One Phoenix land

Transcription

One Phoenix land

One Phoenix land
5.665 Gross Acres of Vacant Land
located at the Northwest Corner of
McDowell Rd. and Central Ave.
Phoenix, Arizona 85003
Prepared for:
The BSR Group
97 Menachem Begin Road
Ramat Gan, Israel 52521
Prepared by:
NAI Horizon Valuation Services Group
2944 N. 44th Street, Suite 220
Phoenix, AZ 85018
2944 N. 44th Street, Suite 220
Phoenix, Arizona 85018
602.955.4000 Main telephone
February 20th, 2013
B.S.R. Group
c/o Ms. Liya Moshe, CPA, Controller
7 Menachem Begin Road
Ramat Gan, Israel 52521
Re:
One Phoenix land is 5.665 gross acres (5.553 net acres) of vacant land located at the
northwest corner of McDowell Road and Central Avenue in Phoenix, Arizona, USA 85003
NAI File No.: 13-DAP-203
Dear Ms. Moshe:
As per agreement, we are pleased to transmit our complete due diligence, self-contained appraisal
report on the above referenced property. The report has been prepared for you on behalf of AI-BSR,
LLC (the property owner) and is intended only for its specified use. It may be distributed to your
attorneys, advisors, investors, the Tel Aviv Stock Exchange, the Israeli Security Commission, the
Israel Security Authority, the BSR Projects, Ltd. Board of Directors, and Shanholt Glassman Klein
Kramer & Company. It may not be distributed to or relied upon by other persons or entities without
written permission of NAI Horizon Valuation Services Group, LLC.
This appraisal report has been prepared in accordance with FIRREA, the regulations of OCC, and the
2012-2013 Uniform Standards of Professional Appraisal Practice (“USPAP”) including the
Competency Rule. The property was inspected on February 7th, 2013 and the report prepared by
Dan A. Paulus, MAI; an Arizona Certified General Appraiser.
This appraisal employs the (Land) Sales Comparison Approach. Based on our analysis and knowledge
of the property as vacant land and typical investor profiles, it is our opinion that only this approach
would be considered meaningful and applicable in developing a credible value conclusion.
Based on our appraisal as defined by the Uniform Standards of Professional Appraisal Practice, we
have developed an opinion that the retrospective fee simple estate of the referenced property,
subject to the assumptions and limiting conditions, certifications, extraordinary and hypothetical
conditions, if any, and definitions, “As Is” on December 31st, 2012 was:
TWELVE MILLION THREE HUNDRED FORTY THOUSAND DOLLARS
$12,340,000
Please note that the Value Conclusion does not deduct the $262,751.97 in 2011 Tax Liened and $217,572.56 in 2012
Delinquent property taxes including penalties and interest-to-date totaling $480,324.53. All six of the subject parcels
are impacted by Certificates of Purchase of Tax Liens. The client’s continued ownership is at risk.
Ms. Liya Moshe, CPA, Controller
February 20th, 2013
Page 2
Volatility in the capital markets nationally and worldwide has continued to make forecasting real
estate market conditions speculative-to-date in early 2013, though local market conditions are
steadily, slowly improving. Our valuation of the subject has considered the best information
available. Clients should make their own investment risk assessment when determining the level of
confidence they have in projected market conditions and the market value conclusion.
Based upon transactions that have occurred in the marketplace as well as discussions with
knowledgeable local market brokers, the subject would have required approximately nine to twelve
months exposure to the market to generate a sale at the concluded market value. This letter is
invalid as an opinion of value if detached from the report, which contains the complete text,
exhibits, and Addenda.
Respectfully submitted,
Dan A Paulus, MAI, President; Arizona Certified General Appraiser License No. 30234
Looking northeast across McDowell Road at subject from the intersection of 1st Avenue
EXECUTIVE SUMMARY
Property Name:
One Phoenix land
Location:
Northwest corner of McDowell Road and Central Avenue in
Phoenix, Maricopa County, Arizona, 85003
Property Description:
5.665 gross acres (5.553 net acres) of fully infrastructured, vacant
land. The DTC zoning allows 375-foot building heights, 1,210
residential units based on net acreage, and retail/office space. The
formerly approved development plans were to build 1,020
residential units in three 35-story± residential condominium
towers with 50,000 square feet of 1st and 2nd floor office/retail.
Assessor's Parcel
Numbers:
118-56-057A, -058, -059, -060, -081B, and -088A in Maricopa
County, Arizona
Interest Appraised:
Fee Simple Estate
Date of Value:
December 31st, 2012. Note that this is a retrospective date of value.
Date of Inspection:
February 7th, 2013
EXECUTIVE SUMMARY
Ownership:
AI-BSR, LLC
Current Property Taxes
2012 Full Cash Value:
$7,866,000 (combined six tax parcels)
2012 Property Taxes:
$211,921.46 (combined six tax parcels excluding Past Due Interest)
Highest and Best Use
If Vacant:
Initiate development of a mixed-use project of office/retail and/or
high-density residential condominiums no sooner than 2015 when
the national employment and local housing market are projected to
have created an adequate upward/improving market and
consumer demand could then create development feasibility.
Site & Improvements
Zoning:
DTC, Downtown Gateway, city of Phoenix
Land Area:
5.665 gross acres or 246,759 gross square feet;
5.553 net acres or 241,904 net square feet per client
Value Conclusion:
$12,340,000 or $50.00 per square foot (a retrospective value as of
December 31st, 2012)
Please note that the Value Conclusion does not deduct the $262,751.97 in 2011
Tax Liened and $217,572.56 in 2012 Delinquent property taxes including
penalties and interest-to-date totaling $480,324.53. All six of the subject
parcels are impacted by Certificates of Purchase of Tax Liens. The client’s
continued ownership is at risk.
Extraordinary Assumptions: Please note as an Extraordinary Assumption that we presume that
the vacant subject land has not physically changed between the
client-requested retrospective Date of Value of December 31st,
2012 and the Date of Physical Inspection on February 7th, 2013 that
occurred five weeks later.
Hypothetical Conditions: This appraisal assumes no Hypothetical Conditions.
SUBJECT PHOTOGRAPHS
View of subject site looking northwest from the McDowell Road/Central Avenue intersection.
Looking southeast from the subject corner across the Central Avenue/McDowell Road
intersection. Metro Light Rail train moving northbound (left) through the intersection.
SUBJECT PHOTOGRAPHS
View north across the subject from the southern boundary. Central Avenue on the right.
Looking west across the subject toward 1st Avenue. Central Avenue is behind photographer.
SUBJECT PHOTOGRAPHS
View north along Central Avenue from McDowell Road. Subject is on the left.
Looking south along Central Avenue from a point one block north of the subject.
SUBJECT PHOTOGRAPHS
Looking north along Central Avenue from a point just north of the subject.
View south along Central Avenue through McDowell Road intersection. Light rail tracks in the
middle of street. Subject located over photographer’s right shoulder.
SUBJECT PHOTOGRAPHS
View southeast across the subject from middle of the northern boundary.
Arizona Opera Co. property under construction adjacent north of subject land – orange brick
building on the far left. Looking east across the subject toward Central Avenue.
SUBJECT PHOTOGRAPHS
Looking south across subject from the northern boundary mid-point toward McDowell Road.
View south along western boundary. 1st Avenue is on the right.
SUBJECT PHOTOGRAPHS
Looking east along the McDowell Road subject fence line.
View northeast across the subject from the 1st Avenue/McDowell Road corner.
SUBJECT PHOTOGRAPHS
View north along subject western boundary with 1st Avenue on the left.
TABLE OF CONTENTS
Introduction ............................................................................................ 1
Regional Analysis ..................................................................................... 6
Local Area Analysis ................................................................................. 17
Site Description ...................................................................................... 23
Highest and Best Use .............................................................................. 27
Land Valuation ....................................................................................... 28
Assumptions and Limiting Conditions ....................................................... 36
Certification of Appraisal ........................................................................ 39
Addenda ................................................................................................ 40
INTRODUCTION
Identification of Property
Common Property Name:
One Phoenix land
Location:
Northwest corner of McDowell Road and Central Avenue in
Phoenix, Maricopa County, Arizona, 85003
Property Description:
5.665 gross acres (5.553 net acres) of fully infrastructured,
vacant land. The new “DTC” zoning allows 375-foot building
heights, 1,210 residential units based on net acreage, and
retail/office space. The formerly approved development plans
were to develop 1,020 residential units in three 35-story±
residential condominium towers with 50,000 square feet of 1st
and 2nd floor office/retail. Development continues to be
postponed until market conditions improve.
Assessor's Parcel Numbers:
118-56-057A, -058, -059, -060, -081B, and -088A
Property Ownership and Recent History
Current Ownership:
AI-BSR, LLC (per public records)
Sale History:
The property was purchased by Central Development, LLC for
$25,600,900 recorded on October 17, 2006 (WD 1368635). The
NAI Valuation Services Group 13-203-DAP
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INTRODUCTION
seller was McDowell & Central Avenue, LLC. The property was
then resold to AI-BSR, LLC closing on April 4, 2007 for
$29,070,000 (WD 397673). We are unaware of any other closed
transactions of the subject within the nearly six year period
preceding current Date of Value.
Current Disposition:
The property is not under contract of sale, but is being actively
marketed for sale by Land Advisors of Scottsdale, AZ (real estate
brokers Randy Titzck and Chad Russell @ 480.483.8100), but
they did not return repeated phone calls to the appraiser.
In the 2nd half of 2011, they (previously reported) had several
offers to purchase ranging from $20.00 to $35.00 per square foot
including joint venture offers. Late in the 1st half of 2012, there
were two separate cash offers to purchase at $10,000,000 or
about $41 per square foot. Both offers included due diligence
periods of about six months and contingencies that included
securing a current multi-family residential entitlement for the
property; a process that would involve the Phoenix City Council.
Per the client, on December 12th 2012 (the “Effective Date”) a
Purchase and Sale Agreement was opened with Votum Holdings,
LLC, an Oregon LLC (the purchaser) agreeing to buy the subject
real estate for $14,500,000 ($58.75 per gross SF) with $500,000
cash down payment and $14.0M in cash at close of escrow. The
“Inspection Period” was to have been 75 days with a “Closing
Date” of March 28, 2013 per the client-provided copy of the
Purchase and Sale Agreement. The escrow was terminated by
the buyer sometime in January 2013 (date unknown), but the
parties are continuing to negotiate, according to The BSR Group.
Intended Use and Users of the Appraisal
The report has been prepared for AI-BSR, LLC (c/o The BSR Group, 7 Menachem Begin Road,
Ramat Gan, Israel 52521) and is intended only for their specified use. It may be distributed to
their attorneys, advisors and external auditors, investors, the Tel Aviv Stock Exchange, the
Israeli Security Commission, the Israel Security Authority, BSR Projects, Ltd. Board of Directors,
and Shanholt Glassman Klein Kramer & Company. As agreed, the report is for the use of client
management for accounting purposes. It may not be distributed to or relied upon by other
persons or entities without permission of NAI Horizon Valuation Services Group, LLC.
Dates of Inspection and Valuation
The retrospective value conclusion reported herein is as of December 31st, 2012. The property
was physically inspected on February 7th, 2013 by Dan A. Paulus MAI. Please note that we
present as an Extraordinary Assumption that the vacant subject land has not physically changed
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INTRODUCTION
between the client requested retrospective Date of Value of December 31st, 2012, and the Date
of Physical Inspection (February 7th, 2013) that occurred about five weeks later.
Property Rights Appraised
Fee Simple Estate
Scope of the Appraisal
The scope of an appraisal is defined as “the type and extent of research and analyses in an
assignment” (2012-2013 USPAP). In accordance with our Letter of Engagement, the scope of
work in the assignment was sufficient to produce a credible result, considering the intended
use of this assignment.
Additionally, this appraisal assignment was prepared to conform to the applicable requirements
set forth by Uniform Standards of Professional Appraisal Practice (“USPAP”). In addition, the
report was also prepared to conform to the requirements of the Code of Professional Ethics of
the Appraisal Institute and the Financial Institutions Reform, Recovery and Enforcement Act of
1989 (FIRREA), Title XI Regulations.
In fulfillment of our agreement for services and the professional requirements noted above, our
complete due diligence, self-contained appraisal report is based on research into a combination
of primary and secondary data sources. The depth of our research and analysis is directly
related to the significance of each issue to the intended use of the appraisal. The specific data
sources relied upon are described throughout the various sections of this report. In summary,
during the course of this assignment, we:

Requested subject property information from the client and their local listing broker,
and reviewed the information that was made available to us.

Conducted a field inspection of the property where we made notes, and took new
photographs, though we noted no relevant physical changes to the property.

Drove the subject’s local area to assess development trends, transportation patterns,
quality and condition of improvements, access to services, adverse influences, etc.

Gathered information on the status of key economic, social, governmental and
environmental factors in the region and local area that influence the subject’s value
from government websites, local business journals, newspapers, etc.

Contacted the city of Phoenix regarding the subject’s zoning designation and key
development restrictions.

Formed an opinion of the subject’s Highest and Best Use, and determined which
approaches to value were applicable and/or necessary.

Investigated and selected the most relevant and reliable land data sales for use in the
(Land) Sales Comparison Approach including CoStar Comps, LoopNet, public and webbased records, local brokerage contacts, and our internal NAI data resources.
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INTRODUCTION

Considered the input gathered from our interviews of buyers, sellers, brokers, property
developers and public officials, as applicable in the approach.
Please refer to the Extraordinary Assumptions of this report for a description of conditions
encountered during this assignment that precluded us from performing all the research and
analysis that would be typical for an assignment of this type.
The scope of this analysis and the analysis contained herein is reflective of “the amount and type
of information researched and the analysis applied in an assignment” (2012-2013 USPAP). This
appraisal employs only the (Land) Sales Comparison Approach. Based on our analysis and
knowledge of the property type and relevant investor profiles, it is our opinion that only this
approach would be considered meaningful and applicable in developing a credible land value
conclusion.
Definitions of Value, Interest Appraised and Other Terms
The following definitions of pertinent terms are taken from the Dictionary of Real Estate
Appraisal, Fifth Edition (2010), published by the Appraisal Institute, as well as other sources.
Market Value
Market value is one of the central concepts of the appraisal practice. Market value is
differentiated from other types of value in that it is created by the collective patterns of the
market. A current economic definition agreed upon by agencies that regulate federal financial
institutions in the United States of America follows, taken from the glossary of the Uniform
Standards of Professional Appraisal Practice of The Appraisal Foundation:
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 interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in US dollars or in terms of financial
arrangements comparable thereto; and
5. The price represents the normal consideration for the property sold unaffected
by special or creative financing or sales concessions granted by anyone
associated with the sale.
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INTRODUCTION
Fee Simple Estate
Absolute ownership unencumbered by any other interest or estate, subject to the
limitations imposed by the governmental powers of taxation, eminent domain,
police power, and escheat.
Cash Equivalent
A price expressed in terms of cash, as distinguished from a price expressed totally
or partly in terms of the face amounts of notes or other securities that cannot be
sold at their face amounts.
Market Value “As Is” on Appraisal Date
The value of specific ownership rights to an identified parcel of real estate as of the
client requested effective date of the appraisal; related to what physically exists and
is legally permissible, and excludes all assumptions concerning hypothetical market
conditions or possible rezoning.
Exposure Time
Exposure Time
Under Paragraph 3 of the Definition of Market Value, the value opinion presumes
that "A reasonable time is allowed for exposure in the open market". Exposure time
is defined as the length of time the property interest being appraised would have
been offered on the market prior to the hypothetical consummation of a sale at the
market value on the effective date of the appraisal. Exposure time is presumed to
precede the effective date of the appraisal.
The reasonable exposure period is a function of price, time and use. It is not an isolated opinion
of time alone. Exposure time is different for various types of real estate and under various
market conditions. As noted above, exposure time is always presumed to precede the effective
date of appraisal. It is the length of time the property would have been offered prior to a
hypothetical market value sale on the effective date of appraisal. It is a retrospective opinion
based on an analysis of recent past events, assuming a competitive and open market. It
assumes not only adequate, sufficient and reasonable time but adequate, sufficient and a
reasonable marketing effort. Exposure time and conclusion of value are therefore interrelated.
Based on our review of national investor surveys, discussions with market participants and
information gathered during the sales verification process, a reasonable exposure time for the
subject at the value concluded within this report would have been approximately 12 or fewer
months. This assumes an active and professional marketing plan would have been employed by
the current owner.
Legal Description
The subject site is identified by the Maricopa County Assessor (Arizona) as Parcel Numbers 11856-057A, -058, -059, -060, -081B, and -088A. A metes and bounds legal description has been
provided by the client and is exhibited in the report Addendum.
5
REGIONAL ANALYSIS
Introduction
The Phoenix economy has slowed; however, Phoenix continues to grow and has pushed its
population over 1.5 million, officially the sixth largest city in the United States. The PhoenixMesa-Glendale metropolitan statistical area or MSA includes Maricopa and Pinal counties. The
MSA, officially the 11th largest in the United States, reached a population of ±4.5 million in
November, 2011, according to www.bizjournals.com. Phoenix’s status as a destination for
transportation, distribution, high-tech and military manufacturing is likely to increase with its
continued population and income growth, new trade opportunities, making it a rising capital in
both the United States and internationally.
Metropolitan Phoenix is the choice for many business entities, including real estate owners,
investors and developers, as they explore new opportunities. The area offers the freedom and
space to build dreams through free enterprise. Greater Phoenix has maintained substantial
employment growth over the past decade. Projections show employment will increase ±85%
reaching 3.4 million jobs by 2030, despite the economic recession.
6
REGIONAL ANALYSIS
Regional Area Overview
The Phoenix-Mesa-Glendale Metropolitan Statistical Area (MSA), located in south central
Arizona, encompasses nearly 14,600 square miles and includes Maricopa and Pinal counties.
The city of Phoenix, located in Maricopa County, is the largest incorporated area within the
MSA, encompasses nearly 520 square miles, and has a population in excess of 1.5 million. The
Phoenix-Mesa-Glendale MSA is outlined in red in the map below.
Phoenix-Mesa-Glendale Metropolitan Statistical Area (MSA)
The Phoenix-Mesa Glendale MSA is a premier destination, with more than 300 sun-filled days a
year and average temperature of 74.2 degrees and due to its central location in the rapidly
growing southwestern region of the United States. Greater Phoenix is a $181 billion
marketplace that serves as a hub for innovation and entrepreneurs by providing international
access for aerospace, high-technology, bioscience, advanced business services and sustainable
technologies companies.
7
REGIONAL ANALYSIS
Population
The following chart compares the population of the MSA, Arizona and the United States from
1990 to the projections for 2016 and shows the percentage change from the prior indicated
year.
Population
Phoenix - Mesa - Glendale MSA, Arizona and the United States
1990
2000
2011*
2016*
MSA
2,238,480
3,251,876
4,325,870
4,840,526
% change
45.3%
33.0%
11.9%
Arizona
3,665,228
5,130,632
6,544,462
7,238,001
% change
40.0%
27.6%
10.6%
U.S.
248,709,873
281,421,906
310,650,750
323,650,750
% change
13.2%
10.4%
4.2%
*2011 estimates, 2016 projections
Source: Claritas Site Reports
The Phoenix-Mesa-Glendale MSA has an estimated population of ±4,326,000 as of November
2011 and continues to be one of the fastest growing metropolitan areas in the country. The
MSA has consistently outpaced the U.S. population growth over the last 18 years. Projections
show the region is expected to grow by nearly 12 percent by 2016, bringing the population to ±
4,900,000 people. Phoenix, the largest city in the MSA, covers more than 520 square miles and
has a population of over 1.5 million, ranking it the sixth largest city in the country and the
largest capital city in terms of population. Phoenix’s residential population is scattered
throughout the metropolitan area. However, population concentrations exist southeast of the
downtown core in the Tempe/Mesa/Chandler areas, northwest of the city in the Glendale/Sun
City corridor, and north along Interstate-17.
Despite the tenuous economic picture of the state of Arizona, the University of Arizona’s
Director at Economic and Business Research Center, Marshall Vest, says of Arizona’s population
growth, “Long term, we continue to expect nation-leading growth to return to Arizona and for it
to become one of the most populous states, with nearly six million additional residents 30
years, hence. Today, Arizona’s ±6.7 million population ranks as 13th, just ahead of Washington
and Massachusetts. In twenty-five years, Arizona will overtake Virginia, New Jersey, North
Carolina, Georgia, Michigan, and Ohio to become the sixth largest state in the nation.”
Demographic Profile
Historically, metro Phoenix has been regarded as a retirement haven. Over the years, the area
has become increasingly popular with young families and upwardly mobile professionals. The
market is now much younger with a median age of only 34 years compared to the national
average of 37 years. The Phoenix market is above average with the national average in
educational attainment and affluence, with 58.2% of its population having some college or
higher in comparison to 55.5% for the United States. Looking at the MSA with the estimates for
2011/2012, the majority of workers, (± 70%) have a household income of $74,999 or below;
while ±27%, the largest percentage of households in the MSA earn an annual income $25,000
to $49,999 (see chart on following page).
8
REGIONAL ANALYSIS
Demographic Characteristic - 2011 estimates
Phoenix-Mesa-Glendale MSA, Arizona & the United States
Characteristic
MSA
State of AZ
United States
Median Age
33.9
35.1
36.9
Average Household Income
$70,289/yr
$65,117/yr
$69,529/yr
Median Household Income
$53,229/yr
$48,521/yr
$49,726/yr
Household by Income Level
under @25,000
$25,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 & above
Source: Census & Hud data set s
19.93%
27.40%
20.68%
12.68%
19.31%
23.07%
28.56%
19.91%
11.66%
16.83%
23.69%
26.60%
19.49%
11.91%
18.31%
Both the average household income for the MSA ($70,289/year) and the median household
income ($53,229) are higher than the average/median household income for both the state of
Arizona and the United States.
Sector Employment
The chart to the right shows the
employment picture of the
Phoenix-Mesa-Glendale
MSA
and the state of Arizona. As of
March 2012, the top three
sectors of the MSA’s economy
include the Services sector, the
TTU (Trade, Transportation,
Utilities) sector and the
Government sector.
These
three sectors account for ±79%
of the total employment in the
MSA. For the State, the same
three sectors, Services, TTU and
Government
employ
the
majority of people (±80). There
are no major differences in
sector employment between
the MSA and the state of
Arizona.
Sector Employment
Phoenix-Mesa-Glendale MSA and Arizona
Mar-11
MSA
3,000
79,400
110,600
351,400
27,500
137,900
755,400
240,100
State
10,900
109,400
149,000
471,800
36,200
163,700
1,029,600
414,700
1,705,300
2,385,300
Mining
Construction
Manufacturing
TTU
Information
FIRE
Services
Government
total
MSA
Mining
0%
State
Con
5%
Mining
0%
Man
7%
Gov
14%
Con
5%
Gov
17%
Man
6%
TTU
20%
TTU
21%
Info
2%
Services
44%
FIRE
8%
Info
2%
Services
43%
FIRE
7%
Source: www.bls.gov/eag
9
REGIONAL ANALYSIS
Unemployment
The national unemployment average for April 2012 was 8.1%, down from 8.7% at the end of
2011. The state unemployment rate as of April 2012 was 8.2% and is down from 9.6% in April
2011. Unemployment for the Phoenix MSA was also 8.2% which is a decrease from December
2011. The chart below reflects the historical unemployment rates comparing the MSA, the
State of Arizona and the United States. The graph is highly indicative of an overall increase in
unemployment that goes along with the impact of the national recession. The MSA has seen a
slight drop in the unemployment rate through the beginning months of 2012.
Phoenix-Mesa-Glendale MSA
Unemployment Rates
2002-2011
year
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
MSA
5.6%
5.2%
4.5%
4.1%
3.6%
3.3%
4.9%
7.9%
9.2%
8.7%
State
6.0%
5.7%
5.0%
4.7%
4.2%
3.9%
5.9%
9.1%
10.0%
9.3%
U.S.
5.8%
6.0%
5.6%
5.2%
4.7%
4.7%
5.8%
9.8%
9.7%
9.3%
11.0%
10.0%
MSA
9.0%
State
8.0%
U.S.
7.0%
6.0%
5.0%
4.0%
3.0%
*March 2011
Source - recenter.tamu.edu
10
REGIONAL ANALYSIS
Major Employers
The chart to the right shows the
major employers for the PhoenixMesa-Glendale MSA. The State of
Arizona tops the list with ±49,300
employees. Wal-Mart has topped the
list again for the largest nongovernment employer with a total of
±30,000 employees. Banner Health,
the City of Phoenix and Wells Fargo
are also among the largest employers
in metro Phoenix. The employers
reinforce the sector employment
figures previously discussed.
Quality of Life/Amenities
Major Employers
Employer
State of Arizona
Wal-Mart Stores Inc
Banner Health
City of Phoenix
Wells Fargo
Maricopa County
Arizona State University
Apollo Group Inc.
Bank of America
Raytheon Company
JPMorgan Chase & Company
Intel Corp.
US Airways Group Inc.
Mesa Public Schools
Catholic Healthcare West
American Express Company
Freeport McMoRan Copper & Gold Inc.
Scottsdale Healthcare
Arizona Public Service Corp.
Luke Air Force Base - 56th Fighter Wing
Mayo Clinic Hospital
Fry's Food Stores (Kroger)
The Boeing Company
Marico County Community College
Salt River Project
Total
# of Employees
49,282
30,000
28,353
15,544
14,000
12,458
12,221
12,000
12,000
11,500
10,500
9,700
8,926
8,836
8,291
7,133
7,000
6,556
6,300
6,000
5,106
4,907
4,800
4,703
4,346
300,462
Source - The Business Journal, 2011 Book of Lists
Major Attractions and Amenities
The metro Phoenix area offers an enviable quality of life to its residents as they enjoy a high
standard of living at a fraction of the cost of other large metropolitan areas. The region offers a
multitude of cultural and recreational activities giving visitors and residents the chance to enjoy
countless activities ranging from museums, galleries, performing arts, to other cultural
opportunities. Four of Greater Phoenix’s communities ranked among CNN Money’s best small
cities to live (July 2011). The communities ranked are Chandler, Scottsdale, Peoria and Gilbert.
Metro Phoenix hosts a large number of resident artists, as well as many touring groups and
exhibits. There are over 40 museums and 150 art galleries. Metro Phoenix is home to the
internationally acclaimed Heard Museum, Phoenix Symphony, Broadway Theater, and has
hosted several Broadway shows at ASU’s Gammage Auditorium. Phoenix also boasts several
concert venues of national acclaim. US Airways Center, Desert Sky Pavilion, and Jobing.com
Arena highlight the list.
11
REGIONAL ANALYSIS
The desirable climate allows outdoor activities such as desert jeep tours, hot air ballooning, and
water recreation. Seven lakes are within an hour of metro Phoenix that offer fishing, boating,
water skiing, picnic areas, and camping. In addition, many opportunities for hiking, mountain
biking, off-road driving are available as well as over 130 golf courses, making Phoenix known as
a golfer’s paradise. Arizona features two ski resorts within two and three-hour drives from
Phoenix - Snow Bowl (Flagstaff) and Sunrise Ski Resort (Pinetop-Lakeside area).
Metro Phoenix is one of only ten metropolitan areas that have all four major professional
sports teams. Those include the Arizona Cardinals of the National Football League, the Phoenix
Suns of the National Basketball Association, the Arizona Diamondbacks of Major League
Baseball, and the Phoenix Coyotes of the National Hockey League.
Phoenix also offers many smaller niche sport franchises, such as the Rattlers of the Arena
Football League and the Sting of the National Lacrosse League. Phoenix’s collegiate sports
offerings include Arizona State University, The Fiesta Bowl, a collegiate football bowl game that
is hosted annually at The University of Phoenix Stadium in Glendale and the Insight Bowl hosted
annually at Arizona State University Sun Devil Stadium.
Education
The Phoenix-Mesa-Glendale MSA
Major Colleges and Universities
has a variety of higher educational
opportunities that produce a steady
2010 Fall
Full/Partflow of entrants for the workforce.
Enrollment
time Faculty
School Name
City
Metro Phoenix offers a variety of
Arizona State University
Tempe
70,440
2,991
Mesa Community College
Mesa
26,408
1,477
public and private universities and a
Rio Salado Community College
Tempe
25,266
879
nationally recognized network of
Glendale Community College
Glendale
21,373
1,196
University of Phoenix, Phoenix
Phoenix
16,700
2,628
community
colleges.
Greater
Phoenix College
Phoenix
13,000
788
Phoenix, ranked No. 1 in attracting Chandler-Gilbert Community College
Chandler
12,296
628
Scottsdale Community College
Scottsdale
11,257
788
college-educated, single people
Paradise Valley Community College
Phoenix
10,282
662
between the ages of 25 and 39 at a
Grand Canyon University
Avondale
8,124
2,657
Phoenix
8,122
412
higher rate than all other cities in Estrella Mountain Community College
GateWay Community College
Phoenix
7,346
496
the U.S, according to The Wall South Mountain Community College
Phoenix
6,354
380
Midwestern University
Glendale
2,464
209
Street Journal (May 2011). Maricopa
A.T. Still University
Mesa
2,305
528
Community College System is the
DeVry University
Phoenix
2,016
123
Maricopa Skill Center
Phoenix
1,512
56
largest community college system in
Source: The Business Journal, 2011 Book of Lists
the country and Arizona State
University (ASU) is the largest
university in Maricopa County. ASU had an enrollment of ±74,000 in the fall of 2011. ASU is
known for its business, architecture, communications, and engineering programs. ASU has a
downtown campus that opened in August 2006 with approximately 5,000 students. This
campus includes the College of Public Programs, University College and the College of Nursing
and Healthcare Innovation. The Phoenix-Mesa-Glendale MSA is also home to many private
educational institutions such as Grand Canyon University, Thunderbird - The School of Global
Management and the University of Phoenix. Also noteworthy is that within two hours of the
MSA are the University of Arizona (Tucson, Arizona) which has a world-renowned medical
12
REGIONAL ANALYSIS
center and Northern Arizona University (Flagstaff, Arizona) known for its nursing, forestry, and
physical therapy programs.
Medical
The Greater Phoenix region provides residents with high quality medical care and its health care
facilities provide access to the latest developments in treatments and technology. There are
also several world-renowned research facilities such as The Mayo Clinic, Mayo Hospital,
Barrows Neurological Institute, and the Arizona Heart Institute. The Phoenix area has a
comprehensive healthcare network, which includes over 20 accredited hospitals several of
which are highly regarded internationally. The table below is a listing of the highest revenue
producing hospitals with the number of beds.
Phoenix-Mesa-Glendale MSA - Major Medical Facilities
Ranking
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Hospitals
St. Josephs Hospital and Medical Center
Banner Good Samaritan Medical Center
Banner Desert Medical Center
Maricopa Integrated Health System
Banner Thunderbird Medical Center
Chandler Regional Medical Center
Banner Boswell Medical Center
Scottsdale Healthcare Shea
Scottsdale Healthcare Osborn
Phoenix Children's Hospital
Banner Baywood Medical Center
John C. Lincoln North Mountain Hospital
Mayo Clinic Hospital
Banner Del E. Webb Medical Center
Banner Estrella Medical Center
No. of Beds
697
662
700
718
513
225
430
400
332
345
340
266
244
404
214
*Source: The Arizona Business Journal Book of Lists 2011
Transportation Network
Phoenix’s evolving transportation network has played a key role in the area’s growth over the
past thirty years and will continue to do so with its outstanding passenger and cargo air service,
superior rail access, and global satellite networks. These combined services give Phoenix easy
access to markets around the world. Phoenix Sky Harbor International Airport was the 24 th
busiest passenger facility in the world and 10th busiest airport in the nation, with more than 43
million passengers using the facility during the 12 months through March 2012. Sky Harbor
consists of three terminal building encompassing 120 gates; more than 20 airlines offer daily
non-stop flights to destinations throughout the world. On a typical day nearly 1,500 aircraft and
±100,000 passengers arrive and depart. Sky Harbor has a daily economic impact of $90 million
in Phoenix.
The public transportation needs of the Phoenix area residents are served by the City of Phoenix,
the Regional Public Transportation Authority (RPTA), and Valley Metro. The area’s
comprehensive public transportation network encompasses bus and shuttle services and light
rail. Opening in 2008, the “METRO light rail” system runs more than 20 miles from suburban
13
REGIONAL ANALYSIS
Mesa, through Tempe and into Phoenix, traveling through the downtown area, offering access
to Phoenix Sky Harbor International Airport and linking two of the four metro area campuses of
Arizona State University. It has the ability to accommodate 26,000 boarding’s a day or more
than 8 million boarding’s a year. Future segments will include routes to downtown Glendale,
north Phoenix, and eastward into downtown Mesa.
The graph below illustrates the freeway system in the Phoenix MSA. The MSA is served by
several controlled-access freeways, including Interstate-10, Interstate 17, US 60, SR 51, Loop
101, SR 143 and Loop 202. Many new freeways are planned to be built by 2025, either through
upgrades of existing roads such as SR 74, SR 85, and Loop 303, or through the construction of
new freeways where no road existed before such as SR 801, SR 802 and the South Mountain
Freeway portion of Loop 202.
Major Highways
Phoenix -Mesa-Glendale MSA
HWY
Direction
I-10
east/west
I-17
north/south
US 60
east/west
Hwy 101
loop
Hwy 202
loop
Hwy 303
loop
SR 51
north/south
SR 74
east/west
SR 87
north/south
Description
National hwy with E terminus -FL, W terminus - CA
Intrastate hwy from Flagstaff to Phoenix
National with E teminus -VA, W terminus - AZ
Semi-beltway - Tolleson to Chandler
Beltway for Tempe, Mesa, Chandler & Gilbert
Loop serving the far west suburbs of Phoenix
Connects Phoenix to 101 Loop
Regional hwy with E. terminus - I-17, W terminus - Morristown, AZ
Regional hwy with N terminus - Second Mesa, S terminus - SR 84
14
REGIONAL ANALYSIS
Regional Summary
The Phoenix region, which has experienced tremendous growth over the past twenty years in
both population and employment, continues to improve its economic diversity. Arizona’s
economy was hit harder than most other states due to the collapse of the housing bubble. This
downturn set off a domino effect across the entire economic landscape from employment,
retail, construction, manufacturing and tourism. Although many indicators are still down, the
basic fundamentals that bring people, companies and investment to Arizona remain
unchanged. The low cost of housing, weather and entrepreneurial spirit continue to make
Arizona and the MSA an attractive place to be. Phoenix’s phenomenal economic growth of the
past twenty years will continue due in large part to the market’s strength in high-tech
manufacturing, tourism, and service employment. Certain sectors, namely Service and Trade,
have also buoyed the local economy and are expected to remain as strong economic drivers.
During 2007, the Phoenix market experienced a slowing in growth and a dramatic slowdown in
residential construction. Mortgage defaults starting in 2008 and continuing to-date at a
lessened pace in 2012 had risen to their highest level in decades by mid-2011 on single family
homes due in large part to the sub-prime lending that had taken place over the past several
years of economic expansion. The default rate started to steadily, slowly fall in late 2011 and
now in 2012, but modest (though improving) job numbers continue to exacerbate the recovery
both locally and nationally, though population growth numbers are quite strong for Arizona-todate in 2012.
However, the real estate market conditions are viewed as part of the normal cycle of buyer and
seller behavior, though admittedly worse in the recent past than normal, which is impacted
both by real estate and non-real estate factors. In this case, lending practices by the financial
sector have exasperated the downturn. A full recovery is expected. It is now generally accepted
that the recession bottom was hit mid-2010, and that the economy is now in a very slow, but
accelerating recovery mode, locally and nationally. Locally, it now appears that Arizona is
recovering more rapidly than most other States pulling out of the down real estate cycle
despite its depth and severity. Certain submarkets and property types are clearly starting to
recover in terms of pricing and transaction volume. Local economists now project a strong
recovery in the commercial real estate market for the MSA no sooner than 2014/2015, and a
complete housing recovery may very well take until 2015/2016, though all signs are positive.
The long-term outlook for the MSA is excellent due in part to its low business costs, strong
demographic trends, low cost of living, and desirable climate. Population and employment
growth have historically been very strong, and continue to increase, but at a slower rate.
Growth is already resuming at a greater rate than the national averages now in the later stages
of the economic recovery. The region’s economic performance should slowly return to “nationleading growth” given the market’s diversity, location, and growing prominence as a regional
business center.
15
REGIONAL ANALYSIS
16
LOCAL AREA ANALYSIS
The objective of a local market area analysis is to determine perceivable patterns of growth,
structure, and change that may detract from or enhance property values. The analysis provides
a framework or context in which the property values are estimated. The following pages
discuss characteristics of the subject’s local market area and the trends that have developed. A
map of the downtown Phoenix region is exhibited below with a red dot depicting the subject.
Location
The property is located just outside the northern edge of the downtown Phoenix central
business district (“CBD”), though the subject site is typically associated with the Midtown
section of the Central Corridor wherein McDowell Road demarks the southern boundary of the
Midtown Office District. Generally, the boundaries of the local area are Interstate-10 (Papago
Freeway) on the south, McDowell Road on the north, 7 th Street on the east, and 7th Avenue on
the west. The subject is located at the southeastern edge of the mature Willo Neighborhood
Association District i.e. single-family housing adjacent west of the subject (west of 1st Avenue) is
17
LOCAL AREA ANALYSIS
located within the Willo District. The subject encompasses one square city block and has
outstanding dual arterial, corner access suitable for high-density, high visibility “gateway”
development.
Access
Local area accessibility is very good, relying on the following arteries:
Local:
The subject is located on the immediate northwest corner of McDowell Road
and Central Avenue in Phoenix, Arizona.
Central Avenue runs adjacent along the eastern boundary of the subject. It is an
asphalt paved north/south arterial with two lanes of traffic in each direction.
The Metro Light Rail runs down the center of Central Avenue.
McDowell Road is an asphalt paved arterial with three lanes of traffic in each
direction (east/west) that runs along the south side of the subject. The
intersection with Central Avenue is fully signalized including left-turn lanes and
signals. There are concrete curbs, gutters, and sidewalks on both streets.
1st Avenue is a non-striped, concrete paved, residential street designed for two
lanes of traffic along the western boundary of the subject. It is improved with
concrete curbs, gutters, and intermittent sidewalk availability on both sides of
the street.
Access to Interstate-10 (½-mile to the south) is via 7th Street which is ½-mile to
the east of Central Avenue. High Occupancy Vehicle (“HOV”) access is available
to I-10 on 3rd Street for eastbound travel and 3rd Avenue and 5th Avenue for
westbound travel. I-17 access via McDowell Road is three miles due west.
Regional:
Interstate-10 (“I-10”) extends westward through Phoenix to the west coast Los
Angeles metro area providing the main truck-shipping route between the two
regions. I-17 is located two miles to the west and provides a loop with I-10
around central Phoenix. It provides access north to Flagstaff and I-40. State
Route 51 is an intra-city freeway and provides access from I-10 three miles east
of the subject into the east/central Phoenix area as well as connecting to the 101
Loop several miles to the north.
Public transit service is provided to the area via bus service on Central Avenue and along
McDowell Road with a passenger collection point mid-way along the subject McDowell Road
frontage. The Central Bus Station is located only one mile south of the subject at the northeast
corner of 1st Avenue and Van Buren Street. There are many bus routes operating seven days per
week.
The Metro Light Rail System opened on December 27, 2008. The initial 20-mile route extends
through downtown Phoenix along Central Avenue past the subject, and extends north to
Camelback Road, west to 19th Avenue, and then north to Bethany Home Road. East of the
downtown Phoenix CBD, the line proceeds east into Tempe and on to Mesa. Trains run every 10
minutes during peak times and every 20 minutes during off-peak. A train station for drop
18
LOCAL AREA ANALYSIS
off/pick up of passengers is located at Central Avenue and McDowell Road; an outstanding
amenity for the eventual residential and retail development of the subject.
View south toward the Phoenix CBD along the Central Avenue Metro Light Rail line that runs next to the subject
(on the right). The McDowell Road intersection is mid-photo.
Local Area Characteristics
The subject’s local market area is composed of a mix of mature residential housing and office
buildings varying from Class A to Class C. Most of the high-rise offices are situated along Central
Avenue, from Jefferson Street about 1½ mile to the south in the downtown CBD and extending
4¼-miles northward to Camelback Road through the Midtown Office District.
Surrounding the subject is a combination of office buildings and mature single-family housing.
The Phoenix Art Museum and the Phoenix Theatre are located directly east of the subject at the
northeast corner of Central Avenue and McDowell Road. It is a 203,000 square foot building
which was expanded in 2006. The Viad Tower is directly north of the subject. Built in 1991 and
renovated in 2006, the Class A office building at 1850 N. Central Avenue is a 24-story, 482,108
square foot corporate center that is a signature tower of the Phoenix skyline. It sold in May
2011 for $116.16 per square foot (66.7% occupancy). The 53,000 square foot Bowne Publishing
Building is located on the southwest corner of the intersection and is also occupied by R.R.
Donnelley. A CVS Drugstore is located at the southeast corner.
19
LOCAL AREA ANALYSIS
Photo of the two-unit light rail southbound in front of subject (near right).
St. Josephs Hospital at 3rd Avenue and Thomas is about one mile north of the subject. Good
Samaritan Hospital is located about one mile to the east at 9 th Street on McDowell Road.
Neighborhood shopping centers are located at southwest corner of 7 th Avenue and Osborn and
the northwest corner of 7th Street and McDowell Road within close driving proximity.
The nearby Phoenix CBD (one to 1½ miles to the south) is the location for many of the Class A
office towers, and home to most of the largest law and accounting firms. State, County and City
government offices are located in the downtown area in addition to the courthouses. The local
market area has proven to be relatively stable enduring the inevitable, cyclical economic
downturns. The downtown entertainment district has greatly enhanced the local market
stability with Chase Field (Arizona Diamondbacks of the MLB), US Airways Center (Phoenix Suns
of the NBA) and other amenities including numerous theaters, dining, multiple museums and
the Phoenix Library. The addition of Arizona State University’s (“ASU”) downtown campus, the
rapidly growing University of Arizona School of Nursing, and the continuing expansion of the
TGen Institute have helped increase area densities; both for employment and housing, and
round out a night life for the downtown area. Both campuses are rapidly expanding year-overyear with nearly continuous construction underway.
The subject has a desirable location within the Central Office Corridor, though it is about 10
blocks north of the downtown Phoenix CBD. With the Metro Light Rail System running along
Central Avenue, the Phoenix bus routes along Central Avenue and McDowell Road, and three
20
LOCAL AREA ANALYSIS
freeways within a five minute drive time, access in and out of the local market area is very
good. As a future residential development, the residents on-site should enjoy a highly
accessible urban environment with a residential “feel” as well as a vibrant and growing nearby
downtown CBD to the south and a high-density office/residential environment to the north.
The local market area is mature, well developed, and experienced a redevelopment resurgence
from 2002 through 2006 predominantly in the residential sector. According to city sources/the
Downtown Phoenix Partnership (“DPP”), between 12,000 and 14,000 people live in the
downtown area, but that number needs to triple to attract the type of projects DPP would like
to see such as grocery stores, additional entertainment venues, and middle-class demographic
apartment complexes. However, no new office buildings have been constructed in the Midtown
Office Corridor since 1991-to-date, though the CityScape high-rise office project was completed
three years ago in the downtown Phoenix CBD along with a major expansion of the Phoenix
Convention Center.
Numerous medium to high-density loft or condominium projects have been constructed in the
same timeframe or planned downtown in the Central Corridor. However, existing projects, both
small and large, experienced a significant slowdown in unit absorption or rental occupancy
from 2007 and into 2011; a negative trend that started to stabilize and slowly reverse mid-to
late 2011 in both the For Lease and the For Sale projects, but at greatly lowered price points
relative to original projections. Projects that have not yet commenced construction are still
postponed until the economic/lending climate for urban housing improves, and there are some
projects that lost funding in 2008/2009 in the middle of construction and still remain
unfinished, though a few of those projects have since been funded by alternate investment
sources in 2011 and are now being completed given a strong, but limited new demand coupled
with a much lower-priced supply.
Conclusion
Residential growth in the local market area has been fueled by ever-rising fuel costs coupled
with the outward suburban growth that is increasing commuting times into work centers. Living
in proximity to the office has become an important option for many employees who spend
considerable time on ever-more congested freeways. The factors of cost, quality of life (both
home and office), and increasing downtown employment have historically driven property
values in the subject local market area. As metropolitan Phoenix inevitably continues to
expand, though interrupted during the recent economic recession from which we are now
emerging, the overall demand for urban housing has strongly trended upward 2012, though
with the absorption of existing units at well-below replacement cost pricing. The trend is
expected to accelerate through 2014-2015 with an expanding demand fueled by job growth
and a recovered economy.
21
LOCAL AREA ANALYSIS
AERIAL PHOTOGRAPH
22
SITE DESCRIPTION
Location:
The property is located at the northwest corner of McDowell
Road and Central Avenue in Phoenix, Arizona. The site is also
bordered on the west by 1st Avenue; a two-lane, non-striped
residential street.
Shape:
The site is generally square.
Topography:
Level and at street level
Land Area:
5.665 gross acres or 246,759 gross square feet;
5.553 net acres or 241,904 net square feet
Please note that the Assessor presents the subject as 238,088 net
square feet, but we have chosen to rely upon the client provided
net footage data that is reportedly A.L.T.A. survey based.
Frontage, Access, Visibility:
The site has excellent frontage, access and visibility due to the
arterial corner location. The site is chain link fenced around its
entire perimeter.
Soil Conditions:
We did not receive nor review a soil report. However, we assume
that the soil's load-bearing capacity is sufficient to support
existing and/or proposed structure(s). We did not observe any
evidence to the contrary during our physical inspection of the
property. Drainage appears to be adequate.
Utilities
Water:
Sewer:
Electricity:
Gas:
Telephone:
City of Phoenix
City of Phoenix
Arizona Public Service
Southwest Gas Corporation
Qwest Communications
Land Use Restrictions:
We were not given a title report to review. We do not know of
any easements, encroachments, or restrictions that would
adversely affect the site's use. However, we recommend a title
search to determine whether any adverse conditions exist.
Flood Map:
National Flood Insurance Rate Map Community Panel Number
04013-C2130G (September 30, 2005)
Flood Zone:
X-500, An area inundated by 500-year flooding; an area
inundated by 100-year flooding with average depths of less than
1 foot or with drainage areas less than 1 square mile; or an area
protected by levees from 100-year flooding.
Wetlands:
We were not given a Wetlands survey. If subsequent engineering
data reveal the presence of regulated wetlands, it could
materially affect property value. We recommend a wetlands
23
SITE DESCRIPTION
survey by a competent engineering firm.
Seismic Hazard:
The site is not located in a known seismic hazard area.
Hazardous Substances:
We observed no evidence of toxic or hazardous substances
during our inspection of the site. However, we are not trained to
perform technical environmental inspections and recommend
the services of a professional engineer for this purpose.
Overall Functionality:
The subject site is functional for the proposed high-density multifamily use.
ASSESSOR’S PLAT MAP
(Subject highlighted in gray)
24
REAL PROPERTY TAXES AND ZONING
The property is subject to the taxing jurisdiction of Maricopa County, Arizona. The Assessors'
parcel identification numbers are 118-56-057A, 058, 059, 060, 081B, and 088A.
The current 2012 fiscal tax year extends from September 2012 through August 2013. Taxes can
be paid 50% due October 1st, 2012 and the remaining 50% due March 1st, 2013. The client has
not paid the 1st half year of 2012 nor have they paid 2011 property taxes. The delinquent 1 st
half 2012 and the entirety of 2011 taxes are accruing interest at a rate of 16% per annum. All of
the parcels are “Liened” with publically recorded Tax Liens purchased on February 11, 2013.
The spreadsheet below shows principle plus interest due through February 28 th, 2013 (two
months beyond the Date of Value) per the Treasurer’s website.
One Phoenix 2012 Property Taxes as of December 31, 2012
Assessor's
Parcel No.
118-56-057A
118-56-058
118-56-059
118-56-060
118-56-081B
118-56-088A
2012 Full
Cash Value
$1,680,500
$94,000
$142,000
$117,500
$5,494,500
$337,500
$7,866,000
2012 Property
Taxes
$45,362.96
$2,511.62
$3,794.12
$3,139.48
$148,029.66
$9,083.62
$211,921.46
FY2012
Taxes Delinquent
incl. Interest Due*
$46,572.62
$2,578.59
$3,895.29
$3,223.20
$151,977.02
$9,325.84
$217,572.56
2011 Tax
Liens & Interest
Due-to-Date*
$57,674.65
$3,256.19
$4,876.17
$4,051.69
$181,672.91
$11,220.36
$262,751.97
Total
now Dueto-Date*
$104,247.27
$5,834.78
$8,771.46
$7,274.89
$333,649.93
$20,546.20
$480,324.53
* Interest Due is calculated by Treasurer accruing through February 28th, 2013 (not at 12/31/12).
Zoning
The subject is now re-zoned as “DTC”, Downtown Gateway District, by the city of Phoenix. The
property was rezoned in 2011 from the previous combined zones of C-2, HR-1, TOD-1
(Intermediate Commercial, High-Rise Zone, Transit-Oriented District), though the previous
‘Approvals’ for the subject development are generally the same based upon our conversation
with City of Phoenix Planning Department. The DTC zoning allows for a range of commercial
uses that provides a building height and density of 375 foot building height and up to 218 units
per acre (5.553 net acres x 218 units per acre = 1,211 units); about the same 1,200 residential
units as previously entitled and the 1,020 originally planned by BSR. It allows retail/office space
to be included within the development plans.
We are not experts in the interpretation of complex zoning ordinances, but the property “as
proposed” appears to be a conforming use based on our review of public information. The
determination of compliance is beyond the scope of a real estate appraisal.
We know of no other deed restrictions, private or public, that further limit the subject’s use.
The research required to determine whether or not such restrictions exist, however, is beyond
the scope of this appraisal assignment. Deed restrictions are a legal matter and only a title
examination by an attorney or Title Company can usually uncover such restrictive covenants.
Thus, we recommend a title search to determine if any such restrictions do exist.
25
SITE DESCRIPTION
Zoning Map from City of Phoenix website with subject site highlighted in light green
26
HIGHEST AND BEST USE
Definition of Highest and Best Use
According to The Dictionary of Real Estate Appraisal, Fifth Edition (2010), a publication of the
Appraisal Institute, the Highest and Best Use is defined as:
The reasonably probable and legal use of vacant land or an improved property,
which is physically possible, appropriately supported, financially feasible, and that
results in the highest value. The four criteria the highest and best use must meet
are legal permissibility, physical possibility, financial feasibility, and maximum
profitability.
Highest and Best Use Criteria
We evaluated the site's Highest and Best Use both as currently improved and as if vacant. In
both cases, the property’s highest and best use must meet four criteria. That use must be (1)
legally permissible, (2) physically possible, (3) financially feasible, and (4) maximally productive.
Legally Permissible
The 1st test concerns permitted uses. According to our understanding of the zoning ordinance,
noted earlier in this report, the site may legally be improved with structures that accommodate
commercial, residential, and retail uses. Aside from the site's new DTC zoning and regulations,
we are not aware of any legal restrictions that limit the potential uses of the subject.
Physically Possible
The 2nd test is what is physically possible. As discussed in the "Site Description," the site's large
size, nearly square shape, soil, and level topography, etc. do not physically limit its use. The
subject site is of adequate shape and size to accommodate virtually all urban uses.
Financial Feasibility and Maximal Productivity
The 3rd and 4th tests are, respectively, what is feasible and what will produce the highest net
return. After analyzing the physically possible and legally permissible uses of the property, the
highest and best use must be considered in light of financial feasibility and maximum
productivity. For a potential use to be considered, it must provide a sufficient return to attract
investment capital over alternative forms of investment. A positive net income or acceptable
rate of return would indicate that a use is financially feasible.
Highest and Best Use of Site “As Vacant”
Considering the subject site’s size, configuration, infrastructure, location among other Central
Corridor properties in Phoenix, it is our opinion that the Highest and Best Use of the subject site
“as vacant” is to start construction with a mixed-use project of office/retail/high-density
condominium housing only when potentially financially feasible in 2014-2015. Please note that
we have not performed a Market or Feasibility Study. Existing projects, both small and large,
experienced a significant recession from 2007 and into 2011; a negative trend that started to
fairly aggressively turn around mid to late-2011 in targeted micro-markets as pent-up demand,
population and job growth re-emerged. However, projects that have not yet started
construction remain postponed until the economic climate for urban, high-density housing
development is further improved and debt funding more readily available.
27
LAND VALUATION
Methodology
There are three generally accepted approaches available in developing an opinion of value: the
Cost, Sales Comparison and Income Capitalization approaches. We have considered only the
(Land) Sales Comparison Approach as appropriate and relevant in this appraisal to develop an
opinion of the market value of the subject as the subject is vacant land. In appraisal practice, an
approach to value is included or eliminated based on its applicability to the property type being
valued and the quality of information available. Therefore, the Cost Approach, the (Improved)
Sales Comparison Approach, and the Income Capitalization Approach were not utilized.
Land Valuation
Developing an opinion of land value is typically accomplished via the (Land) Sales Comparison
Approach by analyzing sites of comparable utility adjusted for differences, to indicate a value
for the subject parcel. Valuation is typically accomplished using a unit of comparison such as
price per square foot. Adjustments are applied to the units of comparison from an analysis of
comparable sales, and the adjusted unit of comparison is then used to derive a total value.
The reliability of this approach is dependent upon (a) the availability of comparable sales data;
(b) the verification of the sales data; (c) the degree of comparability; and (d) the absence of
non-typical conditions affecting the sales price. For this methodology, we analyzed prices
buyers have recently paid for similar land in the area, as well as examined current offerings and
spoke with several local brokers regarding the downtown/midtown Phoenix land market. In
making comparisons, we adjusted the sale prices for differences between this site and the
comparable sites. We have presented on the following pages a summary of pertinent details of
sites (land) recently sold that we have compared to the subject.
Real estate developers make qualitative and quantitative judgments in the acquisition of a site
with development potential such as the subject site. Subjectively, a developer considers the
nature of surrounding land uses and proximity to complimentary services to a potential project.
Objectively, the physical and functional attributes of the site, and the cost of preparing it for
construction must be calculated. Lying between these two considerations are the many
aesthetic and economic factors which come to influence the final product.
The major elements of comparison for analysis of this type include the property rights
conveyed, the financial terms incorporated into a particular transaction, the conditions or
motivations surrounding the sale, changes in market conditions since the sale, the location of
the real estate, its utility and the physical characteristics of the property.
Adjustment Process
Property Rights Conveyed
Each of the sales utilized in this analysis involved the transfer of the fee simple interest.
Therefore, no adjustments were required for property rights conveyed.
28
LAND VALUATION
Financial Terms
To the best of our knowledge, all of the sales utilized in this analysis were accomplished with
cash or market-oriented financing. Therefore, no adjustment for financial terms is required for
the comparables.
Conditions of Sale
Adjustments for conditions of sale usually reflect the motivations of the buyer and the seller. In
many situations, the conditions of sale may significantly affect transaction prices. However, the
sales used in this analysis are considered to be "arms-length" market transactions between
both knowledgeable buyers and sellers on the open market. Therefore, no adjustments for
conditions of sale are required for the first three comparables.
Market Conditions
The sales included in this analysis are dated February through November 2012. Though the land
market is still stabilizing, zoned, approved, and assembled properties in core markets like the
subject are starting to experience price appreciation based upon the ever-increasing multifamily market demand; both locally and nationally. Similarly, the metro Phoenix market has
been experiencing very large price increases in single-family housing and the residential
development land due to accelerating housing demand. The dramatic upward shift in the offer
prices for the subject from $20 to $35 per square foot in the 2nd half of 2011 to about $41 per
square foot in mid-2012, and then upward to $58.75 per square foot at the end of 2012 is a
highly visible signal of the demand shift occurring in the local market. However, the offers
have not yet resulted in a closed sale. Therefore, a true market value of the subject is
considered to be less than the most recent offer price. As regards the subject, there are few
large, assembled properties available for future development i.e. most land sales are tiny, infill
and redevelopment sites that are still in the process of being assembled, or will be developed
with small, low-density multi-family projects.
We extensively researched local market database (multiple times) and the sales data presented
represents the most current data within the competitive submarket. Only a few comparable
sales were discovered during the past 12 months, though many more For Sale properties are
now on the market. The leading indicators for U.S. economic conditions, though generally
positive, are still unsettled and volatile given both the fickle economic and unpredictable
political climate.
A conservative upward adjustment of 5% per annum was made to the comparables as the
market has clearly started to trend upward; especially those properties with multi-family
zoning. The consensus of broker opinions (and ours) is that the land market, the first property
type to collapse during this recessionary cycle starting in late 2006, has already hit market
bottom and is starting to recover. It is their opinion that many recent sales are still reflective of
fairly low market pricing, though targeted, excellent locations for proposed multi-family
construction are in demand.
We’re noting locally that the quantity of current For Sale land data has significantly increased
and therefore the subjective aspect of our market value adjustments is lessened. However, the
29
LAND VALUATION
market recovery remains somewhat tentative due to the national economy, budget issues and
the U.S. debt burden i.e. there remains a concern among a minority of economists that a
double-dip recession is possible. We make this point suggesting that the change in subject
market value every six months may not necessarily track with the global Market Conditions
adjustment that, in this case, is defined as five percent (5%) per annum.
Location
An adjustment for location is required when the locational characteristics of a comparable
property are different from those of the subject. The subject is considered to have a very good
location, though not as good as the comparable properties located in downtown Scottsdale
where the comparables are located within the heart of the restaurant/entertainment,
shopping/art store venues. The subject does have very good access and visibility, but it lacks
the “walkability” amenity and the international draw of the downtown Scottsdale locations. We
have made a negative adjustment to those comparables considered superior in location versus
the subject. Conversely, a positive adjustment was made to those comparables considered
inferior. Each comparable was adjusted accordingly.
Public Utilities
All of the urban land sales, like the subject, had full access to public utilities (water, sewer,
electricity, natural gas, telephone) at the time of sale. Therefore, no adjustments for this
characteristic were required.
Utility
The subject site has good utility. The property is adequately shaped to accommodate a highrise, high-density residential/commercial complex as zoned and proposed, and it has superior
access, frontage and visibility. Site size was also considered within this category. In high-density,
urban submarkets along the Central Corridor, please note that a large parcel often has a
greater unit value i.e. higher square foot value than smaller properties due to the value created
by the assemblage (time and cost) effort of several small parcels. When a comparable is
considered to have superior or inferior utility and size, an adjustment was made.
Unit Density (Dwelling Units per acre) and Zoning
The subject appears to be appropriately zoned to complete the proposed residential project
under its DTC-Downtown Gateway zoning, though feasibility for development near-term is still
questionable given the significant project size, and therefore yield risk. Most of the
comparables provide much lower development densities and building heights than the subject,
and are therefore less valuable.
We also analyzed and adjusted for the dwelling units (DU’s) per acre buildable comparing the
sales data to the subject. Typically, higher density land is more valuable per square foot if a
higher utilization can be gained per square foot. However, the market value only exists if the
market demand for the higher density exists.
30
LAND VALUATION
Discussion of Comparable Land Sales
Land Sale No. 1
This is the sale of a 3.35-acre parcel located along the Scottsdale Waterfront in downtown
Scottsdale, Arizona. The property is zoned D/RCO-2 by the city of Scottsdale. Given its location
south of Scottsdale Fashion Square and zoning, it is suitable for a 259 high density, mid-rise
multi-family or condo/loft unit development. It was sold by the Starwood Capital Group in
February 2012 for a price of $13,500,000 or $92.53 per square foot. After all adjustments, this
sale indicated an adjusted subject unit value of $86.85 per square foot.
Land Sale No. 2
This is the sale of a 9.7-acre parcel located adjacent north of Scottsdale Fashion Square in
downtown Scottsdale, Arizona, and is the undeveloped Phase 3 land of the Scottsdale Portales
condominium project. The property is zoned D/RC-O 2 by the city of Scottsdale with an
approval for 369 dwelling units or 38 du’s per acre. It sold in February 2012 for an REO price of
$13,877,500 or $32.84 per square foot after one year in escrow. After all adjustments, this sale
indicated an adjusted unit value of $44.92 per square foot.
Land Sale No. 3
This is the sale of a 2.11-acre parcel located along the Rio Salado river bank in Tempe, Arizona
just north of Arizona State University. This property is zoned MU-4 by the city of Tempe
allowing 262 units or 124 dwelling units per acre. It closed escrow in April 2012 after one year
in escrow for $2,700,000 or $29.41 per square foot. After all adjustments, this sale indicated an
adjusted unit value of $39.34 per square foot.
Land Sale No. 4
This is the sale of a 7.8-acre parcel called Archstone Tempe located at the northwest corner of
Scottsdale Road and Curry in Tempe, Arizona at the southern edge of Scottsdale. This property
is zoned R-5, an intensive multifamily zoning by the city of Tempe. It sold in August 2012 for a
price of $8,800,000 or $25.90 per square foot including $300,000 for existing retail center
demolition. After all adjustments, this sale indicated an adjusted unit value of $51.08 per
square foot.
Land Sale No. 5
This is the sale of a 26,615 square foot parcel located at the southeast corner of Portland and
3rd Streets just north of downtown Phoenix, Arizona. This property is zoned R-5 by the city of
Phoenix. It sold for $525,000 or $19.3 per square foot of land area. After all adjustments, this
sale indicated an adjusted unit value of $36.64 per square foot.
Summary of Land Data and Opinion of Land Value
After adjustments, the five land sales reflect a broad range in unit pricing ranging from $34.94
to $86.85 per square foot of land with an average or Mean of $50.89 per square foot. Though
we were able to find relatively recent land sales with good proximity and/or reasonably good
similarity to the subject, the land market is still complex and difficult to interpret, though
31
LAND VALUATION
improving when compared to the recent past. We have also spoken with brokers active in the
local land market who have stated that there is a rising demand for core market properties,
though land market investors remain skittish (note the recently failed subject escrow) and
generally restricted to cash-only transactions that narrow the buyer ‘pool’.
Overall, the local market has started to accelerate at the consumer level for well-located singlefamily and condominium product, though not yet at a rate to induce a sizable amount of
development near-term. Speculative land buyers understand that they will have to hold a site
for two+ years before development may be feasible. They will only purchase property at a price
where they can hold for two+ years before development or re-sale to a development company,
and still make a profit for their investors.
The subject is a large, highly desirable long-term hold property with dual arterial/excellent
corner exposure on Central Avenue and McDowell Road. It has a superior locational attribute
to all of the comparables. It has a large site size characteristic in a mature, dense submarket
where large properties are difficult and costly to assemble. Still, demand for investment grade
property is shallow as demand indicators for big project development remains risky.
The subject site is in a very good, high visibility location and, when demand reoccurs, the
subject should then command a top of market price. Therefore, the subject is best represented
by a value at the mid-range on the Adjustment Grid.
We conservatively conclude that the indicated retrospective “as is” value by the (Land) Sales
Comparison Approach as of the December 31st, 2012 date of value was:
Square
Feet
Land Area (gross sq. ft.):
246,759
Indicated Value per Square Foot:
x $50.00
Indicated Land Value:
Rounded Land Value…..
$12,337,950
$12,340,000
Please note that the Value Conclusion does not deduct the $262,751.97 in 2011 Tax Liened and $217,572.56 in
2012 Delinquent property taxes including penalties and interest-to-date totaling $480,324.53. All six of the
subject parcels have Certificates of Purchase of Tax Liens against them. Your continued ownership is at risk.
32
LAND VALUATION
LAND SALES LOCATION MAP
33
LAND VALUATION
SUMMARY OF LAND SALES
No.
1
2
Buyer
Seller
Location
7025 E. Via Soleri Drive
Scottsdale, AZ
5000 N. Portales Place
Scottsdale, AZ
Broadstone Scottsdale
Waterfront, LLC
Scottsdale Waterfront, LLC
c/o Starwood Capital
Group
JLB Portales Partners, LP
PPP Loan, LLC
Pier at Town Lake, LLC
3
WIDBPP Loan Fund II, LLC
Zoning
Utility*
$/SqFt
DU's/Acre
$13,500,000
145,904 SF
D/RCO-2
$92.53
2/12
3.35 Ac
Excellent
77.3
$13,877,500
422,532
D/RC-O 2
$32.84
2/12
9.70 Ac
Excellent
38.0
$2,700,000
91,807
MU-4
$29.41
4/12
2.11 Ac
Good
124.2
$8,800,000
339,768 SF
R-5
$25.90
8/12
7.80 Ac
Good
30.0
$525,000
26,615 SF
R-5
$19.73
11/12
0.61 Ac
Avg
N/Ap
Price
Date
$525,000
$13,877,500
$7,650,625
2/12
11/12
5/12
Site SqFt
Site Acres
26,615 SF
422,532 SF
171,715 SF
0.00 Ac
9.70 Ac
3.15 Ac
246,759
5.66
Zoning
Utility*
N/A
N/A
N/A
N/A
N/A
N/A
DTC
Good
$/SqFt
DU's/Acre
$19.73
$92.53
$43.63
30.0
124.2
67.4
N/A
218
NWC Scottsdale Rd. & Curry Rd
Scottsdale, AZ
Archstone Tempe, LLC
3rd & Portland LLC
5
Site SqFt
Site Acres
NEC Rio Salado Pky & Rural Rd
Tempe, AZ
Southbank ASU, LLC
4
Price
Date
SEC Roosevelt Str. & 3rd Str.
Phoenix, AZ
Rialto Capital Management
Survey Low
Survey High
Average
Survey Low
Survey High
Average
Subject
COMMENTS
Proposed multi-family site located on the Scottsdale Waterfront area directly
south of Scottsdale Fashion Square in the heart of Scottsdale. A 259-unit luxury
apartment complex is to be developed and soon to break ground. The property was
in escrow for almost one year, though the existing zoning and entitlements
allowed for the proposed construction. The purchase price is equal to $52,124 per
unit and the dwelling unit density is 77.3 units per acre.
REO sale (lender-owned property). Property was under contract for about nine
months prior to closing. The site is the former Portales Place Phase III
condominium site now proposed for 369 luxury apartment units. Located directly
north of the Scottsdale Fashion Square retail mall complex inthe heart of
Scottsdale and adjacent west of the prior phases of the condominium project.
Lot 3 was a "direct exchange" where the seller 1st sold an adjoining parcel to the
City of Tempe, the City then sold their Lot 3 parcel to original seller, who in turn resold Lot 3 to Southbank ASU at the same price for development of a 15,000 sf, 2story mixed-use retail and a 262-unit senior housing community in a 17-story
tower called The Villas at Southbank. Property located just north of Arizona State
Unitversity and adjacent to the Karsten Golf Course.
REO sale (lender owned property) on a site formerly improved with a large retail
structure. Recorded purchase price was $8.5M, but buyer spent $300,000
demolishing the structures on-site so that they could build a 234-unit apartment
complex. Property had to be re-zoned by buyer to secure approval for apartment
construction.
This all-cash transaction did not involve brokerage. The porperty is to be held as a
land investment; not for immeidate multi-family development. It is located south
of the I-10 three blocks east of Central Avenue in the area north of the arizona
Center.
34
LAND VALUATION
LAND SALE ADJUSTMENT GRID
$/SqFt
No. Date
1 $92.53
2/12
2 $32.84
2/12
3 $29.41
4/12
4 $25.90
8/12
5 $19.73
11/12
Property
Rights
Conveyed
Fee Simple/Mkt.
0.0%
Fee Simple/Mkt.
0.0%
Fee Simple/Mkt.
0.0%
Fee Simple/Mkt.
0.0%
Fee Simple/Mkt.
0.0%
Economic Adjustments
Financing &
Conditions Exp. After
of Sale
Purchase
Arms-Length
0.0%
Arms-Length
25.0%
Arms-Length
0.0%
Arms-Length
25.0%
Arms-Length
0.0%
SUMMARY
Price Range
Unadj. $/SF
Low
$19.73
High
$92.53
Average
$40.08
Net Adjustment Range
Low
-10.0%
High
85.0%
Average
30.0%
CONCLUSION
Indicated Value
Site Area
Indicated Value
Rounded to nearest $10,000
Per square foot
None
0.0%
None
0.0%
None
0.0%
None
0.0%
None
0.0%
Property Characteristic Adjustments
Market*
Conditions
Subtotal
Inferior
4.3%
Inferior
4.2%
Inferior
3.3%
Inferior
1.8%
Inferior
0.4%
$96.51
4.3%
$42.78
30.3%
$30.38
3.3%
$32.96
27.3%
$19.80
0.4%
Location
Superior
-25.0%
Superior
-25.0%
Inferior
5.0%
Inferior
20.0%
Inferior
30.0%
Adj. $/SF
$34.94
$86.85
$50.89
Public
Utilities
Size/
Utility**
Unit
Density
Adj.
$/SqFt
Similar
0.0%
Similar
0.0%
Similar
0.0%
Similar
0.0%
Similar
0.0%
Similar
0.0%
Similar
0.0%
Similar
0.0%
Inferior
5.0%
Inferior
25.0%
Inferior
15.0%
Inferior
30.0%
Inferior
10.0%
Inferior
30.0%
Inferior
30.0%
$86.85
-10.0%
$44.92
5.0%
$34.94
15.0%
$51.08
55.0%
$36.64
85.0%
Overall
Superior
Inferior
Inferior
Inferior
Inferior
*Market Conditions Adjustment
Compound annual change in market conditions:
5.00%
Date of Value for adjustment calculations: 12/31/12
**Size/Utility includes shape, access, frontage and
visibility. Larger square footage sites are often more
valuable in a high-density urban environment i.e.
assemblage value, the site size adjustments are
reflected in the UTILITY category.
$/SqFt
$50.00
x 246,759
$12,337,950
$12,340,000
$50.01
3
35
ASSUMPTIONS AND LIMITING CONDITIONS
"Appraisal" means the appraisal report and opinion of value stated therein, to which these
Assumptions and Limiting Conditions are annexed.
"Property" means the subject of the Appraisal.
"NAI" means NAI Horizon Valuation Services Group, LLC or its subsidiary which issued the
Appraisal.
"Appraiser" or “Appraisers” means the employee(s) of NAI Horizon Valuation Services Group,
LLC who prepared and signed the Appraisal.
General Assumptions
This appraisal is made subject to the following assumptions and limiting conditions:
1. No opinion is intended to be expressed and no responsibility is assumed for the legal
description or for any matters which are legal in nature or require legal expertise or
specialized knowledge beyond that of a real estate appraiser. Title to the Property is
assumed to be good and marketable and the Property is assumed to be free and clear of all
liens unless otherwise stated. No survey of the Property was undertaken.
2. The information contained in the Appraisal or upon which the Appraisal is based has been
gathered from sources the Appraiser assumes to be reliable and accurate. Some of such
information may have been provided by the owner of the Property. Neither the Appraiser
nor NAI shall be responsible for the accuracy or completeness of such information, including
the correctness of opinions, dimensions, sketches, exhibits and factual matters.
3. The opinion of value is only as of the date stated in the Appraisal. Changes since that date in
external and market factors or in the Property itself can significantly affect property value.
4. The Appraisal is to be used in whole and not in part. No part of the Appraisal shall be used
in conjunction with any other appraisal. Publication of the Appraisal or any portion thereof
without the prior written consent of NAI is prohibited. Except as may be otherwise stated in
the letter of engagement, the Appraisal may not be used by any person other than the party
to whom it is addressed or for purposes other than that for which it was prepared. No part
of the Appraisal shall be conveyed to the public through advertising, or used in any sales or
promotional material without NAI prior written consent. Reference to the Appraisal
Institute or to the MAI designation is prohibited.
5. Except as may be otherwise stated in the letter of engagement, the Appraiser shall not be
required to give testimony in any court or administrative proceeding relating to the
Property or the Appraisal.
6. The Appraisal assumes (a) responsible ownership and competent management of the
Property; (b) there are no hidden or unapparent conditions of the Property, subsoil or
structures that render the Property more or less valuable (no responsibility is assumed for
such conditions or for arranging for engineering studies that may be required to discover
them); (c) full compliance with all applicable federal, state and local zoning and
environmental regulations and laws, unless noncompliance is stated, defined and analyzed
in the Appraisal; and (d) all required licenses, certificates of occupancy and other
ASSUMPTIONS AND LIMITING CONDITION
governmental consents have been or can be obtained and renewed for any use on which
the value opinion contained in the Appraisal is based.
7. The physical condition of the improvements analyzed within the Appraisal is based on visual
inspection by the Appraiser or other person identified in the Appraisal. NAI assumes no
responsibility for the soundness of structural members nor for the condition of mechanical
equipment, plumbing or electrical components.
8. The projected potential gross income referred to in the Appraisal may be based on lease
summaries provided by the owner or third parties. The Appraiser has not reviewed lease
documents and assumes no responsibility for the authenticity or completeness of lease
information provided by others. NAI recommends that legal advice be obtained regarding
the interpretation of lease provisions and the contractual rights of parties.
9. The projections of income and expenses are not predictions of the future. Rather, they are
the Appraiser's opinion of current market thinking on future income and expenses. The
Appraiser and NAI make no warranty or representation that these projections will
materialize. The real estate market is constantly fluctuating and changing. It is not the
Appraiser's task to predict or in any way warrant the conditions of a future real estate
market; the Appraiser can only reflect what the investment community, as of the date of
the Appraisal, envisages for the future in terms of rental rates, expenses, supply and
demand.
10. Unless otherwise stated in the Appraisal, the existence of potentially hazardous or toxic
materials which may have been used in the construction or maintenance of the
improvements or may be located at or about the Property was not analyzed in arriving at
the opinion of value. These materials (such as formaldehyde foam insulation, asbestos
insulation and other potentially hazardous materials) may adversely affect the value of the
Property. The Appraisers are not qualified to detect such substances. NAI recommends that
an environmental expert be employed to determine the impact of these matters on the
opinion of value.
11. The author of this report is not qualified to comment on environmental issues that may
affect the market value of the property appraised, including but not limited to pollution or
contamination of land, buildings, water, groundwater or air. Unless expressly stated, the
property is assumed to be free and clear of pollutants and contaminants, including but not
limited to molds or mildews or the conditions that might give rise to either, and in
compliance with all environmental condition, past, present, or future, that might affect the
market value of the property appraised. If the party relying on this report requires
information about environmental issues then that party is cautioned to retain an expert
qualified in such issues. We expressly deny any legal liability relating to the effect of
environmental issues on the market value of the property being appraised
12. Unless otherwise stated in the Appraisal, compliance with the requirements of the
Americans with Disabilities Act of 1990 (ADA) has not been analyzed in arriving at the
opinion of value. Failure to comply with the requirements of the ADA may adversely affect
the value of the property. NAI recommends that an expert in this field be employed.
37
ASSUMPTIONS AND LIMITING CONDITION
13. Additional work requested by the client beyond the scope of this assignment will be billed
at our prevailing hourly rate. Preparation for court testimony, update valuations, additional
research, depositions, travel or other proceedings will be billed at our prevailing hourly rate,
plus reimbursement of expenses.
14. The reader acknowledges that NAI has been retained hereunder as an independent
contractor to perform the services described herein and nothing in this agreement shall be
deemed to create any other relationship between us. This assignment shall be deemed
concluded and the services hereunder completed upon delivery to you of the appraisal
report discussed herein.
15. This study has not been prepared for use in connection with litigation and this document is
not suitable for use in a litigation action. Accordingly, no rights to expert testimony, pretrial
or other conferences, deposition, or related services are included with this appraisal. If, as a
result of this undertaking, NAI or any of its principals, its appraisers or consultants are
requested or required to provide any litigation services, such shall be subject to the
provisions of the NAI engagement letter or, if not specified therein, subject to the
reasonable availability of NAI and/or said principals or appraisers at the time and shall
further be subject to the party or parties requesting or requiring such services paying the
then-applicable professional fees and expenses of NAI either in accordance with the
provisions of the engagement letter or arrangements at the time, as the case may be.
Extraordinary Assumptions
An extraordinary assumption is defined as “an assumption, directly related to a specific
assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions.
Extraordinary assumptions presume as fact otherwise uncertain information about physical,
legal or economic characteristics of the subject property or about conditions external to the
property, such as market conditions or trends, or the integrity of data used in an analysis.”
(USPAP 2012-2013).
Note that we present as an Extraordinary Assumption that we presume that the vacant
subject land has not physically changed between the client requested retrospective Date of
Value (December 31st, 2012) and the Date of Physical Inspection (February 7th, 2013) that
occurred five weeks later.
Hypothetical Conditions
A hypothetical condition is defined as “that which is contrary to what exists, but is supposed for
the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts
about physical, legal, or economic characteristics of the subject property or about conditions
external to the property, such as market conditions or trends, or the integrity of data used in an
analysis.” (USPAP 2012-2013). This appraisal employs no hypothetical conditions.
38
CERTIFICATION OF APPRAISAL
We certify that, to the best of our knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the reported
assumptions and limiting conditions, and is our personal, impartial, and unbiased
professional analyses, opinions, and conclusions.
3. We have no present or prospective interest in the property that is the subject of this report,
and no personal interest with respect to the parties involved.
4. We have no bias with respect to the property that is the subject of this report or to the
parties involved with this assignment.
5. Our engagement in this assignment was not contingent upon developing or reporting
predetermined results.
6. Our compensation for completing this assignment is not contingent upon the development
or reporting of a predetermined value or direction in value that favors the cause of the
client, the amount of the value opinion, the attainment of a stipulated result, or the
occurrence of a subsequent event directly related to the intended use of this appraisal.
7. Our analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the Code of Professional Ethics and Standards of Professional
Appraised Practice of the Appraisal Institute, which include the Uniform Standards of
Professional Appraisal Practice.
8. The property was physically inspected on February 7th, 2013 by Dan A. Paulus, MAI.
9. No one provided significant real property appraisal assistance to the persons signing this
report.
10. Mr. Paulus has previously appraised the subject property within the past three years.
11. The use of this report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.
12. As of the date of this report, Dan A. Paulus, MAI has completed the continuing education
program of the Appraisal Institute.
Dan A Paulus, MAI, President
Arizona Certified General Appraiser License No. 30234
ADDENDA
Addenda Contents
ADDENDUM A:
Legal Description
ADDENDUM B:
A.L.T.A. Survey (client provided)
ADDENDUM C:
Flood Map
ADDENDUM D:
Qualifications of the Appraiser
ADDENDA
ADDENDUM A:
Legal Description
ADDENDA
ADDENDA
ADDENDUM B:
A.L.T.A. Survey
ADDENDA
ADDENDA
ADDENDUM C:
Flood Map
ADDENDA
ADDENDA
ADDENDUM D:
Qualifications of the Appraiser
ADDENDA

One Phoenix land

Transcription

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RAGEOUS! - ION Arizona