<PAGE>
Exhibit (c)(1)(D)
SELF-CONTAINED
REAL ESTATE APPRAISAL REPORT
226 Space - The Hills
Manufactured Housing Community
105 Skyline Drive
Richland, Benton County, Washington 99352
PREPARED FOR
Mr. Steve Waite
Windsor Corporation
6160 South Syracuse Way
Greenwood Village, Colorado 80111
AS OF
May 10, 2000
PREPARED BY
WHITCOMB REAL ESTATE
<PAGE>
[LETTERHEAD OF WHITCOMB]
May 25, 2000
Steve Waite
Windsor Corporation
6160 South Syracuse Way
Greenwood Village, Colorado 80111
RE: 226 Space - The Hills
Manufactured Housing Community
105 Skyline Drive
Richland, BentonCounty, Washington
Dear Mr. Waite:
At your request, we have inspected and appraised the above captioned
property. We estimate the "as is" market value of the property rights outlined
herein, as of May 10, 2000, based on an exposure period of six months, to be:
- FOUR MILLION ONE HUNDRED THOUSAND DOLLARS -
($4,100,000)
Our value estimate applies to the land as physically constituted and to the
improvements actually in existence. Our value estimate 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.
The subject property consists of a 226-space fully developed all age
manufactured housing community. The physical occupancy of the subject is
currently 96.5%. The base rent was increased to $245.00 per site per month on
April 1, 2000. Although there are a few lots that rent for $224.00 and $236.00
per month, the manager indicated the base rent would be increased to $245.00 for
all of the sites within a few months. The resident reimburses the community for
water, sewer and trash pick-up expense. A 7.62-acre tract of land was recently
acquired by the community for expansion purposes and is included in the above
estimate of value.
<PAGE>
Mr. Steve Waite
May 25, 2000
Page Two
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, the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (FIRREA) and Collateral Mortgage
Company's Appraisal Guidelines.
This appraisal assignment was not based on a requested minimum value,
specific value, or the approval of a loan.
We appreciate this opportunity to be of service to you and would like to
thank you for the help and information you provided. If you have any questions,
please feel free to contact us.
Very truly yours,
WHITCOMB REAL ESTATE
/s/ L. Drake Moore JAG
-------------------------
L. Drake Moore, MAI, CCIM
REA #1100940
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Title Page
Transmittal
Table of Contents....................................................... 3
INTRODUCTORY SECTION
Photographs of the Subject.............................................. 5
Summary of Facts and Conclusions........................................ 7
Scope of Assignment..................................................... 8
Purpose and Function of the Report...................................... 10
Appraisal Definitions................................................... 10
Effective Date of Value................................................. 11
Date of Inspection...................................................... 11
DESCRIPTIVE SECTION
Neighborhood Description................................................ 18
Manufactured Housing Community Overview................................. 21
Land and Site Improvements.............................................. 30
Improvement Description................................................. 34
Ownership and Property History.......................................... 36
Occupancy............................................................... 36
Zoning and Other Land Use Controls...................................... 37
Assessment and Taxes.................................................... 38
Marketability and Exposure Period....................................... 39
VALUATION SECTION
Highest and Best Use.................................................... 42
Valuation Process....................................................... 48
Income Capitalization Approach.......................................... 49
Sales Comparison Approach............................................... 76
Final Estimate of Value................................................. 94
Certification........................................................... 95
Assumptions and Limting Conditions...................................... 96
ADDENDA
Legal Description
Profile of Appraiser
</TABLE>
<PAGE>
INTRODUCTORY SECTION
<PAGE>
5
PHOTOGRAPHS OF SUBJECT (Taken May 10, 2000)
[PHOTO APPEARS HERE]
View of Entry
[PHOTO APPEARS HERE]
Typical Interior Street Scene
<PAGE>
6
PHOTOGRAPHS OF SUBJECT (Taken May 10, 2000)
[PHOTO APPEARS HERE]
View of Clubhouse Building
[PHOTO APPEARS HERE]
Excess Land
<PAGE>
7
SUMMARY OF FACTS AND CONCLUSIONS
--------------------------------
Property Appraised: 226 Space - The Hills
------------------- Manufactured Housing Community
105 Skyline Drive
Richland, Benton County, Washington 99352
Property Rights Appraised: Fee Simple Interest, subject to tenant leases
--------------------------
Land Area: 52.22 gross acres (Per Tax Records)
----------
Improvements: 226 manufactured housing spaces, and clubhouse
------------- containing a gross total of approximately 7,500
square feet. The development also has two pools and
RV storage sheds
Owner: Windsor Park Properties 7
------
Zoning: R-3, Multiple Family Residential Use, City of
------- Richland
Highest and Best Use: As Vacant: Hold for future development as
--------------------- predicated by market demand.
As Improved: Current use (Manufactured Housing
Community)
Value Indications: Income Approach $4,060,000
------------------ Sales Comparison Approach $4,420,000
Final Estimate of Value: $4,100,000
------------------------
Date of Appraisal: May 10, 2000
------------------
Date of Inspection: May 10, 2000
-------------------
<PAGE>
8
SCOPE OF THE ASSIGNMENT
-----------------------
This assignment encompasses providing an "as is" market value of the fee
simple property rights, subject to tenant leases. The subject is a 226-space
manufactured housing community, known as The Hills, located in Richland, Benton
County, Washington. The date of the valuation is May 10, 2000.
The first step in the analysis is to develop a concise statement or
definition of the appraisal assignment. This sets the limits of the analysis and
eliminates any ambiguity about the nature of the assignment. This is
accomplished by: 1) identifying the real estate being analyzed, 2) stating the
effective date of value, 3) stating the purpose and use (function) of the
analysis, 4) defining market value, 5) defining and identifying the property
rights to be valued, and 6) stating the assumptions and limiting conditions
applicable to the conclusions.
After defining and accepting the assignment, the preliminary analysis,
which was previously formulated in order to determine the character and extent
of the proposed assignment, is reviewed and refined. The preliminary analysis
also determines the amount of work that will be required to gather the necessary
data. This analysis and work plan is dependent upon the character of the
assignment and the type of property being analyzed. The next step is to make a
physical inspection of the subject, which was accomplished on May 10, 2000, and
its environs, including the gathering of general and specific data.
General data consists of information on the principles, forces and factors
that affect marketability and property value. This information includes regional
and neighborhood trends, as well as social, economic, governmental and
environmental forces that could or may have an effect on the subject's
marketability and value. This general data contributes significantly to the
understanding of the marketplace. Area data for Richland and the subject's
immediate neighborhood was obtained from a number of published sources that are
appropriately cited in the report. Based on the data produced through the
research of the general area and neighborhood the initial searches for market
data were extended back to May 1997. As there was inadequate sales data from
which to evaluate the subject property, the search had to be extended.
Specific data relates to the property being appraised, including a detailed
description of both the parcel comprising the subject site and the subject's
existing site improvements, based upon the physical inspection of the premises
and the neighborhood, together with various documents and drawings obtained from
the owner, management and public services; as well as current and recent changes
in ownership of the subject, occupancy, zoning and land use regulations
affecting the subject, and assessment and real estate tax information applicable
to the subject, obtained from the appropriate governmental agencies. The
gathering of specific data also relates, as may be applicable, to the comparable
land sales, improved sales and rentals selected. The majority of the market
transactions were originally researched through the TRW
<PAGE>
9
Scope of the Assignment
REDI subscription services, which were then visually inspected and verified with
a principle of the transaction, a broker or agent involved in the transaction
and through public records.
In addition to the physical data, locational and income and expense
information for the subject and, as available, for the comparable sales and
rentals was utilized. Also considered are financing arrangements and/or unusual
motivations of either buyer or seller that could or did affect selling prices or
rentals.
An integral part of the valuation process for the property is the
determination of the highest and best use of the subject site: 1) as if vacant,
and 2) as currently improved. The latter analysis is useful in identifying
comparable properties, and determining whether the existing improvements should
be retained, renovated or demolished. The land value estimate, as if vacant, is
required when the land's contribution to total property value is sought, or when
improvements are valued separately, as in the Cost Approach.
After determining the subject site's highest and best use and gathering the
necessary data, we integrate the information drawn from the market research and
analysis of data and consider the application of the three valuation approaches-
the Income Capitalization Approach, the Sales Comparison Approach and the Cost
Approach - in order to derive a well-supported value estimate of the fee simple
interest. Although the three approaches are interrelated, the property type and
use will determine which approach or approaches are most appropriate. Upon
completion of the applicable approaches, we reconcile the value conclusions
derived in order to provide a final value estimate.
<PAGE>
10
PURPOSE AND FUNCTION OF THE REPORT
----------------------------------
The purpose of the appraisal is to express our opinion of the "as is"
market value of the fee simple interest, subject to existing tenant leases, of
the real estate, as of May 10, 2000.
The information, opinions, and conclusions contained in this report have
been prepared as a basis for mortgage financing.
APPRAISAL DEFINITIONS
---------------------
Market Value, as defined by the Office of the Comptroller of the Currency
is:
The most probable price which a property should bring in a competitive and
open market under all conditions requisite to a fair sale, the buyer and
seller each acting prudently and knowledgeably, and assuming the price is
not affected by undue stimulus. Implicit in this definition is the
consummation of a sale as of a specified date and passing of title from
seller to buyer under conditions whereby:
- buyer and seller are typically motivated;
- both parties are well informed or well advised and acting in what
they consider their own best interests;
- a reasonable time is allowed for exposure in the open market;
- payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
- the price represents the normal consideration for the property
sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale.
Fee Simple Interest is defined as the absolute ownership unencumbered by
any other interest or estate subject only to the four powers of
government./1/
________________________
/1/ The Dictionary of Real Estate Appraisal, Third Edition, Appraisal
Institute, 1993.
<PAGE>
11
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 10, 2000, consistent with our date
of inspection.
DATE OF INSPECTION
------------------
L. Drake Moore, MAI, CCIM inspected the property on May 10, 2000.
<PAGE>
DESCRIPTIVE SECTION
<PAGE>
13
AREA DESCRIPTION
----------------
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 description focuses on the social, economic, governmental and environmental
forces that effect 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 Richland area. In the
following discussion, we have attempted to present sufficient data to inform
readers unfamiliar with Richland, Washington and its environs.
Location
--------
The subject is located in the Tri-Cities area in the southwest section of
the city of Richland, Benton County, just north of the I-182 and the Kennedy
Road interchange. The Greater Tri-Cities Metropolitan Statistical Area (MSA)
consists of 2,945 square miles. The Tri-Cities area is located in the Columbia
Basin of southeastern Washington State at the confluence of the Columbia, Snake
and Yakima Rivers and is comprised of the cities of Richland, Kennewick and
Pasco. Richland is approximately 225 miles southeast of Seattle, 220 miles east
of Portland, Oregon and 134 miles south of Spokane, Washington. Benton County
is bounded on the north by Grant County, on the east by Franklin County, on the
south by the State of Oregon, and on the west by Klickitat and Yakima Counties.
The Columbia Rivers forms the north, east, and southern boundaries.
Demographic
-----------
Benton County, with a 1990 population of 112,560, has grown more than 100%
since 1970. Franklin County's population experienced a lower increase of
approximately 72% since 1980. Growth was equally significant for Benton
County's two largest cities of Richland and Kennewick. During the 1980's, the
growth rates by both counties, as well as the cities of Kennewick and Pasco
slowed noticeably; while in Richland there was a decline. This was attributed
to the "mothballing" of two nuclear power plants by the Washington Public Power
Supply System (WPPSS); the termination of the federal Basalt Waste Isolation
Project; and the closure of the 25-year old reactor in Hanford. The economy has
rebounded largely due to a re-direction to toxic waste clean-up, and population
growth has resumed in the 1990's. The following tables show population figures
for the Tri-Cities area for the past three decades.
<PAGE>
Area Description 14
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
POPULATION
-------------------------------------------------------------------------------------------------------------
Growth
Annual Comp.
Area 1970 1980 1990 1999 1990-99
Est.
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Benton County 67,540 109,444 112,560 137,500 2.24%
-------------------------------------------------------------------------------------------------------------
Franklin County 25,816 35,025 37,473 44,400 1.90%
-------------------------------------------------------------------------------------------------------------
City of Richland 26,290 33,578 32,315 36,860 1.47%
-------------------------------------------------------------------------------------------------------------
Source: 1970-1990: U.S. Census; 1990: Greater Pasco Chamber of Commerce
=============================================================================================================
</TABLE>
The following chart shows median household income, average household size,
total housing units, and median household value for the Tri-Cities in 1990.
<TABLE>
<CAPTION>
OTHER DEMOGRAPHIC DATA
------------------------------------------------------------------------------------------------------------
Richland Kennewick Pasco
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Median Household Income $41,543 $33,393 $24,122
-------------------------------------------------------------------------------------------------------------
Average Household Size 2.44 2.61 2.91
-------------------------------------------------------------------------------------------------------------
Total Housing Units 13,821 17,100 7,632
-------------------------------------------------------------------------------------------------------------
Median Household Value $68,315 $64,613 $44,566
-------------------------------------------------------------------------------------------------------------
Source: U.S. Census Bureau, 1990
=============================================================================================================
</TABLE>
The average household and family size is greatest in Pasco. Kennewick has the
highest percentage of housing stock built during the past two decades and has
lead in the number of home building permits issued in recent years. The general
consensus is that Kennewick, Richland and West Richland are better prepared in
terms of existing infrastructures when compared to Pasco.
The city of Richland is the most affluent of the Tri-Cities, with average
household incomes of $41,543 in 1990. The median family income for the Tri-
Cities is currently approximately $37,495.
<PAGE>
Area Description 15
Economic and Employment Base
----------------------------
The Tri-Cities is home to the Hanford Reservation, historically one of the
nation's largest nuclear material production facility operational from World War
II through the 1980's. Hanford now houses major research facilities, radioactive
and hazardous waste clean-up programs and Washington State's only operating
nuclear power reactor. The primary employers in the region include the
Department of Energy (DOE) and its subcontractors: Westinghouse Hanford Company;
Battelle Northwest; Kaiser Engineers; and the Hanford Environmental Health
Foundation. Other employers associated with Hanford Nuclear Reservation are the
Washington Public Power Supply System (WPPSS), and Siemens Nuclear Power.
Despite the downsizing of more than 5,000 employees, Hanford is still
responsible for 15,000 family wage jobs. The Hanford clean up is estimated
between $50 and $70 billion and will continue over a 30 to 40 year period. The
United States Department of Energy has committed $1.6 billion of its annual
clean-up budget of $5 billion to the Hanford clean up.
Benton-Franklin and its resource communities serve as a crossroads; leading
Washington state in agriculture, food processing, natural resources development,
environmental technologies and outdoor recreation tourism. Some of the
agricultural products include wheat, apples, pears, grapes, wine, potatoes,
corn, seeds, cottonwood and feed grain. With an abundance of approximately a
million acres of irrigated land, another million acres in reserve, producing
more than 200 varieties of fruits, berries, vegetables and grains, the Tri-
Cities area is ideally suited for food processing.
Benton County's labor force is high in managerial and professional specialty
occupations. Approximately 2.3 percent of the state's work force has 8 percent
of the state's natural scientist and 5.4 percent of its engineers. Franklin
County's work force shows a high concentration of farming, fishing, operators,
and fabricators due to its agricultural heritage. The current unemployment rate
for Benton and Franklin counties is approximately 7.5%.
Transportation
--------------
Interstate 82 provides access to Yakima, Ellensburg and Interstate 90 to the
north. Interstate 182 provides regional access between Richland and Pasco. U.S.
395, the major north/south highway connecting Pasco and Kennewick, provides
access to Spokane further to the north, while State Road 240 connects Richland
and Kennewick. A major railroad yard is located in Pasco, which provides
passenger and freight rail service to the region, as well as the nation. Barge
service along the Columbia and Snake rivers is also available at the Ports of
Pasco, Kennewick Richland and Benton. Commercial air service is provided at the
Tri-Cities Airport located in north Pasco. Richland and Kennewick also have
municipal airports.
<PAGE>
Area Description 16
Summary
-------
The Tri-Cities area continues to grow after economic decline in the 1980's.
The economy continues to be dependent upon the Hanford Reservation. Despite the
downsizing of more than 5,000 employees, Hanford is still responsible for 15,000
family wage jobs. The Hanford clean up is estimated between $50 and $70 billion
and will continue over a 30 to 40 year period. The economy is also heavily
dependent upon the agricultural and the food processing industries. The general
long-term outlook for Richland and the Tri-Cities economy appears to be good,
with most of the basic economic factors indicating stable growth patterns. The
total civilian labor force has steadily increased over the years.
<PAGE>
[AREA MAP APPEARS HERE]
<PAGE>
18
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
--------
The subject property is located north of Kennedy Road and Interstate 182.
The neighborhood is generally bounded by the Interstate 182 to the south,
Interstate 82 to the west, the Columbia River to the east and Van Giesen Street
to the north. The subject property is located in the south central portion of
the neighborhood.
Land Use
--------
The neighborhood is approximately 30% built-up, with land uses in the
immediate vicinity predominantly residential. There are residential
subdivisions including "The Hills West" located to the south across I-182, and
"Riverpointe" apartments to the north of the Yakima River. Most of the homes
nearby are priced in the low $100,000's. According to the chamber of commerce,
the average price of a single-family home is $114,000. The city of Richland has
a constructed a new ancillary building near the subject property north of
Kennedy Road. There is a new convenience store located on the southwest corner
of Kennedy Road and Queensgate Drive. In December 1999, the subject acquired
approximately 7.62 acres of land from the City of Richland for expansion
purposes.
Access
------
Access to the subject property is via Skyline Drive and Queensgate Drive,
which interchanges with Interstate 182 to the south and Kennedy Road to the
northwest. Overall, access to the subject property is considered excellent.
Interstate 182 provides access to the Richland central business district, or
Kennewick via Columbia Drive. The excess land has frontage along east side of
Duportail Street. Kennedy Road becomes Duportail Street north of Queensgate
Drive. Currently Duportail Street dead-ends immediately north of City View
Drive.
Housing
-------
While the subject competes with all forms of housing to a certain degree,
the closest competition is other manufactured housing communities. There are
five manufactured housing communities located in the Richland and Kennewick area
that are comparable to the subject. In addition, a new community called
Bridgewater Estates was opened in February. According to the developer,
Santiago Properties, 51 sites are finished and 6 are rented. Ultimately, the
community will have 192 spaces. The rent ranges from $300 to $330 per month per
site. Our surveys of residents indicate that a sense of community is the
primary reason that people choose to reside in a manufactured housing community.
There is also a sense of security, as residents pay close
<PAGE>
Neighborhood Description 19
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 average. The
infrastructure is in-place in the neighborhood. The Tri-Cities area is known for
the large employment base supported by the Federal Government and private
contractors at the Hanford Reservation to the north of Richland. General real
estate values have been relatively stable over the last three to four year
period, although construction has been continuing at a moderate pace, on
properties purchased during that period.
Future development in the neighborhood is expected to continue, due to the
improving infrastructure and the proximity to Hanford. The subject property
will benefit from its convenient location and lack of land zoned for new
manufactured housing communities in Richland.
<PAGE>
[NEIGHBORHOOD MAP APPEARS HERE]
<PAGE>
21
MANUFACTURED HOUSING COMMUNITY MARKET OVERVIEW
----------------------------------------------
The manufactured housing industry in the state of Washington has matured
over the past twenty years, as a direct result of the advancements in
manufactured housing construction techniques and the continued ability of
producers and dealers to make manufactured housing 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 housing 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
homesite.
According to the 1997 U.S. Housing Market Map, Washington ranked 21/st/
among states in the number of homes shipped in 1997. As shown on the following
table, manufactured home shipments in Washington peaked in 1995, but shipments
started to increase again in 1997. Several communities have imposed
restrictions on new manufactured housing development.
Manufactured
Home Shipments
==============================
Year Shipments
------------------------------
1995 7,332
------------------------------
1996 6,257
------------------------------
1997 6,419
==============================
Source: Washington Manufactured Housing Association
There is a wide range of rental rates in the marketplace. Generally
speaking, lot rent ranges between $230.00 per month to $313.00 per month. Rates
varied within some of the communities as lots on a corner, lots for multi-
section homes and larger lots leased for higher than standard amounts.
Typically, no services other than irrigation are included in the rental rate.
The subject base rental rate increased from $236.00 to $245.00 per site per
month on April 1, 2000. The subject rents are within the range found in nearby
communities. No services are included in the subject rent other than irrigation.
Residents reimburse the landlord for water, sewer, and trash pick-up.
<PAGE>
Manufactured Housing Community Market Overview 22
Because occupancies are currently strong, there were no incentives offered
for the move-in of homes into a community. In the past, some communities offered
a free month of rent or would pay some of the setup costs. It is unlikely that
these amounts would cover the cost of moving a home and hooking it up, so once a
community is full it will have a greater tendency to maintain its occupancy. As
shipments continue to increase and existing vacancy is absorbed, the market
should tighten and permit rent increases.
The subject is a 226-space, fully developed, all age 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 89.4% and 100% occupied. The physical occupancy at the
subject is currently 96.5%.
Summary
-------
The manufactured housing market is sophisticated in the state of
Washington. Shipments have increased over the last three years. Manufactured
housing provides a lower cost-housing alternative to site built homes and a
sense of community to residents. No new competition is planned and increasing
rents and occupancies should occur as the local and national economy improves.
<PAGE>
Rent Comparable Number 1 23
Alyson Manor Mobile Home Park
2021 Stevens Drive
Richland, Benton County, Washington
[PHOTO APPEARS HERE]
Location: East Side of Stevens Drive, North of SR 240
Interchange
Number of Spaces: 126
Property Description: All age manufactured housing community built in
1970's.
Monthly Rental Rates: $275.00 to $277.00
Occupancy: 92.9% (117 of 126)
Services Included in Rates: Water and Irrigation
Amenities: Clubhouse, swimming pool, and RV storage.
Verification/Date: Community Manager in May 2000.
Comments: This community is in good condition and
approximately three miles north of the subject.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
--------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
================================================================================
<PAGE>
Rent Comparable Number 2 24
Desert View MHP
700 W. Van Giesen
Richland, Benton County, Washington
[PHOTO APPEARS HERE]
Location: South Side of Van Giesen Road, West of the Yakima
River
Number of Spaces: 435
Property Description: All age manufactured housing community built in
1980's.
Monthly Rental Rates: $230.00 to $240.00
Occupancy: 89.4% (389 of 435)
Services Included in Rates: Water, sewer, irrigation and trash collection
Amenities: Clubhouse, playground, swimming pool and RV
storage.
Verification/Date: Community Manager in May 2000.
Comments: The property is in good condition and is located
in a more rural setting of West Richland.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
--------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
================================================================================
<PAGE>
Rent Comparable Number 3 25
Richland Mobile Park
40 Compton Lane
Richland, Benton County, Washington
[PHOTO APPEARS HERE]
Location: North side of Compton Lane, East of Stevens Drive
Number of Spaces: 310
Property Description: All age manufactured housing community built in
1970's.
Monthly Rental Rates: $273.00 to $313.00
Occupancy: 97.8% (306 of 313)
Services Included in Rates: Water and irrigation.
Amenities: Clubhouse, pool, playground and RV storage.
Verification/Date: Community Manager in May 2000.
Comments: The park is in good condition. The last rent
increase was February 1999.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
--------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
================================================================================
<PAGE>
Rent Comparable Number 4 26
Cherry Hills Mobile Home Park
2917 West 19/th/ Avenue
Kennewick, Franklin County, Washington
[PHOTO APPEARS HERE]
Location: South side of 19/th/ Avenue, 1/4 mile east of U.S.
Highway 395.
Number of Spaces: 166
Property Description: All age manufactured housing community.
Monthly Rental Rates: $276.00
Occupancy: 100%
Services Included in Rates: Irrigation
Amenities: Clubhouse, playground, pool and RV storage.
Verification/Date: Community Manager in May 2000.
Comments: The park has a good location near industrial area
of Kennewick. The community is well maintained and
full.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
--------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
================================================================================
<PAGE>
Rent Comparable Number 5 27
Sun Meadows MHP
3324 West 19/th/ Avenue
Kennewick, Benton County, Washington
[PHOTO APPEARS HERE]
Location: North Side of West 19/th/ Avenue, West of U.S.
Highway 395
Number of Spaces: 200
Property Description: All age manufactured housing community.
Monthly Rental Rates: $250.00 to $300.00
Occupancy: 99.0% (198 of 200)
Services Included in Rates: Water, sewer, irrigation and trash collection
Amenities: Clubhouse, playground, swimming pool, tennis,
carports, and RV storage.
Verification/Date: Community Manager on April 29, 1999.
Comments: The average rent including services is $270. The
property is located between commercial development
on U.S. 395 and a residential neighborhood west
along 19/th/ Avenue.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
--------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
================================================================================
<PAGE>
RENT COMPARABLE SUMMARY
<TABLE>
<CAPTION>
=================================================================================================================================
No. Name/Location Occ./Ttl Spaces Monthly Services Amenities
Pct. Occupied Rental Rates Included In Rent
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Alyson Manor Mobile Home Park 117/126 $275.00 to Water and Irrigation Clubhouse, pool,
2021 Stevens Drive 92.9% $277.00 playground and RV
Richland, Benton County, Washington storage
---------------------------------------------------------------------------------------------------------------------------------
2 Desert View 389/435 $230.00 to Water, sewer, Clubhouse, 2 pools,
700 W. Van Giesen 89.4% $240.00 irrigation and playground and RV
West Richland, Benton County, Washington trash collection storage
---------------------------------------------------------------------------------------------------------------------------------
3 Richland Mobile Park Park 306/310 $273.00 to Water and Irrigation Clubhouse, pool,
40 Compton Lane 97.8% $313.00 playground and RV
Richland, Benton County, Washington storage
---------------------------------------------------------------------------------------------------------------------------------
4 Cherry Hills Mobile Home Park 166/166 $276.00 Irrigation Clubhouse, pool,
2917 West 19/th/ Avenue 100% playground and RV
Kennewick, Franklin County, Washington storage
---------------------------------------------------------------------------------------------------------------------------------
5 Sun Meadows Manufactured Housing Community 198/200 $250.00 to Water, sewer, Clubhouse, pool,
3324 West 19/th/ Avenue 99.5% $300.00 irrigation and playground and RV
Kennewick, Franklin County, Washington trash collection storage
---------------------------------------------------------------------------------------------------------------------------------
Subj. The Hills Mobile Home Park 218/226 $245.00 Irrigation Clubhouse, pool,
105 Skyline Drive 96.5% playground and RV
Richland, Benton County, Washington storage
=================================================================================================================================
</TABLE>
<PAGE>
[RENT COMPARABLE LOCATION MAP APPEARS HERE]
<PAGE>
30
LAND AND SITE IMPROVEMENTS
--------------------------
The subject site is an irregular shaped parcel of land located on the north
side of Skyline Drive and east of Queensgate Drive. The improved parcel contains
approximately 54.85 acres of gross area according to the tax records of Benton
County. The excess land is approximately 7.62 and is identified as Plat of City
View Phase 1, Block 3, Lot 1. Including the excess land, the total gross area
for the subject property is 62.47 acres. A survey was not available as of the
date of this report.
The parcel is at the existing street grades and drainage appears adequate.
There were no adverse soil or subsoil conditions observed during the physical
inspection of the site. Utilities connected and in service, on the date of the
inspection, include
Utility services connected and in service on the date of valuation include
the following:
Sanitary Sewer: City of Richland
--------------
Storm Sewer: City of Richland
-----------
Water: City of Richland
-----
Telephone: U.S. West
---------
Electric: Benton Rural Electric
--------
Gas: None
---
Cable Television: Falcon
----------------
Trash Collection: City of Richland
----------------
Ingress to and egress from the subject community is via Skyline Drive.
Access is rated good. Roadways that are laid-out to maximize the natural
features of the terrain access the individual lots in the community. Roadway
improvements include:
Street-bed: Skyline Drive and Kennedy Road are asphalt paved,
---------- two-lane and four-lane thoroughfares, respectively.
The streets in the community are asphalt-paved
roadways and are 30-foot wide right-of-ways.
Curb: Skyline Drive has valley gutters, but no curbs.
---- Kennedy Road has concrete curbs. The subject has
concrete curbs.
<PAGE>
Land and Site Improvements 31
Sidewalk: There are no sidewalks along Skyline Drive or Kennedy Road,
-------- but there are concrete sidewalks in the community.
Streetlights: Skyline Drive and Kennedy Road have overhead streetlights
------------ in this vicinity. There are pole-mounted lights throughout
the community.
Landscaping: Grass and other planted areas are found throughout
----------- the site. Some lots have trees.
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 and county property records did not reveal any
adverse or potentially adverse interests that 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 the city of Richland.
Easements
---------
Standard utility easements for electricity and telephone are assumed to
exist. No other easements were identified to us. However, there is a power
line easement traversing the southern section of the subject site in an
east/west direction. Development is prohibited below the easement.
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 recommend an audit be
performed.
Functional Utility
------------------
The subject parcel, which is irregular in shape and contains approximately
62.47 acres, is large enough to accommodate building improvements and roadways
as well recreational amenities and green areas. The site is considered
functional for various residential development
<PAGE>
Land and Site Improvements 32
scenarios. The current development as a 226-space manufactured housing community
with an overall density of approximately 3.78 spaces per acre, is low for modern
standards; however, an additional 54 lots are planned for the recently purchased
7.62 acre tract located on the east side of Duportail Street. With 4.48 units
per acre, the site is considered functional for use as a manufactured housing
community.
<PAGE>
Land and Site Improvements 33
[SITE PLAN APPEARS HERE]
<PAGE>
34
IMPROVEMENT DESCRIPTION
-----------------------
The subject is improved with 226 manufactured housing community pads.
Approximately 1/2 of the lots are doublewide. The amenities consist of a one
and a half-story clubhouse containing approximately 7,500 square feet. The
upstairs loft area is utilized as a billiards room. There is a solar heated
swimming pool with adjacent children's pool located behind the clubhouse
building. There is a RV storage area located near the entrance of the community
on Skyline Drive.
The community streets are asphalt paved and between 25 and 30 feet wide.
The streets were observed to be in good condition.
Age and Condition
-----------------
The subject community and site improvements were originally built in 1977.
The community is approximately 23 years old. The asphalt streets are showing
signs of deferred maintenance, however, overall maintenance levels in the
community are rated good.
<PAGE>
Improvement Description 35
[SITE LAYOUT APPEARS HERE]
<PAGE>
36
OWNERSHIP AND PROPERTY HISTORY
------------------------------
The ownership of the subject property, as recorded in the Official Records
of Benton County, Washington is in the name of Windsor Park Properties 7, a
California Limited Partnership. According to the property owner, the subject is
not currently listed for sale or the subject of a pending contract.
OCCUPANCY
---------
A fully developed 226-space manufactured housing community currently
occupies the subject property. There are currently eight vacancies and two
spaces occupied by employees. Based upon the above, the physical occupancy rate
is 96.5% and the economic occupancy is 95.6%. We have incorporated no income
attributable to the sale of homes in our analysis.
The base rent was generally increased from $236.00 to $245.00 per site per
month on April 1, 2000. However, according to the most recent rent roll
furnished by property management, there are ten lots with base rents still at
$224.00 per month and 20 lots at $236.00 per month. Management indicated the
base rent would be $245.00 for all the lots within the next couple of month. The
community is reimbursed for water, sewer and trash pick-up. Prior to the $9.00
increase in April 2000, the last rent increases occurred in March 1999 and was
$12.00 per month.
<PAGE>
37
ZONING AND OTHER LAND USE CONTROLS
----------------------------------
The subject property is located in the City of Richland and is zoned "R-3"
Multiple-Family Residential Use District Special Use Permit to operate according
to the zoning ordinance. The use as a manufactured housing community is
permitted as a special use in this district. The property was in existence prior
to the adoption of the current regulations.
The excess land was recently rezoned to "R-3". Prior to the acquisition in
December 1999, the zoning was limited business.
Flood Hazard
------------
The City of Richardson is a participant in the Federal Emergency Management
Agency (FEMA) flood map system; however, the City of Richland has not updated
their (FEMA) map system. According to Benton County Flood Map Community Number
530237 Panel 0470B, dated July 19, 1982, the property is not located in a FEMA
designated flood zone, but without an updated survey and flood map it was not
possible to make an accurate determination.
Environmental
-------------
We observed no obvious areas of contamination on or about the site, but
recommend an environmental audit be performed.
<PAGE>
38
ASSESSMENT AND TAXES
--------------------
The subject property is identified in the Benton County records as Parcel
numbers 1-1598-300-0002-000, 1229-820-20001-003, 1229-820-20001-002 and 1169-
840-20003-001. According to records at the Assessor's office, the current
(2000) assessed value of these parcels totals $4,781,600. The current assessment
increased approximately 115% from last year's assessment of $2,172,500. The
1999 assessment had been increased 114% from the 1995 assessment, however,
approximately 70 new pads were added in 1993 and the prior assessment had been
in 1990. The total tax liability for 2000 is $67,056. Including the newly
acquired parcel, the assessed value per space for the subject is currently
$21,158 per space. According to the Tax Collector's Office, all taxes are
current.
Assessed values, for purposes of property taxation are determined on
January 1, of each year. In the state of Washington, properties are assessed at
100% of the market. Tax bills are issued in arrears, but taxes are paid
biannually. For instance, the first 1/2 of the 2000 taxes were payable in May
2000 with the second installment payable in November. A 1% per month penalty is
assessed for each month late with a 3% penalty June 1/st/ and 8% December 1/st/.
The first payment for the subject property was credited May 1/st/ totaling
$33,233.89. The most recently purchased parcel was granted a grace period and
the 1/st/ installment of $761.92 is currently due. Properties are reassessed
annually and equitability of assessments is a basis for appeal.
Historically, the tax rates have slightly varied since 1997. The table
below illustrates the tax liability for the subject property since 1997.
===========================================
Year Total Taxes
-------------------------------------------
2000 $65,254.50
-------------------------------------------
1999 $30,589.40
-------------------------------------------
1998 $31,971.49
-------------------------------------------
1997 $30,414.90
===========================================
Historically the taxes have varied, and we would expect some increase in
future years as the demand for governmental service increases. The Benton
County Assessor increased the assessments substantially for most of the
manufactured housing communities within the county. The increased assessment is
based upon the 1998 sales of several communities. We have included three of
these communities within our Sales Comparison analysis. The current assessment
for these communities ranges from $19,517 to $21,517 per site. We have forecast
stabilized taxes at $67,056 reflective of the 2000 amount.
In comparison to our market value opinion contained herein, the subject's
assessed value appears high. It is our opinion that the subject property is
over assessed.
<PAGE>
39
MARKETABILITY AND EXPOSURE PERIOD
---------------------------------
The subject property, as discussed in the Neighborhood Analysis, and
Manufactured Housing 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
housing 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 housing community investments, the
REIT investors have been a major player in the marketplace. In 1994, REIT
investors bid down capitalization rates for new, large communities. However,
after the initial splash, REIT investments slackened as property owners placed
premium prices on their properties. With the recent rise in stock prices, the
REIT's have re-entered the marketplace. There are also numerous national groups
acquiring properties aggressively. These groups plan to convert to REIT's at
some point in the future. Resident groups have also increased demand for
manufactured housing 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. Due to its small
size the subject property would most likely appeal to all types of investors
except the institutional investors.
Discussions with large institutional manufactured housing 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. All age 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
<PAGE>
Marketability and Exposure Period 40
investors will tend to accept lower expense ratios (30%), no capital charges and
a lower overall rate.
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 have 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, 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>
42
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."/2/
The highest and best use of a specific parcel of land does not depend on
subjective analysis by the property owner, the developer, or the appraiser;
rather, the competitive forces within the market where the property is located
shape highest and best use. Therefore, the analysis and interpretation of
highest and best use is an economic study of market forces focused on the
subject property.
Market forces also shape market value. The general data that is 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 to be appraised provides the foundation for a thorough
investigation of the competitive positions of buyers and sellers in the
marketplace. Consequently, highest and best use 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. These objectives may include assured
occupancy, establishing operating costs at a reasonable and acceptable level,
and potential property appreciation.
_______________________
/2/ The Appraisal Institute, The Appraisal of Real Estate, 10th Edition Chicago:
-------------------------
The Appraisal Institute, 1992, page 275.
<PAGE>
Highest and Best Use 43
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 prevailing market conditions, the trends affecting the buyers
and sellers in the marketplace, and the existing use of the subject property.
Analyzing the highest and best use of the land as though vacant serves two
functions. First, it helps identify comparable properties that 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.
<PAGE>
Highest and Best Use 44
Legally Permissible
-------------------
The use must be legal. The use must be probable, not speculative or
conjectural. There must be a profitable demand for such a use and it must return
to the land the highest net return for the longest period of time.
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 restriction, i.e., utility easements, etc. are
in-place, which would not be of any significant consequence to the development
of the site.
If the highest and best use of the site or property is not allowed under
current zoning, but there is a reasonable probability that a change in zoning
could be obtained due to shifting economic and social patterns, these conditions
can be considered determining highest and best use. However, we must fully
disclose all pertinent factors relating to a possible zoning change, including
that the change will not be granted. We must also be sensitive to potential
public reaction to proposed development projects since adverse reactions from
local residents and the general public have stopped many real estate
developments. The existing and/or projected use should be harmonious with the
nature and condition of existing neighborhood development.
The subject is located in an area that is not zoned. The current use of
the subject meets the legally permissible criteria of this analysis. In order
to develop the 7.62 acres of land located along the east side of Duportail
Street, a City of Richland Development Permit permit will be required.
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. In general, the larger the site, the greater the potential
is 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 may be relevant. If the
property should be converted to another use,
<PAGE>
Highest and Best Use 45
the cost of conversion must be analyzed in light of the returns to be generated
by the new use. Obviously, the costs of conversion depend on the property's
existing physical condition.
Including the 7.62 acres recently acquired, the subject site is irregular
in shape and contains a total area of approximately 62.47 acres. The site is
generally level and has access from Skyline Drive. The lack of major
thoroughfare frontage would preclude most types of commercial development. The
size and shape of the site does not restrict maximum flexibility and
development, and the subject's existing development of 226 lots on 54.85 acres
has made an adequate use of the site as indicated by its current density of
approximately 4.12 spaces per acre. However, management has proposed the
development of 54 additional spaces on the 7.62 acres of excess land located on
Duportail Street. Taking the new development into consideration increases the
density to 4.48 spaces per acre, which is adequate for modern standards.
Although the excess land is irregularly shaped, it will have visibility and
access from Duportail Street.
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 highest and best 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.
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
<PAGE>
Highest and Best Use 46
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. In the Zoning section of
this appraisal, it was noted that manufactured housing community development of
the property is "R-3" Multiple-Family Residential, which is a legal, specific
use of the site. The subject is located within the City of Richland and would
only require site plan approval.
We have also noted that there are a number of competitive manufactured
housing communities in the subject's neighborhood. Due to the non-availability
of space for immediate manufactured housing community development fees and a
lack of financing for speculative projects, it is unlikely that there will be an
abundance of speculative manufactured housing community development in the
foreseeable future.
Current trends in the manufactured housing sales would facilitate the
development of a manufactured housing community. 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, or
develop the land for low-to-moderate priced housing, including manufactured
housing.
Highest and Best Use - As Improved
----------------------------------
The site is currently improved with a 226-space all age manufactured
housing community. The use of the site is a legal non-conforming use under the
current zoning code. The subject property has been in existence as a
manufactured housing community since 1977.
The improvements are well situated on the site. The site has access to
Queensgate Drive and Interstate 82 via Skyline Drive. The amenities for this
size and type of improvement are equal to or better than the competitors. The
use of the site is physically possible. Some demand for manufactured housing in
this area is evident, as the subject is fully developed and has a high level of
occupancy. 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.
<PAGE>
Highest and Best Use 47
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
uses as a 226-space all age manufactured housing community. The highest and
best use of the excess 7.62 acres of land would appear to be for expansion of
the community provided the site is zoned for manufactured housing.
<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
Direct 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 space rental rates, an investor would not be willing to compensate a seller
for any more than the income to be received. The subject property is a fully
developed community, with no expansion possibilities; therefore, a potential
investor would be primarily interested in the cash flow and equity return. Due
to the subjectivity of depreciation estimates and the lack of comparable land
sales, we have omitted the cost approach.
A number of positive and negative factors were believed to affect the
overall value of the subject property.
On the positive side, the following were considered.
1. The community is located near the Hanford Reservation and area amenities.
2. The community has a high level of occupancy.
Partially offsetting the positive influences are negative factors among
which the following were considered the most pertinent:
1. The subject taxes have increased approximately 229% since 1995.
With the above factors in mind, the Income Capitalization 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 Use 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. Location, property size, tenant mix, age of the property,
absence or presence of long term leases, assignability of existing debt,
condition of the facility, level of occupancy, quality of management, and other
related factors are among the criteria that affect the marketability of an
income-producing property.
<PAGE>
Income Capitalization Approach 50
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 the process of estimating the total
potential gross income (PGI), from lot rentals, less any vacancy and credit
loss, added to the estimate of income from other sources, producing 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 and expense levels and historical trends, together
with current rent and expense levels at manufactured housing communities similar
to the subject. The subject's historical income and expenses for 1996, 1997,
1998 and 1999 have been presented, in the table on the following page. It
should be noted that we have grouped a number of expense items for reporting
purposes.
Although the expenses do not appear unreasonable, we have also relied on
market comparables. Current income and expense information on three comparable
manufactured housing 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 57.
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
The Hills Manufactured Housing Summary of Historical Operations
Pct. of $ Per Pct. of $ Per Pct. of $ Per
1996 Income Space 1997 Income Space 1998 Income Space
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income:
Rents $512,399 84.81% $2,267.25 $528,953 83.15% $2,340.50 $564,350 81.58% $2,497.12
Utility Income 85,367 14.13% 377.73 100,159 15.74% $ 443.18 114,679 16.58% $ 507.43
Miscellaneous/Other 6,402 1.06% 28.33 7,067 1.11% $ 31.27 12,780 1.85% 56.55
-------------------------------------------------------------------------------------------------
Total Income $604,168 100.00% 2,673.31 $636,179 100.00% $2,814.95 $691,809 100.00% $3,061.10
Expenses:
Insurance 8,192 1.36% 36.25 8,657 1.36% 38.31 3,213 0.46% 14.22
Office 37,976 6.29% 168.04 31,778 5.00% 140.61 34,771 5.03% 153.85
Maintenance & Supplies 28,386 4.70% 125.60 21,776 3.42% 96.35 29,910 4.32% 132.35
Management Expense 29,835 4.94% 132.01 37,330 5.87% 165.18 34,592 5.00% 153.06
Wages & Benefits 59,983 9.93% 265.41 63,284 9.95% 280.02 68,699 9.93% 303.98
Property Taxes 29,396 4.87% 130.07 31,177 4.90% 137.95 32,492 4.70% 143.77
Utilities 110,727 18.33% 489.94 116,673 18.34% 516.25 125,630 18.16% 555.88
-------------------------------------------------------------------------------------------------
Total Expenses $304,495 50.40% $1,347.32 $310,675 48.83% $1,374.67 $329,307 47.60% $1,457.11
Net Operating Income $299,673 49.60% $1,325.99 $325,504 51.17% $1,440.28 $362,502 52.40% $1,603.99
===============================================================================================================================
<CAPTION>
============================================================
Pct. of $ Per
1999 Income Space
------------------------------------------------------------
<S> <C> <C> <C>
Income:
Rents $591,987 80.01% $2,616.41
Utility Income 136,750 18.48% $ 605.09
Miscellaneous/Other 11,152 1.51% 49.35
------------------------------
Total Income $739,889 100.00% $3,273.85
Expenses:
Insurance 3,928 0.53% 17.38
Office 38,332 5.18% 169.61
Maintenance & Supplies 23,491 3.17% 103.94
Management Expense 36,994 5.00% 163.69
Wages & Benefits 68,025 9.19% 301.00
Property Taxes 31,967 4.32% 141.45
Utilities 157,645 21.31% 697.54
------------------------------
Total Expenses $360,382 48.71% $1,594.61
Net Operating Income $379,507 51.29% $1,679.23
============================================================
</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. As previously discussed in the Manufactured Housing Community
Market Overview section of this report, base rental rates at the community is
$245.00 per month; however, according to the most recent rent roll furnished by
property management, there are ten lots with base rents still at $224.00 per
month and 20 lots at $236.00 per month. Management indicated the base rent would
be $245.00 for all the lots within the next couple of month. Prior to the $9.00
increase in April 2000, the last rent increases occurred in March 1999 and was
$12.00 per month.
The base lot rate generally includes no services. Base lot rents typically
generate between 90% and 99% of the total income in a manufactured housing
community. Based on the market range, we are of the opinion that the subject has
a reasonable rent structure within market levels.
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 accounted 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 $664,440.
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
current occupancy at the subject property is 96.5%. All age communities
typically have a more transient occupancy than do senior communities. We have
estimated stabilized vacancy and credit loss at 5.0% to account for both
physical and economic vacancy, and credit loss.
Total vacancy and credit loss has been estimated to be $33,222. The
effective gross income from rentals is estimated to be $631,218.
Utility Income
--------------
The City of Richland provides the community water. Each site is
individually metered and billed by the management. The utility income ranged
from $377.73 in 1996 to $605.09 per space in 1999. We have projected utility
income at $550 per space or $124,300 annually.
<PAGE>
Income Capitalization Approach 53
Other Income
------------
Historically the subject has reported miscellaneous income, ranging from
$28.20 per space in 1996 to $56.30 in 1998. This category includes late fees,
bad check charges and other miscellaneous income items. The owner reported that
the late fee charge has been recently increased and a strict policy by
management is in force. We have averaged the other income reported in 1997, 1998
and 1999 to estimate miscellaneous income at $45.00 per space or $10,170 per
year.
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. Our estimate of the
stabilized effective gross income of $765,688 is detailed below.
================================================================================
The Hills Manufactured Housing Community
Effective Gross Income
================================================================================
Gross Potential Rental Income:
Monthly Monthly
Spaces Rent Total Annualized
--------------------------------------------------------------------------------
226 $245.00 55,370 664,440
--------------------------------------------------------------------------------
Less:
Vacancy & Credit Loss 5.0% (33,222)
--------
Effective Gross Income $631,218
From Lot Rentals
Utility Income $124,300
Miscellaneous Income 10,170
--------
Effective Gross Income $765,688
================================================================================
<PAGE>
Income Capitalization Approach 54
Operating Expense Analysis
--------------------------
The following discussion addresses each of the line item expenses for the
property. We have presented 1996, 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. The expense comparables range in size from
130 to 251 spaces. These communities have operations similar to the subject,
including connection to municipal or county utility systems.
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Manufactured Housing Community Comparable Operations
Pct. of $ Per Pct. of $ Per Pct. of $ Per
Spaces 195 Income Space 130 Income Space 251 Income Space
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income:
Rents $304,839 97.35% $1,563.28 $341,763 99.44% $2,628.95 $375,664 99.57% $1,496.67
Miscellaneous/Other 8,301 2.65% 42.57 1,923 0.56% 14.79 1,619 0.43% 6.45
--------------------------------------------------------------------------------------------------------
Total Income $313,141 100.00% $1,605.85 $343,686 100.00% $2,643.74 $377,283 100.00% $1,503.12
Expenses:
Insurance $ 6,733 2.15% $ 34.53 $ 2,848 0.83% $ 21.91 $ 7,366 1.95% $ 29.35
Office/Administration 17,845 5.70% 91.51 9,264 2.70% 71.26 29,468 7.81% 117.40
Maintenance & Repairs 33,198 10.60% 170.24 21,766 6.33% 167.43 37,153 9.85% 148.02
Management Expense 3,641 1.16% 18.67 0 0.00% 0.00 5,300 1.40% 21.12
Wages & Benefits 33,590 10.73% 172.26 40,235 11.71% 309.50 29,113 7.72% 115.99
Property Taxes 39,211 12.52% 201.08 23,005 6.69% 176.96 50,000 13.25% 199.20
Utilities 16,996 5.43% 87.16 57,397 16.70% 441.52 24,181 6.41% 96.34
--------------------------------------------------------------------------------------------------------
Total Expenses $151,215 48.29% $ 775.46 $154,515 44.96% $1,188.58 $182,581 48.39% $ 727.42
Net Operating Income $161,926 51.71% $ 830.39 $189,171 55.04% $1,455.16 $194,702 51.61% $ 775.70
===================================================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 56
Insurance
---------
Insurance charges are typically property specific based on the location and
the amenity package. Historically, these charges have varied annually, ranging
from approximately $14.22 per space in 1998 to $38.31 per space in 1997. The
comparable expense data indicated a range from $21.91 to $34.53 per space. We
have placed emphasis on the historical amounts, supported by the comparables. We
have used $18.00 per space in our estimate of this expense. This is equal to
$4,068 annually and represents approximately 0.53% of the estimated effective
gross income.
<TABLE>
<CAPTION>
================================================================================================
1996 1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total $8,192 $8,657 $3,213 $3,928 $6,733 $2,848 $7,366 $4,068
------------------------------------------------------------------------------------------------
% EGI 1.36% 1.36% 0.46% 0.53% 2.15% 0.83% 1.95% 0.53%
------------------------------------------------------------------------------------------------
$/Space $36.25 $38.31 $14.22 $17.38 $34.53 $21.91 $29.35 $18.00
================================================================================================
</TABLE>
Office/Administration
---------------------
This expense category is also project specific due to varying
classifications of expense categories. We have attempted to include like items
in this category for both the subject and the expense comparables. For the
subject, this category includes office expense, supplies, licenses, dues,
subscriptions, professional fees, postage, advertising and telephone.
Historically, this expense has ranged from $139.99 per space in 1997 to $169.61
per space in 1999. The expense comparables indicated a range for this category
from $71.26 to $117.40 per space. We have relied primarily on the historical
data, with consideration of the comparables. We have estimated the
administrative/office expense at $150.00 per space or $33,900 per year. This
estimate is equal the equivalent of 4.43% of the effective gross income
estimate.
<TABLE>
<CAPTION>
================================================================================================
1996 1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total $37,976 $31,778 $34,771 $38,332 $17,845 $9,264 $29,468 $33,900
------------------------------------------------------------------------------------------------
% EGI 6.29% 5.00% 5.03% 5.18% 5.70% 2.70% 7.81% 4.43%
------------------------------------------------------------------------------------------------
$/Space $167.30 $139.99 $153.85 $169.61 $ 91.51 $71.26 $117.40 $150.00
================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 57
Maintenance and Supplies
------------------------
These expenses are project specific based on the age and condition of the
property. Many properties expense capital items rather than capitalizing them,
which results in abnormal spikes in the expense amounts in certain years.
Historically, maintenance and repair expenses have ranged from $96.35 per
space in 1997 to $132.35 in 1998. We observed the community to be in good
condition. However, as the community continues to age additional maintenance
efforts will be necessary. The expense comparables indicate a wide range of
expense in this category from $148.02 per space to $170.24 per space. Our
stabilized estimate of this expense is $110.00 per space or $24,860 annually,
based primarily on the historical data. This estimate is equal to approximately
3.25% percent of the estimated effective gross income.
<TABLE>
<CAPTION>
================================================================================================
1996 1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total $28,386 $21,776 $29,910 $23,491 $33,198 $21,766 $37,153 $24,860
------------------------------------------------------------------------------------------------
% EGI 4.70% 3.42% 4.32% 3.17% 10.60% 6.33% 9.85% 3.25%
------------------------------------------------------------------------------------------------
$/Space $125.60 $ 96.35 $132.35 $103.94 $170.24 $167.43 $148.02 $110.00
================================================================================================
</TABLE>
Management Fee
--------------
Management fees have historically been approximately 5% of effective gross
income. Management fees are charged at two of the expense comparables and were
equal to 1.16% and 1.40%. The overall market range for management fees was
found to range from approximately 3.0% to 5.0% of effective gross income.
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 $38,284 or $169.40 per space per year.
<PAGE>
Income Capitalization Approach 58
Wages and Benefits
------------------
This expense includes all of the costs associated with the on-site staff.
These costs including payroll, payroll and unemployment taxes and any health
insurance benefit package. At the subject, the expenses attributed to on-site
management and maintenance range from $265.41 per space for 1996 to $303.98 per
space in 1998. The on-site manager receives free rent as part of the
compensation package.
The expense comparables indicate a wide range of expense in this category
from $115.99 per space to $309.50 per space. Our estimate of this expense has
been based primarily on the historical data. Our estimate of $300.00 per space,
is equal to $67,800 annually or 8.85% of the estimated effective gross income.
<TABLE>
<CAPTION>
================================================================================================
1996 1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total $59,983 $63,284 $68,699 $68,025 $33,590 $40,235 $29,113 $67,800
------------------------------------------------------------------------------------------------
% EGI 9.93% 9.95% 9.93% 9.19% 10.73% 11.71% 7.72% 8.85%
------------------------------------------------------------------------------------------------
$/Space $265.41 $280.02 $303.98 $301.00 $172.26 $309.50 $115.99 $300.00
================================================================================================
</TABLE>
Property Taxes
--------------
This category of expense represents 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 analysis as presented and discussed
in the Assessment and Taxes section of this report. Our analysis indicated a
2000 tax liability of $67,056. This estimate is equal to $296.71 per space or
8.76% of the effective gross income estimate.
<PAGE>
Income Capitalization Approach 59
Utilities
---------
This category of expense is also project specific, due to the number and
type of services that are included in the rent. In this case, this line item
includes the costs of providing water and trash pick-up for the homesites and
water, sewer, electric and trash collection for the common areas of the
community. Only one of the expense comparables provides utilities in the base
rent. Typically, utilities are passed through to the tenant. The comparables, as
shown below, indicate a wide range from $87.16 to $441.52 per space. We have
estimated the utility expense at $700.00 per space or $158,200 annually. This is
equivalent to 20.66% of the effective gross income estimate.
<TABLE>
<CAPTION>
================================================================================================
1996 1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total $110,727 $116,673 $125,630 $157,645 $16,996 $57,397 $24,181 $158,200
------------------------------------------------------------------------------------------------
% EGI 18.33% 18.34% 18.34% 21.31% 5.43% 16.70% 6.41% 20.66%
------------------------------------------------------------------------------------------------
$/Space $ 489.94 $ 516.25 $ 555.88 $ 697.54 $ 87.16 $441.52 $ 96.34 $ 700.00
================================================================================================
</TABLE>
Reserves
--------
Property owners do not typically account for reserves for capital
replacement. 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 2.0%) of effective gross income. We have used
$30.00 per space per year, believed adequate to cover future capital costs. This
equates to $6,780 annually, equal to approximately 0.89% of the effective gross
income estimate.
<PAGE>
Income Capitalization Approach 60
Expense Summary
---------------
To summarize, we have estimated the stabilized total operating expenses for
the subject to be $400,948. This estimate is equal to 52.36% of the effective
gross income estimate or $1,774.11 per space annually.
Expense Summary
<TABLE>
<CAPTION>
========================================================================================================
1996 1997 1998 1999 Comp Comp Comp Stabilize
1 2 3 Estimate
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total $ 304,495 $ 310,675 $ 329,307 $ 360,382 $151,215 $ 154,515 $182,581 $ 400,948
--------------------------------------------------------------------------------------------------------
% EGI 50.40% 48.83% 47.60% 48.71% 48.29% 44.96% 48.39% 52.36%
--------------------------------------------------------------------------------------------------------
$/Space $1,347.32 $1,374.67 $1,450.69 $1,594.61 $ 775.46 $1,188.58 $ 727.42 $1,774.11
========================================================================================================
</TABLE>
As shown on the preceding table, expenses have historically represented
between 47.60% (1998) and 50.40% (1996) of the Effective Gross Income,
reflective of the community filling. The expense comparables, as summarized
above, indicated a range from 44.96% (Comparable Number 2) and 48.39%
(Comparable Number 3).
Our estimate of total expenses is equal to 52.36% of the effective gross
income estimate. It should be noted that historical expenses did not include a
reserve for capital expenditures. Additionally, none of the expense comparables
reflect a reserve for capital expenditures, which has been included in our
estimate. The subject's historical expenses include concessions given to fill
the community, which are no longer applicable.
Our estimate of net operating income is $364,740. Our stabilized estimate
of income and expenses for the subject is presented on the following page.
<PAGE>
Income Capitalization Approach 61
============================================================================
The Hills Manufactured Housing Community
Stabilized Operating Statement
% of $ per
Amount EGI Space
============================================================================
Total Effective Gross Income $765,688 100.00% $3,388.00
Expenses
Insurance $ 4,068 0.53% $ 18.00
Office 33,900 4.43% 150.00
Maintenance & Repairs 24,860 3.25% 110.00
Management Expense 38,284 5.00% 169.40
Wages & Benefits 67,800 8.85% 300.00
Property Taxes 67,056 8.76% 296.71
Utilities 158,200 20.66% 700.00
Reserves 6,780 0.89% 30.00
--------------------------------------
Total Expenses $400,948 52.36% $1,774.11
Net Operating Income $364,740 47.64% $1,613.89
============================================================================
<PAGE>
Income Capitalization Approach 62
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 housing
communities are typically valued by direct capitalization.
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 housing 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 from 9.0% to 10.4%. Our analysis
of this data indicated a narrow range in overall capitalization rates, which
tend to be influenced by the size of the community and its age and condition.
Comparable Sales
======================================================
Sale Sale Date Overall
Number Capitalization Rate
------------------------------------------------------
1 08/98 9.0%
------------------------------------------------------
2 04/98 9.7%
------------------------------------------------------
3 10/98 10.4%
------------------------------------------------------
4 05/97 9.3%
------------------------------------------------------
5 12/97 9.9%
======================================================
Sale comparable one is located in South Kennewick, near U.S. 395. The
property is smaller than the subject, but is similar condition. The average rent
was $270.00 per month including utilities. The expenses were estimated at
$1,300 per space. Sale comparable two is
<PAGE>
Income Capitalization Approach 63
located in a rural setting of Finley. Rents are approximately $235.00 per month.
The property is in average condition and is smaller than the subject. Sale
comparable three is located approximately 200 miles northwest of the subject in
Tacoma, Washington. The property is a built-up neighborhood in Tacoma and in
good condition, but average quality compared to the subject. Sale comparable
four is the 1997 sale of the Cherry Wood Mobile Home Park in Puyallup,
Washington. The property is in a good quality senior park located outside
Puyallup, in a semi-rural setting. Sale comparable five is located Finely and is
a small property that sold in December 1997. The overall rate was derived from a
pro forma.
As discussed in the Marketability and Exposure Period section of this
report, our sources indicated that 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
investors were bidding rates down even further. Our information revealed that
manufactured housing community cooperatives and associations would more likely
accept slightly lower overall rates, while the small investor would require a
slightly higher rate.
The subject has a high degree of vacancy that might represent upside to a
potential purchaser. Based on the comparison of the sale data to the subject
and considering the current investor and interest rate environment, the overall
rate for the subject would likely be in the 9.0% to 9.5% range. We have
concluded a rate of 9.25%, reflective of the subject's location and physical
characteristics and the current interest rate environment.
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, as a negative cash flow after debt service may indicate a 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.
<PAGE>
Income Capitalization Approach 64
The formula for this procedure is: M x f x DCR = R, where;
M = Loan to Value Ratio
f = Mortgage Constant
DCR = Debt Coverage Ratio
R = Overall Rate
To establish the criteria for the development of the Debt Coverage Ratio
Method, we have conducted a recent survey of local lenders; the results are
summarized below:
============================================================================
Contact Gene Fogarty Mike McCoy
----------------------------------------------------------------------------
Bank Bank of America First Union
----------------------------------------------------------------------------
Type Of Lender Conventional Conventional
----------------------------------------------------------------------------
Nominal Mortgage Interest Rate 7.25% Floor 7.00% to 7.50% Floor
----------------------------------------------------------------------------
Amortization Period 15 - 20 Years 15 - 20 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%
============================================================================
Our survey of local lenders indicated an annual interest rate between 8.25%
and 8.75%. For purposes of this analysis, we have selected 8.5%.
A mortgage loan would be available at 75% of the market value, based on a
20-year amortization schedule. Based on these criteria the indicated annual
interest rate constant is 10.414%. 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.
============================================================================
M F DCR OAR
X X =
Loan to Value Ratio Mortgage Constant Debt Coverage Ratio Overall Rate
----------------------------------------------------------------------------
0.75 0.10414 1.25 0.09763
----------------------------------------------------------------------------
Rounded 9.80%
============================================================================
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 conduit programs.
<PAGE>
Income Capitalization Approach 65
The presence of institutional investors in the market and the dearth of
quality real estate investments have bid down rates on manufactured housing
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 housing community
investments.
The rates typically reflect a narrow range and are considered mutually
supportive. Therefore, we have estimated an overall capitalization rate of
9.25%. We have used this rate in the direct capitalization method to capitalize
the net income of $364,740. The value conclusion of the existing 226 lots,
clubhouse, amenities, and infrastructure on 54.85 acres via the direct
capitalization method is summarized as follows:
$364,740 / .0925 $3,943,136
Rounded to $3,940,000
Excess Land Valuation
---------------------
As discussed in the Highest Best Use Analysis, the present density of the
subject is 6.6 units per acre; however, there is approximately 7.62 acres of
excess land. Management indicated that an expansion of tentatively 54 spaces is
being considered for the 7.62 acres located along the east side of Duportail
Street adjacent to the subject's existing development. The zoning was limited
business at the time of sale; however, according to an official with the
Planning Department, the zoning was recently changed to R-3, Multi-family
residential. We have gathered five recent land sales in order to estimate the
value of the excess land. So that a conclusion from the analysis of the sales
data can be drawn, a unit of comparison is commonly selected. 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 commercial tracts of vacant land is the sale
price per square foot.
<PAGE>
Income Capitalization Approach 66
The sales selected for direct comparison should be those transactions that
are most similar to the subject. Adjustments are made to the comparables for
any dissimilar features, leading to an indication of the price at which the
property appraised could be expected to sell. In this analysis, all relevant
factors were considered, including:
1. Locational dissimilarities and the nature of surrounding development.
2. Availability of competing sites.
3. Physical features such as frontage, shape, depth, access, topography,
water and tree coverage, and plot size.
4. Availability of utilities and site preparation costs.
5. Effect of time on selling prices.
6. Zoning.
Numerous sales of vacant land were investigated. Our investigation revealed
five recent transactions for commercial development near the subject. Based on
our investigation these are considered the most significant transactions.
<PAGE>
Comparable Land Sale Number One 67
Southwest Quadrant of State Road 182 and Keene Road
Richland, Benton County, Washington
Sale Date: February 23, 2000
Property Description
--------------------
Size: 21.64 acres
Utilities: Available
Land Description: Level irregular shaped parcel.
Legal: N/A
Sale Data
---------
Sale Price: $151,410
Grantor: Nancy A. Westermeyer, Trustee
Grantee: Nancy, Gene and Michael Brooks
Financing Terms: Cash to Seller.
Parcel: #1-2198-200-0001-002
Sales History
(Past 3 Years): None
Verification/Date: Assessor/5-00
Comparison Data
---------------
Sale Price/SF: $0.16
Comments: This is the recent sale of a property located within a
mile of the subject. The tract sold is part of a 130-
acre parcel zoned agricultural. We were unable to
contact the buyer regarding the use of the 21.64-acre
tract, but the assessor indicated that it was
commercial.
<PAGE>
Comparable Land Sale Number Two 68
Sale of Subject
E. Side of Duportail Road; 460' N. of Queensgate Rd.
Richland, Benton County, Washington
Sale Date: December 30, 1999
Property Description
--------------------
Size: 7.62 acres
Utilities: Available
Land Description: Level irregular shaped parcel.
Legal: Plat of City View PH 1, Lot 1, Block 3
Sale Data
---------
Sale Price: $106,000
Grantor: City of Richland
Grantee: Windsor Property 7
Financing Terms: Cash to Seller.
Parcel: #1-1698-40200-03001
Sales History
(Past 3 Years): None
Verification/Date: Buyer
Comparison Data
---------------
Sale Price/SF: $0.32
Comments: This is the recent sale of the subject property. The
property was rezoned from Limited Business to R-3,
Multiple Residential Use.
<PAGE>
Comparable Land Sale Number Three 69
West Side of State Highway 240
Richland, Benton County, Washington
Sale Date: January 21, 2000
Property Description
--------------------
Size: 17.924 acres
Utilities: Available
Land Description: Level irregular shaped parcel.
Legal: That portion of the SEC of the NEC quarter of Section
25, Township 9N, Range 28E
Sale Data
---------
Sale Price: $250,000
Grantor: City of Richland
Grantee: Tapteal Properties, L.P.
Financing Terms: Cash to Seller.
Parcel: #1-2598-100-0017-000
Sales History
(Past 3 Years): None
Verification/Date: Retrospect/Assessor 5-00
Comparison Data
---------------
Sale Price/SF: $0.32
Comments: This parcel is located approximately three 1/2 miles
southeast of subject near the Columbia River west of
the Columbia Shopping Center.
<PAGE>
Comparable Land Sale Number Three 70
North Side of Gage Road; 1/4 mile east of Leslie Road
Richland, Benton County, Washington
Sale Date: December 16, 1999
Property Description
--------------------
Size: 14.91 acres (11.78 acres commercial land and 3.13 acres
residential land)
Utilities: Available
Legal: That portion of the south half of the SW quarter of
Section 25
Land Description: Level irregular shaped parcel.
Sale Data
---------
Sale Price: $216,000
Grantor: Tapteal II, LLC
Grantee: Arnn and Vandana Joshi, Vihn Pham and Scot Huynh
Financing Terms: Cash to Seller.
Parcel: #1-2598-300-0002-004
#1-2598-300-0003-002
Sales History
(Past 3 Years): None
Verification/Date: Retrospect/Assessor 5-00
Comparison Data
---------------
Sale Price/Acre: $0.33
Comments: Property is located approximately 3 1/2 miles south of
subject and consists of two parcels divided by the
Union Pacific Railroad line.
<PAGE>
Comparable Land Sale Number Three 71
East Side of Hall Road; 1/4 mile south of Van Giesen Road
Richland, Benton County, Washington
Sale Date: March 1, 1999
Property Description
--------------------
Size: 7.87 acres.
Utilities: Available
Legal: East half of the East half of the NE quarter of Section
35
Land Description: Level irregular shaped parcel.
Sale Data
---------
Sale Price: $50,000
Grantor: Christian J. Eckert and Teresa L. Eckert
Grantee: Taber G. Hersum and Lynn L. Hersum
Financing Terms: Cash to Seller.
Parcel: #1-0498-400-0004-000
Sales History
(Past 3 Years): None
Verification/Date: Retrospect/Assessor 5-00
Comparison Data
---------------
Sale Price/SF: $0.15
Comments: Property is located near Richland Airport approximately
two miles north of the subject.
<PAGE>
SUMMARY OF LAND SALES
---------------------
<TABLE>
<CAPTION>
==================================================================================================================================
Sale Location Grantor/ Sale Sale Land Area/ Sale Price/
No. Grantee Date Price Acres SF
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 SW quadrant of SR 182 and Keene Rd. Nancy A. Westermeyer/Nancy, 2/00 $151,410 21.64 $0.16
Richland, Benton County, Washington Gene and Michael Brooks
----------------------------------------------------------------------------------------------------------------------------------
2 (Subject) E. Side of Duportail Road City of Richland/Windsor 12/99 $106,000 7.62 $0.32
Richland, Benton County, Washington Properties 7
----------------------------------------------------------------------------------------------------------------------------------
3 West Side of State Highway 240 City of Richland/ 1/00 $250,000 17.924 $0.32
Richland, Benton County, Washington Tapteal Properties, L.P.
----------------------------------------------------------------------------------------------------------------------------------
4 N. Side of Gage Road; 1/4 mi. E. of Tapteal II, LLC. /Arnn and 12/99 $216,000 14.91 $0.33
Leslie Rd Vandana Joshi, Vihn Pham and
Richland, Benton County, Washington Scot Huynh
----------------------------------------------------------------------------------------------------------------------------------
5 East Side of Hall Road; 1/4 mile south Christian J. Eckert and Teresa 3/99 $ 50,000 7.87 $0.15
of Van Giesen Rd. L. Eckert /Taber G. Hersum and
Richland, Benton County, Washington Lynn L. Hersum
==================================================================================================================================
</TABLE>
<PAGE>
Comparable Land Sales Location Map
----------------------------------
[MAP APPEARS HERE]
<PAGE>
Income Capitalization Approach 74
Unadjusted, these sales indicate a range in unit selling prices from $0.15
to $0.33 per square foot and sold between March 1999 and February 2000. The size
of the comparables ranged from 7.62 acres to 21.64 acres.
Adjustments are made to the per space sales price of the comparable
properties based upon the differences between the comparables and the subject.
Due to the unavailability of paired sale data, the adjustments have been made
based on reasonableness and the judgment of the appraiser. An adjustment is made
to each of the comparable sales, which were all transfers of "raw land", while
the subject property has had engineering, clearing and grading done and utility
trunk lines installed.
Property Rights All of the sales involved the transfer of fee simple
---------------
property rights and no adjustments were necessary.
Financing Terms All of the sales were cash transactions and no adjustments
---------------
were necessary.
Conditions of Sale All of the sales were arms length transactions and no
------------------
adjustments were necessary.
Market Conditions No adjustment for market conditions were appropriate as
-----------------
the market has been static over the last few years.
Other Adjustments have been made as appropriate to each of the comparable
-----------------
sales, in comparison to the subject as follows:
Comparable Sale Number One is the February 2000 sale of a 21.64-acre tract
for $151,410. This property is located at the southwest quadrant of the Keene
Road and SH 182 interchange in Richland. The sale price is equivalent to $0.16
per square foot. The property is approximately 1 mile southwest of the subject.
The property is still zoned for agricultural use. Upward adjustments were made
for the availability of utilities, zoning and size to this sale. After the
adjustment, the indicated price per square foot for the subject was $0.26.
Comparable Sale Number Two is of the sale of the subject. The 7.62 acres
was sold in December 1999 from the City of Richland for $106,000, or $0.32 per
square foot. The zoning was limited business the date of the sale and has been
recently rezoned to R-3.
Comparable Sale Number Three is the January 2000 sale of a 17.924-acre
tract for $250,000. This property is located south of the SH 240 and Columbia
Road interchange, in Benton County. The sale price is equivalent to $0.32 per
square foot. The property is approximately 3 1/2 miles southeast of the subject.
An upward adjustment was made for size to this sale. After the adjustment, the
indicated price per square foot for the subject was $0.35.
<PAGE>
Income Capitalization Approach 75
Comparable Sale Number Four is the December 1999 sale of two parcels
divided by the Union Pacific Railroad line north of Gage Road and containing a
total of 14.91 acres. The property sold for $216,000. This property is located
approximately 1/ 4 of a mile east of Leslie Road. The sale price is equivalent
to $0.33 per square foot. An upward adjustment was made to this sale for size.
After the adjustment, the indicated price per square foot the subject was $0.37.
Comparable Sale Number Five is the March 1999 sale of a 7.87-acre parcel
located near Van Giesen Road. The property sold for $50,000. The sale price is
equivalent to $0.15 per square foot. An upward adjustment was made to this sale
for size. After the adjustment, the indicated price per square foot the subject
was $0.20.
Based on the indicated value produced through the adjustment of the five
land sales, it is our opinion that the "as is" market value of the subject land
is equivalent to $0.35 per square foot, as indicated by the available sale data
which ranged between $0.20 and $0.37 per square foot after adjustments. Our
estimate is further supported by our discussions with the assessor's office and
those knowledgeable of sales within the nearby vicinity. Based on the total
development potential of 7.62 acres, we have estimated the value of the excess
land at $0.35 per square foot, or $120,000, rounded.
The value conclusion of the subject property with excess land via the
direct capitalization method is summarized as follows:
$3,940,000 + $120,000 = $4,060,000
<PAGE>
76
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 must be weighed, and the data of each
transaction must be confirmed to the greatest extent possible.
2. The degree of comparability of each sale to the subject must be
considered; differences in physical, functional and economic
characteristics be noted; and adjustments for the differences be made.
3. The value conclusion must 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.
<PAGE>
Sales Comparison Approach 77
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.
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 housing 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-selling 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 senior communities since
they tend to have a less transient occupancy base and typically trade at lower
capitalization rates than all age communities.
<PAGE>
Sales Comparison Approach 78
Based on our investigation, the following four sales are the most
significant transactions for direct comparison with the subject.
Due to a lack of sales in the tri-city area, we expanded our search to
other areas of state such as Tacoma and Puyallup, which are located respectively
approximately 20 and 30 miles south and southeast of Seattle. These sales
occurred between March 1995 and December 1997. The properties ranged in size
from 50 to 200 spaces. The sale prices, on a per space basis, ranged from
$17,500 to $29,167. The Effective Gross Income Multipliers (EGIM) ranged from
6.1 to 8.2. The indicated overall capitalization rates range from 9.0% to 10.4%.
The following pages detail each of the four sales, following which we have
presented a summary of the pertinent data.
<PAGE>
79
Sale Comparable Number One
Sunmeadows Manufactured Housing Community
3324 West 19/th/ Avenue
Kennewick, Benton County, Washington
[PHOTO APPEARS HERE]
Sale Date: August 1998
PROPERTY DESCRIPTION
--------------------
Size/Type: 200 space all age manufactured housing community
Utilities: Available
Land Description: Generally level, four parcels containing approximately
34.63-acres of land with adequate access. Improved with
asphalt-paved streets and streetlights.
Improvements/Amenities: None
Year Built/Condition: N/A/Good
<PAGE>
80
Sale Comparable Number One
INCOME DATA
-----------
Annual Occupancy: 95% (pro forma)
Average Lot Rent: $270.00
Effective Gross Income: $648,000
Expenses: $260,000 (40.17% of effective gross income)
Net Income: $388,000
SALE DATA
---------
Sale Price: $4,500,000
Cash Equivalent Price: $4,322,525 (Adjusted for excess land)
Grantor: Rick and Lois Rutherford
Grantee: Chrestwood Investment (Al Jaurequi)
Financing Terms: Cash to seller
Source/Date Verified: Assessor /5-00
Sales History
(Past 3 Years): None noted
Market Exposure: Unknown
COMPARISON DATA
---------------
Sale Price/Space: $21,613
Effective Gross Income
Multiplier (EGIM): 6.7
Overall Capitalization
Rate (OAR): 9.0%
Comments: This community is located south of the subject in
Kennewick near commercial development and U.S. 395.
<TABLE>
<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>
81
Sale Comparable Number Two
Alderwood Mobile Home Park
Bowles Road
Finley, Benton County, Washington
[PHOTO APPEARS HERE]
Sale Date: April 1998
PROPERTY DESCRIPTION
--------------------
Size/Type: 102-space age-restricted manufactured housing community
Utilities: All available
Land Description: 29.5-acre parcel of land with adequate access and a
density of 3.5 per acre. Improved with asphalt-paved
streets and streetlights.
Improvements/Amenities: Clubhouse and pool
Year Built/Condition: 1970's/Average
<PAGE>
82
Sale Comparable Number Two
INCOME DATA
-----------
Annual Occupancy: 100%
Average Lot Rent: $235.00
Effective Gross Income: $287,640
Expenses: $74,082 (25.8% of the effective gross income)
Net Income: $213,558
SALE DATA
---------
Sale Price: $2,200,000
Cash Equivalent Price: $2,200,000
Grantor: Wrangler Investment Corporation
Grantee: Darrell and Hellen Dachtler
Financing Terms: Cash to Seller
Source/Date Verified: Buyer/5-00
Sales History
(Past 3 Years): None noted.
Market Exposure: Unknown
COMPARISON DATA
---------------
Sale Price/Space: $21,569
Effective Gross Income
Multiplier (EGIM): 7.6
Overall Capitalization
Rate (OAR): 9.7%
Comments: This is an average quality park located near Finley
in a rural setting. The income analysis is based upon
actual income and expenses at the time of sale with
allocations made for reserves and management.
<TABLE>
<CAPTION>
===========================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
___________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Inferior Similar Similar Inferior Similar Inferior Inferior
===========================================================================================================
</TABLE>
<PAGE>
83
Sale Comparable Number Three
Canterbury Estates Mobile Home Park
3411 82/nd/ Street S.
Tacoma, Tacoma-Pierce County, Washington
[PHOTO APPEARS HERE]
Sale Date: October 1998
PROPERTY DESCRIPTION
--------------------
Size/Type: 98-space age-restricted manufactured housing community
Utilities: All available
Land Description: 10.458-acre parcel of land with adequate access and a
density of 9.4 per acre. Improved with asphalt-paved
streets and streetlights.
Improvements/Amenities: Clubhouse and laundry
Year Built/Condition: N/A/Average
<PAGE>
84
Sale Comparable Number Three
INCOME DATA
-----------
Annual Occupancy: 99%
Average Lot Rent: $300.00
Effective Gross Income: $350,472
Expenses: $126,872 (36.2% of the effective gross income)
Net Income: $223,600
SALE DATA
---------
Sale Price: $2,150,000
Cash Equivalent Price: $2,150,000
Grantor: Dorothy Lee (et al)
Grantee: Canterbury Manufactured Home Park
Financing Terms: Cash to Seller
Source/Date Verified: Comps/A. Hui/5-99
Sales History
(Past 3 Years): None noted.
Market Exposure: Unknown
COMPARISON DATA
---------------
Sale Price/Space: $21,939
Effective Gross Income
Multiplier (EGIM): 6.1
Overall Capitalization
Rate (OAR): 10.4%
Comments: This is an average quality park located in densely
developed area of Tacoma. The income analysis is
based upon actual income and expenses at the time of
sale. Total rent was reported at $29,260/mo. and
laundry income was $100 per month. There was one
vacancy and property is on septic.
<TABLE>
<CAPTION>
==========================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
__________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Superior Similar Similar Similar Superior Similar Superior
===========================================================================================================
</TABLE>
<PAGE>
85
Sale Comparable Number Four
Cherry Wood Mobile Home Park
3715 Freeman Road E.
Puyallup, Washington
================================================================================
Photograph Not Available
================================================================================
Sale Date: May 1997
PROPERTY DESCRIPTION
--------------------
Size/Type: 84-space age-restricted manufactured housing community
Utilities: All available
Land Description: 10.1-acre parcel of land with adequate access and a
density of 8.3 per acre. Improved with asphalt-paved
streets and streetlights.
Improvements/Amenities: Clubhouse and laundry
Year Built/Condition: 1973/Good
<PAGE>
86
Sale Comparable Number Four
INCOME DATA
-----------
Annual Occupancy: 91%
Average Lot Rent: $350.00
Effective Gross Income: $321,089
Expenses: $36,130 (29% of the effective gross income)
Net Income: $228,362
SALE DATA
---------
Sale Price: $2,450,000
Cash Equivalent Price: $2,450,000
Grantor: George Y. and Betsy P. Lou
Grantee: Bill and Barry Kalmakis
Financing Terms: Cash to Seller
Source/Date Verified: Appraisal Files/5-99
Sales History
(Past 3 Years): None noted.
Market Exposure: Unknown
COMPARISON DATA
---------------
Sale Price/Space: $29,167
Effective Gross Income
Multiplier (EGIM): 7.6
Overall Capitalization
Rate (OAR): 9.3%
Comments: This is a good quality senior park located outside of
Puyallup, in a semi-rural setting. The income
analysis is based upon actual income and expenses at
the time of sale with allocations made for reserves
and management.
<TABLE>
<CAPTION>
==========================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
__________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Superior Similar Similar Similar Superior Similar Superior
==========================================================================================================
</TABLE>
<PAGE>
87
Sale Comparable Number Five
Meadowlark Estates
11984 Route 21
Finley, Benton County, Washington
[PHOTO APPEARS HERE]
Sale Date: December 1997
PROPERTY DESCRIPTION
--------------------
Size/Type: 50 space all age manufactured housing community
Utilities: Well and septic system
Land Description: Generally level, irregularly shaped 12-acre parcel of
land with adequate access. Improved with asphalt-paved
streets and streetlights.
Improvements/Amenities: None
Year Built/Condition: 1978/Fair
<PAGE>
88
Sale Comparable Number Five
INCOME DATA
-----------
Annual Occupancy: 95% (pro forma)
Average Lot Rent: $190.00
Effective Gross Income: $106,506
Expenses: $20,000 (18.8% of effective gross income)
Net Income: $86,506
SALE DATA
---------
Sale Price: $875,000
Cash Equivalent Price: $875,000
Grantor: John and Sheryl Cole
Grantee: Leonard and Debra Kelley
Financing Terms: Cash to seller
Source/Date Verified: Assessor /5-00
Sales History
(Past 3 Years): None noted
Market Exposure: Unknown
COMPARISON DATA
---------------
Sale Price/Space: $ 17,500
Effective Gross Income
Multiplier (EGIM): 8.2
Overall Capitalization
Rate (OAR): 9.9%
Comments: This community is located near Finley, south of
Kennewick. The property is located in a rural setting
and has no amenities.
<TABLE>
<CAPTION>
===========================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
___________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Inferior Similar Similar Inferior Inferior Inferior Inferior
===========================================================================================================
</TABLE>
<PAGE>
COMPARABLE SALES SUMMARY
<TABLE>
<CAPTION>
====================================================================================================================================
No. Name/Location Sale Price/ Number Of Price/ Average E.G.I.M./ O.A.R.
Sale Date Spaces Space Lot Rent Expense
Ratio
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Sunmeadows MHP $4,322,525 200 $21,613 $270.00 6.7/ 9.0%
3324 West 19/th/ Avenue August 1998 40.1%
Kennewick, Washington
------------------------------------------------------------------------------------------------------------------------------------
2 Alderwood Mobile Home Park $2,200,000 102 $21,569 $235.00 7.6/ 9.7%
Bowles Road April 1998 25.8%
Finley, Washington
------------------------------------------------------------------------------------------------------------------------------------
3 Canterbury Estates Mobile Home Park $2,150,000 98 $21,939 $300.00 6.1/ 10.4%
3411 82/nd/ Street October 1998 36.2%
Tacoma, Washington
------------------------------------------------------------------------------------------------------------------------------------
4 Cherry Wood Mobile Home Park $2,450,000 84 $29,167 $250.00 7.6/ 9.3%
3715 Freeman Road E. May 1997 29%
Puyallup, Washington
------------------------------------------------------------------------------------------------------------------------------------
5 Meadowlark Estates MHP $ 875,000 50 $17,500 $190.00 8.2/ 9.9%
11874 Route 21 December 1997 18.8%
Kennewick, Washington
====================================================================================================================================
</TABLE>
<PAGE>
[COMPARABLE SALE LOCATION MAP APPEARS HERE]
<PAGE>
91
As previously stated, the Sales Comparison Approach involves investigating
recent transfers of properties similar to the subject. All of the sales were
fee simple transactions, with no abnormal financing which would effect the
price. There were no abnormal sale conditions known to have occurred, except as
noted.
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 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.
Effective Gross Income Multiplier (EGIM)
----------------------------------------
The Effective Gross Income Multiplier for the comparable sale properties
ranged between 6.1 and 8.2. 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 and a property's expense ratio. The high end of the range
represents a community with upside potential from filling lots.
The subject is an all age community. The community has a minimal amount of
vacancy and higher expense ratio than all of the comparables. Considering all
factors, the most comparable sale to the subject would be comparable number 1;
however, based upon our estimate, the expense ratio for this sale was 40.17%
compared to 51.96% for the subject. In addition, the property sold prior to a
substantial tax increase. Based on these considerations, we have concluded an
EGIM in the low end of the range, processing subject's Effective Gross Income of
$766,818 with an EGIM of 6.1.
Thus, $765,688 x 6.1 is: $4,670,697
Rounded $4,670,000
This equates to $20,664 per space, which is the high end of the range of
the comparables with exception to comparable number two.
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
<PAGE>
92
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 is for a community, the higher
the per space sales price. The subject has a NOI/Space of $1,630 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 is made for a comparable with a lower
NOI/Space.
NOI/Space and Per Space Sales Price
================================================================================
COMP 1 COMP 2 COMP 3 COMP 4 COMP 5 SUBJECT
--------------------------------------------------------------------------------
NOI/Space $ 1,940 $ 2,719 $ 2,282 $ 2,719 $ 1,730 $1,630
--------------------------------------------------------------------------------
Price/Space $21,613 $21,569 $21,939 $29,167 $17,500 N/A
--------------------------------------------------------------------------------
Percent
Adjustment -16.81% -22.92% -29.27% -40.64% -6.72% N/A
--------------------------------------------------------------------------------
Adjusted
Price/Space $17,980 $16,626 $15,518 $17,315 $16,324 N/A
================================================================================
After adjustments, the indicated range is from $15,518 to $17,980 per
space. We have placed greater emphasis on sale comparable no. 1 and we
concluded $18,000 per space.
Thus, 226 Spaces x $18,000/Space is: $4,068,000
Rounded $4,070,000
Conclusion
Processing the subject's stabilized effective gross income with an
effective gross income multiplier indicated a value for the subject of
$4,670,000. Employing the net operating income per space methodology we arrived
at an estimate of value for the subject of $4,070,000. The estimated values,
produced by the two methods are considered mutually supportive. In
reconciliation, we have placed slightly more emphasis on the net operating
income per space method. Our value estimate of the subject's existing 226 lots,
clubhouse, amenities, and infrastructure on 54.85 acres via the Sales Comparison
Approach is $4,300,000.
<PAGE>
Sales Comparison Approach 93
The value conclusion of the subject property with excess land via the Sales
Comparison method is summarized as follows:
$4,300,000 + $120,000 = $4,420,000
<PAGE>
94
FINAL ESTIMATE OF VALUE
-----------------------
The two approaches to value applied in the subject analysis yielded these
conclusions:
Income Capitalization Approach $4,060,000
Sales Comparison Approach $4,420,000
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 and listings 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 the current instance, 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 property.
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 relatively narrow range of values and are
considered mutually supportive. Since buyers are most concerned with cash flow
to service debt, we have placed primary emphasis on the income approach.
Therefore, our opinion of the market value of the subject property, based on a
reasonable exposure period of six months, as of May 10, 2000, was:
- FOUR MILLION ONE HUNDRED THOUSAND DOLLARS -
($4,100,000)
<PAGE>
95
CERTIFICATION
-------------
I certify that, to the best of my 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 is my personal,
unbiased professional analyses, opinions, and conclusions.
. I have no present or prospective interest in the property that is the
subject of this report, and I have no personal interest or bias with
respect to the parties involved.
. My compensation is not contingent on the reporting of a predetermined
value or direction in value that favors the cause of the client, the
amount of the value estimate, the attainment of a stipulated result,
or the occurrence of a subsequent event.
. To the best of my knowledge and belief, the reported analyses,
opinions, and conclusions were developed and this report was prepared
in conformity with the Uniform Standards of Professional Appraisal
Practice of the Appraisal Foundation, the Code of Professional Ethics,
and the Standards of Professional Practice of the Appraisal Institute.
. 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, L. Drake Moore, MAI, CCIM has completed
the requirements under the continuing education program of the
Appraisal Institute.
. L. Drake Moore, MAI, CCIM has made a personal inspection of the
property that is the subject of this report.
. I am 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/ L. Drake Moore JAG
----------------------------
L. Drake Moore, MAI, CCIM
St.Cert. Gen. REA #1100940
<PAGE>
96
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 a third party may not utilize the findings of the report 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 that 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.
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.
<PAGE>
Assumptions and Limitimg Conditions 97
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 assume 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 that 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
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.
<PAGE>
Assumptions and Limitimg Conditions 98
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 that 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 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.
<PAGE>
Assumptions and Limitimg Conditions 99
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>
PROFILES OF APPRAISERS
<PAGE>
PROFILE OF APPRAISER
L. DRAKE MOORE, MAI, CCIM
St.Cert. Gen. REA #1100940
REAL ESTATE EXPERIENCE
----------------------
Appraiser
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. Moore has also
owned and operated the L.D. Moore Company, a commercial appraisal firm
in Dallas, Texas since 1991.
Senior Appraiser/Manager
Marshall and Stevens, Inc.
Dallas, TX 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. December 1988 to September 1990.
Appraiser
Appraisal & Acquisition, Inc.
Lakeworth, Florida
Prepared appraisals on hotels and other commercial properties for
purposes of sale/purchase, property tax appeals, financing and
allocation of purchase price. September 1987 to December 1988.
Appraiser
Laventhol & Horwath
Dallas, Texas
Specialized in preparation of appraisals on hotel and commercial
properties. Performed appraisals for purposes of sale/purchase,
financing and allocation of purchase price. September 1985 to September
1987.
<PAGE>
Profile of the Appraiser
BANKING EXPERIENCE
------------------
Vice President
BF Saul Mortgage Company
Arlington, Texas
Managed branch office and originated non-conforming single-family mortgages
in addition to investor and commercial mortgages loans for BF Saul and
Chevy Chase Savings. March 1983 to 1985.
PROFESSIONAL AFFILIATIONS
-------------------------
MAI, Member Appraisal Institute
CCIM, Certified Commercial Investment Member
State Certified General Real Estate Appraiser
Florida #0002401
Georgia #004008
Texas #1321098-G
Washington #1100940
Wyoming #456
Real Estate Broker License
Florida #0512812
Texas #0283892
PARTIAL LIST OF CLIENTS AND PROPERTIES
--------------------------------------
Apartments
----------
Candlelight Lenexa, KS Oaktree Square Grandview, MS
Cedars Irving, Texas Pineridge Arlington, TX
Claridge Dallas, TX Regency Cove Tampa, FL
Elmwood West Palm Beach, FL Parkwood Broken Arrow, OK
Hunters Glen Kansas City, KS Santa Fe Village Kansas City, MS
Monticeto Austin, TX Towne Oaks Austin, TX
Manufactured Home Communities and Reacreational Vehicle Parks
-------------------------------------------------------------
Aberdeen Ormond Beach, FL Oak Hills Kyle, TX
Aztec Kyle, Texas Ramblewood Barnwell, SC
Boulevard Estates Pasadena, TX Regency Cove Tampa, FL
Casa del Monte West Palm Beach, FL Rolling Meadows Columbia, SC
<PAGE>
Profile of Appraiser
Carolina Village Concorde, NC Rose Bay Port Orange, FL
Denton West Denton, TX Tropic Isles Palmetto, FL
Dessau Austin, TX Victoria Lakes Lexington, SC
Hacienda Village New Port Richey, FL Villa del Sol Bradenton, FL
Hermitage Farms Camden, SC Windsor City Sumter, SC
Self-Storage Facilities
-----------------------
<TABLE>
<S> <C> <C> <C>
American Self Storage Charlotte, NC American Self Storage Ocala, FL
American Self Storage Monroe, NC Extra Closet Ft Lauderdale, FL
American Self Storage Newel, NC
American Self Storage Stallings, NC
</TABLE>
Hotels/Resorts
--------------
114-Room Ambassador Plaza, Dallas, TX
420-Room Excelsior Hotel, Little Rock, AR
121-Room Lexington Park Suites, Memphis, TN
160-Room Ramada Inn, Kingsland, GA
71-Room Best Western, Guymon, OK
Office Buildings
----------------
<TABLE>
<S> <C> <C> <C>
AMI Medical Houston, TX Medical Park Hope, AR
Barnett Bank North Palm Beach, FL Okeechobee Commerce W Palm Beach, FL
Carteret Savings Del Ray Beach, FL United Bank Roswell, NM
Enron Houston, TX Schindler Corporate Morris, NJ
Harolds Dallas, TX Texarkana Medical Arts Texarkana, TX
First South Little Rock, AR QVC Network Plymouth, MN
First Union Atlanta, GA
</TABLE>
Industrial
----------
<TABLE>
<S> <C> <C> <C>
American Lantern McKenzie, TN Falco Lime Boca Raton, FL
American Lantern Newport, AR High Ridge Commerce Boynton Beach, FL
Campbell Soup Paris, TX John Rust Albuquerque, NM
Carrington Irving, TX Lake Pointe Centre Boca Raton, FL
</TABLE>
<PAGE>
Profile of Appraiser
Clients List
------------
Bank of America Heller Financial
Barnett Bank Heron Financial
Belgravia Capital Hewlett Packard
Circuit City Internal Revenue Service
Citicorp Real Estate Lexington Hotel
Collateral Mortgage Lincoln Property
CoreStates Financial Corporation NationsBank
Credit Suisse First Boston Nomura Securities
FINOVA Capital Meyers Group (The)
First Union Corporation National Realty Advisors
GE Capital PA Holdings/Whitman Corporation
Goldman Sachs QVC
Greentree Financial Sullivan Development
EDUCATIONAL BACKGROUND
----------------------
University of Texas, B.A.
American Institute of Real Estate Appraisers
The Appraisal Institute
Commercial Investment Real Estate Institute
<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
--------------------------------------
Manufactured Home Communities
-----------------------------
<TABLE>
<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 Tara Jonesboro, GA
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 Melboourne, 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
Hotels/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.
