SELF-CONTAINED APPRAISAL REPORT

Transcription

SELF-CONTAINED APPRAISAL REPORT
Distribution / Warehouse Facility
14416 Export Road
Laredo, Texas 78045
Relevant Dates
Date of Inspection: January 27, 2007
Effective Date of Value Opinion: January 27, 2007
Date of Report: March 9, 2007
Prepared for:
Nancy Morales
Membership Services
Appraisal Institute
550 W. Van Buren St, Suite 1000
Chicago, Illinois 60607
Prepared by:
Paul Lorenzen
CCIM, CPM, CSM
8151 Easy Meadow Drive
Converse, Texas 78109
Paul Lorenzen, CCIM, CPM, CSM
Real Estate Appraiser
210-662-2857
March 9, 2007
Nancy Morales
Membership Services
Appraisal Institute
550 W. Van Buren St, Suite 1000
Chicago, Illinois 60607
RE:
Demonstration Appraisal Report - Member Account #94920
14416 Export Road, Laredo, Texas 78045
Dear Ms. Morales:
As partial fulfillment of the requirements for the Member Appraisal Institute (MAI) designation, as
required by the Appraisal Institute, I have prepared an appraisal of the Single Tenant Industrial /
Distribution Property located at 14416 Export Road, Laredo, Texas. The Legal Description of the
property is:
Surface Rights Only, Lot 3, Block 7, International Trade Center, Unit II, City of
Laredo, Webb County, Texas.
The purpose of this appraisal is to determine the "As Is" Market Value of the Fee Simple Estate in
the property. The intended use of the appraisal is to fulfill part of the requirements for the MAI
designation awarded by the Appraisal Institute. The Intended Users of the report are the Appraisal
Institute and persons selected by the Appraisal Institute to evaluate the merits of the appraisal.
In the process of preparing this appraisal, I have inspected the property and the surrounding
neighborhood, researched the industrial property market, selected, researched, and analyzed
appropriate comparable properties, and prepared all three approaches (Cost Approach, Sales
Comparison Approach, and Income Approach) for estimating value. The full Scope of Work is
described in Section I of the accompanying report.
The Appraisal Report which accompanies this Transmittal Letter is a Self-Contained Report and
contains full explanations of the data, analysis and reasoning used to reach my final opinion of value.
Please be aware that this Transmittal Letter is not an appraisal report and the accompanying
Appraisal Report must be read to fully understand my analysis and conclusions. Please also give
special attention to the Assumptions and Limiting Conditions as outlined in the Addenda to the
Report.
The relevant dates in the appraisal are:
Effective Date of Value Opinion
Date of On-Site Visit to the property
Appraisal Report Date
-- January 27, 2007
-- January 27, 2007
-- March 9, 2007
The analyses and results of the investigation presented in the attached appraisal report are intended
to comply with the Code of Ethics and Standards of Professional Practice of the Appraisal
Institute and the requirements of the current edition of the Uniform Standards of Professional
Appraisal Practice (USPAP) as adopted by the Appraisal Standard Board of the Appraisal
Foundation.
Because this Transmittal Letter is not the actual Appraisal Report, I have not indicated my opinion of
value in this letter. Please refer to the Summary of Salient Facts following the Table of Contents
and the Reconciliation & Final Value Opinion in Section VIII of the accompanying Report.
Thank you for permitting me to present you with this sample of my appraisal work. I look forward to
hearing from you and the Demonstration Report graders in the Appraisal Institute regarding the
acceptability of this report.
Sincerely,
Paul Lorenzen
CCIM, CPM, CSM
Certified General Appraiser
TX- 1336071-G
NV-A.0006527-CG
Page 2 of 2
TABLE OF CONTENTS
Title Page
Letter of Transmittal
Table of Contents
Summary of Salient Facts
Location Maps of Subject Property
Photographs of Subject Property
SECTION I - PRELIMINARY MATTERS
Identification of the Subject Property
Footnotes, Bibliography, Glossary, and Addenda
Extraordinary Assumptions and Hypothetical Conditions
Competency Provision
Scope of Work
Purpose of the Appraisal
Identification of the Client
Intended Use of Appraisal and Intended User
Property Rights Appraised
Relevant Dates in Report
Definition of Value
History of the Property Ownership
II. DESCRIPTION OF THE SUBJECT PROPERTY
A.
B.
Site Data and Analysis
Location
Political Boundaries
Census Tract
School District
Adjacent Properties & Land Uses
Flood Zone
Natural, Recreational, Cultural or Scientific Aspects of the Site
Hazards, Nuisances, Detrimental Influences
Access to the Neighborhood
Street Improvements
Site Dimensions, Area, Shape
Topography
Drainage
Soil, Subsoil Conditions
Access to Site
Utilities
Fire and Police
Easements & Encroachments
Environmental Hazards Assessment
Analysis of Units of Comparison
Conclusion
Improvement Data and Analysis
Building Improvements
Warehouse Building
Table of Contents - Page 1 of 3
C.
D.
E.
F.
Office Area
ADA Compliance
Environmental Aspects
Site Improvements
Property Condition
Deferred Maintenance / Physical Deterioration Analysis
Current Occupancy Analysis
Zoning and Deed Restrictions
Taxes and Assessment Analysis
SECTION III. MARKET ANALYSIS AND HIGHEST & BEST USE ANALYSIS
A.
B.
Fundamental Market Analysis
Step 1. Define the Property (Property Productivity Analysis)
Step 2. Define the user of the property (Market Delineation)
Step 3. Forecast demand factors
Step 4. Inventory and forecast competitive supply
Step 5. Analyze the interaction of supply and demand
Step 6. Forecast subject capture
Highest and Best Use Analysis
1)
Highest and Best Use of the Land as Vacant
2)
Highest and Best use of the Property as Improved
SECTION IV. SITE VALUATION
Land Sale Comparables
Land Sales Analysis
Land Sales Grid
Reconciliation of Land Value
Excess / Surplus Land Analysis
SECTION V. COST APPROACH VALUATION
Cost New Estimate
Accrued Depreciation Estimate
Market Extracted Depreciation
Breakdown Method
Tabulation of Value by Cost Approach
SECTION VI. SALES COMPARISON APPROACH VALUATION
Improved Comparable Sales
Improved Sales Analysis
Reconciliation of Improved Sale Value
Potential Gross Income Multipliers
Deferred Maintenance
SECTION VII. INCOME APPROACH VALUATION
Market Rent Determination
Vacancy Allowance
Operating Expenses
Selection of Capitalization Rate
Gross Rent Multipliers
SECTION VIII. RECONCILIATION & FINAL VALUE OPINION
Laredo Market
Cost Approach Evaluation
Sales Comparison Approach Evaluation
Income Approach Evaluation
Final Reconciliation of Value Opinion
Extraordinary Assumptions
Exposure Time
ADDENDA
A.
General Appraisal Support
1)
Appraiser Certification
2)
Assumptions and Limiting Conditions
3)
Qualifications of the Appraiser
4)
Glossary of Technical Terminology
5)
Bibliography
6)
Engagement Letter
7)
Text of Email from Property Owner
B.
Maps
1)
2)
3)
4)
5)
6)
Laredo Truck Route
Long Range Thoroughfare Plan for Laredo, Texas
Extra Territorial Jurisdiction Boundary
Flood Maps
Zoning Map
M-1 Zoning Ordinance
C.
Comparables
1)
Land Sales Map & Sales Data Pages
2)
Improved Sales Map & Sales Data Pages
3)
Rent Comparables Map & Rental Data Pages
D.
Financial Analysis Schedules
1)
Neighborhood Market Survey
2)
Time Adjustment Test - Industrial Land Sales in Laredo
3)
Marshall Swift Segregated Estimator Detailed Report
4)
United Steel Building Cost Estimates
E.
Other Schedules and Exhibits
1)
Webb County Appraisal District Report
2)
Title Insurance Policy
3)
Warranty Deed of last transfer
4)
Closing Statement from Delta Midwest purchase
5)
Longhorn Lot Maintenance Repair Estimate
6)
Soils Report - 14416 Export Rd
SUMMARY OF SALIENT FACTS
Property Type
Industrial - Warehouse / Distribution Facility
Property Location
14416 Export Road, Laredo, Texas
Legal Description
The Surface Rights Only of Lot 3, Block 7, International Trade
Center, Phase 2, City of Laredo, Webb County, Texas, as per Plat
recorded in Volume 11, Page 86-87, Webb County Plat Records.
Fee Simple
Purpose of Appraisal
Provide an opinion of "As Is" Market Value
Client/Intended Use/User
The Client is the Appraisal Institute; The Intended User is the
Appraisal Institute; and the Intended Use is fulfillment of the
Demonstration Report requirement toward the MAI designation
with the Appraisal Institute
Land
One Acre; 43,560 square feet, rectangular in shape, and level in
topography, in fully developed International Trade Center industrial
park
Improvements
One warehouse distribution facility, with 12,000 square feet of
Gross Building Area, pre-engineered metal construction, containing
an office area of 866 square feet, covered dock-high loading dock,
two roll-up overhead doors, fully fenced with chain link fencing,
asphalt parking lot
Zoning
"M-1" - Light Manufacturing District
Flood Zone
Flood Zone C, Panels 4810590650B and 4810590625B, dated May
17, 1982.
Highest & Best Use
Light Industrial - Warehouse / Distribution
Relevant Dates
Date of On-Site Visit -- January 27, 2007
Date of Opinion -- January 27, 2007
Date of Report -- March 9, 2007
Land Value
$76,000
Cost Approach
$430,000
Sales Comparison Approach
$400,000
Income Approach
$420,000
Final Opinion of Value
$410,000
Summary Of Salient Facts - Page 1 of 1
14416 Export Rd, Laredo, Texas
Location of Subject in State Context
Location Maps
Location of Subject in County & City Context
Location Maps
Location of Subject in Neighborhood Context
Location Maps
Location of Subject in Plat Map Context
Location Maps
Location of Subject In Aerial Photo - Top is Industrial Area in North Laredo
Bottom is Immediate Market of Subject Property
Location Maps
Location of Subject in Aerial Photo
Close-Up Showing Subject and Immediate Neighboring Properties
Location Maps
Photographs Of Subject Property
1) Export Rd Street View looking North.
Subject is on the left.
2) Export Rd Street View looking South.
Subject is on the right.
3) Front View of the Subject from across
Export Rd.
4) Entrance to the office on the right side of
the Subject looking from the parking lot.
5) Loading Dock looking from the
Southwest corner of the building by ramp.
6) Auto Ramp on the Southeast corner
leading to the overhead door.
Photographs of Subject, Page 1 of 3
7) Guardhouse at the front entrance.
8) View inside warehouse looking toward
the office in the Northeast corner.
9) View looking from the overhead door by
the ramp toward the Southwest corner of
warehouse.
10) View looking from the overhead door by
the ramp toward the office in the Northeast
corner of the warehouse.
11) Office looking from the front entrance at
the secretary workstation.
12) Executive office in the back of the
office area.
13) View of the reception area from the door
of the executive office.
14) View of the work area to the right of the
front entrance from the executive office.
15) View the secretary workstation from the
entrance from the warehouse area.
16) View of the second private office in the
back of the office area.
17) Restroom in the office area.
18) Signage on the fascia of the roof over
loading dock. This is the only signage on
the property.
SECTION I.
PRELIMINARY MATTERS
Identification of the Subject Property
The property that is the Subject of this appraisal is a 12,000 square foot
Distribution/Warehouse building on a 43,560 square foot site, located at 14416
Export Road, Laredo, Texas 78045. The property is legally described as follows:
The Surface Rights Only of Lot 3, Block 7, International Trade
Center, Phase 2, City of Laredo, Webb County, Texas, as per
Plat recorded in Volume 11, Page 86-87, Webb County Plat
Records.
Footnotes, Bibliography, Glossary, and Addenda
In order to facilitate the smooth flow of the narrative of this appraisal report, I have
included a Bibliography and Glossary in the Addenda. If you read unfamiliar
technical terms in this report, please refer to the Glossary. I have included footnotes
to provide supplemental information or documentation which may be of interest to the
reader. References in the footnotes often simply refer to the author or the title of
items listed in the Bibliography. Much of the data, such as sale comparables and
maps, are also included in the Addenda. You may want to scan the contents of the
Addenda before reading further to become familiar with its contents.
Extraordinary Assumptions1 and Hypothetical Conditions2
In addition to the Extraordinary Assumptions and/or Hypothetical Conditions listed
below, please be sure to review the Assumptions and Limiting Conditions
included in the Addenda as they are important in understanding the limitations of this
appraisal report.
Building Permits. The City of Laredo Building Department did not have access to
records of construction prior to the year 2000 so could not confirm whether the
improvements were built with permit.3 However, during my visit I did not observe any
improvements that had the appearance of additions subsequent to original
construction that would require building permits. Therefore . . . .
It is an Extraordinary Assumption of this appraisal that all
improvements were built to the building codes in effect as of the date
of construction, and there have been no additional improvements
requiring permits since the original construction.
1
Extraordinary Assumptions. See Glossary in Addenda.
2
Hypothetical Conditions. See Glossary in Addenda.
3
Building Permits. Per phone call to Laredo building department on 1/26/07.
Section I - Preliminary Matters - Page 1 of 6
Fuel Storage Tanks. There is a fuel storage tank just inside the North overhead
door that is used to store diesel fuel. This storage tank is not registered with the
Texas Commission on Environmental Quality as it is less than 1,100 gallons and is
not required to be registered1. Therefore . . . .
It is an Extraordinary Assumption of this appraisal that this fuel
tank has not had any leakage and has not caused any environmental
contamination.
Competency Provision
USPAP2 requires that an appraiser state whether he is competent to perform a given
appraisal based on experience and training. As explained in the footnote below, I
have the experience and training that indicates competency to perform this
appraisal3.
Scope of Work
USPAP requires an appraiser to describe the scope of work used to develop the
appraisal.4 Below I have outlined, in a brief bullet format, the research and analysis I
performed in the preparation of this appraisal report.
Research
I performed the following research activity:
a.
Drove the neighborhood surrounding the Subject, taking note of "for sale"
and "for lease" signs on properties similar to the Subject; observing the dynamics of
the real estate property types, level of development, traffic patterns, and property
condition; and making other relevant observations that may affect a valuation
decision.
b.
Made a personal visit to the Subject and performed a visual observation of
the land and improvements, including the interior of improvements, took numerous
photographs, and measured the improvements.
1
Fuel Storage Tank. Per phone call to Texas Commission on Environmental Quality on 1/29/07.
2
USPAP. Page 11, See Bibliography in Addenda.
3
Competency. Since 1981, I have been heavily involved with the marketing, management, research,
and analysis of industrial property of all types and sizes. In the 1980's I managed and leased a 250,000 s/f
portfolio of small industrial property in Colorado Springs, Colorado. In the 1990's I created, maintained, and
annually published an Industrial Property Analysis of a city-wide industrial database of 30,000,000 s/f of all
types of industrial property. From 1995-1997 I was part of the marketing team for the South Meadow Business
Park, a 2,500-acre mixed-use planned development, mostly industrial, closing over $100,000,000 of industrial
land sales and over $30,000,000 of industrial build-to-suit leases or sales. From 2005-2007 I was employed by
Laredo National Bank as a Commercial Review Appraiser and during that period I reviewed hundreds of
appraisals, many of which were of industrial properties in Laredo, Texas. Much of my education for the CCIM
[1979] and CPM [1986] designations included principles related to industrial property.
4
Uniform Standards of Professional Appraisal Practice, 2006 Edition, July 1, 2006. Standard 22(a)(vii) comment states that "Sufficient information includes disclosure of research and analysis performed and
might also include disclosure of research and analysis not performed."
c.
Researched the economic, geographic, and demographic information of
the community and the neighborhood.
d.
Contacted local real estate brokers to determine rental rates, absorption
rates, lease commission rates, and other relevant marketing information for
properties similar to the Subject.
e.
Contacted local property managers and leasing agents to locate
occupancy and operating data for properties similar to the Subject.
f.
Took numerous photographs of the Subject, comparable sales and rentals,
and other relevant features of the immediate market, some of which are contained in
this report.
g.
Investigated the real estate tax assessment information with the local
Appraisal District.
h.
Investigated the local zoning ordinances and zoning of the Subject and
surrounding property.
i.
Researched the history of ownership of the Subject over the past several
years, including any listings, sales, leases, and offers to sell or lease.
j.
Obtained a flood map of the area surrounding the Subject, and identified the
relevant flood zone.
Analysis
I performed the following analysis:
a.
Compared the features of the comparable land sales, and prepared a
comparison grid with appropriate adjustments to reach an opinion of land value for
the Subject.
b.
Researched the construction reproduction cost for the Subject using the
Marshall Valuation Service resources.
c.
Performed a Highest and Best Use analysis of the site and a market
analysis of the industrial property market in Laredo.
d.
Reached an opinion of value of the land as though vacant.
e.
Reached an opinion of value using the Cost Approach.
f.
Reached an opinion of value using the Sales Comparison Approach.
g.
Reached an opinion of value using the Income Approach.
h.
Reached a final opinion of value after reconciling the results of the
individual approaches.
Composition
I composed a Self-Contained Appraisal Report, including a complete discussion of
the data, analysis, and reasoning, used to reach my final opinion of value.
Purpose of the Appraisal
The purpose of this appraisal is to provide an opinion of the Market Value (as
defined below) of the Fee Simple Estate of the Subject Property as of the Effective
Date of the appraisal in its "As Is" condition on the date of my on-site visit to the
property.
Identification of the Client
The Client in this assignment is the Appraisal Institute, 550 W. Van Buren St, Suite
1000, Chicago, Illinois 60607. Although the owner of the property, Delta express,
L.C., has given me written authorization to appraise the property, neither Delta
Express, L.C., nor its president, Robert Rollins, are the Client in this assignment.
Intended Use of Appraisal and Intended User
The intended use of this appraisal report is the fulfillment of the Demonstration
Appraisal Report requirement of the Appraisal Institute for the Member Appraisal
Institute (MAI) professional designation. The Intended User of the report is the
Appraisal Institute. Although a copy of this report will be delivered to Delta Express,
L.C., as a courtesy in return for permission to appraise the Subject property, that
copy is not intended to be used for any purpose apart from sharing with the property
owner the report submitted to the Appraisal Institute. Any use by Delta Express, L.C.
is not intended. No other use by any other user is permitted without prior written
authorization of the appraiser signing this report.
The property rights appraised in this appraisal is the unencumbered Fee Simple
Estate. The Fee Simple Estate is defined as follows:
Absolute ownership unencumbered by any other interest or estate,
subject only to the limitations imposed by the governmental powers
or taxation, eminent domain, police power, and escheat.1
The property is owner-occupied, and there is no Leased Fee or Leasehold2 interest
involved. Therefore, I have only addressed the Fee Simple Estate in this report.
1
2
The Dictionary of Real Estate Appraisal, pg 113.
See Glossary in Addenda.
No analysis or valuation of personal property, including trade fixtures, is included. All
liens and encumbrances are disregarded in the value conclusion of this analysis, and
the property is considered as though free and clear of any liens or encumbrances.
Relevant Dates in Report
The dates in this report are important because the value conclusion is valid only as of
the Effective Date of the opinion of value. Changes after that date may have an
impact on the value of the Subject property. Therefore it is important to clarify the
relevant dates in this report as follows:
RELEVANT DATE
Date of On-Site Visit to the Subject Property
Effective Date of Opinion of Value
Date of Report
DATE
January 27, 2007
January 27, 2007
March 9, 2007
Definition of Value
The definition of market value as used in this appraisal is:
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:
Buyer and seller are typically motivated;
Both parties are well informed or well advised, and acting in
what they consider their best interests;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions
1
granted by anyone associated with the sale.
History of the Property Ownership
The table below shows the transfers of the Subject during the last three years. The
Subject has changed ownership three times. One of the three was a less-than-armslength transaction.
Grantor
Gaeli Enterprises
Valverde
VA Properties
Grantee
Valverde
VA Properties
Delta Midwest, L.C.
Date
5/14/2004
1/17/2006
11/29/2006
1
Volume
1596
2008
2240
Page
104
529
595
Source. 12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57
Federal Register 12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994. See also the Glossary in the
Addenda.
(1)
Gaeli to Valverde. This transaction involved two unrelated parties and
appears to be arms-length. The price is undisclosed.
(2)
Valverde to VA Properties. This transaction was a less-than-arms-length
transaction between family members apparently moving ownership from an individual
family member to a company owned by the family members. The consideration on
this transaction is unknown but is assumed to be a contribution of property in
exchange for a credit to the capital account on the company books.
(3)
VA Properties to Delta Midwest, L.C. This transaction was arms-length.
The Subject was originally listed for sale or lease with Lula Morales Realty with an
asking price of $525,000. The asking lease rate is unknown. The purchase contract
was initially negotiated and accepted on 10/03/06 at a price of $480,000, a counteroffer from a $450,000 original offer by Robert W. Rollins, or entity owned by Robert
W. Rollins, on 9/28/06. On 10/26/06 it was modified to $474,140, apparently after a
further inspection of the property. On 11/16/06 it was again amended to $380,000,
$10,000 more than the value conclusion of $370,000 from the appraiser selected by
Laredo National Bank as lender. The final price on the deed, dated 11/20/06, was
$403,750. However, the closing statement of the same date reflects a price of
$380,000. The buyer confirmed to me that the final price was $380,000 with cash
down payment of $65,500. He did not know why the deed reflected a higher price.
The loan with Laredo National Bank was for $314,500 and, according to the loan
officer involved, was based on an 85% loan-to-value ratio of the appraised value.
The recorded deed shows Delta Midwest, L.C. as the Grantee. Subsequent to the
closing, the buyer, Delta Midwest, L.C., leased the property to an affiliated entity,
Delta Express Incorporated, in a less-than-arms-length transaction at an undisclosed
lease rate. Mr. Rollins stated that this transaction was to facilitate tax benefits to the
president and owner of Delta Express Incorporated. Based on the analysis shown
later in this report, the purchase price of $380,000 appears to be slightly below
market value of the property as of the effective date of this appraisal report.
The Subject is not currently listed or offered for sale or lease. I was unable to identify
any other transactions of sale or lease other than those listed above.
SECTION II.
DESCRIPTION OF THE SUBJECT
A. Site Data and Analysis
The site consists of a one-acre parcel in the International Trade Center Industrial
Park, an industrial subdivision of homogeneous property. This business park was
developed in the early 1990's, and most of the properties around the Subject were
constructed in that time period. The Subject is the third parcel from the intersection of
Export Road and Trade Center Boulevard. The figure below shows the size and
configuration of the Subject site.
Location.
The street address of the property is 14416
Export Road, Laredo, Texas 78045. The
location is in the far Northwest portion of the
City of Laredo, just West of Mines Road which is
also known as FM 1472.1 This is an area of
high truck traffic, in the heart of the
industrial/distribution activity of Laredo.
Political Boundaries. The property is just inside the Laredo
city limits. The figure below shows the city limits
Plat of Subject
surrounding the Subject neighborhood. The city
limits extend to just East of Mines Road and a short way to the West of the Subject
subdivision. The irregular configuration
to the North of the Subject subdivision,
that takes in the Millennium Industrial
Park and a couple of small residential
subdivisions, is the far Northwest edge of
the Laredo city limits.
Census Tract. The Subject is in Census Tract 17.05 in
Webb County.
School District. The Subject is located in the Laredo
United Independent School District.
The nearest public school in this district
is the Muller Elementary School, at
Laredo City Limits
4430 Muller Memorial Boulevard,
approximately two blocks to the
Southeast of the Subject, bordering the International Trade Center Industrial Park.
Adjacent Properties and Land Uses. The surrounding properties are all industrial/distribution or
similar use, resulting in a very homogeneous neighborhood. The International Trade
Center Industrial Park is sandwiched between the Pan American Business Park, to
the North, and the InterAmerica Distribution Center, to the South; both of which are
industrial parks developed at about the same time as the International Trade Center
Industrial Park. With the exception of the La Bota Ranch residential subdivision, just
Southwest of the International Trade Center Industrial Park, virtually all other
1
FM 1472. FM stands for "Farm to Market Road," and is a common designation of rural roads in Texas.
Section II - Description of Subject - Page 1 of 14
surrounding land use is industrial in nature. It is notable that La Bota Ranch has an
exceptional view amenity overlooking the Rio Grande River.
The immediate neighbors of the Subject are Interlink Logistics on the North at
14418 Export Road, P&P Transportation to the South at 14414 Export Road,
Chantler Motor Carriers across the street to the East at 14415 Export Road, and
Jecov Forwarding Agency to the West behind the Subject at 14411 Atlanta Drive.
Flood Zone.
The Subject is located right on the edge of two flood map panels. Both of these
panels are included on one page in the Addenda. The maps indicate that the Subject
is in Flood Zone C, outside of the 500-year flood plain, and offers minimal risk of
flooding. The maps are Panels 4810590650B and 4810590625B, both dated May
17, 1982.
Natural, Recreational, Cultural, or Scientific Aspects of the Site. The Rio Grande River, serving
as both the boundary between USA and Mexico, and the Texas state-line, is 1.2
miles West of the Subject. There is a drop of about 100 feet in elevation between the
Subject (495 feet above sea level) and the Rio Grande River (395 feet above sea
level). There is no view amenity of the Rio Grande from the Subject, as other
buildings block the view in that direction. However, the properties on the Western
edge of the industrial park, as well as the La Bota residential subdivision, do provide
the river view amenity. I am unaware of any other cultural or scientific aspects of the
site.
Hazards, Nuisances, Detrimental Influences. The immediate area is used for
warehouse/distribution activity, with many businesses involved with trucking and light
manufacturing, causing a great deal of heavy truck traffic on the streets resulting in
excessive wear to the pavement. This is evidenced by a number of sections of
pavement in the Pan American Business Park to the north that have potholes so
deep that a passenger car must go around them to avoid damage to the vehicle. The
condition of Export Road does not show excessive wear, but there are several other
streets in the industrial park that do. Because of the high intensity of industrial
activity, there is also the risk of petrochemical or other environmental contamination
that could occur on or near the Subject; however, I was not provided any
environmental reports, nor do I have any information that would indicate such
contamination exists.
Access to the Neighborhood. The International Trade Center Industrial Park can only be accessed
from Mines Road (FM 1472) on the East. There are only two roads that lead into the
park from Mines Road: Trade Center Drive and Pan American Boulevard. This
creates a high volume of traffic on these streets, and because much of this traffic is
18-wheeler truck traffic, there can be significant traffic delay getting into and out of
the park at various times during the day.
Street Improvements. All of the streets in the International Trade Center are asphalt paved with
concrete curbs. However, very few of the streets have sidewalks. The street in front
of the Subject is a 60-foot wide, two-way, two-lane, asphalt paved street. There are
no sidewalks directly in front of the Subject. Electrical service is delivered by
overhead transmission lines rather than the more modern underground conduit
systems. There are no electric traffic signals in the development at intersections
including the intersections with Mines Road, that have only stop signs with no further
traffic regulation equipment.
Site Dimensions, Area, Shape. The Subject site is rectangular and measures 145.2 feet by 300 feet.
The frontage is 145.2 feet. The total area is 43,560 square feet, or exactly one acre.
Topography.
The site is essentially level. The elevation is 495 feet above sea level on the
Southeast and Southwest corners, and 492 feet on the Northeast and Northwest
corners, resulting in a very slight (2.0%) slope from South to North.1 This slope has
no detrimental effect on the utility of the site.
Drainage.
The site does not appear to have any drainage problems, except as noted in the
discussion of deferred maintenance below. There is a drainage culvert
immediately behind the Subject,
that aids in removing storm
water. Since I was not provided
a survey, I was unable to
determine whether this drainage
culvert is on the Subject or
behind it on the adjacent
property.
Soil and Subsoil Conditions. The soil on the
Subject is defined as VkC Verick Fine Sandy Loam,
according to the Soil Survey of
Webb County, Texas.2 This soil
drains well with medium surface
Drainage Culvert behind Subject
runoff, and permeability is
moderate. Water erosion and soil blowing are moderate hazards if this soil if left bare
of vegetation. The soil conditions should cause little problem for construction or
continuation of the current use of the site.
Access to Site. Access to the site is by means of only one entrance from Export Road. There is a
curb-cut of approximately 65 feet, centered in the 145-foot frontage.
Utilities.
1
Water and wastewater services are provided by the City of Laredo.
Natural gas service is available to the site through either Reliant Energy (866-2227100) or Center Point Energy Entex (956-723-6351).
Electrical service is available to the site through a number of retail providers,
regulated by The Public Utility Commission of Texas. Two of the major providers are
American Electric Power (877-373-4858) and CPL Retail Energy (866-322-5563).
Telephone service is available to the site through Southwestern Bell Telephone
Company.
Rubbish collection is provided by either the city of Laredo or commercial waste
disposal companies. The current occupant contracts with Southern Sanitation in
Laredo for trash collection.
Elevations are taken from the Google.Earth website.
2
Soil Survey of Webb County, Texas, United States Department of Agriculture, Soil Conservation
Service, Electronic Version, 1985, pg 42, available on-line at
http://soildatamart.nrcs.usda.gov/Manuscripts/TX479/0/Webb.pdf.
Fire and Police. Fire protection is provided by the Laredo Fire Department. The closest fire station
is Station #9, at 13301 Mines Road., 2.01 miles driving distance and four minutes
driving time from the site.1 Police protection is provided by the Laredo Police
Department, Precinct 14, at 4712 Maher Avenue.
Easements and Encroachments. No survey was available to me from the ownership, and the title
insurance commitment, provided in the Addenda, does not indicate any easements
that would affect the utility of the site. Typical utility easements and set-back
requirements for a fully developed industrial park are present. Observation during my
on-site visit did not indicate the presence of encroachments from surrounding
property.
Environmental Hazards Assessment. There was no Environmental Site Assessment provided to
me by the ownership. The existence of potentially hazardous material and/or toxic
waste may or may not be present on the property. During my on-site visit I did not
observe any signs of environmental contamination. However, I am not an expert on
such matters, nor am I qualified to detect such substances. Therefore, no
responsibility is assumed for any hazardous conditions, or for any expertise or
engineering knowledge required to discover them. The value conclusion of this
appraisal is predicated on the assumption that no significant environmental
problems exist that would adversely affect the market value or marketability of the
Subject.
Analysis of Units of Comparison. Industrial land in Laredo is typically evaluated on either a price
per acre or price per square foot basis, with larger sites valued at price per acre, and
smaller sites valued at price per square foot. In my analysis in subsequent sections
of this appraisal report, we use both the price per square foot and price per acre as
units of comparison to establish an opinion of land value.
Conclusion.
The site is well suited for development as a smaller industrial property. The
topography and soil type make it relatively easy to develop, and its presence in a welldeveloped industrial park makes its use very compatible with surrounding property uses.
It is 100% usable without any significant site preparation expenses.
1
Fire Department. Driving distance and time provided by mapquest.com.
B. Improvement Data and Analysis
Building Improvements. The building consists of one 12,000 square foot
warehouse structure, inclusive of an office area of 866 square feet. A sketch of the
building, the covered loading dock area, ramp, and concrete landing pad is shown
below.1
Warehouse Building
Exterior Description
The building structure is defined as a Low Cost, Class S, Distribution Warehouse,
as described in the Marshall Swift Valuation Service,2 as a pre-engineered frame
structure with plain shell exterior walls, adequate interior office areas, and a
warehouse area provided with adequate lighting, plumbing, and space heaters. The
Subject follows this description except for its lack of space heaters in the warehouse
area.
Dimensions. The building exterior measures 100 feet deep by 120 feet wide. The
office improvements are located in the Northeast corner of the warehouse and
measure 39 feet deep by 22.20 feet wide. Total Gross Building Area is 12,000
1
Building sketch is courtesy of Sergio Alvarez, Alvarez & Company, Laredo, Texas.
2
Marshall Swift, Section 14, Page 23.
square feet, with the included office area of 866 square feet, leaving a net warehouse
area of 11,134 square feet.
Foundation/Floor Structure. The foundation is poured concrete footings supporting
a concrete slab floor structure. Without construction plans, it is impossible to
determine for sure, but it is assumed that the floor is reinforced concrete to support
the heavy loads of a warehouse use.
Frame. The frame is constructed of pre-engineered steel beams.
Exterior Walls. All exterior walls are pre-fabricated steel siding except the portions
in front of the office area. This portion of the exterior walls has wood studs framing
the front wall, with a dry-wall interior surface and brick veneer exterior.
Roof Structure/Cover. I was unable to personally inspect the roof as there was no
roof access available at the time of my visit. However, as can be seen from the
photo below of the roof line, the roof is composed of the same metal as the siding,
and includes a series of roof vents at the ridge line. The equipment showing on the
right side of the roof structure is an FM transmitter/receiver for the occupant's internet
connection.
Roof View Showing Roof Materials and FM Transceiver
Windows. There are no windows in the warehouse portions of the structure. There
are four aluminum framed windows in the front of the office section, each measuring
two feet by six feet.
Doors. The warehouse area has two door openings to the loading dock. The South
door, two feet from the South end of the loading dock, is 14' X 12', and the North
door, sixteen feet from the Office partitions, is 12' X 12'. Both openings have roll-up
overhead doors. There is no service door or any other entrance or exit from the
warehouse area except a service door into the office area. The front entrance to the
office are is a 36" anodized aluminum framed glass door.
Loading Dock and Vehicle Ramp. At the front of the building, running the full 120'
width of the building, is a 12' wide loading dock, covered with a 12' extension of the
building roof structure. On the South end of the loading dock is a concrete vehicle
ramp measuring 12' X 28', and rising 48" from the parking lot level to the loading
dock elevation.
Signage. The only signage on the Subject that identifies the occupant is a small
painted sign attached to the fascia on the front eave of the loading dock with the
words "Delta Express."
Interior Description/Warehouse Area
Plumbing. The warehouse area has no interior plumbing.
Electrical. The warehouse area is provided minimal electrical service. The electrical
panel has typical 110/220 service with no 3-phase electrical service1 to the building.
HVAC. The warehouse area has no mechanical heating or air conditioning
equipment.
Floor Covering. The warehouse area flooring is exposed concrete.
Walls. There are no interior walls in the warehouse area.
Ceiling. There are no ceilings in the warehouse area. The space is open to the
underside of the metal roofing.
Interior Doors. There are no interior doors in the warehouse area.
Lighting. The warehouse area is lighted by 20 dual-tube fluorescent light fixtures.
Office Area
The office area has two private offices, an open reception/secretarial area with two
workstations, a break counter with faucet\sink and cabinets, one restroom open to
the office area for the office staff, and a second restroom open to the warehouse
area for the warehouse staff.
Plumbing. The office area has standard plumbing serving the two uni-sex restrooms
and the single kitchen sink/faucet. Each restroom has one toilet and one hand-sink.
Electrical. The office is serviced with typical 110/220 electrical service.
HVAC. The office is served by a Carrier 3.0 ton package heating/air conditioning
(heat pump) unit.
Floor Covering. The office area floor covering is 12"X12" vinyl tiles throughout the
office and restroom areas.
Walls. Interior walls are standard 2"X4" wood studs covered by painted dry-wall.
Ceiling. The ceiling throughout the office area is composed of suspended "T-grid"
framing with 2'X4' acoustical ceiling tiles.
Interior Doors. There are four doors, one for each restroom, and one for each
private office. Each door is hollow core wood.
Windows. The only windows in the Subject improvements are four 2'X6' anodized
aluminum framed windows, two on each side of the 36" front entrance to the office.
Lighting. The office lighting is provided with 2'X4' fluorescent lighting fixtures
suspended within the "T-grid" ceiling structure.
1
Electrical service description is based on a conversation with the manager of the facility, and not
confirmed with an electrical contractor.
ADA Compliance
The Americans with Disabilities Act requires minimum access features for
handicapped into and within the facilities. There was no ADA compliance survey
provided to me, and I am not qualified to perform an ADA survey of the facility.
However, with the above disclosure and limitation, I did observe that the restrooms in
the office area do not have a sufficient turning radius for permitting a handicapped
person in a wheelchair to utilize these facilities. There may by other issues related to
ADA compliance, and it is recommended that a qualified expert in ADA requirements
be engaged to survey the facility. This appraisal assumes that any non-compliance
would have little or no impact on the market value opinion.
Environmental Aspects
In the warehouse area there are two fuel storage facilities. One is a fuel storage tank
just inside the North overhead door, used to store diesel fuel. This storage tank is not
registered with the Texas Commission on Environmental Quality as it is less than
1,100 gallons and is not required to be registered.1 There are no visual signs of
leakage from this tank. The facility manager, Luis Ponce, indicated that the tanks
contain diesel fuel from time to time, taken from appliances that were being shipped.
The fuel was removed to facilitate moving the appliances with fork-lift equipment then
replaced in the appliances after the appliances were moved. There is also a propane
tank storage cage on the other side of this same overhead door. The propane tanks
are used to fuel the fork-lift equipment.
The building was constructed after 1979, when the use of lead-based paint was
prohibited. Therefore there should be minimal risk of any lead-based paint
contamination on the property.
I was not provided with an environmental risk analysis report, and I am not qualified
to perform an environmental risk analysis. It is recommended that the owner engage
a qualified expert to confirm the presence or absence of environmental
contamination. With the above disclaimer, I did not note any signs of environmental
contamination. If an expert were to confirm the presence of such contamination, the
value conclusions of this appraisal report may change.
Site Improvements. Improvements to the site are comprised of the following items:
Curbing. On the North and South boundaries of the property, extending from the
street approximately 190' back to the front of the building, is a high concrete curbing
approximately 18" above grade, at the edge of the asphalt parking lot, just inside the
perimeter fencing.
Fencing. The entire site is enclosed with a six-foot chain link fence. The fence
begins about ten-feet back from the street and continues around the entire perimeter.
There is a gate at the front drive entrance with two wheeled sections approximately
32' each. There is approximately 800 total linear feet of fencing and 64 linear feet of
gates.
1
Trailer Landing Pads. There are two concrete trailer landing pads in the parking
area. The first, in front of the loading docks, measures 15' X 98'.
The second, at the front of the trailer
parking spaces against the South
fencing, measures 4.5' X 77', and runs
across the front of the seven trailer
parking spaces against that fence.
Landscaping. There are three areas of
landscaping. The ten feet of land
between the street curbing and the fence
is intended as a "greenbelt" landscape
area. However, it is not well maintained.
4.5' X 77' Trailer Landing Pad
Greenbelt between Street and Fence
The second area is in a small garden area around the stairs leading up to the front
entrance of the office on the Northeast corner of the building. This area has one tree,
and is filled with bark rather than plantings. The landscaping is inside 35 linear feet
of concrete sidewalk that leads to the stairs. The third area of greenbelt/landscaping
is in the rear and side setback areas around the warehouse building. These three
areas of building setback show evidence of having been maintained as meaningful
landscaping in the past, but show neglect in recent care.
Parking Lot. A ten-foot concrete apron leads from the street to the gate entrance of
the parking lot. The parking lot itself is asphalt covered. The lot is striped for
parking, with seven trailer spaces against the South fence, nine trailer spaces at the
loading dock, seventeen spaces for passenger vehicles against the North fence, and
one "executive" parking space beside the stairs leading to the office, for a total of 34
on-site parking spaces including trailer stalls. As discussed below under zoning, the
parking regulations for the M-1 zoning district require one parking space for each two
employees on the premises. The 17 passenger vehicle parking spaces can
accommodate 34 on-site employees, far in excess of the number of personnel
typically employed in a 12,000 square foot warehouse/distribution facility.
In the table below, I have listed all of the various components of improvements on the
Subject, with the respective square footage occupied by each component. The total
land area is accounted for in this table.
Site Improvements
Total Site
Building Footprint
Loading Dock
Auto Ramp
Subtotal
145.2 X 300
120 X 100
12 X 120
12 X 28
Total Remaining Site
Trailer Landing Pad 1
Trailer Landing Pad 2
Front Stairs and Garden
Landscaping - Rear
Landscaping - South
Landscaping - North
Landscaping - Front
Concrete Entrance
Asphalt Parking Lot
Subtotal
s/f
43,560
12,000
1,440
336
13,776
29,784
15 X 98
4.5 X 77
13 X 17.5
10 X 145.2
13.2 X 100
12 X 100
10 X 80
10 X 65
Irregular
Unaccounted For Land Area
1,470
347
228
1,452
1,320
1,200
800
650
22,318
29,784
-
C. Property Condition
Deferred Maintenance / Physical Deterioration Analysis.
My observations during my visit to the Subject found a number of items of deferred
maintenance that are itemized below. For most of the items on this list, I have
obtained a written estimate of repair costs from Longhorn Lot Maintenance. A copy
of this estimate is included in the Addenda to this report.
1) Flooring in Office Area. There was a severe water leak in December 2006 that
flooded the entire office area, resulting in many of the VCT floor tiles warping and/or
coming loose in numerous areas throughout the office. This repair would require
replacing all of the tiles at an estimated cost of $1,295.
2) Moisture Penetration - Back Wall. During heavy rains, water penetrates
sections of the back wall on the Northeast corner where the wall meets the
foundation footings, requiring that the joints be cleaned and resealed, at an estimated
cost of $500.
3) Asphalt Parking Lot - Ponding and Sealing. There are several spots in the
parking lot where depressions have developed and ponding occurs. In addition, the
entire parking lot needs to be re-sealed to preserve the asphalt surface. Estimated
costs for these repairs are $1,200 for the ponding depressions and $2,500 for the resealing of the entire parking lot.
4) Fence Repair. The chain link fencing on both sides of the Subject has been
severely damaged by trucks backing into it. Some of the fence posts have been
dislodged from their concrete bases and need to be replaced, and most of the
fencing and cross supports also need to be replaced, at an estimated cost of
$17,400.
5) Loading Dock Trailer Bumpers. There is one trailer bumper on the loading dock
that has torn loose completely and another that is hanging, both of which need to be
replaced at an estimated cost of $600.1
6) Roof Leak. There is a leak in the metal roof about 30 feet South of the North wall
at the ridge line of the roof. According to the facility manager, Luis Ponce, this is the
only current problem with the roof. The estimated cost of the repair of this leak is
$500.2
Below are photos of some of these items of deferred maintenance.
Water Penetrating Joints - Corner of Back Wall
Ponding on Asphalt Parking Lot
Fence Repair - Both Sides of Subject
Loading Dock Trailer Bumpers
1
Trailer Bumpers. Cost to replace two bumpers estimated at $600 for labor and materials based on
conversation with Leo's Handy-Man Services, San Antonio, Texas (210-823-6838).
2
Roof Repair. This is based on a phone conversation with the cost estimator of All-Tex Roofing, San
Antonio, Texas, (210-930-6464) 3/2/2007.
Effective Age / Chronological Age
The current ownership is not the original owner/developer of the Subject and there
have been numerous owners since the original construction. The original building
plans have long since been lost. The City of Laredo Building Department indicated
that they do not maintain building permit records earlier than 1999 in files anymore so
they were unable to indicate from their records when the improvements were
constructed.1 Therefore, the only means available to determine the original
construction date was the Webb County Appraisal District records. A copy of the
Webb CAD report is included in the Addenda showing a 1993 date of construction.
That would mean that the Subject is approximately 14 years old. I determined by
visual observation determined that the improvements have been fairly well
maintained. In my judgment, the effective age of the improvements is ten years.
Typical building life for this type of structure is thirty-five years.2
D. Current Occupancy Analysis.
The Subject is effectively owner occupied. The owner of record is Delta Express,
L.C., a company owned by the principal Owner and President of Delta Express,
Incorporated, the tenant under a less-than-arms-length lease agreement. Delta
Express, Inc.3 is headquartered in Cape Girardeau, Missouri. The company also has
a location in Monterey, Mexico, as well as in Laredo. Their freight system includes
the Pacific and Midwest States, as well as Texas and Mexico. The Laredo location is
managed by Luis Ponce, Terminal Manager, who assisted me in my personal on-site
visit to the Subject on January 27, 2007.
The company began operations in the facility on December 26, 2006. At this point, I
would typically include an analysis of any income and expenses attributable to the
real estate during the current ownership. However, since the current owner has been
in possession for such a short time, there is virtually no financial operating history of
the property to report and analyze under the current ownership/occupancy.
E. Zoning and Deed Restrictions
The zoning on the Subject is "M-1" - Light Manufacturing District. This
designation permits "the development of manufacturing and wholesale business
establishments which are clean, quiet, and free of hazardous or objectionable
elements such as noise, odor, dust, smoke or glare. Research activities are
encouraged. This district is further designed to act as a transitional use between
heavy industrial uses and other less intense and residential uses." 4
The complete M-1 ordinance from the City of Laredo Planning Department is
included, along with a zoning map showing the Subject in the M-1 zoning, in the
addenda to this report. The Subject, as improved, conforms well to this zoning, and
the neighborhood is very consistent with the permitted uses.
1
2
Marshall Swift, Section 97, Page 7.
3
More detail on the company may be found at their website: http://www.deltaexp.com/
4
City of Laredo Planning Department, Zoning Ordinance Book, "M-1" District.
According to the Title Policy issued November 15, 2006, there are restrictive
covenants of record in Volume 1487, pages 502-532, Webb County Real Property
Records; that are also recorded in Volume 1519, Page 556-560, Webb County Real
Property Records. This document, recorded May 29, 1991, is the original
"Declaration of Covenants, Conditions, and Restrictions for International Trade
Center, Phase I," that established the industrial park restrictions. These restrictions
do not adversely affect the use of the property under its current use. I know of no
other restrictions affecting the Subject.
F. Taxes and Assessment Analysis
The property is subject to taxing by the taxing authorities shown in the table below.
The total tax rate for 2006 was $2.761910 per $100 of assessed value. Total real
estate taxes for 2006 were $7,981.92.
Entity
C1
G3
J2
R5
S7
Description
Tax Rate
City of Laredo
0.637000
Webb County
0.412450
Laredo Community College
0.230500
Webb County Road & Bridge
0.007605
United ISD
1.474355
Total Tax Rate: 2.761910
Appraised
Value
$289,000
$289,000
$289,000
$289,000
$289,000
Taxable
Value
$289,000
$289,000
$289,000
$289,000
$289,000
Taxes Due
Estimated
Tax
$1,840.93
$1,191.98
$666.15
$21.98
$4,260.89
$7,981.92
The taxes over the past several years have been erratic. The table below shows the
assessment, tax rate, and taxes due history since 2003. The property was
reassessed in 2005, and the tax increased dramatically. The following year the
assessment remained the same, and the tax rate was reduced, resulting in a
reduction in taxes due. Based on this history, I would anticipate that there would be
a slight increase in real estate taxes in 2007 and beyond, at a rate approximating
about 8.0% per year.
Year
2003
2004
2005
2006
Assessed
Value
$ 265,820
$ 265,820
$ 289,000
$ 289,000
Tax Rate
2.791828
2.837794
2.915506
2.761910
Taxes
$ 7,421.24
$ 7,543.42
$ 8,425.81
$ 7,981.92
Rate of
Increase
1.65%
11.70%
-5.27%
There have been several sales within one block of the Subject during the last two
years, so a comparison can be made of the assessed value and the actual sale
prices during the year of assessment. Below is a table of six sales, including the
sale of the Subject in November, 2006. With the exception of the two sales on June
20, 2006, the assessments range from 69% to 82% of the sale prices achieved. The
June 20th sales, as is explained on the sale comparable worksheets in the addenda,
were sold together to the same buyer at a 20% discount for a fast sale, as the seller
was very motivated to be out of the properties quickly. The Subject sold in November
2006 and the ratio between its sale price and its assessment was 76%, right in the
middle of the range. From this I conclude that the real estate tax assessment, and
taxes due, is typical for the neighborhood.
Address
14419 Import Rd
14404 Export Rd
14416 Import Rd
14403 Import Rd
14409 Import Rd
Subject
14416 Export Rd
Sale Date
12/15/05
1/24/2006
6/20/2006
6/20/2006
12/15/06
Sale Price
$
750,000
$
235,000
$
300,000
$
400,000
$
431,500
11/29/2006 $
380,000
Sale Year
Assessment
2005
2006
2006
2006
2006
2006
Sale Year Tax
Assessment
$
569,090
$
193,730
$
297,110
$
401,160
$
299,110
Sale Year Assessment
Taxes
Ratio
$
16,591
75.88%
$
5,350
82.44%
$
8,206
99.04%
$
11,079
100.29%
$
8,261
69.32%
$
$
289,000
7,981
From the above analysis, I conclude that the real estate tax load of the Subject is in
line with the tax load of the neighborhood. The taxes have varied over the past
several years, but create a reasonable expectation of an increase in real estate taxes
of about 8.0% per year, that will be used in the Income Approach analysis below.
76.05%
SECTION III.
MARKET ANALYSIS AND
HIGHEST AND BEST USE ANALYSIS
Real estate can be put to many uses. The question of which use should be applied
is answered by the question of productivity. The use that will produce the greatest
return to the ownership is the use that will create the highest value. The process of
determining that use is called Market Analysis and Highest and Best Use
Analysis.
The first part of this process requires looking at the Subject and its surroundings to
determine what market forces are at work that create supply and demand. When that
is determined, the appraiser can determine how the Subject can best fit into that
scenario. Below I have stepped through this process and reached a conclusion
about the specific use that will bring the greatest return to the ownership of the
Subject property.
Entrance to the World Trade Bridge to Mexico
The major focus of the Laredo market is its interaction with Mexico. There are four
bridges in Laredo that link Mexico and the United States, two of which handle the
bulk of the truck traffic. One of the most important aspects of the location of the
Subject is that it is located between these two bridges, and very close to the one
(World Trade Bridge) that handles most of the international truck traffic in Laredo.
Above is a photo of the entrance to this bridge.
Section III - Market Analysis and Highest and Best Use - Page 1 of 17
A.
Fundamental Market Analysis
The purpose of the fundamental market analysis is to understand the forces that
create supply and demand for a parcel of real estate. The first step is to understand
the productivity potential of the Subject. Then the Subject must be seen in its
context. The last step will be to identify the Highest and Best Use of the Subject
based on this analysis.
Each of the six steps leading to the Highest and Best Use analysis is designed to
answer one of the following questions.1
1)
What uses are probable for the Subject based on the Subject's physical,
legal and location attributes?
2)
Who are the potential typical users or likely purchasers of the Subject for
each alternative use?
3)
Is there a need (demand) for the alternative uses?
4)
What is the competition for each alternative use?
5)
When will the market require new construction for each use?
6)
How much of the market can the Subject capture for each use?
Step #1. Property Productivity Analysis.
The Subject property is described in detail in the previous section of this report. It is
sufficient here to reiterate that the Subject is a one-acre parcel of land, zoned M-1,
Light Industrial zoning, in the heart of one of the older industrial parks in Northern
Laredo, improved with a 12,000 square foot warehouse/distribution facility, including
an office area of 866 square feet.
The border of Texas, and thus the United States, lies about one mile to the West of
the Subject and runs North and South along the Rio Grande River. Although Laredo
proper has a population of only about 200,000 (the MSA2 has about 224,6953),
Nuevo Laredo, in Mexico, just across the Rio Grande River, has a population of over
800,000, making the effective immediate market area over one million people.
Because of the importance of the international border and bridges for import and
export activity, the industrial parks in Northern Laredo are very active. The main
bridge for freight trucking through Laredo to and from Mexico is the World Trade
Bridge, located about two miles South of the Subject. This bridge handles over
100,000 commercial vehicles per month.4
1
Market Analysis for Real Estate, Page 380.
2
MSA. Metropolitan Statistical Area - as defined by the United States Census Bureau.
3
U.S. Census Bureau - 2005 estimate.
4
http://ops.fhwa.dot.gov/freight/freight_analysis/world_trade_brdg/wrld_trd_brdg_2.htm. Total truck
crossings on all four bridges in 2005 were 2,743,517 for the year (Texas A&M International University, Texas
Center for Border Economic and Enterprise Development).
Interstate Highway #35 and Mines Road are the two main north/south highways
through the industrial developments in North Laredo, and form a "Y" coming out of
the commercial and residential areas of Laredo. The Subject is located just West of
the left arm of this "Y" configuration. As such, it is easily accessible from the main
arteries that carry truck traffic over the border and North to the rest of the United
States.
To facilitate the very heavy truck traffic in this area, the Texas Department of
Transportation is in the middle of a highway interchange project designed to enable
trucks to move to and from the World Trade Bridge more easily. With this new
interchange, Truck
traffic will be able to
move from I-35 to the
bridge without leaving
the freeway and will be
able to exit directly
onto Mines Road into
the industrial park area
without disturbing the
passenger vehicle
traffic. This will
enhance the value and
utility of the industrial
property around the
Subject.
Since warehousing
and trucking are a
New interchange leading to the World Trade Bridge
major component of
the Laredo economy, the Subject will continue to provide a valuable service to the
community for some time to come.
Other location linkages include the Laredo International Airport,1 about five miles
Southeast of the Subject, residential neighborhoods with both low-income and highincome housing very near the industrial parks, police and fire protection in close
proximity, retail shopping including the Mall Del Norte a few miles South at I-35 and
Calle de Norte, and the new Doctors Hospital at Bob Bullock Boulevard and
McPherson, just East of I-35. All the necessary services and facilities are available in
close proximity to the Subject.
Step #2. User Definition For The Property (Market Delineation)
The Subject competes in the Northern Laredo industrial market, bounded on the
South by Loop 20 (Bob Bullock Boulevard), and includes all of the greater Laredo
area North of that roadway, as shown by the aerial photo below.
1
Airport. Total passenger activity in 2005 was 183,585 passengers and air cargo total was
374,434,576 pounds in 2005 (Source: Laredo International Airport).
Properties in this area are primarily industrial warehouse/distribution facilities. The
land area is almost entirely within the Laredo City Limits. However, that property
outside the city limits is under the "Extra Territorial Jurisdiction" of the City of Laredo,
established by the Texas legislature. A map in the addenda shows the territory
outside the city limits included in this jurisdiction.
The City of Laredo has developed a very efficient plan for handling the heavy
trucking traffic coming through the city. A map in the addenda shows the Laredo
truck route plan, including the location of the Subject shown on it. As can be seen in
that map, the Subject has excellent access to the designated truck routes.
Step #3. Demand Forecast Factors For the Property
Demand for Laredo industrial property has been fairly consistent over the last several
years, being a major component of the Laredo import and export economy. The
maquiladora1 industry in Nuevo Laredo in Mexico provides inexpensive labor for the
manufacture and assembly of goods. Manufacturers in the USA ship components to
their facilities in Mexico. The products are assembled and shipped back to the
facilities in the USA for eventual sale. This activity creates a substantial demand for
freight and warehousing facilities. Much of the industrial property in Laredo is used
for freight forwarding and freight brokering to facilitate this maquiladora business.
As an illustration of the type and volume of manufacturing and import/export activity,
the pie chart below shows the type of products and the dollar volume that was
processed through the Port of Laredo in 2006.
1
Maquiladora Industry. "An assembly plant in Mexico, especially one along the border between the
United States and Mexico, to which foreign materials and parts are shipped and from which the finished product
is returned to the original market." http://dictionary.reference.com/browse/maquiladora
The volume of import/export activity handled in Laredo is more than double that of
any other USA/Mexico port of entry. In 2006, Laredo handled $93.80 billion of
imports as compared to El Paso with $43.10 billion, the second highest volume.1
Foreign Trade Zones
There are seven foreign trade zones in Laredo that permit movement of
materials back and forth between the two nations without tariff. These seven trade
zones are:
SITE I
SITE II
SITE III
SITE IV
SITE V
SITE VI
SITE VII
TOTAL
500 acres (Laredo International Airport)
20 acres (Tex-Mex Railroad)
500 acres (Killam Industrial Park)
1,500 acres (International Commerce Center)
930 acres (La Barranca Ranch Development)
825 acres (Unitec Industrial Park)
800 acres (Embarcadero Industrial Park)
5,075 acres with over 20 buildings
Although the Subject is not located within one of these seven foreign trade zones, the
fact that Laredo has seven foreign trade zones, most located very close to the
Subject, is indicative of a strong import/export market that would support the viability
of the Subject's utility.
1
Texas A&M University, Real Estate Center, Real Estate Market Overview 2006, page 12.
The demand for industrial property to handle this warehousing and shipping activity is
projected to continue to grow as the US and the Mexican economies become more
integrated.
Step #4. Inventory and Forecast of Competitive Supply
In Laredo, as of 2004, there were approximately 37,135,000 square feet of industrial
property.1 At that time there was a vacancy rate of 5.7%, and net absorption for 2004
was 1,135,000 square feet. In 2006, the vacancy rate had risen to 6.9%, and there
were only 885,000 square feet absorbed.2
Construction activity since 2000 has had its ups and downs. Following the 9/11
terrorist attacks, Laredo, just as the rest of the US, experienced a dramatic drop in
economic activity. The construction of new industrial property dropped from 600,000
square feet in 2001 to 230,000 square feet in 2002. Since then, the rate has
consistently increased as shown in the graph below. 2006 new construction was
estimated at 600,000 square feet, almost back to the level of the peak year of 2000.
Laredo Industrial Marekt Overview SF Under Construction
700
600
500
Square Feet - 400
Thousands 300
Series1
200
100
0
2000
2001
2002
2003
2004
2005
2006
2000 - 2006
Neighborhood Market Analysis.
Although the entire Laredo market contains 23 separate industrial parks, located
mostly in the Northern Laredo industrial district, the immediate neighborhood of the
Subject is comprised of only three: International Trade Center,
1
Grubb & Ellis 2004 Real Estate Forecast - Texas/Oklahoma/Mexico. This is the most recent period
that I could find with a total inventory listing. Obviously with nearly 1,000,000 square feet per year of additional
construction, the inventory in 2007 is closer to 40,000,000 square feet.
2
Real Estate Center at Texas A&M University.
InterAmerica
Industrial Park,
and the Pan
American
Business Park,
shown in the
aerial photo to
the right. The
Subject is
located in the
International
Trade Center,
situated
between the
other two parks.
These three
parks were all
developed in the
early 1990's,
and have very
similar
characteristics.
The lots are
typically one to
four acres, and
the typical
improvements
are small
warehouse/distribution facilities. They represent a homogeneous neighborhood of
small light industrial property. Deer Creek Village,1 a small residential
neighborhood of low-income housing, is on the North side of the Pan American
Business Park, and provides housing for a low-cost labor force. La Bota, a private
gated residential community, is to the West of the International Trade Center and the
InterAmerica Industrial Park, and provides middle-income housing. Green Ranch,2 a
new middle-to-high-income housing subdivision, is immediately East of the parks,
across Mines Road, and is currently about 50% completed and sold. Thus, housing
for all levels of employees involved in these three parks is available only minutes
from their work environment.
Industrial Inventory in the Neighborhood.
To identify the character of this industrial neighborhood, I personally surveyed these
three parks, identifying each parcel, the improvements on the parcel, and the current
occupants. A full listing of these parcels, called Neighborhood Market Survey, is
located in the addenda. The table below is the summary of these three parks.
1
Deer Creek Village. Typical housing price in this subdivision is about $70,000 for a 2 bedroom, 1 bath
home.
2
Green Ranch. Prices in this subdivision range in the 140,000's to 150,000's for a 4 bedroom, 2.5 bath
home. D. R. Horton is the developer.
Occupancy Survey
Three Industrial Parks
Laredo, Texas
January 27, 2007
International
Trade Ctr
LAND ANALYSIS
Total Acres
Number of Parcels
Average Parcel Size
Parcels Available for Development
Percent Available by Count
Acres Available for Development
Percent Available by Acreage
BUILDING ANALYSIS
Number of Buildings
Gross Building Area (S/F)
Average Building Size (S/F)
Number of Buildings Vacant
Percent of Buildings Vacant
Gross Building Area Vacant
Percent of GBA Vacant
InterAmerica
Industrial
Pan American
Industrial
Totals
172.57
112
1.5408
15
13.39%
25.70
14.90%
200.64
103
1.9480
18
17.48%
28.50
14.20%
154.84
39
3.9702
15
38.46%
60.69
39.20%
528.04
254
7.4589
48
18.90%
114.89
21.76%
95
1,608,897
16,936
5
5.26%
69,684
4.33%
77
1,768,984
22,974
4
5.19%
90,279
5.10%
21
656,693
31,271
2
9.52%
28,490
4.34%
193
4,034,574
20,905
11
5.70%
188,453
4.67%
This table shows a total of 528 acres in these three parks, with 254 parcels.1 Of
these parcels, 48 are not yet developed, though many of them are currently used for
truck or trailer parking, and so not "unused." The parcels available for development
represent 21.76% by acreage and 18.90% by parcel count. Thus, the three parks
are about 80% developed, though the "utilization" of the land is closer to 95% when
the truck and trailer parking use is included.
The three parks contain 193 buildings with a total Gross Building Area of
approximately 4,034,574 square feet. Of the 193 buildings, I found 11 vacant
buildings, with 188,453 square feet of vacant space. This equals a 5.7% vacancy
factor by building count, and 4.67% vacant by Gross Building Area. This is a better
performance than the overall industrial market running at 6.9% vacancy.2 However,
since these three parks are essentially fully developed, a more stable occupancy
would be expected than that in the newer developing parks to the East. Over 90% of
the buildings are designed as single-occupant buildings, and about 50% are tenantoccupied.
Because these three parks are nearly fully developed, there is little chance for
increased competition within the immediate neighborhood. However, competition is
increasing in the newer industrial parks to the East. The Subject's environment
1
Parcels. When more than one parcel has been utilized to construct one building or building complex for
one user, I have called that accumulation of parcels one parcel for ease in tabulation. There are actually 303 tax
parcels rather than the 254 "combined-use parcels" shown in the table.
2
Real Estate Center, Texas A&M University, Real Estate Market Overview 2006, Laredo, page 23.
should remain stable as demand for the warehouse/distribution properties continues
to grow. I would consider the neighborhood to be in the "stability" stage of its life
cycle.1
Step #5. Analysis of the Interaction of Supply and Demand
The industrial market in Laredo has been in a growth mode for the last several years,
and this growth is projected to continue into the near future. My conversations with
industrial brokers indicate that buildings available for lease or for sale do not last long
on the market. In fact, the typical marketing time for an industrial building to sell in
Laredo is three to six months.2 A listing of the current inventory of industrial buildings
available for lease shows 21 buildings with lease space available.3 These buildings
contain 466,890 square feet, or an average of about 26,000 square feet each.
The table to the right
shows the vacancy and
absorption rates for
Laredo industrial
property since the year
2000.4 This chart
shows that the vacancy
rate has been steadily
declining since 2002,
and the amount of
space absorbed has
had a dramatic
1,000,000 square foot
increase in 2006. The
projection by Grubb &
Ellis is that the vacancy
rate will continue to
decline while the
absorption rate will
continue rise. This
should result in an increase in rental rates and industrial land and building values. As
mentioned above, the three parks in the Subject neighborhood are nearly fully
absorbed, so most of the new activity will be in other areas of the Laredo industrial
district; however, the impact of these market trends will definitely affect over to the
Subject neighborhood and the Subject itself.
1
Market Area Life Cycle. "The typical, but not necessarily universal, four-stage cycle that describes the
life patterns of neighborhoods and districts: Stages of a Market Area Life Cycle: Growth; Stability; Decline;
Revitalization." The Dictionary of Real Estate Appraisal, page 175.
2
Based on telephone and email surveys of industrial brokers performed by me during my research.
3
Website of the Laredo Development Foundation, as of February 2007. http://www.ldfonline.org/
4
Vacancy/Absorption. Source: Grubb & Ellis.
Step #6. Forecast of the Subject Capture Rate
The Subject is a single-tenant building in an established industrial park. At the time
that I performed my survey referenced above, there were only 11 vacant buildings in
the three parks. Of these 11 buildings, I was able to find only five that had "For
Lease" or "For Sale" signs on them. That means that, should the Subject become
vacant, there would be very little competition within the neighborhood for a buyer or
tenant.
Based on data discussed above, the typical absorption in the entire market has been
running at a rate of about 2.0% to 3.0% of additional space per year. The vacancy
rate has been declining even as this additional space has been absorbed. This
would indicate that the demand for industrial space is increasing more rapidly than
developers can add inventory to the market.
The Subject should remain competitive for the foreseeable future, and maintain an
average occupancy rate at least on par with the rest of the market, currently at 95%
based on my market study. In the event of a need to sell the Subject, buyers (both
users and investors) should be readily available to buy or lease the Subject at market
value, if offered at market rates, and marketed in a competent and professional
manner. Marketing Time1 should be a three to six month period for a sale, consistent
with the Exposure Time discussed in the Reconciliation section of this report.
1
Marketing Time. "Reasonable marketing time is an estimate of the amount of time it might take to sell
an interest in real property at its estimated market value during the period immediately after the effective date of
the appraisal; the anticipated time required to expose the property to a pool of prospective purchasers and to
allow appropriate time for negotiations, the exercise of due diligence, and the consummation of a sale at a price
supportable by concurrent market conditions. Marketing time differs from exposure time, which is always
presumed to precede the effective date of the appraisal." The Dictionary of Real Estate Appraisal, page 17576. Marketing Time is always "prospective" into the future where Exposure Time is always "historical" looking
into the immediate past.
B. Highest and Best Use Analysis
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
1
permissibility, physical possibility, financial feasibility, and maximum productivity."
The property is first viewed as though vacant. If there are improvements on the
property, the appraiser must assume that these improvements are not present, and
that the land is vacant and available for development to its Highest and Best Use.
After testing for the Highest and Best Use as vacant, the appraiser must then
consider the existing improvements, if any, and progress through the same four
criteria with a view to the improvements. It is possible for the Highest and Best Use
as improved to be different than the Highest and Best Use of the land as though
vacant.
The question of Highest and Best Use must answer three questions about the land:
(1) What is the Highest and Best Use; (2) Who is the user for that use; and (3) When
will that use be feasible.2
1) Highest and Best Use of the Land "As Vacant"
Legally Permissible. The first criterion is that the use must be legal. That means it
is permitted within the current zoning laws, building codes, and other governmental
restrictions, as well as conforms to any deed restrictions that are recorded against
the property. If a use does not fall within these criteria, and the use may be more
productive, the appraiser must consider whether it is feasible to rezone or otherwise
change or remove the legal restraints.
In the case of the Subject, the zoning is "M-1" - Light Manufacturing District. A
zoning map in the addenda shows that the Subject is in a neighborhood with all M-1
zoned property, thus the zoning conforms well to its surroundings. The full Laredo
city ordinance describing the M-1 zone is also included in the Addenda. A brief
statement from the zoning ordinance describing the purpose of this zone is as
follows:
"The purpose of the M-1 Light Manufacturing District is to encourage the development
of manufacturing and wholesale business establishments which are clean, quiet, and
free of hazardous or objectionable elements such as noise, odor, dust, smoke or glare.
Research activities are encouraged. This district is further designed to act as a
transitional use between heavy industrial uses and other less intense and residential
uses."
Any use of the Subject that does not conform to this ordinance would not be legally
permissible. Since the Subject is part of a well established and successful industrial
park, it is also highly unlikely that the City of Laredo would approve a rezoning.
Therefore, any use of the Subject will need to conform to this light industrial use.
1
The Dictionary of Real Estate Appraisal, page 135.
2
Market Analysis for Real Estate, page 378-79.
In addition, there are deed restrictions on the Subject that were created when the
industrial park was developed. The full "Declaration of Covenants, Conditions, and
Restrictions for International Trade Center, Phase I" are in Volume 1487, page 502-532
in the public records of the Webb County Clerk, recorded on May 29, 1991. They are
too extensive to include in the addenda to this report. However, these CC&R's
create restrictions that enforce a uniform and orderly development of an industrial
distribution park intended for small light industrial users. It creates set-back
requirements, building architecture, and size restrictions, and creates a membership
association intended to enforce these restrictions.
These restrictions are in effect for twenty-five years beginning on their effective date
in 1991, and renewable automatically for successive ten-year periods until terminated
by a vote of a minimum of 75% of the association membership, which membership is
appurtenant to the land.
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AS VACANT
Legally Permissible
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Based on this analysis, as shown in the table below, the only legally permissible use
would be industrial, specifically light industrial as opposed to heavy industrial or
manufacturing.
X
Physically Possible. The second criterion that must be met is physically possible.
The site must be large enough to accommodate improvements for the use but not so
large that the use is not economically infeasible because of excessive land area.
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AS VACANT
Legally Permissible
Physically Possible
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The site, as described earlier in this and previous sections of this report, is exactly
one acre, basically level, and 100% usable. There is a drainage easement at the
West end of the parcel, but it is within the building set-back requirements, and does
not interfere with development of the site within the legal limitations described above.
With a typical 25% coverage for building area of a small distribution warehouse, the
site could easily support improvements for warehouse distribution, which fits within
the legal criteria. Thus, the Subject meets the physically possible criteria of a small
light industrial use, and fits well with its surrounding properties.
X
X
Financially Feasible. In order to determine the financial feasibility, a land residual
test must be made. The cost to construct improvements for the proposed use is
estimated and deducted from the market value of the completed improvements and
land. The result is the value of the land under that use. If that "residual" land value
equals or exceeds the market value of similar land in the area, then the use is
financially feasible.
Since the previous two tests have determined that only light industrial uses would be
legally permitted and physically possible, I have needed only to test the various kinds
or qualities of light industrial buildings. Using the Marshall Swift Valuation Calculator
pages, I have created the table below with the five classes of building types for
warehouse distribution buildings.1 In the market study above, the Laredo Economic
Indicators report was referenced from the Real Estate Center at Texas A&M
University, in which the 2006 rents ranged from $3.60 per square foot to $4.68 per
square foot on NNN leases. I have used this rental range, adjusting the rents based
on the quality of the building class. In the Income Approach section below, I have
established the range of income capitalization rates, and have applied these
capitalization rates to the various building qualities. As can be seen from the table
below, the typical rents in the market do not justify Class A or B buildings, as the land
residual values are negative. Class C, D, and S buildings have positive land residual
values, meaning that it is economically feasible to build Class C, D, and S buildings,
as long as the land can be acquired for equal to, or less than, the cost per acre of the
land residual values shown.
Based on the table below, I have concluded that warehouse / distribution facilities are
economically feasible at the land values shown. In the Land Valuation section below,
I have concluded that the value of the land of the Subject is $76,000. Since the site
is exactly one acre, the land value is $76,000 per acre. None of the land residual
values below are equal to or greater than $76,000, which means that even though
the warehouse distribution facility is financially feasible at the given land values, the
land values are not achievable at this time, leaving the question of when
unanswered. However, I have narrowed the choices to the three building classes of
C, D, and S within the light industrial category of land uses.
Building Type
Building Cost S/F
Site Improvements
Total Cost S/F
Current Cost Multipliers
Local Cost Multipliers
Adjusted Total Cost S/F
Rent Potential
Vacancy
Expenses
Net Operating Income
Capitalization Rate
Value S/F of Building
Building Cost S/F
Residual Land Value
Land/Building Ratio
Land Residual Value
Cost per Acre of Land
Distribution Warehouse - Marshall Swift Class
A
B
C
D
S
$ 60.34 $ 57.65 $ 38.15 $ 34.54 $ 33.74
$ 15.09 $ 14.41 $
9.54 $
8.64 $
8.44
$ 75.43 $ 72.06 $ 47.69 $ 43.18 $ 42.18
$
1.04 $
1.02 $
1.02 $
1.03 $
1.03
$
0.80 $
0.80 $
0.81 $
0.82 $
0.79
$ 62.75 $ 58.80 $ 39.40 $ 36.47 $ 34.32
$
4.68 $
4.32 $
3.96 $
3.78 $
3.60
$
0.23 $
0.22 $
0.20 $
0.19 $
0.18
$
0.22 $
0.21 $
0.19 $
0.18 $
0.17
$
4.22 $
3.90 $
3.57 $
3.41 $
3.25
7.50%
7.50%
8.00%
8.00%
8.00%
$ 56.32 $ 51.98 $ 44.67 $ 42.64 $ 40.61
$ 62.75 $ 58.80 $ 39.40 $ 36.47 $ 34.32
$ (6.44) $ (6.82) $
5.27 $
6.18 $
6.29
25%
25%
25%
25%
25%
$ (1.61) $ (1.70) $
1.32 $
1.54 $
1.57
$ (70,105) $ (74,259) $ 57,438 $ 67,273 $ 68,549
Land Residual Analysis of Warehouse Distribution Buildings
1
Marshall Swift Valuation Service, Section 14, Page 23.
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AS VACANT
Legally Permissible
Physically Possible
Financially Feasible
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X
X
X
Maximally Productive. To determine which of the three alternatives (Class C, D, or
S) is maximally productive, the cost per acre of land in the above table can be
referenced. The Class S building has a land residual value of $68,549 per acre. This
would indicate that the maximally productive use would be to construct a Class
S distribution warehouse on the site.
Based on my survey of the three industrial parks that comprise the neighborhood of
the Subject I found that there is a fairly even distribution of tenant-occupied versus
owner-occupied properties. Investors are active in the market and some investors
own numerous buildings in this neighborhood.1 The typical occupant of the buildings
is a small business, owned by local entrepreneurs operating freight forwarding or
trucking operations. Some buildings are occupied by larger national companies with
a local branch, but they are in the minority. It is most likely, then, that the user of the
Subject would be a local business in the freight forwarding, warehousing, or
trucking business.
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Legally Permissible
Physically Possible
Maximally Productive
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In the Income Approach section below, I have determined that the Net Operating
Income of the current improvements, based on market rents, is $2.79 per square
foot. The required Net Operating Income, based on the above schedule, would be
$3.25 per square foot to justify construction of the project built new today, a
difference of $.46 per square foot, or about 16.5%. The analysis of trends in
industrial rents since 2000, discussed above, indicates that rents averaged $3.84 per
square foot in 2000, declined to $3.54 per square foot in 2003 and 2004, and have
increased back to $3.84 in 2006. The rate of increase since 2004 is about 4% per
year. At that rate, it will take about four years for the rents to increase enough to
generate a Net Operating Income of $3.25 per square foot from the current $2.79 per
square foot, assuming that the cost of construction remains constant, which is highly
unlikely. Therefore, assuming that the rental rates continue to increase at the current
rate, the earliest time frame that would permit the construction of the improvements
to their Highest and Best Use would be four years. Based on construction cost
increasing, it will likely be more than four years.
X
X
X
X
1
One such ownership is the Asa Group Limited, 315 Calle Del Norte, #201, Laredo, Texas, that owns
seven buildings in these three parks and several others outside these three parks. White Ark Management,
6900 McPherson, Laredo, Texas, also has an investor portfolio with ownership in literally dozens of the smaller
warehouse properties in these three parks.
Conclusion. My conclusion of Highest and Best Use of the land "As Vacant" is:
(1) for development of a Class S warehouse/distribution building;
(2) for an owner-occupant of a trucking/shipping business;
(3) sometime beyond four years.
2) Highest and Best use of the Property "As Improved"
Again, the four criteria must be applied. The Highest and Best Use "As Improved"
may or may not be the same as the Highest and Best Use "As Vacant."
AS IMPROVED
Legally Permissible
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Legally Permissible. The same zoning and deed restrictions apply to the current
improvements and the improvements conform to and are a legally permitted use with
the current zoning. Therefore, the light industrial building that exists fits the definition
of legally permissible. No other uses outside the industrial category would be
permitted.
X
Physically Possible. The current improvements are well maintained and, except for
the curable deferred maintenance identified in Section 2 of this report, are in good
condition. The question remains about whether the current improvements could be
expanded to create more productivity. The current land to building ratio is 3.63:1
(one square foot of Gross Building Area to every 3.63 square feet of land area). This
equals a 27.55% coverage of the land.
Ag
AS IMPROVED
Legally Permissible
Physically Possible
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A review of the improved properties in the International Trade Center indicates that
the average land to building ratio is 3.922:1, with average building coverage of 25%,
meaning that the Subject has a higher building coverage than the average improved
property in the park. The building is built to the set-back limits in the back and on
both sides. The front is fully developed for trailer parking, with passenger vehicle
parking for employees and visitors. There is no unused land area, and the
improvements seem to maximize the available land. Therefore, I have concluded
that its use is physically possible and that there is little likelihood that the
improvements could be expanded. The Subject does not need refurbishing, except
for the deferred maintenance identified earlier, and remodeling would not increase its
productivity.
X
X
Financially Feasible. The improvements are productive and, if rented, would
produce a net operating income that would satisfy investor requirements, as shown in
the Income Approach later in this report. Therefore, the current improvements are
financially feasible without remodeling or expansion.
There is the possibility of expanding the office area from the current 866 square feet.
If the larger office area were to increase the rental value more than enough to pay for
the cost of the expanded office area, it would be financially feasible to expand the
office area and increase the productivity of the current improvements. To test this
question, I created the chart below to compare the rent per square foot and the
percent of office area within the five sales comparables used in the Sales
Comparison Approach. If there were a direct correlation between the rent charged
and the percent office area, it would indicate that the market would pay more for the
expanded office area. The R2 calculation in the chart shows the correlation
coefficient of 0.0023. The closer this number is to either +1.0 or -1.0, the stronger
the predictability of one variable by the other. Since the formula produced a
coefficient of 0.0023, this indicates that there is no evidence that increasing the office
square footage would increase the productivity of the Subject from a rental income
perspective. Therefore, I see no remodeling or expansion potential for the existing
improvements that would change the Highest and Best Use of the Subject from its
use with the current improvements.
Correlation of Office % S/F to Rental Rate
y = 0.0023x + 0.0695
R2 = 0.0023
12.00%
Office Percentage
10.00%
8.00%
Series1
6.00%
Linear (Series1)
4.00%
2.00%
0.00%
-
1.00
2.00
3.00
4.00
5.00
6.00
AS IMPROVED
Legally Permissible
Physically Possible
Ag
ric
ult
ur
Re
al
cre
ati
on
Re
al
sid
en
tia
Of
l
fic
e
Re
tai
l
Ind
us
tri
al
Sp
ec
ial
Us
e
Rental Rate S/F
X
X
X
AS IMPROVED
Legally Permissible
Physically Possible
Maximally Productive
Ag
ric
ult
ura
Re
l
cre
ati
on
Re
al
sid
en
tia
Of
l
fic
e
Re
tai
l
Ind
us
tria
l
Sp
ec
ial
Us
e
Maximally Productive. The above tests indicate that the Highest and Best Use of
the Subject, "As Improved," is consistent with the "As Vacant" conclusion. Continued
use without remodeling or expansion, in its current conditions as a distribution
warehouse, with the curing of deferred maintenance identified in the previous
section of this report, is its Highest and Best Use.
X
X
X
X
Conclusion. My conclusion of Highest and Best Use of the land "As Improved" is:
(1) continued use of the existing Class S warehouse/distribution
building with curing of deferred maintenance;
(2) by an owner-occupant of a trucking/shipping business;
(3) now.
SECTION IV.
LAND VALUATION
It is customary to include the site valuation as part of the Cost Approach in an
appraisal. However, the site valuation is really a separate appraisal of the land of the
Subject, under the assumption that the improvements are not yet in place.
Therefore, I have elected to treat the site valuation as a separate component of the
appraisal process. After I reach an opinion of value for the Subject site, that value
will be transferred to the tabulation of the Cost Approach in Section V. of this report.
Land Sale Comparables.
A land sales map, found in the addenda, shows each of the sales used below,
followed by a complete description of each land sale, along with photo and plat. The
sales are assembled into the table below for quick review. Two of these sales, #2
and #6, are in the Millennium Industrial Park about two miles North of the Subject.
Since the Subject is located in a fully developed industrial park, with little land still
available, it was necessary to go further away to obtain a better selection of land
sales.
Comp #
1
2
3
4
5
6
Address
613-15 Enterprise, Laredo, Texas
1617 World Trade Center Loop, Laredo, Texas
14206 Transportation Avenue, Laredo, Texas
14710 Atlanta, Laredo, Texas
4304 Trade Center Boulevard, Laredo, Texas
18729 Metropolitan, Laredo, Texas
Size/Acres
3.0657
5.3140
1.0000
1.8549
2.0234
3.2550
$
$
$
$
$
$
Price
240,000
372,400
80,000
125,000
150,743
292,950
$
$
$
$
$
$
$/Acre
78,286
70,079
80,000
67,389
74,500
90,000
Date
2/15/2002
5/13/2002
12/16/2002
7/28/2005
5/2/2006
10/24/2006
Land Sales Analysis.
The analysis of the individual land sales, and their comparison to the Subject site, will
proceed in two levels.1 The first level will address items that have to do with market
conditions or the sales transaction between buyer and seller. Adjustments in this
level are applied sequentially, and have the effect of compounding the changes,
until an adjusted price is reached that has taken the market and sales transaction
issues into consideration. The second level considers property-specific features such
as location, physical, economic, use, and non-realty components (if any) of the
comparable property. These adjustments are aggregated together before being
applied to the price determined in the first level.
Not all items of comparison can be quantified from market-extracted data. Therefore,
some comparison items will have a "qualitative" adjustment noted. Although not
resulting in an actual number, these qualitative adjustments guide me in determining
how to treat the various sales when it comes to making my final conclusion of land
value.
Following the discussion of the adjustments is a table with separate fields for
quantitative and qualitative differences for each adjustment feature. In those cases
where market support cannot be found for a quantitative adjustment, only a
1
Appraisal of Real Estate, pages 442-46.
Section IV - Land Valuation - Page 1 of 9
qualitative adjustment will be noted, without a change in value. The final value
conclusion will consider these qualitative comments even though they have not made
a numeric change in the price of the comparable sale.
First Level Adjustments.
Property Rights Conveyed. This adjustment is to account for differences in
property rights such as the difference between Fee Simple and Leased Fee. It also
accounts for such things as partial interests sold rather than undivided interest. In
the case of the comparables, all six were 100% undivided interest in fee simple, so
no adjustments are necessary to equate them to the Subject.
Financing Terms. This adjustment accounts for financing terms that are different
from the prevailing market financing terms and provisions. To motivate a buyer to
close a sale, seller financing often includes an interest rate that is lower than financial
institutions charge. Sellers also often take a lower down payment. These softer
terms tend to affect the stated sale price, and adjustments are necessary to bring the
price back to an effective market transaction. This is known as determining the "cash
equivalency" of a transaction. All of the comparable sales resulted in cash to the
seller. If financing was involved, it was from a third party, and did not appear to affect
the sales price. Therefore, no adjustment is required for financing.
Conditions of Sale. This adjustment involves such things as non-typical motivations
on the part of the buyer or seller to enter into the transaction. A seller under duress,
or a buyer who has no alternative but to buy the property to expand his business, for
examples, would create non-typical conditions of sale. Since the definition of Market
Value used in this report assumes that the buyer and seller are well informed and
typically motivated, an adjustment would need to be made if this is not the case. In
the six land sales used, no unusual conditions of sale are present, so no adjustment
is required.
Market Conditions. This adjustment reflects changes in the market during the time
between the effective date of the appraisal and the time of the sale of the
comparables. This is often referred to as a "time adjustment." However, time alone
may not fully explain changes in the market. To determine whether a market
condition adjustment is warranted, I have assembled a representative sample of 59
sales of industrial land in Laredo over the last five years. This representative sample
does not account for 100% of all sales during this time period. However, all sales in
this sample were verified, and constitute a reliable representation of comparable
industrial land sales. These sales are shown in an exhibit labeled "Time Adjustment
Test - Industrial Parks in Laredo" in the addenda.
Below is a table that gives a summary of this exhibit. Based on this analysis, it is fair
to conclude that there has been an increase in price per acre of industrial park lots.
The average rate of increase has been about 6.0%. There was one year in which a
decline occurred, but the other years easily compensated for that negative price
change. Using this data, I have concluded that a time adjustment of 5.0%1 per year
is warranted for the land sales comparables.
1
Rounding. "An appraisal conclusion may be rounded to reflect the lack of precision associated with the
value opinion." Dictionary of Appraisal, page 253. As a conservative approach I typically round down to the
nearest 5.0% to reflect my level of confidence in this type of data analysis.
SUMMARY
Year
2002
2003
2004
2005
2006
Sales
12
6
11
16
14
Avg Size Avg Price % Change
3.8766 $ 78,510
4.1695 $ 85,817
9.31%
12.4173 $ 83,139
-3.12%
13.2868 $ 90,979
9.43%
9.4585 $ 98,910
8.72%
Average Change in Price per Acre
6.08%
Buyer Expenditures. Immediately following the purchase of a property, a buyer will
often spend money to cure a problem or to make the property useable. These
expenditures need to be accounted for in the adjustments. If a buyer pays for an
expense that would typically be the seller's responsibility, such as a real estate listing
commission, this expense should be added to the sales price to determine the true
price paid by the buyer for the property. Demolition of existing improvements that
have no contributory value is another example of a cost paid by the buyer that would
increase the effective price of property. In the case of the comparable sales, no
buyer expenditures appear to have been required, as the lots were all in existing
industrial parks and ready to begin construction of the intended improvements.
Therefore, I have made no adjustment for Buyer Expenditures.
The adjusted price of each comparable land sale based on the transaction elements
are shown in the table below. They range from a low of $1.66 per square foot for
14710 Atlanta, a site with a topographical issue discussed later in this report, to a
high of $2.25 per square foot for 613 Enterprise, a lot with excellent development
potential.
Adjusted Price/Acre
Adjusted Price/S/F
613 Enterprise 1617 WTC 14206 Trans 14710 Atlanta 4304 Trade Ctr 18729 Metro
$
97,933 $ 86,820 $
96,700 $
72,519 $
77,294 $
91,187
$
2.25 $
1.99 $
2.22 $
1.66 $
1.77 $
2.09
Second Level Adjustments.
Location. Location of land is a very important component of value determination.
The six comparable properties were taken from essentially three different industrial
parks. To determine how these locations influence value, I have assembled the table
below that shows the comparable sales segregated by industrial park. Since Pan
American Business Park and International Trade Center are, for all practical
purposes, the same industrial park, I have lumped them together. Thus, there are
two sales from InterAmerica Industrial Park, two from the Millennium Park, and two
from the International Trade Center/Pan American Business Park. The Subject is in
the International Trade Center. The prices used are the prices after all other
adjustments, except for location, have been factored. Thus, the only remaining
variable is location. It appears from these samples that there is a difference in land
value of about 20% to 25% between the International Trade Center and the other two
1
industrial parks. Thus, I have used a 20% negative adjustment for location on sales
2
#1, #2, #3, and #6 .
Comp #
1
3
4
5
2
6
Industrial Park
InterAmerica Industrial Park
InterAmerica Industrial Park
Average
Pan American Business Park
International Trade Center
Average
Millennium Park
Millennium Park
Average
Adjusted Price
S/F
Difference % Difference
$
2.42
$
2.22
$
2.32 $
0.50
27.12%
$
1.79
[Location of Subject]
$
1.86
$
1.83 $
0.00%
$
2.23
$
2.16
$
2.20 $
0.37
20.27%
Size. Generally speaking, with all other things being equal, a larger parcel of land
will sell for a lower price per unit than a smaller parcel. A rule of thumb that
appraisers often use is that for each time the size of the comparable property doubles
compared to the Subject, the price per unit will drop about 10%. If the size of the
comparable is half the size of the Subject, the price per unit will increase about 10%.
In an attempt to test and validate that principle for industrial land in Laredo, I have
assembled the comparable sales in
the table to the right. I then charted the sales
on the graph shown below and calculated the
Comp #
Size
Price S/F
linear regression of the prices. The prices per
1
133,542 $
2.42
square foot used in this table are the prices
2
231,478 $
2.23
after all adjustments have been performed,
3
43,560 $
2.22
except for the location adjustment. Although
4
80,799 $
1.79
six samples is an insufficient number to
5
88,139 $
1.86
perform a valid statistical analysis, the visual
6
141,788 $
2.16
and mathematical results will give some
evidence regarding the validity of this
procedure to determine a size adjustment.
1
Rounding. "An appraisal conclusion may be rounded to reflect the lack of precision associated with the
value opinion." Dictionary of Appraisal, page 253. As a conservative approach I typically round down to the
nearest 5.0% to reflect my level of confidence in this type of data analysis.
2
Comp Numbers. The comparable sales are grouped in this table by location, where in the addenda
they are grouped by age. Thus, the comparable numbers are not in sequence in this table.
$3.00
y = 1E-06x + 1.9416
2
R = 0.152
$2.50
$2.00
Series1
$1.50
Linear (Series1)
$1.00
$0.50
$-
50,000
100,000
150,000
200,000
250,000
Linear Regression Analysis of size/price differences
The coefficient of correlation shown in the equation in the upper right corner of the
graph illustration is 0.152. The closer this is to 1.0 or -1.0, the stronger the
relationship (positive or negative) between the two variables of price per unit and size
of the property. Since the formula resulted in nearly zero, it indicates that there is a
very weak correlation, if any, between size and price per unit in this sample. Thus, I
have concluded that in Laredo, there is insufficient data to use a size adjustment in
the sales comparison grid for land.
Shape. Some shapes make a parcel more difficult or expensive to develop, or limit
the type of development that can occur. An irregular shape will often result in a lower
value than a square or rectangular shape since the latter are more easily developed.
All of the comparable sales are either square or rectangular, except for sale #2,
which is triangular in shape with a wider dimension in the back than in the front.
Although this makes the parcel somewhat inferior, there is insufficient market data to
quantify the difference in value caused by this shape. Therefore, I have indicated a
qualitative difference, but have not made a quantitative adjustment for this aspect.
Corner Influence. Corner parcels generally sell for more than interior parcels
because of the additional frontage afforded by the second street. It often provides
additional access and visibility for businesses that need those amenities. Two of the
comparables are located on a corner. The difference in value attributed to the corner
can be estimated by paired sales analysis. Sales #2 and #6 are very close to each
other and are in the same industrial park. The major difference between these lots is
corner influence. The difference in time-adjusted price between these two is shown
in the table below.
Comp #
Adj Price/Acre
2 $
86,820
6 $
91,187
Difference $
4,367
% Difference
5.03%
This paired sales analysis indicates a difference of about 5.0% for the corner over the
interior location. I have used this adjustment for comparables #4 and #6 both of
which have corner locations, reducing their price by this amount.
Access. All of the comparable sales and the Subject have only one side with access
for ingress and egress. Sale #6 is a corner lot with three sides exposed to streets but
access is only permitted from one street. Therefore, the access is no different on this
parcel, and I have not included access as a component on the adjustment grid.
Frontage. The amount of street frontage on a parcel will often make a difference in
the value. All of the sales have about the same amount of "front foot" ratio, except
sales #4 and #6. Sale #4, however, has most of its street frontage on the side of the
property where a substantial drop in elevation, from the lot to the street, minimizes
the frontage value. Thus, the benefit of that frontage is limited, and no adjustment is
warranted, as the negative impact of that topography seems to offset the positive
benefit of the frontage. The frontage on sale #6 does enhance its value, but that
value has already been reflected in its corner influence, as shown in the paired sales
analysis. Thus, no frontage adjustment has been made on the grid for any of the
comparable sales.
Utilities. All sales are in developed industrial parks where all utilities are available.
No utility adjustments are necessary.
Flood Plain. All of the comparable sales and the Subject are in either Flood Zone C
or Flood Zone X, neither of which are indicative of flood hazards. No flood plain
adjustments are necessary.
Rail Service. Neither the Subject nor any of the comparable sales have rail service.
No rail service adjustments are necessary.
Topography/Soil. All of the comparable sales and the Subject have relatively level
topography, as well as equivalent soil conditions, except for sale #4 which has a
substantial drop of elevation on the North side of the lot. Sale #4, like Sale #6, has a
corner location. However, Sale #6 is much superior to Sale #4 in its location,
younger age of its industrial park, and its exposure to Mines Road. It is my judgment
that the difference in value between Sale #4 and Sale #6 is attributable about twothirds to the superior location of Sale #6, and one-third to the inferior topography of
Sale #4 (increased cost of development). Below is a table that pairs these two sales.
The difference in adjusted price per acre is about 25%. As one-third of this difference
is allocated to topography, I have used an 8% upward adjustment on sale #4.
Comp #
Adj Price/Acre
4 $
72,519
6 $
91,187
Difference $
18,669
% Difference
25.74%
Zoning. All comparable sales and the Subject were zoned "M-1." No zoning
adjustments are necessary.
Site Improvements. Sale #1 had some minor site improvements, such as fencing
and concrete landing pads for trailers. However, no contributory value has been
given to these improvements, due to their minor nature. None of the other
comparable sales had site improvements beyond that typical for an industrial park
subdivision. No site improvement adjustments are necessary.
View/Amenities. None of the comparable sales had significant views beyond the
highway visibility of Sale #6, that has already been accounted for in its corner
adjustments. No view/amenities adjustments are necessary.
Land Sales Grid.
The next two pages contain the Land Sales Comparable Grid in which the above
described comparisons and adjustments are compiled. The first page shows the
adjustments for the transaction related items. The second page carries this adjusted
value forward, and factors in the property related items.
Reconciliation of Land Value.
The adjusted prices of the six comparables have a range of $1.57 to $1.80 per
square foot. In my conclusion, I have relied most heavily on Sale #4 and Sale #5, as
these two are closest to the Subject, and in the same industrial park. Sale #1 and
Sale #3 are given the next most weight as they are in the InterAmerica Industrial
Park, which is about the same age as the Subject's park, and has very similar
property. Sale #2 and Sale #6, in the Millennium Park, are given the least amount of
weight, as that park is newer, and developing more expensive and modern industrial
buildings, commanding a higher price for the remaining land.
The indicated value is then $1.75 per square foot, equaling $76,031 per acre,
rounded down to $76,000 per acre. Since the Subject is exactly one acre, the value
of the land of the Subject is $76,000.
Excess/Surplus Land Analysis.
As previously shown in the Highest and Best Use Analysis, the current improvements
maximize the land, and there is no reasonable expectation that the site would
support any substantial expansion of the current improvements. Therefore, all of the
one-acre site is considered to be appurtenant to the improvements, and is required to
support them. Thus, there is no excess or surplus land to be considered.
Comparable Land Sales Adjustment Grid
Level 1 - Transaction Adjustments
Comparable Sale
Subject
Date of Sale
Months since Sale
Price
Size s/f
43,560
Price per Acre
Price per Square Foot
Transaction Adjustments
Property Rights
Fee Simple
Adjustment %
Adjustment $$
Adjusted Price
Financing
Cash
Adjustment %
Adjustment $$
Adjusted Price
Conditions of Sale
Arms-Length
Adjustment %
Adjustment $$
Adjusted Price
Market Conditions
N/A
Adjustment %
(5% per Year)
Adjustment $$
Adjusted Price
Buyer Expenditures
N/A
Adjustment %
Adjustment $$
Adjusted Price
Total Price Adjustment per s/f
Total Price Adjustment
Transaction Adjusted Prices
613 Enterprise 1617 WTC
2/15/2002
5/13/2002
60
57
$
240,000 $
372,400
133,542
231,478
$
78,285 $
70,079
$
1.80 $
1.61
14206 Trans
12/16/2002
50
$
80,000
43,560
$
80,000
$
1.84
14710 Atlanta
7/28/2005
18
$
125,000
80,799
$
67,389
$
1.55
4304 Trade Ctr
5/2/2006
9
$
150,743
88,139
$
74,500
$
1.71
18729 Metro
10/24/2006
3
$
292,950
141,788
$
90,000
$
2.07
Fee Simple
0.00%
$
$
1.80
Cash
0.00%
$
$
1.80
None
0.00%
$
$
1.80
60 Months
25.10%
$
0.45
$
2.25
None
0.00%
$
$
2.25
$
0.45
$
60,233
$
300,233
Fee Simple
0.00%
$
$
1.84
Cash
0.00%
$
$
1.84
None
0.00%
$
$
1.84
50 Months
20.88%
$
0.38
$
2.22
None
0.00%
$
$
2.22
$
0.38
$
16,700
$
96,700
Fee Simple
0.00%
$
$
1.55
Cash
0.00%
$
$
1.55
None
0.00%
$
$
1.55
18 Months
7.61%
$
0.12
$
1.66
None
0.00%
$
$
1.66
$
0.12
$
9,514
$
134,514
Fee Simple
0.00%
$
$
1.71
Cash
0.00%
$
$
1.71
None
0.00%
$
$
1.71
9 Months
3.75%
$
0.06
1.77
$
None
0.00%
$
$
1.77
$
0.06
$
5,653
$
156,396
Fee Simple
0.00%
$
$
2.07
Cash
0.00%
$
$
2.07
None
0.00%
$
$
2.07
3 Months
1.32%
$
0.03
$
2.09
None
0.00%
$
$
2.09
$
0.03
$
3,865
$
296,815
Fee Simple
0.00%
$
$
1.61
Cash
0.00%
$
$
1.61
None
0.00%
$
$
1.61
57 Months
23.89%
$
0.38
$
1.99
None
0.00%
$
$
1.99
$
0.38
$
88,962
$
461,362
Comparable Land Sales Adjustment Grid
Level 2 - Property Adjustments
Comparable Sale
Adjusted Price s/f
Property Adjustments
Location
Adjustment %
Adjustment $$
Size
Adjustment %
Adjustment $$
Shape
Adjustment %
Adjustment $$
Corner Influence
Adjustment %
Adjustment $$
Frontage
Adjustment %
Adjustment $$
Topography
Adjustment %
Adjustment $$
Subject
$
$
$
$
$
$
Net % Adjust.
Net $$ Adjust.
Adjusted Price S/F
Adjusted Price Acre
Attributed Weight
Weight Adjusuted Price
Adjusted Range $
Adjusted Mean
Weighted Mean
613 Enterprise 1617 WTC
$
2.25 $
1.99
1.57
$
$
$
$
$
$
$
Superior
-20.00%
(0.45)
Larger
0.00%
Similar
0.00%
Similar
0.00%
Similar
0.00%
Similar
0.00%
-20.00%
(0.45)
1.80
78,346
20.00%
0.36
1.80
1.70
1.75
$
$
$
$
$
$
$
$
$
$
Superior
-20.00%
(0.40)
Larger
0.00%
Inferior
0.00%
Similar
0.00%
Inferior
0.00%
Similar
0.00%
-20.00%
(0.40)
1.59
69,456
5.00%
0.08
14206 Trans
$
2.22
$
$
$
$
$
$
$
$
$
$
Superior
-20.00%
(0.44)
Similar
0.00%
Similar
0.00%
Similar
0.00%
Similar
0.00%
Similar
0.00%
-20.00%
(0.44)
1.78
77,360
20.00%
0.36
14710 Atlanta 4304 Trade Ctr 18729 Metro
$
1.66 $
1.77 $
2.09
$
$
$
$
$
$
$
$
$
$
Subject Size
Subject Value $
Rounded Conclusion $
Similar
0.00%
Larger
0.00%
Similar
0.00%
Superior
-5.00%
(0.08)
Similar
0.00%
Inferior
8.00%
0.13
3.00%
0.05
1.71
74,694
25.00%
0.43
43,560
76,031
76,000
$
$
$
$
$
$
$
$
$
$
Similar
0.00%
Larger
0.00%
Similar
0.00%
Similar
0.00%
Similar
0.00%
Similar
0.00%
0.00%
1.77
77,294
25.00%
0.44
$
$
$
$
$
$
$
$
$
$
Superior
-20.00%
(0.42)
Larger
0.00%
Similar
0.00%
Superior
-5.00%
(0.10)
Superior
0.00%
Similar
0.00%
-25.00%
(0.52)
1.57
68,391
5.00%
0.08
SECTION V.
COST APPROACH
The Cost Approach is based on the principle of substitution, which states that a
prudent buyer would pay no more for a property than the cost to acquire a similar
site, and construct the equivalent improvements without undue delay.1 The Cost
Approach is most useful when applied to properties that are either new or fairly
young, and well maintained. Because depreciation must be estimated, determining
the value by the Cost Approach for older properties is much more subjective, and
less reliable.
The steps required to complete the Cost Approach are listed below.
1)
Determine the Land Value. This was done in the previous section
of this report. First, a determination is made of the appurtenant land (the necessary
minimum land area of the Subject's site that is required in order to support the current
land use and improvements). The amount beyond the appurtenant land is then
identified as being either excess land or surplus land.2 A separate value of any
excess or surplus land is then determined.
2)
Determine the Replacement or Reproduction Cost of existing
improvements. Replacement Cost is the cost to replace the current improvements
with improvements that would provide the same utility, but are not necessarily
identical to the current improvements. Reproduction Cost is the cost to replicate the
improvements as they currently exist. In this report, I have used the Reproduction
Cost determined by using the Segregated Cost methodology.3
3)
Determine the accrued Depreciation. There are three different
kinds of depreciation: Physical Deterioration, both curable and incurable; Functional
Obsolescence, both curable and incurable; and External Obsolescence.
4)
Deduct the accrued Depreciation. The accrued depreciation is
then deducted from the Replacement/Reproduction Cost, to determine the current
depreciated value of the improvements.
5)
Determine the combined value. The combined value is then
determined by adding the value of the appurtenant land to the depreciated value of
the improvements.
6)
Determine the Net Value. The value of any Excess or Surplus
Land, and any other required adjustments (such as the cost to achieve stabilization
1
The Appraisal of Real Estate, page 350.
2
Excess Land is land that can be separated and sold off without hindering the current utility of the
improvements. Surplus Land is land that is more than what is required to support the current improvements,
but are situated in such a manner that makes it unfeasible to sell it separately.
3
Segregated Cost Methodology. ". . . individual unit costs for various building components are applied
to the various subcomponents in the structure. . . . The appraiser computes a unit cost based on the actual
quantity of materials used plus the labor of assembly required for each square foot of area." The Appraisal of
Real Estate, page 375-376.
Section V - Cost Approach - Page 1 of 15
on income producing properties) is added to the Combined Value to determine the
Net Value, the final value conclusion by the Cost Approach.
Reproduction Cost Estimate.
The three parts of the Reproduction Cost are direct costs, indirect costs, and
entrepreneurial profits. The Marshall Swift program calculates all direct costs, and
some indirect costs. A separate determination of the remaining indirect costs must
be made. Then an entrepreneurial profit must be factored into the equation to
determine the final reproduction cost of the improvements.
Direct Costs.
To determine the Direct Costs of the Reproduction Cost estimate, I utilized the
Marshall Swift "Swift Estimator" program.1 The report generated by the Swift
Estimator is included in the Addenda of this appraisal. The table below shows the
contents of this report, organized into the three major areas of construction
(warehouse, office area, and site improvements), summarizing the costs from this
tabulation. The final Reproduction Cost shown below is $32.75 per square foot.
Component Category
Total Warehouse Building Cost
Total Office Area Cost
Total Site Improvement Cost
Total Reproduction Cost
Cost
$ 285,417
$ 24,425
$ 83,107
$ 392,949
$
$
$
$
$$ S/F
23.78
2.04
6.93
32.75
To test the reasonableness of the Swift Estimator costs, I contacted United Steel and
obtained an estimate of what it would cost to have them pre-engineer and ship a
similar warehouse/distribution building.2 United Steel's standard program template
provides for size increments of 10,000 and 15,000 square feet; however, the Subject
is 12,000 square feet. To accommodate this difference, I have generated estimates
for both of the sizes that bracket the Subject, included them in the addenda, and
interpolated the cost for a 12,000 square foot building in a table below.
Additionally, because the Marshall Swift program includes more than the components
provided by the United Steel estimate, I have extracted the Marshall Swift cost for
just the comparable components alone (including labor3), shown in the table below.
The equivalent components equal $95,135, or $7.93 per square foot.
1
Swift Estimator can be seen at the following website: https://www.swiftestimator.com/
2
United Steel provides only the shell building materials for a customer. The customer then provides local
labor to install the building on their property. This additional labor cost is factored in later in this report in order to
make a true comparison.
3
The Marshall Swift Segregated Cost numbers include the estimated labor for the installation of the
components, but the United Steel costs do not. Therefore, in order to reach a true comparison, either the labor
cost must be deducted from the Marshall Swift numbers, or added to the United Steel cost. I have chosen to add
the labor cost to the United Steel estimates.
Marshall Swift Equivalent Components
Frame / Steel, Pre-engineered
Exterior Metal Walls / Steel Frame
Roof / Metal, Preformed Sheets
Garage Doors / 2 overhead
Total of Marshall Swift Components
$
$
$
$
$
Cost
37,800
37,312
18,720
1,303
95,135
$$ S/F
$
3.15
$
3.11
$
1.56
$
0.11
$
7.93
Since the Marshall Swift numbers include labor, but the United Steel estimates do
not, it is necessary to add the estimated labor costs to the United Steel material costs
in order to reach an equivalent comparison. Below is a table that factors in the labor
cost of $3.00 per square foot,1 and determines the United Steel equivalent to the
Marshall Swift number,2 including the interpolation of a 12,000 square foot building
size. The costs with labor are $9.75 per square foot for the 10,000 square foot
building, $9.23 per square foot for the 15,000 square foot building, and an
interpolated $9.54 per square foot for a 12,000 square foot building.
United Steel Building Cost
10,000 s/f Material Cost
12,000 s/f (Interpolated)
15,000 s/f Material Cost
Material
$ 67,479
$ 78,492
$ 93,460
Labor
$ 30,000
$ 36,000
$ 45,000
$
$
$
Total
97,479
114,492
138,460
$
$
$
$$ S/F
9.75
9.54
9.23
The table below shows a side-by-side comparison of the equivalent Marshall Swift
and United Steel costs, showing that the United Steel estimate is somewhat greater
than the Marshall Swift cost. I have chosen to use the more conservative Marshall
Swift cost, as it more accurately reflects market behavior of choosing the lower cost
for comparable products.
Vendor Option
Cost
Marshall Swift Cost
$ 95,135
United Steel (12,000 s/f Interpolated)
$ 114,492
Difference $ 19,357
$$ S/F
$
7.93
$
9.54
$
1.61
% Diff
16.91%
The Direct Costs used for this report, then, are those determined by the Marshall
Swift program, totaling $392,949, as shown in the table on the following page.
1
The labor costs are based on a phone conversation with a staff person at United Steel. He indicated
that the typical labor cost for installing the structure, not counting the labor for other contract work such as
electrical, plumbing, HVAC, etc., is "around $3.00 per square foot." I have estimated the labor cost using this
amount.
2
The interpolated price per square foot for a 12,000 square foot building is determined by the decrease
of per square foot cost between the 10,000 and 15,000 square foot building. This decrease is reduced to a rate
of change per square foot, that is then multiplied by the 2,000 square foot difference between the smaller
building estimate and the Subject size. The resulting difference in price per square foot is then subtracted from
the per square foot cost of the 10,000 square foot estimate.
Marshall Swift Segregated Estimator
Reconstruction by Paul Lorenzen
14416 Export Road, Laredo, Texas
Survey Date: January 27, 2007
Cost as of: February 2007
Component
Warehouse Building
Building Area
12,000
Units
Site Preparation
Foundation / Concrete, Bearing Wall
Floor / Concrete, Elevated Slab
Floor / Hardner & Sealer on concrete
Electrical Service/distribution
Stairs / Concrete & Steel Exterior
Loading Dock / with Roof
Dock Bumpers
Concrete Vehicle Ramp
12,000
12,000
12,000
12,000
12,000
12,000
8,800
12,000
1
1,440
100
2
360
Cost
Total
$
0.22
$
1.66
$
3.15
$
9.31
$
0.64
$
0.81
$
4.24
$
1.56
$ 2,409.05
$
18.12
$
29.90
$ 651.43
$
19.75
$
2,640
$ 19,920
$ 37,800
$ 111,720
$
7,680
$
9,720
$ 37,312
$ 18,720
$
2,409
$ 26,093
$
2,990
$
1,303
$
7,110
$
$
$
$
$
$
$
$
$
$
$
$
$
0.22
1.66
3.15
9.31
0.64
0.81
3.11
1.56
0.20
2.17
0.25
0.11
0.59
$ 285,417
$
23.78
$
$
$
$
$
$
$
$
$
$
$
1,412
935
1,299
4,114
2,565
702
563
279
2,061
7,274
3,222
$
$
$
$
$
$
$
$
$
$
$
0.12
0.08
0.11
0.34
0.21
0.06
0.05
0.02
0.17
0.61
0.27
$
24,425
$
2.04
$
$
$
$
$
$
$
$
$
3,701
12,073
7,213
2,581
10,757
1,682
2,306
2,398
40,396
$
$
$
$
$
$
$
$
$
0.31
1.01
0.60
0.22
0.90
0.14
0.19
0.20
3.37
$
83,107
$
6.93
Total Warehouse Building Cost
$$ S/F
Office Area
Flooring / Vinyl Composition Tile
Ceiling / Suspended Ceiling T-Grid
Ceiling / Acoustical Organic Fiber
Interior Framing
Interior Walls / Wood - Drywall finish
Base Cabinet
Wall Cabinet
Laminated Plastic Countertop
Plumbing / 2 Restrooms
HVAC - Heat Pump
866
866
866
866
368
6
6
6
866
866
866
$
$
$
$
$
$
$
$
$
$
$
1.63
1.08
1.50
4.75
6.97
116.93
93.87
46.55
2.38
8.40
3.72
Total Office Area Cost
Site Improvements
High Curbing
Landscaping
Concrete Landing Pads
Concrete Entry - Gate
Chain Link Fencing
Lighting / High Intensity Sodium/Mercury
Lighting / Light poles (2)
Gate, Chain Link
Paving - Asphalt
380
4,772
1,817
650
4,980
2
40
360
22,318
$
$
$
$
$
$
$
$
$
Total Site Improvement Cost
Total Reproduction Cost
9.74
2.53
3.97
3.97
2.16
841.06
57.66
6.66
1.81
$ 392,949
$ 32.75
Indirect Costs. Indirect Costs include expenditures such as real estate taxes on the land during the
construction period, interest on construction financing, professional fees such as
architectural and engineering fees, and marketing expenses to find a buyer if the
property is for sale or to obtain tenants for a property intended for lease.
The real estate taxes during the construction period are calculated by estimating the
taxes attributable to the land only, and prorating that for the construction period
estimate. Below is a table that shows this calculation using a 90-day construction
period, and the current 2006 tax assessment, resulting in a charge for real estate
taxes of $472.
Tax Estimation
Current Land Assessment
$
Land Value Conclusion
$
Assessment Ratio
Tax Rate per $100
Taxes on Land
$
Construction Period
Taxes during Construction
$
68,390
76,000
89.99%
2.76191
1,889
90 days
472
To estimate the interest expenses during the construction period, I constructed the
table below. I have assumed that the maximum loan would be 70% of the combined
value of land and improvement cost, funded at an average of 50% during the
construction period1. Interest is assumed at 9.0%. The loan terms used are those
typical of commercial banks in South Texas for industrial development. This results
in an interest charge of $3,693.2
Interest Estimate
Land value
$
Hard Costs
$
Total of Land and Hard Cost $
LTV Ratio
Loan Amount Maximum
$
Assume 50% funded
$
Interest rate
Annual Interest
$
Prorate to 90 days
$
76,000
392,949
468,949
70.00%
328,264
164,132
9.00%
14,772
3,693
1
Normal and customary practice of Texas appraisers is to assume that the average balance of a
construction loan is 50% of the total loan approved as draws are taken against the loan over the construction
term.
2
Loan terms are based on personal observation of the lending practices of Laredo National Bank during
my recent tenure as a Commercial Review Appraiser with that bank.
Architectural and professional fees are estimated at 6.5% of the hard costs of the
project.1 Marketing costs are estimated at 4.0% which allocates a real estate broker
commission of 3.0% and 1.0% for other closing expenses, such as escrow fees, and
title insurance. The table below tabulates these soft costs of $45,425. This equals
just less than 12.0% of the hard costs.
Indirect Costs
Real Estate Taxes
Architectural Fees - 6.5%
Marketing Expenses - 4.0%
Interest
Total Indirect Costs
$
$
$
$
$
472
25,542
15,718
3,693
45,425
Entrepreneurial Incentive. This is the amount of profit that a developer expects to receive for
having taken on the development project.2 It is a subjective amount and will vary
from developer to developer and from project to project. The higher the risk of a
given project, the higher the expected profit must be to motivate the developer to
take on that risk. The shorter the time period to complete the development, the
smaller the required incentive needs to be.
To determine the appropriate number to use for Entrepreneurial Incentive, I
interviewed several developers and real estate brokers who work in the Laredo
industrial market. Although the answers varied, the typical response was that the
profit expectation required would be about 10% of the total value of the finished
project.3 If the land costs were $200,000 and the direct and indirect costs total
$800,000, the total cost would be $1,000,000. 10% of this would result in a $100,000
entrepreneurial incentive, or 12.5% of the direct costs. Because the ratio of land to
improvement direct cost will vary, the entrepreneurial profit percentage, based on
only the direct cost without land, will vary, ranging from 10% to 15% or more.
Because the land to improvement ratio on the Subject is about the same as in the
example above, I have used 12.5% as the entrepreneurial incentive rate applied to
only the direct and indirect costs (without land value). The table below shows this
calculation, resulting in an entrepreneurial incentive of $54,797.
1
Architectural fees. Marshall Valuation Service, Section 99, page 2, indicates fees for a project of
$200,000 at 6.7% and $500,000 at 6.4%. Since hard costs on this project are about $400,000, I have
extrapolated a 6.5% rate. Section 1, page 3, indicates that in the Segregated Cost calculations, no architectural
or engineering fees are included when they are included in the "calculator" section.
2
Entrepreneurial Incentive. This is the profit "anticipated" by the developer before the project begins.
"Entrepreneurial Profit" is that actual profit received when the development is completed and sold. The
difference is perspective (before versus after the development). The Entrepreneurial Profit can actually be
mathematically determined because the sale price is determined after completion where Entrepreneurial
Incentive is speculative because the project has not yet commenced (c.f. Appraisal Dictionary).
3
Interview results. For example, Nick Sota, of Finsa Development (800-653-4672), said that they
typically estimate the market value using an income capitalization rate (say 10%) then calculate the capitalization
rate that would result from the total of their hard costs, soft costs and land cost. If the difference in capitalization
rate were at least 1.0% (say 11.0% in our example), then the profit is sufficient. They prefer a 1.5% difference
but would probably accept a 1.0% difference).
Entrepreneurial Incentive
Direct (Hard) Costs
$
Indriect (Soft) Costs
$
Total Improvement Cost
$
Incentive Percentage
$
392,949
45,425
438,374
12.50%
54,797
Total Reproduction Cost. When the above calculations are combined, the total reproduction cost
can be determined. Below is a table that showing a reproduction cost of $493,171.
Reproduction Cost
Direct Cost
$
Indirect Cost
$
$
Total Reproduction Cost $
392,949
45,425
54,797
493,171
Accrued Depreciation Estimate
To determine the accrued depreciation, I have used two different methods. The first
is the "Market Extracted Method," in which I have selected comparable sold
properties with known replacement costs and land values and compared these with
the known sale prices. This results in an aggregate amount of depreciation on each
property. Using these known amounts, and the ages of the property, I have
determined a typical annual rate of depreciation for industrial property in Laredo. The
second method is the "Breakdown Method" in which depreciation is analyzed in five
different categories as actually observed on the Subject property.
Market Extracted Depreciation. In order to determine the rate of depreciation that this market
typically experiences, I have selected a sample of five similar industrial properties in
Northwest Laredo that have sold within the last two years, as shown in the table
below.1
Address
Date of Sale
Sale Price
Land Area (S/F)
Building Area
Land Value
Replacement Cost
Chronological Age
1
14106
Transportation
2/3/2005
$800,000
182,015
21,807
$340,000
$693,785
14
2
8200
San Gabriel
3/10/2005
$600,000
87,120
21,614
$220,000
$567,195
17
3
8680
San Lorenzo
3/10/2005
$450,000
63,155
14,072
$115,000
$428,160
17
1
4
8020-50
San Lorenzo
3/2/2005
$950,000
139,405
36,288
$350,000
$1,263,022
24
5
4601
Modern Lane
2/7/2006
$270,000
44,597
14,884
$80,000
$456,297
25
Depreciation Comparables. Each of these properties was appraised for Laredo National Bank by
appraisers on the LNB approved appraiser panel. The date indicated is the date of the appraisal and the sale
took place within several days of the appraisal dates. The appraisals estimated land value and replacement
cost, these figures have been used in this analysis.
These sales were selected because they are all about the same age or somewhat
older than the Subject property, which has a chronological age of 14 years. In order
to determine the rate of depreciation, I have prepared the table shown below which
estimates the annual rate of depreciation experienced by these properties. After the
table I have explained each of the steps used to determine this rate.
Depreciation Comp #
Sale Price
$
Adjust for
Cash Equiv
$
Conditions of Sale
$
Property Rights
$
Buyer Expenditures
$
Adjusted Sale Price
$
Land Value Calculation
S/F Land
$
Value Land S/F
$
Land Value
$
Land Valu S/F of Bldg
$
Improvement Value
$
Improvement Cost Calculation
S/F Bldg
Cost per S/F Bldg
Cost of Improvements
$
Depreciation
$
Percent Depreciation
Improvement Value
Age
Depreciation per year
1
800,000
$
2
600,000
800,000
$
$
$
$
$
182,015
1.87
340,000
15.59
460,000
$
$
$
$
$
21,807
31.81
693,785 $
233,785 $
33.70%
66.30%
14
2.41%
Low Rate
High Rate
Average Rate
$
3
450,000
600,000
$
$
$
$
$
87,120
2.53
220,000
10.18
380,000
$
$
$
$
$
21,614
26.24
567,195 $
187,195 $
33.00%
67.00%
17
1.94%
$
4
950,000
$
5
270,000
450,000
$
$
$
$
$
950,000
$
$
$
$
$
270,000
63,155
1.82
115,000
8.17
335,000
$
$
$
$
$
139,405
2.51
350,000
9.65
600,000
$
$
$
$
$
44,597
1.79
80,000
5.37
190,000
14,072
36,288
30.43
34.81
428,160 $ 1,263,022 $
93,160 $
663,022 $
21.76%
52.49%
78.24%
47.51%
17
24
1.28%
2.19%
14,884
30.66
456,297
266,297
58.36%
41.64%
25
2.33%
1.28%
2.41%
2.03%
The first step is to arrive at an adjusted price of the property after consideration of the
transaction elements such as cash equivalency, conditions of sale, property rights,
and buyer expenditures that were made immediately following the closing of the sale.
The value of the land is then subtracted to determine the amount of the adjusted
purchase price attributable to the improvements. In the case of Comparable #1, for
example, the land value was $340,000 resulting in an improvement value of
$460,000
The next step is to determine the replacement cost new of the comparable. In the
case of comparable #1, that replacement cost is $693,785. The difference between
the replacement cost and the amount of the sale price allocated to the improvements
equals the total depreciation experienced by that property. This depreciation is
divided by the cost of the improvements to arrive at the percentage of total
depreciation experienced, which then is divided by the age of the property to
determine the annual depreciation rate.
The results indicate a range of 1.28% to 2.33% per year with a mean average of
2.01%. The table below shows the depreciation rates ordered based on the age of
the properties. With the exception of the first property, it seems that the older the
property is, the more rapid is the depreciation, which only seems logical.
This next chart graphically displays this relationship between age of the property and
the rate of depreciation. Five samples are not sufficient data to draw statistically valid
conclusions. However, the graphic display, with the linear regression trend line, will
give the reader a pictorial representation of what the data appear to indicate.
When this trendline is applied to the age of the
subject of 14 years, the conclusion shows in
the table above that the rate of annual
depreciation to be anticipated for the Subject
would be 1.85%. As mentioned above, the
statistical reliability of these calculations when
using such a small sample is very low.1
Therefore, I have rounded the rate to 2.0% to
use for the depreciation schedule.
Age
14
17
17
24
25
Rate
2.41%
1.94%
1.28%
2.19%
2.33%
Subject
14
1.89%
2.50%
2.00%
1.50%
1.00%
y = 0.0139e0.0178x
R2 = 0.1175
0.50%
0.00%
0
5
10
15
20
25
30
Linear Regression Analysis with trend line indicating that the older
properties tend to depreciate at a more rapid rate than younger properties.
1
You will also note that the correlation coefficient (R2) in the chart is only 0.1175. This is a very weak
correlation coefficient as the closer to 1.0 or -1.0 the stronger the relationship between the variable.
Conclusion. The Subject property is 14 years old. The annual rate of depreciation
extracted from the above data is 2.0% per year. This means that the Subject property
will be expected to have depreciated by 28% of its current replacement cost. We
determined that the total reproduction cost1 of the Subject is $493,171. Below is a
table in which I have determined the value of the Subject by this methodology.
Adding the land value to the depreciated improvement value results in a value of
$431,083 by the market extraction methodology.
Market Extracted Depreciation
Reproduction Cost of Subject
$ 493,171
Extracted Rate of Depreciation
2.00%
Age of Subject (years)
14
Total Expected Depreciation %
28.00%
Total Expected Depreciation
$ 138,088
Depreciated Improvement Value
$ 355,083
Land Value
$
76,000
$ 431,083
Value by Market Extracted Method
Breakdown Method. As a more detailed approach to determining depreciation, I have used the
"Breakdown Method" applied to the reproduction cost total. This requires the
depreciation to be divided into three categories: (1) Physical deterioration (curable
and incurable); (2) Functional Obsolescence (curable and incurable); and External
Obsolescence.
Allocation of Cost to Building and Site Improvements. To determine our depreciation schedule
by the Breakdown Method, I need to separate the building improvements from the
site improvements because the site improvements have a different useful life than
does the building structure. Separate depreciation schedules will be applied to the
site improvements.
Because the indirect costs and entrepreneurial incentive apply to the site
improvements as well as the building structure, I have also allocated these costs to
the building structure and site improvements. The table below illustrates this
allocation. The result is that the Building Structure is allocated $388,867 and the Site
Improvements $104,303, which equals the total cost of $493,171. The depreciation
scheduled below will use this allocation.
1
It needs to be noted that the Market Extracted method applies to Replacement Cost not Reproduction
Cost. Since the rate of depreciation is extracted from the market, the cost to replace with equivalent utility is to
be used instead of reproduction cost as we have determined from the Segregated Cost methodology in this
appraisal report. Any difference in results between the two methods of determining depreciation is at least partly
attributable to this difference.
Allocation between Building Improvements and Site Improvements
Building Components
Bldg
Site
%
Total
%
Warehouse Structure
$ 285,417
72.63%
$ 285,417
Office Area
$ 24,425
6.22%
$ 24,425
Site Improvements
$
83,107
21.15% $ 83,107
Total Direct Costs
$ 309,842
78.85% $
83,107
21.15% $ 392,949
Indirect Costs
Total Costs
$ 35,818
$ 43,207
$ 388,867
$
$
$
9,607
11,589
104,303
%
72.63%
6.22%
21.15%
100.00%
$ 45,425
$ 54,797
$ 493,171
Physical Deterioration. Physical deterioration is both curable and incurable.1 Curable deterioration
is deferred maintenance2 which is economically feasible to repair. In Section II of this
report I identified and described six items of deferred maintenance and supplied
information regarding the cost to cure in the Addenda and footnotes. Below I have
included a table that summarizes these six items. The total cost to cure these items
is $22,795. These items are curable physical deterioration. They are broken out
to show the deferred maintenance on the building structure and on the site
improvements because that division will be used later in this analysis.
Flooring in Office
$
Moisture Penetration - Back Wall
$
Asphalt Parking Lot
$
Fence Repair
$
Loading Dock Bumpers
$
Roof Leak
$
Total Deferred Maintenance $
1,295
500
2,500
17,400
600
500
22,795
Bldg
$ 1,295
$
500
Site
$ 2,500
$ 17,400
$
600
$
500
$ 2,895
$ 19,900
The next step is to identify the Short-Lived3 and Long-Lived4 items that can suffer
physical deterioration. There is a series of four tables below. The first table has
assembled the short-lived items from the segregated cost schedule above that apply
to the building structure only. The first column identifies the component of cost.
The second column gives the useful life of this component based on the Marshall
Valuation Service estimates,5 followed by the cost taken from the segregated cost
1
Curable Depreciation. "Items of physical deterioration or functional obsolescence that are
economically feasible to cure. Economic feasibility is indicated if the cost to cure is equal to or less than the
anticipated increase in the value of the property." Dictionary of Real Estate Appraisal.
2
Deferred Maintenance. Curable, physical deterioration that should be corrected immediately, although
work has not commenced; denotes the need for immediate expenditures, but does not necessarily suggest
inadequate maintenance in the past." Dictionary of Real Estate Appraisal.
3
Short-Lived Item. "A building component with an expected remaining economic life that is shorter than
the remaining economic life of the entire structure." Dictionary of Real Estate Appraisal.
4
Long-Lived Item. "A building component with an expected remaining economic life that is the same as
the remaining economic life of the entire structure." Dictionary of Real Estate Appraisal.
5
Useful Life. Marshall valuation Service, Section 97, Pages 12-13. For those items not listed on these
pages, I have used my personal judgment in estimating useful life.
table. To each of these items, I have factored the prorata amount of the indirect
costs and entrepreneurial incentive determined above. This factor is 25.5% of the
direct costs. My estimate of the effective age of each item is then listed followed by
the amount of depreciation allocated to that item. I have used the Age-Life method1
of determining this depreciation amount. Those items that are included in the
deferred maintenance list above are given an effective age of zero as they would be
new if they were cured, thus would have no depreciation.
The second table has assembled the long-lived items. Since, by definition, long-lived
items have a remaining useful life equal to or longer than the basic building structure,
I have assigned a 35 year useful life to each of the items as that is the estimate of
useful life in the Marshall Valuation Service. The same ratio of indirect cost and
entrepreneurial incentive is factored to each component. The current effective age
and depreciation amount are in the following columns.
From these tables it can be seen that the total depreciation on the short-lived items is
$10,682 and on the long-lived items is $85,725.
Life
Building Short-Lived Items
Flooring / Vinyl Composition Tile
Interior Walls / Wood - Drywall finish
Dock Bumpers
Ceiling / Suspended Ceiling T-Grid
Ceiling / Acoustical Organic Fiber
Base Cabinet
Wall Cabinet
Plumbing / 2 Restrooms
HVAC - Heat Pump
Total Short-Lived
7
18
10
8
8
15
15
10
17
18
5
Cost
$
$
$
$
$
$
$
$
$
$
$
$
1,412
2,565
2,990
935
1,299
702
563
279
2,061
3,222
7,274
23,302
Soft Cost &
Entr Incent
$
$
$
$
$
$
$
$
$
$
$
$
1
1,772
3,219
3,753
1,173
1,630
881
707
350
2,587
4,044
9,129
29,245
Effective
Age
0
10
0
3
3
3
3
3
10
10
2
Depreciation
$
$
$
$
$
$
$
$
$
$
$
$
Age-Life Method. "A method of estimating depreciation in which the ratio between the effective age of
a building and its total economic life is applied to the current cost of the improvements to obtain a lump-sum
deduction; also known as the economic age-life method." Dictionary of Real Estate Appraisal.
1,788
440
611
176
141
105
1,522
2,247
3,652
10,682
Life
Building Long-Lived Items
Site Preparation
Foundation / Concrete, Bearing Wall
Floor / Concrete, Elevated Slab
Floor / Hardner & Sealer on concrete
Stairs / Concrete & Steel Exterior
Loading Dock / with Roof
Concrete Vehicle Ramp
Interior Framing
High Curbing
Concrete Landing Pads
Concrete Entry - Gate
Total Short-Lived
35
35
35
35
35
35
35
35
35
35
35
35
35
35
35
35
35
$
$
$
$
Cost
Soft Cost &
Entr Incent
2640
19920
37800
111720
7680
9720
37312
18720
2409
26093
1303
7110
4114
0
3,701
7,213
2,581
300,036
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,313
25,001
47,441
140,214
9,639
12,199
46,828
23,495
3,023
32,748
1,635
8,923
5,163
4,645
9,053
3,239
376,560
Effective
Age
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
Depreciation
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
754
5,691
10,800
31,920
2,194
2,777
10,661
5,349
688
7,455
372
2,031
1,175
1,057
2,061
737
85,725
The next table shows the same calculations for the site improvements. The site
improvements, of course, have much shorter useful lives. Again, those items that are
listed in the deferred maintenance list above are given a zero effective age as they
are assumed to be cured. The total depreciation of the site improvements is $19,323.
Life
Site Short-Lived Items
Landscaping
Chain Link Fencing
Lighting / High Intensity Sodium/Mercury
Lighting / Light poles (2)
Gate, Chain Link
Paving - Asphalt - Subbase
Paving - Asphalt
Total Short-Lived
10
15
10
10
8
25
10
Cost
$
$
$
$
$
$
$
$
12,073
10,757
1,682
2,306
2,398
16,158
24,238
69,612
Soft Cost &
Entr Incent
$
$
$
$
$
$
$
$
15,152
13,501
2,111
2,894
3,010
20,280
30,419
87,367
Effective
Age
9
0
5
5
0
10
0
Depreciation
$
$
$
$
$
$
$
$
Finally, I have prepared a table that assembles the totals of the above three tables.
The total of the Cost column balances to the total on the segregated cost table
above.1 The total depreciation of the short-lived and long-lived items, after
accounting for the curable physical items, is $115,730.
1
The difference of $1.00 is due to rounding in the Excel spreadsheets.
10,866
841
1,153
6,463
19,323
Short-Lived & Long-Lived Items Combined
Building Short-Lived Items
Site Short-Lived Items
Building Long-Lived Items
Totals
$
$
$
$
Cost
Soft Cost &
Entr Incent
Depreciation
23,302
69,612
300,036
392,950
$
$
$
$
$
$
$
$
29,245
87,367
376,560
493,172
10,682
19,323
85,725
115,730
Functional Obsolescence. Functional obsolescence is an element of depreciation resulting from
deficiencies or superadequacies in the structure. Functional obsolescence is divided
into curable and incurable obsolescence, based on whether the value added is equal
to or greater than the cost to cure. In the Highest & Best Use analysis section, I
determined that the improvements of the Subject are well suited to its Highest & Best
use and that the site seems to be fully developed. The interior of the warehouse or
the office area could be modified for the desires of a particular user but those
modifications would not necessarily change the market value of the Subject, nor
increase its utility to the general buying public.
Therefore, it is my conclusion that there is no measurable functional obsolescence,
either curable or incurable, on the Subject.
External Obsolescence. This aspect of depreciation is a defect, usually incurable, caused by
negative influences outside a site and generally incurable on the part of the owner,
landlord, or tenant.1 As observed in the market analysis section, the Subject is well
located among a homogeneous neighborhood of light industrial distribution property.
Typically, external obsolescence can be measured by loss of rents. As can be seen
in the analysis of rent comparables in Section 7 of this appraisal, the Subject can
command rent equivalent to other properties in the immediate area and, after
appropriate adjustments, comparable to similar properties in the newer industrial
parks to the East of the subject.
Therefore, it is my conclusion that there is no measurable external obsolescence on
the Subject property.
Tabulation of Value by Cost Approach
The final calculation to reach a value conclusion by the Cost Approach is to assemble
the data into a Cost Approach Table. The following page provides this table with the
conclusions reached in each of the steps above into a final conclusion of value by the
Cost Approach.
I have used the calculations from the Breakdown Method in this table. When the
depreciated value of the improvements, including site improvements, is added to the
site value of $76,000, the total value is $430,646. I have rounded this to $430,000.
It is interesting to note that the depreciation using the breakdown method and the
depreciation using the market extracted method are only $437 apart. These two
methods of determining depreciation on the Subject seem to confirm each other,
giving more credibility to the final conclusion of value.
1
External obsolescence. Dictionary of Real Estate Appraisal.
Cost Approach Table
Reproduction or Replacement Cost
Direct Costs
Indirect Costs
$ 392,949
$ 45,425
$ 54,797
TOTAL COST
$
493,171
$
138,525
Depreciated Value of Improvements
$
354,646
Site Value
$
76,000
Value of Excess / Surplus Land
$
-
Depreciation
Curable Physical Deterioration - Structure
Curable Physical Deterioration - Site Improvements
Total Physical Deterioration
Incurable Physical Deterioration
Short-lived items - Structure
Long-lived items - Structure
Short-lived items - Site Improvements
TOTAL PHYSICAL DETERIORATION
Curable Functional Obsolescence
Deficiency - addition
Deficiency -- substitution
Superadequacy
TOTAL CURABLE FUNCTIONAL OBSOLESCENCE
Incurable Functional Obsolescense
Deficiency
Superadequacy
TOTAL INCURABLE FUNCTIONAL OBSOLESCENCE
Total External Obsolescence
TOTAL DEPRECIATION
$
2,895
$ 19,900
$ 22,795
$ 10,682
$ 85,725
$ 19,323
$ 115,730
$
$
$
$
$
TOTAL INDICATED VALUE
Other Adjustments
$
-
$
$
-
-
$
$
ROUNDED FINAL VALUE
$
430,646
430,000
SECTION VI.
SALES COMPARISON APPROACH
The Sales Comparison Approach is based on the principle of substitution which holds
that the value of a property tends to be set by the price that would be paid to acquire
a substitute property of similar utility and desirability within a reasonable amount of
time.1 In this approach, the appraiser identifies properties similar to the Subject, then
makes adjustments to the sale price of the other properties (comparables) removing
the differences between the Subject and the comparable properties until the
comparables are reasonably equivalent to the Subject. The adjusted prices of the
comparable properties are then applied to the Subject to determine the value of the
Subject by comparison.
The steps involved in this approach are
(1)
Identify and analyze sales of similar properties in the same or similar
locations.
(2)
Determine the changes or adjustments to the comparable properties that
will eliminate or minimize the differences between the Subject and the
comparables.
(3)
Create an "Adjustment Grid" to display the comparables and the Subject
side-by-side to enable a clear presentation of the similarities and differences.
(4)
Reach a conclusion regarding the price per unit of comparison (usually per
square foot in the case of improved commercial or industrial property).
(5)
Apply that value for the unit of comparison to the Subject to reach a value
conclusion.
Improved Sale Comparables.
In the addenda you will find an improved sales map showing each of the sales used
below followed by a complete description and photo of each improved sale. The
sales are assembled into the following table for quick review.
Sale #
1
2
3
4
5
1
Address
14411 Import Rd, Laredo, Texas
14418 Industry, Laredo, Texas
Land Area
43,560
43,560
43,560
55,548
43,560
Bldg
Size
11,353
12,336
12,276
16,276
12,391
Sale Price
$ 335,000
$ 310,000
$ 300,000
$ 400,000
$ 431,500
Substitution. The Appraisal of Real Estate, pg 418.
Section VI - Sales Comparison Approach - Page 1 of 8
$
$
$
$
$
$ S/F
29.51
25.13
24.44
24.58
34.82
Date
06/10/02
04/07/06
06/20/06
06/20/06
01/16/07
Improved Sales Analysis.
The analysis of the individual sales, and their comparison to the Subject, will proceed
in two levels1. The first level will address items that have to do with market
conditions or the sales transaction between buyer and seller. Adjustments in this
level are applied sequentially and have the effect of compounding the changes until
an adjusted price is reached which has considered the market and sales transaction
issues. The second level considers property specific features such as location,
physical, economic, use, and non-realty components (if any), of the comparable
property. These adjustments are aggregated together before being applied to the
price determined in the first level.
Not all items of comparison can be quantified from market extracted data. Therefore
some comparison items will have a "qualitative" adjustment noted. Although not
resulting in an actual number, these qualitative adjustments will guide us in
determining how to treat the various sales when it comes to making our final
conclusion of value.
Following the discussion of the adjustments, you will find a table. In the table, each
of the adjustment features have separate fields for a qualitative and a quantitative
differences. In those cases where market support cannot be found for a quantitative
adjustment, only a qualitative adjustment will be noted without a change in value.
The final value conclusion will consider these qualitative comments even though they
have not made a numeric change in the price of the comparable sale.
First Level Adjustments.
Property rights conveyed. This adjustment is to account for differences in property
rights such as the difference between Fee Simple and Leased Fee. It also accounts
for such things as partial interests sold rather than undivided interest. The Subject is
owner-occupied and the ownership is Fee Simple. In the case of the comparables,
three of the comparables were occupied by tenants at the time of sale -- #2, #3, and
#4. The tenant in comparable #4 told me in a personal interview that they were on a
month to month rental agreement and had been at the time of sale. Thus, there was
no Leased Fee to address.
Comparables #2 and #3 were under lease for a term of more than a year at the time
of sale. Comparable #2 has a 3 year lease that began two months before the sale
closed and is a strange situation where the landlord occupies a small office in the loft
above the tenant's office area. Conversation with the tenant indicated that this is a
"less than arms-length" relationship. It appears that the lease arrangement and
above market rental rate appear to confirm this. Therefore, I have elected to treat
this sale as a Fee Simple and disregard the Leased Fee Interest as having an impact
on the sale price. No adjustment is made for this Leased Fee transaction.
Comparable #3, on the other hand, is a long term lease in what appears to be an
arms-length transaction with a tenant who has occupied the space since 2000. The
rent is $3,750 per month which is about $.31 per square foot per month. This is
about 10% below the market rents as determined in the Income Approach in Section
7. Since the comparable property is virtually identical to the Subject, the market rents
for this comparable should be the same as the Subject. It is unknown what the
1
Appraisal of Real Estate, pgs 442-446.
remaining term of the lease is but the tenant, Syntranet, is a large corporate tenant
and is more likely to have a long term lease than a smaller local tenant would have. I
have assumed that the remaining term would be three years, which would be typical
for smaller properties in Laredo. This would mean that the current income stream at
the time of sale would be about $420 per month below market. This deficiency over
36 months would have a net present value of about $13,000. This equals 4.4% of
the sale price. Therefore, I have adjusted this sale up by 4.0% to equate a Fee
Simple interest after adjusting the existing leasehold interest.
Financing terms. This adjustment accounts for financing terms that are different
from the prevailing market financing terms and provisions. Seller financing often
includes interest that is lower than financial institutions charge to motivate a buyer to
close a sale. Sellers also often take a lower down payment. These softer terms
often affect the stated sale price, and adjustments are necessary to bring the price
back to level that would equate to a market transaction. This is known as
determining the "cash equivalency" of a transaction. All of the comparable sales
resulted in cash to the seller. No adjustments were required for this item.
Conditions of sale. This factor involves such things as non-typical motivations on the
part of the buyer or seller to enter into the transaction. A seller under duress or a
buyer who has no alternative but to buy the property to expand his business, for
example, would create non-typical conditions of sale. Since the definition of Market
Value used in this appraisal assumes that the buyer and seller are well informed and
typically motivated, an adjustment would be needed if this were not the case.
Comparable #1, #2 and #5 were all arms-length with typical buyer and seller
motivations.
Comparables #3 and #4, however, were transactions between the same buyer and
seller. According to the real estate broker who handled the sale, the seller was very
motivated to sell quickly and the buyer is an investor who owns many industrial rental
properties in Laredo. Because the seller wanted a quick sale, the broker contacted
this investor and the transaction was consummated very quickly. According to the
broker, the discount from market value was, in her opinion, about 20%. Therefore, it
is appropriate to use a positive 25% adjustment to both of these sales.1
Market conditions. This adjustment reflects changes in the market during the time
does not explain the changes in the market. In Section 4 above I reached a
conclusion that the industrial land market has been increasing at a rate of about 6.0%
per year. I have included an exhibit in the Addenda labeled "Time Adjustment Test
- Industrial Parks in Laredo." I have applied the same time adjustment of 5.0% per
year to the improved sales comparables.
To further test the time adjustment, I have used a paired sale analysis of the same
property. 14409 Import Road sold in June 2002 for $365,000. It sold again in
January 2007 for $431,500. The table below illustrates this paired sale analysis. The
gross increase in price was $66,500, or 18.22%. This results in an annual rate of
increase of 3.90%. This is less than the 6.0% found in the analysis of land sales but
justifies the more conservative time adjustment rate of 5.0%.
1
25% Adjustment. It is appropriate to use this rate because a 20% discount is equal in amount to a
25% increase. ($100 minus 20% = $80; $80 plus 25% = $100)
Paired Sale Analysis
14409 Import Rd
Sale Date
06/10/02
Sales Prices
$ 365,000 $
Gross Price Increase
$
Gross Percent Increase
Annual Rate of Increase
01/16/07
431,500
66,500
18.22%
3.90%
Buyer Expenditures. Money spent by the buyer immediately following the purchase
to cure a problem or make the property usable needs to be accounted for in the
adjustments. If a buyer pays for an expense that would typically be a seller expense,
such as a real estate listing commission typically paid by the seller, this expense
should be added to the sales price to determine the true price paid by the buyer for
the property. In the case of the comparable sales, there does not appear to be any
buyer expenditures. No adjustment is made for Buyer Expenditures.
Second Level Adjustments.
Location. Location of land is a very important component of value determination. All
five of the comparable sales are in the same industrial park and are within two blocks
of the Subject. All of them share the same location features, so no adjustment is
needed for this item.
Size. Generally speaking, with all other things being equal, a larger property will sell
for a lower price per unit than a smaller parcel. A rule of thumb that appraisers often
use is that for each time the size of the comparable property doubles compared to
the Subject, the price per unit will drop about 10%. If the size of the comparable is
half the size of the Subject, the price per unit will increase about 10%. In the case of
the comparables used, the sizes are quite uniform. Comparable #4 is the only one
with any significant size difference, at 16,276 square feet. I have included
appropriate size adjustments but because the size differences are so small the
amount of adjustments are negligible.
Corner Influence. Corner parcels generally sell for more than interior parcels
because of the additional frontage afforded by the additional street frontage. It often
provides additional access and visibility for businesses that need that visibility. None
of the comparables are corner parcels. All of them are interior. Comparable #4 is the
second parcel from the end of Import. However, Atlanta Drive ends at the
intersection with Import so even it if were on the actual corner, it would not have any
corner influence value as there is no additional frontage created by the corner. No
adjustment is made for this item.
Rail Service. Neither the Subject nor any of the sales have rail service. No
adjustments are necessary for this feature and I have not included it on the grid.
Office Ratio. The amount of office space included in an office/warehouse structure
affects its value and utility. The comparables all have close to the same percentage
of office area. They range from 5.22% to 10.57%. I have used the Marshall Swift
cost for the office components of $28.00 per square foot of office area as an
adjustment rate. The formula that I have used is illustrated in the table below. I have
first determined the percent of office in the comparable property. I then find the
difference, positive or negative, between the comparable and Subject, which is
7.22%. This difference is multiplied by the total square footage of the comparable to
arrive at the extra square footage of office which is then multiplied by the $28 per
square foot cost to arrive at the additional value. This cost is divided by the
comparable sale price to determine the percentage which is then applied as the
adjustment on the adjustment grid for that feature. All of the comparables are
adjusted by this formula.
Step
Comp #1
Office Ratio
10.57%
Difference in Office Ratio
3.35%
Square Feet Difference
380.69
Cost of the Extra Office $
10,659
Cost as Percent of Sale Price
3.18%
Zoning. All sales, and the Subject, were zoned "M-1" so no adjustment was
necessary for this feature.
Access. All of the sales, and the Subject, have only one side of the parcel with
access for ingress and egress. Therefore, the access is no different on these
properties, and I have not included access as a component on the adjustment grid.
Frontage. The amount of street frontage on a parcel will often make a difference in
the value. All of the properties have essentially the same frontage dimensions
because they are part of a standard subdivision. No adjustment is made on the grid
for any of the sales for frontage.
Utilities. All sales are in developed industrial parks where all utilities are available.
No adjustments are necessary for this feature.
Flood Zone. All of the sales, and the Subject, are in Flood Zone C or Flood Zone X,
neither of which are indicative of flood hazards. No adjustments are necessary for
this feature.
Topography/soil. All of the sales, and the Subject, have relatively level topography
as well as equivalent soil conditions. No adjustment is necessary and I have not
included this item on the grid.
Improved Sales Grid.
The last two pages in this Section contain the Improved Sales Comparable Grid in
which the above described comparisons and adjustments are compiled. The first
page shows the adjustments for the transaction related items and the second page
carries that forward and includes the property related items.
Reconciliation of Improved Sale Value.
The adjusted prices of the five comparables range from $26.29 to $35.09 per square
foot. The greatest amount of adjustment was required on comparables #3 and #4
because of their discounted price and leased fee ownership. Comparable #1 had a
substantial time adjustment because it is nearly five years old. Comparable #5 is
very recent, closing in the same month as the effective date of this appraisal. All of
the comparables are very similar and require very little adjustment on the property
characteristics.
Because of the minimal adjustments required and the very recent date of closing, I
have relied most heavily on comparable #5, at $34.11 per square foot.
Comparable #2 has an unusual leased fee structure and some unanswered
questions. The tenant, an apparently unrelated party, began the lease two months
before closing of the sale and then the landlord moved in and shares office space.
Because of this atypical situation, I have given the least weight to comparable #2. It
does not seem to pass the "smell test."
Thus, the final conclusion of value for the Subject is $33.17 per square foot, or
$398,005, which I have rounded to $400,000.
Potential Gross Income Multiplier Analysis.
There are a couple of other analysis techniques that are often included in the Sales
Comparison Approach: the Potential Gross Income Multiplier (PGIM) and the
Effective Gross Income Multiplier (EGIM). The difference between these two is that
the second considers the impact of a vacancy factor. Older appraisal textbooks1
suggest that these techniques should be used in the Sales Comparison Approach
while the more recent thought is that, because these are based on the rental income
stream, they are more appropriately handled in the Income Section. I agree with the
latter approach so will discuss these techniques in the Income Approach section
below.
Deferred Maintenance. In the Cost Approach, I identified deferred maintenance (curable physical
deterioration) in the amount of $22,795. The comparable properties were all
reportedly in "average" condition. None were in "like new" condition and all have
some amounts of maintenance required. Based on my observation of the competing
properties in the immediate neighborhood, the Subject is considered in "average"
condition even with the deferred maintenance present. The presence of these items
of deferred maintenance does not make the Subject less attractive than competing
properties.
The first test of whether physical deterioration is curable is whether the cure will
result in a value increment equal to or greater than the expenditure, and this test is
not met in this case. However, there is a second test, which successfully applies to
the Subject. That is "if spending the money to cure the item will not result in a value
increment equal to or greater than the expenditure but will allow other existing items
to maintain their value, then the item is normally considered curable."2 It Is my
opinion that this applies to the Subject. Thus, I have not made an adjustment to the
value conclusion reducing the value by the cost to cure the deferred maintenance.
1
For example, The ninth edition of The Appraisal of Real Estate, published in 1987, page 336-7,
discussed this methodology in the Sales Comparison Approach chapters. The twelfth edition of the same book,
published in 2001, discussed this methodology on pages 546-7, in the Income Approach chapters.
2
The Appraisal of Real Estate, pg. 398.
Comparable Improved Sales Adjustment Grid
Level 1 - Transaction Adjustments
Sale #
Subject
Date of Sale
Months since Sale
Price
Size
12,000
Price per Square Foot
Transaction Adjustments
Property Rights
Fee Simple
Adjustment %
Adjustment $$
Adjusted Price
Financing
Cash
Adjustment %
Adjustment $$
Adjusted Price
Conditions of Sale
Arms-Length
Adjustment %
Adjustment $$
Adjusted Price
Market Conditions
N/A
Adjustment %
Adjustment $$
Adjusted Price
Buyer Expenditures
N/A
Adjustment %
Adjustment $$
Adjusted Price
Transaction Adjusted Prices
14411 Import 14418 Industry 14416 Import
14403 Import
14409 Import
6/10/2002
4/7/2006
6/20/2006
6/20/2006
1/16/2007
56
10
7
7
0
$
335,000 $
310,000 $
300,000 $
400,000 $
431,500
11,353
12,336
12,276
16,276
12,391
$
29.51 $
25.13 $
24.44 $
24.58 $
34.82
Fee Simple
0.00%
$
$
29.51
Cash
0.00%
$
$
29.51
Arms-Length
0.00%
$
$
29.51
56 months
23.50%
$
6.93
$
36.44
None
0.00%
$
$
36.44
$
413,725
Leased Fee
0.00%
$
$
25.13
Cash
0.00%
$
$
25.13
Arms-Length
0.00%
$
$
25.13
10 months
4.10%
$
1.03
$
26.16
None
0.00%
$
$
26.16
322,701
$
Leased Fee
4.00%
$
0.98
$
25.42
Cash
0.00%
$
$
25.42
Sale Discount
25.00%
$
6.35
$
31.77
7 months
3.07%
$
0.98
$
32.74
None
0.00%
$
$
32.74
$
401,971
Fee Simple
0.00%
$
$
24.58
Cash
0.00%
$
$
24.58
Sale Discount
25.00%
$
6.14
$
30.72
7 months
3.07%
$
0.94
$
31.66
None
0.00%
$
$
31.66
$
515,347
Fee Simple
0.00%
$
$
34.82
Cash
0.00%
$
$
34.82
Arms-Length
0.00%
$
$
34.82
0 months
0.00%
$
$
34.82
None
0.00%
$
$
34.82
$
431,500
Comparable Improved Sales Adjustment Grid
Level 2 - Property Adjustments
Sale #
Subject
Adjusted Price S/F
Property Adjustments
Location
N/A
Adjustment %
Adjustment $$
Size
12,000 sf
Adjustment %
Adjustment $$
Corner Influence
Inside
Adjustment %
Parcel
Adjustment $$
Rail Service
None
Adjustment %
Adjustment $$
Zoning
M-1
Adjustment %
Adjustment $$
Office Ratio
7.22%
Adjustment %
office
Adjustment $$
Level 2 Net % Adjust.
Level 2 Net $$ Adjust.
Adjusted Price S/F
Attributed Weight
Weight Adjusuted Price
Adjusted Range $
Adjusted Mean
Weighted Mean
26.29
14411 Import
$
36.44
$
$
$
$
$
$
$
$
$
$
$
$
Similar
0.00%
11,353
-0.54%
(0.20)
Inside
0.00%
None
0.00%
M-1
0.00%
10.57%
-3.18%
(1.16)
-3.72%
(1.36)
35.09
20.00%
7.02
35.09
32.27
33.17
14418 Industry
$
26.16
$
$
$
$
$
$
$
$
$
Similar
0.00%
12,336
0.14%
0.04
Inside
0.00%
None
0.00%
M-1
0.00%
6.89%
0.36%
0.10
0.50%
0.13
26.29
10.00%
2.63
14416 Import
$
32.74
$
$
$
$
$
$
$
$
$
Similar
0.00%
12,276
0.12%
0.04
Inside
0.00%
None
0.00%
M-1
0.00%
6.92%
0.34%
0.11
0.45%
0.15
32.89
15.00%
4.93
14403 Import
$
31.66
$
$
$
$
$
$
$
$
$
Subject Size
Subject Value $
Rounded Conclusion $
Similar
0.00%
16,276
1.78%
0.56
Inside
0.00%
None
0.00%
M-1
0.00%
5.22%
2.27%
0.72
4.05%
1.28
32.95
15.00%
4.94
14409 Import
$
34.82
$
$
$
$
$
$
$
$
$
Similar
0.00%
12,391
0.16%
0.06
Inside
0.00%
None
0.00%
M-1
0.00%
9.96%
-2.20%
(0.77)
-2.04%
(0.71)
34.11
40.00%
13.65
12,000 Square Feet
398,005
400,000
SECTION VII.
INCOME APPROACH
The Income Approach is based on the principles of Anticipation1 and Change2. Since
buyers of income producing properties are buying an "income stream", as much as
"bricks & mortar," the appraiser must estimate and project an income stream that can
be quantified and measured. A value can then be attached to that projected income
stream. There are two basic approaches to performing this task: Direct
Capitalization and Yield Capitalization3.
Direct Capitalization. This is a method "used to convert an estimate of a single
year's income expectancy into an indication of value in one direct step, either by
dividing the income estimate by an appropriate rate or by multiplying the income
estimate by an appropriate factor."4 When an income producing property is existing
and has been stabilized, so that the current year's economic performance is at a level
that is typical of a stable real estate market for that kind of property, this method is
most appropriate. If an existing property is owner-occupied but is in a market that is
relatively stabilized, this method would be appropriate to determine the "potential"
income stream to an investor who would buy the property and lease it to a tenant for
the rental income.
Yield Capitalization5. This method is a "procedure in which a discount rate is
applied to a set of projected income streams and a reversion. The analyst specifies
the quantity, variability, timing, and duration of the income streams as well as the
quantity and timing of the reversion and discounts each to its present value at a
specified yield rate."6 This method is most appropriate to use when a property is
proposed and improvements do not yet exist. The appraiser must then project the
time it will take the property to achieve stabilization; estimate the absorption process
during which the leasing of the property will be accomplished, or in the case of a
subdivision, the process of sell-out of the individual lots; estimate income and
expenses during the process of reaching stabilization; then determine the Present
Value of the cash flows by discounting them at a market rate of return to determine
the value of the property.
This method is also appropriate in the case of an improved rental property, such as a
multi-tenant office building or apartment building, if its current occupancy and rental
performance is substandard for a market where supply and demand is in equilibrium.
In that case, the appraiser must estimate the time and cost to bring the property to a
1
Anticipation. "The perception that value is created by the expectation of benefits to be derived in the
future." Appraisal of Real Estate, pgs 35.
2
Change. "The result of the cause and effect relationship among the forces that influence real property
value. Appraisal of Real Estate, pgs 35.
3
4
Yield Capitalization is also sometimes referred to as "Discounted Cash Flow Analysis."
Direct Capitalization. The Dictionary of Real Estate Appraisal.
5
Yield Capitalization. "The capitalization method used to convert future benefits into present value by
discounting each future benefit at an appropriate yield rate or by developing an overall rate that explicitly reflects
the investment's income pattern, value change, and yield rate. The Dictionary of Real Estate Appraisal.
6
Discounted Cash Flow Analysis. The Dictionary of Real Estate Appraisal.
Section VII - Income Approach - Page 1 of 16
condition that is "at par with" the surrounding stabilized market for that type of
property. The "As Is" value of the property is then the Present Value of the cash
flows after accounting for the time and cost (lost revenue and extra expense)
required to reach stabilization. The "Prospective Value"1 would be the value at the
end of the construction / absorption period when the property is stabilized.
A third example of when Discounted Cash Flow Analysis is appropriate is in the case
of an existing property that requires renovation/remodeling, or where there is an
addition proposed to expand the existing improvements. Again, the construction
period and absorption period process must be analyzed and the income stream
discounted to a Present Value to determine the market value of the property in its "As
Is" condition.
In the case of the Subject of this appraisal, the property is a single-tenant owneroccupied property. The industrial market is very strong and one could even say that
demand exceeds the supply of improved industrial property at this time. Therefore, it
is most appropriate to use the Direct Capitalization method for this appraisal.
Direct Capitalization Process.
The steps involved in this approach are
(1)
Determine the Income Potential of the property. This is done by selecting
comparable properties that have recently rented to tenants, analyze the
lease terms, the character and condition of the property, and use this
information to determine a market rent level for the Subject property. Using
this market rent conclusion, and allowing for a market extracted vacancy
rate, the Effective Gross Income (EGI) is estimated for the Subject.
(2)
Determine the Operating Expenses that would be anticipated during the first
year of operation following the effective date of the appraisal. This is done
by analysis of the Subject operating history, if available, examining the
expense history of similar properties in the market (preferably that have
recently sold), and consulting reports of surveys that have been conducted
that provide average operating experiences of similar property (preferably in
the market where the Subject is located).
(3)
Project a Net Operating Income for the first year of operation following the
effective date of the appraisal, using the income and expense Proforma
created in steps (1) and (2) above.
(4)
Determine an appropriate Overall Capitalization Rate by analyzing
comparable sales where operating income and expenses are known2, by
consulting reports of surveys or published reports that provide market
1
Prospective Value. "A forecast of the value expected at a specified future date. A prospective value
opinion is most frequently sought in connection with real estate projects that are proposed, under construction, or
under conversion to a new use, or those that have not achieved sellout or a stabilized level of long-term
occupancy at the time the appraisal report is written." The Dictionary of Real Estate Appraisal.
2
Comparable Sale Proforma. "Sometimes income and expense data for income-producing properties
is unobtainable. If data on a particular sale is unavailable, assigning rents and expenses 'based on market
parameters' may be improper, especially for properties with existing leases." Appraisal of Real Estate, pgs
424.
extracted rates for the appropriate property type, and discussions with
market participants such as investors or real estate brokers.
(5)
Apply the selected Overall Capitalization Rate to the estimated Net
Operating Income to determine a value for the Subject.
Market Rent Determination.
To determine the market rents for the Subject, I have identified six comparable
properties that have had recent leases executed. Two of these rent comparables are
located in the same industrial park as the Subject; Two are in the InterAmerica park
immediately South of the Subject and two are located the Killam Industrial Park, to
the Southeast of the subject, which is a much newer park with higher quality
buildings. Below is a table with these rent comparable properties.
Comp #
1
2
3
4
5
6
Address
14418 Industry Ave, Laredo, Texas
14408 Export, Laredo, Texas
618 Enterprise St., #2, Laredo, Texas
618 Enterprise St., #4-5, Laredo, Texas
8414 El Gato, Laredo, Texas
11903 Auburn, Laredo, Texas
Mo Rent
$
5,000
$
4,000
$
3,000
$
6,000
$ 22,627
$
5,685
GLA
12,336
12,488
10,000
21,000
59,544
14,960
$
$
$
$
$
$
S/F Yr
4.86
3.84
3.60
3.43
4.56
4.56
Terms
Gross
Gross
Gross
Gross
Gross
Gross
Each of these rent comparables has a complete write up in the Addenda, including a
photo of the property, explanation of lease terms, lease date, and other relevant
information.
I need to make an observation about the Laredo industrial rental market discovered
in my research. Where most markets around the country seem to prefer net leases
(NNN Leases) for industrial property, in which the tenant is responsible for payment
(directly or by proration from the landlord) of real estate taxes, property insurance,
and maintenance expenses, this type of lease is very rare in Laredo. With the
exception of a few very large (100,000 s/f and over) industrial properties, owned by
national developers or real estate investment trusts and leased to national institutiongrade tenants, I could find nothing but Gross Leases used in Laredo.1 Because of
this, I have assumed that the rental of the Subject, should it become vacant, would
be under a Gross lease in which the tenant pays for utility services directly to the
utility vendors, and pays for minor inside maintenance and janitorial. The landlord
would be responsible for all real estate taxes, property insurance, and typical
maintenance on the structure, exterior and grounds.
Below is an Adjustment Grid with these six rental comparables. The comparables
are very similar to the Subject so require only minor adjustments, which I have
explained below. Again, the Level 1 adjustments are cumulative and the Level 2
adjustments are aggregate.
1
Gross Leases. This is based on numerous conversations with developers and brokers, including Lula
Morales of Lula Morales Realty, who handles by far the largest quantity of industrial sale and lease transactions
in Laredo and has been involved in over a dozen developments as a principal; Mike Mangum, Tarantino
Properties, Inc., who handles numerous industrial properties as manager and leasing agent; and Nick Sota, of
Finsa Development, who develops institutional grade industrial property in Laredo.
Expense Structure. Some leases require the tenants to pay for all or part of the real
estate taxes, insurance, and maintenance on a building in addition to the utilities
consumed. For a detailed discussion of the various types of commercial leases, see
the Glossary in the Addenda. All of the comparable leases are Gross Leases in
which the tenant pays the rent and utilities and the landlord is responsible for all other
property related expenses. No adjustment was required for this item.
Conditions of Lease. This factor involves items in a lease such as free rent
concessions, tenant improvements paid for by the landlord beyond what the market
dictates, or other considerations to induce either the tenant or landlord to sign the
lease. In the case of the comparables, the properties were already existing and the
leases are all second generation leases1. No initial marketing concessions were
required and no other atypical provisions in the leases were found.
However, as discussed in the Sales Comparison Approach on comparable #1, there
is an unusually situation that has created unanswered questions in my mind
because the lease was executed two months before the sale closed (unusual) and
the landlord actually moved in and occupies a small office above the tenant's office
area. The rents on this building are substantially greater than on the other rent
comparables which further confirms the uncertainty of the relationship between
landlord and tenant. I have therefore, adjusted this lease rate down by 10% to allow
for a less-than-arms-length relationship possibility. No other adjustments were
required.
Market conditions. This adjustment reflects changes in the market during the time
does not explain the changes in the market. In Section 4 above I reached a
conclusion that the industrial land market has been increasing at a rate of about 6.0%
per year. I have included an exhibit in the Addenda labeled "Time Adjustment Test
- Industrial Parks in Laredo." I have applied the same time adjustment of 5.0% per
year to the rent comparables.
Lease Term. A lease term that extends for a longer time than the typical lease in the
market will often have a negative impact on value as a new owner would be unable
to modify the lease structure to conform to the market until the lease expires. A
month-to-month lease could also have a negative impact on the value because of the
uncertainty of the continued income stream. However, month to month leases often
charge a premium rental rate to offset the risk of vacancy so each situation must be
evaluated on its own merits.
In the case of Laredo market, except for institutional grade industrial property, the
lease terms typically range from month-to-month to three years. The most common
1
Second Generation Lease. This is a lease on a space that was previously occupied after initial
construction of a building. Second generation leases generally do not require extensive interior tenant
improvements to make them ready for occupancy. Often, however, the space needs to be reconfigured and
payment for the expense for reconfiguration or remodeling is a negotiated item between tenant and landlord and
can have a substantial impact on the effective rental rate under the lease. A First Generation Lease is a lease
to the first occupant of a newly constructed building and often has a "tenant finish allowance" that includes base
items needed to prepare the space for occupancy, such as installation of HVAC or plumbing. In come cases, I
have even seen the pouring of concrete flooring as part of the "T/I Allowance." These, obviously, should not
change the effective lease rate as it is assumed that the landlord should deliver the space ready for occupancy in
order to obtain "market rents."
term that I encountered in my research was a one-year lease term. Anything
between month to month and three years, however, would not require any
adjustments. Since all of the rent comparables fall within this range, no adjustments
are required.
Location. Location is a very important component of value determination. Four of
the rent comparables are located in the older industrial parks West of Mines Road.
The other two are located East of Mines Rd in the newer Killam Industrial Park. To
test for an adjustment based on location, I have prepared the table below. I have
removed the rents for comparable #1 because of the unusual relationship described
above. The average rents for the West comparables is $4.05 per square foot. The
averages for the East comparables. Is $4.32. The difference of $.27, or 6.25% can
be attributed to the location difference as the rents used are the adjusted rents after
all other adjustments have been applied Based on this analysis, I have adjusted
comparables #5 & #6 downward by 5.0% for location.
Paired Sales - Location
Comp # E Mines W Mines
1
N/A
2
$
3.91
3
$
4.30
4
$
3.94
5
$
4.38
6
$
4.26
Average
$
4.32 $
4.05
Difference $$
$
0.27
Difference %
6.25%
Building Size. Building size will sometimes make a difference in rental rate with
larger properties renting for a lower rate and smaller properties for a higher rate.
Scanning the size adjustment row on the grid it is clear comparing comparables #5
and #6 that size made no difference in their rental rate. Comparable #3 is larger and
has a lower rental rate but I believe that can be explained by the inferior condition of
the building and the fact that it is a multi-tenant building rather than a single tenant
building. Therefore, in this case, I have not applied any size adjustment.
Building Age. Building age will often make a difference in the rental rate as new
buildings will command a higher rental rate than older one. Comparables #1 - #4 are
essentially the same age. Comparables #5 & #6 are much new buildings and they
have a higher rental rates. However, I believe that the difference can be explained
more by building quality/condition and location than by their age differences. No
building age adjustment is noted.
Building Condition/Quality. Building condition (deferred maintenance, etc.) and
quality (type of construction), will impact the rental rate. In the case of the subject,
comparables #1 and #2 are the same condition and quality and require no
adjustment. Comparables #3 & #4 are in the same complex with tilt-up construction,
which is a higher quality construction, but shows considerable deferred maintenance.
However, I believe that the higher quality construction offsets the effect of the
deferred maintenance. No adjustments are made to these comparables.
Comparables #5 and #6, however, are newer tilt-up concrete construction and are in
excellent condition. The cost to construct tilt-up construction for these buildings
would be about 12% more than the pre-engineered metal construction of the
Subject.1 However, the rental rates in Laredo do not seem to capture the full
difference in this cost and that difference would be somewhat diluted by factoring the
land cost, which is accommodated in the Location adjustment above. Therefore, I
have adjusted these comparables downward by half of this difference, or 6.0%.
Other. The other differences noted are the fact that three of the comparables (#3, #4
and #5) are multi-tenant and the others are single tenant buildings. Typically a single
tenant building will lease for slightly more than a multi-tenant building because the
tenant will have exclusive use of the yard and parking areas thus have a greater
utility. A glance at the Level 1 adjusted rents of these comparables will confirm that
this is so with these comparables. The multi-tenant comparables have lower rents
than the single tenant building comparables. The three multi-tenant buildings have
been adjusted upward by 5.0% each since the Subject is a single-tenant building.
Rent Value Conclusion.
The Rent Comparable Grid on the following page shows all of the above adjustments
and concludes with a rental range of $3.91 to $4.60 per square foot per year under
gross lease structures. The adjusted mean average is $4.14 per square foot.
Since comp #1 has the unanswered questions described above, I have given it minor
weight even though it is located very close to the Subject and very similar.
Comparable #2 is the most similar and located very close. It also required only a
very small time adjustment so I have given the most weight to this rent comparable.
Because #5 and #6 are newer and on the East side of Mines Rd, in a somewhat
different sub-market, I have assessed a lesser weight to these two. Rent comparable
#3 and #4 are multi-tenant but fairly similar to the Subject in other respects. I have
assigned a secondary importance to these comparables.
With these considerations, the weighted mean average rents equate to $4.17 per
square foot. I have rounded this down to $4.15 per square foot per year under a
gross lease structure as the Market Rents for the Subject.
This rental rate, applied to the 12,000 square foot of the Subject, will produce a
Potential Gross Income of $49,800 per year.
1
Building Condition/Quality. Marshall Valuation Service, Section 14, page 23, Class C, Average (tiltup) base cost of $38.15 per square foot; Class S, Average (Steel Frame and Siding) base cost of $33.74 per
square foot.
RENT Comparison Grid
14418
Industry
Property
Subject
2/1/2006
Lease Date
Current
Price
49,800 $ 60,000
Size
12,000
12,336
PPSF
$
4.15 $
4.86
Expenses Structure
Gross
same
0%
$
$
4.86
Question
Conditions of Lease
Arms-Length
-10%
$
$
4.38
Market Conditions
Current
Feb-06
5%
$
$
4.60
Lease Term
1 year term
3 yr
0%
$
$
4.60
First Level Adjusted Rent
$
4.60
Location
none
same
0%
$
Building Size
none
12,336
0%
$
Building Age
none
same
0%
$
Building Condition
none
same
0%
$
Other
none
same
0%
$
Second Adjustment Percentage
0%
Second Adjustment Dollars
$
-
14408 Export
9/1/2006
$
48,000
$
12,488
$
3.84
same
0%
$
$
3.84
same
0%
$
$
3.84
Sep-06
2%
$
$
3.91
mo/mo
0%
$
$
3.91
$
3.91
same
0%
$
12,488
0%
$
same
0%
$
same
0%
$
same
0%
$
0%
$
-
Adjusted Rental Rate
$
4.60 $
Attributed Weight
10.00%
Weight Adjusuted Price $
0.46 $
Adjusted Range $
Adjusted Mean $
3.91
4.14
Appraiser Selected $
Weighted Mean $
4.15
4.17
$
618
Enterprise
#2
4/1/2006
$ 36,000
$ 10,000
$
3.60
same
0%
$
$
3.60
same
0%
$
$
3.60
Apr-06
4%
$
$
3.74
1 yr
0%
$
$
3.74
$
3.74
same
0%
$
10,000
0%
$
same
0%
$
inferior
10%
$
0.37
Multi-ten
5%
$
0.19
15%
$
0.56
618
Enterprise
#4-5
2/1/2007
$ 72,000
$ 21,000
$
3.43
same
0%
$
$
3.43
same
0%
$
$
3.43
Feb-07
0%
$
$
3.43
1 yr
0%
$
$
3.43
$
3.43
same
0%
$
21,000
0%
$
same
0%
$
inferior
10%
$
0.34
Multi-ten
5%
$
0.17
15%
$
0.51
8414
El
Gato
11/1/2006
$ 271,521
$ 59,544
$
4.56
same
0%
$
$
4.56
same
0%
$
$
4.56
Nov-06
1%
$
$
4.61
3 yrs
0%
$
$
4.61
$
4.61
Superior
-5%
$ (0.23)
59,544
0%
$
Superior
-5%
$ (0.23)
Superior
-6%
$ (0.28)
Multi-ten
5%
$
0.23
-11%
$ (0.51)
11903
Auburn
4/1/2006
$ 68,218
$ 14,960
$
4.56
same
0%
$
$
4.56
same
0%
$
$
4.56
Apr-06
4%
$
$
4.73
2 yr
0%
$
$
4.73
$
4.73
Superior
-5%
$ (0.24)
14,960
0%
$
Superior
-5%
$ (0.24)
Superior
-6%
$ (0.28)
same
0%
$
-16%
$ (0.76)
3.91 $
4.30 $
3.94 $
4.10 $
3.97
25.00%
20.00%
20.00%
12.00%
15.00%
0.98 $
0.86 $
0.79 $
0.49 $
0.60
4.60
$
0.35 per month
Vacancy Allowance.
In Section 2 of this report, I performed a market analysis of the neighborhood in
which the Subject is located. Included in that analysis was a detailed survey of
occupancy which is included in full in the Addenda. This survey indicated that of the
4,034,475 square feet of Gross Building Area (GBA) in the three industrial parks
comprising the neighborhood, there were 11 buildings vacant and a total of 188,453
square feet of vacant Gross Building Area. That equates to a 4.67% vacancy factor
by GBA and 5.7% vacancy by building count, for the entire neighborhood. The
International Trade Center, in which the Subject is located, shows a 4.33% vacancy
by GBA and 5.26% by building count. Based on this data, I have used a 5.0%
vacancy & credit loss factor for the following financial Proforma. This results in a
loss of $2,490 per year.
The building is a single-tenant building; however, this vacancy factor allocates a
certain amount of vacancy each year as though the building were leased for a three
year period or longer with one tenant. When the vacancy does occur, it may take
several months to find the replacement tenant. Because it is impossible to know
when that vacancy will occur, I am allocating that anticipated vacancy over a several
year period and accruing the vacancy on an annual basis.
Operating Expenses.
As discussed in Section 2 of this appraisal report, the ownership has been in
possession for less than one month as of the effective date of this appraisal, and I
was not given access to operating data from the previous ownership. Thus, I must
rely on data external to the Subject to determine operating expenses.
It is important to note at this point that it is very difficult to find reliable actual
operating expense data in Laredo as the real estate brokerage community does not
have the sophistication to provide in their sale marketing packages a full write up
including income and expense history or Proforma.1 Most brokers and buyers in the
local Laredo market use very simple methods to evaluate a purchase, relying usually
on such things as price per square foot of the building or a Potential Gross Income
Multiplier (PGIM)2 that do not involve a detailed presentation of operating expenses.
As a starting point, the Society of Industrial and Office Realtors3 publishes an
annual survey of all major metropolitan areas of industrial property that includes an
income and expense analysis. The most recent survey was for 2004, with a
publication date of 2005. The Laredo market is not included in the survey and the
closest market geographically is San Antonio, Texas. Below I have assembled the
survey information for industrial property between 5,000 and 19,999 square feet in
San Antonio. Although it is not from Laredo, it will give a beginning point for
projecting expenses based on real world data.
The overall average NNN lease rental rate is $4.24 and operating expenses
1
Based on conversation with Lula Morales, Lula Morales Realty, and a few other brokers and
developers. Looking at listings of property for sale in Laredo on Loopnet.com also shows the same lack of
financial history or proforma in marketing packages.
2
PGIM. "The ratio between the sale price of a property and its potential gross income (PGIM = V/PGI)."
The Dictionary of Real Estate Appraisal.
3
2005 Comparative Statistics of Industrial and Office Real Estate Markets.
averaged $1.46 per square foot. This equates to a gross lease rate of $5.62 per
square foot and results in an average Net Operating Income of $4.17 per square
foot. The average Overall Capitalization Rate was reported as 9.5% which would
result in an average sale price of $43.84 per square foot. This was data for 2004, is
three years old, and is for San Antonio not Laredo. It is also for an average of all
classes of industrial / manufacturing property. But it is a starting point for analysis.
San Antonio Income/Expense Report
2005
NNN Lease Rental Rates
NNN Recovery
Effective Gross Income
Central City
High
Low
$
3.00 $
3.60
$
1.01 $
1.34
$
4.01 $
4.94
Suburban
High
$
3.36 $
$
0.97 $
$
4.33 $
Real Estate Taxes
Insurance (Fire & Liability)
Common Area Maintenance
Structural & Roof Maintenance
Total Expenses
$
$
$
$
$
0.60
0.06
0.35
0.05
1.06
$
$
$
$
$
0.85
0.09
0.40
0.10
1.44
$
$
$
$
$
0.65
0.07
0.25
0.05
1.02
$
2.95
$
3.50
$
3.31
Low
7.00
2.20
9.20
$
$
$
Average
4.24
1.38
5.62
$
$
$
$
$
1.10
0.15
0.95
0.10
2.30
$
$
$
$
$
0.80
0.09
0.49
0.08
1.46
$
6.90
$
4.17
I was also able to identify the actual operating expenses of two similar properties in
San Antonio. The first property is 823 E. Nakoma whose operating expenses for
2005 are shown in the table below. The total of $2.91 per square foot is higher than
the averages in the above table. However, the Nakoma expenses also include a
substantial property management fee. When that is removed, the expenses fall
nicely within the ranges in the above table for city-wide averages.
823 E. Nakoma
San Antonio, Texas
22,584 s/f office/warehouse
2005 operating expenses
Expense Item
Amount
Real Estate Taxes
$
29,925 $
Insurance
$
2,475 $
Utilities
$
5,400 $
Maintenance/Landscape $
2,250 $
Structural Maintenance
$
4,500 $
Management Fee
$
21,150 $
TOTAL $
65,700 $
$$ S/F
1.33
0.11
0.24
0.10
0.20
0.94
2.91
The next table shows the income and expenses of an unnamed office/warehouse
property in San Antonio.1 It is a 55,000 square foot building. The insurance expense
is dramatically lower on this property because, according to the property manager, it
is covered under a blanket policy that covers a large portfolio of industrial property
owned by the institutional investor owner. The property management fee is more in
line with expectations than the Nakoma property above. The Nakoma property is
owner-managed and appears, at 34% of the operating expenses, to be charging the
1
The identity of the property is confidential at the request of the property manager, although it is quite
similar to the Subject except for the size.
property with more than the typical management expenses. The property in the table
below is managed by a fee manager, and the management expenses are typical at
just under 4.0% of the effective gross income.
Unnamed Office/warehouse
San Antonio, Texas
55,000 s/f office/warehouse
2006 Income/Expense
Income/Expense Items
Amount
Base Rents
$
220,490 $
NNN Recovery
$
36,747 $
$
257,237 $
$$ S/F
4.01
0.67
4.68
Repair & Maint
Utility
Grounds/Landscaping
Administrative/Mgmt
Real Estate Taxes
Insurance
Total Operating Expense
$
$
$
$
$
$
$
8,507
6,019
5,250
9,881
29,561
1,536
60,754
$
$
$
$
$
$
$
0.15
0.11
0.10
0.18
0.54
0.03
1.10
$
196,483
$
3.57
Fixed Expenses.
This category of expenses is comprised primarily of real estate taxes and property
insurance. These expenses do not vary based on occupancy, thus they are
considered "fixed" expenses. The other expenses, in the "variable expenses"
category, typically change based on the level of occupancy in a building.
Real Estate Taxes. Since the improvements on the property currently exist, and are
currently assessed, this expense number is highly predictable. As discussed in
Section 2, the current tax burden is $7,981.92. Taxes have been increasing at a rate
of about 8.0% per year. Since this Proforma is for the next twelve months following
the effective date of this appraisal, I have increased the taxes by 8.0% to $8,620.
Property Insurance. Insurance on the San Antonio Nakoma Property was $.11 per
square foot. The insurance expenses on the other San Antonio property is
dramatically lower because of the blanket policy of the ownership. I have estimated
$.12 per square foot for this expense, allowing for an increase due to the time lapse
between the Nakoma information and the effective date of this appraisal.
Variable Expenses.
Utilities. Under the gross lease structure, the tenant would be expected to pay for all
utilities directly to the utility vendor. Based on the performance of the two properties
above, I project that the overall utility expense for the building would be about $.12
per square foot per year. During any vacancy periods, the owner would need to pick
up some of that expense but it would be during periods when very low consumption
was experienced. Therefore, I project that a $.01 per square foot per year
chargeable to the landlord would be adequate. This would result in a utility expense
of $120 annualized, but only occurring during the vacancies.
Maintenance. The Subject has very little landscaping to maintain and the
improvements are very low maintenance. The major expenses that would occur
would be in the office area and the parking lot. The two properties analyzed above
reported maintenance expenses, including landscaping, of about $.10 per square
foot. The Nakoma property, because of the high management expenses, and the
owner-occupant status, probably included much of the labor for maintenance in the
management expense line item, resulting in a low amount in the maintenance
expense category.
The other San Antonio property had $.20 per square foot classified as structural
maintenance, much of which could be normal on-going maintenance and repairs.
Assuming that at least half of the $.20 of structural maintenance is normal recurring
maintenance activity, that would result in about $.10 per square foot. The property is
reported by its property manager to have a large amount of landscaping, making that
line item fairly high. Taking all of these factors into consideration, I estimate that for
the Subject, the on-going maintenance and repairs that would be incurred by the
Landlord would be $.15 per square foot per year. This results in a maintenance
expense of $1,800 per year.
Property Management. The property management fees reported for the unnamed
property in San Antonio were just under 4.0%. That included some administrative
expenses in addition to the actual management fee charged by the manager to the
investor/client. The actual property management fee, taken from the detail of the
schedule provided to me, is $7,976, or 3.10% of the Effective Gross Income. Since
smaller properties require a larger management fee than larger properties due to the
economy of scale, I estimate that the Subject property, as a single-tenant property,
could be managed by a local management firm for a 4.0% fee. This would result in
an annual management expense of $1,892.
Reserves for Replacement. Typically, the short-lived items described in the Cost
Approach need to be budgeted for replacement and a reserve amount set aside for
these items. The reserve amount would be set up estimating the cost for
replacement divided by the useful life of the item and that amount set apart in a
sinking fund so that when the item needs replacing, the funds are available.
In Laredo, the smaller investment property owners do not typically practice this
procedure. Additionally, the Expense Analysis below that shows the estimated
income and expenses of each of the comparable properties, does not include a
reserve for replacements. I have utilized these comparables to extract an income
capitalization rate. In order to maintain consistency with the comparables, I have not
included any reserves for replacement.
The resulting one-year proforma using the above data provides for a total operating
expense of $13,872, or $1.16 per square foot. This amount compares very favorably
with the 55,000 square foot building from San Antonio which had $1.10 per square
foot. This amount, deducted from the effective gross income, leaves a Net Operating
Income of $33,438 per year.
Income / Expenses on Comparables.
In order to check these numbers with the market, I have assembled the table below
in which I have analyzed the income, expenses, and various ratios and rates on each
of the comparable properties used in the Sales Comparison Approach above. Each
of the sale comparables had information on income and expenses either directly from
the real estate broker who handled the sale or from an appraisal on the property
prepared by a colleague.
The operating expenses average $1.19 per square foot on the comparables. The
Subject Proforma is $1.16 per square foot. The operating expense ratio averages
30.58% and the Subject Proforma is 29.32%. The Average Net Operating Income
per square foot on the comparables is $2.73 and on the Subject Proforma it is $2.79.
Thus, the income and expenses of the Subject align very closely with the five
comparable sales.
Comp
Address
Sale Price
Comparables Expense Ratio Analysis
1
2
3
4
5
14411
14418
14416 Export
Import
Industry
14416 Import 14403 Import 14409 Import
$ 410,000 $ 335,000 $
310,000 $
300,000 $ 400,000 $ 431,500
Subject
Square Feet
Vacant S/F
Vacancy %
Gross Potential Income
Vacancy
Vacancy Rate
Operating Expenses
NOI
12,000
600
5.00%
$
$
$
$
$
PGIM
EGIM
Price - $ / SF
Op Exp Ratio
$
$
$
$
$
8.23
8.67
$
34.17
$
$
2.79
1.16
29.32%
47,738
2,387
5.00%
45,351
15,055
30,296
12,336
617
5.00%
$
$
$
$
$
7.02
7.39
$
8.16%
Cap Rate
NOI / S/F
Operating Exp S/F
49,800
2,490
5.00%
47,310
13,872
33,438
11,353
568
5.00%
29.51
2.67
1.33
33.20%
$
$
$
$
$
5.17
5.44
$
9.04%
$
$
60,000
3,000
5.00%
57,000
14,250
42,750
12,276
614
5.00%
25.13
3.47
1.16
25.00%
$
$
$
$
$
6.67
7.02
$
13.79%
$
$
45,000
2,250
5.00%
42,750
15,792
26,958
16,276
733
4.50%
24.44
$
2.20
1.29
24.58
$
$
$
$
$
36.94%
2.61
1.11
29.74%
49,068
2,453
5.00%
46,615
13,070
33,545
$
34.82
$
$
$
$
$
2.71
1.05
28.04%
53,033
2,589
4.88%
50,445
15,233
35,212
6.79
7.14
$
7.77%
$
$
355,300
12,926
630
4.87%
8.79
9.26
10.63%
$
$
$
12,391
619
5.00%
6.31
6.61
8.99%
$
$
63,360
2,853
4.50%
60,507
17,996
42,511
Mean
27.69
10.04%
$
$
2.73
1.19
30.58%
Selection of Direct Capitalization Rate.
The next step is to select an Income Capitalization Rate to apply to the Net Operating
Income determined in the Proforma. There are several methods of determining an
appropriate rate of return. Below I have first used the most reliable method, then
tested the results against a number of other methods.
Market Extracted Capitalization Rate. The most reliable method of determining an
appropriate overall rate of return is to extract it from the market by finding comparable
properties that have sold, determining the Net Operating Income (NOI) that was
produced by them at the time of sale, and dividing that NOI by the known sale price.
This results in a percentage number that represents the one-year Overall Rate of
Return (OAR) on the purchase price of the property. This rate, of course, must
recapture a portion of the original investment and provide a return on that investment,
in order to make economic sense.
The table above shows the income / expense analysis of the five comparable sales
we have selected, set side-by-side with the Subject. The capitalization rates on
these sales ranged from a low of 7.77% to a high of 13.79%, with a mean average of
10.04%. The 13.79% cap rate was on comparable #2 which is the sale that has the
unanswered questions about arms-length relationships. As in the Sales Comparison
Approach, I have discounted this data. Removing this from the analysis, the new
high capitalization rate is 10.63% on comparable #4. Comparables #3 and #4 were
sales at a discount of 20%, per the real estate broker, and these capitalization rates
are generated off of the actual sale price not the adjusted sale price. When adjusting
the capitalization rate based on the adjusted sale price, the rates drop to 6.68% and
7.93% respectively. That produces an adjusted range of 6.68% to 9.04%. The
comparable that is most similar to the Subject and which required the least amount of
adjustment in the Sales Comparison Approach, is comparable #5. That comparable
had a capitalization rate of 7.77%. This would mean that the appropriate
capitalization rate, by the Market Extraction method, would be between 7.0% and
9.0%. With the most comparable property producing a 7.77% overall rate, it seems
most appropriate to select an 8.0% income capitalization rate for the Subject.
Before proceeding with this analysis, however, I want to test this 8.0% rate against
other data to check its reasonableness.
Investor Survey. The RealtyRate.com website performs a quarterly survey of
investors for all kinds of property throughout the United States. The result of this
investor survey is published on their website. Below I have created a table that
replicates the results of their 4th quarter, 2006, survey for Industrial - Warehouses &
Distribution Centers. The Overall Rate of Return (OAR) in the table provides a
minimum of 6.77%, a maximum of 12.26%, and an average of 8.68%. The high and
low rates easily bracket the 8.0% determined above and the average is slightly above
that rate. In a market such as Laredo where there is active buying interest from both
investors and users, the low end of the mid-range is not unreasonable.
RealtyRates.com INVESTOR SURVEY - 4th Quarter 2006
INDUSTRIAL - WAREHOUSES & DISTRIBUTION CENTERS
Input
Item
Minimum
Spread Over 10-year Treasury
Debt Coverate Ratio
Interest Rate
Amortization
Mortgage Constant
Loan-to-Value Ratio
Equity Dividend Rate
Maximum
Debt Coverate Ratio
Interest Rate
Amortization
Mortgage Constant
Loan-to-Value Ratio
Average
Debt Coverate Ratio
Interest Rate
Amortization
Mortgage Constant
Loan-to-Value Ratio
0.89%
1.20
5.77%
30
0.070181
85%
7.75%
DCR Technique
1.20
Band of Investment Technique
Mortgage
85%
Equity
15%
OAR
Surveyed Rates
2.89%
1.65
7.77%
15
0.113091
60%
15.30%
DCR Technique
1.65
Mortgage
60%
Equity
40%
OAR
Surveyed Rates
1.89%
1.43
6.77%
23
0.086677
73%
11.15%
DCR Technique
1.43
Mortgage
73%
Equity
28%
OAR
Surveyed Rates
OAR
0.070181
0.85
0.070181
0.077500
0.059654
0.011625
7.16
7.13
6.77
0.113091
0.6
0.113091
0.153000
0.067854
0.061200
11.20
12.91
12.26
0.086677
0.73
0.086677
0.111475
0.062841
0.030656
Selection of Income Capitalization Rate.
Based on the above analysis, it is reasonable to select an Income Capitalization Rate
of 8.0%. When this rate is applied to the Subject's proforma Net Operating Income, it
results in a value of $417,970, which I have rounded, as shown in the table below, to
$420,000.
APPLICATION OF CAP RATE
$
33,438
Capitalization Rate
8.00%
Value
$
417,970
$
420,000
Rounded to
On the next page is a completed financial proforma using the income, expenses, and
capitalization rates discussed above.
8.95
9.35
8.68
Proforma Operating Statement
Income / Expenses Schedule
Building GBA
Building GLA
Rent Roll
Space
Size
1
12,000
Totals
12000
$ 12,000
$ 12,000
$
$ S/F
0.35
$
0.35
Annual $$ Other Chgs
$ 49,800 $
$
- $
$ 49,800 $
-
$
$
$
Mo Rent
4,150
4,150
Potential Gross Income
RE Tax Recovery
RE Insurance Recovery
CAM Recovery
Total NNN Recovery
$
$
$
$
$
4.15
-
Other Income - Utilities
Other Income #2
Total Other Income
$
$
$
- s/f
- s/f
-
$
4.15 s/f
5.00%
Less:
Vacancy/Credit Loss
Effective Gross Rental Income
Operating Expenses
Fixed Expenses
R E Taxes
R E Insurance
Variable Expenses
Utilities
Common Area Maintenance
Other Repair &Maintenance
General & Administrative
Property Management
Misc
Structural Maint
Reserves
Total Expenses & Reserves
$
$
$
$
$
$
$
$
$
$
s/f
s/f
s/f
s/f
s/f
0.72 s/f
0.12 s/f
0.01
0.15
4.00%
1.16
s/f
s/f
% EGI
s/f
$
$
$
$
$
$
$
49,800
105.26%
$
-
0.00%
$
-
0.00%
$
49,800
105.26%
$
47,310
100%
-
-
2,490
$
$
8,620
1,440
18.22%
3.04%
$
$
$
$
$
$
$
$
120
1,800
1,892
-
0.25%
3.80%
4.00%
$
13,872
0.00%
29.32%
$
33,438
70.68%
Capitalization Rate
8.00%
Value
$
417,970
Rounded
$
420,000
Value S/F
$
35.00
Gross Rent Multipliers.
Another approach to confirming the value of a property is to use the two gross rent
multipliers typically used by investors. The Potential Gross Rent Multiplier (PGIM)
uses the gross rents before vacancy and the Effective Gross Rent Multiplier
(EGIM) factors in vacancy and credit losses. On the table above showing the
comparable sales, two of the lines address the PGIM and the EGIM. I have copied
these two lines in the table below.
Comp
Address
PGIM
EGIM
1
2
14411
14418
Import
Industry
7.02
5.17
7.39
5.44
3
14416
Import
6.67
7.02
4
14403
Import
6.31
6.61
5
14409
Import
8.79
9.26
Mean
6.79
7.14
The range of these multipliers is fairly broad. The comparable that is most similar to
the Subject is comparable #5, which sold and closed in January of this year. Splitting
the difference between the average and the multipliers from comparable #5 would
give us a PGIM of about 8.0 and an EGIM of about 8.5. Applying these multipliers to
the Subject income levels produces the values shown in the table below.
Vacancy/Credit Loss
$
$
$
Income
Multipliers
Value
49,800
8.00 $ 398,400
2,490
47,310
8.50 $ 402,135
It is interesting to note that these two values bracket the conclusion reached in the
Sales Comparison Approach and are slightly lower than the value reached by the
Income Approach using the Direct Capitalization process. This is a good check and
balance process confirming that both of these other methodologies reach reasonable
conclusions.
The results of the above analysis, indicate that the value conclusion by the Direct
Capitalization in the Income Approach is $420,000.
Deferred Maintenance. In the Cost Approach, I identified deferred maintenance (curable physical
deterioration) in the amount of $22,795. It is my observation in the Laredo market
that the value discussed in this section of the appraisal report would not be materially
affected by the presence or absence of this deferred maintenance. Because of the
character of the immediate neighborhood, the presence of these items of deferred
maintenance does not make the Subject less attractive than competing properties.
The first test of whether physical deterioration is curable is whether the cure will
result in a value increment equal to or greater than the expenditure, and this test is
not met in this case. However, as discussed in the Sales Comparison Approach,
there is a second test, that successfully applies to the Subject. That is "if spending
the money to cure the item will not result in a value increment equal to or greater than
the expenditure but will allow other existing items to maintain their value, then the
item is normally considered curable."1 It Is my opinion that this applies to the
Subject. Thus, I have not made an adjustment to the value conclusion reducing the
value by the cost to cure the deferred maintenance.
1
The Appraisal of Real Estate, pg. 398.
SECTION XIII.
RECONCILIATION
As the last step in the appraisal process, reconciliation is the process of evaluation of
the merits of the three approaches to value and resolving problems that may exist
between them. Reconciliation "provides an integral quality control assessment of the
valuation process prior to the final opinion of value and also helps identify key factors
that must be cited and explained in the appraisal report."1
During this process, several questions must be asked and answered. In each of the
approaches, is there sufficient data available to make a credible analysis? Is that
data reliable? Are the conclusions reached consistent with the data? What does
"the market" do with that data and how do buyers and sellers typically behave in this
market with that data?
The Laredo Market.
As explained in the Market Analysis section, the Laredo industrial market is very
strong and active. The warehouse / distribution business is a major portion of the
local economy and links Mexico with the United States in many ways. Transactions
are frequent and plentiful. Thus, there is adequate transactional information to be
able to reach a credible analysis of the market. It is not necessary to go outside of
the Laredo market or use subjective analyses to reach a conclusion of value. Each
approach to value can be well supported with local and fairly timely information.
The Cost Approach Evaluation.
The determination of land value, as the first step in the Cost Approach, was
handicapped only by the fact that land sales in the immediate neighborhood (the
three industrial parks) was limited because the land has been nearly all absorbed
and developed. However, four land sales were located and used within this
neighborhood. Two sales were taken from a newer industrial park about two miles
North of the Subject. I needed to go back to early 2002 to find the local land sales,
so the closest sales were fairly old. However, the land value reached is consistent
with activity in the rest of the market outside the immediate neighborhood as shown
by the analysis of the 59 industrial land sales over the past five years.
The reproduction cost of the Subject did not present a problem in that the building is
a generic warehouse with no unique or unusual characteristics that caused a
problem. Cost information was available through reliable sources (primarily Marshall
Swift Valuation Service). The property is 14 years old, though, and the older the
property, the less reliable is the Cost Approach, because of the need to estimate
depreciation. To overcome this problem, I was able to estimate depreciation by two
independent methods, the market extracted depreciation method and the breakdown
method. It is reassuring to find that the two independent approaches ended with
values less than $500 apart.
1
The Appraisal of Real Estate, pg 598.
Section VIII - Reconciliation - Page 1 of 4
Because the Laredo industrial market is very active, and a great deal of construction
is going on, local industrial users and investors have the choice of buying existing
buildings or building new buildings. This makes the Cost Approach more reliable
than the age of the Subject would typically warrant. Therefore, the Cost Approach
should be given reasonable weight in the final value conclusion.
Sales Comparison Approach Evaluation.
In this approach, the data was plentiful and fairly easy to verify and confirm.
Although Texas is a "non-disclosure" state and does not require the recording of
actual sale prices, participants in the market are not typically hesitant about sharing
information about their transactions. I also had the benefit of working for Laredo
National Bank, and, on all of the sales used, had access to accurate information
about the sales through my resources in the bank so could verify much of the
information from documents in the files as well as conversations with the principals
and other appraisers and brokers. Therefore, the information used in this approach
is highly reliable and can yield credible results.
Through conversations with real estate brokers in Laredo, it is clear that most buyers
of industrial buildings in Laredo use this approach in making a buying decision. The
use of price per square foot is easy for the buyers to understand and use and does
not require a high degree of sophistication. This is consistent with the market
participants with whom I spoke.
The sales used were all in the same International Trade Center, located within two
blocks of the Subject. This made the need to make large adjustments unnecessary.
Most of the sales used were very recent; all but one were within the last year and one
closed in same month as the effective date of this appraisal. That makes the data
very timely, enhancing the reliability. Three of the sales were to investors and two
were to users giving a good cross-section of buyer types.
The availability, timeliness of the data, and close proximity of comparable sales,
combined with the level of sophistication of the typical buyer of smaller industrial
buildings in Laredo, make the Sales Comparison very reliable and this approach
should be given the most weight in the reconciliation process.
Income Approach Evaluation.
The Income Approach as applied to the Subject has some limitations in that the
information regarding operating expenses was more difficult to obtain than the other
data in this process. Most of the real estate brokers and buyers in Laredo do not give
serious attention to the operating expenses in the marketing of industrial property or
making buying decisions. If any income analysis is used, the typical Laredo buyer,
according to the brokers, uses gross rent multipliers which utilize only the potential
rental income of the property. It is interesting to note that the gross rent multipliers
used to test the value at the end of the Income Approach actually confirmed the
value of the Sales Comparison Approach better than the Direct Capitalization
process, by bracketing the value conclusion of the Sales Comparison Approach.
Therefore, to apply any sophisticated financial analysis to make a valuation decision
in Laredo is to impute a mind-set to the typical buyer that does not exist and is
primarily a theoretical exercise that should be used to confirm the Sales Comparison
and Cost Approach information.
The rental income data used in this analysis was reliable and acquired primarily from
the principals in the lease transactions. However, the expense information was for
the most part estimated rather than actual historical data. This makes the conclusion
of value less credible and reliable. Therefore, the least amount of weight is given
to the Income Approach in reaching a final conclusion.
Final Reconciliation of Value Opinion
The table below shows my calculations and allocation of weight in the final
reconciliation of value. The greatest weight is given to the Sales Comparison
Approach because (1) the data is plentiful and required very little adjustment, (2) the
market participants most typically use this method, and (3) the data was well verified.
The Income Approach was given the least weight because the expense information
was more subjective and market participants rely on this method much less.
Value Conclusion
Allocated Weight
Allocated Value
RECONCILIATION
Cost
Sales
Income
$ 430,000 $ 400,000 $ 420,000
40.00%
50.00%
10.00%
$ 172,000 $ 200,000 $ 42,000
Final Value
Rounded Value
$
$
414,000
410,000
Based on this analysis, it is my opinion that the "As Is" Market Value of the Subject
property, as of January 27, 2007, is
$410,000
Four Hundred Ten Thousand Dollars
Extraordinary Assumptions.
The opinion of value stated above is subject to the following extraordinary
assumptions:
Building Permits. The City of Laredo Building Department did not have access to
records of construction prior to the year 2000 so could not confirm whether the
improvements were built with permit1. However, during my visit I did not observe any
improvements that had the appearance of additions subsequent to original
construction which would require building permits. Therefore . . . .
It is an Extraordinary Assumption of this appraisal that all
improvements were built to the building codes in effect as of the date
of construction, and there have been no additional improvements
requiring permits since the original construction.
Fuel Storage Tanks. There is a fuel storage tank just inside the North overhead
door which is used to store diesel fuel. This storage tank is not registered with the
1
Texas Commission on Environmental Quality as it is less than 1,100 gallons and is
not required to be registered1. Therefore . . . .
It is an Extraordinary Assumption of this appraisal that this fuel
tank has not had any leakage and has not caused any environmental
contamination.
EXPOSURE TIME.
USPAP requires that, "when developing an opinion of market value, the appraiser
must also develop an opinion of reasonable exposure time linked to the value
opinion."2 Exposure time is defined as: "The estimated length of time the property
would have been offered on the market prior to the hypothetical consummation of a sale
at market value on the effective date of the appraisal; a retrospective estimate based on
an analysis of past events assuming a competitive and open market. Exposure time is
3
always presumed to occur prior to the effective date of the appraisal. . . ."
While doing my research, I performed a brief survey of real estate brokers who sell
industrial property in Laredo, asking how long they would expect it to take, with
reasonable marketing activity, to find a buyer and put the property under contract,
then how long it would take to close, once under contract. The survey specifically
referenced a small 12,000 square foot warehouse distribution facility. The consensus
of the responses was that it would take three to six months to have the property
under contract then an additional thirty to sixty days to close the sale escrow.
Thus, my opinion of Exposure Time, assuming a hypothetical sale that closed on
January 27, 2007, is six months.
1
2
Exposure Time. USPAP, 2006, Standard Rule 1-2(c).
3
The Dictionary of Real Estate Appraisal, pg 105.
INDEX OF THE ADDENDA
A.
B.
C.
D.
General Appraisal Support
1)
Appraiser Certification
2)
Assumptions and Limiting Conditions
3)
Qualifications of the Appraiser
4)
Glossary of Technical Terminology
5)
Bibliography
6)
Engagement Letter
7)
Text of Email from Property Owner
Maps
1)
Laredo Truck Route
2)
Long Range Thoroughfare Plan for Laredo, Texas
3)
Extra Territorial Jurisdiction Boundary
4)
Flood Maps
5)
Zoning Map
6)
Comparables
1)
Land Sales Map & Sales Data Pages
2)
Improved Sales Map & Sales Data Pages
3)
Rent Comparables Map & Rental Data Pages
Financial Analysis Schedules
1)
Neighborhood Market Survey
2)
Time Adjustment Test - Industrial Land Sales in Laredo
3)
Marshall Swift Segregated Estimator Detailed Report
4)
United Steel Building Cost Estimates
Index of the Addenda - Page 1 of 2
E.
Other Schedules and Exhibits
1)
Webb County Appraisal District Report
2)
Title Insurance Policy
3)
Warranty Deed of last transfer
4)
Closing Statement from Delta Midwest purchase
5)
Longhorn Lot Maintenance Repair Estimate
6)
Soils Report - 14416 Export Rd
Index of the Addenda - Page 2 of 2
CERTIFICATION
I certify that, to the best of my 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 are my personal, unbiased professional analyses, opinions,
and conclusions.
3.
I 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.
I have no bias with respect to the property that is the subject of this report or to the parties
involved with this assignment.
5.
My engagement in this assignment was not contingent upon developing or reporting
predetermined results.
6.
My 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.
The reported analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of
Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of
Professional Appraisal Practice.
8.
I have made a personal inspection of the property that is the subject of this report.
9.
No one provided significant real property appraisal assistance to the person signing this
certification.
10.
The use of this report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.
11.
As of the date of this report, I am not subject to continuing education requirements of the
Appraisal Institute but am subject to continuing education requirements of the states in which I hold
appraisal licenses or certifications. I am current on all continuing education requirements of such
jurisdictions.
______________________________________
Paul Lorenzen
CCIM, CPM, CSM
TX-1336071-G
NV-A-0006527-CG
Certification
ASSUMPTIONS & LIMITING CONDITIONS
Unless otherwise specifically stated within this report, this appraisal and report are subject to the
following assumptions and limiting conditions. Acceptance and use of this report by the client and
intended user(s) shall be deemed to be acceptance of these Assumptions and Limiting Conditions.
LEGAL ASPECTS
Legal Description. Legal description(s) furnished is/are assumed to be correct. No
responsibility is assumed for matters legal in nature, nor is any opinion rendered with respect to title,
which is assumed to be good and marketable.
Liens & Encumbrances. All existing liens and encumbrances, if any, have been
disregarded and the property has been considered as though free and clear of liens and
encumbrances.
Encroachments. Unless otherwise stated in this report, there were no encroachments
observed by the appraiser during the appraiser’s visit. The opinion of value is rendered without
regard to other possible encroachments.
Ownership/Management. It is assumed that the property is under responsible ownership
and competent management.
PROPERTY DESCRIPTIONS
Drawings, Engineering, Plans & Measurements. Any sketches, maps or other exhibits
included have been prepared to assist the reader in visualizing and understanding the subject
property. Basic measurements and calculations of the boundaries and dimensions of the site(s) and
of the improvements, if any, are based upon information supplied by others are not guaranteed and
no responsibility for accuracy is assumed. Unless otherwise stated in the report, the appraiser was
not provided with a survey, parcel map, architectural drawings, or other documents relative to the
location, boundaries, or dimensions of the property. The appraiser is not an architect or civil engineer
and cannot guarantee the accuracy of measurements taken by the appraiser.
Proposed Improvements/Renovations. Any proposed improvements, renovations, or
remodeling of the property are assumed to be completed in a good workmanlike manner in
accordance with the submitted plans and specifications. Deviation from these plans and
specifications may require a revision to this report and its value conclusions.
Structural/Mechanical Items. Descriptions and conclusions regarding structural items, if
any, have been based on observed condition at the time of appraiser’s visit to the property. No
responsibility is assumed for any deficiencies not visible by external observation. Unless otherwise
indicated, all structural components, plumbing, electrical, and mechanical items are assumed to be
operative, but no warranty is made as to their condition or future life. No responsibility is assumed as
to the structural soundness of the improvements. It is assumed that there are no hidden or
unapparent conditions of the property, subsoil or structures that render it more or less valuable. No
liability is assumed by the appraiser for any engineering-related issues.
Hazardous Substances. Unless otherwise stated in this report, the appraiser has not been
informed of the existence of hazardous substances, including but not limited to asbestos,
polychlorinated biphenyl, petroleum leakage, agricultural chemicals, toxic waste or hazardous
materials which might affect the subject property. The existence of potentially hazardous materials
used in construction, operation, or maintenance of the property, such as the presence of asbestos,
urea formaldehyde foam insulation, and/or existence of toxic waste which may or may not be present
Assumptions & Limiting Conditions, Page 1 of 3
in the property, has not been considered. The appraiser is not qualified to detect such substances or
conditions. The concluded value is predicated on the assumption that there is no such condition on,
in or near the property that would cause a loss in value. The valuation is subject to modification if any
such potentially hazardous materials were detected by a qualified expert in these areas. The
appraiser reserves the right to modify this valuation if so warranted.
Soil Conditions. The appraiser has not performed soil or drainage tests. Nor has the
appraiser been provided with soil or drainage tests results. Therefore, the appraiser assumed that
there are no subsoil or drainage conditions which would adversely affect the subject or its final
valuation. No known waste hazards affecting the subject site were evident upon site inspection. The
appraiser has not been provided with information concerning soil conditions. An expert in this field
should be consulted for an opinion on this matter, if so desired.
Americans with Disability Act (ADA). The “Americans with Disability Act of 1990” (ADA) is
intended to provide full access and participation for disabled Americans and contains areas of
coverage including employment, public services, public accommodations, and telecommunications.
Subchapter III of the ADA addresses architectural and procedural barriers to disabled individuals in
connection with the public accommodations. The appraiser has not been afforded a survey with
regard to the subject property to indicate whether or not it conforms to the ADA requirements. Should
such a survey be provided, this appraiser reserves the right to adjust and/or modify the value
conclusion, if warranted.
Compliance with Laws/Regulations. It is assumed that the property is in full compliance
with all applicable zoning, building, use, environmental, and other regulations and laws imposed by
federal, state, local, or other jurisdictions unless non-compliance is specifically identified, described,
and considered in this report. It is assumed that all required licenses, certificate of occupancy,
consents, or other legislative or administrative requirements either have been or can be obtained or
renewed for any use on which the value estimated is based.
OTHER ITEMS
Information Provided by Others. The various data reported herein, as supplied by others,
have been obtained from sources deemed reliable, but no responsibility is assumed for accuracy. It
is assumed that all information known to the client and relative to the valuation has been accurately
furnished and that there are no undisclosed leases, agreements, liens, or other encumbrances
affecting the use of the property. Some information and data was obtained from public records and,
where possible and feasible, was checked and verified, and deemed to be correct.
Subsequent Testimony. The appraiser, by reason of this report, is not required to give
testimony in court, litigation deposition, or any other hearing with reference to the property in
question. If the appraiser is requested to appear in any such court, deposition, or hearing, the
appraiser shall have the right to bill the client or other person(s) requesting such testimony at the
appraiser’s normal and customary hourly fee then in effect.
Distribution of Value. The distribution of the total valuation in this report between land and
improvements applies only under the existing program of utilization. The separate valuations for land
and improvements should not be used in conjunction with any other appraisal and are invalid if so
used.
Confidentiality of Report. This report was obtained from Paul Lorenzen, CCIM, CPM, CSM,
and consists of “trade secrets and commercial or financial information” which is protected, privileged
and confidential and exempted from public disclosure under 5USC552(b)(4). Possession of this
report, or a copy, does not carry with it the right of publication. It may not be used for any purpose or
any person other than the client and intended users identified in the report, without the prior written
consent of the appraiser. If consent is given, the entire report shall be used without deleting or
omitting any portions of the report. Under the Bylaws and Regulations of the Appraisal Institute, each
designated or general member is required to control the use and distribution of each appraisal report
signed by such member. No third parties may rely upon this appraisal report for any purpose
whatsoever, including the provision of financing for the acquisition or improvement of the subject
property. This appraisal was prepared specifically for our client, as addressed in this report. Third
parties who desire us to prepare an appraisal of the subject property for their use should contact the
addressee of this report to obtain approval for Paul Lorenzen, CCIM, CPM, CSM, to prepare an
additional appraisal report for their specific needs.
Publication / Distribution of Report. The contents of this report, in whole or in part, shall
not be given to third parties without prior written consent of the person signing this appraisal report.
Further, neither all nor any part of this appraisal report shall be disseminated to the general public by
the use of advertising media, public relations media, news media, sales media, or other media for
public communication without the prior written consent of the person signing this appraisal report.
Nor shall any reference be made to the Appraisal Institute, the MAI designation, the CCIM Institute, or
the CCIM designation, the Institute of Real Estate Management, the CPM designation, the
International Council of Shopping Centers, the CSM designation, in any reference to the contents of
this report or the value conclusions reported, without prior written approval of the person signing this
report.
National/Local Economy. This appraisal report is based on the condition of local and
national economies, purchasing power of money, and finance rates prevailing at the effective date of
value. Any change in these conditions subsequent to the date of this report may affect the value
conclusions.
Real Estate Taxes. All taxes are assumed to be current. Actual taxes have not been
verified and may be owed. If they are owed, no deduction has been made from the reported value
conclusions. In instances, when the client specifically requires information on outstanding balances,
the data has been presented in the Real Estate Taxes and Assessed Value section of this report.
QUALIFICATIONS OF APPRAISER
Paul Lorenzen
CCIM, CPM, CSM
Since 1976 I have been involved professionally in some aspect of real estate. Beginning in residential
sales, I quickly determined that selling houses was not my destiny. In 1978 I transitioned to
commercial / investment real estate and have been active in that discipline since then.
During the years since 1976, I have held real estate broker's licenses and worked in California (197680, 2000-2002), Colorado (1980-85, 86-87), Arizona (1985-86), Nevada (1987-2002), Oregon (2001 2005), and Texas (2005 - Present). During this time I have been involved in virtually every phase of
commercial / investment real estate including Sales, Real Estate Leasing, Property Management,
Real Estate Appraisal, Real Estate Development, Real Estate Financing, and Real Estate Consulting.
In 1992 I obtained a Certified General Appraiser license in Nevada and in 2005, the same license in
Texas.
Below I have listed my certifications, education (both academic and professional), teaching and
writing experience applicable to commercial real estate.
Pasadena College / Point Loma Nazarene University, San Diego, California. 1967-70:
Completed B.A. degree with major in Psychology and minor in New Testament Greek.
CCIM - Certified Commercial Investment Member awarded in 1979 by the Commercial
Investment Real Estate Institute of the National Association of Realtors
CPM - Certified Property Manager awarded in 1985 by the Institute of Real Estate
Management of the National Association of Realtors
CSM - Certified Shopping Center Manager awarded in 1987 by the International Council of
Shopping Centers, in New York, New York
Real Estate Broker License - Currently, Texas (#0542412) - Formerly, Oregon, California,
Colorado, Arizona, Nevada.
Certified General Appraiser License - Nevada (NV-A.0006527-CG) and Texas (TX1336071-G).
Qualifications, Page 1 of 7
REAL ESTATE COURSES & SEMINARS
REAL ESTATE APPRAISAL COURSES
Nevada Appraisal Law, Western Nevada Community College (1992 - 3 classroom hours)
Nevada Appraisal Law, McKissock Data Systems (2005 - 3 classroom hours)
Real Estate Appraisal, Lumbleau Real Estate School (3 semester hours)
Fundamentals of Appraisal, Allied Appraisal School (90 classroom hours)
RE 206 Real Estate Appraisal, Truckee Meadows Community College (3 semester hours)
RE 207B Income Valuation Appraising, Truckee Meadows Community College (3 semester hours)
RE 198B Special Topics in Real Estate - Analysis of TMCC Appraisal Curriculum, Truckee
Meadows Community College (6 semester hours)
Standards of Professional Practice: Part A - Standards, Appraisal Institute, (2 days)
Standards of Professional Practice: Part B - Ethics, Appraisal Institute, (2 days)
Introduction to Appraising Real Property, Appraisal Institute (10 days)
Litigation Valuation, Appraisal Institute (6 days)
Writing Narrative Appraisal Report, Lincoln Graduate Center (2 day seminar)
Residential Market Analysis & Highest & Best Use, Appraisal Institute (2 day seminar)
Business Practice & Ethics, Appraisal Institute (1 day seminar)
Uniform Standards of Professional Practice (USPAP) Course, Appraisal Institute (2 day seminar multiple times from 1992 - 2005)
Principles of Appraisal Review, Lincoln Graduate Center (2 day seminar)
Course 510 - Advanced Income Capitalization, Appraisal Institute (Self-Study and Challenge
Exam)
Course 520 - Highest & Best Use and Market Analysis, Appraisal Institute (Self-Study and
Challenge Exam)
Course 530 - Advanced Sales Comparison and Cost Approaches, Appraisal Institute (40
classroom hours)
Course 540 - Report Writing & Valuation Analysis, Appraisal Institute (40 classroom hours)
Course 550 - Advanced Applications, Appraisal Institute (Self-Study and Challenge Exam)
REAL ESTATE MARKETING COURSES
CI-101 Fundamentals of Real Estate Investment and Taxation, Realtors National Marketing
Institute (6 days)
CI-102 Fundamentals of Creating a Real Estate Investment, Realtors National Marketing Institute
(6 days)
CI-103 Advanced Real Estate Taxation and Marketing Tools for Investment Real Estate,
Realtors National Marketing Institute (6 days)
CI-104 Impact of Human Behavior on Commercial Investment decision-Making, Realtors
National Marketing Institute (6 days)
CI-105 Case Studies in Commercial Investment Real Estate Brokerage, Realtors National
Marketing Institute (6 days)
REO Super Session, Dallas Texas, September, 1988, Realtors National Marketing Institute (3 days)
The Art of Real Estate Counseling - 500, Charles Chatham (5 days) Trade Secrets of Exchanging
Warren Harding (6 days)
Lowery/Nickerson Real Estate Investment Seminar, Education Advancement Institute (3 days)
Developing, Syndicating and Big Money Brokerage, Chet Allen (3 days)
Money Making Formulas for Creative Real Estate, Barney Zick (3 days)
Course 501 - Fundamentals of Syndication, Real Estate Securities & Syndication Institute (5 days)
Real Estate Practice, Lumbleau Real Estate School (3 semester hours)
Marketing Real Estate In An Automated Office, Arnold Information Institute, Inc. (2 days)
Leasing Commercial Real Estate, Northwest Center for Professional Education (2 days)
Leasing Commercial Real Estate, Institute of Real Estate Management, Ron Simpson, CPM, RPA,
Instructor (1 day)
Real Estate Investments, Truckee Meadows Community College, Reno, Nv, (3 semester hours) creator and instructor for the course
REAL ESTATE MANAGEMENT COURSES
IREM 302 - Leasing and Management of Office Buildings, Institute of Real Estate Management (6
days)
IREM 400 - Managing Real Estate As An Investment, Institute of Real Estate Management (6
days)
IREM 502 - Long Range Management Plan for Office Buildings, Institute of Real Estate
Management (6 days)
IREM 503 - Long Range Management Plan for Shopping Centers, Institute of Real Estate
Management (6 days)
IREM 800 - Ethics in Real Estate Management, Institute of Real Estate Management (1 day) - Also
taught this course for IREM National numerous times
Design, Operation & Maintenance of Building Systems, Part I, Building Owners & Managers
Institute, Course 1 of Real Property Administrator (RPA) program, 3 semester hours college level
equivalent
Preparing for Disaster, Nevada IREM Chapter, (1 day)
Real Estate Management, Truckee Meadows Community College, Reno, Nv (3 semester hours) creator and instructor for the course
OTHER REAL ESTATE RELATED TOPICS
Income Tax Aspects of Real Estate Transactions, Charles Considine (4 days)
Business Opportunities, Art Hammel (3 days)
Real Estate Economics, Long Beach Community College (3 semester hours)
Real Estate Finance, Lumbleau Real Estate School (3 semester hours)
Real Estate Law, Lumbleau Real Estate School (3 semester hours)
Basic Arbitrator Training, American Arbitration Association (1 day)
Series 7 Securities License Training, Merrill Lynch (4 months training program - passed federal
license exam with score of 96%)
Measuring Commercial Real Estate, Northern Nevada CCIM Chapter, Reno, Nv, - 1 day
Principles of Real Estate, Midwestern State University (30 classroom hours)
Texas Principles of Real Estate II, University of Texas, Arlington (30 classroom hours)
Texas Law of Agency - TREC 1111, University of Texas, Arlington (30 classroom hours)
Law of Contracts - TREC 1200, University of Texas, Arlington (30 classroom hours)
TEACHING
I first began teaching for the Coastline Community College in Costa Mesa, California, in 1979. I
have taught both regular college classes and professional continuing education classes under the
sponsorship of community colleges, universities, the Nevada State Real Estate Division, local
Realtor Associations, the National Association of Realtors, and numerous smaller real estate
educational organizations over the last 28 years. Below is a listing of the courses I have taught.
Real Estate Investments, Coastline Community College, Costa Mesa, California 1979-80,
developed and taught a 3 semester hour course in real estate investments, 2 semesters.
RE 199, Real Estate Investments, Truckee Meadows Community College, Reno, Nevada 1988 1994, 3 semester hour course in real estate investments, 1 semester each year.
RE 205B & REM 201, Real Estate Management, Truckee Meadows Community College, Reno,
Nevada 1990 - 1994, 3 semester hour property management course developed by the Institute of
Real Estate Management in Chicago, giving credit toward the CERTIFIED PROPERTY MANAGER
(CPM) designation as well as college credit toward an Associates or Bachelors degree, 1 semester
each year.
IREM 800 - Ethics in Real Estate Management, Facilitator for local IREM Chapter of course which
is required for the CERTIFIED PROPERTY MANAGER (CPM) designation from the Institute of Real
Estate Management, Chicago, Illinois. Offered periodically from 1992 - 1998 in Reno, Nevada.
Commercial Property Management, University of Nevada - Reno, Continuing Education
Department, developed and taught one day course, three times in 1988 and two times in 1991.
Measuring Commercial Real Estate, Northern Nevada CCIM Chapter, developed and taught 1/2
day seminar on methods of measuring commercial and industrial real estate, including BOMA and
IREM methods as well as AIA methodology. Taught 2 times in 1988 in Nevada and at National
Association of Realtors national convention, November 1990.
Real Estate Strategies - Business Opportunities Section, GRI Course, Nevada Association of
Realtors, 1/2 day session in GRI program, developed and taught 2 times in 1988.
Real Estate Strategies - Real Estate Investments Section, GRI Course, Nevada Association of
Realtors, 1/2 day session in GRI program, developed and taught in 1989 and 1990.
BROKERS RECORDS: How To Survive A Real Estate Division Audit, Real Estate Research
Institute, 4 hour seminar developed with the Nevada Real Estate Division -- offered periodically
beginning in 1990.
Strategic Marketing of Commercial Real Estate: How to Sell 100% of your Listings, National
Association of Realtors Convention, Las Vegas, Nevada, Education Session, 1991; University of
Nevada, Reno, Continuing Education Department, 1994, 6 hrs Nevada Continuing Education Credits.
Using the IRR For Fun & Profit: Part I - Basic Concepts & Part II - Case Studies, Big Ten
Seminars, Reno, 1992, 1993, 1994 (offered monthly for real estate continuing education for real
estate and appraisal licensees).
Environmental Hazards And The Real Estate Professional, Big Ten Seminars, 1993, 1994
(offered monthly for real estate continuing education for real estate and appraisal licensees).
How To Negotiate The Best Lease For Your Business, Small Business Development Center,
University of Nevada, Reno, one day seminar, 1992.
PUBLISHED ARTICLES
Listed below are articles published in professional newsletters, magazines and journals.
Programs For The HP-38E Calculator, 25 page booklet published in 1979 with creative real estate
programs to be used in the first programmable Hewlett Packard hand-held calculator for
commercial/investment real estate brokers.
Introduction to Real Estate Investments, A Course Outline For Real Estate Investments, RE
199, Truckee Meadows Community College, 1989, 1990, 218 pages.
Trust Fund Accounting and Record Keeping for Nevada Brokers, A Reference Manual published
by the Education Section of the Real Estate Division, Nevada Department of Commerce, 1990, 28
pages. Although no author is listed, I am acknowledged in the inside cover of the book as having
assisted by drafting about 50% of the book and critically reviewing the entire book for the Real Estate
Division.
"Asset Management," Real Estate Business Magazine, 1983.
"Real Estate Joint Ventures," Airline magazine in 1979.
"Colorado Office Market Survey," Real Estate West Magazine, 1980.
"Leasehold Value: Finding a Hidden Asset," CCIM Newsletter, Northern Nevada CCIM Chapter,
1989.
"Creating An Efficient Commercial Real Estate Marketplace," Nevada Building & Homes, Vol 1,
No. 2, Nov-Dec 1988.
"Good Real Estate Investments," Nevada Building & Homes, Vol 1, No. 1, Oct 1988.
"Downtown Reno Office Survey," Published 1988 and 1989.
"Reno Shopping Center Survey" Published 1989 and 1991.
"Reno/Sparks Industrial Property Survey" Published 1990.
"Strategic Marketing: How To Sell 100% of Your Commercial Investment Listings," San Diego
Realtor Magazine, Volume 68, Number 7, July 1993 [Subsequently reprinted in other Realtor
magazines].
GLOSSARY OF TECHNICAL TERMS IN APPRAISAL
Unless other wise noted, the definitions are taken from The Dictionary of Real Estate Appraisal,
4th Edition, Appraisal Institute, Chicago, Illinois, 2002.
Absolute Net Lease. See "Lease Types" in this Glossary.
Entrepreneurial Incentive. A market-derived figure that represents the amount an entrepreneur
expects to receive for his or her contribution to a project and risk.
Extraordinary Assumptions. 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 about the integrity of data used
in an analysis. An extraordinary assumption may be used in an assignment only if: it
is required to properly develop credible opinions and conclusions; the appraiser has
a reasonable basis for the extraordinary assumption; use of the extraordinary
assumption results in a credible analysis; and the appraiser complies with the
disclosure requirements set forth in USPAP for extraordinary assumptions. (Appraisal
Dictionary)
Fee Simple Estate. Absolute ownership unencumbered by any other interest or estate, subject only
to the limitations imposed by the governmental powers or taxation, eminent domain,
police power, and escheat.
Full Service Gross Lease. See "Lease Types" in this Glossary.
Gross Lease. See "Lease Types" in this Glossary.
Hypothetical Condition. 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 about the
integrity of data used in an analysis. A hypothetical condition may be used in an
assignment only if: use of the hypothetical condition is clearly required for legal
purposes, for purposes of reasonable analysis, or for purposes of comparison; use of
the hypothetical condition results in a credible analysis; and the appraiser complies
with the disclosure requirements set forth in USPAP for hypothetical conditions.
(Appraisal Dictionary)
Lease Types. In commercial and industrial real estate, space is leased under any one of five types
of Commercial Leases as described below. Any of these leases can have other
features such as percentage rent provisions, in addition to these categories.
However, these five categories are mutually exclusive (i.e., you cannot have both a
Net Lease and a Modified Gross Lease in the same lease document).
(1) Full Service Gross Lease. The landlord pays all operating expenses of
the building, including maintenance inside the tenant's space, utilities consumed in
the leased premises as well as providing janitorial services for the tenant. This type
is most common in Class "A" professional office buildings.
(2) Gross Lease. The landlord pays all operating expenses of the building
but the tenant is responsible for the maintenance, utilities and janitorial services
Glossary, Page 1 of 2
inside the leased premises. This type is most common in lower quality office
buildings and smaller multi-tenant industrial buildings.
(3) Modified Gross Lease. The landlord pays all expenses as in a Gross
Lease except that one or more of the three "Net components" of a Net Lease (taxes,
insurance and common area maintenance) are recovered from the tenant in some
manner. When a Modified Gross Lease is identified, the analyst must ask which of
the components are recovered from tenants any by what formula.
(4) Net Lease (Also known as NNN Lease or Triple Net Lease). A Lease
in which the tenant is responsible for payment of three Net Components of operating
expenses: 1) real estate taxes, 2) real estate insurance, and 3) common area
maintenance. In a single tenant building, the tenant generally pays these expenses
directly. In a multi-tenant building, the landlord generally pays these expenses and
recovers the expenses from each tenant on a prorata basis, usually based on the
square footage of each leased space. Property management fees may or may not
be included in the NNN recovery from the tenants. The analyst must determine who
pays the property management expenses.
(5) Absolute Net Lease. A lease in which the landlord recovers all of the
Net Components of a Net Lease but, in addition, is able to recover additional
expenses such as capital improvements, increase in interest expenses in adjustment
rate mortgages, etc. The analysis must define what expenses are recovered beyond
the three Net components. (source: Paul Lorenzen)
Leased Fee Interest. An ownership interest held by a landlord with the rights of use and occupancy
conveyed by lease to others. The rights of the lessor (the leased fee owner) and the
lessee are specified by contract terms contained within the lease.
Leasehold Interest. The interest held by the lessee (the tenant or renter) through a lease
transferring the rights of use and occupancy for a stated term under certain
conditions.
Market Value. The most probable price which a property should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and seller each acting
prudently 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:
●
Buyer and seller are typically motivated;
●
Both parties are well informed or well advised, and acting in what they
consider their best interests;
●
A reasonable time is allowed for exposure in the open market;
●
Payment is made in terms of cash in U.S. dollars or in terms of financial
arrangements comparable thereto; and
●
The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions granted by anyone
associated with the sale.
(source. 12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as
amended at 57 Federal Register 12202, April 9, 1992; 59 Federal Register 29499,
June 7, 1994)
Modified Gross Lease. See "Lease Types" in this Glossary.
Net Lease.
See "Lease Types" in this Glossary.
Glossary, Page 2 of 2
BIBLIOGRAPHY
BOOKS
2005 Comparative Statistics of Industrial and Office Real Estate Markets, Society of Industrial
and Office Realtors of the National Association of Realtors, New York, NY, 2005.
Appraisal of Real Estate, The, 12th Edition, No author indicated, Appraisal Institute, Chicago,
Illinois, 2001.
Appraising Industrial Properties, Appraisal Institute, Chicago, Illinois, 2005.
Construction Dictionary: Construction Terms & Tables, Greater Phoenix, Arizona Chapter #98 of
the National Association of Women in Construction, Phoenix, Arizona, 1989.
Dictionary of Real Estate Appraisal, The, No author indicated, Appraisal Institute, Chicago, Illinois,
2002.
Fanning, Stephen F, MAI, Market Analysis for Real Estate: Concepts and Applications in
Valuation and Highest and Best Use, Appraisal Institute, Chicago, Illinois, 2005.
Marshall Swift Valuation Service, Marshall & Swife/Boeckh, LLC, 2006 edition, 915 Wilshire Blvd.,
8th Floor, Los Angeles, California.
USPAP. Uniform Standard of Professional Appraisal Practice and Advisory Opinions, 2006
Edition, Appraisal Standards Board of the Appraisal Foundation, 2006.
PERSONAL INTERVIEWS
Morales, Lula, Lula Morales Realty, Inc., 5615 San Dario, #101, Laredo, Texas. Interview January
10, 2007.
Morgan, Michael, Tarantino Properties, Inc., 6655 First Park Ten, Suite 216, San Antonio, Texas.
Interview January 24, 2007.
Bibliography Page 1 of 1
210-662-2857
January 25, 2007
Sent Via: email attachment
Robert W. Rollins
Delta Express
P O Box 68
Cape Girardeau, Missouri 63702
RE:
Authorization to Perform Appraisal - 14416 Export Road, Laredo, Texas
Dear Mr. Rollins:
This letter is intended to confirm your authorization for me to prepare an appraisal of your property at
14416 Export Road, Laredo, Texas. Please review the items below and confirm your understanding
and authorization by approval at the end of this letter and return a copy to me.
INTENDED USE AND INTENDED USER OF THE APPRAISAL.
The Intended User of the appraisal will be the Appraisal Institute in Chicago, Illinois, and the
Intended Use is to fulfill the requirements for a Demonstration Appraisal Report, as part of the
requirements for the MAI (Member of Appraisal Institute) designation.
SCOPE OF ASSIGNMENT.
I will perform an appraisal using all three approaches (Cost, Sales Comparison, and Income) and
prepare a Self-Contained Appraisal Report.
YOUR PARTICIPATION.
You will provide the following information relating to the assignment.
1.
Any marketing literature used by the seller in your recent purchase;
2.
Building plans if available (I will copy and return any originals.)
3.
Copy of Title Insurance Policy from your purchase
4.
Survey of the property, if available (I will copy and return any originals.)
As you instructed me in our phone conversation of this morning, I have set an appointment with the
manager of your operation at the property and will be visiting the property to take measurements,
photographs, etc., on Saturday, January 27th.
SCHEDULE FOR PERFORMANCE OF ASSIGNMENT.
I will anticipate completing the report by the end of March, 2007. Upon completion I will send you a
complimentary copy of the report, as well as submit originals of the report to the Appraisal Institute for
evaluation.
COMPENSATION.
There will be no charge to you for the appraisal. I will provide you a copy of the report.
CONFIDENTIALITY.
The report will be subject to the "confidentiality" provisions of the Uniform Standards of
Professional Appraisal Practice. I will keep in confidence any information that you indicate that you
wish to be kept confidential when you deliver that information to me. However, by approving this
letter, you are giving me permission to give copies of the report to the Appraisal Institute and their
designated Demonstration Report graders, as well as permission to submit the report to any state
appraisal licensing agency, if requested, to qualify for either new or renewal of appraisal licenses from
such agency. The appraisal will also be subject to review by other persons authorized by the
Appraisal Institute.
OTHER ITEMS.
This assignment shall be for the benefit of completing the Demonstration Report requirements of the
Appraisal Institute for the MAI designation. If, after your copy of the report is delivered, you request
any follow-up activity from me, it shall be considered a separate and new assignment and will be
subject to negotiation for fees at that time.
You understand that my full time employment right now is as a Commercial Review Appraiser for
the Laredo National Bank (LNB) in their San Antonio office at 40 NE Loop 410, Suite #515. However,
I am not representing Laredo National Bank in this appraisal and will be doing the work on my own
time and at my own expense. There will be no liability to LNB for this activity.
If you need to call me during this process, using my cell phone at 210-383-2164 will expedite the
communication. Please approve on the line provided below and return a copy of this letter to me. I
am enclosing with this letter a Federal Express shipping label filled out with my account number and
return address. You can use this to return the signed copy of this letter and the other information
requested above.
Thank you for the opportunity to appraise your property. I look forward to presenting you with a copy
of the completed report as described above.
Sincerely,
Paul Lorenzen
CCIM, CPM, CSM
Certified General Appraiser
TX- 1336071-G
NV-A.0006527-CG
Approved By:
_______________________________
Robert W. Rollins
Delta Express, Inc.
Date:
________________________________
Page 2 of 2
TEXT OF EMAIL FROM PROPERTY OWNER
AUTHORIZING ACCESS TO THE PROPERTY FOR THIS APPRAISAL
From: Robert Rollins [mailto:[email protected]]
Sent: Thursday, January 25, 2007 10:00 AM
To: [email protected]
Cc: David E. Puig
Subject:
Luis,
Good morning. I hope all is well in Laredo. [deleted portions not relevant to this
appraisal] . . . .
. . . . There is going to be a gentleman named Paul Lorenzen from Laredo National
Bank call you sometime today. He is working on an appraisal accreditation. David
Puig asked if he could use our property as a case for his accreditation. He is
basically going to re-appraise our property and present his work for the
accreditation. Mr. Lorenzen will be calling you today (PM) to work out the details.
Please accommodate him. He will probably want to conduct the site review on
Sat/Sun. Let him know when we are there and if he needs to stay later than when
we are there, just give him a key to lock up.
If you have any questions, e-mail me. . . .
See you soon,
Robbie
Authorization Email from Owner
LAREDO TRUCK ROUTE
Laredo Truck Route
LAREDO LONG RANGE THOROUGHFARE
Laredo Long Range Thoroughfare
Laredo Extra Territorial Jurisdiction
Laredo EJT
FLOOD MAPS
Flood Maps
ZONING MAP
Zoning Map
ZONING ORDINANCE FOR M-1 – LIGHT MANUFACURING DISTRICT 1
Section 24.62.2 Zoning District Purpose
15. The purpose of the M-1 Light Manufacturing District is to encourage the development of
manufacturing and wholesale business establishments which are clean, quiet, and free of hazardous
or objectionable elements such as noise, odor, dust, smoke or glare. Research activities are
encouraged. This district is further designed to act as a transitional use between heavy industrial
uses and other less intense and residential uses.
Section 24.65.15 M-1 LIGHT MANUFACTURING DISTRICT
(1) Adult and alien detention facilities are permitted provided such detention facility or facilities are
located a distance of more than five hundred (500’) fee from the nearest boundary linen of the
nearest residential district.
(2) Juvenile detention facilities are permitted provided such detention facility or facilities are located a
distance of fifty (50’) feet from the nearest boundary line of the nearest residential district.
(3) Accessory uses and structures incidental to manufacturing activities including warehouse and
storage facility; heavy equipment storage and maintenance facilities, offices, on-site security offices;
public and private scales; freight-handling; dead-storage facilities.
(4) Hazardous materials – Incidental to Transportation and Storage: Hazardous materials receivable
for freight-handling shall be in product-tight containers or packings recognized as per the hazardous
materials ordinance for the City of Laredo and/or CFR 49 Department of Transportation. Storage of
hazardous materials under this section shall be limited to “short term” as defined in the Hazardous
Materials Ordinance. No on-site handling (opening, repackaging, etc.) will be permitted.
(5) Sexually oriented businesses are permitted provided that such sexually oriented business meets
the following distance requirements.
(a) It shall not be located within one thousand (1000) feet of:
(1) A church;
(2) A public or private elementary or secondary school;
(3) A boundary of any residential district;
(4) A public park;
(5) A boundary of any district zoned AG, R-S, R-1, R-1A, R-1-MH, RSM, R-2, R-3, R-O, B-1,
B-1R, CBD, B-3, B-4, MXD;
(b) It shall not be located within fifteen hundred (1500) feet of another sexually oriented business.
1
Land Development Code Book, published by the City of Laredo, Planning & Zoning
Department, e-book downloaded from the Laredo City website.
(c) For the purposes of subsection (a), measurement shall be made in a straight line, without regard
to intervening structures or objects, from the nearest portion of the property line where a sexually
oriented business is conducted, to the nearest property line of the premises of a church or public or
private elementary or secondary school, or to the nearest boundary of an affected public park,
residential district, or residential lot or to the nearest boundary line any district listed in (a) (5), supra.
(d) For the purposes of subsection (b) of this section, the distance between two (2) sexually oriented
businesses shall be measured in a straight line, without regard to intervening structures or objects,
from the closest property line in which the businesses are located.
(e) The Board of Adjustment shall have no authority to grant any variance to the requirements of (a),
(b) and (c), above.
(f) Sexually oriented business shall be restricted to the permitted sign dimensions prescribed for B-1
zoned properties.
MAP OF LAND SALES COMPARABLES
Land Sale Comparables - Page 1 of 13
Comparable Land Sale #1
Property Identification
Record ID
Property Type
Address
Location
Tax ID
8009
Vacant Industrial Land
613-15 Enterprise, Laredo, Texas
East side of Enterprise, 114 ft North of Interamerica Blvd.
Webb CAD #237189 & 237190
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Verification
Arnoldo M Maldanado
Hector Morteo Marasco
2/15/2002
unknown
1178/869-871
Fee Simple
Market
Cash to Seller
Warrantee Deed
Seller had owned the property more than three years.
Fellow appraiser - Byron Setser, MAI
Sale Price
$240,000
Land Data
Zoning
Topography
View or other amenities
"M-1", Manufacturing District
Level, slight downward slope to west (toward street frontage);
elevations - 484 NEC, 486 SEC, 480 NWC, 481 SWC
All available
Interior
Rectangular
no
Flood Zone C
240 X 392.2 plus slight curve at SWC
No known adverse; typical utility & set backs
Perimeter fencing and some concrete landing pads for trailer
parking. Some lighting on the property.
Thre was a 14'X30' canopy with concrete ramp for access at the
rear.
None
Land Size Information
Gross Land Size
Useable Land Size
Front Footage
3.0657 acres - 133,542 s/f
3.0657 acres - 133,542 s/f
240 ft
Indicators
Sale Price/Gross Acre
Sale Price/Gross SF
Sale Price/Useable Acre
Sale Price/Useable SF
$78,286
$1.80 s/f
$78,286
$1.80 s/f
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Legal Description
Lots 9 & 10, Block 8, Interamerica Industrial Park Unit VI, Laredo, Webb County, Texas
Remarks
The site improvements were given no contributory value.
Record ID
Property Type
Address
Location
Tax ID
8011
1617 World Trade Center Loop, Laredo, Texas
North side of World Trade Center Loop, Approx 800 ft East of FM
1472 (Mines Rd).
Webb CAD #246401
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Verification
Laredo Millennium Properties, Ltd.
Tracomsa USA, Inc.
5/13/2002
unknown
1213/224
Fee Simple
Market
Cash to seller; $396,000 not to Laredo National Bank
Warranty Deed with Vendors Lien
Property has been owned by Laredo Millennium Properties, Ltd.
since original development of the Millennium Industrial Park
previous 2001.
Sale Price
$372,400
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Downward slopping to the southeast, toward road frontage;
elevations - 505 SEC to 512 NWC
All available
Interior
Irregular
no
Flood Zone C
Irregular - depth varies from 400 ft to 500 ft
No known adverse
None
None
None
Gross Land Size
Useable Land Size
Front Footage
5.314 acres - 231,478 s/f
5.314 acres - 231,478 s/f
383 ft along north side of World Trade Center Loop
Indicators
Sale Price/Gross SF
$70,079
$1.61 s/f
$70,079
$1.61 s/f
Legal Description
Lots 5 & 6, Block 4, Millennium Park, Laredo, Webb County, Texas
Remarks
Two contiguous interior parcels on the curve. Buyer is using the
land for truck parking and has put a modular building on the site
that is used for a small office.
Record ID
Property Type
Address
Location
Tax ID
8008
14206 Transportation Ave, Laredo, Texas
West Side of Transportation Ave, 335 ft N. of Interamerica
Blvd
Webb CAD #237106
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Verification
Luis & Laura G. Hurtado
Easy Transportation, Inc.
12/16/2002
unknown
1325/618
Fee Simple
Market
Cash to seller
Warranty Deed
Seller had owned the property for at least 3 yrs prior to sale.
Sale Price
$80,000
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Level at grade; elevations - 505 NEC to 502 SWC
All available
Interior
Rectangular
no
Zone C, 481059 0650 B
145.20 X 300
12' utility easement along the southwesterly and southeasterly
boundaries of the property. No adverse easements were noted
on the available plats
None
None
None
Gross Land Size
Useable Land Size
Front Footage
1.00 acres - 43,560 s/f
1.00 acres - 43,560 s/f - 100%
145.20 ft
Indicators
Sale Price/Gross SF
$80,000
$1.84 s/f
$80,000
$1.84 s/f
Legal Description
Lot 3, Block 3, Interamerica Distribution Park Phase I, Laredo, Webb County, Texas
Remarks
Site is an inside, standard one acre industrial lot.
Record ID
Property Type
Address
Location
Tax ID
8082
14710 Atlanta, Laredo, Texas
SWC of Atlanta & Quivira Dr
Webb CAD #237235
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Verification
Richard Boswell & Sandra Ortiz
Carrillo Octavio
7/28/2005
unknown
Fee Simple
Arms Length
Interviw with Lula Morales, Broker - 1/10/07 - P Lorenzen
Sale Price
$125,000
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Level but elevated above street with severe drop at NEC to street
level; Elevations 474' SWC, 464' NWC, 460' NEC, 467' SEC;
All available to the site
Corner - fronts on two secondary streets
Rectangular
no
Flood Zone C
225 X 340 (less 28.26 corner cut)
Typical for industrial park
None
None
View to the NE with topo sloping away from site
Gross Land Size
Useable Land Size
Front Footage
1.8549 acres - 80,799 s/f
1.8549 acres - 80,799 s/f
225 feet
Indicators
Sale Price/Gross SF
$67,389 acre
$1.55 s/f
$67,389 acre
$1.55 s/f
Legal Description
Lot 1, Block 4, Pan American Business Park III, City of Laredo, Webb County, Texas.
Remarks
Site has been improved with a small office building, asphalt
parking, and a chain link fence around perimeter and is used as
a truck / trailer parking facility.
Record ID
Property Type
Address
Location
Tax ID
8073
4304 Trade Center Blvd., Laredo, Texas
North side of Trade Center Blvd., between Import & Export
Webb CAD #237274
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Verification
Ferrion Corp
Rubio's Development
5/2/2006
unknown
2087/714
Fee Simple
Market
Cash to Seller
Seller had owned the property since before 1999.
Sale Price
$150,743
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
"M-1", Light Industrial
Level to slightly sloping; elevations - 495 SEC to 479 NWC
All available
Interior
Rectangular
no
Flood Zone C
223.38 X 390 X 172.48 X 20.00 X 50.90 X 410
No known adverse
None
None
None
Gross Land Size
Useable Land Size
Front Footage
2.0234 acres - 88,139 s/f
2.0234 acres - 88,139 s/f
223.38 feet
Indicators
Sale Price/Gross SF
$74,500
$1.71s/f
$74,500
$1.71s/f
Legal Description
Lot 11, Block 1, International Trade Center, Laredo, Webb County, Texas
Remarks
Asphalt paving on property in fair conditoin given no contributory
value.
Record ID
Property Type
Address
Location
Tax ID
8083
18729 Metropolitan, Laredo, Texas
SEC of Metropolitan & World Trade Center Loop
Webb CAD #256382
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Laredo Millennium Propreties, Ltd.
Mauricio Murillo
10/24/2006
unknown
Fee Simple
Arms Length
Verification
Property has been owned by Laredo Millennium Properties, Ltd.
since original development of the Park previous to 2001.
Interview with Lula Morales, Broker - 1/10/07 - P Lorenzen
Sale Price
$292,950
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Gross Land Size
Useable Land Size
Front Footage
Indicators
Sale Price/Gross SF
Level; elevations - 509 SEC to 512 NWC
All available
Corner - Frontage on three sides with Main Highway Visibility
Roughly square
no
Flood Zone C
400 X 353 X 425 X 275 (with additional dimensions on corner
curvatures)
typical for industrial park
None
None
Frontage on Mines Rd giving highway visibility.
3.2550 acres - 141,788 s/f
3.2550 acres - 141,788 s/f
Fronts on Mines road (353 feet), World Trade Center Loop
(approx 425 feet), and Metropolitan (Approx 275 feet)
$90,000 per acre
$2.07 s/f
$90,000 per acre
$2.07 s/f
Legal Description
Lot 8, Block 1, Millennium Park, City of Laredo, Webb County, Texas.
Remarks
High visibility corner parcel. Used for truck / trailer parking after
sale.
MAP OF IMPROVED SALES COMPARABLES
Improved Sale Comparables - Page 1 of 16
Comparable Improved Sale #1
Record ID
Building Name
Property Type
Address
Location
Tax ID
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
1003
Tramimundo, Inc. Building
Industrial Office/Warehouse
South of Trade Center Blvd on Import Rd
Webb CAD
Ricardo and Julie Zaragoza
ASA Group, Ltd
June 10, 2002
Unknown
1227/01 & 1227/100
Fee Simple
Market
Cash to seller
Warranty Deed
Verification
Zaragoza had owned the property more than 3 years before sale.
Two separate Colleague MAI appraisers
Sale Price
$335,000
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Level. Elevation - 509' at street to 512' at back of site.
All available to site.
Interior - 6th lot from intersection.
Rectangular
none
Flood Zone "C" - 4810590650B - May 17, 1982
145.2 X 300
No known adverse
Asphalt parking, perimeter chain link fencing.
Building described below.
None
Gross Land Size
Useable Land Size
Front Footage
43,560 s/f
43,560 s/f
145.20 feet
Building Data
Building Type
Gross Building Area (GBA)
Gross Leasable Area (GLA)
Area Breakdown (uses)
Construction Type
Foundation
Condition
Stories
Roof Type
HVAC
Sprinklers
Year Built
Other
Single Tenant Office/Warehouse - with dock high truck loading
and overhead doors
11,353 s/f
11,353 s/f
10,153 s/f warehouse - 1,200 s/f office
Metal
Slab
Average
One
Metal
Central A/C in office area. No HVAC in warehouse.
None
1994
Landscaping very minimal
Occupancy Data
Occupancy at time of sale
Lease Type
Occupancy Comments
Unknown
Unknown
Unknown
Income Analysis
Vacancy
Expenses
Source of Financial Data
$47,738
$2,387
$45,351
$15,055
$30,296
Colleague MAI appraiser's proforma
Indicators
Sale Price/SF GBA
Sale Price/SF GLA
Floor Area Ratio
Land to Building Ratio
Gross Income Multiplier
Effective GIM
Expenses S/F
Overall Cap Rate
Net Operating Income S/F
$29.51
$29.51
0.26
3.84
7.02
7.39
$1.33
9.04%
$2.67
Legal Description
Lot 17, Block 5, International Trade Center, Phase 2, Laredo, Webb County, Texas.
Remarks
This sale was part of a sale that involved the adjacent property (14409 Import Rd. - Sale #1004)
with the same seller and buyer. Price of this property was determined by allocation based on
building square footage.
Record ID
Building Name
Property Type
Address
Location
Tax ID
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Verification
Sale Price
1063
Unnamed Industrial Building
14418 Industry, Laredo, Texas
Third lot South of Trade Center Blvd., on West side of Industry.
Webb CAD 237323
Francis De La Grange Gomez
Alejandro Contreras
4/7/2006 - Morales says 3/29/06
Unknown
Book 2006, Page 67
Leased Fee - 3 year lease in place
Arms Length
Cash to Seller
Warranty Deed
Grantor had owned the property in excess of six years.
Byron Setser, MAI, Lula Morales, Broker, and Laredo National
Bank Loan Officer
$310,000 - Lula Morales had listed for $315,000
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Level. Elevation ranges from 499' - 505' above sea level.
Interior
Rectangular
None
Flood Zone "C" - 4810590650B - May 17, 1982
145.2 X 300
None
Gross Land Size
Useable Land Size
Front Footage
43,560 s/f
43,560 s/f
145.2 feet
Building Data
Building Type
Construction Type
Foundation
Condition
Stories
Roof Type
HVAC
Sprinklers
Year Built
Other
Occupancy Data
Lease Type
Occupancy Comments
and overhead doors
12,336 s/f
12,336 s/f
11,486 s/f warehouse, 850 s/f office
Pre-engineered steel frame with metal walls
Concrete dock high
Average
One
Standing seam metal
Package A/C office area only
None
1993
Eave height - 20 ft
Tenant - KACIA Services, LLC - Sergio Cano
Gross Lease - tenant pays utilities & inside maintenance
Lease began 2/1/06, 3 yr term, no T/I's, no concessions, no
renewal options. Rent - $5,000 mo. Landlord maintains small
office in loft over main office.
Income Analysis
Vacancy
Expenses
Indicators
Sale Price/SF GBA
Sale Price/SF GLA
Floor Area Ratio
Effective GIM
Expenses S/F
Overall Cap Rate
$60,000
$3,000
$57,000
$14,250
$42,750
Revenue based on tenant's representation of rent schedule,
expenses based on proforma by appraiser
$25,13
$25.13
0.28
3.53
5.17
5.44
$1.16
13.79%
$3.47 s/f
Legal Description
Lot 3, Block 5, International Trade Center, Unit I, Laredo, Webb County, Texas.
Remarks
Record ID
Building Name
Property Type
Address
Location
Tax ID
1064
Third lot South of Trde Center Blvd., West side of Import Rd
Webb CAD 237345
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Verification
Manuel Riverol, et al.
Hector Hall Developments
6/20/2006 - Lula Morales says 6/15/06
Unknown
Book 2118, Page 119
Leased Fee.
Bulk sale discount - seller was highly motivated.
Cash to seller
Warranty Deed
Grantor had owned the property for more than five years
Byron Setser, MAI and Lula Morales, Broker
Sale Price
$300,000 - Lula Morales listed for $315,000
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Level.
Level. Elevation ranges from 499 - 505 feet above sea level.
Interior
Rectangular
None
Flood Zone "C" - 4810590650B - May 17, 1982
145.2' X 300'
None
Gross Land Size
Useable Land Size
Front Footage
43,560 s/f
43,560 s/f
145.2 ft.
Building Data
Building Type
Construction Type
Foundation
Condition
Stories
Roof Type
HVAC
Sprinklers
Year Built
Other
and overhead doors
12,276 s/f
12,276 s/f
11,426 s/f warehouse; 850 s/f office
Pre-engineered Steel frame with metal walls
Concrete dock high
Average
One
Standing seam metal
Package A/C in office area only
None
1994
3 overhead doors, 7 trailer parking spaces
Occupancy Data
Lease Type
Occupancy Comments
Tenant - Syntranet
$3,750 per month.
Tenant has been in place since 2000
Income Analysis
Vacancy
Expenses
Indicators
Sale Price/SF GBA
Sale Price/SF GLA
Floor Area Ratio
Effective GIM
Expenses S/F
Overall Cap Rate
$45,000
$2,250
$42,750
$15,792
$26,958
Revenue information from tenant; expenses from Colleague
appraiser
$24.44 s/f
$24.44 s/f
0.28
3.55
6.67
7.02
$1.29 s/f
8.99%
$2.20 s/f
Legal Description
Lot 3, Block 6, International Trade Center, Unit II, Laredo, Webb County, Texas.
Remarks
Purchased as investment by investor who owns several of the surrounding warehouses as
investments. Broker reported that the price was discounted for fast sale. Purchased in
conjunction with another similar property
Record ID
Building Name
Property Type
Address
Location
Tax ID
1066
Second lot from the South end of Import Rd, on East side.
Webb CAD 237341
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Verification
Manuel Riverol, et al
Hector Hall Development
6/20/2006 - Lula Morales says 6/15/06
Unknown
Book 2118, Page 119
Fee Simple
Bulk sale discount - seller was highly motivated.
Cash to Seller
Warranty Deed
Grantor had owned the property for more than five years
Byron Setser, MAI and Lula Morales, Broker
Sale Price
$400,000 - Lula Morales listed for $435,000
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Level. Elevation ranges from 512 - 518 feet above sea level.
All available to the site.
Interior
Approximately rectangular - curved frontage and wider in back of
lot than in front.
none
Flood Zone "C" - 4810590650B - May 17, 1982
300.25' X 196.12' X 357.41' X approximately 145' (curved frontage
None
Gross Land Size
Useable Land Size
Front Footage
55,548 s/f
55,548 s/f
Approximately 145 feet (curved frontage)
Building Data
Building Type
Construction Type
Foundation
Condition
Stories
Roof Type
HVAC
Sprinklers
Year Built
Other
Occupancy Data
Lease Type
Occupancy Comments
and overhead doors
16,276 s/f
16,276 s/f
15,426 s/f warehouse; 850 s/f office
Pre-engineered steel frame with metal walls
Concrete dock high
Average
One
Standing seam metal
Package A/C office only
None
1999
4 overhead doors, 8 trailer parking spaces,
Tenant occupied - Grupo Advanal Funding Svcs
$5,280 per month
Tenant stated that they are on month to month rental agreement
Income Analysis
Vacancy
Expenses
Indicators
Sale Price/SF GBA
Sale Price/SF GLA
Floor Area Ratio
Effective GIM
Expenses S/F
Overall Cap Rate
$63,360
$2,853
$60,507
$17,996
$42,510
Revenue information from tenant; expenses from colleague
appraiser
$24.58
$24.58
0.29
3.41
6.31
6.61
$1.11 s/f
10.63%
$2.61 s/f
Legal Description
Lot 21, Block 5, International Trade Center, Unit II, Laredo, Webb County, Texas.
Remarks
Purchased as investment by investor who owns several of the surrounding warehouses as
investments. Broker reported that the price was discounted for fast sale. Purchased in
conjunction with another similar property
Record ID
Building Name
Property Type
Address
Location
Tax ID
1059
T&A Forwarding Agency Building
South of Trade Center Blvd on Import Rd
Webb CAD 237338
Sale Data
Grantor
Grantee
Sale Date
Marketing Time
Deed Recording Info
Property Rights
Conditions of Sale
Financing
Type of Instrument
Sale History
Verification
Tramimundo, Inc.
Carlos Montes De Oca
January 16, 2007
Unknown
Volume 2275, Page 580-583
Fee Simple
Arms Length
Cash to seller
Grantor purchased the property in June 2002 for $365,000.
Jon Tillman / colleague appraiser
Sale Price
$431,500
Land Data
Zoning
Topography
Utilities
Corner/Interior
Shape
Rail Service
Flood Info
Dimensions / Depth
Easements
Site Improvements
Other Improvements
Level. Elevation - 509' at street to 512' at back of site.
Interior - 5th lot from intersection.
Rectangular
None
Flood Zone "C" - 4810590650B - May 17, 1982
145.2' X 300'
No known adverse
None
Gross Land Size
Useable Land Size
Front Footage
43,560 s/f
43,560 s/f
145.20 feet
Building Data
Building Type
Construction Type
Foundation
Condition
Stories
Roof Type
HVAC
Sprinklers
Year Built
Other
and overhead doors
12,391 s/f
12,391 s/f
11,157 s/f warehouse - 1,234 s/f office
Metal
Slab
Average
One
Metal
Central A/C in office area. No HVAC in warehouse.
No
1994
Landscaping very minimal
Occupancy Data
Lease Type
Occupancy Comments
Owner occupied
N/A
N/A
Income Analysis
Vacancy
Expenses
$49,068
$2,453
$46,615
$13,070
$33,545
Appraisal on property prepared by MAI colleague 12/2006
Indicators
Sale Price/SF GBA
Sale Price/SF GLA
Floor Area Ratio
Effective GIM
Expenses S/F
Overall Cap Rate
$34.82
$34.82
0.28
3.52
8.79
9.26
$1.05
7.77%
$2.71
Legal Description
Lot 18, Block 5, International Trade Center, Phase 2, Laredo, Webb County, Texas.
Remarks
This property sold for $365,000 in June 2002. It was part of a sale of this and the adjacent
property and the price of $365,000 was established by proration using improvement square
footage. Site value estimated at $75,000.
MAP OF RENT COMPARABLES
Addenda - Rent Comparables - Page 1 of 7
Comparable Rental #1
Record ID
Building Name
Property Type
Address
Location
Unit/Space Leased
Lease Data
Landlord
Tenant
Business of Tenant
Lease Date
Lease Rate
Lease Terms
Length of Lease
Tenant Improvements
Rent Concessions
GLA of Leased Space
GLA of Entire Building
Site area
Space Description
2001
None
Industrial - office/warehouse
14418 Industry Ave, Laredo, Texas
South of Trade Center Blvd on Industry Ave
Entire building
Alejandro Contreras
KACIA Services, LLC - Sergio Cano, Manager
Brokerage services for shipping / trucking
2/1/2006
$5,000 per month; equals $.4053 s/f mo; equals $4.86 s/f yr
Gross lease; tenant pays utilities and inside maintenance
Three year initial term; no renewal options
None
None
12,336 s/f
12,336 s/f
43,560 s/f
Single tenant office/warehouse building, dock high loading; office
area of about 800 s/f = 6.5%
Verification
Sergio Cano, Manager. Personal interview with P Lorenzen on
1/10/07
Remarks
Landlord maintains a small office in loft area over office area of
leased space.
Record ID
Building Name
Property Type
Address
Location
Unit/Space Leased
Lease Data
Landlord
Tenant
Business of Tenant
Lease Date
Lease Rate
Lease Terms
Length of Lease
Tenant Improvements
Rent Concessions
GLA of Leased Space
Site area
Space Description
Verification
2002
None
14408 Export, Laredo, Texas
South of Trade Center Blvd on Export Rd
Entire building
Richardo M. Flores
Sky Electronics Corp - Mario Garcia, Sales Manager
Electronics manufacturing/distrubution
September 1 2006
$4,000 mo; $.32 s/f mo; = $3.84 sf yr
Gross; tenant pays utilities and inside maintenance
one year
None
None
12,488 s/f
12,488 s/f
43,560 s/f
Single tenant office/warehouse building, dock high loading; office
area of about 600 s/f = 4.8%
Conversation with Mario Garcia, General Manager of tenant - by
P Lorenzen - 1/10/07
Remarks
Record ID
Building Name
Property Type
Address
Location
Unit/Space Leased
Lease Data
Landlord
Tenant
Business of Tenant
Lease Date
Lease Rate
Lease Terms
Length of Lease
Tenant Improvements
Rent Concessions
GLA of Leased Space
Site area
Space Description
2003
None
618 Enterprise St., #2, Laredo, Texas
Corner of Enterprise & Interamerica Blvd
Space #2
Juan A. Madrigal-Cortez
Garo Forwarding, Inc. - Juan Jose Rodriguez
Shipping / Warehousing / Trucking
April 1, 2006
$3,000 mo; $.30 s/f mo; = $3.60 s/f year
Gross - tenant pays utilities and inside maintenance
One Year
None
None
10,000 s/f
35,000 s/f - one of two buildings on site - other is 21,000 s/f
3.5548 acres
Open warehouse space, dock high loading; two-story finished
office of about 1,200 s/f.
Verification
Personal interview with Juan Rodriguez by Paul Lorenzen
1/10/07
Remarks
This space is part of a two building complex with shared parking,
much of which is currently used as outside storage by the
tenants. The building shows a fair amount of deferred
maintenance.
Record ID
Building Name
Property Type
Address
Location
Unit/Space Leased
Lease Data
Landlord
Tenant
Business of Tenant
Lease Date
Lease Rate
Lease Terms
Length of Lease
Tenant Improvements
Rent Concessions
GLA of Leased Space
Site area
Space Description
2004
none
618 Enterprise St., #4-5, Laredo, Texas
Corner of Enterprise & Interamerica Blvd
Suite #4 & #5 - All of Building #2
Juan A. Madrigal-Cortez
Montalvo Enterprises - Antonio Montalvo
Plastics recycling
February 1, 2007
$6,000 mo; $.2857 s/f mo; $3.43 s/f yr
Gross; tenant pays utilities and inside maintenance
One year
None
None
21,000 s/f
21,000 s/f
3.5548 acres
Open warehouse space, dock high loading; two small offices with
about 600 s/f each.
Verification
Antonio Montalvo, tenant - personal interview with Paul Lorenzen
1/10/07
Remarks
The space is actually two warehouse suites in a multi-tenant
building that is occupied by one tenant.
Record ID
Building Name
Property Type
Address
Location
Unit/Space Leased
Lease Data
Landlord
Tenant
Business of Tenant
Lease Date
Lease Rate
Lease Terms
Length of Lease
Tenant Improvements
Rent Concessions
GLA of Leased Space
Site area
Space Description
2005
El Portal Industrial Park
Industrial / Warehouse Distribution building - Multi-tenant
8414 El Gato, Laredo, Texas
Auburn Rd & El Gato Rd, Just East of Mines Rd.
Suite A
Insu-Tech, LLC
Dicex International
Distribution, Consulting, Customs Brokerage
November 1, 2006
$.38 s/f mo / $4.56 s/f yr
Gross Lease - Landlord pays all expenses of building
3 years
None
None
59,544 s/f
118,600 s/f
6.497 acres
2,191 s/f office, balance is warehouse / distribution space. 12
overhead dock high doors, 20' ceiling, concrete tilt-wall
construction, built in 2002.
Verification
Leasing agent - Mike Mangum, Tarantino Properties, Inc.
Remarks
Very attractive new building in newer industrial park. Excellent
location for truck access to I-37 and international bridges. Webb
CAD Property ID: 221349
Record ID
Building Name
Property Type
Address
Location
Unit/Space Leased
Lease Data
Landlord
Tenant
Business of Tenant
Lease Date
Lease Rate
Lease Terms
Length of Lease
Tenant Improvements
Rent Concessions
GLA of Leased Space
Site area
Space Description
2006
El Portal Industrial Park - Auburn Building
Industrial / Warehouse distribution - Multi-tenant
11903 Auburn, Laredo, Texas
Corner of Auburn & El Gato
Suite #A
T-Serve, LLC
Onilog, LP
Distribution, Consulting, Customs Brokerage
April 1, 2006
$.38 s/f mo / $4.56 s/f yr
Gross Lease - Landlord pays all expenses of building
2 years
Minimal - $500.00
None
14,960 s/f
30,751 s/f
3.4666 acres
1,134 s/f of office finish, concrete tilt-wall construction built in
2000, 1 drive in ramp, 20' ceiling, dock high loading with covered
overhang.
Verification
Leasing agent - Mike Mangum, Tarantino Properties, Inc.
Remarks
Webb CAD Property ID #221371
NEIGHBORHOOD MARKET SURVEY
During January, 2007, I performed a comprehensive market survey of inventory and occupancy in the
three industrial parks identified as the Neighborhood of the Subject property: The International Trade
Center, InterAmerica Distribution Park, and the Pan American Business Park. These three business
parks comprise a homogeneous neighborhood of similar warehouse / distribution properties. The
map shown below gives the approximate boundaries of these three parks, showing their proximity to
each other and the subject. The following pages give the summary table of this survey followed by
pages listing each parcel in this neighborhood, its improvement size and occupancy.
Neighborhood Survey - Page 1 of 12
SUMMARY TABLE
The table below gives the totals of the land area in each of these three industrial parks, the number of undeveloped lots, and amount
available by acreage. The building analysis lists the number of buildings, Gross Building Area of and the building count in each park
followed by the vacancy rate calculated both by building count and by Gross Building Area.
Occupancy Survey
Three Industrial Parks
Laredo, Texas
January 27, 2007
Name of Park
LAND ANALYSIS
Total Acres
Number Parcels
Average Parcel Size
Parcels Available for Development
Percent Available by Count
Acres Available for Development
Percent Available by Acreage
BUILDING ANALYSIS
Number of Buildings
Gross Building Area (S/F)
Average Building Size (S/F)
Number of Buildings Vacant
Percent of Buildings Vacant
Gross Building Area Vacant
Percent of GBA Vacant
International
Trade Ctr
InterAmerica
Industrial
Pan American
Industrial
Totals
172.5666
112
1.5408
15
13.39%
25.7041
14.90%
200.639
103
1.9480
18
17.48%
28.4979
14.20%
154.8383
39
3.9702
15
38.46%
60.6896
39.20%
528.0439
254
7.4589
48
18.90%
114.8916
21.76%
95
1,608,897
16,936
5
5.26%
69,684
4.33%
77
1,768,984
22,974
4
5.19%
90279
5.10%
21
656,693
31,271
2
9.52%
28,490
4.34%
193
4,034,574
20,905
11
5.70%
188453
4.67%
Street
Address
Land Size
(Acres)
Bldg Size
(SF)
GBA
Vacant GBA Vac Land
Land
Parking
Block
Lot
7
11,12
Atlanta Dr
14413-19
4.0000
30,480
30,480
Comments
MB International Corp
7
13
Atlanta Dr
14411
1.5000
12,291
12,291
JECOV Fwd
7
14
Atlanta Dr
14409
1.5000
12,291
12,291
Benito Rangel Trucking
7
15
Atlanta Dr
14407
1.5000
12,291
12,291
Algebrez & LVC Group
7
16
Atlanta Dr
14405
1.5000
12,291
12,291
Losen Agencia
7
17
Atlanta Dr
14403
1.5000
12,244
12,244
ATA Fwd
7
18
Atlanta Dr
14401
2.5020
30,150
30,150
Logis, Inc.
6
12
Export Rd
14417
1.0000
0
6
13
Export Rd
14415
1.0000
12,274
12,274
6
14
Export Rd
14413
1.0000
1,092
1,092
6
15
Export Rd
14411
1.0000
17,008
17,008
6
16
Export Rd
14409
1.0000
7,968
7,968
6
17
Export Rd
14407
1.0000
12,166
12,166
Global Funding Svcs
6
18
Export Rd
14405
1.0000
10,936
10,936
Fedai Fwd
6
19
Export Rd
14403
1.0000
12,276
12,276
T & A Fwd
6
20
Export Rd
14401
1.3261
19,286
19,286
Occupied - no name on bldg
7
1
Export Rd
14420
1.0000
16,141
16,141
Casa Blanca, USA
7
2
Export Rd
14418
1.0000
16,141
16,141
Interlink Logistics
7
3
Export Rd
14416
1.0000
12,000
12,000
Delta Express - SUBJECT
7
4
Export Rd
14414
1.0000
12,276
12,276
7
5
Export Rd
14412
1.0000
12,276
12,276
7
6
Export Rd
14410
1.0000
12,276
12,276
Trans Container
7
7
Export Rd
14408
1.0000
12,488
12,488
7
8
Export Rd
14406
1.0000
12,488
12,488
Salazar Fwd
7
9
Export Rd
14404
1.0000
6,000
6,000
D K Transfer
7
10
Export Rd
14402
1.1726
14,300
14,300
Omega Trucking
9
4,5,6
Free Trade St
4116-20
3.6052
12,000
12,000
Logis, Inc.
10
1
Free Trade St
4119
1.8416
23,450
23,450
Multi-Tenant - 100% Occupied
10
2
Free Trade St
4117
1.5000
12,291
12,291
Ali International
10
3
Free Trade St
4115
1.5000
12,291
12,291
Fowarding, Distribution, Logistics, LLC
5
12
Import Rd
14421
1.0000
11,088
11,088
Trans Discovery Fwding
Truck parking
Chantler Motorcarriers
Benavidas Trucking
Jorsa Trucking
Vabico Trucking
P&P Transportation
12,276
Vacant Building
Street
Address
Land Size
(Acres)
Bldg Size
(SF)
GBA
Vacant GBA Vac Land
Land
Parking
Block
Lot
5
13
Import Rd
14419
1.0000
30,828
30,828
Wheels, Inc.
Comments
5
15
Import Rd
14415-17
2.0000
30,090
30,090
Cimino Bros Produce
5
16
Import Rd
14413
1.0000
17,509
17,509
Garza Fwd
5
17
Import Rd
14411
1.0000
11,353
11,353
VM Fwding
5
18
Import Rd
14409
1.0000
12,364
12,364
T & A Fwd
5
19
Import Rd
14407
1.0000
12,364
12,364
C.T.L. Fwd
5
20
Import Rd
14405
1.0000
9,975
9,975
5
21
Import Rd
14403
1.2752
16,276
16,276
5
22
Import Rd
14401
1.8041
24,622
24,622
6
1
Import Rd
14420
1.0000
0
6
2
Import Rd
14418
1.0000
12,276
12,276
Jaame Trucking
6
3
Import Rd
14416
1.0000
12,276
12,276
Syntranet
6
4
Import Rd
14414
1.0000
12,276
12,276
6
5
Import Rd
14412
1.0000
12,276
12,276
Kalisch Brokers
6
6
Import Rd
14410
1.0000
12,276
12,276
R C Laredo Svcs
6
7
Import Rd
14408
1.0000
12,276
12,276
6
8
Import Rd
14406
1.0000
12,276
12,276
6
9
Import Rd
14404
1.0000
12,276
12,276
6
10
Import Rd
14402
1.3623
12,060
12,060
Royal Carriers
4
20
Industry Ave
14401
1.0000
12,336
12,336
FAO Freight Fwd
4
21
Industry Ave
14403
1.0000
12,336
12,336
R G Fwd
4
22
Industry Ave
14405
1.0000
12,336
12,336
4
23
Industry Ave
14407
1.0000
12,336
12,336
4
24
Industry Ave
14409
1.0000
12,376
12,376
4
25
Industry Ave
14411
1.0000
0
4
26
Industry Ave
14413
1.0000
0
4
27
Industry Ave
14415
1.0000
12,336
12,336
Nafta Fwd
4
28
Industry Ave
14417
1.0000
12,336
12,336
Mante Logistics
4
29
Industry Ave
14419
1.0000
12,376
12,376
IN & OUT Cardo
4
30
Industry Ave
14421
1.6380
20,657
20,657
Santos Fwd
North Star Fibers, Inc.
Grupo Aduanal Fwd Svcs
AAA Cooper Transportation
1.0000
12,276
Vacant Land - Modular bldg on site
Vacant Building
ESCA, Inc.
12,276
Vacant Building
Speed Systems International
12,336
Vacant Building
GRV Freight Svcs
1.0000 Vacant Lot - equipment storage
1.0000 Vacant Lot - equipment storage
Block
Lot
Street
Address
Land Size
(Acres)
Bldg Size
(SF)
GBA
Vacant GBA Vac Land
Land
Parking
Comments
Daga, LC
5
1
Industry Ave
14422
1.3454
16,064
5
2
Industry Ave
14420
1.0000
0
5
3
Industry Ave
14418
1.0000
12,336
12,336
KACIA Svcs
5
4
Industry Ave
14416
1.0000
12,336
12,336
Manuel Gonzales Fwd
5
5
Industry Ave
14414
1.0000
12,336
12,336
Servicio Aduanero Internacional
5
6
Industry Ave
14412
1.0000
12,336
12,336
Grupo Aduanero Global
5
7
Industry Ave
14410
1.0000
17,264
17,264
Ocampo Yudico, Inc.
5
8
Industry Ave
14408
1.0000
10,266
10,266
Ribesa Corp
9,10,11 Industry Ave
14402-6
3.0000
30,738
30,738
5
16,064
C&I Trucking - used for truck parking
Servio Luan, Inc.
1.1863 Vacant Lot - Truck Storage
3
11
Investment Ave
14417
1.1863
0
3
12
Investment Ave
14415
1.0000
0
3
15
Investment Ave
14409
1.0000
20,802
20,802
3
16
Investment Ave
14407
1.0000
18,975
18,975
3
17
Investment Ave
14405
1.0000
18,975
18,975
3
18
Investment Ave
14403
1.0000
0
3
19
Investment Ave
14401
1.0000
0
4
1,2,3
Investment Ave
14418-22
3.332
15,300
4
4
Investment Ave
14416
1.0000
0
Asesoria Internacional
1.0000 Vacant Lot - Fork Lift Storage
1.0000 Vacant Lot - Fork Lift Storage
Luis A Gonzalez CH Fwd
15,300
Cosme Ordonez Int'l
4
5
Investment Ave
14414
1.0000
5,625
4
6
Investment Ave
14412
1.0000
0
5,625
4
7
Investment Ave
14410
1.0000
12,372
12,372
Mardi
4
8
Investment Ave
14408
1.0000
12,677
12,677
Nicolas Trevino Fwd
4
9
Investment Ave
14406
1.0000
9,984
9,984
4
10
Investment Ave
14404
1.0000
15,968
15,968
Villarreal 7 Medina Fwd
11
Investment Ave
1,2,3,
10,13,14 Maquila Loop
14402
1.0000
15,120
15,120
1.0000
Vacant Land
14420
6.7677
78,344
78,344
V & V Fwd
Interamerica Fwd includes 14413,15,19
Industry
3
4,5
Maquila Loop
14412-14
2.0000
55,832
55,832
IMEX Fwd
3
6
Maquila Loop
14410
1.0000
15,284
15,284
APC Logistics
3
7
Maquila Loop
14408
1.0000
12,636
12,636
CAT Controls, Inc.
3
8
Maquila Loop
14406
1.1959
12,136
12,136
NAVA Trucking Sales
4
3
Land Size
(Acres)
Bldg Size
(SF)
GBA
Vacant GBA Vac Land
Land
Parking
14404
1.2441
16,614
16,614
Comments
Trade Center Blvd
4460
2.5990
33,325
33,325
R&G Logistics
Trade Center Blvd
4450
2.0000
14,332
14,332
3
Trade Center Blvd
4444
6.0034
0
1
4
Trade Center Blvd
4430
4.4000
25,000
25,000
BDC Interamerica, LLC
1
5
Trade Center Blvd
4420
3.0000
22,614
22,614
MZA Fwd
1
6
Trade Center Blvd
4402
3.8555
30,819
30,819
ABC Supply
1
7
Trade Center Blvd
4320
4.4571
15,000
15,000
1
8
Trade Center Blvd
4310
2.5000
0
1
9
Trade Center Blvd
4308
2.0000
0
1
10
Trade Center Blvd
4306
2.0000
20,520
1
11
Trade Center Blvd
4304
2.0234
0
Block
Lot
Street
3
9
Maquila Loop
1
1
1
2
1
Address
Graco Logistics
Vacant Land - for lease sign
6.0034
Pete Gallegos Paving
20,520
Vacant Building - for lease - Swisher Realty
20,520
1
12
Trade Center Blvd
4302
1.9910
0
1
13
Trade Center Blvd
4208
2.0833
24,382
1
14
Trade Center Blvd
4206
2.0000
0
1
15
Trade Center Blvd
4204
2.0000
29,261
29,261
ATF International
1
16
Trade Center Blvd
4202
2.0000
12,000
12,000
Uninet Fwd
8
1
Trade Center Blvd
4120
1.9280
24,120
24,120
Logis, Inc.
8
2
Trade Center Blvd
4118
1.5000
12,291
12,291
Trafago Fwd
24,382
Vacant Lot
2.0000
8
3
Trade Center Blvd
4116
1.5000
12,291
12,291
San Ramon Logistics
9
1,2,3
Trade Center Blvd
4115-19
3.6274
64,998
64,998
Logis Inc.
1,608,897
Land
Acres
95
4
1,608,897
1.5408
112
Undeveloped parcels
15
Total Parcels
Total Buildings
10.0034
172.5666
Parcels/Bldgs
Undeveloped Acres
5
Buildings
S/F
Average Size
69,684
95
25.7041
112
16,936
95
13.39%
Vacant Buildings
14.90%
Total Bldg GLA
1,608,897
5
Vacant Bldg GLA
69,684
5.26%
4.33%
15.7007
11
InterAmerica Distribution Park
Block
4
Lot
Street
13,14,15 Atlanta Dr.
Address
Land Size
(Acres)
Bldg Size
(SF)
GBA
Vacant GBA Vac Land
Land
Parking
Comments
14201
6.0235
19,948
19,948
Zego group
20,400
Zego group
5
1
Atlanta Dr.
14202
1.5709
20,400
4
12
Atlanta Dr.
14205
2.0087
0
4
11
Atlanta Dr.
14207
2.0087
39,650
39,650
EXL, Inc.
5
4
Atlanta Dr.
14208
1.0003
16,240
16,240
C. Logistics Group
5
5
Atlanta Dr.
14210
1.0005
15,894
15,894
MP Brokerage
4
10
Atlanta Dr.
14211
2.0087
22,610
22,610
TC International Corp
5
6
Atlanta Dr.
14212
1.0005
21,604
21,604
Day Star - 14214
4
9
Atlanta Dr.
14213
2.0087
13,500
13,500
Neryis Funding
4
16
Atlanta Dr.
14215
1.0017
17,820
17,820
Overhead Door
5
7,8
Atlanta Dr.
14218
2.0010
27,154
27,154
GDL Brokerage & Fwd
5
9
Atlanta Dr.
14220
0.9979
10,000
10,000
Sonia Prieto Funding
5
2,3
Atlanta Dr.
14204-6
2.0005
27,930
27,930
Multi-tenant - both occuipied
9
8
14108
1.4297
15,784
15,784
Business Ave.
Truck Parking - occupied
9
7
Business Ave.
14110
1.4323
15,784
15,784
5
17
Business Ave.
14201
1.1663
15,190
15,190
Rogerio Cavazos fwd grp
8
1
Business Ave.
14202
1.4752
17,280
17,280
Martinez Arzani
5
16
Business Ave.
14203
1.2692
14,964
14,964
ABD Group
8
2
Business Ave.
14204
1.3042
10,000
10,000
5
15
Business Ave.
14205
1.2879
390
390
16,000
Deisan Fwd
Vacant Land - Truck parking with
1.2879 small office bldg
Ottos Tire svc
8
3
Business Ave.
14206
1.2879
16,000
5
14
Business Ave.
14207
1.2879
1,296
1,296
8
4,5,6
Business Ave.
14208,10,18
4.0307
34,230
34,230
McBar International
5
13
Business Ave.
14209
1.2879
16,728
16,728
Alfredo Casso & Co
5
12
Business Ave.
14211
1.2879
56,100
56,100
5
10
Business Ave.
14215
1.6149
0
5
11
Business Ave.
14243
1.3025
15,540
15,540
Arro Int.
3
16
Distribution Ave.
14201
1.6000
30,316
30,316
Occupied but no name on bldg
4
1
Distribution Ave.
14202
3.9000
0
3
15
Distribution Ave.
14203
1.0000
17,484
Leon Fwding
Arro Int.
1.6149
Vacant Land
Arro Int.
17,484
Meja Fwding
Street
Address
Land Size
(Acres)
Bldg Size
(SF)
GBA
Vacant GBA Vac Land
Land
Parking
Comments
Vacant Building - no signs
Block
Lot
3
14
Distribution Ave.
14205
1.0000
19,680
4
2,3
Distribution Ave.
14206
4.0174
0
Arro Int.
3
13
Distribution Ave.
14207
1.0000
0
Nepi Inc.
3
12
Distribution Ave.
14209
1.0000
28,937
28,937
Nepi Inc.
4
4
Distribution Ave.
14210
2.0087
18,680
18,680
Arro Int.
3
11
Distribution Ave.
14211
1.0000
10,200
10,200
Borden Milk
3
10
Distribution Ave.
14213
1.0000
16,000
16,000
AN Fwding
4
5,6
Distribution Ave.
14214
4.0174
44,072
44,072
Cross Border Logistics
3
9
Distribution Ave.
14215
1.0000
12,444
12,444
Distribution Ave.
19,680
19,680
MD International
Vacant - Truck Parking - Key Intl
2.0087 Carriers
Coordinatdueres Aduandales
4
7
14216
2.0087
0
1
8,9
Enterprise St.
302
1.8844
15,747
15,747
1
10
Enterprise St.
304
1.0000
12,040
12,040
Springfield Wire
1
11
Enterprise St.
306
1.0000
10,192
10,192
MB Fwding
1
12
Enterprise St.
308
1.0400
15,990
15,990
Villarreal Trevino Fwd
1
13
Enterprise St.
310
1.0800
36,442
36,442
Laredo Logistics
1
14,15
Enterprise St.
402-4
2.4000
30,000
30,000
Global Express
1
16
Enterprise St.
406
1.2000
0
1
18
Enterprise St.
410-12
2.9818
36,952
36,952
Celadon Trucking
6
1
Enterprise St.
502
1.4287
14,400
14,400
6
2
Enterprise St.
504
1.4934
29,388
29,388
6
5,6
Enterprise St.
510-12
2.3921
15,525
15,525
Leticia Gonzalez Inc.
6
7
Enterprise St.
514
2.2911
11,664
11,664
Integral Solutions Fwd
8
7
Enterprise St.
609
2.1163
12,400
12,400
Lamon International
8
8
Enterprise St.
611
1.5302
10,000
10,000
8
9
Enterprise St.
613
1.5306
0
1.5306
Vacant land
8
10
Enterprise St.
615
1.5351
0
1.5351
Vacant Land
6
12,13
Enterprise St.
614-16
3.0612
15,394
15,394
Intercargo Svcs
6
14
Enterprise St.
618-20
3.5853
57,800
57,800
8
11
Enterprise St.
619
1.6270
30,000
30,000
6
16
Enterprise St.
622
1.5611
0
C Martinos Inc.
FM Fwd
Occupiied bldg - no name
1.5611
Vacant Land
Block
Lot
Street
Address
Land Size
(Acres)
Bldg Size
(SF)
GBA
Vacant GBA Vac Land
Land
Parking
Comments
Vacant Land
6
17
Enterprise St.
624
1.5611
0
1.5611
6
18
Enterprise St.
626
1.5552
0
1.5552
6
22
Enterprise St.
701
1.3161
0
9
4
Enterprise St.
702
2.6753
35,000
35,000
6
23
Enterprise St.
705-7
2.6322
32,875
32,875
9
5
Enterprise St.
706
1.3161
0
9
2
Interamerica Blvd.
507
2.0599
17,200
6
25
Enterprise St.
709
1.3161
0
6
26
Enterprise St.
711
1.5542
15,410
15,410
6
3,4
Enterprise St.
506-8
4.9091
21,380
21,380
Old Dominion Freight
6
8,9
Enterprise St.
606-8
3.1222
18,498
18,498
Glen Raven Trans.
6
10,11
Enterprise St.
610-12
4.9863
19,20,21 Enterprise St.
628-30
5.8892
17,477
17,477
6
Vacant land
Vacant Land - small 672 s/f modular
1.3161 bldg
Intercontinential
1.3161 Vacant Land - truck parking
17,200
1.3161 Vacnat Land - truck parking
Vacant Building - for rent - 727-0099
15,410
Watkins Motor Lines
Estes Express Lines
C Martinos Inc.
1
17
Enterprise St.
1.4589
2
12
Interamerica Blvd.
401
1.7530
13,440
2
13
Interamerica Blvd.
403
1.8950
0
2
14
Interamerica Blvd.
407
1.4032
30,502
30,502
Carter Express
2
15
Interamerica Blvd.
413
3.0123
36,000
36,000
Multi-tenant - 100% occuipied
7
1
Interamerica Blvd.
501
1.3656
16,038
16,038
Foreign Trade Center
7
2
Interamerica Blvd.
503
1.2922
300
300
Foreign Trade Center
9
1
Interamerica Blvd.
505
1.5952
15,699
15,699
9
3
Interamerica Blvd.
509
1.2714
25,189
25,189
2
16
Interamerica Blvd.
1
7
Transportation Ave.
12413
2.0000
0
2
5
Transportation Ave.
14101
2.0000
45,474
45,474
2
6,7
Transportation Ave.
14102-4
2.0000
22,456
22,456
2
4
Transportation Ave.
14103
2.0000
0
2
3
Transportation Ave.
14105
2.0000
0
2
8,9
Transportation Ave.
14106-8
2.0000
21,796
2
2
Transportation Ave.
14107
2.0000
0
1.6040
30,000
JMC Fwd
13,440
1.8950
30,000
Vacant Land - fenced
Multi-tenant - 100% occuipied
25,189
30,000
Multi-Tenant - Both vacant
Vacant Building for lease - 236-9617
Trans Maritime, Inc.
Mercuryt Fwd
Naviotex Inc.
2.0000 Vacant land - truck parkinig
21,796
New Century Freight
2.0000 Vacant land - truck parking
Block
Lot
Street
Address
2
1
2
10,11
Transportation Ave.
1
1
Transportation Ave.
3
1
Transportation Ave.
1
2
Transportation Ave.
3
2
3
3
3
Transportation Ave.
14109
Land Size
(Acres)
Bldg Size
(SF)
GBA
Vacant GBA Vac Land
Land
Parking
Comments
2.0000 Vacant land - truck parking
Ocampo Dist
2.0000
0
14110
2.4052
27,200
27,200
14201
1.0000
3,372
3,372
14202
1.5000
36,644
36,644
14203
2.7934
0
Transportation Ave.
14204
1.0000
0
Transportation Ave.
14206
1.0000
2,016
2,016
4
Transportation Ave.
14208
1.0000
19,890
19,890
3
5
Transportation Ave.
14210
1.0000
0
3
6,7
Transportation Ave.
14212-14
2.0000
18,080
18,080
Genesis Trucking
1
8
Transportation Ave.
14215
3.0100
50,680
50,680
Oscar Fernandex of Tx
3
8
Transportation Ave.
14216
1.0000
12,480
12,480
Del Bajio Logistics
1
3,4,5,6
Transportation Ave.
14205-11
8.0000
150,105
150,105
ALA Trucking parking - no building
Michelin Tires
Acres
103
Undeveloped parcels
18
Total Parcels
90,279
77
4
Total Buildings
77
12.2530
8
1,768,984
200.639
28.4979
103
Vacant Land
Trans Maritime, Inc.
200.6390
Parcels/Bldgs
Undeveloped Acres
Axel Brokers
Buildings
S/F
Average Size
Easy Transport
1.0000
1,768,984
Land
Michelin Tires
22,974
77
17.48%
Vacant Buildings
14.20%
Total Bldg GLA
1,768,984
4
Vacant Bldg GLA
90,279
5.19%
5.10%
16.2449
10
3
1,2,3
Atlanta Dr
14502
6.1102
2,000
4
4
Atlanta Dr
14602
1.7801
24,616
24,616
4
3
Atlanta Dr
14610
2.4711
32,976
32,976
4
2
Atlanta Dr
14702
1.8595
26,075
26,075
4
1
Atlanta Dr
14710
1.8549
2,252
2
11,12,13
Atlanta Dr
14609-709
17.2998
129,523
2
1
Indian River Ave
4501
10.0000
0
2
2
Indian River Ave
4503
10.0000
0
2
10
Pan American Blvd.
4202
5.0000
4,550
4,550
9,10,11,12 Pan American Blvd.
4203
6.5000
125,218
125,218
4206
4.0000
0
2
9
Pan American Blvd.
Address
GBA
Lot
1
Street
Land Size Bldg Size
(Acres)
(SF)
Block
Vacant
GBA
Vac
Land
Land
Parking
Comments
6.1102 PAM Transport - truck parking & 2 small temp bldgs
ARC Logistics
Ortiz International
Deschamps Forwarding
1.8549 Occupied - Truck parking with small office structure
Dynasty Transportation - see below
129,523
10.0000 CFI - Truck Parking
10.0000 CFI - Truck Parking
USA Trucking - occupied
Olympia International
USA Trucking - occupied
Cabrera Llamas Forwarding
1
8
Pan American Blvd.
4209
2.4308
20,513
2
8
Pan American Blvd.
4210
4.0000
0
20,513
2
7
Pan American Blvd.
4214
4.0139
0
1
7
Pan American Blvd.
4301
2.5262
7,944
7,944
2
6
Pan American Blvd.
4302
3.0000
10,000
10,000
1
6
Pan American Blvd.
4303
2.0000
0
1
5
Pan American Blvd.
4305
2.0000
0
2
5
Pan American Blvd.
4306
3.0000
0
1
4
Pan American Blvd.
4307
2.0000
552
552
1
3
Pan American Blvd.
4309
2.0000
10,912
10,912
DTA Transport
2
4
Pan American Blvd.
4310
5.4799
25,300
25,300
R L Charriers
1
2
Pan American Blvd.
4311
2.0000
10,440
10,440
1
1
Pan American Blvd.
4313
2.0000
15,990
15,990
2
3
Pan American Blvd.
4410
7.1909
25,000
25,000
4
8
Quivira Dr
none
1.8595
0
2
14
Quivira Dr
none
4.1320
0
American Dispatch, Inc. - combine with 2/16
2
15
Quivira Dr
none
5.3423
0
American Dispatch, Inc. - combine with 2/16
2
16
Quivira Dr
none
7.5502
127,800
2
17
Quivira Dr
none
6.6485
0
4.0000 Vacand Land - Truck Parking
B H Transportation
Forwarding, Inc.
ATS Specialized, Inc. - truck parking with small modular
2.0000 structure
Star Trucking
DTA Transport
Vacant Building
15,990
Conway Southern - building not on Webb CAD
1.8595
Vacant land - undeveloped
American Dispatch, Inc. - combine with 2/14 & 2/15
127,800
6.6485
Street
Address
Land Size Bldg Size
(Acres)
(SF)
Vacant
GBA
GBA
Block
Lot
5
1,2
Ruhlman Dr
14602
2.9619
14,552
14,552
4
7
Ruhlman Dr
14619
2.4711
572
572
5
3
Ruhlman Dr
14620
1.2611
0
4
9
Ruhlman Dr
none
1.8549
0
5
4
Ruhlman Dr
none
1.0000
5,000
5
5
Ruhlman Dr
none
2.2382
0
4
6
Weathers
310
2.1529
25,000
25,000
4
5
Weathers
314
1.0000
14,160
14,160
3
4,5
Weathers
301
3.8484
0
Acres
154.8383
1.8549
Parcels/Bldgs
39
21
Undeveloped parcels
15
38.46%
60.6896
39
Despachos J. Ferrey Ro Company
Multi-Tenant - 2 suites - B is Vacant, A is occupied 12,500 s/f
vacant
12,500
ARC Logistics
3.8484
28,490 16.4495
21
2
Total Buildings
21
Vacant Buildings
2
5
31,271
39.20%
1.2611 Vacant Land - Truck parking
2.2382
656,693
3.9702
Total Parcels
T E Trucking
660,945
Average Size
Comments
Diamond Trucking
Buildings
S/F
Undeveloped Acres
Land
Parking
5,000
656,693
Land
Vac
Land
Total Bldg GLA
656,693
Vacant Bldg GLA
28,490
9.52%
4.34%
44.2401
10
Time Adjustment Test - Industrial Parks in Laredo
Verified Sales of Industrial Park Land
Sale Date
02/15/02
02/22/02
03/14/02
05/13/02
07/12/02
07/29/02
08/27/02
09/04/02
11/04/02
11/12/02
11/18/02
12/16/02
01/08/03
03/12/03
06/18/03
8/1/2003
10/22/03
10/22/03
02/26/04
04/02/04
04/28/04
05/15/04
06/09/04
07/06/04
07/06/04
09/01/04
11/29/04
12/03/04
12/15/04
Property Type
Vacant industrial land
Address/Location
14205 Enterprise
SWC Carriers Dr & S. Unitec
NWC San Ignacio & Bruni
NS World Trade Center Loop, E of Metropolitan
13713 Cabezut Dr.
SES Hallmark Dr 918' NE of McPherson
NEC McPherson Rd & Union Pacific Blvd
SEC McPherson Rd & Union Pacific Blvd
SW Side of Nafta Blvd, at Delta Dr
NS of Nafta, East of McPherson
SES Nafta Blvd at Delta Dr
WS Transportation, N of Interamerica
SWS Transportation Ave 356' NW Interamerica Blvd.
WS Doc. Adams Drive
NEC San Ignacio & Scott
NS of Logistics at Albany
SWC Killam Industrial Blvd & General Milton Dr
SWC Killam Industrial Blvd & Genral Milton Dr
SEC El Gato & Hayter Rd
1625 World Trade Center Loop
SEC of Mines Rd & World Trade Center Loop
12019 General Milton Drive
SEC San Ignacio & Montezuma
12019 General Milton Drive (earlier sale 5/15/04)
SEC GeneralMilton Dr & Killam Industrial Blvd
ES of Sara Rd at Amparan Rd
N side of Hallmark Drive, Adjacent to Delta Drive
820 Hallmark Dr
14601 Archer Dr, ES Archer Dr, 500 ' N of Killam Ind. Blvd
Subdivision
Interamerica Industrial Park
Unitec Industrial Park
Western Division
Millennium Park
Unitec Industrial Center
San Isidro East Point Center
San Isidro Ranch East Point Center
Interamerica Distribution Park
Land Size
133,542
542,714
77,101
231,478
222,282
80,490
123,048
114,349
78,844
300,128
78,844
43,560
$
$
$
$
$
$
$
$
$
$
$
$
Price
240,000
903,277
140,000
372,400
346,120
148,000
246,096
228,698
144,800
551,216
144,800
80,000
2002 sales
Average Size
Average Price/Acre $
12
3.8766
78,510
Interamerica Distribution Park
Killam Industrial Park
Western Division
Laredo Distribution Park
43,560
153,832
34,825
244,197
306,662
306,662
$
$
$
$
$
$
85,000
282,520
70,000
573,750
563,200
563,200
2003 sales
Average Size
6
4.1695
85,817
Millennium Industrial Park
Millennium Indusrial Park
Western Division
San Isidro East Point Center Subdivision
Milo Distribution Center
543,890
80,124
285,754
541,102
77,101
541,102
541,102
176,000
80,000
80,150
104,000
$ 936,428
$ 128,758
$ 582,250
$ 1,069,339
$ 130,000
$ 1,069,339
$ 1,180,090
$ 333,333
$ 158,240
$ 159,160
$ 202,938
2004 sales
Average Size
Section I, Page 1 of 2
11
12.4173
83,139
$$ Acre
$ 78,285
$ 72,500
$ 79,096
$ 70,079
$ 67,828
$ 80,095
$ 87,120
$ 87,120
$ 80,000
$ 80,002
$ 80,000
$ 80,000
Acres
Acres
$ 85,000
$ 80,000
$ 87,558
$ 102,346
$ 80,000
$ 80,000
Acres
Acres
$
$
$
$
$
$
$
$
$
$
$
74,998
70,000
88,757
86,084
73,447
86,084
95,000
82,500
86,162
86,500
85,000
Acres
Acres
Time Adjustment Test - Industrial Parks in Laredo
Verified Sales of Industrial Park Land
03/03/05
3/11/2005
04/01/05
04/14/05
04/15/05
05/02/05
06/17/05
06/24/05
6/27/2005
6/28/2005
07/07/05
7/28/2005
10/19/05
10/31/05
11/15/2005
11/21/2005
12104 Sara Drive
WS Sara Dr, Nof Killiam Ind Bldg
NS of Las Cruces (Lots 1 & 2, Blk 1, Gutierrez Ind Sub)
NWC McPherson Rd & Grand Central Blvd.
NS of Las Cruces
NEC Mines Rd & World Trade Center Loop
11909-11921 Hayter Rd
NEC Mines Rd & World Trade Ctr Loop
8707 Killam Industrial Blvd
14710 Atlanta
303-311 Union Pacific Blvd
SS Killam Industrial Blvd at JEF Drive
11905 Conly
11902 Whitepoint
Guitierrez Industrial Subdivision
Gutierrez Distribution Industrial Park
Pan American Industrial Park
87,120
87,120
221,285
313,632
313,632
217,800
92,491
713,587
92,478
376,794
313,632
80,799
420,790
376,790
456,104
143,561
$ 170,000
$ 170,000
$ 400,000
$ 800,000
$ 800,000
$ 400,000
$ 180,480
$ 1,359,681
$ 180,480
$ 756,000
$ 1,000,000
125,000
$ 1,000,000
$ 817,425
$ 837,656
$ 263,656
2005 Sales
Average Size
04/19/06
04/21/06
5/2/2006
06/06/06
6/14/2006
8/15/2006
8/18/2006
8/31/2006
10/01/06
10/01/06
10/24/2006
10/31/2006
11/1/2006
11/22/2006
11901-909 Conly Rd
SES Grand Central Blvd., SW of Santa Fe Dr
4304 International Trade Center
SWC General Milton Dr & Killam Industrial Blvd
4402 Santa Rita Ave
ES of Hayter, cul de sac
8613 Whitepoint - SEC Whitepoint & Sara
814 Union Pacific
NEC Nafta Blvd & East Point Dr
SES Union Pacific - 971' NE McPherson Rd
18729 Metropolitan
1605 World Trace Center Loop
General Milton Dr, 845 Ft SE of Killam Industrial Bldg
13118 Spivey Drive
Western Division
456,104
67,082
88,139
306,697
69,440
181,789
337,298
124,952
176,854
80,150
141,788
78,848
158,057
145,000
$
$
$
$
$
$
837,656
146,000
150,743
608,960
175,000
333,864
1,525,000
$ 280,000
$ 365,400
$ 187,000
292,950
$ 126,714
362,850
376,064
2006 Sales
Average Size
Section I, Page 2 of 2
16
13.2868
90,979
14
9.4585
98,910
$ 85,000
$ 85,000
$ 78,740
$ 111,111
$ 111,111
$ 80,000
$ 85,000
$ 83,000
$ 85,012
$ 87,399
$ 138,889
$ 67,389
$ 103,520
$ 94,501
$ 80,000
$ 80,000
Acres
Acres
$ 80,000
$ 94,806
$ 74,500
$ 86,490
$ 109,778
$ 80,000
$ 196,945
$ 97,612
$ 90,000
$ 101,631
$ 90,000
$ 70,004
$ 100,000
$ 112,975
Acres
Acres
Page 1 of 4
Segregated Estimator
Detailed Report
Estimate ID:
Property Owner:
Address:
City:
State:
ZIP/Postal Code:
Surveyed By:
Survey Date:
Cost as of Date:
SUMMARY
Section 1: Distribution
Warehouse
TOTAL COST
14416
Delta Midwest, L.C.
14416 Export Rd
Laredo
TX
78045
1/27/2007
02/2007
Cost New
Depreciation
Depreciated Cost
392,949
392,949
392,949
392,949
https://www.swiftestimator.com/main/SEG/report_detailed.asp
3/5/2007
Page 2 of 4
Segregated Estimator
Detailed Report
Estimate ID:
14416
Section 1
Occupancy: Distribution Warehouse
Class: S - Metal Frame and Walls
Quality: 2 - Average
Condition: 4 - Good
Number of Stories: 1
Average Story Height: 18
Floor Area: 12000
Component
Excavation & Site Preparation:
Site Preparation
High Curbing
Units
Cost
Cost New
Depr
Depr Cost
12,000
.22
2,640
2,640
380
9.74
3,701
3,701
6,341
6,341
Subtotal
Foundation:
Concrete, Bearing Wall
12,000
1.66
19,920
19,920
Frame:
Steel, Pre-engineered
12,000
3.15
37,800
37,800
Floor Structure:
Concrete, Elevated Slab
12,000
9.31
111,720
111,720
Floor cover:
Hardener and Sealer on Concrete
12,000
.64
7,680
7,680
866
1.63
1,412
1,412
9,092
9,092
Vinyl Composition Tile
Subtotal
Ceiling:
Suspended Ceiling
866
1.08
935
935
Acoustical, Organic Fiber
866
1.50
1,299
1,299
2,234
2,234
Subtotal
Interior Construction:
Interior Construction, Framed
866
4.75
4,114
4,114
Wood Frame, Drywall Finish
368
6.97
2,565
2,565
6
116.93
702
702
Base Cabinet
3/5/2007
Page 3 of 4
Segregated
Estimator
Detailed Report
Estimate ID:
Component
Wall Cabinet
14416
Units
6
Cost
93.87
Cost New
563
Depr
Depr Cost
563
6
46.55
279
279
8,223
8,223
Subtotal
Plumbing:
Plumbing
866
2.38
2,061
2,061
Heating, Cooling & Ventilation:
Heat Pump
866
8.40
7,274
7,274
Electrical:
Electrical, Finished
866
3.72
3,222
3,222
12,000
.81
9,720
9,720
12,942
12,942
Electrical, Unfinished
Subtotal
Exterior Wall:
Metal Cover, Steel Frame
8,800
4.24
37,312
37,312
Roof Cover:
Metal, Preformed Sheets
12,000
1.56
18,720
18,720
1
2,409.05
2,409
2,409
1,440
18.12
26,093
26,093
100
29.90
2,990
2,990
12000
25.43
29,083
305,131
29,083
305,131
2
651.43
1,303
1,303
12000
12000
.11
25.54
1,303
306,434
1,303
Stairs:
Concrete & Steel Exterior Stairways
Other Superstructure:
Loading Dock with Roof
Dock Bumpers, Horizontal
Subtotal
Subtotal Superstructure
Basement:
Basement Garage Door
Nonsuperstructure Subtotal
Replacement Cost New
Depreciated Cost
Yard Improvements:
Concrete Truck Ramp to Whs
306,434
360
19.75
7,110
7,110
3/5/2007
Page 4 of 4
Segregated
Estimator
Detailed Report
Estimate ID:
Component
Landscaping
14416
Units
4,772
Cost
2.53
Cost New
12,073
Paving, Concrete, Reinforced
1,817
3.97
7,213
7,213
Paving, Concrete, Reinforced
650
3.97
2,580
2,580
4,980
2.16
10,757
10,757
2
841.06
1,682
1,682
40
57.66
2,306
2,306
360
6.66
2,398
2,398
22,318
1.81
40,396
40,396
86,515
86,515
392,949
86,515
86,515
392,949
Chain Link Fence
High Intensity Sodium/Mercury Lighting
w/o Pole
Light Pole
Gate, Chain Link
Paving, Asphalt
Subtotal
NonBuilding Subtotal
Total Cost
Depr
Depr Cost
12,073
3/5/2007
United Steel Building - Building Quote
Page 1 of 2
United Steel Building
2700 West Cypress Creek Road - Ft. Lauderdale, FL 33309 - Phone: 888-448-6963 - Fax: 954-957-9352
Date: 03/05/07
Quote Number: 07-72244
Customer Information
Bill To:
Name: Paul Lorenzen
Phone Number: 210-662-2857
Email Address: [email protected]
Ship to:
County: webb
State: Texas
Building Codes
(Includes all state stamped certified structural and construction drawings)
Building Code: IBC '03
Live Load: 20 psf
Snow Load: 0 psf
Wind Load: 91 mph
Seismic Zone: 0
Exposure: C
Drawings
Drawings:
Stamped Engineered Drawings, Letter of Certification & Anchor Bolt Locations Included : $0.00
Calculations:
None: $0.00
Stamped Foundation Drawings:
None: $0.00
Building Dimensions
100'x100'x20' 1:12 (Freight Included): $64,032.84
Doors & Openings
(4) 12x12 Roll Up Door Series 2500 Non Insulated w/ Chain Hoist with framing & trim: $4,152.00
Windows
(None)
Accessories
Vents:
(4) 12"x10 RIDGE VENT GALVALUME: $1,416.00
Gutters & Downspouts:
Gutters & Downspouts: $1,392.00
Walkdoors:
(1) 3070M SINGLE WALK DOOR W/STD KNOB: $382.50
Skylights:
(4) Skylights: $500.00
Colors
Exterior Wall : Ash Gray: $0.00
Trim : Hawaiian Blue: $0.00
Roof : Ash Gray: $2,007.00
Costs
(Freight Included)
Basic Building Cost: $64,032.84
Accessories: $3,690.50
Sub Total: $73,882.34
10% Internet Building Discount: $6,403.28
Total Cost: $67,479.06
Engineer/Drafting Deposit: $20,244.12
Balance: $47,234.94
*All buildings quoted clear span (no interior columns)*
Guaranteed Lowest Price
INSTANT REBATE VALID 5 DAYS ONLY
STANDARD UNITED STEEL BUILDING FEATURES
Fabricated Under AISC (American Institute of Steel Construction) - All Sheeting 26 Gauge 80,000psi Roof &
Walls - 23 Color Selections - Roof & Wall Sheeting Upgraded PBR (Extra Bearing Leg for Support & Leak
http://www.unitedsteelbuilding.com/wizard/index.php?step=REVIEW
3/5/2007
Page 2 of 2
Stoppage) - Overhead Door Openings Factory Located (No Cutting on Jobsite) - All Clips Pre-Welded for Easy
Construction - All Parts Pre-Marked - All Trim for Gable, Corners, Eaves, & Base - State Stamped Certified
Engineered Blueprints (Construction Drawings, Anchor Layouts, Calculations) 3-5 Days - Solid I-Beam
Construction (50,000psi Built Up) - High Strength Bolts - All Components Pre-Cut & Punched - 2' Girt & Purlin
Overlap - Gable Sheeting Angle - Flange Bracing - Base Sheeting Angle - Corrugated Ridge Cap - Eave & Base
Foam Closures - Mastic Sealant - Self Drilling Screws w/ Washers (Lifetime No Rust Warranty) Factory List of
PartsBefore Delivery - All Factory Warranties - 100% American Made
3/5/2007
Page 1 of 2
United Steel Building
2700 West Cypress Creek Road - Ft. Lauderdale, FL 33309 - Phone: 888-448-6963 - Fax: 954-957-9352
Date: 03/05/07
Quote Number: 07-72258
Customer Information
Bill To:
Name: Paul Lorenzen
Phone Number: 210-662-2857
Email Address: [email protected]
Ship to:
County: webb
State: Texas
Building Codes
(Includes all state stamped certified structural and construction drawings)
Building Code: IBC '03
Live Load: 20 psf
Snow Load: 0 psf
Wind Load: 91 mph
Seismic Zone: 0
Exposure: C
Drawings
Drawings:
Stamped Engineered Drawings, Letter of Certification & Anchor Bolt Locations Included : $0.00
Calculations:
None: $0.00
Stamped Foundation Drawings:
None: $0.00
Building Dimensions
100'x150'x20' 1:12 (Freight Included): $88,705.48
Doors & Openings
(6) 12x12 Roll Up Door Series 2500 Non Insulated w/ Chain Hoist with framing & trim: $6,228.00
Windows
(None)
Accessories
Vents:
(4) 12"x10 RIDGE VENT GALVALUME: $1,416.00
Gutters & Downspouts:
Gutters & Downspouts: $2,088.00
Walkdoors:
(1) 3070M SINGLE WALK DOOR W/STD KNOB: $382.50
Skylights:
(4) Skylights: $500.00
Colors
Exterior Wall : Ash Gray: $0.00
Trim : Hawaiian Blue: $0.00
Roof : Ash Gray: $3,010.40
Costs
(Freight Included)
Basic Building Cost: $88,705.48
Accessories: $4,386.50
Sub Total: $102,330.38
10% Internet Building Discount: $8,870.55
Total Cost: $93,459.83
Engineer/Drafting Deposit: $28,038.55
Balance: $65,421.28
*All buildings quoted clear span (no interior columns)*
Guaranteed Lowest Price
INSTANT REBATE VALID 5 DAYS ONLY
STANDARD UNITED STEEL BUILDING FEATURES
Fabricated Under AISC (American Institute of Steel Construction) - All Sheeting 26 Gauge 80,000psi Roof &
Walls - 23 Color Selections - Roof & Wall Sheeting Upgraded PBR (Extra Bearing Leg for Support & Leak
3/5/2007
Page 2 of 2
Stoppage) - Overhead Door Openings Factory Located (No Cutting on Jobsite) - All Clips Pre-Welded for Easy
Construction - All Parts Pre-Marked - All Trim for Gable, Corners, Eaves, & Base - State Stamped Certified
Engineered Blueprints (Construction Drawings, Anchor Layouts, Calculations) 3-5 Days - Solid I-Beam
Construction (50,000psi Built Up) - High Strength Bolts - All Components Pre-Cut & Punched - 2' Girt & Purlin
Overlap - Gable Sheeting Angle - Flange Bracing - Base Sheeting Angle - Corrugated Ridge Cap - Eave & Base
Foam Closures - Mastic Sealant - Self Drilling Screws w/ Washers (Lifetime No Rust Warranty) Factory List of
PartsBefore Delivery - All Factory Warranties - 100% American Made
3/5/2007
Webb CAD - 2006
Prop ID:
237365
Owner:
VA PROPERTIES LTD
Legal:
LOT 3 BLK 7 INTERNATIONAL TRADE CENTER II
Property
Improvements
Land
Roll History
Summary
Name, Address and Property Information
Owner ID
10063204
Property ID
237365 (Real)
Geo ID
972-80007-030
% Ownership
VA PROPERTIES LTD
LOT 3 BLK 7 INTERNATIONAL TRADE CENTER II
14416 EXPORT RD
Legal Description
LAREDO, TX 78045-7944
100%
Situs
14416 EXPORT RD
Exemptions
n/a
Name & Address
Neighborhood
IP05 (INTERAMERICA AREA)
Map ID
Property Value and Taxing Jurisdiction Information
Property Values
(+)Improvement Homesite Value:
+
$0
(+)Improvement Non-Homesite Value:
+
$220,610
(+)Land Homesite Value:
+
$0
(+)Land Non-Homesite Value:
+
(+)Agricultural Market Valuation:
+
$0
$0
(+)Timber Market Valuation:
+
$0
$0
(=)Market Value:
=
(-)Ag or Timber Use Value Reduction:
_
$68,390 Ag / Timber Use Value
-------------------------$289,000
$0
-------------------------(=)Appraised Value:
=
$289,000
(-) HS Cap:
_
$0
(=)Assessed Value:
=
--------------------------
Owner
$289,000
Percent Ownership Total Value
VA PROPERTIES LTD
100 %
$289,000
Entity Description
Tax Rate Appraised Value
C1
G3
CITY OF LAREDO
WEBB COUNTY
0.637000
0.412450
$289,000
$289,000
$289,000
$289,000
$1,840.93
$1,191.98
J2
R5
LAREDO COMMUNITY COLLEGE 0.230500
WEBB COUNTY ROAD & BRIDGE 0.007605
$289,000
$289,000
$289,000
$289,000
$666.15
$21.98
S7
UNITED ISD
$289,000
$289,000
$4,260.89
Estimated Tax With Current Exemptions:
$7,981.92
Estimated Tax Without Current Exemptions:
$7,981.92
1.474355
Taxable Value Estimated Tax
Total Tax Rate: 2.76191
Improvement / Building Information
ID
Type
Description
State Code
Living
Area
SQFT
1
C
COMMERCIAL
F1
12000 $220,610
Detail
ID:
Type
Description
Class CD
Value
Year
SQFT
Built
1
WD
Warehouse Distribution
WDSL
1993 12000
2
DOK
DOCK
*
1993
1440
3
RAM
RAMP
*
1993
4
ASP
ASPHALT
*
1993 25619
336
5
CAN
CANOPY
*
1993
1440
Land Information
ID
Type
Description
1
S9728 INTER L TRADE CTR
Acres
SqFt
Eff Front
1
43560
Eff Depth
Market Value
Prod. Value
$68,390
$0
Appraised
HS Cap
Assessed
Roll Value History Information
Year
Imprv
Land Market
AG Valuation
2007
n/a
n/a
n/a
n/a
n/a
n/a
2006
$220,610
$68,390
$0
$289,000
$0
$289,000
2005
$220,610
$68,390
$0
$289,000
$0
$289,000
2004
$197,430
$68,390
$0
$265,820
$0
$265,820
2003
$197,430
$68,390
$0
$265,820
$0
$265,820
2002
n/a
n/a
n/a
n/a
n/a
n/a
2001
n/a
n/a
n/a
n/a
n/a
n/a
2000
n/a
n/a
n/a
n/a
n/a
n/a
1999
n/a
n/a
n/a
n/a
n/a
n/a
[Property] [Improvements] [Land] [Roll History] [Summary] [Search] [Home]
This Data is for Webb CAD Questions Please Call 956-718-4091. Last Restore:1/22/2007 4:18:35 PM
©2004 True Automation, Inc., All Rights Reserved. Privacy Notice
System Requirements: Microsoft Internet Explorer 5.0 Or Higher. Sketches Require Microsoft Java Virtual Machine Enabled.
SOIL SURVEY OF WEBB COUNTY, TEXAS
Texas
RD
RT
PO
EX
VkC
Webb
0
10
20
Meters
40
Web Soil Survey 1.1
National Cooperative Soil Survey
0
30
60
120
180
Feet
240
2/3/2007
Page 1 of 3
SOIL SURVEY OF WEBB COUNTY, TEXAS
MAP INFORMATION
MAP LEGEND
Soil Map Units
Cities
Detailed Counties
Detailed States
Interstate Highways
Roads
Rails
Water
Hydrography
Source of Map: Natural Resources Conservation Service
Web Soil Survey URL: http://websoilsurvey.nrcs.usda.gov
Coordinate System: UTM Zone 14
Soil Survey Area: Webb County, Texas
Spatial Version of Data: 2
Soil Map Compilation Scale: 1:31680
Oceans
Escarpment, bedrock
Escarpment, non-bedrock
Gulley
Levee
Slope
Blowout
Borrow Pit
Clay Spot
Depression, closed
Eroded Spot
Gravel Pit
Gravelly Spot
Gulley
Lava Flow
Landfill
Marsh or Swamp
Miscellaneous Water
Map comprised of aerial images photographed on these dates:
1/8/1995
Rock Outcrop
Saline Spot
Sandy Spot
Slide or Slip
Sinkhole
Sodic Spot
Spoil Area
Stony Spot
Very Stony Spot
The orthophoto or other base map on which the soil lines were compiled and
digitized probably differs from the background imagery displayed on these maps.
As a result, some minor shifting of map unit boundaries may be evident.
Perennial Water
Wet Spot
Web Soil Survey 1.1
2/3/2007
Page 2 of 3
Soil Survey of Webb County, Texas
Map Unit Legend Summary
Webb County, Texas
Map Unit Symbol
Map Unit Name
Acres in AOI
Percent of AOI
VkC
Verick fine sandy loam, 1
to 5 percent slopes
6.6
100.0
Web Soil Survey 1.1
2/3/2007
Page 3 of 3

SELF-CONTAINED APPRAISAL REPORT

Transcription

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