Appraisal
Content
APPRAISAL REPORT
OFFICE CONDOMINIUM UNITS
LOCATED AT:
UNITS 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111, 113,
114, 116, 117, 202, 203, 304, 320, 370, 380 & 390
THE LAKES FRONTAGE CENTER CONDOMINIUM
14100 PALMETTO FRONTAGE ROAD
MIAMI LAKES, FLORIDA 33016
PREPARED FOR:
EASTERN NATIONAL BANK
799 BRICKELL PLAZA, 10TH FLOOR
MIAMI, FLORIDA 33131
AS OF:
AUGUST 22, 2011
PREPARED BY:
QUINLIVAN APPRAISAL, P.A.
7300 NORTH KENDALL DRIVE - SUITE 530
MIAMI, FLORIDA 33156
QUINLIVAN APPRAISAL
A PROFESSIONAL ASSOCIATION
7300 NORTH KENDALL DRIVE, SUITE 530
MIAMI, FLORIDA 33156
J. Mark Quinlivan, MAI
State Certified General Appraiser
RZ 000112
Telephone (305) 663-6611
Fax (305) 670-4330
[email protected]
Thomas F. Magenheimer, MAI
State Certified General Appraiser
RZ 000553
August 24, 2011
Marianella Lozada-Duque
Eastern National Bank
799 Brickell Plaza, 10th Floor
Miami, Florida 33131
Dear Ms. Lozada-Duque:
In accordance with your request and authorization, I have prepared this Appraisal Report
covering the following described property:
Units 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111, 113,
114, 116, 117, 202, 203, 304, 320, 370, 380 & 390 of The Lakes
Frontage Center Condominium located at 14100 Palmetto Frontage
Road, Miami Lakes, Florida
The purpose of this Appraisal is to estimate the “As Is” Market Value of the subject units as of
the market conditions existing on August 22, 2011, being one of the dates of personal inspection.
The Appraisal Report that follows sets forth the identification of the property, the assumptions
and limiting conditions, pertinent facts about the area and the subject property, comparable data,
the results of the investigations and analyses, and the reasoning leading to the conclusions set
forth.
This report was prepared in accordance with the requirements of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (FIRREA) relating to appraisal standards as
enumerated in Title 12, Code of Federal Regulation, Part 34 (12CFR34) and in compliance with
the most current Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by
the Appraisal Standards Board of the Appraisal Foundation.
Marianella Lozada-Duque
August 24, 2011
Page 2
Based on the inspection of the property and the investigation and analyses undertaken, I have
formed the opinion that the subject units had an “As Is” Market Value based upon the market
conditions prevalent on August 22, 2011, as follows:
TWO MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS
($2,650,000)
Respectfully submitted,
J. Mark Quinlivan, MAI
State-Certified General Appraiser
Certification Number: RZ0000112
Brian M. Quinlivan
Registered Trainee Appraiser
License Number: RI19051
JMQ/rp
(11-063U)
TABLE OF CONTENTS
PAGE
COVER PAGE
TRANSMITTAL LETTER
TABLE OF CONTENTS
CERTIFICATION OF VALUE .................................................................................................... 1
SUMMARY OF SALIENT FACTS AND CONCLUSIONS.................................................. 3
INTRODUCTION........................................................................................................................ 21
INTRODUCTION ................................................................................................................... 22
IDENTIFICATION OF THE PROPERTY........................................................................... 22
LOCATION ............................................................................................................................. 22
PURPOSE AND DATE OF APPRAISAL ............................................................................. 22
INTENDED USE AND INTENDED USER OF APPRAISAL............................................. 22
LEGAL DESCRIPTION......................................................................................................... 22
PROPERTY RIGHTS APPRAISED ..................................................................................... 22
DEFINITION OF MARKET VALUE ................................................................................... 23
ASSESSMENT AND TAXES – 2010...................................................................................... 24
OWNER OF RECORD AND ADDRESS .............................................................................. 25
FIVE-YEAR HISTORY OF TITLE ...................................................................................... 25
SCOPE OF THE APPRAISAL ................................................................................................... 26
LOCATION ANALYSIS .............................................................................................................. 29
COUNTY DATA...................................................................................................................... 30
NEIGHBORHOOD DATA..................................................................................................... 39
SITE DATA .................................................................................................................................. 42
ZONING ....................................................................................................................................... 45
HIGHEST AND BEST USE ....................................................................................................... 48
DESCRIPTION OF IMPROVEMENTS.................................................................................... 52
THE APPRAISAL PROCESS..................................................................................................... 58
INCOME APPROACH................................................................................................................ 61
SALES COMPARISON APPROACH ........................................................................................ 67
RECONCILIATION AND VALUE CONCLUSION ................................................................. 85
ADDENDA ................................................................................................................................... 88
ASSUMPTIONS AND LIMITING CONDITIONS
QUALIFICATIONS
CLIENT LIST
ENGAGEMENT LETTER
RENT ROLL / EXPENSES
CERTIFICATION OF VALUE
The undersigned hereby certifies that, to the best of my knowledge and belief:
(A)
The statements of fact contained in the report are true and correct.
(B)
The reported analyses, opinions and conclusions are limited only by the
assumptions and limiting conditions set forth, and are our personal,
unbiased professional analyses, opinions and conclusions.
(C)
I have no present or prospective interest in the property that is the subject
of this report, and we have no personal interest or bias with respect to the
parties involved.
(D)
I have no bias with respect to the property that is the subject of this report
or to the parties involved with this assignment.
(E)
My engagement in this assignment is not contingent upon developing or
reporting predetermined results.
( F)
The appraiser’s compensation for completing this assignment is not
contingent upon the reporting of a predetermined value or direction in
value that favors the cause of the client, the amount of the value estimate,
the attainment of a stipulated result, or the occurrence of a subsequent
event directly related to the intended use of this appraisal. Furthermore,
the appraisal assignment is not based on a requested minimum valuation,
a specific valuation or the approval of a loan.
(G)
The appraiser’s analyses, opinions and conclusions are developed, and
this report is prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice, and the requirements of the State of
Florida for state-certified appraisers.
(H)
Use of this report is subject to the requirements of the State of Florida
relating to review by the Real Estate Appraisal Subcommittee of the
Florida Real Estate Commission.
(I)
Brian Quinlivan has made a personal inspection of the property that is the
subject of this report.
(J)
No one provided professional assistance to the persons signing this
report.
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(K)
The reported analyses, opinions, and conclusions are developed, and this
report is prepared, in conformity with the requirements of the Code of
Professional Ethics and the Standards of Professional Appraisal Practice
of the Appraisal Institute.
(L)
The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
(M)
The appraiser has not performed any services on the subject property
within the past three years.
As of the date of this report, J. Mark Quinlivan has completed the requirements under the
continuing education program for The Appraisal Institute.
Based on the inspection of the property and the investigation and analyses undertaken, subject to
the assumptions and limiting conditions set forth in the Addendum of this report, I have formed
the opinion, as of August 22, 2011 the subject units had an “As Is” Market Value of:
TWO MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS
($2,650,000)
J. MARK QUINLIVAN, MAI
STATE CERTIFIED GENERAL APPRAISER
CERTIFICATION NUMBER: RZ0000112
BRIAN M. QUINLIVAN
REGISTERED TRAINEE APPRAISER
LICENSE NUMBER: RI 19051
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SUMMARY OF SALIENT FACTS AND CONCLUSIONS
Type Report
Self-contained
Purpose of Appraisal
“As Is” Market Value
Property Rights Appraised
Fee Simple
Location
14100 Palmetto Frontage Road
Miami Lakes, Florida
Legal Description
Units 100, 101, 103, 104, 105, 106, 107, 108, 109,
110, 111, 113, 114, 116, 117, 202, 203, 304, 320,
370, 380 & 390 and a combined 64.528% interest in
the common elements, The Lakes Frontage Center
Condominium, OR Book 24401, Page 4031, Public
Records of Miami-Dade County, Florida.
Age
1983
Zoning
IU-C, Industrial Conditional
Highest and Best Use
Existing office condominium use
Indications of Value:
Cost Approach
Not Applicable
Income Approach
$2,210,000
Sales Comparison Approach (Gross Value) $3,320,000
“As Is” Market Value
$2,650,000
Date of Value Estimate
August 22, 2011
Date of Inspection
August 22, 2011
Date of Report
August 24, 2011
Remarks
The subject units are located in a 30-unit office
condominium building known as The Lakes
Frontage Center Condominium.
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14100 PALMETTO FRONTAGE ROAD
LOOKING NORTHEASTERLY ON PALMETTO FRONTAGE ROAD- SUBJECT BUILDING TO LEFT
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SUBJECT BUILDING
LOOKING NORTHWESTERLY ALONG NW 80 AVENUE- SUBJECT BUILDING TO RIGHT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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UNFINISHED UNIT
UNFINISHED UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTRODUCTION
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INTRODUCTION
IDENTIFICATION OF THE PROPERTY
Twenty-two office condominium units located within the Lakes Frontage Center Condominium.
LOCATION
14100 Palmetto Frontage Road
Miami Lakes, Florida.
PURPOSE AND DATE OF APPRAISAL
The purpose of this Appraisal is to estimate the “As Is” Market Value of the subject units as of
the market conditions existing on August 22, 2011, being one of the dates of personal inspection.
INTENDED USE AND INTENDED USER OF APPRAISAL
The intended use of this appraisal is to assist the client in loan underwriting and/or credit
decisions. The intended user is Eastern National Bank.
LEGAL DESCRIPTION
Units 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111, 113, 114, 116, 117, 202, 203, 304,
320, 370, 380 & 390 and a combined 64.528% interest in the common elements, The Lakes
Frontage Center Condominium, OR Book 24401, Page 4031, Public Records of Miami-Dade
County, Florida.
PROPERTY RIGHTS APPRAISED
The property is appraised in fee simple: a fee without limitations to any particular class of heirs
or restrictions, but subject to the limitations of eminent domain, escheat, police power and
taxation, as well as utility easements of record.
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DEFINITION OF MARKET VALUE
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)
buyer and seller are typically motivated;
(2)
both parties are well informed or well advised and acting in what
they consider their own best interest;
(3)
a reasonable time is allowed for exposure to 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 a normal consideration for the property sold
unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.
(Source: USPAP 2010-2011 Edition)
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ASSESSMENT AND TAXES – 2010
The subject property is assessed under the jurisdiction of the Town of Miami Lakes, Florida.
The assessment for the property is established each year as of January 1st by the Miami-Dade
County Property Appraiser's Office at 100% of "Just Value." Just Value has been equated to
Market Value less closing costs. While the State of Florida requires real estate to be assessed at
100% of Just Value, in reality the ratio of the assessed value to sales price is generally below
100%.
Folio No.
32-2015-045-0010
32-2015-045-0020
32-2015-045-0040
32-2015-045-0050
32-2015-045-0060
32-2015-045-0070
32-2015-045-0080
32-2015-045-0090
32-2015-045-0100
32-2015-045-0110
32-2015-045-0120
32-2015-045-0140
32-2015-045-0150
32-2015-045-0160
32-2015-045-0170
32-2015-045-0200
32-2015-045-0210
32-2015-045-0250
32-2015-045-0270
32-2015-045-0280
32-2015-045-0290
32-2015-045-0300
Unit
100
101
103
104
105
106
107
108
109
110
111
113
114
116
117
202
203
304
320
370
380
390
Assessed Value
$203,070
$168,270
$77,380
$36,010
$164,120
$169,480
$266,250
$133,300
$151,650
$205,490
$122,910
$59,900
$65,780
$34,100
$60,250
$63,360
$175,360
$293,260
$204,100
$309,190
$249,120
$282,700
$3,495,050
Millage Rate
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
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Tax Amount
$4,168.93
$3,454.50
$1,588.57
$739.27
$3,369.30
$3,479.34
$5,465.98
$2,736.58
$3,113.30
$4,218.61
$2,523.28
$1,229.72
$1,350.43
$700.06
$1,236.90
$1,300.75
$3,600.05
$6,020.48
$4,190.07
$6,347.52
$5,114.31
$5,803.69
$71,751.63
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OWNER OF RECORD AND ADDRESS
Palmetto Road Frontage, LLC
14100 Palmetto Frontage Road, #101
Miami Lakes, FL 33016-1557
FIVE-YEAR HISTORY OF TITLE
According to the Public Records of Miami-Dade County, there have been no sale transactions of
the subject units within the past three years.
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SCOPE OF THE APPRAISAL
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SCOPE OF THE APPRAISAL
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.
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.
Data related to the subject property was derived from various sources including but not limited to
the Miami-Dade County Property Appraiser’s Office, Miami-Dade County plats as compiled by
First American Real Estate Solutions, Inc., FEMA flood zone maps, Land Development
Regulations of the Town of Miami Lakes, condominium documents and tax roll information
provided by ISCNET.
Comparable sale sources include First American Real Estate Solutions, Inc., an on-line computer
service provided by First American Real Estate Solutions (ISC Division), Board of Realtors’
Multiple Listing Services, Miami-Dade County Property Appraiser’s Office and LoopNet. Sales
prices are typically confirmed with a party to the transaction, i.e., buyer, seller, real estate agent
or attorney to the transaction.
A search for office condominium units within the subject market area was conducted. The initial
sales period researched was from January of 2009 through the date of valuation. The sales all
have similar improvements and highest and best uses as the subject property. Several other sales
were considered, but were not included because there was too wide a difference in physical
factors, location and time.
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ESTIMATED MARKETING PERIOD
The estimated value of the subject is predicated upon a normal marketing period. A normal
marketing period is generally defined as the most probable amount of time necessary to expose
and actively market a property on the open market to achieve a sale. Implicit in this definition
are the following assumptions:
(A) The property will be actively exposed and aggressively marketed to potential
purchasers through marketing channels commonly used by sellers and buyers
of similar type properties.
(B)
The property will be offered at a price reflecting the most probable markup
over market value used by sellers of similar type properties.
(C)
A sale will be consummated under the terms and conditions of the definition
of Market Value required by the regulation.
In order to estimate the marketability of this property, sales activity in this market area is
reviewed over the past three years, multiple listings are reviewed and real estate brokers
operating in the area are interviewed.
Based on the above sources, the marketing period for the subject property is estimated to be less
than twelve months.
ESTIMATED EXPOSURE TIME
Exposure time is defined as the estimated length of time the property interest being appraised
would have 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.
The overall concept of reasonable exposure encompasses not only adequate, sufficient and
reasonable time but also adequate, sufficient and reasonable effort.
In estimating a reasonable exposure time for the subject property, the appraisers have taken the
following steps:
Discussion with buyers, sellers, brokers and/or review of multiple listings of commercial
condominium units in the area related to historic marketing periods.
Based on the above sources, exposure time is estimated to have been twelve months for the
subject property.
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LOCATION ANALYSIS
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COUNTY DATA
Miami-Dade County - Location and Size
Miami-Dade County, which comprises the metropolitan area of Miami, is situated on the
southeast tip of the state of Florida. It is bordered on the east by the Atlantic Ocean, on the west
by Monroe and Collier Counties, on the north by Broward County, and on the south by Monroe
County (the Florida Keys).
Miami-Dade County, the largest county in area and population in the state of Florida, covers an
area of 2,054 square miles with an altitude ranging from sea level to 25 feet. Water covers 354
square miles of the County.
Although the County is relatively large, approximately half of the total area is comprised of the
Everglades, which is a natural area that will not be developed. Therefore, only the eastern section
of Miami-Dade County encompasses the area which is currently developed or available for
future development.
Miami-Dade County's location, its southern latitude and proximity to the Gulf Stream provide
for mild winters and pleasant summers.
Population
The state of Florida has increased rapidly in population from 9,740,000 in 1980 to 12,937,926 in
1990 and 15,982,378 in 2000. The 2009 population of Florida was estimated at 18,537,969.
Florida is expected to add an average of only about 209,000 residents a year between 2007 and
2010, compared with annual increases of about 418,000 people between 2002 and 2006.
Miami-Dade County's population increased from 1,626,000 in 1980 to 1,937,094 in 1990,
reflecting an average annual compounded growth rate of 1.77%, compared with 2.88% for the
state of Florida. By 2000, Miami-Dade County's population increased to approximately
2,253,362 and in 2008 it is estimated at 2,398,245. The population is estimated to grow to
2,560,000 by the Year 2010.
Miami-Dade County's population growth during the last four decades has been dramatic
especially in relation to national trends. From 1950 to 1990 the United States population
increased by 60% while the population of Miami-Dade County has almost quadrupled from
495,084 to 1,937,000. During this period, the state of Florida was elevated from the 20th most
populous state to the 4th in 1990 and continues to be the fourth most populous state.
During the 1960s, the major increase in Miami-Dade County's population was due to the large
immigration of Cubans. Today, Cuban and other Spanish speaking people comprise
approximately 62% of Miami-Dade County's population. The increase in Hispanic population
has had favorable effects on the local economy and has helped to create a multi-national cultural
environment in the area.
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The overall population of Miami-Dade County is well dispersed throughout the entire area, yet
has several key areas of concentration. During the 1960s, several sub-areas accounted for
approximately 70% of the growth. These areas include Hialeah, northern Miami-Dade County,
the Beach area, the Miami River area, the area southwest of Miami International Airport, as well
as the Kendall and Cutler Ridge areas. In the first half of the 1970s, population growth continued
in an uneven fashion especially in the urban fringes.
Since 1970, approximately three-fourths of the total population growth for the County has
occurred in the unincorporated areas. The older centrally located cities such as Miami, Miami
Beach and Coral Gables have grown at modest rates from 1970 to 1990. Unincorporated MiamiDade County has evidenced the most rapid growth which continues to occur in areas in northeast
Miami-Dade County (Aventura), as well as the currently expanding southwest area, especially in
sections of Flagler Street, S.W. 8th Street, North Kendall Drive and Homestead.
Population trends indicate that most of the population growth in Miami-Dade County between
2010 and 2015 will occur in outlying areas such as North Miami Beach, the Kendall area west of
the Florida Turnpike, the S.W. 8th Street area west of the Florida Turnpike, the Hialeah-Miami
Lakes area, as well as those areas both east and west of U.S. Highway 1 between Cutler Ridge
and Florida City.
Employment Trends
The dominant characteristic of Miami-Dade County is that it is primarily trade and service based.
Personal, business and repair services have had a substantial increase in importance in the
economic base over the last decade. The major sectors of the economy include services,
wholesale and retail trade, transportation, communications, public utilities, government and
manufacturing. The most dominant industries which form the County's economic base are
construction and tourism.
Tourism is Miami-Dade County's biggest industry with an estimated 12.1 million visitors in
2008 contributing to more than 50 percent of the area's economy. Aviation and related industries
are responsible for another large segment of the economy.
The largest employer in Miami-Dade County is the Miami-Dade County School Board, followed
by Miami-Dade County, Federal Government, State of Florida, Jackson Health System,
American Airlines, University of Miami, Baptist Health Systems of South Florida, AT&T, and
Florida Power and Light. Assuming additional importance is the growing prominence of MiamiDade County as a center for international trade, finance and tourism. The establishment of
Miami as the "Gateway of the Americas" should provide the area with a much needed degree of
economic diversification. This should enable Miami-Dade County to weather slowdowns in the
national economy by an increase of trade through the Port of Miami, growth of international
arrivals at the airport, the Free Trade Zone, and the substantial foreign investment in the local
economy, particularly in real estate.
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In December of 2009, Florida’s unemployment rate was 11.8 percent, up from 3.6 percent in
2006. The unemployment rate for Miami-Dade County was 11.3 percent, up from 3.8 percent in
2007.
TABLE 1
ESTIMATES OF MIAMI-DADE COUNTY TOURIST TRENDS
INTERNATIONAL
DOMESTIC
TOTAL
2005
5,248,380
6,053,220
11,301,600
2006
5,322,200
6,262,800
11,585,000
2007
5,492,900
6,473,000
11,965,900
2008
6,169,043
6,662,546
12,831,589
2009
5,684,400
6,251,564
11,935,964
2010
6,060,100
6,544,000
12,604,100
Source: Greater Miami Convention and Visitors Bureau, Tourism Facts and Figures
Figures for 2010 indicate 12,604,100 overnight visitors came to Miami-Dade County, a 5.6%
increase from 2009.
Table 2 shows that the bulk of international visitors to Miami-Dade County originate from
Central and South American Countries (52.2%), followed by European Countries (23.5%) and
Canada (9.9%). England and Germany accounted for the largest proportion of European visitors.
In 2010 there were a total of 4,334,004 passengers passing through the Port of Miami and
approximately 17,985,000 arriving through Miami International Airport. During 2010, the
number of Port of Miami passengers increased 9.3% from 2009 and 2.7% from 2008. During
2010 the passengers arriving at the airport increased 5.7% from 2009 and 5.5% from 2008. The
arrivals at the airport are fairly evenly distributed between international and domestic passengers.
In 2010, domestic passengers totaled 9,432,074 and international passengers totaled 8,552,895.
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TABLE 2
ESTIMATES OF INTERNATIONAL VISITORS BY REGION
REGION
2006
2007
2008
2009
EUROPEAN COUNTRIES
23.0%
23.6%
23.5%
22.5%
CARIBBEAN COUNTRIES
12.5%
12.4%
12.1%
12.0%
9.4%
9.3%
9.3%
9.1%
42.8%
42.3%
42.9%
44.9%
9.9%
10.1%
9.9%
9.5%
OTHER COUNTRIES
2.4%
2.3%
2.3%
2.0
TOTAL
100%
100%
100%
100%
CENTRAL AMERICAN
COUNTRIES
SOUTH AMERICAN
COUNTRIES
CANADA
Source: Greater Miami Convention and Visitors Bureau, Tourism Facts and Figures
There are approximately 50,000 motel and hotel rooms in 470 lodging facilities in Greater
Miami and the Beaches. The area had an occupancy rate of 74.5 percent as of January 2011,
down 0.8% from January 2010. The difference between the 2010 and 2011 hotel occupancy
figures may be skewed by the presence of the Super Bowl in South Florida in 2010. The airport
area had the highest occupancy rate as of January 2011 at around 85%.
Average room rate for hotel rooms in Miami-Dade County was $171.51 in January of 2011, up
from $164.88 in January of 2010. The average room rate for the same period in 2008 was
$146.54. Therefore, the average hotel room rates in 2011 indicate an increase of 4.0% over the
2010 rate and an increase of 17.0% over the 2008 rate.
The first in a series of new luxury properties opened in February 2004 when the 380-room Ritz
Carlton opened in Miami Beach. In May of 2005, the 210-room Le Meridian opened in Sunny
Isles Beach. Three other new hotels with a total of 271 rooms opened in Miami Beach during
2005. In 2009, 11 new hotels with 2,054 rooms were completed with the largest being the Epic
Hotel in downtown Miami.
Miami-Dade Financial Resources
Over the course of the last decade, Greater Miami has evolved into a major international
financial center. Domestic and international businesses find convenient access to a full array of
services provided by locally-based state and national commercial banks, savings and loan
associations, foreign banks, non-depository credit institutions, securities and commodities
brokers and insurance companies.
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33
Greater Miami has the largest concentration of domestic and international banks south of New
York City. With more than 90 percent of the state's foreign banks operating offices in Miami,
this market dominates international banking in Florida.
Overall, about 150 domestic banks, foreign banks and Edge Act banks operate in Greater Miami.
The greatest concentration is located along Brickell Avenue in downtown Miami.
Transportation
Miami-Dade County has an extensive expressway system with access to all points in the County.
However, due to the rapidly increasing population, some of the expressways, especially
Interstate 95, are becoming overburdened. In 1985 Miami-Dade County completed a 20.5 mile
elevated rapid transit system. This system originally extended southward from downtown Miami
to Dadeland, paralleling U.S. Highway 1 and northwesterly from downtown Miami to Hialeah.
Recently, the system was extended about a mile from Hialeah to the Palmetto Expressway at NW
74th Street. In conjunction with this system, there is a Downtown People Mover Automated
Transit system which encircles the central business district of Miami and extends south to the
Brickell area and north to the Omni area.
Miami-Dade County is served by the CSX and Florida East Coast Railroads for freight and
Amtrak Rail, Greyhound and Trailways Interstate bus lines for passenger service.
Miami International Airport, one of the nation's largest and busiest, had approximately 35.7
million arrivals and departures in 2010. The airport is currently undergoing a $5.4 billion
expansion. A South Terminal has recently been completed and a North Terminal is under
construction and a fourth runway is planned.
Miami has become a port of embarkation for airlines and ships bound for Central and South
American Countries. The Port of Miami, besides being the largest passenger port in the nation, is
also important as a cargo center with a 2009 annual tonnage of approximately 6.83 million down
from 7.43 million in 2008. The port’s traditional customer base has been Europe, China, Latin
America and the Caribbean, accounting for 65% of the port’s total volume.
Miami's comprehensive transportation system and its strategic location have enabled it to
become an important international transportation center, providing commercial access to Latin
America and the Caribbean.
Government
Miami-Dade County is comprised of unincorporated areas, as well as 36 municipalities, the
largest of which is the city of Miami.
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Miami-Dade County is governed under a modified two-tier metropolitan government. The
purpose of this type government was to establish one governing body for the county, and to
establish one supply of services such as fire, police, etc. for the county. The upper tier is the
County, which provides broad "regional" or county functions, such as metropolitan planning,
welfare, health and transit services. The thirty-six municipalities represent the lower tier of
government, providing a varying array of services within their jurisdictional boundaries. The
County also maintains lower tier functions, such as the provision of municipal-type services,
including police and fire, to the unincorporated areas and certain municipalities on a negotiated
basis.
The County operates under the Commission-Manager form of government. Legislative and
policy-making authority is vested in the elected thirteen-member Board of County
Commissioners; the Commission appointed County Manager is the chief administrator. MiamiDade County has operated under the metropolitan form of government since 1957, when the
Home Rule Charter was passed by the local electorate. Prior to Home Rule, the County had to
rely on the State Legislature for the enactment of its laws.
County government had not been able to respond to the tremendous demand for municipal
services in this rapidly urbanizing area, which is larger than the State of Rhode Island or
Delaware. The need to combine services duplicated by the County and numerous cities was also
clearly evident. The Charter permitted the limited County government to reorganize into a
general purpose "municipal-type" government capable of performing the full range of public
functions into an area wide operation.
Real Estate
At the end of 2010, the Miami-Dade County Office Market contained approximately 81 million
square feet of office space. Approximately 28.8% of this space is located in the Miami central
business district and adjacent Brickell Avenue and 20% in the Airport West area. The vacancy
rate of office buildings in Miami-Dade County was flat during 2010 at about 15%, but up from
11.3% in 2007 to 10.8% in 2008. However, during 2010 office inventory grew by about 800,000
square feet, most of which was in the Brickell Avenue market area. The total new offices under
construction totals about 1,213 million square feet. Again, most of the new office construction is
concentrated in the Brickell Avenue market area. Other market areas with new construction of
office space include Coral Gables and Central Miami. Asking rental rates have been declining in
2010 with the average county lease rate falling below $30 per square foot for the first time since
2006.
Office rental rates in new buildings typically range from $26.00 to $40.00 per square foot. The
low end of the range is for office space in the suburban markets. The upper end of the range is
for first class office space in Downtown Miami, Brickell Avenue, Coconut Grove and Coral
Gables.
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35
The Greater Miami Industrial Market, as of the end of 2010, consisted of approximately 178.7
million square feet of industrial space and approximately 16.1 million square feet of flex space.
The approximate percentage location of this space is as follows:
MARKET AREA
% OF TOTAL MARKET SPACE
AIRPORT WEST
29.6%
HIALEAH
25.6%
MEDLEY
16.7%
MIAMI LAKES
3.3%
NORTHEAST DADE
4.8%
NORTHCENTRAL DADE
14.9%
SOUTH DADE
5.1%
TOTAL
100%
The county's vacancy rate for the overall Miami-Dade County industrial market for the end of
2010 was 10%. Airport West, the largest industrial area, had a vacancy rate of 10.9% as of the
end of 2010. Industrial rental rates generally average $7.50 per square foot, down 11% on an
average of $8.00 per square foot at the end of 2009. No new industrial space is expected to be
constructed during much of 2011.
For the month of fourth quarter of 2010 there were 842 building permits issued in Miami-Dade
County, compared to 398 permits issued in the fourth quarter of 2009. The increase in new
permits issued between the same quarter of 2009 to 2010 is approximately 3.8 times. The total
number of permits issued in 2010 amounted to 2,297. This is in contrast to the 1,150 permits
issued in 2009.
Miami-Dade’s single-family home sales increased 11.1% in the fourth quarter of 2010 in
comparison with the fourth quarter of 2009. A total of 200 new homes were reported sold in the
fourth quarter of 2010. In the fourth quarter of 2010, the median sales price for single-family
units was $206,578, down 24.9% from the year earlier.
Existing condo sales showed gains of 25.8% in December 2009 over the units sold in November
2009. The median sales price for condos decreased slightly by 0.5% during the same period.
During the last 12 months, condo sales increased 49.6%. Over the same period, the average sales
price was $142,650; a year ago, it was $239,367 for a 40.4% decline.
Reinhold P. Wolff Quarterly Housing Report shows a vacancy rate of 2.8% for rental apartment
buildings in the First Quarter of 2011, lower than the 5.8% rate of the first quarter of 2010. The
vacancy rate had been declining steadily since 2006 due to the reduction of inventory caused by
the large amount of condominium conversions. Since 2007 many ownership housing units,
including both condominiums and single family houses, were placed into the rental market by
developers and individual owners.
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The condominium apartment market is currently experiencing an all-time high inventory for new
units. High-rise condominium towers have been recently completed in the traditional
condominium locations such as Brickell Avenue, Coral Gables, Aventura and the Miami
beaches, as well as areas with no existing high-rise condominiums, such as the central business
district of Miami, the Edgewater, Little Havana and Shenandoah neighborhoods of the city of
Miami. Additionally, many existing rental apartment projects have been converted to
condominiums. Sales of new condominiums peaked in the second quarter of 2005 with 14,700
units sold during the first six months of 2005. New condominium sales during 2010 totaled
3,700 units, down 19% from the 4,556 units sold during 2009. The new condominium apartment
market is in a largely oversupply condition.
The Miami-Dade County retail market contains approximately 59.5 million square feet in
buildings over 20,000 square feet. The major retail markets in Miami-Dade County include
Hialeah, Coral Gables/South Miami-Dade, Aventura and Kendall. Rental rates typically range
from $20.00 to $45.00 per square foot with rates in the $80 to $120 per square foot on South
Beach. The overall Miami-Dade County vacancy rate for 2010 was approximately 5.8%. The
total net absorption of new retail space was only about 39,400 square feet during 2010. Very
little, if any, significant sized retail space is expected to be constructed during 2011.
Conclusions
In the future, one of the principal growth areas for Miami-Dade County is expected to be the
international sector. Miami-Dade County, because of its geographic location and excellent
transportation facilities, is well-suited to attract both business individuals and tourists from Latin
America. It is already one of the principal shopping markets for Central and South Americans
visiting the United States and one of the principal export points for goods and services destined
for Latin America.
The existence of major financial institutions, retail outlets, corporations and other business
entities, coupled with its geographic location, transportation systems and planned international
trade centers give Miami-Dade County an excellent opportunity for continued growth as an
international center.
During 2010 all segments of the commercial real estate market will continue to experience
increasing vacancy rates and decreasing rental rates. With decreasing sale prices for both single
family residences ad condominium apartment units, sales activity is expected to rise during 2011.
QUINLIVAN APPRAISAL
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LOCATION MAP
QUINLIVAN APPRAISAL
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NEIGHBORHOOD DATA
The subject site is located within the Town of Miami Lakes, approximately fourteen miles
northwest of the Central Business District of Miami.
The subject property may further be identified as being located on the northwesterly corner of
Palmetto Frontage Road and N.W. 80th Avenue, one block west of the Palmetto Expressway.
The boundaries of the subject neighborhood are generally delineated as N.W. 138th Street to the
south, The Palmetto Expressway (S.R. 826) to the north, Interstate 75 to the west and N.W. 57th
Avenue to the east. This area encompasses approximately six square miles.
Miami Lakes, a residential community in northwest Miami-Dade County at the bend in the
Palmetto Expressway, is located between N.W. 57th Avenue to the east and N.W. 87th Avenue to
the west, and the Palmetto Expressway to the north, and NW 138th Street to the south. This
community began development in the 1960s and is almost totally developed today with a
combination of single family residences, town houses, rental apartment buildings, condominium
apartment buildings, warehouses, retail stores and offices. The residences generally range in
price from $500,000 to $1,000,000.
The Town of Miami Lakes was incorporated in 2000 as the 31st municipality in Miami-Dade
County. Miami Lakes was a master planned community developed in the 1960’s by the Graham
family. The original master plan was over 3,000 acres in size that would allow over 30 years of
growth. As its name implies, the town has 23 lakes within its boundaries. The Town currently
has over 27,000 residents. The Town has a council-manger form of government with an elected
mayor and town council.
The majority of Miami Lakes area (approximately four sections) is located east of the Palmetto
Expressway. The section located west of the Palmetto Expressway, north and east of Interstate
75 and south of N.W. 154th Street is the most recently developed section of Miami Lakes. The
easterly portion of this section is primarily zoned for industrial/office use and has been
developed almost exclusively with low and mid-rise office buildings. The buildings are primarily
owned by the Graham Companies, the developer of Miami Lakes. Tenants in these buildings
include State Farm, American Express, Kislak Bank, Ikon Office Solutions, Attorney’s,
Insurance Company, Minolta, Keen Battle Mead Insurance and American Healthcare services.
The westerly half of this section has been developed with single family residences, townhouses
and condominium apartments. These properties were developed from the mid-1980s to the late
1990s.
The Palmetto Expressway extends westerly from the Golden Glades Interchange (intersection of
I-95, Florida Turnpike and US 441) to N.W. 77th Avenue, thence southerly to US Highway 1 at
S.W. 104th Street in South Miami-Dade County. Interstate I-75 connects to the Palmetto
Expressway at N.W. 138th Street. Interstate 75 extends northerly to Ft. Lauderdale at S.R. 84 (I595) and then extends west to Naples and the West Coast of Florida. I-75 provides the subject
neighborhood with good access to the southern and western regions of Broward County.
QUINLIVAN APPRAISAL
39
The subject property is located in commerce park located between the Palmetto Expressway on
the east, N.W. 154th Street to the north, Interstate 75 to the south, and N.W. 82nd Avenue to the
west. The district is mostly improved with one- to four-story office buildings and one-story flex
space buildings. The commerce park has some vacant land available for development.
In summary, the subject property is located in a commercial district on the east side of Miami
Lakes. Miami Lakes is a relatively strong suburban office/industrial market because of its good
access via the Palmetto Expressway and I-75, and its proximity to the Miami International
Airport. The Palmetto Expressway and I-75 link the subject neighborhood with both Miami and
Ft. Lauderdale.
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NEIGHBORHOOD MAP
QUINLIVAN APPRAISAL
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SITE DATA
QUINLIVAN APPRAISAL
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SITE DATA
Dimensions and Shape:
The site is mostly rectangular in shape.
The site fronts 195 feet, more or less, along the northwesterly side of Palmetto Frontage Road
and approximately 340 feet along the northeasterly side of N.W. 80 Avenue.
Source: Condominium Documents
Area:
66,300 square feet (approximate)
Source: Condominium Documents
Topography and Drainage:
The site is level and approximately at street grade.
Flood Zone:
Map No. 12086C0114L (Effective September 11, 2009)
"AE"
Base flood elevation determined- 6 feet
Soil and Subsoil:
The immediate area of the subject site appears to have no unusual soil or subsoil conditions.
Unusual conditions would be brought out by test borings.
Utilities:
Water:
Sewer:
Electricity:
Telephone:
Miami-Dade Water & Sewer Department
Miami-Dade Water & Sewer Department
Florida Power & Light Company
AT & T
Street Improvements:
Palmetto Frontage Road is asphalt paved with a dedicated width of 50 feet. Palmetto Frontage
Road has one northerly bound lane and one southerly bound lane in the vicinity of the subject.
QUINLIVAN APPRAISAL
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SITE MAP
QUINLIVAN APPRAISAL
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ZONING
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ZONING
Under Ordinance of the Town of Miami Lakes
Classification:
IU-C Industrial Conditional
Intent: The IU-C District shall be applied only to those lands that appropriately may be used
and utilized for the development, construction, and operation of large industrial projects and
industrial park development of the nature, type and character with the public health, safety,
comfort, convenience and the general welfare of the county.
Permitted uses include utility plants and substations such as, but not limited to, sewage, water,
power, communications and gas and every use permitted in the IU-1 and IU-3 districts such as
aircraft hangars, bakeries, auto painting, bottling plants, breweries, cold storage warehouses,
food packing, furniture manufacturing, garages, lumber yards, office buildings, banks, boat
repairs, hotels, radio stations, limited retail, millwork, showrooms, parking lots, storage
warehouses, welding shops and textile mills, animal reduction plants, cement plants, blooming
mills, distilleries, foundries, paper mills, and stockyards.
Development Standards
Minimum Street Frontage:
330 feet
Minimum Lot Depth:
330 feet
Minimum Land Size:
10 acres; credit for right-of-way
Building Setbacks:
Front
25 feet, sites up to 2 acres net
2 acres or greater, 15% of lesser dimension
of property; maximum 50 feet, minimum 25
feet
Side
10 feet from interior side lines
25 feet from side property line abutting a
highway right-of-way
Rear
20 feet from residential district
5 feet from industrial or business district,
properties with open wall
None, industrial or business district properties with closed wall.
Minimum setback on through lot, same as
for front setback
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Minimum Landscaped
Open Space:
20% of net land area
Minimum Greenbelt Areas
Abutting Right-of-Ways
or Residential Districts
8 feet for sites up to 3 acres(net)
10 feet for sites over 3 acres (net)
Minimum Offstreet Parking Space:
Industrial Area:
Single Tenant Building
1 per 1,000, up to 10,000 square feet; then 1
per 2,000 square feet.
Multi-tenant Building
1 per 1,000 square feet, min. of 2 per bay.
Office Area:
1 per 300 square feet of gross building area
allocated for offices.
Open Lot or Walled-In Uses:
2 for each 5,000 square feet of lot area or 15
spaces per 2 employees, whichever is
greater; these must be no more than 1,500
feet from the use.
Wholesale Showrooms:
1 for each 600 square feet of showroom
Building Height:
No building shall be of a height greater
than the width of the widest street upon
which such buildings abuts.
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HIGHEST AND BEST USE
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HIGHEST AND BEST USE
Fundamental to the concept of value is the theory of highest and best use. Land is valued as if
vacant and available for its highest and best use.
The Appraisal Institute in The Appraisal of Real Estate, Thirteenth Edition, defines highest and
best use as follows:
The reasonably probable and legal use of vacant land or an improved property, which is
physically possible, appropriately supported, financially feasible, and results in the highest value.
Land has limited value unless there is a present or anticipated use for it; the amount of value
depends on the nature of the land's anticipated use, according to the concept of surplus
productivity. Among all reasonable, alternative uses, the use that yields the highest present land
value, after payments are made for labor, capital, and coordination, is generally regarded as the
highest and best use of the land as though vacant.
The highest and best use of a property as improved refers to the optimal use that could be made
of the property including all existing structures. The implication is that the existing improvement
should be renovated or retained as so long as it continues to contribute to the total market value
of the property, or until the return from a new improvement would more than offset the cost of
demolishing the existing building and constructing a new one.
In estimating the highest and best use there are essentially four stages of analysis:
1.
Possible Use. What uses of the site being appraised are physically possible?
2.
Permissible Use (Legal) What uses are permitted by Zoning and Deed
Restriction, if any?
3.
Feasible Use. Which possible and permissible uses will produce a net return to
the owner of the site?
4.
Maximally Productive. Among feasible uses, which use will produce the highest
net return to the owner of the site?
The highest and best use of the land (or site), if vacant and available for use, may be different
from the highest and best use of the improved property. This is true when the improvements are
not an appropriate use, but make a contribution to the total property value in excess of the value
of the site.
The following four-point test is required in estimating the Highest and Best Use. The use must
be legal. The use must be probable, not speculative or conjectural. There must be a profitable
demand for such use and it must return to the land the highest net return for the longest period of
time.
QUINLIVAN APPRAISAL
49
These tests have been applied to the subject property. In arriving at the estimate of Highest and
Best Use, the subject site is analyzed as vacant and available for development and as developed.
Possible Use
The site fronts 195 feet, more or less, along the northwesterly side of Palmetto Frontage Road
and approximately 340 feet along the northeasterly side of N.W. 80 Avenue. Therefore, the site
has adequate access and exposure on two neighborhood traffic arteries.
The subject site is mostly rectangular, with sufficient street frontage and depth for functional
utility. All necessary utility services are available along existing street right-of-ways. The site is
filled to street grade and does not appear to have any drainage or subsoil deficiencies.
The subject site is 66,300 square feet in size which equates to 1.52 acres. The size of the subject
site would allow a medium to large scale use.
The physical characteristics of the subject site would not restrict any use of the site.
Permissible Use
Permissible or legal uses are those uses which are permitted by zoning or deed restrictions.
There are presently no known private deed restrictions of record.
The site is zoned for industrial usage. The zoning of the site permits office and industrial uses.
Feasible Use/Maximally Productive Use
The physical characteristics and zoning of the subject property permit a wide range of potential
uses. The possible and permissible uses of the subject site include offices, warehouses,
showrooms and bank branches.
The site is a corner location with frontage on two traffic arteries. The site has adequate access
and exposure. Similar sites in the vicinity of the subject site are improved with office buildings
and commercial condominiums.
Based on an analysis of the subject site, the highest and best use of the site is estimated to be for
office usage.
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50
Highest and Best Use as Improved
The site is improved with a three-story office condominium building. The building was
constructed in 1983 but was renovated when converted to condominium usage. The building is
in good condition.
The value indication of the property as a rental at stabilized occupancy is estimated in the
Income Approach at $2,210,000. The “As Is” value indication based on a discounted sellout of
the condominium units is estimated in the Sales Comparison Approach at $2,650,000. Since the
value indication by the Income Approach is significantly less than the value indication by the
Sales Comparison Approach, the operation of the property as a rental is indicated not to be the
highest and best use of the property. However, due to the presently soft market conditions for
commercial condominium units, the immediate sell off of the individual units is probably not
feasible.
Based on the above analysis, the highest and best use of the property as improved is considered
to be for an interim operation as a rental and eventual sellout of the individual condominium
units when market conditions improve.
QUINLIVAN APPRAISAL
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DESCRIPTION OF IMPROVEMENTS
QUINLIVAN APPRAISAL
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DESCRIPTION OF IMPROVEMENTS
Age and Condition
According to the Public Records of Miami-Dade County, the building improvements were
originally constructed in 1983 but was recently renovated and converted to condominium use.
From a personal inspection of the property, the improvements appear to be in good condition.
Description
The subject units are located in a 30-unit office condominium building known as The Lakes
Frontage Center Condominium. With the exception of Unit 106, the subject units are fully built
out. Unit 106 is mostly complete but would require a cost estimate of $10.00 per square foot to
complete.
Unit Sizes
Unit
100
101
103
104
105
106
107
108
109
110
111
Size (Net SF)
1,173
972
447
208
948
979
1,538
770
876
1,187
710
Unit
113
114
116
117
202
203
304
320
370
380
390
Size (Net SF)
346
380
197
348
366
1,013
1,694
1,179
1,786
1,439
1,633
The combined size of the units is 20,189 net square feet.
(Source: Condominium Documents)
Details of Construction
Foundation:
Poured concrete spread footings in excavation trench
Exterior Walls:
8” concrete block stuccoed and painted
Windows:
Fixed glass in aluminum frame
Roof:
Flat, built-up composition
Interior Walls:
Drywall-painted
QUINLIVAN APPRAISAL
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Ceilings:
Acoustical tile
Floors:
Carpet, wood and tile
Lighting:
Fluorescent
Equipment and Fixtures
Central air conditioning
Site Improvements
Landscaping
Asphalt paved parking
QUINLIVAN APPRAISAL
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FIRST FLOOR PLAN
QUINLIVAN APPRAISAL
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SECOND FLOOR PLAN
QUINLIVAN APPRAISAL
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THIRD FLOOR PLAN
QUINLIVAN APPRAISAL
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THE APPRAISAL PROCESS
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THE APPRAISAL PROCESS
The appraisal of real estate is generally valuated by means of one or more of the following
approaches:
(1)
(2)
(3)
The Cost Approach
The Income Approach
The Sales Comparison Approach
The Cost Approach
In the Cost Approach, land and building are valued as though they are separate entities. The land
value is first estimated as if vacant. Then, by consulting various cost services, local building
contractors and knowledge of construction costs, the replacement cost new of the building is
estimated. Accrued depreciation from all sources including physical deterioration, functional
and economic obsolescence must be deducted from this cost. The estimated land value is then
added to the depreciated cost of the building to give the "depreciated replacement cost" of the
property.
The Cost Approach is based on the premise that the value of a commodity tends to be set by the
cost of acquiring an equally desirable substitute. Applied to real estate, the assumption is that a
person would not likely pay more for a property than it would cost him to acquire a suitable site
and place an equally desirable building upon it. Costs would include direct cost of construction,
indirect costs such as financing costs, land and developer/builder's profit.
The subject units are located in an office condominium building on a single site with common
parking facilities.
The Cost Approach typically is not applicable to individual units in condominium properties
where there are multiple units with multiple ownership of the common elements. Therefore, the
Cost Approach would have no applicability in this situation and was not utilized.
Income Approach
The Income Approach is based on the premise that the value of a property may be determined by
the amount of net income it can reasonably produce over its remaining economic life. The
rationale of the approach is that the present worth of a future income stream is equivalent to the
value of the property which produces that income.
Four basic steps comprise the Income Approach:
(1)
Estimate the reasonable expectable annual gross income the
property will likely produce.
QUINLIVAN APPRAISAL
59
(2)
Deduct an allowance for vacancy and collection loss to arrive
at the effective gross income.
(3)
Deduct the annual expense of operation from the effective
gross income to arrive at the annual net income.
(4)
Capitalize the annual net income into an indication of value.
In this section of the report, a comprehensive market rent survey is conducted in order to
estimate the Market Rent for the subject property and to estimate a stabilized occupancy rate.
The operating expenses are estimated based on the actual operation of the subject and the
operation of comparable office buildings.
The Sales Comparison Approach
The Sales Comparison Approach is an attempt to measure the reactions of typical buyers and
sellers. In this approach, a direct comparison is made between the property being appraised and
comparable properties, which have sold recently. These sales are compared for degrees of
comparability such as location, size, age, zoning, time, the conditions of sale, financing and other
pertinent data, which would affect value. Adjustments are made for these factors in order to
arrive at a reliable estimate of value.
In this report, sales of office condominium units within the subject development and competitive
locations are gathered and analyzed.
Reconciliation
After applying the three approaches, three separate indications of value are available for analysis.
The indicated values obtained from each approach are correlated into one final conclusion of
value. Usually one approach will be considered more significant than the rest, either because of
the reliability of the data, or because of the type of property involved. Reconciliation is the
process by which each approach is objectively weighed according to its importance.
QUINLIVAN APPRAISAL
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INCOME APPROACH
QUINLIVAN APPRAISAL
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INCOME APPROACH TO VALUE (At Stabilization)
This approach to value is a technique in which the anticipated net income is processed to indicate
the capital amount of the investment which produces the net income. The capital amount, called
the capitalized value, in effect, is the sum of the anticipated annual rents less the loss of interest
until the time of collection.
Income
Potential Gross Annual Income
20,189 Square Feet x $22.50/SF
$454,253
LESS: Vacancy & Collection Loss @
7.5%
Effective Gross Annual Income
Operating Expenses
Management @ 4%
RE Taxes (Less 4% Discount)
Maintenance
Total Operating Expenses
-$ 34,069
$420,184
$16,807
$68,882
$157,772
$243,461
-$243,461
$176,723
Net Operating Income
$176,723
Capitalized @
Value Indication by Income Approach
(Rd)
8.00%
$2,209,038
$2,210,000
Typically, these units are owner-occupied and not purchased by investors as income property.
This is evidenced by the difference in value between operating the property as a rental and the
value by Sales Comparison Approach.
QUINLIVAN APPRAISAL
62
CONTRACT RENT ANALYSIS
A rent roll of the property was provided by the property owner. A copy of the rent roll is
contained in the addendum of this report. Currently 15 of the 22 units are occupied at a rental
rate ranging from $11.59 to $24.12 with an average rent of approximately $22.50. The larger
units rent at a lower price per square foot.
MARKET RENT ANALYSIS
The market rent of the subject building is estimated based on a survey of competitive office
properties in the subject market area. A summary of the comparable rentals is as follows:
No.
Address
Size (S.F.)
Age
1
1,961
575
1,230
1985
2
14160
Palmetto
Frontage Rd
7759 NW 146 St
2000
Rental Rate
Per S.F.
$16.83
$16.59
$22.44-$25.00
3
14333 NW 78 Ave
1,085
2005
$19.92*
1,622
1987
$18.00*
4
14411
Commerce
Way
*Asking rate
Comparable Rentals 1, 3 and 4 are the rental rates before expenses. Comparable Rental 2 has
similar lease terms as the subject units.
.
Based on an analysis of the contract rental rates as well as comparable rental rates, it is the
appraiser’s opinion that the contract rent is indicative of market rent.
QUINLIVAN APPRAISAL
63
Vacancy and Collection Loss
A vacancy and collection loss allowance is a reduction in potential rental income due to space
not leased or rents not collected. This allowance is generally expressed as a percentage of
Potential Gross Income.
As of the date of valuation, 15 of the 22 subject units were occupied indicating a vacancy rate of
31.8%.
The CB Richard Ellis Office Market Report – Miami-Dade County- Second Quarter 2011
indicates a countywide vacancy rate of 16.8% for office properties and 27.4% in the subject
market area. Historically, the vacancy rates in the subject market area have been well below
10%.
Based on the above, a stabilized vacancy and collection loss allowance of 7.5% is considered
applicable for the subject.
Operating Expense Analysis
The expenses are based on expense information obtained from the actual operation of the subject
building, from operating expenses of similar buildings and from a review of published studies.
The property owner provided the operating expenses from January of 2010 to June of 2011. A
copy of the operating expenses is contained in the addenda.
Management is based on 4% of Effective Gross Annual Income. This item would cover salary
and administrative cost for rent collection and record keeping of the subject property.
Real Estate Taxes are estimated based on 2010 real estate taxes for the property less a 4%
discount for early payment.
Maintenance Fees are based on the actual condominium maintenance fees. This expense covers
the remaining costs to operate the units such as utilities, insurance, maintenance and reserves for
replacement.
The indicated operating expense ratio is 57.9%, very high for an income producing property.
QUINLIVAN APPRAISAL
64
SELECTION OF CAPITALIZATION RATE
Capitalization is a process which translates an income projection into an indication of value. The
connecting link is a rate which reflects the return necessary to attract investment capital. Hence,
the selection of an appropriate rate represents a critical factor in the capitalization process.
OVERALL RATES FROM MARKET SALES OF OFFICE PROPERTIES
N0.
LOCATION
DATE
PRICE
OVERALL RATE
1
8500 SW 117 Ave, Miami-Dade Co.
7/08
$26,800,000
7.4%
2
355 Alhambra Cir, Coral Gables
7/08
$87,300,000
7.1%
3
1500 Monza Ave, Coral Gables
4/09
$8,500,000
7.2%
4
1790 Coral Way, Miami
6/09
$3,425,000
8.2%
5
2850 Douglas Rd, Coral Gables
8/09
$4,250,000
8.6%
6
5820 Blue Lagoon Dr, Miami-Dade Co
9/09
$6,950,000
7.3%
7
20880 West Dixie Hwy, Miami-Dade Co.
1/10
$3,750,000
8.4%
8
4155 SW 130 Ave., Miami-Dade Co.
8/10
$3,950,000
7.5%
OVERALL RATE BY BAND OF INVESTMENT THEORY
The overall rate developed by application of the Band of Investment Theory is a synthesis of
mortgage debt service and anticipated cash flow to equity which market data discloses as
applicable to comparable properties.
The rate developed is a weighted average, the weighing being for the respective portions of the
value represented by the mortgage and equity positions, or Band of Investment.
Cash
Flow
Rate
Source of Capital
Portion
Mortgage Loan
0.75
x
0.078792
Equity Funds
0.25
x
0.8
Weighted
Average
=
=
0.0591
0.0200
0.0791
OR
Overall Rate
QUINLIVAN APPRAISAL
7.91%
65
From discussions with lending institutions, an investor survey from Realty Rates.com – First
Quarter 2011 and from an analysis of comparable sales, it is determined the most favorable rate
and likely terms available to the subject property would be a mortgage at a loan-to-value ratio of
75% and at an interest rate of 5.7% with an amortization period of 25 years and a term of five to
ten years. A cash flow rate of 8.0% is estimated to be sufficient to attract equity funds to this
type of investment.
Overall Rates From Investor Surveys
The Realty Rates.com Investor Survey – First Quarter 2011 indicates overall rates for of
suburban office buildings ranging from 5.61% to 11.94%, with the average being 9.41%.
The Korpacz Price Waterhouse Coopers Investor Survey- Fourth Quarter 2010 indicates overall
rates for office buildings ranging from 7.00% to 13.0%, with the average being 9.39%.
Overall Rate Conclusion
The rates utilized in the Band of Investment are based on rates derived from surveys of large
multiple tenant office buildings bought and sold for their income potential. Similarly, the overall
rates from the investor survey are for large multiple tenant office buildings bought and sold for
their income potential. The overall rates from comparable sales are given primary emphasis in
the final analysis since the rates are abstracted from actual sales of buildings in Miami-Dade
County. The overall rates from comparable sales range from 7.1% to 8.6%.
Based on the above sources, with the overall rates abstracted from the market sales given
primary emphasis in the final analysis, a capitalization rate of 8.0% is considered appropriate for
the subject property.
QUINLIVAN APPRAISAL
66
SALES COMPARISON APPROACH
QUINLIVAN APPRAISAL
67
SALES COMPARISON APPROACH TO VALUE
This approach to value is a technique in which the Market Value estimate is predicated upon
prices paid in actual market transactions of similar properties. These similar, or comparable,
transactions (sales) are adjusted to indicate a value to the subject.
The Sales Comparison Approach is a process of analyzing sales of similar recently sold
properties in order to derive an indication of the most probable sales price of the property being
appraised. The reliability of this approach is dependent upon the availability of comparable sales
data, the verification of the sales data, the degree of comparability and the absence of non-typical
conditions affecting the sale.
The following page contains a summary of sales of similar properties, which have recently sold.
Several other sales are considered, but are not included because there is too wide a difference in
physical factors, location and time. The sales are analyzed based on a sale price per square foot
of adjusted building area.
In comparing the sales to the subject, consideration is given to factors of time, location, physical
characteristics and terms and conditions of the sale.
A profile and photograph of the comparable condominium buildings, a summary of comparable
office condo sales, a sales map and a value conclusion follows herein.
QUINLIVAN APPRAISAL
68
PARK WEST PROFESSIONAL CENTER
ADDRESS:
7767 N.W. 146 Street
Miami-Lakes, Florida
LOCATION:
7 blocks northeast of the subject property
NUMBER OF UNITS:
44
BUILDING AGE:
2001
BUILDING CONDITION:
Good
RECENT SALES/LISTINGS:
Date of Sale
Sale Price
Unit Number
Unit Size (S.F.)
Price (S.F.)
10/2009
$210,000
ED-2
1,051
$199.80
REMARKS:
The building is in good condition.
QUINLIVAN APPRAISAL
69
PARK WEST
PROFESSIONAL CENTER
QUINLIVAN APPRAISAL
70
JCMH CONDOMINIUM
ADDRESS:
814 Ponce de Leon Boulevard
Coral Gables, Florida
LOCATION:
2 blocks northeast of the subject property
NUMBER OF UNITS:
16
BUILDING AGE:
2005
BUILDING CONDITION:
Good
RECENT SALES/LISTINGS:
Date of Sale
Sale Price
Unit Number
Unit Size (S.F.)
Price (S.F.)
7/2010
1/2011
$152,500
$180,000
1
12
1,085
1,085
$140.55
$165.90
REMARKS:
The building is in good condition.
QUINLIVAN APPRAISAL
71
JCMH CONDOMINIUM
QUINLIVAN APPRAISAL
72
SUMMARY OF COMPARABLE OFFICE CONDOMINIUMS
No.
Date
Name
Address
Unit
Location
1 10/2009 Park West Professional Center 7767 N.W. 146 St.
ED-2 7 blocks NE
2
7/2010 J C M H Condominium
14329 N.W. 78 Ave.
1 2 blocks NE
3
1/2011 J C M H Condominium
14351 N.W. 78 Ave.
12 2 blocks NE
14100 Palmetto Frontage
Subject
4
Listing Lakes Frontage Center Condo. Rd.
N/A Building
14100 Palmetto Frontage
5
Listing Lakes Frontage Center Condo. Rd.
N/A Subject units
14100 Palmetto Frontage
Subject Unit
Lakes Frontage Center Condo. Rd.
*Asking price
Unit
Age Size
2001 1,051
2005 1,085
2005 1,085
1983
751
Sale Price Price/SF
$210,000 $199.80
$152,500 $140.55
$180,000 $165.90
$150,000* $199.73*
1983 20,189 $4,500,000* $223.69*
1983 20,189
SALES MAP
QUINLIVAN APPRAISAL
74
ANALYSIS OF SALES
The unit prices of the closed sales range from $140.55 to $199.80 per square foot and range in
time from October of 2009 to January of 2011. The prices per square foot are based on the unit
sizes reported on the tax roll of the Miami-Dade County Property Appraiser’s Office. The size
of the subject unit based on the tax roll is 6,640 square feet. For purposes of direct comparison
with the comparable sale properties, the size of the subject unit reported in the county tax roll is
utilized in this analysis.
In comparing the sale properties to the subject units, consideration was given to time of sale,
location, age/condition of the building, and tenant improvements.
Park West Professional Center
The unit price of Sale 1 occurring in the Park West Professional Center, $199.80 per square foot,
is considered an upper limit of value of the subject units. Sale 1 requires a downward adjustment
for the declining market conditions in this market area since October of 2009.
JCMH Condominium
The unit prices of the sales that occurred in the JCMH Condominium range in unit price from
$140.55 to $165.90. Sales 2 and 3 have the same buyer but different sellers. The seller of Sale 2
is a financial institution and the unit appears to have sold for below market value (approximately
15%) when compared to the identical Sale 3 unit.
The subject building was constructed in 1983 but was renovated when converted to
condominium usage. The sales and subject units are similar in condition.
A summary of adjustments is as follows:
Unit Price
Market Conditions
Age/Building Condition
Unit Size
Other
Total Adjustments
Adjusted Unit Price
Sale 1
$199.80
-15%
=
=
=
-15%
$169.83
Sale 2
$140.55
=
=
=
+15%
=
$161.63
Sale 3
$165.90
=
=
=
=
=
$165.90
QUINLIVAN APPRAISAL
75
Sale 4 is a current listing for one unit in the subject building based on gross size. Sale 5 is a
current listing for the subject units. No difference in unit price is evidenced by these listings for
purchasing in bulk.
As stated previously, with the exception of Unit 106, the subject units are fully built out. Unit
106 is mostly complete but would require a cost estimate of $10.00 per square foot to complete.
This cost estimate equates to $9,790.
Conclusion –Gross Sellout Value
The adjusted unit prices range from $161.63 to $169.83.
Based on a careful analysis of the unit sales, it is estimated that the subject units have a value as
follows:
Size (NSF)
Price/SF
20,189 SF
$165.00
LESS: Cost to Complete Unit 106
Gross Value by Sales Comparison Approach (Rd)
Estimated Value
$3,331,185
$9,790
$3,321,395
$3,320,000
The indicated average unit price of the subject units based on the Gross Sellout Value is
approximately $150,909 per unit.
QUINLIVAN APPRAISAL
76
“AS IS” MARKET VALUE
Converting the Gross Sellout Value to an “as is” Market Value requires a discounting process to
account for selling expenses and holding costs, if any, sell all of the units over an absorption
period. The discounting process can be performed in several methods.
The first method would be a discounted sellout analysis. First, an absorption period is estimated
for the unsold units. Estimated sales expenses and holding costs are then deducted from the
gross sales proceeds to derive net sales proceeds. A discount rate is then applied to the net sales
proceeds to reflect a return on debt and equity capital.
A second method is to abstract a discount from sales of bulk inventories of condominium units.
The discounting process is performed based on a matched pair analysis of bulk sales of
commercial condominium units to sales of individual commercial condominium units in the
same project or comparable projects. The estimated bulk sale adjustment is then applied to the
estimated gross sellout value to indicate the “as is” value of the property.
The following pages contain three case studies of comparisons of bulk sales and individual sales
of commercial condominium units. The unit prices of the comparable units are discounted to the
unit price of the bulk sales.
QUINLIVAN APPRAISAL
77
SUMMARY OF BULK COMMERCIAL CONDOMINIUM SALES
No.
1
2
Name
Bldg.
Unit
Unit
Sale
Location
Age
No.
Sq. Ft.
Date
1600 Ponce Office Condo
1600 Ponce de Leon Blvd
Coral Gables
2008
1001
1002
1003
1004
1005
1006
1007
1008
1101, 1102, 1103 & 1104
904
905
801, 802, 803, 804,
805, 806, 807, 808,
906, 907, 908, 1202,
1203, 1206, 1207& 1208
Merrick View
135 San Lorenzo Ave
Coral Gables
2008
130
840
140, 150, 160, 170,
770 & 780
790
550
540
850
530
Sale
Price
Per Sq.
Ft.
Discount
Recordation
Price
Percentage
27001/3049
$537.55
$533.11
$541.53
$575.80
$593.49
$595.72
$598.43
$532.20
$516.22
$456.62
$456.62
$507.38
5.61%
4.83%
6.31%
11.88%
14.51%
14.83%
15.22%
4.66%
1.71%
-11.12%
-11.12%
972
1,149
1,447
876
876
1,447
1,149
972
4,444
876
876
18,620
Sep-09
Sep-09
Sep-09
Sep-09
Sep-09
Sep-09
Sep-09
Sep-09
Jul-10
Aug-10
Nov-10
Mar-11
27001/2919
27024/2195
27029/3438
27024/2280
27366/1928
27410/3702
27497/4103
27634/3362
$522,500
$612,549
$783,600
$504,400
$519,900
$862,000
$687,600
$517,300
$2,294,100
$400,000
$400,000
$9,447,400
1,013
1,868
8,190
12/09
12/09
Apr-10
27111/3943
27111/4394
27255/4700
$315,000
$640,900
$2,400,000
$310.96
$343.09
$293.04
5.76%
14.59%
2,135
2,135
2,342
1,836
1,317
8/10
11/10
11/10
12/10
1/11
27381/4771
27485/2621
27486/466
27523/4691
27545/341
$693,900
$788,400
$831,900
$718,900
$442,200
$325.01
$369.27
$355.21
$391.56
$335.76
9.84%
20.64%
17.50%
25.16%
12.72%
27014/317
3
Colorama
2445 W. 80 St
Hialeah
2157 W. 73 St
7760 W. 20 Ave
7600 W. 20 Ave
2271 W. 80 St
2231 W. 80 St
8000 W. 24 Ave
8055 W. 23 Ave
2002
1B, 2B, 3B, 4B, 5B,
6B,
7B & 8B
8,344
Jul-10
27367/3430
$550,000
$65.92
1985
1986
2003
2005
2005
2002
2002
3
12
224
A-1
D-4
E-3
B-1
2,629
2,290
1,004
1,426
1,300
1,020
1,499
Mar-10
May-10
Dec-10
Apr-11
Jun-11
Jun-11
Jun-11
27228/3832
27281/721
27691/2943
27667/1993
27756/2055
27762/2644
27732/646
$200,000
$200,000
$80,000
$106,000
$100,000
$65,800
$125,000
$76.07
$87.34
$79.68
$74.33
$76.92
$64.51
$83.39
13.35%
24.52%
17.27%
11.32%
14.30%
-2.19%
20.95%
BULK SALE ANALYSIS
In Case Study 1, 16 units were purchased in bulk in March of 2011 at a unit price of $507.38 per
square foot. Four units sold together in July of 2010 at a unit price of $516.22. The remaining
sales were of individual units within the same building ranging from $456.62 to $598.43 per
square foot. Excluding the two sales that sold below the cost of the bulk sale, the indicated
discount rates from this case study range from 1.71% to 15.22%.
In Case Study 2, six units were purchased in bulk in April of 2010 at a unit price of $293.04 per
square foot. The remaining sales were of individual units within the same building ranging in
unit price from $310.96 to $391.56 per square foot. The indicated discount rates from this case
study range from 5.76% to 25.16%.
In Case Study 3, eight units were purchased in bulk in July of 2010 at a unit price of $65.92 per
square foot. The remaining sales are of individual units within the same neighborhood as the
building where the bulk sale occurred. These sales range in unit price from $64.51 to $87.34 per
square foot. The indicated discount rates from this case study range from 11.32% to 24.52%.
Based on the above analysis, a discount rate of 20% of the Gross Value is considered applicable
for the subject units.
Gross Sellout Value
Discount Rate
“As Is” Market Value
$3,320,000
20%
$2,656,000
The indicated average unit price of the subject units based on the “As Is” Market Value is
approximately $120,727 per unit.
QUINLIVAN APPRAISAL
80
MARKET VALUE BY DISCOUNTED SELLOUT
Converting the Gross Sellout Value to Market Value requires a discounting process to account
for selling expenses and holding costs, if any, from the completion of construction to the sale and
closing of all the units. The discounting process is performed in three steps. First, an absorption
period is estimated for the unsold units. Estimated sales expenses and holding costs are then
deducted from the gross sales proceeds to derive net sales proceeds. A discount rate is then
applied to the net sales proceeds to reflect a return on debt and equity capital.
Estimate of Absorption Period
Based on a review of historic sales and the current soft condition of the office condominium
market, it is projected that it will require a period of 24 months to sell the subject units. During
the sellout period, the property would be operated as a rental. The rental income is based on the
effective gross income of $420,184 estimated previously in the Income Approach. The indicated
effective income per square foot is $20.81 ($420,184 ÷ 20,189 Sq. Ft.). The sale prices for the
units were estimated preciously in the Sales Comparison Approach at an average of $165.00 per
square foot. The sales prices in year two of the sellout are projected to increase based on a
growth rate of 3%.
The vacant space is projected to be absorbed over 24 months at a rate of 878 square feet per
month (20,189 Sq. Ft. ÷ 23 Months). The first month would be projected to not have a sale.
The growth rate on expenses is projected at 2% annually. The estimated growth rate is based on
historic trends in the Consumer Price Index (CPI) and investor surveys. The Korpacz Price
Waterhouse Coopers Investor Survey- Second Quarter 2011 indicates expense growth rates for
office buildings ranging from 1.00% to 3.0%.
Selling Expenses
There will be closing costs, recording fees and legal expenses. It is expected there would be a
five year holding period from the date of valuation to the date in which all units are closed.
During this period, there will be interest holding costs, sales commissions, and overhead and
marketing. These expenses are estimated on the following page.
Sales commissions are estimated at 3% of gross sales.
Closing costs are estimated at 1.5% of gross sales.
Overhead and marketing is estimated at 2.0% of gross sales.
Operating expenses are estimated at $12.06 per square foot of the unsold office space while it is
operated as a rental. The operating expenses are based on the expenses estimated previously in
the Income Approach ($243,461 ÷ 20,189 Sq. Ft.). The growth rate on operating expenses is
projected at 2% annually.
QUINLIVAN APPRAISAL
81
Discount Rate
A discount rate (yield rate) is applied to the cash flow over the seven year projection period to
reflect a net present value.
A discount rate and an overall rate differ in concept. The overall rate is based on current net
operating income as of the date of sale. The overall rate implicitly recognizes future income
increases and appreciation in property value at the time of sale.
Whereas the discount rate explicitly will recognize future income increases and appreciations in
property value at time of sale. The overall rate is used in direct capitalization technique using
first year net income. The discount rate is used in an annuity capitalization technique with an
income stream.
The discount rate is influenced by the degree of apparent risk, prospective rates of return of
alternative investment opportunities, historical rates of return earned by comparable properties,
market attitudes with respect to future inflation or deflation, supply of and demand for mortgage
funds, availability of tax shelter, etc.
A review of the Realty Rates.com Investor Survey – Third Quarter 2011 indicates that typical
investors desire an internal rate of return in the 8.63% to 14.43% range for suburban office
buildings, with the average being 12.01%.
The Korpacz Price Waterhouse Coopers Investor Survey- Second Quarter 2011 indicates
discount rates for rental office buildings ranging from 7.0% to 16.0%, with the average being
10.38%.
It should be noted that the discount rates reported in the investor surveys are for multiple tenant
rental office properties, not fractured interests of office condominiums. Discount rates from
sales of fractured interests of office condominium properties are not reported in investor surveys.
Sales of fractured interests of office condominium properties are few in number and each
property is unique as to overall size, unit size, percentage of ownership, location, etc. Fractured
interests of office condominium properties typically sell by the purchase of mortgage notes and
are not recorded. Abstracting discount rates from actual sales of fractured interests of office
condominium properties is therefore difficult. The discount rates from the investor surveys may
not be a direct comparison for fractured interests of office condominium properties, but do
provide a general guideline for discount rates for fractured interests.
Based on the above analysis, a discount rate of 12.0% is considered appropriate for the subject
income stream.
The Discounted Sellout Analysis is contained on the following page. The indicated value of the
property under a scenario operating as a rental while simultaneously selling out the
condominium over two years is $2,650,000. Based on a profit on sales of 10% and a discount
rate of 12%, the indicated true Internal Rate of Return (IRR) is 16.8%.
QUINLIVAN APPRAISAL
82
DISCOUNTED MARKET VALUE CONCLUSION
Case studies were prepared to abstract a discount from sales of bulk inventories of commercial
condominium units. The discounting process is performed based on a matched pair analysis of
bulk sales of commercial condominium units to sales of individual commercial condominium
units in the same project or comparable projects. The estimated bulk sale adjustment is then
applied to the estimated gross sellout value to indicate the “as is” value of the property.
A discounted sellout analysis was also prepared. First, an absorption period is estimated for the
unsold units. There has been very limited market activity in the vicinity of the subject which
makes estimating an accurate absorption rate difficult. Estimated sales expenses and holding
costs are then deducted from the gross sales proceeds to derive net sales proceeds. A discount
rate is then applied to the net sales proceeds to reflect a return on debt and equity capital.
The discounted value indicated by the bulk sale analysis is $2,656,000. The indicated market
value by discounted sellout is $2,646,948. Based on the above, it is the appraiser’s opinion that
the subject units have a Discounted Market Value of:
$2,650,000
QUINLIVAN APPRAISAL
84
RECONCILIATION AND VALUE CONCLUSION
QUINLIVAN APPRAISAL
85
RECONCILIATION AND VALUE CONCLUSION
The reconciliation of the data and indicated value estimates is the final step in the appraisal
process. Sufficient data has been assembled and analyzed for the purpose of judging the
reactions of typical purchasers in the market place.
In this report, the three accepted appraisal techniques are utilized. The value estimates indicated
by these approaches resulted in the following:
Cost Approach to Value
N/A
Income Approach to Value
$2,210,000
Sales Comparison Approach to Value
$2,650,000
Cost Approach to Value
The subject unit is located in an office condominium building on a single site with common
parking facilities.
The Cost Approach typically is not applicable to single units in condominium properties where
there are multiple units with multiple ownership of the common elements. Therefore, the Cost
Approach would have no applicability in this situation and was not utilized.
Income Approach to Value
The data in this approach as to the quality, quantity and durability of the income is considered
fair. The income and expenses are based on the actual operation of the subject building and
comparable buildings.
Net Income is capitalized by means of a direct capitalization method with an overall rate derived
from market sales, market surveys and a Band of Investment Technique.
Typically, these units are owner-occupied and not purchased by investors as income property.
This is evidenced by the difference in value between operating the property as a rental and the
value by Sales Comparison Approach.
Sales Comparison Approach to Value
In reference to the Sales Comparison Approach, consideration has been given to sales that have
taken place in the real estate market. These sales are analyzed and adjusted to the subject to
reflect a market value estimate of the subject.
The quality of the market sales in this approach to value is considered good.
QUINLIVAN APPRAISAL
86
Considering the quality of these sales, this approach to value is given primary emphasis in the
final analysis.
Final Conclusion
In the reconciliation process, the greatest weight should be given to the approach or approaches
which produce the highest degree of confidence and which has been processed with a minimum
of assumptions. Of equal importance are the reasonableness of the data and the reliability of the
data.
In consideration of the above, and for the reasons and conclusions contained herein, the “As Is”
Market Value of the subject property at stabilized occupancy as of market conditions as of
August 22, 2011 was estimated at:
$2,650,000
QUINLIVAN APPRAISAL
87
ADDENDA
QUINLIVAN APPRAISAL
88
ASSUMPTIONS AND LIMITING CONDITIONS
This Appraisal Report has been made with the following general assumptions:
1.
No responsibility is assumed for the legal description or for matters
including legal or title considerations. Title to the property is
assumed to be good and marketable unless otherwise stated.
2.
The property is appraised free and clear of any or all liens or
encumbrances unless otherwise stated.
3.
Responsible ownership and competent property management are
assumed.
4.
The information furnished by others is believed to be reliable.
However, no warranty is given for its accuracy.
5.
All engineering is assumed to be correct. The plot plans and
illustrative material in this report are included only to assist the
reader in visualizing the property.
6.
If no survey has been furnished to the appraisers, all measurements
have been confirmed either in the field, in the plat book or by other
reliable sources and are presumed to be accurate.
7.
It is assumed that there are no hidden or unapparent conditions of the
property, subsoil, or structures that render it more or less valuable.
No responsibility is assumed for such conditions or for arranging for
engineering studies that may be required to discover them.
8.
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.
9.
It is assumed, unless a study has been provided otherwise, that no
hazardous material such as asbestos, urea formaldehyde or other
toxic waste exists in the property. The existence of a potentially
hazardous material could have a significant effect on the value of the
property.
10.
In reference to proposed construction, the real estate taxes and other
expenses are estimated. These amounts are not guaranteed.
QUINLIVAN APPRAISAL
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11.
It is assumed in the valuation of the subject land site, unless a
compliance letter has been furnished to us, that the State of Florida
Growth Management Act does not prevent the issuance of a building
permit.
12.
It is assumed that all required licenses, certificates of occupancy,
consents, or other legislative or administrative authority from any
local, state or national government or private entity or organization
have been or can be obtained or renewed for any use on which the
value estimate contained in this report is based.
13.
It is assumed that the utilization of the land and improvements is
within the boundaries of property lines of the property described and
that there is no encroachment or trespass unless noted in the report.
This Appraisal Report has been made with the following general limiting conditions:
1.
The distribution, if any, of the total valuation of this report between
land and improvements applies only under the stated program of
utilization. The separate allocations for land and buildings must not
be used in conjunction with any other appraisal and are invalid if so
used.
2.
Possession of this report, or a copy thereof, does not carry with it the
right of publication. It may not be used for any purpose by any
person other than the party to whom it is addressed without the
written consent of the appraisers, and in any event, only with proper
written qualification and only in its entirety.
3.
The appraisers herein by reason of this appraisal is not required to
give further consultation, testimony, or be in attendance in court with
reference to the property in question unless arrangements have been
previously made.
4.
Neither all nor any part of the contents of this report (especially any
conclusions as to value, the identity of the appraisers, or the firm
with which the appraisers are connected) shall be disseminated to
the public through advertising, public relations, news, sales, or other
media without the prior written consent and approval of the
appraisers.
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QUALIFICATIONS OF THE APPRAISER
J. MARK QUINLIVAN
Experience:
Engaged in the field of real estate appraising since 1972. Associated with F. Robert Quinlivan,
MAI, from 1972 to 1985. Currently President of Quinlivan Appraisal, P.A., a Real Estate
Appraising and Consulting Firm, established in 1964.
Graduate:
University of Notre Dame
BBA Bachelor of Business Administration (Major in Finance and Business Economics)
University of Maryland
MBA - Master of Business Administration (Concentration in Finance)
University of Miami Law School
JD Juris Doctor (Concentration in Real Estate and Taxation)
Florida International University
MSM - Master of Science in Management (Major in Real Estate)
University of Miami
MALS - Master of Arts in Liberal Studies (Humanities)
Professional Affiliations:
Member of the Appraisal Institute (MAI # 5791)
Former Member of the Florida Bar (1977-2009)
Real Estate Broker, State of Florida (# 0125264)
Certified General Appraiser, State of Florida, License # RZ0000112
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Qualified as an Expert Witness in the Following Courts:
Miami-Dade, Broward, Palm Beach, and Monroe County Circuit Courts
United States Bankruptcy Court
United States District Court
Other Activities:
Appraiser Special Master (1978 - 1980),
Miami-Dade County Property Appraisal Adjustment Board
Past President - Miami Chapter m 71,
Society of Real Estate Appraisers (1983 - 1984)
Past President - South Florida Chapter m 24, Appraisal Institute (1988)
Past Governing Councilor of the American Institute of Real Estate Appraisers (1990)
Young Advisory Council of Society of Real Estate Appraisers (1979 and 1980)
Editorial Review Board (1981 - 1991)
THE REAL ESTATE APPRAISER AND ANALYST published quarterly by the Society of
Real Estate Appraisers
Recent Publications:
"Non-Conforming Use Properties: The Concept of Positive Economic Obsolescence", The
Appraisal Journal, January 1981, Pages 45-51. (Arthur A. May Memorial Award 1982).
QUINLIVAN APPRAISAL
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QUALIFICATIONS OF THE APPRAISER
BRIAN M. QUINLIVAN
Experience:
Engaged in the field of real estate appraising since 2004, associated with J. Mark Quinlivan,
president of Quinlivan Appraisal, P.A., a Real Estate Appraising and Consulting Firm,
established in 1964.
Education:
University of Florida
Major in Business (1996-2001)
Florida International University
Major in Real Estate (Expected graduation- 2011)
Recent Real Estate Classes:
Legal Environment of Real Estate
The Appraisal of Real Estate
Real Estate Principles
Real Estate Investment
Income Capitalization
Financial Management
Professional Affiliations:
Registered Trainee Appraiser, State of Florida, License No. RI 19051
QUINLIVAN APPRAISAL
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Quinlivan Appraisal has prepared Appraisal Reports for the following:
Institutions and Corporations:
AT&T
Archdiocese of Miami
Atlantic Security Bank
The Bank of America
Bank United
Barry University
Bessemer Trust Company
California Bank and Trust
Chevron Oil Company
Chase Manhattan Bank
Chemical Bank
Citibank
Citrus Bank
City National Bank of Miami
Coamerica Bank
Coconut Grove Bank
Commerce Bank
Commercial Bank of Florida
Consolidated Bank
Colonial Bank
County National Bank
Eagle National Bank
Eastern National Bank
Equitable Bank
Espirito Santo Bank
Farm Credit of South Florida
Fidelity Bank
First International Bank
First National Bank of South Miami
Florida International University
First Nationwide Bank
Florida Memorial College
Florida Power and Light Company
Florida Rock Industries
Great Eastern Bank of Florida
Greyhound Lines
HSBC
Hemisphere National Bank
Intercontinental Bank
International Bank of Miami, N.A.
QUINLIVAN APPRAISAL
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Jefferson Bank
LaSalle National Bank
Marine Midland Bank
McDonalds Corp.
Mellon United National Bank
Metro Bank
Miami-Dade County Community College
Miami-Dade Water and Sewer Authority
Northern Trust Bank of Florida
Ocean Bank
Pacific National Bank
Pan American Bank
Pointe Bank
Shell Oil Company
South Trust Bank
SunTrust Bank
TotalBank
Trade National Bank
Trust for Public Lands
UniBank
Union Planters National Bank
University of Miami
Wachovia
Wal-Mart
YMCA
Governmental Agencies:
City of Aventura
City of Coral Gables
City of Hialeah
City of Miami
City of Miami Parking Authority
City of Miami Beach
City of Miramar
City of North Bay Village
City of North Miami Beach
City of South Miami
City of Sunny Isles Beach
Miami-Dade County Aviation Department
Miami-Dade County Department of Development & Facilities Management
Miami-Dade County HUD
Miami-Dade County Property Appraisal Adjustment Board
Miami-Dade County Public Schools
Miami-Dade County Public Works Department
Miami-Dade County Transportation Administration
Miami-Dade Water & Sewer Department
QUINLIVAN APPRAISAL
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South Florida Water Management District
State of Florida, Attorney General’s Office
State of Florida, Department of Community Affairs
State of Florida, Department of Corrections
State of Florida, Department of Environmental Protection
State of Florida, Department of Insurance
State of Florida, Department of Rehabilitation and Liquidation
State of Florida, Department of Transportation
Town of Golden Beach
United States Army Corps of Engineers
United States Department of Justice
United States Department of Commerce
United States Department of the Interior
United States General Services Administration
Village of Islamorada
Village of Key Biscayne
Village of Pinecrest
Law Firms:
Akerman Senterfitt
Greenberg, Traurig
Daniels, Kashton, Downs and Robertson
Holland and Knight, LLP
Shutts & Bowen
Ruden McClosky, LLP
Steel, Hector & Davis, LLP
Weiss, Serota, Helfman, Pastoriza, Guedes, Cole and Boniske, P.A.
Types of Properties Appraised:
Single Family Residences
Apartment Buildings
Office Buildings
Retail Stores
Shopping Centers
Condominium Apartment Buildings
Golf Courses
Residential Subdivisions
Automobile Dealerships
Vacant Land
Hotel/Motels
Warehouses
Nursing Homes
Mobile Home Parks
Schools
Service Stations
Marinas
Wetlands
QUINLIVAN APPRAISAL
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ENGAGEMENT LETTER
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RENT ROLL / EXPENSES
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OFFICE CONDOMINIUM UNITS
LOCATED AT:
UNITS 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111, 113,
114, 116, 117, 202, 203, 304, 320, 370, 380 & 390
THE LAKES FRONTAGE CENTER CONDOMINIUM
14100 PALMETTO FRONTAGE ROAD
MIAMI LAKES, FLORIDA 33016
PREPARED FOR:
EASTERN NATIONAL BANK
799 BRICKELL PLAZA, 10TH FLOOR
MIAMI, FLORIDA 33131
AS OF:
AUGUST 22, 2011
PREPARED BY:
QUINLIVAN APPRAISAL, P.A.
7300 NORTH KENDALL DRIVE - SUITE 530
MIAMI, FLORIDA 33156
QUINLIVAN APPRAISAL
A PROFESSIONAL ASSOCIATION
7300 NORTH KENDALL DRIVE, SUITE 530
MIAMI, FLORIDA 33156
J. Mark Quinlivan, MAI
State Certified General Appraiser
RZ 000112
Telephone (305) 663-6611
Fax (305) 670-4330
[email protected]
Thomas F. Magenheimer, MAI
State Certified General Appraiser
RZ 000553
August 24, 2011
Marianella Lozada-Duque
Eastern National Bank
799 Brickell Plaza, 10th Floor
Miami, Florida 33131
Dear Ms. Lozada-Duque:
In accordance with your request and authorization, I have prepared this Appraisal Report
covering the following described property:
Units 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111, 113,
114, 116, 117, 202, 203, 304, 320, 370, 380 & 390 of The Lakes
Frontage Center Condominium located at 14100 Palmetto Frontage
Road, Miami Lakes, Florida
The purpose of this Appraisal is to estimate the “As Is” Market Value of the subject units as of
the market conditions existing on August 22, 2011, being one of the dates of personal inspection.
The Appraisal Report that follows sets forth the identification of the property, the assumptions
and limiting conditions, pertinent facts about the area and the subject property, comparable data,
the results of the investigations and analyses, and the reasoning leading to the conclusions set
forth.
This report was prepared in accordance with the requirements of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (FIRREA) relating to appraisal standards as
enumerated in Title 12, Code of Federal Regulation, Part 34 (12CFR34) and in compliance with
the most current Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by
the Appraisal Standards Board of the Appraisal Foundation.
Marianella Lozada-Duque
August 24, 2011
Page 2
Based on the inspection of the property and the investigation and analyses undertaken, I have
formed the opinion that the subject units had an “As Is” Market Value based upon the market
conditions prevalent on August 22, 2011, as follows:
TWO MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS
($2,650,000)
Respectfully submitted,
J. Mark Quinlivan, MAI
State-Certified General Appraiser
Certification Number: RZ0000112
Brian M. Quinlivan
Registered Trainee Appraiser
License Number: RI19051
JMQ/rp
(11-063U)
TABLE OF CONTENTS
PAGE
COVER PAGE
TRANSMITTAL LETTER
TABLE OF CONTENTS
CERTIFICATION OF VALUE .................................................................................................... 1
SUMMARY OF SALIENT FACTS AND CONCLUSIONS.................................................. 3
INTRODUCTION........................................................................................................................ 21
INTRODUCTION ................................................................................................................... 22
IDENTIFICATION OF THE PROPERTY........................................................................... 22
LOCATION ............................................................................................................................. 22
PURPOSE AND DATE OF APPRAISAL ............................................................................. 22
INTENDED USE AND INTENDED USER OF APPRAISAL............................................. 22
LEGAL DESCRIPTION......................................................................................................... 22
PROPERTY RIGHTS APPRAISED ..................................................................................... 22
DEFINITION OF MARKET VALUE ................................................................................... 23
ASSESSMENT AND TAXES – 2010...................................................................................... 24
OWNER OF RECORD AND ADDRESS .............................................................................. 25
FIVE-YEAR HISTORY OF TITLE ...................................................................................... 25
SCOPE OF THE APPRAISAL ................................................................................................... 26
LOCATION ANALYSIS .............................................................................................................. 29
COUNTY DATA...................................................................................................................... 30
NEIGHBORHOOD DATA..................................................................................................... 39
SITE DATA .................................................................................................................................. 42
ZONING ....................................................................................................................................... 45
HIGHEST AND BEST USE ....................................................................................................... 48
DESCRIPTION OF IMPROVEMENTS.................................................................................... 52
THE APPRAISAL PROCESS..................................................................................................... 58
INCOME APPROACH................................................................................................................ 61
SALES COMPARISON APPROACH ........................................................................................ 67
RECONCILIATION AND VALUE CONCLUSION ................................................................. 85
ADDENDA ................................................................................................................................... 88
ASSUMPTIONS AND LIMITING CONDITIONS
QUALIFICATIONS
CLIENT LIST
ENGAGEMENT LETTER
RENT ROLL / EXPENSES
CERTIFICATION OF VALUE
The undersigned hereby certifies that, to the best of my knowledge and belief:
(A)
The statements of fact contained in the report are true and correct.
(B)
The reported analyses, opinions and conclusions are limited only by the
assumptions and limiting conditions set forth, and are our personal,
unbiased professional analyses, opinions and conclusions.
(C)
I have no present or prospective interest in the property that is the subject
of this report, and we have no personal interest or bias with respect to the
parties involved.
(D)
I have no bias with respect to the property that is the subject of this report
or to the parties involved with this assignment.
(E)
My engagement in this assignment is not contingent upon developing or
reporting predetermined results.
( F)
The appraiser’s compensation for completing this assignment is not
contingent upon the reporting of a predetermined value or direction in
value that favors the cause of the client, the amount of the value estimate,
the attainment of a stipulated result, or the occurrence of a subsequent
event directly related to the intended use of this appraisal. Furthermore,
the appraisal assignment is not based on a requested minimum valuation,
a specific valuation or the approval of a loan.
(G)
The appraiser’s analyses, opinions and conclusions are developed, and
this report is prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice, and the requirements of the State of
Florida for state-certified appraisers.
(H)
Use of this report is subject to the requirements of the State of Florida
relating to review by the Real Estate Appraisal Subcommittee of the
Florida Real Estate Commission.
(I)
Brian Quinlivan has made a personal inspection of the property that is the
subject of this report.
(J)
No one provided professional assistance to the persons signing this
report.
QUINLIVAN APPRAISAL
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(K)
The reported analyses, opinions, and conclusions are developed, and this
report is prepared, in conformity with the requirements of the Code of
Professional Ethics and the Standards of Professional Appraisal Practice
of the Appraisal Institute.
(L)
The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
(M)
The appraiser has not performed any services on the subject property
within the past three years.
As of the date of this report, J. Mark Quinlivan has completed the requirements under the
continuing education program for The Appraisal Institute.
Based on the inspection of the property and the investigation and analyses undertaken, subject to
the assumptions and limiting conditions set forth in the Addendum of this report, I have formed
the opinion, as of August 22, 2011 the subject units had an “As Is” Market Value of:
TWO MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS
($2,650,000)
J. MARK QUINLIVAN, MAI
STATE CERTIFIED GENERAL APPRAISER
CERTIFICATION NUMBER: RZ0000112
BRIAN M. QUINLIVAN
REGISTERED TRAINEE APPRAISER
LICENSE NUMBER: RI 19051
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SUMMARY OF SALIENT FACTS AND CONCLUSIONS
Type Report
Self-contained
Purpose of Appraisal
“As Is” Market Value
Property Rights Appraised
Fee Simple
Location
14100 Palmetto Frontage Road
Miami Lakes, Florida
Legal Description
Units 100, 101, 103, 104, 105, 106, 107, 108, 109,
110, 111, 113, 114, 116, 117, 202, 203, 304, 320,
370, 380 & 390 and a combined 64.528% interest in
the common elements, The Lakes Frontage Center
Condominium, OR Book 24401, Page 4031, Public
Records of Miami-Dade County, Florida.
Age
1983
Zoning
IU-C, Industrial Conditional
Highest and Best Use
Existing office condominium use
Indications of Value:
Cost Approach
Not Applicable
Income Approach
$2,210,000
Sales Comparison Approach (Gross Value) $3,320,000
“As Is” Market Value
$2,650,000
Date of Value Estimate
August 22, 2011
Date of Inspection
August 22, 2011
Date of Report
August 24, 2011
Remarks
The subject units are located in a 30-unit office
condominium building known as The Lakes
Frontage Center Condominium.
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14100 PALMETTO FRONTAGE ROAD
LOOKING NORTHEASTERLY ON PALMETTO FRONTAGE ROAD- SUBJECT BUILDING TO LEFT
QUINLIVAN APPRAISAL
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SUBJECT BUILDING
LOOKING NORTHWESTERLY ALONG NW 80 AVENUE- SUBJECT BUILDING TO RIGHT
QUINLIVAN APPRAISAL
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INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
6
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
7
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
8
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
9
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
10
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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11
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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12
UNFINISHED UNIT
UNFINISHED UNIT
QUINLIVAN APPRAISAL
13
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
14
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
15
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
16
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
17
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
18
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
QUINLIVAN APPRAISAL
19
INTERIOR- TYPICAL UNIT
INTERIOR- TYPICAL UNIT
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INTRODUCTION
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INTRODUCTION
IDENTIFICATION OF THE PROPERTY
Twenty-two office condominium units located within the Lakes Frontage Center Condominium.
LOCATION
14100 Palmetto Frontage Road
Miami Lakes, Florida.
PURPOSE AND DATE OF APPRAISAL
The purpose of this Appraisal is to estimate the “As Is” Market Value of the subject units as of
the market conditions existing on August 22, 2011, being one of the dates of personal inspection.
INTENDED USE AND INTENDED USER OF APPRAISAL
The intended use of this appraisal is to assist the client in loan underwriting and/or credit
decisions. The intended user is Eastern National Bank.
LEGAL DESCRIPTION
Units 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111, 113, 114, 116, 117, 202, 203, 304,
320, 370, 380 & 390 and a combined 64.528% interest in the common elements, The Lakes
Frontage Center Condominium, OR Book 24401, Page 4031, Public Records of Miami-Dade
County, Florida.
PROPERTY RIGHTS APPRAISED
The property is appraised in fee simple: a fee without limitations to any particular class of heirs
or restrictions, but subject to the limitations of eminent domain, escheat, police power and
taxation, as well as utility easements of record.
QUINLIVAN APPRAISAL
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DEFINITION OF MARKET VALUE
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)
buyer and seller are typically motivated;
(2)
both parties are well informed or well advised and acting in what
they consider their own best interest;
(3)
a reasonable time is allowed for exposure to 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 a normal consideration for the property sold
unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.
(Source: USPAP 2010-2011 Edition)
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ASSESSMENT AND TAXES – 2010
The subject property is assessed under the jurisdiction of the Town of Miami Lakes, Florida.
The assessment for the property is established each year as of January 1st by the Miami-Dade
County Property Appraiser's Office at 100% of "Just Value." Just Value has been equated to
Market Value less closing costs. While the State of Florida requires real estate to be assessed at
100% of Just Value, in reality the ratio of the assessed value to sales price is generally below
100%.
Folio No.
32-2015-045-0010
32-2015-045-0020
32-2015-045-0040
32-2015-045-0050
32-2015-045-0060
32-2015-045-0070
32-2015-045-0080
32-2015-045-0090
32-2015-045-0100
32-2015-045-0110
32-2015-045-0120
32-2015-045-0140
32-2015-045-0150
32-2015-045-0160
32-2015-045-0170
32-2015-045-0200
32-2015-045-0210
32-2015-045-0250
32-2015-045-0270
32-2015-045-0280
32-2015-045-0290
32-2015-045-0300
Unit
100
101
103
104
105
106
107
108
109
110
111
113
114
116
117
202
203
304
320
370
380
390
Assessed Value
$203,070
$168,270
$77,380
$36,010
$164,120
$169,480
$266,250
$133,300
$151,650
$205,490
$122,910
$59,900
$65,780
$34,100
$60,250
$63,360
$175,360
$293,260
$204,100
$309,190
$249,120
$282,700
$3,495,050
Millage Rate
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
0.0205295
QUINLIVAN APPRAISAL
Tax Amount
$4,168.93
$3,454.50
$1,588.57
$739.27
$3,369.30
$3,479.34
$5,465.98
$2,736.58
$3,113.30
$4,218.61
$2,523.28
$1,229.72
$1,350.43
$700.06
$1,236.90
$1,300.75
$3,600.05
$6,020.48
$4,190.07
$6,347.52
$5,114.31
$5,803.69
$71,751.63
24
OWNER OF RECORD AND ADDRESS
Palmetto Road Frontage, LLC
14100 Palmetto Frontage Road, #101
Miami Lakes, FL 33016-1557
FIVE-YEAR HISTORY OF TITLE
According to the Public Records of Miami-Dade County, there have been no sale transactions of
the subject units within the past three years.
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SCOPE OF THE APPRAISAL
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SCOPE OF THE APPRAISAL
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.
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.
Data related to the subject property was derived from various sources including but not limited to
the Miami-Dade County Property Appraiser’s Office, Miami-Dade County plats as compiled by
First American Real Estate Solutions, Inc., FEMA flood zone maps, Land Development
Regulations of the Town of Miami Lakes, condominium documents and tax roll information
provided by ISCNET.
Comparable sale sources include First American Real Estate Solutions, Inc., an on-line computer
service provided by First American Real Estate Solutions (ISC Division), Board of Realtors’
Multiple Listing Services, Miami-Dade County Property Appraiser’s Office and LoopNet. Sales
prices are typically confirmed with a party to the transaction, i.e., buyer, seller, real estate agent
or attorney to the transaction.
A search for office condominium units within the subject market area was conducted. The initial
sales period researched was from January of 2009 through the date of valuation. The sales all
have similar improvements and highest and best uses as the subject property. Several other sales
were considered, but were not included because there was too wide a difference in physical
factors, location and time.
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ESTIMATED MARKETING PERIOD
The estimated value of the subject is predicated upon a normal marketing period. A normal
marketing period is generally defined as the most probable amount of time necessary to expose
and actively market a property on the open market to achieve a sale. Implicit in this definition
are the following assumptions:
(A) The property will be actively exposed and aggressively marketed to potential
purchasers through marketing channels commonly used by sellers and buyers
of similar type properties.
(B)
The property will be offered at a price reflecting the most probable markup
over market value used by sellers of similar type properties.
(C)
A sale will be consummated under the terms and conditions of the definition
of Market Value required by the regulation.
In order to estimate the marketability of this property, sales activity in this market area is
reviewed over the past three years, multiple listings are reviewed and real estate brokers
operating in the area are interviewed.
Based on the above sources, the marketing period for the subject property is estimated to be less
than twelve months.
ESTIMATED EXPOSURE TIME
Exposure time is defined as the estimated length of time the property interest being appraised
would have 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.
The overall concept of reasonable exposure encompasses not only adequate, sufficient and
reasonable time but also adequate, sufficient and reasonable effort.
In estimating a reasonable exposure time for the subject property, the appraisers have taken the
following steps:
Discussion with buyers, sellers, brokers and/or review of multiple listings of commercial
condominium units in the area related to historic marketing periods.
Based on the above sources, exposure time is estimated to have been twelve months for the
subject property.
QUINLIVAN APPRAISAL
28
LOCATION ANALYSIS
QUINLIVAN APPRAISAL
29
COUNTY DATA
Miami-Dade County - Location and Size
Miami-Dade County, which comprises the metropolitan area of Miami, is situated on the
southeast tip of the state of Florida. It is bordered on the east by the Atlantic Ocean, on the west
by Monroe and Collier Counties, on the north by Broward County, and on the south by Monroe
County (the Florida Keys).
Miami-Dade County, the largest county in area and population in the state of Florida, covers an
area of 2,054 square miles with an altitude ranging from sea level to 25 feet. Water covers 354
square miles of the County.
Although the County is relatively large, approximately half of the total area is comprised of the
Everglades, which is a natural area that will not be developed. Therefore, only the eastern section
of Miami-Dade County encompasses the area which is currently developed or available for
future development.
Miami-Dade County's location, its southern latitude and proximity to the Gulf Stream provide
for mild winters and pleasant summers.
Population
The state of Florida has increased rapidly in population from 9,740,000 in 1980 to 12,937,926 in
1990 and 15,982,378 in 2000. The 2009 population of Florida was estimated at 18,537,969.
Florida is expected to add an average of only about 209,000 residents a year between 2007 and
2010, compared with annual increases of about 418,000 people between 2002 and 2006.
Miami-Dade County's population increased from 1,626,000 in 1980 to 1,937,094 in 1990,
reflecting an average annual compounded growth rate of 1.77%, compared with 2.88% for the
state of Florida. By 2000, Miami-Dade County's population increased to approximately
2,253,362 and in 2008 it is estimated at 2,398,245. The population is estimated to grow to
2,560,000 by the Year 2010.
Miami-Dade County's population growth during the last four decades has been dramatic
especially in relation to national trends. From 1950 to 1990 the United States population
increased by 60% while the population of Miami-Dade County has almost quadrupled from
495,084 to 1,937,000. During this period, the state of Florida was elevated from the 20th most
populous state to the 4th in 1990 and continues to be the fourth most populous state.
During the 1960s, the major increase in Miami-Dade County's population was due to the large
immigration of Cubans. Today, Cuban and other Spanish speaking people comprise
approximately 62% of Miami-Dade County's population. The increase in Hispanic population
has had favorable effects on the local economy and has helped to create a multi-national cultural
environment in the area.
QUINLIVAN APPRAISAL
30
The overall population of Miami-Dade County is well dispersed throughout the entire area, yet
has several key areas of concentration. During the 1960s, several sub-areas accounted for
approximately 70% of the growth. These areas include Hialeah, northern Miami-Dade County,
the Beach area, the Miami River area, the area southwest of Miami International Airport, as well
as the Kendall and Cutler Ridge areas. In the first half of the 1970s, population growth continued
in an uneven fashion especially in the urban fringes.
Since 1970, approximately three-fourths of the total population growth for the County has
occurred in the unincorporated areas. The older centrally located cities such as Miami, Miami
Beach and Coral Gables have grown at modest rates from 1970 to 1990. Unincorporated MiamiDade County has evidenced the most rapid growth which continues to occur in areas in northeast
Miami-Dade County (Aventura), as well as the currently expanding southwest area, especially in
sections of Flagler Street, S.W. 8th Street, North Kendall Drive and Homestead.
Population trends indicate that most of the population growth in Miami-Dade County between
2010 and 2015 will occur in outlying areas such as North Miami Beach, the Kendall area west of
the Florida Turnpike, the S.W. 8th Street area west of the Florida Turnpike, the Hialeah-Miami
Lakes area, as well as those areas both east and west of U.S. Highway 1 between Cutler Ridge
and Florida City.
Employment Trends
The dominant characteristic of Miami-Dade County is that it is primarily trade and service based.
Personal, business and repair services have had a substantial increase in importance in the
economic base over the last decade. The major sectors of the economy include services,
wholesale and retail trade, transportation, communications, public utilities, government and
manufacturing. The most dominant industries which form the County's economic base are
construction and tourism.
Tourism is Miami-Dade County's biggest industry with an estimated 12.1 million visitors in
2008 contributing to more than 50 percent of the area's economy. Aviation and related industries
are responsible for another large segment of the economy.
The largest employer in Miami-Dade County is the Miami-Dade County School Board, followed
by Miami-Dade County, Federal Government, State of Florida, Jackson Health System,
American Airlines, University of Miami, Baptist Health Systems of South Florida, AT&T, and
Florida Power and Light. Assuming additional importance is the growing prominence of MiamiDade County as a center for international trade, finance and tourism. The establishment of
Miami as the "Gateway of the Americas" should provide the area with a much needed degree of
economic diversification. This should enable Miami-Dade County to weather slowdowns in the
national economy by an increase of trade through the Port of Miami, growth of international
arrivals at the airport, the Free Trade Zone, and the substantial foreign investment in the local
economy, particularly in real estate.
QUINLIVAN APPRAISAL
31
In December of 2009, Florida’s unemployment rate was 11.8 percent, up from 3.6 percent in
2006. The unemployment rate for Miami-Dade County was 11.3 percent, up from 3.8 percent in
2007.
TABLE 1
ESTIMATES OF MIAMI-DADE COUNTY TOURIST TRENDS
INTERNATIONAL
DOMESTIC
TOTAL
2005
5,248,380
6,053,220
11,301,600
2006
5,322,200
6,262,800
11,585,000
2007
5,492,900
6,473,000
11,965,900
2008
6,169,043
6,662,546
12,831,589
2009
5,684,400
6,251,564
11,935,964
2010
6,060,100
6,544,000
12,604,100
Source: Greater Miami Convention and Visitors Bureau, Tourism Facts and Figures
Figures for 2010 indicate 12,604,100 overnight visitors came to Miami-Dade County, a 5.6%
increase from 2009.
Table 2 shows that the bulk of international visitors to Miami-Dade County originate from
Central and South American Countries (52.2%), followed by European Countries (23.5%) and
Canada (9.9%). England and Germany accounted for the largest proportion of European visitors.
In 2010 there were a total of 4,334,004 passengers passing through the Port of Miami and
approximately 17,985,000 arriving through Miami International Airport. During 2010, the
number of Port of Miami passengers increased 9.3% from 2009 and 2.7% from 2008. During
2010 the passengers arriving at the airport increased 5.7% from 2009 and 5.5% from 2008. The
arrivals at the airport are fairly evenly distributed between international and domestic passengers.
In 2010, domestic passengers totaled 9,432,074 and international passengers totaled 8,552,895.
QUINLIVAN APPRAISAL
32
TABLE 2
ESTIMATES OF INTERNATIONAL VISITORS BY REGION
REGION
2006
2007
2008
2009
EUROPEAN COUNTRIES
23.0%
23.6%
23.5%
22.5%
CARIBBEAN COUNTRIES
12.5%
12.4%
12.1%
12.0%
9.4%
9.3%
9.3%
9.1%
42.8%
42.3%
42.9%
44.9%
9.9%
10.1%
9.9%
9.5%
OTHER COUNTRIES
2.4%
2.3%
2.3%
2.0
TOTAL
100%
100%
100%
100%
CENTRAL AMERICAN
COUNTRIES
SOUTH AMERICAN
COUNTRIES
CANADA
Source: Greater Miami Convention and Visitors Bureau, Tourism Facts and Figures
There are approximately 50,000 motel and hotel rooms in 470 lodging facilities in Greater
Miami and the Beaches. The area had an occupancy rate of 74.5 percent as of January 2011,
down 0.8% from January 2010. The difference between the 2010 and 2011 hotel occupancy
figures may be skewed by the presence of the Super Bowl in South Florida in 2010. The airport
area had the highest occupancy rate as of January 2011 at around 85%.
Average room rate for hotel rooms in Miami-Dade County was $171.51 in January of 2011, up
from $164.88 in January of 2010. The average room rate for the same period in 2008 was
$146.54. Therefore, the average hotel room rates in 2011 indicate an increase of 4.0% over the
2010 rate and an increase of 17.0% over the 2008 rate.
The first in a series of new luxury properties opened in February 2004 when the 380-room Ritz
Carlton opened in Miami Beach. In May of 2005, the 210-room Le Meridian opened in Sunny
Isles Beach. Three other new hotels with a total of 271 rooms opened in Miami Beach during
2005. In 2009, 11 new hotels with 2,054 rooms were completed with the largest being the Epic
Hotel in downtown Miami.
Miami-Dade Financial Resources
Over the course of the last decade, Greater Miami has evolved into a major international
financial center. Domestic and international businesses find convenient access to a full array of
services provided by locally-based state and national commercial banks, savings and loan
associations, foreign banks, non-depository credit institutions, securities and commodities
brokers and insurance companies.
QUINLIVAN APPRAISAL
33
Greater Miami has the largest concentration of domestic and international banks south of New
York City. With more than 90 percent of the state's foreign banks operating offices in Miami,
this market dominates international banking in Florida.
Overall, about 150 domestic banks, foreign banks and Edge Act banks operate in Greater Miami.
The greatest concentration is located along Brickell Avenue in downtown Miami.
Transportation
Miami-Dade County has an extensive expressway system with access to all points in the County.
However, due to the rapidly increasing population, some of the expressways, especially
Interstate 95, are becoming overburdened. In 1985 Miami-Dade County completed a 20.5 mile
elevated rapid transit system. This system originally extended southward from downtown Miami
to Dadeland, paralleling U.S. Highway 1 and northwesterly from downtown Miami to Hialeah.
Recently, the system was extended about a mile from Hialeah to the Palmetto Expressway at NW
74th Street. In conjunction with this system, there is a Downtown People Mover Automated
Transit system which encircles the central business district of Miami and extends south to the
Brickell area and north to the Omni area.
Miami-Dade County is served by the CSX and Florida East Coast Railroads for freight and
Amtrak Rail, Greyhound and Trailways Interstate bus lines for passenger service.
Miami International Airport, one of the nation's largest and busiest, had approximately 35.7
million arrivals and departures in 2010. The airport is currently undergoing a $5.4 billion
expansion. A South Terminal has recently been completed and a North Terminal is under
construction and a fourth runway is planned.
Miami has become a port of embarkation for airlines and ships bound for Central and South
American Countries. The Port of Miami, besides being the largest passenger port in the nation, is
also important as a cargo center with a 2009 annual tonnage of approximately 6.83 million down
from 7.43 million in 2008. The port’s traditional customer base has been Europe, China, Latin
America and the Caribbean, accounting for 65% of the port’s total volume.
Miami's comprehensive transportation system and its strategic location have enabled it to
become an important international transportation center, providing commercial access to Latin
America and the Caribbean.
Government
Miami-Dade County is comprised of unincorporated areas, as well as 36 municipalities, the
largest of which is the city of Miami.
QUINLIVAN APPRAISAL
34
Miami-Dade County is governed under a modified two-tier metropolitan government. The
purpose of this type government was to establish one governing body for the county, and to
establish one supply of services such as fire, police, etc. for the county. The upper tier is the
County, which provides broad "regional" or county functions, such as metropolitan planning,
welfare, health and transit services. The thirty-six municipalities represent the lower tier of
government, providing a varying array of services within their jurisdictional boundaries. The
County also maintains lower tier functions, such as the provision of municipal-type services,
including police and fire, to the unincorporated areas and certain municipalities on a negotiated
basis.
The County operates under the Commission-Manager form of government. Legislative and
policy-making authority is vested in the elected thirteen-member Board of County
Commissioners; the Commission appointed County Manager is the chief administrator. MiamiDade County has operated under the metropolitan form of government since 1957, when the
Home Rule Charter was passed by the local electorate. Prior to Home Rule, the County had to
rely on the State Legislature for the enactment of its laws.
County government had not been able to respond to the tremendous demand for municipal
services in this rapidly urbanizing area, which is larger than the State of Rhode Island or
Delaware. The need to combine services duplicated by the County and numerous cities was also
clearly evident. The Charter permitted the limited County government to reorganize into a
general purpose "municipal-type" government capable of performing the full range of public
functions into an area wide operation.
Real Estate
At the end of 2010, the Miami-Dade County Office Market contained approximately 81 million
square feet of office space. Approximately 28.8% of this space is located in the Miami central
business district and adjacent Brickell Avenue and 20% in the Airport West area. The vacancy
rate of office buildings in Miami-Dade County was flat during 2010 at about 15%, but up from
11.3% in 2007 to 10.8% in 2008. However, during 2010 office inventory grew by about 800,000
square feet, most of which was in the Brickell Avenue market area. The total new offices under
construction totals about 1,213 million square feet. Again, most of the new office construction is
concentrated in the Brickell Avenue market area. Other market areas with new construction of
office space include Coral Gables and Central Miami. Asking rental rates have been declining in
2010 with the average county lease rate falling below $30 per square foot for the first time since
2006.
Office rental rates in new buildings typically range from $26.00 to $40.00 per square foot. The
low end of the range is for office space in the suburban markets. The upper end of the range is
for first class office space in Downtown Miami, Brickell Avenue, Coconut Grove and Coral
Gables.
QUINLIVAN APPRAISAL
35
The Greater Miami Industrial Market, as of the end of 2010, consisted of approximately 178.7
million square feet of industrial space and approximately 16.1 million square feet of flex space.
The approximate percentage location of this space is as follows:
MARKET AREA
% OF TOTAL MARKET SPACE
AIRPORT WEST
29.6%
HIALEAH
25.6%
MEDLEY
16.7%
MIAMI LAKES
3.3%
NORTHEAST DADE
4.8%
NORTHCENTRAL DADE
14.9%
SOUTH DADE
5.1%
TOTAL
100%
The county's vacancy rate for the overall Miami-Dade County industrial market for the end of
2010 was 10%. Airport West, the largest industrial area, had a vacancy rate of 10.9% as of the
end of 2010. Industrial rental rates generally average $7.50 per square foot, down 11% on an
average of $8.00 per square foot at the end of 2009. No new industrial space is expected to be
constructed during much of 2011.
For the month of fourth quarter of 2010 there were 842 building permits issued in Miami-Dade
County, compared to 398 permits issued in the fourth quarter of 2009. The increase in new
permits issued between the same quarter of 2009 to 2010 is approximately 3.8 times. The total
number of permits issued in 2010 amounted to 2,297. This is in contrast to the 1,150 permits
issued in 2009.
Miami-Dade’s single-family home sales increased 11.1% in the fourth quarter of 2010 in
comparison with the fourth quarter of 2009. A total of 200 new homes were reported sold in the
fourth quarter of 2010. In the fourth quarter of 2010, the median sales price for single-family
units was $206,578, down 24.9% from the year earlier.
Existing condo sales showed gains of 25.8% in December 2009 over the units sold in November
2009. The median sales price for condos decreased slightly by 0.5% during the same period.
During the last 12 months, condo sales increased 49.6%. Over the same period, the average sales
price was $142,650; a year ago, it was $239,367 for a 40.4% decline.
Reinhold P. Wolff Quarterly Housing Report shows a vacancy rate of 2.8% for rental apartment
buildings in the First Quarter of 2011, lower than the 5.8% rate of the first quarter of 2010. The
vacancy rate had been declining steadily since 2006 due to the reduction of inventory caused by
the large amount of condominium conversions. Since 2007 many ownership housing units,
including both condominiums and single family houses, were placed into the rental market by
developers and individual owners.
QUINLIVAN APPRAISAL
36
The condominium apartment market is currently experiencing an all-time high inventory for new
units. High-rise condominium towers have been recently completed in the traditional
condominium locations such as Brickell Avenue, Coral Gables, Aventura and the Miami
beaches, as well as areas with no existing high-rise condominiums, such as the central business
district of Miami, the Edgewater, Little Havana and Shenandoah neighborhoods of the city of
Miami. Additionally, many existing rental apartment projects have been converted to
condominiums. Sales of new condominiums peaked in the second quarter of 2005 with 14,700
units sold during the first six months of 2005. New condominium sales during 2010 totaled
3,700 units, down 19% from the 4,556 units sold during 2009. The new condominium apartment
market is in a largely oversupply condition.
The Miami-Dade County retail market contains approximately 59.5 million square feet in
buildings over 20,000 square feet. The major retail markets in Miami-Dade County include
Hialeah, Coral Gables/South Miami-Dade, Aventura and Kendall. Rental rates typically range
from $20.00 to $45.00 per square foot with rates in the $80 to $120 per square foot on South
Beach. The overall Miami-Dade County vacancy rate for 2010 was approximately 5.8%. The
total net absorption of new retail space was only about 39,400 square feet during 2010. Very
little, if any, significant sized retail space is expected to be constructed during 2011.
Conclusions
In the future, one of the principal growth areas for Miami-Dade County is expected to be the
international sector. Miami-Dade County, because of its geographic location and excellent
transportation facilities, is well-suited to attract both business individuals and tourists from Latin
America. It is already one of the principal shopping markets for Central and South Americans
visiting the United States and one of the principal export points for goods and services destined
for Latin America.
The existence of major financial institutions, retail outlets, corporations and other business
entities, coupled with its geographic location, transportation systems and planned international
trade centers give Miami-Dade County an excellent opportunity for continued growth as an
international center.
During 2010 all segments of the commercial real estate market will continue to experience
increasing vacancy rates and decreasing rental rates. With decreasing sale prices for both single
family residences ad condominium apartment units, sales activity is expected to rise during 2011.
QUINLIVAN APPRAISAL
37
LOCATION MAP
QUINLIVAN APPRAISAL
38
NEIGHBORHOOD DATA
The subject site is located within the Town of Miami Lakes, approximately fourteen miles
northwest of the Central Business District of Miami.
The subject property may further be identified as being located on the northwesterly corner of
Palmetto Frontage Road and N.W. 80th Avenue, one block west of the Palmetto Expressway.
The boundaries of the subject neighborhood are generally delineated as N.W. 138th Street to the
south, The Palmetto Expressway (S.R. 826) to the north, Interstate 75 to the west and N.W. 57th
Avenue to the east. This area encompasses approximately six square miles.
Miami Lakes, a residential community in northwest Miami-Dade County at the bend in the
Palmetto Expressway, is located between N.W. 57th Avenue to the east and N.W. 87th Avenue to
the west, and the Palmetto Expressway to the north, and NW 138th Street to the south. This
community began development in the 1960s and is almost totally developed today with a
combination of single family residences, town houses, rental apartment buildings, condominium
apartment buildings, warehouses, retail stores and offices. The residences generally range in
price from $500,000 to $1,000,000.
The Town of Miami Lakes was incorporated in 2000 as the 31st municipality in Miami-Dade
County. Miami Lakes was a master planned community developed in the 1960’s by the Graham
family. The original master plan was over 3,000 acres in size that would allow over 30 years of
growth. As its name implies, the town has 23 lakes within its boundaries. The Town currently
has over 27,000 residents. The Town has a council-manger form of government with an elected
mayor and town council.
The majority of Miami Lakes area (approximately four sections) is located east of the Palmetto
Expressway. The section located west of the Palmetto Expressway, north and east of Interstate
75 and south of N.W. 154th Street is the most recently developed section of Miami Lakes. The
easterly portion of this section is primarily zoned for industrial/office use and has been
developed almost exclusively with low and mid-rise office buildings. The buildings are primarily
owned by the Graham Companies, the developer of Miami Lakes. Tenants in these buildings
include State Farm, American Express, Kislak Bank, Ikon Office Solutions, Attorney’s,
Insurance Company, Minolta, Keen Battle Mead Insurance and American Healthcare services.
The westerly half of this section has been developed with single family residences, townhouses
and condominium apartments. These properties were developed from the mid-1980s to the late
1990s.
The Palmetto Expressway extends westerly from the Golden Glades Interchange (intersection of
I-95, Florida Turnpike and US 441) to N.W. 77th Avenue, thence southerly to US Highway 1 at
S.W. 104th Street in South Miami-Dade County. Interstate I-75 connects to the Palmetto
Expressway at N.W. 138th Street. Interstate 75 extends northerly to Ft. Lauderdale at S.R. 84 (I595) and then extends west to Naples and the West Coast of Florida. I-75 provides the subject
neighborhood with good access to the southern and western regions of Broward County.
QUINLIVAN APPRAISAL
39
The subject property is located in commerce park located between the Palmetto Expressway on
the east, N.W. 154th Street to the north, Interstate 75 to the south, and N.W. 82nd Avenue to the
west. The district is mostly improved with one- to four-story office buildings and one-story flex
space buildings. The commerce park has some vacant land available for development.
In summary, the subject property is located in a commercial district on the east side of Miami
Lakes. Miami Lakes is a relatively strong suburban office/industrial market because of its good
access via the Palmetto Expressway and I-75, and its proximity to the Miami International
Airport. The Palmetto Expressway and I-75 link the subject neighborhood with both Miami and
Ft. Lauderdale.
QUINLIVAN APPRAISAL
40
NEIGHBORHOOD MAP
QUINLIVAN APPRAISAL
41
SITE DATA
QUINLIVAN APPRAISAL
42
SITE DATA
Dimensions and Shape:
The site is mostly rectangular in shape.
The site fronts 195 feet, more or less, along the northwesterly side of Palmetto Frontage Road
and approximately 340 feet along the northeasterly side of N.W. 80 Avenue.
Source: Condominium Documents
Area:
66,300 square feet (approximate)
Source: Condominium Documents
Topography and Drainage:
The site is level and approximately at street grade.
Flood Zone:
Map No. 12086C0114L (Effective September 11, 2009)
"AE"
Base flood elevation determined- 6 feet
Soil and Subsoil:
The immediate area of the subject site appears to have no unusual soil or subsoil conditions.
Unusual conditions would be brought out by test borings.
Utilities:
Water:
Sewer:
Electricity:
Telephone:
Miami-Dade Water & Sewer Department
Miami-Dade Water & Sewer Department
Florida Power & Light Company
AT & T
Street Improvements:
Palmetto Frontage Road is asphalt paved with a dedicated width of 50 feet. Palmetto Frontage
Road has one northerly bound lane and one southerly bound lane in the vicinity of the subject.
QUINLIVAN APPRAISAL
43
SITE MAP
QUINLIVAN APPRAISAL
44
ZONING
QUINLIVAN APPRAISAL
45
ZONING
Under Ordinance of the Town of Miami Lakes
Classification:
IU-C Industrial Conditional
Intent: The IU-C District shall be applied only to those lands that appropriately may be used
and utilized for the development, construction, and operation of large industrial projects and
industrial park development of the nature, type and character with the public health, safety,
comfort, convenience and the general welfare of the county.
Permitted uses include utility plants and substations such as, but not limited to, sewage, water,
power, communications and gas and every use permitted in the IU-1 and IU-3 districts such as
aircraft hangars, bakeries, auto painting, bottling plants, breweries, cold storage warehouses,
food packing, furniture manufacturing, garages, lumber yards, office buildings, banks, boat
repairs, hotels, radio stations, limited retail, millwork, showrooms, parking lots, storage
warehouses, welding shops and textile mills, animal reduction plants, cement plants, blooming
mills, distilleries, foundries, paper mills, and stockyards.
Development Standards
Minimum Street Frontage:
330 feet
Minimum Lot Depth:
330 feet
Minimum Land Size:
10 acres; credit for right-of-way
Building Setbacks:
Front
25 feet, sites up to 2 acres net
2 acres or greater, 15% of lesser dimension
of property; maximum 50 feet, minimum 25
feet
Side
10 feet from interior side lines
25 feet from side property line abutting a
highway right-of-way
Rear
20 feet from residential district
5 feet from industrial or business district,
properties with open wall
None, industrial or business district properties with closed wall.
Minimum setback on through lot, same as
for front setback
QUINLIVAN APPRAISAL
46
Minimum Landscaped
Open Space:
20% of net land area
Minimum Greenbelt Areas
Abutting Right-of-Ways
or Residential Districts
8 feet for sites up to 3 acres(net)
10 feet for sites over 3 acres (net)
Minimum Offstreet Parking Space:
Industrial Area:
Single Tenant Building
1 per 1,000, up to 10,000 square feet; then 1
per 2,000 square feet.
Multi-tenant Building
1 per 1,000 square feet, min. of 2 per bay.
Office Area:
1 per 300 square feet of gross building area
allocated for offices.
Open Lot or Walled-In Uses:
2 for each 5,000 square feet of lot area or 15
spaces per 2 employees, whichever is
greater; these must be no more than 1,500
feet from the use.
Wholesale Showrooms:
1 for each 600 square feet of showroom
Building Height:
No building shall be of a height greater
than the width of the widest street upon
which such buildings abuts.
QUINLIVAN APPRAISAL
47
HIGHEST AND BEST USE
QUINLIVAN APPRAISAL
48
HIGHEST AND BEST USE
Fundamental to the concept of value is the theory of highest and best use. Land is valued as if
vacant and available for its highest and best use.
The Appraisal Institute in The Appraisal of Real Estate, Thirteenth Edition, defines highest and
best use as follows:
The reasonably probable and legal use of vacant land or an improved property, which is
physically possible, appropriately supported, financially feasible, and results in the highest value.
Land has limited value unless there is a present or anticipated use for it; the amount of value
depends on the nature of the land's anticipated use, according to the concept of surplus
productivity. Among all reasonable, alternative uses, the use that yields the highest present land
value, after payments are made for labor, capital, and coordination, is generally regarded as the
highest and best use of the land as though vacant.
The highest and best use of a property as improved refers to the optimal use that could be made
of the property including all existing structures. The implication is that the existing improvement
should be renovated or retained as so long as it continues to contribute to the total market value
of the property, or until the return from a new improvement would more than offset the cost of
demolishing the existing building and constructing a new one.
In estimating the highest and best use there are essentially four stages of analysis:
1.
Possible Use. What uses of the site being appraised are physically possible?
2.
Permissible Use (Legal) What uses are permitted by Zoning and Deed
Restriction, if any?
3.
Feasible Use. Which possible and permissible uses will produce a net return to
the owner of the site?
4.
Maximally Productive. Among feasible uses, which use will produce the highest
net return to the owner of the site?
The highest and best use of the land (or site), if vacant and available for use, may be different
from the highest and best use of the improved property. This is true when the improvements are
not an appropriate use, but make a contribution to the total property value in excess of the value
of the site.
The following four-point test is required in estimating the Highest and Best Use. The use must
be legal. The use must be probable, not speculative or conjectural. There must be a profitable
demand for such use and it must return to the land the highest net return for the longest period of
time.
QUINLIVAN APPRAISAL
49
These tests have been applied to the subject property. In arriving at the estimate of Highest and
Best Use, the subject site is analyzed as vacant and available for development and as developed.
Possible Use
The site fronts 195 feet, more or less, along the northwesterly side of Palmetto Frontage Road
and approximately 340 feet along the northeasterly side of N.W. 80 Avenue. Therefore, the site
has adequate access and exposure on two neighborhood traffic arteries.
The subject site is mostly rectangular, with sufficient street frontage and depth for functional
utility. All necessary utility services are available along existing street right-of-ways. The site is
filled to street grade and does not appear to have any drainage or subsoil deficiencies.
The subject site is 66,300 square feet in size which equates to 1.52 acres. The size of the subject
site would allow a medium to large scale use.
The physical characteristics of the subject site would not restrict any use of the site.
Permissible Use
Permissible or legal uses are those uses which are permitted by zoning or deed restrictions.
There are presently no known private deed restrictions of record.
The site is zoned for industrial usage. The zoning of the site permits office and industrial uses.
Feasible Use/Maximally Productive Use
The physical characteristics and zoning of the subject property permit a wide range of potential
uses. The possible and permissible uses of the subject site include offices, warehouses,
showrooms and bank branches.
The site is a corner location with frontage on two traffic arteries. The site has adequate access
and exposure. Similar sites in the vicinity of the subject site are improved with office buildings
and commercial condominiums.
Based on an analysis of the subject site, the highest and best use of the site is estimated to be for
office usage.
QUINLIVAN APPRAISAL
50
Highest and Best Use as Improved
The site is improved with a three-story office condominium building. The building was
constructed in 1983 but was renovated when converted to condominium usage. The building is
in good condition.
The value indication of the property as a rental at stabilized occupancy is estimated in the
Income Approach at $2,210,000. The “As Is” value indication based on a discounted sellout of
the condominium units is estimated in the Sales Comparison Approach at $2,650,000. Since the
value indication by the Income Approach is significantly less than the value indication by the
Sales Comparison Approach, the operation of the property as a rental is indicated not to be the
highest and best use of the property. However, due to the presently soft market conditions for
commercial condominium units, the immediate sell off of the individual units is probably not
feasible.
Based on the above analysis, the highest and best use of the property as improved is considered
to be for an interim operation as a rental and eventual sellout of the individual condominium
units when market conditions improve.
QUINLIVAN APPRAISAL
51
DESCRIPTION OF IMPROVEMENTS
QUINLIVAN APPRAISAL
52
DESCRIPTION OF IMPROVEMENTS
Age and Condition
According to the Public Records of Miami-Dade County, the building improvements were
originally constructed in 1983 but was recently renovated and converted to condominium use.
From a personal inspection of the property, the improvements appear to be in good condition.
Description
The subject units are located in a 30-unit office condominium building known as The Lakes
Frontage Center Condominium. With the exception of Unit 106, the subject units are fully built
out. Unit 106 is mostly complete but would require a cost estimate of $10.00 per square foot to
complete.
Unit Sizes
Unit
100
101
103
104
105
106
107
108
109
110
111
Size (Net SF)
1,173
972
447
208
948
979
1,538
770
876
1,187
710
Unit
113
114
116
117
202
203
304
320
370
380
390
Size (Net SF)
346
380
197
348
366
1,013
1,694
1,179
1,786
1,439
1,633
The combined size of the units is 20,189 net square feet.
(Source: Condominium Documents)
Details of Construction
Foundation:
Poured concrete spread footings in excavation trench
Exterior Walls:
8” concrete block stuccoed and painted
Windows:
Fixed glass in aluminum frame
Roof:
Flat, built-up composition
Interior Walls:
Drywall-painted
QUINLIVAN APPRAISAL
53
Ceilings:
Acoustical tile
Floors:
Carpet, wood and tile
Lighting:
Fluorescent
Equipment and Fixtures
Central air conditioning
Site Improvements
Landscaping
Asphalt paved parking
QUINLIVAN APPRAISAL
54
FIRST FLOOR PLAN
QUINLIVAN APPRAISAL
55
SECOND FLOOR PLAN
QUINLIVAN APPRAISAL
56
THIRD FLOOR PLAN
QUINLIVAN APPRAISAL
57
THE APPRAISAL PROCESS
QUINLIVAN APPRAISAL
58
THE APPRAISAL PROCESS
The appraisal of real estate is generally valuated by means of one or more of the following
approaches:
(1)
(2)
(3)
The Cost Approach
The Income Approach
The Sales Comparison Approach
The Cost Approach
In the Cost Approach, land and building are valued as though they are separate entities. The land
value is first estimated as if vacant. Then, by consulting various cost services, local building
contractors and knowledge of construction costs, the replacement cost new of the building is
estimated. Accrued depreciation from all sources including physical deterioration, functional
and economic obsolescence must be deducted from this cost. The estimated land value is then
added to the depreciated cost of the building to give the "depreciated replacement cost" of the
property.
The Cost Approach is based on the premise that the value of a commodity tends to be set by the
cost of acquiring an equally desirable substitute. Applied to real estate, the assumption is that a
person would not likely pay more for a property than it would cost him to acquire a suitable site
and place an equally desirable building upon it. Costs would include direct cost of construction,
indirect costs such as financing costs, land and developer/builder's profit.
The subject units are located in an office condominium building on a single site with common
parking facilities.
The Cost Approach typically is not applicable to individual units in condominium properties
where there are multiple units with multiple ownership of the common elements. Therefore, the
Cost Approach would have no applicability in this situation and was not utilized.
Income Approach
The Income Approach is based on the premise that the value of a property may be determined by
the amount of net income it can reasonably produce over its remaining economic life. The
rationale of the approach is that the present worth of a future income stream is equivalent to the
value of the property which produces that income.
Four basic steps comprise the Income Approach:
(1)
Estimate the reasonable expectable annual gross income the
property will likely produce.
QUINLIVAN APPRAISAL
59
(2)
Deduct an allowance for vacancy and collection loss to arrive
at the effective gross income.
(3)
Deduct the annual expense of operation from the effective
gross income to arrive at the annual net income.
(4)
Capitalize the annual net income into an indication of value.
In this section of the report, a comprehensive market rent survey is conducted in order to
estimate the Market Rent for the subject property and to estimate a stabilized occupancy rate.
The operating expenses are estimated based on the actual operation of the subject and the
operation of comparable office buildings.
The Sales Comparison Approach
The Sales Comparison Approach is an attempt to measure the reactions of typical buyers and
sellers. In this approach, a direct comparison is made between the property being appraised and
comparable properties, which have sold recently. These sales are compared for degrees of
comparability such as location, size, age, zoning, time, the conditions of sale, financing and other
pertinent data, which would affect value. Adjustments are made for these factors in order to
arrive at a reliable estimate of value.
In this report, sales of office condominium units within the subject development and competitive
locations are gathered and analyzed.
Reconciliation
After applying the three approaches, three separate indications of value are available for analysis.
The indicated values obtained from each approach are correlated into one final conclusion of
value. Usually one approach will be considered more significant than the rest, either because of
the reliability of the data, or because of the type of property involved. Reconciliation is the
process by which each approach is objectively weighed according to its importance.
QUINLIVAN APPRAISAL
60
INCOME APPROACH
QUINLIVAN APPRAISAL
61
INCOME APPROACH TO VALUE (At Stabilization)
This approach to value is a technique in which the anticipated net income is processed to indicate
the capital amount of the investment which produces the net income. The capital amount, called
the capitalized value, in effect, is the sum of the anticipated annual rents less the loss of interest
until the time of collection.
Income
Potential Gross Annual Income
20,189 Square Feet x $22.50/SF
$454,253
LESS: Vacancy & Collection Loss @
7.5%
Effective Gross Annual Income
Operating Expenses
Management @ 4%
RE Taxes (Less 4% Discount)
Maintenance
Total Operating Expenses
-$ 34,069
$420,184
$16,807
$68,882
$157,772
$243,461
-$243,461
$176,723
Net Operating Income
$176,723
Capitalized @
Value Indication by Income Approach
(Rd)
8.00%
$2,209,038
$2,210,000
Typically, these units are owner-occupied and not purchased by investors as income property.
This is evidenced by the difference in value between operating the property as a rental and the
value by Sales Comparison Approach.
QUINLIVAN APPRAISAL
62
CONTRACT RENT ANALYSIS
A rent roll of the property was provided by the property owner. A copy of the rent roll is
contained in the addendum of this report. Currently 15 of the 22 units are occupied at a rental
rate ranging from $11.59 to $24.12 with an average rent of approximately $22.50. The larger
units rent at a lower price per square foot.
MARKET RENT ANALYSIS
The market rent of the subject building is estimated based on a survey of competitive office
properties in the subject market area. A summary of the comparable rentals is as follows:
No.
Address
Size (S.F.)
Age
1
1,961
575
1,230
1985
2
14160
Palmetto
Frontage Rd
7759 NW 146 St
2000
Rental Rate
Per S.F.
$16.83
$16.59
$22.44-$25.00
3
14333 NW 78 Ave
1,085
2005
$19.92*
1,622
1987
$18.00*
4
14411
Commerce
Way
*Asking rate
Comparable Rentals 1, 3 and 4 are the rental rates before expenses. Comparable Rental 2 has
similar lease terms as the subject units.
.
Based on an analysis of the contract rental rates as well as comparable rental rates, it is the
appraiser’s opinion that the contract rent is indicative of market rent.
QUINLIVAN APPRAISAL
63
Vacancy and Collection Loss
A vacancy and collection loss allowance is a reduction in potential rental income due to space
not leased or rents not collected. This allowance is generally expressed as a percentage of
Potential Gross Income.
As of the date of valuation, 15 of the 22 subject units were occupied indicating a vacancy rate of
31.8%.
The CB Richard Ellis Office Market Report – Miami-Dade County- Second Quarter 2011
indicates a countywide vacancy rate of 16.8% for office properties and 27.4% in the subject
market area. Historically, the vacancy rates in the subject market area have been well below
10%.
Based on the above, a stabilized vacancy and collection loss allowance of 7.5% is considered
applicable for the subject.
Operating Expense Analysis
The expenses are based on expense information obtained from the actual operation of the subject
building, from operating expenses of similar buildings and from a review of published studies.
The property owner provided the operating expenses from January of 2010 to June of 2011. A
copy of the operating expenses is contained in the addenda.
Management is based on 4% of Effective Gross Annual Income. This item would cover salary
and administrative cost for rent collection and record keeping of the subject property.
Real Estate Taxes are estimated based on 2010 real estate taxes for the property less a 4%
discount for early payment.
Maintenance Fees are based on the actual condominium maintenance fees. This expense covers
the remaining costs to operate the units such as utilities, insurance, maintenance and reserves for
replacement.
The indicated operating expense ratio is 57.9%, very high for an income producing property.
QUINLIVAN APPRAISAL
64
SELECTION OF CAPITALIZATION RATE
Capitalization is a process which translates an income projection into an indication of value. The
connecting link is a rate which reflects the return necessary to attract investment capital. Hence,
the selection of an appropriate rate represents a critical factor in the capitalization process.
OVERALL RATES FROM MARKET SALES OF OFFICE PROPERTIES
N0.
LOCATION
DATE
PRICE
OVERALL RATE
1
8500 SW 117 Ave, Miami-Dade Co.
7/08
$26,800,000
7.4%
2
355 Alhambra Cir, Coral Gables
7/08
$87,300,000
7.1%
3
1500 Monza Ave, Coral Gables
4/09
$8,500,000
7.2%
4
1790 Coral Way, Miami
6/09
$3,425,000
8.2%
5
2850 Douglas Rd, Coral Gables
8/09
$4,250,000
8.6%
6
5820 Blue Lagoon Dr, Miami-Dade Co
9/09
$6,950,000
7.3%
7
20880 West Dixie Hwy, Miami-Dade Co.
1/10
$3,750,000
8.4%
8
4155 SW 130 Ave., Miami-Dade Co.
8/10
$3,950,000
7.5%
OVERALL RATE BY BAND OF INVESTMENT THEORY
The overall rate developed by application of the Band of Investment Theory is a synthesis of
mortgage debt service and anticipated cash flow to equity which market data discloses as
applicable to comparable properties.
The rate developed is a weighted average, the weighing being for the respective portions of the
value represented by the mortgage and equity positions, or Band of Investment.
Cash
Flow
Rate
Source of Capital
Portion
Mortgage Loan
0.75
x
0.078792
Equity Funds
0.25
x
0.8
Weighted
Average
=
=
0.0591
0.0200
0.0791
OR
Overall Rate
QUINLIVAN APPRAISAL
7.91%
65
From discussions with lending institutions, an investor survey from Realty Rates.com – First
Quarter 2011 and from an analysis of comparable sales, it is determined the most favorable rate
and likely terms available to the subject property would be a mortgage at a loan-to-value ratio of
75% and at an interest rate of 5.7% with an amortization period of 25 years and a term of five to
ten years. A cash flow rate of 8.0% is estimated to be sufficient to attract equity funds to this
type of investment.
Overall Rates From Investor Surveys
The Realty Rates.com Investor Survey – First Quarter 2011 indicates overall rates for of
suburban office buildings ranging from 5.61% to 11.94%, with the average being 9.41%.
The Korpacz Price Waterhouse Coopers Investor Survey- Fourth Quarter 2010 indicates overall
rates for office buildings ranging from 7.00% to 13.0%, with the average being 9.39%.
Overall Rate Conclusion
The rates utilized in the Band of Investment are based on rates derived from surveys of large
multiple tenant office buildings bought and sold for their income potential. Similarly, the overall
rates from the investor survey are for large multiple tenant office buildings bought and sold for
their income potential. The overall rates from comparable sales are given primary emphasis in
the final analysis since the rates are abstracted from actual sales of buildings in Miami-Dade
County. The overall rates from comparable sales range from 7.1% to 8.6%.
Based on the above sources, with the overall rates abstracted from the market sales given
primary emphasis in the final analysis, a capitalization rate of 8.0% is considered appropriate for
the subject property.
QUINLIVAN APPRAISAL
66
SALES COMPARISON APPROACH
QUINLIVAN APPRAISAL
67
SALES COMPARISON APPROACH TO VALUE
This approach to value is a technique in which the Market Value estimate is predicated upon
prices paid in actual market transactions of similar properties. These similar, or comparable,
transactions (sales) are adjusted to indicate a value to the subject.
The Sales Comparison Approach is a process of analyzing sales of similar recently sold
properties in order to derive an indication of the most probable sales price of the property being
appraised. The reliability of this approach is dependent upon the availability of comparable sales
data, the verification of the sales data, the degree of comparability and the absence of non-typical
conditions affecting the sale.
The following page contains a summary of sales of similar properties, which have recently sold.
Several other sales are considered, but are not included because there is too wide a difference in
physical factors, location and time. The sales are analyzed based on a sale price per square foot
of adjusted building area.
In comparing the sales to the subject, consideration is given to factors of time, location, physical
characteristics and terms and conditions of the sale.
A profile and photograph of the comparable condominium buildings, a summary of comparable
office condo sales, a sales map and a value conclusion follows herein.
QUINLIVAN APPRAISAL
68
PARK WEST PROFESSIONAL CENTER
ADDRESS:
7767 N.W. 146 Street
Miami-Lakes, Florida
LOCATION:
7 blocks northeast of the subject property
NUMBER OF UNITS:
44
BUILDING AGE:
2001
BUILDING CONDITION:
Good
RECENT SALES/LISTINGS:
Date of Sale
Sale Price
Unit Number
Unit Size (S.F.)
Price (S.F.)
10/2009
$210,000
ED-2
1,051
$199.80
REMARKS:
The building is in good condition.
QUINLIVAN APPRAISAL
69
PARK WEST
PROFESSIONAL CENTER
QUINLIVAN APPRAISAL
70
JCMH CONDOMINIUM
ADDRESS:
814 Ponce de Leon Boulevard
Coral Gables, Florida
LOCATION:
2 blocks northeast of the subject property
NUMBER OF UNITS:
16
BUILDING AGE:
2005
BUILDING CONDITION:
Good
RECENT SALES/LISTINGS:
Date of Sale
Sale Price
Unit Number
Unit Size (S.F.)
Price (S.F.)
7/2010
1/2011
$152,500
$180,000
1
12
1,085
1,085
$140.55
$165.90
REMARKS:
The building is in good condition.
QUINLIVAN APPRAISAL
71
JCMH CONDOMINIUM
QUINLIVAN APPRAISAL
72
SUMMARY OF COMPARABLE OFFICE CONDOMINIUMS
No.
Date
Name
Address
Unit
Location
1 10/2009 Park West Professional Center 7767 N.W. 146 St.
ED-2 7 blocks NE
2
7/2010 J C M H Condominium
14329 N.W. 78 Ave.
1 2 blocks NE
3
1/2011 J C M H Condominium
14351 N.W. 78 Ave.
12 2 blocks NE
14100 Palmetto Frontage
Subject
4
Listing Lakes Frontage Center Condo. Rd.
N/A Building
14100 Palmetto Frontage
5
Listing Lakes Frontage Center Condo. Rd.
N/A Subject units
14100 Palmetto Frontage
Subject Unit
Lakes Frontage Center Condo. Rd.
*Asking price
Unit
Age Size
2001 1,051
2005 1,085
2005 1,085
1983
751
Sale Price Price/SF
$210,000 $199.80
$152,500 $140.55
$180,000 $165.90
$150,000* $199.73*
1983 20,189 $4,500,000* $223.69*
1983 20,189
SALES MAP
QUINLIVAN APPRAISAL
74
ANALYSIS OF SALES
The unit prices of the closed sales range from $140.55 to $199.80 per square foot and range in
time from October of 2009 to January of 2011. The prices per square foot are based on the unit
sizes reported on the tax roll of the Miami-Dade County Property Appraiser’s Office. The size
of the subject unit based on the tax roll is 6,640 square feet. For purposes of direct comparison
with the comparable sale properties, the size of the subject unit reported in the county tax roll is
utilized in this analysis.
In comparing the sale properties to the subject units, consideration was given to time of sale,
location, age/condition of the building, and tenant improvements.
Park West Professional Center
The unit price of Sale 1 occurring in the Park West Professional Center, $199.80 per square foot,
is considered an upper limit of value of the subject units. Sale 1 requires a downward adjustment
for the declining market conditions in this market area since October of 2009.
JCMH Condominium
The unit prices of the sales that occurred in the JCMH Condominium range in unit price from
$140.55 to $165.90. Sales 2 and 3 have the same buyer but different sellers. The seller of Sale 2
is a financial institution and the unit appears to have sold for below market value (approximately
15%) when compared to the identical Sale 3 unit.
The subject building was constructed in 1983 but was renovated when converted to
condominium usage. The sales and subject units are similar in condition.
A summary of adjustments is as follows:
Unit Price
Market Conditions
Age/Building Condition
Unit Size
Other
Total Adjustments
Adjusted Unit Price
Sale 1
$199.80
-15%
=
=
=
-15%
$169.83
Sale 2
$140.55
=
=
=
+15%
=
$161.63
Sale 3
$165.90
=
=
=
=
=
$165.90
QUINLIVAN APPRAISAL
75
Sale 4 is a current listing for one unit in the subject building based on gross size. Sale 5 is a
current listing for the subject units. No difference in unit price is evidenced by these listings for
purchasing in bulk.
As stated previously, with the exception of Unit 106, the subject units are fully built out. Unit
106 is mostly complete but would require a cost estimate of $10.00 per square foot to complete.
This cost estimate equates to $9,790.
Conclusion –Gross Sellout Value
The adjusted unit prices range from $161.63 to $169.83.
Based on a careful analysis of the unit sales, it is estimated that the subject units have a value as
follows:
Size (NSF)
Price/SF
20,189 SF
$165.00
LESS: Cost to Complete Unit 106
Gross Value by Sales Comparison Approach (Rd)
Estimated Value
$3,331,185
$9,790
$3,321,395
$3,320,000
The indicated average unit price of the subject units based on the Gross Sellout Value is
approximately $150,909 per unit.
QUINLIVAN APPRAISAL
76
“AS IS” MARKET VALUE
Converting the Gross Sellout Value to an “as is” Market Value requires a discounting process to
account for selling expenses and holding costs, if any, sell all of the units over an absorption
period. The discounting process can be performed in several methods.
The first method would be a discounted sellout analysis. First, an absorption period is estimated
for the unsold units. Estimated sales expenses and holding costs are then deducted from the
gross sales proceeds to derive net sales proceeds. A discount rate is then applied to the net sales
proceeds to reflect a return on debt and equity capital.
A second method is to abstract a discount from sales of bulk inventories of condominium units.
The discounting process is performed based on a matched pair analysis of bulk sales of
commercial condominium units to sales of individual commercial condominium units in the
same project or comparable projects. The estimated bulk sale adjustment is then applied to the
estimated gross sellout value to indicate the “as is” value of the property.
The following pages contain three case studies of comparisons of bulk sales and individual sales
of commercial condominium units. The unit prices of the comparable units are discounted to the
unit price of the bulk sales.
QUINLIVAN APPRAISAL
77
SUMMARY OF BULK COMMERCIAL CONDOMINIUM SALES
No.
1
2
Name
Bldg.
Unit
Unit
Sale
Location
Age
No.
Sq. Ft.
Date
1600 Ponce Office Condo
1600 Ponce de Leon Blvd
Coral Gables
2008
1001
1002
1003
1004
1005
1006
1007
1008
1101, 1102, 1103 & 1104
904
905
801, 802, 803, 804,
805, 806, 807, 808,
906, 907, 908, 1202,
1203, 1206, 1207& 1208
Merrick View
135 San Lorenzo Ave
Coral Gables
2008
130
840
140, 150, 160, 170,
770 & 780
790
550
540
850
530
Sale
Price
Per Sq.
Ft.
Discount
Recordation
Price
Percentage
27001/3049
$537.55
$533.11
$541.53
$575.80
$593.49
$595.72
$598.43
$532.20
$516.22
$456.62
$456.62
$507.38
5.61%
4.83%
6.31%
11.88%
14.51%
14.83%
15.22%
4.66%
1.71%
-11.12%
-11.12%
972
1,149
1,447
876
876
1,447
1,149
972
4,444
876
876
18,620
Sep-09
Sep-09
Sep-09
Sep-09
Sep-09
Sep-09
Sep-09
Sep-09
Jul-10
Aug-10
Nov-10
Mar-11
27001/2919
27024/2195
27029/3438
27024/2280
27366/1928
27410/3702
27497/4103
27634/3362
$522,500
$612,549
$783,600
$504,400
$519,900
$862,000
$687,600
$517,300
$2,294,100
$400,000
$400,000
$9,447,400
1,013
1,868
8,190
12/09
12/09
Apr-10
27111/3943
27111/4394
27255/4700
$315,000
$640,900
$2,400,000
$310.96
$343.09
$293.04
5.76%
14.59%
2,135
2,135
2,342
1,836
1,317
8/10
11/10
11/10
12/10
1/11
27381/4771
27485/2621
27486/466
27523/4691
27545/341
$693,900
$788,400
$831,900
$718,900
$442,200
$325.01
$369.27
$355.21
$391.56
$335.76
9.84%
20.64%
17.50%
25.16%
12.72%
27014/317
3
Colorama
2445 W. 80 St
Hialeah
2157 W. 73 St
7760 W. 20 Ave
7600 W. 20 Ave
2271 W. 80 St
2231 W. 80 St
8000 W. 24 Ave
8055 W. 23 Ave
2002
1B, 2B, 3B, 4B, 5B,
6B,
7B & 8B
8,344
Jul-10
27367/3430
$550,000
$65.92
1985
1986
2003
2005
2005
2002
2002
3
12
224
A-1
D-4
E-3
B-1
2,629
2,290
1,004
1,426
1,300
1,020
1,499
Mar-10
May-10
Dec-10
Apr-11
Jun-11
Jun-11
Jun-11
27228/3832
27281/721
27691/2943
27667/1993
27756/2055
27762/2644
27732/646
$200,000
$200,000
$80,000
$106,000
$100,000
$65,800
$125,000
$76.07
$87.34
$79.68
$74.33
$76.92
$64.51
$83.39
13.35%
24.52%
17.27%
11.32%
14.30%
-2.19%
20.95%
BULK SALE ANALYSIS
In Case Study 1, 16 units were purchased in bulk in March of 2011 at a unit price of $507.38 per
square foot. Four units sold together in July of 2010 at a unit price of $516.22. The remaining
sales were of individual units within the same building ranging from $456.62 to $598.43 per
square foot. Excluding the two sales that sold below the cost of the bulk sale, the indicated
discount rates from this case study range from 1.71% to 15.22%.
In Case Study 2, six units were purchased in bulk in April of 2010 at a unit price of $293.04 per
square foot. The remaining sales were of individual units within the same building ranging in
unit price from $310.96 to $391.56 per square foot. The indicated discount rates from this case
study range from 5.76% to 25.16%.
In Case Study 3, eight units were purchased in bulk in July of 2010 at a unit price of $65.92 per
square foot. The remaining sales are of individual units within the same neighborhood as the
building where the bulk sale occurred. These sales range in unit price from $64.51 to $87.34 per
square foot. The indicated discount rates from this case study range from 11.32% to 24.52%.
Based on the above analysis, a discount rate of 20% of the Gross Value is considered applicable
for the subject units.
Gross Sellout Value
Discount Rate
“As Is” Market Value
$3,320,000
20%
$2,656,000
The indicated average unit price of the subject units based on the “As Is” Market Value is
approximately $120,727 per unit.
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MARKET VALUE BY DISCOUNTED SELLOUT
Converting the Gross Sellout Value to Market Value requires a discounting process to account
for selling expenses and holding costs, if any, from the completion of construction to the sale and
closing of all the units. The discounting process is performed in three steps. First, an absorption
period is estimated for the unsold units. Estimated sales expenses and holding costs are then
deducted from the gross sales proceeds to derive net sales proceeds. A discount rate is then
applied to the net sales proceeds to reflect a return on debt and equity capital.
Estimate of Absorption Period
Based on a review of historic sales and the current soft condition of the office condominium
market, it is projected that it will require a period of 24 months to sell the subject units. During
the sellout period, the property would be operated as a rental. The rental income is based on the
effective gross income of $420,184 estimated previously in the Income Approach. The indicated
effective income per square foot is $20.81 ($420,184 ÷ 20,189 Sq. Ft.). The sale prices for the
units were estimated preciously in the Sales Comparison Approach at an average of $165.00 per
square foot. The sales prices in year two of the sellout are projected to increase based on a
growth rate of 3%.
The vacant space is projected to be absorbed over 24 months at a rate of 878 square feet per
month (20,189 Sq. Ft. ÷ 23 Months). The first month would be projected to not have a sale.
The growth rate on expenses is projected at 2% annually. The estimated growth rate is based on
historic trends in the Consumer Price Index (CPI) and investor surveys. The Korpacz Price
Waterhouse Coopers Investor Survey- Second Quarter 2011 indicates expense growth rates for
office buildings ranging from 1.00% to 3.0%.
Selling Expenses
There will be closing costs, recording fees and legal expenses. It is expected there would be a
five year holding period from the date of valuation to the date in which all units are closed.
During this period, there will be interest holding costs, sales commissions, and overhead and
marketing. These expenses are estimated on the following page.
Sales commissions are estimated at 3% of gross sales.
Closing costs are estimated at 1.5% of gross sales.
Overhead and marketing is estimated at 2.0% of gross sales.
Operating expenses are estimated at $12.06 per square foot of the unsold office space while it is
operated as a rental. The operating expenses are based on the expenses estimated previously in
the Income Approach ($243,461 ÷ 20,189 Sq. Ft.). The growth rate on operating expenses is
projected at 2% annually.
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Discount Rate
A discount rate (yield rate) is applied to the cash flow over the seven year projection period to
reflect a net present value.
A discount rate and an overall rate differ in concept. The overall rate is based on current net
operating income as of the date of sale. The overall rate implicitly recognizes future income
increases and appreciation in property value at the time of sale.
Whereas the discount rate explicitly will recognize future income increases and appreciations in
property value at time of sale. The overall rate is used in direct capitalization technique using
first year net income. The discount rate is used in an annuity capitalization technique with an
income stream.
The discount rate is influenced by the degree of apparent risk, prospective rates of return of
alternative investment opportunities, historical rates of return earned by comparable properties,
market attitudes with respect to future inflation or deflation, supply of and demand for mortgage
funds, availability of tax shelter, etc.
A review of the Realty Rates.com Investor Survey – Third Quarter 2011 indicates that typical
investors desire an internal rate of return in the 8.63% to 14.43% range for suburban office
buildings, with the average being 12.01%.
The Korpacz Price Waterhouse Coopers Investor Survey- Second Quarter 2011 indicates
discount rates for rental office buildings ranging from 7.0% to 16.0%, with the average being
10.38%.
It should be noted that the discount rates reported in the investor surveys are for multiple tenant
rental office properties, not fractured interests of office condominiums. Discount rates from
sales of fractured interests of office condominium properties are not reported in investor surveys.
Sales of fractured interests of office condominium properties are few in number and each
property is unique as to overall size, unit size, percentage of ownership, location, etc. Fractured
interests of office condominium properties typically sell by the purchase of mortgage notes and
are not recorded. Abstracting discount rates from actual sales of fractured interests of office
condominium properties is therefore difficult. The discount rates from the investor surveys may
not be a direct comparison for fractured interests of office condominium properties, but do
provide a general guideline for discount rates for fractured interests.
Based on the above analysis, a discount rate of 12.0% is considered appropriate for the subject
income stream.
The Discounted Sellout Analysis is contained on the following page. The indicated value of the
property under a scenario operating as a rental while simultaneously selling out the
condominium over two years is $2,650,000. Based on a profit on sales of 10% and a discount
rate of 12%, the indicated true Internal Rate of Return (IRR) is 16.8%.
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DISCOUNTED MARKET VALUE CONCLUSION
Case studies were prepared to abstract a discount from sales of bulk inventories of commercial
condominium units. The discounting process is performed based on a matched pair analysis of
bulk sales of commercial condominium units to sales of individual commercial condominium
units in the same project or comparable projects. The estimated bulk sale adjustment is then
applied to the estimated gross sellout value to indicate the “as is” value of the property.
A discounted sellout analysis was also prepared. First, an absorption period is estimated for the
unsold units. There has been very limited market activity in the vicinity of the subject which
makes estimating an accurate absorption rate difficult. Estimated sales expenses and holding
costs are then deducted from the gross sales proceeds to derive net sales proceeds. A discount
rate is then applied to the net sales proceeds to reflect a return on debt and equity capital.
The discounted value indicated by the bulk sale analysis is $2,656,000. The indicated market
value by discounted sellout is $2,646,948. Based on the above, it is the appraiser’s opinion that
the subject units have a Discounted Market Value of:
$2,650,000
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RECONCILIATION AND VALUE CONCLUSION
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RECONCILIATION AND VALUE CONCLUSION
The reconciliation of the data and indicated value estimates is the final step in the appraisal
process. Sufficient data has been assembled and analyzed for the purpose of judging the
reactions of typical purchasers in the market place.
In this report, the three accepted appraisal techniques are utilized. The value estimates indicated
by these approaches resulted in the following:
Cost Approach to Value
N/A
Income Approach to Value
$2,210,000
Sales Comparison Approach to Value
$2,650,000
Cost Approach to Value
The subject unit is located in an office condominium building on a single site with common
parking facilities.
The Cost Approach typically is not applicable to single units in condominium properties where
there are multiple units with multiple ownership of the common elements. Therefore, the Cost
Approach would have no applicability in this situation and was not utilized.
Income Approach to Value
The data in this approach as to the quality, quantity and durability of the income is considered
fair. The income and expenses are based on the actual operation of the subject building and
comparable buildings.
Net Income is capitalized by means of a direct capitalization method with an overall rate derived
from market sales, market surveys and a Band of Investment Technique.
Typically, these units are owner-occupied and not purchased by investors as income property.
This is evidenced by the difference in value between operating the property as a rental and the
value by Sales Comparison Approach.
Sales Comparison Approach to Value
In reference to the Sales Comparison Approach, consideration has been given to sales that have
taken place in the real estate market. These sales are analyzed and adjusted to the subject to
reflect a market value estimate of the subject.
The quality of the market sales in this approach to value is considered good.
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Considering the quality of these sales, this approach to value is given primary emphasis in the
final analysis.
Final Conclusion
In the reconciliation process, the greatest weight should be given to the approach or approaches
which produce the highest degree of confidence and which has been processed with a minimum
of assumptions. Of equal importance are the reasonableness of the data and the reliability of the
data.
In consideration of the above, and for the reasons and conclusions contained herein, the “As Is”
Market Value of the subject property at stabilized occupancy as of market conditions as of
August 22, 2011 was estimated at:
$2,650,000
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ADDENDA
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ASSUMPTIONS AND LIMITING CONDITIONS
This Appraisal Report has been made with the following general assumptions:
1.
No responsibility is assumed for the legal description or for matters
including legal or title considerations. Title to the property is
assumed to be good and marketable unless otherwise stated.
2.
The property is appraised free and clear of any or all liens or
encumbrances unless otherwise stated.
3.
Responsible ownership and competent property management are
assumed.
4.
The information furnished by others is believed to be reliable.
However, no warranty is given for its accuracy.
5.
All engineering is assumed to be correct. The plot plans and
illustrative material in this report are included only to assist the
reader in visualizing the property.
6.
If no survey has been furnished to the appraisers, all measurements
have been confirmed either in the field, in the plat book or by other
reliable sources and are presumed to be accurate.
7.
It is assumed that there are no hidden or unapparent conditions of the
property, subsoil, or structures that render it more or less valuable.
No responsibility is assumed for such conditions or for arranging for
engineering studies that may be required to discover them.
8.
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.
9.
It is assumed, unless a study has been provided otherwise, that no
hazardous material such as asbestos, urea formaldehyde or other
toxic waste exists in the property. The existence of a potentially
hazardous material could have a significant effect on the value of the
property.
10.
In reference to proposed construction, the real estate taxes and other
expenses are estimated. These amounts are not guaranteed.
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11.
It is assumed in the valuation of the subject land site, unless a
compliance letter has been furnished to us, that the State of Florida
Growth Management Act does not prevent the issuance of a building
permit.
12.
It is assumed that all required licenses, certificates of occupancy,
consents, or other legislative or administrative authority from any
local, state or national government or private entity or organization
have been or can be obtained or renewed for any use on which the
value estimate contained in this report is based.
13.
It is assumed that the utilization of the land and improvements is
within the boundaries of property lines of the property described and
that there is no encroachment or trespass unless noted in the report.
This Appraisal Report has been made with the following general limiting conditions:
1.
The distribution, if any, of the total valuation of this report between
land and improvements applies only under the stated program of
utilization. The separate allocations for land and buildings must not
be used in conjunction with any other appraisal and are invalid if so
used.
2.
Possession of this report, or a copy thereof, does not carry with it the
right of publication. It may not be used for any purpose by any
person other than the party to whom it is addressed without the
written consent of the appraisers, and in any event, only with proper
written qualification and only in its entirety.
3.
The appraisers herein by reason of this appraisal is not required to
give further consultation, testimony, or be in attendance in court with
reference to the property in question unless arrangements have been
previously made.
4.
Neither all nor any part of the contents of this report (especially any
conclusions as to value, the identity of the appraisers, or the firm
with which the appraisers are connected) shall be disseminated to
the public through advertising, public relations, news, sales, or other
media without the prior written consent and approval of the
appraisers.
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QUALIFICATIONS OF THE APPRAISER
J. MARK QUINLIVAN
Experience:
Engaged in the field of real estate appraising since 1972. Associated with F. Robert Quinlivan,
MAI, from 1972 to 1985. Currently President of Quinlivan Appraisal, P.A., a Real Estate
Appraising and Consulting Firm, established in 1964.
Graduate:
University of Notre Dame
BBA Bachelor of Business Administration (Major in Finance and Business Economics)
University of Maryland
MBA - Master of Business Administration (Concentration in Finance)
University of Miami Law School
JD Juris Doctor (Concentration in Real Estate and Taxation)
Florida International University
MSM - Master of Science in Management (Major in Real Estate)
University of Miami
MALS - Master of Arts in Liberal Studies (Humanities)
Professional Affiliations:
Member of the Appraisal Institute (MAI # 5791)
Former Member of the Florida Bar (1977-2009)
Real Estate Broker, State of Florida (# 0125264)
Certified General Appraiser, State of Florida, License # RZ0000112
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Qualified as an Expert Witness in the Following Courts:
Miami-Dade, Broward, Palm Beach, and Monroe County Circuit Courts
United States Bankruptcy Court
United States District Court
Other Activities:
Appraiser Special Master (1978 - 1980),
Miami-Dade County Property Appraisal Adjustment Board
Past President - Miami Chapter m 71,
Society of Real Estate Appraisers (1983 - 1984)
Past President - South Florida Chapter m 24, Appraisal Institute (1988)
Past Governing Councilor of the American Institute of Real Estate Appraisers (1990)
Young Advisory Council of Society of Real Estate Appraisers (1979 and 1980)
Editorial Review Board (1981 - 1991)
THE REAL ESTATE APPRAISER AND ANALYST published quarterly by the Society of
Real Estate Appraisers
Recent Publications:
"Non-Conforming Use Properties: The Concept of Positive Economic Obsolescence", The
Appraisal Journal, January 1981, Pages 45-51. (Arthur A. May Memorial Award 1982).
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QUALIFICATIONS OF THE APPRAISER
BRIAN M. QUINLIVAN
Experience:
Engaged in the field of real estate appraising since 2004, associated with J. Mark Quinlivan,
president of Quinlivan Appraisal, P.A., a Real Estate Appraising and Consulting Firm,
established in 1964.
Education:
University of Florida
Major in Business (1996-2001)
Florida International University
Major in Real Estate (Expected graduation- 2011)
Recent Real Estate Classes:
Legal Environment of Real Estate
The Appraisal of Real Estate
Real Estate Principles
Real Estate Investment
Income Capitalization
Financial Management
Professional Affiliations:
Registered Trainee Appraiser, State of Florida, License No. RI 19051
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Quinlivan Appraisal has prepared Appraisal Reports for the following:
Institutions and Corporations:
AT&T
Archdiocese of Miami
Atlantic Security Bank
The Bank of America
Bank United
Barry University
Bessemer Trust Company
California Bank and Trust
Chevron Oil Company
Chase Manhattan Bank
Chemical Bank
Citibank
Citrus Bank
City National Bank of Miami
Coamerica Bank
Coconut Grove Bank
Commerce Bank
Commercial Bank of Florida
Consolidated Bank
Colonial Bank
County National Bank
Eagle National Bank
Eastern National Bank
Equitable Bank
Espirito Santo Bank
Farm Credit of South Florida
Fidelity Bank
First International Bank
First National Bank of South Miami
Florida International University
First Nationwide Bank
Florida Memorial College
Florida Power and Light Company
Florida Rock Industries
Great Eastern Bank of Florida
Greyhound Lines
HSBC
Hemisphere National Bank
Intercontinental Bank
International Bank of Miami, N.A.
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Jefferson Bank
LaSalle National Bank
Marine Midland Bank
McDonalds Corp.
Mellon United National Bank
Metro Bank
Miami-Dade County Community College
Miami-Dade Water and Sewer Authority
Northern Trust Bank of Florida
Ocean Bank
Pacific National Bank
Pan American Bank
Pointe Bank
Shell Oil Company
South Trust Bank
SunTrust Bank
TotalBank
Trade National Bank
Trust for Public Lands
UniBank
Union Planters National Bank
University of Miami
Wachovia
Wal-Mart
YMCA
Governmental Agencies:
City of Aventura
City of Coral Gables
City of Hialeah
City of Miami
City of Miami Parking Authority
City of Miami Beach
City of Miramar
City of North Bay Village
City of North Miami Beach
City of South Miami
City of Sunny Isles Beach
Miami-Dade County Aviation Department
Miami-Dade County Department of Development & Facilities Management
Miami-Dade County HUD
Miami-Dade County Property Appraisal Adjustment Board
Miami-Dade County Public Schools
Miami-Dade County Public Works Department
Miami-Dade County Transportation Administration
Miami-Dade Water & Sewer Department
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South Florida Water Management District
State of Florida, Attorney General’s Office
State of Florida, Department of Community Affairs
State of Florida, Department of Corrections
State of Florida, Department of Environmental Protection
State of Florida, Department of Insurance
State of Florida, Department of Rehabilitation and Liquidation
State of Florida, Department of Transportation
Town of Golden Beach
United States Army Corps of Engineers
United States Department of Justice
United States Department of Commerce
United States Department of the Interior
United States General Services Administration
Village of Islamorada
Village of Key Biscayne
Village of Pinecrest
Law Firms:
Akerman Senterfitt
Greenberg, Traurig
Daniels, Kashton, Downs and Robertson
Holland and Knight, LLP
Shutts & Bowen
Ruden McClosky, LLP
Steel, Hector & Davis, LLP
Weiss, Serota, Helfman, Pastoriza, Guedes, Cole and Boniske, P.A.
Types of Properties Appraised:
Single Family Residences
Apartment Buildings
Office Buildings
Retail Stores
Shopping Centers
Condominium Apartment Buildings
Golf Courses
Residential Subdivisions
Automobile Dealerships
Vacant Land
Hotel/Motels
Warehouses
Nursing Homes
Mobile Home Parks
Schools
Service Stations
Marinas
Wetlands
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ENGAGEMENT LETTER
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RENT ROLL / EXPENSES
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