Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
12-1395 08-28-2012
RESOLUTION NO. 12-1395 A RESOLUTION OF THE CITY COUNCIL THE CITY OF EULESS, TEXAS AUTHORIZING THE ZONING BOARD OF ADJUSTMENT TO INITIATE AMORTIZATION PROCEEDINGS FOR THE PROPERTY LOCATED AT 311 S. INDUSTRIAL BOULEVARD FOR THE PURPOSE OF DISCONTINUING THE NONCONFORMING USE BY A DATE CERTAIN; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Euless is a home rule city acting under its charter adopted by the electorate pursuant to Article XI, Section 5 of the Texas Constitution and Chapter 9 of the Local Government Code; and WHEREAS, the property located at 311 S. Industrial Blvd., known as the Shadow Creek Apartments, has been a nonconforming use under the provisions of the City's Unified Development Code since 1973; and WHEREAS, Article III, Section 84-50 of the Unified Development Code provides that it is a purpose of this article that nonconforming uses and structures should be eventually discontinued and the use of such premises shall be required to conform to the regulations prescribed in the Unified Development Code having due regard for the investment in such nonconforming use; and WHEREAS, the Zoning Board of Adjustment has the authority under Section 84- 59 of the Unified Development Code to determine whether the property owner has been given an opportunity to recover its investment in the nonconforming use from the time such property became nonconforming; and WHEREAS, the City Council now deems it necessary to authorize the Zoning Board of Adjustment to initiate amortization proceedings in order to discontinue the nonconforming use of the above referenced property. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EULESS, TEXAS: SECTION 1. The City Council of the City of Euless, Texas, hereby finds and determines that the recitals made in the preamble of this Resolution are true and correct, and incorporates such recitals herein. SECTION 2. The City Council of the City of Euless, Texas hereby finds and determines that it is in the best interest of the public health, safety and welfare of the citizens of Euless that the property located at 311 S. Industrial Boulevard, known as the Shadow Creek Apartments, should be amortized as a nonconforming use and that thereafter the property should be utilized in accordance with applicable regulations of the Unified Development Code. SECTION 3. The City Council hereby authorizes the Zoning Board of Adjustment to initiate amortization proceedings under Section 84-59 of the Unified Development Code for the discontinuance of the nonconforming use of the above referenced property by conducting a hearing to determine a reasonable date for termination of the nonconforming use based upon the recovery of the owners investment in the nonconforming use and any other factors that should be considered in determining a reasonable termination date. SECTION 4. This resolution shall become effective immediately upon its passage and approval. APPROVED AND ADOPTED at a regular meeting of the Euless City Council on the 28th day of August 2012 by a vote of 7 ayes, o nays, and 0 abstentions. APPROVED: ( Mary Lib Sadeh, Mayor ATTEST: / Kim Sutter, RMC City Secretary Resolution No. 12-1395, Page 2 of 2 Integra Realty Resources Dallas/Fort Worth Appraisal Consultation Of Real Property Shadow Creek Apartments Multifamily Property 111 S. Industrial Boulevard Shadow Creek Apartments 311 S. Industrial Boulevard Euless, Texas L11"O Integra Realty Resources Dallas/Fort Worth January 30, 2013 700 East Campbell Road Suite 265 Richardson, Texas 75081 T 972.960.1222 800.388.8162 F 972.960.2922 dallas@irr.com www.irr.com Mike Collins Director of Planning and Economic Development City of Euless 201 N. Ector Drive Euless, Texas 76039 SUBJECT: Market Value Appraisal Shadow Creek Apartments 311 S. Industrial Boulevard Euless, Tarrant County, Texas 76040 Integra DFW, LLP File No. 116-2012-0952 Dear Mr. Collins: 930 West First Street Suite 400 Fort Worth, Texas 76102 T 817.332.5522 F 817.336.1621 fortwoi-th@irr.com www.irr.com Integra Realty Resources — DFW, LLP is pleased to submit the accompanying appraisal consultation report of the referenced property. The purpose of this consultation report is to determine the amortization period based on the City's ordinance pertaining to non -conforming uses. The findings and report will be for the possible enforcement of the ordinance for the amortization period. The client for the assignment is City of Euless, and the intended use is for code compliance (non- conforming use) purposes. The appraisal consultation is intended to conform with the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, and applicable state appraisal regulations. In addition, this consultation follows Section 84-59 Amortization of Nonconforming Uses and Structures, of the City of Euless code of ordinances. To report the assignments results, we use the summary report option of Standards Rule 2-2 of USPAP. Accordingly, this report contains summary discussions of the data, reasoning, and analyses that are used in the appraisal process whereas supporting documentation is retained in our file. The depth of discussion contained in this report is specific to the needs of the client and the intended use of the appraisal. Mike Collins City of Euless January 30, 2013 Page 2 The subject is an existing multifamily property containing 192 dwelling units. The improvements were constructed in 1968 and are 80% leased as of January 2013. The site area is 8.99 acres or 391,484 square feet. Based on the analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, we have determined that the retrospective value as of September 25, 1973 is $2,200,000. The subject property is estimated to be amortized in 1984, or about 11 years after the implementation of its legal non -conforming existence. All recoupment of modern unrecoverable costs associated with Item E-2 of the ordinance discussed herein have already taken place. EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS The value conclusions are subject to the following e-draordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain infonnation accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, our value conclusions may change. 1. We have relied on the deed ofconveyance for the land area size utilized herein along with data from third party sources for improvement sizes and the amount ofunits. 2. The appraisers were not provided any historical operating data or a current rent roll for the subject property. All financial information within this report has been projected by IRR, DFW based on market data for purposes ofthe Income Capitalization Approach. 3. An interior inspection ofthe subject property was not permitted and the appraisers assume the subject property to contain similar finish -out items of typical Class C Apartment Complexes of similar vintage and condition for purposes of cost estimates in the Cost Approach presented herein. 4. The appraisers rely on multiple external professionals to determine estimates of unrecoverable modern costs associated with the termination ofthe existing non -conforming use. These include relocation costs, mortgage discharge and release of lien, and estimates of pre -payment penalties. These discussions with the external professionals were utilized to allowthe appraisers to make these estimates, but it is important for the reader to realize that a more precise estimate could be obtained from the e-dernal professionals themselves and the estimates reflected in this report are merely estimates drafted by the appraiser based on our discussions with these professionals. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date ofthe appraisal but is supposed for the purpose ofanalysis. 1. For purposes ofthe Income Capitalization Approach presented herein, the appaisers hypothetically assume the subject property is in good condition and operating at stabilized occupancy levels, producing market level rental rates with market expected expenses as of January 2013. 2. The appraisers also hypothetically assume that the subject property is in nearly new and good condition in 1973 for purposes of depreciation estimates in the Cost Approach. This is also the purpose of estimating the value in the Income Capitalization Approach based on the subject being in good condition and at stabilized occupancy levels. Mike Collins City of Euless January 30, 2013 Page 3 If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service. Respectfully submitted, INTEGRA REALTY RESOURCES - DFW, LLP I& J'11114 Daniel Wright, MAI, Director Certified General Real Estate Appraiser Texas Certificate # TX-1329321-G Telephone: (817) 332-5522, ext. 214 Email: dwright@irr.com M. Colt Jones, Senior Analyst Certified General Real Estate Appraiser Texas Certificate # TX- 1380107-G Telephone: (817) 332-5522, ext. 270 Email: cjones@irr.com SHADOW CREEK APARTMENTS TABLE OF CONTENTS TABLE OF CONTENTS SUMMARY OF SALIENT FACTS AND CONCLUSIONS............................................................. 1 GENERALINFORMATION...................................................................................................... 2 Identification of Subject.............................................................................................. 2 Current Ownership and Sales History......................................................................... 2 Type of Value, Property Rights and Effective Date ................................................... 4 Definition of Market Value/Non-Conforming Use/Amortization .............................. 4 Definition of Property Rights Appraised.................................................................... 5 Client, Intended User and Intended Use..................................................................... 5 ApplicableRequirements............................................................................................ 5 PriorServices.............................................................................................................. 5 Scopeof Work............................................................................................................ 6 PROPERTYANALYSIS............................................................................................................ 8 Land Description and Analysis................................................................................... 8 Improvements Description and Analysis..................................................................19 RealEstate Tax Analysis.......................................................................................... 26 Highest and Best Use Analysis (January 2013)........................................................27 CONSULTATIONANALYSIS................................................................................................. 29 ConsultationMethodology........................................................................................ 29 LandValuation..........................................................................................................32 CostApproach.......................................................................................................... 37 Income Capitalization Approach.............................................................................. 41 Historic Forensic Investigation and Analysis........................................................... 57 Reconciliation and Conclusion of Value.................................................................. 59 Amortization............................................................................................................. 60 CERTIFICATION................................................................................................................... 64 ASSUMPTIONS AND LIMITING CONDITIONS....................................................................... 66 ADDENDA A. Appraiser Qualifications B. Property Information C. Comparable Data Comparable Land Sales Comparable Rental Surveys D. Paired Flood Sales E. Inflation Index Rates and Historical Cost Calculations © 2013 BY INTEGRA KEALTY KESUURULS SHADOW CREEK APARTMENTS SUMMARY OF SALIENT FACTS AND CONCLUSIONS SUMMARY OF SALIENT FACTS AND CONCLUSIONS Property Name Shadow Creek Apartments Address 311 S. Industrial Boulevard Euless, Texas 76040 Property Type Multifamily - Garden Style Multiple Residences Owner of Record 311 S. Industrial Blvd., LLC Tax ID 00669814 Land Area 8.99 acres, 391,484 SF Number of Units 192 Gross Building Area 147,445 SF Rentable Floor Area 146,056 SF Percent Leased 80% Year Built 1968 Zoning Designation "C-2", Community Business District Date of the Report January 30, 2013 EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, our value conclusions may change. 1. We have relied on the deed of conveyance for the land area size utilized herein along with data from third party sources for improvement sizes and the amount of units. 2. The appraisers were not provided any historical operating data or a current rent roll for the subject property. All financial information within this report has been projected by IRR, DFW based on market data for purposes of the Income Capitalization Approach. 3. An interior inspection of the subject property was not permitted and the appraisers assume the subject property to contain similar finish -out items of typical Class C Apartment Complexes of similar vintage and condition for purposes of cost estimates in the Cost Approach presented herein. 4. The appraisers rely on multiple external professionals to determine estimates of unrecoverable modern costs associated with the termination of the existing non -conforming use. These include relocation costs, mortgage discharge and release of lien, and estimates of pre -payment penalties. These discussions with the external professionals were utilized to allow the appraisers to make these estimates, but it is important for the reader to realize that a more precise estimate could be obtained from the external professionals themselves and the estimates reflected in this report are merely estimates drafted by the appraiser based on our discussions with these professionals. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. For purposes of the Income Capitalization Approach presented herein, the appaisers hypothetically assume the subject property is in good condition and operating at stabilized occupancy levels, producing market level rental rates with market expected expenses as of January 2013. 2. The appraisers also hypothetically assume that the subject property is in nearly new and good condition in 1973 for purposes of depreciation estimates in the Cost Approach. This is also the purpose of estimating the value in the Income Capitalization Approach based on the subject being in good condition and at stabilized occupancy levels. PAGE 7 SHADOW CREEK APARTMENTS IDENTIFICATION OF SUBJECT GENERAL INFORMATION IDENTIFICATION OF SUBJECT The subject is an existing multifamily property containing 192 dwelling units. The improvements were constructed in 1968 and are 80% leased as of January 2013. The site area is 8.99 acres or 391,484 square feet. PROPERTY IDENTIFICATION Property Name Shadow Creek Apartments Address 311 S. Industrial Boulevard Euless, Texas 76040 Tax ID 00669814 Legal Description Being all of Block A, Crossroads Addition, City of Euless, Tarrant County, Texas CURRENT OWNERSHIP AND SALES HISTORY The owner of record is 311 S. Industrial Blvd., LLC. The appraisers have developed the following timeline tracing the historical transactions of the subject back to the original developer (I.C. Deal) who built the subject property in 1968. Attempts were made to contact I.C. Deal to discuss the original development of the subject property and find out the terms of the transaction between I.C. Deal and Henry Dickerson, Jr. in 1970. The appraisers were able to speak to Nancy C. Rogers, Chief Operating Officer and Executive Vice President of I.C. Deal Investments, who stated that I.C. Deal was not in the capacity to discuss the original transaction because of health reasons. She went on further to state that records were only kept for seven years and no records were held back from the 1970's that she could remember. She did state that the buyer, Henry Dickerson, Jr. has since deceased, along with several members of her staff who may have been able to recall intimate details about this transaction. Thus, no specific details were ascertained by the appraisers in our attempt to acquire information about this original transaction. PAGE 2 O fn S w 0 z a_ x w z O F- z w a' 7 U a s � d O _ F S Cg u � 2 " F F s 3 8 F w F b � s� ni �Rasp R•'S O Y a a ¢ ~ Y C c� c� n � � n z z� V z a ¢ a ¢ a �>:uzz'zzz�� Via€ z� ° m` 0 u c o � ° ¢ 00 id7 > 2 0 v � c"aU���a�3QS �c�aaaa "Q za�'zz'zN _ a C =O x x > x A T 3 ¢ � z 5: A x� Q u 0 `o c A��s�a�BFs SHADOW CREEK APARTMENTS TYPE OF VALUE, PROPERTY RIGHTS AND EFFECTIVE DATE To the best of our knowledge, no other sale or transfer of ownership has occurred within the past three years, and as of the effective date of this appraisal, the property is not subject to an agreement of sale or option to buy, nor is it listed for sale. TYPE OF VALUE, PROPERTY RIGHTS AND EFFECTIVE DATE The purpose of this consultation report is to determine the amortization period based on the City's ordinance pertaining to non -conforming uses. In this case, the subject property was developed in 1968 with an apartment complex. The zoning was changed to a commercial district and residential uses were excluded from the commercial district in 1973. On September 25, 1973 the subject improvements were rendered a non -conforming use. The consultation report herein will be based on a retrospective valuation date of the subject property as of September 25, 1973. The appraisers will then amortize a reasonable return on the real estate in accordance with Section 84-59, Amortization of Nonconforming Uses and Structures, of the City of Euless Code of Ordinances and past court cases in Texas. The findings and report will be for the possible enforcement of the ordinance for the amortization period. The date of the report is January 30, 2013. The appraisal is valid only as of the stated effective date or dates. DEFINITION OF MARKET VALUE/NON-CONFORMING USE/AMORTIZATION Market value is defined as: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently 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 own 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: Code of Federal Regulations, Title 12, Chapter I, Part 34.42[g]) Legally non -conforming use is defined as: "A use that was lawfully established and maintained, but no longer conforms to the use regulations of the current zoning in the zone where it is located". (Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5"' ed. (Chicago: Appraisal Institute, 2010). PAGE 4 SHADOW CREEK APARTMENTS DEFINITION OF PROPERTY RIGHTS APPRAISED Amortization is defined as: "Amortization in the American planning system is a technique for the removal of non- conforming uses after the value of a non -conforming use has been recovered -or amortized - over a period of time". (Source: Methods of Determining Amortization Periods for Non -Conforming Uses, by. - Margaret Collins). DEFINITION OF PROPERTY RIGHTS APPRAISED Fee simple estate (subject to short-term leases) is defined as, "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat." Leasehold interest is defined as, "The tenant's possessory interest created by a lease." Lease is defined as, "A contract in which rights to use and occupy land or structures are transferred by the owner to another for a specified period of time in return for a specified rent." (Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois, 2010) CLIENTS INTENDED USER AND INTENDED USE The client and intended user is the City of Euless. The intended use is of this consultation report is to determine the amortization period based on the City's ordinance pertaining to non -conforming uses. The findings and report will be for the possible enforcement of the ordinance for the amortization period. The appraisal is not intended for any other use or user. No party or parties other than the City of Euless may use or rely on the information, opinions, and conclusions contained in this report. APPLICABLE REQUIREMENTS This appraisal consultation is intended to conform to the requirements of the following: ■ Uniform Standards of Professional Appraisal Practice (USPAP); ■ Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute; ■ Applicable state appraisal regulations; ■ Section 84-59, Amortization of Nonconforming Uses and Structures, of the City of Euless Code of Ordinances; ■ Past court cases with regard to amortization cases. PRIOR SERVICES USPAP requires appraisers to disclose to the client any services they have provided in connection with the subject property in the prior three years, including valuation, consulting, PAGE 5 SHADOW CREEK APARTMENTS SCOPE OF WORK property management, brokerage, or any other services. We have performed no other services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. SCOPE OF WORK Our scope of work for this appraisal consultation is listed below: ■ The appraisers will not contact the current owner as directed by the client, but will make an inspection of the subject property from public right-of-way and adjoining public areas. ■ A forensic investigation will be conducted of multiple data sources for historical/archive records on the subject property, extending back to the original time of construction (Circa 1968). ■ A highest and best use (H&BU) analysis of the subject site as vacant and as improved as of the date of inspection (January 11, 2013) will be performed. ■ Market information on comparable land sales will be gathered and an estimate of the retrospective land value will be performed. ■ Market information on improved sales, construction costs, depreciation, rents, operating expenses, and capitalization rates will be gathered and an estimate of the retrospective improved value will be performed. ■ The appraisers will develop an amortization period estimate that conforms to Item E of Section 84-59, Amortization of Nonconforming Uses and Structures, of the City of Euless Code of Ordinances. ■ The appraisers will consider case law precedents that establish the compensable elements related to amortization of non -conforming uses of real estate in Texas. Listed below is Section 84-59, Amortization of Nonconforming Uses and Structures, of the City of Euless Code of Ordinances, and will be used as a guide for the layout and information provided within this appraisal consultation report. Sec. 84-59. - Amortization of Nonconforming Uses and Structures. (a) The board, upon the request of the city or the owner of property upon which is located a nonconforming structure or use, shall initiate an action to bring about the discontinuance of the nonconforming use or the removal of a nonconforming structure, or both, by a date certain. (b) The board shall conduct a hearing for the purpose of determining a date certain for termination of the nonconforming use or removal of the nonconforming structure, or both, with respect to the property. If such action is initiated by the city, prior notice of such hearing shall be given to the property owner. (c) The date established for termination of the nonconforming use or removal of the nonconforming structure is to give the property owner an opportunity to recover its investment in the nonconforming structure or use from the time such property or structure became nonconforming. NAGE b SHADOW CREEK APARTMENTS SCOPE OF WORK (d) The board shall measure the reasonableness of the opportunity for recoupment of the property owners investment by conditions existing at the time such use or structure became nonconforming. (e) The following factors must be considered by the board in determining a reasonable amortization period: (1) The owners capital investment in structures, fixed equipment, and other assets (excluding inventory and other assets that may be feasibly transferred to another site) made on the property before the time the use, the structure, or both, as applicable, became nonconforming. Costs of replacements, improvements or additions made after the structure or use became nonconforming shall not be included. (2) Any costs that are directly attributable to the establishment of compliance date, including demolition expenses, relocation expenses, termination of leases, and discharge of mortgages. (3) Any return on investment since inception of the use, or construction of the structure, including net income and depreciation. (4) Recovery of investment, including net income and depreciation. (5) General character of the neighborhood in proximity to the nonconforming use or structure and the necessity for all property within the City of Euless to conform to the regulations of the unified development code of the City of Euless. (f) Once the board establishes a compliance date for a nonconforming use, the use must cease operations on or before that date and it may not operate thereafter unless it becomes a conforming use. (g) Once the board establishes a termination date for a nonconforming structure, the structure must be completely removed from the property by that date, by demolition or otherwise, and such structure may not be reconstructed or relocated in any other location in the city where it would not be in conformance with all provisions of the unified development code then in effect. (Ord. No. 1341, § I, 12-8-98; Ord. No. 1440, § 1, 8-8-00) REPORT FORMAT The report has been prepared under the summary report option of Standards Rule 2-2(b) of USPAP. As such, it contains summary discussions of the data, reasoning, and analyses that are used in the appraisal process whereas supporting documentation is retained in our file. The depth of discussion contained in this report is specific to the needs of the client and the intended use of the appraisal. PAGE 7 SHADOW CREEK APARTMENTS LAND DESCRIPTION AND ANALYSIS PROPERTY ANALYSIS LAND DESCRIPTION AND ANALYSIS LAND DESCRIPTION Land Area 8.99 acres; 391,484 SF Land Area (Usable) 8.99 acres; 391,484 SF Source of Land Area Deed of Conveyance and Recorded Plat Primary Street Frontage Industrial Boulevard - 312' Shape Rectangular Corner No Topography Sloping westward toward floodplain Drainage No problems reported or observed Environmental Hazards None reported or observed Ground Stability No problems reported or observed Flood Area Panel Number 48439CO230K Date September 25, 2009 Zone AE Des cription Within 100-year floodplain Insurance Required? Yes ZONING; OTHER REGULATIONS Zoning Jurisdiction City of Euless Zoning Designation "C-2" Description Community Business District Permitted Uses Large and small retailers and office uses, service establishments, hotels, motels, medical and dental clinics, automotive repair and service shops, schools, and parks and playgrounds Minimum Lot Area None Minimum Setbacks (Feet) Front: 20 Ft.; Rear: 15 Ft.; Side 5 Ft. Maximum Building Height 60 Ft. or four stories Parking Requirement 1 space per unit, plus 0.5 a space per bedroom and 1 guest space per every 5 units Other Exterior fagade must be 100% masonry Rent Control No Other Land Use Regulations None UTILMES Service Provider Water City of Euless Sewer City of Euless Electricity Oncor Electric Delivery, through various retail providers Natural Gas Atmos Energy Local Phone Various Providers The subject property is located along the east side of F.M. 157 (Industrial Boulevard) in southeastern Euless, between its intersection with Airport Freeway and S.H. 10 (Euless Boulevard). PAGE 8 SHADOW CREEK APARTMENTS LAND DESCRIPTION AND ANALYSIS The subject property has about 60% 100-year floodplain encumbrance with some floodway. While improvements exist on the subject property, they were constructed prior to development restrictions on floodplain encumbered properties. Additional flood insurance is required for the subject property given that it is located within the 100-year floodplain. Review of historical flood maps reveal that this flood encumbrance has existed since 1976 (the oldest historical flood maps on file with FEMA). These flood maps are identified after this section of the report. It appears development of the subject property originally included a drainage easement and culvert to control flood waters to an extent. However, the 100-year floodplain remains in existence on flood maps. The appraisers did locate a Letter of Map Revision (LOMR), effective July 11, 2011, that mitigated some of the floodplain reflected in the LOMR map shown after this section by means of a culvert and storm sewer. However, this map continues to show the subject property is crossed and affected by the 100-year floodplain. As previously discussed within this report, the subject property is zoned for commercial uses ("C-2"), which occurred on September 25, 1973 (zoning change). This is the date that the existing improvements became a non -conforming use. EASEMENTS, ENCROACHMENTS AND RESTRICTIONS We were not provided a current title report to review. We have reviewed an abstract of title, but this does not cover any easements of record. The most recent deed of conveyance does not reflect any substantial permitted exceptions, outside of the following: 4. A seventy-foy> %¢t (74;J)_wide drainage easement along the Western Portion of the Property, as' Shawn. li :• lad:;recorded in Volume 398.49, Page 24, Deed Records of Tarrant Counts: Texasl. . 5. Terms, conditions'"and stfpula}ion;-Qf Drainage Maintenance Agreement as set forth by plat recorded in VolQme::3$8'4-93'Pdge 24, Deed Records of Tarrant County, Texas, as affected by instrument r+wco`rdecl;,itl Volume 8620, Page 903, Deed Records of Tarrant County, Texas. These two recordings were dictated for purposes of control of the 100-year floodplain encumbrance previously described by means of a culvert and maintenance agreement. We are not aware of any easements, encumbrances, or restrictions that would adversely affect value. Our valuation assumes no adverse easements, encroachments or restrictions and that the subject has a clear and marketable title. CONCLUSION OF LAND ANALYSIS Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses including those permitted by zoning. The reader needs to be aware that the existing 100-year flood encumbrance would likely affect any future development of the subject property as vacant due to the higher development costs associated with mitigating the floodplain. As improved, the subject property requires additional flood insurance. There are no other particular restrictions on development noted in the analysis. PAGE 9 --- ----- get --------- Zf/ .49welff NY ------------ ------------------------ it IY LL LL is WO L. r SHADOW CREEK APARTMENTS LAND DESCRIPTION AND ANALYSIS TAX MAP I I�A F%i oNi ��tw� A � saltl � E • C N ��I • Ili Q L 1 e lal ,I I Q v g I SNE P,pON .a.c ,.5 •,,9.I A n' J ORx¢INCI >TI I iN I•. �A ♦I° ,Jq,&Lst �C � _ l�xt III 9%1G ml IN T 5 • B ro.° • '"" Subject zo" ¢G oo 9� I 4Ai lye G 1 vCC• PkALwblf"'T I IN Cc 0. XEL.ANE ,yltl Ls ° N PAGE 'I 7 SHADOW CREEK APARTMENTS LAND DESCRIPTION AND ANALYSIS CURRENT FLOOD MAP (AERIAL OVERLAY PAGE 'I 1 irr. SHADOW CREEK APARTMENTS HISTORICAL 1976 FLOOD MAP ;f '110N�'A •i�`'`I:�i �•�� �::..� , ._Subject �� ijhl'r rA VI :: y; COlM14if lIY11S b LAND DESCRIPTION AND ANALYSIS )1All TON! h S• .�.•.� --`� � $ ¢ ZONE A —+ I i Twain x—al PAGE 93 SHADOW CREEK APARTMENTS LAND DESCRIPTION AND ANALYSIS HISTORICAL 1980 FLOOD MAP -- -- - - Subject - -- ZONE 0 Subject ZONE A. ZONEe �• _lam'" -- -COVE '- _ SEf YE J PAGE 14 irr SHADOW CREEK APARTMENTS LAND DESCRIPTION AND ANALYSIS LOMR REVISED FLOOD MAP NAGE 10 SHADOW CREEK APARTMENTS LAND DESCRIPTION AND ANALYSIS r *Pool Not Operatio - �o ®� .���o •oomo some DON• 311 S. Indushial Blvd. w Euless, TS 76040 {yam 817-835-0699 MANAGEMENT INC. 3�,ti-,,tv.DSproperthmgmtcom PAGE 16 SHADOW CREEK APARTMENTS LAND DESCRIPTION AND ANALYSIS ZONING MAP PAGE 17 Ai sp Jowl TIT 4.1 r i i So i a' j1p '� .- 1)11 �f AM - lAi{ \ .W Ef- I& i Al AW7 z SHADOW CREEK APARTMENTS IMPROVEMENTS DESCRIPTION AND ANALYSIS IMPROVEMENTS DESCRIPTION AND ANALYSIS The subject is an existing multifamily property containing 192 dwelling units. The improvements were constructed in 1968 and are 80% leased as of January 2013. The site area is 8.99 acres or 391,484 square feet. IMPROVEMENTS DESCRIPTION Name of Property Shadow Creek Apartments General Property Type Multifamily Property Sub Type Garden Style Multiple Residences Competitive Property Class Class C Percent Leased 80% Number of Buildings 26 Stories 2 Construction Class D Construction Type Wood frame Construction Quality Average Condition Poor Number of Units 192 Units per Acre (Density) 21.4 Rentable Floor Area (SF) 146,056 Land Area (SF) 391,484 Floor Area Ratio (RFA/Land SF) 0.37 Building Area Source ALN and Tarrant Appraisal District Year Built 1968 Actual Age (Yrs.) 45 Estimated Effective Age (Yrs.) 50 Estimated Economic Life (Yrs.) 50 Remaining Economic Life (Yrs) 0 Number of Parking Spaces 275 Parking Type Asphalt Parking Spaces/Unit 1.4 As of January 11, 2013 (our date of inspection), the subject property is in poor condition, with several units boarded up, the easternmost pool was filled in and appeared to not be operational, and the general character of the on -going maintenance was in below average condition. The appraisers did contact the management office and were told that the subject is currently at 80% occupancy. Based on review of information obtained by the Apartment Listing Network (ALN), the subject has 192 units, consisting of one bedroom/one bathroom units, two bedroom/one bathroom units, and two bedroom/two bathroom units with a total rentable floor area of 146,056 square feet. Based on our exterior only inspection, the subject exterior had a poured concrete foundation, wooden structural frame, masonry veneer (about 75% of wall area), and wood siding (about 25% of wall area), single hung windows, with pitched composition roofing and flat built-up roofs. An interior inspection was not performed, but the appraisers assume the interior condition of the subject property is equivalent with the exterior appearance, which was in poor condition with low on -going maintenance. PAGE IV SHADOW CREEK APARTMENTS IMPROVEMENTS DESCRIPTION AND ANALYSIS UNIT MIX AND BUILDING AREAS % of Unit Type Units Total Avg. Unit Size Total SF I13/113A - Small 72 37.5% 1B/lBA-Big 48 25.0% 2B/1BA 24 12.5% 2B/2BA - Small 32 16.7% 2B/2BA - Big 16 8.3% 648 678 813 953 1,053 46,656 32,544 19,512 30,496 16,848 TOTAL/AVG. 192 100.0% 761 146,056 Includes employee and model units, as applicable UNIT FEATURES AND PROJECT AMENITIES At At Unit Features Subject Project Amenities Subject Patio/Balcony Yes Gated Entrance No Fireplace No Swimming Pool Yes Vaulted Ceilings No Spa/Hot Tub No Dishwasher Yes Sauna No Disposal Yes Covered Parking No Trash Compactor No Garage/Under Building No Washer/Dryer Hookup No Tennis Court No Washer/Dryer In Unit No Playground Yes Storage in Unit No Clubhouse/Rec. Building Yes Air Conditioning Yes Fitness Room No Carpets/Drapes/Blinds Yes Racquet Ball No Walk-in Closets Yes Volleyball No Basketball No Laundry Facility Yes Storage No Security No *Note interior amenities are based on information supplied by ALN as the appraisers did not inspect the interior of the subject property. IMPROVEMENTS ANALYSIS Quality and Condition The quality and condition of the subject is considered to be poor and inferior to that of most competing properties within the market place. However, for purposes of this report we assume the subject property to be in good condition and at stabilized occupancy levels. Functional Utility The improvements appear to be adequately suited to their current use, and there do not appear to be any significant items of functional obsolescence. PAGEZU SHADOW CREEK APARTMENTS IMPROVEMENTS DESCRIPTION AND ANALYSIS Deferred Maintenance Deferred maintenance does exist as of the date of our inspection (January 11, 2013); however, we were not provided any detailed information pertaining to this matter, nor is it relevant to consider for purposes of our analysis as our analysis is retrospective in nature. ADA Compliance Based on our inspection and information provided, we are not aware of any ADA issues. We assume the subject property does not comply with ADA, given that it was constructed prior to ADA being passed in 1990. However, we are not expert in ADA matters, and further study by an appropriately qualified professional would be recommended to assess ADA compliance. Hazardous Substances We are not aware of the presence of any hazardous substances at the property; however, we are not qualified to detect such substances. Personal Property There are no personal property items that would be significant to the overall valuation. CONCLUSION OF IMPROVEMENTS ANALYSIS Overall, the quality, condition, and functional utility of the improvements are below average for their age and location. PAGE 21 SHADOW CREEK APARTMENTS IMPROVEMENTS DESCRIPTION AND ANALYSIS SUBJECT UNIT FLOOR PLANS Shadow Creek Apartment Community 3115outh InduAnal6Nd. Wlev,,T%76040 Telephone: 317-8379699 Escape from the Ordinary! rc, fr eearaan E.e Y]o� ��•`"� umrt _inn; Flee MaddA4 1 Badroam/1 Bath- 648 SRAL uvr a -ea RerR$ Depost$ Modd A.2 1 eadmom/l Bath - 679 sq.& Rent$ Dep7siO Nodal B-3 2 Badromv/1 Bath • B13 sq.h. RCM $ Deposit $ f_ CIOSGt Mc, Kitchen L ,Ji q Scdroom 4-ea I e 8ar t ea:r Dining S::h Free ealr Dir•,nE .,. A•eo Kitdxn 5ea-ooT rg ecd •oom Model B 1 2 Bedroare,J2 Bath 953 sq.f. Modat B-2 2 Badrwr.VZ Bash • 1053 sq-tt. RerR$ Dust$ Featured Amenities • 2 51vimmntg Pools • Club Hause • Playground Area ' spacious Floor Plans * Laundiy Facilities • 24-houB Maintenance PAGE 22 Irr SHADOW CREEK APARTMENTS IMPROVEMENTS DESCRIPTION AND ANALYSIS View of Industrial Boulevard looking south from the subject property. (Photo Taken on January 11, 2013) View of the drainage easement and culvert for flood water mitigation. (Photo Taken on January 11, 2013) PAGE 23 SHADOW CREEK APARTMENTS IMPROVEMENTS DESCRIPTION AND ANALYSIS Typical view of the subject property looking north from the southern boundary. (Photo Taken on January 11. 2013) Typical community facility view and easternmost pool. (Photo Taken on January 11, 2013) PAGE 24 SHADOW CREEK APARTMENTS IMPROVEMENTS DESCRIPTION AND ANALYSIS Looking west along the northern interior street. (Photo Taken on January 11, 2013) Typical view of the subject property looking southwest from the northern boundary. (Photo Taken on January 11, 2013) PAGE 25 SHADOW CREEK APARTMENTS REAL ESTATE TAX ANALYSIS REAL ESTATE TAX ANALYSIS Historical taxing information was generated from Tarrant Appraisal District back to 2005. No historical information was provided for the subject in 1973. Current tax information is shown below for purposes of our modern Income Capitalization Approach expressed later within this report. Real estate tax assessments are administered by the Tarrant Appraisal District. Real estate taxes in this state and this jurisdiction represent ad valorem taxes, meaning a tax applied in proportion to value. Real estate taxes and assessments for 2012 are identified below. Note that 2013 assessments and rates have not been developed or released by TAD at this time. TAXES AND ASSESSMENTS - 2012 Assessed Value Taxes and Assessments Ad Valorem Direct TaxID Land Improvements Total TaXRate Tams Assessments Total 00669814 $783,992 $1,616,008 $2,400,000 2.518367% $60,441 $60,441 Note that the tax assessment is lower than our value conclusion via the Income Capitalization Approach (revealed later in this report), under the hypothetical condition that the subject property is in good condition and operating at stabilized occupancy. We realize that the Tarrant Appraisal District likely has the subject assessed at its current value knowing that the subject is currently performing under stabilized occupancy levels and is in poor condition. However, given that our Income Approach Value provided herein is under the assumption that the subject is in good condition and operating at stabilized occupancy levels, we must ascertain the reasonableness of the subject's assessment and related tax expense, as this will allow us to make the appropriate tax expense deduction in our pro forma income and expense analysis. TAX COMPARABLES Total Assessed Assessed Total No Property Name Units Value Value/Unit Taxes Taxes/Unit 1 Concord Terrace Apartments 214 $1,337,801 $6,251 $33,691 $157 2 Terrace Apartments 108 $1,078,199 $9,983 $27,153 $251 3 Royal Terrace 120 $2,150,000 $17,917 $54,145 $451 Subject Shadow Creek Apartments 192 $2,400,000 $12,500 $60,441 $315 Tax assessments for comparable properties range from $6,251 to $17,917 per unit, as compared with the subject at $12,500 per unit. On balance, the subject's taxes appear reasonable for its current condition and operating performance. However, for purposes of our pro forma analysis provided later within the Income Capitalization Approach, we use a tax estimate of $450 per unit, which equates to a total tax liability of $86,400. We justify this based on our expense comparables introduced later within this report that have a tax liability per unit between $404 to $575 per unit and average $516 per unit. PAGE 26 SHADOW CREEK APARTMENTS HIGHEST AND BEST USE ANALYSIS (JANUARY 2013) HIGHEST AND BEST USE ANALYSIS (JANUARY 2013) AS IF VACANT Legally Permissible The only permitted use under zoning that is consistent with prevailing land use patterns in the area is commercial use. Industrial Boulevard and Euless Boulevard are comprised of commercial, office, and industrial uses, with residential uses being prevalent behind the commercial, office, and industrial uses located along the aforementioned two thoroughfares. Physically Possible There are no physical limitations that would prohibit development of a commercial use on the site, except for its floodplain encumbrance. As previously discussed, the subject has about 60% floodplain encumbrance with some floodway. Development of this area would be limited due to the floodplain and floodway and would likely require additional development costs. Financially Feasible Based on our analysis of the market, there is limited demand for additional commercial development at the current time. It appears that a newly developed commercial use on the site would not have a value commensurate with its cost; therefore commercial use is not considered to be financially feasible. Nevertheless, we expect an eventual recovery of the market accompanied by a rise in property values to a level that will justify the cost of new construction. Thus, it is anticipated that commercial development will become financially feasible in the future. Maximally Productive There does not appear to be any reasonably probable use of the site that would generate a higher residual land value than holding the property for future development of a commercial use. Accordingly, it is our opinion that holding the property for future commercial use, based on the normal market density level permitted by zoning, is the maximally productive use of the property. Conclusion Investment holding the property for future development of a commercial use is the only use that meets the four tests of highest and best use. Therefore, it is concluded to be the highest and best use of the property as if vacant. As IMPROVED The subject site is developed with multifamily use, which is not consistent with the highest and best use of the site as if it were vacant. Furthermore, the existing use is not conforming to current zoning requirements and has been a non -conforming use since September 25, 1973. However, the existing improvements are currently leased (even though this may be below stabilized occupancy levels). Therefore, a continuation of this use is concluded to be PAGE L/ SHADOW CREEK APARTMENTS HIGHEST AND BEST USE ANALYSIS (JANUARY 201 financially feasible. The appraisers do not have any historical financial details from the subject to know if a substantial positive cash flow is currently being generated. Based on our analysis, there does not appear to be any alternative use that could reasonably be expected to provide a higher present value than the current use, and the value of the existing improved property exceeds the value of the site, as if vacant. The reader must bear in mind that the existing flood encumbrance affects the value of the site as if vacant. For these reasons, continued multifamily use is concluded to be maximally productive and the highest and best use of the property as improved. MOST PROBABLE BUYER Taking into account the size and characteristics of the property and its multitenant occupancy, the likely buyer is a national, regional, or local investor. *Note that a retrospective highest and best use analysis is not provided or feasible to produce. PAGE Zt$ SHADOW CREEK APARTMENTS CONSULTATION METHODOLOGY CONSULTATION ANALYSIS CONSULTATION METHODOLOGY As previously discussed, this appraisal consultation follows Section 84-59, Amortization of Nonconforming Uses and Structures, of the City of Euless Code of Ordinances, and will be used as a guide for the layout and information provided within this appraisal consultation report. Sec. 84-59. - Amortization of Nonconforming Uses and Structures. (a) The board, upon the request of the city or the owner of property upon which is located a nonconforming structure or use, shall initiate an action to bring about the discontinuance of the nonconforming use or the removal of a nonconforming structure, or both, by a date certain. (b) The board shall conduct a hearing for the purpose of determining a date certain for termination of the nonconforming use or removal of the nonconforming structure, or both, with respect to the property. If such action is initiated by the city, prior notice of such hearing shall be given to the property owner. (c) The date established for termination of the nonconforming use or removal of the nonconforming structure is to give the property owner an opportunity to recover its investment in the nonconforming structure or use from the time such property or structure became nonconforming. (d) The board shall measure the reasonableness of the opportunity for recoupment of the property owners investment by conditions existing at the time such use or structure became nonconforming. (e) The following factors must be considered by the board in determining a reasonable amortization period; (1) The owners capital investment in structures, fixed equipment, and other assets (excluding inventory and other assets that may be feasibly transferred to another site) made on the property before the time the use, the structure, or both, as applicable, became nonconforming. Costs of replacements, improvements or additions made after the structure or use became nonconforming shall not be included. (2) Any costs that are directly attributable to the establishment of compliance date, including demolition expenses, relocation expenses, termination of leases, and discharge of mortgages. (3) Any return on investment since inception of the use, or construction of the structure, including net income and depreciation. (4) Recovery of investment, including net income and depreciation. PAGE Z9 SHADOW CREEK APARTMENTS CONSULTATION METHODOLOGY (5) General character of the neighborhood in proximity to the nonconforming use or structure and the necessity for all property within the City of Euless to conform to the regulations of the unified development code of the City of Euless. (f) Once the board establishes a compliance date for a nonconforming use, the use must cease operations on or before that date and it may not operate thereafter unless it becomes a conforming use. (g) Once the board establishes a termination date for a nonconforming structure, the structure must be completely removed from the property by that date, by demolition or otherwise, and such structure may not be reconstructed or relocated in any other location in the city where it would not be in conformance with all provisions of the unified development code then in effect. (Ord. No. 1341, § I, 12-8-98; Ord. No. 1440, § I, 8-8-00) With the aforementioned in mind the following steps are followed in adherence with Section 84-59 of the Euless Code of Ordinances. The appraisers determine the current (January 11, 2013) land value as relevant land value data is not available from the retrospective date of value (September 25, 1973). Upon calculation of the modern land value the appraisers discount this land value back to the retrospective date of September 25, 1973 for an estimate of the land value during this time period. The appraisers use the Consumer Price Index, the Producer Price Index, and RS Means Construction Cost Index to formulate rates for inflation for purposes of discounting. ■ After determining the land value, the appraisers estimate the replacement cost of the subject improvements for the current date (January 11, 2013), utilizing cost estimate numbers from both Marshall Valuation and RS Means. Then we apply a historical cost ratio to discount these current replacement cost estimates back to the retrospective date of September 25, 1973. The combination of these cost estimates and the discounted retrospective land value estimate allows us to determine an estimate of the value of the subject property via the Cost Approach for the subject property as of September 25, 1973. ■ No improved sales data is able to be obtained from the retrospective era and therefore no Sales Comparison Approach is performed herein. Furthermore, the Income Capitalization Approach is the most widely used and relied upon method by market participants for purchase of a multifamily property similar to that of the subject property. ■ No historical income information is able to be obtained to develop a retrospective value via the Income Capitalization Approach. Thus, the appraisers use modern rental rates, vacancy rates, and expenses, to develop a pro forma analysis through net operating income as of January 11, 2013. We further use modern capitalization rates to estimate the current value of the subject property via the Income Capitalization Approach. After yielding this result, we then take this value and discount it back to the retrospective date of September 25, 1973 for an estimate of the improved value during this time period. The appraisers use the Consumer Price Index, the Producer PAGE 3U SHADOW CREEK APARTMENTS CONSULTATION METHODOLOGY Price Index, and RS Means Construction Cost Index to formulate rates for inflation for purposes of discounting. This allows the appraisers to develop an estimate of value for the retrospective date via the Income Capitalization Approach. ■ The appraisers also analyze historical documents and note financial instrument holdings as of the retrospective date along with a sensitivity analysis to determine an applicable value range of the subject property as of the retrospective date. ■ The aforementioned value conclusions as of September 25, 1973 are reconciled for a final indication of value. The previous steps, will take the report through Item D of Section 84-59 of the Euless Code of Ordinances. The following list of items will outline how the appraisers determine Item E of Section 84-59. ■ Based on the modern calculations of net operating income (cash flow after expenses, but not considering debt service or taxes), the appraisers provide a timeline of net operating income back to the retrospective date based on inflation calculations. Using net operating income we determine the amortization period from September 25, 1973 going forward until completely amortized. ■ The appraisers then estimate any costs associated with Item E-2 by the current owner and compare these costs against any continued return from the end of the amortization period through the compliance date, plus underlying appreciation of the land that could potentially be realized. The aforementioned steps should reasonably allow for production of Section 84-59 of the Euless Code of Ordinances and are described in detail following this section of the report. PAGE 31 SHADOW CREEK APARTMENTS LAND VALUATION LAND VALUATION To develop an opinion of the subject's land value, as if vacant and available to be developed to its highest and best use, we utilize the sales comparison approach. Our search for comparable sales focused on transactions most relevant to the subject in terms of location, size, highest and best use, and transaction date. For this analysis, we use price per square foot as the appropriate unit of comparison because market participants typically compare sale prices and property values on this basis. The most relevant sales are summarized in the following table. SUMMARY OF COMPARABLE LAND SALES Sale Date; SF; $/Usable No Name/Address Status Sale Price Acres Zoning SF 1 Commercial Site Jun-12 $1,156,424 245,005 S (Service Commercial) $4.72 2029 Parkwood Dr. Closed 5.62 Bedford Tarrant County TX 2 Bell Helicopter Dec-11 $3,000,000 1,026,212 R-2 and A (Residential and Ag) $3.35 N/S Trinity Blvd East of Norwood Dr. Closed 23.56 Fort Worth Tarrant County TX 3 Commercial Site Nov-10 $556,760 234,920 TX-10 (Commercial) $2.37 NEC of Euless Blvd and Debra Drive Closed 5.39 Euless Tarrant County TX 4 Commercial Site Aug-10 S486,815 216,363 C-1(Commercial) $2.25 SWC Mid -Cities Boulevard and Holiday Lane Closed 4.97 North Richland Hills Tarrant County TX 5 Commercial Tract Jun-08 $600,000 562,708 TX-10 (Commercial) $1.07 NEQ oflndustrial Blvd. and W. Euless Blvd. Closed 12.92 Euless Tarrant County TX Subject 391,484 Conununity Business District Shadow Creek Apartments 8.99 Euless, TX PAGE 32 SHADOW CREEK APARTMENTS COMPARABLE LAND SALES MAP LAND VALUATION *The comparable sales are represented by numerals in the map above, while listings are identified by letters. PAGE 33 SHADOW CREEK APARTMENTS ANALYSIS AND ADJUSTMENT OF SALES LAND VALUATION The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factor Accounts For Comments Effective Sale Price Atypical economics of a No adjustments required. transaction, such as demolition cost or expenditures by buyer at time of purchase. Real Property Rights Fee simple, leased fee, No adjustments required leasehold, partial interest, etc. Financing Terms Seller financing, or No adjustments required, assumption of existing financing, at non -market terms. Conditions of Sale Extraordinary motivation of Land Sale Nos. I and 2 were both purchased by adjoining neighbors as buyer or seller, assemblage, assemblages and require a downward adjustment for this condition of forced sale. sale. No specific amount of above market influence was disclosed to the appraisers regarding these transactions; however, we consider it here in our analysis. Market Conditions Changes in the economic In this appraisal, we have not made a specific adjustment for changing environment over time that market conditions, but we have tempered our reconciliation and affect the appreciation and conclusions in light of current market conditions. depreciation of real estate. Location Market or submarket area Land Sale No. 1 is located north if Airport Freeway in a superior area influences on sale price; and requires a downward adjustment for location. Land Sale No. 2 surrounding land use requires an upward adjustment for its inferior location as it is located influences. along Trinity Boulevard, which travels almost parallel with Euless Boulevard, but does not have as high of traffic volume. Size Inverse relationship that Land Sale No. 2 requires an upward adjustment for its larger size. often exists between parcel size and unit value. Topography/Flood Primary physical factors The subject property is approximately 60% encumbered with 100-year that affect the utility of a floodplain and floodway (combination of the two) and therefore site for its highest and best requires adjustment for this negative feature. We rely on the paired use. flood sale analysis included in the addendum of this report to derive an adjustment for this characteristic. Considering the discounts indicated by the analysis, we apply a 55% discount to all of the comparable sales, except Land Sale No. 5 as it is located adjacent to the subject and is 50% encumbered. In addition, a lower degree of adjustment is warranted for Land Sale No. 2 as it has a drainage area and about 13% floodplain encumbrance. Zoning/Use Potential Government regulations that No adjustments required. affect the types and intensities of uses allowable on a site. PAGE 34 SHADOW CREEK APARTMENTS LAND VALUATION The following table summarizes the adjustments we make to each sale. LAND SALES ADJUSTMENT GRID Subject Comparable 1 I Comparable 2 Comparable 3 Comparable 4 Comparable 5 Name Shadow Creek Commercial Site Bell Helicopter Commercial Site Commercial Site Commercial Apartments Tract Address 311 S. Industrial 2029Parkwood N/S Trinity Blvd NECofEuless SWCMid-Cities NEQof Boulevard Dr. East of Norwood Blvd and Debra Boulevard and Industrial Blvd. Dr. Drive Holiday Lane and W. Euless Blvd. City Euless Bedford Fort Worth Euless North Richland Euless Hills County Tarrant Tarrant Tarrant Tarrant Tarrant Tarrant State Texas TX TX TX TX TX Sale Date Jun-12 Dec-11 Nov-10 Aug-10 Jun-08 Sale Status Closed Closed Closed Closed Closed Sale Price $1,156,424 $3,000,000 $556,760 $486,815 $600,000 Usable Square Feet 391,484 245,005 895,532 234,920 216,363 562,708 Usable Acres 8.99 5.62 20.56 5.39 4.97 12.92 Price per Square Foot $4.72 $2.92 $2.37 $2.25 $1.07 PROPERTYRIGHTS Fee Snnple Fee Simple Fee Supple Fee Simple Fee Supple % ADJUSTMENT 0% 0% 0% 0% 0% FINANCINGTIRMS Cash to seller Cash to seller Cash to seller Cash to seller Cash to seller %ADJUSTMENT 0% 0% 01/6 0% 0% CONDITIONS OF SALE %ADJUSTMENT -1o% -10% 0% 0% 0% MARKET' CONDITIONS 1/1/2013 Jun-12 Dec-11 Nov-10 Aug-10 Jun-08 0% 0% 01/6 0% 0% CUMOATTVEADJUSTEDPRICE $4.25 $2.63 $2.37 $2.25 $1.07 LOCATION Superior Inferior Sunilar Similar Similar %ADJUSTMENT -25% 5% 0% 0% 0% SIZE Similar Inferior Similar Similar Similar % ADJUSTMENT 0% 10% 01/o 0% 0% TOPOGRAPHY/FLOOD Superior Superior Superior Superior Similar % ADJUSTMENT -55% -45% -55% -55% 0% ZONING/USEPOTFNTIAL Similar Similar Similar Similar Similar %ADJUSTMENT 01/6 0%1 0% 0% 0% Net $ Adjustment -$3.40 -$0.79 -$1.30 -$1.24 $0.00 Net % Adjustment -80 % -30 % -55% -55% 0% Final Adjusted Price $0.85 $1.84 $1.07 $1.01 $1.07 Overall Adjustment -82 % -37 % -55% -55% 0% Range of Adjusted Prices $0.85 - $1.84 Average $1.17 Indicated Value $1.15 LISTINGS AND OTHER SALES CONSIDERED In addition to the sales previously presented, the appraisers have analyzed current listings and found several that are similar to the subject property. Anecdotal Sale # 1 - In addition to the land sales used directly in our analysis, the appraiser's are also aware of the June 30, 2011 sale of 17.70 acres to Texas Star Cove, LP from SJ Thornhill Partnership (recorded under instrument number D2011156921). This sale transacted for $2,000,000, or $2.59 per SF of land area. The tract of land is located along the South Side of Trinity Boulevard; about half a mile west of Industrial Boulevard, adjacent to the Texas Star Golf Course. This land was zoned for residential uses and was purchased for the construction of approximately 89 residential lots. Thus, this is the reason for the appraisers to not directly consider this sale in our analysis, as its highest and best use is for residential purposes, rather than commercial purposes. However, interestingly enough the price per square foot is generally in -line with the sales directly utilized. Listing # A - A 4.27-acre tract is currently being marketed for sale at 1851 W. Euless Boulevard for a listing price of $2.12 per SF. PAGE 35 SHADOW CREEK APARTMENTS LAND VALUATION Listing # B — Multiple lots are being marketed at the 2800 block of W. Euless Boulevard near a Frost Bank and existing Fastenal facility. These lots range in size from 29,993 (0.69- acre) square feet to 109,325 (2.51 acres) square feet and have listing prices from $2.20 per SF to $3.65 per SF. Listing # C — 7.93 acres of land is being marketed at SH-10 and Precinct Line Road in Hurst for approximately $5.00 per SF. LAND VALUE CONCLUSION We place significant weight on Land Sale No. 5 as it adjoins the subject property to the south and is also encumbered by the same floodplain and existing drainage easement. Thus, we arrive at a land value conclusion of a $1.15 per SF of land area, or $450,207. However, this is the modern value conclusion as of January 11, 2013 and we must estimate the retrospective value as of September 25, 1973. In order to do this we discount the future value, which in this case is $450,207, back to 1973 to calculate the present value of the land in 1973 based on inflation rates calculated for the 40 year period (1973 through 2013) from the Consumer Price Index, the Producer Price Index, and the RS Means Cost Index. According to our analysis, the CPI has produced a 4.20% average per annum inflation rate over the 40 year span, while the PPI has produced a 3.73% per annum inflation rate, and the RS Means cost index has produced a 4.05% per annum inflation rate. Between the three the overall average is 3.99%. For purposes of our analysis we conclude that the average per annum inflation rate over the 40 year span has been 4.00%. A table for the delineation of the inflation calculations for the aforementioned three indexes can be found in the addendum of this report. Furthermore, we also realize that the three indices are tracking inflation on consumer goods (whether from the producer — PPI or to the consumer — CPI) and construction cost components. As the reader can see, these items are generally personal property items and also are very liquid items. On the contrary to this, we note that real estate is illiquid when compared to consumer products and therefore carries a stronger liquidity risk when calculating appreciation. Therefore, we would expect the appreciation for the subject property to be lower than that of consumer goods and construction cost components. So for purposes of this report, we deduct 100 basis points from our previously estimated appreciation rate of 4.00% to yield an overall estimated appreciation rate of 3.00% for our land analysis. RETROSPECTIVELAND VALUATION DERIVATION Total Per Unit Concluded Modern Land Value (2013) $450,207 $2,345 Concluded Retrospective Land Value as of September 25 1973 $138,014 $719 Concluded Retrospective Land Value as of September 25, 1973 (Rounded) $138,000 $719 PAGE 36 irr. SHADOW CREEK APARTMENTS COST APPROACH COST APPROACH The steps taken to apply the cost approach are: ■ Develop an opinion of the value of the land as though vacant and available to be developed to its highest and best use, as of the retrospective date; ■ Estimate the replacement cost new of the existing improvements using Marshall Valuation Service and RS Means; ■ Estimate depreciation as of 1973 when the subject would only be 5 years old and in good condition, from all causes and deduct this estimate from replacement cost new to arrive at depreciated replacement cost of the improvements; and ■ Apply the historical ratio to the calculated modern replacement costs; ■ Add the retrospective land value to the depreciated replacement cost of the improvements to arrive at a retrospective value indication for the property overall. The following tables summarize our valuation by the cost approach using Marshall Valuation Service. REPLACEMENT COST ESTIMATE Building Improvements Bldg Name MVS Building Type MVS Class Quality Quantity Unit Unit Cost Cost New Shadow Creek Apartments Multiple Residence D Average 147,445 SF $53.97 $7,957,607 Subtotal - Replacement Cost New $7,957,607 Plus: Indirect Cost 10.00% $795,761 Subtotal $8,753,367 Plus: Entrepreneurial Profit 15.00% $1,313,005 Total Replacement Cost New $10,066,372 Site Improvements Item Quality Quantity Unit Unit Cost Cost New Asphalt Paving Average 100,272 SF $1.84 $184,500 Landscaping Average 143,767 SF $3.41 $490,245 Swimming Pools Average 2 EA $32,130.00 $64,260 Playground Average 1 EA $5,508.00 $5,508 Subtotal - Replacement Cost New $744,514 Plus: Indirect Cost 10.00% $74,451 Subtotal $818,965 Plus: Entrepreneurial Profit 15.00% $122,845 Total Replacement Cost New $941,810 Overall Property Building Improvements $7,957,607 Site Improvements $744,514 Subtotal - Replacement Cost New $8,702,121 Plus: Indirect Cost 10.00% $870,212 Subtotal $9,572,333 Plus: Entrepreneurial Profit 15.00% $1,435,850 Total Replacement Cost New $11,008,183 Source: Marshall Valuation Service except for Indirect Costs and Entrepreneurial Profit, which are appraisers estimates. PAGE 37 SHADOW CREEK APARTMENTS ESTIMATE OF DEPRECIATION COST APPROACH Building Lnprovements Replacement Cost New $10,066,372 Less: Deferred Maintenance Remaining Cost $10,066,372 Age -Life Depreciation 10%-$1,006,637 Additional Functional Obsolescence 0% $0 External Obsolescence 0% $0 Total Depreciation -$1,006,637 Depreciated Replacement Cost $9,059,735 Site Improvements Replacement Cost New Less: Deferred Maintenance $941,810 $0 Remaining Cost $941,810 Age -Life Depreciation 10%-$94,181 Additional Functional Obsolescence 0% $0 E?demal Obsolescence 0% $0 Total Depreciation -$94,181 Depreciated Replacement Cost $847,629 Overall Property Replacement Cost New $11,008,183 Deferred Maintenance $0 Remaining Cost $11,008,183 Age -Life Depreciation -$1,100,818 Additional Functional Obsolescence $0 Fxdemal Obsolescence $0 Total Depreciation-$1,100,818 Depreciated Replacement Cost $9,907,364 Rounded: $9,910,000 *Note our depreciation estimates are based on the hypothetical condition that the subject property is nearly new and in good condition in 1973 versus its modern condition. VALUE INDICATION BY COST APPROACH Depreciated Replacement Cost $9,910,000 Historical Modifier 0.205 Historical Improvement Value $2,031,550 Historical Land Value Estimate $138,000 Indicated Property Value $2,169,550 Rounded $2,200,000 *It is important for the reader to recognize that Marshall Valuation Services only tracks historical costs back 1979, whereas RS Means tracks historical costs back to 1940. Thus, the historical modifier used in both cost estimates is based on the RS Means historical cost index. In order to calculate this modifier the appraisers must take the indexed cost in 1973 and divide it by the indexed cost in 2013, which develops the ratio of 0.205 used in the table above. This ratio is then applied to the depreciated replacement cost estimate as of 2013. The historical index and directions for this calculation are included in the addenda of this report. PAGE 38 SHADOW CREEK APARTMENTS COST APPROACH As can be witnessed from the table above, the concluded retrospective value of the subject property using Marshall Valuation Service's costs is $2,200,000 (Rounded). The following tables summarize our valuation by the cost approach using RS Means. To estimate the initial unit cost of the subject property we use a unit -in -place cost form produced by RS Means to estimate the Substructure, Shell, Interiors, and Services, for the property. This cost yields $93.43 per square foot. When then take this unit cost and apply a height and perimeter adjustment, which yields the final unit value of $53.30 per square foot, which is what is used in the table below. CH APPRAISAL FIELD DATA FORM (RS MEANS) i Subject Property Shadow Creek Apartments 5 Date January 1, 2013 2 Building N/A 6 Appraiser M. Colt Jones/Daniel Wright, MAI 3 Address 311 S. Industrial Blvd. Euless, Texas 76040 4 Building Use Apartments 7 Year Built 1968 No Sketch Performed 8 Exterior Wall Construction Face Brick with front Wood Siding 9 Frame Wooden frame and joists 10 Ground Floor Area Average - 3,072 SF 11 Gross Floor Area 6,144SF 12 Number of Stories 2 13 Story Height About 8' Each 14 Perimeter Square -224; Rectangular -284' 15 Basement Area None 16 General Comments There are three distinct configurations of buildings at the subject property, which include square, rectangular, and "L" shaped. Measurements identified above were taken based on aerial measurements using Pictometry Online. Base Cost per square area: Specify Source: Page: 78 Model # M.010 Area: 147,445 SF Exterior Wall: Brick/Wood Frame: Wood $93.43 Height Adjustment: $93.43 $8.30 = $85.13 Perimeter Adjustment: $85.13 $31.83 = $53.30 Adjusted Base Cost per square foot: $53.30 Building Cost: $53.30 x 147,445 SF = $7,858,819 Adj�dB—C A4 ,SF FloorArea Lump Sum Additions Asphalt Paving $194,500 Landscaping $490,245 Swuruning Pools $64,260 Playground $5,508 Grand Total $744,513 Total Building Costs (sumofabove costs) $8,603,332 Indirect and Entreprenurial Incentive Cost x 25% $2,279,883 Total Building Costs inclusive oflEl $10,883,214 Location Modifier: City Euless (Fort Worth), Texas Date: January-13 x 0.820 Local costofreplacement $8,924,236 Less depreciation: 10% $892,424 Final improvement Value $8,031,812 Historical Modifeir: 0.205 Historical Improvement Value $1,646,521 Plus Historical Land Value $138,000 $138,000 Retrospective Value via the Cost Approach $1,784,521 Rounded $1,800,000 PAGE 39 SHADOW CREEK APARTMENTS COST APPROACH *Note that RS Means did not provide specific costs for the site improvements, only the building improvements; therefore the appraisers use the same site improvement costs from our Marshall Valuation estimate. As can be witnessed from the table above, the concluded retrospective value of the subject property using Marshall Valuation Service's costs is $1,800,000 (Rounded). The difference between the two costs is mostly attributable to the difference in location multipliers from the two cost sources and the slight difference in the calculated base cost of the building improvements. PAGE 40 SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH INCOME CAPITALIZATION APPROACH The income capitalization approach converts anticipated economic benefits of owning real property into a value estimate through capitalization. The steps taken to apply the income capitalization approach are: ■ Analyze the revenue potential of the property. ■ Consider appropriate allowances for vacancy, collection loss, and operating expenses. ■ Calculate net operating income by deducting vacancy, collection loss, and operating expenses from potential income. ■ Apply the most appropriate capitalization method, either direct capitalization or discounted cash flow analysis, or both, to convert anticipated net income to an indication of value. In this analysis, we use only direct capitalization because investors in this property type typically rely most on this method. OCCUPANCY AND RENTAL RATES The unit mix, occupancy status, and rental rates at the subject are shown below. UNIT MIX AND OCCUPANCY Total Unit Type Unit Size Units 113/113A - Small 648 72 1B/1BA-Big 678 48 2B/1BA 813 24 2B/2BA - Small 953 32 2B/2BA - Big 1,053 16 TOTAL JA VG. 761 192 Includes employee and model units, as applicable The subject property has 192 total units and is at 80% occupancy levels based on our discussions with property management. ALN, reports the occupancy level was 75% as of October 2012. SUBJECT RENTAL RATES Asking Rent Average Total Unit Type Unit Size Units Average Avg. $/SF 1B/1BA - Small 648 72 $565 $0.87 1B/1BA-Big 678 48 $595 $0.88 2B/1BA 813 24 $705 $0.87 213/213A - Small 953 32 $740 $0.78 213/213A - Big 1,053 16 $780 $0.74 TOTALJAVG. 761 192 $637 $0.84 Includes employee & model units, if any. PAGE 41 SHADOW CREEK APARTMENTS UTILITIES EXPENSES INCOME CAPITALIZATION APPROACH Tenant -Paid Utilities Owner -Paid -Utilities Cable In -Unit Electric Broadband Sewer Trash Common Area Electric Water The subject property is an "all bills paid" property, which is common in this vintage and property class of multifamily assets. MARKET RENT ANALYSIS In addition to contract rent, our analysis considers the market rent of each basic unit type within the subject. To estimate market rent, we analyze comparable rentals most relevant to the subject in terms of location, property type, building age, and quality. The comparables are summarized in the following table. SUMMARY OF COMPARABLE RENTALS Avg. Avg. Avg. Property Name; Survey Built; No. Unit Rent/ Rent/ No. Address Date %Occ. Unit Mix Units SF Month SF 1 Manchester Apartments 01/02/13 1968 394 901 S617 S0.68 100 Manchester Dr. 88% Euless 1&IBA 128 715 $550 $0.77 2B/IBA 128 940 $630 $0.67 2B/2BA 128 1,049 $670 S0.64 2 Royal Terrace 01/02/13 1964 120 658 $640 $0.97 309 Martha St. 91% Euless IB/1BA 32 525 $585 $1.11 I33/1BA 16 540 $585 $1.03 IB/IBA 12 656 $645 $0.98 IB/IBA 8 664 S625 $0.94 1B/1BA 20 680 S660 $0.97 IB/1BA 20 745 S660 $0.89 2B/2BA 12 982 $795 $0.81 3 Wilshire Manor 01/02/13 1968 118 748 $675 $0.90 1450 Sagebrush Trl. 87% Fuless IB/IBA 58 650 S609 $0.94 IWIBATH 20 750 $679 S0.91 2B/IBA 32 800 $729 $0.91 2B/1.5BA TH 8 1,250 $929 $0.74 4 Terrace 01/02/13 1965 108 752 S610 $0.81 306 Park Dr. 501/6 Euless EFF 3 448 S415 $0.93 IB/IBA 48 650 $555 S0.85 2B/IRA 54 850 5665 S0.78 3B/IBA 3 920 $695 $0.76 5 Concord Terrace 01/02/13 1968 214 813 $670 $0.82 1001 Villa Dr. 701% Euless EFF 6 421 $425 $1.01 IB/IBA 8 625 $565 $0.90 1B/1BA 76 648 $595 $0.92 2B/IBA 104 912 $720 $0.79 2B/2BA 8 950 $750 $0.79 3B/2BA 4 1,230 $865 $0.70 3B/2BA 8 1,239 $840 S0.68 6 Mission Pointe Club 01/03/13 1963 260 819 $545 $0.66 917 Del Paso St. 97% Euless 1B/IBA 72 612 $460 $0.75 IB/IBA 72 720 $500 $0.69 2B/1BA 40 948 $600 $0.63 2B/2BA 36 1,008 $625 $0.62 2B/2BA 40 1,072 S650 %61 PAGE 42 SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH COMPARABLE RENTALS MAP a eat l r L_s +J' % j� ;/q 157,!`` ,.`` �C edford }&Citgo m Euless ' • ' yr T_exTQQ- 183�-#jgport ! HuffmatLDr -' r. Flna = — I 1-'Q,Lick�W�y .r acetrac J � � 757 i' 1 ` �I� = �•1� 4� t 1 n D— r;. �r. r �' ,i 1 me D \ Valero 1 I _ Shell 1 Sub-eck igr�D a` _ ` II r a) F Ja Carr PEark Q lea Aid f Kiddie Ja6arrParlt� f' S a r Park J' r 'Guiktrip L j 157 � � k� ad Park_ ` V J 70- 1, SoftballMII S r /� World 'e o 1�IlI1P Rrl IA! Softball ( — World L J i y lttarnwoo T��_ Fart Worth Uq_' _] BI d f= -Tree �Y 4a•err7iOald 19W-^,fJlG ?Ai' grceCdl Mmorall&2IMm1%sjllill�r5.Allr1 `Ilsreieerl I PAGE 43 SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH RENTAL ANALYSIS FACTORS Our analysis of the comparable rentals considers the following elements of comparison. RENTAL ANALYSIS FACTORS Tenant Paid Utilities Utilities costs for which tenants are responsible. Unit Size Floor area in square feet. Location Market or submarket area influences on rent; surrounding land use influences. Age/Condition Effective age; physical condition. Quality Construction quality, market appeal, functional utility. Unit Features Features included in individual dwelling units. Project Amenities Amenities available to the entire property. Tenant Paid Utilities Rental Nos. 1 and 5 have a different expense structure, where the tenants are responsible for more expenses versus the subject "All Bills Paid" structure. Thus, an upward adjustment is required to both of these rentals as a higher rental rate would be expected to pay for the additional expenses passed off to the landlord. Unit Size Adjustments for size differences are based on the assumption that rent will vary at less than a one-to-one ratio to unit size differences. In this case, a value ratio of 50% is applied. Unit Features and Project Amenities Standard unit features and project amenities for this market are shown in the following table. Adjustments are made to each comparable based on a comparison of its features and amenities with those of the subject. PAGE 44 SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH UNIT FEATURES / PROJECT AMENITIES Subject Rent 1 Rent 2 Rent 3 Rent 4 Rent 5 Rent 6 Unit Features Patio/Balcony Yes X X X X X X Vaulted Ceilings No Dishwasher Yes X X X X X X Disposal Yes X X X X X X Trash Compactor No Storage in Unit No Air Conditioning Yes X X X X X X Carpets/Drapes/Blinds Yes X X X X X X Walk-in Closets Yes X X X X X X _ Comparison to Subject Similar Similar Similar Similar Similar Similar _ Project Amenities Crated Entrance No X Swimming Pool Yes XX X X X X Spa/Hot Tub No Sauna No Covered Parking No Garage/Under Building No Tennis Court No Playground Yes X X X Clubhouse/Rec. Yes X Fitness Room No Racquet Ball No Volleyball No Basketball No Laundry Facility Yes X X X X X X Storage No Security No Comparison to Subject Similar Inferior Inferior Inferior Similar Inferior PAGE 45 SHADOW CREEK APARTMENTS ANALYSIS OF COMPARABLE RENTALS INCOME CAPITALIZATION APPROACH COMPARABLE RENTAL ADJUSTMENT GRIDS The following tables summarize the adjustments made to the comparable rentals. Separate tables are provided for different unit types. RENTAL ADJUSTMENT GRID - 1BABA - SMALL Subject Comparable 1 Cornparable2 Comparable 3 Co arable 41 Comparable 5 Comparable 6 Property Name Shadow Creek Manchester Royal Terrace Wilshire Manor Terrace Concord Terrace Mission Pointe Apartments Apartments Club Address 311 S. Industrial 100 Manchester 309 Martha St. 1450 Sagebrush 306 Park Dr. 1001 Villa Dr. 917 Del Paso St. Boulevard Dr. Trl. City Euless Euless Euless Euless Euless Euless Euless County Tarrant Tarrant Tarrant Tarrant Tarrant Tarrant Tarrant State Texas TX TX TX TX TX TX Unit Type 1B/IBA-Small 1B/IBA IBr1BA IB/1BA 113/I13A 113/1BA 1B/1BA Average Unit SF 1 648 715 656 650 650 648 720 Average Rent/Mo $565 $550 $645 $609 $555 $595 $500 Rent/SF $0.87 S0.77 $0.98 $0.94 $0.85 S0.92 $0.69 Average Rent(Month $550 $645 $609 $555 $595 $500 UIIUITFS ADJUSTMENT $ ADJUSTMENT $50 $0 $0 $0 $50 $50 SIZEADJUSTMENT %ADJUSTMENT 50% $ADJUSTMENT -S26 -$4 -$1 -Sl $0 -S25 CUMULATIVEADJUSTEII RENT $574 $641 $608 $554 $645 $525 LOCATION Superior Similar Similar SirMar Similar Similar %ADJUSTMENT -5% 0% 0% 01/. 0% 0% AGE/CONDITION/QUALITY Similar Superior Superior Similar Superior Similar %ADJUSTMENT 00/0 -10% -l0% 0% -10% 0% UNIT FEATURES Sirnilar Similar Similar Similar Similar Similar %ADJUSTMENT 0% 0% 0% 0% 0% 0% PROJECT AMENrFIES Similar Inferior Inferior Inferior Similar Inferior %ADJUSTMENT 0% 5% 10% 5% 0% 5% Net$Adjus tment -S29 -S32 $o $28 -565 $26 Net % Ad'us trrrent -5% -5% 0% 5% -10% 5% Final Adjusted Price $546 $609 $608 S582 $581 $551 Overall Adjustment -1 % -6 % 0% 5% -2 % 10 Range Average Avera a/SF Median Comparables - Adjusted S546-$609 $579 $0.89 $581 AIN Submarket Rnnge S415-S1,205 $651 S1.00 AIN Submarket Range (Cap at 1979 YOC) S459-S746 S573 $0.88 SubjectAsking Rent S565-$565 $565 $0.87 Concluded Market Rent S580 S0.90 PAGE 46 SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH RENTAL ADJUSTMENT GRID - 1B/1BA - BIG Subject Comparable 1 Comparable 2 Comparable 3 Cc amble 4 comparable 5 Comparable 6 Property Name Shadow Creek Manchester Royal Terrace Wilshire Manor Terrace Concord Terrace Mission P rote Apartments 311 S. Industrial Apartments 100Manchester 309 Martha St. 1450Sagebmsh 306 Park Dr. 1001 Villa Dr. Club 917 Del Paso St. Address Boulevard Dr. Trl. Euless Euless Euless Euless Euless Euless Euless City Tarrant Tarrant Tarrant Tarrant Tarrant Tarrant Tarrant County Terms TX TX TX TX TX TX State Unit Type 1B/IBA-Big 1/1 1/1 1/1 1/1 1/1 1B✓1BA Average Unit SF 678 715 680 650 650 648 720 $500 Average Rent/Mo $595 $550 $660 $609 $555 $595 $0.92 S0.69 Rent/SF $0.88 $0.77 $0.97 $0.94 $0.85 $555 $595 $500 Average Rent/Month $550 $660 S609 UTILITIES ADJUSTIVIIENT SO S50 $50 $ ADJUSTMENT $50 So $0 SIZEADJLBTnJEVT % ADJUSTMENT 50 % $13 $12 $14 415 $ADJUSTMENT -$14 S586 -$1 S659 $622 S567 S659 $535 CUMULATIVEADJLETED RENT Similar Sinn ar Similar Similar Similar LOCATION Superior -5% 0% 0% 0% 0% 0% %ADJUSTMENT Similar Superior Superior Similar Superior Similar AGF/CONDITTON/QUALITY -10% 0% -10% 0% %ADJUSTMENT 0% Similar -10% Similar Similar Similar Similar Similar UNIT FEATURES 0% 0% 0% 0% 0% 0% %ADJUSTMENT Similar Inferior Inferior Inferior Similar Inferior PROJECT'AD'IEVITIES 5% 10% 5% 0% 5% % ADJUSTMENT 0% -$29 -$33 $0 $28 S66 S27 Net$Adjus tment -5% -5% 0% 5% -10% 5% Net% Adjustment $556 $626 $622 S595 $593 $562 Final Adjusted Price % 2 % 7 % 0% 12 % Overall Adjustment 1 % -5 Ran a Average Average/SF Median Comparables- Adjusted S556-S626 $593 S0.87 $594 ALN Subnarket Range (All) $415-S1,205 S651 S0.96 ALN Subnarket Range (Cap at 1979 YOC) S459 - S746 $573 S0.85 Subject Askin Rent $595-$595 S595 S0.88 Concluded IDEarket Rent $595 $0.88 RENTAL ADJUSTMENT GRID - 211/111A Subject Comparable 1 Comparable 2 Comparable 3 Compamble 4 Comparable 5 Comparable 6 Property Name Shadow Creek Manchester Royal Terrace Wilshire Manor Terrace Concord Tenace Mission Pointe Apartments 311 S. Industrial Apartments 100 Manchester 309 Martha St. 1450 Sagebrush 306 Park Dr. 1001 villa Dr. Club 917 Del Paso St. Address TrI. City Boulevard Farless Dr. Euless Euless Euless Euless Euless Euless County Tarrant Tarrant Tarrant Tarrant Tarrant Tarrant Tarrant State Twins TX TX TX TX TX TX Unit Type 2B/1BA 2B/IBA 2B/2BA 2B11BA 2B/IBA 2B/IBA 2B11BA Average Unit SF 813 940 982 goo 850 912 948 S600 Average Rent/Mo S705 S630 $795 $729 S665 S720 $0.63 Rent/SF $0.87 $0.67 $0.81 $0.91 $0.78 $0.79 Average Rent/Dlonth $630 $795 $729 $665 $720 $600 UTILITIES ADJUSTMENT $0 $50 $50 $ADJUSTMENT $50 $0 $0 SIZEADJUSTMENT %ADJUSTMENT 50010 -$68 $G -S14 -$39 �43 $ADJUSTMENT -S43 S637 $727 $735 $651 S731 $607 CULIULA•TIVEADJUSTFD RINT Similar Similar Similar Sirrvlar Similar LOCATION Superior 0% 0% 0% 0% 0% %ADJUSTMENT -5% Simihn Superior Superior Similar Superior Similar AGFICONDITLON/QUALITY 0% -10% 0% %ADJUSTMENT 00/0 -10% Similar -10% Sirroar Similar Similar Sirnilar UNIT FEATURES 0% 0% 0% 0% 0% 0% %ADJUSTMENT Similar Inferior Inferior Inferior Similar Inferior PROJECT AMENITIES 5% 10% 5% 0% 5% %ADJUSTMENT 0% Similar Superior Similar Similar Similar Similar BATHS %ADJUSTMENT 0% -5% 0% 0% 0% 0% NetSAdjustment 432 -S73 $0 $33 5 % -$73 -10 % $30 5 Net % Adjustment -5% -10^/0 0 % S735 S683 S658 S`i Final Adjusted Price S606 5654 48% 1 /0 3 % -9 6 Overall Adjustment -4 % Range Average Average/SF Median Compar•ables- Adjusted S606-$735 S662 S0.81 $656 ALN SubnarketRange (All) S395-$1,568 S866 $1.07 AINSubnarketRange (Cap at1979YOC) $395-$1,008 $713 $0.88 Subject Askin Rent $705-S705 S705 S0.87 Concluded Market Rent S705 $0.87 YAUE 4/ SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH RENTAL ADJUSTMENT GRID - 2B/2BA -SMALL Subject Comparable 1 Comparable 2 Comparable 3 Comparable 4 Comparable 5 Comparable 6 Property Name Shadow Creek Manchester Royal Terrace Wilshire Manor Terrace Concord Terrace Mission Pointe Apartments 311 S. Industrial Apartments 100Manchester 309 Martha St. 1450 Sagebrush 306 Park Dr. 1001 Vila Dr. Club 917 Del Paso St. Address Trl. Boulevard Euless Dr. Fatless Fatless Euless Euless Euless Tarrant City County Tarrant n Tarrant Tarrant Tarrant Tan -ant ra Tartan[ Tenant State Texas 2B/2BA-Small TX 2B/2BA TX 213/213A TX 2BJ1BA TX 2B/1BA TX 2W2BA TX 2B/2BA Unit Type 953 1,048 982 800 850 950 1,008 Average Unit SF $740 $670 $795 $729 $665 $750 $625 Average Rent/Mo $0.78 $0.64 $0.81 $0.91 $0.78 S0.79 S0.62 Rent/SF $795 $729 $665 S750 $625 Awra a Rent/Month $670 UI7LIM ADJUSTMENT $0 $50 $50 $ADJUSTMENT $50 $D SIZEADJLSTMENTT %ADJUSTMENT 501% -$30 -$12 S70 $40 $I -$t7 $ADJUSTMENT 5690 5783 $799 $705 S801 $658 CUMUEATWEADJUSTED RENT• Similar Similar Similar Similar Similar LOCATION Superior -51/6 01/0 01/6 0'/0 0Y0 0'/ %ADJUSTMENT Similar Superior Superior Similar Superior Similar AGE(CONDITION/QUAIdTY -10Yo 0'/ -10% 0'% % ADJUSTMENT 01/0 Similar 40% Similar Similar Similar Similar Similar fin. FFATUREs 01/6 d'/ 0'/ 0% 0/ a/ % ADJUSTMENT Similar Inferior Inferior Inferior Similar Inferior PROJECI'ANIFNII7FS 5% 10'/0 5% 0% 5% %ADJUSTMENT 0% Similar Similar Inferior Inferior Similar Similar % ADJUSTMENT 0% 0'/ 5% 5% 0% 0% -$34 S39 S40 $71 S80S33 ustment -5 % �5 / 5% 10% -10% 5% LATM djustment $655 $744 S839 S776 S721 S691 usted Price -6 % IS % 17% -4%11Ran djustment -2% a Avera a Avera a/SF Median bles-Adjusted $655-$839 $738 $0.77 $733 ALN Submarket Range (All) $395-$1,568 $866 $0.91 ALN Submarket Range (Cap at 1979 YOC) $395 - $1,008 $713 $0.75 Subject Asking Rent $740-$740 $740 $0.78 Concluded Market Rent $740 $0.78 RENTAL ADJUSTMENT GRID - 2B/2BA - BIG Subject Comparable 1 Comparable 2 Comparable 3 Comparable 4 Co amble 5 Comparable 6 Property Name Shadow Creek Manchester Royal Terrace Wilshire Manor Terrace Concord Terrace Mission Pointe Apartments 311 S. Industrial Apartments too Manchester 309 Martha St. 1450 Sagebrush 306 Park Dr. 1001 Villa Dr. Club 917 Del Paso St. Address Boulevard Dr. Trl. Euless Euless Euless Euless Euless Euless Fallen[ City County Tarrant Tarrant Tarrant Tarrant Taman t Tenant Tarrant State Teas TX TX TX TX TX TX Unit Type 2B/2BA-Big 2B/2BA 2B/2BA 2B/I.5BA TH 3B/IBA 2B/2BA 2B/2BA Average Unit SF 1,053 1,048 982 1,250 920 $695 950 S750 1,072 S650 Average Rent/Mo $780 $670 $0.64 S795 $0.81 $929 $0.74 $0.76 $0.79 $0.61 Rent/SF $0.74 $795 S929 S695 $750 $650 Awra a Rent/Nlonth $670 I7TRITIES ADJUSTMENT $50 $50 $ ADJUSTMENT $50 $0 $0 _READJUSTMENT ADJUSTMENT 5(M. $2 $29 -$73 $50 S41 -$6 $ADJUSTMENT $722 $824 $856 ;iii;i$0 $745 $841 $694 CUMULATIVEADJUSTID RENT Superior Similar Similar Similar Similar Similar LOCATION -5% 0% �/ �/ �/ ADJUSTMENT AGEC0NDMON/QUALTFY Similar Superior Superior Similar Superior Similar %ADJUSTMENT 00/0 -10% 40Y0 (P/o -10% 0% UND'FEATURES Similar Similar Similar Similar Similar Similar 00/ %ADJUSTMENT 0% 0'/ 01/6 0'/ 01/ Similar Inferior AMENITIES PROJECT AMES Similar Inferior Inferior Inferior 01/6 5/ %ADJUSTMENT 0% SmarSimilar 5% 10% Similar 5% Inferior Similar Similar ADJUSTMENT 0% 0% 0°/, 5% 0% 0%Adjustment S36 S41 $0 $75S84 S35 -5 % -5% 0 % 10 % -10 % 5 [BATHS % Adjustment $686 $783$856 $820 $757 $729 Adjusted Price % 12R all Adjustment 2%1 an a Awrita AAra a/SF parables -Adjusted S686-$856 $772 $0.73 ALNSubmarket Range (All) $395-$1,568 $866 $0.82 ALN Submarket Range (Cap at 1979 YOC) $395-$1,008 $713 $0.68 Subject Asking Rent $780-$780 $780 $0.74 Concluded Market Rent $780 $0.74 rAUE 40 SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH MARKET RENT CONCLUSION Based on the preceding analysis of comparable rentals, market rent is estimated for each unit type as shown below. MARKET RENT CONCLUSIONS ALN ALN Average Market Total Avg. Unit Submarket Submarket Asking Rent/ Market Unit Type Units Size Avg (ALL) Avg (CAP) Rent Month Rent/SF 1B/lBA - Small 72 648 $651 $573 $565 $575 $0.89 1B/lBA - Big 48 678 $651 $573 $595 $595 $0.88 2B/1BA 24 813 $866 $713 $705 $705 $0.87 2B/2BA - Small 32 953 $866 $713 $740 $740 $0.78 7R/2RA - Big 16 1,053 $866 $713 $780 $780 $0.74 TOTAL/AVG. 192 761 $780 $657 1%63-/ 3041 )U.O,+ STABILIZED INCOME AND EXPENSE ESTIMATE Potential Gross Rent The following table summarizes the potential gross rent of the subject based on contract rent from leased units plus market rent applied to vacant units. The total of these amounts is compared to the potential rent that would be generated if the entire property were leased at market rates. POTENTIAL GROSS RENT Total Market Potential Rent Unit Type Units Rent/Unit at Market Vacant Units lB/1BA - Small 72 $575 $496,800 lB/lBA -Big 48 $595 $342,720 2B/lBA 24 $705 $203,040 2B/2BA - Small 32 $740 $284,160 2B/2BA - Big 16 $780 $149,760 Total Vacant 192 $641 $1,476,480 Grand Total 192 $641 $1,476,480 In our stabilized income projection for the subject, rental income is based on market rent. Income is projected for the 12-month period following the effective date of the appraisal. Vacancy & Collection Loss The subject property is located in the Hurst/Bedford/Euless submarket, according to REIS, Inc., and has an overall vacancy rate of 4.2%, but a higher vacancy rate is witnessed for properties built prior to 1970 like the subject, which is 11.7%. Review of data compiled by ALN for the subject's submarket with a cap on the year built at 1979 and older, the average vacancy rate is 7.2%. Based on this information and considering likely credit risk, we conclude a stabilized vacancy and collection loss allowance for the subject of 11.0% of potential gross income (7.00% for vacancy and 4.00% for collection loss and concessions). rAUh 4y SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH This includes any concession loss too, which is a loss due to free rent and other tenant concessions that are customary at the subject and also typical in the market. Other Income The other income category includes any other income from the property including revenues from application fees, pet rent, vending machines, reletting fees, late fees, NSF fees, and miscellaneous income. Expenses Operating expenses are estimated based on expense data from comparable properties, and industry benchmarks, as summarized in the following tables. Per unit expense data for the subject, comparable properties, and industry benchmarks are summarized below. EXPENSE ANALYSIS PER UNIT Comp Data* Subject Comp i Comp 2 Comp 3 Comp 4 IREM — Projected Expenses Year Bu ilt 1980 1968 1968 1979 1968 Units 138 252 142 176 _ 192 _ _ Operating Data Type Budget Annualized Annualized In Place Year 2011 2012 2012 2011 2011 0 IRRProjection Real Estate Tars $519 $567 $575 $404 $777 $0 $450 Insurance $217 $250 $250 $232 $243 $0 $265 Utilities $616 $1,658 $1,767 $648 $846 $0 $1,150 Repairs/Maintenance $804 $288 $476 $599 $535 $0 $550 Payroll/Benefits $906 $1,007 $1,165 $1,396 $579 $0 $1,100 Advertising & Marketing $109 $28 $11 $1 $11 $0 $20 General/Administrative $159 $258 $273 $270 $876 $0 $260 Management $217 $210 $253 $272 $304 $0 $240 Renlacement Reserves $250 $250 $250 $247 $0 $0 $250 Total $3,797 $4,516 $5,020 $4,069 $4,171 — $4,285 Operating Expense Ratio 70 01% 64.54% 79.29% 59.82% N/A *Comp 1: Carlyle Apartments, 6300 Vega Drive, Fort Worth, Texas Co nip 2: Garden Park Apartments, 1609 Sherry Lane, Arlington, Texas Comp 3: Finely Terrace Apartments, 2504 Finely Road, Irving, Texas Comp 4: Woodway on the Green, 6201 Woodway Drive, Fort Worth, Texas Industry Benchmark: IREM 2011, Conventional Apartments, Fort Worth, Texas, Garden Type Buildings Expenses for the subject property are estimated based on the comparables and survey data shown in the chart above. No historical financial information was provided to the appraisers for the subject property. Note, as we previously discussed within the Tax Section of this report, we estimate the subject's taxes to be higher based off the comparables shown above. In addition, we also allow for a higher insurance cost at the subject in consideration of the additional flood insurance requirements. Total Operating Expenses Total operating expenses are projected at $822,720 overall, or $4,285 per unit. NET OPERATING INCOME Based on the preceding income and expense projections, stabilized net operating income is estimated at $515,347, or $2,684 per unit, as shown on the following page. PAGE 50 SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH OPERATING HISTORY & PROJECTIONS IRR Projection INCOME Rental Income $1,476,480 POTENTIAL GROSS INCOME $1,476,480 Vacancy at 7.01/6 -$103,354 Collection Loss at 4.0% -$59,059 Other Income $24,000 EFFECTIVE GROSS INCOME $1,338,067 Real Estate Taxes $86,400 Insurance $50,880 Utilities $220,800 Repairs/Maintenance $105,600 Payroll/Benefits $211,200 Advertising & Marketing $3,840 General/Administrative $49,920 Management $46,080 Replacement Reserves $48,000 TOTAL EXPENSES $822,720 NET OPERATING INCOME $515,347 Operating Expense Ratio 61.5% INCOME PER UNIT Rental Income $7,690 POTENTIAL GROSS INCOME PER UNIT $7,690 Vacancy at 7.0% -$538 Collection Loss at 4.0% -$308 Other Income $125 EFFECTIVE GROSS INCOME PER UNIT $6,969 EXPENSES PER UNIT Real Estate Taxes $450 Insurance $265 Utilities $1,150 Repairs/Maintenance $550 Payroll/Benefits $1,100 Advertising & Marketing $20 General/Administrative $260 Management $240 Replacement Reserves $250 TOTAL EXPENSES PER UNIT $4,285 NOI PER UNIT $2,684 Number of Units: 192 PAGE bl SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH CAPITALIZATION RATE SELECTION A capitalization rate is used to convert net income into an indication of value. Selection of an appropriate capitalization rate considers the future income pattern of the property and investment risk associated with ownership. We use the following methods to derive a capitalization rate for the subject: analysis of comparable sales, review of national investor surveys, interviews with market participants, and the band of investment method. Analysis of Comparable Sales Capitalization rates derived from comparable sales are shown in the following table. CAPITALIZATION RATE COMPARABLES Year Sale % No. Price Cap No Property Name City State Built Date Occup. Units /Unit Rate 1 Garden Park Apartments Arlington TX 1968 Jun-11 95% 252 $28,373 10.00% 2 Autumn Brook Apartments San Antonio TX 1971 May-12 90% 124 $27,823 8.35% 3 Kensington Apartments Temple TX 1976 Apr-12 90% 128 $23,438 10.70% 4 Collins Park Apartments Arlington TX 1963 Oct-12 94% 262 $23,664 9.67% 5 Annex Apartments Dallas TX 1959 Apr-12 85% 316 $21,408 9.15% 6 Bay House Apartments Houston TX 1968 Mar-12 90% 190 $27,368 8.00% 7 Trinity Patens Apartments Dallas TX 1971 Mar-12 83% 506 $27,253 7.43% 8 Hulen Gardens Fort Worth TX 1979 Jan-12 90% 200 $28,375 8.18% 9 W aldemar Ap artments Haltom City TX 1970 Mar-12 90% 88 $18,352 8.98% 10 Britain Way Apartments Irving TX 1963 Dec-11 91% 168 $25,399 8.50% 11 Gardina Court Apartments San Antonio TX 1966 Aug-11 88% 52 $25,769 8.18% 12 Rock Island Apartments Irving TX 1973 Jun-11 91% 154 $31,169 8.50% 13 Andora Apartments Dallas TX 1968 Jun-11 90% 150 $15,333 10.13% 14 Tanglewood Apartments victoria TX 1973 Jun-11 95% 104 $28,846 7.95% 15 Villa Marquis Apartments Fanners Branch TX 1969 Mar-11 96% 142 $33,204 9.53% 16 Grayson Falls Apartments Pasadena TX 1971 Feb-11 90% 308 $19,683 8.29% Averages 1969 91% 197 $25,341 8.85% Based on this information, a capitalization rate within a range of 7.95% to 10.70% could be expected for the subject. National Investor Surveys Data pertaining to investment grade properties from the PwC, ACLI, and Viewpoint surveys are summarized below. Capitalization Rate Surveys — Multifamily Properties IRR-Viewpoint IRR-Viewpoint PWC ACLI Year End 2012 Year End 2012 4Q-2012 3Q-2012 National Urban National Suburban National National Multifamily Multifamily Apartment Apartment Range 4.0% - 8.75% 4.25% - 8.0% 3.75% - 10.00% NA Average 5.91% 6.08% 5.72% 6.36% Source: IRR-Viewpoint 2013; PwC Real Estate Investor Survey; American Council of Life Insurers Investment Bulletin. NAGE bL SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH Multifamily Capitalization Rate Trends 7.8 7.4 7 6.6 6.2 5.8 5.4 5 4.6 1Q 11 2Q 11 3Q-11 4Q-11 1Q 12 2Q 12 3Q 12 4Q-12 PwC 6.29 6.1 5.98 5.8 5.83 5.76 5.74 5.72 ACLI 6.2 6.1 6 5.63 6.39 6.02 6.36 PwC- PwC Real Estate Investor Survey - National Apartment Market ACLI - American Council of Life Insurers Investment Bulletin -Apartment Properties The PwC survey indicates that a going -in capitalization rate for the national apartment market ranges from 3.75% to 10.00%% and averages 5.72%. We would expect the rate appropriate to the subject to be above the average rate in the survey data because the subject's class and age and given that it is not an institutional grade asset, which is what the aforementioned survey rates are based upon. Band of Investment The band of investment method derives a capitalization rate from the weighted average of the mortgage and equity demands on net income generated from the property. This method involves an estimate of typical financing terms as well as an estimated rate of return on equity capital sufficient to attract investors. The rate indicated by this method is shown in the following table. BAND OF INVESTMENT METHOD LENDER SURVEY Amort. Interest Lender Date LTV (Years) Rate Realty Rates.com 4Q2012 Apartments Min 50% 15 2.42% Max 90% 40 8.50% Avg 73% 27 4.54% &W k field Ca ital Market Update 1/7/2013 51%-83% 30 2.51%-4.65% Cushman a e p MORTGAGE / EQUITY ASSUMPTIONS Loan To Value Ratio 60% Interest Rate 4.00% Amortization (Years) 30 Mortgage Constant 0.0573 Equity Ratio 40% Eouitv Dividend Rate 12.00% WEIGHTED A VERAGE OF MORTGAGE AND EQUITY REQUIREMENTS Mortgage Requirement Equity Requirement 60% x 5.73% = 3.44% 40% x 12.00% = 4.80% Indicated Capitalization Rate 3.247o Rounded 8.25% PAGE 04 SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH Considering the income characteristics of the subject and its competitive position in the market, we conclude a capitalization rate as follows: CAPITALIZATION RATE CONCLUSION Going -In Capitalization Rate 8.75% DIRECT CAPITALIZATION ANALYSIS Net operating income is divided by the capitalization rate to indicate the stabilized value of the subject. Valuation of the subject by direct capitalization is shown below. DIRECT CAPITALIZATION ANALYSIS Annual $/Unit INCOME Rental Income $1,476,480 $7,690 Potential Gross Income $1,476,480 $7,690 Vacancy 7.00% -$103,354 -$538 Collection Loss 4.00% -$59,059 -$308 Other Income $24,000 $125 Effective Gross Income $1,338,067 $6,969 EXPENSES Real Estate Tries $86,400 $450 Insurance $50,880 $265 Utilities $220,800 $1,150 Repairs/Maintenance $105,600 $550 Payroll/Benefits $211,200 $1,100 Advertising & Marketing $3,940 $20 General/Administrative $49,920 $260 Management 3.44% $46,080 $240 Replacement Reserves $48,000 $250 Total Expenses $822,720 $4,285 NEr OPERATING INCOME $515,347 $2,684 Capitalization Rate 8.75% Stabilized Value Indication $5,889,682 $30,675 However, this is the modern value conclusion as of January 11, 2013 and we must estimate the retrospective value as of September 25, 1973. In order to do this we discount the future value, which in this case is $5,889,682, back to 1973 to calculate the present value of the improved value in 1973 based on inflation rates calculated for the 40 year period (1973 through 2013) from the Consumer Price Index, the Producer Price Index, and the RS Means Cost Index. According to our analysis, the CPI has produced a 4.20% average per annum inflation rate over the 40 year span, while the PPI has produced a 3.73% per annum inflation rate, and the RS Means cost index has produced a 4.05% per annum inflation rate. Between the three the overall average is 3.99%. For purposes of our analysis we conclude that the average per annum inflation rate over the 40 year span has been 4.00%. A table for the delineation of the inflation calculations for the aforementioned three indexes can be found in the addendum of this report. However, it is important for the reader to realize that these indices are tracking consumer goods and construction cost items and are not directly related to real estate appreciation, but are the best possible sources for information on inflation rates. rAUh 04 SHADOW CREEK APARTMENTS INCOME CAPITALIZATION APPROACH We also note that when apartment complexes, such as the subject property, are constructed they are considered Class A properties and typically attract the highest rents available in the market and have moderately lower expenses when compared to an older apartment complex because all short-lived items that require replacement over time are brand new along with all mechanical systems. On the contrary, an older apartment complex, such as a Class B, or Class C (like the subject is currently) typically attracts a lower rental rate within the market and has higher expenses due to older short-lived items needing replacement quicker and older mechanical systems. The appraisers express this here because the aforementioned factors into the properties ability to produce a net operating income. Thus, one can assume that when the subject property was initially constructed it produced a net operating income that was less affected by expenses, or had a lower operating expense ratio (operating expenses/effective gross income). On the contrary, as the property got older to its current day and age the operating expense ratio increased. We believe this increasing operating expense ratio over time would have an effect on the overall appreciation of the subject property because multifamily properties are typically bought on their income stream, or net operating income. To assess this assumption, we examined 46 different confirmed sale transactions across Texas that had been constructed after the year 2000. The range of operating expense ratios witnessed from these sales was 36.94% to 61.21% and averaged 49.82% (median was 50.01%, suggesting a low amount of outliers). In addition, we also examined 44 different confirmed sale transactions across Texas that had been constructed prior to 1980. The range of operating expense ratios witnessed from these sales was 40.72% to 80.76% and average 60.63% (median was 60.96%, suggesting a low amount of outliers). As the reader can see from the aforementioned, multifamily properties typically do have an operating expense ratio that trends upward over time. We further calculated the change rate, or delta, between the two average operating expense ratios over a 40 year time period to examine how this change would affect the overall appreciation. The change rate derived was 0.49% per annum over the 40 year period. Thus, we can take the inflation rate from the three indices of 4.00% and subtract the calculated 0.49% to estimate an overall appreciation rate for the subject of 3.51%. This includes the tapering income due to increased expenses and lower rental rates over time witnessed by the subject property as it drops classes in property from Class A to Class C. Furthermore, we also realize that the three indices are tracking inflation on consumer goods (whether from the producer — PPI or to the consumer — CPI) and construction cost components. As the reader can see, these items are generally personal property items and also are very liquid items. On the contrary to this, we note that real estate is illiquid when compared to consumer products and therefore carries a stronger liquidity risk when calculating appreciation. Therefore, we would expect the appreciation for the subject property to be lower than that of consumer goods and construction cost components. So for purposes of this report, we deduct an additional 100 basis points from our previously calculated appreciation rate of 3.51% to yield an overall estimated appreciation rate of 2.51% for our improved analysis. This is also supported by an article found in USA Today on November 26, 2012, where President Greg Willett of MPF Yieldstar Research stated that rf+%Jr_ va Cunt f'or-cw APARTMENTS INCOME CAPITALIZATION APPROACH historical rent growth in apartments has generally averaged about 2.50% over the last two decades. We then take our calculated value from the Income Capitalization Approach and take it back over 40 years based on an appreciation rate of 2.51% The following table derives our retrospective improved value estimate. RETROS PECTIVE VALUATION VIA THE INCOME CAPITALIZATION APPROACH Total Per Unit Concluded Stabilized Modern Value Indication $5,889,682 $30,675 Concluded Retrospective Value as of September 25, 1973 $2,184,955 $11,380 Concluded Retrospective Value as of September 25,1973 (Rounded) $2,200,000 $11,458 t'AGC 00 SHADOW CREEK APARTMENTS HISTORIC FORENSIC INVESTIGATION AND ANALYSIS HISTORIC FORENSIC INVESTIGATION AND ANALYSIS As previously identified within this report, the appraisers have researched every transaction that has occurred since the original development of the subject property by I.C. Deal in 1968. This is outlined in the table below. With the retrospective date of September 25, 1973 in mind, the appraisers recognize two important items. 1.) The first item is that I.C. Deal borrowed $1,600,000 against the subject property in 1969 shortly after the construction of the subject property. In the 1970 transaction to Henry H. Dickerson, this note was assumed. 2.) The second item is that Henry H. Dickerson modified this lien and it is recorded under Volume 5628, Page 744 of the Tarrant County public records. According to this document the unpaid principal balance of the original $1,600,000 lien described above, was $1,544,331.72 as of December 1, 1973, or a little over two months from the retrospective date of this report. This indicates two important inferences from the aforementioned, which one of them is that the subject property is likely worth more than the unpaid principal balance of $1,544,331.72 as of December 1, 1973, assuming that there is some equity in the property. The second inference is that we can apply a sensitivity analysis of varying loan -to -value ratios to this unpaid mortgage balance to estimate a range of value for the overall property as of the retrospective date. The appraisers are not aware of what prevalent loan -to -value ratios were r-Aue ar SHADOW CREEK APARTMENTS HISTORIC FORENSIC INVESTIGATION AND ANALYSIS in 1973, or do any known databases track this information based on the appraisers independent research. The following table derives our sensitivity analysis based on a wide variety of common -place loan -to -value ratios witnessed over the last decade. FORENSIC SENSITIVITY ANALYSIS Total Per Unit 1973 Unpaid Mortgage Balance $1,544,332 $8,043 Value at 60% LTV $2,573,886 $13,406 Value at 70% LTV $2,206,188 $11,491 Value at 80% LTV $1,930,415 $10,054 Value at 90% LTV $1,715,924 $8,937 Overall Range of Indications $1,715,924 to $2,573,886 $8,937 to $13,406 Thus, depending on the equity present in December 1973, the subject property's value likely ranged from $1,715,924 to $2,573,886. PAGE 58 SHADOW CREEK APARTMENTS RECONCILIATION AND CONCLUSION OF VALUE RECONCILIATION AND CONCLUSION OF VALUE The values indicated by our analyses are as follows: RETROSPECTIVE VALUE CONCLUSIONS Retrospective Value Date of September 25, 1973 Cost Approach Value Conclusion (MVS) $2,200,000 Cost Approach Value Conclusion (RS Means) $1,800,000 Income Capitalization Approach $2,200,000 Forensic Sensitivity Analysis $1,715,924 to $2,573,886 Reconciled Concluded Value (Rounded) $2,200,000 The appraisers place the most weight on Income Capitalization Approach and the Marshall Valuation Service Cost Approach values. This is also supported by our forensic evidence, as we know the loan in place was not a new loan, but merely a modification of an existing lien and therefore we imagine that the equity present in the subject property was likely higher then what would be present at the origination of a new loan. Thus, at a 70% LTV; the value would have been $2,206,188. EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, our value conclusions may change. 1. We have relied on the deed of conveyance for the land area size utilized herein along with data from third party sources for improvement sizes and the amount of units. 2. The appraisers were not provided any historical operating data or a current rent roll for the subject property. All financial information within this report has been projected by IRR, DFW based on market data for purposes of the Income Capitalization Approach. 3. An interior inspection of the subject property was not permitted and the appraisers assume the subject property to contain similar finish -out items of typical Class C Apartment Complexes of similar vintage and condition for purposes of cost estimates in the Cost Approach presented herein. 4. The appraisers rely on multiple external professionals to determine estimates of unrecoverable modern costs associated with the termination of the existing non -conforming use. These include relocation costs, mortgage discharge and release of lien, and estimates of pre -payment penalties. These discussions with the external professionals were utilized to allow the appraisers to make these estimates, but it is important for the reader to realize that a more precise estimate could be obtained from the external professionals themselves and the estimates reflected in this report are merely estimates drafted by the appraiser based on our discussions with these professionals. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. For purposes of the Income Capitalization Approach presented herein, the appaisers hypothetically assume the subject property is in good condition and operating at stabilized occupancy levels, producing market level rental rates with market expected expenses as of January 2013. 2. The appraisers also hypothetically assume that the subject property is in nearly new and good condition in 1973 for purposes of depreciation estimates in the Cost Approach. This is also the purpose of estimating the value in the Income Capitalization Approach based on the subject being in good condition and at stabilized occupancy levels. PAGE 59 SHADOW CREEK APARTMENTS AMORTIZATION AMORTIZATION Amortization in the American planning system is a technique for the removal of non- conforming uses after the value of a non -conforming use has been recovered -or amortized - over a period of time. Once the value of the use had been amortized, no compensation is payable after the expiration of the period.' Now that we have established a retrospective value for the subject property, we must determine the amortization going forward from the retrospective date of value, or September 25, 1973. In order to do this, we reconcile our inflation amounts to 2.51% per annum (similar to that used in the Income Capitalization Approach) and create a net operating income estimate for every year going back from 2013 through 1973 based on the 2.51% per annum inflation. The table below identifies each net operating income estimate along with the amortization. AMORTIZATION TABLE Year Cash Outflow Cash Inflow Cash Flows After Amortization 1973 ($2,200,000) 1974 $195,982 1975 $200,902 1976 $205,944 1977 $211,113 1978 $216,412 1979 $221,944 1980 $227,413 1981 $233,121 1982 $238,972 1983 $244,970 1984 $3,326 $247,793 1985 $257,422 $257,422 1986 $263,883 $263,883 1987 $270,506 $270,506 1988 $277,296 $277,296 1989 $284,256 $284,256 1990 $291,391 $291,391 1991 $298,705 $298,705 1992 $306,203 $306,203 1993 $313,888 $313,888 1994 $321,767 $321,767 1995 $329,843 $329,843 1996 $338,122 $338,122 1997 $346,609 $346,609 1998 $355,309 $355,309 1999 $364,227 $364,227 2000 $373,369 $373,369 2001 $382,741 $382,741 2002 $392,348 $392,348 2003 $402,196 $402,196 2004 $412,291 $412291 2005 $422,639 $422,639 2006 $433,248 $433,248 2007 $444,122 $444,122 2008 $455,270 $455,270 2009 $466,697 $466,697 2010 $478,411 $478,411 2011 $490,419 $490,419 2012 $502,729 $502,729 2013 $515 347 $515,347 Total Before Amortization Total After Amortization $2,200,000 $11,039,047 1 "Methods of Determining Amortization Periods for Non -conforming Uses", by Margaret Collins. PAGE bU SHADOW CREEK APARTMENTS AMORTIZATION Based on the table on the preceding page, the subject property would be amortized out during 1984. This assumes no time value of money concepts and is strictly a dollar -for -dollar payoff of the retrospective value estimate. Thus, the subject property had the opportunity to operate for 11 years prior to amortization. Thus, in 1984 the City of Euless could have enacted Section 84-59 of the Code of Ordinances and terminated the subject's current use. However, this use has remained in existence through 2013. Therefore the subject property has benefitted from income generation since 1984 or after the amortization of the use. This total cash flow after amortization is calculated to be $11,039,047. Again, this is a dollar -for -dollar addition of income and does not consider any time value of money concepts. This number could potentially be greater assuming the owner reinvested the income at a certain rate (i.e. safe rate) since 1984. For purposes of conservative estimates, we ignore time value of money concepts. The total cash flow after amortization is identified here because it potentially offsets any current cost of the termination of the existing use in 2013. This includes all items detailed in Item E-2 of Section 84-59 of the Code of Ordinances. We have further detailed this in the table below. In addition, we also include the appreciation value of the underlying land, which is the difference of the modern value and the retrospective value. INVESTMENT/PROFTTREQUII2EMENTS FROMTERMINATION After Amortization Cash Flows (Investment Recovery) $11,039,047 Plus Current Land Value Less Original Investment (Appreciation Benefit) $312,000 Less Demolition Costs ($672,437) Less Unpaid Mortgage Balance ($1,300,000) Less Pre -payment Penalties ($130,000) Less Mortgage Discharge and Release of Lien ($174) Less Relocation Costs of Tenants/Termination of Leases ($3,938,900) Unrecoverable Investment/Profit from Termination $5,309,536 As shown in the table above, we take the investment recovery amount and the appreciation benefit and deduct all modern cost associated with the termination of the existing non- conforming use. First, we deduct demolition costs from demolishing the existing improvements, which are further derived in the table below. DEMOLITION COST ESTIMATE Demolition Cost @ $4.00/SF $589,780 Asphalt Paving/Site Improvements @ $0.50/SF $50,136 Haul -off Costs $500 Contingency r, 5% $32,021 Total Demolition Estimate $672,437 We also know that the current owner purchased the subject property in 2010 and filed a deed of trust identifying the security of $1,300,000 payable to Fairwinds Capital, LP. We are unaware if this original note has been altered, refinanced, or what the precise modern unpaid mortgage balance is today; however, we go ahead and deduct the original amount of the loan to acknowledge that the buyer would have to pay this lien off as the majority of the collateral is going to be demolished. We also realize that pre -payment penalties are typical for modern multifamily loans and we suspect that the buyer will also incur some penalty costs associated VAUL:Ol SHADOW CREEK APARTMENTS AMORTIZATION with the prepayment of the existing loan. These pre -payment penalties can differ vastly on the type of loan and terms and we are not aware of the intimate details of the loan. However we did discuss prepayment penalties with NorthMarq Capital Group who identified the following: Prepayment penalties are common on all agency loans (Fannie, Freddie and HUD) as well as all CMBS (Commercial Mortgage Backed Security) Loans. The only loans that might be open to prepay with no penalty are floating bank loans (typically 5 years or less). Any time the rate is fixed a prepayment penalty is common. There are three types of prepayment penalties: ■ Yield Maintenance — You have to maintain the yield on the loan over the corresponding treasury that matches up with the loan end date. It is not uncommon for prepayment penalties to be 10% or more until you get near the end of the loan term. In a falling rate environment these penalties are large and in an increasing rate environment the penalties are much smaller. Fannie and Freddie fixed rate loans typically have this structure but the loans are assumable and resizable so that mitigates this to some degree. ■ Defeasance — All fixed CMBS loans use this. It is complicated, but the borrower basically has to use proceeds from the sale of the property to purchase treasuries that have a yield that matches the loan payments (P&I). The penalties are similar to Yield Maintenance above. ■ Structured — i.e. 5 year loan with a 5% declining to 1% prepay over the life of the loan or 3%, 2%, 1%, 0%, 0%. Those are two examples but can be anything you negotiate. Banks and Life companies are more likely to have this structure. Thus, we estimate a 10% pre -payment penalty against the unpaid mortgage balance, which in this case is the original loan amount. We do this as to best estimate the worst case scenario and knowing that the current owner is a private individual and not a bank or life insurance company and likely has a yield maintenance prepayment penalty. We also realize that there will be fees associated with the drafting of a mortgage discharge and filing fees to show that the existing mortgage has been formally discharged from the property and publically filed. We discussed typical fees associated with performing this action with Elizabeth Bobo (Vice President -Transportation Division, Universal Land Title of Texas) and Ashley Cook (Ashley L. Cook, P.C.). Based on our discussions we were able to determine a fee of $150 is typical for the drafting of the discharge and filing fees are $16 for the first page and $4 for every page thereafter. Thus, we determined that the total cost would be about $174. We also recognize that there would be relocation costs associated with the termination of all existing leases and allowing the existing tenants to move to other complexes within the area of their desire. We spoke to Donna Harrison (Pinnacle Consulting Management Group, Inc.) who informed us how to calculate an estimate of potential relocation costs. The derivation of this estimate is discussed below. The reader must be aware that the appraisers are not rAUL 04 SHADOW CREEK APARTMENTS AMORTIZATION relocation experts and this is merely an estimate based off of discussions with the appropriate professional type. RELOCATION COST ESTIMATE Tenant Costs Consulting Fee $768,000 Occupant Rate @ 158 Occupants $829,500 Occupant Rate (L" @ 106 Occupants $2,120,000 Room Rate 3 Rooms @ 120 Units $120,000 4 Rooms @ 72 Units $86,400 Subtotal for Tenant $3,923,900 Owner Costs Office Relocation $5,000 Reestablishment Fee $10,000 Subtotal for Owner $15,000 Grand Total $3,938,900 The estimate above identifies a consulting fee of $5,000 per occupied unit. In addition, we estimate that 40% of the occupied units are low income housing, based on demographic trends in a 3-mile radius from Claritas, Inc. Low housing occupants are estimated at $20,000 per occupant, while the remaining occupants are estimated at $5,250 per occupant. In addition, a room rate is provided for relocation of personal belongings. The room rates were extracted from the Texas Department of Transportation ROW Vol. 3 — Relocation Assistance Manual. Furthermore, Donna stated that the owner would likely be supplied an office relocation fee and reestablishment fee at $5,000 and $10,000. The total relocation estimate adds up to $3,938,900. After deduction of all appropriate modern expenses that will be realized by the owner we determine that the owner has previously been compensated for these expenses incurred through the investment recovery after amortization and the realized appreciation of the land. Thus, the recoupment of these unrecoverable costs incurred by the owner has already taken place. No further compensation by the client is required for termination of the existing non- conforming use. rAut: OJ CERTIFICATION SHADOW CREEK APARTMENTS CERTIFICATION We certify that, to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. We have performed no other services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal practice as well as applicable state appraisal regulations. 9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 11. Daniel Wright, MAI made a personal inspection of the property that is the subject of this report. M. Colt Jones has personally inspected the subject. 12. No one provided significant real property appraisal assistance to the person(s) signing this certification. 13. We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP. 14. As of the date of this report, Daniel Wright, MAI, has completed the continuing education program of the Appraisal Institute. PAGE 64 CERTIFICATION SHADOW CREEK APARTMENTS 15. As of the date of this report, M. Colt Jones, has completed the Standards and Ethics Education Requirement of the Appraisal Institute for associate members. Daniel Wright, MAI, Director Certified General Real Estate Appraiser Texas Certificate # TX-1329321-G �.l M. Colt Jones, Senior Analyst Certified General Real Estate Appraiser Texas Certificate # TX-1380107-G PAGE 65 SHADOW CREEK APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS ASSUMPTIONS AND LIMITING CONDITIONS This appraisal is based on the following assumptions, except as otherwise noted in the report. 1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use. 2. There are no existing judgments or pending or threatened litigation that could affect the value of the property. 3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property. 4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction. 5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes. 6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. This appraisal is subject to the following limiting conditions, except as otherwise noted in the report. 1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised. 2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events. 3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated. 4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies. 5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment. 6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct. rrw� - SHADOW CREEK APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS 7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal. 8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability, and civil, mechanical, electrical, structural and other engineering and environmental matters. 9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal report shall be utilized separately or out of context. 10.Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the person signing the report. 11.Information, estimates and opinions contained in the report and obtained from third - party sources are assumed to be reliable and have not been independently verified. 12. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results. 13.If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate. 14. No consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered. 15. The current purchasing power of the dollar is the basis for the value stated in our appraisal; we have assumed that no extreme fluctuations in economic cycles will occur. 16.The value found herein is subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions. 17. The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual PAGE 67 SHADOW CREEK APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material. 18. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject with ADA regulations. Inasmuch as compliance matches each owner's financial ability with the cost to cure the non -conforming physical characteristics of a property, a specific study of both the owner's financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance. 19. The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk. 20. No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property and the person signing the report shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property. 21. The person signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. We are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non-existent or minimal. 22.Integra Realty Resources — DFW, LLP is not a building or environmental inspector. Integra DFW, LLP does not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended. 23. The appraisal report and value conclusion for an appraisal assumes the satisfactory completion of construction, repairs or alterations in a workmanlike manner. 24. It is expressly acknowledged that in any action which may be brought against Integra Realty Resources — DFW, LLP, Integra Realty Resources, Inc. or their respective officers, owners, managers, directors, agents, subcontractors or employees (the "Integra Parties"), arising out of, relating to, or in any way pertaining to this engagement, the appraisal reports, or any estimates or information contained therein, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with PAGE WS cuAnnW CREEK APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS gross negligence. It is further acknowledged that the collective liability of the Integra Parties in any such action shall not exceed the fees paid for the preparation of the appraisal report unless the appraisal was fraudulent or prepared with gross negligence. Finally, it is acknowledged that the fees charged herein are in reliance upon the foregoing limitations of liability. 25.Integra Realty Resources — DFW, LLP, an independently owned and operated company, has prepared the appraisal for the specific purpose stated elsewhere in the report. The intended use of the appraisal is stated in the General Information section of the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided. Accordingly, the appraisal report is addressed to and shall be solely for the Client's use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable). 26. The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer -seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. Integra Realty Resources, Inc. and the undersigned are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property. 27. All prospective value estimates presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future. PAGE by SHADOW CREEK APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS 28. The appraisal is also subject to the following: EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, our value conclusions may change. 1. We have relied on the deed of conveyance for the land area size utilized herein along with data from third party sources for improvement sizes and the amount of units. 2. The appraisers were not provided any historical operating data or a current rent roll for the subject property. All financial information within this report has been projected by IM DFW based on market data for purposes of the Income Capitalization Approach. 3. An interior inspection of the subject property was not permitted and the appraisers assume the subject property to contain similar finish -out items of typical Class C Apartment Complexes of similar vintage and condition for purposes of cost estimates in the Cost Approach presented herein. 4. The appraisers rely on multiple external professionals to determine estimates of unrecoverable modern costs associated with the termination of the existing non -conforming use. These include relocation costs, mortgage discharge and release of lien, and estimates of pre -payment penalties. These discussions with the external professionals were utilized to allow the appraisers to make these estimates, but it is important for the reader to realize that a more precise estimate could be obtained from the external professionals themselves and the estimates reflected in this report are merely estimates drafted by the appraiser based on our discussions with these professionals. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed forthe purpose of analysis. 1. For purposes of the Income Capitalization Approach presented herein, the appaisers hypothetically assume the subject property is in good condition and operating at stabilized occupancy levels, producing market level rental rates with market expected expenses as of January 2013. 2. The appraisers also hypothetically assume that the subject property is in nearly new and good condition in 1973 for purposes of depreciation estimates in the Cost Approach. This is also the purpose of estimating the value in the Income Capitalization Approach based on the subject being in good condition and at stabilized occupancy levels. SHADOW CREEK APARTMENTS ADDENDUM A APPRAISER QUALIFICATIONS SHADOW CREEK APARTMENTS Integra Realty Resources Daniel P. Wright, MAI DFW 930 West First Street Experience Suite 400 Mr. Wright is a Director with the Fort Worth office of Integra Realty Resources DFW, L.L.P. Mr. Fort Worth, TX 76102 Wright is also responsible for project and personnel management of the Eminent Domain and Litigation group in Dallas/Fort Worth. Mr. Wright has been active in real estate valuation and T 817.332.5522 consulting since 1995. Mr. Wright joined Appraisal/Data Services in 1996, which became part of at the bottom of the corporate ladder and F 817.336.1621 Integra Realty Resources, Inc. in 1999. Mr. Wright started worked his way up using integrity and hard work, and has been a top producer every year since 2002. irr.com In May 2006, Mr. Wright was named one of the "40 under 40" by the Fort Worth Business Press, which recognizes individuals that have contributed significantly to the business climate in the an "Outstanding Alumnus" by the Dallas/Fort Worth market. In April 2007, Mr. Wright was named University of North Texas, which is an annual award reserved for three UNT alumnus. Mr. Wright has been a guest speaker and lecturer on valuation issues throughout Texas and other states. Mr. Wright has been and is currently involved in board level capacity with several trade organizations. Mr. Wright has performed valuation and consulting services on various properties including, but not complexes, industrial facilities, raw and developed land, limited to, shopping centers, apartment office towers and complexes, motels, hotels, and mixed -use developments. He has also acted as a broker in real estate transactions, provided consultation and feasibility studies, and has worked extensively on complex eminent domain and litigation assignments of all types of properties. Mr. Wright has worked on numerous unique valuations, such as utility corridors, easement interests, partial and undivided interests, water towers, and billboards. Professional Activities & Affiliations International Right -of -Way Association (IRWA) Chapter 36 Director, 2006-2007 Chapter 36 President, 2004-2005 Chapter 36 Vice President, 2003-2004 Chapter 36 Secretary, 2002-2003 Chapter 36 Education Chair, 2000-2003 Region II Education Chair, 2005-2010 2013 Conference Bid Committee, 2008 Appraisal Institute - Central Texas Chapter President, 2010 Vice President, 2009 Chapter Secretary, 2008 Chapter Treasurer, 2007 LDAC and Regional Representative, 2008-2009 Greater Fort Worth Board of REALTORS Board Member First United Methodist Church Past Trustee Tanglewood Homeowner's Association Past Member Boy Scouts of America irr , dwright@irr.com - 817.332.5522 x214 SHADOW CREEK APARTMENTS 7eaoRiealrt, Resources Daniel P. Wright, MAI Cubmaster - Pack 703, 2010 - Current t Fist Street Assistant Scoutmaster - Troop 234, 2007 - Current th, TX 76102 Licenses Texas, Real Estate Broker, 0446939, Expires February 2014 T 817.332.5522 Texas, State Certified General Real Estate Appraiser, TX-1329321-G, Expires March 2014 F 817.336.1621 Education irr.com Bachelor of Business Administration (with honors) University of North Texas, Denton, Texas 1995 Successfully completed numerous real estate related courses and seminars sponsored by the Appraisal Institute, accredited universities and others. Articles and Publications Current Issues Impacting Billboards - Multiple Venues, 2004-2009 Appraisal Methods for Estimating Damages -Texas A&M University & Other Venues, 2005-2009 A Market View on Real Estate vs. Personal Property and Inventory - Denver, CO, June 2006 City's Condo Craze Doesn't Concern Industry Observers - FW Business Press, September 4, 2006 Eminent Domain Appraising in an Adversarial Environment - CLE International Austin, TX, January 2008 Planning and Zoning Implications on the Appraiser - Plano, TX, May 2008 Tarrant County Forecast - Fort Worth, TX, January 2009 Banks Paid Dearly to Build Out Local Branches - FW Business Press/Associated Press, March 23, 2009 Study Looking at Impact of Gas Wells on Home Values Gets Mixed Results - Dallas Morning News, 2011 Am irr � dwright@irr.com - 817.332.5522 x214 SHADOW CREEK APARTMENTS Colt Jones Integra Realty Resources DFW 930 West First Street Experience Suite 400 Senior Analyst for the Fort Worth office of Integra Realty Resources DFW, LLP, a full service real Fort Worth, TX 76102 estate consulting and appraisal firm. Over the course of the last five years, Mr. Jones has completed over 500 appraisal and consultation assignments for varying clients. Assignments have included T 817-332-5522 valuations for eminent domain, litigation, federal acquisitions, capital market and banking F 817-336-1621 transactions, private and corporate estate planning and filing, and asset management purposes. A list of recent (2010-2012) relevant assignments include: Interstate 35 Highway Expansion, Airport irr.com Freeway Expansion, North Tarrant Expressway, Connector Highway Project, Loop 12 Expansion, Bonnie View Road Expansion, Competitive Renewable Energy Zones (CREZ) Project, Red River Pipeline Project, Trinity River Vision, Bowman Springs Roadway Expansion, and the Abram Street Improvement Project. Specialty appraisals completed have included the valuation of marinas, wind farms, residential subdivisions, self -storage facilities, cattle/grazing ranches, bulk petroleum terminals, life science/biotech research and lab facilities, stigmas due to construction deficiencies, municipal code compliance cases, and municipal non -conforming use cases. Specialty unpublished case studies drafted have included: wildfires and their affect on rural property values, landlocked rural property, visual obstructions adjacent to residential property, rail spur value add analysis, topography and drainage issues and their affect on residential lots, and high voltage transmission line easement impacts. Prior to joining Integra, Mr. Jones was a real estate salesperson for The Real Estate Station in Argyle, Texas, specializing in farm and ranch and rural residential sales. Professional Activities & Affiliations Member of the National Association of Realtors Candidate for Designation Member of the Appraisal Institute Licenses Texas, Certified General Real Estate Appraiser, TX 1380107 G, Expires November 2013 Texas, Real Estate Broker, 0558042, Expires January 2014 Education Bachelor of Business Administration, Major in Real Estate University of North Texas, Denton, Texas 2007 Key Courses • Real Estate Principles • Real Estate Finance • Real Estate Property Management • Real Estate Investments • Real Estate Valuation • Real Estate Law Appraisal Institute Related Coursework • Basic Appraisal Procedures • Basic Appraisal Principles LIr cjones@irr.com - 817-332-5522 x270 SHADOW CREEK APARTMENTS Integra Rea ty Resour Colt Jones DFW Education (Cont'd) 930 West First Street Suite 400 • USPAP — National Uniform Standards of Professional Appraisal Practice Fort Worth, TX 76102 • General Report Writing & Case Studies • General Sales Comparison Approach T 817-332-5522 • General Income Capitalization Approach F 817-336-1621 • General Market and Highest and Best Use Analysis • Advanced Income Capitalization Approach irr.com irr� cjones@irr.com - 817-332-5522 x270 Integra Realty Resources, Inc. Corporate Profile Integra Realty Resources, Inc. offers the most comprehensive property valuation and counseling coverage in the United States with 61 independently owned and operated offices in 33 states. Integra was created for the purpose of combining the intimate knowledge of well -established local firms with the powerful resources and capabilities of a national company. Integra offers integrated technology, national data and information systems, as well as standardized valuation models and report formats for ease of client review and analysis. Integra's local offices have an average of 25 years of service in the local market, and each is headed by a Managing Director who is an MAI member of the Appraisal Institute. A listing of IRR's local offices and their Managing Directors follows: ATLANTA, GA - Sherry L. Watkins., MAI, MRICS AUSTIN, TX- Randy A. Williams, MAI, SR/WA, FRICS BALTIMORE, MD - G. Edward Kerr, MAI, MRICS BOISE, ID - Bradford T. Knipe, MAI, ARA, CCIM, CRE, FRICS BOSTON, MA - David L. Cary, MAI, MRICS CHARLOTTE, NC - Fitzhugh L. Stout MAI, CRE, FRICS CHICAGO, IL - J. Denis Gathman, MAI, CRE, FRICS, SRA CHICAGO, IL - Eric L. Enloe, MAI, MRICS CINCINNATI, OH - Gary S. Wright MAI, SRA, FRICS CLEVELAND, OH - Douglas P. Sloan, MAI COLUMBIA, SC- Michael B. Dodds, MAI, CCIM, MRICS COLUMBUS, OH- Bruce A. Daubner, MAI, FRICS DALLAS, TX - Mark R. Lamb, MAI, CPA, MRICS DAYTON, OH - Gary S. Wright MAI, SRA, FRICS DENVER, CO - Brad A. Weiman, MAI, MRICS DETROIT, MI -Anthony Sanna, MAI, CRE, FRICS FORT WORTH, TX - Donald J. Sherwood, MAI, SR/WA, FRICS GREENSBORO, NC - NancyTritt, MAI, SRA GREENVILLE, SC- Michael B. Dodds, MAI, CCIM, MRICS HARTFORD, CT - Mark F. Bates, MAI, CRE, FRICS HOUSTON, TX - David R. Dominy, MAI, CRE, FRICS INDIANAPOLIS, IN - Michael C. Lady, MAI, SRA, CCIM, MRICS JACKSONVILLE, FL - Robert Crenshaw, MAI KANSAS CITY, MO/KS - Kenneth Joggers, MAI, FRICS LAS VEGAS, NV - Shelli L. Lowe, MAI, SRA, MRICS LOSANGELES, CA -John G. Ellis, MAI, CRE, FRICS LOS ANGELES, CA - Matthew J. Swanson, MAI LOUISVILLE, KY- George M. Chapman, MAI, SRA, CRE, FRICS MEMPHIS, TN -J. Walter Allen, MAI, MRICS MIAM11PALM BEACH, FL - Scott M. Powell, MAI MINNEAPOLIS, MN - Michael Amundson, MAI, CCIM, MRICS NAPLES, FL - Carlton J. Lloyd, MAI NASHVILLE, TN - R. Paul Perutelli, MAI, SRA, MRICS NEW JERSEY COASTAL -Anthony M. Graziano, MAI, CRE, FRICS NEW JERSEY NORTHERN - Barry J. Krouser, MAI, CRE, FRICS NEW YORK, NY - Raymond T. Cirz, MAI, CRE, FRICS ORANGE COUNTY, CA - Larry D. Webb, MAI, FRICS ORLANDO, FL - CharlesJ. Lentz, MAI, MRICS PHILADELPHIA, PA - Joseph Posquarella, MAI, CRE, FRICS PHOENIX, AZ- Walter Winius, Jr., MAI, CRE, FRICS PITTSBURGH, PA - Paul D. Griffith, MAI, CRE, FRICS PORTLAND, OR - Brian A. Glanville, MAI, CRE, FRICS PROVIDENCE, RI - Gerard H. McDonough, MAI RALEIGH, NC - Chris R. Morris, MAI, MRICS RICHMOND, VA - Kenneth L. Brown, MAI, CCIM, MRICS SACRAMENTO, CA - Scott Beebe, MAI, FRICS ST. LOUIS, MO - P. Ryan McDonald, MAI SALT LAKE CITY, UT - Darrin Liddell, MAI, CCIM, MRICS SAN ANTONIO, TX - Martyn C. Glen, MAI, CRE, FRICS SAN DIEGO, CA -Jeff Greenwald, MAI, SRA, FRICS SAN FRANCISCO, CA - Jan Kleczewski, MAI, FRICS SARASOTA, FL - Carlton J. Lloyd, MAI SAVANNAH, GA - J. Carl Schultz, Jr., MAI, SRA, CRE, FRICS SEATTLE, WA - Allen N. Safer, MAI, MRICS SYRACUSE, NY- William J. Kimball, MAI, FRICS TAMPA, FL - Bradford L. Johnson, MAI, MRICS TULSA, OK - Robert E. Gray, MAI, FRICS WASHINGTON, DC - Patrick C. Kerr, MAI, SRA, FRICS WILMINGTON, DE- Douglas L. Nickel, MAI, FRICS I RR de MEXICO - Oscar J. Franck Terrazas, MRICS IRRCARIBBEAN - James Andrews, MAI, FRICS Corporate Office 1133 Avenue of the Americas, 27th Floor, New York, New York 10036 Telephone: (212) 255-7858; Fax: (646) 424-1869; E-mail info@irr.com Website: www.irr.com irr Cuennw rPFFK APARTMENTS ADDENDUM B PROPERTY INFORMATION c��wnn�ni (`occt[ ADARTMFNTR Tarrant Appraisal District Real Estate 01102/2013 Account Number: 00669814 Georeference: 8897 A Property Location: 311 Industrial Bled S. Euless Owner Information: 311 S Industrial Blvd LLC % Mike Aulert 105 W Walnut St Gardena Ca 90248-3103 12 Prior Owners Legal Description: Crossroads Addition -Euless Blk A Lot Taxing Jurisdictions: 025 City of Euless 220 Tarrant C'oimty 224 Turant Comity Hospital Dist 225 T -,uit Cotmty C'olleee Dist 916 Hiust-Euless-Bedford ISD xtt•jr*.3s a:n,1 w�-----.a fnr TaV Vonr 9n1n Market Value Appraised ValuerApproximate T 22013a Size tttLand Acres Land S Ft 1 YG1CP[ ' A-p-at20'.3jc--ra? Ce efs vor T3re.et �3 r. w.e :�•a�a __ .___ t` A Ze'O'OlLe 1� :X ?'- t'e F• :C•?!ij �? a? 7 t.36 r;1)e! te~r year tttRour4*C c V��. \l�lun IJictnN Tax Year 71MPT Appraised Land Appraised Im Appraised Total Market land Market tmpr Market Total 2012 000 ;783.992 $1,616,008 52,400'000 5783,992 $1,b16,008 52,400,000 2011 000 5783,992 $2,733.275 $3,517,267 $783.992 $2,733,275 53,517,267 2010 000 $793,992 $1,641.008 $2,425,000 $783,992 31,641,008 $2,425,000 2009 000 $783,992 $4.316,009 $5,100,000 4783.992 S:.316,008 $5.100.000 2008 000 $793.992 $3,341,008 $4,125,000 $783992 $3,341,008 $4.125.000 Proiesi weawnw. Exemptions: None Property Data Deed Date: 03,30 2010 1 Instrument: D210074746 Year Built: 1968 TAD Map: 2120 424 MAPSCO: 055K Ate: 00751 Cantrell McCulloch Inc Class:021 State Code: BL lti-Fvluly Garage Bays: 00 Central Air: Central Heat: Pool: V irr cuennw rPPFK APARTMENTS 1,0: 11,1" Id Law I nnn: Terry Spradlill Ile: 00669814 1973 Amorti2ation Asslguntent David, The above mention property is an aparUnent complex that watt molt In 1906. It contains I8S units and is a riass 21 sub -metered complex The valual loll history of the subjerl. properly is 15101how5. APPRAISALYEAR -- APPRAISbatVALUE A110 PROTEST F----- - - --i -2007 2006 2005 2004 2003 — 200Z 2001 ;2,400,000 ,3,517,267 i2,425,000 K 100,000 S3,103,7SO S2,700,000 53,c,•►5,558 $3,109,615 — 52,600,000 52,600,000 $2,100,000 V1,2 VS1 VLO VS9 VLB VS6 "6 VN5 D04 ROt irr SHADOW CREEK APARTMENTS ?000 _ R00 1999 $1,679, 736 W99 1998 $1,679,736 R98 1997 $1,679,736 - - — 1996 31,b79,736 ' 1995 51,G80,941 I ?9q 51,689 960 i r c S 1,565,507 -- $1,565,207 — - 1991 $1.565,507-- - - 1Qp --- $1,432,035 1109 $1,82.1,000 1988 $1,974,017 1987 $2,471,075 1986 53,072,884 198.5 — -- — 54,277,541 S4.'177,541 I lie subject property has changed hands twelve times since 1981, own(,.YShil) history in the below! chat 1. irr SHADOW CREEK APARTMENTS Electronically Recorded Tarrant County Texas Official Public Records 4/1/2010 2 08 PM D210074746 - PGS 5 S32.00 NOTiC`Ol�a►�' RIGHTS: IF Y�EA6SNATURAI. PERSON, YOU MAN' REMOVE OR STRIKE ANY OF THE FO.ILOWIN(, 1NFORn9a'TION FROM TH15aNSTRnIENT BEFORE IT 1S FILED FOR RECORD IN THE PUBLIC RFCOA9S: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE ,sug41al war wd Dccici STATE OE' TEXAS• � �- ) KNOW ALL BYTHESE PRESENTS: COUNTY OF TARRANT ) THAT Bi kVnlJX1g.' APa.Rl'MENTS, iNC., a Florida corporation ("Grantor"), for and in consideration"of the sum ?f.'TFN AND NO/100 DOLLARS ($10.00) and other good and valuable consideration-p-AW-to f)rantor by 311 S. INDUSTRIAL. Bi,vD., LLC', a Texas limited liability e:ompany ("Grarifeo'j, the receipt and sufficiency whereof are hereby acknowledged, has GRANTED, SOLD A1�D CONVEYED, and by these presents does hereby GRANT, SELL. AND CONVEY unto Granfcc, -al) of, that certain real property situated in the City of Euless, Tarrant County, Texas, mote rnrtjcu1,arly dcscribtd in pjhibit A attached hereto and incorporated herein by reference, togeffici-with all buildings, improvements and fixtures located thcmon, and all rights, ways. privileges liiid appurtenances pertaining thereto (collectively, the "Property"). SUBJECT, HOWEVER.'to'each of.tbc nyatters set forth in Exhibit B attached hereto and incorporated herein by reference. TO HAVE AND TO HOLD, the Property,, together with all and singular the es rights and appurtenancthereto in anywise belonging subjocl to the atbresaid encumbrances, unto Grantee, Grantee's heirs, successors and assigns; forever; and Grantor does hereby bind Grantor and Grantor's successors and assiuts to WARRANT AND FOREVER DEFEND all and singular the Property, subject to the afi►resaid encumbrance.,; unto Grantee, Grantees heirs, successors and assigns, against every person whomsoever lawfully ein►ming or to claim the Sallie or any part thereof, by, through or under Grantor, but not oth'erwisc.. THIS CONVEYANCE is further made subject to•(;rantces's:ucknowledpnent and agreement upon acceptance of this Deed that Grantee is solely'responaiblc for determining the suitability of the Property for its purposes and that Grantee is not r�lyil tg on any representation or the silence of Grantor with respect to the purchase. Grantee has relied sglcly on its investigation and analysis of the Property for all purposes. GRANTEE ACKNOWLI, I S. AND AGREES THAT ALL WARRANTIES, EXPRESS OR IMPLIED, EXCEPT THOSW WARRANTIES OF TiTLE SET FORI'll IN 'PHIS DEED CONVEYING THE PROPERTY, ARIr'WAI1 ED AND DISCLAIMED AND GRANTEE BUYS AND ACCEPTS THE PROPERTY AS. IS; WHERE iS, AND WITH ALL FAULTS. GRANTEE ACKNOWLEDGES AND AGRCCS'THAT GIL-kNTOR HAS NOT MADE. DOES NOT MAKE AND SPECIFICALLY NEGATES AIND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISF,S, COVENANTS, AGREENIEN'TS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRFITEN, PAST, PRESENT OR FUTURE, SFFA iM. WARN ANTY DFf.0 I SIIMON'(IF.EK APARIMfi1.TS 57(A730v.I alto-axs'fifiko SHADOW CREEK APARTMENTS Page 2 of 6 OF, AS TO, CONCERNING OR WITH RESPECT TO (1) VALUE OF THE PROPERTY; (11) THE INCOME TO BE DERIVED FROM THE PROPERTY; (11I) THE SUITABILITY OF 'I-I1l~ PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH GRANTEE MAN' CON DUgT-THEREON, INCLUDING THE POSSIBILITIES FOR FUTURE DEVELOPMENT OF. TiIF.. 1'itOPF.RTY; (IV) THE HABITABILITY, MURCIIANTABILH-Y, MARK' Li'ABILJ,I Y. PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE Ol' THFi--PROPERTY; (V) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (VI) THE NATURE, QUALITY OR CONDITION OF THE PROPLII:'CY, INCLUDING, WHIIOUT LIMITATION, THE 1VATF.11, SOIL AND GEOLOGY;{VII) Tt,lB COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION ANY LAWS; RtJ1,ES'; URDINANCIrS OR REGULATIONS OF ANY APPLICABLE WITH WITH NIvIENTA)J AfITHf)RJTY OR BODY; (Vlll) THE MANNF,R OR QUALITY Of- THE jOVECONS'TItUCTION-OR NIA-C1ItlA.LS, IF AN INCORPORATED INTO THE PROPERTY; (IX) COMPLIANC'Ii Wi'Cil ANY ENVIRONMENTAL PROTECTION, POLLUTION OR 1-AND USE. LAWS, RLJU4S'.'RFGULATION, ORDERS OR REQUIREMENTS, INCLUDING BUT NOT LIMITED TO-1111L' III OF THE AMERICANS WITH UISABILI HES ACT OF 1990, THE FFDERAI, IN -POLLUTION CONTROL. ACT. THE FFD1iRAL RESOURCE CONSERVATION AND RE(..IE ERY'-ACT, 'THE U.S. ENVIRONMF.N'1'r�L PROTECTION AGENCY ItL:GULA'i IONS' a1.T.C,F.R.. PART 261, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE•,.C'ONiPFNSATION AND LIABILITY ACT OF 1990, AS AMENDFI THE RESOURCE C_,ONS.UVATJON AND RECOVERY ACT OF 1976, Tl-IF CLEAN WATER ACT, THESA11:•flRI-KING WATER ACT, THE HAZARDOUSS lv1ATERIALS'TRANSPOR'I'A I'lOV ACC', THE TOXIC; SUBSTANCE, CONTROL ACT, AND FOREGOING; \) THE REGUTATIONS PROMULGATED uNbER ANY 'OF THE i N�ER, OR PRESENCE OR ABSENCE OF HAZARDOUS -MATERIALS AT, ON, UNDER, ADJACENT TO THE PROPERTY; (XI) -:THE CUN'I'FNT, <'OMPLETENESS OR ACCURACY OF THE DUE DILIGENCE ITEMS —OR —TITLE COMMIT?\fEN'1'; (XIl) THE CONFORMITY OF THE IMPROVEMENTS'[ b *,NNY PLANS OR SPECIFICATIONS FOR THE PROPERTY, TNCI.t1DTNG ANY PLANS A1D SPECIF_1CATIONS THAT MAY IIAVE BEEN OR MAY BE PROVIDED TO GRANTI F; (XIll) TI{E CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE APPLIC:ABl!.E ZONING OR BUILDING REQUIREMENTS; (XIV) DEFICIENCY OF ANY UNI)FRSHO ING; (XV) DEFICIENCY OF ANY DRAINAGE; (XVI) THE EXISTENCE OF VF.STCIl LAND tISF., ZONING OR BUILDING FNTTTLF.MENTS AFFF.CTTNG THE PROPERTY, OR (NV.11) WITH RESPECT TO ANY OTHER MA'I-I'ER, Ad valorem taxes for the year of this Deed have heen.pr )r,aWd; a,pcordingly, by its acceptance of this Deed. Grantee assumrs responsibility to pay all ;uf valorem taxes on the Property f'or such year and all subscqucnt years. Grantee's Mailing Address: 1110 Rosecrans Avenue, Silk 4'0- N-lanhattan Beach, California 90266 [ Signature page Jotlor1sj SPE{ IASL W.Wy-q4 1' DEED S76473Dv.1 SIIALX)W CREEK AP `AT`.-f:.TH -qwAnnw CREEK APARTMENTS Page 3 of 5 EXECUTED this day ofiNtorch, 2010, GRANTOR: BLUE VALLEY APARTMENTS, INC., a Florida corporation By:_ Nam STATF OF RORIDA (,(wN I'N'01-'PALM BEA On 201.0. before me, the undersiplud personally appeas^d �nO 40 be pi�iAI&personiAlmknown to tlic (,or proved to Ille on the C�J-to,- " '* nanic(s) islare he within basis of satisfactory c ide clhe-pers�4,1—)Whose!7subscribedlot i6i . c 't . lik, Wslic.1they executed the same ill hi&her/their instrument and acknowledged -1o. --km(s), or y Ifurtheir signatures) on the instrument the per,. authorized capacity(ics), and that 6 'his it - (lie entity upon behalf'ot'which the Oected,6xecuted the instrumcni. Wll'NGSS my 1-1 and otlicral seal, Notary Public in and for said County and State pvb:c stem Cd F:,j(VJN Mdronon MY ccrrml6aw C,067'325 I oil 1114013 Sf � V 1AL WARRANTY DEED �764730v.l 3 SgADow Cwaix APARimvi I s SHADOW CREEK APARTMENTS Page 4 of 5 EXIIIBI'I' "A" Lcaal Description Dr. rfI;•:.••tract n,f land eituatod in the A.J. MLitt Slutvey, Abstract- r(o. 604, and being ajl •'r Fiic^k r.'oC Crooernads Addition, an adds" m to :tin City of 6v;eee, Tarrant CdttntT', .."ex3S;• according) to the plat thtreof recorded .0 Volume 31k6 49, Page 24, Plat Recordu'bf .'at[nnt County, said Slor-k A beiru_ mire particularly dencribei aD follows.- ESG1NNrRCr":L.d;•27'd`iiich iron rod fcr corner, aald Point lying on the East right -of -rd" li;set vf'South rr,:9u8,,r.al Nnulervard (State Highway 157, 100 foot public right-of-way'.,tA[%A hPtn•g the Northwest. corner of G:t 1, Block A o: Plata or. The Lake, an addition Ey i:iie,:? ity ci,, 2ulean according cn the plat Lherof as cerorded in VOlulre 388 204, Page 71. F1at..Rj(cofd0of Twrrar. Zounty, Texar-; THEN17F, NCRTH, a1Vley Lbe •>baaf•.•}.inc+ of chid South lildustt.al Bou:evard. a distauce of 311.91 feet to A 112 jnch.-fton rod found for corner, being the Southwoat corner of Black R, Villa West Add•_tiod', an addition to the City of liulsss according to the plat thereof an recorded ih ':ol,urrio.)88 45, Page 23, Plat Records of Tarrant County, Texan, said point heing South a disCsm-e+:of 345.99 Feet from the South right -of way line o1 Villa hest Drive: i6o foot public ri•gh�.a`- war': t THMICE South 89 degireeF 36 m;nuLgn 4?'seccndc 9" t, along the South line of eaid 81oci. 8, a distance of 1r 251 03 'Gee,t, a 5(0 Luc:: i1•c.n rod set for corner; THRNI,*K 9ouLh 00 degreea 41 mime 19 pe:o:,da•?rao[, ., distance of Ile" feet Lo r 1 iton rod found for earner; , • mcii tlorth 89 degrees 36 minutes 47•rec-rd, .Xr,9j • a. dictence of 12t,6 78 feet to the YOIta OF BEGINNING and containing 391.454 kquar? feet,or 8-98+[ acres, more or lean e SI'kt.iAl WARR.+tNrt IXEG Exhibit, "A" Sm\Do�v CRLL'f. AMKIXLNIS 5764130v.1 irr ,i AI'1AIIIIEKITC Page 5 of 5 FXIIIBIT "B" Permitted CncumhUl= 1. •`Rights ol'trnants in possession, as tenants only, under ulwecorded lease agreements. 2. Aliy encroachment, encumbrance, violation, variation, or adverse circumstance affecting the title that would be disclosed by an accurate and complete land survey of the Property. 3. A variable width fire lane, utility and access easement throughout the Property, as shown by plat.re6ded.in-Volome 388-24, Deed Records of Tarrant County, Texas. 4, A seventy-four foot (74') wide drainage easement along the Western portion of the Property, as shotwn• by,ptat recorded in Volume 389-49, Page 24, Deed Records of Tarrant County, Texas. 5. Terms, conditions' and Stipulations of Drainage Maintenance Agreement as set forth by plat recorded in Volume +188-49,:•Page 24. Deed Records of Tarrant County, Texas, as affected by instrument rc oiOcd in. Voluntc 8620, Page 903. Deed Records of Tarrant County, 'Texas. 6. Easement for sanitary sewer line recorded in Volume 3677, Page 49, Deed Records of Tarrant County. Texas. 7. Easement for water, utilities, fire lane, recess; prtii drainage recorded in Voluntc 9611. Page 282. Deed Records of "farrant COuntY, Texas, ; 8. Terms, conditions, stipulations of and easemetns granted by Broadband Easement and Right of Entry Agreement, recorded in Volume 13470. Page 384, Deal Records of Tarrant County, Texas_ tt, renns, conditions and stipulations contained in lease --agreement between Bridgegate. Apartments, as Lessor, and Web Service Cuutptuly..jnCI as Lcssee, a Memorandum of which is recorded ill Volume 9082, Page 1928. Deed Records; 'If Tarrant Cowtty, Texas. 10. Terms, conditions and stipulations contained in lease Ngfecinetlt dated May 15, 1996. between Brentwood Terrace Apts.. as Lessor, and Prefdrre4• I'ittcresl Inc., as Lcsscc recorded in Volume 14019, Page 11, Deed Records of Tarrarit.Ca6nty..'Fcxas 1 I . 'rernts, (Altlllltltltls And stipulations of Oil, Gas and Mineral Least; hated January 29, 2008, riled for record under Clerk's File No. D208043534, Deed Records of.Tarrant County, Texas. l-xhrblt /' SIIAL)VW (7RF.FK APAP I MI N 1 % bt'k114L. WJW.IUYTi' L1kEV S llri731h..1 irr SHADOW CREEK APARTMENTS PRTSRCHG3 UNIVERSAL LAND TITLE OF N.TEYAS,LLC PAGES: 1 RUN DATE: 12/04/2012 TARRANI COUNTY TITLE DATABASE RVH TIME: 17:23t13 UNIVERSAL LAND TITLE OF N.TKKAS,LLC • • • • • ORDER NUMBER: CBRTI PI HD TEED: 11/39/2032 COURTS: DISTRICT: 11D//300/2012GROBA KRUUPT�D11/225T201OREDS� RAN: 11/30/2012 PROBATE. 11/30/2012 REQUESTED FROM RUN DAOCUMENTTE: 05/17/1973 TO RUN DATBt 12/04/2012 Print SequenCet File Date SEARCHED FOR -a Vol. 3980049 Pg: 00024 Idt Blk, OOOOA Ltt 00000000 SEARCH ON CURRENT DEED, N ALL GRANTEES ON CURRENT DEED, N SELECTED FROM LIST, N F4-LISTt N SEARCH OPTIONS USED -> GRANTER _---------------------- _------------------------------------ _----------- ---------------- _-------------- MATCHES FOUND - Vol: 3060049 Pg: 00024 Id, CRO Elk: OOOOA Ltt 00000000 CROSSROADS ZIP, DSCR, MAP 2120 421 ELK A TD, 1), 006MIAL IQT CA I0, 00669814 ADDR: 311 INDUSTRIAL BLVD S CTY, EULESS DOCUMENT FILE DT VOL PAGE DOC TYPE REMARKS- MOUNT GRAN70R GLITRE AYER GEN INV 24464 04/15/1974 5628 744 DEED OF TEST _ _ - - - _ _ _ DICKERSON H JR COORDINATED FIN SERV BRIDGEGATE EDT P S 356051 12/07/1981 356052 12/07/1981 7218 7218 2107 WAERNTY DEED 2121 DEED OF THE BRIDOEOATE GEN P S BRIDGEGATE INV CO P S COORDINATED FIN SERV BRIDGEGATE GEN P S 374382 12/29/1982 7418 135 DEED OF THET 161 Y DEED 170000 BR IDGEGATE GEN P S BRID3EGAT£ INV CO P S a P S 374383 12/29/1982 370928 09/03/1985 7418 8295 TESTSWARRH 1897 TASTE DEED 7418/0135 BRIDGEGATE INV CO P S HOFFMAN LEONARD E III TH BRIDGEGAT£ BRIDGEGATE GET P S 370928 09/03/1985 8295 1897 TESTS DEED 1728 RM./AP SB TR 7415/0135 7135/1574 BRYAN FAMILY P S STEPHEN H ATTY ROSEN HARRY M SHE AOBERT P JR 4900 02/04/1986 4900 02/04/1986 8447 8447 3 RM/ArTESTS SB D TH575 DEED 7135/1574 7175/1574 SUFPIN BRIDOHGSTE HEN P S COORDINATED FIN SERV BRYAN PAYILY P S BRYAN FAMILY P S 310660 02/04/1986 310690 02/04/1986 8448 B44B 52 52 52 TESTS DEED TESTS DEED 71]5/1574 7135/IS74 ROBOTBARRY M TR BRYAN FAMILY P 5 GASARAC9 JUSTIN TR 310680 02/04/1986 14073 04/27/198T 8448 892E 52 3056 GENERAL N/D BRYAN FAMILY P S SUFFIN STEPHEN H AM GASARACH JUSTIN TR 14073 04/27/1987 383922 09/16/1988 892E 9382 1056 CENTRAL W/D 2248 DEED OF TEST 114500 GASARCH JUSTIN TR GASARCH JUSTIN TR CENTRAL JERSEY ELT CO CENTRAL JERSFiI BLT CO 168014 09/27/1911 10398 682 EKTN AGR.�T 365 D/T - PIS 9382/2248 114500 GAEARCH JUSTIN TA CM117tAL JERSEY BLT CO CENTRAL JERSEY SL7 CO 160338 09/01/1992 236403 12/08/1992 10758 10871 1405 SPECIAL MID GASAACH JUSTIN 7R. CABJERSEY BfiT CO HOSKINS HCKELLASSOC 164513 08/04/1993 164520 08/04/1993 11176 11176 1572 SPECIAL W/o 161E MORTGAGE 32236 ECKEL HOSEINSLASSOC CENTRAL JERSEY BLT CO BRENTWOOD TERRACE LP 240800 11/03/1994 11781 1532 WARRNTY DEED ECKEL DENNIS C ECKEL HOSKINSLASSOC BRENTWOOD TERRACE LP 240800 lIZ03/1994 240800 11/03/1994 11781 11781 1532 WAARNTY DEED 153E WARRITTY DEED R{OSKINS CHRISTOPHER K MEET CAN PROPTERRACELLC BRENTWOOD TERRACE LP 12583 1282 SPECIAL MID SPECIAL MID BRENTWOOD151996 LP P S BRENTWOOD TERRACE PARTITE BRENTWOOD TERRACE PARTITE 227726 II/IS/1996 227726 1l/15/1996 12583 12583 128E 1282 SPECIAL WIG CHRISDEN ONE LP P S ECKEL DC TR BRENWOOD TERRACE PARTITE 227726 32/15/1996 227726 11/15/1996 12583 12583 128E SPECIAL MID 1282 SPECIAL W/o ECKEL DE20TIS C ECKEL FAMILY TP.UST BRENTWOOD TERRACE PAR771E BRENTWOOD TERRACE PARTNE 227726 11/15/1996 32583 1 2 a 2 SPECIAL MID SPECIAL ECKEL HOSKINSLASSOC P 5 BRENTWOOD TERRACE PARTNE 227726 11/15/1996 227726 11/15/1996 12583 12583 1282 MID 128E SPECIAL MID £RDM LP P S HAWAIIAN TRUST CO TR BETERRACE PARTNE BRENTWOOD TERRACE PARTITE 227726 11/15/1996 227726 11/15/1996 12583 12583 1282 SPECIAL W/o 1262 SPECIAL W/D No NINE CHRISTOPHER K HGSKINB CHRISTOPHER K TA BRENTWOOD TERRACE PARTITE BR£NTWOOD TERRACE PARTNE 22772fi 11/IS/1996 12583 1282 SPECIAL W/0 128E SPECIAL MID HOSKINS CK TRUST BRENTWOOD TERRACE PARTITE HR£NTWOOD TERRACE PARTITE 227726 11/15/1996 227726 11/15/1996 12583 12583 1282 SPECIAL W/D MUDD DHBRA J MUDD EBRA J EST TRUST BRENTWOOD TERRACE PARTITE 227726 11/15/1996 227726 11/15/1996 12583 12583 1282 SPECIAL W/o 128E SPECIAL MUDD HITCHE N BRENTWOOD TERRACE PARTNE MUDD RITCHIE N RET TRUST BRENTWOOD TERRACE PARTITE 227726 11/15/1996 11583 MID 128E SPECIAL MID 1338 DEED OF TEST �----- BREh'TWOOD MGMT INC MIDLAND LOAN SERV LP P S 227732 11/15/1996 12583 DRTSRCH03 UNIVERSAL LAND TITLE OF N.TERUNKAS,LLC PAGETINEEt 17t23t13 RUN ➢ATEt 12/04/2012 TARRANT COUNTY TITLE DATABASE • • • • • MVERSRDER LLA R, TITLE OF N.TEKAS,LLC• • CERTIFIED TKRUI 11/19/2012 COURTS: DI5IRICTs 11D/032@OMEGAOUPSKSEARCHEDII/D/T2012 CC LAW: 11/30/2012 PROBATE, 11/30/2012 REQUESTED FROM RUN DATE: 05/17/1973 TO RUN DATE: 12/04/2012 PTlrtt sequence: File Date SEARCHED FOR -a Vol: 3880049 Pg: 00024 Idi Blkt OOOOA Lt: 00000000 _______________________ ___________________________________________________________________ _________________ MATCHES FOUND -a Volt 3860049 ADDR: 311 INDUSTRIAL BLVD S GRANTOR GRANTEE BREW TERRACE PARTITE MIDLAND BRFhiTNOOD MGM-, INC SILVSRGA BRENTWOOD TERRACE PAF.TNE SILVERGA BRENTWOOD MGMT INC JI BRISA BRENTWOOD TERRACE PARTNE JI BRISA BALLOTTA LINDSAY A TR A'Ti BRfOOD TERRACE PARTNE FM INV L FM INV LLC SPNADOV A SILVERGATE BK SHADOW A SHADOW APT LLC STILLWAI SHADOW APT LLC NA HOVIA FANNIE MAE W FANTIH FAE WEAVER E SHADOW APT LLC PYKA NIC PYKA NICHOLAS M TR FANNIE Y SHADOW APT LLC PANHIE H FANNIE MAE BLUE VA BLUE VALLEY APT INC 311 S " 311 S IhD BLVD LLC FAIRNINI 00024 Idt CRO Blke OOOOA Lt: 00000000 CROSSROADS R: Yt EVLESS DSCV 2120 4DOC 24 ELK A DO��ZIPFILE DT LMAP PAGE TYPE DAN SERV LP P S 227732 11/15/1996 12583 1338 DEED OF TRST E BK 76555 04/12/2000 14295 315 DEED OF TEST E BK 76555 04/12/2000 14295 31S DEED OF TEST LP P S 133840 04/15/2003 16597 290 SPECIAL MID LP P S 133840 04/15/2003 16597 290 SPECIAL MID DEED 31335 02/01/2005 TESTS C 31335 02/01/2005 TESTS DEED T LLC 193367 06/27/2006 SPECIAL MID IT LLC 193167 06/27/2006 SPECIAL W/o :R NATL BLT CO 193199 06/27/2006 D/T - PIS D/T - PIS MULTIFAMILY CAP •6UR7NEY 76665 212825 03/04/2008 08/10/2009 RM/AP SB TR D 212825 08/10/2009 RM/AP SB TR ,ISA TDLAS M 212825 06/10/2009 RM/AP SB TR sE 234369 09/%2009 TESTS DEED LE 234369 09/O1/2009 DEED EY APT INC 238710 74746 09/04/2009 04/O1/2010 DEEDS SPECIAL MID ) BLVD LLC CAPITAL LP 74747 04/01/2010 DEED OF TEST TPt RESIDENTIAL RAT CR ID: 00669814 REMARKS_ _ _ AMOUNT 225000 600000 600000 4480000 5732100 1300000 WATCHES FOUND -1 Vol: 3880049 Pgi 00024 Idt CRO Elk: 00000 Ltt 00000000 VOL CROSSROADS PACE DOC T- REMARKS GRANTOR GRANTEE DOCUMENT FILE DT - DICKERSON HH JR HOUSEMAN RLTY 50357 08/19/1974 76143 12/01/1976 5697 6134 507 WARRNTY DEED 715 WARRNTY DEED HOUSEMAN REALTY CORP DH BRIDGSGATB APARIMSNI'S HOUSEMAN REALTY CORP DH 76144 12/01/1976 2838 B86 DEED OF TEST BRIDGE'ATE APARTMENTS BRIDGEGATE APT J V AS INV CORP 5B 0407 11/10/1978 6617 817 WARENTY DEED 797 DEED OF TEST ASINN CORD RRIDGEGATE APT J V BROMET KURT ENT INC SB0988 11/10/1978 15564 03/12/1979 3147 6697 704 WARRNTY DEED AB INV CORP BROM.ET KURT ENT INC AS INV CORP ISS65 03/12/1979 15568 03/12/1979 3197 6697 29 DEED OF TEST 714 WARRNTY DEED BECKET KURT EMI INC BRYAN FAMILY P S COORDINATED FIN SERV 38571 06/12/19:1 7135 1561 WARRNTY DEED BRYAN FAMILY P S COOEDINATED FIN SERV BRYAN PAMILY P S 38572 06/12/191 7335 1574 DEED OF TEST •• END OF PROPERTY REPORT •• •• END OF REPORT •• AMOUNT _ _ _ _ _ _ 170000 566517 242500 167500 SHADOW CREEK APARTMENTS Shadow Crook NEWT County_Tax_paye.for thisproperty AREA: N1 MAP: 55-K 311 S Industrial Blvd Y-Man G- ap B-MaQ SCHOOL DIST: Hurst -Euless -Bedford Euless TX 76040.4247 CENSUS TRACT: 1135.14 (817) 835.0699 # UNITS: 192 YR BLTIRENO: 1963 /1993 MGT CO: Class A Management OCCUPANCY: COUNTY: 75 Tarrant LSE TERM: 6-12 ELECTRIC: ALL BILLS PAID PARKING: Open PETS: <25#/$200 (100 NR)/1 Max/Breed Restrict APP FEE: LOC COMMISSION: $40 ■ 50a/ /Name on App & Guest Card ANIENITIES: a Pools (2) Laundry (3) LI BBO Grill EPlayground LI self -clean Oven ❑ Cont-Clean Oven r Pantry Ceiling Fan ❑ Tennis U Water V•ball ❑ Fitness Center ❑ Double Oven LI 2a•Hour Fitness Room N F F Refry ■ patlulbolcuny f] Extra Storage OPictures II15hII1C I RCIIUII❑volleybaN ❑Jogging Trail ❑Ica Maker ❑Garden Tubs IM111 11w. S-Yew ❑easketba'I ❑Racquetball ❑Access Gales 0On•Site Mgml 0D�shwashei 0Dsposal 0Mnl-elusls ❑Private Alarms IIISItN ICaI t Ilan ❑ Corporate Rates ❑ hlluowave ❑ Mondorud Alarms ❑ Sauna N Clubhouse ❑ Short Term Leases LJ Near Transit ❑ Crown Molding ❑ Vaul ed Ce,' ❑ H.gh Speed Internet Walk -In Closet & Plans ❑ Business Center ❑ Income Restricted ■ Comroctml Electric Wall-WaII Curput Ail B0!a paid ■ Accepts Sect,on 8 NOTES: All Utilities And Bills Are Included In Your Rent. IINIT INFORWATION MIX 72 48 III_(' 1!1 tit \1'fll H� FP tiQFI` 648 67N \IIiT. RI:CFF. S550 5580 80.85 5088 RI'. $512 $Sall s0 79 S080 200 200= $475.200 $334,080 �❑ 813 $600 S0.85 $6a1 SO 70 200 $108,720 P4 L1 s53 SM $0 76 $673 SO /t 200 $27N S00 J7 1G ?12 D'2 �❑ �� 1.053 57G5 50.73 $710 $0.67 200 $14G,880 192 EIAVERAGES TnTA1.S ❑❑ ❑❑ +as.osb 761 $ns,a4o ss22 a $uN2 sltt,osd❑� SW so.76 $1,a3J,?80 ❑�� Deposit Can Be Up To im Rent Based on Credit. $199 Total Move In information obtained from sources deemed reliable, but is not guaranteed. Last update: 2012110131 ALN Apartment Data. • 9721931-2553 or 800/643-6416 • www.alndats.com SHADOW CREEK APARTMENTS Sec. 84-111. - "C-2" community business district. (a) Purpose. The intent of this district is to provide suitable areas for the development of business uses which offer a wide variety of retail and service establishments that are generally oriented towards serving the overall needs of the entire community. Such uses generally include those retail, service and office activities that are usually found in major community shopping centers and in centralized commercial districts. This district should be the most widely applied business district in the city due to its generic service nature and provide for appropriate landscaping. (b) Permitted primary uses. See Table 4-A for detailed listing. General uses include: Large and small retailers and office uses. Service establishments. Hotels, motels, and travel lodges. Medical and dental clinics. Automotive repair and service shops. Schools. Parks, playgrounds. No manufacturing or sales of secondhand goods. (c) District development standards. (1) Minimum lot area and width—none- (2) Minimum front yard-20 feet. (3) Minimum rear yard-15 feet. (4) Minimum side yard —none, except when adjacent to land zoned for residential purposes. then five feet. (5) Maximum height limit. General-60 feet or four stories (which ever is less). Public and semipublic uses —hotels, hospitals. schools, public buildings may be erected to 80 feet, provided all yards are increased an additional foot for each foot the building exceeds 60 feet. Adjacent to residential —any structures located within 100 feel of land zoned for one- or two-family dwelling purposes are limited to a single story. (6) Minimum exterior facade-100 percent masonry facade on all wall elevations. (7) Minimum off-street parking —see article V. (8) Signs —see article VI. (9) Landscaping and screening —see article VII. (10) Utility services —All utility services shall be buried. See subsection s-' .1,; i (2)(k), construction standards for additional requirements. (11) Site plan approval —see article VIII. City council approval required prior to construction commencing. (Ord P,'o. 11 +_. 7f4 1 1 r . ord. No. 12.25. § 2. 1; :., iG: Ord. N, ; I . SHADOW CREEK APARTMENTS ADDENDUM C COMPARABLE DATA COMPARABLE LAND SALES Location & Property Identification Property Name: Sub -Property Type: Address: Commercial Site Land 2029 Parkwood Dr City/State/Zip: Bedford, TX 76021 County: Tarrant Submarket: Hurst -Euless -Bedford Market Orientation: Suburban Sale Information Sale Price: $1,156,424 Eff. R.E. Sale Price: $1,156,424 Sale Date: 06/14/2012 Sale Status: Closed $/Acre(Gross) : $205,769 $/Land SF(Gross): $4.72 $/Acre(Usable): $205,769 $/Land SF(Usable): $4.72 Case Study Type: none Grantor/Seller: IPMorgan Chase Bank, N.A. Grantee/Buyer: State National Insurance Company, Inc. Property Rights: Fee Simple % of Interest Conveyed: 100.00 Terms of Sale: Cash to seller Document Type: Deed Recording No.: D212142985 Verified By: Colt Jones Verification Type: Confirmed -Seller Broker Improvement and Site Data MSA: Dallas -Fort Worth -Arlington, TX Metropolitan Statistical Area IRR Event ID ( 612942 ) Legal/Tax/Parcel ID: Lot 3, Block 1, of the Texas American Bankshares Addition, City of Bedofrd, Texas Acres(Usable/Gross) : 5.62/5.62 Land-SF(Usable/Gross) : 245,005/245, 005 Usable/Gross Ratio: 1.00 Shape: Rectangular Topography: Level Corner Lot: Yes Zoning Code: S Zoning Desc.: Service Commercial Easements: No Environmental Issues: No Flood Plain: No Utilities: Electricity, Water Public, Sewer, Gas, Telephone Source of Land Info.: Other This site was not a foreclosure and the bank was the original owner. The neighboring office user to the south purchased this tract for future expansion. Parties involved were under a non -disclosure agreement, but within a small margin of the actual price was confirmed closing price. IRR Data Point Copyright 2013 Integra Realty Resources, Inc. aniRRSystem e �9 Location & property Identification Property Name: Sub -Property Type City/State/Zip: Market Orientation Bell Helicopter N/S Trinity Blvd East of Norwood Dr. Fort Worth, TX 76118 East Fort Worth IRR Event ID ( 585459 ) Acres(Usable/Gross): 20.56/23.56 Sale Information - Land-SF(Usable/Gross): 895,532/1,026,212 Sale Price: $3,000,000 Usable/Gross Ratio: 0.87 Eff. R.E. Sale Price: $3,000,000 Shape: Rectangular Sale Date: 12/01/2011 Closed Corner Lot: Zoning Code: No R-2 (& A for portion in the Sale Status: flood zone) 127,334 Zoning Desc.: Townhouse Dev (10 units $/Land SF(Gross): $2.92 per building) $/Acre(Usable): $145,914 Flood Plain: Yes $/Land SF(Usable): $3.35 Flood Zone: —13% of site in zone AE Case Study Type: none FM48439CO220K Grantor/Seller: AAE Pacific Park Flood Area(SF): 130,680 Associates, LLC Utilities Desc.: All to site. Grantee/Buyer: Bell Helicopter Textron, Source of Land Info.: Public Records Inc. Property Rights: Fee Simple of Interest Conveyed: 100.00 Document Type: Deed Recording No.: D211292181 Verified By: Tyler I. Arbogast Verification Date: 10/2/12 Verification Source: Todd Burnette Verification Type: Confirmed -Buyer Broker [Improvement and Site Data MSA: Dallas -Fort Worth -Arlington, TX Metropolitan Statistical Area Legal/Tax/Parcel ID: 41092368 & 41092376 IRR Data Point IRRoCopyright 2013 Integra Realty Resources, Inc. MIRR System Location & Property Identification Property Name: Sub -Property Type Market Orientation Commercial Site NEC of Euless Blvd and Debra Drive Euless, TX 76040 Hurst -Euless -Bedford , sale Information Sale Price: $556,760 Eff. R.E. Sale Price: $556,760 Sale Date: 11/02/2010 Sale Status: Closed $/Acre(Gross): $103,295 $/Land SF(Gross): $2.37 $/Acre(Usable): $103,295 $/Land SF(Usable): $2.37 Case Study Type: none Grantor/Seller: Donald H. Dilmore Grantee/Buyer: Mad Triangle, LLC Property Rights: Fee Simple % of Interest Conveyed: 100.00 Terms of Sale: Cash to seller Document Type: Deed Recording No.: D210279836 Verified By: Allison Whitehead Verification Source: Nancy Halliday - 214-850-0730 Verification Type: Confirmed -Seller Broker mprovement and Site Data . MSA: Dallas -Fort Worth -Arlington, TX Metropolitan Statistical Area e Copyright 2013 Integra Realty Resources, Inc. Lat./Long.: 32.819284/-97.108057 IRR Event ID ( 464359 ) Legal/Tax/Parcel ID: Being a tract of land situated in the A.M. Downen Survey, Abst. No. 415, City of Euless, Tarrant County, Texas Acres(Usa ble/Gross) : 5.39/5.39 Land-SF(Usable/Gross) : 234,920/234,920 Usable/Gross Ratio: 1.00 Shape: Irregular Topography: Gently Sloping Corner Lot: Yes Zoning Code: TX-10 Zoning Desc.: Highway Corridor Easements: No Environmental Issues: No Utilities: Electricity, Water Public, Sewer, Gas, Telephone Source of Land Info.: Other The buyer purchased the property to utilize the back portion (about 147,799 SF) to construct a flex warehouse to be used as their corporate office. The remaining 87,120 SF is currently being marketed for sale. This remainder portion can be divided with the hard corner of 43,560 SF for $7/SF and the interior 43,560 SF for $6/SF. IRR DataPoint An IRR System Location & Property Identification Property Name: Commercial Site Sub -Property Type: Land Address: SWC Mid -Cities Boulevard and Holiday Lane City/State/Zip: North Richland Hills, TX 76180 County: Tarrant Submarket: Far NE Fort Worth Market Orientation: Urban Sale Information Sale Price: $486,815 Eff. R.E. Sale Price: $486,815 Sale Date: 08/05/2010 Sale Status: Closed $/Acre(Gross): $98,010 $/Land SF(Gross): $2.25 $/Acre(Usable): $98,010 $/Land SF(Usable): $2.25 Grantor/Seller: Clark's Holiday Lane Cottages LLC, et al Grantee/Buyer: HL & MCB Properties, LP Property Rights: Fee Simple % of Interest Conveyed: 100.00 Document Type: Deed Recording No.: D210192804 Verified By: Ms. Keri L. Redford Verification Date: 4/18/11 Verification Source: Mark Wood, 817-498-7877 Verification Type: Confirmed -Seller Broker Improvement and Site Data Legal/Tax/Parcel ID: Tax: 03751856 / Legal: Abstract 130, Tract 10H, John H. Barlough Survey Acres(Usable/Gross) : 4.97/4.97 Land-SF(Usable/Gross): 216,362/216,362 MR. Copyright 2013 Integra Realty Resources, Inc. I 1 Lat./Long.: 32.874616/-97.211931 IRR Event ID ( 461232 ) Usable/Gross Ratio: 1.00 Shape: Irregular Corner Lot: Yes Zoning Code: C-1 Zoning Desc.: Commercial Utilities Desc.: All to site Source of Land Info.: Public Records Investment purchase. Seller was comprised of four individuals who wanted to dispose of the property. Broker believed they had previously been asking around $5 PSF for the site. Property has good frontage on Mid -Cities Boulevard and Holliday Lane due to curve in Holliday Lane. Purchaser subsequently listed the site at $5.50/SF. IRR Data Point MIRRSystem Location & Property Identification Property Name: Sub -Property Type City/State/Zip: Market Orientation: Commercial Tract NEQ of Industrial Blvd. and W. Euless Blvd. Euless, TX 76040 Tarrant Hurst -Euless -Bedford Sale Information z - - -_ Sale Price: $600,000 Eff. R.E. Sale Price: $600,000 Sale Date: 06/02/2008 Sale Status: Closed $/Acre(Gross) : $46,440 $/Land SF(Gross): $1.07 $/Acre(Usable) : $46,440 $/Land SF(Usable): $1.07 Case Study Type: none Grantor/Seller: PRA Corinth Shopping Center, LP Grantee/Buyer: KVA Corporation, Ltd. Property Rights: Fee Simple % of Interest Conveyed: 100.00 Terms of Sale: Cash to seller Document Type: Deed Recording No.: D208206679 Verification Source: Paul Knowlton - 972-385-4105 Verification Type: Confirmed -Seller Broker MSA: Dallas -Fort Worth -Arlington, TX Metropolitan Statistical Area Legal/Tax/Parcel ID: A.J. Huitt Survey, Abstract No. 684 IRR. Copyright 2013 Integra Realty Resources, Inc. IRR Event ID ( 612949 ) Acres(Usable/Gross) : 12.92/12.92 Land-SF(Usable/Gross) : 562,708/562,708 Usable/Gross Ratio: 1.00 Shape: Irregular Topography: Gently Sloping Corner Lot: No Zoning Code: TX-10 Zoning Desc.: Highway 10 Commercial Easements: Yes Easements Desc.: Large drainage ditch in central portion with heavy flood encumrabce. Not a legal encumbrance, but physical. Environmental Issues: No Flood Plain: Yes Flood Zone: 50% Flood Encumbrance Utilities: Electricity, Water Public, Sewer, Gas, Telephone Source of Land Info.: Other comments This property was purchased as an investment. The property is bisected by a drainage area and has about 50% flood encumbrance. The property is currently listed for sale as of January 2013 for $2,000,000 or $3.55 per SF. IRR Data Point M IRR System SHADOW CREEK APARTMENTS COMPARABLE RENTAL SURVEYS Location & Property Identification Property Name: Sub -Property Type Address: City/State/Zip: County: Submarket: Market Orientation Property Data Manchester Apartments Multi -Family 100 Manchester Dr. Euless, TX 76039 Tarrant Hurst -Euless -Bedford Suburban Survey Date: 01/02/2013 No. of Units/Unit Type: 384/Apt. Units Building Class: C Vacancy @ Survey: 12% Yr. Built/Yr. Renov.: 1968/2006 Land Size (Ac.): 16.03 Lat./Long.: 32.839569/-97.095596 IRR Event ID ( 608603 ) Project Amenities: Swimming Pool, Swimming Pool, Clubhouse/Rec. Bldg., Laundry Facility Unit Amenities: Ceiling Fans, Dishwasher, Patios/Balcony, Range-Refrig., Disposal, Central AC, Carpets/Drapes/Blinds, Walk-in Closets Landlord Pays: Common Area Electric Tenant Pays: In -Unit Electric, Sewer, Trash, Cable, Broadband, Water Unit Rms/BR/ No.Of Vacant S.F Per Base Rent $/S.F. Unit Comments Information Bth Units Units Unit Effective 1B/1BA 3/1/1.0 128 INA 715 $550.00 $0.77 2B/1BA 4/2/1.0 128 INA 940 $630.00 $0.67 2B/2BA 4/2/2.0 128 INA 1,048 $670.00 $0.64 Overall 384 INA 901 $616.66 $0.68 Sum/Averages: m Copyright 2013 Integra Realty Resources, Inc. IRR Data Point MIRRSrtem Location & Property Identification Property Name: Royal Terrace Sub -Property Type: Multi -Family Address: City/State/Zip: County: Submarket: Market Orientation: 309 Martha St. Euless, TX 76040 Tarrant Hurst -Euless -Bedford Suburban Lat./Long.: 32.833595/-97.086206 IRR Event ID ( 608604 ) Property Data Survey Date: 01/02/2013 Project Amenities: Swimming Pool, Laundry No. of Units/Unit Type: 120/Approved Units Facility Multi-Tenant/Condo.: Yes/No Unit Amenities: Dishwasher, Ceiling Fans, Range-Refrig., Disposal, Building Class: C Central AC, Vacancy @ Survey: 9% Carpets/Drapes/Blinds, Yr. Built/Yr. Renov.: 1964/2011 Walk-in Closets Construction Type: Two-story wood frame Landlord Pays: In -Unit Electric, Sewer, with flat roof Trash, Water Land Size (Ac.): 2.56 Tenant Pays: Cable, Broadband Unit Mix Unit Rms/BR/ No.Of Vacant S.F Per Base Rent $/S.F. Unit Comments Information Bth Units Units Unit Effective 1B/1BA 3/1/1.0 32 INA 525 $585.00 $1.11 1B/1BA 3/1/1.0 16 INA 540 $585.00 $1.08 1B/1BA 3/1/1.0 12 INA 656 $645.00 $0.98 1B/1BA 3/1/1.0 8 INA 664 $625.00 $0.94 1B/1BA 3/1/1.0 20 INA 680 $660.00 $0.97 1B/1BA 3/1/1.0 20 INA 745 $660.00 $0.89 2B/2BA 4/2/2.0 12 INA 982 $795.00 $0.81 Overall 120 INA 658 $639.66 $0.97 Sum/Averages: MR. Copyright 2013 Integra Realty Resources, Inc. MR -Data Point An IRR System I ocation & Property Identification Property Name: Wilshire Manor Sub -Property Type: Multi -Family: Garden/Low-Rise Address: 1450 Sagebrush TH. City/State/Zip: Euless, TX 76040 County: Tarrant Submarket: Hurst -Euless -Bedford Market Orientation: Suburban Property Data Survey Date: 01/02/2013 No. of Units/Unit Type: 118/Apt. Units Multi-Tenant/Condo.: Yes/No Building Class: C Vacancy @ Survey: 13% Yr. Built/Yr. Renov.: 1968/2011 Land Size (Ac.): 1.04 Lat./Long.: 32.829338/-97.106239 IRR Event ID ( 608608 ) oject & m mem 1es Project Amenities: Laundry Facility Unit Amenities: Range-Refrig., Ceiling Fans, Patios/Balcony, Dishwasher, Disposal, Central AC, Carpets/Drapes/Blinds, Walk-in Closets Landlord Pays: In -Unit Electric, Sewer, Trash, Common Area Electric, Water Tenant Pays: Cable, Broadband Unit Rms/BR/ No.Of Vacant S.F Per Base Rent $/S.F. Unit Comments Information Bth Units Units Unit Effective 1B/1BA 3/1/1.0 58 INA 650 $609.00 $0.94 1B/1BA TH 3/1/1.0 20 INA 750 $679.00 $0.91 2B/1BA 4/2/1.0 32 INA 800 $729.00 $0.91 2B/1.5BA TH 4/2/1.5 8 INA 1,250 $929.00 $0.74 Overall 118 INA 748 $675.10 $0.90 Sum/Averages: IRR. Copyright 2013 Integra Realty Resources, Inc. IRR Data Point An IRR System �ocation & Property Identification Property Name: Terrace Sub -Property Type: Multi -Family: Garden/Low-Rise Address: 306 Park Dr. City/State/Zip: Euless, TX 76040 County: Tarrant Submarket: Hurst -Euless -Bedford Market Orientation: Suburban Property Data - Survey Date: Multi-Tenant/Condo.: Building Class: Vacancy @ Survey: Yr. Built/Yr. Renov.: Land Size (Ac.): Unit Information 01/02/2013 Yes/No C 50% 1965/2010 1.01 Lat./Long.: 32.832405/-97.094955 IRR Event ID ( 608606 ) Project & Unit Amenities Project Amenities: Swimming Pool, Laundry Facility, Playground Unit Amenities: Ceiling Fans, Dishwasher, Range-Refrig., Disposal, Central AC, Carpets/Drapes/Blinds, Walk-in Closets Landlord Pays: In -Unit Electric, Sewer, Trash, Water, Common Area Electric Tenant Pays: Cable, Broadband Survey Comp./Contact: Property Manager/ Rms/BR/ No.Of Vacant S.F Per Base Rent $/S.F. Unit Comments Bth Units Units Unit Effective Eff 2/0/1.0 3 1B/1BA 3/1/1.0 48 2B/1BA 4/2/1.0 54 3B/1BA 5/3/1.0 3 Overall 108 Sum/Averages: IRR. Copyright 2013 Integra Realty Resources, Inc. INA 448 $415.00 $0.93 INA 650 $555.00 $0.85 INA 850 $665.00 $0.78 INA 920 $695.00 $0.76 INA 752 $610.00 $0.81 IRR DataPoht An IRR System Location & Property Identification Property Name Sub -Property Type: Address: City/State/Zip: County: Submarket: Market Orientation Concord Terrace Multi -Family: Garden/Low-Rise 1001 Villa Dr. Euless, TX 76040 Tarrant Hurst -Euless -Bedford Suburban Lat./Long.: 32.833790/-97.097504 IRR Event ID ( 608610 ) Property Dat roject & ni Amem yes , Survey Date: 01/02/2013 Project Amenities: Swimming Pool, Laundry No. of Units/Unit Type: 214/Apt. Units Facility, Playground, Gated Multi-Tenant/Condo.: Yes/No Unit Amenities: Entrance Range-Refrig., Dishwasher, Building Class: C Disposal, Ceiling Fans, Vacancy @Survey: 30% Patios/Balcony, Walk-in Yr, Built/Yr. Renov.: 1968/2005 Closets, Land Size (Ac.): 505,426.00 Carpets/Drapes/Blinds, Central AC Landlord Pays: Common Area Electric Tenant Pays: In -Unit Electric, Sewer, Trash, Cable, Broadband, Water Survey Comp./Contact: Property Manager/ Unit Mix Unit Rms/BR/ No.Of Vacant S.F Per Base Rent $/S.F. Unit Comments Information Bth Units Units Unit Effective Eff 2/0/1.0 6 INA 421 $425.00 $1.01 1B/1BA 3/1/1.0 8 INA 625 $565.00 $0.90 1B/1BA 3/1/1.0 76 INA 648 $595.00 $0.92 2B/1BA 4/2/1.0 104 INA 912 $720.00 $0.79 2B/2BA 4/2/2.0 8 INA 950 $750.00 $0.79 3B/2BA 5/3/2.0 4 INA 1,230 $865.00 $0.70 3B/2BA 5/3/2.0 8 INA 1,239 $840.00 $0.68 Overall 214 INA 813 $669.85 $0.82 Sum/Averages: MR. Copyright 2013 Integra Realty Resources, Inc. IRR Data Point An IRR System LncaW & Rronerty .Identification Property Name: Mission Pointe Club Sub -Property Type Address: City/State/Zip: County: Submarket: Market Orientation: Property Data Survey Date: Building Class: Vacancy @ Survey: Yr. Built/Yr. Renov.: Land Size (Ac.): Multi -Family 917 Del Paso St. Euless, TX 76040 Tarrant Hurst -Euless -Bedford Suburban Lat./Long.: 32.827145/-97.098305 IRR Event ID ( 609021 ) 01/03/2013 Project Amenities: Swimming Pool, Laundry C Facility, Playground 3% Unit Amenities: Ceiling Fans, Patios/Balcony, Dishwasher, Range-Refrig., 1963/1996 Disposal, Central AC, 11.91 Carpets/Drapes/Blinds, Walk-in Closets Landlord Pays: Common Area Electric Tenant Pays: In -Unit Electric, Sewer, Trash, Cable, Broadband, Water Unit Rms/BR/ No -Of Vacant S.F Per Base Rent $/S.F. Unit Comments Information Bth Units Units Unit Effective 1B/1BA 1B/1BA 2B/1BA 2B/2BA 2B/2BA Overall Sum/Averages: 3/1/1.0 72 INA 612 $460.00 $0.75 3/1/1.0 72 INA 720 $500.00 $0.69 4/2/1.0 40 INA 948 $600.00 $0.63 4/2/2.0 36 INA 1,008 $625.00 $0.62 4/2/2.0 40 INA 1,072 $650.00 $0.61 260 INA 819 $544.69 $0.66 M. Copyright 2013 Integra Realty Resources, Inc. IRR DataPoint An IRR System SHADOW CREEK APARTMENTS ADDENDUM D PAIRED FLOOD SALES FLOOD ANALYSIS This approach studies the relationship between sales of properties that are impacted by flood plain and/or floodway to comparable sales of properties that are not impacted by flood. This is commonly called the paired - sales technique. Paired Sale #1 - 21% Flood vs. No Flood A: W/S Riverside Dr., S of Basswood Blvd., Ft. B: NWC Fossil Creek Rd & N. Beach St,, Fort Worth, TX Worth, TX HLGL%M to cinCl E .' a r.AO ���. `" • INIII�FFF r� DRIVE ZOK E X 4 m G,9EENSTI m DHIVL J tNJ F.JS3ri- ,�q� �j- 4 ' Old Q f, d) _ @ I! � 2: Land Sale A' X 7I I rn — it Cj 21%Flood ' ' r I I I)59 �,�Ul �l �. II astern Center' Blvd I o western Center it 0,' 1 � — n llI � �r Aspen rl Land Sale B X No Flood CJ Iire I1� ` `<c j�UU f ' w� Drjn<0 Buffalo Ridge Park o Foss# Sale A Sale B Date of Sale 9/ 25/2005 Date of Sale 11/30 /2005 Land Size 7.5563 Acres Land Size 10.05 Acres 329,152 SF 437,778 SF Sale Price $522,720 Sale Price $1,550,000 Zoning/Use Residential Zoning/Use Residential Percent Flood 21 % Percent Flood None Price per Acre $69,177 Price per Acre $154,229 Price per SF $1.59 Price per SF $3.54 Difference in Price per SF 51.95 Proportional Difference 55% Comments: The sales occurred within two months of each other and are located less than one mile apart. The properties were relatively similar in size, utilities, and zoning/highest and best uses at the time of sale. The sales indicate about a 55% discount for 21 % flood on Sale A. Paired Sale 42 — 27% Flood vs. No Flood A: N/S of Bethel Rd., 220' E of Enchanted Way, B: SEC Genesis Way & Enchanted Way, Grapevine, TX Grapevine, TX ZONE X B ZONE X I ZONE X 7ONE X B -- ZONE X I ZONE X Land Sale B X No Flood Genesis Way,< i Land Sale A 27% Flood W -- -, , W Bethel Rd Cbp i Sale A Sale B Date of Sale 9/l/2004 Date of Sale 12/28/2004 Land Size 4.128 Acres Land Size 2.598 Acres 179,816 SF 113,169 SF Sale Price $490,000 Sale Price $378,000 Zoning/Use Commercial Zoning/Use Commercial Percent Flood 27% Percent Flood None Price per Acre $118,702 Price per Acre $145,497 Price per SF $2.73 Price per SF $3.34 Difference in Price per SF $0.61 Proportional Difference 18% Comments: The sales occurred within four months of each other and are located within the same block. The properties were relatively similar in size, utilities, and zoning/highest and best uses at the time of sale. The sales indicate about an 18% discount for 27% flood on Sale A. Paired Sale #3 — 28% Flood vs. No Flood A: N/S IH-20, W of S. Great Southwest Pkwy, Grand B: SWQ of SH-360 & Bardin Rd., Arlington, Prairie, TX TX 54 cLrnws a UF.'VE � I C 2 J 7 PALADIUM UH w o Z C � I Y "ish Creek 0 gc P ANGTON 4 F STUDY vn, m )rook wd r— c _ _� Dr oorurrl pr Land Sale A X 3601' 28% Flood -- _ o - - - land sale B_-`'— No Flood d Bardin kb�L' Ernie E Bardin tit $ Bardin Rd Vicki a I lata7 }Grand Prairie Clan I� ( �, C nnici9 Or 4, Ul Clat�MOok Dr Rd Sale A Sale B Date of Sale 8/5/2008 Date of Sale 6/18/2008 Land Size 57.16 Acres Land Size 32.0 Acres 2,489,890 SF 1,393,920 SF Sale Price $7,469,346 Sale Price $6,467,788 Zoning/Use Commercial Zoning/Use Commercial Percent Flood 28% Percent Flood None Size Adj ustment -5% Adjusted Price per Acre $130,674 Adjusted Price per Acre $192,012 Adjusted Price per SF $3.00 Adjusted Price per SF $4.41 Difference in Price per $1.41 Proportional Difference 32% SF Comments: The sales occurred two months apart and are situated within the same market area. The properties were relatively similar in location, utilities, and zoning/highest and best uses; however, a downward size adjustment was necessary for Sale B. The sales indicate about a 32% discount for 28% flood on Sale A. Paired Sale #4 — 31% Flood vs. No Flood A: S & SE/S of Airport Rd., E of Corbin Rd., t!n f Airport Rd. & Corbin Rd., Denton, TX Denton. TX aaq 1EI il . .� 4t DENTON �I C Y U i �'62? yfi21 P—Z NEAE N Land Sale B x )n Municipal Mo Flood Airport W Airport Rd '1515 i II a (D I G Q Rd f j •k!lAtl/tEk� oq3• jtI S�i�' or �uCOrU`JN�4fNY r U 1S�622 -52r —Z NE AE rhurary2 611 IE DENTON DJ-1 12 W Prairie St s; 14, ��' r' Safi -B5A r r x467-p - 466B U Land Sale A 31% Flood 436 U] R � L � YG willom'vood St Y CA ca C •,Y.•tl U) i' Sale A Sale B Date of Sale 7/28/2011 Date of Sale 1 Land Size 69.780 Acres Land Size 48.0 .0 A 010 Acres 3,039,617 SF 2,090,880 SF Sale Price $2,090,880 Sale Price $2,600,000 Zoning/Use Commercial/Industrial Zoning/Use Commercial/Industrial Percent Flood 31% Percent Flood None Location Adjustment -10% Adjusted Price per Acre $29,964 Adjusted Price per Acre $48,750 Adjusted Price per SF $0.69 Adjusted Price per SF $1.12 Difference in Price per SF $0.61 Proportional Difference 38% Comments: The sales occurred eight months apart and are situated adjacent to each other. The properties were similar in utilities and zoning/highest and best uses at the time of sale; however, downward size and location adjustments were necessary for Sale B as it is a 48.0 acre corner tract with superior access when compared to Sale A. The sales indicate about a 38% discount for 31% flood on Sale A. Paired Sale #5 - 50% Flood vs. 5% Flood A: S/S of SH-114, E of IH-35W, Ft. Worth, TX B: SEC of Keller -Haslet Rd. & Caylor Rd., Fort Worth, TX N Elizabethtown ;J ���, T X A S Land Sale A 50% Flood F,Ort Worth ..............c . ANia rice ....... Airport Land Sale B X ---{4042j 5% Flood 0 0 TMM MI AY S�\ITOtIIRIV0.Stkll ARMS IYAIi 1 0 o re r.......................L I I L f Mom- — 1, -Fort Worth Sale A Sale B Date of Sale 2/12/1999 Date of Sale 9/18/1998 Land Size 508.32 Acres Land Size 228 Acres 22,142,419 SF 9,931,680 SF Sale Price $3,200,000 Sale Price $3,420,000 Zoning/Use Residential Zoning/Use Residential Percent Flood 50% Percent Flood 5% Price per Acre $6,295 Price per Acre $15,000 Price per SF $0.14 Price per SF $0.34 Difference in Price per SF $0.20 Proportional Difference 55% Comments: The sales occurred within five months of each other and are similarly located; however, Sale A is situated closer to IH-35W and does have some commercial potential. The sales indicate about a 58% discount for 50% flood on Sale A when compared to 5% flood on Sale B. Paired Sale #6 — 60% Flood vs. No Flood A: E & W/S of Haltom Rd., N of IH-820, Ft. Worth, B: NEC Mark IV Pkwy & Cantrell Sansom Rd., TX Ft Worth, TX Q liiY 11V PtMR ■,.Rlll u 1 �II� •'liiir • IL?Land Sale B ., J I� �i No Flood G� r 1 Rd IL — Fort Wor 671 himilwam A j�► �— o D - �— Western Center Blvd I—t' Aspen y� X ay B I Blacl Buffalo Ridge Park O Fossil Vti Land Sale A x 60% Flood _ Creek Sandshell Dr„ Sale A Sale B Date of Sale 3/4/1999 Date of Sale 7/8/1999 Land Size 118.306 Acres Land Size 191.862 Acres 5,153,409 SF 8,357,509 SF Sale Price $1,452,460 Sale Price $4,750,000 Zoning/Use Residential Zoning/Use Residential Percent Flood 60% Percent Flood None Price per Acre $12,277 Price per Acre $24,757 Price per SF $0.28 Price per SF $0.57 Difference in Price per $0.29 Proportional Difference 50% SF Comments: The sales occurred within four months of each other and would be attractive to a similar market of buyers. The properties are generally similar in size, utilities, and location. Sale A was purchased for the cievelonment of a eolf course. The sales indicate about a 50% discount for 60% flood on Sale A. Paired Sale #7 — 66% Flood vs. No Flood A: E/S of Haltom Rd., N of IH-820, Ft. Worth, TX B: NEC Mark IV Pkwy & Cantrell Sansom Rd., Ft Worth, TX } ? rel ♦ I 1NMIir IN(.: A �� 011A Ul'M1lY it A tt \ ZONE x 1 ME X r 20NE x n 201 toNt x l Jd- �l a — ° — assw oot� ``',r Bus T E X A S i 287 'E 4JlCteaay.. v _.. ., ;�, _ _+.— auga R r4to7 Saginaw, _: ° Blue Wun Land Sale A + X T u. E6°!° Flood R R k N T o Land Sale B X No Flood I �' m d _ _ vd Kelle Rd u ort Wo Meacrlam Internation tAio.dc?. ihaf l3a Sale A Sale B Date of Sale 4/11/2005 Date of Sale 4/21/2005 Land Size 118.306 Acres Land Size 110.745 Acres 5,153,409 SF 4,824,052 SF Sale Price $850,000 Sale Price $2,615,000 Zoning/Use Residential Zoning/Use Residential Percent Flood 66% Percent Flood None Price per Acre $7,185 Price per Acre $23,613 Price per SF $0.16 Price per SF $0.54 Difference in Price per $0.25 Proportional Difference 70% SF Comments: The sales occurred within two weeks of each other. Sale A was previously acquired for the development of a golf course and was sold in 2005 for residential development. Sale B was also acquired for residential development. Sale A had water, but no sewer at time of sale while Sale B had all utilities available to the site. The sales indicate about a 70% discount for 66% flood on Sale A. Paired Sale #8 — 69% Flood vs. 2% Flood A: SEC of SH-377 & Lakeview Dr., Benbrook, TX B: SW/S Rawleigh Dr., SE of Tiger Tr., Benbrook, TX TEE zoNx a � _ ,xoNE a p ZONE %-�Z:::71 ZONE V ! % ZONE % ZONE A r % ;Tiger Trail uLake Shore Estates �°' Land Sale 6 X tr .tea ii 2% Flood •r Land Sale A X 69% Flood ___ _ 21 a Sale A Sale B Date of Sale 12/23/1999 Date of Sale 7/31/2001 Land Size 189.189 Acres Land Size 110.151 Acres 8,241,073 SF 4,798,178 SF Sale Price $473,000 Sale Price $1,100,000 Zoning/Use Residential Zoning/Use Residential Percent Flood 66% Percent Flood 2% Price per Acre $2,500 Price per Acre $9,986 Price per SF $0.06 Price per SF $0.23 Difference in Price per $0.17 Proportional Difference 75% SF Comments: The paired sales are located adjacent to each other and would be attractive to a similar market of buyers. The properties were relatively similar in size, utilities, and zoning/highest and best uses at the time of sale. The sales indicate about a 75% discount for 69% flood on Sale A when compared to 2% flood on Sale B. Paired Sale #9 — 70% Flood vs. No Flood A: South dead end of Burkett Drive, Benbrook, B: North end of Overlook Court, Cresson, TX I TX L j River Oa :7N 11,�, T. Foil Parker VVeltworth Weatherford C 0 unty 0 Ammon Park: Wol AilPod 1 4 Kidson 0 a aWlIoW rk Se�Wrniert! 2652, Du I E F", W M 28 T X Park 'V Z E J8 4) Bear_ 2071 T 41 Aledo 1=024 Land Sale A �71 , Alecf� C 70% Flood Folk Part; lake Land Sale 8 _X No Flood d 377 ield Crowley ' 13urles of) . .. .. ........... Sale A Sale B Date of Sale 8/13/2010 Date of Sale 6/28/2010 Land Size 10.9673 Acres Land Size 9.3830 Acres 477,735 SF 408,723 SF Sale Price $50,000 Sale Price $125,000 Zoning/Use Residential Zoning/Use Residential Percent Flood 70% Percent Flood 0% Price per Acre $4,559 Price per Acre $13,322 Price per SF $0.10 Price per SF $0.31 Difference in Price per $0.21 Proportional Difference 68% SF Comments: The sales occurred within two months of each other and are located approximately 12 miles apart. Both properties are heavily treed and have varying elevations. The properties were relatively similar in size, utilities, access, and zoning/highest and best uses at the time of sale. The sales indicated about a 68% discount for a 70% flood encumbrance on Land Sale A. Paired Sale #10 — 75% Flood vs. No Flood A: W of Roy Orr, at Trinity River, Grand Prairie, B: NWQ Post & Paddock and GSW, Grand Prairie, TX TX taw ■ } IIER9 as 7 . =• � - V r ... ••J W 0 o �,i1 Nl . IA.7 cow*■ I , wr .. f r. r s�,■p . CEµt j .C. 0 G 5,` IO t.. iira.,1 1ff•'S in .'• E .... n000soulae e: ,a• . nwwrt<.a .s•I• I ws.ra ..,......_.._.._.._. \ teen e0.7I ,.. ,5�', St Pail:er ty,� Rd. i II'�111 Land Sale A x ' illl 75% Flood Qkvu + i 360J uZu =P,� ,n , i _- - Land Sale 6 x Q No Flood Dr 1L IC `J Oakdale Rd irk! Avenue T Sale A Sale B Date of Sale 9/3/2002 Date of Sale 11/7/2001 Land Size 24.688 Acres Land Size 14.14 Acres 1,075,409 SF 615,938 SF Sale Price $200,000 Sale Price $1,324,035 Zoning/Use Industrial Zoning/Use Industrial Percent Flood 75% Percent Flood None Price per Acre $8,101 Price per Acre $93,638 Price per SF $0.19 Price per SF $2.15 Difference in Price per $1.96 Proportional Difference 91 SF Comments: The paired sales are located at the north end of the Great Southwest Industrial Market. Both sales were purchased for industrial development. The sales indicate about a 91 % discount for 75% flood on Sale A. Paired Sale #11 — 75% Flood vs. No Flood A: SE/S of I1-1-35, NE of Pilgrim Ln., B: McLennan County sales along I1-1-35, TX Lorena. TX _ Z10 �e Sale Price P^ Land Size 4 Y;1;f 1 oRodc Creek China Spring', 1 Land Sale D �18371— o Valley Viel No Flood 4f-'Eralfi - q--- 1 Waco Regiopal ; '+ J Airpgrt �Bosquevilil, '3051°i i (340! ll; '1Naco �Speegleville x '- '. ";IN Willow GroveA, J i� `ti3.>- n r '33g6 yf KI C L:E'N.N A I E X South A 109511, 'Bosque --- Sale A X Spring Valley 2837 Lorene' I ry Percent of Adjusted Flood Price/SF Land Sale C No Flood 1,77i Proportional Difference Mori EastWaco B 3400 ,Robinson Iil. J' Sale A $185,000 10.0 Ac., 435,600 75% Flood $0.42 SF Sale B $205,000 3.792 Ac., None $1.18 -64% 165,180 SF Sale C $743,395 14.84 Ac., None $1.15 -63% 646,430 SF Sale D $114,000 2.076 Ac., 90,431 None $1.20 -65% SF Sale E $1,251,079 16.79 Ac., None $1.71 -75% 731,503 SF Comments: This paired sales analysis consisted of comparing Sale A, a ten acre tract with 7 5% flood, to four relatively similar tracts within the same market area that were not affected by flood. Downward adjustments were necessary for Sale B and Sale D to account for their smaller sizes. After adjustments were applied, Sale A had a unit price of $0.42 per square foot, while the remaining sales ranged from $1.15 to $1.71 per square foot. The analysis indicated a discount range from 63% to 75%. For purposes of this analysis, this range has been reconciled at 67% discount for 75% flood on Sale A. Paired Sale #12 —100% Flood vs. No Flood A: W/S of US-75, S of Weston Rd., McKinney, B: W/S of US-75, N of Wilmeth Rd., McKinney, TX TX j J __7 DNE X C - :b:m. �\ COLLIN COl'N 11' UNINCORPORATED AREAS .rr 1 4BOl M1 ZONE Ate` / ( I ZONI LJ COAn i Oqq— - C.r L _J t1 + \ '275 Land Sale A _X I� 100°/o Flood -43 75' ' 5'1 II Land Sale 6 X (121: ; II1 No Flood Rd ; .'` Bloom Dale Rd � r 273 -� Sale A Sale B Date of Sale 5/9/2008 Date of Sale 9/18/2006 Land Size 12.03 Acres Land Size 9.323 Acres 524,033 SF 406,110 SF Sale Price $350,000 Sale Price $2,639,715 Zoning/Use Commercial Zoning/Use Commercial Percent Flood 100% Percent Flood None Price per Acre $29,094 Price per Acre $283,140 Price per SF $0.67 Price per SF $6.50 Difference in Price per $5.83 Proportional Difference 90% SF Comments: The paired sales occurred approximately 20 months apart; however, they are both located along SH-75. The properties had similar utilities available at time of sale. The sales indicate about a 90% discount for 100% flood on Sale A. CONCLUSION — FLOOD ANALYSIS Paired Sales Set Paired Sale A Percent Flood Paired Sale B Percent Flood Zoning/Use Discount 1 21% None Residential -55% 2 27% None Commercial -18% 3 28% None Commercial -32% q 31% None Comm./Ind. -38% 5 50% 5% Residential -55% 6 60% None Residential -50% 7 66% None Residential -70% 8 69% 2% Residential -75°/a 9 70% None Residential -68% 10 75% None Industrial -9100 11 75% None Commercial -67% 12 100% None Commercial -90% The paired sales listed above of properties with varying degrees of flood issues show a loss in value from 18% to 91%. Considering the discounts indicated by each pair above, about a 55% discount for flood seems reasonable. Cuennw rRFFK APARTMENTS ADDENDUM E INFLATION INDEX RATES AND HISTORICAL COST CALCULATIONS SHADOW CREEK APARTMENTS INDEXES AND INFLATION CALCULATIONS CPT Index (1967=100) 689.64 673.82 653.20 642.66 644.95 621.11 603.90 585.00 565.80 551.10 538.80 530.40 515.80 499.00 CPI Index % Change 1.80 % 3.20 % 1.60 % -0.40% 3.80 % 2.80 % 3.20 % 3.40% 2.70 % 2.30% 1.60 % 2.80% 3.40% 2.20% PPI index (Commodities) 195 201 185 173 190 173 165 157 147 138 131 134 133 126 PPI Index%Change -3.23% 9.80% 6.80% -8.80% 9.80% 4.80% 4.60% 7.30% 6.20% 5.30% -2.30% 1.10% 5.70% 0.90% RS Means ILstorical Cost Index 162.10 159.40 152.80 149.60 150.10 138.30 134.80 127.60 119.40 108.40 105.50 104.60 I00.90 99.90 97.60 RS Means Index / Change 1.69% 4.32% 2.14% -0.33% 8.53% 2.60% 5.64% 6.87% 10.15% 2.75% 0.86% 3.67% 1.00% 2.36% 3.28% CPI Index (1967=100) 488.30 480.80 469.90 456.50 444.00 432.70 420.30 408.00 391.40 371.40 354.30 340.40 329.40 322.20 311.10 CPT Index % Change 1.60% 2.30% 2.90% 180% 2.60% 3.00% 3.00% 4.20% 5.40% 4.80% 4.10% 3.70% 1.90% 3.60% 4.30% PPI Index (Commodities) 124 128 128 125 120 119 117 117 116 112 107 103 100 103 104 PPI Index % Change -2.50% -0.10% 2.40% 3.60% 1.30% 1.50% 0.60% 0.20% 3.70% 5.00% 4.00% 2.60% -2.90% -0.50% 2.40% RS Means Historical Cost Index 94.50 93.30 91.50 89.50 87.40 85.50 82.10 0.36% 0.36% 0.36% 75.10 1.13% 1.13 % RS Means Index % Chan a 1.29% 1.97% 2.23% 2,40% 2.22% 0.45% 0.45% 0.45% 0,36% 0.36% - -- - -- -- ----1978 1977 1976 1975 1974 1973 Aggregate Change Rates CPI Index (1967=100) 298.40 289.10 272.40 246.80 217.40 195.40 181.50 170.50 161.20 147.70 133.10 CPI 4.20 % CPI Index % Change 3.20% 6.10% 10.40% 13.50% 11.30% 7.70% 6.50% 5.80% 9.10% 11.00% 6.20% PPI 3.73 % Rs Means 4.05 % PPIlndex(Commodities) 101 100 98 90 79 70 65 61 58 54 45 PPI Index % Change 1.30% 2.00% 9.10% 14.10% 12.60% 7.70% 6.20% 4.60% 9.20% 18,90% 13.10% RS Means I-Lstorical Cost Index 57.00 40.40 33.15 RS Means Index % Change 1.13% 1.13% 1.13% 1.43 % 1.43 % 1.43 % 1.43 % 1.43 % 3.41 % 3.41 % SHADOW CREEK APARTMENTS HISTORICAL COST INDEX (RS MEANS National Texas Utah 30 City Abi- Ama- Beau- Corpus Fort San Wichita Year Average lene riilo Austin mont Christi I Dallas El Paso Worth Houston Lubbock Odessa Antonio Waco Falls Ogden Jan 2013 197.6E 135.0E 161.4E 157.1E 160.9E 154.6E 167.9E 151.5E 162.1E 171.0E 159.2E 151.9E 163.7E 156.2E 155.2E 168,0E 2012 194.0 152.5 158.6 154.3 258.2 151.8 165.2 249.1 159.4 167.8 156.6 149.1 160.1 153.8 152.9 165,E 2011 185.7 145.9 151.9 147.6 152.4 145.0 157.9 142.5 152.8 160.8 150.0 142.5 152.6 147.3 146.6 158.7 2010 181.6 144.2 150.1 144.7 150.5 142.1 155.1 140.8 149.6 157.3 148.1 140.7 147.9 145.8 145.0 157-5 2009 182.5 143.5 147.3 146.4 149.8 141.7 155.5 141.1 150.1 150.9 144.6 139.1 150.8 146.7 146.1 155.1 2008 1710 132.4 137.0 137.5 140.3 133.2 144.1 130.1 138.3 149.1 134.7 128.9 141.0 136.1 136.1 144.2 2007 165.0 128.5 132.2 131.6 137.1 128.8 138.E 125.2 134.8 146.0 130.2 ?5.0 136.4 132.1 132.1 141-_ 2006 156.2 121.6 125.7 125.5 130.1 122.0 131.1 120.3 127.6 138.2 '23,2 118.3 129.8 125.2 125.3 133.4 2005 146.7 113.8 117.3 117.9 121.3 114.4 123.7 112.5 119.4 129.0 115.5 110.5 121.3 116.1 117.3 126.0 2004 132.8 102.9 106.3 105.7 108.5 102.9 112.0 101.5 108.4 115.9 104.7 99.9 108.4 104.8 105.1 115.2 2003 129.7 100.5 104.4 103.9 106.1 100.4 109.3 99.5 105.5 113.4 102.3 97.6 104.8 102.7 103.0 112.7 2002 126.7 99.9 101.9 102.4 104.5 98.9 107.9 98.7 104.6 111.5 100.5 95.9 103.7 100.5 101.4 120.8 2001 122.2 93.4 98.4 99.8 102.3 96.6 103.8 95.5 100.9 107.8 97.6 93.4 100.5 97.8 97.3 107.7 2000 118.9 93.4 98.1 99.1 101.6 96.9 102.7 92.4 99.9 106.0 97.6 93.4 99.4 97.3 96.9 10a.6 1999 116.6 91.8 94.5 96.0 99.7 94.0 101.0 90.7 97.6 104.6 96.0 92.1 98.0 94.8 95.5 103.3 1998 113.6 89.8 92.7 94.2 97.9 91.8 97.9 88.4 94.5 101.3 93.3 90.1 94.8 92.7 1 92.9 9Q.� 1997 111.5 88.4 91.3 92.8 96.8 90.3 96.2 87.0 93.3 100.1 91.9 88.8 93.4 91.4 91.5 96.: 1996 108.9 86.8 89.6 90.9 95.3 88.5 94.1 86.7 91.5 97.9 90.2 87.1 92.3 89.7 89.9 94.1 1995 105.6 85.2 87.4 89.3 93.7 87.4 RA 85.2 89.5 95.9 88.4 85.6 88.9 86.4 86.8 92.2 1994 103.0 83.3 85.5 87.0 91.8 84.6 89.6 82.2 82.4 93.4 87.0 83.9 87.0 84.9 85 z 89.4 1993 100.0 81.4 83.4 84.9 90.0 82.8 87.8 8C.2 85.5 91.2 84.8 81.9 85.0 83.0 83.5 87.1 1990 93.2 78.0 80.1 81.3 86.5 79.3 84.5 76.7 1 82.1 85.4 81.5 78.6 80.7 79.6 80.3 83.4 1985 81.8 71.1 72.5 74.5 79.3 72.3 77.6 69.4 75.1 79.6 74.0 71.2 73.9 71.7 73.3 75.? 1980 60.7 53.4 55.2 54.5 57.6 54.5 57.0 53.1 57.0 59.4 55.6 57,2 55.0 54.9 55,4 62 " 1975 43.7 37.6 39.0 39.0 39.6 38.1 40.7 38.0 40.4 41.2 38.9 37.9 39.0 38.6 38.0 4=:.= 1970 27.8 24.5 24.9 24.9 25.7 24.5 25.5 23.7 25.9 25.4 25.1 24.6 23.3 24.8 1 24.5 2^.c 1965 21.5 18.9 19.2 19.2 19.9 18.9 19.9 19.0 19.9 20.0 19.4 19.0 18.5 19.2 18.9 2.c 1960 19.5 17.1 17.4 17.4 18.1 17.1 18.2 17.0 18.1 18.2 17.6 17.3 16.8 I7.4 17.2 15._=. 1955 16.3 14. 14.6 14.6 15.1 14.4 15.3 14.3 15.2 15.2 14:8 14.5 14.1 14.6 14.4 5 j0 13.5 11.9 12.1 12.1 12.5 11.9 12.6 11.8 12.5 12.6 12.2 12.0 11.5 12.1 11.9 �'; 8.6 7.6 7.7 7.7 8.0 7.6 8.0 7.5 8.0 8.0 7.8 7.6 7.4 7.7 7.6 ` - '-1 6.6 5.9 5.9 5.9 6.1 5.86.- irr SHADOW CREEK APARTMENTS CALCULATION OF HISTORICAL COST EXAMPLE The following rubles are the estimaled Historical Cost Indexes based on o 30-city national average with a base of 100 on January 1, 1993. The indexes may be used to: 1. Estimate and compare construction costs for different years in the same city. 2. Estimate and compare construction costs in different cities for the same year. 3. Estimate and compare construction costs in different cities for different years. 4. Compare construction trends in any city with the national average. 1. Estimate and compare construction costs for different in tEXAMPLES ears same city. y 3. Estimate and compare construction costs in different cities for different years. A. To estimate the construction cost of a building in Lexington, KY in To compare the construction cost of a building in Detroit, MI in 2013 1970, knowing that It cost $915,000 In 2013. with the known construction Cost of 55.000,000 (tx the same building 4xington. KY in 1970 = 26.9 In San Francisco, CA in 1980. hxkx IA•xilll'n1t1, KY In 10I3 = 1 -7 8 kxk'x prrnri6 III in 2111 i = 20.4.8 IIaICx 1970 x GA t 2013 ('i r411- t .11 liltkx \III Print:LKtr. of in I980 = 'S.2 - Intkx bill 26.9 Con4ntcikm Girt U) Iexington. Kl' in I')-n = .S198.i110 B. To estimate the current construction cost of a building in Boston, MA that was built in 1980 for $900,000. hldex fkrslon. ,NIA in 1980 = 611I Intkx I1,r4011, \E\ )n 2013 = 22;.! Inik'x loll X (.UM I'M _ ON Sol i irkkx I%A) 223.! \ �'NxI,IxMI = Si,111.51x1 Ctsutnw(ion Ctx.t fit ftlolon in 21)13 = St,l I I,Sllll 2. Fstimate and compare construction costs in different cities for the svne year. To compare the construction cost of a building in Topeka, KS in 2013 with the known cost of $800,00o in Baltimore, MD in 2013 Index 1lopckj, KS in 2013 = m5.2 Index Utimorc. %If) in -)(if 3 = I83.m ntdca'I'olxka x Cuq lkillinnrn = Cnsl "liryxka litckx fliliiunw e 165:2 x Srllrpx) = 5-1911IM1 183 H c'1114nKYton (arst m •I'ulxka In 2015 = S719,nni) Intkx Iknnrit 2013 x (•ust San Ilancisc'n 1%SO = Cost Will lit 2t11 i IntkX Sin Muicisiv I Jli(1 211,S,N X 55,000,00N1 _ $I:,S5n,511f1 'S 3 C in mittfon LMI in Detroit in 2013 = SI i,55U,iINI 4, Compare construction trends in any city with the national average. To compare the cons!ntction cost in Las Vegas, NV from 1975 to 2013 with the increase in the National Average during the same limo period. Index les \ rpm X\' li r N) i = 12.8 For 2013 = 205.6 Index ill 01% Axcril(r ror 1975 = 13.7 RIr 2014 = 19',G A Nattond Ai crge L-mi:linn = Index — ie City 24)11 rums W i ur 2013 Inik x — 3O (.iH ITS Nadard At crlgo t�c:datirn Inxn 19?5 to 2011 = i.52 nr oicn.ixcd Ill 35 2", It fxalatiun 1'ur L li 1trt>. V\' = hxkx l s 1iXts. I\1 201 i From 1975 W 1013 Irxlrx Ias liitx, Jl 19-5-5 245.6 2_4 I-t. \'cg:u ixalation FnnnFri ill 201i = 1.84)ortnematdh)LV)', Conclusion: Construction costs in Las Vegas are higher than National average costs and increased at a greater rate from 1975 to 2013 than the National Average.