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THE MEADOWS AT BROOK HIGHLAND APARTMENTS One Meadow Drive Birmingham, Shelby County, Alabama CBRE File No. 08-341AT-1846
Self Contained Appraisal Report
Prepared for: Mr. Jay Grooters President ELIASON 1031 PROPERTIES CORPORATION 548 Highway 155 Street Germain, WI 54558-0219
VALUATION & ADVISORY SERVICES
© 2008 CB Richard Ellis, Inc.
VALUATION & ADVISORY SERVICES
3280 Peachtree Road, Suite 1400 Atlanta, Georgia 30305
T 404-812-5002 F 404-812-5051
www.cbre.com
October 3, 2008 Mr. Jay Grooters President ELIASON 1031 PROPERTIES CORPORATION 548 Highway 155 Street Germain, WI 54558-0219 RE: Appraisal of The Meadows at Brook Highland Apartments One Meadow Drive Birmingham, Shelby County, Alabama CBRE File No 08-341AT-1846
Dear Mr. Grooters:
At your request and authorization, CB Richard Ellis (CBRE) has prepared an appraisal of the market value of the referenced property and presented our analysis in the following Self Contained Appraisal Report.
The subject is a 400-unit garden-style apartment property built in 1984 and 1987 and situated on a 36.84-acre site in Birmingham, Shelby County, metropolitan Birmingham, Alabama. The subject property is currently 96.3% occupied. The subject is more fully described, legally and physically, within the enclosed report.
Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter.
Based on the analysis contained in the following report, the market value of the subject is concluded as follows:
MARKET VALUE CONCLUSIONAppraisal Premise Interest Appraised Exposure Date of Value Value Conclusion
As Is Fee Simple Estate 6 Months September 30, 2008 $30,150,000Compiled by CBRE
The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, our interpretation of the guidelines
© 2008 CB Richard Ellis, Inc.
Mr. Jay Grooters October 3, 2008 Page 2
and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Title XI Regulations.
It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us.
Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES
Mark A. Thibodeau Don Poore, MAI Senior Appraiser Managing Director Georgia State Certification No. 216122 Georgia State Certification No. CG001683 Alabama State Certification No. G00668 Alabama State Certification No. G00693 Phone: 404-812-5002 Phone: 404-812-5008 Fax: 404-812-5051 Fax: 404-812-5051 Email: [email protected] Email: [email protected]
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS CERTIFICATION OF THE APPRAISAL
i
CERTIFICATION OF THE APPRAISAL
1. The statements of fact contained in this report are true and correct. 2. 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.
3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment.
4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.
5. 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.
6. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.
7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation and the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, as well as the requirements of the State of Alabama relating to review by its duly authorized representatives. This report also conforms to the requirements of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).
8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
9. Don Poore, MAI has completed the requirements of the continuing education program of the Appraisal Institute.
10. Mark A. Thibodeau has and Don Poore, MAI has not made a personal inspection of the property that is the subject of this report.
11. No one provided significant real property appraisal assistance to the persons signing this report. 12. Don Poore, MAI and Mark A. Thibodeau have extensive experience in the appraisal/review of similar
property types. 13. Don Poore, MAI and Mark A. Thibodeau are currently certified in the state where the subject is located. 14. Valuation & Advisory Services operates as an independent economic entity within CBRE. Although
employees of other CBRE divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy are maintained at all times with regard to this assignment without conflict of interest.
Mark A. Thibodeau Don Poore, MAI Senior Appraiser Managing Director Georgia State Certification No. 216122 Georgia State Certification No. CG001683 Alabama State Certification No. G00668 Alabama State Certification No. G00693
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SUBJECT PHOTOGRAPHS
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SUBJECT PHOTOGRAPHS
AERIAL VIEW OF THE SUBJECT
TYPICAL EXTERIOR VIEW OF THE SUBJECT
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SUBJECT PHOTOGRAPHS
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TYPICAL EXTERIOR VIEW OF THE SUBJECT
TYPICAL EXTERIOR VIEW OF THE SUBJECT
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SUBJECT PHOTOGRAPHS
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TYPICAL EXTERIOR VIEW OF THE SUBJECT
TYPICAL EXTERIOR VIEW OF THE SUBJECT
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SUBJECT PHOTOGRAPHS
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TYPICAL INTERIOR VIEW OF THE SUBJECT
TYPICAL INTERIOR VIEW OF THE SUBJECT
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SUBJECT PHOTOGRAPHS
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TYPICAL INTERIOR VIEW OF THE SUBJECT
TYPICAL INTERIOR VIEW OF THE SUBJECT
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SUBJECT PHOTOGRAPHS
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TYPICAL INTERIOR VIEW OF THE SUBJECT
TYPICAL INTERIOR VIEW OF THE SUBJECT
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SUMMARY OF SALIENT FACTS
viii
SUMMARY OF SALIENT FACTS
Property Name
Location
Assessor’s Parcel Numbers
Highest and Best Use
As Though Vacant
As Improved
Property Rights Appraised
Land Area 36.84 AC 1,604,750 SF
Improvements
Property Type
Number of Buildings
Number of Stories
Gross Building Area
Net Rentable Area
Number of Units 400
Average Unit Size 1,169 SF
Year Built
Condition
Estimated Exposure Time
Financial Indicators
Current Occupancy 96.3%
Stabilized Occupancy 94.0%
Overall Capitalization Rate 6.50%
Pro Forma Operating Data Total Per Unit
Effective Gross Income $3,698,050 $9,245
Operating Expenses $1,739,226 $4,348
Expense Ratio 47.03%
Net Operating Income $1,958,824 $4,897
6 Months
Good
1984 and 1987
One Meadow Drive,Birmingham, Alabama
The Meadows at Brook Highland Apartments
Fee Simple Estate
Apartment
Apartment
Apartment
03-9-31-0-001-018.002
03-9-31-0-001-014.001
467,668 SF
481,698 SF
One, Two and Three
25
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SUMMARY OF SALIENT FACTS
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VALUATION Total Per UnitLand Value $2,800,000 $7,000
Cost Approach $30,400,000 $76,000
Sales Comparison Approach $30,000,000 $75,000
Income Capitalization Approach $30,150,000 $75,375
Insurable Value $29,100,000 $72,750
CONCLUDED MARKET VALUES
Appraisal Premise Interest Appraised Date of Value Value
As Is Fee Simple Estate September 30, 2008 $30,150,000
Compiled by CBRE
EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS
None.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS TABLE OF CONTENTS
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TABLE OF CONTENTS
CERTIFICATION OF THE APPRAISAL.............................................................................................i SUBJECT PHOTOGRAPHS ..........................................................................................................ii SUMMARY OF SALIENT FACTS................................................................................................. viii TABLE OF CONTENTS................................................................................................................ x INTRODUCTION ...................................................................................................................... 1 AREA ANALYSIS......................................................................................................................... 5 NEIGHBORHOOD ANALYSIS .................................................................................................. 10 MARKET ANALYSIS .................................................................................................................. 13 SITE ANALYSIS ........................................................................................................................ 23 IMPROVEMENT ANALYSIS........................................................................................................ 26 ZONING ................................................................................................................................ 31 TAX AND ASSESSMENT DATA .................................................................................................. 32 HIGHEST AND BEST USE ......................................................................................................... 34 APPRAISAL METHODOLOGY................................................................................................... 37 LAND VALUE........................................................................................................................... 38 COST APPROACH................................................................................................................... 42 INSURABLE VALUE................................................................................................................... 46 SALES COMPARISON APPROACH............................................................................................ 48 INCOME CAPITALIZATION APPROACH.................................................................................... 53 RECONCILIATION OF VALUE .................................................................................................. 77 ASSUMPTIONS AND LIMITING CONDITIONS .......................................................................... 78 ADDENDA A Glossary of Terms B Comparable Land Sales C Improved Comparable Sales D Rent Comparables E Operating Data F Purchase and Sale Agreement G Freddie Mac Form 439 H Letter of Engagement I Qualifications
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS INTRODUCTION
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INTRODUCTION
PROPERTY IDENTIFICATION
The subject, commonly known as The Meadows at Brook Highland Apartments, is located along the
northern and southern sides of Brook Highland Parkway, just north of the intersection of Highway 280 and Cahaba Valley Road. The street address is One Meadow Drive, unincorporated Shelby County,
metropolitan Birmingham, Alabama.
OWNERSHIP AND PROPERTY HISTORY
Title to the subject property is currently vested in the name of G & I III Meadows, LLC. However, the subject property is currently under contract to be purchased by Eliason 1031 Properties Corporation.
The current contract price is $30,115,000. To the best of our knowledge there have been no other
ownership transfers of the property in the last three years.
At this point it is necessary to reconcile between the current contract price of $30,115,000 and our as is market value of $30,150,000. The variance is minor and considered reasonable.
PREMISE OF THE APPRAISAL/RELEVANT DATES
The following table illustrates the various dates associated with the valuation of the subject and the
valuation premise(s):
PREMISE OF THE APPRAISAL/RELEVANT DATES
Date of Report: October 3, 2008
Date of Inspection: September 30, 2008
Date of ValueAs Is: September 30, 2008
Compiled by CBRE
TERMS AND DEFINITIONS
The current economic definition of market value agreed upon by agencies that regulate federal
financial institutions in the U.S. (and used herein) is as follows:
The most probable price which a property should bring in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and
assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
1. buyer and seller are typically motivated;
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS INTRODUCTION
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2. both parties are well informed or well advised, and acting in what they consider their own best interests;
3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or
creative financing or sales concessions granted by anyone associated with the sale. 1
The Glossary of Terms in the addenda provides definitions for additional terms that are, and may be
used, in this appraisal.
INTENDED USE AND USER OF REPORT
This appraisal is to be used for internal decision-making purposes by the client.
SCOPE OF WORK
The scope of the assignment relates to the extent and manner in which research is conducted, data is
gathered and analysis is applied, all based upon the following problem-identifying factors stated
elsewhere in this report:
• Client • Intended use • Intended user • Type of opinion • Effective date of opinion • Relevant characteristics about the subject • Assignment conditions
This appraisal of the subject has been presented in the form of a Self-Contained Appraisal Report,
which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of
the USPAP. That is, this report incorporates, to the fullest extent possible, practical explanation of the
data, reasoning and analysis that were used to develop the opinion of value. This report also includes thorough descriptions of the subject and the market for the property type. CBRE completed the
following steps for this assignment:
Extent to Which the Property is Identified
CBRE collected the relevant physical characteristics about the subject via a physical identification and
inspection of both the interior and exterior of the subject property. The physical property was legally
1 Office of Comptroller of the Currency (OCC), 12 CFR Part 34, Subpart C – Appraisals, 34.42 (g); Office of Thrift
Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP).
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS INTRODUCTION
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identified through its postal address and assessor’s records. Economic characteristics of the subject
were identified via an analysis of the recent rent roll.
Extent to Which the Property is Inspected
CBRE conducted a physical inspection of both the interior and exterior of the subject property, as well as its surrounding environs on the effective date of appraisal.
Type and Extent of the Data Researched
CBRE physically inspected the micro and macro market environments with respect to physical and
economic factors relevant to the valuation process. This knowledge was expanded through interviews with regional and/or local market participants, available published data and other various resources.
CBRE also conducted local research with respect to applicable tax data, zoning requirements, flood
zone status, demographics, income and expense data, and sale and rental information.
Type and Extent of Analysis Applied
CBRE analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. All
three traditional approaches to value were considered and utilized. CBRE then correlated and
reconciled the results into a reasonable and defensible value conclusion, as defined herein and
estimated a reasonable exposure time and marketing time associated with the value estimate presented.
SPECIAL APPRAISAL INSTRUCTIONS
There have been no special appraisal instructions for this assignment.
EXPOSURE/MARKETING TIME
Current appraisal guidelines require an estimate of a reasonable time period in which the subject property could be brought to market and sold. This reasonable time frame can either be examined
historically or prospectively. In a historic analysis, this is referred to as exposure time. Exposure time
always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the
date of value. On a prospective basis, the term marketing time is most often used. In reality,
exposure and marketing time overlap to some degree as marketing time estimates are based on an
analysis of historical trends, and effectively represent an extrapolation of exposure time data. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time
alone. It is different for various types of real estate and under various market conditions.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS INTRODUCTION
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A discussion of an appropriate exposure/marketing time estimate for the subject property is presented
in the following sections.
In consideration of these factors, we have analyzed the following:
• exposure periods for comparable sales used in this appraisal; • marketing time information from the CB Richard Ellis, Inc. National Investor Survey; and • the opinions of market participants.
The following table presents the information derived from these sources.
EXPOSURE TIME INFORMATION
Exposure Time (Months)Investment Type Range Average
ApartmentsClass A 1.5 - 15.0 5.5Class B 1.5 - 6.0 4.2Class C 2.3 - 9.0 4.7
CBRE Estimate
Source: CBRE National Investor Survey
6 Months
In general, the improved sales indicate exposure times in the lower to middle portion of the range
indicated by the investor survey. In addition to the sales and survey data, we have also reviewed the
assumptions and conclusions reached in the Valuation section of this report, particularly the income estimates and rates of return. Based on these analyses, we have concluded an exposure/marketing
time of 6 months or less would be considered reasonable for the subject property.
This exposure/marketing time reflects current economic conditions, current real estate investment market conditions, the terms and availability of financing for real estate acquisitions, and property and
market-specific factors. It assumes that the subject property is (or has been) actively and professionally
marketed. The marketing/exposure time would apply to all valuation premises included in this report.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS AREA ANALYSIS
5
AREA ANALYSIS
LOCATION
The Metropolitan Birmingham area is defined primarily by the Birmingham MSA, which consists of
Jefferson, St. Clair, Blount, and Shelby Counties. The MSA is situated in north-central Alabama bounded on the north by areas surrounding Huntsville, on the east by the Anniston-Gadsden area, on
the south by the Central Alabama and Montgomery area, and on the west by the Tuscaloosa area.
POPULATION
Population growth has been on an upward trend within Shelby County and the Birmingham MSA, with relatively minimal change in Jefferson County.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS AREA ANALYSIS
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AREA POPULATION STATISTICS
Area 2000 2008Annual % Change 2013
Annual % Change
Jefferson County 662,047 656,391 -0.1% 652,434 -0.1%Shelby County 143,293 187,030 3.4% 215,275 2.9%Birmingham MSA 1,052,238 1,113,610 0.7% 1,153,407 0.7%
Source: Claritas
The 2008 population of the four-county Birmingham MSA was estimated at 1,113,610, up from the
2000 census which was 1,052,238. The population estimate for 2013 is 1,153,407. This represents a total increase of 9.6% during this 13-year period. The overall population of the MSA has been
increasing but the bulk of this increase has occurred in suburban Shelby County. The 2008
population of Shelby County is estimated at 187,030, which is an increase from the 2000 census of 143,293. The population estimate for 2013 is 215,275, which represents a total increase of 50.2%.
In addition, the 2008 population of Jefferson County was estimated at 656,391, which is an increase
from the 2000 census of 662,047. The population estimate for 2013 is 652,434. This represents a
slight decrease of 1.5%.
The following table compares the household income for Jefferson County, Shelby County, and the
Birmingham MSA.
HOUSEHOLD INCOMEJefferson County Shelby County Birmingham MSA
2008 Median Household Income $43,998 $66,842 $46,435 2008 Average Household Income $61,864 $86,557 $63,705 2008 Median Housing Value $121,812 $178,367 $123,562
Source: Claritas
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS AREA ANALYSIS
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EMPLOYMENT
Based on the Alabama Department of Labor, the civilian labor force is approximately 482,424 for the
Birmingham MSA. The following table compares the unemployment rate for the area to that of the state and national averages.
UNEMPLOYMENT RATE ANNUAL AVERAGE
COMPARISON BY MSA, STATE, AND U.S.
Year
Birmingham MSA
State of Alabama
United States
1996 3.5% 5.1% 5.6% 1997 3.7% 5.1% 4.6% 1998 3.1% 4.2% 4.3% 1999 3.5% 4.8% 4.1% 2000 3.5% 4.6% 4.0% 2001 4.1% 5.3% 4.7% 2002 4.2% 5.9% 5.8% 2003 4.5% 5.8% 5.7% 2004 5.6% 5.6% 5.4% 2005 3.0% 3.5% 4.7% 2006 3.3% 3.6% 4.5% 2007 3.4% 3.7% 4.8%
August 2008 4.7% 4.9% 6.1%
Source: Bureau of Labor Statistics
The unemployment rate in the Birmingham MSA has increased only slightly in recent years. As of
Year-End 2006 the unemployment rate was 3.3%, which was below with the state unemployment rate of 3.7% and below the national unemployment rate of 4.8%. The unemployment rate for the
Birmingham MSA increased to 3.4% in 2007. In addition, the unemployment rate for the state of
Alabama increased only slightly to 3.7% and the overall unemployment rate for the U.S increased slightly to 4.8%. As of August 2008 the unemployment increased for the MSA, state and the nation.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS AREA ANALYSIS
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The major employers in the area are as follows:
MAJOR AREA EMPLOYERS
Company
Product
No. Of Employees
Univ. of Alabama at Birmingham Education 15,625 U.S. Government Government 9,302 Jefferson County Board of Educ. Education 9,191 Birmingham Board of Educ. Education 9,055 State of Alabama Government 6,372 BellSouth Telecommunications 6,300 Baptist Health System Medical services 6,000 Bruno’s, Inc. Grocery stores 5,374 Wal-Mart Retail stores 3,800 Amsouth Bank Banking services 3,094 Alabama Power Co. Public utility 3,000 Blue Cross-Blue Shield Medical services 2,700 American Cast Iron Pipe Pipe manufacturing 2,300
Source: Birmingham Chamber of Commerce
In addition to the employers listed previously, Mercedes-Benz recently completed the expansion of its
plant in Vance, Alabama, approximately 30 miles southwest of Birmingham. The 13-year-old plant,
built for assembly of the original M-Class SUV, has grown in size from 1.2 million square feet to more
than 3 million square feet. The workforce increased from 1,900 to 4,000 employees, bringing capacity to 160,000 units a year, according to the company. In addition, the Honda plant in Lincoln,
Alabama was originally built in 2002 totaling 1.7 million square feet. The plant is located
approximately 40 miles east of Birmingham is utilized for development of the Honda Odysseys minivans. The plant was recently expanded with the addition of a second assembly line for
development on the Honda Pilot SUV. The plant now totals 2.8 million square feet situated on 1,350
acres. The plant expects to have a total of 4,300 employees at full capacity.
TRANSPORTATION
Interstate Highways 20, 59, and 65 converge in Birmingham and branch out in five directions. Interstate 20 interchanges with Interstate 85, 150 miles east in Atlanta, and Interstate 59 intersects
Interstate 75, 150 miles northeast in Chattanooga. Interstate Highways 85 and 75 are major
north/south expressways providing access to a number of major midwest and east coast metropolitan areas. Also, a partial circumferential expressway, Interstate 459, extends through the southern portion
of Jefferson County.
Air service at Birmingham’s Municipal Airport is provided by 10 air carriers offering passenger and cargo service to all major cities in the U.S. A relatively recent $125 million expansion includes
additional gates, parking, a new two-lane access road, a 32-acre site for an air cargo facility
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS AREA ANALYSIS
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featuring a 67,500 square foot building, and runway additions. Another component in Birmingham’s
transportation system is Port Birmingham, located 20 miles west of the city. The port provides an entry into the Warrior River and a nine-foot barge channel to Mobile and the Gulf of Mexico. Currently,
work is under way to establish a Port Authority to fully develop this potential.
Rail service is provided by CSX, Norfolk Southern, and Burlington Northern. Bus service is provided
by Greyhound, with local service provided by Birmingham-Jefferson Transit Authority’s Metro Area Express (MAX) and the Downtown Shuttle Service, DART. Also serving the Birmingham area are
approximately 90 motor freight carriers.
GROWTH AND TRENDS
Major growth continues to be in a southerly direction into Shelby County along U.S. Highways 280, 31, and Interstate 65. The slowest growth is in the western and northern directions from downtown
Birmingham. These are the older sections of the City and County. With the completion of I-459
(which connects I-59 on the northeast) there has been extensive new growth along this corridor. Development at the western end is primarily of a light industrial use with more commercial, retail, and
residential at I-65 and U.S. Highway 280.
Another growth area is to the south of the downtown area along the U.S. Highway 31 corridor
through the cities of Vestavia Hills and Hoover and into northern Shelby County. This area has seen extensive growth in retail trade with the Riverchase Galleria regional mall and the area surrounding it.
Furthermore, there has been both extensive residential and professional office developments along the
U.S. Highway 280 corridor.
Adjacent to the U.S. Highway 280 corridor is the U.S. Highway 31 corridor. The U.S. Highway 280
corridor has seen substantial commercial, professional, and residential developments over the past 5
to 10 years. These developments include numerous office parks and apartment complexes, as well as
the development of a series of planned residential communities. The growth along both the U.S. Highway 280 and U.S. Highway 31 corridors extends into north Shelby County, and is expected to
continue into the future.
CONCLUSION
The region has a diversified economy, which has grown at a steady pace over the past several years. Recent trends indicate that the economy should continue to grow over the near-term. The
employment base is well diversified, without reliance on any one industry. The generally conservative
nature of the business and banking communities have insulated the market from some of the extreme
economic cycles which have been experienced in other areas; while Birmingham rarely experiences significant economic booms, it also tends to avoid significant downturns.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS NEIGHBORHOOD ANALYSIS
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NEIGHBORHOOD ANALYSIS
LOCATION
The subject property is located along the northern and southern sides of Brook Highland Parkway, just
north of the intersection of Highway 280 and Cahaba Valley Road. The subject neighborhood is not differentiated or exact, and we have identified the neighborhood as the area within an approximate
three-mile radius from the subject property.
ACCESS
The subject neighborhood enjoys convenient access to the Birmingham area by way of a number of major transportation arteries. Major north/south routes include U.S. Highway 280 (which is a major
commercial corridor), Interstate Highway 65 extends along the western side of neighborhood (which
provides access to downtown Birmingham), and Cahaba Valley Road (which is a
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS NEIGHBORHOOD ANALYSIS
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northeasterly/southwesterly route connecting many of the major roadways in the neighborhood). The
major east/west roadways are Interstate Highway 459 (which forms a southern Beltline for the Birmingham metropolitan area), and State Road 119 (Cahaba Valley Road). Access to Interstate 65
is by way of interchanges with I-459, Valleydale Road, and State Road 119. Access to Interstate 459
is limited to an interchange with U.S. 280. One other neighborhood road crosses I-459 to the areas
to the north (Cahaba River Road).
DEVELOPMENT
The area is dominated by planned, large-scale developments, many of which have an anticipated
development span of several decades before completion. Principal among these are the Meadow
Brook, Inverness, Brook Highland, and Greystone developments. These developments are all located along the Highway 280 corridor.
These are all mixed use residential developments with some commercial uses as well. Residential
properties run the range from large estate-type homes to garden homes, townhomes, and apartments. Commercial development includes mid-rise office buildings, low-rise office parks, and retail centers
including Inverness Corners, Inverness Plaza, and dozens of smaller strip-type shopping centers.
These projects compete with other properties to the west on the I-65 corridor including Riverchase,
Southlake, and Trace Crossings. In addition, there are dozens of small residential subdivisions developed outside of these “master-planned” communities. There are also several planned
commercial developments including the Colonnade, Grandview, and Perimeter Park South.
Development in the area is rounded out by a number of quality schools, with students in the area attending Hoover, Pelham, Shelby County, and Jefferson County Public Schools, or private schools in
the area such as Briarwood Christian School or Indian Springs School. Other public services are
available in the area including several fire stations, medical clinics, a U.S. Post Office, and related
facilities.
As a bedroom community for the city of Birmingham, the subject neighborhood has become an active
center of employment, shopping, and residential living. Indeed, it is our finding that the
neighborhood is a viable, growth-oriented area. As development shifts outward along the neighborhood boundaries, properties within it will continue to experience growth. In conclusion, there
appears to be opportunities for commercial and residential projects in the area based on the
continued development of the larger, planned communities.
DEMOGRAPHICS
Selected neighborhood demographics in a one-, three-, and five-mile radius from the subject are shown in the following table:
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS NEIGHBORHOOD ANALYSIS
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SELECTED NEIGHBORHOOD DEMOGRAPHICSOne Meadows Drive Radius 1.0 Radius 3.0 Radius 5.0Birmingham, Alabama Mile Miles Miles
Population2013 Population 7,226 39,235 74,898 2008 Population 6,429 34,063 67,293 2000 Population 5,266 25,952 55,299 1990 Population 3,133 15,891 38,802 Growth 2008 - 2013 2.36% 2.87% 2.16%Growth 2000 - 2008 2.53% 3.46% 2.48%Growth 1990 - 2000 5.33% 5.03% 3.61%
Households2013 Households 3,903 16,446 30,739 2008 Households 3,473 14,251 27,416 2000 Households 2,848 10,826 22,240 1990 Households 1,861 6,653 15,050 Growth 2008 - 2013 2.36% 2.91% 2.31%Growth 2000 - 2008 2.51% 3.50% 2.65%Growth 1990 - 2000 4.35% 4.99% 3.98%
2008 Median HH Inc $71,878 $84,545 $84,6902008 Estimated Average Household Income $98,055 $117,094 $122,0902008 Estimated Per Capita Income $43,614 $47,686 $49,8772008 Median Value of all Owner-Occ HUs $307,762 $292,311 $289,119Age 25+ College Graduates - 2000 2,035 9,883 22,016 Age 25+ Percent College Graduates - 2008 46.0% 43.0% 48.5%Source: CBRE
CONCLUSION
As shown in the previous table, the population within the subject neighborhood has experienced
increases in the population and households. The neighborhood currently has a middle-income demographic profile. The outlook for the neighborhood is for continued steady growth over the next
several years, and as a result, the demand for existing developments is expected to remain positive.
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MARKET ANALYSIS
Marketability refers to the posture of the subject property within its marketplace and its ability to be
leased, sold, or marketed relative to its competition and current conditions. In this regard, the subject property is competitive relative to other apartment developments in the submarket.
We will recognize the probable near- and long-term future market demand for the subject property.
To assist in our analysis, we have utilized the Mid-Year 2007 Birmingham Apartment Survey provided
by Rock Apartment Advisors and The David Wilson Company, LLC and a demographic study prepared by Claritas, Inc. In addition, we have also utilized the 2nd Quarter 2008 apartment market data
provided by Reis, Inc. Reis, Inc. identifies the subject’s location as the East submarket, while the Rock
Apartment Advisors report identifies the subject property as being located in the Highway 280 submarket.
Within this section we will analyze the factors affecting the marketability of the property, including
trends occurring in the local apartment market, the demographic character of the neighborhood, and the subject's market acceptance. A demographic study prepared by Claritas, Inc. has also been used
to project probable future market demand for the subject property.
The subject is considered to be a Class B garden style apartment community. The following
apartment property definition, from Income/Expense Analysis: Conventional Apartments 2005, published by the Institute of Real Estate Management, may be applicable to the subject property:
Garden Type Projects: We consider this to be a group of low-rise apartment buildings situated on a sizable landscaped plot, under one management.
TRENDS IN THE BIRMINGHAM APARTMENT MARKET AND THE SUBJECT AREA
The overall Birmingham market, like many similar markets, experienced a significant level of new
development during the 1980’s. However, during the early 1990’s the level of new apartment
construction was significantly below historical levels, but the Birmingham apartment market experienced a significant level of new construction during the past few years, which was typical of other
similar cities. However, the average occupancy has remained very strong during recent years. This
resulted from the continued overall expansion of the Birmingham economy, and the resulting job growth, along with only an average level of new apartment units. Although, during 1996 and 1997 the
market received a moderate level of new units, which resulted in a slight decrease in the occupancy level
and market rents increased only slightly during this time period. During this same time period the
overall economy has continued to expand.
In this section we have considered various factors affecting the supply and demand components, as
well as the rental rates, occupancy, and absorption trends of the Birmingham apartment market. The
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active Birmingham market is divided into eight submarkets, including Southside, Homewood,
Vestavia/Hoover, Cahaba Heights/Mountain Brook, Highway 280, Centerpoint/Gardendale/North, East, and West according to Rock Apartment Advisors. The following table provides a summary of the
historical occupancy rates from Year-End 2005 to Mid-Year 2007. This report is now published
annually and the 2008 market report will be available in October 2008.
# of Properties Total Units
Year-End 2005
Year-End 2006 % Change
Mid-Year 2007 % Change
Southside 6 597 95.8% 96.7% 0.9% 93.5% -3.4%Homewood 24 5,660 89.9% 90.4% 0.6% 89.5% -1.0%Vestavia/Hoover/South 45 9,799 96.1% 94.4% -1.8% 94.5% 0.1%Cahaba Heights/Mtn. Brook 9 2,609 98.0% 95.0% -3.2% 97.7% 2.8%Highway 280 17 5,838 96.7% 91.5% -5.7% 92.1% 0.7%Centerpoint/Gardendale/North 23 3,752 96.2% 91.9% -4.7% 94.1% 2.3%East 7 1,622 97.6% 92.1% -6.0% 94.1% 2.1%West 13 1,597 94.6% 96.2% 1.7% 96.9% 0.7%Birmingham Area 144 31,474 95.2% 92.9% -2.5% 93.4% 0.5%Total Average 32 62,948 95.6% 93.5% -2.2% 94.0% 0.5%Source: Rock Apartment Advisors (2007)
HISTORICAL OCCUPANCY BY SUBMARKET
The previous table indicates the overall occupancy rate for the Birmingham area was at 95.6% as of
year-end 2005. The overall occupancy decreased to 93.5% as of the Year-End of 2006. However,
as of Mid-Year 2007 the overall occupancy rate increased to 94.0%. The subject property is located in the Highway 280 submarket, which experienced a slight increase in the occupancy rate from Year-
End 2006 to Mid-Year 2007. As of Mid-Year 2007 the occupancy rate was 92.1%.
The following table identifies the historical construction levels separated by submarket.
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Submarket Property Name Developer 2000 2001 2002 2003 2004 2005 2006 2007Vestavia/Hoover/South Crowne Woods Reserve Crown Partners 64Cahaba Heights/Mtn. Brook Cameron at the Summit, Phase I Archstone 68Cahaba Heights/Mtn. Brook Colonial Grand at Liberty Park Colonial Properties 256Highway 280 The Parc at Cahaba River Equity Resources 262Homewood Aspen Trail Westdale Asset Management 64West Eagle Point, Phase I Brooks Properties 8Highway 280 Lake Heather Reserve Metropolitan Life 252Highway 280 The Crowne at Grandview Crown Partners 120 171Homewood Wildridge Consolildated Construction 80West Notting Hill College Station Properties 32Homewood Collegiate Hall Collegiate Properties 176Homewood The Oaks at Lakeshore Tynes-Mulkey 167 99Vestavia/Hoover/South The Reserve at Hampton Park II Swaim & Associates 80Southside Jemison Flats Corporate Realty Advisors 39 57Centerpoint/Gardendale/North Livingston Oaks Chip Moore 48 48East The Oaks at St. Clair Tynes-Mulkey 48 144Southside Avondale Gardens Charter Dev. & Aletheia House 68West Cherry Ridge Apartments Rappuhn / Bell 56Centerpoint/Gardendale/North Carson Landing Chip Moore 72East Hunter Ridge Hall Housing Development 168 32Vestavia/Hoover/South Wellington Manor, Phase II The Rime Companies 48 16Vestavia/Hoover/South The Park at Rocky Ridge Gateway Construction (Rappuhn) 168Homewood Lakeshore Ridge Tynes Development 124 200 28Vestavia/Hoover/South The Huntley Apartments Hall Housing Development 175 25Southside (downtown) Park Place (HOPE VI) The Integral Group 197 198Southside (near UAB campus) Blazer Hall Allen and O'Hara 190Highway 280 Springs at Greystone Continental Development 140 160Centerpoint/Gardendale/North Chapel Creek Stan Smith 96 152Centerpoint/Gardendale/North Stoneybrook, Phase II Jerry Mitchell 18 24Southside (downtown) University House First Worthing Development 162Homewood Stonegate Apartments Mitchell Companies 116East Springs of Trussville Continental Development 177Totals 1,094 626 314 317 344 712 867 819Source: Rock Apartment Advisors (Mid Year 2007)
HISTORICAL CONSTRUCTION BY SUBMARKET
An additional major factor to consider with respect to the health of the apartment market is the level
of new construction expected to occur. Most of the new apartment development in Birmingham has
generally been close to the Galleria Mall (Hoover), and along the U.S. Highway 280 corridor. However, in 2007 819 units were been delivered in seven properties. However, only one new
development has been delivered in the subject’s submarket. The following table identifies the level of
apartments planned or under construction in the Birmingham area.
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Submarket Property NameNumber of
Units Status Projected CompletionUnder Construction 2006 / 2007Homewood Lakeshore Ridge 352 Completed Final completion in Spring 2007.Highway 280 Springs at Greystone 300 Completed Final completion in Spring 2007.Centerpoint / Gardendale / North Chapel Creek (in Fultondale) 248 Completed Final completion in Spring 2007.Centerpoint / Gardendale / North Stoney Brook 42 Completed Final completion in April 2007.Centerpoint / Gardendale / North HighGate Apartments 200 Underway First units to be ready in Fall 2007.Southside (downtown) Park Place (Hope VI) 76 Underway Completion expected in late 2007 or early 2008.Highway 280 The Bluffs 200 Underway New owner to complete in 2007.Southside (downtown) University House 162 Completed Student per Bed north of UAB Campus near I-65.Homewood Stonegate Apartments 260 Underway Completion in early 2008.East Springs of Trussville 328 Underway Completion in late 2007.Total Under Construction
PendingHomewood West Oxmoor Road 120 Due Dillgence West Oxmoor Road across for West Homewood Park.Hoover Ross Bridge Apartments 251 Due Dillgence Ross Bridge Development north of main entrance.West Hunter's Ridge, Phase I 120 Due Dillgence Tax credit property. Phase II of 200-unit property. Const. begin in 2007.Highway 280 Oaks at Greystone 294 Due Dillgence Developer awaiting progress at Springs at Greystone.West No name 78 Due Dillgence Located between Forest Road / 21st Avenue, HueytownTotal PendingSource: Rock Apartment Advisors (Mid Year 2007)
APARTMENTS UNDER CONSTRUCTION OR PLANNED
The previous tables identify a moderate level of apartment units planned or under construction.
Considering the level of construction during recent years and the current occupancy rates we do not
believe the Birmingham area will experience an overbuilt situation in the foreseeable future.
The following table identifies the historical apartment market statistics for the Birmingham area.
BIRMINGHAM APARTMENT MARKET - HISTORICAL SUMMARY
YearInventory
(Units) Completions VacancyNet
Absorption Asking RentEffective
Rent% of
ChangeYE 2003 40,450 288 5.3% 161 $619 $590 0.3%YE 2004 40,509 59 4.3% 474 $638 $609 3.2%YE 2005 40,680 332 4.8% (25) $639 $613 0.7%YE 2006 40,945 0 5.6% (78) $656 $626 2.1%YE 2007 41,022 77 6.1% (146) $680 $650 3.8%1Q2008 41,022 0 6.5% (172) $688 $658 1.2%2Q2008 41,350 328 6.5% 307 $697 $666 1.2%Source: Reis MetroStats, Birmingham Apartment - 2nd Quarter 2008
The previous table reflects the overall occupancy rates in the Birmingham area from Year-End 2003 to the 2nd Quarter of 2008. The occupancy rate has experienced relatively little change in recent
years, ranging from 93.5% to 95.7%. While the occupancy rate has maintained a strong level, the
rental rates have continued to increase during the same period. As of the 2nd Quarter 2008 the
occupancy rate was 93.5%, and the asking rental rates increased to an average of $697 per month.
The following table identifies the historical apartment market statistics from Year-End 2003 to 2nd
Quarter 2008 for the East Birmingham submarket.
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APARTMENT MARKET TRENDSOverall Metropolitan Birmingham Market East Submarket
Year Asking
Rent/Unit Occupancy Asking
Rent/Unit OccupancyYE 2003 $619 94.7% $695 96.2%YE 2004 $638 95.7% $704 96.2%YE 2005 $639 95.2% $697 95.2%YE 2006 $656 94.4% $725 94.1%YE 2007 $680 93.9% $754 95.1.%1Q2008 $688 93.5% $768 94.1%2Q2008 $697 93.5% $790 93.9%
Source: Reis MetroStats, Birmingham Apartment - 2nd Quarter 2008
As reflected in the previous table, the East Birmingham submarket has experienced minimal change in the vacancy rate. In addition, the rental rates increased 8.97% from the year-end 2006 level of $725
per month to 2nd Quarter 2008 level of $790 per month.
DEMOGRAPHIC ANALYSIS
Demand for additional residential property is a direct function of population change. Multi-family communities are products of a clearly definable demand relating directly to population shifts.
Housing, Population and Household Formation
The following table illustrates the population and household changes for the subject neighborhood.
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POPULATION AND HOUSEHOLD PROJECTIONSOne Meadows Drive Radius 1.0 Radius 3.0 Radius 5.0Birmingham, Alabama Mile Miles Miles
Population2013 Population 7,226 39,235 74,898 2008 Population 6,429 34,063 67,293 2000 Population 5,266 25,952 55,299 1990 Population 3,133 15,891 38,802 Growth 2008 - 2013 2.36% 2.87% 2.16%Growth 2000 - 2008 2.53% 3.46% 2.48%Growth 1990 - 2000 5.33% 5.03% 3.61%
Households2013 Households 3,903 16,446 30,739 2008 Households 3,473 14,251 27,416 2000 Households 2,848 10,826 22,240 1990 Households 1,861 6,653 15,050 Growth 2008 - 2013 2.36% 2.91% 2.31%Growth 2000 - 2008 2.51% 3.50% 2.65%Growth 1990 - 2000 4.35% 4.99% 3.98%
Source: CBRE
Households represent a basic unit of demand in the housing market. According to the data, the population within the subject neighborhood has experienced increases in the population and
households.
Income Distributions
Household income available for expenditure on housing and other consumer items is a primary factor
in determining the price/rent level of housing demand in a market area. In the case of this study, projections of household income, particularly for renters, identifies in gross terms the market from
which the subject submarket draws. The following table illustrates estimated household income
distribution for the subject neighborhood.
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HOUSEHOLD INCOME DISTRIBUTIONOne Meadows Drive Radius 1.0 Radius 3.0 Radius 5.0Birmingham, Alabama Mile Miles Miles
Households by Income Distribution - 2008 3,473 14,251 27,416 Less than $15K 5.33% 4.61% 4.93%$15K - $25K 5.47% 4.67% 4.80%$25K - $35K 10.34% 6.94% 6.64%$35K - $50K 15.03% 12.27% 12.00%$50K - $75K 15.52% 16.10% 16.13%$75K - $100K 13.25% 13.41% 13.36%$100K - $150K 19.15% 20.07% 19.09%$150K - $250K 10.74% 13.51% 13.11%$250K - $500K 4.03% 5.63% 6.23%$500K or more 1.15% 2.79% 3.71%
Source: CBRE
The following table illustrates the median and average household income levels for the subject neighborhood.
HOUSEHOLD INCOME LEVELSOne Meadows Drive Radius 1.0 Radius 3.0 Radius 5.0Birmingham, Alabama Mile Miles Miles
2008 Median HH Inc $71,878 $84,545 $84,6902008 Estimated Average Household Income $98,055 $117,094 $122,0902008 Estimated Per Capita Income $43,614 $47,686 $49,877Source: CBRE
An analysis of the income data indicates that the submarket is generally comprised of middle and
upper-middle income economic cohort groups.
Employment
An employment breakdown typically indicates the working class characteristics for a given market
area. The specific employment population within the indicated radii of the subject is as follows:
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EMPLOYMENT BY INDUSTRYOne Meadows Drive Radius 1.0 Radius 3.0 Radius 5.0Birmingham, Alabama Mile Miles Miles
Employment by Industry - 2008 4,038 19,294 36,700 Agr/Frst/Fish/Hunt/Mine 0.22% 0.31% 0.41%Construction 5.87% 6.39% 5.88%Total Manufacturing 7.50% 7.20% 7.02%Wholesale Trade 6.12% 6.10% 5.58%Retail Trade 11.54% 10.33% 10.05%Transport/Warehse/Utils 3.81% 4.47% 4.33%Information 5.79% 6.38% 5.90%Fin/Insur/RE/Rent/Lse 15.50% 14.24% 13.79%Prof/Sci/Tech/Admin 11.91% 11.50% 12.05%Mgmt of Companies 0.00% 0.25% 0.43%Admin/Spprt/Waste Mgmt 2.03% 2.50% 2.54%Educational Svcs 6.44% 7.35% 8.37%Health Care/Soc Asst 12.13% 12.61% 13.06%Entertainment & Rec Services 2.33% 2.32% 2.20%Accommdtn/Food Svcs 3.99% 3.15% 3.19%Oth Svcs, Not Pub Admin 2.85% 2.90% 3.25%Public Administration 1.96% 2.02% 1.94%Source: CBRE
The previous table illustrates the employment character of the submarket, indicating a predominantly
middle-income employment profile, with the majority of the population holding finance, insurance and
real estate related jobs.
Outlook
Given the area demographics, it appears that demand for both comparable surrounding area apartment units and the subject property will continue to be favorable. The overall market is expected
to experience a continuation of the operating environment that has existed recently and should remain
stable. Further, while new construction is occurring in many sectors, overbuilding is not anticipated
during the near-term.
COMPETITIVE PROPERTIES
Comparable properties have been surveyed in order to identify the occupancy trends within the
immediate submarket. The comparable data is summarized in the following table:
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SUMMARY OF COMPARABLE APARTMENT RENTALSComp.
No. Name Location Occupancy
1 Inverness Cliffs 100 Inverness Cliffs Drive,Birmingham, AL
97%
2 Riverside Parc 801 Cahaba Forest Cove,Birmingham, AL
94%
3 The Crown at Grandview 3550 Grandview Parkway,Birmingham, AL
95%
4 The Parc At Cahaba River 50 Cahaba River Parc,Birmingham, AL
96%
5 Wood Springs 200 Springs Avenue,Birmingham, AL
93%
Subject The Meadows at Brook Highland Apartments
One Meadow Drive,Birmingham, Alabama
96.3%
Compiled by CBRE
The comparable properties surveyed reported stabilized occupancy rates of 93% or better, and all are currently in average to good condition.
SUBJECT TRENDS AND PROJECTIONS
Occupancy
Occupancy rate is the relationship between the actual income received from a property and the
income that would be received if the entire space were occupied. Consequently, the occupancy rate
is a product of both (1) the relationship between the amount of occupied space in a building or market (physical) and (2) the relationship between the contract rent for the occupied building or
market space and the total rent estimated for all space in the building or market (economic).
Conclusion
Based on the foregoing analysis, CBRE’s conclusion of stabilized occupancy for the subject is
illustrated in the following table. This estimate considers the physical factors of the market.
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OCCUPANCY CONCLUSIONSBirmingham Area (Rock Apartment Advisors, 2007) 94.0%Birmingham Area (Reis, Inc. 2nd Qtr. 2008) 93.5%Highway 280 Submarket (Rock Apartment Advisors, 2007) 94.5%East Submarket (Reis, Inc., 2nd Qtr. 2008) 93.5%Rent Comparables (Average) 95.0%Subject's Current Occupancy 96.3%
Subject's Stabilized Occupancy 94.0%
Compiled by CBRE
Our projected stabilized occupancy is supported by the average in the market, submarket and
comparable properties surveyed. In addition, we have included a deduction for two non-revenue
units separately.
CONCLUSION
With respect to the subject property in particular, we believe the subject property is well located for an apartment project. The site is conveniently located with respect to employment centers and major
roadways, and the surrounding apartment developments are experiencing good levels of demand. In
addition, the subject is located in a neighborhood experiencing a good level of new development in virtually all areas, and this is expected to continue over the foreseeable future. Given these
considerations, we believe the subject property will continue to enjoy a good operating level.
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SITE ANALYSIS
The following chart provides a summary of the salient features relating to the subject site.
SITE SUMMARY
Physical DescriptionGross Site Area 36.84 Acres 1,604,750 Sq. Ft.
Net Site Area 36.84 Acres 1,604,750 Sq. Ft.
Primary Road Frontage Brook Highland ParkwayExcess Land Area None
Zoning District
Flood Map Panel No. 0101910020BFlood Zone X
Source: Various sources compiled by CBRE
R-2, Mulit Dwelling District
LOCATION
The property is located at the is located along the northern and southern sides of Brook Highland Parkway, just north of the intersection of Highway 280 and Cahaba Valley Road, in unincorporated
Shelby County, metropolitan Birmingham, Alabama. The street address is One Meadow Drive.
ASSESSOR’S PARCEL NUMBERS
The Shelby County Tax Assessor’s parcel numbers are 03-9-31-0-001-014.001 and 03-9-31-0-001-018.002.
LAND AREA
The sites consist of 36.84 gross acres. The site is considered adequate in terms of size and utility.
There is no unusable, excess or surplus land area.
SHAPE AND FRONTAGE
The sites are irregular in shape and contain frontage along the along the northern and southern sides
of Brook Highland Parkway.
INGRESS/EGRESS
Ingress and egress is available to the site via one curb cut along the northern side of Brook Highland Parkway and one curb cut along the southern side of Brook Highland Parkway.
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TOPOGRAPHY AND DRAINAGE
The sites are rolling throughout. The site appears to be properly engineered to provide for a good
level of drainage. During our inspection of the site, we observed no drainage problems and assume that none exist. A pond is located on the subject site. The pond is utilized for water retention and as
a visual amenity.
SOILS
A soil analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soil report, it is a specific assumption that the site has adequate soils to support the highest and
best use.
EASEMENTS AND ENCROACHMENTS
A title policy for the property has not been provided for the preparation of this appraisal. The subject
property has an access easement at the northeast corner of the site. However, based on our visual inspection and review of the site plan, the property does not appear to be adversely affected by any
easements or encroachments. It is recommended that the client/reader obtain a current title policy
outlining all easements and encroachments on the property, if any, prior to making a business decision.
ACCESS AGREEMENTS
There are no known access agreements that may affect the subject’s marketability.
COVENANTS, CONDITIONS AND RESTRICTIONS
There are no known covenants, conditions and restrictions impacting the site that are considered to affect the marketability or highest and best use, other than zoning restrictions.
UTILITIES AND SERVICES
The sites are within the jurisdiction of Shelby County and is provided all municipal services, including
police, fire and refuse garbage collection. All utilities are available to the site in adequate quality and quantity to service the highest and best use as if vacant and as improved.
FLOOD ZONE
According to flood hazard maps published by the Federal Emergency Management Agency (FEMA),
the site is within Zone X, as indicated on Community Map Panel 0101910020B, dated September 29,
2006. This zone is defined as follows:
FEMA Zone C: Areas determined to be outside the 100-year flood plain.
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ENVIRONMENTAL ISSUES
CBRE has not observed, yet is not qualified to detect, the existence of potentially hazardous material
or underground storage tanks that may be present on or near the site. The existence of hazardous materials or underground storage tanks may have an affect on the value of the property. For this
appraisal, CBRE has specifically assumed that any hazardous materials and/or underground storage
tanks that may be present on or near the property do not affect the property.
CONCLUSION
The sites are well-located and afforded average access and visibility from roadway frontage. The size
of the sites is typical for the area and use, and there are no known detrimental uses in the immediate
vicinity. Overall, there are no known factors that are considered to prevent the site from development
to its highest and best use, as if vacant, or adverse to the existing use of the sites.
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IMPROVEMENT ANALYSIS
The following chart depicts the subject’s building area by component.
IMPROVEMENT SUMMARY
Total Spaces: 802
Unit MixNo. of Units
Percent of Total
Unit Size (SF) NRA (SF)
1BR/1BA 86 21.5% 925 79,5502BR/1BA 58 14.5% 965 55,9702BR/2BA 148 37.0% 1,200 177,6003BR/2BA 108 27.0% 1,431 154,548
Total/Average: 400 100% 1,169 467,668
Source: Various sources compiled by CBRE
481,698 SF
467,668 SF
25
1,169 SF
One, Two and Three
Number of Buildings
Number of Stories
Gross Building Area
Net Rentable Area
Parking Improvements
400 Number of UnitsAverage Unit Size
Surface2.01Parking Ratio (spaces/unit)
Development Density 10.9 Units/Acre
Building plans and specifications were not provided for the preparation of this appraisal. The
following is a description of the subject improvements and basic construction features derived from
CBRE’s physical inspection and based on discussions with the property manager.
YEAR BUILT
The subject property was built in 1984 and 1987.
FOUNDATION
The foundation consists of poured reinforced concrete/perimeter footings and column pads.
CONSTRUCTION COMPONENTS
The construction components include a wood frame with wood truss and joist floor structure and plywood floor deck.
FLOOR STRUCTURE
The floor structure is summarized as follows:
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Ground Floor: Concrete slab on compacted fill
Other Floors: Plywood deck with light-weight concrete cover
EXTERIOR WALLS
The exterior wall structure is wood frame with vinyl siding. The buildings have double-pane aluminum
frame windows.
ROOF COVER
The roofs of all buildings are pitched with a wood truss support system covered with plywood decking, felt paper, and asphalt shingles. The buildings have gutters and downspouts.
HVAC
Central heating and cooling systems with individual controls. Units have exterior mounted
compressors.
UTILITIES
Each unit is individually metered for electrical usage. The residents pay a flat rate for the water and
sewer and trash removal expenses. The one-bedroom units are charged $64 per month, the two-
bedroom/one-bathroom units are charged $69 per month, the two-bedroom/two-bathroom units are
charged $74 per month and the three-bedroom/two-bathroom units are charged $79 per month. Current operations indicate the landlord is responsible for the vacant units and common area utility
costs.
FIRE PROTECTION
The improvements are not fire sprinklered. However, all units are equipped with smoke detectors. It is assumed the improvements have adequate fire alarm systems, fire exits, fire extinguishers, fire
escapes and/or other fire protection measures to meet local fire marshal requirements.
UNIT AMENITIES
Kitchens
Each unit features electric appliances including a range/oven, frost-free refrigerator and a dishwasher.
Additionally, each unit features wood cabinets with Formica countertops and vinyl tile flooring in the kitchen area.
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Bathrooms
The bathrooms within each unit feature combination tub/showers with ceramic tile wainscot.
Additionally, each bathroom features a commode, wood cabinet with Formica counter and built-in
porcelain sink, wall-mounted medicine cabinet with vanity mirror and vinyl tile flooring.
Interior Lighting
Each unit features incandescent lighting in appropriate interior and exterior locations with fluorescent
lighting in bathrooms and kitchen areas.
Interior Amenities
Each unit features ceiling fans and washer dryer connections. In addition, the top floor units feature a
fireplace and vaulted ceilings.
Patios and Balconies
All units feature a private patio or balcony area.
SITE AMENITIES
Parking and Drives
The subject property has a total of 802 parking spaces, or 2.0 spaces per unit. All parking spaces
and vehicle drives are asphalt paved and considered to be in good condition.
Landscaping
The project features combinations of grass and natural forest landscaping which is considered to be in good condition and adequately maintained.
PROJECT AMENITIES
The project amenities include two swimming pools, two lighted tennis courts, basket ball court, soccer
field, three playgrounds, fitness center, a pond and a laundry facility. The pond is utilized as a visual
amenity and for water retention.
QUALITY AND STRUCTURAL CONDITION
The overall quality of the project is considered good for the neighborhood and age. CBRE did not
observe any evidence of structural fatigue and the improvements appear structurally sound for
occupancy. However, CBRE is not qualified to determine structural integrity and it is recommended that the client/reader retain the services of a qualified, independent engineer or contractor to
determine the structural integrity of the improvements prior to making a business decision.
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FUNCTIONAL UTILITY
All of the floor plans are considered to feature functional layouts and the layout of the overall project
is considered functional in utility. Therefore, the unit mix is also functional and no conversion is warranted to the existing improvements.
PROJECT DENSITY
The project is developed to a density of 10.9 units per acre, which is commensurate with other
properties in the neighborhood.
ADA COMPLIANCE
All common areas of the property appear to have handicap accessibility and some of the project’s
units have been designed for handicap occupancy. The client/reader’s attention is directed to the
specific limiting conditions regarding ADA compliance.
FURNITURE, FIXTURES AND EQUIPMENT
The apartment units are rented on an unfurnished basis. However, miscellaneous maintenance tools,
pool furniture, leasing office furniture, recreational room and clubhouse furniture, and various
exercise machines are examples of personal property associated with and typically included in the sale
of multifamily apartment complexes. The personal property items contained in the project are not considered to contribute significantly to the overall value of the real estate.
ENVIRONMENTAL ISSUES
CBRE has not observed, yet is not qualified to detect, the existence of any potentially hazardous
materials such as lead paint, asbestos, urea formaldehyde foam insulation, or other potentially hazardous construction materials on or in the improvements. The existence of such substances may
have an affect on the value of the property. For the purpose of this assignment, we have specifically
assumed that any hazardous materials that would cause a loss in value do not affect the subject.
DEFERRED MAINTENANCE
Our inspection of the property did not reveal any meaningful items of deferred maintenance.
ECONOMIC AGE AND LIFE
CBRE’s estimate of the subject improvements effective age and remaining economic life is depicted in
the following chart:
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS IMPROVEMENT ANALYSIS
30
ECONOMIC AGE AND LIFE
Actual Age 21 and 24 YearsEffective Age 15 YearsMVS Expected Life 45 YearsRemaining Economic Life 30 YearsAccrued Physical Incurable Depreciation 33.3%
Compiled by CBRE
The overall life expectancy is based upon our on-site observations and a comparative analysis of typical life expectancies reported for buildings of similar construction as published by Marshall and
Swift, LLC, in the Marshall Valuation Service cost guide. While CBRE did not observe anything to
suggest a different economic life, a capital improvement program could extend the life expectancy.
CONCLUSION
The improvements are considered to be in good overall condition and are considered to be typical for
the age and location in regard to improvement design and layout, as well as interior and exterior
amenities. Overall, there are no known factors that could be considered to adversely impact the
marketability of the improvements.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ZONING
31
ZONING
The following chart summarizes the zoning requirements applicable to the subject:
ZONING SUMMARYCurrent Zoning R-2, Mulit Dwelling DistrictLegally Conforming YesUses Permitted Multi-Family ResidentialZoning Change Not likely
Source: Planning & Zoning Dept.
ANALYSIS AND CONCLUSION
The improvements appear to represent a legally conforming use. It is recommended that local
planning and zoning personnel be contacted regarding more specific information that might be applicable to the subject.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS TAX AND ASSESSMENT DATA
32
TAX AND ASSESSMENT DATA
The property is subject to taxes by Jefferson County. The 2008 tax rate is $44.00/$1,000 of assessed
value based on a 20% assessment ratio. The subject’s market value, assessed value, and taxes are summarized below, and do not include any furniture, fixtures, and equipment. The subject’s current
real estate taxes are identified in the following table.
AD VALOREM TAX INFORMATION
Market Value 200803-9-31-0-001-014.001 $10,991,90003-9-31-0-001-018.002 11,341,200
Subtotal $22,333,100Assessed Value @ 20%
$4,466,620
Combined Tax Rate (per $1,000 A.V.) 44.00
Total Taxes $196,531
Source: Assessor's Office
TAX COMPARABLES
As a crosscheck to the subject’s applicable real estate taxes, CBRE has reviewed the real estate tax
information according to the Shelby County for comparable properties in the immediate area. The following table summarizes the real estate tax comparables employed for this assignment:
AD VALOREM TAX COMPARABLESTurtle Lake Wood Springs The Grove at Riverchase Subject
Year Built 1987 1988 1996 1984 and 1987Parcel # 09-3-05-0-001-017.002 02-7-35-0-001-003.001 10-9-30-0-001-004.029No. Units 184 280 345 400Tax Year 2008 2008 2008 2008
Total Tax Value $10,734,400 $14,142,300 $25,208,200 $22,333,100Per Unit $58,339 $50,508 $73,067 $55,833
Source: Assessor's Office
CONCLUSION
The tax comparables range from $50,508 to $73,067 per unit. The subject’s tax value per unit is
within the range indicated by the comparables. Therefore, we have utilized the subject’s actual taxes in our analysis.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS TAX AND ASSESSMENT DATA
33
Another factor we have considered is the subject’s estimated tax value compared to our final value
conclusion or “true” market value. The tax value is less, however we have found this to be common in that the value from the Tax Assessor’s Office typically lags behind “true” market values.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS HIGHEST AND BEST USE
34
HIGHEST AND BEST USE
In appraisal practice, the concept of highest and best use represents the premise upon which value is
based. The four criteria the highest and best use must meet are:
• legal permissibility; • physical possibility; • financial feasibility; and • maximum profitability.
Highest and best use analysis involves assessing the subject both as if vacant and as improved.
AS VACANT
Legal Permissibility
The legally permissible uses were discussed in detail in the site analysis and zoning sections of this
report.
Physical Possibility
The subject is adequately served by utilities, has an adequate shape and size, sufficient access, etc., to
be a separately developable site. The subject site would reasonably accept a site layout for any of the legally probable uses. There are no known physical reasons why the subject site would not support
any legally probable development. The existence of the present development on the site provides
additional evidence for the physical possibility of development.
Financial Feasibility
The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally probable land uses versus the cost to create the uses. As discussed in the
Market Analysis section of this report, the subject apartment market is generally stabilized.
Development of new apartment properties has occurred in the past few years. These factors indicate that it would be financially feasible to complete a new apartment project if the site acquisition cost was
low enough to provide an adequate developer’s profit.
Maximum Profitability
The final test of highest and best use of the site as though vacant is that the use be maximally
productive, yielding the highest return to the land. In the case of the subject as if vacant, the analysis has indicated that a new apartment project would be most appropriate.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS HIGHEST AND BEST USE
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CONCLUSION: HIGHEST AND BEST USE AS VACANT
Based on the information presented above and upon information contained in the Market and
Neighborhood Analyses sections, we conclude that the highest and best use of the subject as if vacant, would be the development of an apartment property. Our analysis of the subject property and
its respective market characteristics indicate the most likely buyer, as if vacant, would be an investor
(land speculation) or a developer.
AS IMPROVED
Legal Permissibility
As discussed, the subject site’s zoning and legal restrictions permit a variety of land uses. The site has been improved with an apartment development that is a legal, conforming use.
Physical Possibility
The physical characteristics of the subject improvements were discussed in detail in the Improvement
Analysis section. The layout and positioning of the improvements is considered functional for
apartment use. While it would be physically possible for a wide variety of uses, based on the legal restrictions and the design of the improvements, the continued use of the property for apartment users
would be the most functional use.
Financial Feasibility
The financial feasibility of an apartment property is based on the amount of rent which can be generated, less operating expenses required to generate that income; if a residual amount existing,
then the land is being put to a productive use. As will be indicated in the Income Capitalization
Approach section, the subject is producing a positive net cash flow and continued utilization of the
improvements for apartment purposes is considered financially feasible.
Maximum Profitability
The maximum profitable use of the subject as improved should conform to neighborhood trends and
be consistent with existing land uses. Although several uses may generate sufficient revenue to satisfy
the required rate of return on investment and provide a return on the land, the single use that
produces the highest price or value is typically the highest and best use. As shown in the applicable valuation sections, buildings that are similar to the subject have been acquired or continue to be used
by apartment owners/tenants. None of the comparable buildings have been acquired for conversion
to an alternative use. These comparables would indicate that the maximally productive use of the property is consistent with the existing use as an apartment property.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS HIGHEST AND BEST USE
36
CONCLUSION: HIGHEST AND BEST USE AS IMPROVED
Based on the foregoing, the highest and best use of the property as improved is consistent with the
existing use, as an apartment development.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS APPRAISAL METHODOLOGY
37
APPRAISAL METHODOLOGY
In appraisal practice, an approach to value is included or omitted based on its applicability to the
property type being valued and the quality and quantity of information available.
COST APPROACH
The cost approach is based upon the proposition that the informed purchaser would pay no more for
the subject than the cost to produce a substitute property with equivalent utility. This approach is
particularly applicable when the property being appraised involves relatively new improvements that represent the highest and best use of the land, or when relatively unique or specialized improvements
are located on the site and for which there exist few sales or leases of comparable properties.
SALES COMPARISON APPROACH
The sales comparison approach utilizes sales of comparable properties, adjusted for differences, to
indicate a value for the subject. Valuation is typically accomplished using physical units of comparison such as price per square foot, price per unit, price per floor, etc., or economic units of comparison
such as gross rent multiplier. Adjustments are applied to the physical units of comparison derived
from the comparable sale. The unit of comparison chosen for the subject is then used to yield a total value. Economic units of comparison are not adjusted, but rather analyzed as to relevant differences,
with the final estimate derived based on the general comparisons.
INCOME CAPITALIZATION APPROACH
The income capitalization approach reflects the subject’s income-producing capabilities. This approach is based on the assumption that value is created by the expectation of benefits to be derived
in the future. Specifically estimated is the amount an investor would be willing to pay to receive an
income stream plus reversion value from a property over a period of time. The two common
valuation techniques associated with the income capitalization approach are direct capitalization and the discounted cash flow (DCF) analysis.
METHODOLOGY APPLICABLE TO THE SUBJECT
In valuing the subject, all three approaches are applicable and have been utilized. In addition, the
replacement cost has been utilized within the analysis of insurable value.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS LAND VALUE
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LAND VALUE
The following location map and table of sales summarizes the comparable data used in the valuation
of the subject site. A detailed description of each transaction is included in the Addenda.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS LAND VALUE
39
SUMMARY OF COMPARABLE LAND SALESActual Sale Adjusted Sale Size Price Per Price Per
No. Property Location Type Date Zoning Price Price 1 (Acres) Acre Bldg Unit
1 East side of Mary Taylor Road,Birmingham, AL
Sale Jun-06 R-4 $1,350,000 $1,350,000 14.08 $95,881 $4,116
2 NW side of Cahaba Valley RoadJust north of Highway 280,Birmingham, AL
Sale Sep-05 R-2, Multi-Family $2,040,000 $2,040,000 16.80 $121,429 $6,800
3 Frankfurt Circle, just south ofLakeshore Parkway, Birmingham,AL
Sale Dec-99 Mixed-Use Development
$1,625,000 $1,625,000 19.09 $85,123 $4,565
Subject One Meadow Drive,Birmingham, Alabama
--- --- R-2, Mulit Dwelling District
--- --- 36.84 --- ---
1 Transaction amount adjusted for cash equivalency and/or development costs (where applicable)Compiled by CBRE
Transaction
The sales utilized were selected from our research of comparable land sales within the Birmingham
area. While we would have preferred to utilize more recent land sales in our analysis, the apartment
land sales utilized are the most recent sales that have occurred in the Birmingham area. This results from the limited amount of apartment development in recent years. In addition, we recognize that the
sales vary significantly in size. However, we have found no decernable difference between the sale
price per unit and the total size of the site.
ANALYSIS OF LAND SALES
Land Sale One
This property is located along the eastern side of Mary Taylor Road, just south of Gadsden Highway
(Highway 11). The site was purchased for development of a 328-unit apartment complex. The sale
price was $1,350,000, or $4,116 per unit.
The sale price per unit requires an upward adjustment for location. The adjustment for location results from the subject being located in an area with higher rental rates and higher values than the
comparables location. No additional adjustments are required to this comparable.
Land Sale Two
This property is located along the northwest side of Cahaba Valley Road in Birmingham, Al. The site
was purchased for the development of a 300-unit apartment complex, identified as The Springs at Greystone. The sale occurred in September 2005 for $2,040,000, which equates to a price per unit
and per acre of $6,800 and $121,428, respectively.
No adjustments are required to this comparable.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS LAND VALUE
40
Land Sale Three
The site is located at the end of Frankfurt Circle and does not have direct access to Lakeshore
Parkway. The site was purchased for development of a 356-unit apartment complex. The remaining
land along Frankfurt Circle is zoned for retail or office development. The sale price was $1,625,000, which equates to a sale price unit and per acre of $4,565 and $85,123, respectively.
The sale price per unit requires an upward adjustment for market conditions and or location. The
adjustment for market conditions results from the increase in property values during the time period analyzed. The adjustment for location results from the subject being located in an area with higher
rental rates and higher values than the comparables location. No additional adjustments are required
to this comparable.
SUMMARY OF ADJUSTMENTS
Based on a comparative analysis, the following table summarizes the adjustments warranted when
comparing each sale to the subject.
LAND SALES ADJUSTMENT GRID
Comparable Number 1 2 3 SubjectTransaction Type Sale Sale Sale ---Transaction Date Jun-06 Sep-05 Dec-99 ---Zoning R-4 R-2, Multi-Family Mixed-Use
DevelopmentR-2, Mulit
Dwelling DistrictActual Sale Price $1,350,000 $2,040,000 $1,625,000 ---
Adjusted Sale Price 1 $1,350,000 $2,040,000 $1,625,000 ---
Size (Acres) 14.08 16.80 19.09 36.84Size (SF) 613,325 731,808 831,560 1,604,750Price Per Acre $95,881 $121,429 $85,123 ---Price Per SF $2.20 $2.79 $1.95 ---Price Per Unit $4,116 $6,800 $4,565 ---Price ($ Per Unit) $4,116 $6,800 $4,565
Conditions of Sale 0% 0% 0%
Market Conditions 0% 0% 30%Subtotal $4,116 $6,800 $5,934Size 0% 0% 0%Shape 0% 0% 0%Topography 0% 0% 0%Location 50% 0% 20%Total Other Adjustments 50% 0% 20%Value Indication for Subject $6,174 $6,800 $7,121
1 Transaction amount adjusted for cash equivalency and/or development costs (where applicable)Compiled by CBRE
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS LAND VALUE
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CONCLUSION
Based on the preceding analysis of each comparable and the foregoing adjustment grid a price per
unit indication within the range was the most appropriate for the subject. The following table presents the valuation conclusion:
CONCLUDED LAND VALUE
$ Per Unit Subject Units Total
$7,000 x 400 = $2,800,000
Indicated Value: $2,800,000
Compiled by CBRE
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS COST APPROACH
42
COST APPROACH
In estimating the replacement cost new for the subject, the comparative unit method has been
employed, utilizing the Marshall Valuation Service (MVS) cost guide, published by Marshall and Swift, LLC.
MARSHALL VALUATION SERVICE
Direct Cost
Salient details regarding the direct costs are summarized in the Cost Approach Schedule that follows
this section. The MVS cost estimates include the following:
1. average architect’s and engineer’s fees for plans, plan check, building permits and survey(s) to establish building line;
2. normal interest in building funds during the period of construction plus a processing fee or service charge;
3. materials, sales taxes on materials, and labor costs; 4. normal site preparation including finish grading and excavation for foundation and backfill; 5. utilities from structure to lot line figured for typical setback; 6. contractor’s overhead and profit, including job supervision, workmen’s compensation, fire and
liability insurance, unemployment insurance, equipment, temporary facilities, security, etc.; 7. site improvements (included as lump sum additions); and 8. initial tenant improvement costs are included in MVS cost estimate. However, additional lease-
up costs such as advertising, marketing and leasing commissions are not included.
Base building costs (direct costs), indicated by the MVS cost guide, are adjusted to reflect the physical characteristics of the subject. Making these adjustments, including the appropriate local and current
cost multipliers, the Direct Building Cost is indicated.
Additions
Items not included in the direct building cost estimate include parking and walks, signage,
landscaping, and miscellaneous site improvements. The cost for these items is estimated separately using the segregated cost sections of the MVS cost guide.
Indirect Cost
Several indirect cost items are not included in the direct building cost figures derived through the MVS
cost guide. These items include developer overhead (general and administrative costs), property
taxes, legal and insurance costs, local development fees and contingencies, lease-up and marketing costs and miscellaneous costs. Research into these costs leads to the conclusion that an average
property requires an allowance for additional indirect costs of about 5% to 15% of the total direct
costs.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS COST APPROACH
43
MVS Conclusion
The concluded direct and indirect building cost estimate obtained via the MVS cost guide is illustrated
as follows:
MARSHALL VALUATION SERVICE COST SCHEDULE
Primary Building Type: Height per Story: 9'Effective Age: Number of Buildings: 25Quality/Condition: Gross Building Area: 481,698 SFExterior Wall: Net Rentable Area: 467,668 SFNumber of Units: Average Unit Size: 1,169 SFNumber of Stories:
Final Square Foot Cost $67.13
Base Component Cost $32,336,389
Base Building Cost (via Marshall Valuation Service cost data) $32,336,389Additions
Signage, Landscaping & Misc. Site Improvements $600,000Parking/Walks/Garages $450,000Appliances $800,000
Direct Building Cost $34,186,389
Indirect Costs 10.0% of Direct Building Cost $3,418,639Direct and Indirect Building Cost $37,605,028Rounded $37,605,000
Compiled by CBRE
400One, Two and Three
Apartment15 YRSGoodVinyl Siding
DIRECT AND INDIRECT COST CONCLUSION
The indicated direct and indirect building costs for the subject are illustrated as follows:
DIRECT AND INDIRECT COST CONCLUSION
Source Total Per Unit
MVS Cost Guide $37,605,000 $94,013CBRE Estimate $37,605,000 $94,013
Compiled by CBRE
ENTREPRENEURIAL PROFIT
Entrepreneurial profit represents the return to the developer, and is separate from contractor’s
overhead and profit. This line item, which is a subjective figure, tends to range from 10% to 15% of
total direct and indirect costs for this property type, based on discussions with developers active in this market, 10.0% will be used.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS COST APPROACH
44
ACCRUED DEPRECIATION
There are essentially three sources of accrued depreciation:
1. physical deterioration, both curable and incurable; 2. functional obsolescence, both curable and incurable; and 3. external obsolescence.
Physical Deterioration
The subject’s physical condition was detailed in the Improvement Analysis section. With regard to
incurable deterioration, the subject improvements are considered to have deteriorated due to normal wear and tear associated with natural aging.
ECONOMIC AGE AND LIFE
Actual Age 21 and 24 YearsEffective Age 15 YearsMVS Expected Life 45 YearsRemaining Economic Life 30 YearsAccrued Physical Incurable Depreciation 33.3%
Compiled by CBRE
Functional Obsolescence
Based on a review of the design and layout of the improvements, no forms of curable functional
obsolescence were noted. Because replacement cost considers the construction of the subject improvements utilizing modern materials and current standards, design and layout, functional
incurable obsolescence is not applicable.
External Obsolescence
Based on a review of the local market and neighborhood, no forms of external obsolescence affect
the subject.
COST APPROACH CONCLUSION
The value estimate is calculated on the Cost Approach Schedule that follows.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS COST APPROACH
45
COST APPROACH CONCLUSION
Building Type: Height per Story: 9'Effective Age: Number of Buildings: 25Quality/Condition: Gross Building Area: 481,698 SFExterior Wall: Net Rentable Area: 467,668 SFNumber of Units: Average Unit Size: 1,169 SFNumber of Stories:
Direct and Indirect Building Cost $37,605,000
Entrepreneurial Profit 10.0% of Total Building Cost $3,760,500
Replacement Cost New $41,365,500
Accrued DepreciationIncurable Physical Deterioration 33.3% ($13,788,500)
Functional Obsolescence $0External Obsolescence $0Total Accrued Depreciation 33.3% of Replacement Cost New ($13,788,500)
Depreciated Replacement Cost $27,577,000
Land Value $2,800,000Stabilized Value Indication $30,377,000Rounded $30,400,000Value Per Unit $76,000
Compiled by CBRE
of Replacement Cost New less Curable Physical Deterioration
400One, Two and Three
Apartment15 YRSGoodVinyl Siding
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS INSURABLE VALUE
46
INSURABLE VALUE
As part of the client’s requested scope of work, an estimate of insurable value is provided herein.
CBRE has followed traditional appraisal standards to develop a reasonable calculation based upon industry practices and industry accepted publications such as the Marshall Valuation Service
handbook. The methodology employed is a derivation of the cost approach which is primarily used as
an academic exercise to help support the market value estimate and therefore is not reliable for
Insurable Value estimates. Actual construction costs and related estimates can vary greatly from this estimate.
This analysis should not be relied upon to determine proper insurance coverage which can only be
properly estimated by consultants considered experts in cost estimation and insurance underwriting. It is provided to aid the client/reader/user as part of their overall decision making process and no
representations or warranties are made by CBRE regarding the accuracy of this estimate and it is
strongly recommend that other sources be utilized to develop any estimate of insurable value.
The insurable value estimate presented herein is intended to reflect the value of the destructible
portions of the subject, based on the replacement of physical items that are subject to loss from
hazards (excluding indestructible items such as basement excavation, foundation, site work, land value
and indirect costs). In the case of the subject, this estimate is based upon the base building costs (direct costs) as obtained via the Marshall Valuation Service handbook, with appropriate deductions.
Again, CBRE is not an expert to determine insurable value whereby it is recommended that the
client/reader/user of this report retain the services of a qualified, independent insurance adjuster to determine insurable value prior to making a business decision.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS INSURABLE VALUE
47
INSURABLE VALUE SCHEDULE
Building Type: Height per Story: 9'Effective Age: Number of Buildings: 25Quality/Condition: Gross Building Area: 481,698 SFExterior Wall: Net Rentable Area: 467,668 SFNumber of Stories:
Final Square Foot Cost $0.00 $0.00 $0.00 $0.00 $67.13Base Component Cost $0 $0 $0 $0 $32,336,389
Base Building Cost (via Marshall Valuation Service cost data) $32,336,389
Insurable Value Exclusions 10.0% of Total Building Cost ($3,233,639)
Insurable Value Indication $29,102,750Rounded $29,100,000Value Per SF $62.22
Compiled by CBRE
One, Two and Three
Apartment15 YRSGoodVinyl Siding
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SALES COMPARISON APPROACH
48
SALES COMPARISON APPROACH
The following location map and table of sales summarizes the comparable data used in the valuation
of the subject property. A detailed description of each transaction is included in the Addenda.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SALES COMPARISON APPROACH
49
SUMMARY OF COMPARABLE APARTMENT SALES
Year No. Avg. Unit Actual Sale Adjusted Price Per NOI PerNo. Name Type Date Built Units Size Price Sale Price 1 Unit 1 Unit OAR
1 Riverside Parc,Birmingham, AL
Contract Aug-08 1987 400 1,078 $28,500,000 $28,500,000 $71,250 $4,762 6.68%
2 Colonial Village at Monte D' Oro,Hoover, AL
Sale Jun-08 1979 200 1,480 $16,510,000 $19,045,000 $95,225 $6,218 6.53%
3 Stonegate,Birmingham, AL
Sale Jan-08 2007 260 1,133 $24,000,000 $25,550,000 $98,269 $6,218 6.33%
4 Ridge Crossing,Hoover, AL
Sale Jul-07 1992 720 1,099 $68,500,000 $73,540,000 $102,139 $6,165 6.04%
5 Pine Brook,Hoover, AL
Sale Jun-07 1978 241 882 $11,068,000 $14,354,175 $59,561 $4,478 7.52%
6 Stonecrest at Double Oak Mountain,Birmingham, AL
Sale Feb-07 1997 315 1,176 $27,000,000 $29,562,000 $93,848 $6,398 6.82%
Subj.Pro
Forma
The Meadows at Brook Highland Apartments,Birmingham, Alabama
--- --- 1984 and 1987 400 1,169 --- --- --- $4,897 ---
1 Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable)Compiled by CBRE
Transaction
ANALYSIS OF IMPROVED SALES
The sales utilized were selected from our research of comparable improved sales. These sales were
chosen based upon age, condition, and size. These sales share investment characteristics similar to
the subject’s.
Improved Sale One
This property is a 400-unit garden apartment property known as Riverside Parc. The property is
located on Cahaba Forest Drive, just east of Highway 280 in Birmingham, Alabama. The property
was built in 1987. The property is currently under contract to be purchased. The current contract
price is $28,500,000, or $71,250 per unit. The property is being purchased based on proforma income inclusive of a 7.0% vacancy and collection loss allowance. The capitalization rate is 6.68%.
No adjustments are required to this comparable.
Improved Sale Two
The property is a 200-unit garden-style apartment complex built in 1979 and situated on a 5.70-acre
site in Hoover, Jefferson County, metropolitan Birmingham, Alabama. The property is currently 97.5% occupied and under contract to be purchased. The current contract price is $16,510,000.
The purchaser is planning to renovate the property following the sale. The planned renovation costs
are $1,535,000 or $7,675 per unit. The property will also incur rent loss during the renovation and we have included additional cost of $1,000,000 for rent loss and entrepreneurial profit. This results
in a capitalization rate of 6.53% utilizing an 8.5% vacancy and collection loss and $250 per unit for
reserves.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS SALES COMPARISON APPROACH
50
The sale price per unit requires a downward adjustment for average unit size. The adjustment for size
results from the subject having an average unit size of 1,169 square feet while the comparable has an average unit size of 1,480 square feet. Smaller units typically have lower rental rates and lower
values than larger units, all other things being equal. No additional adjustments are required to this
comparable.
Improved Sale Three
This property is a 260-unit garden apartment property located along the southern side of Lakeshore Drive, just north of State Route 150, in Birmingham, Jefferson County, Alabama. The property was
built in 2007. The property is situated on a 20.00-acre site. The property was purchased in January
2008. The property was is initial lease-up at the time of sale and was 27.0% occupied. In addition,
the property required approximately $500,000 in additional construction expenses in addition to approximately $1,050,000 in rent loss during the lease-up. The capitalization rate derived from the
buyers pro forma following completion of the lease-up and stabilization was 6.33%.
The sale price per unit requires a downward adjustment for age. The adjustment for age results from the subject being built in 1984 and 1987 while the comparable was completed in 2007. Older
properties typically have lower rental rates and lower values than newer properties, all other things
being equal. No additional adjustments are required to this comparable.
Improved Sale Four
Ridge Crossing, is located in Hoover, Alabama. This property was purchased in July 2007. The sale price was $68,500,000, or $95,139 per unit. However, following the sale the purchaser is planning
to extensively renovate the property. The cost of the planned renovation is estimated at $5,040,000,
or $7,000 per unit. Based on the pro forma income inclusive a 7.0% vacancy and collection loss this equates to a 6.04% capitalization rate.
The sale price per unit requires a downward adjustment for age. The adjustment for age results from
the subject being built in 1984 and 1987 while the comparable was completed in 1992. Older
properties typically have lower rental rates and lower values than newer properties, all other things being equal. No additional adjustments are required to this comparable.
Improved Sale Five
This property is a 241-unit garden apartment property located along the northern and southern sides
of Little Valley Road, just east of Lorna Road and west of Interstate 65, in Hoover, Jefferson County,
Alabama. The property was built in 1978. The property is situated on a 17.95-acre site. The property is currently under contract to be purchased. Following the sale the prospective purchaser is
planning to renovate the property. The cost of the planned renovation is estimated at $3,286,175, or
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$13,636per unit. The property is currently 91.7% occupied. The capitalization rate derived from the
buyers pro forma following completion of the renovation equates to 7.52%. However, this does not reflect the rent loss and entrepreneurial profit associated with the renovation. Therefore, the actual
capitalization rate is below the indicated level.
The sale price per unit requires an upward adjustment for adjustment for average unit size and for
age. The adjustment for size results from the subject having an average unit size of 1,169 square feet while the comparable has an average unit size of 882 square feet. Larger units typically have higher
rental rates and higher values than smaller units, all other things being equal. The adjustment for age
results from the subject being built in 1984 and 1987 while the comparable was completed in 1979. Newer properties typically have higher rental rates and higher values than older properties. No
additional adjustments are required to this comparable.
Improved Sale Six
This comparable represents the sale of a 315-unit apartment property that was built in 1997. The
property is located at the eastern end of Bowling Drive, just east of Highway 280, in metropolitan Birmingham, Alabama. The property offers one-, two- and three-bedroom units, with an average unit
size of 1,176 square feet. The property sold in February 2007 for $27,000,000. However, buyer
plans to spend an additional $2,562,000 renovating the property, resulting in a total project cost of $29,562,000, or $93,848 per unit. The property is being purchased based on pro forma income,
inclusive of a 7.0% vacancy and collection loss allowance, which results in an overall rate of 6.82%.
However, the actual capitalization rate would be lower considering the entrepreneurial profit
associated with the planned renovation.
The sale price per unit requires a downward adjustment for age. The adjustment for age results from
the subject being built in 1984 and 1987 while the comparable was completed in 1997. Older
properties typically have lower rental rates and lower values than newer properties, all other things being equal. No additional adjustments are required to this comparable.
SUMMARY OF ADJUSTMENTS
Based on the foregoing discussions, the following table summarizes the adjustments warranted when
comparing each sale to the subject.
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APARTMENT SALES ADJUSTMENT GRID
Comparable Number 1 2 3 4 5 6Subj.Pro
FormaTransaction Type Contract Sale Sale Sale Sale Sale ---Transaction Date Aug-08 Jun-08 Jan-08 Jul-07 Jun-07 Feb-07 ---Year Built 1987 1979 2007 1992 1978 1997 1984 and 1987No. Units 400 200 260 720 241 315 400Avg. Unit Size 1,078 1,480 1,133 1,099 882 1,176 1,169Actual Sale Price $28,500,000 $16,510,000 $24,000,000 $68,500,000 $11,068,000 $27,000,000 ---Adjusted Sale Price 1 $28,500,000 $19,045,000 $25,550,000 $73,540,000 $14,354,175 $29,562,000 ---
Price Per Unit 1 $71,250 $95,225 $98,269 $102,139 $59,561 $93,848 ---
Price Per SF 1 $66.11 $64.34 $86.71 $92.98 $67.56 $79.81 ---NOI Per Unit $4,762 $6,218 $6,218 $6,165 $4,478 $6,398 $4,897NOI Per SF $4.42 $4.20 $5.49 $5.62 $5.08 $5.44 $4.19OAR 6.68% 6.53% 6.33% 6.04% 7.52% 6.82% ---Adj. Price Per Unit $71,250 $95,225 $98,269 $102,139 $59,561 $93,848Conditions of Sale 0% 0% 0% 0% 0% 0%Market Conditions (Time) 0% 0% 0% 0% 0% 0%Subtotal $71,250 $95,225 $98,269 $102,139 $59,561 $93,848Location 0% 0% 0% 0% 0% 0%Average Unit Size 0% -15% 0% 0% 20% 0%Age/Condition 0% 0% -20% -15% 5% -15%Total Other Adjustments 0% -15% -20% -15% 25% -15%
Indicated Value Per Unit $71,250 $80,941 $78,615 $86,818 $74,451 $79,770
1 Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable)
Compiled by CBRE
Based on the preceding discussions of each comparable and the foregoing adjustment analysis, we
have not placed primary reliance on any one sale as we do not believe one sale is more indicated of
a market value. In conclusion, a price per unit indication within the range was most appropriate for the subject.
SALES COMPARISON APPROACH CONCLUSION
The following table presents the estimated value for the subject as indicated by the sales comparison
approach.
SALES COMPARISON APPROACH
Total Units X Value Per Unit = Value400 X $75,000 = $30,000,000
VALUE CONCLUSIONIndicated Stabilized Value $30,000,000Value Per Unit $75,000
Compiled by CBRE
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INCOME CAPITALIZATION APPROACH
The following location map and table of rents summarizes the comparable data used in the valuation
of the subject property. A detailed description of each transaction is included in the Addenda.
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SUMMARY OF COMPARABLE APARTMENT RENTALS
Comp. No. Property Name Location Year Built Occ.
No. Units
Avg. Rent Per Unit
1 1986 97% 400 $854
2 1987 94% 400 $748
3 2001 95% 336 $972
4 2000 96% 348 $1,019
5 1987 93% 280 $740
Subj.Pro
Forma
The Meadows at Brook Highland Apartments
One Meadow Drive,Birmingham, Alabama
1984 and 1987 96% 400 ---
Compiled by CBRE
Wood Springs 200 Springs Avenue,Birmingham, AL
50 Cahaba River Parc,Birmingham, AL
The Parc At Cahaba River
3550 Grandview Parkway,Birmingham, AL
801 Cahaba Forest Cove,Birmingham, AL
Riverside Parc
Inverness Cliffs 100 Inverness Cliffs Drive,Birmingham, AL
The Crown at Grandview
The rentals utilized represent the best data available for comparison with the subject property. They
were selected from our research of comparable rentals within the local submarket.
ANALYSIS OF RENT COMPARABLES
Rent Comparable One
This comparable represents a 400-unit apartment property, located along the southeastern side of
Valleydale Road, just south of Highway 280. The property, identified as Inverness Cliffs, was
developed in 1986 and is currently 97% occupied. The comparable offers one- and two-bedroom
floor plans, with an average unit size of 1,026 square feet. Management employs a RUBS for reimbursement of water and sewer. As a concession, management is offering $300 pro-rated over
the first three months on all one-bedroom unit types with a 12-month lease.
As compared to the subject, this project is comparable in terms of location, age, quality and overall market appeal.
Rent Comparable Two
This comparable represents a 400-unit apartment property, located just off Highway 280 along the
northern side of Cahaba Park Circle. The property, identified as Riverside Parc, was developed in
1987 and is currently 94% occupied. The comparable offers one-, two-, and three-bedroom floor plans, with an average unit size of 980 square feet. Units are sub-metered for water and sewer with
the tenant responsible for usage. As a concession, management is offering $150 off per month on all
unit types with a 12-month lease.
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As compared to the subject, this project is comparable in terms of location, age, quality and overall
market appeal.
Rent Comparable Three
This comparable represents a 336-unit apartment property, located on Grandview Parkway .5 mile from Highway 280 in Birmingham, Al. The property, identified as The Crown at Grandview, was
developed in two phases in 2001 and 2006 and is currently 95% occupied. The comparable offers
one-, two-, and three-bedroom floor plans, with an average unit size of 1,041 square feet. In addition, detached parking garages are available for $135 per month and two covered garages for
$50 per month. Price ranges in the same floor plan differ depending on which floor they are on and
whether or not they have fireplaces. Units are sub-metered for water and sewer with the tenant
responsible for usage. Resident pays $15 per month for trash removal. Management is offering from up to $1,250 off a 14-month lease pro-rated on select unit types. In addition, $200 off the first
month is given via a Look-n-Lease special.
As compared to the subject, this project is comparable in terms of location and superior in terms of age, quality and overall market appeal.
Rent Comparable Four
This comparable represents a 348-unit apartment property, located along the northern side of
Cahaba River Road, just west of Highway 280. The property, identified as The Parc at Cahaba River,
was developed in 2000 and is currently 96% occupied. The property offers one-, two-, and three-bedroom floor plans, with an average unit size of 1,227 square feet. Units are sub-metered for water
and sewer with the tenant responsible for usage. Garages can be rented at $125 a month. As a
concession, reduced rents are being offered on select unit types from $101 to $181 off the monthly rental rate with a minimum 6-month lease.
As compared to the subject, this project is comparable in terms of location and superior in terms of
age, quality and overall market appeal.
Rent Comparable Five
This comparable represents a 280-unit apartment property, located at the northwest corner of Riverview Road and Cahaba River Road, just south of Highway 280. The property, identified as
Wood Springs, was developed in 1987 and is currently 93% occupied. The comparable offers one-,
two-, and three-bedroom floor plans, with an average unit size of 917 square feet. The construction
of the two- and three-story buildings is wood frame with vinyl siding exteriors. Unit amenities include washer/dryer connections, fireplaces, ceiling fans, fully equipped kitchens, and patios/balconies.
Management employs a RUBS for reimbursement of water and sewer. A flat fee of $35 (1BR), $45
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(2BR), and $55 (3BR) is charged for the water/sewer expense. Concessions currently being offered at
this property include reduced rental rates on all floor plans. The reduced rental rates are $599 per month for the units with 601 square feet, $609 per month for the units with 789 square feet, $699
per month for the units with 1,062 square feet and $799 per month for the units with 1,288 square
feet.
As compared to the subject, this project is comparable in terms of location, age, quality and overall market appeal.
SUBJECT RENTAL INFORMATION
The following table depicts the subject’s unit mix and average quoted rental rates.
SUBJECT RENTAL INFORMATIONNo. of Unit Avg. Quoted Rent
Type Units Size (SF) Rents Per SF1BR/1BA 86 925 SF $690 $0.75 2BR/1BA 58 965 SF $731 $0.76 2BR/2BA 148 1,200 SF $771 $0.64 3BR/2BA 108 1,431 SF $941 $0.66
Total/Average: 400 1,169 SF $794 $0.68
Compiled by CBRE
The residents pay a flat rate for the water and sewer and trash removal expenses. The one-bedroom
units are charged $64 per month, the two-bedroom/one-bathroom units are charged $69 per month,
the two-bedroom/two-bathroom units are charged $74 per month and the three-bedroom/two-bathroom units are charged $79 per month. Concessions currently being offered at the subject
include $1,000 off prorated over the term of the lease.
ESTIMATE OF MARKET RENT
In order to estimate the market rates for the various floor plans, the subject unit types have been compared with similar units in the comparable projects. The following is a discussion of each unit
type.
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One-Bedroom Units
SUMMARY OF COMPARABLE RENTALSONE BEDROOM UNITS
Rental RatesComparable Plan Type Size $/Mo. $/SFSubject 1BR/1BA 925 SF $690 $0.75Inverness Cliffs 1 BR, 1 BA 1,076 SF $855 $0.79Inverness Cliffs 1 BR, 1 BA 973 SF $815 $0.84Riverside Parc 1 BR, 1 BA 803 SF $675 $0.84Inverness Cliffs 1 BR, 1 BA 977 SF $825 $0.84Wood Springs 1 BR, 1 BA 789 SF $685 $0.87The Parc At Cahaba River 1 BR, 1 BA 855 SF $815 $0.95Inverness Cliffs 1 BR, 1 BA 809 SF $785 $0.97The Crown at Grandview 1 BR, 1 BA 892 SF $875 $0.98The Crown at Grandview 1 BR, 1 BA 842 SF $830 $0.99The Crown at Grandview 1 BR, 1BA 892 SF $890 $1.00Wood Springs 1 BR, 1 BA 601 SF $625 $1.04Inverness Cliffs 1 BR, 1 BA 653 SF $695 $1.06 Compiled by CBRE
The subject’s current quoted rental rate per square foot is slightly below the range indicated by the
comparables. However, the subject’s floor plans are larger than the majority of the comparable one-
bedroom floor plans. Larger units typically have lower rental rates per square foot than smaller units, all other things being equal. In addition, the quoted monthly rental rate is within the indicated range.
Therefore, we have utilized the subject’s current quoted rental rates in our analysis.
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Two-Bedroom Units
SUMMARY OF COMPARABLE RENTALSTWO BEDROOM UNITS
Rental RatesComparable Plan Type Size $/Mo. $/SFSubject 2BR/2BA 1,200 SF $771 $0.64Riverside Parc 2 BR, 2 BA 1,050 SF $765 $0.73Inverness Cliffs 2 BR, 2.5 BA 1,495 SF $1,095 $0.73Wood Springs 2 BR, 2 BA 1,062 SF $785 $0.74Inverness Cliffs 2 BR, 2 BA 1,235 SF $925 $0.75Subject 2BR/1BA 965 SF $731 $0.76Inverness Cliffs 2 BR, 2 BA 1,425 SF $1,080 $0.76Inverness Cliffs 2 BR, 2 BA 1,198 SF $915 $0.76Inverness Cliffs 2 BR, 2 BA 1,135 SF $880 $0.78The Parc At Cahaba River 2 BR, 2 BA 1,285 SF $1,015 $0.79Riverside Parc 2 BR, 1 BA 900 SF $725 $0.81The Crown at Grandview 2 BR, 2 BA 1,235 SF $1,010 $0.82The Crown at Grandview 2 BR, 2 BA 1,213 SF $1,000 $0.82The Crown at Grandview 2 BR, 2 BA 1,169 SF $970 $0.83The Crown at Grandview 2 BR, 2 BA 1,235 SF $1,045 $0.85 Compiled by CBRE
The subject’s current quoted rental rate per square foot is slightly below the range indicated by the comparables. However, the subject’s floor plans are larger than six of the comparable two-bedroom
floor plans. Larger units typically have lower rental rates per square foot than smaller units, all other
things being equal. In addition, the quoted monthly rental rate is within the indicated range.
Therefore, we have utilized the subject’s current quoted rental rates in our analysis.
Three-Bedroom Units
SUMMARY OF COMPARABLE RENTALSTHREE BEDROOM UNITS
Rental RatesComparable Plan Type Size $/Mo. $/SFSubject 3BR/2BA 1,431 SF $941 $0.66Riverside Parc 3 BR, 2 BA 1,306 SF $900 $0.69Wood Springs 3 BR, 2 BA 1,288 SF $915 $0.71The Crown at Grandview 3 BR, 2 BA 1,416 SF $1,220 $0.86The Crown at Grandview 3 BR, 2 BA 1,378 SF $1,200 $0.87The Parc At Cahaba River 3 BR, 2 BA 1,416 SF $1,265 $0.89The Crown at Grandview 3 BR, 2 BA 1,300 SF $1,165 $0.90 Compiled by CBRE
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The subject’s current quoted rental rate per square foot is slightly below the range indicated by the
comparables. However, the subject’s floor plans are larger than the comparable three-bedroom floor plans. Larger units typically have lower rental rates per square foot than smaller units, all other things
being equal. In addition, the quoted monthly rental rate is within the indicated range. Therefore, we
have utilized the subject’s current quoted rental rates in our analysis.
MARKET RENT CONCLUSIONS
Based on the foregoing analysis and discussion, the following is the estimate of potential rental income for the subject:
MARKET RENT CONCLUSIONSUnit Monthly Rent Annual Rent Annual
Unit Type Size Total SF $/Unit $/SF PRI $/Unit $/SF Total1BR/1BA 925 SF 79,550 SF $690 $0.75 $59,340 $8,280 $8.95 $712,0802BR/1BA 965 SF 55,970 SF $731 $0.76 $42,398 $8,772 $9.09 $508,7762BR/2BA 1,200 SF 177,600 SF $771 $0.64 $114,108 $9,252 $7.71 $1,369,2963BR/2BA 1,431 SF 154,548 SF $941 $0.66 $101,628 $11,292 $7.89 $1,219,536
1,169 SF 467,668 SF $794 $0.68 $317,474 $9,524 $8.15 $3,809,688
d by CBRE
RENT ADJUSTMENTS
Rent adjustments are sometimes necessary to account for differences in rental rates applicable to
different units within similar floor plans due to items such as location within the property, view, and
level of amenities. These rental adjustments may be in the form of rent premiums or rent discounts. In the case of the subject property premiums are charged. However, we have utilized the average
quoted rental rates in our analysis. Therefore, an additional adjustment is not required.
RENT ROLL ANALYSIS
The rent roll analysis serves as a crosscheck to the estimate of market rent for the subject. The collections shown on the rent roll include rent premiums and/or discounts.
RENT ROLL ANALYSISTotal Total
Revenue Component Monthly Rent Annual Rent385 Occupied Units at Contract Rates $302,445 $3,629,34015 Vacant Units at Quoted Rates $6,667 $80,004
400 Total Units @ Contract Rent $309,112 $3,709,344
400 Total Units @ Market Rent $317,474 $3,809,688
Compiled by CBRE
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The variation between the total annual rent reflected in the rent roll analysis and the market rent
results from concession being offered. Therefore, a loss to lease deduction is required.
POTENTIAL RENTAL INCOME CONCLUSION
Within this analysis, potential rental income is estimated based upon the forward-looking market
rental rates over the next twelve months. This method of calculating rental income is most prevalent in
the local market and is consistent with the method used to derive overall capitalization rates from the
comparable sales data. The subject’s actual operating statements have been analyzed. The following table presents the historical operating statements for the subject.
OPERATING HISTORY
2006 2007Sept. 07 to
Aug. 08Total $/Unit Total $/Unit Total $/Unit
IncomeRental Income $2,789,728 $6,974 $2,847,858 $7,120 $2,947,350 $7,368Utility Income 177,407 444 187,098 468 248,911 622 Other Income 264,476 661 238,692 597 217,132 543 Effective Gross Income $3,231,611 $8,079 $3,273,648 $8,184 $3,413,393 $8,533
ExpensesReal Estate Taxes $173,609 $434 $193,102 $483 $199,512 $499Property Insurance 67,020 168 64,875 162 66,186 165 Electricity 71,466 179 89,870 225 85,417 214 Water and Sewer 81,404 204 267,400 669 239,816 600 Trash Removal 83,210 208 86,455 216 44,346 111 Repairs and Maintenance 221,274 553 248,889 622 210,621 527 Painting and Decorating 154,194 385 146,376 366 198,740 497 Landscaping 58,584 146 64,595 161 71,704 179 Administrative Payroll 263,843 660 241,496 604 219,217 548 Maintenance Payroll 160,601 402 195,028 488 166,820 417 Management Fee 96,594 241 96,331 241 100,065 250 Employee Taxes and Benefits 9,329 23 11,891 30 - - Non-Revenue Units 20,622 52 22,236 56 15,956 40 Advertising and Promotion 42,994 107 48,271 121 36,140 90 Administrative 135,337 338 95,767 239 84,363 211 Fire Dues 54,371 136 - - Reserves for Replacement - - - - Operating Expenses $1,694,452 $4,236 $1,872,582 $4,681 $1,738,903 $4,347
Net Operating Income $1,537,159 $3,843 $1,401,066 $3,503 $1,674,490 $4,186
Source: Operating statements
LOSS TO LEASE
Within the local market, buyers and sellers typically recognize a reduction in potential rental income due to the difference between market and contract rental rates. Based upon the difference between
market rent and contract rent a 1.00% loss to lease deduction is required.
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RENT CONCESSIONS
Concessions currently being offered at the subject include $1,000 off prorated over the term of the
lease. Therefore, we have included an 8.00% deduction for concession loss in our analysis.
VACANCY
This is an allowance for reductions in potential income attributable to vacancies, tenant turnover, and
non-payment of effective rent. In the direct capitalization process, a market-derived, stabilized
vacancy and collection loss estimate is subtracted from potential gross income in order to arrive at the effective gross income. As stated earlier in the Market Analysis, we have included a 6.00% vacancy
loss.
CREDIT LOSS
The credit loss estimate is an allowance for nonpayment of rent or other income. The subject’s credit
loss was not detailed in the operating statements. Therefore, we have placed primary emphasis on similar properties and have estimated the subject’s credit loss at 1.0%.
UTILITY INCOME
The subject’s utility income is detailed as follows:
UTILITY INCOME
Year Total $/Unit2006 $177,407 $444 2007 $187,098 $468 Sept. 07 to Aug. 08 $248,911 $622 CBRE Estimate $248,911 $622
Compiled by CBRE
The subject property derives additional income from reimbursing the utility expenses. The residents
pay a flat rate for the water and sewer and trash removal expenses. The one-bedroom units are charged $64 per month, the two-bedroom/one-bathroom units are charged $69 per month, the two-
bedroom/two-bathroom units are charged $74 per month and the three-bedroom/two-bathroom
units are charged $79 per month. This source of income is very property specific. Therefore, we have
included the utility income at the recent historical level in our analysis.
OTHER INCOME
Other income is supplemental to that derived from leasing of the improvements. This includes
categories such as forfeited deposits, vending machines, late charges, etc. The subject’s ancillary
income is detailed as follows:
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OTHER INCOME
Year Total $/Unit2006 $264,476 $661 2007 $238,692 $597 Sept. 07 to Aug. 08 $217,132 $543 CBRE Estimate $225,000 $563
Compiled by CBRE
Typically, other income at similar properties ranges between $25 and $50 per unit monthly. The
historical amounts are at a typical level. Therefore, we have included this source of income at
$225,000 annually, or $46.92 per unit per month.
EFFECTIVE GROSS INCOME
The subject’s effective gross income is detailed as follows:
EFFECTIVE GROSS INCOME
Year Total % Change2006 $3,231,611 --- 2007 $3,273,648 1.30%Sept. 07 to Aug. 08 $3,413,393 4.27%CBRE Estimate $3,698,050 8.34%
Compiled by CBRE
Our projected effective gross income is above the historical level. However, considering the current level of collections we believe our projection to be reasonable. The 385 occupied units have contract
rental rates totaling $3,629,340 annually.
OPERATING EXPENSE ANALYSIS
The following subsections represent the analysis for the pro forma estimate of each category of the subject’s stabilized expenses.
Expense Comparables
The following table summarizes expenses obtained from recognized industry publications and/or
comparable properties.
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EXPENSE COMPARABLES
Comparable Number 1 2 3
Units 224 101 252Expense Year 2007 Ann. 2007 Ann. 2007
Expenses $/Unit $/Unit $/Unit
Real Estate Taxes $258 $455 $990Property Insurance 257 283 253 GasElectricity 126 129 257 Water and Sewer 377 529 94 Trash Removal 53 89 64
Repairs and Maintenance 98 244 321 Painting and Decorating 380 386 111 Landscaping 141 144 300 Administrative Payroll 362 301 359 Maintenance Payroll 420 333 401 Management Fee 373 264 148 Employee Taxes and Benefits 178 136 117 Advertising and Promotion 176 218 128 Administrative 155 230 109 Reserves for Replacement - - -
Operating Expenses $3,354 $3,741 $3,652
Source: Operating Statements
Real Estate Taxes
The real estate taxes for the subject were previously discussed. The subject’s expense is detailed as
follows:
REAL ESTATE TAXES
Year Total $/Unit2006 $173,609 $434 2007 $193,102 $483 Sept. 07 to Aug. 08 $199,512 $499 Expense Comparable 1 N/A $258 Expense Comparable 2 N/A $455 Expense Comparable 3 N/A $990 CBRE Estimate $196,531 $491
Compiled by CBRE
The property taxes were previous discussed and have been included at the actual level in our analysis.
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Property Insurance
Property insurance expenses typically include fire and extended coverage and owner’s liability
coverage. The subject’s expense is detailed as follows:
PROPERTY INSURANCE
Year Total $/Unit2006 $67,020 $168 2007 $64,875 $162 Sept. 07 to Aug. 08 $66,186 $165 Expense Comparable 1 N/A $257 Expense Comparable 2 N/A $283 Expense Comparable 3 N/A $253 CBRE Estimate $66,000 $165
Compiled by CBRE
We have found that the insurance expense with most apartment properties in the area typically
ranging from approximately $100 to $250 per unit. The subject’s historical expense varies only
slightly and is at a typical level. Therefore, we have estimated this expense at $165 per unit.
Electricity
The subject’s electricity expense is detailed as follows:
ELECTRICITY
Year Total $/Unit2006 $71,466 $179 2007 $89,870 $225 Sept. 07 to Aug. 08 $85,417 $214 Expense Comparable 1 N/A $126 Expense Comparable 2 N/A $129 Expense Comparable 3 N/A $257 CBRE Estimate $90,000 $225
Compiled by CBRE
This expense typically ranges from approximately $100 to $250 per unit annually, with most
properties being toward the middle to lower end of the range. However, electricity expenses are typically very property specific, and comparables offer a minimal indication of an appropriate level.
The historical expense is at a typical level. Therefore, we have included this expense at $225 in our
analysis.
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Water & Sewer
The subject’s water and sewer expense is detailed as follows:
WATER AND SEWER
Year Total $/Unit2006 $81,404 $204 2007 $267,400 $669 Sept. 07 to Aug. 08 $239,816 $600 Expense Comparable 1 N/A $377 Expense Comparable 2 N/A $529 Expense Comparable 3 N/A $94 CBRE Estimate $239,816 $600
Compiled by CBRE
As with the other utility expenses, water and sewer costs are typically very property specific. The recent historical levels vary only slightly. Therefore, we have included this expense at the recent historical
level in our analysis.
Trash Removal
The subject’s trash removal expense is detailed as follows:
TRASH REMOVAL
Year Total $/Unit2006 $83,210 $208 2007 $86,455 $216 Sept. 07 to Aug. 08 $44,346 $111 Expense Comparable 1 N/A $53 Expense Comparable 2 N/A $89 Expense Comparable 3 N/A $64 CBRE Estimate $80,000 $200
Compiled by CBRE
This expense typically ranges from approximately $30 to $100 per unit annually, with most properties
being toward the middle to lower end of the range. The historical amount is above a typical level.
However, the subject property offers a trash valet service which includes pick-up of the trash at the door of each unit. This greatly increases this expense. Therefore, we have included this expense at
$200 per unit in our analysis.
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Repairs & Maintenance
This expense category includes the cost of routine repairs to the apartments units. The subject’s
expense is detailed as follows:
REPAIRS AND MAINTENANCE
Year Total $/Unit2006 $221,274 $553 2007 $248,889 $622 Sept. 07 to Aug. 08 $210,621 $527 Expense Comparable 1 N/A $98 Expense Comparable 2 N/A $244 Expense Comparable 3 N/A $321 CBRE Estimate $120,000 $300
Compiled by CBRE
We have found this expense typically ranges from approximately $150 to $300 per unit annually. The
historical amounts are above a typical level. Therefore, we have included this expense at $300 per
unit in our analysis.
Painting & Decorating
This expense category includes normal cleaning, painting, decorating and other “make ready” costs expended prior to the initial move-in of a tenant. The subject’s expense is detailed as follows:
PAINTING AND DECORATING
Year Total $/Unit2006 $154,194 $385 2007 $146,376 $366 Sept. 07 to Aug. 08 $198,740 $497 Expense Comparable 1 N/A $380 Expense Comparable 2 N/A $386 Expense Comparable 3 N/A $111 CBRE Estimate $120,000 $300
Compiled by CBRE
This expense typically approximates $125 to $300 per unit. The historical amounts are above a typical level. Therefore, we have included this expense at $300 per unit in our analysis.
Grounds (Landscaping)
The subject’s expense is detailed as follows:
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LANDSCAPING
Year Total $/Unit2006 $58,584 $146 2007 $64,595 $161 Sept. 07 to Aug. 08 $71,704 $179 Expense Comparable 1 N/A $141 Expense Comparable 2 N/A $144 Expense Comparable 3 N/A $300 CBRE Estimate $70,000 $175
Compiled by CBRE
This expense item covers normal landscaping and grounds maintenance of the property. This expense typically approximates $100 to $300 per unit. The historical amounts are at a typical level.
Therefore, we have included this expense at $175 per unit in our analysis.
Administrative Payroll
This expense item reflects payroll costs associated with on-site management and other administrative
personnel. The subject’s expense is detailed as follows:
ADMINISTRATIVE PAYROLL
Year Total $/Unit2006 $263,843 $660 2007 $241,496 $604 Sept. 07 to Aug. 08 $219,217 $548 Expense Comparable 1 N/A $362 Expense Comparable 2 N/A $301 Expense Comparable 3 N/A $359 CBRE Estimate $180,000 $450
Compiled by CBRE
The administrative payroll expense typically approximates $200 to $450 per unit. The historical
amounts are above a typical level. Therefore, we have included this expense at $450 per unit in our
analysis.
Maintenance Payroll
This expense item reflects payroll costs associated with the upkeep and maintenance of the property,
including engineering and other maintenance personnel. The subject’s expense is detailed as follows:
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MAINTENANCE PAYROLL
Year Total $/Unit2006 $160,601 $402 2007 $195,028 $488 Sept. 07 to Aug. 08 $166,820 $417 Expense Comparable 1 N/A $420 Expense Comparable 2 N/A $333 Expense Comparable 3 N/A $401 CBRE Estimate $160,000 $400
Compiled by CBRE
This expense typically approximates $200 to $450 per unit. The historical amounts are at and above a typical level. Therefore, we have included this expense at $400 per unit in our analysis.
Management Fee
Management expenses are typically negotiated as a percentage of collected revenues (effective gross
income). The subject’s expense is detailed as follows:
MANAGEMENT FEE
Year Total $/Unit2006 $96,594 $241 2007 $96,331 $241 Sept. 07 to Aug. 08 $100,065 $250 Expense Comparable 1 N/A $373 Expense Comparable 2 N/A $264 Expense Comparable 3 N/A $148 CBRE Estimate $92,451 $231
Compiled by CBRE
Professional management fees in the local market range from 2.0% to 5.0% for comparable properties. The three major factors influencing this expense are the rent levels at the property, the
number of units, and the total gross fee. Given the size of the subject property (i.e. number of units),
as well as the rent levels, we believe an appropriate management expense would be at 2.5%.
Employee Taxes & Benefits
This expense item includes all employee payroll taxes and other employment benefits for the subject
property. The subject’s expense is detailed as follows:
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EMPLOYEE TAXES AND BENEFITS
Year Total $/Unit2006 $9,329 $23 2007 $11,891 $30 Sept. 07 to Aug. 08 $0 $0 Expense Comparable 1 N/A $178 Expense Comparable 2 N/A $136 Expense Comparable 3 N/A $117 CBRE Estimate $51,000 $128
Compiled by CBRE
This expense typically approximates 15% to 20% of the combined payroll expense. Therefore, based on the typical level of similar area properties and the subject’s recent historical levels we have
estimated this expense at 15% of the combined payroll expense.
Employee Apartments (Non-Revenue Units)
Apartment properties typically include units that are non-revenue producing. These may include
model units, employee units, or others. The subject’s expense is detailed as follows:
NON-REVENUE UNITS
Year Total $/Unit2006 $20,622 $52 2007 $22,236 $56 Sept. 07 to Aug. 08 $15,956 $40 Expense Comparable 1 N/A N/A Expense Comparable 2 N/A N/A Expense Comparable 3 N/A N/A CBRE Estimate $19,056 $48
Compiled by CBRE
This expense typically approximates one non-revenue unit per 100-units. Therefore, we have included
this expense at two non-revenue units at the average quoted rental rate of $794 per unit, or $19,056
annually.
Advertising & Leasing
This expense category accounts for placement of advertising, commissions, signage, brochures, and
newsletters. The subject’s expense is detailed as follows:
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ADVERTISING AND PROMOTION
Year Total $/Unit2006 $42,994 $107 2007 $48,271 $121 Sept. 07 to Aug. 08 $36,140 $90 Expense Comparable 1 N/A $176 Expense Comparable 2 N/A $218 Expense Comparable 3 N/A $128 CBRE Estimate $40,000 $100
Compiled by CBRE
This expense typically approximates $50 to $200 per unit. The historical amounts are at a typical level. Therefore, we have included this expense at $100 per unit in our analysis.
General & Administrative
Administrative expenses typically include legal costs, accounting, items which are not provided by off-
site management, telephone, supplies, furniture, and temporary help. The subject’s expense is
detailed as follows:
ADMINISTRATIVE
Year Total $/Unit2006 $135,337 $338 2007 $95,767 $239 Sept. 07 to Aug. 08 $84,363 $211 Expense Comparable 1 N/A $155 Expense Comparable 2 N/A $230 Expense Comparable 3 N/A $109 CBRE Estimate $80,000 $200
Compiled by CBRE
This expense typically approximates $100 to $250 per unit. The historical levels vary significantly and
are at and above a typical level. Therefore, we have included this expense at $200 per unit.
Fire Dues
The subject’s expense is detailed as follows:
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FIRE DUES
Year Total $/Unit2006 $54,371 $136 2007 N/A N/A Sept. 07 to Aug. 08 N/A N/A Expense Comparable 1 N/A $0 Expense Comparable 2 N/A $0 Expense Comparable 3 N/A $0 CBRE Estimate $54,371 $136
Compiled by CBRE
The subject property is located in unincorporated Shelby County. As a result the property is charged
fire dues. Each apartment unit is charged $120 annually. In addition, the clubhouse and leasing offices are charged $0.0934 per square foot per year. Therefore, we have included this expense at
the actual historical level in our analysis.
Reserves for Replacement
Reserves for replacement have been estimated based on discussions with knowledgeable market participants who indicate a range from $150 to $300 per unit for comparable properties. Therefore,
we have estimated this expense at $200 per unit in our analysis.
OPERATING EXPENSE CONCLUSION
The subject’s expense is detailed as follows:
OPERATING EXPENSES
Year Total $/Unit2006 $1,694,452 $4,236 2007 $1,872,582 $4,681 Sept. 07 to Aug. 08 $1,738,903 $4,347 Expense Comparable 1 N/A $3,354 Expense Comparable 2 N/A $3,741 Expense Comparable 3 N/A $3,652 CBRE Estimate $1,739,226 $4,348
Compiled by CBRE
Our projected operating expenses closely approximate the recent historical level. Therefore, we
believe our projection to be reasonable.
NET OPERATING INCOME CONCLUSION
The subject’s net operating income is detailed as follows:
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NET OPERATING INCOME
Year Total $/Unit2006 $1,537,159 $3,843 2007 $1,401,066 $3,503 Sept. 07 to Aug. 08 $1,674,490 $4,186 CBRE Estimate $1,958,824 $4,897
Compiled by CBRE
Our projected net operating income is above the historical levels. However, considering the current
level of collections we believe our projection to be reasonable.
DIRECT CAPITALIZATION
Direct capitalization is a method used to convert a single year’s estimated stabilized net operating
income into a value indication. The following subsections represent different techniques for deriving an overall capitalization rate for direct capitalization.
Comparable Sales
The OARs confirmed for the comparable sales analyzed in the Sales Comparison Approach are as
follows:
COMPARABLE CAPITALIZATION RATESSale Sale Price Pro Forma
Sale Date $/Unit OAR Basis OAR1 Aug-08 $71,250 Pro Forma 6.68%2 Jun-08 $95,225 Pro Forma 6.53%3 Jan-08 $98,269 Pro Forma 6.33%4 Jul-07 $102,138 Pro Forma 6.04%5 Jun-07 $59,560 Pro Forma 7.52%6 Feb-07 $93,847 Pro Forma 6.82%
Indicated OAR: 6.50%
Compiled by: CBRE
The overall capitalization rates for these sales were derived based upon the pro-forma income characteristics of the property. Each of these sales depicts a similar tenancy structure with regard to
stability, whereby little if any adjustment adjustments are required when compared with the subject.
We believe the appropriate overall rate for the subject property toward the lower end of the indicated
range, and concluded at 6.50%.
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Published Investor Surveys
The results of the most recent National Investor Survey, published by CBRE, are summarized in the
following table.
OVERALL CAPITALIZATION RATESInvestment Type OAR Range AverageApartments
Class A 4.75% - 6.50% 5.61%Class B 5.25% - 8.00% 6.52%Class C 7.00% - 8.50% 7.41%
Indicated OAR: 6.50%
Source: CBRE National Investor Survey
The subject is considered to be a Class B property. Because of the subject’s age/condition, and location, an OAR toward the middle of the range indicated in the preceding table is considered
appropriate.
Market Participants
OVERALL CAPITALIZATION RATES - APARTMENTRespondent Company OAR Date of SurveyKevin Geiger CB Richard Ellis, Inc. 6.25% to 7.00% Oct-08
Indicated OAR: 6.50%
Compiled by: CBRE
Band of Investment
The band of the investment technique has been utilized as a crosscheck to the foregoing techniques.
The analysis is shown in the following table.
BAND OF INVESTMENTMortgage Interest Rate 6.00%Mortgage Term (Amortization Period) 30 YearsMortgage Ratio (Loan-to-Value) 80%Mortgage Constant 0.07195Equity Dividend Rate (EDR) 6.0%
Mortgage Requirement 80% x 0.07195 = 0.05756Equity Requirement 20% x 0.06000 = 0.01200
100% 0.06956
Indicated OAR: 7.00%Compiled by: CBRE
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CREDIT CRUNCH IMPACT
The ongoing credit crunch, which began in early August 2007, continues to impact the commercial
real estate market. The continuation of the credit crunch was highlighted in the Federal Reserve Board April 2008 Senior Loan Office Opinion Survey on Bank Lending Practices. This quarterly survey is
based on responses from 56 domestic banks and 21 U.S. branches and agencies of foreign banks.
In this survey they note that “domestic and foreign institutions reported having further tightened their
lending standards and terms on a broad range for loan categories over the previous three months.” The survey cited the following items as reasons for the continued tightening:
Less favorable or more uncertain economic outlook;
Worsening of industry-specific problems;
Banks reduced tolerance for risk and decreased liquidity in secondary markets; and
Concerns about their current or expected internal capital requirements.
The lack of liquidity is clearly impacting commercial real estate sales volumes, and more moderately, pricing. Specifically, the following table provide a summary of the volume and pricing statistics for the
apartment, office, retail and industrial markets outlined in the May 2008 article “Buyers and Sellers
No Closer to Closing Gap in Pricing; Sales Continue to Slow” published by Real Capital Analytics.
REAL CAPITAL ANALYTICS APRIL 2008 SALE STATISTICSNational Top 10 % Decline Markets
Asset % Change In Value % DeclineType Volume ($B) Prior Year from Peak from Peak
Apartment $1.20 -81% -3.4% -2.4%
Office $4.90 -80% -2.0% -1.0%
Retail $1.00 -79% -5.5% -2.0%
Industrial $1.00 -67% -2.3% -2.2%
Source: "Buyers and Sellers No Closer to Closing Gap in Pricing; Sales Continue to Slow" Real Capital Analytics, May 2008
As shown, although the volume of sales has declined significantly, prices have held relatively firm. The
general consensus is this indicates a disparity in the perception of market value between buyers
(values have dropped) and sellers (unwilling to sell at the reduced pricing).
In order to assess the investor market perception on the demand for commercial real estate we
reviewed the article “Expectations & Market Realities in Real Estate: 2008” (published in 2007 by
Principle Real Estate Investors, Real Estate Research Corporation and CBRE/Torto/Wheaton Research). In that publication they state “Real estate now faces the increasingly daunting task of moving through
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a much more challenging capital market than it has faced in several years.” Three primary risks to
real estate identified are:
• “Repricing of the debt capital markets could result in a broad-based (as opposed to selective)
upward movement in real estate going-in and exit cap rates and discount rates of sufficient
magnitude to overwhelm earnings growth, causing private market real estate values to decline materially.”
• “The global credit market disruption could spill over into the broader economy, denying
capital access to otherwise creditworthy business and consumer activity, and leading to a recession in the U.S. economy.”
• “A backlash against the forces of globalization and free trade could result in an increase in protectionist legislation that would adversely impact the economy and real estate markets over
the long term.”
Overall, it is clear the credit crunch is impacting sales volume, sale prices, and market perceptions.
The general consensus is that the credit crunch has had a more severe impact on Class B and C assets (either location or quality of the real estate) than Class A properties.
Capitalization Rate Conclusion
The following table summarizes the OAR conclusions.
OVERALL CAPITALIZATION RATE - CONCLUSIONSource Indicated OARComparable Sales (Range) 6.04% to 7.52%National Investor Survey (Range) 5.25% to 8.00%Market Participants (Range) 6.25% to 7.00%Band of Investment 7.00%
CBRE Estimate 6.50%
Compiled by: CBRE
In concluding an overall capitalization rate for the subject, primary reliance has been placed upon the
data obtained from the comparable sales and interviews with active market participants. This data tends to provide the most accurate depiction of both buyer’s and seller’s expectations within the
market and the ranges indicated are relatively tight. Further secondary support for our conclusion is
noted via both the CBRE National Investor Survey and the band of investment methodology.
Considering the data presented, the concluded overall capitalization rate appears to be well supported in the local market.
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Direct Capitalization Summary
A summary of the direct capitalization of the subject at stabilized occupancy is illustrated in the
following table.
DIRECT CAPITALIZATION SUMMARY
Income $/Unit/Yr Total Potential Rental Income $9,524 $3,809,688Less: Loss to Lease 1.00% (95) (38,097) Less: Concessions 8.00% (762) (304,775) Credit Loss 1.00% (87) (34,668) Vacancy 6.00% (520) (208,009)
Net Rental Income $8,060 $3,224,139
Utility Income $622 $248,911Other Income 563 225,000
Effective Gross Income $9,245 $3,698,050
ExpensesReal Estate Taxes $491 $196,531Property Insurance 165 66,000 Electricity 225 90,000 Water and Sewer 600 239,816 Trash Removal 200 80,000 Repairs and Maintenance 300 120,000 Painting and Decorating 300 120,000 Landscaping 175 70,000 Administrative Payroll 450 180,000 Maintenance Payroll 400 160,000 Management Fee 2.5% 231 92,451 Employee Taxes and Benefits 128 51,000 Non-Revenue Units 48 19,056 Advertising and Promotion 100 40,000 Administrative 200 80,000 Fire Dues 136 54,371 Reserves for Replacement 200 80,000
Operating Expenses $4,348 $1,739,226Operating Expense Ratio 47.03%
Net Operating Income $4,897 $1,958,824OAR / 6.50%Indicated Stabilized Value $30,135,760Rounded $30,150,000Value Per Unit $75,500
Matrix Analysis Cap Rate Value6.25% $31,341,2006.50% $30,135,8006.75% $29,019,600
Compiled by CBRE
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RECONCILIATION OF VALUE
The value indications from the approaches to value are summarized as follows:
SUMMARY OF VALUE CONCLUSIONSCost Approach $30,400,000 Sales Comparison Approach $30,000,000 Income Capitalization Approach $30,150,000
Compiled by CBRE
The cost approach typically gives a reliable value indication when there is evidence for the replacement cost estimate and when there is minimal depreciation contributing to a loss in value that
must be estimated. Considering the amount of depreciation present in the property, the reliability of
the cost approach is diminished. Therefore, the cost approach is considered less applicable to the subject and is used primarily as a test of reasonableness against the other valuation techniques.
In the sales comparison approach, the subject property is compared to similar properties that have
been sold recently or for which listing prices or offers are known. The sales used in this analysis are
considered comparable to the subject, and the required adjustments were based on reasonable and well-supported rationale. In addition, market participants are currently analyzing purchase prices on
investment properties as they relate to available substitutes in the market. Therefore, the sales
comparison approach is considered to provide a reliable value indication, although has been given secondary emphasis in the final value reconciliation.
The income capitalization approach is applicable to the subject property since it is an income
producing property leased in the open market. Market participants are primarily analyzing properties
based on their income generating capability. Therefore, the income capitalization approach is considered a reasonable and substantiated value indicator and has been given greatest emphasis in
the final value estimate.
Based on the foregoing, the market value of the subject has been concluded as follows:
MARKET VALUE CONCLUSIONAppraisal Premise Interest Appraised Exposure Date of Value Value Conclusion
As Is Fee Simple Estate 6 Months September 30, 2008 $30,150,000Compiled by CBRE
EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS
None.
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ASSUMPTIONS AND LIMITING CONDITIONS
1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties appraised is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE is not aware of any title defects nor has it been advised of any unless such is specifically noted in the report. CBRE, however, has not examined title and makes no representations relative to the condition thereof. Documents dealing with liens, encumbrances, easements, deed restrictions, clouds and other conditions that may affect the quality of title have not been reviewed. Insurance against financial loss resulting in claims that may arise out of defects in the subject property’s title should be sought from a qualified title company that issues or insures title to real property.
2. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on the property or properties being appraised are structurally sound, seismically safe and code conforming; that all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the elements; that the property or properties have been engineered in such a manner that the improvements, as currently constituted, conform to all applicable local, state, and federal building codes and ordinances. CBRE professionals are not engineers and are not competent to judge matters of an engineering nature. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. Unless otherwise specifically noted in the body of the report: no problems were brought to the attention of CBRE by ownership or management; CBRE inspected less than 100% of the entire interior and exterior portions of the improvements; and CBRE was not furnished any engineering studies by the owners or by the party requesting this appraisal. If questions in these areas are critical to the decision process of the reader, the advice of competent engineering consultants should be obtained and relied upon. It is specifically assumed that any knowledgeable and prudent purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. Structural problems and/or building system problems may not be visually detectable. If engineering consultants retained should report negative factors of a material nature, or if such are later discovered, relative to the condition of improvements, such information could have a substantial negative impact on the conclusions reported in this appraisal. Accordingly, if negative findings are reported by engineering consultants, CBRE reserves the right to amend the appraisal conclusions reported herein.
3. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property was not observed by the appraisers. CBRE has no knowledge of the existence of such materials on or in the property. CBRE, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.
We have inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in the appraisal.
4. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real property, have been disregarded with only real property being considered in the report unless otherwise stated. Any existing or proposed improvements, on or off-site, as well as any alterations or repairs considered, are assumed to be completed in a workmanlike manner according to standard practices based upon the information submitted to CBRE This report may be subject to amendment upon re-inspection of the subject property subsequent to repairs, modifications, alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the information, conditions and projected levels of operation.
5. It is assumed that all factual data furnished by the client, property owner, owner’s representative, or persons designated by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal report. Unless otherwise specifically noted in the appraisal report, CBRE has no reason to believe that any of the data furnished contain any material error. Information and data referred to in this paragraph include, without being limited to, numerical street addresses, lot and block numbers, Assessor’s Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any material error in any of the above data could have a substantial impact on the conclusions reported. Thus, CBRE reserves the right to amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should carefully review
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all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report and should immediately notify CBRE of any questions or errors.
6. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this appraisal. Under the terms of the engagement, we will have no obligation to revise this report to reflect events or conditions which occur subsequent to the date of the appraisal. However, CBRE will be available to discuss the necessity for revision resulting from changes in economic or market factors affecting the subject.
7. CBRE assumes no private deed restrictions, limiting the use of the subject property in any way.
8. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposit or subsurface rights of value involved in this appraisal, whether they be gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred.
9. CBRE is not aware of any contemplated public initiatives, governmental development controls, or rent controls that would significantly affect the value of the subject.
10. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the property, both physically and economically, on the open market.
11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics are predicated on the information and assumptions contained within the report. Any projections of income, expenses and economic conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market expectations of future income and expenses. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary from the projections considered herein. CBRE does not warrant these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of CBRE
12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct or indirect recommendation of CBRE to buy, sell, or hold the properties at the value stated. Such decisions involve substantial investment strategy questions and must be specifically addressed in consultation form.
13. Also, unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or regulations governing use, density, or shape are being considered. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report is based, unless otherwise stated.
14. This study may not be duplicated in whole or in part without the specific written consent of CBRE nor may this report or copies hereof be transmitted to third parties without said consent, which consent CBRE reserves the right to deny. Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission to attorneys, accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the report to any court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this appraisal was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any public document without the express written consent of CBRE which consent CBRE reserves the right to deny. Finally, this report shall not be advertised to the public or otherwise used to induce a third party to purchase the property or to make a “sale” or “offer for sale” of any “security”, as such terms are defined and used in the Securities Act of 1933, as amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised that they should rely on their own independently secured advice for any decision in connection with this property. CBRE shall have no accountability or responsibility to any such third party.
15. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in the report.
16. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with any other property or appraisal and are invalid if so used.
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17. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and reliable. None of the exhibits are to be removed, reproduced, or used apart from this report.
18. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been made known to CBRE unless otherwise stated within the body of this report. If the Consultant has not been supplied with a termite inspection, survey or occupancy permit, no responsibility or representation is assumed or made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No representation or warranty is made concerning obtaining these items. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance.
19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special assumptions set forth in this report. It is the responsibility of the Client, or client’s designees, to read in full, comprehend and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor CBRE assumes responsibility for any situation arising out of the Client’s failure to become familiar with and understand the same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting profession if so desired.
20. CBRE assumes that the subject property analyzed herein will be under prudent and competent management and ownership; neither inefficient or super-efficient.
21. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined and considered in the appraisal report.
22. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be correct. It is further assumed that no encroachments to the realty exist.
23. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of possible readily achievable barrier removal construction items in this report, CBRE has not made a specific compliance survey and analysis of this property to determine whether it is in conformance 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 ADA. If so, this fact could have a negative effect on the value estimated herein. Since CBRE has no specific information relating to this issue, nor is CBRE qualified to make such an assessment, the effect of any possible non-compliance with the requirements of the ADA was not considered in estimating the value of the subject property.
24. Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client proximately result in damage to Appraiser. The Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising as a result of the Client’s failure or the failure of any of the Client’s agents to provide a complete copy of the appraisal report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be entitled to recover from the other reasonable attorney fees and costs.
25. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDA
ADDENDA
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM A
ADDENDUM A
GLOSSARY OF TERMS
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM A
assessed value Assessed value applies in ad valorem taxation and refers to the value of a property according to the tax rolls. Assessed value may not conform to market value, but it is usually calculated in relation to a market value base. †
cash equivalency The procedure in which the sale prices of comparable properties sold with atypical financing are adjusted to reflect typical market terms.
contract, coupon, face, or nominal rent The nominal rent payment specified in the lease contract. It does not reflect any offsets for free rent, unusual tenant improvement conditions, or other factors that may modify the effective rent payment.
coupon rent See Contract, Coupon, Face, or Nominal Rent
effective rent 1) The rental rate net of financial concessions such as periods of no rent during a lease term; may be calculated on a discounted basis, reflecting the time value of money, or on a simple, straight-line basis. ‡ 2) The economic rent paid by the lessee when normalized to account for financial concessions, such as escalation clauses, and other factors. Contract, or normal, rents must be converted to effective rents to form a consistent basis of comparison between comparables.
excess land In regard to an improved site, the land not needed to serve or support the existing improvement. In regard to a vacant site or a site considered as though vacant, the land no needed to accommodate the site’s primary highest and best use. Such land may be separated from the larger site and have its own highest and best use, or it may allow for future expansion of the existing or anticipated improvement. See also surplus land. ‡
face rent See Contract, Coupon, Face, or Nominal Rent
fee simple estate Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. ‡
floor area ratio (FAR) The relationship between the above-ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area; also called building-to-land ratio. ‡
full service lease A lease in which rent covers all operating expenses. Typically, full service leases are
combined with an expense stop, the expense level covered by the contract lease payment. Increases in expenses above the expense stop level are passed through to the tenant and are known as expense pass-throughs.
going concern value Going concern value is the value of a proven property operation. It includes the incremental value associated with the business concern, which is distinct from the value of the real estate only. Going concern value includes an intangible enhancement of the value of an operating business enterprise which is produced by the assemblage of the land, building, labor, equipment, and marketing operation. This process creates an economically viable business that is expected to continue. Going concern value refers to the total value of a property, including both real property and intangible personal property attributed to the business value. †
gross building area (GBA) The sum of all areas at each floor as measured to the exterior walls.
insurable value Insurable Value is based on the replacement and/or reproduction cost of physical items that are subject to loss from hazards. Insurable value is that portion of the value of an asset or asset group that is acknowledged or recognized under the provisions of an applicable loss insurance policy. This value is often controlled by state law and varies from state to state. †
investment value Investment value is the value of an investment to a particular investor based on his or her investment requirements. In contrast to market value, investment value is value to an individual, not value in the marketplace. Investment value reflects the subjective relationship between a particular investor and a given investment. When measured in dollars, investment value is the price an investor would pay for an investment in light of its perceived capacity to satisfy his or her desires, needs, or investment goals. To estimate investment value, specific investment criteria must be known. Criteria to evaluate a real estate investment are not necessarily set down by the individual investor; they may be established by an expert on real estate and its value, that is, an appraiser.
†
leased fee See leased fee estate
leased fee estate An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease.‡
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM A
leasehold See leasehold estate
leasehold estate The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions.‡
load factor The amount added to usable area to calculate the rentable area. It is also referred to as a “rentable add-on factor” which, according to BOMA, “is computed by dividing the difference between the usable square footage and rentable square footage by the amount of the usable area. Convert the figure into a percentage by multiplying by 100.
market rent The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations. ‡
market value “as if complete” on the appraisal date Market value as if complete on the appraisal date is an estimate of the market value of a property with all construction, conversion, or rehabilitation hypothetically completed, or under other specified hypothetical conditions as of the date of the appraisal. With regard to properties wherein anticipated market conditions indicate that stabilized occupancy is not likely as of the date of completion, this estimate of value should reflect the market value of the property as if complete and prepared for occupancy by tenants.
market value “as is” on the appraisal date Market value “as is” on the appraisal date is an estimate of the market value of a property in the condition observed upon inspection and as it physically and legally exists without hypothetical conditions, assumptions, or qualifications as of the date of appraisal.
market value Market value is one of the central concepts of the appraisal practice. Market value is differentiated from other types of value in that it is created by the collective patterns of the market. Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1) A reasonable time is allowed for exposure in the open market; 2) Both parties are well informed or well advised, and acting in what they consider their own
best interests; 3) Buyer and seller are typically motivated; 4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.§
marketing period The time it takes an interest in real property to sell on the market subsequent to the date of an appraisal. ‡
net lease Lease in which all or some of the operating expenses are paid directly by the tenant. The landlord never takes possession of the expense payment. In a Triple Net Lease all operating expenses are the responsibility of the tenant, including property taxes, insurance, interior maintenance, and other miscellaneous expenses. However, management fees and exterior maintenance are often the responsibility of the lessor in a triple net lease. A modified net lease is one in which some expenses are paid separately by the tenant and some are included in the rent.
net rentable area (NRA) 1) The area on which rent is computed. 2) The Rentable Area of a floor shall be computed by measuring to the inside finished surface of the dominant portion of the permanent outer building walls, excluding any major vertical penetrations of the floor. No deductions shall be made for columns and projections necessary to the building. Include space such as mechanical room, janitorial room, restrooms, and lobby of the floor. *
nominal rent See Contract, Coupon, Face, or Nominal Rent
occupancy rate The relationship or ratio between the income received from the rented units in a property and the income that would be received if all the units were occupied.‡
prospective future value “upon completion of construction” Prospective future value “upon completion of construction” is the prospective value of a property on the future date that construction is completed, based upon market conditions forecast to exist, as of that completion date. The value estimate at this stage is stated in current dollars unless otherwise indicated.
prospective future value “upon reaching stabilized occupancy” Prospective future value “upon reaching stabilized occupancy” is the prospective value of a property at a future point in time when all improvements have been physically constructed and the property has been leased to its optimum level of long-term occupancy. The value
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM A
estimate at this stage is stated in current dollars unless otherwise indicated.
reasonable exposure time The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market. ††
rent See full service lease net lease market rent contract, coupon, face, or nominal rent effective rent
shell space Space which has not had any interior finishing installed, including even basic improvements such as ceilings and interior walls, as well as partitions, floor coverings, wall coverings, etc..
surplus land Land not necessary to support the highest and best use of the existing improvement but, because of physical limitations, building placement, or neighborhood norms, cannot be sold off separately. Such land may or may not contribute positively to value and may or may not accommodate future expansion of an existing or anticipated improvement. See also excess land. ‡
usable area 1) The area actually used by individual tenants. 2) The Usable Area of an office building is computed by measuring to the finished surface of the office side of corridor and other permanent walls, to the center of partitions that separate the office from
adjoining usable areas, and to the inside finished surface of the dominant portion of the permanent outer building walls. Excludes areas such as mechanical rooms, janitorial room, restrooms, lobby, and any major vertical penetrations of a multi-tenant floor. *
use value Use value is a concept based on the productivity of an economic good. Use value is the value a specific property has for a specific use. Use value focuses on the value the real estate contributes to the enterprise of which it is a part, without regard to the property’s highest and best use or the monetary amount that might be realized upon its sale. †
value appraised During the real estate development process, a property typically progresses from a state of unimproved land to construction of improvements to stabilized occupancy. In general, the market value associated with the property increases during these stages of development. After reaching stabilized occupancy, ongoing forces affect the property during its life, including a physical wear and tear, changing market conditions, etc. These factors continually influence the property’s market value at any given point in time. See also market value “as is” on the appraisal date market value “as if complete” on the appraisal date prospective future value “upon completion of
construction” prospective future value “upon reaching stabilized
occupancy”
† The Appraisal of Real Estate, Twelfth Edition, Appraisal Institute, 2001.
‡ The Dictionary of Real Estate Appraisal, Fourth Edition, 2002.
§ The Office of the Comptroller of the Currency, 12 CFR Part 34, Subpart C, ♣34.42(f), August 24, 1990. This definition is compatible with the definition of market value contained in The Dictionary of Real Estate Appraisal, Third Edition, and the Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Standards Board of The Appraisal Foundation, 1992 edition. This definition is also compatible with the OTS, RTC, FDIC, NCUA, and the Board of Governors of the Federal Reserve System definition of market value.
* 2000 BOMA Experience Exchange Report, Income/Expense Analysis for Office Buildings (Building Owners and Managers Association, 2000)
†† Statement on Appraisal Standard No. 6, Appraisal Standards Board of The Appraisal Foundation, September 19, 1992.
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM B
ADDENDUM B
COMPARABLE LAND SALES
© 2008 CB Richard Ellis, Inc.
MULTI-FAMILY LAND SALE No. 1
East side of Mary Taylor RoadBirmingham,AL 35235Jefferson
Comments This property is located along the eastern side of Mary Taylor Road, just south of Gadsden Highway (Highway 11). The site waspurchased for development of a 328-unit apartment complex, identified as The Springs at Trussville.
The Springs at Trussville Apartments
Location:
County:
Location Data
Physical Data
Sale Data Sale
Hall Howard CompanyEML IncorporatedN/A
Cash to Seller$1,350,000
$1,350,000$0$1,350,000Grantor
Multi-FamilyType:
N/A6/2006
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:Grantee:Document No.:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
12-27-4-1-12.000-RR-03N/AAtlas Ref:
Assessor's Parcel No:
Land Area:
Max FAR:
Acres:Square Feet:
Topography:Shape:Utilities:Zoning:Allowable Bldg Area:Floor Area Ratio:No. of units:
14.0800
Generally LevelIrregularAll Available
N/AN/AR-4
Gross Usable14.0800
613,325 613,325
328N/A
Onsite/Offsite Costs:
Analysis
Use At Sale:
Price Per SF of Bldg:
Proposed Use or Dev.Price Per Acre:Price Per SF of Land:Price Per Unit:
VacantApartments$95,880$2.20$4,116N/A
Frontage: N/A;
© 2008 CB Richard Ellis, Inc.
MULTI-FAMILY LAND SALE No. 2
NW side of Cahaba Valley RoadBirmingham,ALShelby
Comments This property is located along the northwest side of Cahaba Valley Road in Birmingham, Al. The site was purchased for thedevelopment of a 300-unit apartment complex, identified as The Springs at Greystone. The sale occurred in September 2005 for$2,040,000, which equates to a price per unit and per acre of $6,800 and $121,428, respectively.
The Springs at Greystone Apartments
Location:
County:
Location Data
Physical Data
Sale Data Sale
Air Engineers, LLCN/AN/A
Cash to Seller$2,040,000
$2,040,000$0$2,040,000Withheld By Request
Multi-FamilyType:
N/A9/2005
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:Grantee:Document No.:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
N/AN/AAtlas Ref:
Assessor's Parcel No:
Land Area:
Max FAR:
Acres:Square Feet:
Topography:Shape:Utilities:Zoning:Allowable Bldg Area:Floor Area Ratio:No. of units:
16.8000
Generally LevelIrregularAll Available
N/AN/AR-2, Multi-Family
Gross Usable16.8000
731,808 731,808
300
Onsite/Offsite Costs:
Analysis
Use At Sale:
Price Per SF of Bldg:
Proposed Use or Dev.Price Per Acre:Price Per SF of Land:Price Per Unit:
VacantApartments$121,428$2.79$6,800N/A
Frontage: N/A;
© 2008 CB Richard Ellis, Inc.
MULTI-FAMILY LAND SALE No. 3
Frankfurt Circle, just south ofBirmingham,ALJefferson
Comments The site is located at the end of Frankfurt Circle and does not have direct access to Lakeshore Parkway. The site was purchasedfor development of a 356-unit apartment complex. The remaining land along Frankfurt Circle is zoned for retail or officedevelopment.
Frankfurt Circle
Location:
County:
Location Data
Physical Data
Sale Data Sale
USX CorporationLakeshore Ridge, LLC9963/6961
Not Available$1,625,000
$1,625,000$0$1,625,000Withheld By Request
Multi-FamilyType:
N/A12/1999
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:Grantee:Document No.:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
29-28-4-000-001.007N/AAtlas Ref:
Assessor's Parcel No:
Land Area:
Max FAR:
Acres:Square Feet:
Topography:Shape:Utilities:Zoning:Allowable Bldg Area:Floor Area Ratio:No. of units:
19.0900
RollingIrregularAll Available
N/AN/AMixed-Use Development
Gross Usable19.0900
831,560 831,560
356
Onsite/Offsite Costs:
Analysis
Use At Sale:
Price Per SF of Bldg:
Proposed Use or Dev.Price Per Acre:Price Per SF of Land:Price Per Unit:
VacantApartments$85,123$1.95$4,565N/A
Frontage: Cul-de-sac at the end of FrankfurtCircle;
© 2008 CB Richard Ellis, Inc.
LAND SALE No. 4
South Liberty Road, off LibertyVestavia Hills,ALJefferson
Comments This site is located in the "Liberty Park" mixed-use development. The Colonial Grand at Liberty Park is currently under construction.The first units will be available for occupancy around April 2000, with completion around June 2000.
South Liberty Road, Off Liberty Parkway
Location:
County:
Location Data
Physical Data
Sale Data Sale
Liberty Park Joint VentureColonial Realty LimitedN/A
Cash to Seller$2,150,000
$2,150,000$0$2,150,000Withheld By Request
Type:
N/A8/1998
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:Grantee:Document No.:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
N/AN/AAtlas Ref:
Assessor's Parcel No:
Land Area:
Max FAR:
Acres:Square Feet:
Topography:Shape:Utilities:Zoning:Allowable Bldg Area:Floor Area Ratio:No. of units:
30.0000
RollingIrregularAll Available
N/AN/AMulti-Family
Gross Usable30.0000
1,306,800 1,306,800
300
Onsite/Offsite Costs:
Analysis
Use At Sale:
Price Per SF of Bldg:
Proposed Use or Dev.Price Per Acre:Price Per SF of Land:Price Per Unit:
VacantApartments$71,666$1.65$7,167N/A
Frontage: N/A;
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM C
ADDENDUM C
IMPROVED COMPARABLE SALES
© 2008 CB Richard Ellis, Inc.
APARTMENT SALE No. 1
Financial Data Buyer95%Pro Forma
$3,712,872$222,772
$3,490,100$1,585,000$1,905,100
$9,282Per Unit
Analysis
Overall Cap. Rate (OAR):
Other6.68 %N/A %8.1745.41 %$66.11
Riverside Parc
$556$8,725$3,962$4,762
$71,250
Buyers Und. Crit.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Physical Data
Sale Data Contract
Equity Resources, Inc.N/AN/A
Cash to Seller$28,500,000
$28,500,000$0$28,500,000Withheld By Request
34.009 Acres431,130 SF
1987
Good
Multi-family GardenType:Land Area:
Year Built:
Condition:
N/A
400Number of Units:
1,078 SFAverage Unit Size:
Two Swimming Pools, TennisCourts, Playground, Nature Trail,and Laundry Facility.
Amenities:
8/2008
Grs Liv.Area
TwoNo. of Stories:
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:
Grantee:Document No.:
Req.Capital Cost:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
Vinyl SidingExterior:
Projected IRR:Eff. Gross Multiplier (EGIM):Oper. Expense Ratio (OER):Price Per Square Foot:Price Per Unit:
801 Cahaba Forest CoveBirmingham,AL 35242Jefferson
Location:
County:
Location Data
28-25-3-0-2.001-RR-02
N/AAtlas Ref:
Assessor's Parcel No:
Total
Comments
The subject is located along the northeast side of Cahaba Park Circle and features average access and exposure.
Unit Mix
Unit Type No.
1 BR, 1 BA
2 BR, 1 BA 48
128 803
900
SF
2 BR, 2 BA 182 1050
3 BR, 2 BA 42 1306
391,936Totals 400
32
%
12
45
10
100
© 2008 CB Richard Ellis, Inc.
APARTMENT SALE No. 2
Financial Data Buyer97.5%Pro Forma
$2,310,000$196,350
$2,113,650$870,000
$1,243,650
$11,550Per Unit
Analysis
Overall Cap. Rate (OAR):
Direct Cap6.53 %N/A %9.0141.16 %$64.34
Colonial Village at Monte D' Oro
$981$10,568$4,350$6,218
$95,225
Buyers Und. Crit.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Physical Data
Sale Data Contract
CMA Monte D' OroEliason 1031 PropertiesN/A
Cash to Seller$16,510,000
$16,510,000$2,535,000$19,045,000Seller
5.700 Acres296,000 SF
1979
Average
Multi-family GardenType:Land Area:
Year Built:
Condition:
N/A
200Number of Units:
1,480 SFAverage Unit Size:
two pools, tennis courts, fitnesscenter, laundry facility
Amenities:
6/2008
Grs Liv.Area
Two and ThreeNo. of Stories:
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:
Grantee:Document No.:
Req.Capital Cost:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
Wood and BrickExterior:
Projected IRR:Eff. Gross Multiplier (EGIM):Oper. Expense Ratio (OER):Price Per Square Foot:Price Per Unit:
2870 Regal CircleHoover,AL 35216Jefferson
Location:
County:
Location Data
39-1-4-2-1.000-RR
N/AAtlas Ref:
Assessor's Parcel No:
Total
Comments
The property is a 200-unit garden-style apartment complex built in 1979 and situated on a 5.70-acre site in Hoover,Jefferson County, metropolitan Birmingham, Alabama. The property is currently 97.5% occupied and under contract tobe purchased. The current contract price is $16,510,000. The purchaser is planning to renovate the property followingthe sale. The planned renovation costs are $1,535,000 or $7,675 per unit. The property will also incur rent loss duringthe renovation and we have included additional cost of $1,000,000 for rent loss and entrepreneurial profit. This results ina capitalization rate of 6.53% utilizing an 8.5% vacancy and collection loss and $250 per unit for reserves.
Unit Mix
Unit Type No.
1 BR, 1 BA
2 BR, 2 BA 80
40 1212
1362
SF
2 BR, 2 BA 19 1732
3 BR, 2 BA 61 1732
296,000Totals 200
20
%
40
9
30
100
© 2008 CB Richard Ellis, Inc.
APARTMENT SALE No. 3
Financial Data Seller26.9%Pro Forma
$2,975,000$208,250
$2,766,750$1,150,000$1,616,750
$11,442Per Unit
Analysis
Overall Cap. Rate (OAR):
Direct Cap6.33 %N/A %9.2341.57 %$86.71
Stonegate
$800$10,641$4,423$6,218
$98,269
Buyers Und. Crit.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Physical Data
Sale Data Sale
Ross Bridge, LLCEBSCON/A
Cash to Seller$24,000,000
$24,000,000$1,550,000$25,550,000Buyer Leslie Yielding
20.000 Acres294,652 SF
2007
Very Good
Multi-family GardenType:Land Area:
Year Built:
Condition:
N/A
260Number of Units:
1,133 SFAverage Unit Size:
Swimming pool, fitness center,business center and a laundryfacility.
Amenities:
1/2008
Grs Liv.Area
Two and ThreeNo. of Stories:
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:
Grantee:Document No.:
Req.Capital Cost:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
Stone and HardiExterior:
Projected IRR:Eff. Gross Multiplier (EGIM):Oper. Expense Ratio (OER):Price Per Square Foot:Price Per Unit:
101 Leaf Lake BoulevardBirmingham,AL 35022Jefferson
Location:
County:
Location Data
38-1-1-1-2.001-RR-02
N/AAtlas Ref:
Assessor's Parcel No:
Total
Comments
This property is a 260-unit garden apartment property located along the southern side of Lakeshore Drive, just north ofState Route 150, in Birmingham, Jefferson County, Alabama. The property was built in 2007. The property is situated ona 20.00-acre site. The property was purchased in January 2008. The property was is initial lease-up at the time of saleand was 27.0% occupied. In addition, the property required approximately $500,000 in additional construction expensesin addition to approximately $1,050,000 in rent loss during the lease-up. The capitalization rate derived from the buyerspro forma following completion of the lease-up and stabilization was 6.33%.
Unit Mix
Unit Type No.
1 BR, 1 BA
1 BR, 1 BA 44
54 854
903
SF
2 BR, 2 BA 74 1198
2 BR, 2 BA 60 1295
3 BR, 2 BA 8 1459
3 BR, 2 BA 8 1572
294,652Totals 260
3 BR, 2.5 BA, TH 6 15073 BR, 2.5 BA, TH 6 1527
20
%
16
28
23
3
3
2 2
100
© 2008 CB Richard Ellis, Inc.
APARTMENT SALE No. 4
Financial Data Appraiser92%Pro Forma
$7,650,000$535,500
$7,114,500$2,675,000$4,439,500
$10,625Per Unit
Analysis
Overall Cap. Rate (OAR):
Direct Cap6.04 %N/A %10.3437.60 %$92.98
Ridge Crossing
$743$9,881$3,715$6,165
$102,138
Buyers Und. Crit.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Physical Data
Sale Data Sale
Ridge Crossing Apartments, Ltd.New Dawn Acquisition, LLC.N/A
Cash to Seller$68,500,000
$68,500,000$5,040,000$73,540,000Buyer
86.000 Acres790,920 SF
1992
Good
Multi-family GardenType:Land Area:
Year Built:
Condition:
N/A
720Number of Units:
1,099 SFAverage Unit Size:
two pools, tennis courts, tworacquetball courts, fitness center,car wash, volleyball, playground,
Amenities:
7/2007
Grs Liv.Area
Two and ThreeNo. of Stories:
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:
Grantee:Document No.:
Req.Capital Cost:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
1997
Brick, Stone, HardiExterior:
Projected IRR:Eff. Gross Multiplier (EGIM):Oper. Expense Ratio (OER):Price Per Square Foot:Price Per Unit:
100 Tree Crossings ParkwayHoover,AL 35216Jefferson
Location:
County:
Location Data
39-27-1-000-005.000-rr-01 & 4
N/AAtlas Ref:
Assessor's Parcel No:
Total
Comments
This property is located along the northwest side of John Hawkins Parkway, less than one mile east of the intersection ofInterstate 459. The property was built in three phases from 1992 and 1997. Each unit features include ceiling fans,exterior storage and washer dryer connections. In addition, select units feature a fireplace. Thethree-bedroom/two-bathroom floor plan with 1,520 square feet include an attached 2-car garage. Parcel #39-27-1-000-005.000-RR-01 and 39-27-1-000-004.000-RR-01.
Unit Mix
Unit Type No.
1 BR, 1 BA
1 BR, 1 BA 80
20 581
640
SF
1 BR, 1 BA 20 668
1 BR, 1 BA 150 861
2 BR, 2.5 BA 90 1019
2 BR, 2 BA 110 1268
790,920Totals 720
2 BR, 2.5 BA 110 13652 BR, 2.5 BA 42 13503 BR, 2.5 BA 30 14333 BR, 2.5 BA, 2-car 18 1520
3 BR, 2.5 BA 50 1544
2
%
11
2
20
12
15
15 5 4 2
6
100
© 2008 CB Richard Ellis, Inc.
APARTMENT SALE No. 5
Financial Data Seller91.7%Pro Forma
$2,120,000$190,800
$1,929,200$850,000
$1,079,200
$8,796Per Unit
Analysis
Overall Cap. Rate (OAR):
Direct Cap7.52 %N/A %7.4444.06 %$67.56
Pine Brook
$791$8,004$3,526$4,478
$59,560
Buyers Und. Crit.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Physical Data
Sale Data Sale
Lorna Road Properties, LLCN/AN/A
Cash to Seller$11,068,000
$11,068,000$3,286,175$14,354,175Seller
17.950 Acres212,455 SF
1978
Average
Multi-family GardenType:Land Area:
Year Built:
Condition:
N/A
241Number of Units:
882 SFAverage Unit Size:
Swimming pool, tennis courts anda laundry facility.
Amenities:
6/2007
Grs Liv.Area
TwoNo. of Stories:
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:
Grantee:Document No.:
Req.Capital Cost:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
Wood SidingExterior:
Projected IRR:Eff. Gross Multiplier (EGIM):Oper. Expense Ratio (OER):Price Per Square Foot:Price Per Unit:
2250 Little Valley RoadHoover,AL 35216Jefferson
Location:
County:
Location Data
N/A
N/AAtlas Ref:
Assessor's Parcel No:
Total
Comments
This property is a 241-unit garden apartment property located along the northern and southern sides of Little Valley Road,just east of Lorna Road and west of Interstate 65, in Hoover, Jefferson County, Alabama. The property was built in 1978.
Unit Mix
Unit Type No.
1 BR, 1 BA
1 BR, 1 BA 39
1 400
641
SF
1 BR, 1 BA 57 672
2 BR, 1.5 BA 64 967
2 BR, 2 BA 32 997
3 BR, 2 BA 48 1145
212,455Totals 241
0
%
16
23
26
13
19
100
© 2008 CB Richard Ellis, Inc.
APARTMENT SALE No. 6
Financial Data Appraiser85.1%Pro Forma
$3,565,000$249,550
$3,315,450$1,300,000$2,015,450
$11,317Per Unit
Analysis
Overall Cap. Rate (OAR):
Direct Cap6.82 %N/A %8.9239.21 %$79.81
Stonecrest at Double Oak Mountain
$792$10,525$4,126$6,398
$93,847
Buyers Und. Crit.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Physical Data
Sale Data Sale
Grey Shoal, LLCStone Crest Apartments Alabama,N/A
Cash to Seller$27,000,000
$27,000,000$2,562,000$29,562,000Withheld By Request
26.470 Acres370,386 SF
1997
Good
Multi-family GardenType:Land Area:
Year Built:
Condition:
N/A
315Number of Units:
1,176 SFAverage Unit Size:
Swimming pool, fitness center,business center, laundry facility.
Amenities:
2/2007
Grs Liv.Area
Two and ThreeNo. of Stories:
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:
Grantee:Document No.:
Req.Capital Cost:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
Brick and StuccoExterior:
Projected IRR:Eff. Gross Multiplier (EGIM):Oper. Expense Ratio (OER):Price Per Square Foot:Price Per Unit:
One Stonecrest DriveBirmingham,AL 35242Shelby
Location:
County:
Location Data
09-3-05-0-001-024.000
N/AAtlas Ref:
Assessor's Parcel No:
Total
Comments
The property is known as Stonecrest at Double Oak Mountain Apartments is located at the eastern end of Bowling Drive,just east of Highway 280, in unincorporated Shelby County, Alabama. The property was built in 1997. The property isbeing purchased based on proforma income inclusive of a 7.0% vacancy and collection loss allowance. Thecapitalization rate is 6.82%. However, the actual capitalization rate is lower considering the entrepreneurial profitassociated with the planned renovation.
Unit Mix
Unit Type No.
1BR, 1BA
2BR, 2BA 189
54 850
1150
SF
3BR, 2BA 72 1488
370,386Totals 315
17
%
60
22
100
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM D
ADDENDUM D
RENT COMPARABLES
© 2008 CB Richard Ellis, Inc.
APARTMENT COMPARABLE No. 1
Comments
This comparable represents a 400-unit apartment property, located along the southeastern side of Valleydale Road, just south ofHighway 280. The property, identified as Inverness Cliffs, was developed in 1986 and is currently 97% occupied. The comparableoffers one- and two-bedroom floor plans, with an average unit size of 1,026 square feet. Management employs a RUBS forreimbursement of water and sewer. As a concession, management is offering $300 pro-rated over the first three months on allone-bedroom unit types with a 12-month lease..
Inverness Cliffs
Physical Data
Occupancy / Lease Data
1986
Average
Multi-family GardenType:
Year Built:
Condition:
400Number of Units:
Three pools, two tennis cts., carwash, & fitness ctr.
Amenities:
Unit Type No.
1 BR, 1 BA
1 BR, 1 BA 77
40 653
809
SF
1 BR, 1 BA 73 973
1 BR, 1 BA 21 977
1 BR, 1 BA 54 1076
2 BR, 2 BA 25 1135
410,401Totals 400
2 BR, 2 BA 54 11982 BR, 2 BA 12 1217-12692 BR, 2 BA 19 1356-14842 BR, 2.5 BA 25 1495
TwoNo. of Stories:
Rent Summary
Brick VeneerExterior:
100 Inverness Cliffs DriveBirmingham,AL 35242Shelby
Location:
County:
Location Data
N/A
N/AAtlas Ref:
Assessor's Parcel No:
Occupancy:
6 and 12 Month Leases.
97%
Management Co.:
(205)991-0631SPM
See Comments
Trash RemovalMiddle Income Groups
09/2008
Concessions:Typical Lease Term:Utilities incl. in Rent:Tenant Profile:
Phone No:Survey Date:
NoneRent Premiums:
Rent Rent PSF
1.06695
0.97785
0.84815
0.84825
0.79855
0.78880
0.769150.75900-9550.761075-10850.731095
$0.83$854
1,026 SFAverage Unit Size:
© 2008 CB Richard Ellis, Inc.
APARTMENT COMPARABLE No. 2
Comments
This comparable represents a 400-unit apartment property, located just off Highway 280 along the northern side of Cahaba ParkCircle. The property, identified as Riverside Parc, was developed in 1987 and is currently 94% occupied. The comparable offersone-, two-, and three-bedroom floor plans, with an average unit size of 980 square feet. Units are sub-metered for water and sewerwith the tenant responsible for usage. As a concession, management is offering $150 off per month on all unit types with a 12-monthlease.
Riverside Parc
Physical Data
Occupancy / Lease Data
1987
Good
Multi-family GardenType:
Year Built:
Condition:
400Number of Units:
Swimming Pool, Tennis Courts,Laundry Facility
Amenities:
Unit Type No.
1 BR, 1 BA
2 BR, 1 BA 48
128 803
900
SF
2 BR, 2 BA 182 1050
3 BR, 2 BA 42 1306
391,936Totals 400
TwoNo. of Stories:
Rent Summary
Wood SidingExterior:
801 Cahaba Forest CoveBirmingham,AL 35242Jefferson
Location:
County:
Location Data
N/A
N/AAtlas Ref:
Assessor's Parcel No:
Occupancy:
Six to Twelve Months
94%
Management Co.:
(205)991-9884ER Management
See Comments
Trash RemovalMiddle Income Groups
09/2008
Concessions:Typical Lease Term:Utilities incl. in Rent:Tenant Profile:
Phone No:Survey Date:
LevelRent Premiums:
Rent Rent PSF
0.84659-689
0.81725
0.73755-785
0.69895-915
$0.76$748
980 SFAverage Unit Size:
© 2008 CB Richard Ellis, Inc.
APARTMENT COMPARABLE No. 3
Comments
This comparable represents a 336-unit apartment property, located on Grandview Parkway .5 mile from Highway 280 in Birmingham,Al. The property, identified as The Crown at Grandview, was developed in two phases in 2001 and 2006 and is currently 95%occupied. The comparable offers one-, two-, and three-bedroom floor plans, with an average unit size of 1,041 square feet. Inaddition, detached parking garages are available for $135 per month and two covered garages for $50 per month. Price ranges inthe same floor plan differ depending on which floor they are on and whether or not they have fireplaces. Units are sub-metered forwater and sewer with the tenant responsible for usage. Resident pays $15 per month for trash removal. Management is offeringfrom up to $1,250 off a 14-month lease pro-rated on select unit types. In addition, $200 off the first month is given via aLook-n-Lease special.
The Crown at Grandview
Physical Data
Occupancy / Lease Data
2001
Very Good
Multi-family GardenType:
Year Built:
Condition:
336Number of Units:
Swimming pool, fitness center,business center, laundry.
Amenities:
Unit Type No.
1 BR, 1 BA
1 BR, 1 BA 36
72 842
892
SF
1 BR, 1BA 12 892
2 BR, 2 BA 61 1169
2 BR, 2 BA 12 1213
2 BR, 2 BA 84 1235
371,358Totals 336
2 BR, 2 BA 11 12353 BR, 2 BA 24 13003 BR, 2 BA 12 13783 BR, 2 BA 12 1416
ThreeNo. of Stories:Ph.2, 2006
Rent Summary
Hardi, Brick, StoneExterior:
3550 Grandview ParkwayBirmingham,ALJefferson
Location:
County:
Location Data
28-26-2-001-029.003-RR-01
N/AAtlas Ref:
Assessor's Parcel No:
Occupancy:
Six and Twelve months
95%
Management Co.:
(205)969-1930Crowne
See Comments
NoneMiddle-Income Groups
09/2008
Concessions:Typical Lease Term:Utilities incl. in Rent:Tenant Profile:
Phone No:Survey Date:
Vaulted and ViewsRent Premiums:
Rent Rent PSF
0.99810-850
0.98850-890
1.00870-910
0.83950-990
0.82975-1015
0.82995-1035
0.851025-10650.901145-11850.871185-12250.861200-1240
$0.88$972
1,105 SFAverage Unit Size:
© 2008 CB Richard Ellis, Inc.
APARTMENT COMPARABLE No. 4
Comments
This comparable represents a 348-unit apartment property, located along the northern side of Cahaba River Road, just west ofHighway 280. The property, identified as The Parc at Cahaba River, was developed in 2000 and is currently 96% occupied. Theproperty offers one-, two-, and three-bedroom floor plans, with an average unit size of 1,227 square feet. Units are sub-metered forwater and sewer with the tenant responsible for usage. Garages can be rented at $125 a month. As a concession, reduced rents arebeing offered on select unit types from $101 to $181 off the monthly rental rate with a minimum 6-month lease.
The Parc At Cahaba River
Physical Data
Occupancy / Lease Data
2000
Excellent
Multi-family GardenType:
Year Built:
Condition:
348Number of Units:
Swimming Pool, Fitness Center,Business Center, Car Wash,Playground
Amenities:
Unit Type No.
1 BR, 1 BA
2 BR, 2 BA 228
64 855
1285
SF
3 BR, 2 BA 56 1416
426,996Totals 348
Two and ThreeNo. of Stories:
Rent Summary
Hardi PlankExterior:
50 Cahaba River ParcBirmingham,AL 35243Jefferson
Location:
County:
Location Data
28-34-1-001-007.000-RR-01
N/AAtlas Ref:
Assessor's Parcel No:
Occupancy:
Six to Eighteen Months
96%
Management Co.:
(205)298-7277ER Management
See Comments
Trash RemovalMiddle Income Groups
09/2008
Concessions:Typical Lease Term:Utilities incl. in Rent:Tenant Profile:
Phone No:Survey Date:
SunroomsRent Premiums:
Rent Rent PSF
0.95800-830
0.791001-1031
0.891250-1280
$0.83$1019
1,227 SFAverage Unit Size:
© 2008 CB Richard Ellis, Inc.
APARTMENT COMPARABLE No. 5
Comments
This comparable represents a 280-unit apartment property, located at the northwest corner of Riverview Road and Cahaba RiverRoad, just south of Highway 280. The property, identified as Wood Springs, was developed in 1987 and is currently 93% occupied.The comparable offers one-, two-, and three-bedroom floor plans, with an average unit size of 917 square feet. The construction ofthe two- and three-story buildings is wood frame with vinyl siding exteriors. Unit amenities include washer/dryer connections,fireplaces, ceiling fans, fully equipped kitchens, and patios/balconies. Management employs a RUBS for reimbursement of waterand sewer. A flat fee of $35 (1BR), $45 (2BR), and $55 (3BR) is charged for the water/sewer expense. Concessions currently beingoffered at this property include reduced rental rates on all floor plans. The reduced rental rates are $599 per month for the units with601 square feet, $609 per month for the units with 789 square feet, $699 per month for the units with 1,062 square feet and $799 permonth for the units with 1,288 square feet.
Wood Springs
Physical Data
Occupancy / Lease Data
1987
Good
Multi-family GardenType:
Year Built:
Condition:
280Number of Units:
2 clubhouses, car wash area, pool,tennis
Amenities:
Unit Type No.
1 BR, 1 BA
1 BR, 1 BA 84
56 601
789
SF
2 BR, 2 BA 104 1062
3 BR, 2 BA 36 1288
256,748Totals 280
Two and ThreeNo. of Stories:
Rent Summary
Vinyl SidingExterior:
200 Springs AvenueBirmingham,AL 35242Shelby
Location:
County:
Location Data
02-7-35-0-001-003.001
N/AAtlas Ref:
Assessor's Parcel No:
Occupancy:
9 months
93%
Management Co.:
(205)991-6219D.E.L. Development
See Comments
Trash RemovalMiddle Income Groups
09/2008
Concessions:Typical Lease Term:Utilities incl. in Rent:Tenant Profile:
Phone No:Survey Date:
Varies by level, fp, and poolRent Premiums:
Rent Rent PSF
1.04625
0.87685
0.74785
0.71915
$0.81$740
917 SFAverage Unit Size:
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM E
ADDENDUM E
OPERATING DATA
© 2008 CB Richard Ellis, Inc.
Database: CLP_PROD Twelve Month Budget vs. Actual Page:
Report Id: CPT_12MONTH MGMT Report for Exec Detail Date:
ENTITY: 95647 Actual amounts from 01/06 to 12/06 Time:
Budget Type: Final Budget Meadows User:
Accrual
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 YTD
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual
Revenue
MR40000001 Schedule Rent 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 3,628,764
Total Scheduled Rent 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 302,397 3,628,764
Total Straight Line Rents 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Specialty Leasing 0 0 0 0 0 0 0 0 0 0 0 0 0
MR40010000 Vacancy Loss -20,529 -23,741 -18,790 -15,906 -17,907 -24,141 -19,527 -11,021 -18,227 -30,995 -39,899 -35,755 -276,438
Total Vacancy Loss -20,529 -23,741 -18,790 -15,906 -17,907 -24,141 -19,527 -11,021 -18,227 -30,995 -39,899 -35,755 -276,438
MR40020002 Concess-Employees -854 -854 -854 -854 -854 -854 -905 -905 -905 -905 -905 -905 -10,554
MR40020003 Model Apartments -839 -839 -839 -839 -839 -839 -839 -839 -839 -839 -839 -839 -10,068
MR40020012 Concess-Move-In -17,384 -15,653 -17,867 -23,737 -23,636 -25,849 -28,914 -27,232 -24,842 -23,679 -25,088 -31,264 -285,143
MR40020013 Concess-LTOL/GTOL -22,939 -23,463 -21,400 -21,617 -18,167 -16,497 -16,656 -16,599 -14,935 -14,258 -13,554 -13,353 -213,438
Total Concessions -42,016 -40,809 -40,960 -47,047 -43,496 -44,039 -47,314 -45,575 -41,521 -39,681 -40,386 -46,361 -519,203
MR40020004 Bad Debt Writeoff -10,863 -7,390 -8,724 -4,374 -5,434 -2,812 -2,230 -8,871 -10,873 -2,283 -3,142 -476 -67,470
MR40020005 Bad Debt Recovery 99 454 83 0 0 0 1,545 694 535 22 0 22 3,454
© 2008 CB Richard Ellis, Inc.
Total Bad Debts -10,764 -6,936 -8,641 -4,374 -5,434 -2,812 -685 -8,177 -10,338 -2,261 -3,142 -454 -64,017
Total Mgmt & Leasing Fee Income 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Percentage Rents 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Tenant Recoveries 0 0 0 0 0 0 0 0 0 0 0 0 0
MR48040000 Late Charges 1,272 1,509 667 930 1,327 1,308 1,173 1,226 467 932 852 1,268 12,929
Total Late Fees 1,272 1,509 667 930 1,327 1,308 1,173 1,226 467 932 852 1,268 12,929
MR48010000 Vending Income 0 0 0 0 0 0 0 0 0 0 0 0 0
MR48020000 Forfeited Deposits -1,202 -150 1,239 -231 1,497 -1,200 -216 -234 156 933 -200 522 915
MR48030000 Washer & Dryers Income 2,660 4,316 5,230 3,980 4,817 3,700 5,090 5,985 3,115 1,820 2,180 5,360 48,253
MR48050000 NSF Check Fees 117 321 36 30 87 261 150 30 150 150 60 330 1,722
MR48060000 Administrative Fees 0 1,833 803 0 0 0 0 2,131 250 0 0 0 5,017
MR48080000 Laundry Income 567 678 0 0 276 892 516 715 795 749 767 -167 5,787
MR48110000 Miscellaneous Income 6,456 7,438 7,781 9,950 6,865 7,814 7,899 13,835 14,170 7,253 7,030 7,311 103,803
MR48140000 Termination Fees 4,351 1,264 742 -647 6,070 512 1,705 2,412 554 1,940 456 300 19,660
MR48190000 Court Reimbursed Income 0 0 0 0 0 0 0 0 0 0 0 0 0
MR48210000 Cable Income 0 6,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
MR48240000 Pet Fee Income 1,142 0 2,000 950 1,423 991 2,031 3,766 1,293 675 1,350 2,060 17,681
MR48270000 Month-to Month Fee 719 1,338 1,068 765 1,600 1,210 818 758 585 652 550 165 10,228
MR48290000 Electric Income 14,730 14,895 14,445 15,257 15,014 14,697 14,976 15,428 15,078 14,599 13,891 14,396 177,407
MR48410000 Damage-Miscellaneous 622 11 375 155 60 85 82 20 785 45 122 121 2,483
Total Other Income 30,162 37,944 36,719 33,210 40,709 31,963 36,052 47,846 39,930 31,816 29,206 33,398 428,954
Total Buy-Outs 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Income 260,523 270,364 271,392 269,210 277,596 264,677 272,096 286,696 272,708 262,207 249,028 254,493 3,210,989
© 2008 CB Richard Ellis, Inc.
Operating Expenses
MR52500000 Electricity-Common Area 4,539 4,189 4,258 3,079 5,651 4,893 5,600 4,809 1,010 4,997 4,855 4,059 51,940
MR52510000 Electricity-Vacants 1,255 1,598 1,327 1,006 1,476 1,926 1,849 2,706 1,224 1,301 1,235 1,323 18,226
MR52520000 Electricity-Occupied 0 0 0 0 1,300 0 0 0 0 0 0 0 1,300
MR52550000 Water & Sewer 6,361 6,252 7,874 5,759 6,227 6,419 6,747 7,871 6,129 8,080 7,081 6,603 81,404
MR52560000 Water & sewer Reimburse 11,814 13,482 13,152 11,630 11,966 12,105 12,341 13,150 11,902 13,363 12,581 12,268 149,754
MR63100000 Cable TV 371 0 50 256 425 332 119 53 53 175 53 57 1,946
Total Utilities 24,340 25,521 26,661 21,730 27,045 25,675 26,656 28,590 20,319 27,917 25,805 24,310 304,569
MR50250000 Telephone 1,440 278 1,360 863 1,338 1,255 1,868 928 1,157 0 1,299 1,914 13,700
MR50260000 Answering Service 241 236 205 200 0 329 170 168 174 88 0 0 1,810
MR50500000 Office Supplies 857 567 370 547 1,209 526 793 1,214 750 266 346 1,019 8,464
MR50600000 Postage 0 23 63 107 0 0 11 0 156 -66 1 0 294
MR50750000 Legal Fees 2,097 0 1,000 0 3,386 1,017 1,177 1,544 492 654 18 736 12,120
MR50880000 Brochures 0 0 0 0 0 0 0 0 0 0 0 0 0
MR51260000 Professional Fees-Other 257 0 0 100 0 0 418 12,468 3,000 3,408 3,005 5,707 28,363
MR51480000 Lodging Tax 0 0 0 1,488 0 0 0 0 0 0 0 0 1,488
MR51580000 Bank Charges 0 52 95 0 20 211 98 73 168 66 58 75 914
MR51600000 Miscellaneous 1,056 221 535 291 879 1,060 121 1,251 389 695 549 2,321 9,367
MR51650000 General Repairs & Maint 0 35 0 0 0 0 0 0 0 0 252 0 287
MR51670000 Credit Reports 0 674 368 630 353 586 0 1,091 457 0 0 0 4,158
Total General & Admin 5,948 2,084 3,995 4,226 7,186 4,983 4,656 18,737 6,742 5,111 5,528 11,770 80,966
MR50860000 General Advertising 3,405 4,080 3,657 2,344 3,248 2,744 2,174 2,858 2,171 1,383 1,500 4,395 33,960
MR53520000 Leasing Comm-Res Referra 0 598 0 843 299 0 0 0 1,324 299 0 1,264 4,626
MR53700000 Entertainment & Promotion 77 376 329 135 894 165 195 670 1,330 -174 138 274 4,408
Total Advertising & Promotions 3,483 5,053 3,986 3,322 4,441 2,909 2,369 3,528 4,825 1,508 1,638 5,932 42,994
MR54100000 Administrative Payroll 22,038 17,003 31,380 3,401 53,170 20,478 17,436 20,154 17,005 17,880 18,314 25,585 263,843
MR54110000 Maintenance Payroll 10,245 11,020 11,750 17,910 15,271 16,019 16,588 12,666 19,756 8,991 11,202 9,184 160,601
© 2008 CB Richard Ellis, Inc.
Total Salaries 32,283 28,023 43,130 21,310 68,441 36,497 34,024 32,820 36,761 26,871 29,516 34,768 424,444
Total Incentives - Current Year 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Incentives - Prior Year 0 0 0 0 0 0 0 0 0 0 0 0 0
MR50300000 Licenses & Taxes 4,910 4,910 4,910 4,910 4,910 4,978 6,406 5,116 4,802 4,802 3,716 0 54,371
MR51450000 Property Taxes 13,113 13,113 13,113 13,113 14,088 14,088 14,088 16,043 16,043 16,043 15,382 15,382 173,609
Total Taxes 18,023 18,023 18,023 18,023 18,999 19,066 20,495 21,158 20,845 20,845 19,099 15,382 227,980
MR50160000 Worker's Compensation 0 0 0 0 0 0 0 6,219 777 777 777 777 9,329
MR51350000 Insurance 5,773 6,305 6,201 6,201 6,201 6,201 4,812 4,812 4,812 5,234 5,234 5,234 67,020
Total Insurance 5,773 6,305 6,201 6,201 6,201 6,201 4,812 11,031 5,590 6,011 6,011 6,011 76,349
MR55310000 Miscellaneous 526 167 266 808 481 629 464 369 173 412 139 84 4,518
MR55900000 Apartment Furnishings 0 0 0 0 0 0 139 0 0 77 292 0 508
MR56250000 Carpet Cleaning & Repairs 1,275 2,920 1,650 1,965 7,472 6,620 6,165 4,914 7,736 5,070 3,495 4,689 53,971
MR58200000 HVAC-Supplies 865 499 648 763 -2 1,642 758 880 252 133 631 325 7,393
MR59210000 Electrical Supplies 2,708 837 241 308 208 706 433 207 113 1,681 150 0 7,592
MR59220000 Electrical Contracted 0 0 0 192 2,156 163 195 0 0 0 152 262 3,119
MR59440000 Trash Removal 10,662 12,346 6,501 5,830 5,885 6,641 5,914 5,250 6,753 5,190 6,394 5,845 83,210
MR60310000 Lawn & Grounds 4,619 4,489 4,169 7,669 6,370 4,262 4,076 4,262 4,076 4,169 4,319 6,104 58,584
MR60500000 Hardware & Supplies 95 323 476 184 209 514 198 287 487 1,021 303 224 4,321
MR61100000 Pool Service Contracted 0 0 0 0 892 0 0 0 0 283 0 0 1,175
MR61110000 Pool Supplies 0 282 0 440 174 255 231 1,203 296 280 0 0 3,161
MR62200000 Appliances-Contracted 492 466 0 0 0 0 0 65 283 0 0 0 1,306
MR62250000 General Repair & Maint 1,927 650 1,299 1,764 1,657 4,486 1,621 392 442 521 489 96 15,345
MR62500000 Equip Repair/Rental 0 65 0 0 180 0 0 0 0 0 174 0 419
MR62510000 Vehicle Maintance 0 0 18 40 14 0 60 0 381 49 51 0 614
MR62600000 Glass & Screen 0 0 290 242 780 0 535 535 281 92 46 0 2,801
MR62700000 Interior Landscaping 2,460 3,335 1,335 3,378 0 0 0 0 0 0 0 0 10,508
MR62750000 Misc Maintenance 494 2,964 1,200 205 4,170 10,269 3,278 150 0 3,043 515 450 26,738
MR62860000 Painting Interior 4,055 14,425 5,375 7,573 11,025 5,160 6,835 7,770 16,485 7,335 4,855 9,330 100,223
© 2008 CB Richard Ellis, Inc.
MR62910000 Exterminatting Supplies 0 480 480 480 480 1,350 585 515 480 515 243 995 6,603
MR62950000 Plumbing-Contracted 750 690 0 1,530 375 1,420 395 608 2,135 0 625 230 8,758
MR62960000 Plumbing-Supplies 733 392 207 509 453 2,139 1,314 130 1,037 850 819 170 8,753
MR63200000 Uniforms 71 0 0 0 0 186 0 0 0 0 0 0 256
MR63400000 Roofing 925 3,475 350 5,375 2,050 0 0 300 5,100 600 1,050 3,825 23,050
MR64210000 Fire Exits & Alarms 45 90 45 135 90 0 180 135 45 90 45 135 1,034
MR64300000 Controlled Access Gates 45 0 0 0 0 45 0 0 0 0 0 0 90
MR64700000 Insurance Rehabilitation 0 0 0 0 0 0 0 0 0 0 3 0 3
Total Repairs & Maintenance 32,746 48,894 24,549 39,390 45,117 46,486 33,376 27,971 46,557 31,411 24,791 32,763 434,052
MR50060000 Management Fees 8,096 8,157 8,243 7,897 8,450 7,769 8,344 8,358 8,238 7,726 7,307 8,008 96,594
Total Commissions & Fees 8,096 8,157 8,243 7,897 8,450 7,769 8,344 8,358 8,238 7,726 7,307 8,008 96,594
Total Expenses 130,691 142,060 134,788 122,100 185,881 149,587 134,732 152,194 149,876 127,400 119,694 138,945 1,687,948
Net Operating Income 129,832 128,304 136,604 147,110 91,715 115,090 137,364 134,502 122,832 134,807 129,334 115,548 1,523,041
Other Income (Expenses)
MR70050000 Deprec-Buildings -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -666,263
Total Depreciation -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -666,263
MR70550000 Amtz-Debt Costs 0 -29,782 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -178,691
Total Amortization 0 -29,782 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -14,891 -178,691
Total Asset Mgmt Fee 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Impairment Charge 0 0 0 0 0 0 0 0 0 0 0 0 0
© 2008 CB Richard Ellis, Inc.
MR71100002 Interest-Notes 0 0 0 0 0 0 0 0 0 0 0 0 0
MR71100003 Interest-Notes -74,411 -44,543 -59,347 -59,260 -59,172 -59,084 -58,996 -58,908 -58,819 -58,730 -58,550 -58,460 -708,279
Total Interest Expense -74,411 -44,543 -59,347 -59,260 -59,172 -59,084 -58,996 -58,908 -58,819 -58,730 -58,550 -58,460 -708,279
MR71200001 Interest Income 241 215 212 17 144 676 134 274 505 327 489 419 3,652
Total Interest Income 241 215 212 17 144 676 134 274 505 327 489 419 3,652
Total Sale of For Sale Projects 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Other Income (Expense) -129,692 -129,631 -129,547 -129,655 -129,441 -128,821 -129,275 -129,047 -128,727 -128,815 -128,474 -128,454 -1,549,580
Net Income 139 -1,327 7,056 17,455 -37,726 -13,731 8,089 5,455 -5,895 5,992 859 -12,906 -26,539
© 2008 CB Richard Ellis, Inc.
Database: CLP_PROD Twelve Month Budget vs. Actual Page: 1
Report Id: CPT_12MONTH MGMT Report for Exec Detail Date: 39673.4644
ENTITY: 95647 Actual amounts from 01/07 to 12/07 Time: 8/13/2008
Budget Type: Final Budget Meadows User: LMILAM
Accrual
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 YTD
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Total
Revenue
MR40000001 Schedule Rent 302,397 302,397 302,397 302,397 302,397 302,397 302,397 304,907 304,907 304,907 304,907 304,907 3,641,314 3,641,314
Total Scheduled Rent 302,397 302,397 302,397 302,397 302,397 302,397 302,397 304,907 304,907 304,907 304,907 304,907 3,641,314 3,641,314
Total Straight Line Rents 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Specialty Leasing 0 0 0 0 0 0 0 0 0 0 0 0 0 0
MR40010000 Vacancy Loss -21,268 -19,101 -20,605 -18,365 -23,278 -17,791 -12,951 -15,667 -22,424 -20,384 -21,293 -17,491 -230,617 -230,617
MR40010003 Vacancy Loss-Down Units 0 0 0 -681 -681 -681 -681 -681 -691 0 0 0 -4,096 -4,096
Total Vacancy Loss -21,268 -19,101 -20,605 -19,046 -23,959 -18,472 -13,632 -16,348 -23,115 -20,384 -21,293 -17,491 -234,713 -234,713
MR40020002 Concess-Employees -905 -905 -905 -905 -905 -905 -905 -905 -905 876 0 0 -7,269 -7,269
MR40020003 Model Apartments -839 -839 -839 -905 -905 -905 -905 -733 -733 -733 -733 -733 -9,802 -9,802
MR40020010 Concess-Courtesy Officer 0 0 0 -765 -765 -765 -765 108 -322 -595 -648 -648 -5,165 -5,165
MR40020011 Concess-Renewals 0 0 0 -1,175 -2,787 -4,379 -5,846 -7,677 -8,389 -8,170 -7,880 -7,566 -53,870 -53,870
MR40020012 Concess-Move-In -32,120 -30,021 -26,344 -30,904 -28,453 -24,397 -24,839 -24,031 -22,159 -23,653 -28,342 -39,161 -334,422 -334,422
MR40020013 Concess-LTOL/GTOL -12,874 -12,788 -14,356 -17,576 -13,805 -9,550 -15,989 -16,145 -7,404 -9,027 -6,158 -4,401 -140,072 -140,072
MR40020016 Concess-Resident Referral 0 0 0 -1,731 -300 0 -150 -1,050 -350 -500 -1,050 -150 -5,281 -5,281
MR40020017 Concess-Administrative 0 0 0 -60 0 -629 -661 -74 -608 -867 -150 -440 -3,490 -3,490
Total Concessions -46,738 -44,553 -42,444 -54,021 -47,920 -41,529 -50,060 -50,507 -40,870 -42,670 -44,961 -53,099 -559,372 -559,372
© 2008 CB Richard Ellis, Inc.
MR40020004 Bad Debt Writeoff -2,737 -320 463 1,356 -2,937 -7,607 -3,830 -7,041 -7,903 -4,619 -4,489 -1,847 -41,511 -41,511
MR40020005 Bad Debt Recovery 0 263 365 3,251 1,004 1,022 1,325 2,793 969 3,881 2,165 2,864 19,902 19,902
Total Bad Debts -2,737 -57 828 4,607 -1,933 -6,585 -2,505 -4,249 -6,934 -738 -2,324 1,018 -21,608 -21,608
Total Mgmt & Leasing Fee Income 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Percentage Rents 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Tenant Recoveries 0 0 0 0 0 0 0 0 0 0 0 0 0 0
MR48040000 Late Charges 952 1,032 1,501 2,394 2,756 2,490 2,393 2,371 2,380 2,066 1,860 2,268 24,462 24,462
Total Late Fees 952 1,032 1,501 2,394 2,756 2,490 2,393 2,371 2,380 2,066 1,860 2,268 24,462 24,462
MR47180000 Interest Income 0 0 0 757 0 0 0 0 0 0 0 0 757 757
MR48010000 Vending Income 0 0 0 72 121 0 0 109 0 0 123 0 425 425
© 2008 CB Richard Ellis, Inc.
CLP_PROD Page: Database:
Report Id: CPT_12MONTH MGMT Report for Exec Detail Date: 39673.4644
ENTITY: 95647 Actual amounts from 01/07 to 12/07 Time: 8/13/2008
Budget Type: Final Budget Meadows User: LMILAM
Accrual
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 YTD
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Total
MR48020000 Forfeited Deposits 752 0 1,639 0 -2,266 2,001 867 0 0 -150 0 0 2,843 2,843
MR48030000 Washer & Dryers Income 2,210 2,485 2,145 0 0 0 0 0 0 0 0 0 6,840 6,840
MR48050000 NSF Check Fees 60 210 210 270 120 240 226 180 180 90 150 240 2,176 2,176
MR48060000 Administrative Fees 0 0 0 1,661 1,089 530 333 678 403 555 1,353 1,533 8,135 8,135
MR48070000 Non-Refundable Fees 0 0 0 3,012 2,674 3,375 2,949 1,689 2,850 1,470 1,001 1,239 20,260 20,260
MR48080000 Laundry Income 0 0 0 2,643 778 705 897 820 719 0 708 1,287 8,558 8,558
MR48110000 Miscellaneous Income 8,524 8,206 8,845 8,193 7,012 6,207 5,128 4,233 7,652 0 2,476 2,296 68,773 68,773
MR48140000 Termination Fees 3,038 319 300 0 0 2,254 0 316 133 0 0 1,745 8,104 8,104
MR48160000 Clubhouse Rental Income 0 0 0 150 0 0 150 0 150 150 150 150 900 900
MR48210000 Cable Income 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 36,000
MR48230000 Trash Service Income 0 0 0 257 565 1,337 2,276 3,117 -35 7,544 5,049 5,424 25,534 25,534
MR48240000 Pet Fee Income 1,567 2,033 1,760 1,032 1,747 1,454 1,555 1,479 1,804 1,174 1,116 514 17,235 17,235
MR48270000 Month-to Month Fee 300 873 300 1,505 2,256 2,730 1,533 682 1,449 1,126 799 1,263 14,814 14,814
MR48280000 Water/Sewer Income 0 0 0 534 1,193 2,809 4,807 6,557 -241 16,032 10,230 10,851 52,771 52,771
MR48290000 Electric Income 15,023 15,475 15,765 14,884 14,368 12,653 10,740 9,022 16,183 0 5,450 4,765 134,327 134,327
MR48340000 Telephone Income 0 0 0 0 1,121 225 695 225 225 225 650 225 3,591 3,591
MR48380000 Rebates 0 0 0 16 1,306 0 4,511 356 356 222 88 68 6,924 6,924
MR48410000 Damage-Miscellaneous 0 78 131 0 0 150 0 0 250 0 0 140 749 749
MR48420000 Damage-Cleaning 0 0 0 0 0 0 0 100 0 210 1,381 733 2,424 2,424
MR48450000 Damage-Carpet 0 0 0 0 0 335 0 100 222 978 0 0 1,635 1,635
MR48460000 Damage-Window 0 0 0 0 0 0 0 150 0 0 0 0 150 150
MR48470000 Damage-Keys Not Returned 0 0 0 25 25 25 0 125 280 20 125 25 650 650
MR48480000 Damage-Appliances 0 0 0 0 314 0 0 0 0 0 0 0 314 314
MR48510000 Transfer Fees 0 0 0 0 0 300 0 300 0 0 300 0 900 900
Total Other Income 34,474 32,679 34,095 38,010 35,422 40,330 39,668 33,239 35,579 32,647 34,150 35,497 425,790 425,790
Total Buy-Outs 0 0 0 0 0 0 0 0 0 0 0 0 0 0
© 2008 CB Richard Ellis, Inc.
Total Income 267,080 272,396 275,772 274,341 266,765 278,631 278,261 269,413 271,946 275,828 272,338 273,101 3,275,873 3,275,873
Operating Expenses
MR52500000 Electricity-Common Area 4,516 4,516 5,277 4,656 8,962 5,500 5,515 5,031 5,707 4,741 4,735 2,699 61,854 61,854
MR52510000 Electricity-Vacants 1,981 1,338 1,947 2,084 1,656 1,908 1,617 3,835 3,343 1,200 2,611 4,497 28,016 28,016
MR52550000 Water & Sewer 6,540 8,932 9,639 10,510 9,203 3,329 23,325 7,623 5,372 6,400 5,783 6,051 102,705 102,705
MR52560000 Water & sewer Reimburse 12,223 18,692 8,273 10,208 15,969 15,988 13,463 14,977 12,175 13,575 15,310 13,842 164,695 164,695
MR59050000 Gross Power 0 0 0 0 30 0 0 0 0 0 0 0 30 30
MR63100000 Cable TV 523 113 300 -8 143 264 116 64 100 223 223 546 2,607 2,607
Total Utilities 25,781 33,590 25,437 27,449 35,963 26,988 44,037 31,529 26,696 26,139 28,662 27,635 359,907 359,907
MR50200000 Education & Training 0 0 0 95 140 64 165 212 548 203 229 295 1,951 1,951
MR50250000 Telephone 801 1,165 1,143 791 1,790 1,056 358 1,433 2,026 988 1,110 400 13,063 13,063
MR50260000 Answering Service 90 44 -107 0 0 81 81 0 81 162 0 162 593 593
MR50400000 Copier Costs 0 0 0 0 0 198 730 0 210 0 95 27 1,260 1,260
Database: CLP_PROD Twelve Month Budget vs. Actual Page: 3
Report Id: CPT_12MONTH MGMT Report for Exec Detail Date: 39673.4644
ENTITY: 95647 Actual amounts from 01/07 to 12/07 Time: 8/13/2008
Budget Type: Final Budget Meadows User: LMILAM
Accrual
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 YTD
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Total
MR50450000 Computer/Bookkeeping 0 0 0 475 -96 20 0 21 273 223 91 157 1,165 1,165
MR50500000 Office Supplies 459 420 1,056 352 81 290 558 358 316 350 374 158 4,772 4,772
MR50600000 Postage 79 0 6 0 45 0 114 14 0 41 44 28 370 370
MR50650000 Printing 0 0 0 0 0 0 312 0 8 0 0 0 321 321
MR50750000 Legal Fees 22 1,148 54 1,240 -950 83 1,863 1,546 -467 1,768 2,430 78 8,815 8,815
MR50800000 Audit Fees 0 0 0 1,022 1,022 2,355 1,022 1,022 1,022 1,022 1,022 1,022 10,527 10,527
MR50880000 Brochures 8 0 0 0 0 0 0 0 0 0 0 0 8 8
© 2008 CB Richard Ellis, Inc.
MR50950000 Equipment Rental 0 0 0 0 0 0 382 191 305 0 0 408 1,286 1,286
MR51000000 Association Dues 0 0 0 175 0 0 0 0 0 0 0 0 175 175
MR51100000 Meals & Entertainment 0 0 0 0 285 0 170 720 155 102 157 0 1,588 1,588
MR51110000 Promotions 0 0 0 0 109 267 237 346 675 430 603 1,500 4,166 4,166
MR51120000 Computer Network 0 0 0 26 498 149 97 268 2,097 649 174 789 4,746 4,746
MR51200000 Automotive Expenses 0 0 0 0 0 0 30 52 38 0 12 0 131 131
MR51250000 Travel 0 0 0 0 0 0 0 1,000 0 0 0 0 1,000 1,000
MR51260000 Professional Fees-Other 1,022 1,290 1,022 0 0 2,500 4,645 145 145 145 725 435 12,073 12,073
MR51270000 Consulting Fees 0 0 0 0 0 246 123 121 121 122 0 234 966 966
MR51320000 Employment Screening Fees 0 0 0 0 0 0 0 0 240 132 93 0 465 465
MR51480000 Lodging Tax 0 0 0 353 176 353 353 353 -1,586 0 0 0 0 0
MR51580000 Bank Charges 63 100 123 170 133 118 155 148 202 53 59 92 1,413 1,413
MR51600000 Miscellaneous 449 107 499 1,094 175 582 657 -1,159 0 488 90 207 3,189 3,189
MR51620000 Temporary Help 0 0 0 0 0 0 0 0 1,028 0 0 0 1,028 1,028
MR51630000 Recruiting & Hiring Costs 0 0 0 0 0 0 159 0 0 0 0 0 159 159
MR51650000 General Repairs & Maint 0 0 118 34 0 0 0 0 0 0 0 0 152 152
MR51670000 Credit Reports 1,463 147 475 -475 0 756 378 378 378 378 378 378 4,635 4,635
MR52900000 Outside Services 0 0 0 1,073 0 0 0 0 0 0 0 0 1,073 1,073
MR52910000 Dues Subscriptions 0 0 0 0 288 0 125 0 0 0 0 290 702 702
Total General & Admin 4,455 4,421 4,388 6,424 3,695 9,119 12,713 7,166 7,814 7,254 7,685 6,657 81,791 81,791
MR50860000 General Advertising 2,894 2,524 4,157 0 3,354 2,159 2,019 0 0 731 1,871 2,213 21,922 21,922
MR51840000 Internet/Web Page 0 0 0 795 1,697 184 488 1,724 672 299 1,073 3,089 10,021 10,021
MR51890000 Outdoor Advertising 0 0 0 0 109 0 0 0 0 0 0 0 109 109
MR52850000 Advertising 0 0 0 956 0 0 0 0 0 0 0 0 956 956
MR53150000 Newspaper Advertising 0 0 0 0 0 0 316 0 0 0 0 0 316 316
MR53310000 Signs 0 0 0 0 44 0 0 0 99 0 9 0 152 152
MR53350000 Apartment Guide 0 0 0 0 0 0 0 0 470 0 0 35 505 505
MR53360000 Leas Comm-Apt Locater 0 0 0 0 0 1,546 2,850 897 2,752 0 1,198 58 9,301 9,301
MR53520000 Leasing Comm-Res Referral 1,598 1,698 -1 0 0 0 0 0 0 0 0 0 3,296 3,296
MR53700000 Entertainment & Promotion 92 115 317 85 665 0 0 73 0 248 0 98 1,692 1,692
Total Advertising & Promotions 4,584 4,336 4,474 1,837 5,869 3,889 5,673 2,694 3,993 1,277 4,152 5,493 48,271 48,271
MR54100000 Administrative Payroll 23,129 32,021 20,427 4,165 22,699 15,806 17,786 16,277 15,349 16,425 15,599 13,443 213,125 213,125
MR54110000 Maintenance Payroll 12,575 11,160 12,783 23,984 21,455 15,446 15,864 17,017 12,634 14,673 16,670 14,723 188,984 188,984
MR54120000 Contract Payroll 0 0 0 0 653 0 0 0 0 1,052 1,126 3,214 6,044 6,044
MR54400000 Bonus/Commissions 0 0 2,258 0 2,688 4,994 4,223 8,521 993 2,337 4,114 -1,757 28,371 28,371
Total Salaries 35,704 43,180 35,467 28,148 47,495 36,247 37,873 41,815 28,977 34,487 37,509 29,623 436,524 436,524
© 2008 CB Richard Ellis, Inc.
CLP_PROD Page: Database:
Report Id: CPT_12MONTH MGMT Report for Exec Detail Date: 39673.4644
ENTITY: 95647 Actual amounts from 01/07 to 12/07 Time: 8/13/2008
Budget Type: Final Budget Meadows User: LMILAM
Accrual
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 YTD
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Total
Total Incentives - Current Year 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Incentives - Prior Year 0 0 0 0 0 0 0 0 0 0 0 0 0 0
MR50300000 Licenses & Taxes 11,784 4,259 4,259 4,259 -20,350 946 946 1,246 2,884 1,298 1,298 1,122 13,950 13,950
MR50310000 Licenses & Taxes Reimburs 0 0 0 0 0 0 0 26 0 0 0 0 26 26
MR51450000 Property Taxes 15,382 15,382 15,382 15,382 14,486 12,752 15,064 15,064 15,064 15,064 15,064 15,064 179,152 179,152
Total Taxes 27,166 19,642 19,642 19,642 -5,864 13,698 16,010 16,336 17,948 16,362 16,362 16,186 193,128 193,128
MR50160000 Worker's Compensation 777 777 970 970 970 970 970 970 970 1,183 1,183 1,183 11,891 11,891
MR51350000 Insurance 6,550 5,069 5,069 4,965 4,965 4,965 4,965 4,965 5,400 5,542 5,542 5,949 63,945 63,945
MR51350003 Insurance-Fiduciary 0 0 0 103 103 103 103 103 103 103 103 103 930 930
Total Insurance 7,327 5,846 6,038 6,038 6,038 6,038 6,038 6,038 6,473 6,827 6,827 7,234 76,765 76,765
MR55250000 Telephone-Executive S 0 0 0 56 0 0 0 0 0 0 0 0 56 56
MR55310000 Miscellaneous 396 88 539 0 0 0 0 0 0 0 0 0 1,023 1,023
MR55370000 Office Supplies 0 0 0 161 0 0 0 0 0 0 0 0 161 161
MR55850000 Furniture Rental 0 0 0 0 0 0 0 0 0 0 0 210 210 210
MR55900000 Apartment Furnishings 99 0 0 0 0 0 0 0 0 0 248 0 347 347
MR56250000 Carpet Cleaning & Repairs 7,480 6,939 5,030 2,360 3,662 1,575 6,575 3,645 5,059 6,127 2,160 4,235 54,847 54,847
© 2008 CB Richard Ellis, Inc.
MR56260000 Carpet Repair-Contracted 0 0 0 1,270 0 0 0 0 0 0 0 0 1,270 1,270
MR56270000 Carpet-New 0 0 0 4,080 0 0 0 0 0 0 0 0 4,080 4,080
MR56300000 Chem & Cleaning Supplies 0 0 0 0 0 0 0 0 234 358 291 260 1,143 1,143
MR56350000 Contract Cleaning 0 0 0 0 2,910 2,315 1,700 3,189 1,805 789 1,805 1,611 16,125 16,125
MR56360000 Clean Public Area-Contrac 0 0 0 620 -620 0 0 0 0 0 0 0 0 0
MR56410000 Blinds New 0 0 0 0 0 0 0 0 0 0 176 -7 169 169
MR56700000 Trash Removal 0 0 0 0 0 0 0 0 4,657 11,524 7,412 11,177 34,770 34,770
MR58200000 HVAC-Supplies 369 101 1,697 159 212 0 320 1,529 449 363 947 0 6,146 6,146
MR59100000 Equipment Repair/Rental 0 0 0 5,000 0 0 0 0 0 0 0 0 5,000 5,000
MR59200000 Contract Labor 0 0 0 0 0 0 0 0 956 505 0 0 1,461 1,461
MR59210000 Electrical Supplies 495 78 364 2 79 0 28 812 309 189 184 0 2,540 2,540
MR59220000 Electrical Contracted 896 0 0 0 380 0 368 490 1,036 0 1,141 286 4,595 4,595
MR59440000 Trash Removal 4,717 3,580 5,127 9,180 9,463 7,273 7,349 4,995 0 0 0 0 51,685 51,685
MR60310000 Lawn & Grounds 4,169 4,169 7,686 2,414 8,588 4,256 4,089 4,089 6,749 6,389 7,589 4,409 64,595 64,595
MR60500000 Hardware & Supplies 1,068 111 764 407 0 0 0 0 0 0 0 0 2,350 2,350
MR60600000 Light Bulbs 0 0 0 0 0 0 0 0 0 0 0 384 384 384
MR60700000 General Repair & Maint 0 0 0 135 0 0 0 0 0 0 0 0 135 135
MR60800000 Ext Roof Repair 0 0 0 225 900 0 0 0 0 0 0 0 1,125 1,125
MR61110000 Pool Supplies 24 0 0 0 236 464 677 665 1,628 340 268 75 4,377 4,377
MR61250000 Tile-Ceramic 0 0 0 0 0 0 0 0 0 0 275 0 275 275
MR61260000 Tile-Vinyl 0 0 0 0 0 0 0 0 0 0 100 0 100 100
MR62000000 Repair & Maint Interior 0 0 0 244 180 0 250 0 825 1,455 150 0 3,104 3,104
MR62200000 Appliances-Contracted 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Twelve Month Budget vs. Actual Page: Database:
Report Id: CPT_12MONTH MGMT Report for Exec Detail Date: 39673.4644
ENTITY: 95647 Actual amounts from 01/07 to 12/07 Time: 8/13/2008
Budget Type: Final Budget Meadows User: LMILAM
Accrual
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 YTD
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Total
MR62210000 Appliances-Supplies 0 0 0 0 0 0 125 181 77 316 73 428 1,201 1,201
MR62250000 General Repair & Maint 491 62 298 0 0 0 0 0 0 0 0 0 852 852
© 2008 CB Richard Ellis, Inc.
MR62360000 Carpentry 0 0 0 0 28 0 0 86 175 270 457 24 1,040 1,040
MR62500000 Equip Repair/Rental 0 0 0 0 26 0 0 0 0 0 0 0 26 26
MR62510000 Vehicle Maintance 30 0 102 0 58 0 66 0 50 1,562 1,165 63 3,096 3,096
MR62600000 Glass & Screen 168 295 256 200 730 135 145 200 811 455 440 0 3,835 3,835
MR62650000 Hardware & Supplies 0 0 0 0 7 135 0 2,067 1,094 153 333 642 4,431 4,431
MR62750000 Misc Maintenance 273 767 0 5,000 376 239 766 388 1,015 252 705 354 10,136 10,136
MR62800000 Pressure Washing 0 0 0 0 3,200 0 0 0 275 525 0 18 4,018 4,018
MR62860000 Painting Interior 8,545 3,740 4,505 6,560 9,164 10,748 5,880 13,735 2,985 13,918 4,800 6,949 91,529 91,529
MR62900000 Pest Control 0 0 0 0 817 0 400 0 49 400 735 1,825 4,225 4,225
MR62910000 Exterminatting Supplies 400 400 0 0 0 480 -480 0 0 0 0 0 800 800
MR62950000 Plumbing-Contracted 670 145 637 0 0 690 0 660 870 790 115 0 4,577 4,577
MR62960000 Plumbing-Supplies 995 316 1,985 111 75 69 682 1,020 257 300 561 1,995 8,367 8,367
MR63050000 Tools & Equipment 0 0 0 0 0 0 0 0 0 0 142 315 457 457
MR63200000 Uniforms 0 2,500 -2,500 0 0 0 0 0 0 0 0 0 0 0
MR63210000 Uniform Purchases 0 0 0 0 0 101 0 0 0 73 235 0 409 409
MR63380000 Building Repairs 5,000 5,000 -5,000 -5,000 0 0 0 0 0 0 0 0 0 0
MR63400000 Roofing 300 150 700 0 300 75 475 0 4,250 3,000 400 0 9,650 9,650
MR64210000 Fire Exits & Alarms 90 90 245 0 25,555 4,589 4,259 4,379 4,259 4,334 0 0 47,799 47,799
MR64250000 Security Service-Contract 0 0 0 0 75 0 323 90 300 315 120 75 1,297 1,297
MR64300000 Controlled Access Gates 0 0 45 0 0 0 0 0 0 0 0 0 45 45
Total Repairs & Maintenance 36,675 28,531 22,481 33,185 66,400 33,142 33,998 42,219 40,172 54,701 33,027 35,328 459,860 459,860
MR50060000 Management Fees 7,772 8,096 7,948 8,161 7,798 8,273 7,831 7,880 8,019 8,311 7,941 8,301 96,331 96,331
Total Commissions & Fees 7,772 8,096 7,948 8,161 7,798 8,273 7,831 7,880 8,019 8,311 7,941 8,301 96,331 96,331
Total Expenses 149,466 147,642 125,875 130,885 167,393 137,394 164,173 155,677 140,092 155,358 142,166 136,457 1,752,577 1,752,577
Net Operating Income 117,615 124,755 149,897 143,456 99,371 141,237 114,088 113,736 131,854 120,470 130,172 136,644 1,523,295 1,523,295
Other Income (Expenses)
MR70050000 Deprec-Buildings -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -666,263 -666,263
Total Depreciation -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -55,522 -666,263 -666,263
MR70550000 Amtz-Debt Costs -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -56,429 -56,429
© 2008 CB Richard Ellis, Inc.
Total Amortization -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -56,429 -56,429
Total Asset Mgmt Fee 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Twelve Month Budget vs. Actual Page: Database:
Report Id: CPT_12MONTH MGMT Report for Exec Detail Date: 39673.4644
ENTITY: 95647 Actual amounts from 01/07 to 12/07 Time: 8/13/2008
Budget Type: Final Budget Meadows User: LMILAM
Accrual
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 YTD
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Total
Total Impairment Charge 0 0 0 0 0 0 0 0 0 0 0 0 0 0
MR71100003 Interest-Notes -58,369 -58,279 -58,187 -58,096 -58,004 -57,911 -57,819 -57,819 -57,726 -57,632 -57,538 -57,444 -694,823 -694,823
Total Interest Expense -58,369 -58,279 -58,187 -58,096 -58,004 -57,911 -57,819 -57,819 -57,726 -57,632 -57,538 -57,444 -694,823 -694,823
MR71200000 Interest Income 0 0 0 0 710 0 -710 0 0 0 0 0 0 0
MR71200001 Interest Income 436 503 41 0 0 501 1,158 524 269 376 14 493 4,314 4,314
Total Interest Income 436 503 41 0 710 501 449 524 269 376 14 493 4,314 4,314
Total Sale of For Sale Projects 0 0 0 0 0 0 0 0 0 0 0 0 0 0
© 2008 CB Richard Ellis, Inc.
Total Other Income (Expense) -118,158 -118,000 -118,371 -118,320 -117,518 -117,635 -117,594 -117,519 -117,681 -117,481 -117,749 -117,175 -1,413,200 -1,413,200
Net Income -543 6,755 31,525 25,137 -18,147 23,603 -3,506 -3,782 14,173 2,990 12,423 19,469 110,095 110,095
© 2008 CB Richard Ellis, Inc.
Report Id: CPT_12MTHACF 12 MONTHS ENDING AUGUST 2008 Page: 7Database: CLP_PROD MGMT Report for Exec Detail Date: 9/5/2008ENTITY: 095647 Meadows Time: 03:33 PMAccrual User: LMILAM
Sep 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul 2008 Aug 2008 Total
Revenue
4000-0001 Schedule Rent 304,907 304,907 304,907 304,907 304,907 313,491 313,491 313,491 313,671 313,911 314,211 314,241 3,721,042
Total Scheduled Rent 304,907 304,907 304,907 304,907 304,907 313,491 313,491 313,491 313,671 313,911 314,211 314,241 3,721,042
Total Straight Line Rents 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Specialty Leasing 0 0 0 0 0 0 0 0 0 0 0 0 0
4001-0000 Vacancy Loss -22,424 -20,384 -21,293 -17,491 -19,818 -15,882 -11,050 -9,090 -11,550 -16,900 -18,364 -12,084 -196,3314001-0003 Vacancy Loss-Down Units -691 0 0 0 0 0 0 0 0 0 0 0 -691
Total Vacancy Loss -23,115 -20,384 -21,293 -17,491 -19,818 -15,882 -11,050 -9,090 -11,550 -16,900 -18,364 -12,084 -197,022
4002-0002 Concess-Employees -905 876 0 0 -363 -346 -346 -346 -346 -204 -200 -635 -2,8154002-0003 Model Apartments -733 -733 -733 -733 -733 -743 -743 -743 -743 -743 -743 -743 -8,8664002-0010 Concess-Courtesy Officer -322 -595 -648 -648 -648 -648 -648 -648 -327 -653 -653 -653 -7,0904002-0011 Concess-Renewals -8,389 -8,170 -7,880 -7,566 -6,715 -5,843 -5,370 -4,448 -3,245 -2,610 -1,993 -859 -63,0894002-0012 Concess-Move-In -22,159 -23,653 -28,342 -39,161 -29,223 -33,077 -35,456 -36,598 -36,843 -39,569 -42,737 -44,518 -411,3364002-0013 Concess-LTOL/GTOL -7,404 -9,027 -6,158 -4,401 -4,113 -13,549 -10,451 -9,662 -10,919 -7,155 -7,155 -12,188 -102,1824002-0016 Concess-Resident Referral -350 -500 -1,050 -150 -150 -750 -450 -150 -300 -150 -450 -300 -4,7504002-0017 Concess-Administrative -608 -867 -150 -440 -150 0 -400 -1,404 -150 -1,050 -837 -897 -6,954
Total Concessions -40,870 -42,670 -44,961 -53,099 -42,094 -54,956 -53,864 -53,999 -52,872 -52,136 -54,767 -60,793 -607,082
4002-0004 Bad Debt Writeoff -7,903 -4,619 -4,489 -1,847 -1,925 -1,129 708 -2,750 -2,508 -3,531 -2,215 -3,206 -35,4144002-0005 Bad Debt Recovery 969 3,881 2,165 2,864 2,226 834 1,159 3,221 1,638 1,617 616 1,814 23,005
Total Bad Debts -6,934 -738 -2,324 1,018 302 -295 1,867 471 -870 -1,913 -1,599 -1,393 -12,408
Total Mgmt & Leasing Fee Income 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Percentage Rents 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Tenant Recoveries 0 0 0 0 0 0 0 0 0 0 0 0 0
4804-0000 Late Charges 2,380 2,066 1,860 2,268 2,051 2,321 1,384 1,996 2,671 2,253 2,746 2,866 26,864
Total Late Fees 2,380 2,066 1,860 2,268 2,051 2,321 1,384 1,996 2,671 2,253 2,746 2,866 26,864
4801-0000 Vending Income 0 0 123 0 76 0 0 0 0 0 41 0 2394802-0000 Forfeited Deposits 0 -150 0 0 0 0 0 0 0 0 -300 0 -4504805-0000 NSF Check Fees 180 90 150 240 150 210 150 210 210 210 120 120 2,0404806-0000 Administrative Fees 403 555 1,353 1,533 1,291 1,765 1,495 1,390 1,540 2,920 1,960 2,380 18,5854807-0000 Non-Refundable Fees 2,850 1,470 1,001 1,239 1,823 2,996 2,120 2,900 2,100 4,459 3,803 3,700 30,461
© 2008 CB Richard Ellis, Inc.
Report Id: CPT_12MTHACF 12 MONTHS ENDING AUGUST 2008 Page: 8Database: CLP_PROD MGMT Report for Exec Detail Date: 9/5/2008ENTITY: 095647 Meadows Time: 03:33 PMAccrual User: LMILAM
Sep 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul 2008 Aug 2008 Total
4808-0000 Laundry Income 719 0 708 1,287 687 620 532 628 538 571 691 552 7,5334811-0000 Miscellaneous Income 7,652 0 2,476 2,296 2,028 0 0 695 500 -139 235 220 15,9644814-0000 Termination Fees 133 0 0 1,745 3,434 1,544 0 661 1,382 0 0 0 8,8984815-0000 Cleaning Fees 0 0 0 0 65 0 0 0 85 0 0 0 1504816-0000 Clubhouse Rental Income 150 150 150 150 0 150 150 300 300 400 450 300 2,6504821-0000 Cable Income 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,0004823-0000 Trash Service Income -35 7,544 5,049 5,424 6,167 8,458 8,620 8,177 8,960 8,666 8,825 9,127 84,9834824-0000 Pet Fee Income 1,804 1,174 1,116 514 813 1,669 1,633 1,108 1,982 1,043 2,137 3,230 18,2234827-0000 Month-to Month Fee 1,449 1,126 799 1,263 875 1,675 1,869 2,089 2,862 2,676 2,059 2,354 21,0954828-0000 Water/Sewer Income -241 16,032 10,230 10,851 12,117 16,468 16,822 16,749 16,548 15,790 16,048 16,515 163,9284829-0000 Electric Income 16,183 0 5,450 4,765 3,886 0 733 38 218 1,238 1,078 549 34,1384834-0000 Telephone Income 225 225 650 225 0 390 0 0 352 600 150 479 3,2974838-0000 Rebates 356 222 88 68 -596 68 2,536 405 375 372 -323 233 3,8034841-0000 Damage-Miscellaneous 250 0 0 140 0 0 0 0 0 0 0 0 3904842-0000 Damage-Cleaning 0 210 1,381 733 1,164 220 0 55 184 685 0 240 4,8714843-0000 Damage-Mini Blinds 0 0 0 0 0 0 0 0 0 0 0 100 1004844-0000 Damage-Painting/Walls 0 0 0 0 0 0 0 0 0 0 250 0 2504845-0000 Damage-Carpet 222 978 0 0 701 0 0 80 461 1,825 444 984 5,6944847-0000 Damage-Keys Not Returned 280 20 125 25 0 120 50 125 120 170 25 145 1,2054848-0000 Damage-Appliances 0 0 0 0 0 0 0 0 0 135 0 50 1854849-0000 Damage-Vinyl/Floor 0 0 0 0 0 113 0 0 0 0 0 0 1134851-0000 Transfer Fees 0 0 300 0 300 0 0 300 0 600 0 0 1,5004853-0000 Washer & Dryer Income 0 0 0 0 0 0 0 0 48 50 50 50 198
Total Other Income 35,579 32,647 34,150 35,497 37,981 39,464 39,709 38,910 41,767 45,272 40,741 44,328 466,043
Total Buy-Outs 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Income 271,946 275,828 272,338 273,101 283,328 284,144 291,537 291,779 292,817 290,486 282,967 287,165 3,397,437
Operating Expenses
5250-0000 Electricity-Common Area 5,707 4,741 4,735 2,699 4,895 4,806 4,253 4,017 4,359 4,244 5,394 5,354 55,2045251-0000 Electricity-Vacants 3,343 1,200 2,611 4,497 3,059 2,700 2,290 1,739 2,243 1,078 2,743 2,713 30,2135255-0000 Water & Sewer 5,372 6,400 5,783 6,051 5,200 1,395 4,215 4,215 3,275 1,395 7,256 3,950 54,5075256-0000 Water & sewer Reimburse 12,175 13,575 15,310 13,842 17,954 21,386 17,725 17,725 18,945 14,855 10,913 10,904 185,3096310-0000 Cable TV 100 223 223 546 446 218 116 0 0 431 0 0 2,302
Total Utilities 26,696 26,139 28,662 27,635 31,554 30,504 28,598 27,696 28,822 22,003 26,306 22,921 327,536
5020-0000 Education & Training 548 203 229 295 186 172 391 673 681 610 340 72 4,4005025-0000 Telephone 2,026 988 1,110 400 1,814 -887 2,990 3,066 1,044 864 150 281 13,8475026-0000 Answering Service 81 162 0 162 81 0 81 162 81 81 81 81 1,0525040-0000 Copier Costs 210 0 95 27 0 0 174 0 0 0 783 0 1,2895045-0000 Computer/Bookkeeping 273 223 91 157 42 0 352 1,099 400 292 1,082 387 4,3975050-0000 Office Supplies 316 350 374 158 93 289 16 0 354 160 313 507 2,9315060-0000 Postage 0 41 44 28 86 29 0 0 67 0 57 84 4345065-0000 Printing 8 0 0 0 0 0 0 0 0 0 0 0 85075-0000 Legal Fees -467 1,768 2,430 78 2 0 1,179 247 0 430 759 2,135 8,561
© 2008 CB Richard Ellis, Inc.
Report Id: CPT_12MTHACF 12 MONTHS ENDING AUGUST 2008 Page: 9Database: CLP_PROD MGMT Report for Exec Detail Date: 9/5/2008ENTITY: 095647 Meadows Time: 03:33 PMAccrual User: LMILAM
Sep 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul 2008 Aug 2008 Total
5080-0000 Audit Fees 1,022 1,022 1,022 1,022 500 500 500 500 500 500 500 500 8,0865090-0000 Property Rental 0 0 0 0 0 0 0 0 0 191 0 0 1915095-0000 Equipment Rental 305 0 0 408 0 393 197 196 394 0 197 393 2,4835110-0000 Meals & Entertainment 155 102 157 0 614 79 9 164 151 0 0 117 1,5475111-0000 Promotions 675 430 603 1,500 61 328 191 110 129 261 298 3,641 8,2265112-0000 Computer Network 2,097 649 174 789 162 130 449 1,282 546 877 411 832 8,3975120-0000 Automotive Expenses 38 0 12 0 36 49 0 20 13 0 132 0 2995125-0000 Travel 0 0 0 0 0 0 0 0 0 0 0 0 05126-0000 Professional Fees-Other 145 145 725 435 0 0 225 171 0 171 0 0 2,0175127-0000 Consulting Fees 121 122 0 234 398 0 0 0 0 0 0 0 8745132-0000 Employment Screening Fees 240 132 93 0 0 60 0 0 0 30 0 0 5555148-0000 Lodging Tax -1,586 0 0 0 0 0 0 0 0 0 0 0 -1,5865158-0000 Bank Charges 202 53 59 92 140 183 102 171 282 797 195 163 2,4375160-0000 Miscellaneous 0 488 90 207 0 327 0 2,157 211 2,841 -409 50 5,9615162-0000 Temporary Help 1,028 0 0 0 0 0 0 0 0 0 0 0 1,0285163-0000 Recruiting & Hiring Costs 0 0 0 0 0 0 7 265 70 0 0 141 4825167-0000 Credit Reports 378 378 378 378 378 378 359 378 1,036 608 707 99 5,4565291-0000 Dues Subscriptions 0 0 0 290 0 19 0 0 475 0 -175 382 991
Total General & Admin 7,814 7,254 7,685 6,657 4,591 2,050 7,221 10,661 6,432 8,712 5,421 9,865 84,363
5086-0000 General Advertising 0 731 1,871 2,213 470 3,153 1,324 495 2,633 1,346 1,263 0 15,4995184-0000 Internet/Web Page 672 299 1,073 3,089 638 787 482 528 890 0 55 -839 7,6745191-0000 Agency Production Fees 0 0 0 0 0 0 0 0 0 0 0 0 05315-0000 Newspaper Advertising 0 0 0 0 0 0 0 1,459 1,011 0 0 0 2,4705331-0000 Signs 99 0 9 0 437 0 0 0 0 0 0 10 5545335-0000 Apartment Guide 470 0 0 35 0 0 0 0 0 0 0 140 6455336-0000 Leas Comm-Apt Locater 2,752 0 1,198 58 58 240 440 440 684 828 1,042 1,118 8,8595370-0000 Entertainment & Promotion 0 248 0 98 93 0 0 0 0 0 0 0 439
Total Advertising & Promotions 3,993 1,277 4,152 5,493 1,696 4,180 2,245 2,922 5,219 2,174 2,360 429 36,140
5013-0000 Incentives 0 0 0 0 0 0 511 0 0 0 0 0 5115410-0000 Administrative Payroll 15,349 16,425 15,599 13,443 16,952 13,141 13,404 15,064 17,302 12,998 16,767 17,091 183,5365411-0000 Maintenance Payroll 12,634 14,673 16,670 14,723 14,124 17,321 13,589 15,156 8,779 11,571 12,441 10,794 162,4755412-0000 Contract Payroll 0 1,052 1,126 3,214 -2,034 0 0 0 0 0 988 0 4,3455440-0000 Bonus/Commissions 993 2,337 4,114 -1,757 2,449 4,586 5,331 3,143 4,020 2,170 3,299 4,996 35,681
Total Salaries 28,977 34,487 37,509 29,623 31,490 35,048 32,835 33,362 30,100 26,740 33,496 32,881 386,549
5440-0200 Bonus/Comm-Other 0 0 0 0 511 0 -511 0 0 0 0 0 0
Total Incentives - Current Year 0 0 0 0 511 0 -511 0 0 0 0 0 0
Total Incentives - Prior Year 0 0 0 0 0 0 0 0 0 0 0 0 0
5030-0000 Licenses & Taxes 2,884 1,298 1,298 1,122 737 737 737 737 737 553 1,277 602 12,7205145-0000 Property Taxes 15,064 15,064 15,064 15,064 15,817 15,817 15,817 15,817 15,817 15,817 15,817 15,817 186,792
Total Taxes 17,948 16,362 16,362 16,186 16,554 16,554 16,554 16,554 16,554 16,370 17,094 16,419 199,512
© 2008 CB Richard Ellis, Inc.
Report Id: CPT_12MTHACF 12 MONTHS ENDING AUGUST 2008 Page: 10Database: CLP_PROD MGMT Report for Exec Detail Date: 9/5/2008ENTITY: 095647 Meadows Time: 03:33 PMAccrual User: LMILAM
Sep 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul 2008 Aug 2008 Total
5016-0000 Worker's Compensation 970 1,183 1,183 1,183 1,183 1,183 1,183 1,183 1,183 1,183 1,183 1,183 13,9785135-0000 Insurance 5,400 5,542 5,542 5,949 5,844 5,844 5,844 4,673 5,078 5,078 5,078 5,078 64,9475135-0003 Insurance-Fiduciary 103 103 103 103 103 103 103 103 103 103 103 103 1,239
Total Insurance 6,473 6,827 6,827 7,234 7,130 7,130 7,130 5,959 6,363 6,363 6,363 6,363 80,165
5585-0000 Furniture Rental 0 0 0 210 0 0 0 0 0 0 0 0 2105590-0000 Apartment Furnishings 0 0 248 0 0 0 0 0 0 0 0 0 2485625-0000 Carpet Cleaning & Repairs 5,059 6,127 2,160 4,235 3,615 2,775 2,110 834 8,503 4,531 5,584 4,448 49,9805630-0000 Chem & Cleaning Supplies 234 358 291 260 0 270 30 340 730 409 0 505 3,4275635-0000 Contract Cleaning 1,805 789 1,805 1,611 1,545 2,024 2,578 962 -130 2,500 914 3,598 20,0005641-0000 Blinds New 0 0 176 -7 342 0 321 0 0 -335 522 31 1,0495670-0000 Trash Removal 4,657 11,524 7,412 11,177 -493 7,376 0 0 0 0 0 0 41,6545820-0000 HVAC-Supplies 449 363 947 0 3,758 -6,647 782 2,356 8 10,352 -5,643 -179 6,5475920-0000 Contract Labor 956 505 0 0 0 0 0 0 0 0 4,585 0 6,0465921-0000 Electrical Supplies 309 189 184 0 6 322 6 508 33 1,329 0 862 3,7475922-0000 Electrical Contracted 1,036 0 1,141 286 0 0 0 0 245 939 1,701 1,072 6,4185944-0000 Trash Removal 0 0 0 0 0 0 6,824 7,203 6,909 4,985 7,625 10,801 44,3466031-0000 Lawn & Grounds 6,749 6,389 7,589 4,409 0 12,223 4,854 7,089 5,648 5,178 6,496 5,081 71,7046060-0000 Light Bulbs 0 0 0 384 78 -299 0 0 0 337 830 458 1,7886110-0000 Pool Service Contracted 0 0 0 0 0 0 0 0 466 0 0 200 6666111-0000 Pool Supplies 1,628 340 268 75 0 38 0 1,093 131 2,984 590 1,259 8,4086125-0000 Tile-Ceramic 0 0 275 0 0 0 0 0 825 275 275 275 1,9256126-0000 Tile-Vinyl 0 0 100 0 0 0 0 0 0 0 0 0 1006200-0000 Repair & Maint Interior 825 1,455 150 0 0 0 0 0 220 0 145 0 2,7956221-0000 Appliances-Supplies 77 316 73 428 750 -328 64 220 16 428 -284 444 2,2046222-0000 Appliances-New 0 0 0 0 715 458 0 0 0 -1,173 45 0 456236-0000 Carpentry 175 270 457 24 0 0 135 0 205 0 0 0 1,2676240-0000 Locks & Keys 0 0 0 0 0 36 0 0 0 0 0 0 366250-0000 Equip Repair/Rental 0 0 0 0 0 715 0 0 253 0 0 0 9686251-0000 Vehicle Maintance 50 1,562 1,165 63 63 35 0 0 52 0 1,198 113 4,2996260-0000 Glass & Screen 811 455 440 0 878 715 0 355 500 0 440 -428 4,1666265-0000 Hardware & Supplies 1,094 153 333 642 980 921 1,059 1,453 218 1,611 715 1,891 11,0716275-0000 Misc Maintenance 1,015 252 705 354 136 455 300 0 365 1,846 0 2,820 8,2496280-0000 Pressure Washing 275 525 0 18 0 0 0 0 75 850 550 775 3,0686286-0000 Painting Interior 2,985 13,918 4,800 6,949 7,200 13,933 17,605 11,277 7,392 16,796 15,657 6,821 125,3336290-0000 Pest Control 49 400 735 1,825 400 0 1,200 153 1,850 400 400 -400 7,0126291-0000 Exterminatting Supplies 0 0 0 0 0 400 0 0 0 85 0 0 4856295-0000 Plumbing-Contracted 870 790 115 0 1,055 1,170 1,340 325 3,935 1,840 1,115 1,930 14,4856296-0000 Plumbing-Supplies 257 300 561 1,995 1,686 1,293 -767 1,839 0 1,833 -1,073 169 8,0936305-0000 Tools & Equipment 0 0 142 315 487 -496 98 447 0 0 0 -448 5456320-0000 Uniforms 0 0 0 0 0 0 0 0 0 0 39 0 396321-0000 Uniform Purchases 0 73 235 0 0 0 0 0 0 104 0 0 4126330-0000 Vertical Transportation 0 0 0 0 0 1,261 -1,261 0 0 0 0 0 06340-0000 Roofing 4,250 3,000 400 0 4,050 0 4,725 0 0 286 225 1,050 17,9866421-0000 Fire Exits & Alarms 4,259 4,334 0 0 4,304 4,259 4,259 4,259 4,259 4,274 4,309 4,421 42,9386425-0000 Security Service-Contract 300 315 120 75 0 195 0 110 110 243 158 29 1,653
Total Repairs & Maintenance 40,172 54,701 33,027 35,328 31,555 43,104 46,262 40,824 42,819 62,905 47,118 47,596 525,411
© 2008 CB Richard Ellis, Inc.
Report Id: CPT_12MTHACF 12 MONTHS ENDING AUGUST 2008 Page: 11Database: CLP_PROD MGMT Report for Exec Detail Date: 9/5/2008ENTITY: 095647 Meadows Time: 03:33 PMAccrual User: LMILAM
Sep 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul 2008 Aug 2008 Total
5006-0000 Management Fees 8,019 8,311 7,941 8,301 8,074 8,382 8,465 8,590 8,582 8,628 8,260 8,514 100,065
Total Commissions & Fees 8,019 8,311 7,941 8,301 8,074 8,382 8,465 8,590 8,582 8,628 8,260 8,514 100,065
Total Expenses 140,092 155,358 142,166 136,457 133,154 146,952 148,800 146,567 144,891 153,896 146,419 144,989 1,739,740
Net Operating Income 131,854 120,470 130,172 136,644 150,174 137,192 142,737 145,212 147,926 136,591 136,548 142,176 1,657,697
Other Income (Expenses)
7000-0000 Deprec Exp-Estimates 0 0 0 0 0 0 0 0 0 -333,132 -55,522 -55,522 -444,1767005-0000 Deprec-Buildings -55,522 -55,522 -55,522 -55,522 0 0 0 0 0 0 0 0 -222,088
Total Depreciation -55,522 -55,522 -55,522 -55,522 0 0 0 0 0 -333,132 -55,522 -55,522 -666,264
7055-0000 Amtz-Debt Costs -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -56,429
Total Amortization -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -4,702 -56,429
Total Asset Mgmt Fee 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Impairment Charge 0 0 0 0 0 0 0 0 0 0 0 0 0
7110-0002 Interest-Notes 0 0 0 0 -57,350 0 0 0 0 0 0 0 -57,3507110-0003 Interest-Notes -57,726 -57,632 -57,538 -57,444 0 -57,255 -57,160 -57,064 -56,968 -56,872 -56,775 -56,678 -629,110
Total Interest Expense -57,726 -57,632 -57,538 -57,444 -57,350 -57,255 -57,160 -57,064 -56,968 -56,872 -56,775 -56,678 -686,460
7120-0000 Interest Income 0 0 0 0 709 0 378 32 31 318 216 233 1,9187120-0001 Interest Income 269 376 14 493 0 0 0 0 0 0 0 0 1,151
Total Interest Income 269 376 14 493 709 0 378 32 31 318 216 233 3,069
Total Sale of For Sale Projects 0 0 0 0 0 0 0 0 0 0 0 0 0
© 2008 CB Richard Ellis, Inc.
Report Id: CPT_12MTHACF 12 MONTHS ENDING AUGUST 2008 Page: 12Database: CLP_PROD MGMT Report for Exec Detail Date: 9/5/2008ENTITY: 095647 Meadows Time: 03:33 PMAccrual User: LMILAM
Sep 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul 2008 Aug 2008 Total
Total Other Income (Expense) -117,681 -117,481 -117,749 -117,175 -61,343 -61,957 -61,484 -61,734 -61,639 -394,388 -116,783 -116,670 -1,406,084
Net Income 14,173 2,990 12,423 19,469 88,830 75,235 81,254 83,478 86,287 -257,797 19,765 25,507 251,614
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM F
ADDENDUM F
PURCHASE AND SALE AGREEMENT
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
© 2008 CB Richard Ellis, Inc.
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THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM G
ADDENDUM G
FREDDIE MAC FORM 439
© 2008 CB Richard Ellis, Inc.
CB RICHARD ELLIS, INC.
DEFINITION OF MARKET VALUE: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market: (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale. * Adjustments to the comparables must be made for special or creative financing or sales concessions. No
adjustments are necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing adjustments car be made to the comparable property by comparisons to financing terms offered by a third party institutional lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession, but the dollar amount of any adjustment should approximate the market's reaction to the financing or concessions based on the appraiser's judgment.
STATEMENT OF LIMITING CONDITIONS AND APPRAISER'S CERTIFICATION
CONTINGENT AND LIMITING CONDITIONS: The appraiser's certification that appears in the appraisal report is subject to the following conditions: 1. The appraiser will not be responsible for matters of a legal nature that affect either the property being
appraised or the title to it. The appraiser assumes that the title is good and marketable and, therefore, will not render any opinions about the title. The property is appraised on the basis of it being under responsible ownership.
2. The appraiser has provided a sketch in the appraisal report to show approximate dimensions of the improvements, and the sketch is included only to assist the reader of the report in visualizing the property and understanding the appraiser's determination of its size.
3. The appraiser has examined the available flood maps that are provided by the Federal Emergency Management Agency (or other data sources) and has noted in the appraisal report whether the subject site is located in an identified Special Flood Hazard Area. Because the appraiser is not a surveyor, he or she makes no guarantees, express or implied, regarding this determination.
4. The appraiser will not give testimony or appear in court because he or she made an appraisal of the property in question, unless specific arrangements to do so have been made beforehand.
5. The appraiser has estimated the value of the land in the cost approach at its highest and best use and the improvements at their contributory value. These separate valuations of the land and improvements must not be used in conjunction with any other appraisal and are invalid if they are so used.
6. The appraiser has noted in the appraisal report any adverse conditions (such as, needed repairs, depreciation, the presence of hazardous wastes, toxic substances, etc.) observed during the inspection of the subject property or that he or she became aware of during the normal research involved in performing the appraisal. Unless otherwise stated in the appraisal report, the appraiser has no knowledge of any hidden or unapparent conditions of the property or adverse environmental conditions (including the presence of hazardous wastes, toxic substances, etc.) that would make the property more or less valuable, and has assumed that there are no such conditions and makes no guarantees or warranties, express or implied, regarding the condition of the property. The appraiser will not be responsible for any such conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because the appraiser is not an expert in the field of environmental hazards, the appraisal report must not be considered as an environmental assessment of the property.
© 2008 CB Richard Ellis, Inc.
7. The appraiser obtained the information, estimates, and opinions that were expressed in the appraisal report from sources that he or she considers to be reliable and believes them to be true and correct. The appraiser does not assume responsibility for the accuracy of such items that were furnished by other parties.
8. The appraiser will not disclose the contents of the appraisal report except as provided for in the Uniform Standards of Professional Appraisal Practice.
9. The appraiser has based his or her appraisal report and valuation conclusion for an appraisal that is subject to satisfactory completion, repairs, or alternations on the assumption that completion of the improvements will be performed in a workmanlike manner.
10. The appraiser must provide his or her prior written consent before the lender/client specified in the appraisal report can distribute the appraisal report (including conclusions about the property value, the appraiser's identity and professional designations, and references to any professional appraisal organizations or the firm with which the appraiser is associated) to anyone other than the borrower: the mortgages or its successors and assigns' the mortgage insurer; consultants; professional appraisal organizations; any state or federally approved financial institution; or any department, agency, or instrumentality of the United States or any state or the District of Columbia; except that the lender/client may distribute the property description section of the report only to data collection or reporting services(s) without having to obtain the appraiser's prior written consent. The appraiser's written consent and approval must also be obtained before the appraisal can be conveyed by anyone to the public through advertising, public relations, news, sales, or other media.
CB RICHARD ELLIS, INC.
APPRAISER'S CERTIFICATION: The Appraiser certifies and agrees that:
11. I have researched the subject market area and have selected a minimum of three recent sales of properties most similar and proximate to the subject property for consideration in the sales comparison analysis and have made a dollar adjustment when appropriate to reflect the market reaction to those items of significant variation. If a significant item in a comparable property is superior to, or more favorable than, the subject property, I have made a negative adjustment to reduce the adjusted sales price of the comparable, and if a significant item in a comparable property is inferior to, or less favorable than the subject property, I have made a positive adjustment to increase the adjusted sales price of the comparable.
12. I have taken into consideration the factors that have an impact on value in my development of the estimate of market value in the appraisal report. I have not knowingly withheld any significant information from the appraisal report, and I believe, to the best of my knowledge, that all statements and information in the appraisal report are true and correct.
13. I stated in the appraisal report only my own personal, unbiased, and professional analysis, opinions, and conclusions, which are subject only to the contingent and limiting conditions specified in this form.
14. I have no present or prospective interest in the property that is the subject to this report, and I have no present or prospective personal interest or bias with respect to the participants in the transaction. I did not base, either partially or completely, my analysis and/or the estimate of market value in the appraisal report on the race, color, religion, sec, handicap, family status, or national origin of either the prospective owners or occupants of the subject property or the present owners or occupants of the properties in the vicinity of the subject property.
15. I have no present or contemplated future interest in the subject property, and neither my current or future employment nor my compensation for performing this appraisal is contingent on the appraised value of the property.
16. I was not required to report a predetermined value or direction in value that favors the cause of the client or any related party, the amount of the value estimate, the attainment of a specific results, or the occurrence of a subsequent event in order to receive my compensation and/or employment for performing the appraisal. I did not base the appraisal report on a requested minimum valuation, a specific valuation, or the need to approve a specific mortgage loan.
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17. I performed this appraisal in conformity with the Uniform Standards of Professional Appraisal Practice that were adopted and promulgated by the Appraisal Standards Board of The Appraisal Foundation and that were in place as of the effective date of this appraisal, with the exception of the departure provision of those Standards, which does not apply. I acknowledge that an estimate of a reasonable time for exposure in the open market is a condition in the definition of market value and the estimate I developed is consistent with the marketing time notes in the neighborhood section of this report, unless I have otherwise stated in the reconciliation section.
18. I have personally inspected the interior and exterior areas of the subject property and the exterior of all properties listed as comparables in the appraisal report. I further certify that I have notes any apparent or known adverse conditions in the subject improvements, on the subject site, or on any site within the immediate vicinity of the subject property of which I am aware and have made adjustments for these adverse conditions in my analysis of the property value to the extent that I had market evidence to support them. I have also commented about the effect of the adverse conditions on the marketability of the subject property.
19. I personally prepared all conclusions and opinions about the real estate that were set forth in the appraisal report. If I relied on significant professional assistance from any individual or individuals in the performance of the appraisal or the preparation of the appraisal report, I have named such individual(s) and disclosed the specific tasks performed by them in the reconciliation section of this appraisal report. I certify that any individual so named is qualified to perform the tasks. I have not authorized anyone to make a change to any item in the report; therefore, if an unauthorized change is made to the appraisal report, I will take no responsibility for it.
SUPERVISORY APPRAISER'S CERTIFICATION: If a supervisory appraiser signed the appraiser report, he or she certifies and agrees that: I directly supervise the appraiser who prepared the appraisal report, have reviewed the appraisal report, agree with the statements and conclusions of the appraiser, agree to be bound by the Appraiser's Certifications numbered 4 through 7 above, and am taking full responsibility for the appraisal and the appraisal report. ADDRESS OF PROPERTY APPRAISED: The Meadows at Brook Highland Apartments, One Meadow Drive, Birmingham, Jefferson County, Alabama APPRAISER: SUPERVISORY APPRAISER (only if required):
Name:
Mark A. Thibodeau
Name:
Date Signed: 10/3/2008 Date Signed:
State Certification No.: G00668 State Certification No.:
or State License No.: Same or State License No.: Same
State: Alabama State:
Expiration Date of Certification or License: 8/09 Expiration Date of Certification or License:
DID Did not inspect the Property
© 2008 CB Richard Ellis, Inc.
THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM G
ADDENDUM H
LETTER OF ENGAGEMENT
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THE MEADOWS AT BROOK HIGHLAND APARTMENTS ADDENDUM H
ADDENDUM H
QUALIFICATIONS
© 2008 CB Richard Ellis, Inc.
QUALIFICATIONS OF
Max Donald Poore, MAI Managing Director
CB Richard Ellis, Inc. – Appraisal Services
3280 Peachtree Road, Suite 1400 Atlanta, Georgia 30339
(404) 812-5008 [email protected]
EDUCATIONAL B.A. Wake Forest University, Winston Salem, North Carolina M.S. in Real Estate, Georgia State University, Atlanta, Georgia
CERTIFICATION Certified Real Estate Appraiser: State of Georgia - Certificate Number CG001683 Certified Real Estate Appraiser: State of Florida - Certificate Number RZ0001466 Certified Real Estate Appraiser: State of Tennessee - Certificate Number 00001348 Certified Real Estate Appraiser: State of South Carolina - Certificate Number 4993 Certified Real Estate Appraiser: State of North Carolina - Certificate Number A1084 Certified Real Estate Appraiser: State of Kentucky - Certificate Number 003429 Real Estate Broker State of North Carolina – 59070 Real Estate Broker State of Georgia – 250193
PROFESSIONAL
Appraisal Institute Designated Member - Appraisal Institute (MAI), Certificate No. 7969
EMPLOYMENT EXPERIENCE 1984-1989 Shiplett - Wilkins & Associates
Appraiser Charlotte, North Carolina
1989-1999 Arthur Andersen, LLP. Senior Real Estate Manager
Atlanta, Georgia
1999-2004 Andrews Street Realty Real Estate Consultant
Atlanta, Georgia
2004-Present CB Richard Ellis, Inc. Managing Director
Atlanta, Georgia
© 2008 CB Richard Ellis, Inc.
QUALIFICATIONS OF
MARK A. THIBODEAU Senior Appraiser – Multifamily Specialist
CB Richard Ellis, Inc. – Valuation and Advisory Services
3280 Peachtree Road, Suite 1400 Atlanta, Georgia 30305
(404) 812-5002 (404) 812-5051 FAX
Email: [email protected]
EDUCATIONAL B.A. in Business Administration and Economics, Piedmont College Appraisal Institute
Courses: 110, 120, 310, 410, 420, and 530
LICENSE(S)/CERTIFICATION(S) Georgia Real Estate Appraisers Board - Certified General Real Property Appraiser - 216122
Alabama Real Estate Appraisers Board - Certified General Real Property Appraiser – G00668
South Carolina Real Estate Appraisers Board - Certified General Real Property Appraiser – CG6048
Tennessee Real Estate Appraisers Board - Certified General Real Property Appraiser – 00003419
EMPLOYMENT EXPERIENCE 1993-1996 Cushman & Wakefield
Market Research Analyst Atlanta, Georgia
1996–Present CB Richard Ellis, Inc. Senior Appraiser
Atlanta, Georgia
PROFESSIONAL General Associate Member, Appraisal Institute
© 2008 CB Richard Ellis, Inc.