<PAGE>
Exhibit (c)(1)(A)
SELF CONTAINED COMPLETE
REAL ESTATE APPRAISAL REPORT
111 Space - Kings And Queens
Manufactured Home Community
2808 North Florida Avenue
Lakeland, Polk County, Florida 33805
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]
May 16, 2000
Mr. Steve Waite
Windsor Corporation
6430 South Quebec
Englewood, Colorado 80111
RE: 111 Space - Kings And Queens
Manufactured Home Community
2808 North Florida Avenue
Lakeland, Polk County, Florida 33805
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:
- ONE MILLION NINE HUNDRED THOUSAND DOLLARS -
($1,900,000)
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.
Kings And Queens is an age restricted manufactured home community located
on the west side of North Florida Avenue, south of Griffin Road in the City of
Lakeland, Polk County, Florida. The property is located in the western portion
of the county and was originally
<PAGE>
Mr. Steve Waite
April 12, 1999
Page Two
developed in 1981. 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.
Kings And Queens consists of 107 manufactured home spaces, 4 recreational
vehicle spaces, a clubhouse, swimming pool and shuffleboard courts. As of the
date of inspection, all of the manufactured home sites and one of the
recreational vehicle spaces were occupied. The site rent rates range from
$173.30 to $262.00 per site per month, averaging $246.33. These rents became
effective January 1, 2000, when an increase of $15.00 per manufactured home site
took effect. The recreational vehicle spaces rent for $280.00 per space per
month. The resulting average rent of $246.33 per manufactured home site and
$280.00 per recreational vehicle space has been used in the estimates of value.
Due to the fact that all 111 units on the property contribute to the income and
share the expenses, our income and expense analysis is based on the total of 111
units.
Our analysis has accounted for a management fee, adequate to ensure
professional management of the property. We have also forecast maintenance
expenditures to maintain the property in adequate repair in order to retain
residents and achieve rental increases. Our analysis and opinions are contingent
on adequate management and maintenance expenditures.
We appreciate this opportunity to be of service to you. If you have any
questions, please do not hesitate to contact us.
Very truly yours,
WHITCOMB REAL ESTATE
/s/ John H. Whitcomb JAG
---------------------------
John H. Whitcomb, MAI, CCIM
St. Cert. Gen. REA #0001234
/s/ William G. Trask JAG
---------------------------
William G. Trask
St. Cert. Gen. REA #0002347
<PAGE>
4
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Title Page
Transmittal
Table Of Contents........................................................ 4
Introduction
Photographs Of Subject................................................... 6
Summary Of Facts And Conclusions......................................... 8
Extent of Confirming, Collecting And Reporting Data...................... 9
Purpose And Function Of The Report....................................... 9
Property Rights Appraised................................................ 10
Effective Date Of Value.................................................. 10
Appraisal Definitions.................................................... 10
Descriptive Section
Area Description......................................................... 12
Neighborhood Description................................................. 17
Manufactured Home Community Market Overview.............................. 20
Land And Site Improvements............................................... 33
Improvement Description.................................................. 35
Ownership And Property History........................................... 37
Occupancy................................................................ 37
Zoning And Other Land Use Controls....................................... 38
Assessment And Taxes..................................................... 38
Marketability And Exposure Period........................................ 40
Valuation Section
Highest And Best Use..................................................... 43
Valuation Process........................................................ 48
Income Capitalization Approach........................................... 49
Sales Comparison Approach................................................ 65
Final Estimate Of Value.................................................. 82
Certification............................................................ 83
Assumptions And Limiting Conditions...................................... 84
Addenda
Legal Description
Profiles Of Appraisers
</TABLE>
<PAGE>
INTRODUCTION
<PAGE>
PHOTSGRAPHS OF THE SUBJECT (Taken May 11, 2000) 6
[PHOTO APPEARS HERE]
Entrance to Kings And Queens
[PHOTO APPEARS HERE]
Typical Street View
<PAGE>
PHOTOGRAPHS OF THE SUBJECT (Taken May 11, 2000) 7
[PHOTO APPEARS HERE]
North Florida Avenue Facing North
[PHOTO APPEARS HERE]
North Florida Avenue Facing South
<PAGE>
8
SUMMARY OF FACTS AND CONCLUSIONS
--------------------------------
Property Appraised: 111 Space - Kings And Queens
-------------------
Manufactured Home Community
2808 North Florida Avenue
Lakeland, Polk County, Florida
Property Rights Appraised: Fee Simple Interest, subject to tenant leases
--------------------------
Land Area: 18.01 acres
----------
Improvements: Existing 107 manufactured home spaces, 4
------------- recreational vehicle spaces, a clubhouse,
swimming pool and shuffleboard courts.
Owner: Windsor Park Properties, 7.
------
Zoning: RM, Residential Medium Density, City of Lakeland
-------
MSA/Census Tract: 3980 (Lakeland/Winter Haven MSA) /
----------------- 0114 (City of Lakeland)
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 $1,900,000
------------- Sales Comparison Approach $2,000,000
Final Estimate of Market
----------------------
Value: $1,900,000
-----
Date of Appraisal: May 1, 2000
------------------
Date of Inspection: May 11, 2000
-------------------
<PAGE>
9
EXTENT OF CONFIRMING, COLLECTING AND REPORTING DATA
---------------------------------------------------
William G. Trask inspected the property on May 11, 2000. The property's
physical data is based on information provided by the owner, confirmed by
physical inspection of the premises and information obtained from the Polk
County Property Appraiser's office.
Information regarding the subject's land use plan designation and zoning
are based on discussions with representatives of the City of Lakeland, Florida.
We have analyzed the property with regard to its Highest and Best Use, as if the
land was vacant and available for development and as it has been currently
improved.
We have employed only the Income Capitalization and Sales Comparison
Approaches in our estimate of the market value of the property. The Cost
Approach has not been used in this valuation, due to the subjectivity of
entrepreneurial profit estimates. Recent data for the Income Capitalization and
Sales Comparison Approaches has been generated from local real estate brokers,
investors (local and nationally), owners, managers, and from our inspection of
the supporting rental neighborhood. All of the market data has been confirmed
with buyers, sellers, or other real estate professionals involved with or
knowledgeable of the transaction.
PURPOSE AND FUNCTION OF THE APPRAISAL
-------------------------------------
The purpose of the appraisal is to express our opinion of the "As Is"
market value of the fee simple interest, subject to existing leases, of the real
estate as of May 1, 2000.
Rental rates and increases are governed by the community's prospectus,
filed with the Florida Department of Business and Professional Regulation, until
a unit is removed from the community. At that time, a new prospectus can be
supplied to the tenant. A copy of the prospectus has been included in the
Addenda of this report.
We have surveyed the local market rents, but emphasis has been
appropriately given to the prospectus, in the forecast of rental levels at the
subject.
The information, opinions, and conclusions contained in this report have
been prepared as a basis for portfolio valuation.
<PAGE>
10
PROPERTY RIGHTS APPRAISED
-------------------------
The real estate interest appraised is that of ownership in fee simple
interest, subject to existing tenant leases, and the property is appraised as if
free and clear of mortgages, liens, servitudes and encumbrances, except those
noted in the body of this appraisal.
EFFECTIVE DATE OF VALUE
-----------------------
The effective date of our value is May 1, 2000.
APPRAISAL DEFINITIONS
---------------------
Market Value is defined as: The most probable price which a property should
bring in a competitive and open market under all conditions requisite to a fair
sale, the buyer and seller each acting prudently, knowledgeably and assuming the
price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as of a specified
date and the passing of title from seller to buyer under conditions whereby:
. Buyer and Seller are typically motivated;
. Both parties are well informed or well advised, and each acting in what
he considers his own best interest;
. A reasonable time is allowed for exposure in the open market;
. Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
. The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions granted
by anyone associated with the sale./1/
Fee Simple Interest is defined as: The absolute ownership unencumbered by
any other interest or estate subject only to the four powers of government./2/
_____________________
/1/ The Office of the Comptroller of Currency, 12 CFR 564.2(f).
/2/ The Dictionary of Real Estate Appraisal, Third Edition, Appraisal Institute,
1993.
<PAGE>
DESCRIPTIVE SECTION
<PAGE>
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 Polk County area. In the
following discussion, we have attempted to present sufficient data to inform
readers unfamiliar with the state of Florida, Polk County and the Lakeland
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>
13
Area Description
The slower rate of future population growth will be partially attributable
to more stringent growth management policies. Growth management legislation will
curtail the demand for developable properties, which will restrict the supply of
a given population. The result should be more modest returns on real estate
investments with investors having to develop feasible projects in areas where
sufficient demand exists.
The dynamic complexities in the demographic composition had a significant
impact on the Florida real estate market through increased demand for housing
and the corresponding commercial development that usually follows. Until the
recessionary period of the early nineties and the financial institution
collapse, Florida was one of the most heavily invested states in the nation for
speculative real estate development.
Geography
---------
The subject is located in the western portion of Polk County and lies
within the City of Lakeland municipal limits. More specifically, the subject
property is located on the west side of North Florida Avenue south of Griffin
Road. This location is in the northern portion of the City of Lakeland, within
one-mile southeast the intersection of U. S. Highway 98 and Interstate 4.
Polk County and the Lakeland/Winter Haven SMSA (Standard Metropolitan
Statistical Area) are synonymous. Polk County is located in the west/central
area of Florida, east of the Tampa SMSA and southwest of the Orlando SMSA both
within a 50 mile radius. These metropolitan areas are connected by Interstate 4,
which passes through Polk County and is the main corridor for central Florida.
Interstate 4 connects to Interstate 95 in Daytona Beach and Interstate 75 in
Tampa. The Gulf of Mexico is located approximately 50 miles to the west and the
Atlantic Ocean is less than 55 miles to the east. Polk County lies on the
southwest fringe of Central Florida's tourist center, centered in the Orlando-
Kissimmee area.
Population
----------
The 1990 U. S. Census estimated the population of Polk County to be
405,382, up 26.0% from the 1980 population estimate of 321,652. This indicates a
compounded annual growth rate of 2.3% over the 10-year period. These growth
rates were similar to the compounded growth rate of 2.87% and the increase in
growth of 32.7% experienced by the State of Florida during the same period. The
1998 estimate of 465,858 indicates a 1.9% average increase in growth since the
1990 census, and the year 2005 projection (512,727), indicates a slight decrease
in this rate. Just over 77% of the population growth in Polk County is the
result of in-migration.
<PAGE>
14
Area Description
Economic Base
-------------
The economic base for this general area consists of phosphate mining and
processing, citrus production and processing, and agriculture (cattle and
farming); however, light manufacturing, distribution, tourism, medical services,
and services are becoming more important in the diversification of Polk County's
economic base. This diversification resulted from the national recession that
occurred during the early 1980's and was compounded on the local level by a poor
performance of the phosphate industry and damage incurred by the citrus industry
as the result of several major freezes. Both industries have rebounded well, but
the economic difficulties brought attention to the importance of a diverse
economy, which would be better able to cope with economic downturns.
The tourism aspects of the local economy result from the area's close
proximity to Cypress Gardens in Winter Haven, Busch Gardens in Tampa, Disney
World/Epcot/Universal Studios Sea World near Orlando, and a substantial number
of winter season residents. Lakeland is the primary retail and service center
for the surrounding area and the home of Florida Southern College, the Lakeland
Regional Medical Center, the Watson Clinic, the main office and warehouse of
Publix Supermarkets, Inc., and the winter training facility for the Detroit
Tigers.
Local business expansions and a rejuvenated market for phosphate have
helped Polk County prosper over the last year. The county's average unemployment
rate, which has been hovered at near 10% in the early 1990's, has reached a near
twenty-year low at 5.5%. As development pressures are moving inland from the
coastal areas, Polk County's large land area and central location are two
factors that are expected to contribute to its future growth.
Transportation
--------------
The primary form of transportation in Polk County is the automobile.
Interstate 4 traverses the northern portion of the county as it extends from
Interstate 275 in Tampa, on the west coast of Florida, through Orlando to
Daytona Beach and Interstate 95, on the east coast. State Road 60 is the major
east-west roadway in the central portion of the county. North south travel is
accomplished via U.S. Highway 27 in the eastern portion of the county, and U.S.
Highway 17/98 in the west.
The Lakeland area is particularly well served by the Interstate and U. S.
Highway network, and Polk County alone has 195 motor freight and warehousing
firms. Commercial Carrier Corporation, one of Florida's largest motor freight
carriers, is based in the area.
Orlando and Tampa International Airports are within a convenient 50-mile
drive from Winter Haven. The second and third largest air carrier operations in
Florida, they have a combined average of over 1,000 daily flights. Winter Haven
enjoys daily Amtrak passenger service connecting north to Orlando and beyond and
south to Miami. CSX Transportation (formerly Seaboard Coast Line Railroad)
maintains its main line through the Winter Haven area,
<PAGE>
15
Area Description
assuring industry of continued convenient rail service. The Port of Tampa, less
than 50 miles away, is the 7th busiest port in the U.S. and Polk County
companies are responsible for over half of the tonnage through this deep-water
port.
Concurrency
-----------
The State of Florida's Local Government Comprehensive Planning Act of 1975
required all counties and municipalities in the state to develop, implement and
monitor local comprehensive/growth management plans. Pursuant to this law, each
county was required to publish Land Use Policy Guides, both in written and map
form, which designate desired types of land use and probable zoning for all
county lands not within their boundaries.
Under Florida's 1985 Growth Management Act, a concept called "Concurrency"
was set forth to require that adequate roads, sewers, schools and other
facilities be in place when local officials approve a new development. Fearing
restrictions on growth, developers, builders, and realtors have vehemently
lobbied the State Legislature to alter the requirement.
At present, concurrency requires developers to agree to provide necessary
infrastructure before new developments are approved. However, in some areas,
moratoriums on new development are being implemented to allow government staff
sufficient time to study the affects of further growth and to develop plans,
both on-site and off will likely result in a protracted approval process, and
ultimately entail more costs to the private sector.
Any proposed large development that will have impacts on traffic, noise,
air quality, etc., that go beyond the immediate vicinity, must go through
Development of Regional Impact (DRI) a Regional Planning Council. The Council
studies the proposed development and its potential impacts, then makes
recommendations to the appropriate local governmental entity regarding whether
the development should be approved and what, if any, constraints or mitigation
requirements should be imposed to minimize adverse regional impacts.
Summary
-------
In conclusion, Polk County enjoys a strategic location between the two
rapidly growing Tampa and Orlando Metropolitan areas. The County is also
centrally located to many of the area's major tourist attractions. Coupled with
its mild winter climate, points to long-term growth and prosperity. Short-term
economic distress has resulted from the current economic recessions, but Polk
County's economy should continue to diversify, which will make it less
vulnerable to economic downturns in any one particular sector. The prospects of
an increasing population base, together with economic improvement are expected
to contribute positively to the overall growth of the area.
<PAGE>
[AREA MAP APPEARS HERE]
<PAGE>
17
NEIGHBORHOOD DESCRIPTION
------------------------
A neighborhood is defined as a portion of a larger community, or an entire
community, containing a homogeneous group of inhabitants, buildings, or business
enterprises.
Location and Boundaries
-----------------------
The subject property is located on the west side of North Florida Avenue,
south of Griffin Road within the municipal limits of the City of Lakeland. The
neighborhood is generally bounded by Interstate 4 to the north, the Lakeland
city limits to the west, Memorial Boulevard to the south and Lake Parker to the
east. Most of the neighborhood is within the incorporated area of the City of
Lakeland.
Land uses generally consist of commercial development along the major
thoroughfares with residential backup. Development in the neighborhood has taken
the form of mixed use, strip development of commercial (retail) and light
industrial properties, located primarily along the U. S. Highway 98 and Lakeland
Hills Boulevard frontages. Residential development is intermixed throughout the
immediate neighborhood. The neighborhood is estimated to be over 75% developed.
There are a few large tracts of vacant land in the neighborhood for infill
development and development is expected to occur at a slower pace in the future,
due to the present level of existing development.
This area of Lakeland offers all amenities and shopping, schools, churches
and medical facilities. Additionally the Detroit Tigers winter training
facility, known as Tigertown, is located east of Lakeland Hills Boulevard
approximately one mile east of the subject property.
Access
------
Access to the subject property is via North Florida Avenue. North Florida
Avenue is a two lane roadway that bisects the neighborhood in an north/south
direction. The subject is located on the west side of North Florida Avenue south
of Griffin Road, which bisects the neighborhood in an east/west direction.
Access to Interstate 4 is available within one mile northwest of the subject
property via U. S. Highway 98 and within one mile north via State Road 33.
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
<PAGE>
18
Neighborhood Description
goings in the community. While the subject is not the least expensive form of
housing in the neighborhood, it is also not the most expensive.
Summary and Conclusion
----------------------
The subject property's location in regard to the local amenities in the
form of shopping, recreational and activity centers is considered 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 future development of
the Interstate 4 corridor.
<PAGE>
[NEIGHBORHOOD MAP APPEARS HERE]
<PAGE>
20
MANUFACTURED HOME COMMUNITY MARKET OVERVIEW
-------------------------------------------
The manufactured home industry in the State of Florida has prospered and
matured, over the past twenty years, as a direct result of the advancements in
manufactured home construction techniques and the continued ability of producers
and dealers to make manufactured homes a relatively inexpensive housing
alternative. Over this period the industry has progressed from it's original
"trailer park" image, to the "mobile home park" and, finally, to its present
status as "a manufactured home community." This most recent status is only
appropriate, as most manufactured homes are typically moved only once during
their economic lifetime; from the manufacturer or dealer's lot to the home site.
According to the 1990 U. S. Census, 1,290,000 people occupied 762,855
manufactured homes in the State of Florida. These totals were the highest in the
United States with only Texas and California having manufactured home
populations that exceed one million. The measure of the significance of the
manufactured home in the state is evidenced by the fact that nearly 12.5% of all
housing units in the state were manufactured homes, as of 1990. The table below
lists the top five counties in the state, the number of manufactured homes and
the percentage of the state total of manufactured homes.
=======================================================
Manufactured Housing Communities
Top Five Counties In Florida
_______________________________________________________
County No. Of Homes Pct. Total Housing
_______________________________________________________
Pinellas 52,207 6.84%
_______________________________________________________
Polk 51,768 6.36%
_______________________________________________________
Hillsborourgh 42,314 5.55%
_______________________________________________________
Pasco 40,391 5.29%
_______________________________________________________
Lake 26,935 3.53%
_______________________________________________________
Florida 762,855 100.00%
=======================================================
Source: 1990 U.S. Census
As shown in the table on the following page, sales have decreased 39%
since 1985, again due principally to restriction imposed by government
regulations as well as difficult economic times. The 1996 and 1997 statewide
figures show a varied trend, with significant increases over the 1991 sales.
<PAGE>
Manufactured Housing Community Market Overview 21
Single Family Housing
Site Built vs. New Manufactured Home Sales
Florida and Polk County 1983 to 1998
<TABLE>
<CAPTION>
==========================================================================================
Florida Polk
Year Housing Mfd. Mfd. County Mfd. Mfd.
Starts Home Homes % Housing Home Homes %
Sales of Total Starts Sales of Total
__________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
1983 128,408 29,244 22.77% 2,062 2,320 52.94%
__________________________________________________________________________________________
1984 121,828 29,442 24.17% 1,858 2,720 59.41%
__________________________________________________________________________________________
1985 125,073 30,126 24.09% 2,012 2,673 57.05%
__________________________________________________________________________________________
1986 124,379 27,233 21.90% 1,708 2,710 61.34%
__________________________________________________________________________________________
1987 132,096 25,446 19.26% 2,322 2,757 54.28%
__________________________________________________________________________________________
1988 122,493 23,315 19.03% 2,326 2,592 52.70%
__________________________________________________________________________________________
1989 119,345 21,821 18.33% 2,428 2,672 52.39%
__________________________________________________________________________________________
1990 89,609 17,483 19.51% 1,525 2,031 57.11%
__________________________________________________________________________________________
1991 83,497 12,572 15.06% 1,988 1,284 39.24%
__________________________________________________________________________________________
1992 97,400 14,172 14.55% 2,253 1,506 40.06%
__________________________________________________________________________________________
1993 106,980 15,964 14.92% 2,588 1,699 39.63%
__________________________________________________________________________________________
1994 113,360 17,067 15.06% 2,573 2,047 44.31%
__________________________________________________________________________________________
1995 101,076 16,199 16.03% 2,187 1,705 43.81%
__________________________________________________________________________________________
1996 91,076 15,905 14.88% 2,504 1,542 38.11%
__________________________________________________________________________________________
1997 90,268 18,242 16.81% 2,648 1,459 35.52%
__________________________________________________________________________________________
1998 97,870 19,035 16.28% 2,852 1,374 32.51%
===========================================================================================
</TABLE>
Source: Florida Manufactured Housing Association, Statistical Package, 1998.
The Polk County new manufactured housing sales have generally followed the
state trends, peaking in 1986 and declining through 1991. Since that time, sales
have fluctuated. Significantly, Polk County manufactured homes sales have
represented a substantial portion of the county's development. This is supported
by the fact that Polk County has the second highest number and percentage of
manufactured housing to total housing in the state. Additionally, Polk County
was the top ranked county in sales from 1990 to 1994, falling to second
position, behind Marion County in 1995 and remaining there through 1998.
Although recent trends indicate sales
<PAGE>
Manufactured Housing Community Market Overview 22
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.
According to the Florida Manufactured Housing Association's 1998
Statistical Package, there are 471 manufactured home communities in Polk County.
Of this total, there are 102 communities (approximately 22% of the total), with
101 or more spaces. Additionally, 115 of the communities, or approximately 24%
of the total, are in the 26 to 100-space range. Approximately 54% of the
manufactured home communities in Polk County have 100 or fewer spaces. The large
percentage of small communities points to a fragmented marketplace, with a
variety of ownership forms. The subject, at 107 spaces, is one of the mid sized
communities in Polk County.
The rapid growth in Florida during the 1960's and 1970's outstripped the
ability of county and municipal governments to provide adequate infrastructure
improvements. This precipitated state legislation mandating that each county
submits an acceptable Comprehensive Plan. As previously discussed in the Area
Description section of this report, the concept of Concurrency required all
municipalities with zoning jurisdiction to adjust their zoning codes and reach
"substantial conformance" to county-wide land use plan. Many municipal planners
were forced to scale back the total developable inventory in their communities,
resulting in decreased projections of future municipal revenues from property
taxes. Manufactured housing communities were viewed as a poor developmental
alternative in many municipalities since they produce less property tax for the
municipality while creating about the same infrastructure burden. While many
counties have instituted a moratorium on the development of new manufactured
housing communities, others have imposed severe limitations on the development
of manufactured housing communities, typically found in the form of restrictive
impact fees (or transportation fees). It was noted that approved communities
have been allowed to develop to capacity.
Based on our conversations with Polk County officials, it is readily
apparent that it has become increasingly more difficult to rezone sites to
manufactured home use, with governmental restrictions and increasing impact
fees, much of the developer's profit has been taken away. When coupled with
infrastructure costs dictated by concurrency, the cost of development can
increase to a point that makes the development of a manufactured home community
financially unfeasible. Hence, there is limited inventory and future supply will
be limited.
Additionally, our survey of the smaller municipalities has indicated that
additional fees are incurred for community development and are generally based
on the community's capacity. These fees vary among the individual
municipalities. The overall effect has been the decline in the development of
new manufactured housing communities in recent years. The difficult economic
times of the early 1990's and the lack of land for development have been
contributing factors to the inhibited growth in the state.
In the early 1980's, lot rental rates in most quality communities increased
100% or more,
<PAGE>
Manufactured Housing Community Market Overview 23
while vacancies, at that time, were negligible. Spiraling rent increases and the
lack of a viable alternative for manufactured home owners had resulted in
problems in many communities in the form of rent strikes, picket lines, and a
high percentage of homes made available for resale.
An additional restriction, which has greatly impacted the operation of
manufactured housing communities, was the 1984 Florida Mobile Home Act. This Act
established the Bureau of Mobile Homes of the Department of Business and
Professional Regulation and further, set out a list of requirements for
community owners and residents under Chapter 723 of the Florida Statutes.
The law requires manufactured home community owners to file a prospectus
with the Bureau of Mobile Homes fully describing the community and its rental
agreements and further requires owners to distribute the prospectus to all
community residents. In addition, rental rates must pass the test of being
reasonable. The code states:/3/
1. For the purpose of this section, a lot rental amount that is in excess
of market rent shall be considered unreasonable.
2. Market rent means that rent which would result from market forces
absent an unequal bargaining position between mobile home park owners
and mobile home owners.
3. In determining market rent, the court may consider rents charged by
comparable mobile home parks in its competitive area. To be
comparable, a mobile home park must offer similar facilities,
services, amenities, and management.
4. In determining whether a rent increase or resulting lot rental amount
is unreasonable, the court may consider economic or other factors, but
not limited to, increases or decreases in the consumer price index,
published by the Bureau of Labor Statistics of the Department of
Labor, increases or decreases in operating costs or taxes and prior
disclosures.
5. An arbitrator or mediator under sections 723.037, 723.038 and 723.0381
shall employ the same standards as set forth in this section.
The statute established procedures that the community owner must follow in
order to affect rental rate increases and, perhaps most importantly, requires
that a community owner who wishes to sell his community must first offer it (at
the owner's price and terms) to the community's homeowners association.
Current HUD wind standards are more stringent for manufactured housing than
they are for conventional site built housing. These wind standards were created
in response to Hurricane
______________________
/3/ History: Section 1, Chapters 84-90 and Section 9, Chapters 90-198.
<PAGE>
Manufactured Housing Community Market Overview 24
Andrew. Additionally, many insurance companies are hesitant to write business
interruption coverage for manufactured housing communities in coastal Florida.
However, business interruption insurance only covers losses sustained until all
debris is cleared away and the community is again fit for occupancy, the point
when the insurance coverage ends. Therefore, the insurance coverage is available
for a typically short period of time. These changes do not appear to have had a
major effect on the demand for manufactured homes, as market demand has actually
strengthened. It is apparent that the market reception for manufactured homes is
as a continued source of quality and affordable housing.
Rental Rates and Occupancy
--------------------------
There is a wide range of rates in the marketplace, based on the project and
the amenities offered. Generally speaking, a standard (non corner/no view
amenity) pad ranges between $190.00 per month to $277.00 per month. Premiums are
also attached to pads with a corner or view amenity, and these can run as high
as $56 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 $246.33 per lot (based on 107 lots), per month, with
the rent range from $173.30 to $262.00. 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 107-space, fully developed, age restricted manufactured
housing community. The communities that are most competitive with the subject
have been detailed on the following pages. These five communities are fully
developed and are currently between 85.6% and 100.0% occupied. The physical
occupancy at the subject is currently 100.0%. The manager occupies one space
rent free and 106 occupied sites produce rent resulting in an economic occupancy
of 99.1%. This occupancy appears to be slightly above the sub-market occupancy
of approximately 97%.
<PAGE>
Manufactured Housing Community Market Overview 25
Summary
-------
The State of Florida experienced high levels of growth in the manufactured
housing industry during the 1980's. Sales climbed steadily through the late
seventies and early eighties, peaking in 1985. Since that time sales showed a
steady decline each year through 1991. Sales in 1992, 1993 and 1994 indicated a
reversal from this most recent declining trend.
Manufactured home community owners, who in recent years have benefited from
a "captive" market and little competitive new supply, now find their interests
sandwiched between those of county and municipal authorities on the one hand,
and those of state regulators on the other. The upshot is likely to be that
although occupancies in manufactured housing communities will remain high,
future rent increases will not likely be as great as they have been.
<PAGE>
26
RENT COMPARABLE NUMBER ONE
--------------------------
Chateau Lakeland Junction
202 East Griffin Road
Lakeland, Polk County, Florida
[PICTURE APPEARS HERE]
Location: North side of East Griffin Road, east of North
Florida Avenue.
Number of Spaces: 191
Property Description: Age restricted manufactured housing community built
in 1984.
Monthly Rental Rates: $210.17 to $266.53
Occupancy: 100.0% (191 of 191)
Services Included in Rates: Lawn mowing.
Amenities: Clubhouse, pool, shuffleboard and laundry.
Verification/Date: Community Manager on May 15, 2000.
Comments: This community is the closest geographic comparable
to the subject.
============================================================================
Location Access Visibility Condition Amenities Home Quality Overall
----------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
============================================================================
<PAGE>
27
RENT COMPARABLE NUMBER TWO
--------------------------
Holiday Mobile Home Park
4141 West U. S. Highway 92
Lakeland, Unincorporated Polk County, Florida
[PICTURE APPEARS HERE]
Location: North side of U. S. Highway 92, east of Galloway
Road.
Number of Spaces: 214
Property Description: Age restricted manufactured housing community built
in the early 1960's.
Monthly Rental Rates: $195.00 to $205.00
Occupancy: 97.7% (209 of 214)
Services Included in Rates: Water, sewer and trash collection.
Amenities: Clubhouse, shuffleboard and laundry.
Verification/Date: Community Manager on May 15, 2000.
Comments: This is a good quality community located in the
western portion of Lakeland.
================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
________________________________________________________________________________
Similar Similar Similar Similar Similar Similar Similar
================================================================================
<PAGE>
28
RENT COMPARABLE NUMBER THREE
----------------------------
Beacon Terrace
3500 Harden Boulevard
Lakeland, Polk County, Florida
[PICTURE APPEARS HERE]
Location: West side of Harden Boulevard, south of Beacon
Road.
Number of Spaces: 297
Property Description: Age restricted manufactured housing community built
in 1987.
Monthly Rental Rates: $277.00 to $307.00
Occupancy: 100.0% (297 of 297)
Services Included in Rates: Water and sewer.
Amenities: Clubhouse, pool, spa, putting green, laundry and
shuffleboard.
Verification/Date: Community Manager on May 15, 2000.
Comments: This is a good quality community with slightly more
amenities than the subject.
===============================================================================
Location Access Visibility Condition Amenities Home Quality Overall
_______________________________________________________________________________
Similar Similar Similar Similar Superior Similar Inferior
===============================================================================
<PAGE>
29
RENT COMPARABLE NUMBER FOUR
---------------------------
Imperial Manor
2321 U. S. Highway 92 West
Lakeland, Florida
[PICTURE APPEARS HERE]
Location: North side of U. S. Highway 92, 1/2 mile west of
Wabash Avenue.
Number of Spaces: 200
Property Description: Age-restricted manufactured housing community built
in the early 1970's.
Monthly Rental Rates: $190.00 to $195.00
Occupancy: 99.0% (198 of 200)
Services Included in Rates: Water and sewer.
Amenities: Clubhouse, pool, laundry and shuffleboard.
Verification/Date: Community Manager on May 15, 2000.
Comments: This is a slightly older, age-restricted community
located in the western portion of Lakeland.
===============================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
===============================================================================
<PAGE>
30
RENT COMPARABLE NUMBER FIVE
---------------------------
Ariana Village
1625 Ariana Street
Lakeland, Florida
[PICTURE APPEARS HERE]
Location: North side Ariana Street, west of Harden Boulevard.
Number of Sites: 209
Property Description: Age restricted manufactured housing community built
in 1986.
Monthly Rental Rates: $238.00 to $258.00
Occupancy: 85.6% (179 of 209)
Services Included in Rates: None.
Amenities: Clubhouse, pool, laundry and shuffleboard.
Verification/Date: Community Manager on May 15, 2000.
Comments: This is a good quality community with similar
amenities to the subject.
===============================================================================
Location Access Visibility Condition Amenities Home Quality Overall
_______________________________________________________________________________
Similar Similar Similar Similar Similar Similar Similar
===============================================================================
<PAGE>
Rent Comparable Summary
<TABLE>
<CAPTION>
====================================================================================================================================
No. Name/Location Occ. Sites/Sites Monthly Services Included Amenities
% Occ. Rental Rates
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
1 Chateau Lakeland Junction 191/191 $210.17 Lawn mowing. Clubhouse, pool and
202 East Griffin Road 100.0% to shuffleboard.
Lakeland, Polk County, Florida $266.53
____________________________________________________________________________________________________________________________________
2 Holiday Mobile Home Park 209/214 $195.00 Water, sewer and trash Clubhouse, laundry and
4141 U. S. Highway 92 West 97.7% to collection. shuffleboard.
Lakeland, Polk County, Florida $205.00
____________________________________________________________________________________________________________________________________
3 Beacon Terrace 297/297 $277.00 Water and sewer. Clubhouse, pool, spa,
3500 North Harden Boulevard 100.0% to shuffleboard, putting
Lakeland, Polk County, Florida $307.00 green and laundry.
____________________________________________________________________________________________________________________________________
4 Imperial Manor Mobile Home Park 198/200 $190.00 Water and sewer. Clubhouse, pool,
2321 U. S. Highway 92 West 99.0% to shuffleboard and laundry.
Lakeland, Polk County, Florida $195.00
____________________________________________________________________________________________________________________________________
5 Ariana Village 179/209 $238.00 None Clubhouse, pool, laundry
1625 Ariana Street 85.6% to and shuffleboard.
Lakeland, Polk County, Florida $258.00
____________________________________________________________________________________________________________________________________
S Kings & Queens 107/107 $173.30 Lawn mowing. Clubhouse, pool and
2808 North Florida Avenue 100.0% to shuffleboard.
Lakeland, Polk County, Florida $262.00
====================================================================================================================================
</TABLE>
<PAGE>
[RENT COMPARABLES MAP APPEARS HERE]
<PAGE>
33
LAND AND SITE IMPROVEMENTS
--------------------------
The subject site is a rectangular shaped parcel of land containing
approximately 18.01 acres of gross area. The site is presently developed with
107 manufactured housing spaces and 4 recreational vehicle spaces. The tract is
generally level and at street grade and drainage of the tract appears adequate.
We observed no obvious adverse soil or subsoil conditions during the physical
inspection of the site.
Utility services connected and in service on the date of valuation include
the following:
Sanitary Sewer: City of Lakeland.
--------------
Storm Sewer: On site drainage system.
-----------
Water: City of Lakeland.
-----
Telephone: GTE
---------
Electric: Florida Power and Light
--------
Ingress to and egress from the subject community is via North Florida
Avenue, south of Griffin Road. The individual lots, in the community, are
accessed by roadways, which are laid-out in a grid pattern, maximizing the use
of the site, typical of manufactured housing communities. Roadway improvements
include:
Street-bed: North Florida Avenue is an asphalt paved two-lane
---------- roadway. The streets in the community are asphalt-paved
roadways and are 24-foot wide right-of-ways.
Curb: North Florida Avenue has concrete curbs. The community
---- streets do not have curbs.
Sidewalk: North Florida Avenue has concrete sidewalks. The
-------- community streets do not have sidewalks.
Streetlights: There are pole mounted lights along North Florida
------------ Avenue and throughout the community.
Landscaping: Grass and planted areas found throughout the site.
-----------
<PAGE>
Land and Site Improvements 34
Other: A six-foot high, masonry block and chain link fence
----- encloses the community.
Arrangements between the subject ownership and municipal and/or public
utility authorities for the connection of telephone and electricity are presumed
to exist, although neither a plan specifically identifying the location of all
underground lines nor contracts providing for their installation were provided
to us.
Encumbrances
------------
Our review of the deed, county property records and survey did not reveal
any adverse or potentially adverse interests, which would affect the utility of
the subject property. Specifically, there are no recorded or otherwise known
liens, defects in title or adverse easements. Additionally, there are no rent
controls in effect in Polk County.
Easements
---------
Standard utility easements for electricity and telephone are assumed to
exist. No other easements were identified to us.
Encroachments
-------------
There were no obvious encroachments observed during the inspection of the
subject and neighboring properties.
Environmental
-------------
There were no obvious areas of contamination on or about the subject site.
We are not qualified in environmental hazards and, therefore recommend an audit
be performed.
Functional Utility
------------------
The site, which is rectangular in shape and contains approximately 18.01
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 111-
space manufactured housing and recreational vehicle community with an overall
density of approximately 6.16 spaces per acre, is within modern standards. The
site is considered functional for use as a manufactured housing community.
<PAGE>
35
IMPROVEMENT DESCRIPTION
-----------------------
The subject is improved with 107 manufactured housing spaces and 4
recreational vehicle spaces. The lots in the community are arranged along
streets laid out in a grid pattern taking advantage of the rectangular shape of
the site. The streets have been configured to maximize the available number of
spaces. The individual manufactured housing lots in the community vary slightly
in size averaging approximately 3,745 square feet. The density of the property
is equal to 6.16 dwelling units per acre.
The common area amenities include a clubhouse, swimming pool and
shuffleboard courts. The clubhouse contains approximately 1,470 square feet of
area and has been partitioned into the main hall/multipurpose room, restrooms,
kitchen and the park office. The interior construction consists of painted or
papered drywall walls and ceilings. The flooring finish is vinyl tile. There are
flush mounted fluorescent light fixtures and ceiling fans. Adjacent to the
clubhouse is a patio, the pool area and shuffleboard courts. Additionally, there
is a 1,330 square foot steel frame, metal covered maintenance shed on the
premises.
We have not estimated a separate value for these amenities, or equipment,
as they are standard items found at most manufactured housing communities. These
amenities are typical for a community of this type, age, size and location, and
are adequate and functional in use.
Age and Condition
-----------------
According to the owner, the community was developed in two phases. Phase I,
consisting of 88 manufactured housing spaces and the common area amenities was
developed in 1981. Phase II, consisting of 19 manufactured housing spaces and 4
recreational vehicle spaces was developed in 1986. The subject is approximately
14 to 19 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 10 years old and were observed to
be in good condition.
<PAGE>
Improvement Description 36
[SITE LAYOUT-KINGS AND QUEENS APPEARS HERE]
<PAGE>
37
OWNERSHIP AND PROPERTY HISTORY
------------------------------
The ownership of the subject, as recorded in the Official Records of Polk
County, Florida, is in the name of Windsor Park Properties, 7. The property was
purchased by the current owners in February 1992 for $1,175,000 as is evidenced
by the Warranty Deed recorded in Official Record Book 3063 on Page 0205. There
have been no significant transactions involving the subject property within the
past five years.
OCCUPANCY
---------
The property is currently occupied by a 111-space manufactured housing and
recreational vehicle community, known as Kings And Queens. There are no vacant
manufactured housing spaces of the 107 total spaces. The physical occupancy is
100.0%. All of the spaces will accommodate multi-sectional homes. In addition to
the physical vacancy the manager occupies one space rent free resulting in an
economic occupancy of 106 spaces. The economic vacancy of the manufactured
housing spaces is 1 space or 0.9%
The community is governed, as required by law, by a prospectus. Annual
increases in the rental rates are governed by the prospectus, contained in the
Addenda to this report. The current rents at the subject range from $173.30 to
$262.00 per month. The rents were increased by $15.00 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 four recreational vehicle spaces, of which 1 was
occupied on the date of inspection. Historically the recreational vehicle spaces
have been at near 100% occupancy during the winter months with some use during
the remainder of the year. The recreational vehicle spaces rent for $280.00 per
space per month.
<PAGE>
38
ZONING AND OTHER LAND USE CONTROLS
----------------------------------
The subject property is located within the municipal limits of the City of
Lakeland and is zoned RM, Residential Medium Density according to the City of
Lakeland zoning ordinance. This classification allows for a density between 5.01
units per acre and 10 units per acre.
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 The City of Lakeland. Therefore,
concurrency is not an issue.
Flood Hazard
------------
The City of Lakeland is a participant in the Federal Emergency Management
Agency (FEMA) system. According to Flood Map Community Number 120267, Panel 0005
B, dated September 16, 1981, the subject property is located in FEMA designated
"C" and "A1" zones. The "A1" zone corresponds with the Lake Parker Tributary
which forms the north and west boundaries of the community. An "A" zone is
defined as a "special flood hazard area where no base flood elevations are
provided". An "A1" zone is defined as a "special flood hazard area where base
flood elevations are shown".
ASSESSMENT AND TAXES
--------------------
The subject is identified in the Polk County records under Parcel Numbers
01-28-23-000000-012040 and 01-28-23-000000-012050. According to the records at
the Polk County Property Appraiser's Office, the current (1999) assessed value
of the subject totals $932,010. In comparison to our opinion of the market value
the subject is under assessed. Under assessment is common for manufactured home
communities, because much of the value can be attributed to the entrepreneurial
skill in acquiring the land and filling the community. In our discussions with
the Polk County Property Appraiser's Office, it has been noted that properties
are not re-assessed upon sale in Polk County. Rather, all sales will be factored
in to the assessment of each property type. The Prospectus allows for the pass
through of additional ad valorem taxes to the residents.
Assessed values, for purposes of property taxation are determined on
January 1, of each year. In the state of Florida, properties are assessed at
100% of the market value, as required by Florida Statute, Chapter 192.042.
Properties are reassessed annually and equitability of assessments is not a
basis for assessment in the state of Florida. Taxes are due and payable on the
first day of the year, although tax bills are issued in arrears. Discounts up to
4% of the total bill are available for early payment and taxes become delinquent
after March 31. Discussions with owners of investment real estate and
manufactured home communities have revealed that
<PAGE>
Assessment And Taxes 39
"early" payment of real estate taxes is a common practice. Additionally, prudent
management would also dictate the payment of real estate taxes to take advantage
of any discounts offered. All tax amounts are current.
Historically, the actual taxes have decreased slightly over the last three
years. The table below illustrates the actual taxes over the last three years.
Historical Taxes
============================================
Tax Year Assessment Taxes
--------------------------------------------
1999 $932,010 $19,711.09
--------------------------------------------
1998 $932,010 $19,949.68
--------------------------------------------
1997 $932,010 $20,045.67
============================================
Based on historical tax trends we expect the real estate taxes to increase
slightly in the future. We have the estimated the 2000 tax liability to be
$19,908. We have applied the available early payment discount for November 2000
and our estimate of total taxes is $19,112.
<PAGE>
40
MARKETABILITY AND EXPOSURE PERIOD
---------------------------------
The subject as discussed in the Neighborhood Analysis, and Manufactured
Home Community Market Overview sections of this report is competitive and
marketable with other properties in the marketplace.
There are typically four classes of purchasers attracted to this type of
development. The first are the tenants/residents of the community, purchasing on
a cooperative or condominium basis to reduce rental rates. The second class of
purchaser would be the single owner/operator who purchases a community as an
income and investment vehicle. Third would be the "traditional" manufactured
home community owner/developer who views the community as a safe, long-term
investment. Finally, there is the institutional investor or syndicate (REIT)
which owns several large manufactured housing communities on a
statewide/nationwide basis.
Due to the stability of manufactured home community investments, the REIT
investors have been a major player in the marketplace. REIT investors have bid
down capitalization rates for new, large communities. Resident groups have also
increased demand for manufactured home community investments. According to our
banking sources, resident groups are able to borrow money at debt coverage
ratios as low as 1.0 to 1. The banks view resident group loans as good quality
with minimum risk. Typical payback periods range between five and eight years.
Discussions with large institutional manufactured home community investor
representatives and local area realtors, indicated that "properly priced",
stable, well kept manufactured housing communities should "be under contract"
within a six to eight month period in today's market. However, our research has
also revealed that very few communities are "listed" for sale and that for the
most part brokers solicit owners for buyers.
Our discussions further indicated that institutional investors required a
minimum of 200 spaces, and pricing would reflect an 8.50% to 9.50% overall
capitalization rate requirement for senior communities. Family communities
typically reflect higher capitalization rates due to a less stable occupancy
base. Pricing is established by processing gross income, reduced by a 2% to 3%
vacancy and credit loss factor with expenses of 35% of effective gross income.
An additional capital charge of 3% to 5%, based on overall condition, is
deducted to arrive at a net operating income (NOI). This criteria is generally
the most restrictive pricing, as other investors will tend to accept lower
expense ratios (30%), no capital charges and a lower overall rate.
In late summer 1998, commercial mortgage backed securities (CMBS) lenders
restructured their pricing for long term fixed rate loans. These loans had
historically been priced based on an interest rate spread above Treasury
Securities. The secondary market for these loans became illiquid and lenders
were unable to sell the loans profitably. Consequently, although interest rates
on Treasuries have fallen, the interest rates on securitized loans have
increased. Prior to this increase, interest rate spreads were available lower
than 150 basis points over the 10-
<PAGE>
Marketability and Exposure Period 41
year Treasuries. Since the fall, spreads have increased to the low 200 basis
point range for manufactured housing communities.
Interest rates are low and financial institutions are again willing to lend
money for existing real estate projects with good occupancies. The presence of
life insurance companies and conduit programs has made the financing of
manufactured housing communities a very competitive business. The insurance
companies and conduit programs will lend on a non-recourse basis, with terms
ranging from 10 to 20 years.
On the basis of the preceding analysis, the subject would be attractive to
all but the institutional investor. In our opinion, the exposure period for the
subject would be within the range indicated by the industry participants, and we
estimate an exposure period of six months.
<PAGE>
VALUATION SECTION
<PAGE>
43
HIGHEST AND BEST USE
--------------------
Highest and Best Use may be defined as:
"The reasonably probable and legal use of vacant land or an
improved property, which is physically possible, appropriately
supported, financially feasible and which results in the
highest value. The four criteria the highest and best use must
meet are legal permissibility, physical possibility, financial
feasibility, and maximum profitability."/4/
The highest and best use of a specific parcel of land does not depend on
subjective analysis; rather, the competitive forces in the market shape it. The
analysis and interpretation of highest and best use is an economic study of the
market forces on the subject.
Market forces also shape market value. The data collected and analyzed to
estimate property value is also used to formulate an opinion of the property's
highest and best use as of the effective date of the appraisal. In all
valuation assignments, value estimates are based on use. The highest and best
use of a property provides the foundation for an investigation of the
competitive positions of buyers and sellers in the marketplace, and can be
described as the foundation on which market value rests. Without interaction in
the marketplace, highest and best use would not exist and market value
estimations would be impossible.
When potential buyers contemplate purchasing real estate for personal use
or occupancy, their principal motivations are perceived benefits of enhanced
enjoyment, prestige, and privacy. Purchasers of investment property are
frequently motivated by the promise of net income or capital accumulation and
certain tax advantages. These investors are more directly concerned with
feasibility, an indication that a project has a reasonable likelihood of
satisfying their specific objectives.
Analysis of the highest and best use of: 1) the land as though vacant, and
2) the property as improved, is essential in the valuation process. Through
highest and best use analysis, we attempt to interpret the market forces that
influence the subject property and identify the use on which the final value
estimate will be based. This determination is based on the analysis and
interpretation of market conditions, the trends affecting the buyers and sellers
in the marketplace, and the existing use of the subject. The highest and best
use of the land, as though vacant and the property as improved, must meet four
criteria.
___________________
/4/ The Appraisal Institute, The Dictionary of Real Estate Appraisal, 3d ed.
(Chicago, Illinois: The Appraisal Institute, 1993), Page 170.
<PAGE>
Highest and Best Use 44
Analyzing the highest and best use of the land as though vacant serves two
functions. First, it helps identify comparable properties, which should have
highest and best uses of the land as though vacant, similar to that of the
subject property. The second reason is to identify the use that would produce
maximum income to the land after property income is allocated to the
improvements. In the Cost Approach and some income capitalization techniques, a
separate value estimate of the land is required. Estimating the land's highest
and best use as though vacant becomes the necessary part of deriving a land
value estimate.
There are also reasons to analyze the highest and best use of the property
as improved. The first is to help identify comparable properties that should
have the same or similar highest and best uses as the improved subject property.
The second is to decide whether the improvements should be demolished, renovated
or retained in their present condition. They should be retained as long as they
have some marketable value and the return from the property exceeds the return
that would be realized by a new use, after deducting the costs of demolishing
the old building and constructing a new one. Identification of the existing
property's most profitable use is crucial to this determination.
The highest and best use of both the land as though vacant and the property
as improved must meet four criteria. The highest and best use must be:
1. Legally Permissible
2. Physically Possible
3. Financially Feasible
4. Maximally Productive
These criteria are usually considered sequentially; a use may be
financially feasible, but this is irrelevant if it is physically impossible or
legally prohibited. Only when there is a reasonable possibility that one of the
prior, unacceptable conditions can be changed is it appropriate to proceed with
the analysis. If, for example, current zoning does not permit a potential
highest and best use, but there is a possibility that the zoning can be changed,
the proposed use can be considered on that basis.
Legally Permissible
-------------------
Legal restrictions, as they apply to the subject property, are of two
types, i.e., private restrictions (deed restrictions, easements, etc.) and
public restrictions (zoning, building codes, environmental regulations and
historic district controls, etc.). These latter restrictions must be
investigated, to the best of our ability, because they may preclude many
potential highest and best uses.
No information regarding private restrictions affecting the subject was
uncovered in our research or provided by the client. It is assumed that only
common restrictions, such as utility easements, are in-place, which would not be
of any significant consequence to the development
<PAGE>
Highest and Best Use 45
of the site.
The subject is an approved Manufactured Housing Community by the City of
Lakeland 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 18.01
acres. The site is generally level and has adequate access frontage along the
west side of North Florida Avenue, within one mile south of Interstate 4. 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 6.16 spaces per acre. The subject
meets the physically possible criteria of this analysis.
Financially Feasible
--------------------
After determining which uses are physically possible and legally
permissible, we have eliminated many uses from consideration. Then the uses
that meet the first two criteria are analyzed further to determine which are
likely to produce an income, or return, equal to or greater than the amount
needed to satisfy operating expenses, financial obligations and capital
amortization. All uses that are expected to produce a positive return are
regarded as financially feasible.
To determine financial feasibility, we then estimate the future gross
income that can be expected from each logical use. Vacancy and collection
losses and operating expenses are then subtracted from each gross income to
obtain the likely net operating income (NOI) from each use. A rate of return on
the invested capital can then be calculated for each use. If the net revenue
capable of being generated is enough to satisfy the required rate of return on
investment and provide a return on the land, the use is financially feasible
within some price limit.
<PAGE>
Highest and Best Use 46
Maximally Productive
--------------------
Of the financially feasible uses, the use that produces the highest price,
or value, consistent with the rate of return warranted by the market for that
use is the highest and best use. To determine the highest and best use of land
as though vacant, the same rate of return is often used to capitalize income
streams from different uses into their respective values. This procedure is
appropriate if all competing uses have similar risk characteristics. If not,
differing rates of return would be required. The use that produces the highest
value is the highest and best use.
To test the highest and best use of land as though vacant or a property as
improved, an appraiser analyzes all logical, feasible alternatives. The market
usually limits the number of property uses to a few logical choices. Each
alternative use must first meet the tests of physical possibility and legal
permissibility. The uses that meet the first two tests are then analyzed to
ascertain how many financially feasible alternatives must be considered.
An appraiser must exercise caution in performing market analysis to support
an estimate of highest and best use. Although a given site may be particularly
well suited for a specific use, there may be a number of other sites that are
also well suited, and some may be better suited. Therefore, the appraiser must
test the highest and best conclusion to ensure that existing and potential
competition from other sites has been fully recognized.
Highest and Best Use - Vacant Land
----------------------------------
In determining the highest and best use of the site as vacant, the most
restrictive constraint is the legal use of the site. As stated above and in the
Zoning and Other Land Use Controls section of this report, the subject is a
legal and conforming use of the site.
We have also noted that less than 1/4 of the manufactured housing
communities have over 100 spaces in Polk County. Due to the non-availability of
space for immediate development, restrictive governmental impact fees and a lack
of financing for speculative projects, it is unlikely that there will be
speculative manufactured housing community development in the foreseeable
future.
Current trends in the manufactured housing sales would preclude the
development of a manufactured housing community until such time as the market
has improved. In our opinion, the highest and best use of the site, as if
vacant and available for development, would be to hold the property for future
sale as the market trends might predicate.
<PAGE>
Highest and Best Use 47
Highest and Best Use - As Improved
----------------------------------
The site is currently improved with a 111-space age restricted manufactured
housing and recreational vehicle 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 1981.
The improvements are well situated on the site. The site has excellent
access from North Florida Avenue. The amenities for this size and type of
improvement are within normal standards. The use of the site is physically
possible. Demand for manufactured housing in this area is evident. As
evidenced in the Income Capitalization Approach, the property is capable of
providing an acceptable return to an owner, demonstrating the financial
feasibility of the subject property.
The property, as currently improved, is physically possible, legally
permissible, financially feasible and maximally productive. Therefore, in our
opinion, the highest and best use of the property as improved is its current use
as a 111-space age restricted manufactured housing and recreational vehicle
community.
<PAGE>
48
VALUATION PROCESS
-----------------
There are three recognized approaches to the valuation of real property:
Cost; Income; and, Direct Sales Comparison. The appropriateness of each
approach varies with the type and age of the property under examination, as well
as the quantity and quality of applicable market data as of the appraisal date.
In the analyses and appraisal of the subject property, we have considered the
positive and negative aspects of each approach for this specific assignment.
The Cost Approach provides a value indication based on the depreciated cost
of the improvements added to land value. The Income Approach produce an
estimate of value through an economic analysis of the net income derived from
the property and is converted to a capital sum at an appropriate rate. The
Sales Comparison Approach produces an estimate of value through a comparison of
similar properties, which have been transferred in the local market.
In the analysis of a stabilized manufactured housing community, investors
are primarily concerned with cash flow to service any debt and the equity
positions. While development costs are important for developing communities,
investors assume that these costs are adequately accounted for in rental levels.
In communities where developers have made money on the sale of homes by offering
low site rents, an investor would not be willing to compensate a seller for any
more than the income to be received. The Cost Approach was not utilized due to
the subjectivity of depreciation and entrepreneurial profit estimates.
A number of positive and negative factors were believed to affect the
overall value of the subject. On the positive side, the following were
considered.
1. The subject is well located in regard to the area amenities.
2. The subject is well kept and has a high-grade amenity package.
Partially offsetting the positive influences are negative factors among
which the following was considered the most pertinent:
1. The market is competitive, with shipments down from the 1980's levels.
With the above factors in mind, the Income Capitalization Comparison and
Sales Comparison Approaches will now be discussed in detail on the following
pages.
<PAGE>
49
INCOME CAPITALIZATION APPROACH
------------------------------
As an introduction to the analysis of the subject, it is helpful to identify
the goals and objectives of both buyers and sellers of properties such as the
subject.
From the standpoint of a seller, maximum price is of course an initial goal.
Tempered by capital gains considerations and the potential for recapture of book
depreciation accruals, a seller is often forced to consider a negotiated price
that may include such concessions as interim or permanent financing. Dictated
by market forces, the rate, term, and amount of financing may be favorable,
neutral, or unfavorable with respect to the ultimate selling price.
The purchasers of investment realty naturally prefer to pay a minimum price
subject to terms. Within the goal of price minimization purchasers seek:
1. Cash flow relative to capital investment measured either on a pre-
income tax or post-income tax basis.
2. Minimal capital investment to permit leverage.
3. Equity build-up through mortgage amortization.
4. Sheltered income through accumulation of book depreciation.
5. Capital accumulation through market appreciation.
The relative importance of the above factors to an investor's formula is
difficult to quantify. Institutional investors, speculators, developers,
financial institutions, and syndicators do not uniformly apply the same
investment strategies. The location, size, tenant mix, age, absence or presence
of long term leases, assignability of existing debt, condition of the
facilities, level of occupancy, quality of management, and other related factors
are among the criteria affecting the marketability of an income-producing
property.
The first step in the Income Approach to value involves the estimate of
future net operating income to be generated by the property. The estimate of
net operating income is derived through a process of estimating the total
potential gross income (PGI) from lot rentals, less a vacancy and credit loss
factor, added to an estimate of income from other sources. The result is an
effective gross income (EGI) estimate. All expenses associated with the
operation of the property are then deducted to yield a stabilized net operating
income (NOI) estimate.
In our estimate of the stabilized net operating income, we have considered
the subject's current rent, expense levels and historical trends. We have also
considered the current rent and expenses at manufactured home communities
similar to the subject, as limited by the existing Prospectus and rental
agreement.
<PAGE>
Income Capitalization Approach 50
The subject's historical income and expenses for 1997, 1998 and 1999 have
been presented, in the table, on the following page. Although the reported
expenses do not appear unreasonable, we have also relied on market comparables.
Current income and expense information for three comparable age-restricted
manufactured home communities has also been presented in this section.
The data on the tables has been arrayed to display the "percent of total
income" and "dollar per space" figures, consistent with industry reporting
practices. We have combined some of the owners expense categories for purposes
of comparison.
Our analysis of each component of income, vacancy and credit loss and
expenses follows these tables, and has been summarized in the Reconstructed
Operating Statement found on Page 60.
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
Kings & Queens - 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:
MH Rents $251,473 96.60% $2,265.52 $269,096 98.23% $2,424.29 $289,033 98.81% $2,603.90
RV Rents 8,185 3.14% 73.74 3,667 1.34% 33.04 2,850 0.97% 25.68
Miscellaneous/Other 675 0.26% 6.08 1,191 0.43% 10.73 620 0.21% 5.59
-----------------------------------------------------------------------------------------------------
Total Income $260,333 100.00% $2,345.34 $273,954 100.00% $2,468.05 $292,503 100.00% $2,635.16
Expenses:
Insurance $ 4,621 1.78% $ 41.63 $ 1,629 0.59% $ 14.68 $ 2,024 0.69% $ 18.23
Office/Administrative 24,230 9.31% 218.29 21,308 7.78% 191.96 19,442 6.65% 175.15
Maintenance & Repairs 29,804 11.45% 268.50 22,303 8.14% 200.93 25,032 8.56% 225.51
Management Expense 12,969 4.98% 116.84 13,662 4.99% 123.08 14,625 5.00% 131.76
Wages & Benefits 22,937 8.81% 206.64 25,780 9.41% 232.25 26,764 9.15% 241.12
Property Taxes 19,932 7.66% 179.57 20,530 7.49% 184.95 19,875 6.79% 179.05
Utilities 21,398 8.22% 192.77 24,230 8.84% 218.29 20,605 7.04% 185.63
-----------------------------------------------------------------------------------------------------
Total Expenses $135,891 52.20% $1,224.24 $129,442 47.25% $1,166.14 $128,367 43.89% $1,156.46
Net Operating Income $124,442 47.80% $1,121.10 $144,512 52.75% $1,301.91 $164,136 56.11% $1,478.70
==================================================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 52
Income Analysis
---------------
The general practice in the local market is to charge a base lot rent on a
monthly basis. The base lot rate may, or may not include such services as water,
sewer, trash collection and lawn mowing. The higher base lot rents typically
include more services. The base lot rents typically generate between 90% and
99% of the total income in a manufactured home community. At the subject, lawn
mowing is 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 recreational vehicle rentals is
$329,728. The manufactured home lot rent rate averages $246.33 per month and
the recreational vehicle spaces rent for $280.00 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 100.0% physically occupied. As of the date of inspection, there
were no vacant spaces and the community manager occupied one space. The
economic vacancy of the manufactured home sites at the subject is currently
0.9%. In addition to the vacancy, a small percentage for credit loss is
appropriate. We have estimated stabilized vacancy and credit loss for the
manufactured home spaces at 5.0% to account for both physical and economic
vacancy and credit loss. The economic vacancy of the recreational vehicle
spaces at the subject on the date of inspection was 75.0%, however the manager
indicated that historically the recreational vehicle spaces are near 100%
occupied for six months of the year. Based on this a significant vacancy factor
is appropriate. Additionally, a nominal factor for credit loss is appropriate.
We have estimated stabilized vacancy and credit loss for the recreational
vehicle spaces at 60.0% to account for both physical and economic vacancy and
credit loss. Total vacancy and credit loss has been estimated to be $23,878.
The effective gross income from rentals is estimated to be $305,849.
Miscellaneous Income
--------------------
Miscellaneous income, at the subject, is derived from late check charges and
similar fees. Historically this amount has ranged from $5.59 to $10.73 per
space, varying annually. Based on the historical financials we have estimated
this amount at $10.00 per space, equal to $1,110 annually.
<PAGE>
Income Capitalization Approach 53
Effective Gross Income
----------------------
Effective Gross Income is derived from income based upon the current
economic rent less a vacancy and credit loss allowance for present and
anticipated income losses due to any tenant changes, added to any additional
income from miscellaneous sources. Our estimate of the stabilized effective
gross income follows:
Effective gross income chart
<TABLE>
<CAPTION>
====================================================================================================================================
Kings & Queens
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>
107 Mobile Home $246.33 12 $26,357 $316,288 5.0% (15,814) $ 300,473
4 RV $280.00 12 1,120 13,440 60.0% (8,064) 5,376
------------------------------------------------------------------------------------------------------------------------------------
111 Total Units $27,477
Gross Potential Rental Income $329,728
Less: Vacancy & Credit Loss $ (23,878)
---------
Effective Gross Income From Rentals $ 305,849
Miscellaneous/Other Income $ 10.00 per space 1,110
--------------
Effective Gross Income $ 306,959
====================================================================================================================================
</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 126 Income Space 109 Income Space 144 Income Space
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income:
Rents $213,370 88.23% $1,693.41 $339,528 100.00% $3,114.94 $366,892 97.98% $2,547.86
Miscellaneous/Other 28,460 11.77% 225.87 0 0.00% 0.00 7,557 2.02% 52.48
-----------------------------------------------------------------------------------------------------
Total Income $241,830 100.00% $1,919.29 $339,528 100.00% $3,114.94 $374,449 100.00% $2,600.34
Expenses:
Insurance $ 3,131 1.29% $ 24.85 $ 2,740 0.81% $ 25.14 $ 3,616 0.97% $ 25.11
Office/Administration 2,155 0.89% 17.10 5,783 1.70% 53.06 2,310 0.62% 16.04
Maintenance & Repairs 3,899 1.61% 30.94 4,100 1.21% 37.61 10,040 2.68% 69.72
Management Expense 6,000 2.48% 47.62 16,400 4.83% 150.46 8,400 2.24% 58.33
Wages & Benefits 13,200 5.46% 104.76 10,000 2.95% 91.74 17,040 4.55% 118.33
Property Taxes 17,179 7.10% 136.34 38,058 11.21% 349.16 36,397 9.72% 252.76
Utilities 25,633 10.60% 203.44 27,920 8.22% 256.15 57,479 15.35% 399.16
Miscellaneous 631 0.26% 5.01 0 0.00% 0.00 500 0.13% 3.47
-----------------------------------------------------------------------------------------------------
Total Expenses $ 71,828 29.70% $ 570.06 $105,001 30.93% $ 963.31 $135,782 36.26% $ 942.93
Net Operating Income $170,002 70.30% $1,349.22 $234,527 69.07% $2,151.62 $238,667 63.74% $1,657.41
==================================================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 55
Insurance charges are property specific based on the location of the
property and the amenity package. Insurance charges varied over the last three-
year period. Insurance costs have ranged from $14.68 per space in 1998 to
$41.63 per space in 1997. The 1999 insurance expense totaled $18.23 per space.
The comparable expense data indicated a range from $21.91 to $42.06 per space.
We have used $20.00 per space based on the historical amounts, which is $2,220
annually.
Insurance
<TABLE>
<CAPTION>
============================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $4,621 $1,629 $2,024 $5,014 $2,848 $8,707 $2,220
--------------------------------------------------------------------------------------------
% EGI 1.78% 0.59% 0.69% 2.43% 0.83% 1.25% 0.72%
--------------------------------------------------------------------------------------------
$/Space $41.63 $14.68 $18.23 $28.49 $21.91 $42.06 $20.00
============================================================================================
</TABLE>
Office/Administrative expense is project specific due to varying
classifications of expense categories. At the subject, this expense includes the
costs associated with the operation of the office, such as telephone, supplies,
licenses, dues and subscriptions and advertising expenses. We have attempted to
include like items in this category for both the subject and the expense
comparables. The expense comparables indicated a range for this category from
$58.77 to $71.26 per space. The historical data has decreased annually over the
last three years and was above the range of the comparable expenses. We have
placed greatest reliance on the historical data weighed by the comparable data,
estimating administrative expense at $180.00 per space or $19,980 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 $24,230 $21,308 $19,442 $10,343 $9,264 $13,029 $19,980
--------------------------------------------------------------------------------------------
% EGI 9.31% 7.78% 6.65% 5.00% 2.70% 1.86% 6.51%
--------------------------------------------------------------------------------------------
$/Space $218.29 $191.96 $175.15 $ 58.77 $71.26 $ 62.94 $180.00
============================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 56
Maintenance and Repairs expense is project specific based on the age and
condition of the property. Many properties expense capital items rather than
capitalizing them. This can result in abnormal spikes in the expense amounts in
certain years.
Historically, maintenance and repair expenses have varied annually from
$200.93 per space in 1998 to $268.50 per space in 1997. Our inspection revealed
the property to be in good overall condition, with no items of deferred
maintenance noted.
The expense comparables indicate a lower and wider range of expense in this
category from $42.80 per space (Comparable Number 1), to $238.04 per space
(Comparable Number 3). Our stabilized estimate of this expense is $210.00 per
space or $23,310 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 $29,804 $22,303 $25,032 $7,533 $21,766 $49,275 $23,310
--------------------------------------------------------------------------------------------
% EGI 11.45% 8.14% 8.56% 3.64% 6.33% 7.05% 7.59%
--------------------------------------------------------------------------------------------
$/Space $268.50 $200.93 $225.51 $42.80 $167.43 $238.04 $210.00
============================================================================================
</TABLE>
Management Fee has historically ranged from 4.98% to 5.00% of effective
gross income at the subject. Management expense was charged at one of the three
comparables and amounted to 2.31%, for Comparable Number Three. The overall
market range for management fees was found to range from approximately 3.0% to
5.0%.
We have estimated a fee of 5.0% of effective gross income, considered
adequate for the management of a property of this size, in this location.
Applying this percentage to the Effective Gross Income Estimate produces an
annual amount of $15,348 or $138.27 per space per year.
<PAGE>
Income Capitalization Approach 57
Wages and Benefits expense has increased annually ranging from $206.64 per
space in 1997, to $241.12 per space in 1999. The 1998 wages and benefits expense
amounted to $232.25 per space. The comparables have indicated a wider range from
$75.31 per space for Comparable Number One to $309.50 per space for Comparable
Number Two.
This category includes all of the costs associated with the staffing
including payroll and payroll taxes and any health and/or life insurance
benefits. The manager would typically receive a rent-free home and this is the
case at the subject property. Our estimate of this expense has been based on the
historical amounts weighed by the comparables. Our estimate of $27,750 annually
is the equivalent of $250.00 per space or 9.04% 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 $22,937 $25,780 $26,764 $13,254 $40,235 $38,059 $27,750
--------------------------------------------------------------------------------------------
% EGI 8.81% 9.41% 9.15% 6.41% 11.71% 5.44% 9.04%
--------------------------------------------------------------------------------------------
$/Space $206.64 $232.25 $241.12 $ 75.31 $309.50 $183.86 $250.00
============================================================================================
</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 $19,112, corresponding
to the forecast November 2000 amount. This is equivalent to $172.18 per space or
6.23% of the Effective Gross Income estimate.
<PAGE>
Income Capitalization Approach 58
Utilities expense is also project specific, due to the number and type of
services which may be included in the rent. In this case, this line item
includes trash collection for the residents and the cost of the common area
utilities. We have placed greatest reliance on the historical data, as it is the
best indicator for this expense at the subject. The expense comparables include
some utilities in the lot rents. Historically, this expense has varied each
year. We have estimated utilities expense at $200.00 per space or $22,200
annually. This is equivalent to 7.23% 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 $21,398 $24,230 $20,605 $31,009 $57,397 $56,120 $22,200
--------------------------------------------------------------------------------------------
% EGI 8.22% 8.84% 7.04% 15.00% 16.70% 8.03% 7.23%
--------------------------------------------------------------------------------------------
$/Space $192.77 $218.29 $185.63 $176.19 $441.52 $271.11 $200.00
============================================================================================
</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
$2,775 annually.
<PAGE>
Income Capitalization Approach 59
Expense Summary
---------------
To summarize, we have estimated the stabilized total operating expenses for
the subject to be $132,695. This estimate is equal to 43.23% 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 $ 135,891 $ 129,442 $ 128,367 $82,832 $ 341,763 $ 689,020 $ 132,695
-----------------------------------------------------------------------------------------------
% EGI 52.20% 47.25% 43.89% 40.07% 44.96% 34.80% 43.23%
-----------------------------------------------------------------------------------------------
$/Space $1,224.24 $1,166.14 $1,156.46 $470.64 $1,188.58 $1,175.32 $1,195.45
===============================================================================================
</TABLE>
As shown on the preceding table, expenses have historically represented
between 43.89% (1999) and 52.20% (1997) of the Effective Gross Income, and has
decreased each year. The expense comparables, as summarized above, indicated a
lower and wider range between 34.80% (Comparable Number 3) and 44.96%
(Comparable Number 2). Our estimate of total expenses is equal to 43.23% of the
estimated EGI. It should be noted that the historical expenses had no provision
for a reserve for capital expenditures, which we have included in our estimate.
Our estimate of net operating income is $174,264. We have presented our
stabilized estimate of income and expenses on the following page.
<PAGE>
Income Captitalization Approach 60
=============================================================================
Kings & Queens
Stabilized Operating Statement
% of $ per
Amount EGI Space
=============================================================================
Total Effective Gross Income $306,959 100.00% $2,765.40
Expenses
Insurance $ 2,220 0.72% $ 20.00
Office 19,980 6.51% 180.00
Maintenance & Repairs 23,310 7.59% 210.00
Management Expense 15,348 5.00% 138.27
Wages & Benefits 27,750 9.04% 250.00
Property Taxes 19,112 6.23% 172.18
Utilities 22,200 7.23% 200.00
Reserves 2,775 0.90% 25.00
-------- ------ ---------
Total Expenses $132,695 43.23% $1,195.45
Net Operating Income $174,264 56.77% $1,569.95
=============================================================================
<PAGE>
Income Capitalization Approach 61
Capitalization Discussion
-------------------------
Two alternative methods of valuation are employed in the Income Approach.
Direct capitalization is a method of converting net operating income into market
value, employing a "capitalization" rate based upon market perimeters. This
approach is particularly applicable to properties with a stable income stream,
or in cases where income, and consequently value, can be projected to increase
at a constant or stable rate.
An alternative valuation method is yield capitalization, which employs a
year-by-year projection of income and expenses, recognizing rent changes and the
cost of improvements as they occur. Yield capitalization, also known as
Discounted Cash Flow Analysis, is considered most appropriate in the valuation
of properties with uneven income streams. Since investors are unwilling to pay
for any upside from vacant units, fully developed manufactured home communities
are typically valued by direct capitalization, based on existing income.
Direct Capitalization
---------------------
Direct capitalization of net operating income by an overall capitalization
rate extracted from the market provides an excellent indication of market value.
Purchasers of manufactured home communities most often utilize this method.
This method is the most easily understood, closely related to the market, and
convincing if the overall rates abstracted from recent sales are from comparable
sale properties and accurate income data are available. Income data was
available from all of the comparable sale properties included in this report.
Market Data
-----------
The comparable sale data shown in the Sales Comparison section of this
report indicated an overall capitalization rate between 7.98% and 9.48%. Our
analysis of this data indicated a narrow range in overall capitalization rates,
which tend to be influenced by the size of the community, its age and condition,
occupancy, amenity package and location.
Comparable Sales
=========================================================
Sale Sale Date Overall
Number Capitalization Rate
---------------------------------------------------------
1 07/98 8.24%
---------------------------------------------------------
2 07/99 9.48%
---------------------------------------------------------
3 03/99 9.27%
---------------------------------------------------------
4 10/98 8.72%
---------------------------------------------------------
5 08/99 7.98%
=========================================================
As discussed in the marketability section of this report, our sources
indicated that
<PAGE>
Income Capitalization Approach 62
institutional investors required 8.5% to 9.5% overall capitalization rates for
projects in the 200 space range and were the most restrictive in pricing due to
stringent criteria. We also found that REIT's were bidding rates down even
further. Our information revealed that manufactured home community cooperatives
and associations would more likely accept slightly lower overall rates, while
the small investor would require a slightly higher rate. We have also discussed
the fact that the manufactured home community market in Polk County is
unsophisticated and the subject at 107 spaces is one of the mid sized
communities in the county.
The comparable sale data represents recent sales of properties, similar in
respects to the subject. Sale Comparable Number One is a sale of a similar
sized, slightly older property with similar amenities, located in a similar
market area. Sale Comparable Number Two is a slightly larger, older property,
with similar amenities. This sale indicated an overall rate of 9.48%, and
represented the upper portion of the indicated range. Sale Comparable Number
Three is a larger, older property with similar amenities, located in a similar
market area. Sale Comparable Number Four is a sale of a similar sized, slightly
older property with similar amenities. Sale Comparable Number Five is a sale of
a larger, older property with similar amenities.
Based on the comparison of the sale data to the subject, the overall rate
for the subject would likely be in the 8.5% to 9.5% range, as the subject is
considered attractive to all investors and interest rates are still low. We
have concluded a rate of 9.00%, as the subject is a 111 space, well-occupied
community, located in a sophisticated market area. The subject would appeal to
a large number of investors.
Debt Coverage Ratio Method
--------------------------
As an alternative to market-derived overall capitalization rates, we have
developed an overall rate through the Debt Coverage Ratio analysis. The
parameters for this calculation are summarized below.
The Debt Coverage Ratio Method of income capitalization essentially
measures the risk involved in mortgage lending. Its usefulness to mortgage
underwriting takes the form of establishing a degree of safety with a given set
of loan terms.
Mortgage underwriting typically focuses on positive debt coverage, (net
operating income/annual mortgage debt service or NOI/ADS), rather than market
value, because a negative cash flow, after debt service, may indicate the
probability that a mortgage loan could be in jeopardy. Accordingly, if the
greatest portion of the property's value is debt capital, as established by the
loan-to-value ratio, annual debt coverage in underwriting is a major
consideration. The Debt Coverage Ratio method is therefore market based and
direct.
By multiplying this risk factor by the projected mortgage payment
requirement an estimate of the required overall rate to satisfy the lender's
minimum risk requirements can be derived. The formula for this procedure is: M
x f x DCR = R, where;
<PAGE>
Income Capitalization Approach 63
M = Loan to Value Ratio
f = Mortgage Constant
DCR = Debt Coverage Ratio
R = Overall Rate
In order to establish the criteria for the development of the Debt Coverage
Ratio Method, we have conducted a recent survey of local lenders. The results of
our survey have been summarized on the following table.
=====================================================================
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 =
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loan to Value Ratio Mortgage Constant Debt Coverage Ratio Overall Rate
---------------------------------------------------------------------------------------------
0.75 0.96671 1.25 0.090629
---------------------------------------------------------------------------------------------
Rounded 9.1%
=============================================================================================
</TABLE>
The Debt Coverage Ratio method indicated a capitalization rate based upon
financing by local banks. However, as the popularity of manufacturing housing
community investments has increased, alternate sources of financing have become
available through insurance companies and
<PAGE>
Income Capitalization Approach 64
conduit programs.
The presence of institutional investors in the market and few quality real
estate investments has bid down rates on manufactured home communities.
Investors have become more creative in their acquisition strategies in order to
compete. Therefore, actual transactions in the marketplace better demonstrate
investor perceptions of yields on manufactured home community investments.
The rate developed via the Debt Coverage Ratio method is slightly lower
than the rate extracted from the market data, and is considered supportive of
the market rate. We have estimated an overall capitalization rate of 9.00% for
the subject and capitalized the net income of $174,264. The value conclusion via
the income approach is summarized as follows:
$174,264 divided by .0900 = $1,936,267
Rounded to $1,900,000
<PAGE>
65
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>
66
3. The functional adequacy of each sale property and the subject are
competitive in terms of the ability of each to support similar
functions.
To draw a conclusion from the analysis of the sales data, a unit of
comparison has been selected. The calculation of a unit of comparison provides
a common denominator by which the market sales can be related to each other and
to the subject property. The commonly accepted unit of comparison in the
valuation of a manufactured home community is the sale price per space. This
unit of comparison emphasizes the contribution of the improvements, and the
contribution of the land is merged into the unit sale price.
While a diverse array of transactions was initially considered, the sales
selected for direct comparison to the subject are those transactions that are
most similar to the subject. For features that are dissimilar, adjustments have
been made leading to an indication of the price at which the subject could be
expected to sell. In considering adjustments, relevant factors were considered
including:
1. Nature of surrounding development.
2. Relative size.
3. Availability of competing properties.
4. Effect of time on selling prices.
5. Age and condition of the improvements.
6. Amenities and occupancy.
In our search for comparable sales, we excluded age-restricted communities
since they tend to have a less transient occupancy base and typically trade at
lower capitalization rates than all age communities. Based on our
investigation, the following five sales are the most significant transactions
for direct comparison with the subject. All are recent transactions and are
indicative of the actions of the manufactured housing community market.
Meanwhile, we expanded our sales search geographically in an attempt to provide
the most relevant market data to the subject property.
The sales occurred between July 1998 and August 1999. The properties
ranged in size from 110 to 337 spaces. The sale prices, on a per space basis,
ranged from $18,846 to $25,519. The Effective Gross Income Multipliers (EGIM)
ranged from 5.56 to 7.89 and the indicated overall rates, as previously
mentioned, ranged from 7.98% to 9.48%. The following pages detail each of the
sales, following which we have presented a summary of the pertinent data.
<PAGE>
67
Sale Comparable Number One
Ship Reck Harbor
1600 Lake Shipp Drive South
Winter Haven, Polk County, Florida
[PICTURE APPEARS HER]
Sale Date: July 1998
Property Description
--------------------
Size/Type: 112-space age-restricted manufactured home community
Utilities: All Public
Land Description: Generally level, irregularly shaped, parcel of land
with adequate access. Improved with asphalt paved
streets and streetlights.
Improvements/Amenities: Clubhouse, pool and shuffleboard courts.
Year Built/Condition: Late 1970's/Good
<PAGE>
68
Sale Comparable Number One
Income Data
-----------
Annual Occupancy: 100.0% (112 of 112 spaces)
Average Lot Rent: $220.00
Effective Gross Income: $310,680
Expenses: $108,738 (35.0% of the effective gross income)
estimated
Net Income: $201,942 / $1,803 per space
Sale Data
---------
Sale Price: 2,450,000
Cash Equivalent Price: 2,450,000
Grantor: Orin M. Shell, et al
Grantee: Isaac Kelbie, Inc.
Financing Terms: Purchase Money Mortgage, No effect.
Sales History
(Past 3 Years): None noted
Market Exposure: Unknown
Verification Source: Confidential
Date: September 29, 1998
Comparison Data
---------------
Sale Price/Space: $21,875
Effective Gross Income
Multiplier (EGIM): 8.24
Overall Capitalization
Rate (OAR): 7.89
Comments The income and expenses were estimated from percentages
provided during verification.
<TABLE>
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Location Access Visibility Condition Amenities Home Quality Overall
------------------------------------------------------------------------------------------------------------------------
Similar Similar Similar Similar Superior Similar Similar
========================================================================================================================
</TABLE>
<PAGE>
69
Sale Comparable Number Two
Hidden Village
3035 66/th/ Avenue North
St. Petersburg, Pinellas County, Florida
[PICTURE APPEARS HERE]
Sale Date: July 1999
Property Description
--------------------
Size/Type: 130-space age restricted manufactured housing community
Utilities: All Public
Land Description: Generally level, irregularly shaped, parcel of land
with adequate access. Improved with asphalt-paved
streets and streetlights.
Improvements/Amenities: Clubhouse, pool, shuffleboard courts and laundry
facilities.
Year Built/Condition: 1973/Good
<PAGE>
70
Sale Comparable Number Two
Income Data
-----------
Annual Occupancy: 96.9% (126 of 130)
Average Lot Rent: $253.29
Effective Gross Income: $440,560
Expenses: $208,372 (47.3% of the effective gross income)
Net Income: $232,188 / $1,786 per space
Sale Data
---------
Sale Price: $2,450,000
Cash Equivalent Price: $2,450,000
Grantor: Wayne C. Rickert
Grantee: Home Mobile Home Park
Financing Terms: Cash to Seller.
Sales History
(Past 3 Years): None noted
Verification Source: Lorraine Leitheiser, Broker
Date: November 10, 1999
Comparison Data
---------------
Sale Price/Space: $18,846
Effective Gross Income
Multiplier (EGIM): 5.56
Overall Capitalization
Rate (OAR): 9.48%
Comments: This sale also included 15 apartments along the front
of the community. The financial information reflects
the buyer's pro-forma adjusted for a 5% management fee
and $25 per space in reserves.
<TABLE>
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Location Access Visibility Condition Amenities Home Quality Overall
------------------------------------------------------------------------------------------------------------------------
Similar Similar Similar Similar Superior Similar Similar
========================================================================================================================
</TABLE>
<PAGE>
71
Sale Comparable Number Three
Flamingo Shores and Heritage Estates
3275 West U. S. Highway 92
Winter Haven, Polk County, Florida
[PICTURE APPEARS HERE]
Sale Date: March 1999
Property Description
--------------------
Size/Type: 206-space age restricted manufactured housing community
Utilities: All Public
Land Description: Generally level, irregularly shaped, parcel of land
with adequate access and lake frontage. Improved with
asphalt-paved streets and streetlights.
Improvements/Amenities: Clubhouses, shuffleboard courts, boat slips and docks.
Year Built/Condition: 1959/Good
<PAGE>
72
Sale Comparable Number Three
Income Data
-----------
Annual Occupancy: 98.1% (202 of 206 spaces)
Average Lot Rent: $217.00
Effective Gross Income: $510,603
Expenses: $139,924 (27.4% of the effective gross income)
Net Income: $370,679 / $1,799 per space
Sale Data
---------
Sale Price: $4,000,000
Cash Equivalent Price: $4,000,000
Grantor: Ullrich Enterprises, Inc.
Grantee: Corrigan Group Two, L.C.
Financing Terms: Cash to Seller.
Sales History
(Past 3Years): None noted
Market Exposure: Unknown
Verification Source: Bill Corrigan, Buyer
Date: June 1999
Comparison Data
---------------
Sale Price/Space: $19,417
Effective Gross Income
Multiplier (EGIM): 7.83
Overall Capitalization
Rate (OAR): 9.27%
Comments This is a good quality community older than the
subject.
<TABLE>
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Location Access Visibility Condition Amenities Home Quality Overall
------------------------------------------------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
========================================================================================================================
</TABLE>
<PAGE>
73
Sale Comparable Number Four
Tyrone Village
13618 North Florida Avenue
Tampa, Hillsborough County, Florida
[PICTURE APPEARS HERE]
Sale Date: October 1998
Property Description
--------------------
Size/Type: 110-space age restricted manufactured housing community
Utilities: All Public
Land Description: Generally level, irregularly shaped 15.84-acre parcel
of land with adequate access. Improved with asphalt-
paved streets and streetlights.
Improvements/Amenities: Clubhouse, pool, laundry and shuffleboard courts.
Year Built/Condition: 1974/Good
<PAGE>
Sale Comparable Number Four 74
Income Data
-----------
Annual Occupancy: 97.2% (106 of 110 spaces)
Average Lot Rent: $260.00
Effective Gross Income: $329,839
Expenses: $138,022 (41.85% of the effective gross income)
Net Income: $191,817 / $1,744 per space
Sale Data
---------
Sale Price: $2,200,000
Cash Equivalent Price: $2,200,000
Grantor: Daniel and Catherine Woods
Grantee: Tyrone Park, LLC
Financing Terms: Cash to Seller
Sales History
(Past 3 Years): None.
Market Exposure: Unknown
Verification Source: Michael Hay, Grantee
Date: October 1998
Comparison Data
---------------
Sale Price/Space: $20,000
Effective Gross Income
Multiplier (EGIM): 6.67
Overall Capitalization
Rate (OAR): 8.72%
Comments: This sale included five rental homes.
===============================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-------------------------------------------------------------------------------
Similar Similar Similar Similar Superior Similar Similar
===============================================================================
<PAGE>
Sale Comparable Number Five 75
Gateway Mobile Home Park
10100 Gandy Boulevard
St. Petersburg, Pinellas County, Florida
[PICTURE APPEARS HERE]
Sale Date: August 1999
Property Description
--------------------
Size/Type: 337-site age restricted manufactured home community
Utilities: All Public
Land Description: Generally level, irregularly shaped 40.07-acre parcel
of land with adequate access. Improved with asphalt-
paved streets and streetlights.
Improvements/Amenities: Clubhouse, pool, laundry and shuffleboard courts.
Year Built/Condition: 1957-1964/Good
<PAGE>
Sale Comparable Number Five 76
Income Data
-----------
Annual Occupancy: 98.8% (333 of 337 sites)
Average Lot Rent: $290.00
Effective Gross Income: $1,094,711
Expenses: $408,412 (37.31% of the effective gross income)
Net Income: $686,299 / $2,036 per space
Sale Data
---------
Sale Price: $8,600,000
Cash Equivalent Price: $8,600,000
Grantor: D. A. Bennett Company.
Grantee: RAC Investments, Inc.
Financing Terms: Cash to Seller
Sales History
(Past 3 Years): None.
Market Exposure: Unknown
Verification Source: D. A. Bennett, Grantor
Date: August 1999
Comparison Data
---------------
Sale Price/Space: $25,519
Effective Gross Income
Multiplier (EGIM): 7.86
Overall Capitalization
Rate (OAR): 7.98%
Comments: This community was developed in phases, with the
newer phase (62 lots) being completed in 1964.
Expenses included a management fee and have been
adjusted to reflect $25.00 per site reserve.
===============================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-------------------------------------------------------------------------------
Superior Similar Similar Similar Inferior Similar Similar
===============================================================================
<PAGE>
Summary of Sale Comparables
<TABLE>
<CAPTION>
=======================================================================================================================
No. Name/Location Sale Price/ Total Price/ Average EGIM/ O.A.R.
Sale Date Spaces/ Space Lot Rent %
Occupancy Expenses
=======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1 Ship Reck Harbor $2,450,000 112/ $21,875 $220.00 7.89/ 8.24%
1600 Lake Shipp Drive South July 1998 100.0% 35.0%
Winter Haven, Polk County, Florida
-----------------------------------------------------------------------------------------------------------------------
2 Hidden Village $2,450,000 130/ $18,846 $253.29 5.56/ 9.48%
3035 66/th/ Avenue North July 1999 96.9% 47.3%
St. Petersburg, Pinellas County, Florida
-----------------------------------------------------------------------------------------------------------------------
3 Flamingo Shores & Heritage Estates $4,000,000 206/ $19,417 $217.00 7.83/ 9.27%
3275 West U. S. Highway 92 March 1999 98.1% 27.4%
Winter Haven, Polk County, Florida
-----------------------------------------------------------------------------------------------------------------------
4 Tyrone Village $2,200,000 110/ $20,000 $260.00 6.67/ 8.72%
13618 North Florida Avenue October 1998 97.2% 41.85%
Tampa, Hillsborough County, Florida
-----------------------------------------------------------------------------------------------------------------------
5 Gateway Mobile Home Park $8,600,000 337/ $25,519 $290.00 7.86/ 7.98%
10100 Gandy Boulevard August 1999 98.8% 37.3%
St. Petersburg, Pinellas County, Florida
=======================================================================================================================
</TABLE>
<PAGE>
[COMPARABLE SALES MAP APPEARS HERE]
<PAGE>
Sales Comparision Approach 79
As previously stated, the Sales Comparison Approach involves investigating
recent transfers of properties similar to the subject. The properties, which
have been compared to the subject, have been discussed below:
Sale Comparable Number One is Ship Reck Harbor in Winter Haven, Polk
County, Florida. This 112 space rental park sold for $2,450,000 in July 1998.
This price equates to a sale price per space of $21,875. Based on an effective
gross income of $310,680, the EGIM was 7.89, and the overall rate was 8.24%.
This park was 100.0% occupied at the time of sale.
Sale Comparable Number Two is Hidden Village in St. Petersburg, Pinellas
County, Florida. The property has 130 home sites and recently sold for
$2,450,000, or $18,846 per space. Based on an effective gross income of
$440,560, the EGIM was 5.56. The expenses represented 47.3% of the effective
gross income and the indicated capitalization rate was 9.48%. This age
restricted community was 96.9% occupied at the time of sale.
Sale Comparable Number Three is the combined sale of Flamingo Shores and
Heritage Estates in Winter Haven, Polk County, Florida. This 206 space age
restricted community sold for $4,000,000 in March 1999. This price equates to a
sale price per space of $19,417. Based on an effective gross income of $510,603,
the EGIM was 7.83, and the overall rate was 9.27%. The parks were 98.1% occupied
at the time of sale.
Sale Comparable Number Four is Tyrone Village Mobile Home Park in Tampa,
Hillsborough County, Florida. This 110 space age restricted community sold for
$2,200,000 in October 1998. This price equates to a sale price per space of
$20,000. Based on an effective gross income of $329,839, the EGIM was 6.67, and
the overall rate was 8.72%. This community was 97.2% occupied at the time of
sale.
Sale Comparable Number Five is Gateway Mobile Home Park located in St.
Petersburg, Pinellas County, Florida. This 337-site age restricted community
sold for $8,600,000 in August 1999. This price equates to a sale price per site
of $25,519. Based on an effective gross income of $1,094,711, the EGIM was 7.86,
and the overall capitalization rate was 7.98%. This community was 98.8% occupied
at the time of sale.
All of the sales were fee simple transactions, with abnormal financing
reflected in the cash equivalent price. There were no abnormal sale conditions
known to have occurred and all of the sales represent transactions that have
taken place over a two year period, having traded under similar market
conditions.
Effective Gross Income Multiplier
---------------------------------
Other adjustments, typically considered, are location, amenities, age and
condition, occupancy, etc., and are reflected in the average lot rent. A tenant
is typically willing, absent other factors, to pay more lot rent for a better
located, newer community. This also holds true for
<PAGE>
Sales Comparision Approach 80
amenities, age and other factors. The average lot rent reflects, in most cases,
the market perception of a property's position in the marketplace. It is also
typical that lot rent increases contribute to increases in net operating income.
Alternatively, we have employed the effective gross income multiplier (EGIM), in
this analysis.
The Effective Gross Income Multiplier for the comparable sale properties
ranged between 5.56 and 7.89. As previously discussed, the EGIM is essentially a
function of the average lot rent. The average lot rent is a function of the
physical aspects of the property, such as age and condition, location and
amenities. EGIM's also reflect the market's perception of the potential for
future rent increases.
The subject is an established, age-restricted community, with a good
location and access. There is a history of good occupancy and the property and
improvements were observed to be in good overall condition. There is adequate
maintenance to maintain the current condition of the community. A rent increase
of $15.00 per space went into effect January 1, 2000 and our analysis
incorporated this increase. The rent levels have been shown to be within the
indicated market range.
Based on these considerations, we have concluded an EGIM at the low end of
the indicated range, processing the subject's Effective Gross Income of $306,959
with an EGIM of 6.50.
$306,959 x 6.50 = $1,995,234
Rounded $2,000,000
On a per space basis, our estimate of value is the equivalent of $18,018.
Price Per Space Analysis
------------------------
Adjustments, typically considered, are location, age and condition,
occupancy, etc., and are reflected in the income generating capabilities of a
community. A tenant is typically willing, absent other factors, to pay more rent
for a better located, newer community with a greater amenity package. Rather
than making a subjective percentage adjustment to the per space sales prices,
the Net Operating Income/Space (NOI/Space) reflects, in most cases, the market
perception of a property's position in the marketplace. Since investors are
mainly concerned with cash flow to service debt, the net operating income
generating capability of a particular community can be used for comparison
purposes. Typically, the higher the NOI/Space for a community, the higher the
per space sales price. The subject has a NOI/Space of $1,569.95 in our
stabilized analysis. The NOI/Space and the per space sales prices for the
comparables are shown on the following table. We then compare the percentage
difference between each comparable's NOI/Space and the subject's NOI/Space. For
comparables with a higher NOI/Space, a downward adjustment to the per space
sales price is made. An upward adjustment
<PAGE>
Sales Comparision Approach 81
is made for a comparable with a lower NOI/Space.
NOI/Space and Per Space Sales Price
============================================================================
COMP 1 COMP 2 COMP 3 COMP 4 COMP 5 SUBJECT
----------------------------------------------------------------------------
NOI/Space $ 1,803 $ 1,786 $ 1,799 $ 1,744 $ 2,036 $1,570
----------------------------------------------------------------------------
Price/Space $21,875 $18,846 $19,417 $20,000 $25,519 N/A
----------------------------------------------------------------------------
Percent
Adjustment -12.93% -12.10% -12.75% -9.97% -22.91% N/A
____________________________________________________________________________
Adjusted
Price/Space $19,047 $16,566 $16,941 $18,006 $19,673 N/A
============================================================================
After adjustments, the indicated range is from $16,566 to $19,673 per
space. We have concluded towards the middle of the range giving equal weight to
all of the comparables. We concluded $18,000 per space.
Thus, 111 Spaces x $18,000/Space is: $1,998,000
Rounded $2,000,000
The two methods indicated the same value and are considered mutually
supportive. We have concluded $2,000,000 via the sales comparison approach.
<PAGE>
82
FINAL ESTIMATE OF VALUE
-----------------------
The two approaches to value applied in the subject analysis yielded these
conclusions:
Income Capitalization Approach $1,900,000
Sales Comparison Approach $2,000,000
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 indicated a narrow range of values and are considered
mutually supportive. 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:
- ONE MILLION NINE HUNDRED THOUSAND DOLLARS -
($1,900,000)
<PAGE>
83
CERTIFICATION
-------------
We certify that, to the best of our knowledge and belief:
. The statements of fact in this report are true and correct.
. The reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions and are our personal,
impartial and unbiased professional analyses, opinions, and conclusions.
. We have no present or prospective interest in the property that is the
subject of this report, and no personal interest with respect to the
parties involved.
. We have no bias with respect to the property that is the subject of this
report or to the parties involved with this assignment.
. Our engagement in this assignment was not contingent upon developing or
reporting predetermined results.
. Our compensation for completing this assignment is not contingent upon
the development or reporting of a predetermined value or direction in
value that favors the cause of the client, the amount of the value
opinion, the attainment of a stipulated result, or the occurrence of a
subsequent event directly related to the intended use of this appraisal.
. Our analysis, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice.
. The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
. As of the date of this report, John H. Whitcomb, MAI, CCIM has completed
the requirements under the continuing education program of the Appraisal
Institute.
. John H. Whitcomb, MAI, CCIM and William G. Trask have made a personal
inspection of the property that is the subject of this report.
. No one provided significant professional assistance to the persons
signing this report.
. We are in compliance with the competency provisions of the Uniform
Standards of professional Appraisal Practice of the Appraisal Foundation.
. This appraisal assignment was not based on a requested minimum value,
specific value, or the approval of a loan.
___________________________ ___________________________
John H. Whitcomb, MAI, CCIM William G. Trask
St. Cert. Gen. REA #0001234 St. Cert. Gen. REA #0002347
<PAGE>
84
ASSUMPTIONS AND LIMITING CONDITIONS
-----------------------------------
The primary assumptions and limiting conditions pertaining to the
conclusion in this report are summarized below.
To the best of our knowledge and belief, the statements of facts contained in
the appraisal report, upon which the analysis and conclusion expressed are
based, are true and correct. Information, estimates and opinions furnished to
us and contained in the report or utilized in the formation of the value
conclusion were obtained from sources considered reliable and believed to be
true and correct. However, no representation, liability or warranty for the
accuracy of such items is assumed by or imposed on us, and is subject to
corrections, errors, omissions and withdrawal without notice.
The legal description of the appraised property, as exhibited in the report is
assumed correct.
The valuation may not be used in conjunction with any other appraisal or study.
The value conclusion stated in this appraisal is based on the program of
utilization described in the report, and may not be separated into parts. The
appraisal was prepared solely for the purpose and party so identified in the
Purpose and Function. The appraisal report may not be reproduced, in whole or
in part, and the findings of the report may not be utilized by a third party for
any purpose, without the written consent of Whitcomb Real Estate.
No change of any item in any of the appraisal report shall be made by anyone
other than Whitcomb Real Estate and we shall have no responsibility for any such
unauthorized change.
The property has been appraised as though free and clear of mortgages, liens,
leases, servitudes and encumbrances, except as may be described in the
appraisal.
We are not required to give testimony or be in attendance at any court or
administrative proceeding with reference to the property appraised unless
additional compensation is agreed to and prior arrangements have been made.
Unless specifically stated, the value conclusion contained in the appraisal
applies to the real estate only, and does not include personal property,
machinery and equipment, trade fixtures, business value, goodwill or other non-
realty items. Income tax considerations have not been included or valued unless
so specified in the appraisal. We make no representations as to the value
changes, which may be attributed to such considerations.
Neither all nor any part of the contents of the report shall be disseminated or
referred to the public through advertising, public relations, news or sales
media, or any other public means of communication or referenced in any
publication, including any private or public offerings including buy not limited
to those filed with Securities and Exchange Commission or other governmental
agency, without the prior written consent and approval of and review by Whitcomb
Real Estate.
<PAGE>
Assumptions and Limiting Conditions 85
In completing the appraisal, it is understood and agreed that the report are not
now intended, and will not be used in connection with a real estate syndication.
Good and marketable title to the interest being appraised is assumed. We are
not qualified to render an "opinion of title," and no responsibility is assumed
or accepted for matters of a legal nature affecting the property being
appraised. No formal investigation of legal title was made, and we render no
opinion as to ownership of the property or condition of its title.
Unless otherwise noted in the appraisal, it is assumed that there are no
encroachments, zoning, building, fire or safety code violations, or restrictions
of any type affecting the subject property. It is assumed that the property is
in full compliance with all applicable federal, state, local and private codes,
laws, consents, licenses and regulations, and that all licenses, permits,
certificates, approvals, franchises, etc. have been secured and can be freely
renewed and/or transferred to a purchaser.
It is assumed that the utilization of the land and any improvements are within
the boundaries or property lines of the property described, and that there are
no encroachments, easements, trespass, etc., unless noted within the report. We
have not made a survey of the property, and no responsibility is assumed in
connection with any matter that may be disclosed by a proper survey. If a
subsequent survey should reflect a differing land area and/or frontages, we
reserve the right to review our final value estimate.
All maps, plats, building diagrams, site plans, floor plans, photographs, etc.
incorporated into the appraisal are for illustrative purposes only, to assist
the reader in visualizing the property, but are not guaranteed to be exact.
Dimensions and descriptions are based on public records and/or information
furnished by others and are not meant to be used as a reference in legal matters
of survey.
Management is assumed to be competent, and the ownership to be in responsible
hands. The quality of property management can have a direct effect on a
property's economic viability and value. The financial projections contained in
the appraisal assumes both responsible ownership and competent management. Any
variance from this assumption could have a significant impact on the final value
estimate.
We assume that there are no hidden or unapparent conditions of the property's
soil, subsoil or structures, which would render them more or less valuable. No
responsibility is assumed for such conditions, or for engineering which might be
required to discover such factors. Detailed soil studies were not made available
to us, so statements regarding soil qualities, if made in the report, are not
conclusive but have been considered consistent with information available to us
and provided by others. In addition, unless stated otherwise in the appraisal,
the land and soil of the area under appraisement appears firm and solid, but the
appraisal does not warrant this condition.
The appraisal report covering the subject property is limited to surface rights
only, and does not include any inherent subsurface or mineral rights.
The appraisal is made for valuation purposes only. It is not intended nor to be
construed to be an engineering report. We are not qualified as structural or
environmental engineers, therefore we are not qualified to judge the structural
and environmental integrity of the improvements, if any. Consequently, no
warranty, representations or liability are assumed for the structural soundness,
quality, adequacy or capacities of said improvements and utility services,
including the construction materials, particularly the roof, foundations, and
equipment, including the HVAC systems, if applicable. Should there be any
<PAGE>
Assumptions and Limiting Conditions 86
question concerning same, it is strongly recommended that an
Engineering/Construction/Environmental inspection be obtained. The value
estimate stated in this appraisal, unless noted otherwise, is predicated on the
assumption that all improvements, equipment and building services, if any, are
structurally sound and suffer no concealed or latent defects or inadequacies
other than those noted in the appraisal.
Any proposed construction or rehabilitation referred to in the appraisal report
is assumed to be completed within a reasonable time and in a workmanlike manner
according to or exceeding currently accepted standards of design and methods of
construction.
Any areas or inaccessible portions of the property or improvements not inspected
are assumed to be as reported or similar to the areas, which are inspected.
Unless specifically stated in the report, we found no obvious evidence of insect
infestation or damage, dry or wet rot. Since a thorough inspection by a
competent inspector was not performed for us, the subject improvements, if any,
is assumed to be free of existing insect infestation, wet rot, dry rot, and any
structural damage which may have been caused by pre-existing infestation or rot
which was subsequently, treated.
In the appraisal assignment, the existence of potentially hazardous material
used in the construction, maintenance or servicing of the improvements, such as
the presence of urea-formaldehyde foam insulation, asbestos, lead paint, toxic
waste, underground tanks, radon and/or any other prohibited material or chemical
which may or may not be present on or in the subject property, was, unless
specifically indicated in the report, not observed by us, nor do we have any
knowledge of the existence of such materials on or in the property. We,
however, are not qualified to detect such substances. The existence of these
potentially hazardous materials may have a significant effect on the value of
the property. The client is urged to retain an expert in this field, if
desired. The value conclusion assumes the property is "clean" and free of any
of these adverse conditions unless notified to the contrary in writing.
No effort has been made to determine the possible effect, if any, on the subject
property of energy shortages or present or future federal, state or local
legislation, including any environmental or ecological matters or
interpretations thereof.
We take no responsibility for any events, conditions or circumstances affecting
the subject property or its value, that take place subsequent to either the
effective date of value cited in the appraisal or the date of our field
inspection, which ever occurs first.
The estimates of value stated in this appraisal apply only to the effective
dates of value stated in the report. Value is affected by many related and
unrelated economic conditions within a local, regional, national and/or
worldwide context, which might necessarily affect the prospective value of the
subject property. We assume no liability for an unforeseen change in the
economy, or at the subject property, if applicable.
We believe that the underlying assumptions and current conditions provide a
reasonable basis for the value estimate stated in this appraisal. However, some
assumptions or projections inevitably will not materialize and unanticipated
events and circumstances may occur during the forecast period. These could
include major changes in the economic environs; significant increases or
decreases in current
<PAGE>
Assumptions and Limiting Conditions 87
mortgage interest rates and/or terms or availability of financing altogether;
property assessment; and/or major revisions in current state and/or federal tax
or regulatory laws. Therefore, the actual results achieved during the projected
holding period and investor requirements relative to anticipated annual returns
and overall yields could vary from the projection. Thus, variations could be
material and have an impact on the individual value conclusion stated herein.
The Americans with Disabilities Act (ADA) became effective January 26, 1992.
The appraiser has not made a specific compliance survey and analysis of this
property to determine whether or not it is in conformity with the various
detailed requirements of the ADA. It is possible that a compliance survey of
the property together with a detailed analysis of the requirements of the ADA
could reveal that the property is not in compliance with one or more of the
requirements of the act. If so, this fact could have a negative effect upon the
value of the property. Since the appraiser has no direct evidence relating to
this issue, possible noncompliance with the requirements of ADA was not
considered in estimating the value of the property.
<PAGE>
ADDENDA
<PAGE>
LEGAL DESCRIPTION
<PAGE>
LEGAL DESCRIPTION
-----------------
EXISTING KINGS & QUEENS MOBILE HOME PARK
A tract of land lying the South 1/2 of the Southeast 1/4 of the Northeast 1/4
Section 1, Township 28 South, Range 23 East, Polk County, Florida, and a portion
of Republican Heights as recorded in Pict Book 16, Page 33 of the public records
of Polk County, Florida and being more particularly described as: Commence at
the Southeast corner of the Southeast 1/4 of the Northeast 1/4; thence North
00'15'11" West along the East line of said Southeast 1/4 of the Northeast 1/4 a
distance of 210.00 feet; thence South 89'14'43" West and parallel to the South
line of said Southeast 1/4 of the Northeast 1/4 a distance of 28.88 feet to the
Southeast corner of Lot 2 of said Republican Heights and the West right of way
line of North Florida Avenue; thence North 0009'11" West along said West right
of way line 75.00 feet to the Point of Beginning; thence continue North
00'09'11" West still along said West right of way line a distance of 372.16 feet
to the North line of said South 1/2 of the Southeast 1/4 of the Northeast 1/4,
said point also being 28.10 feet West of the Northeast corner of said South 1/2;
thence South 89'22'02" West along said North line 1295.59 feet to the Northwest
corner of said South 1/2 of the Southeast 1/4 of the Northeast 1/4; thence South
00'24'29" East along the West line of said Southeast 1/4 of the Northeast 1/4 a
distance of 327.90 feet to the intersection of the North line of Lots 19 and 20,
Block D, of said Republican Height projected Westerly; thence North 89'14'43"
East along said North line 120.57 feet to the Northeast corner of said Lot
19; thence South 00'45'17" East along the East line of said Lot 19 a distance of
142.00 feet to the Southeast corner of said Lot 19; thence North 89'14'43" East
along a projection Easterly of the South line of said Lots 19 and 20, a distance
of 37.99 feet to the West line of a drainage easement as recorded in OR. Book
1534 Page 888 of the public records of Polk County, Florida; thence South
00'04'24" East along said West line 166.45 feet; thence South 46'53'30" West
still along the said West line 34.751 feet; thence continue South 48'53'30" West
0.23 feet to the South line of said Southeast 1/4 of the Northeast 1/4; thence
North 89'14'43" East along said South line 589.19 feet to the Southwest corner
of the East 600.00 feet of said Southeast 1/4 of the Northeast 1/4; thence North
00'15'11" West along the West line of said East 600.00 feet a distance of 210.00
feet; thence North 89'14'43" East 301.12 feet to the Southwest corner of Lot 5,
Block B, of said Republican Heights; thence North 00'09'11" West, along the West
line of said Lot 5, a distance of 75.00 feet; thence North 89'14'43" East 270.00
feet to the Point of Beginning.
LESS AND EXCEPT ROAD RIGHT OF WAY.
LEGAL DESCRIPTION FOR KINGS & QUEENS ADDITION
Commencing at the Southeast corner of the Southeast 1/4 of the Northeast 1/4 of
Section 1, Township 28 South, Range 23 East; thence South 89'14'43" West along
the South boundary thereof, 29.95 feet to the Point of Beginning, said Point of
Beginning being on the West right of way of North Florida Avenue; continue South
89'14'43" West along said South boundary 570.75 feet; thence North 05'15'11"
West, parallel with the East line of said Southeast 1/4 of the Northeast 1/4
210.00 feet; thence North 89'14'43" East 571.12 feet to a point on said right of
way line; thence South 00'09'11" East along said right of way line 210.00 feet
to the Point of Beginning, LESS AND EXCEPT road right of way.
<PAGE>
PROFILES OF APPRAISERS
<PAGE>
PROFILE OF APPRAISER
WILLIAM G. TRASK
St.Cert. Gen. REA #0002347
REAL ESTATE APPRAISAL EXPERIENCE
--------------------------------
Appraiser
Whitcomb Real Estate
Tampa, FL
Specializing in real estate valuations and consulting projects for
lending institutions, public and private corporations and individuals,
for a variety of uses. Property types appraised include manufactured
housing communities, recreational vehicle parks, manufacturing plants,
office buildings, apartment complexes, retail properties and other types
of commercial establishments. February 1998 to Present.
Appraiser
Atlas Real Estate Group, Inc.
Tampa, FL
Specialized in real estate condemnation valuations and related studies.
Property types appraised include agricultural, industrial, residential,
office buildings, retail properties and other types of commercial land
and establishments. August 1991 to January 1998.
PROFESSIONAL AFFILIATIONS
-------------------------
State Certified General Real Estate Appraiser
Florida # 0002347
Georgia # CG007464
PARTIAL LIST OF CLIENTS AND PROPERTIES
--------------------------------------
Manufactured Home Communities
-----------------------------
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 Mobrland Bytle 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
<PAGE>
Profile of Appraiser 2
William G. Trask
<TABLE>
<CAPTION>
Manufactured Home Communities (Cont.)
-------------------------------------
<S> <C> <C> <C>
Country Club Estates Venice, FL River Bay Tampa, FL
Country Lakes Coconut Creek, FL Riverview Micco, FL
Country Life Leesburg, FL Serendipity Clearwater, FL
Crystal River Village Crystal River, FL Southern Acres St. Cloud, FL
Diamond Point Leesburg, FL Spanish Trails Zephyrhills, FL
Friendly Village Sellersburg, IN Sun Village Largo, FL
Hammock Lake Fort Meade, FL Sundance Zephyrhills, FL
Heron Cay Vero Beach, FL Sunshine Village Lake Worth, FL
Hibiscus Mount Dora, FL Tall Pines Fort Pierce, FL
Hidden Village St. Petersburg, FL Tanglewood Fort Pierce, FL
High Point Clearwater, FL Vero Palms Vero Beach, FL
Recreational Vehicle Parks
--------------------------
Lazy Lakes RV Sugarloaf Key, FL Ridgecrest RV Leesburg, FL
Lions Lair RV Marathon, FL Sunshine RV Vero Beach, FL
Pioneer Village North Fort Myers, FL Topics RV Spring Hill, FL
Other
-----
ABC Pizza House Tampa, FL Fabian Enterprises Tampa, FL
Blakie's Restaurant Tampa, FL Florida Power & Light St. Petersburg, FL
Breed Automotive Lakeland, FL Mobil Oil Lakeland, FL
Discount Auto Parts Lakeland, FL Pier 1 Imports Hoover, AL
Discount Auto Parts Sarasota, FL Pizza Hut Brandon, FL
Discount Auto Parts Land O' Lakes, FL Pizza Hut Lakeland, FL
Financial
---------
Belgravia Capital Heller Financial
Collateral Mortgage, Ltd. Lehman Brothers
Executive Commercial Funding NationsBank
First Federal Savings Bank, Leesburg, FL Republic Bank, Port Richey, FL
First National Bank St. Lucie, FL Signature Financial Services, Inc.
First Union National Bank Union Capital Investments, LLC
GE Capital Corporation United Southern Bank, Eustis, FL
Greentree Financial
</TABLE>
<PAGE>
Profile of Appraiser 3
William G. Trask
Real Estate/Real Estate Investment
----------------------------------
Continental Communities National Home Communities
Martin Newby Management Pacific Life
Munao Partnership Windsor Corporation
EDUCATIONAL BACKGROUND
----------------------
Florida State University
University of South Florida
Edison Community College
Hillsborough Community College
Appraisal Institute
International Right of Way Association
<PAGE>
PROFILE OF APPRAISER
JOHN H. WHITCOMB, MAI, CCIM
St.Cert. Gen. REA #0001234
REAL ESTATE EXPERIENCE
----------------------
Owner
Whitcomb Real Estate
Tampa, FL
Specialize in complex real estate valuations and consulting projects.
Property types include manufactured home communities, recreational vehicle
parks, self-storage facilities, hotels, manufacturing plants, office
buildings, retail buildings and other types of commercial establishments as
well as special use facilities. Mr. Whitcomb is active in the ownership and
management of seven manufactured home communities throughout Florida.
January 1996 to present.
Partner
Chartwell Advisory Group, Ltd.
Tampa, FL
Supervised complex real estate valuations and property tax consulting
projects. Responsibilities included management of all technical staff
members throughout the country. Property types included manufactured home
communities, recreational vehicle parks, hotels, large manufacturing
plants, office buildings and retail buildings. April 1993 to January 1996.
Senior Appraiser
Marshall and Stevens, Inc.
Philadelphia, PA and Tampa, FL
Specialized in preparing appraisals for land and buildings in industrial,
commercial and residential uses. Performed appraisals for purposes of
sale/purchase, property tax appeals, syndication, financing and allocation
of purchase price. September 1985 to March 1990, and June 1992 to April
1993.
Vice President
Strategis Asset Valuation & Management, Inc.
Tampa, FL
Prepared appraisals and feasibility studies on complex commercial
properties. Performed appraisals for purposes of sale/purchase, property
tax appeals, financing and allocation of purchase price. March 1990 to May
1992.
<PAGE>
Profile of Appraiser 2
PROFESSIONAL AFFILIATIONS
-------------------------
MAI, Member Appraisal Institute
CCIM, Certified Commercial Investment Member Commercial Investment Real Estate
Institute
State Certified General Real Estate Appraiser
Florida #0001234
PARTIAL LIST OF CLIENTS AND PROPERTIES
--------------------------------------
<TABLE>
<CAPTION>
Manufactured Home Communities
-----------------------------
<S> <C> <C> <C>
Akers Away West Palm Beach, FL Lakeside Douglasville, GA
Alafia Riverfront Gibsonton, FL Lakewood Denton, TX
Alpine Village Sebring, FL Lantana Cascade Lantana, FL
Arbor Oaks Zephyrhills, FL Long Lake Village West Palm Beach, FL
Blue Heron Clearwater, FL Marlboro Court West Palm Beach, FL
Bradenton Trailer Park Brandenton, 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 Brandenton, 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
Harmony 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
<TABLE>
<S> <C> <C> <C>
Recreational Vehicle Parks
--------------------------
Avalon RV Park Clearwater, FL Pioneer Creek Bowling Green, FL
Camp Inn Frostproof, FL Rainbow Village Clearwater, FL
Forest Lake Village Zephyrhills, FL Space Coast RV Resort Rockledge, FL
Hide Away Ruskin, FL Sunshine RV Vero Beach, FL
Holiday RV Resort Leesburg, FL Topics Hudson, FL
Horizon RV Park Davenport, FL Twelve Oaks Sanford, FL
Key RV Park Marathon, FL Village Park Orange City, FL
Self-Storage Facilities
-----------------------
Affordable Self Storage Loganville, GA Orange Avenue Tallahassee, FL
Alpine Self Storage Rockford, IL Plantation Xtra Storage Plantation, FL
Baytree Self Storage Valdosta, GA St. Augustine Self Storage St. Augustine, FL
Budget Self Storage Sterling, VA Southern Self Storage Riviera Beach, FL
Delray Mini Storage Delray Beach, FL Storage Express Lauderhill, FL
Edison Lock Up Edison, NJ Valdosta Self Storage Valdosta, GA
Extra Space Lauderhill, FL Xtra Space Orlando, FL
Howell Self Storage Howell, NJ Your Extra Attic Duluth, GA
Hyde Park Storage Tampa, FL Your Extra Attic Norcross, GA
Jacksonville Storage Jacksonville, FL Your Extra Attic Stockbridge, GA
Okeechobee Storage Hialeah Gardens, FL Your Extra Attic Winters Chapel, GA
Hotels/Resorts
--------------
Canyon Ranch in the Berkshires Howard Johnson Maingate
Comfort Inn Kissimmee Hyatt On Union Square
Comfort Suites Asheville Hyatt Orlando
Embassy Suites Boca Raton Hyatt Wilshire
Hotel Nikko San Francisco Hyatt Regency Houston
Hilton Southwest Freeway Houston La Samanna
Hollywood Beach Hilton Ramada Resort Maingate
Holiday Inn Gainesville Westin Washington, D.C.
</TABLE>
<PAGE>
Profile of Appraiser 4
Financial
---------
Belgravia Capital Heller Financial
Bloomfield Acceptance Company Household Finance Corporation
Chase Manhattan Bank Irving Leasing Corporation
Chrysler Capital Corporation Mfd. Housing Community Bankers
Citicorp Real Estate Mellon Bank
Collateral Mortgage Morgan Stanley
CoreStates Financial Corporation NationsBank
Credit Suisse First Boston Nomura Securities
FINOVA Capital Pacificorp Financial Services
First Union Corporation PACTEL Finance
GE Capital Society National Bank
Goldman Sachs Sun America Insurance
Greentree Financial Union Capital
Real Estate/Real Estate Investment
----------------------------------
W.P. Carey & Company, Inc. LaSalle Partners
Chateau Communities Las Colinas Corporation
Continental Communities Metropolitan Life
Delaware North Companies MHC
Dillon Read Real Estate Inc. National Home Communities
Drexel Burnham Lambert Realty, Inc. Pitney Bowes Credit Corp.
First Boston Corporation Salomon Brothers, Inc.
EDUCATIONAL BACKGROUND
----------------------
University of Florida, B.A.
College of William and Mary, M.B.A.
American Institute of Real Estate Appraisers
The Appraisal Institute
Commercial Investment Real Estate Institute
PUBLICATIONS
------------
Mr. Whitcomb has authored an article on ad valorem taxes and cogeneration
facilities for Cogeneration and Resource Recovery magazine.
----------------------------------
TESTIMONY
---------
Mr. Whitcomb has presented expert testimony in United States Tax Court.
