<PAGE>
Exhibit (c)(1)(G)
SELF CONTAINED COMPLETE
REAL ESTATE APPRAISAL REPORT
Long Lake Village
Manufactured Home Community
4750 Carefree Trail
West Palm Beach, Palm Beach County, Florida 33415
PREPARED FOR
Mr. Steve Waite
Windsor Corporation
6430 South Quebec
Englewood, Colorado 80111
AS OF
May 1, 2000
PREPARED BY
WHITCOMB REAL ESTATE
<PAGE>
[LETTERHEAD OF WHITCOMB REAL ESTATE]
May 19, 2000
Steve Waite
Windsor Corporation
6430 South Quebec
Englewood, Colorado 80111
RE: Long Lake Village
Manufactured Home Community
4750 Carefree Trail
West Palm Beach, Palm Beach County, Florida 33415
Dear Mr. Waite:
At your request, we have inspected and appraised the above captioned
property. We estimate the prospective market value of the property rights
outlined herein, as of May 1, 2000, based on an exposure period of six months,
to be:
- THREE MILLION FIVE HUNDRED THOUSAND DOLLARS -
($3,500,000)
Our value estimate applies to the land as physically constituted, to the
improvements actually in existence and reflects prevailing trends in the local
real estate market. We have made a careful inspection, study, and analysis of
the property, and have considered all factors, which, in our opinion, would tend
to influence the market value of the subject.
This conclusion is premised on the Assumptions and Limiting Conditions as
cited in our attached report, as well as the facts and circumstances as of the
valuation date. This appraisal has been prepared in accordance with the "Uniform
Standards of Professional Appraisal Practice" (USPAP) as published by the
Appraisal Standard Board of the Appraisal Foundation and those specific
conditions indicated in the engagement letter.
This appraisal assignment was not based on a requested minimum value,
specific value, or the approval of a loan. The intended user of this report is
Windsor Corporation.
Our analysis has accounted for a management fee, adequate to ensure
professional management of the property. We have also forecast maintenance
expenditures to maintain the property in adequate repair in order to retain
residents and achieve rental increases. Our analysis and opinions are contingent
on adequate management and maintenance expenditures.
<PAGE>
Steve Waite
May 19, 2000
Page Two
Long Lake Village is an all age manufactured home community located on the
east side of Haverhill Road, north of Forest Hill Boulevard in West Palm Beach,
Palm Beach County, Florida. The property is located in the eastern portion of
the county and was originally developed in 1987. We observed the property to be
in good overall condition. There were no major items of deferred maintenance
noted during the physical inspection of the premises.
Long Lake Village consists of 134 manufactured home spaces, 16 apartments,
a clubhouse, swimming pool and a playground. As of the date of inspection, 127
of the home sites and 13 of the apartments were occupied. The site rent rates
range from $349.00 to $409.00 per site per month, averaging $385.53 and the
apartment rates range from $600.00 to $700.00 per unit and average $646.88.
These rents went into effective January 1, 2000, when an increase of $11.00 per
manufactured home site took effect. The resulting average rent of $385.53 per
manufactured home site and $646.88 per apartment has been used in the estimates
of value. Due to the fact that all 150 units on the property contribute to the
income and share the expenses, our income and expense analysis is based on the
total of 150 units
We appreciate this opportunity to be of service to you. If you have any
questions, please do not hesitate to contact us.
Very truly yours,
WHITCOMB REAL ESTATE
/s/ John H. Whitcomb JAG
John H. Whitcomb, MAI, CCIM
St. Cert. Gen. REA #0001234
/s/ William G. Trask JAG
William G. Trask
St. Cert. Gen. REA #0002347
<PAGE>
4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
<S> <C>
Transmittal
Table Of Contents....................................................... 4
Introduction
Photographs Of Subject.................................................. 6
Summary Of Facts And Conclusions........................................ 8
Extent of Confirming, Collecting And Reporting Data..................... 9
Purpose And Function Of The Report...................................... 9
Property Rights Appraised............................................... 10
Effective Date Of Value................................................. 10
Appraisal Definitions................................................... 10
Descriptive Section
Area Description........................................................ 12
Neighborhood Description................................................ 23
Manufactured Home Community Market Overview............................. 26
Land And Site Improvements.............................................. 37
Improvement Description................................................. 39
Ownership And Property History.......................................... 41
Occupancy............................................................... 41
Zoning And Other Land Use Controls...................................... 42
Assessment And Taxes.................................................... 42
Marketability And Exposure Period....................................... 44
Valuation Section
Highest And Best Use.................................................... 47
Valuation Process....................................................... 52
Income Capitalization Approach.......................................... 53
Sales Comparison Approach............................................... 69
Final Estimate Of Value................................................. 86
Certification........................................................... 87
Assumptions And Limiting Conditions..................................... 88
</TABLE>
Addenda
Profiles Of Appraisers
<PAGE>
INTRODUCTION
<PAGE>
PHOTOGRAPHS OF THE SUBJECT (Taken May 15, 2000) 6
[PHOTO OF LONG LAKE VILLAGE APPEARS HERE]
Entrance to Long Lake Village
[PHOTO OF TYPICAL STREET VIEW APPEARS HERE]
Typical Street View
<PAGE>
PHOTOGRAPHS OF THE SUBJECT (Taken May 15, 2000) 7
[PHOTO OF HAVERHILL ROAD APPEARS HERE]
Haverhill Road Facing North
[PHOTO OF HAVERHILL ROAD APPEARS HERE]
Haverhill Road Facing South
<PAGE>
8
SUMMARY OF FACTS AND CONCLUSIONS
--------------------------------
Property Appraised: Long Lake Village
-------------------
Manufactured Home Community
4750 Carefree Trail
West Palm Beach, Palm Beach County, Florida
Property Rights Appraised: Fee Simple Interest, subject to tenant leases
--------------------------
Land Area: 19.40 acres
----------
Improvements: Existing 134 manufactured home spaces, 16
-------------
apartments, a clubhouse, swimming pool and a
playground.
Owner: Windsor Park Properties, 7 and Windsor Park
------
Properties, 8.
Zoning: RM, Multiple Family Residential, Palm Beach
-------
County
MSA/Census Tract: 8960 (West Palm Beach/Boca Raton MSA)/
-----------------
004006 (Palm Beach County)
Highest and Best Use:
---------------------
As Vacant: Hold for future development as predicated by
market demand.
As Improved: The current use as a manufactured home
community.
Market Value: Income Approach $3,500,000
------------
Sales Comparison Approach $3,500,000
Final Estimate of Market Value: $3,500,000
-------------------------------
Date of Appraisal: May 1, 2000
------------------
Date of Inspection: May 15, 2000
-------------------
<PAGE>
9
EXTENT OF CONFIRMING, COLLECTING AND REPORTING DATA
---------------------------------------------------
William G. Trask inspected the property on May 15, 2000. The property's
physical data is based on information provided by the owner, confirmed by
physical inspection of the premises and information obtained from the Palm Beach
County Property Appraiser's office.
Information regarding the subject's land use plan designation and zoning
are based on discussions with representatives of Palm Beach County, Florida. We
have analyzed the property with regard to its Highest and Best Use, as if the
land was vacant and available for development and as it has been currently
improved.
We have employed only the Income Capitalization and Sales Comparison
Approaches in our estimate of the market value of the property. The Cost
Approach has not been used in this valuation, due to the subjectivity of
entrepreneurial profit estimates. Recent data for the Income Capitalization and
Sales Comparison Approaches has been generated from local real estate brokers,
investors (local and nationally), owners, managers, and from our inspection of
the supporting rental neighborhood. All of the market data has been confirmed
with buyers, sellers, or other real estate professionals involved with or
knowledgeable of the transaction.
PURPOSE AND FUNCTION OF THE APPRAISAL
-------------------------------------
The purpose of the appraisal is to express our opinion of the "As Is"
market value of the fee simple interest, subject to existing leases, of the real
estate as of May 1, 2000.
Rental rates and increases are governed by the community's prospectus,
filed with the Florida Department of Business and Professional Regulation, until
a unit is removed from the community. At that time, a new prospectus can be
supplied to the tenant. The prospectus for Long Lake Village was assigned the
identification number 5002698P.
We have surveyed the local market rents, but emphasis has been
appropriately given to the prospectus, in the forecast of rental levels at the
subject.
The information, opinions, and conclusions contained in this report have
been prepared as a basis for loan underwriting.
<PAGE>
10
PROPERTY RIGHTS APPRAISED
-------------------------
The real estate interest appraised is that of ownership in fee simple
interest, subject to existing tenant leases, and the property is appraised as if
free and clear of mortgages, liens, servitudes and encumbrances, except those
noted in the body of this appraisal.
EFFECTIVE DATE OF VALUE
-----------------------
The effective date of our value is May 1, 2000.
APPRAISAL DEFINITIONS
---------------------
Market Value is defined as: The most probable price which a property should
bring in a competitive and open market under all conditions requisite to a fair
sale, the buyer and seller each acting prudently, knowledgeably and assuming the
price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as of a specified
date and the passing of title from seller to buyer under conditions whereby:
. Buyer and Seller are typically motivated;
. Both parties are well informed or well advised, and each acting in
what he considers his own best interest;
. A reasonable time is allowed for exposure in the open market;
. Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
. The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale./1/
Fee Simple Interest is defined as: The absolute ownership unencumbered by
any other interest or estate subject only to the four powers of government./2/
_______________________
/1/ The Office of the Comptroller of Currency, 12 CFR 564.2(f).
/2/ The Dictionary of Real Estate Appraisal, Third Edition, Appraisal
Institute, 1993.
<PAGE>
DESCRIPTIVE SECTION
<PAGE>
12
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 analysis usually focuses on the social, economic, governmental and
environmental forces that affect real estate.
The first step in estimating the highest and best use of the subject
property is an examination of the social, economic, governmental and
environmental forces affecting property values in the Palm Beach County area. In
the following discussion, we have attempted to present sufficient data to inform
readers unfamiliar with the state of Florida, West Palm Beach, Palm Beach County
and the Palm Beach Metropolitan Area and its environs.
The subject is located in the State of Florida, nicknamed the Sunshine
State. Florida has a strong economic base consisting of tourism, real estate,
construction, manufacturing, finance, defense contracting and insurance.
Florida
-------
The population of Florida has grown rapidly in recent decades. In 1950,
Florida was the twentieth largest state in the nation with a population
approaching 3 million. By 1990, Florida had become the fourth largest state in
the nation with a population of nearly 13 million. This growth saw dramatic
changes in the demographic composition of the population, brought about by a
higher population age, a lower minority population and increased per capita
wealth. As shown in the following table, the population growth was explosive
during the 1970's and 1980's, slowing in the early 1990's. This trend is
expected to continue in the future as shown by the 2004 and 2009 projections.
Florida Population Growth and Projections
======================================
Year Population Percent
Change
--------------------------------------
1970 6,790,929 N/A
--------------------------------------
1980 9,746,324 43.5%
--------------------------------------
1990 12,937,926 32.7%
--------------------------------------
1999* 15,167,025 17.2%
--------------------------------------
2004* 16,416,782 8.2%
--------------------------------------
2009* 17,648,165 7.5%
======================================
United States Census Bureau.
*Florida Trend 2000 Economic Yearbook, April 2000.
<PAGE>
Area Description 13
The slower rate of future population growth will be partially attributable
to more stringent growth management policies. Growth management legislation will
curtail the demand for developable properties, which will restrict the supply of
a given population. The result should be more modest returns on real estate
investments with investors having to develop feasible projects in areas where
sufficient demand exists.
The dynamic complexities in the demographic composition had a significant
impact on the Florida real estate market through increased demand for housing
and the corresponding commercial development that usually follows. Until the
recessionary period of the early nineties and the financial institution
collapse, Florida was one of the most heavily invested states in the nation for
speculative real estate development.
Geography
---------
The subject property is located within southeastern Florida in Palm Beach
County. Martin County borders the county to the north, Broward County to the
south, Hendry and Glades Counties and Lake Okeechobee to the west and the
Atlantic Ocean to the east. The County has approximately 45 miles of coastline.
West Palm Beach is the county seat and the approximate geographic center of
coastal Palm Beach County. The county is located approximately 250 miles
south/southeast of Jacksonville, and 50 miles north of Miami and 150 miles
southeast of Orlando.
It is one of the largest counties in the United States and the second
largest in Florida. Palm Beach County contains a total of 2,387 square miles
including 412 square miles of water area. The county measures roughly 53 miles
east-to-west and 45 miles north-to-south. The average elevation is 15 feet above
sea level, and its terrain is basically sandy flatlands, with occasional sloping
coastal ridges. The climate is subtropical, with an average temperature of 74.5
Fahrenheit. Prevailing winds are out of the east/southeast, and average annual
rainfall is 69.79 inches. The area is known for its mild winters, which result
from the close proximity to the warm Gulf Stream currents of the Atlantic Ocean.
Palm Beach County's climate is a major factor in the area's growth pattern.
Population
----------
The Bureau of Economic and Business Research from the University of Florida
estimated the county's 1990 population at 863,503, an increase of approximately
50% over the 1980 figure. This rate of growth ranked the County as the sixth
fastest growing metropolitan area in the United States and second fastest in the
state. The average growth rate for Palm Beach County has been 5% to 6% per year
over the past 20 years. The 1998 population was 1,020,521, an 18.2% increase
from 1990. The County now ranks as the 49th largest Metropolitan Statistical
Area in the nation, up from 58th in 1980. Palm Beach County is the third most
populated county in the state.
<PAGE>
Area Description 14
Of the Metropolitan Statistical Areas that ranked above Palm Beach County
in percentage rate of growth over the same period, all were in Florida, and all
had less than half the population of Palm Beach County. The County had the
highest 10-year growth rate in the United States for metropolitan areas having
more than 800,000 residents through 1990.
The largest municipalities in the county in population are as follows:
<TABLE>
<CAPTION>
==================================================================
Municipality 1990 Census 1998 % Change
Estimate
<S> <C> <C> <C>
West Palm Beach 67,764 80,901 19.4%
------------------------------------------------------------------
Boca Raton 61,486 68,850 12.0%
------------------------------------------------------------------
Boynton Beach 46,284 53,635 15.9%
------------------------------------------------------------------
Delray Beach 47,184 53,471 13.3%
------------------------------------------------------------------
Palm Beach Gardens 22,990 33,824 47.1%
------------------------------------------------------------------
Jupiter 24,907 31,419 26.1%
==================================================================
</TABLE>
Historically, the concentration of population has been in and around the
City of West Palm Beach. However, recent growth and trends have added
significantly to the population of northern Palm Beach County. The largest
incorporated municipalities in northern Palm Beach County are Riviera Beach,
North Palm Beach, Palm Beach Gardens, and Jupiter. As shown, Palm Beach Gardens
is the fastest growing municipality within Palm Beach County.
Municipalities in the central part of the county include Greenacres City
(24,813) and Lake Worth (30,424). The central county area has experienced a
lower degree of population growth relative to other areas. Many of these
municipalities have annexed and included in their future comprehensive plans
unincorporated lands surrounding their boundaries. The Town of Belle Glade, with
a 1998 population of 16,717, is the principal municipality in the Glades
(western) agricultural area along the south and southeast shore of Lake
Okeechobee.
The south county area has experienced growth in and around Boca Raton,
Boynton Beach and Delray Beach. Boca Raton is the dominant municipality in the
southern portion of the county. The 1990 Census indicated a population of 61,486
and the 1998 estimate of 68,850.
While little room for further growth remains along the coastal sections,
significant westward sprawl has occurred over the last 10 years. This expansion
is evidenced by the rapidly growing communities of Wellington and Royal Palm
Beach in the central portion of the county.
Northern retirees and people nearing retirement are a major force of Palm
Beach County's
<PAGE>
Area Description 15
population growth. However, the Chamber of Commerce of the Palm Beaches
indicates that the 20-39 year old age group is the fastest growing sector. Much
of this growth is due to the large increase in job opportunities in Palm Beach
County. In-migration by retirees from New England, New York and the Mid-Atlantic
States has slowed during the past seven years. This is a result of a slowdown in
the respective real estate markets and, in many cases, to reductions in the
value of single all age homes. This affects the ability of retirees to transfer
equity capital to traditional retirement centers like those in Florida.
The following table shows the percentage of population distribution by age
group estimated as of July 1998, the latest date for which these figures are
available.
<TABLE>
<CAPTION>
=============================
Age Group Percent
-----------------------------
<S> <C>
0-14 17.6%
-----------------------------
15-24 9.6%
-----------------------------
25-44 26.9%
-----------------------------
45-64 22.3%
-----------------------------
65+ 23.6%
=============================
</TABLE>
Source: Population Projections, Bureau of Economic
----------------------
and Business Research, University of Florida.
The University of Florida, Bureau of Economic and Business Research
projects a population of approximately 1,155,267 in 2005. Population grew at a
5.6% annual rate during the 1980's, which was substantially higher than previous
growth experience. Growth in the current decade is projected to be slower,
approximately 3% annually. These projections parallel the experience of Dade and
Broward Counties, to the south, where growth rates have declined after rapid
population gains.
Many of the new residents are fleeing the congestion and social problems
that followed rapid growth in Dade and Broward Counties. Hurricane Andrew slowed
the growth in Dade County and possibly has affected population growth in Palm
Beach County. Palm Beach County and its municipalities are attempting to learn
from the experience of Dade and Broward by enacting restrictive land use codes
and creating development impact laws. While the county will continue to attract
new population growth, this restrictive legislation will have a major effect on
future growth patterns. A number of analysts also predict a significant slowing
in population growth as a result of the slow economic growth.
Economy
-------
Agriculture, tourism, health care, manufacturing, construction and in-
migration of retired
<PAGE>
Area Description 16
persons drive Palm Beach County's economy. An increase in growth in employment
for Palm Beach County is projected after more than 3 years of predominantly
negative economic headlines. The rate of growth for the new jobs measure the
momentum of the labor market, and in Palm Beach County the annualized rate of
growth has begun to improve somewhat from its lows of 2.0% in August 1991.
Services, followed by trade dominate the local economy as shown in the following
table.
Nonagricultural Employment By Industry
<TABLE>
<CAPTION>
==========================================================================
Industry Percentage Employment
--------------------------------------------------------------------------
<S> <C> <C>
Services 39.1% 179,704
--------------------------------------------------------------------------
Trade 25.9% 119,036
--------------------------------------------------------------------------
Government 12.0% 55,152
--------------------------------------------------------------------------
Finance, Insurance, Real Estate 6.8% 31,253
--------------------------------------------------------------------------
Manufacturing 6.7% 30,793
--------------------------------------------------------------------------
Construction 5.5% 25,278
--------------------------------------------------------------------------
Transportation, Communications, Utilities 3.6% 16,546
==========================================================================
</TABLE>
The average annual rate of job growth for Palm Beach County between 1997
and 1998 was 2.8%, slightly higher than the entire state's figure of 2.5% for
the same period. Job growth remains steady, with Palm Beach County adding 12,200
jobs between 1997 and 1998. Local leaders have begun to initiate a national
marketing campaign to attract new manufacturing jobs. The following charts show
the current employment leaders.
<PAGE>
Area Description 17
<TABLE>
<CAPTION>
================================================================
TOP NON-MANUFACTURING EMPLOYERS
----------------------------------------------------------------
Name of Company Employees
----------------------------------------------------------------
<S> <C>
School Board of Palm Beach County 16,800
----------------------------------------------------------------
Palm Beach County 9,000
----------------------------------------------------------------
Columbia Palm Beach Healthcare Systems 4,000
----------------------------------------------------------------
Intracoastal Health Systems 3,200
----------------------------------------------------------------
Florida Power & Light 2,300
----------------------------------------------------------------
Boca Raton Community Hospital 2,000
----------------------------------------------------------------
Boca Raton Resort & Club 1,850
----------------------------------------------------------------
Bethesda Memorial Hospital 1,600
================================================================
<CAPTION>
===================================================
TOP 5 DURABLE MANUFACTURING EMPLOYERS
---------------------------------------------------
NAME OF COMPANY EMPLOYEES
---------------------------------------------------
<S> <C>
United Technologies - Pratt & Whitney 5,100
---------------------------------------------------
Motorola, Inc. 3,200
---------------------------------------------------
Flo Sun, Inc. 2,500
---------------------------------------------------
Talisman Sugar Corp. 1,400
---------------------------------------------------
Palm Beach Newspapers, Inc. 1,400
===================================================
</TABLE>
Unemployment in Palm Beach County for 1998 was 6.6%. This compares to a
non-seasonally adjusted unemployment rate for Florida of 5.5% and a rate of 4.5%
for the nation. According to the Department of Labor and Employment Security,
the total labor force for the West Palm Beach-Boca Raton MSA was 492,736 in
1998.
The University of Florida, Bureau of Economic Business Research, estimated
Palm Beach County's 1998 per capita income at $35,690 as compared to $35,163 in
1997, an increase of 1.5%. According to The Florida Outlook, the county's 1998
-------------------
per capita income level exceeded the state's level.
<PAGE>
Area Description 18
Construction has been a primary factor in the county's growth, however,
local governments have sought to attract clean, light industrial businesses to
the area. This is an area of economic expansion that was long neglected while
many other localities have attracted manufacturing and light industrial concerns
with success. Significant gains have been made, with the addition of numerous
electronics firms, in particular. Most of these additions have been in the Boca
Raton area, but these have largely been offset by job losses at IBM.
Tourism
-------
Tourism is considered to be the county's top industry employing an
estimated 41,738. The fame of Palm Beach County as a vacation area began in
1894, when Henry Morrison Flagler extended his railroad to Palm Beach and opened
up the Royal Poinciana Hotel. According to the County's Tourist Development
Council, approximately 3,600,000 tourists visited Palm Beach County in 1992-
1993, spending approximately $1.5 billion. Only half of the people visiting Palm
Beach County reside in commercial lodging. Taking the other half who stay with
relatives and friends into account, the Palm Beach County Tourism Board
estimates that close to $1.5 billion is spent in the county each year by
tourists. These tourist dollars are estimated to generate over 10% of the
revenues received by Palm Beach County municipalities. The vacation areas
include the entire coastal area and many other locations throughout the county.
Transportation
--------------
Private automobile use is the predominant means of transportation in Palm
Beach County. Major highways form a grid system across the County. Florida's
Turnpike, Interstate 95, State Road A-1-A, U.S. Highway 441, and U.S. Highway 1
are the major north/south roads in the county, all providing access to locations
beyond the local area. A portion of Interstate 95 between Yamato Road and Linton
Boulevard in the southern part of the county has recently been widened.
Florida's Turnpike runs parallel and to the west of Interstate 95 and
provides north/south access to points west of the immediate coastal areas. The
completion of I-95 in 1987 reduced the traffic that utilized the stretch of the
Turnpike between Palm Beach Gardens and Fort Pierce. A $400 million project to
widen Interstate 95 through Palm Beach County is underway. Interstate 95 is now
eight lanes south of Linton Boulevard in Delray Beach. The Turnpike provides
high speed access to points between Orlando and Homestead, with Palm Beach
County interchanges in Jupiter, Palm Beach Gardens, West Palm Beach, Lake Worth,
Boynton Beach, Delray Beach, and Boca Raton. A second West Palm Beach
interchange is proposed at 45th Street.
Several east/west thoroughfares connect the coastal area to the western
portions of the county, yet no east/west limited access roads or expressways
exist. State Road 80 is the primary traffic artery linking the coastal cities
with the Glades area in western Palm Beach County as well as the West Coast of
Florida. This major east/west artery has recently been widened to 4 lanes from
West Palm Beach to Belle Glade. Many of these east/west roads have been widened
in
<PAGE>
Area Description 19
recent years with Okeechobee Boulevard currently being expanded in the central
county area.
Two systems, the Florida East Coast and the CSX Railroads handle rail
freight traffic. Passenger service is available via Amtrak from Miami north to
Orlando and Jacksonville, and the remainder of Amtrak's USA rail network. Palm
Beach County acquired the old CSX rail station storage site on the south side of
Banyan Road, just west of the railroad tracks in West Palm Beach. The county
plans to transform this site into a transportation hub. The train station was
restored to its 1920's Spanish revival style in 1991.
Tri-Rail, South Florida's commuter rail system, began service in January
1989. The system runs between West Palm Beach and northern Dade County, where
commuters can connect to Dade County's Metrorail. Each County along the route
provides free bus service between each of the fifteen stops to various
employment and shopping districts. The Tri-Rail system was designed as an
alternative to Interstate 95 during its widening project and beyond. The County
operates limited public bus transportation.
The Palm Beach International Airport serves the commercial aviation needs
of the county and offers 30 different airlines, including U.S. carriers,
nonscheduled airlines, and international airlines. In 1993, 5,083,844 passengers
used the airport facilities, up from 5,077,573 passengers in 1991. The 1996
estimate was 6,485,258. The airport is self-revenue generating and does not rely
on county tax dollars.
The new North County General Aviation Airport opened in April 1994, at a
cost of $30,000,000. It is located on State Road 710 at the terminus of PGA
Boulevard, west of Palm Beach Gardens. This 1,800-acre site will service both
the general and corporate aviation communities, with a low density easy access
airport. The southern part of the county is served by Boca Raton airport, which
was recently upgraded and expanded. This facility is capable of handling the
largest corporate jets.
Deep-water access to the Atlantic Ocean is provided via the Lake Worth
Inlet adjacent to the Port of Palm Beach in Riviera Beach. With 69 acres of
prime land and 25 berths to accommodate ships, the Port is an alternative means
of transportation and can serve a variety of needs. The Port is used primarily
to transport cement, sugar products and fuel oil. Cruise ship traffic to the
Bahama Islands is also significant to the Port operation. In addition, the port
is home to Palm Beach County's foreign trade zone. There are currently two
cruise ships operating out of the Port of Palm Beach. Cruise lines make up 17%
of the Port's revenue or roughly $800,000. The Port, an independent taxing
district, employs roughly 35,000 people in Palm Beach County.
Medical facilities are adequate throughout the county, with special units
being added at many hospital facilities. The Jupiter Hospital recently expanded
its outpatient cancer center. JFK Hospital in Atlantis opened a new Heart
Institute and Cardiac Rehabilitation Center in 1987. Bethesda Hospital in
Boynton Beach expanded its Ambulatory Care Unit and Neonatal Care Unit
<PAGE>
Area Description 20
in 1988. On July 1, 1992, St. Mary's Hospital, in West Palm Beach, and Delray
Community Hospital in Delray Beach officially opened their new Trauma Center
facilities.
Other major hospitals include Good Samaritan in West Palm Beach, Palm Beach
Gardens Medical Center in Palm Beach Gardens, Palm Beach Regional Hospital in
Lake Worth, and the Boca Raton Community Hospital. Four newer facilities in the
central and southern portion of Palm Beach County are the Wellington Regional
Medical Center, the Palms West Hospital, the 40 acre medical Center at Delray
and the 170-bed West Boca medical Center. Also, the Veteran's Administration has
recently completed a 400-bed hospital and 120-bed nursing home in Riviera Beach.
This 10 story, $159 million facility employs approximately 1,600.
Palm Beach County is internationally known as a golfing center. The county
has the second highest number of golf courses per capita in the country and at
the current rate will soon surpass Los Angeles County, California.
The Palm Beach County school system provides education through the Junior
College level. Enrollment in the county's school system in 1997 was 144,000.
Upper level college curriculum is available at Florida Atlantic University, and
other small private institutions. F.A.U. is a state institution located in Boca
Raton, with a campus in West Palm Beach.
Concurrency
-----------
The concept of concurrency is the result of the 1975 Local Comprehensive
Planning Act. The Florida Statutes require local governments to maintain adopted
level of standards for roads, stormwater drainage, water, wastewater, solid
waste, and parks; and for localities with a population in excess of 50,000, a
mass transit element is required. If the capacity for each and all of the above
services and/or facilities is not available, a development permit cannot be
issued.
At present, concurrency requires developers to agree to provide necessary
infrastructure before new developments are approved. However, in some areas,
moratoriums on new development are being implemented to allow government staff
sufficient time to study the affects of further growth and to develop plans,
both on-site and off will likely result in a protracted approval processes, and
ultimately entail more costs to the private sector.
Any proposed large development that will have impacts on traffic, noise,
air quality, etc. that go beyond the immediate vicinity, must go through
Development of Regional Impact (DRI) a Regional Planning Council. The Council
studies the proposed development and its potential impacts, then makes
recommendations to the appropriate local governmental entity regarding whether
the development should be approved and what, if any, constraints or mitigation
requirements should be imposed to minimize adverse regional impacts.
Conclusion
----------
<PAGE>
Area Description 21
The real estate market in Palm Beach County is strong. The growth demands
on the county are very evident in light of past trends and the projections for
further population increases. The desirability of south Florida's climate and
the continuing trend toward retirement in the area will continue to produce
populations which will stress the road systems and services required for the
growing population. The county is expected to be among the highest in absolute
population growth in the state for the next four years.
The economic base of the area will broaden due to commitments to attract
clean, light industrial users. Additionally, the expanding population will
require more supporting commercial, service and industrial development
throughout the area.
The future outlook for economic development is positive; however, a decline
in the quality of life for current residents is possible due to congestion, over
population and strains on services. Concurrency is a major concern for Palm
Beach County's future growth within the state's growth management policies.
Concurrency is the requirement that adequate infrastructure be available to
serve new development. Eight types of infrastructure are affected, including:
traffic, potable water, sewer, drainage, solid waste, recreation and open space,
mass transit and fire rescue. In the long run, this growth policy may prove
beneficial to both property values and the quality of life in the county as
approval of future development becomes more difficult.
Property values, rents, and interest rates have risen in recent years as
the economy has recovered from the overbuilding of the late 1980' and early
1990's. Supply of manufactured housing lots has been static for several years
and no new communities are likely due to restrictive development regulations.
<PAGE>
[AREA MAP APPEARS HERE]
<PAGE>
23
NEIGHBORHOOD DESCRIPTION
------------------------
A neighborhood is defined as a portion of a larger community, or an entire
community, containing a homogeneous group of inhabitants, buildings, or business
enterprises.
Location and Boundaries
-----------------------
The subject property is located on the east side of Haverhill Road, north
of Forest Hill Boulevard in an unincorporated area of Palm Beach County. The
neighborhood is generally bounded by Southern Boulevard to the north, Florida's
Turnpike to the west, 10th Avenue to the south and Military Trail to the east.
The center of the neighborhood is approximately 2 miles southwest of the Palm
Beach International Airport. Large portions of the neighborhood are within the
incorporated area of Greenacres City.
Land uses generally consist of commercial development along the major
thoroughfares with residential backup. The neighborhood is approximately 80%
built-up with new development occurring west of the subject property. Large
tracts of vacant land are scarce in the neighborhood and the new development
consists of infill development. However, a notable new 1,649-acre mixed-use
development consisting of 500,000 square feet of retail space, an assisted
living complex, 600 apartments and 3,811 homes is planned for the southeast
quadrant of U. S. Highway 441 and Forest Hill Boulevard. The developer says it
would have to widen Forest Hill Boulevard through Wellington to six lanes, which
has created some controversy due to traffic congestion. The site is less than
six miles west-southwest of the subject property.
Access
------
Access to the subject property is via Haverhill Road. Haverhill Road is a
four lane, divided thoroughfare that bisects the neighborhood in an north/south
direction. The subject is located on the east side of Haverhill Road north of
Forest Hill Boulevard, which bisects the neighborhood in an east/west direction.
Access to Interstate 95 is available within three miles east of the subject
property via Forest Hill Boulevard. Access to the Florida Turnpike is available
within three miles southwest of the subject property, at Lake Worth Road.
Overall, access to the subject property is considered good.
Housing
-------
While the subject competes with all forms of housing to a certain degree,
the closest competition is other manufactured housing communities. Our surveys
of residents indicate that a sense of community is the primary reason that
people choose to reside in a manufactured housing community. There is also a
sense of security, as residents pay close attention to comings and goings in the
community. While the subject is not the least expensive form of housing in the
neighborhood, it is also not the most expensive.
<PAGE>
Neighborhood Description 24
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 excellent. The
infrastructure is in-place in the neighborhood and concurrency is not an issue
in development. General real estate values have been rising over the last three
to four year period, although construction has been continuing at a moderate
pace, on properties purchased during that period.
Future infill development in the neighborhood is expected to be at a much
slower pace, due primarily to the lack of prime available land in the
neighborhood, and the advanced degree of existing development. The subject
property will benefit from its excellent location and the westward trend of
development.
<PAGE>
[NEIGHBORHOOD MAP APPEARS HERE]
<PAGE>
26
MANUFACTURED HOME COMMUNITY MARKET OVERVIEW
-------------------------------------------
The manufactured home industry in the State of Florida has prospered and
matured, over the past twenty years, as a direct result of the advancements in
manufactured home construction techniques and the continued ability of producers
and dealers to make manufactured homes a relatively inexpensive housing
alternative. Over this period the industry has progressed from it's original
"trailer park" image, to the "mobile home park" and, finally, to its present
status as "a manufactured home community." This most recent status is only
appropriate, as most manufactured homes are typically moved only once during
their economic lifetime; from the manufacturer or dealer's lot to the home site.
According to the 1990 U. S. Census, 1,290,000 people occupied 762,855
manufactured homes in the State of Florida. These totals were the highest in
the United States with only Texas and California having manufactured home
populations that exceed one million. The measure of the significance of the
manufactured home in the state is evidenced by the fact that nearly 12.5% of all
housing units in the state were manufactured homes, as of 1990. The table below
lists the top five counties in the state, the number of manufactured homes and
the percentage of the state total of manufactured homes.
============================================
Manufactured Home Communities
Top Five Counties In Florida
============================================
County No. Of Pct. Total
Homes Housing
--------------------------------------------
Pinellas 52,207 6.84%
--------------------------------------------
Polk 51,768 6.79%
--------------------------------------------
Hillsborough 42,314 5.55%
--------------------------------------------
Pasco 40,391 5.29%
--------------------------------------------
Lake 26,935 3.53%
--------------------------------------------
Florida 762,855 100.00%
============================================
Source: 1990 U.S. Census
The top five counties in Florida for new manufactured home sales during
1998 were Marion (2,120), Leon (1,737), Polk (1,374), Hillsborough (1,184) and
Columbia (1,129). Marion and Columbia Counties are located in the north central
portion of the state, Polk and Hillsborough are adjacent counties in the Tampa
Bay area and Leon County is located in the panhandle.
As shown in the following table, new sales in the state have decreased over
40% since
<PAGE>
Manufactured Housing Community Market Overview 27
1985, again due principally to restriction imposed by government regulations as
well as difficult economic times. The 1997 and 1998 statewide figures show an
upward trend, with significant increases over the 1991 sales.
1983 to 1998 Manufactured Home Sales
=================================================
PALM BEACH
YEAR FLORIDA COUNTY
-------------------------------------------------
1983 29,248 490
-------------------------------------------------
1984 29,448 434
-------------------------------------------------
1985 30,026 428
-------------------------------------------------
1986 27,233 300
-------------------------------------------------
1987 25,446 184
-------------------------------------------------
1988 23,315 74
-------------------------------------------------
1989 21,821 55
-------------------------------------------------
1990 17,483 49
-------------------------------------------------
1991 12,572 23
-------------------------------------------------
1992 14,172 16
-------------------------------------------------
1993 15,964 37
-------------------------------------------------
1994 17,067 114
-------------------------------------------------
1995 16,199 71
-------------------------------------------------
1996 15,905 67
-------------------------------------------------
1997 18,242 106
-------------------------------------------------
1998 19,035 177
=================================================
Source: Florida Manufactured Housing Association,
Statistical Package, 1998.
Although recent trends indicate sales of manufactured homes to be far below
the peak of the mid eighties, demand within good quality manufactured housing
communities is still strong according to recent publications. Palm Beach
County, as shown, has occupied a very small share of the manufactured housing
market in the state of Florida, a trend which appears to be continuing.
The rapid growth in Florida during the 1960's and 1970's outstripped the
ability of county
<PAGE>
Manufactured Housing Community Market Overview 28
and municipal governments to provide adequate infrastructure improvements. This
precipitated state legislation mandating that each county submit an acceptable
Comprehensive Plan. As previously discussed in the Area Description section of
this report, the concept of Concurrency required all municipalities with zoning
jurisdiction to adjust their zoning codes and reach "substantial conformance" to
county-wide land use plan. Many municipal planners were forced to scale back the
total developable inventory in their communities, resulting in decreased
projections of future municipal revenues from property taxes. Manufactured
housing communities were viewed as a poor developmental alternative in many
municipalities since they produce less property tax for the municipality while
creating about the same infrastructure burden. While many counties have
instituted a moratorium on the development of new manufactured housing
communities, others have imposed severe limitations on the development of
manufactured housing communities, typically found in the form of restrictive
impact fees (or transportation fees). It was noted that approved communities
have been allowed to develop to capacity.
Based on our conversations with Palm Beach County officials, it is readily
apparent that it has become increasingly more difficult to rezone sites to
manufactured home use, with governmental restrictions and increasing impact
fees, much of the developer's profit has been taken away. When coupled with
infrastructure costs dictated by concurrency, the cost of development can
increase to a point that makes the development of a manufactured home community
financially unfeasible. Hence, there is limited inventory and future supply
will be limited.
Additionally, our survey of the smaller municipalities has indicated that
additional fees are incurred for community development and are generally based
on the community's capacity. These fees vary among the individual
municipalities. The overall effect has been the decline in the development of
new manufactured housing communities in recent years. The difficult economic
times of the early 1990's and the lack of land for development have been
contributing factors to the inhibited growth in the state.
In the early 1980's, lot rental rates in most quality communities increased
100% or more, while vacancies, at that time, were negligible. Spiraling rent
increases and the lack of a viable alternative for manufactured home owners had
resulted in problems in many communities in the form of rent strikes, picket
lines, and a high percentage of homes made available for resale.
An additional restriction, which has greatly impacted the operation of
manufactured housing communities, was the 1984 Florida Mobile Home Act. This
Act established the Bureau of Mobile Homes of the Department of Business and
Professional Regulation and further, set out a list of requirements for
community owners and residents under Chapter 723 of the Florida Statutes.
The law requires manufactured home community owners to file a prospectus
with the Bureau of Mobile Homes fully describing the community and its rental
agreements and further
<PAGE>
Manufactured Housing Community Market Overview 29
requires owners to distribute the prospectus to all community residents. In
addition, rental rates must pass the test of being reasonable. The code
states:/3/
1. For the purpose of this section, a lot rental amount that is in excess
of market rent shall be considered unreasonable.
2. Market rent means that rent which would result from market forces
absent an unequal bargaining position between mobile home park owners
and mobile home owners.
3. In determining market rent, the court may consider rents charged by
comparable mobile home parks in its competitive area. To be
comparable, a mobile home park must offer similar facilities,
services, amenities, and management.
4. In determining whether a rent increase or resulting lot rental amount
is unreasonable, the court may consider economic or other factors, but
not limited to, increases or decreases in the consumer price index,
published by the Bureau of Labor Statistics of the Department of
Labor, increases or decreases in operating costs or taxes and prior
disclosures.
5. An arbitrator or mediator under sections 723.037, 723.038 and 723.0381
shall employ the same standards as set forth in this section.
The statute established procedures that the community owner must follow in
order to affect rental rate increases and, perhaps most importantly, requires
that a community owner who wishes to sell his community must first offer it (at
the owner's price and terms) to the community's homeowners association.
Current HUD wind standards are more stringent for manufactured housing than
they are for conventional site built housing. These wind standards were created
in response to Hurricane Andrew. Additionally, many insurance companies are
hesitant to write business interruption coverage for manufactured housing
communities in coastal Florida. However, business interruption insurance only
covers losses sustained until all debris is cleared away and the community is
again fit for occupancy, the point when the insurance coverage ends. Therefore,
the insurance coverage is available for a typically short period of time. These
changes do not appear to have had a major effect on the demand for manufactured
homes, as market demand has actually strengthened. It is apparent that the
market reception for manufactured homes is as a continued source of quality and
affordable housing.
___________________
/3/ History: Section 1, Chapters 84-90 and Section 9, Chapters 90-198.
<PAGE>
Manufactured Housing Community Market Overview 30
Rental Rates and Occupancy
--------------------------
There is a wide range of rates in the marketplace, based on the project and
the amenities offered. Generally speaking, a standard (non corner/no view
amenity) pad ranges between $335.00 per month to $382.00 per month. Premiums
are also attached to pads with a corner or view amenity, and these can run as
high as $100 per month above the standard pad pricing, although these premiums
are not generally found in smaller communities. Services included in the rental
rate vary by community, with higher rental rates indicative of more services.
The subject averages $385.53 per lot (based on 134 lots), per month, with
the rent range from $349.00 to $409.00. The local market supports the subject
rents. No rent increase is planned at the current time.
Most importantly, regardless of the competitive rental rates shown by the
competitive properties, the subject community is governed exclusively by the
Prospectus, which specifically addresses annual rental increases and other
charges. A copy of the Prospectus has been included in the Addenda to this
report. Income forecasts were based upon current rent levels.
The subject is a 134-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 four communities are fully developed and
are currently between 97.3% and 99.4% occupied. The physical occupancy at the
subject is currently 94.8%. The manager occupies one space rent-free, and 126
occupied sites produce rent resulting in an economic occupancy of 94.0%. This
occupancy appears to be below the sub-market occupancy of approximately 98%.
Summary
-------
The State of Florida experienced high levels of growth in the manufactured
housing industry during the 1980's. Sales climbed steadily through the late
seventies and early eighties, peaking in 1985. Since that time sales showed a
steady decline each year through 1991. Sales in 1992, 1993 and 1994 indicated a
reversal from this most recent declining trend and have further increased in
1997 and 1998.
Manufactured home community owners, who in recent years have benefited from
a "captive" market and little competitive new supply, now find their interests
sandwiched between those of county and municipal authorities on the one hand,
and those of state regulators on the other. The upshot is likely to be that
although occupancies in manufactured housing communities will remain high,
future rent increases will not likely be as great as they have been.
<PAGE>
31
RENT COMPARABLE NUMBER ONE
--------------------------
Colonial Coach Estates
6046 Lake Worth Road
Greenacres City, Palm Beach County, Florida
[PHOTO APPEARS HERE]
Location: South side of Lake Worth Road, east of Jog Road.
Number of Spaces: 326
Property Description: All age manufactured housing community built in
1970.
Monthly Rental Rates: $382.00
Occupancy: 99.4% (324 of 326)
Services Included in Rates: Trash collection and lawn irrigation.
Amenities: Clubhouse, pool, tennis courts, shuffleboard,
playground, volleyball and laundry.
Verification/Date: Community Manager on May 16, 2000.
Comments: The last rental increase was $12 per month in
February 2000. No concessions are offered.
<TABLE>
<CAPTION>
===================================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Superior Superior Similar Similar Similar Similar Similar
===================================================================================================================
</TABLE>
<PAGE>
32
RENT COMPARABLE NUMBER TWO
--------------------------
Pickwick Parks
1 Pickwick Park Drive
Greenacres City, Palm Beach County, Florida
[PHOTO APPEARS HERE]
Location: South side of 10/th/ Avenue North, east of Sherwood
Forest.
Number of Spaces: 370
Property Description: All age manufactured housing community built in
1970.
Monthly Rental Rates: $368.00
Occupancy: 97.3% (360 of 370)
Services Included in Rates: Trash collection and irrigation.
Amenities: Clubhouse, pool, laundry, playground and
shuffleboard.
Verification/Date: Community Manager on May 16, 2000.
Comments: The last rental increase was $10 per month in
February 2000. No concessions are offered.
<TABLE>
<CAPTION>
================================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Similar Similar Inferior Similar Similar Similar Similar
================================================================================================================
</TABLE>
<PAGE>
33
RENT COMPARABLE NUMBER THREE
----------------------------
Briarwood
134 Ferne Lane
Lake Worth, Palm Beach County, Florida
[PHOTO APPEARS HERE]
Location: North side of Lake Worth Road, west of Jog Road.
Number of Spaces: 144
Property Description: All age manufactured housing community built in
1971.
Monthly Rental Rates: $332.00
Occupancy: 99.3% (143 of 144)
Services Included in Rates: Trash collection and irrigation water.
Amenities: Meeting room and laundry facility.
Verification/Date: Community Manager on May 16, 2000.
Comments: The last rent increase was January 2000 and was
$15.00.
<TABLE>
<CAPTION>
=========================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Superior Similar Similar Similar Inferior Similar Inferior
=========================================================================================================
</TABLE>
<PAGE>
34
RENT COMPARABLE NUMBER FOUR
---------------------------
Tavares Cove
2315 Espana Real
West Palm Beach, Palm Beach County, Florida
[PHOTO APPEARS HERE]
Location: South side of Purdy Lane, between Sherwood Forest
and Jog Road.
Number of Spaces: 377
Property Description: All age manufactured housing community built in
1970.
Monthly Rental Rates: $335.00
Occupancy: 97.9% (369 of 377)
Services Included in Rates: Water, sewer and trash collection.
Amenities: Clubhouse, pool, playground, laundry and
shuffleboard.
Verification/Date: Community Manager on May 16, 1999.
Comments: The last rent increase was January 1999 and was
$13.00.
<TABLE>
<CAPTION>
=========================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Similar Similar Inferior Similar Similar Similar Similar
=========================================================================================
</TABLE>
<PAGE>
RENT COMPARABLE SUMMARY
<TABLE>
<CAPTION>
==================================================================================================================================
Monthly
Occ. Rental Rates
No. Name/Location Sites/Sites Services Included Amenities
% Occ.
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Colonial Coach Estates 324/326 $382.00 Trash collection and Clubhouse, pool,
6046 Lake Worth Road 99.4% irrigation. shuffleboard,
Greenacres City, Unincorporated Palm Beach, laundry, playground,
County Florida tennis and laundry.
----------------------------------------------------------------------------------------------------------------------------------
2 Pickwick Parks 360/370 $368.00 Trash collection and Clubhouse, pool,
1 Pickwick Park Drive 97.3% irrigation. laundry, playground
Greenacres City, Palm Beach County, Florida and shuffleboard.
----------------------------------------------------------------------------------------------------------------------------------
3 Briarwood 143/144 $332.00 Trash collection and Meeting room and
134 Ferne Lane 99.3% irrigation. laundry facility.
Lake Worth, Palm Beach County, Florida
----------------------------------------------------------------------------------------------------------------------------------
4 Tavares Cove 369/377 $335.00 Water, sewer and Clubhouse, pool,
2315 Espana Real 97.9% trash collection. playground, laundry
Unincorporated Palm Beach County, Florida and shuffleboard.
----------------------------------------------------------------------------------------------------------------------------------
Subj. Long Lake Village 127/134 $349.00 Water, sewer, trash Clubhouse, pool and
4750 Carefree Trail 94.8% -$409.00 collection, lawn playground.
Unincorporated Palm Beach County, Florida mowing and basic
cable.
==================================================================================================================================
</TABLE>
<PAGE>
[RENT COMPARABLES MAP APPEARS HERE]
<PAGE>
37
LAND AND SITE IMPROVEMENTS
--------------------------
The subject site is a rectangular shaped parcel of land containing
approximately 19.40 acres of gross area. The site is presently developed with
134 manufactured housing spaces and 16 apartments. The tract is generally level
and at street grade and drainage of the tract appears adequate. We observed no
obvious adverse soil or subsoil conditions during the physical inspection of the
site.
Utility services connected and in service on the date of valuation include
the following:
Sanitary Sewer: Palm Beach County.
--------------
Storm Sewer: On site drainage system.
-----------
Water: Palm Beach County.
-----
Telephone: BellSouth
---------
Electric: Florida Power and Light
--------
Ingress to and egress from the subject community is via Haverhill Road,
north of Forest Hill Boulevard. The individual lots, in the community, are
accessed by roadways, which are laid-out in a grid pattern, maximizing the use
of the site, typical of manufactured housing communities. Roadway improvements
include:
Street-bed: Haverhill Road is an asphalt paved four-lane thoroughfare.
----------
The streets in the community are concrete-paved roadways
and are 24 foot wide right-of-ways.
Curb: Haverhill Road has concrete curbs. The community streets
----
do not have curbs.
Sidewalk: Haverhill Road has concrete sidewalks.
--------
Streetlights: There are pole mounted lights along Haverhill Road and
------------
throughout the community.
Landscaping: Grass and planted areas found throughout the site.
-----------
Other: A six-foot high, masonry block and chain link fence
-----
encloses the community.
<PAGE>
Land and Site Improvements 38
Arrangements between the subject ownership and municipal and/or public
utility authorities for the connection of telephone and electricity are presumed
to exist, although neither a plan specifically identifying the location of all
underground lines nor contracts providing for their installation were provided
to us.
Encumbrances
------------
Our review of the deed, county property records and survey did not reveal
any adverse or potentially adverse interests, which would affect the utility of
the subject property. Specifically, there are no recorded or otherwise known
liens, defects in title or adverse easements. Additionally, there are no rent
controls in effect in Palm Beach County.
Easements
---------
Standard utility easements for electricity and telephone are assumed to
exist. No other easements were identified to us.
Encroachments
-------------
There were no obvious encroachments observed during the inspection of the
subject and neighboring properties.
Environmental
-------------
There were no obvious areas of contamination on or about the subject site.
We are not qualified in environmental hazards and, therefore recommend an audit
be performed.
Functional Utility
------------------
The site, which is rectangular in shape and contains approximately 19.40
acres, is large enough to accommodate building improvements and roadways as well
as recreational amenities and green areas. The site is considered functional
for various residential development scenarios. The existing development as a
150-space manufactured housing and apartment community with an overall density
of approximately 7.73 spaces per acre is within modern standards. The site is
considered functional for use as a manufactured housing community.
<PAGE>
39
IMPROVEMENT DESCRIPTION
-----------------------
The subject is improved with 134 manufactured housing spaces and 16
apartments. The lots in the community are arranged along streets laid out in a
grid pattern taking advantage of the rectangular shape of the site. The streets
have been configured to maximize the available number of spaces. The individual
lots in the community vary slightly in size, as indicated in the Prospectus
averaging approximately 3,500 square feet. There are 16 duplex units in eight
buildings. The buildings are of masonry construction. There are seven three
bedroom/two bath units and nine two bedroom/two bath units. The density of the
property is equal to 7.73 dwelling units per acre.
The common area amenities include a clubhouse, swimming pool and a
playground. The clubhouse contains approximately 2,100 square feet of area and
has been partitioned into the main hall/multipurpose room, restrooms, kitchen,
laundry, storage and the park office. The interior construction consists of
painted or papered drywall walls and ceilings. The flooring finish is vinyl
tile. There are flush mounted fluorescent light fixtures and ceiling fans.
Adjacent to the clubhouse is the playground and pool area.
We have not estimated a separate value for these amenities, or equipment,
as they are standard items found at most manufactured housing communities.
These amenities are typical for a community of this type, age, size and
location, and are adequate and functional in use.
Age and Condition
-----------------
According to the owner, the duplexes were built in 1984 and the
manufactured housing community was developed in 1987. The subject is
approximately 13 to 16 years old. The common areas, streets, amenities and
individual mobile homes were observed to be in good overall condition. Overall,
the subject improvements are estimated to be effectively 8 years old and were
observed to be in good condition.
<PAGE>
Improvement Description 40
[MAP APPEARS HERE]
Site Layout-Long Lake Village
<PAGE>
41
OWNERSHIP AND PROPERTY HISTORY
------------------------------
The ownership of the subject, as recorded in the Official Records of Palm
Beach County, Florida, is in the name of Windsor Real Estate Investment Trust, 8
and Windsor Park Properties, 7. The property was purchased by the current owners
in June 1995 for $3,025,000 as is evidenced by the Quit Claim Deed recorded in
Official Record Book 8815 on Page 1043. The property had been the subject of a
foreclosure and bankruptcy proceeding as a result of the financial collapse of
the previous owner. There have been no other significant transactions involving
the subject property within the past five years.
OCCUPANCY
---------
The property is currently occupied by a 150-space manufactured housing and
apartment community, known as Long Lake Village. There are seven vacant
manufactured housing spaces of the 134 total spaces. The physical occupancy is
94.8%. All of the spaces will accommodate multi-sectional homes. In addition to
the physical vacancy the manager occupies a community owned home resulting in an
economic occupancy of 126 spaces. The economic vacancy of the manufactured
housing spaces is 8 spaces or 6.0%
The community is governed, as required by law, by a prospectus. Annual
increases in the rental rates are governed by the prospectus, contained in the
Addenda to this report. The current rents at the subject range from $349.00 to
$409.00 per month. The rents were increased by $11.00 per site per month,
effective January 1, 2000.
Our analysis does not incorporate any value attributable to any community
owned models as these units are considered personal property, not a portion of
the real estate. Likewise, we have incorporated no income attributable to the
sale of homes in our analysis.
Additionally, there are 16 apartments at the rear of the community, of
which 13 are presently rented and another is to be occupied next week.
Historically the apartments have been at near 100% occupancy with vacancies only
lasting a month or two. The apartment rent rates range from $600.00 to $700.00
per month.
<PAGE>
42
ZONING AND OTHER LAND USE CONTROLS
----------------------------------
The subject property is located in Unincorporated Palm Beach County and is
zoned RM, Multiple Family Residential according to the Palm Beach County zoning
ordinance. This zoning classification allows manufactured home communities and
related ancillary structures.
The subject was approved as constructed and is a legal, conforming use of
the site.
Concurrency
-----------
Based on the present configuration of the subject, it is in conformance
with the approved comprehensive plan filed by Palm Beach County. Therefore,
concurrency is not an issue.
Flood Hazard
------------
Palm Beach County is a participant in the Federal Emergency Management
Agency (FEMA) system. According to Flood Map Community Number 120192, Panel 0165
B, dated October 15, 1982, the subject property is located in a FEMA designated
"B" zone. A "B" zone is defined as an "area of moderate flood hazard, usually
depicted on Flood Insurance Rate Maps as between limits of the base and 500-year
floods".
ASSESSMENT AND TAXES
--------------------
The subject is identified in the Palm Beach County records under Parcel
Numbers 00-42-44-12-34-001, 00-42-44-12-34-002, 00-42-44-12-34-003, 00-42-44-12-
34-004, 00-42-44-12-34-005, 00-42-44-12-34-006, 00-42-44-12-34-007, 00-42-44-12-
34-008, 00-42-44-12-34-018, 00-42-44-12-34-019, and 00-42-44-12-34-023.
According to the records at the Palm Beach County Property Appraiser's Office,
the current (1999) assessed value of the subject totals $2,269,189. In
comparison to our opinion of the market value the subject is under assessed.
Under assessment is common for manufactured home communities, because much of
the value can be attributed to the entrepreneurial skill in acquiring the land
and filling the community. In our discussions with the Palm Beach County
Property Appraiser's Office, it has been noted that properties are not re-
assessed upon sale in Palm Beach County. Rather, all properties are re-assessed
every three years and any sale will be factored in to the assessment of each
property type. The subject will probably be re-assessed in 2000. The Prospectus
allows for the pass through of additional ad valorem taxes to the residents.
Assessed values, for purposes of property taxation are determined on
January 1, of each year. In the state of Florida, properties are assessed at
100% of the market value, as required by Florida Statute, Chapter 192.042.
Properties are reassessed annually and equitability of assessments is not a
basis for assessment in the state of Florida. Taxes are due and payable on the
first day of the year, although tax bills are issued in arrears. Discounts up
to 4% of the total
<PAGE>
Assessment And Taxes 43
bill are available for early payment and taxes become delinquent after March 31.
Discussions with owners of investment real estate and manufactured home
communities have revealed that "early" payment of real estate taxes is a common
practice. Additionally, prudent management would also dictate the payment of
real estate taxes to take advantage of any discounts offered. All tax amounts
are current.
Historically, the taxes have [ ] over the last three years. The table below
illustrates the actual taxes over the last three years.
<TABLE>
<CAPTION>
Historical Taxes
========================================================
Tax Year Assessment Taxes
--------------------------------------------------------
<S> <C> <C>
1999 $ 2,250,497 $69,834.94
--------------------------------------------------------
1998 $ 2,250,497 $70,498.17
--------------------------------------------------------
1997 $ 2,225,559 $68,542.49
========================================================
</TABLE>
Based on the historical taxes we expect the real estate taxes to increase
slightly in the future. We have the estimated 2000 tax liability to be $70,882.
We have applied the available early payment discount for November 2000 and our
estimate of total taxes is $68,047.
<PAGE>
44
MARKETABILITY AND EXPOSURE PERIOD
---------------------------------
The subject as discussed in the Neighborhood Analysis, and Manufactured
Home Community Market Overview sections of this report is competitive and
marketable with other properties in the marketplace.
There are typically four classes of purchasers attracted to this type of
development. The first are the tenants/residents of the community, purchasing on
a cooperative or condominium basis to reduce rental rates. The second class of
purchaser would be the single owner/operator who purchases a community as an
income and investment vehicle. Third would be the "traditional" manufactured
home community owner/developer who views the community as a safe, long term
investment. Finally, there is the institutional investor or syndicate (REIT)
which owns several large manufactured housing communities on a
statewide/nationwide basis.
Due to the stability of manufactured home community investments, the REIT
investors have been a major player in the marketplace. REIT investors have bid
down capitalization rates for new, large communities. Resident groups have also
increased demand for manufactured home community investments. According to our
banking sources, resident groups are able to borrow money at debt coverage
ratios as low as 1.0 to 1. The banks view resident group loans as good quality
with minimum risk. Typical payback periods range between five and eight years.
Discussions with large institutional manufactured home community investor
representatives and local area realtors, indicated that "properly priced",
stable, well kept manufactured housing communities should "be under contract"
within a six to eight month period in today's market. However, our research has
also revealed that very few communities are "listed" for sale and that for the
most part brokers solicit owners for buyers.
Our discussions further indicated that institutional investors required a
minimum of 200 spaces, and pricing would reflect an 8.50% to 9.50% overall
capitalization rate requirement for senior communities. Family communities
typically reflect higher capitalization rates due to a less stable occupancy
base. Pricing is established by processing gross income, reduced by a 2% to 3%
vacancy and credit loss factor with expenses of 35% of effective gross income.
An additional capital charge of 3% to 5%, based on overall condition, is
deducted to arrive at a net operating income (NOI). This criteria is generally
the most restrictive pricing, as other investors will tend to accept lower
expense ratios (30%), no capital charges and a lower overall rate.
In late summer 1998, commercial mortgage backed securities (CMBS) lenders
restructured their pricing for long term fixed rate loans. These loans had
historically been priced based on an interest rate spread above Treasury
Securities. The secondary market for these loans became illiquid and lenders
were unable to sell the loans profitably. Consequently, although interest rates
on Treasuries have fallen, the interest rates on securitized loans have
increased. Prior to this increase, interest rate spreads were available lower
than 150 basis points over the 10-
<PAGE>
Markertability and Exposure Period 45
year Treasuries. Since the fall, spreads have increased to the low 200 basis
point range for manufactured housing communities.
Interest rates are low and financial institutions are again willing to lend
money for existing real estate projects with good occupancies. The presence of
life insurance companiesand conduit programs has made the financing of
manufactured housing communities a very competitive business. The insurance
companies and conduit programs will lend on a non-recourse basis, with terms
ranging from 10 to 20 years.
On the basis of the preceding analysis, the subject would be attractive to
all but the institutional investor. In our opinion, the exposure period for the
subject would be within the range indicated by the industry participants, and we
estimate an exposure period of six months.
<PAGE>
46
VALUATION SECTION
<PAGE>
47
HIGHEST AND BEST USE
--------------------
Highest and Best Use may be defined as:
"The reasonably probable and legal use of vacant land or an
improved property, which is physically possible, appropriately
supported, financially feasible and which results in the highest
value. The four criteria the highest and best use must meet are
legal permissibility, physical possibility, financial
feasibility, and maximum profitability."/4/
The highest and best use of a specific parcel of land does not depend on
subjective analysis; rather, the competitive forces in the market shape it. The
analysis and interpretation of highest and best use is an economic study of the
market forces on the subject.
Market forces also shape market value. The data collected and analyzed to
estimate property value is also used to formulate an opinion of the property's
highest and best use as of the effective date of the appraisal. In all valuation
assignments, value estimates are based on use. The highest and best use of a
property provides the foundation for an investigation of the competitive
positions of buyers and sellers in the marketplace, and can be described as the
foundation on which market value rests. Without interaction in the marketplace,
highest and best use would not exist and market value estimations would be
impossible.
When potential buyers contemplate purchasing real estate for personal use
or occupancy, their principal motivations are perceived benefits of enhanced
enjoyment, prestige, and privacy. Purchasers of investment property are
frequently motivated by the promise of net income or capital accumulation and
certain tax advantages. These investors are more directly concerned with
feasibility, an indication that a project has a reasonable likelihood of
satisfying their specific objectives.
Analysis of the highest and best use of: 1) the land as though vacant, and
2) the property as improved, is essential in the valuation process. Through
highest and best use analysis, we attempt to interpret the market forces that
influence the subject property and identify the use on which the final value
estimate will be based. This determination is based on the analysis and
interpretation of market conditions, the trends affecting the buyers and sellers
in the marketplace, and the existing use of the subject. The highest and best
use of the land, as though vacant and the property as improved, must meet four
criteria.
___________________________
/4/ The Appraisal Institute, The Dictionary of Real Estate Appraisal, 3d ed.
(Chicago, Illinois: The Appraisal Institute, 1993), Page 170.
<PAGE>
Highest and Best Use 48
Analyzing the highest and best use of the land as though vacant serves two
functions. First, it helps identify comparable properties, which should have
highest and best uses of the land as though vacant, similar to that of the
subject property. The second reason is to identify the use that would produce
maximum income to the land after property income is allocated to the
improvements. In the Cost Approach and some income capitalization techniques, a
separate value estimate of the land is required. Estimating the land's highest
and best use as though vacant becomes the necessary part of deriving a land
value estimate.
There are also reasons to analyze the highest and best use of the property
as improved. The first is to help identify comparable properties that should
have the same or similar highest and best uses as the improved subject property.
The second is to decide whether the improvements should be demolished, renovated
or retained in their present condition. They should be retained as long as they
have some marketable value and the return from the property exceeds the return
that would be realized by a new use, after deducting the costs of demolishing
the old building and constructing a new one. Identification of the existing
property's most profitable use is crucial to this determination.
The highest and best use of both the land as though vacant and the property
as improved must meet four criteria. The highest and best use must be:
1. Legally Permissible
2. Physically Possible
3. Financially Feasible
4. Maximally Productive
These criteria are usually considered sequentially; a use may be
financially feasible, but this is irrelevant if it is physically impossible or
legally prohibited. Only when there is a reasonable possibility that one of the
prior, unacceptable conditions can be changed is it appropriate to proceed with
the analysis. If, for example, current zoning does not permit a potential
highest and best use, but there is a possibility that the zoning can be changed,
the proposed use can be considered on that basis.
Legally Permissible
-------------------
Legal restrictions, as they apply to the subject property, are of two
types, i.e., private restrictions (deed restrictions, easements, etc.) and
public restrictions (zoning, building codes, environmental regulations and
historic district controls, etc.). These latter restrictions must be
investigated, to the best of our ability, because they may preclude many
potential highest and best uses.
No information regarding private restrictions affecting the subject was
uncovered in our research or provided by the client. It is assumed that only
common restrictions, such as utility easements, are in-place, which would not be
of any significant consequence to the development
<PAGE>
Highest and Best Use 49
of the site.
The subject is an approved Manufactured Housing Community by the Palm Beach
County Planning and Zoning Department. As discussed in the Zoning and Other Land
Use Controls Section of this report, the property, as developed, is a legal and
conforming use of the land and concurrency is not an issue.
Physically Possible
-------------------
The second constraint imposed on the possible use of the property is that
dictated by the physical aspects of the site itself. Size, shape and terrain of
the parcel of land affect the uses to which it can be developed. The utility of
the parcel may depend on its frontage and depth. Also considered are the
capacity and availability of public utilities. When a site's topography or
subsoil conditions make development restrictive or costly, its potential use is
adversely affected. Generally, the larger the site, the greater the potential
for achieving economies of scale or flexibility in development.
The highest and best use of a property as improved also depends on physical
considerations such as size, design and condition. The condition of the property
and its ability to continue in its current use are also relevant.
The subject site is rectangular in shape and contains a total area of 19.40
acres. The site is generally level and has adequate access frontage along the
east side of Haverhill Road, approximately three miles west of Interstate 95.
The size and shape of the site does not restrict maximum flexibility and
development, and the subject's development has made an adequate use of the site
as indicated by its density of approximately 7.73 spaces per acre. The subject
meets the physically possible criteria of this analysis.
Financially Feasible
--------------------
After determining which uses are physically possible and legally
permissible, we have eliminated many uses from consideration. Then the uses that
meet the first two criteria are analyzed further to determine which are likely
to produce an income, or return, equal to or greater than the amount needed to
satisfy operating expenses, financial obligations and capital amortization. All
uses that are expected to produce a positive return are regarded as financially
feasible.
To determine financial feasibility, we then estimate the future gross
income that can be expected from each logical use. Vacancy and collection losses
and operating expenses are then subtracted from each gross income to obtain the
likely net operating income (NOI) from each use. A rate of return on the
invested capital can then be calculated for each use. If the net revenue capable
of being generated is enough to satisfy the required rate of return on
investment and provide a return on the land, the use is financially feasible
within some price limit.
<PAGE>
Highest and Best Use 50
Maximally Productive
--------------------
Of the financially feasible uses, the use that produces the highest price,
or value, consistent with the rate of return warranted by the market for that
use is the highest and best use. To determine the highest and best use of land
as though vacant, the same rate of return is often used to capitalize income
streams from different uses into their respective values. This procedure is
appropriate if all competing uses have similar risk characteristics. If not,
differing rates of return would be required. The use that produces the highest
value is the highest and best use.
To test the highest and best use of land as though vacant or a property as
improved, an appraiser analyzes all logical, feasible alternatives. The market
usually limits the number of property uses to a few logical choices. Each
alternative use must first meet the tests of physical possibility and legal
permissibility. The uses that meet the first two tests are then analyzed to
ascertain how many financially feasible alternatives must be considered.
An appraiser must exercise caution in performing market analysis to support
an estimate of highest and best use. Although a given site may be particularly
well suited for a specific use, there may be a number of other sites that are
also well suited, and some may be better suited. Therefore, the appraiser must
test the highest and best conclusion to ensure that existing and potential
competition from other sites has been fully recognized.
Highest and Best Use - Vacant Land
----------------------------------
In determining the highest and best use of the site as vacant, the most
restrictive constraint is the legal use of the site. As stated above and in the
Zoning and Other Land Use Controls section of this report, the subject is a
legal and conforming use of the site.
We have also noted that less than 1/3 of the manufactured housing
communities have over 100 spaces in Palm Beach County. Due to the non-
availability of space for immediate development, restrictive governmental impact
fees and a lack of financing for speculative projects, it is unlikely that there
will be speculative manufactured housing community development in the
foreseeable future.
Current trends in the manufactured housing sales would preclude the
development of a manufactured housing community until such time as the market
has improved. In our opinion, the highest and best use of the site, as if vacant
and available for development, would be to hold the property for future sale as
the market trends might predicate.
<PAGE>
51
Highest and Best Use
Highest and Best Use - As Improved
----------------------------------
The site is currently improved with a 150-space all age manufactured
housing and apartment community. The use of the site is a legally permissible
use under the current zoning. The subject property has been in existence as a
manufactured housing community since 1987.
The improvements are well situated on the site. The site has excellent
access from Haverhill Road. The amenities for this size and type of improvement
exceed normal standards. The use of the site is physically possible. Demand for
manufactured housing in this area is evident. As evidenced in the Income
Capitalization Approach, the property is capable of providing an acceptable
return to an owner, demonstrating the financial feasibility of the subject
property.
The property, as currently improved, is physically possible, legally
permissible, financially feasible and maximally productive. Therefore, in our
opinion, the highest and best use of the property as improved is its current use
as a 150-space all age manufactured housing and apartment community.
<PAGE>
52
VALUATION PROCESS
-----------------
There are three recognized approaches to the valuation of real property:
Cost; Income; and, Direct Sales Comparison. The appropriateness of each approach
varies with the type and age of the property under examination, as well as the
quantity and quality of applicable market data as of the appraisal date. In the
analyses and appraisal of the subject property, we have considered the positive
and negative aspects of each approach for this specific assignment.
The Cost Approach provides a value indication based on the depreciated cost
of the improvements added to land value. The Income Approach produce an estimate
of value through an economic analysis of the net income derived from the
property and is converted to a capital sum at an appropriate rate. The Sales
Comparison Approach produces an estimate of value through a comparison of
similar properties, which have been transferred in the local market.
In the analysis of a stabilized manufactured housing community, investors
are primarily concerned with cash flow to service any debt and the equity
positions. While development costs are important for developing communities,
investors assume that these costs are adequately accounted for in rental levels.
In communities where developers have made money on the sale of homes by offering
low site rents, an investor would not be willing to compensate a seller for any
more than the income to be received. The Cost Approach was not utilized due to
the subjectivity of depreciation and entrepreneurial profit estimates.
A number of positive and negative factors were believed to affect the
overall value of the subject. On the positive side, the following were
considered.
1. The subject is well located in regard to the area amenities.
2. The subject is well kept and has a high-grade amenity package.
Partially offsetting the positive influences are negative factors among
which the following was considered the most pertinent:
1. The market is competitive, with shipments down from the 1980's levels.
With the above factors in mind, the Income Capitalization Comparison and
Sales Comparison Approaches will now be discussed in detail on the following
pages.
<PAGE>
53
INCOME CAPITALIZATION APPROACH
------------------------------
As an introduction to the analysis of the subject, it is helpful to
identify the goals and objectives of both buyers and sellers of properties such
as the subject.
From the standpoint of a seller, maximum price is of course an initial
goal. Tempered by capital gains considerations and the potential for recapture
of book depreciation accruals, a seller is often forced to consider a negotiated
price that may include such concessions as interim or permanent financing.
Dictated by market forces, the rate, term, and amount of financing may be
favorable, neutral, or unfavorable with respect to the ultimate selling price.
The purchasers of investment realty naturally prefer to pay a minimum price
subject to terms. Within the goal of price minimization purchasers seek:
1. Cash flow relative to capital investment measured either on a pre-
income tax or post-income tax basis.
2. Minimal capital investment to permit leverage.
3. Equity build-up through mortgage amortization.
4. Sheltered income through accumulation of book depreciation.
5. Capital accumulation through market appreciation.
The relative importance of the above factors to an investor's formula is
difficult to quantify. Institutional investors, speculators, developers,
financial institutions, and syndicators do not uniformly apply the same
investment strategies. The location, size, tenant mix, age, absence or presence
of long term leases, assignability of existing debt, condition of the
facilities, level of occupancy, quality of management, and other related factors
are among the criteria affecting the marketability of an income-producing
property.
The first step in the Income Approach to value involves the estimate of
future net operating income to be generated by the property. The estimate of net
operating income is derived through a process of estimating the total potential
gross income (PGI) from lot rentals, less a vacancy and credit loss factor,
added to an estimate of income from other sources. The result is an effective
gross income (EGI) estimate. All expenses associated with the operation of the
property are then deducted to yield a stabilized net operating income (NOI)
estimate.
In our estimate of the stabilized net operating income, we have considered
the subject's current rent, expense levels and historical trends. We have also
considered the current rent and expenses at manufactured home communities
similar to the subject, as limited by the existing Prospectus and rental
agreement.
<PAGE>
Income Capitalization Approach 54
The subject's historical income and expenses for 1997, 1998 and 1999 have
been presented, in the table, on the following page. Although the reported
expenses do not appear unreasonable, we have also relied on market comparables.
Current income and expense information for three comparable age-restricted
manufactured home communities has also been presented in this section.
The data on the tables has been arrayed to display the "percent of total
income" and "dollar per space" figures, consistent with industry reporting
practices. We have combined some of the owners expense categories for purposes
of comparison.
Our analysis of each component of income, vacancy and credit loss and
expenses follows these tables, and has been summarized in the Reconstructed
Operating Statement found on a following page.
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
Long Lake Village - Historical Income and Expenses
Pct. of $ Per Pct. of $ Per Pct. of $ Per
1997 Income Space 1998 Income Space 1999 Income Space
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income:
Rents $458,717 82.27% $3,058.11 $433,413 78.71% $2,889.42 $481,744 80.65% $3,211.63
Apartments 82,919 14.87% 552.79 106,282 19.30% 708.55 106,200 17.78% 708.00
Miscellaneous/Other 15,954 2.86% 106.36 10,925 1.98% 72.83 9,346 1.56% 62.31
-------------------------------------------------------------------------------------------------
Total Income $557,590 100.00% $3,717.27 $550,620 100.00% $3,670.80 $597,290 100.00% $3,981.93
Expenses:
Insurance $ 9,903 1.78% 66.02 $ 3,068 0.56% 20.45 $ 5,172 0.87% 34.48
Office/Administrative 23,541 4.22% 156.94 42,293 7.68% 281.95 53,419 8.94% 356.13
Maintenance & Repair 50,788 9.11% 338.59 50,124 9.10% 334.16 64,372 10.78% 429.15
Management Expense 27,187 4.70% 174.58 26,893 4.88% 179.29 29,865 5.00% 199.10
Wages & Benefits 59,750 10.72% 398.33 56,522 10.27% 376.81 52,198 8.74% 347.99
Property Taxes 68,541 12.28% 456.34 67,905 12.33% 452.70 81,426 13.63% 542.84
Utilities 87,637 15.72% 584.25 86,204 15.66% 574.69 95,286 15.95% 635.24
Miscellaneous/Other 12,165 2.18% 81.10 205 0.04% 1.37 0 0.00% 0.00
-------------------------------------------------------------------------------------------------
Total Expenses $338,422 60.69% $2,256.15 $333,214 60.52% $2,221.43 $381,738 63.91% $2,544.92
Net Operating Income $219,168 39.31% $1,461.12 $217,406 39.48% $1,449.37 $215,552 36.09% $1,437.01
==========================================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 56
Income Analysis
---------------
The general practice in the local market is to charge a base lot rent on a
monthly basis. The base lot rate may, or may not include such services as water,
sewer, trash collection and lawn mowing. The higher base lot rents typically
include more services. The base lot rents typically generate between 90% and 99%
of the total income in a manufactured home community. At the subject, trash
collection, irrigation water and lawn mowing are included in the monthly lot
rent. As previously discussed, based on the market rent range, we are of the
opinion that the subject rent structure is within the market range for
comparable properties.
Potential Gross Income
----------------------
As any potential purchaser would incorporate a one-year forecast of
potential gross income at the existing rent levels, our analysis must, and has,
also account for this. In our forecast of total rental income, we have projected
12 months at the current rent levels, based on the current rent roll. The total
potential gross income from lot and apartment rentals is $744,133. The lot rent
rate averages $385.53 per month and the apartment rents average $646.88 per
month.
Vacancy and Credit Loss
-----------------------
Vacancy and credit loss is typically a very small percentage in an
established community, due primarily to the high cost of relocating homes. The
community is 94.8% physically occupied. As of the date of inspection, there was
one community owned home occupied by the community manager. The economic vacancy
of the manufactured home sites at the subject is currently 6.0%. In addition to
the vacancy, a small percentage for credit loss is appropriate. We have
estimated stabilized vacancy and credit loss for the manufactured home spaces at
10.0% to account for both physical and economic vacancy and credit loss. The
economic vacancy of the apartments at the subject is currently 18.75%, however
the manager indicated that historically the apartments did not remain vacant for
more than a month or two. Based on this a significant vacancy factor is not
appropriate. Additionally, a nominal factor for credit loss is appropriate. We
have estimated stabilized vacancy and credit loss for the apartments at 15.0% to
account for both physical and economic vacancy and credit loss. Total vacancy
and credit loss has been estimated to be $80,623. The effective gross income
from rentals is estimated to be $663,510.
Miscellaneous Income
--------------------
Miscellaneous income, at the subject, is derived from late check charges and
similar fees. Historically this amount has ranged from $62.31 to $106.36 per
space, decreasing annually. Based on the historical financials we have estimated
this amount at $60.00 per space, equal to $9,000 annually.
<PAGE>
Income Capitalization Approach 57
Effective Gross Income
----------------------
Effective Gross Income is derived from income based upon the current
economic rent less a vacancy and credit loss allowance for present and
anticipated income losses due to any tenant changes, added to any additional
income from miscellaneous sources. Our estimate of the stabilized effective
gross income follows:
<TABLE>
<CAPTION>
==============================================================================================
Long Lake Village
Effective Gross Income
==============================================================================================
Income:
Spaces Monthly Number Monthly Annual Vacancy & C.L. Annual
No. Type Rent Months Total Sub-Total Percent Amount Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
134 Mobile Home $385.53 12 $ 51,661 $ 619,932 10.0% (61,933) $557,939
16 Apt. Rental $646.88 12 $ 10,350 $ 124,201 15.0% (18,630) $105,571
----------------------------------------------------------------------------------------------
150 Total units $ 62,011
Gross Potential Rental Income $ 744,133
Less: Vacancy & Credit Loss $(80,623)
--------
Effective Gross Income From Rentals $663,510
Miscellaneous/Other Income $ 60.00 per unit 9,000
--------
Effective Gross Income $672,510
==============================================================================================
</TABLE>
Operating Expense Analysis
--------------------------
The following discussion addresses each of the line item expenses for the
property. We have presented the 1997, 1998 and 1999 amounts, together with the
comparable expense data, followed by our stabilized estimate of the expense. The
comparable expense information has been obtained from a number of reliable
sources and we have presented it in a summary form, on the following page, to
maintain confidentiality.
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================================
Manufactured Housing Community Comparable Operations
Pct. of $ Per Pct. of $ Per Pct. of $ Per
Spaces 99 Income Space 144 Income Space 145 Income Space
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income:
Rents $307,409 99.13% $3,105.14 $506,259 91.73% $3,515.69 $418,157 98.26% $2,883.84
Miscellaneous/Other 2,690 0.87% 27.17 45,633 8.27% 316.90 7,403 1.74% 51.06
-------------------------------------------------------------------------------------------------------
Total Income $310,099 100.00% $3,132.31 $551,892 100.00% $3,832.58 $425,560 100.00% $2,934.90
Expenses:
Insurance $ 7,592 2.45% $ 76.69 $ 13,776 2.50% $ 95.67 $ 9,963 2.34% $ 68.71
Office/Administration 10,775 3.47% 108.84 26,932 4.88% 187.03 9,506 2.23% 65.56
Maintenance & Repairs 28,337 9.14% 286.23 21,544 3.90% 149.61 36,484 8.57% 251.61
Management Expense 1,200 0.39% 12.12 20,702 3.75% 143.76 6,064 1.42% 41.82
Wages & Benefits 11,772 3.80% 118.91 29,323 5.31% 203.63 48,218 11.33% 332.54
Property Taxes 20,224 6.52% 204.28 52,310 9.48% 363.26 50,365 11.83% 347.34
Utilities 29,457 9.50% 297.55 101,780 18.44% 706.81 74,743 17.56% 515.47
Miscellaneous 0 0.00% 0.00 0 0.00% 0.00 0 0.00% 0.00
-------------------------------------------------------------------------------------------------------
Total Expenses $109,358 35.27% $1,104.62 $266,367 48.26% $1,849.77 $235,343 55.30% $1,623.06
Net Operating Income $200,741 64.73% $2,027.69 $285,525 51.74% $1,982.81 $190,217 44.70% $1,311.84
================================================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 59
Insurance charges are property specific based on the location of the
property and the amenity package. Insurance charges varied over the last three-
year period. Insurance costs have ranged from $20.45 per space in 1998 to $66.02
per space in 1997. The 1999 insurance expense totaled $34.48 per space. The
comparable expense data indicated a range from $68.71 to $95.67 per space. We
have used $35.00 per space based on the historical amounts, which is $5,250
annually.
Insurance
<TABLE>
<CAPTION>
========================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $9,903 $3,068 $5,172 $7,592 $13,776 $9,963 $5,250
--------------------------------------------------------------------------------------------------------
% EGI 1.78% 0.56% 0.87% 2.45% 2.50% 2.34% 0.78%
--------------------------------------------------------------------------------------------------------
$/Space $66.02 $20.45 $34.48 $76.69 $ 95.67 $68.71 $35.00
========================================================================================================
</TABLE>
Office/Administrative expense is project specific due to varying
classifications of expense categories. At the subject, this expense includes the
costs associated with the operation of the office, such as telephone, supplies,
licenses, dues and subscriptions and advertising expenses. We have attempted to
include like items in this category for both the subject and the expense
comparables. The expense comparables indicated a range for this category from
$65.56 to $187.03 per space. The historical data has increased annually over the
last three years and was above the range of the comparable expenses. We have
placed greatest reliance on the historical data, estimating administrative
expense at $300.00 per space or $45,000 per year.
Office/Administration
<TABLE>
<CAPTION>
========================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $23,541 $42,293 $53,419 $10,775 $26,932 $9,506 $45,000
--------------------------------------------------------------------------------------------------------
% EGI 4.22% 7.68% 8.94% 3.47% 4.88% 2.23% 6.69%
--------------------------------------------------------------------------------------------------------
$/Space $156.94 $281.95 $356.13 $108.84 $187.03 $65.56 $300.00
========================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 60
Maintenance and Repairs expense is project specific based on the age and
condition of the property. Many properties expense capital items rather than
capitalizing them. This can result in abnormal spikes in the expense amounts in
certain years.
Historically, maintenance and repair expenses have varied annually from
$334.16 per space in 1998 to $429.15 per space in 1999. Our inspection revealed
the property to be in good overall condition, with no items of deferred
maintenance noted.
The expense comparables indicate a lower range of expense in this category
from $149.61 per space (Comparable Number 2), to $286.23 per space (Comparable
Number 1). Our stabilized estimate of this expense is $370.00 per space or
$55,500 annually, based on the historical data.
Maintenance and Repairs
<TABLE>
<CAPTION>
========================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $50,788 $50,124 $64,372 $28,337 $21,544 $36,484 $55,500
--------------------------------------------------------------------------------------------------------
% EGI 9.11% 9.10% 10.78% 9.14% 3.90% 8.57% 8.25%
--------------------------------------------------------------------------------------------------------
$/Space $338.59 $334.16 $429.15 $286.23 $149.61 $251.61 $370.00
========================================================================================================
</TABLE>
Management Fee has historically ranged from 4.70% to 5.00% of effective
gross income at the subject. Management expense was charged at all three
comparables and ranged from 0.39% for Comparable One to 3.75%, for Comparable
Two. The overall market range for management fees was found to range from
approximately 3.0% to 5.0%.
We have estimated a fee of 5.0% of effective gross income, considered
adequate for the management of a property of this size, in this location.
Applying this percentage to the Effective Gross Income Estimate produces an
annual amount of $33,625 or $224.17 per space per year.
<PAGE>
Income Capitalization Approach 61
Wages and Benefits expense has decreased annually from $398.33 per space in
1997, to $347.99 per space in 1998. The 1998 wages and benefits expense amounted
to $376.81 per space. The comparables have indicated a lower range from $118.91
per space for Comparable Number One to $332.54 per space for Comparable Number
Three.
This category includes all of the costs associated with the staffing
including payroll and payroll taxes and any health and/or life insurance
benefits. The manager would typically receive a rent-free home and this is the
case at the subject property. Our estimate of this expense has been based on the
historical amounts weighed by the comparables. Our estimate of $52,500 annually
is the equivalent of $350.00 per space or 8.17% of the Effective Gross Income
estimate.
Wages and Benefits
<TABLE>
<CAPTION>
========================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $59,750 $56,522 $52,198 $11,772 $29,323 $48,218 $52,500
--------------------------------------------------------------------------------------------------------
% EGI 10.72% 10.27% 8.74% 3.80% 5.31% 11.33% 7.81%
--------------------------------------------------------------------------------------------------------
$/Space $398.33 $376.81 $347.99 $118.91 $203.63 $332.54 $350.00
========================================================================================================
</TABLE>
Property Taxes represent the annual real estate tax liability of the
property. This category is project specific due to location and taxing
authority. We have not used the expense comparables for the estimate this
expense.
In our analysis, we have relied on the historical tax data as presented and
discussed in the Assessment and Taxes section of this report. Our stabilized
estimate of the owner's annual property tax liability is $68,047, corresponding
to the forecast November 2000 amount. This is equivalent to $453.65 per space or
10.12% of the Effective Gross Income estimate.
<PAGE>
Income Capitalization Approach 62
Utilities expense is also project specific, due to the number and type of
services that may be included in the rent. In this case, this line item includes
trash collection and irrigation water for the residents and the cost of the
common area utilities. We have placed greatest reliance on the historical data,
as it is the best indicator for this expense at the subject. The expense
comparables include some utilities in the lot rents. Historically, this expense
has varied annually. We have estimated utilities expense at $630.00 per space or
$94,500 annually. This is equivalent to 14.05% of the Effective Gross Income
estimate.
Utilities
<TABLE>
<CAPTION>
========================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $87,637 $86,204 $95,286 $29,457 $101,780 $74,743 $94,500
--------------------------------------------------------------------------------------------------------
% EGI 15.72% 15.66% 15.95% 9.50% 18.44% 17.56% 14.05%
--------------------------------------------------------------------------------------------------------
$/Space $584.25 $574.69 $635.24 $297.55 $ 706.81 $515.47 $630.00
========================================================================================================
</TABLE>
Reserves are not typically accounted for by property owners. This category
represents the inclusion of set-asides for major recurring or capital type
expenditures experienced periodically by any property. This item is typically
accounted for either on a dollar per space ($20.00 to $30.00) or a percentage
(0.5% to 1.0%) of effective gross income. We have used $25.00 per space per
year, which should be adequate to cover future capital costs. This equates to
$3,750 annually.
<PAGE>
Income Capitalization Approach 63
Expense Summary
---------------
To summarize, we have estimated the stabilized total operating expenses for
the subject to be $358,173. This estimate is equal to 53.26% of the Effective
Gross Income (EGI) estimate.
Expense Summary
<TABLE>
<CAPTION>
========================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $338,422 $333,214 $381,738 $109,358 $266,367 $235,343 $358,173
--------------------------------------------------------------------------------------------------------
% EGI 60.69% 60.52% 63.91% 35.27% 48.26% 55.30% 53.26%
--------------------------------------------------------------------------------------------------------
$/Space $2,256.15 $2,203.51 $2,544.92 $1,104.62 $1,849.77 $1,623.06 $2,387.82
========================================================================================================
</TABLE>
As shown on the preceding table, expenses have historically represented
between 60.52% (1998) and 63.91% (1999) of the Effective Gross Income, and has
varied each year. The expense comparables, as summarized above, indicated a
lower and wider range between 35.27% (Comparable Number 1) and 55.30%
(Comparable Number 3). Our estimate of total expenses is equal to 53.26% of the
estimated EGI. It should be noted that the historical expenses included no
provision for a reserve for capital expenditures, which we have included in our
estimate.
Our estimate of net operating income is $314,337. We have presented our
stabilized estimate of income and expenses on the following page.
<PAGE>
Income Capitalization Approach 64
================================================================================
Long Lake Village
Stabilized Operating Statement
% of $ per
Amount EGI Space
================================================================================
Total Effective Gross Income $ 672,510 100.00% $ 4,483.40
Expenses
Insurance $ 5,250 0.78% $ 35.00
Office 45,000 6.69% 300.00
Maintenance & Repairs 55,500 8.25% 370.00
Management Expense 33,625 5.00% 224.17
Wages & Benefits 52,500 7.81% 350.00
Property Taxes 68,047 10.12% 453.65
Utilities 94,500 14.05% 630.00
Reserves 3,750 0.56% 25.00
---------------------------------
Total Expenses $ 358,173 53.26% $ 2,387.82
Net Operating Income $ 314,337 46.74% $ 2,095.58
================================================================================
<PAGE>
Income Capitalization Approach 65
Capitalization Discussion
-------------------------
Two alternative methods of valuation are employed in the Income Approach.
Direct capitalization is a method of converting net operating income into market
value, employing a "capitalization" rate based upon market perimeters. This
approach is particularly applicable to properties with a stable income stream,
or in cases where income, and consequently value, can be projected to increase
at a constant or stable rate.
An alternative valuation method is yield capitalization, which employs a
year-by-year projection of income and expenses, recognizing rent changes and the
cost of improvements as they occur. Yield capitalization, also known as
Discounted Cash Flow Analysis, is considered most appropriate in the valuation
of properties with uneven income streams. Since investors are unwilling to pay
for any upside from vacant units, fully developed manufactured home communities
are typically valued by direct capitalization, based on existing income.
Direct Capitalization
---------------------
Direct capitalization of net operating income by an overall capitalization
rate extracted from the market provides an excellent indication of market value.
Purchasers of manufactured home communities most often utilize this method. This
method is the most easily understood, closely related to the market, and
convincing if the overall rates abstracted from recent sales are from comparable
sale properties and accurate income data are available. Income data was
available from all of the comparable sale properties included in this report.
Market Data
-----------
The comparable sale data shown in the Sales Comparison section of this
report indicated an overall capitalization rate between 8.51% and 9.79%. Our
analysis of this data indicated a narrow range in overall capitalization rates,
which tend to be influenced by the size of the community, its age and condition,
occupancy, amenity package and location.
Comparable Sales
==================================================================
Sale Sale Date Overall
Number Capitalization Rate
------------------------------------------------------------------
1 03/97 9.79%
------------------------------------------------------------------
2 06/98 9.17%
------------------------------------------------------------------
3 01/99 8.51%
------------------------------------------------------------------
4 06/97 9.53%
------------------------------------------------------------------
5 03/97 9.30%
==================================================================
As discussed in the marketability section of this report, our sources
indicated that
<PAGE>
Income Capitalization Approach 66
institutional investors required 8.5% to 9.5% overall capitalization rates for
projects in the 200 space range and were the most restrictive in pricing due to
stringent criteria. We also found that REIT's were bidding rates down even
further. Our information revealed that manufactured home community cooperatives
and associations would more likely accept slightly lower overall rates, while
the small investor would require a slightly higher rate. We have also discussed
the fact that the manufactured home community market in Palm Beach County is
sophisticated and the subject at 134 spaces is one of the large communities in
the county.
The comparable sale data represents recent sales of properties, similar in
many respects to the subject. Sale Comparable Number One is an older larger
community in a similar market with similar amenities. Sale Comparable Number Two
is an older larger property, with similar amenities, also located in a similar
market. This sale indicated an overall rate of 9.17%. Sale Comparable Number
Three is a larger community older than the subject with a slightly superior
amenity package. Sale Comparable Four is a larger, older property located in an
inferior market. Sale Comparable Five is a similar aged property with similar
amenities in a lower rent market.
Based on the comparison of the sale data to the subject, the overall rate
for the subject would likely be in the 8.5% to 9.5% range, as the subject is
considered attractive to all investors and interest rates are still low. We
have concluded a rate of 9.00%, as the subject is a 134 space, well-occupied
community, located in a sophisticated market area. The subject would appeal to
a large number of investors.
Debt Coverage Ratio Method
--------------------------
As an alternative to market-derived overall capitalization rates, we have
developed an overall rate through the Debt Coverage Ratio analysis. The
parameters for this calculation are summarized below.
The Debt Coverage Ratio Method of income capitalization essentially
measures the risk involved in mortgage lending. Its usefulness to mortgage
underwriting takes the form of establishing a degree of safety with a given set
of loan terms.
Mortgage underwriting typically focuses on positive debt coverage, (net
operating income/annual mortgage debt service or NOI/ADS), rather than market
value, because a negative cash flow, after debt service, may indicate the
probability that a mortgage loan could be in jeopardy. Accordingly, if the
greatest portion of the property's value is debt capital, as established by the
loan-to-value ratio, annual debt coverage in underwriting is a major
consideration. The Debt Coverage Ratio method is therefore market based and
direct.
By multiplying this risk factor by the projected mortgage payment
requirement an estimate of the required overall rate to satisfy the lender's
minimum risk requirements can be derived. The formula for this procedure is: M
x f x DCR = R, where;
<PAGE>
Income Capitalization Approach 67
M = Loan to Value Ratio
f = Mortgage Constant
DCR = Debt Coverage Ratio
R = Overall Rate
In order to establish the criteria for the development of the Debt Coverage
Ratio Method, we have conducted a recent survey of local lenders. The results
of our survey have been summarized on the following table.
====================================================================
Contact Gene Fogarty Mike McCoy
-------------------------------------------------------------------
Bank NationsBank Community Bank
-------------------------------------------------------------------
Type Of Lender Conventional Conventional
-------------------------------------------------------------------
Nominal Mortgage Interest Rate 7.25% to 7.50% 7.25% to 7.50%
-------------------------------------------------------------------
Amortization Period 15 - 30 Years 15 - 30 Years
-------------------------------------------------------------------
Loan Term 3 - 7 Years 5 - 10 Years
-------------------------------------------------------------------
Debt Coverage Ratio 1.20 - 1.25 1.20 - 1.25
-------------------------------------------------------------------
Loan To Value Ratio 75% 75%
===================================================================
Our survey of local lenders indicated an annual interest rate of 7.50%.
A mortgage loan would be available at 75% of the market value, based on a
15-year amortization schedule. Based on these criteria the indicated annual
interest rate constant is 9.6671%. Additionally, our survey indicated that a
minimum debt coverage ratio (DCR) of 1.25 to 1.00 would likely be required for a
property similar to the subject. An overall capitalization rate, based on these
assumptions, has been developed as shown below.
<TABLE>
<CAPTION>
=================================================================================
M F DCR OAR
X X =
Loan to Value Ratio Mortgage Constant Debt Coverage Ratio Overall Rate
---------------------------------------------------------------------------------
<S> <C> <C> <C>
0.75 0.96671 1.25 0.090629
---------------------------------------------------------------------------------
Rounded 9.1%
=================================================================================
</TABLE>
The Debt Coverage Ratio method indicated a capitalization rate based upon
financing by local banks. However, as the popularity of manufacturing housing
community investments has increased, alternate sources of financing have become
available through insurance companies and conduit programs.
<PAGE>
Income Capitalization Approach 68
The presence of institutional investors in the market and few quality real
estate investments has bid down rates on manufactured home communities.
Investors have become more creative in their acquisition strategies in order to
compete. Therefore, actual transactions in the marketplace better demonstrate
investor perceptions of yields on manufactured home community investments.
The rate developed via the Debt Coverage Ratio method is slightly lower
than the rate extracted from the market data, and is considered supportive of
the market rate. We have estimated an overall capitalization rate of 9.00% for
the subject and capitalized the net income of $314,337. The value conclusion
via the income approach is summarized as follows:
$314,337 / .0900 = $3,492,633
Rounded to $3,500,000
<PAGE>
69
SALES COMPARISON APPROACH
-------------------------
The fundamental premise of the Sales Comparison Approach is the concept
that the analysis of sales of reasonably similar properties provides an
appraiser with empirical data from which observations and conclusions about the
property being appraised can be made. Proper application of the approach
requires that:
1. Only market transactions be weighed, and the data of each transaction
be confirmed to the greatest extent possible.
2. The degree of comparability of each sale to the subject be considered;
differences in physical, functional, and economic characteristics be
noted; and adjustments for the differences be made.
3. The value conclusion be consistent with the analysis of the sales data.
For a conveyance to qualify as a "market transaction", four factors must be
present:
1. The conveyance must be "arm's length"; that is, it must be between two
non-related parties.
2. Neither the buyer nor the seller should have been under compulsion to
act.
3. The property should be available to the class of purchasers best able
to utilize the facility.
4. The price must be expressed in the equivalent of cash, adjusted for any
special financing, concessions, or terms.
For any class of real estate, the market area for comparative data must
reflect the area prospective purchasers would consider. Comparability is also a
function of the physical character of the asset to be appraised. Classes of
real estate in which physical specifications are standardized, or in which scale
is small, and/or in which the commodity has achieved uniform market recognition
require that the sales data considered closely resemble the subject. As
specifications become more complex, as scale increases, and as market
recognition declines, the physical similarity of the sales data and the subject
tends to decline.
To judge the degree of comparability that exists between the sales selected
for analysis and the subject, several guidelines were applied.
1. Each sale is in the same market as the subject. To the extent that a
market is a meeting place for buyers and sellers of real estate of a
given type, the boundaries of the market are set by the participants in
merchandising and absorbing competitive properties and are economic not
purely physical or geographic.
2. Physical characteristics of the subject and comparables are similar.
<PAGE>
Sales Comparison Approach 70
3. The functional adequacy of each sale property and the subject are
competitive in terms of the ability of each to support similar
functions.
To draw a conclusion from the analysis of the sales data, a unit of
comparison has been selected. The calculation of a unit of comparison provides
a common denominator by which the market sales can be related to each other and
to the subject property. The commonly accepted unit of comparison in the
valuation of a manufactured home community is the sale price per space. This
unit of comparison emphasizes the contribution of the improvements, and the
contribution of the land is merged into the unit sale price.
While a diverse array of transactions was initially considered, the sales
selected for direct comparison to the subject are those transactions that are
most similar to the subject. For features that are dissimilar, adjustments have
been made leading to an indication of the price at which the subject could be
expected to sell. In considering adjustments, relevant factors were considered
including:
1. Nature of surrounding development.
2. Relative size.
3. Availability of competing properties.
4. Effect of time on selling prices.
5. Age and condition of the improvements.
6. Amenities and occupancy.
In our search for comparable sales, we excluded age-restricted communities
since they tend to have a less transient occupancy base and typically trade at
lower capitalization rates than all age communities. Based on our investigation,
the following five sales are the most significant transactions for direct
comparison with the subject. All are recent transactions and are indicative of
the actions of the manufactured housing community market. Meanwhile, we expanded
our sales search geographically in an attempt to provide the most relevant
market data to the subject property.
The sales occurred between March 1997 and January 1999. The properties
ranged in size from 185 to 499 spaces. The sale prices, on a per space basis,
ranged from $11,676 to $30,862. The Effective Gross Income Multipliers (EGIM)
ranged from 4.97 to 7.35 and the indicated overall rates, as previously
mentioned, ranged from 8.51% to 9.79%. The following pages detail each of the
improved sales, following which we have presented a summary of the pertinent
data.
<PAGE>
Sale Comparable Number One 71
Coral Lake Mobile Home Park
4701 Lyons Road
Coconut Creek, Broward County, Florida
[PHOTO APPEARS HERE]
Sale Date: March 1997
Property Description
--------------------
Size/Type: 235-space all age manufactured housing community
Utilities: All Public
Land Description: Generally level, irregularly shaped 29.25-acre parcel
of land with adequate access. Improved with asphalt-
paved streets and streetlights.
Improvements/Amenities: Clubhouse, pool, playground and laundry.
Year Built/Condition: 1972/Good
<PAGE>
Sale Comparable Number One 72
Income Data
-----------
Annual Occupancy: 95.0% (223 of 255 spaces)
Average Lot Rent: $363.88
Effective Gross Income: $1,073,850
Expenses: $437,444 (40.7% of the effective gross income)
Net Income: $636,406
Sale Data
---------
Sale Price: $6,500,000
Cash Equivalent Price: $6,500,000
Grantor: Whitcomb, Inc.
Grantee: Newport Coral Lake Associates, Inc.
Financing Terms: Cash to Seller.
Sales History
(Past 3 Years): None
Verification Source: Lorraine Leithiser, Broker
Date: March 17, 1997
Comparison Data
---------------
Sale Price/Space: $27,660
Effective Gross Income
Multiplier (EGIM): 6.05
Overall Capitalization
Rate (OAR): 9.79%
Comments: This good quality all age community is located in
northern Broward County.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
--------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
================================================================================
<PAGE>
Sale Comparable Number Two 73
Imperial Estates Mobile Home Park
5601 North State Road 7
Fort Lauderdale, Broward County, Florida
[PHOTO APPEARS HERE]
Sale Date: June 1998
Property Description
--------------------
Size/Type: 261-space all age manufactured housing community
Utilities: All Public
Land Description: Generally level, irregularly shaped, parcel of land
with adequate access. Improved with asphalt-paved
streets and streetlights.
Improvements/Amenities: Clubhouse, pool, playground and shuffleboard.
Year Built/Condition: 1971/Average
<PAGE>
Sale Comparable Number Two 74
Income Data
-----------
Annual Occupancy: 96.9% (253 of 261 spaces)
Average Lot Rent: $372.00
Effective Gross Income: $1,091,720
Expenses: $357,770 (32.8% of the effective gross income)
Net Income: $733,950
Sale Data
---------
Sale Price: $8,000,000
Cash Equivalent Price: $8,000,000
Grantor: Stanley R. Garris
Grantee: Halliday Family Corporation
Financing Terms: Cash to seller.
Sales History
(Past 3 Years): None noted
Verification Source: B. J. Liner, Representative of Grantor
Date: November 9, 1998
Comparison Data
---------------
Sale Price/Space: $30,651
Effective Gross Income
Multiplier (EGIM): 7.33
Overall Capitalization
Rate (OAR): 9.17%
Comments: This park was converted from an age restricted
community to an all age community two years ago and
approximately 90% of the residents are senior
citizens.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
--------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
================================================================================
<PAGE>
Sale Comparable Number Three 75
Country Lakes Mobile Home Park
6800 Northwest 39/th/ Avenue
Coconut Creek, Broward County, Florida
[PHOTO APPEARS HERE]
Sale Date: January 1999
Property Description
--------------------
Size/Type: 499-space all age manufactured housing community
Utilities: All Public
Land Description: Level 82-acre parcel of land with adequate access and
drainage canals. Improved with asphalt-paved streets
and streetlights.
Improvements/Amenities: Clubhouse, two swimming pools, shuffleboard, tennis
courts, laundry building and playground.
Year Built/Condition: 1970/Good
<PAGE>
Sale Comparable Number Three 76
Income Data
-----------
Annual Occupancy: 90.4% (451 of 499 spaces)
Average Lot Rent: $382.80
Effective Gross Income: $ 2,026,471
Expenses: $758,031 (37.41% of the effective gross income)
Net Income: $ 1,268,440
Sale Data
---------
Sale Price: $14,900,000
Cash Equivalent Price: $14,900,000
Grantor: NMG Joint Venture
Grantee: Hometown America
Financing Terms: Cash to Seller.
Sales History
(Past 3 Years): None
Verification Source: Rich Cline, Buyer's representative
Date: February 1999
Comparison Data
---------------
Sale Price/Space: $30,862
Effective Gross Income
Multiplier (EGIM): 7.35
Overall Capitalization
Rate (OAR): 8.51%
Comments: This all age community has adequate amenities and
good access to Interstate 95 and the Florida
Turnpike.
===============================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-------------------------------------------------------------------------------
Similar Similar Similar Similar Superior Similar Similar
===============================================================================
<PAGE>
Sale Comparable Number Four 77
Village of Tampa
1201 Skipper Road
Tampa, Unincorporated Hillsborough County, Florida
[PHOTO APPEARS HERE]
Sale Date: June 1997
Property Description
--------------------
Size/Type: 463-space all age manufactured housing community
Utilities: All Public.
Land Description: Level, irregularly shaped 62.4-acre parcel of land with
adequate access.
Improvements/Amenities: Clubhouse, two pools, playground, basketball court,
shuffleboard courts, storage area and lakes.
Year Built/Condition: 1972/Good
<PAGE>
Sale Comparable Number Four 78
Income Data
-----------
Annual Occupancy: 90.9%(421 of 463 spaces) at time of sale
Average Lot Rent: $240.08
Effective Gross Income: $1,450,044 (Buyer's Pro-forma)
Expenses: $763,548 (52.7% of the effective gross income)
Net Income: $686,496
Sale Data
---------
Sale Price: $7,200,000
Cash Equivalent Price: $7,200,000
Grantor: Village Tampa Associates, Ltd.
Grantee: Brand-Broadway Associates, LP.
Financing Terms: Cash to seller.
Sales History
(Past 3 Years): None noted
Verification Source: Confidential
Date: February 1999
Comparison Data
---------------
Sale Price/Space: $15,551
Effective Gross Income
Multiplier (EGIM): 4.97
Overall Capitalization
Rate (OAR): 9.53%
Comments: This is a good quality all age community located in
the northern portion of Tampa.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
--------------------------------------------------------------------------------
Similar Similar Similar Similar Superior Similar Similar
================================================================================
<PAGE>
Sale Comparable Number Five 79
Golden Hills
7865 West Highway 40
Ocala, Unincorporated Marion County, Florida
===================================================================
Photo Not Available
===================================================================
Sale Date: March 1997
Property Description
--------------------
Size/Type: 185-space all age manufactured housing community
Utilities: On-site well and wastewater treatment plant.
Land Description: Level, irregularly shaped 32.11-acre parcel of land
with adequate access.
Improvements/Amenities: Clubhouse, pool and shuffleboard.
Year Built/Condition: 1984/Good
<PAGE>
Sale Comparable Number Five 80
Income Data
-----------
Annual Occupancy: 89.2% (170 of 185 spaces) at time of sale
Average Lot Rent: $159.39
Effective Gross Income: $325,992 (Buyer's Pro-forma)
Expenses: $125,141 (38.4% of the effective gross income)
Net Income: $200,851
Sale Data
---------
Sale Price: $2,160,000
Cash Equivalent Price: $2,160,000
Grantor: H & S Real Estate Company, Ltd.
Grantee: Lakeworth MHP, Ltd.
Financing Terms: Cash to seller.
Sales History
(Past 3 Years): None noted
Verification Source: Confidential, Owner's Representative
Date: May 1, 1997
Comparison Data
---------------
Sale Price/Space: $11,676
Effective Gross Income
Multiplier (EGIM): 6.63
Overall Capitalization
Rate (OAR): 9.30%
Comments: The seller paid for construction of a new clubhouse.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
--------------------------------------------------------------------------------
Inferior Similar Similar Similar Similar Similar Similar
================================================================================
<PAGE>
<TABLE>
<CAPTION>
Summary Of Sale Comparables
==================================================================================================================================
No. Name/Location Sale Price/ Total Price/ Average E.G.I.M./E. O.A.R.
Sale Date Spaces/ Space Lot Rent xpense %
Occupancy
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Coral Lake Mobile Home Park $ 6,500,000 235/ $27,660 $ 363.88 6.05/ 9.79%
4701 Lyons Road March 1997 95.0% 40.7%
Coconut Creek,
Broward County, Florida
----------------------------------------------------------------------------------------------------------------------------------
2 Imperial Estates Mobile Home Park $ 8,000,000 261/ $30,651 $ 372.00 7.33/ 9.17%
5601 North State Road 7 June 1998 96.9% 32.8%
Fort Lauderdale,
Broward County, Florida
----------------------------------------------------------------------------------------------------------------------------------
3 Country Lakes Mobile Home Park $15,400,000 499/ $30,862 $ 382.80 7.35/ 8.51%
6800 Northwest 39/th/ Avenue January 1999 90.4% 37.4%
Coconut Creek,
Broward County, Florida
----------------------------------------------------------------------------------------------------------------------------------
4 Village of Tampa $ 7,200,000 463/ $15,551 $ 240.08 4.97/ 9.53%
1201 Skipper Road June 1997 90.9% 52.7%
Tampa, Unincorporated
Hillsborough County, Florida
----------------------------------------------------------------------------------------------------------------------------------
5 Golden Hills $ 2,160,000 185/ $11,676 $ 159.39 6.63/ 9.30%
7865 West Highway 40 March 1997 89.2% 38.4%
Ocala, Unincorporated
Marion County, Florida
==================================================================================================================================
</TABLE>
<PAGE>
[COMPARABLE SALES MAP APPEARS HERE]
<PAGE>
83
Sales Comparison Approach
As previously stated, the Sales Comparison Approach involves investigating
recent transfers of properties similar to the subject. The properties, which
have been compared to the subject, have been discussed below:
Sale Comparable Number One is Coral Lake Mobile Home Park in Coconut Creek.
This 235-space all age community sold for $6,500,000 in March 1997. The price
equates to a sale price per space of $27,660. Based on an effective gross income
of $1,073,850, the EGIM was 6.05. The expenses represented 40.7% of the
effective gross income and the indicated overall capitalization rate was 9.79%,
based on a net operating income of $636,406. This community was 95.0% occupied
at the time of sale with 223 of the 255 spaces leased.
Sale Comparable Number Two is Imperial Estates Mobile Home Park in Fort
Lauderdale. This 261-space all age community sold for $8,000,000 in June 1998.
The price equates to a sale price per space of $30,651. Based on an effective
gross income of $1,091,720, the EGIM was 7.33. The expenses represented
approximately 32.8% of the effective gross income and the indicated overall
capitalization rate was 9.17%, based on a net operating income of $733,950. This
community was 96.9% occupied at the time of sale with 253 of the 261 spaces
leased.
Sale Comparable Number Three is Country Lakes Mobile Home Park in Coconut
Creek. This 499-space all age community sold in January 1999 for $14,900,000.
The price equates to a sale price per space of $30,862. Based on the Buyer's
Pro-forma, the effective gross income of $2,026,471 indicated an EGIM was 7.35.
The expenses were estimated at 37.4% of the effective gross income and the
indicated overall capitalization rate was 8.51%, based on a net operating income
of $1,268,440. This community is 90.4% occupied with 451 of the 499 spaces
leased.
Sale Comparable Number Four is Village of Tampa in Tampa. This 463-space
all age community sold for $7,200,000 in June 1997. This price equates to a sale
price per space of $15,551. Based on the Buyer's Pro-forma the effective gross
income of $1,450,044 indicated an EGIM was 4.97. The expenses were estimated at
52.7% of the effective gross income and the indicated overall capitalization
rate was 9.53%, based on a net operating income of $686,496. This community was
90.9% occupied at the time of sale with 421 of the 463 spaces leased.
Sale Comparable Number Five is Golden Hills in Ocala. This 185-space all
age community sold for $2,160,000 in March 1997. This price equates to a sale
price per space of $11,676. Based on the Buyer's Pro-forma the effective gross
income of $325,992 indicated an EGIM was 6.63. The expenses were estimated at
38.4% of the effective gross income and the indicated overall capitalization
rate was 9.30%, based on a net operating income of $200,851. This community was
89.2% occupied at the time of sale with 170 of the 185 spaces leased.
All of the sales were fee simple transactions, with abnormal financing
reflected in the cash equivalent price. There were no abnormal sale conditions
known to have occurred and all
<PAGE>
84
Sales Comparison Approach
of the sales represent transactions that have taken place over an eighteen-month
period, having traded under similar market conditions.
Effective Gross Income Multiplier
---------------------------------
Other adjustments, typically considered, are location, amenities, age and
condition, occupancy, etc., and are reflected in the average lot rent. A tenant
is typically willing, absent other factors, to pay more lot rent for a better
located, newer community. This also holds true for amenities, age and other
factors. The average lot rent reflects, in most cases, the market perception of
a property's position in the marketplace. It is also typical that lot rent
increases contribute to increases in net operating income. Alternatively, we
have employed the effective gross income multiplier (EGIM), in this analysis.
The Effective Gross Income Multiplier for the comparable sale properties
ranged between 4.97 and 7.35. As previously discussed, the EGIM is essentially a
function of the average lot rent. The average lot rent is a function of the
physical aspects of the property, such as age and condition, location and
amenities. EGIM's also reflect the market's perception of the potential for
future rent increases.
The subject is an established, age-restricted community, with a good
location and access. There is a history of good occupancy and the property and
improvements were observed to be in good overall condition. There is adequate
maintenance to maintain the current condition of the community. A rent increase
of $11.00 per space went into effect January 1, 2000 and our analysis
incorporates this increase. The rent levels have been shown to be within the
indicated market range. The expenses at the subject are projected to be 53.26%,
which is just above the range of expense ratios for the comparable sales.
Based on these considerations, we have concluded an EGIM in the lower
portion of the indicated range, processing the subject's Effective Gross Income
of $672,510 with an EGIM of 5.30.
$672,510 x 5.30 = $3,564,303
Rounded $3,600,000
On a per space basis, our estimate of value is the equivalent of $24,000.
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
<PAGE>
85
Sales Comparison Approach
prices, the Net Operating Income/Space (NOI/Space) reflects, in most cases, the
market perception of a property's position in the marketplace. Since investors
are mainly concerned with cash flow to service debt, the net operating income
generating capability of a particular community can be used for comparison
purposes. Typically, the higher the NOI/Space for a community, the higher the
per space sales price. The subject has a NOI/Space of $1,994.40 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
<TABLE>
<CAPTION>
================================================================================
COMP 1 COMP 2 COMP 3 COMP 4 COMP 5 SUBJECT
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NOI/Space $ 2,708 $ 2,812 $ 2,542 $ 1,483 $ 1,086 $1,994
--------------------------------------------------------------------------------
Price/Space $27,660 $30,651 $30,862 $15,551 $11,676 N/A
--------------------------------------------------------------------------------
Percent
Adjustment -22.62% -25.48% -17.56% +41.33% +93.02% N/A
--------------------------------------------------------------------------------
Adjusted
Price/Space $21,403 $22,842 $25,442 $21,979 $22,536 N/A
================================================================================
</TABLE>
After adjustments, the indicated range is from $21,403 to $25,442 per
space. We have concluded towards the lower portion of the range giving equal
weight to all of the comparables. We concluded $22,500 per space.
Thus, 150 Spaces x $22,500/Space is: $3,375,000
Rounded $3,400,000
This value is slightly lower than the indication from the EGIM method and
considered mutually supportive. We have concluded $3,500,000 via the sales
comparison approach.
<PAGE>
86
FINAL ESTIMATE OF VALUE
-----------------------
The two approaches to value applied in the subject analysis yielded these
conclusions:
Income Capitalization Approach $3,500,000
Sales Comparison Approach $3,500,000
Depending on the circumstances of an appraisal, the two approaches to value
apply to various degrees. The income capitalization approach indicates the
amount at which a prudent investor might be interested in acquiring the
property. The sales comparison approach reflects demand and reasonable selling
price expectancy as evidenced by sales of similar properties.
In the reconciliation, we reviewed each approach to value (a) to ascertain
the reliability of the data and (b) to weight the approach that best represented
the actions of typical users and investors in the marketplace.
The income capitalization approach depends on the principles of
substitution and anticipation. This approach postulates that the value of a
property derives from the net income the property will produce during its
economic life. Investors in the market predicate their decisions on economic
factors oriented to the market and concern themselves with net income and its
durability. The income capitalization approach synthesizes the capitalized
return to, and of, the improvements and to the land. In this case, the
availability of sufficient reliable and supportable historical data for the
subject, made the income capitalization approach a reliable gage of the market
value of the subject.
The sales comparison approach uses a number of value indicators, both
physical and economic, including investors' strategies and attitudes reflected
in documented market transactions. The principle of substitution is the basis of
this approach, which states that a prudent investor will pay no more to buy a
property than the cost to buy a comparable substitute property. In the valuation
of the subject property, the sales comparison approach was considered reliable.
Given the relative homogeneity of the locations, the availability of market
data, we have emphasized this approach in the valuation.
The two approaches reflect the same value. Our estimate of value has been
based on the Income Approach, as buyers are most concerned with cash flow to
service debt. Our opinion of the market value of the subject property, based on
a reasonable exposure period of six months, as of May 1, 2000 is:
- THREE MILLION FIVE HUNDRED THOUSAND DOLLARS -
($3,500,000)
<PAGE>
87
CERTIFICATION
-------------
We certify that, to the best of our knowledge and belief:
. The statements of fact in this report are true and correct.
. The reported analyses, opinions, and conclusions are limited only by
the reported assumptions and limiting conditions and are our personal,
impartial and unbiased professional analyses, opinions, and
conclusions.
. We have no present or prospective interest in the property that is the
subject of this report, and no personal interest with respect to the
parties involved.
. We have no bias with respect to the property that is the subject of
this report or to the parties involved with this assignment.
. Our engagement in this assignment was not contingent upon developing
or reporting predetermined results.
. Our compensation for completing this assignment is not contingent upon
the development or reporting of a predetermined value or direction in
value that favors the cause of the client, the amount of the value
opinion, the attainment of a stipulated result, or the occurrence of a
subsequent event directly related to the intended use of this
appraisal.
. Our analysis, opinions, and conclusions were developed, and this
report has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice.
. The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
. As of the date of this report, John H. Whitcomb, MAI, CCIM has
completed the requirements under the continuing education program of
the Appraisal Institute.
. John H. Whitcomb, MAI, CCIM and William G. Trask have made a personal
inspection of the property that is the subject of this report.
. No one provided significant professional assistance to the persons
signing this report.
. We are in compliance with the competency provisions of the Uniform
Standards of professional Appraisal Practice of the Appraisal
Foundation.
. This appraisal assignment was not based on a requested minimum value,
specific value, or the approval of a loan.
/s/ John H. Whitcomb JAG /s/ William G. Trask JAG
------------------------------ ----------------------------
John H. Whitcomb, MAI, CCIM William G. Trask
St. Cert. Gen. REA #0001234 St. Cert. Gen. REA #0002347
<PAGE>
88
ASSUMPTIONS AND LIMITING CONDITIONS
-----------------------------------
The primary assumptions and limiting conditions pertaining to the
conclusion in this report are summarized below.
To the best of our knowledge and belief, the statements of facts contained in
the appraisal report, upon which the analysis and conclusion expressed are
based, are true and correct. Information, estimates and opinions furnished to us
and contained in the report or utilized in the formation of the value conclusion
were obtained from sources considered reliable and believed to be true and
correct. However, no representation, liability or warranty for the accuracy of
such items is assumed by or imposed on us, and is subject to corrections,
errors, omissions and withdrawal without notice.
The legal description of the appraised property, as exhibited in the report is
assumed correct.
The valuation may not be used in conjunction with any other appraisal or study.
The value conclusion stated in this appraisal is based on the program of
utilization described in the report, and may not be separated into parts. The
appraisal was prepared solely for the purpose and party so identified in the
Purpose and Function. The appraisal report may not be reproduced, in whole or in
part, and the findings of the report may not be utilized by a third party for
any purpose, without the written consent of Whitcomb Real Estate.
No change of any item in any of the appraisal report shall be made by anyone
other than Whitcomb Real Estate and we shall have no responsibility for any such
unauthorized change.
The property has been appraised as though free and clear of mortgages, liens,
leases, servitudes and encumbrances, except as may be described in the
appraisal.
We are not required to give testimony or be in attendance at any court or
administrative proceeding with reference to the property appraised unless
additional compensation is agreed to and prior arrangements have been made.
Unless specifically stated, the value conclusion contained in the appraisal
applies to the real estate only, and does not include personal property,
machinery and equipment, trade fixtures, business value, goodwill or other non-
realty items. Income tax considerations have not been included or valued unless
so specified in the appraisal. We make no representations as to the value
changes, which may be attributed to such considerations.
Neither all nor any part of the contents of the report shall be disseminated or
referred to the public through advertising, public relations, news or sales
media, or any other public means of communication or referenced in any
publication, including any private or public offerings including buy not limited
to those filed with Securities and Exchange Commission or other governmental
agency, without the prior written consent and approval of and review by Whitcomb
Real Estate.
<PAGE>
89
Assumptions and Limiting Conditions
In completing the appraisal, it is understood and agreed that the report are not
now intended, and will not be used in connection with a real estate syndication.
Good and marketable title to the interest being appraised is assumed. We are not
qualified to render an "opinion of title," and no responsibility is assumed or
accepted for matters of a legal nature affecting the property being appraised.
No formal investigation of legal title was made, and we render no opinion as to
ownership of the property or condition of its title.
Unless otherwise noted in the appraisal, it is assumed that there are no
encroachments, zoning, building, fire or safety code violations, or restrictions
of any type affecting the subject property. It is assumed that the property is
in full compliance with all applicable federal, state, local and private codes,
laws, consents, licenses and regulations, and that all licenses, permits,
certificates, approvals, franchises, etc. have been secured and can be freely
renewed and/or transferred to a purchaser.
It is assumed that the utilization of the land and any improvements are within
the boundaries or property lines of the property described, and that there are
no encroachments, easements, trespass, etc., unless noted within the report. We
have not made a survey of the property, and no responsibility is assumed in
connection with any matter that may be disclosed by a proper survey. If a
subsequent survey should reflect a differing land area and/or frontages, we
reserve the right to review our final value estimate.
All maps, plats, building diagrams, site plans, floor plans, photographs, etc.
incorporated into the appraisal are for illustrative purposes only, to assist
the reader in visualizing the property, but are not guaranteed to be exact.
Dimensions and descriptions are based on public records and/or information
furnished by others and are not meant to be used as a reference in legal matters
of survey.
Management is assumed to be competent, and the ownership to be in responsible
hands. The quality of property management can have a direct effect on a
property's economic viability and value. The financial projections contained in
the appraisal assumes both responsible ownership and competent management. Any
variance from this assumption could have a significant impact on the final value
estimate.
We assume that there are no hidden or unapparent conditions of the property's
soil, subsoil or structures, which would render them more or less valuable. No
responsibility is assumed for such conditions, or for engineering which might be
required to discover such factors. Detailed soil studies were not made available
to us, so statements regarding soil qualities, if made in the report, are not
conclusive but have been considered consistent with information available to us
and provided by others. In addition, unless stated otherwise in the appraisal,
the land and soil of the area under appraisement appears firm and solid, but the
appraisal does not warrant this condition.
The appraisal report covering the subject property is limited to surface rights
only, and does not include any inherent subsurface or mineral rights.
The appraisal is made for valuation purposes only. It is not intended nor to be
construed to be an engineering report. We are not qualified as structural or
environmental engineers, therefore we are not qualified to judge the structural
and environmental integrity of the improvements, if any. Consequently, no
warranty, representations or liability are assumed for the structural soundness,
quality, adequacy or capacities of said improvements and utility services,
including the construction materials, particularly the roof, foundations, and
equipment, including the HVAC systems, if applicable. Should there be any
<PAGE>
90
Assumptions and Limiting Conditions
question concerning same, it is strongly recommended that an
Engineering/Construction/Environmental inspection be obtained. The value
estimate stated in this appraisal, unless noted otherwise, is predicated on the
assumption that all improvements, equipment and building services, if any, are
structurally sound and suffer no concealed or latent defects or inadequacies
other than those noted in the appraisal.
Any proposed construction or rehabilitation referred to in the appraisal report
is assumed to be completed within a reasonable time and in a workmanlike manner
according to or exceeding currently accepted standards of design and methods of
construction.
Any areas or inaccessible portions of the property or improvements not inspected
are assumed to be as reported or similar to the areas, which are inspected.
Unless specifically stated in the report, we found no obvious evidence of insect
infestation or damage, dry or wet rot. Since a thorough inspection by a
competent inspector was not performed for us, the subject improvements, if any,
is assumed to be free of existing insect infestation, wet rot, dry rot, and any
structural damage which may have been caused by pre-existing infestation or rot
which was subsequently, treated.
In the appraisal assignment, the existence of potentially hazardous material
used in the construction, maintenance or servicing of the improvements, such as
the presence of urea-formaldehyde foam insulation, asbestos, lead paint, toxic
waste, underground tanks, radon and/or any other prohibited material or chemical
which may or may not be present on or in the subject property, was, unless
specifically indicated in the report, not observed by us, nor do we have any
knowledge of the existence of such materials on or in the property. We, however,
are not qualified to detect such substances. The existence of these potentially
hazardous materials may have a significant effect on the value of the property.
The client is urged to retain an expert in this field, if desired. The value
conclusion assumes the property is "clean" and free of any of these adverse
conditions unless notified to the contrary in writing.
No effort has been made to determine the possible effect, if any, on the subject
property of energy shortages or present or future federal, state or local
legislation, including any environmental or ecological matters or
interpretations thereof.
We take no responsibility for any events, conditions or circumstances affecting
the subject property or its value, that take place subsequent to either the
effective date of value cited in the appraisal or the date of our field
inspection, which ever occurs first.
The estimates of value stated in this appraisal apply only to the effective
dates of value stated in the report. Value is affected by many related and
unrelated economic conditions within a local, regional, national and/or
worldwide context, which might necessarily affect the prospective value of the
subject property. We assume no liability for an unforeseen change in the
economy, or at the subject property, if applicable.
We believe that the underlying assumptions and current conditions provide a
reasonable basis for the value estimate stated in this appraisal. However, some
assumptions or projections inevitably will not materialize and unanticipated
events and circumstances may occur during the forecast period. These could
include major changes in the economic environs; significant increases or
decreases in current
<PAGE>
91
Assumptions and Limiting Conditions
mortgage interest rates and/or terms or availability of financing altogether;
property assessment; and/or major revisions in current state and/or federal tax
or regulatory laws. Therefore, the actual results achieved during the projected
holding period and investor requirements relative to anticipated annual returns
and overall yields could vary from the projection. Thus, variations could be
material and have an impact on the individual value conclusion stated herein.
The Americans with Disabilities Act (ADA) became effective January 26, 1992. The
appraiser has not made a specific compliance survey and analysis of this
property to determine whether or not it is in conformity with the various
detailed requirements of the ADA. It is possible that a compliance survey of the
property together with a detailed analysis of the requirements of the ADA could
reveal that the property is not in compliance with one or more of the
requirements of the act. If so, this fact could have a negative effect upon the
value of the property. Since the appraiser has no direct evidence relating to
this issue, possible noncompliance with the requirements of ADA was not
considered in estimating the value of the property.
<PAGE>
ADDENDA
<PAGE>
PROFILES OF APPRAISERS
<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
Prepare appraisals and feasibility studies on complex commercial
properties. Performed appraisals for purposes of sale/purchase, property
tax appeals, financing and allocation of purchase price. March 1990 to May
1992.
<PAGE>
Profile of Appraiser 2
PROFESSIONAL AFFILIATIONS
-------------------------
MAI, Member Appraisal Institute
CCIM, Certified Commercial Investment Member Commercial Investment Real Estate
Institute
State Certified General Real Estate Appraiser
Florida #0001234
PARTIAL LIST OF CLIENTS AND PROPERTIES
--------------------------------------
<TABLE>
<CAPTION>
Manufactured Home Communities
-----------------------------
<S> <C> <C> <C>
Akers Away West Palm Beach, FL Lakeside Douglasville, GA
Alafia Riverfront Gibsonton, FL Lakewood Denton, TX
Alpine Village Sebring, FL Lantana Cascade Lantana, FL
Arbor Oaks Zephyrhills, FL Long Lake Village West Palm Beach, FL
Blue Heron Clearwater, FL Marlboro Court West Palm Beach, FL
Bradenton Trailer Park Bradenton, FL MH Country Club Oakland Park, FL
Carefree Village Tampa, FL Mission El Paso, TX
Carolina Village Concord, NC Moultrie Oaks St. Augustine, FL
Casa del Monte West Palm Beach, FL Oak Point Titusville, FL
Chateau Forest Seffner, FL Orange Manor East Winter Haven, FL
Chateau Village Bradenton, FL Palm Breezes Club Lantana, FL
Cloverleaf Brooksville, FL Palm Ridge Leesburg, FL
Colonial Coach Greenacres City, FL Panama City Estates Panama City, FL
Coquina Crossing St. Augustine, FL Plantation Estates Seffner, FL
Coral Lake Coconut Creek, FL Portside Jacksonville, FL
Country Club Estates Venice, FL Ridgecrest Fort Pierce, FL
Dessau Austin, TX San Souci North Fort Myers, FL
Foxcroft Village Loch Sheldrake, NY Scenic View Lakeland, FL
Foxwood Estates Lakeland, FL Seminole St. Petersburg, FL
Franklin Estates Murfreesboro, TN Shangri La Largo, FL
Gardens of Manatee Parrish, FL Southwinds Lakeland, FL
A Garden Walk West Palm Beach, FL St. Lucie Village Okeechobee, FL
The Groves Orlando, FL Sunrise Village Cocoa Beach, FL
Gwinnett Estates Snellville, GA Sunshine Lake Worth, FL
Harmony Ranch Thonotosassa, FL Tall Pines Fort Pierce, FL
Holiday Ranch West Palm Beach, FL 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 Melbourne, FL
</TABLE>
<PAGE>
Profile of Appraiser 3
Recreational Vehicle Parks
--------------------------
<TABLE>
<S> <C> <C> <C>
Avalon RV Park Clearwater, FL Pioneer Creek Bowling Green, FL
Camp Inn Frostproof, FL Rainbow Village Clearwater, FL
Forest Lake Village Zephyrhills, FL Space Coast RV Resort Rockledge, FL
Hide Away Ruskin, FL Sunshine RV Vero Beach, FL
Holiday RV Resort Leesburg, FL Topics Hudson, FL
Horizon RV Park Davenport, FL Twelve Oaks Sanford, FL
Key RV Park Marathon, FL Village Park Orange City, FL
Self-Storage Facilities
-----------------------
Affordable Self Storage Loganville, GA Orange Avenue Tallahassee, FL
Alpine Self Storage Rockford, IL Plantation Xtra Storage Plantation, FL
Baytree Self Storage Valdosta, GA St. Augustine Self Storage St. Augustine, FL
Budget Self Storage Sterling, VA Southern Self Storage Riviera Beach, FL
Delray Mini Storage Delray Beach, FL Storage Express Lauderhill, FL
Edison Lock Up Edison, NJ Valdosta Self Storage Valdosta, GA
Extra Space Lauderhill, FL Extra 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.
<PAGE>
PROFILE OF APPRAISER
WILLIAM G. TRASK
St.Cert. Gen. REA #0002347
REAL ESTATE APPRAISAL EXPERIENCE
--------------------------------
Appraiser
Whitcomb Real Estate
Tampa, FL
Specializing in real estate valuations and consulting projects for
lending institutions, public and private corporations and individuals,
for a variety of uses. Property types appraised include manufactured
housing communities, recreational vehicle parks, manufacturing plants,
office buildings, apartment complexes, retail properties and other
types of commercial establishments. February 1998 to Present.
Appraiser
Atlas Real Estate Group, Inc.
Tampa, FL
Specialized in real estate condemnation valuations and related
studies. Property types appraised include agricultural, industrial,
residential, office buildings, retail properties and other types of
commercial land and establishments. August 1991 to January 1998.
PROFESSIONAL AFFILIATIONS
-------------------------
State Certified General Real Estate Appraiser
Florida #0002347
Georgia #CG007464
PARTIAL LIST OF CLIENTS AND PROPERTIES
--------------------------------------
Manufactured Home Communities
-----------------------------
<TABLE>
<S> <C> <C> <C>
A Garden Walk Palm Beach Gardens, FL Honeymoon Park Dunedin, FL
Bear Creek Ormond Beach, FL La Buona Vita Port St. Lucie, FL
Bonfire Leesburg, FL Lincolnshire Largo, FL
Briarwood Lake Worth, FL Meadowbrook Lakeland, FL
Camelot East Sarasota, FL Mobiland By The Sea Melbourne, FL
Camelot Lakes Sarasota, FL Oak View Arcadia, FL
Carefree Village Tampa, FL Palmetto Hallandale, FL
Clover Leaf Brooksville, FL Plaza Bradenton, FL
Coquina Crossing St. Augustine, FL Ranchero Village Largo, FL
</TABLE>
<PAGE>
Profile of Appraiser 2
William G. Trask
Manufactured Home Communities (Cont.)
-------------------------------------
<TABLE>
<S> <C> <C> <C>
Country Club Estates Venice, FL River Bay Tampa, FL
Country Lakes Coconut Creek, FL Riverview Micco, FL
Country Life Leesburg, FL Serendipity Clearwater, FL
Crystal River Village Crystal River, FL Southern Acres St. Cloud, FL
Diamond Point Leesburg, FL Spanish Trails Zephyrhills, FL
Friendly Village Sellersburg, IN Sun Village Largo, FL
Hammock Lake Fort Meade, FL Sundance Zephyrhills, FL
Heron Cay Vero Beach, FL Sunshine Village Lake Worth, FL
Hibiscus Mount Dora, FL Tall Pines Fort Pierce, FL
Hidden Village St. Petersburg, FL Tanglewood Fort Pierce, FL
High Point Clearwater, FL Vero Palms Vero Beach, FL
Recreational Vehicle Parks
--------------------------
Lazy Lakes RV Sugarloaf Key, FL Ridgecrest RV Leesburg, FL
Lions Lair RV Marathon, FL Sunshine RV Vero Beach, FL
Pioneer Village North Fort Myers, FL Topics RV Spring Hill, FL
Other
-----
ABC Pizza House Tampa, FL Fabian Enterprises Tampa, FL
Blakie's Restaurant Tampa, FL Florida Power & Light St. Petersburg, FL
Breed Automotive Lakeland, FL Mobil Oil Lakeland, FL
Discount Auto Parts Lakeland, FL Pier 1 Imports Hoover, AL
Discount Auto Parts Sarasota, FL Pizza Hut Brandon, FL
Discount Auto Parts Land O' Lakes, FL Pizza Hut Lakeland, FL
Financial
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Belgravia Capital Heller Financial
Collateral Mortgage, Ltd. Lehman Brothers
Executive Commercial Funding NationsBank
First Federal Savings Bank, Leesburg, FL Republic Bank, Port Richey, FL
First National Bank, St. Lucie, FL Signature Financial Services, Inc.
First Union National Bank Union Capital Investments, LLC
GE Capital Corporation United Southern Bank, Eustis, FL
Greentree Financial
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Profile of Appraiser 3
William G. Trask
Real Estate/Real Estate Investment
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Continental Communities National Home Communities
Martin Newby Management Pacific Life
Munao Partnership Windsor Corporation
EDUCATIONAL BACKGROUND
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Florida State University
University of South Florida
Edison Community College
Hillsborough Community College
Appraisal Institute
International Right of Way Association
