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CHRISTIAN MANOR 325 EXECUTIVE CENTER DRIVE WEST PALM BEACH, FLORIDA 33401 CBRE GROUP, INC. FILE NO. 19-397MI-0058-1 CLIENT REFERENCE NO. 19-000121-01-1 TD BANK

APPRAISAL REPORT

CBRE VALUATION & ADVISORY SERVICES

© 2019 CBRE, Inc

VALUATION & ADVISORY SERVICES

5100 Town Center Cir. Tower II Ste. 600 Boca Raton, FL 33486-1021

T 561-394-2100 F 561-393-1650

www.cbre.com

January 31, 2019 Mr. Joe McDonald, MAI Appraisal Coordinator TD BANK 2130 Centrepark West Drive West Palm Beach, Florida 33409 RE: Appraisal of: Christian Manor 325 Executive Center Drive West Palm Beach, Palm Beach County, Florida 33401 CBRE, Inc. File No. 19-397MI-0058-1 Client Reference No. 19-000121-01-1

Dear Mr. Mcdonald:

At your request and authorization, CBRE, Inc. has prepared an appraisal of the market value of the referenced property. Our analysis is presented in the following Appraisal Report (Self-Contained).

Christian Manor apartments is an existing 200-unit senior apartment complex located in West Palm Beach. The Property was originally constructed in the early 1970s and has been owned by Christian Manor, Inc., a not for profit corporation, since the original construction. The property is comprised of four 3-story concrete block construction buildings and a large community center. There was a 236 Mortgage recorded against the Property on May 14, 1971. The 236 affordability restrictions at the Property expired on 10/1/2018. After 10/1/2018, the rents are unencumbered by any affordability restrictions other than those imposed the Property Owner, which shall be to keep rents below 120% AMI. All units at the Property are immediately eligible to increase rents. Our client requested we provide a hypothetical value of the subject applying rents at the 120% of AMI threshold; however, because the subject has been operated under the rent and income restrictions for such a long period, there is significant resistance among current tenants on fixed incomes and their ability to pay rents at or near market. Nevertheless, the tenants have been notified and management has begun increasing rents at approximately 5% and the on-site property manager reported that most tenants have been able to accept the rent increases. Furthermore, many tenants have Section 8 rent subsidy vouchers. Considering the current rental rates and concluded market rental rates of $650 for studios and $800 for one-bedroom units,

Mr. Joe McDonald, MAI January 31, 2019 Page 2

© 2019 CBRE, Inc

the 120% AMI rent limit of $1,617 for studios and $1,732 for one-bedrooms are very unlikely to be reached. As such, even as a hypothetical assumption any valuation applying the 120% AMI rent limits would not result in a credible result. Based on further discussions with our client this request for a hypothetical value was deemed not necessary.

Based on the analysis contained in the following report, the market value of the subject is concluded as follows:

MARKET VALUE CONCLUSION

Appraisal Premise Interest Appraised Date of Value Value Conclusion

As Is Leased Fee Interest January 16, 2019 $11,500,000

Compiled by CBRE

CBRE appraised the subject in a report dated April 26, 2017, CBRE File #17-397MI-0703-1. At the time of the prior appraisal the HUD rent restrictions had not ended and the owner did not have a development pro forma to increase the rents and bring the subject to stabilized market rents. Based on the information available at the time of the prior appraisal, the concluded market value was $13,700,000. Considering current market and subject rental data and having the developer’s pro forma we concluded a market value as is of $11,500,000.

The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter.

The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. It also conforms to Title XI Regulations and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) updated in 1994 and further updated by the Interagency Appraisal and Evaluation Guidelines promulgated in 2010.

The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non-intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof).

Mr. Joe McDonald, MAI January 31, 2019 Page 3

© 2019 CBRE, Inc

It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us.

Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES

Christopher G. Samson, MAI James E. Agner, MAI, AI-GRS, SGA, MRICS Vice President Senior Managing Director – Florida/Caribbean Cert Gen RZ3521 Cert Gen RZ382 www.cbre.com/chris.samson www.cbre.com/james.agner Phone: (561) 227-1800 Phone: (305) 381-6480 Fax: (561) 393-1650 Fax: (305) 381-6462 Email: [email protected] Email: [email protected]

Certification

i Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

Certification

We certify 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 or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment.

4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

5. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

6. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.

7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of Florida.

8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

10. As of the date of this report, Christopher G. Samson, MAI and James E. Agner, MAI have not completed the continuing education program for Designated Members of the Appraisal Institute.

11. Christopher G. Samson, MAI has and James E. Agner, MAI has not made a personal inspection of the property that is the subject of this report.

12. No one provided significant real property appraisal assistance to the persons signing this report.

13. Valuation & Advisory Services operates as an independent economic entity within CBRE, Inc. Although employees of other CBRE, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest.

14. Christopher G. Samson, MAI has not and James E. Agner, MAI has provided any 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.

Christopher G. Samson, MAI James E. Agner, MAI, AI-GRS, MRICS, SGA Cert Gen RZ3521 Cert Gen RZ382

Subject Photographs

ii Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

Subject Photographs

Aerial View

Subject Photographs

iii Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

Exterior Exterior

Exterior Exterior

Pool Deck Leasing Office/Community Room

Subject Photographs

iv Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

Commuity Room Community Room

Bedroom Kitchen

Studio Unit Bedroom

Subject Photographs

v Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

Bedroom Kitchen

Bathroom Community Laundry

Executive Center Drive looking north Executive Center Drive looking south

Executive Summary

vi Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

Executive Summary

Property Name

Location

Client

Client Reference Number

Highest and Best Use

As If Vacant

As Improved

Property Rights Appraised

Date of Report

Date of Inspection

Estimated Exposure Time

Estimated Marketing Time

Land Area 5.35 AC 233,142 SF

Zoning

Improvements

Property Type Apartment

Number of Buildings

Number of Stories

Gross Building Area

Net Rentable Area

Number of Units 200

Average Unit Size 506 SF

Year Built 1972 Renovated: 0

Effective Age 30 Years

Remaining Economic Life 20 Years

Condition

Buyer Profile

Financial Indicators

Current Occupancy 94.5%

Stabilized Occupancy 95.0%

Overall Capitalization Rate 6.50%

Discount Rate 8.50%

Terminal Capitalization Rate 7.25%

Pro Forma Operating Data Total Per UnitEffective Gross Income $1,727,948 $8,640

Operating Expenses $918,918 $4,595

Expense Ratio 53.18%

Net Operating Income $809,029 $4,045

(Multi-family Senior Housing)

Investor-Regional

Average

3

101,240 SF

Christian Manor

January 16, 2019

Leased Fee Interest

Apartment

Apartment

19-000121-01-1

325 Executive Center Drive, West Palm Beach, Palm Beach County, FL 33401

January 31, 2019

TD Bank

5

129,186 SF

6 Months

6 Months

MF32, Multifamily High Density Residential

Executive Summary

vii Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

VALUATION Total Per UnitSales Comparison Approach $11,500,000 $57,500

Income Capitalization Approach $11,500,000 $57,500

Insurable Value $10,000,000 $50,000

CONCLUDED MARKET VALUE

Appraisal Premise Interest Appraised Value

As Is Leased Fee Interest $11,500,000

Compiled by CBRE

Date of Value

January 16, 2019

STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT)

Strengths/ Opportunities

The subject is conveniently located to supporting transportation, employment, and supporting service linkages.

The subject is located within an established residential area. Local apartment market fundamentals reflect strong occupancies and moderate rent growth. Neighborhood demographics indicate that the area will experience moderate growth in

relation to population and households over the near term. There has been continued interest among investors for apartment projects across all property

classes. There is upside potential upon with the expired rent restrictions on September 30, 2018 with

more efficient market operations.

Weaknesses/ Threats

Current tenants and prospective future tenants are on typically on fixed income budgets which limits the extent of rental increases.

There is potential for increases in interest rates in the near term. The subject is an older complex that would typically require more maintenance and repairs.

EXTRAORDINARY ASSUMPTIONS

An extraordinary assumption is defined as “an assignment-specific assumption as of the effective

date regarding uncertain information used in an analysis which, if found to be false, could alter

the appraiser’s opinions or conclusions.” 1

None noted

1 The Appraisal Foundation, USPAP, 2018-2019

Executive Summary

viii Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

HYPOTHETICAL CONDITIONS

A hypothetical condition is defined as “a condition, directly related to a specific assignment,

which is contrary to what is known by the appraiser to exist on the effective date of the

assignment results but is used for the purposes of analysis.” 2

None noted

OWNERSHIP AND PROPERTY HISTORY

It should be noted that this office has not performed a title search, nor has a recent title search

been provided. Title to the property is currently vested in the name of Christian Manor, Inc. who

has owned the property since March 24, 1971, as recorded in Palm Beach County’s Official

Record Book 1890 /Page 1704.

The Property Owner entered into a purchase and sale agreement with TSIG-CM, LLC on January

29, 2016. The purchase price in the PSA, along with the amendment, is equal to the sum of any

unpaid balance of the mortgage loan, plus $300,000. One June 16th, 2017, the existing loans

on the property were refinanced with a loan from TD Bank, N.A. in the amount of $2,650,000,

the balance of that loan is now $2,571,000. Therefore, purchase price will be the $2,571,000

plus $300,000 to the nonprofit. The Developer has triggered its option to purchase the Property

and pursuant to the terms of the PSA is required to close on the on or before February 20, 2019.

2 The Appraisal Foundation, USPAP, 2018-2019

Executive Summary

ix Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

EXPOSURE/MARKETING TIME

Current appraisal guidelines require an estimate of a reasonable time period in which the subject

could be brought to market and sold. This reasonable time frame can either be examined

historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure

time always precedes the date of value, with the underlying premise being the time a property

would have been on the market prior to the date of value, such that it would sell at its appraised

value as of the date of value. On a prospective basis, the term marketing time is most often

used. The exposure/marketing time is a function of price, time, and use. It is not an isolated

estimate of time alone. In consideration of these factors, we have analyzed the following:

exposure periods for comparable sales used in this appraisal; exposure/marketing time information from the CBRE, Inc. National Investor Survey and the

PwC Real Estate Investor Survey; and the opinions of market participants.

The following table presents the information derived from these sources.

EXPOSURE/MARKETING TIME DATA

Exposure/Mktg. (Months)Investment Type Range Average

PwC Apartment

National Data 1 - 9 3.7

Local Market Professionals 3.0 - 6.0 4.0

CBRE Exposure Time EstimateCBRE Marketing Period Estimate

Source: CBRE National Investor Survey, RealtyRates.com Survey & PwC Real Estate Survey

6 Months

6 Months

Table of Contents

x Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

Table of Contents

Certification ......................................................................................................................... i

Subject Photographs ............................................................................................................ ii

Executive Summary ............................................................................................................. vi

Table of Contents ................................................................................................................. x

Scope of Work ..................................................................................................................... 1

Area Analysis ...................................................................................................................... 5

Neighborhood Analysis ....................................................................................................... 9

Site Analysis ...................................................................................................................... 16

Improvements Analysis ...................................................................................................... 19

Zoning .............................................................................................................................. 21

Tax and Assessment Data .................................................................................................. 23

Market Analysis ................................................................................................................. 26

Highest and Best Use ........................................................................................................ 43

Insurable Replacement Cost .............................................................................................. 45

Sales Comparison Approach ............................................................................................. 47

Income Capitalization Approach ........................................................................................ 54

Reconciliation of Value ...................................................................................................... 75

Assumptions and Limiting Conditions ................................................................................ 76

ADDENDA A Improved Sale Data Sheets B Rent Comparable Data Sheets C Operating Data D Legal Description E Client Contract Information F Qualifications

Scope of Work

1 Christian Manor, West Palm Beach, Florida © 2019 CBRE, Inc

Scope of Work

This Appraisal Report is intended to comply with the reporting requirements set forth under

Standards Rule 2 of USPAP. The scope of the assignment relates to the extent and manner in

which research is conducted, data is gathered and analysis is applied.

INTENDED USE OF REPORT

This appraisal is to be used for loan underwriting and/or credit decisions by TD Bank, N.A.

and/or affiliates, and no other use is permitted.

CLIENT

The client is TD Bank, N.A.

INTENDED USER OF REPORT

This appraisal is to be used by TD Bank, N.A. and/or affiliates and no other user may rely on our

report unless as specifically indicated in the report.

Intended Users - the intended user is the person (or entity) who the appraiser intends will use the results of the appraisal. The client may provide the appraiser with information about other potential users of the appraisal, but the appraiser ultimately determines who the appropriate users are given the appraisal problem to be solved. Identifying the intended users is necessary so that the appraiser can report the opinions and conclusions developed in the appraisal in a manner that is clear and understandable to the intended users. Parties who receive or might receive a copy of the appraisal are not necessarily intended users. The appraiser’s responsibility is to the intended users identified in the report, not to all readers of the appraisal report. 3

PURPOSE OF THE APPRAISAL

The purpose of this appraisal is to estimate the market value as is of the subject property.

DEFINITION OF VALUE

The current economic definition of market value agreed upon by agencies that regulate federal

financial institutions in the U.S. (and used herein) is as follows:

The most probable price which a property should bring in a competitive and open market under

all conditions requisite to a fair sale, the buyer and seller each acting prudently and

knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this

definition is the consummation of a sale as of a specified date and the passing of title from seller

to buyer under conditions whereby:

1. buyer and seller are typically motivated;

3 Appraisal Institute, The Appraisal of Real Estate, 14th ed. (Chicago: Appraisal Institute, 2013), 50.

Scope of Work


2. both parties are well informed or well advised, and acting in what they consider their own best interests;

3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements

comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale. 4

INTEREST APPRAISED

The value estimated represents the leased fee interest as defined below:

Fee Simple Estate - Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat. 5

Leased Fee Interest - The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires6

Leasehold Interest - The tenant’s possessory interest created by a lease. 7

Going Concern – An established and operating business having an indefinite future life. 8

Extent to Which the Property is Identified

The property is identified through the following sources:

postal address assessor’s records legal description

Extent to Which the Property is Inspected

CBRE, Inc. inspected the readily observable areas of both the interior and exterior of the subject,

as well as its surrounding environs on the effective date of appraisal. We did not inspect the roof

nor did we make a detailed inspection of the mechanical systems. We are not qualified to render

an opinion regarding the adequacy or condition of these components. The client is urged to

retain an expert in this field if detailed information is required.

This inspection sample was considered an adequate representation of the subject property and is

the basis for our findings.

4 Interagency Appraisal and Evaluation Guidelines; December 10, 2010, Federal Register, Volume 75 Number 237, Page 77472.

5 Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), 90.

6 Dictionary of Real Estate Appraisal, 128.



Scope of Work


Type and Extent of the Data Researched

CBRE reviewed the following:

applicable tax data zoning requirements flood zone status demographics income and expense data comparable data

Type and Extent of Analysis Applied

CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal

methodology to arrive at a probable value indication via each applicable approach to value. The

steps required to complete each approach are discussed in the methodology section.

Data Resources Utilized in the Analysis

DATA SOURCES

Item: Source(s):

Site DataSize Survey

Improved DataBuilding Area Rent RollNo. Bldgs. Survey and Property InspectionParking Spaces SurveyYear Built/Developed Public Records

Economic DataDeferred Maintenance: N/ABuilding Costs: MVSIncome Data: Rent Roll/Pro FormaExpense Data: Pro Forma

Compiled by CBRE

Scope of Work


APPRAISAL METHODOLOGY

In appraisal practice, an approach to value is included or omitted based on its applicability to the

property type being valued and the quality and quantity of information available.

Cost Approach

The cost approach is based on the proposition that the informed purchaser would pay no more

for the subject than the cost to produce a substitute property with equivalent utility. This approach

is particularly applicable when the property being appraised involves relatively new improvements

that represent the highest and best use of the land, or when it is improved with relatively unique

or specialized improvements for which there exist few sales or leases of comparable properties.

Sales Comparison Approach

The sales comparison approach utilizes sales of comparable properties, adjusted for differences,

to indicate a value for the subject. Valuation is typically accomplished using physical units of

comparison such as price per square foot, price per unit, price per floor, etc., or economic units

of comparison such as gross rent multiplier. Adjustments are applied to the physical units of

comparison derived from the comparable sale. The unit of comparison chosen for the subject is

then used to yield a total value. Economic units of comparison are not adjusted, but rather

analyzed as to relevant differences, with the final estimate derived based on the general

comparisons.

Income Capitalization Approach

The income capitalization approach reflects the subject’s income-producing capabilities. This

approach is based on the assumption that value is created by the expectation of benefits to be

derived in the future. Specifically estimated is the amount an investor would be willing to pay to

receive an income stream plus reversion value from a property over a period of time. The two

common valuation techniques associated with the income capitalization approach are direct

capitalization and the discounted cash flow (DCF) analysis.

Methodology Applicable to the Subject

In valuing the subject, only the sales comparison and income capitalization approaches are

applicable and have been used. In the sales comparison we used most recent open market sales

transaction found in South Florida and in the income approach we considered the existing legacy

restricted rents which were in place through September 30, 2018. However, we brought up the

income/expenses to market and applied a rent loss based on the developer’s pro form and bring

the rents up to market. The cost approach is not applicable in the estimation of market value due

to the age of the improvements and the lack of investor reliance on this approach. However, the

replacement cost was estimated within the analysis of insurable value.

Area Analysis


Area Analysis

Area Analysis


Neighborhood Analysis



LOCATION

The subject is in the city of West Palm Beach and is considered a suburban location. The city of

West Palm Beach is situated in central Palm Beach County, with the subject approximately 2.5

miles northwest of the downtown area.

BOUNDARIES

The neighborhood boundaries are detailed as follows:

North: 45th Street South: Southern Boulevard East: Florida’s Turnpike West: US Highway 1

LAND USE

Land uses within the subject neighborhood consist of a typical mixture of commercial, industrial

and residential development with single-family and multi-family residential land uses located

along most of the secondary streets, commercial and industrial land uses located along the

primary commercial arteries. The area west of the subject reflects medium to high-density

residential development with single-family and multi-family dwellings. Commercial development

in the immediate subject area and along the Okeechobee Boulevard corridor reflect a wide



variety of commercial uses inclusive of car dealerships and automotive service facilities, as well as

various retail neighborhood and strip shopping centers, restaurant and fast food establishments.

Located along the east side of I-95, just north of Palm Beach Lakes Boulevard, the Palm Beach

Outlets is an outlet mall with more than 100 stores. The original Palm Beach Mall was purchased

by a joint venture between New England Development, Eastern Real Estate, and Lubert-Adler in

October 2010 for $35.5 million. The partnership demolished the existing defunct mall at the end

of 2012 and proceeded with construction of the Palm Beach Outlets on the 80 acre site. The

estimated $200 million Palm Beach Outlets is 500,000 square feet of dining and shopping

located at the corner of Interstate 95 and Palm Beach Lakes Boulevard. The shopping center

opened in February 2014 with 100 retailers in an open rectangular area in the center of the

property. Marketplace at the Outlets opened immediately adjacent to Palm Beach Outlets along

the Interstate 95 boundary. The 300,000 square foot center features approximately 20 big box

stores including Whole Foods, Bed, Bath & Beyond, Nordstrom Rack and Old Navy.

To the east side of the mall is a cluster of office uses. This cluster is located at the intersection of

Palm Beach Lakes Boulevard and North Congress Avenue.

One of the most exciting projects within Florida is the new private railway project that will

facilitate transportation through parts of the state. All Aboard Florida's Brightline train stretches

from downtown Miami to the Orlando airport, with stops in downtown Fort Lauderdale and

downtown West Palm Beach along the way. It will utilize 195 miles of existing Florida rail lines

along the coast while adding 40 new miles inland to Orlando. Service is scheduled to begin mid

this year (2017) with travel time from Miami to downtown Fort Lauderdale taking under 30

minutes; Miami to West Palm Beach 60 minutes and Miami to Orlando taking about three hours.

The $1.5 billion private project was the idea of Florida East Coast Industries, the company that



began as Henry Flagler’s railroad. Passenger railway service running from Miami to Orlando

could reduce highway traffic congestion by approximately 3 million people annually, reducing

emissions and the carbon footprint of every rail traveler who would otherwise be driving a gas

guzzling, carbon monoxide-producing automobile. Currently, Amtrak already provides train

travel between Miami and Orlando twice a day, but its frequent stops make the trip a five-hour

adventure. FEC plans to offer hourly service and shave the travel time by two hours. In addition

the new trains will have WiFi and gourmet meal service. With the project, Florida East Coast

Industries created over 10,000 jobs on average per year through the rail line construction (mid-

2014 through mid-2017 and will create over 5,000 jobs on average per year after the rail line

construction is completed through 2021. The initial segment of the project takes the rail service

from South Florida to Orlando, but future plans include linking Tampa and Jacksonville.

The Downtown West Palm Beach station is be located less than 4-miles east of Christian Manor,

between S. Rosemary and S. Quadrille, east and west and between Datura Street and Evernia

Street, north and south. This new station will:

Connect with the neighborhood’s existing vehicular, trolley, and pedestrian networks and

establish links to the Tri-Rail and Amtrak West Palm Beach Station, creating a new

transportation hub for the West Palm Beach area.

Give travelers access to downtown West Palm Beach, as well as beaches, shopping,

wildlife sanctuaries, boat tours, botanical gardens, museums and more.

Consist of a nearly 60,000 square foot future station and platform in downtown West

Palm Beach located between Datura and Evernia Streets, with CityPlace and the Kravis

Center for the Performing Arts Center to the South, and the government center district and

Clematis Street to the North.

Create more than $164 million in economic impact for Palm Beach County through 2021

and more than 1,200 jobs in Palm Beach County through the construction of the station

and rail line.

In addition, the area west of the subject is currently in an upward stage of growth and

development as evidenced by the recent development activity occurring along the Okeechobee

Boulevard corridor. The overall subject area is considered to be positively influenced and

reasonably well located in reference to adequate labor pools, affordable housing facilities and

major highways, which provide for ease of accessibility.



ACCESS

Primary access to the subject area is provided by Interstate 95, located just west of the subject,

and the Florida Turnpike (about 15 miles west of subject), which are considered to reflect the

major thoroughfares within the overall area of Palm Beach County providing access in a

northerly/southerly direction. Access in the immediate subject neighborhood is provided via Palm

Beach Lakes Boulevard, Okeechobee Boulevard and Congress Avenue. Palm Beach Lakes

Boulevard runs from Australian Avenue in the east to Okeechobee Boulevard in the west.

Okeechobee Boulevard is a primary east/west thoroughfare providing access from Federal

Highway (US 1) to the east throughout western Palm Beach County. In addition, Congress

Avenue is a primary northerly/southerly thoroughfare providing access throughout Palm Beach

County. Additional thoroughfares providing travel in an easterly/westerly direction include

Belvedere Road and Southern Boulevard, while thoroughfares providing access in a

northerly/southerly direction include Military Trail, Haverhill Road and Australian Avenue.

DEMOGRAPHICS

Selected neighborhood demographics in from the subject are shown in the following table:

325 Executive Center DriveWest Palm Beach, FL 33401

Population

2023 Total Population 13,106 114,041 237,089




Annual Growth 2018 - 2023 1.42% 1.15% 0.99%

Annual Growth 2010 - 2018 1.85% 1.00% 0.90%

Annual Growth 2000 - 2010 0.71% 1.05% 1.08%

Households

2023 Total Households 5,218 49,089 93,962




Annual Growth 2018 - 2023 1.62% 1.25% 1.03%

Annual Growth 2010 - 2018 2.05% 0.95% 0.81%

Annual Growth 2000 - 2010 0.06% 0.88% 0.78%

Income

2018 Median Household Income $35,277 $42,687 $43,812

2018 Average Household Income $46,446 $67,228 $66,077

2018 Per Capita Income $19,667 $29,502 $26,699

2018 Pop 25+ College Graduates 1,783 22,440 41,692

Age 25+ Percent College Graduates - 2018 21.6% 29.7% 26.7%

Source: ESRI

SELECTED NEIGHBORHOOD DEMOGRAPHICS

1 Mile Radius 3 Mile Radius 5 Mile Radius



CONCLUSION

In summary, the subject is a stable, urban community with good linkages to the region. The

neighborhood exhibits moderate growth in both population and households and these growth

rates are expected to continue in the future. The neighborhood will likely continue to attract new

residents that appreciate the convenience, lifestyle and relative affordability offered by housing in

the immediate area. The subject area is considered an attractive area for business and residents

due to its proximity to major regional traffic thoroughfares and associated access to businesses in

the overall area.

Site Analysis


SURVEY

Site Analysis


FLOOD PLAIN MAP

Subject

Site Analysis


Site Analysis

The following chart summarizes the salient characteristics of the subject site.

SITE SUMMARY

Physical DescriptionGross Site Area 5.35 Acres 233,142 Sq. Ft.

Net Site Area 5.35 Acres 233,142 Sq. Ft.

Average Depth 596 Feet

Excess Land Area None n/a

Surplus Land Area None n/a

Shape

Topography

Zoning District

Flood Map Panel No. & Date 12099C0579F 5-Oct-17

Flood Zone Zone X (Unshaded)

Adjacent Land Uses

Earthquake Zone

Comparative AnalysisVisibility

Functional Utility

Traffic Volume

Adequacy of Utilities

Landscaping

Drainage

Utilities AvailabilityWater Yes

Sewer Yes

Electricity Yes

Telephone Yes

Mass Transit Yes

Other Yes No UnknownDetrimental Easements x

Encroachments x

Deed Restrictions x

Reciprocal Parking Rights x

Source: Various sources compiled by CBRE

RatingAverage

Average

Average

Irregular

Level, At Street Grade

MF32, Multifamily High Density Residential

N/A

Commercial and residential uses

Palm Beach County

City of West Palm Beach

Florida Power & Light

Multiple Carriers

Assumed adequate

Average

ProviderCity of West Palm Beach

Assumed adequate

Site Analysis


INGRESS/EGRESS

Ingress and egress is available to the site from along Executive Center Drive, which can be

accessed via Palm Beach Lakes Boulevard or North Congress Avenue.

Executive Center Drive is a local northeast/southwest thoroughfare that is improved with one

lanes of traffic in each direction. Street improvements include asphalt paving, median, and

concrete curbs, gutters and sidewalks, and street lighting.

EASEMENTS AND ENCROACHMENTS

CBRE, Inc. is not qualified to detect the existence of potentially hazardous material or

underground storage tanks which may be present on or near the site. The existence of

hazardous materials or underground storage tanks may affect the value of the property. For this

appraisal, CBRE, Inc. has specifically assumed that the property is not affected by any hazardous

materials that may be present on or near the property.

CONCLUSION

The site is a good location and affords average access and visibility from its roadway frontage.

There are no known detrimental uses in the immediate vicinity. Overall, there are no known

factors that are considered to prevent the site from development to its highest and best use, as if

vacant, or adverse to the existing use of the site.

Improvements Analysis


FLOOR PLANS




The following chart shows a summary of the improvements.

IMPROVEMENTS SUMMARY

Apartment

1972 Renovated: 0


(Multi-family Senior Housing)Property Type

Net Rentable Area

506 SF

200

5

129,186 SF

101,240 SF

3

Number of Units

Average Unit Size

Number of Buildings

Number of Stories

Gross Building Area

Year Built

37.4 Units/Acre

Parking Spaces:

0.90Parking Ratio (spaces/unit)

180

Development Density

Parking Improvements Open Asphalt

UNIT MIX

Unit Mix/Type Comments No. UnitsPercent of

TotalUnit Size

(SF) NRA (SF)

1BR/1BA Funtionally Efficient 144 72.0% 537 77,328

Efficiency Funtionally Efficient 56 28.0% 427 23,912

Total/Average: 200 100.0% 506 101,240


IMPROVEMENT DESCRIPTION & RATINGComparative Rating

Improvement Summary Description Good Avg. Fair Poor

Foundation Reinforced concrete X

Frame CBS X

Exterior Walls Painted masonry X

Interior Walls Textured and painted plasterboard X

Roof Built-up Composition (flat roofs) & Shingle (pitched roofs)

X

Ceiling Painted plasterboard X

HVAC System Wall Mounted A/C units X

Exterior Lighting Incandescent Fixtures X

Interior Lighting Ceiling mounted incandecent & fluorescent X

Flooring Linoleum tiles and carpet X

Plumbing Assumed adequate X

Elevators/Stairwells One elevator & 2 stairways per building N/A

Life Safety and Fire Protection

Smoke detectors, fire sprinklers, extinguishers in hallways

X

Amenities Pool and laundry area on each floor X

Furnishings Personal property excluded N/A

Parking Asphalt open parking X

Landscaping Grass, gravel and tropical plantings and trees

X




ECONOMIC AGE AND LIFE

CBRE, Inc.’s estimate of the subject improvements effective age and remaining economic life is

depicted in the following chart:

ECONOMIC AGE AND LIFE

Actual Age 47 Years

Effective Age 30 Years

MVS Expected Life 50 Years

Remaining Economic Life 20 Years

Accrued Physical Incurable Depreciation 60.0%

Compiled by CBRE

The remaining economic life is based upon our on-site observations and a comparative analysis

of typical life expectancies as published by Marshall and Swift, LLC, in the Marshall Valuation

Service cost guide. While CBRE, Inc. did not observe anything to suggest a different economic

life, a capital improvement program could extend the life expectancy.

CONCLUSION

The improvements are considered to be in average overall condition and are considered to be

typical for the age and location in regard to improvement design and layout, as well as interior

and exterior amenities. Overall, there are no known factors that could be considered to adversely

impact the marketability of the improvements.

Zoning


Zoning

The following chart summarizes the subject’s zoning requirements.

ZONING SUMMARYCurrent Zoning MF32, Multifamily High Density Residential

Legally Conforming No - See Comments

Uses Permitted Multifamily residential and accesory uses

Zoning Change Not likely

Category Zoning Requirement

Minimum Lot Size 20,000 Sq. Ft.

Minimum Lot Width 50 Feet

Maximum Height 40 Feet

Minimum Setbacks

Front Yard 25 Feet

Street Side Yard 15 Feet

Interior Side Yard 15 Feet

Rear Yard 15 Feet

Maximum Density 32 Units/Acre

Subject's Actual Density 37.4 Units/Acre

Source: Planning & Zoning Dept.

ANALYSIS AND CONCLUSION

The improvements represent a legally, non-conforming use, due to density being above the

maximum permitted density. However, this is typical for properties of this age and not considered

a detriment to value. If damaged, may not be restored without special permit application. It is

recommended that local planning and zoning personnel be contacted regarding more specific

information that might be applicable to the subject.

Zoning


ZONING MAP

Subject

Tax and Assessment Data



Real estate in Palm Beach County is assessed at 100% of the assessor’s estimated “Just Value”.

In arriving at just valuation as required under s. 4, Art. VII of the State Constitution, the property

appraiser shall take into consideration the following factors:

(1) The present cash value of the property, which is the amount a willing purchaser would pay a

willing seller, exclusive of reasonable fees and costs of purchase, in cash or the immediate

equivalent thereof in a transaction at arm’s length;

(2) The highest and best use to which the property can be expected to be put in the immediate

future and the present use of the property, taking into consideration the legally permissible use of

the property, including any applicable judicial limitation, local or state land use regulation, or

historic preservation ordinance, and any zoning changes, concurrency requirements, and permits

necessary to achieve the highest and best use, and considering any moratorium imposed by

executive order, law, ordinance, regulation, resolution, or proclamation adopted by any

governmental body or agency or the Governor when the moratorium or judicial limitation

prohibits or restricts the development or improvement of property as otherwise authorized by

applicable law. The applicable governmental body or agency or the Governor shall notify the

property appraiser in writing of any executive order, ordinance, regulation, resolution, or

proclamation it adopts imposing any such limitation, regulation, or moratorium;

(3) The location of said property;

(4) The quantity or size of said property;

(5) The cost of said property and the present replacement value of any improvements thereon;

(6) The condition of said property;

(7) The income from said property; and

(8) The net proceeds of the sale of the property, as received by the seller, after deduction of all

of the usual and reasonable fees and costs of the sale, including the costs and expenses of

financing, and allowance for unconventional or atypical terms of financing arrangements. When

the net proceeds of the sale of any property are utilized, directly or indirectly, in the determination

of just valuation of realty of the sold parcel or any other parcel under the provisions of this

section, the property appraiser, for the purposes of such determination, shall exclude any portion

of such net proceeds attributable to payments for household furnishings or other items of

personal property.

The assessment for real estate purposes is made as of January 1 of each year. The county

commission sets the millage rate to be used in calculating the tax bill in September or October of

each year. The Palm Beach County tax collector issues the tax bills providing for a 4% discount if



the bill is paid in November, 3% for bills paid in December, 2% for bills paid in January, and a

1% discount for February payment. All tax bills are delinquent after March 31 of each year.

Prudent management normally pays taxes in November in order to save 4% on the tax bill. In

our income projections, we have assumed the owner will take advantage of the early payment

discount. The subject’s proforma market value, assessed value, and taxes are summarized below,

and do not include any furniture, fixtures and equipment, as FF&E has been fully depreciated by

the county and has nominal value.

AD VALOREM TAX INFORMATION

Parcel Assessor's Parcel No. Parcel Description 2017 2018 Pro Forma

1 74-43-43-20-01-004-0030 $4,259,200 $4,685,120

Subtotal $4,259,200 $4,685,120 $12,300,000

Assessed Value @ 100% 100% 80%

$4,259,200 $4,685,120 $9,840,000

General Tax Rate (per $1,000 A.V.) 21.636800

General Tax: $0 $0 $212,906

Special Assessments: 21,488 20,443 20,443

Total $21,488 $20,443 $233,349

Less: 4% Discount for Early Payment $9,334

Total Taxes $21,488 $20,443 $224,015

Source: Assessor's Office

Florida law, Chapter 196, provides property tax exemption(s) to eligible not-for-profit

organizations that own and operate real estate and or tangible business property as of January

1, for the following purposes:

Religious

Charitable

Literary

Scientific

Hospitals

Nursing Homes or Homes for the Aged

The subject property is currently owned and operated by a not-for-profit, religious organization,

that provides affordable housing for senior citizens; hence it benefits from the aforementioned

exemption. For the 2015 and 2016 fiscal year the subject did not pay property taxes but, it paid

a non-ad valorem assessments levied by the City of West Palm Beach Fire Protection and the

Solid Waste Authority of Palm Beach County.



CONCLUSION

According to the buyer, the subject will be purchased by a not for profit entity and the current ad

valorem tax exemption will remain in place. Furthermore, considering the subject is currently

owned by a not for profit entity and the buyer will be another not form profit entity, it is assumed

that the typical investor/buyer of the subject would also involve a not for profit entity in order to

preserve the tax exemption. As such, we apply only the ad valorem tax to the subject.

For purposes of this analysis, CBRE, Inc. assumes that all taxes are current.

Market Analysis


Market Analysis

The market analysis forms a basis for assessing market area boundaries, supply and demand

factors, and indications of financial feasibility. Within this section, we have addressed the overall

market trends influencing the Palm Beach County apartment market, the trends occurring in the

local submarket, the apartment characteristics of the subject’s immediate area and our

projections for the near and long-term market acceptance of the subject property. The primary

data sources utilized for this analysis are Reis.com, CBRE Econometric Advisors, Real Capital

Analytics, AXIOMetrics Inc., and primary CBRE Valuation & Advisory Services data.

The subject is located within Palm Beach County within the West Palm Beach/Palm Beach

submarket and will be considered a Class C, (age-restricted) low-rise apartment community.

According to the Institute of Real Estate Management (in Income/Expense Analysis: Conventional

Apartments), the following apartment property definitions may be applicable towards the subject:

Low-Rise Projects (25 units or more): Includes walk-up buildings and elevator buildings 3 stories or less.

NATIONAL AGE-RESTRICTED MARKET ANALYSIS

The following discussion illustrates some general observations in regards to the overall

fundamentals of the subject’s property type within the multifamily sector. The primary data

sources utilized for this analysis are American Association of Homes & Services for the Aging

(AAHSA); American Health Care Association (AHCA); American Seniors Housing Association

(ASHA); Seniors Housing Business; Senior Housing HUD and CBRE Research.

To meet the needs of growing Baby Boomer population, age-restricted apartments are a new

approach being considered by many developers. ASHA defines age-restricted apartments as

“multifamily residential rental properties restricted to adults at least 55 years of age or older.

These properties cater to the “active” adult population that are downsizing from the traditional

homes and moving to be closer to their children, have walking distance amenities like shops and

restaurants and are closer to medical facilities, doctors, hospitals as well as being in a place that

offers them activities and a sense of community.

Demand Influences

Demand for seniors housing is primarily driven by people over the age 75. In the mid-term

(2010-2015) and long-term (2015-2020), the population aged 65-74 is expected to realize the

strongest growth, averaging more than four percent growth annually. This rapid acceleration is

commenced in 2010, when the baby boomers, comprising of approximately 30% of the US

population, began to reach their mid-70s, prompting yet another surge in senior housing

demand.

Market Analysis


Baby boomers are defined as

persons born between 1946

and 1964. As of 2012, this

generation accounts for

approximate 76.4 million

people, or about one-quarter of

the U.S. population.9 According

to projections detailed by the

United States Census Bureau,

the population age 65 and

older is expected to more than

double between 2012 and

2060.

As of 2010, approximately 5%

of the US population, or

roughly 19.0 million

individuals, were aged 75 years

or older. The percentage of

seniors in this age group will

continue to grow at a steady

pace for the next 10 years, at

which point, the percentage of

seniors in the age group is

projected to grow at a much

more significant rate due to the

aging of the baby boomers.

Health and Increasing Life Expectancy

An important factor contributing to the increasing demand for seniors housing is increased life

expectancy. The recent emphasis on healthy, active lifestyles has led to seniors living longer, thus

increasing the length of time they stay in a seniors housing community, as well as shaping

expectations of what senior living should be like.

9 United States Census Bureau

Market Analysis


Another important consideration in demographics for some forms of seniors housing is the

financial resources and well-being as well as the geographic residence location of seniors’ adult

children, who often participate in decision-making on behalf of their parents.

Price Sensitivity

Monthly rents for independent living averages nearly $2,700, this might include all inclusive of

meals and activities; while low-income tax credit housing can vary between $500 and $1,200 per

month depending on country location and unit size. If the average middle-market senior’s

monthly income is greater than 50% of median county income, they will most likely not qualify for

tax-credit housing, and on the flipside, their savings and/or monthly income may not be enough

to afford a full-service independent living facility.

Age-Restricted Apartment Development

Some developers are entering the age-restricted segment of multifamily to meet the growing for

this product. This product is typically being built in primary and secondary markets throughout

the country. That being said, developers have realized that their average unit count and pricing

model cannot typically compete with the unit counts and pricing models of the conventional

multifamily developer for Class A infill sites in major metro markets.

This has forced the age-restricted developer to get more creative in searching for land sites or

subsidies from the government. The developable sites tend to be just outside these major metro

markets, in the surrounding suburbs, which tend to be less expensive and sometimes have more

friendly planning and zoning departments that are eager for new development — especially

seniors housing.

New facilities are typically being built with similar specs to luxury garden-style apartments.

Amenities are designed around the active lifestyle of today’s senior — the customary coffee bars,

lounge areas, workout facilities, and movie theaters, but also indoor swimming pools, wellness

areas outfitted with massage equipment, studio space for painting and sculpting, woodworking

rooms and lounge/bar areas for happy hour events and social gatherings.

Most, if not all of the facilities, are still designing a central gathering space in the main floor of

the facility that can host meetings, dining areas for catered events, as well as facility functions

including dances or speakers.

The market for age-restricted assets is growing at a rapid pace, and investors are increasingly

entering into the age-restricted marketplace to meet this growing demand.

Market Analysis


DEMOGRAPHIC ANALYSIS

Demand for residential properties is a direct function of demographic characteristics analyzed on

the following pages.

Housing, Population and Household Formation

The following table illustrates the population and household changes for the subject

neighborhood with primary focus on the one, three and five-mile radius.

POPULATION AND HOUSEHOLD PROJECTIONS

Population





Annual Growth 2018 - 2023 1.42% 1.15% 0.99%

Annual Growth 2010 - 2018 1.85% 1.00% 0.90%

Annual Growth 2000 - 2010 0.71% 1.05% 1.08%

Households





Annual Growth 2018 - 2023 1.62% 1.25% 1.03%

Annual Growth 2010 - 2018 2.05% 0.95% 0.81%

Annual Growth 2000 - 2010 0.06% 0.88% 0.78%

Source: ESRI


As shown, the subject’s neighborhood is experiencing moderate positive increases in both

population and households.

Income Distributions

Household income available for expenditure on housing and other consumer items is a primary

factor in determining the price/rent level of housing demand in a market area. In the case of this

study, projections of household income, particularly for renters, identifies in gross terms the

market from which the subject submarket draws. The following table illustrates estimated

household income distribution for the subject neighborhood.

Market Analysis


HOUSEHOLD INCOME DISTRIBUTION

Households by Income Distribution (2018)

<$15,000 14.60% 13.87% 13.59%

$15,000 - $24,999 17.17% 11.89% 11.76%

$25,000 - $34,999 13.84% 11.90% 11.54%

$35,000 - $49,999 18.49% 15.65% 15.92%

$50,000 - $74,999 15.18% 15.81% 16.83%

$75,000 - $99,999 7.24% 9.12% 9.59%

$100,000 - $149,999 3.32% 8.07% 8.92%

$150,000 - $199,999 1.32% 3.09% 2.86%

$200,000+ 1.09% 4.59% 3.99%

Source: ESRI


The following table illustrates the median and average household income levels for the subject

neighborhood.

HOUSEHOLD INCOME LEVELS

Income

2018 Median Household Income $35,277 $42,687 $43,812

2018 Average Household Income $46,446 $67,228 $66,077

2018 Per Capita Income $19,667 $29,502 $26,699

Source: ESRI


An analysis of the income data indicates that the submarket is generally comprised of middle to

lower income economic cohort groups, which include the target groups to which the subject is

oriented.

Market Analysis


Employment

An employment breakdown typically indicates the working-class characteristics for a given market

area. The specific employment population within the indicated radii of the subject is as follows:

EMPLOYMENT BY INDUSTRY

Occupation (2018)

Agric/Forestry/Fishing/Hunting 0.23% 0.62% 0.61%

Construction 2.59% 6.13% 8.88%

Manufacturing 4.28% 3.74% 3.90%

Wholesale Trade 0.74% 1.69% 1.76%

Retail Trade 15.38% 14.27% 13.47%

Transportation/Warehousing 4.03% 3.95% 4.27%

Information 2.49% 1.96% 1.66%

Finance/Insurance 1.71% 4.04% 3.35%

Prof/Scientific/Tech Services 5.21% 6.76% 6.13%

Mgmt of Companies/Enterprises 0.00% 0.02% 0.01%

Admin/Support/Waste Mgmt Srvcs 7.21% 9.03% 9.08%

Educational Services 4.51% 6.59% 6.84%

Health Care/Social Assistance 24.68% 14.17% 14.77%

Arts/Entertainment/Recreation 2.47% 3.67% 3.15%

Accommodation/Food Services 14.76% 12.54% 11.08%

Other Services (excl Publ Adm) 4.83% 6.80% 6.86%

Public Administration 4.87% 4.05% 4.16%

Source: ESRI


The previous table illustrates the employment character of the submarket, indicating a

predominantly middle income employment profile, with the majority of the population holding

construction, retail trade, administrative/support, waste management, health care specialty,

social assistance and accommodations/food services related jobs.

Outlook

Based on this analysis, the immediate area surrounding the subject is projected to experience

moderate, positive growth relative to households and population into the near future. Given the

area demographics, it appears that demand for both comparable surrounding area apartment

units and the subject will continue to be favorable.

Market Analysis


METROPOLITAN WEST PALM BEACH METRO APARTMENT MARKET OVERVIEW

Recent Performance

The following table summarizes historical and projected performance for the overall metropolitan

West Palm Beach Metro apartment market, as defined by Axiometrics.

WEST PALM BEACH METRO APARTMENT MARKET

Year Ending

Inventory (Units)

Completions(Units)

Occupied Stock (Units) Occupancy

Effective Rent ($/Unit/Mo.)

Effective Rent Change

Net Absorption (Units)

2008 102,522 224 93,910 91.6% $1,037 -2.80% 1,3442009 103,064 542 94,613 91.8% $1,015 -3.38% 7482010 103,589 525 95,716 92.4% $1,070 3.25% 1,0712011 103,673 84 95,275 91.9% $1,091 2.10% -4192012 104,302 629 97,940 93.9% $1,161 4.38% 2,6582013 106,397 2,296 100,971 94.9% $1,220 4.05% 3,0512014 108,136 1,843 103,594 95.8% $1,345 6.25% 2,5572015 109,827 1,748 104,665 95.3% $1,428 6.65% 1,1312016 111,784 2,305 106,083 94.9% $1,456 4.08% 1,4482017 114,793 3,299 108,135 94.2% $1,487 0.95% 1,977

2018 Q1 115,414 621 108,951 94.4% $1,514 1.40% 8292018 Q2 115,852 438 109,364 94.4% $1,535 0.70% 4452018 Q3 116,329 477 109,815 94.4% $1,548 0.50% 4002018 Q4 116,804 475 110,730 94.8% $1,584 1.00% 986

2019* 117,376 572 110,920 94.5% $1,642 3.85% 1902020* 118,587 1,211 111,116 93.7% $1,676 3.00% 1962021* 120,500 1,913 113,150 93.9% $1,717 2.25% 2,0332022* 122,099 1,598 115,017 94.2% $1,774 3.45% 1,8672023* 123,950 1,852 116,513 94.0% $1,829 3.48% 1,496

* Future Projected Data according to Axiometrics

Source: Axiometrics, 4th Quarter 2018

The West Palm Beach Metro apartment market consists of approximately 116,804 units of

apartment space. Historical Inventory is indicated in the table below.

Market Analysis


Occupancy

As of 4th Quarter 2018, there was approximately 110,730 units of occupied apartment space,

resulting in an occupancy rate of 94.8% for the overall market. This reflects an increase from the

previous quarter’s occupancy of 94.4%, and an increase from an occupancy rate of 94.2% for

the same quarter last year.

Market Analysis


Net Absorption

The area experienced positive 986 units of net absorption for the current quarter. This indicates

an improvement from the previous quarter’s positive 400 units of net absorption, and indicates a

decline from the positive 1,135 units of net absorption from a year ago. Overall, the area has

experienced positive 2,660 units of net absorption for the current year-to-date period.

Market Analysis


Completions

The area had completions of positive 475 units for the current quarter, which indicates a

decrease from the previous quarter’s completions of positive 477 units, and a decrease from

completions of positive 967 units from a year ago. Overall, the area has achieved completions of

positive 2,011 units for the current year-to-date period.

Market Analysis


Effective Rent

The area achieved average effective rent of $1,584, which indicates an increase from the

previous quarter’s effective rent of $1,548, and an increase from the effective rent of $1,487

from a year ago.

SUBMARKET SNAPSHOT The following table summarizes the supply of apartment units for each submarket within the West

Palm Beach Metro market as of 4th Quarter 2018.

WEST PALM BEACH METRO SUBMARKET SNAPSHOT

SubmarketInventory

(Units)Completions

(Units)Effective Rent

($/Unit/Mo.) Occupancy

Boca Raton 21,955 270 $1,873 94.8%Boynton Beach/Delray Beach 25,799 411 $1,633 93.8%Lake Worth/Greenacres/Wellington 22,211 250 $1,313 96.3%North Palm Beach County 17,880 394 $1,668 95.2%West Palm Beach 28,959 686 $1,422 94.5%

Source: Axiometrics, 4th Quarter

Market Analysis


West Palm Beach Submarket

Important characteristics of the West Palm Beach apartment market are summarized below:

WEST PALM BEACH APARTMENT SUBMARKET

Year Ending

Inventory (Units)

Completions(Units)

Occupied Stock (Units) Occupancy

Effective Rent ($/Unit/Mo.)

Effective Rent Change

Net Absorption (Units)

2008 26,791 192 24,273 90.6% $925 -2.08% 172009 26,791 0 24,273 90.6% $878 -4.63% 132010 26,791 0 24,782 92.5% $914 1.43% 5062011 26,791 0 24,165 90.2% $914 1.00% -6162012 26,791 0 24,755 92.4% $964 3.10% 5922013 26,665 0 25,012 93.8% $1,024 6.08% 2402014 26,853 188 25,779 96.0% $1,130 6.25% 7592015 27,255 459 25,783 94.6% $1,189 5.25% 172016 28,060 805 26,517 94.5% $1,238 4.68% 7332017 28,273 503 26,379 93.3% $1,309 3.38% -147

2018 Q1 28,451 178 26,602 93.5% $1,317 1.30% 2452018 Q2 28,451 0 26,943 94.7% $1,342 1.50% 3312018 Q3 28,687 236 27,081 94.4% $1,365 0.00% 1362018 Q4 28,959 272 27,366 94.5% $1,422 0.90% 287

2019* 29,056 97 27,255 93.8% $1,473 5.45% -822020* 29,112 56 27,074 93.0% $1,503 3.60% -1592021* 29,709 597 27,689 93.2% $1,538 2.60% 6092022* 30,203 494 28,240 93.5% $1,602 4.10% 5522023* 30,619 416 28,568 93.3% $1,667 3.78% 328

*Future Projected Data according to Axiometrics

Source: Axiometrics, 4th Quarter 2018

The West Palm Beach apartment submarket consists of approximately 28,959 units of apartment

space. Historical Inventory for the market and submarket are indicated in the table below:

The current submarket inventory represents approximately 24.8% of the overall market inventory.

Market Analysis


Occupancy

As of 4th Quarter 2018, there was approximately 27,366 units of occupied apartment space,

resulting in an occupancy rate of 94.5% for the overall market. This reflects a slight increase from

the previous quarter’s occupancy of 94.4%, and an increase from an occupancy rate of 93.3%

for the same quarter last year. The subject’s current occupancy is below the 94.8% market

occupancy.

Market Analysis


Net Absorption

The area experienced positive 287 units of net absorption for the current quarter. This indicates

an improvement from the previous quarter’s positive 136 units of net absorption, and indicates

an improvement from the positive 81 units of net absorption from a year ago. Overall, the

submarket has experienced positive 999 units of net absorption for the current year-to-date

period. The submarket’s current net absorption of positive 287 units is below the overall market

net absorption of positive 986 units.

Market Analysis


Completions

The area had completions of positive 272 units for the current quarter, which indicates an

increase from the previous quarter’s completions of positive 236 units, and an increase from the

completions of positive 176 units from a year ago. Overall, the submarket has achieved

completions of positive 686 units for the current year-to-date period. The submarket's current

completions represent approximately 57.3% of the overall market completions.

Effective Rent

Market Analysis


The submarket achieved average effective rent of $1,422, which indicates an increase from the

previous quarter’s effective rent of $1,365, and an increase from the effective rent of $1,309

from a year ago. The submarket’s current effective rent of $1,422 is below the overall market

asking rent of $1,584.

COMPETITIVE PROPERTIES

Comparable properties were surveyed in order to identify the current occupancy within the

competitive market. The comparable data is summarized in the following table:

SUMMARY OF COMPARABLE APARTMENT RENTALS

Comp. No. Name Location

Distance from Subject Occupancy

1 Bella Lago Vista 710 Executive Center Drive,West Palm Beach, FL

0.3 Miles 98%

2 Royal St. George 1651 Brandywine Road,West Palm Beach, FL

1.1 Miles 94%

3 Windward At The Villages 1441 Brandywine Road,West Palm Beach, FL

1.0 Miles 96%

4 Clear Lake Palms 701 Executive Center Drive,West Palm Beach, FL

0.3 Miles 95%

5 Parc 500 Apartment Homes (fka CityView Apartments)

500 N Congress Ave,West Palm Beach, FL

0.3 Miles 96%

6 Windsor Park 55+ Apartments 1389 Summit Pines Boulevard,West Palm Beach, FL

4.6 Miles 100%

Subject Christian Manor 325 Executive Center Drive,West Palm Beach, Florida

95%

Compiled by CBRE

The majority of comparable properties surveyed reported occupancy rates of 94% or better, and

all are currently in average to good condition.

Market Analysis


SUBJECT ANALYSIS

Occupancy

Based on the foregoing analysis, CBRE, Inc.’s conclusion of stabilized occupancy for the subject is

illustrated in the following table. This estimate considers both the physical and economic factors

of the market.

OCCUPANCY CONCLUSIONS

Palm Beach County 94.8%

West Palm Beach Submarket 94.5%

Rent Comparables 96.0%

Subject's Current Occupancy 94.5%

Subject's Stabilized Occupancy 95.0%

Compiled by CBRE

Based upon the market information discussed above and the competitive market conditions in the

subject neighborhood, the subject is anticipated to maintain a long-term stabilized level.

CONCLUSION

The area apartment market is exhibiting improving occupancy levels and moderately increasing

rental rates, while maintaining favorable absorption in recent years. Considering the positive

trends in absorption, the local market area should maintain a stabilized occupancy position. The

long-term projection for the subject submarket is for continued moderate growth.

With respect to the subject property in particular, we believe the subject is well located for an

apartment project. The site is conveniently located with respect to employment centers and major

roadways, and surrounding apartment developments are experiencing average levels of demand.

Based upon our analysis, the subject property should experience average to good market

acceptance.




In appraisal practice, the concept of highest and best use represents the premise upon which

value is based. The four criteria the highest and best use must meet are:

legally permissible; physically possible; financially feasible; and maximally productive.

The highest and best use analysis of the subject is discussed below.

AS VACANT

Legal Permissibility

The legally permissible uses were discussed in the Site Analysis and Zoning Sections.

Physical Possibility

The subject is adequately served by utilities, and has an adequate shape and size, sufficient

access, etc., to be a separately developable site. There are no known physical reasons why the

subject site would not support any legally probable development (i.e. it appears adequate for

development).

Existing structures on similar sites provides additional evidence for the physical possibility of

development.

Financial Feasibility

Potential uses of the site include multifamily, apartments, single-family and townhomes. The

determination of financial feasibility is dependent primarily on the relationship of supply and

demand for the legally probable land uses versus the cost to create the uses. As discussed in the

market analysis, the subject apartment market is generally stabilized. Development of new

apartment properties has occurred in the past few years.

Maximum Productivity - Conclusion

The final test of highest and best use of the site as if vacant is that the use be maximally

productive, yielding the highest return to the land.

Based on the information presented above and upon information contained in the market and

neighborhood analysis, we conclude that the highest and best use of the subject as if vacant

would be the development of an apartment property. Our analysis of the subject and its

respective market characteristics indicate the most likely buyer, as if vacant, would be an investor

(land speculation) or a developer.



AS IMPROVED

Legal Permissibility

The site has been improved with an apartment development that is legally-nonconforming

relative to density and parking requirements, but it is legally permissible as a grandfathered use.

Physically Possible

The layout and positioning of the improvements are considered functional for apartment use.

While it would be physically possible for a wide variety of uses, based on the legal restrictions

and the design of the improvements, the continued use of the property for apartment users would

be the most functional use.

Financially Feasible

The financial feasibility of an apartment property is based on the amount of rent which can be

generated, less operating expenses required to generate that income; if a residual amount exists,

then the land is being put to a productive use. Based upon the income capitalization approach

conclusion, the subject would be producing a positive net cash flow as is turn to market rents and

continued utilization of the improvements for apartment purposes is considered financially

feasible.

Maximally Productive - Conclusion

As shown in the applicable valuation sections, buildings that are similar to the subject have been

acquired or continue to be used by apartment owners/tenants. None of the comparable buildings

have been acquired for conversion to an alternative use.

Investor-Regional

Based on the foregoing, the highest and best use of the property, as improved, is consistent with

the combined existing use as an senior housing facility and market rental apartment project with

the expiration of the HUD restrictions.

Insurable Replacement Cost



Insurable Replacement Cost is defined as follows:

1. the value of an asset or asset group that is covered by an insurance policy; can be estimated by deducting costs of noninsurable items (e.g., land value) from market value.

2. The estimated cost, at current prices as of the effective date of valuation, of a substitute for the building being valued, using modern materials and current standards, design, and layout for insurance coverage purposes guaranteeing that damaged property is replaced with new property (i.e., depreciation is not deducted). 10

CBRE, Inc. has followed traditional appraisal standards to develop a reasonable calculation

based upon industry practices and industry-accepted publications such as the Marshall Valuation

Service. The methodology employed is a derivation of the cost approach and is not reliable for

Insurable Replacement Cost estimates. Actual construction costs and related estimates can vary

greatly from this estimate.

The Insurable Replacement Cost estimate presented herein is intended to reflect the value of the

destructible portions of the subject, based on the replacement of physical items that are subject to

loss from hazards (excluding indestructible items such as basement excavation, foundation, site

work, land value and indirect costs). In the case of the subject, this estimate is based upon the

base building costs (direct costs) as obtained via the Marshall Valuation Service cost guide, with

appropriate deductions.

This analysis should not be relied upon to determine proper insurance coverage as only

consultants considered experts in cost estimation and insurance underwriting are qualified to

provide an Insurable Replacement Cost. It is provided to aid the client/reader/user as part of their

overall decision making process and no representations or warranties are made by CBRE, Inc.

regarding the accuracy of this estimate. It is strongly recommended that other sources be utilized

to develop any estimate of Insurable Replacement Cost.

10 Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), 119.



INSURABLE REPLACEMENT COST

Primary Building Type: Height per Story: 8'Effective Age: Number of Buildings: 5Condition: Gross Building Area: 129,186 SFExterior Wall: Net Rentable Area: 101,240 SFNumber of Units: Average Unit Size: 506 SFNumber of Stories: Average Floor Area: 43,062 SF

MVS Sec/Page 0 0 0 0 Sec 12, Pg 18Quality/Bldg. Class 0 0 0 0 Average/CBuilding Component 0 0 0 0 Multiple

Residents - Senior Citizen

Component Sq. Ft. 0 SF 0 SF 0 SF 0 SF 129,186 SFBase Square Foot Cost $0.00 $0.00 $0.00 $0.00 $87.00

Square Foot RefinementsHeating and Cooling $0.00 $0.00 $0.00 $0.00 $0.00Subtotal $0.00 $0.00 $0.00 $0.00 $87.00

Height and Size RefinementsNumber of Stories Multiplier 0.00 0.000 0.000 0.000 1.000Height per Story Multiplier 0.00 0.000 0.000 0.000 1.000Floor Area Multiplier 0.00 0.000 0.000 0.000 1.000Subtotal $0.00 $0.00 $0.00 $0.00 $87.00

Cost MultipliersCurrent Cost Multiplier 0.00 0.00 0.00 0.00 1.02Local Multiplier 0.00 0.00 0.00 0.00 0.97

Final Square Foot Cost $0.00 $0.00 $0.00 $0.00 $86.08

Base Component Cost $0 $0 $0 $0 $11,120,047

Base Building Cost (via Marshall Valuation Service cost data) $11,120,047

Insurable Exclusions 10.0% of Total Building Cost ($1,112,005)

Indicated Insurable Replacement Cost $10,008,042

Rounded $10,000,000

Value Per Unit $50,000

Compiled by CBRE

3200

Apartment30 YRSAverageCBS




The following map and table summarize the comparable data used in the valuation of the

subject. A detailed description of each transaction is included in the addenda.

SUMMARY OF COMPARABLE APARTMENT SALES

YOC / Property No. Avg. Unit Distance Actual Sale Adjusted Sale Price Per NOI PerNo. Property Name Type Date Reno'd Subtype Units Size from Subj Price Price 1 Unit 1 Occ. Unit OAR

1 Parkside Apartments,1210 Palm Beach Lakes BoulevardWest Palm Beach, FL 33041

Sale Sep-16 1968 Multi-unit Walk-up

78 640 1.2 Miles $6,000,000 $6,260,000 $80,256 96% $6,205 7.73%

2 Essex House,537 S. Sequoia DriveWest Palm Beach, FL 33409

Sale Oct-16 1974 Multi-unit Mid/High

Rise

156 807 1.1 Miles $15,600,000 $15,600,000 $100,000 96% $4,821 4.82%

3 Blue Heron Apartments,1500 W. Blue Heron BoulevardRiviera Beach, FL 33404

Sale Nov-17 1966 / 2017

Multi-unit Walk-up

73 887 4.7 Miles $5,775,000 $5,775,000 $79,110 100% $6,085 7.69%

4 Vizcaya Villas,1000-10163 S. Nob Hill CircleTamarac, FL 33321

Sale Jun-17 1990 Multi-unit Garden

129 601 36 Miles $12,350,000 $12,350,000 $95,736 97% $6,702 7.00%

5 Summit Palms,4491 NW 19th StreetLauderhill, FL 33313

Sale Mar-18 1974 / 2012

Multi-unit Garden

352 1,170 40 Miles $28,500,000 $28,500,000 $80,966 96% $4,656 5.75%

Subj.Pro

Forma

Christian Manor,325 Executive Center DriveWest Palm Beach, FL 33401

--- --- 1972 Multi-family Senior

Housing

200 506 --- --- --- --- 95% $3,579 ---

1 Adjusted sale price for cash equivalency, lease-up and/or deferred maintenance (where applicable)

Compiled by CBRE

Transaction



The sales utilized represent the best data available for comparison with the subject. They were

selected from our research of comparable improved sales within the South Florida area. These

sales were chosen based upon their property class, age/condition, and overall appeal.

DISCUSSION/ANALYSIS OF IMPROVED SALES

Improved Sale One

This comparable represents the current contract for a 78-unit multi-family garden property

located at 1210 Palm Beach Lakes Boulevard in West Palm Beach, Florida. The property consists

of a single, two-story wrap around apartment building. The improvements were constructed in

1968 and are situated on a 2.83-acre site. The unit mix consists of all identical two-bedroom and

one-bathroom units. Upon contract, the subject is 96.2% occupied and is considered to be in

average overall condition. The property is currently under contract from R & B Properties (seller)

to KVR Properties, LLC and or its assigns (buyer) for a purchase price of $6,000,000

($76,923/unit) and is scheduled to close on or before November 30, 2016. The buyer plans on

investing a total of $260,000 in capital improvements with an estimated final completion time of

12-months, as units turnover. The effective purchase price is $6,260,000 or $80,256 per unit.

The sale indicates a 7.73% OAR based on a pro-forma NOI of $483,991. The pro-forma NOI

includes an adjustment for increase in RE taxes and reserves for replacement allowance.

The upward market conditions (time) adjustment reflects the improved market conditions since the

date of sale. Upon comparison with the subject, this comparable was considered superior in

terms of project size and received a downward adjustment based on economies of scale. An

adjustment for avg. unit size was considered appropriate for this comparable given its larger avg.

unit size. Because of this superior trait, a downward adjustment was considered appropriate.

Overall, this comparable was deemed superior in comparison to the subject and a downward net

adjustment was warranted to the sales price indicator.

Improved Sale Two

This comparable represents the sale of Essex House Apartments, a 156-unit, Class C, garden-

style apartment community located at 537 South Sequoia Drive in West Palm Beach, Florida

33409. The property is considered an institutional grade asset. The property is situated on a 3.84

acre site and the improvements were constructed in 1974 and were in average overall condition

upon sale. Property improvements consist of six (6) two, three, and four-story apartment buildings

and one clubhouse/ leasing. The property offers five (5) distinct floor plans which include a

mixture of one and two bedroom units. The average unit size is 807 square feet. Project amenities

include: Two community swimming pools, immediate access to I-95, and numerous employers

within direct vicinity. The property sold in October 2016 for $15,600,000 ($100,000/unit) and

had a pro forma NOI of $752,066 ($4,820.94/unit); indicating a Cap Rate of 4.82%.





terms of project size and received a downward adjustment based on economies of scale. An

adjustment for avg. unit size was considered appropriate for this comparable given its larger avg.

unit size. Because of this superior trait, a downward adjustment was considered appropriate.

Overall, this comparable was deemed superior in comparison to the subject and a downward net

adjustment was warranted to the sales price indicator.

Improved Sale Three

This property is a 73-unit, 2-story walk-up apartment building located on the northeast corner of

Blue Heron Boulevard and Avenue S in Rivera Beach. The unit mix includes 1BR/1BA and

2BR/2BA units. The improvements were constructed in 1966 and the property was completely

renovated in 2017. The property was reportedly 100% occupied at the time of sale. The property

was on the market for approximately 3 months at an asking price of $7,200,000. The property

was purchased in November 2017 for $5,775,000 ($79,110/Units). Based on the stabilized

income at the time of sale, the going in capitalization rate was 7.69%



terms of project size and received a downward adjustment based on economies of scale.

Considering recent renovations, this property is rated superior for age/condition An adjustment

for avg. unit size was considered appropriate for this comparable given its larger avg. unit size.

Because of this superior trait, a downward adjustment was considered appropriate. Overall, this

comparable was deemed superior in comparison to the subject and a downward net adjustment

was warranted to the sales price indicator.

Improved Sale Four

This property is a 129-unit single-story garden style apartment complex located at 1000 S. Nob

Hill Circle in Tamarac. The improvements were constructed in 1990 and in average condition for

their age. The unit mix is predominantly comprised of one-bedroom units with limited two and

three bedroom units. The property was purchased in June 2017 for $12,350,000, or $95,736

per unit. The property was reportedly 97% occupied and the capitalization rate was 7.0%.



terms of project size and received a downward adjustment based on economies of scale.This

property was built in 1990 and is rated superior for age/condition. An adjustment for avg. unit

size was considered appropriate for this comparable given its larger avg. unit size. Because of

this superior trait, a downward adjustment was considered appropriate. Overall, this comparable

was deemed superior in comparison to the subject and a downward net adjustment was

warranted to the sales price indicator.



Improved Sale Five

This property is a 352-unit apartment complex located at 4491 NW 19th Street in Lauderhill,

Florida. The improvements consist of four, 3-story apartment buildings, built in 1974 and in

average condition for their age. Common area amenities include a pool, fitness center, laundry

facility, and playground. The occupancy at sale was reported at 96%. The property was

purchased in March 2018 for $28,500,000, or $80,966 per unit. The reported capitalization rate

at the time of sale was 5.75%, reflecting proforma income and expenses, inclusive of a tax re-

assessment and reserves allowance. According to the listing broker, the sale was subject to a low

LTV loan assumption, requiring the buyer to bring additional equity.


date of sale. Upon comparison with the subject, this comparable was considered inferior in terms

of project size and received a downward adjustment based on economies of scale. Considering

recent renovations, this property is rated superior for age/condition An adjustment for avg. unit

size was considered appropriate for this comparable given its larger avg. unit size. Because of

this superior trait, a downward adjustment was considered appropriate. Overall, this comparable

was deemed superior in comparison to the subject and a downward net adjustment was

warranted to the sales price indicator.



SUMMARY OF ADJUSTMENTS

Based on our comparative analysis, the following chart summarizes the adjustments warranted to

each comparable.

APARTMENT SALES ADJUSTMENT GRID

Comparable Number 1 2 3 4 5Subj. Pro

FormaTransaction Type Sale Sale Sale Sale Sale ---

Transaction Date Sep-16 Oct-16 Nov-17 Jun-17 Mar-18 ---

Year Built/Renovated 1968 1974 1966 / 2017 1990 1974 / 2012 1972

Property SubtypeMulti-unit Walk-

upMulti-unit

Mid/High RiseMulti-unit Walk-

upMulti-unit Garden

Multi-unit Garden

Multi-family Senior

HousingNo. Units 78 156 73 129 352 200

Avg. Unit Size 640 807 887 601 1,170 506

Actual Sale Price $6,000,000 $15,600,000 $5,775,000 $12,350,000 $28,500,000 ---

Adjusted Sale Price 1 $6,260,000 $15,600,000 $5,775,000 $12,350,000 $28,500,000 ---

Price Per Unit 1 $80,256 $100,000 $79,110 $95,736 $80,966 ---

Occupancy 96% 96% 100% 97% 96% 95%

NOI Per Unit $6,205 $4,821 $6,085 $6,702 $4,656 $4,045

OAR 7.73% 4.82% 7.69% 7.00% 5.75% ---

Adj. Price Per Unit $80,256 $100,000 $79,110 $95,736 $80,966

Property Rights Conveyed 0% 0% 0% 0% 0%Financing Terms 1 0% 0% 0% 0% 0%

Conditions of Sale 0% 0% 0% 0% 0%

Market Conditions (Time) 7% 7% 3% 5% 3%Subtotal - Price Per Unit $85,874 $107,000 $81,483 $100,523 $83,395

Location 0% 0% 0% 0% 0%

Project Size -10% -10% -10% -10% 10%

Age/Condition 0% 0% -5% -20% -10%

Quality of Construction 0% 0% 0% 0% 0%

Avg. Unit Size -10% -20% -20% -10% -25%

Project Amenities 0% 0% 0% 0% 0%

Parking 0% 0% 0% 0% 0%

Other 0% 0% 0% 0% 0%

Total Other Adjustments -20% -30% -35% -40% -25%

Indicated Value Per Unit $68,699 $74,900 $52,964 $60,314 $62,546

Absolute Adjustment 27% 37% 38% 45% 48%1 Adjusted for cash equivalency, lease-up and/or deferred maintenance (where applicable)

Compiled by CBRE

EFFECTIVE GROSS INCOME MULTIPLIER ANALYSIS

The EGIM reflects the relationship between effective gross annual income and sales price. The

following illustrates the EGIM for each of the sales analyzed herein.



EFFECTIVE GROSS INCOME MULTIPLIER ANALYSIS

Sale No. Occupancy OER EGIM

3 100% 34.00% 8.58

1 96% 42.83% 7.39

2 96% 52.71% 9.81

Subject 94% 53.18% ---

5 96% 59.62% 7.02

Compiled by CBRE

Generally speaking, as occupancy levels and expense ratios increase, EGIMs tend to decrease.

Based upon this relationship, and given the subject’s stabilized occupancy and OER estimates, an

EGIM towards the lower end of the range is appropriate.

SALES COMPARISON APPROACH CONCLUSION

The following table presents the estimated value for the subject as indicated by the sales

comparison approach.

SALES COMPARISON APPROACH

Total Units X Value Per Unit = Value

200 X $62,000 = $12,400,000

200 X $64,000 = $12,800,000Total Units X Value Per Unit = Value

EGI X EGIM = Value

$1,727,948 X 7.5 = $12,959,606

$1,727,948 X 8.5 = $14,687,554

VALUE CONCLUSION

Indicated Stabilized Value $12,500,000

Deferred Maintenance $0

Rent Loss Discount ($1,000,000)

Indicated As Is Value $11,500,000

Rounded $11,500,000


Compiled by CBRE



Deduction for Rent Loss

As later shown in the Income Capitalization section of this report, there is a significant

discrepancy between the contract rents and our concluded market rents. Any potential

buyer/investor of the subject property would account for the potential rent loss due to below

market rents. For the purpose of our analysis, we have estimated the rent loss the subject will

experience until it fully converts to an “at market” property. Based on the developer’s projected

rental increase of 5.0% per year it will take approximately nine years for the current rents to catch

up to market (grown at 2.5% per year). The table below estimates the total rent loss during the

market rent catch up period.

RENT LOSS VERSUS MARKETCurrent/Projections Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Studio $525 $551 $579 $608 $638 $670 $704 $739 $776 $814One-Bedroom $656 $689 $723 $759 $797 $837 $879 $923 $969 $1,017PGI $1,486,368 $1,560,864 $1,638,432 $1,720,128 $1,805,952 $1,896,576 $1,991,405 $2,090,975 $2,195,524 $2,305,300

MarketStudio $650 $666 $683 $700 $717 $735 $754 $773 $792 $812One-Bedroom $800 $820 $841 $862 $883 $905 $928 $951 $975 $999PGI $1,819,200 $1,864,680 $1,911,297 $1,959,079 $2,008,056 $2,058,258 $2,109,714 $2,162,457 $2,216,519 $2,271,932

Rent Loss $332,832 $303,816 $272,865 $238,951 $202,104 $161,682 $118,309 $71,482 $20,995 N/ATotal $1,723,037Discount @ 6.0% $1,001,505Rounded $1,000,000




The following map and table summarize the primary comparable data used in the valuation of

the subject. A detailed description of each transaction is included in the addenda.

SUMMARY OF COMPARABLE APARTMENT RENTALS

No. Property Name LocationYOC / Reno'd Property Subtype Occ.

No. Units

Distance from Subj

1 Bella Lago Vista 710 Executive Center Drive 1986 Condominium 98% 314 0.3 Miles

2 Royal St. George 1651 Brandywine Road 1995 Multi-unit Garden 94% 224 1.1 Miles

3 Windward At The Villages 1441 Brandywine Road 1987 Multi-unit Garden 96% 196 1.0 Miles

4 Clear Lake Palms 701 Executive Center Drive 1971 Multi-unit Garden 95% 184 0.3 Miles

5 Parc 500 Apartment Homes (fka CityView Apartments)

500 N Congress Ave 1970 Multi-unit Garden 96% 217 0.3 Miles

6 Windsor Park 55+ Apartments 1389 Summit Pines Boulevard 1999 Multi-unit Garden 100% 240 4.6 Miles

Subj. Christian Manor 325 Executive Center Drive,West Palm Beach, Florida

1972 Multi-family Senior Housing

95% 200 ---

Compiled by CBRE



The rentals utilized represent the best data available for comparison with the subject. They were

selected from our research within the greater West Palm Beach area. These comparables were

chosen based upon location, age/condition, and typical tenant base.

DISCUSSION/ANALYSIS OF RENT COMPARABLES

Rent Comparable One

This is Bella Lago Vista a condominium complex where each apartment unit is individually

owned, but with an on-site professional management and maintenance team. Since units are

individually owned, the level of amenities varies considerably from unit to unit. The complex

offers one- and two-bedroom units which are individually metered for electricity; rent includes

water, trash, sewer and maintenance. The complex was built in 1985 and contains twelve 3-story

buildings on a 9.81-acres. The property reported 98% occupancy and is in overall average

conditions.

Rent Comparable Two

This is a s a 224-unit multifamily (garden-style), property located at 1651 Brandywine Road in

West Palm Beach, Florida 33409. The property consists of eight, three-story apartment buildings

and a one-story clubhouse/leasing office building. The improvements were constructed in 1995

and are situated on a 10.39-acre site. Currently, the property is 94% occupied and is considered

to be in average overall condition.

Rent Comparable Three

This property is a 196-unit multi-family garden property located at 1441 Brandywine Road in

West Palm Beach, Florida 33409. The property consists of 12, two and three-story apartment

buildings, a 1-story leasing office / clubhouse building and a maintenance building. The

improvements were constructed in 1987, renovated in 2009 and are situated on a 11.29-acre

site. Currently, the property is 96% occupied and is considered to be in good overall condition.

Rent Comparable Four

This is a fractured condominium and 184 out of 312 units are owned and operated as rental

apartments. Water and sewer are included in the rent. Amenities include a fitness center, business

center, clubhouse, tennis court, two pools and central air-conditioning. The property is currently

95% occupied.

Rent Comparable Five

This comparable represents Parc 500 Apartment Homes (fka CityView Apartments), a 216-unit

(garden) multifamily property located at 500 N. Congress Avenue in West Palm Beach, Florida

33401. The property consists of 26, two-story apartment buildings, and a 2 story

office/clubhouse building. Amenities at the project include two a community pools with patio

areas and a laundry facility. The improvements were constructed in 1970, renovated on or about



2005 & 2011 and are situated on an 11.76-acre site. Currently, the property is 96% occupied

and is considered to be in average overall condition.

Rent Comparable Six

This property is a 240-unit garden-style apartment building located at 1389 Summit Pines

Boulevard in West Palm Beach. The community is age-restricted and has a mix of income-

restricted and market rate units. The property consists of seven, three-story apartment buildings

and a single-story clubhouse/leasing office. The improvements were constructed in 1999 and are

situated on a 15.10-acre site. The property is 100% leased.

SUBJECT RENTAL INFORMATION

The following table shows the subject’s unit mix and quoted rental rates.

SUBJECT RENTAL INFORMATION

No. of Unit Unit Quoted Rent

Type Units Size (SF) Occ. $/Unit Per SF

1BR/1BA 144 537 94% $656 $1.22

Efficiency 56 427 95% $525 $1.23 Total/Average: 200 506 SF 95% $619 $1.22

Compiled by CBRE

MARKET RENT ESTIMATE

In order to estimate the market rates for the various floor plans, the subject unit types have been

compared with similar units in the comparable projects. The following is a discussion of each

unit type.

Efficiency and One-Bedroom Units

SUMMARY OF COMPARABLE RENTALSONE BEDROOM UNITS

Rental RatesComparable Plan Type Size $/Mo. $/SF

Clear Lake Palms 1BR/1BA 753-753 SF $915 - $915 $1.22

Subject (Quoted Rent) 1BR/1BA 537 SF $656 $1.22

Subject (Quoted Rent) Efficiency 427 SF $525 $1.23

Windsor Park 55+ Apartments 1BR/1BA 733 SF $816 - $1,000 $1.24

Parc 500 Apartment Homes (fka CityView A 1BR/1BA 900 SF $1,267 $1.41

Windward At The Villages 1BR/1BA 831 SF $1,180 $1.42

Subject (Concluded Mkt.) 1BR/1BA 537 SF $800 $1.49

Bella Lago Vista 1BR/1BA 650 SF $975 $1.50

Subject (Concluded Mkt.) Efficiency 427 SF $650 $1.52

Royal St. George 1BR/1BA + Den 750 SF $1,205 $1.61

Windward At The Villages 1BR/1BA 705 SF $1,145 $1.62

Royal St. George 1BR/1BA 675 SF $1,098 $1.63

Royal St. George 1BR/1BA 576 SF $1,110 $1.93

Compiled by CBRE



We could not find enough projects that have efficiency units; therefore, we have combined both

unit types offered by the project. Considering the available data, market monthly rent for the

efficiency units is estimated at $650 per unit or $1.52 per square foot. Also, considering the

same data, monthly market rent for the one-bedroom units is estimated at $800 per unit or

$1.49 per square foot.

MARKET RENT CONCLUSIONS

The following chart shows the market rent conclusions for the subject:

MARKET RENT CONCLUSIONS

No. Unit Monthly Rent Annual Rent AnnualUnits Unit Type Size Total SF $/Unit $/SF PRI $/Unit $/SF Total

144 1BR/1BA 537 77,328 SF $800 $1.49 $115,200 $9,600 $17.88 $1,382,400

56 Efficiency 427 23,912 SF $650 $1.52 $36,400 $7,800 $18.27 $436,800

Compiled by CBRE

RENT ADJUSTMENTS

Rent adjustments are sometimes necessary to account for differences in rental rates applicable to

different units within similar floor plans due to items such as location within the property, view,

and level of amenities. These rental adjustments may be in the form of rent premiums or rent

discounts. In the case of the subject, rent adjustments are not required.

RENT ROLL ANALYSIS

The rent roll analysis serves as a crosscheck to the estimate of market rent for the subject. The

collections shown on the rent roll include rent premiums and/or discounts.

RENT ROLL ANALYSIS

Total TotalRevenue Component Monthly Rent Annual Rent

189 Occupied Units at Contract Rates $117,900 $1,414,800

11 Vacant Units at Market Rates $8,350 $100,200

200 Total Units @ Contract Rent $126,250 $1,515,000200 Total Units @ Market Rent $151,600 $1,819,200

Indicated Loss-to-Lease 16.7%

Compiled by CBRE

The significant variation between the total annual rent reflected in the rent roll analysis and the

market rent conclusion will be adjusted for as rent loss.

POTENTIAL RENTAL INCOME CONCLUSION

Within this analysis, potential rental income is estimated based upon the forward-looking market

rental rates over the next twelve months.



OPERATING HISTORY

The following table presents available operating data for the subject.

OPERATING HISTORY

Year-Occupancy Pro FormaCBRE

Estimate

Total $/Unit Total 2 $/UnitIncome

Net Rental Income $1,397,186 $6,986 $1,692,948 $8,465Other Income 36,652 183 35,000 175 Effective Gross Income $1,433,838 $7,169 $1,727,948 $8,640

ExpensesReal Estate Taxes $22,080 $110 $22,080 $110Property Insurance 139,200 696 120,000 600 Utilities 453,219 2,266 300,000 1,500 Administrative & General 49,930 250 50,000 250 Repairs & Maintenance 123,328 617 120,000 600 Management Fee ¹ 78,861 394 51,838 259 Payroll 189,048 945 200,000 1,000 Advertising & Promotion 3,260 16 5,000 25 Replacement Reserves - - 50,000 250 Operating Expenses $1,058,926 $5,295 $918,918 $4,595

Net Operating Income $374,912 $1,875 $809,029 $4,045

¹ (Mgmt. typically analyzed as a % of EGI) 5.5% 3.0%

Source: Operating statements

94.0%96.0%

LOSS TO LEASE

Within the local market, buyers and sellers typically recognize a reduction in potential rental

income due to the difference between market and contract rental rates. In this market, lease

rates are typically flat and are anticipated to roll to market every 3-6 months on average. As a

result, actual collections typically lag behind market rates. Based upon the difference between

market rent and contract rent, the loss to lease associated with the subject is estimated at 1.00%

of gross rental income. This method of calculating rental income is most prevalent in the local

market and is consistent with the method used to derive overall capitalization rates from the

comparable sales data.

CONCESSIONS

Rent concessions are currently not prevalent in the local market nor are they present at the

subject.



VACANCY

The subject’s estimated stabilized occupancy rate was previously discussed in the market analysis.

The subject’s vacancy is detailed as follows:

VACANCY

Year Total % PGI

Pro Forma -$89,182 6%

Current ----- 6%

CBRE Estimate -$90,050 5%

Compiled by CBRE

CREDIT LOSS

The credit loss estimate is an allowance for nonpayment of rent or other income. The subject’s

credit loss is detailed as follows:

CREDIT LOSS

Year Total % PGI

Pro Forma N/A

CBRE Estimate -$18,010 1.0%

Compiled by CBRE

OTHER INCOME

Other income is supplemental to that derived from leasing of the improvements. This includes

categories such as forfeited deposits, vending machines, late charges, etc. The subject’s income

is detailed as follows:

OTHER INCOME

Year Total $/Unit

Pro Forma $36,652 $183

CBRE Estimate $35,000 $175

Compiled by CBRE

The primary source of other income is laundry and miscellaneous fees. Our estimate is consistent

with other properties operating in the area and generally supported by the available budgeted

financial data.



EFFECTIVE GROSS INCOME

The subject’s effective gross income is detailed as follows:

EFFECTIVE GROSS INCOME

Year Total $/Unit

Pro Forma $1,433,838 $7,169

CBRE Estimate $1,727,948 $8,640

Compiled by CBRE

OPERATING EXPENSE ANALYSIS

Expense Comparables

The following chart summarizes expenses obtained comparable properties.

EXPENSE COMPARABLES

Comparable Number 1 2 3 Subject

Location Palm Beach Co. Palm Beach Co. Palm Beach Co. West Palm Beach,

No. Units 160 404 180 200

Expense Year 2018 Budget 2017 2017 Pro Forma

Revenues $/Unit $/Unit $/Unit $/UnitNet Rental Income $11,723 $16,449 $15,621 $8,465

Other Income 1,158 - 894 175

Effective Gross Income $12,881 $16,449 $16,515 $8,640

Expenses

Real Estate Taxes $737 $1,672 $2,300 $110

Property Insurance 549 340 494 600

Utilities 952 861 658 1,500

Administrative & General 432 197 360 250

Repairs & Maintenance 807 240 876 600

Management Fee ¹ 434 658 496 259

Payroll 1,425 1,265 1,504 1,000

Advertising & Promotion 16 30 204 25

Other 482 - - -

Replacement Reserves - - - 250

Operating Expenses $5,835 $5,264 $6,892 $4,595

Operating Expense Ratio 45.3% 32.0% 41.7% 53.2%¹ (Mgmt. typically analyzed as a % of EGI) 3.4% 4.0% 3.0% 3.0%

Compiled by CBRE

A discussion of each expense category is presented on the following pages.



Real Estate Taxes

The comparable data and projections for the subject are summarized as follows:

REAL ESTATE TAXES

Year Total $/Unit

Pro Forma $22,080 $110

Expense Comparable 1 N/A $737

Expense Comparable 2 N/A $1,672



Compiled by CBRE

As previously discussed, the subject is owned and operated by a not for profit entity and the buyer

will also be a not for profit entity and the ad valorem taxes will continue to be exempt. Only the

non-ad valorem taxes are charged.

Property Insurance

Property insurance expenses typically include fire and extended coverage and owner’s liability

coverage. The comparable data and projections for the subject are summarized as follows:

PROPERTY INSURANCE

Year Total $/Unit

Pro Forma $139,200 $696





Compiled by CBRE

The subject’s projected insurance expense is above the range indicated by the market data. As

such, we apply an insurance expense at $600 per unit.



Utilities

Utility expenses include electricity, natural gas, water, trash and sewer. The comparable data

and projections for the subject are summarized as follows:

UTILITIES

Year Total $/Unit

Pro Forma $453,219 $2,266




CBRE Estimate $300,000 $1,500

Compiled by CBRE

This budgeted expense is significantly higher than market-based expense comparables. A utilities

expense of $1,500 is applied.

Administrative & General

Administrative expenses typically include legal costs, accounting, telephone, supplies, furniture,

temporary help and items that are not provided by off-site management. The comparable data

and projections for the subject are summarized as follows:

ADMINISTRATIVE & GENERAL

Year Total $/Unit

Pro Forma $49,930 $250





Compiled by CBRE

The budgeted administrative and general expenses are within the range of the comparable data.

As such, we project this expense at $250 per unit.



Repairs and Maintenance

Repairs and maintenance expenses typically include all outside maintenance service contracts

and the cost of maintenance and repairs supplies. The comparable data and projections for the

subject are summarized as follows:

REPAIRS & MAINTENANCE

Year Total $/Unit

Pro Forma $123,328 $617





Compiled by CBRE

The budgeted repairs and maintenance expenses are within the range of the comparable data.


Management Fee

Management expenses are typically negotiated as a percentage of collected revenues (i.e.,

effective gross income). The comparable data and projections for the subject are summarized as

follows:

MANAGEMENT FEE

Year Total % EGI

Pro Forma $78,861 5.5%

CBRE Estimate $51,838 3.0%

Compiled by CBRE

Professional management fees in the local market range from 3.0% to 5.0%. Given the subject’s

size and the competitiveness of the local market area, we believe an appropriate management

expense for the subject would be towards the lower end of the range.



Payroll

Payroll expenses typically include all payroll and payroll related items for all directly employed

administrative personnel. Not included are the salaries or fees for off-site management firm

personnel and services. The comparable data and projections for the subject are summarized as

follows:

PAYROLL

Year Total $/Unit

Pro Forma $189,048 $945





Compiled by CBRE

The subject’s budgeted payroll expense is slightly below the expense comparable data. As such,

we project payroll expenses at $1,000 per unit.

Advertising and Promotion

Advertising and promotion expenses typically include all costs associated with the promotion of

the subject including advertisements in local publications, trade publications, yellow pages, et

cetera. The comparable data and projections for the subject are summarized as follows:

ADVERTISING & PROMOTION

Year Total $/Unit

Pro Forma $3,260 $16





Compiled by CBRE

The budgeted advertising and promotion expenses are within the range of the comparable data.


Reserves for Replacement

Reserves for replacement have been estimated based on market parameters. The comparable

data and projections for the subject are summarized as follows:

REPLACEMENT RESERVES

Year Total $/Unit


Compiled by CBRE



OPERATING EXPENSE CONCLUSION


OPERATING EXPENSES

Year Total $/Unit

Pro Forma $1,058,926 $5,295





Compiled by CBRE

NET OPERATING INCOME CONCLUSION


NET OPERATING INCOME

Year Total $/Unit

Pro Forma $374,912 $1,875


Compiled by CBRE

Our projected NOI is significantly higher than the pro forma because we applied market rents

and a lower, market supported management fee of 3.0% versus 5.0% in the developer’s budget.

DIRECT CAPITALIZATION

Direct capitalization is a method used to convert a single year’s estimated stabilized net operating

income into a value indication. The following subsections represent different techniques for

deriving an overall capitalization rate.

Comparable Sales

The overall capitalization rates (OARs) confirmed for the comparable sales analyzed in the sales

comparison approach are as follows:

COMPARABLE CAPITALIZATION RATES

Sale Sale Price

Sale Date $/Unit Occupancy Buyer's Primary Analysis OAR1 Sep-16 $80,256 96% Pro Forma (Stabilized) 7.73%2 Oct-16 $100,000 96% Pro Forma (Stabilized) 4.82%3 Nov-17 $79,110 100% Trailing Actuals 7.69%4 Jun-17 $95,736 97% Pro Forma (Stabilized) 7.00%5 Mar-18 $80,966 96% Pro Forma (Stabilized) 5.75%

Indicated OAR: 94% 4.82%-7.73%

Compiled by: CBRE



The overall capitalization rates for these sales were derived based upon the pro-forma income

characteristics of the property. We placed equal emphasis on each sale in concluding our overall

capitalization rate, as all were relatively recent and reflective of current market trends. Overall,

each of these sales shows a similar tenancy structure with regard to stability and property class,

when compared with the subject.

Published Investor Surveys

The results of the most recent investor surveys are summarized in the following chart.

OVERALL CAPITALIZATION RATES

Investment Type OAR Range Average

CBRE Suburban Apartments (Palm Beach County)

Class A 4.50% - 5.00% 4.75%

Class B 4.75% - 5.50% 5.13%

Class C 6.00% - 6.50% 6.25%

CBRE Apartments

Class A 4.38% - 5.59% 4.80%

Class B 4.84% - 6.06% 5.27%

Class C 5.48% - 7.33% 6.06%

RERC (Situs)

Apartments - Southeast 3rd Tier 6.00% - 9.80% 7.90%

PwC Apartment

National Data 3.50% - 8.50% 5.23%

Indicated OAR: 6.00% - 7.00%

Compiled by: CBRE

The subject is considered to be a Class C property. Because of the subject’s location and age an

OAR near the middle end of the range indicated in the preceding table is considered

appropriate.

Market Participants

The results of recent interviews with knowledgeable real estate professionals are summarized in

the following table.

OVERALL CAPITALIZATION RATES

Respondent Company OAR Income Date of Survey

Beth Walker Keyes Company 6.50%-7.00% Stabilzied 1st Q 2019

Evan Kristol Marcus & Millichap 5.50%-6.50% Stabilzied 1st Q 2019

Indicated OAR: 5.50%-7.00%

Compiled by: CBRE



Band of Investment

The band of the investment technique has been utilized as a crosscheck to the foregoing

techniques. The Mortgage Interest Rate and the Equity Dividend Rate (EDR) are based upon

current market yields for similar investments. The analysis is shown in the following table.

BAND OF INVESTMENT

Mortgage Interest Rate 5.00%

Mortgage Term (Amortization Period) 30 Years

Mortgage Ratio (Loan-to-Value) 75%

Mortgage Constant (monthly payments) 0.06442

Equity Dividend Rate (EDR) 8.00%

Mortgage Requirement 75% x 0.06442 = 0.04832

Equity Requirement 25% x 0.08000 = 0.02000

100% 0.06832

Indicated OAR: 6.80%

Compiled by: CBRE

Capitalization Rate Conclusion

The following chart summarizes the OAR conclusions.

OVERALL CAPITALIZATION RATE - CONCLUSION

Source Indicated OAR

Comparable Sales 4.82%-7.73%

Published Surveys 6.00% - 7.00%

Market Participants 5.50%-7.00%

Band of Investment 6.80%

CBRE Estimate 6.50%

Compiled by: CBRE

In concluding an overall capitalization rate for the subject, primary reliance has been placed

upon the data obtained from the comparable sales and interviews with active market

participants. This data tends to provide the most accurate depiction of both buyer’s and seller’s

expectations within the market and the ranges indicated are relatively tight. Further secondary

support for our conclusion is noted via both the CBRE National Investor Survey and the band of

investment methodology. Considering the data presented, the concluded overall capitalization

rate appears to be well supported in the local market.



Deduction for Rent Loss

As later shown in the Income Capitalization section of this report, there is a significant

discrepancy between the contract rents and our concluded market rents. Any potential

buyer/investor of the subject property would account for the potential rent loss due to below

market rents. For the purpose of our analysis, we have estimated the rent loss the subject will

experience until it fully converts to an “at market” property. Based on the developer’s projected

rental increase of 5.0% per year it will take approximately nine years for the current rents to catch

up to market (grown at 2.5% per year). The table below estimates the total rent loss during the

market rent catch up period.

RENT LOSS VERSUS MARKETCurrent/Projections Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Studio $525 $551 $579 $608 $638 $670 $704 $739 $776 $814One-Bedroom $656 $689 $723 $759 $797 $837 $879 $923 $969 $1,017PGI $1,486,368 $1,560,864 $1,638,432 $1,720,128 $1,805,952 $1,896,576 $1,991,405 $2,090,975 $2,195,524 $2,305,300

MarketStudio $650 $666 $683 $700 $717 $735 $754 $773 $792 $812One-Bedroom $800 $820 $841 $862 $883 $905 $928 $951 $975 $999PGI $1,819,200 $1,864,680 $1,911,297 $1,959,079 $2,008,056 $2,058,258 $2,109,714 $2,162,457 $2,216,519 $2,271,932

Rent Loss $332,832 $303,816 $272,865 $238,951 $202,104 $161,682 $118,309 $71,482 $20,995 N/ATotal $1,723,037Discount @ 6.0% $1,001,505Rounded $1,000,000



Direct Capitalization Summary

A summary of the direct capitalization is illustrated in the following chart.

DIRECT CAPITALIZATION SUMMARY

Income $/Door/Mo. $/Unit/Yr Total Potential Rental Income $758 $9,096 $1,819,200Loss to Lease 1.00% (8) (91) (18,192)

Adjusted Rental Income $750 $9,005 1,801,008 Vacancy 5.00% (38) (450) (90,050) Credit Loss 1.00% (8) (90.05) (18,010)

Net Rental Income $705 $8,465 $1,692,948

Other Income 15 35,000

Effective Gross Income $720 $8,640 $1,727,948

ExpensesReal Estate Taxes $1,120 $22,080Property Insurance 600 120,000 Utilities 1,500 300,000 Administrative & General 250 50,000 Repairs & Maintenance 600 120,000 Management Fee 3.00% 259 51,838 Payroll 1,000 200,000 Advertising & Promotion 25 5,000 Replacement Reserves 250 50,000

Operating Expenses $4,595 $918,918

Operating Expense Ratio 53.18%

Net Operating Income $4,045 $809,029

OAR ÷ 6.50%

Indicated Stabilized Value $12,446,601

Rounded $12,400,000

Deferred Maintenance -

Rent Loss (1,000,000)

Indicated As Is Value $11,446,601

Rounded $11,400,000


Compiled by CBRE



DISCOUNTED CASH FLOW ANALYSIS (DCF)

The DCF assumptions for the subject are summarized as follows:

SUMMARY OF DISCOUNTED CASH FLOW INPUT

General

Start Date Jan-19Terms of Analysis 10 YearsSoftware Excel

Growth Rates Income Growth (Yr. 1) 2.50%

Income Growth (Yr. 2) 2.50%Income Growth (Yr. 3) 2.50%Income Growth (Yr. 4) 2.50%Income Growth (Yrs. 5-10) 2.50%

Expense Growth (Yr. 1) 2.00%Expense Growth (Yr. 2) 2.00%Expense Growth (Yr. 3) 2.00%Expense Growth (Yr. 4) 2.00%Expense Growth (Yrs. 5-10) 2.00%

Inflation (CPI - Yr. 1) 2.00%Inflation (CPI - Yr. 2) 2.00%Inflation (CPI - Yr. 3) 2.00%Inflation (CPI - Yr. 4) 2.00%Inflation (CPI - Yrs. 5-10) 2.00%

Real Estate Tax Growth (Yr. 1) 2.00%Real Estate Tax Growth (Yr. 2) 2.00%Real Estate Tax Growth (Yr. 3) 2.00%Real Estate Tax Growth (Yr. 4) 2.00%Real Estate Tax Growth (Yrs. 5-10) 2.00%

Market Rates - Year 1Average Rent ($/Unit/Yr.)

Total Operating Expenses ($/Unit/Yr.) $4,595

Occupancy Current Occupancy 94.50%Stabilized Occupancy 95.00%Credit Loss 1.00%Stabilized Occupancy (w/Credit Loss) 94.00%Loss to Lease 1.0%Concessions 0.0%

Financial

Discount Rate 8.50%Terminal Capitalization Rate 7.25%

Other

Cost of Sale 2.00%

Compiled by CBRE

Provided on the following pages is a discussion of additional assumptions used in the discounted

cash flow analysis.



General Assumptions

The DCF analysis utilizes a 10-year projection period. This is consistent with current investor

assumptions.

Growth Rate Assumptions

Published investor surveys are shown below.

SUMMARY OF GROWTH RATES

Investment Type Rent Expenses Inflation

U.S. Bureau of Labor Statistics (CPI-U)10-Year Snapshot Average as of Dec-18 1.80%

PwC Apartment

National Data 2.41% 2.73% n/a

CBRE Estimate 2.50% 2.00% 2.00%

Compiled by: CBRE

Leasing Assumptions

The previously concluded pro forma income and expenses have been utilized as the basis for

Year 1 of the holding period. All subsequent years vary according to the growth rate assumptions

applied to the Year 1 estimate.

Occupancy Assumptions

For purposes of this analysis, CBRE has used downtime between leases to derive a vacancy

estimate.

Financial Assumptions

DISCOUNT RATE ANALYSIS

The results of the most recent investor surveys are summarized in the following chart.

DISCOUNT RATES

Investment Type Rate Range Average

PwC Apartment

National Data 5.25% - 10.00% 7.20%

RERC (Situs)

Southeast 3rd Tier Market 8.00% - 10.00% 8.80%

CBRE Estimate 8.50%

Compiled by: CBRE

The subject is considered to be a Class C property. Because of the subject’s age and location, a

discount rate near the middle to upper end of the range indicated in the preceding table is

considered appropriate.



TERMINAL CAPITALIZATION RATE

The reversionary value of the subject is based on an assumed sale at the end of the holding

period based on capitalizing the Year 11 NOI at a terminal capitalization rate.

TERMINAL CAPITALIZATION RATES

Investment Type Rate Range Average

RERC (Situs)

Southeast 3rd Tier Market 6.20% - 9.50% 7.70%

PwC Apartment

National Data - OAR 3.50% - 8.50% 5.23%

National Data - Residual OAR 4.00% - 8.50% 5.57%

Spread: Basis Points (BP) 50 - 0 34

Concluded BP Spread 75

CBRE Estimate 7.25%

Compiled by: CBRE

Discounted Cash Flow Conclusion

The DCF schedule(s) and value conclusions are depicted on the following page(s).



CHRISTIAN MANORDISCOUNTED CASH FLOW ANALYSIS

BEGINNING 01/19

YEAR 1 2 3 4 5 6 7 8 9 10 Reversion

RevenuePotential Rental Income $1,819,200 $1,864,680 $1,911,297 $1,959,079 $2,008,056 $2,058,257 $2,109,713 $2,162,456 $2,216,517 $2,271,930 $2,328,728Loss to Lease (18,192) (18,647) (19,113) (19,591) (20,081) (20,583) (21,098) (21,625) (22,166) (22,720) (23,288)Adjusted Rental Income $1,801,008 $1,846,033 $1,892,184 $1,939,489 $1,987,976 $2,037,675 $2,088,617 $2,140,832 $2,194,353 $2,249,212 $2,305,442Vacancy & Credit Loss (108,060) (110,762) (113,531) (116,369) (119,279) (122,261) (125,317) (128,450) (131,661) (134,953) (138,327)Other Income 35,000 35,875 36,772 37,691 38,633 39,599 40,589 41,604 42,644 43,710 44,803

Effective Gross Income $1,727,948 $1,771,146 $1,815,425 $1,860,811 $1,907,330 $1,955,013 $2,003,889 $2,053,986 $2,105,336 $2,157,969 $2,211,918

ExpensesReal Estate Taxes $22,080 $22,113 $22,146 $22,180 $22,215 $22,250 $22,286 $22,323 $22,361 $22,399 $22,438Property Insurance 120,000 122,400 124,848 127,345 129,892 132,490 135,140 137,843 140,600 143,412 146,280Utilities 300,000 306,000 312,120 318,362 324,729 331,224 337,848 344,605 351,497 358,527 365,698Administrative & General 50,000 51,000 52,020 53,060 54,121 55,203 56,307 57,433 58,582 59,754 60,949Repairs & Maintenance 120,000 122,400 124,848 127,345 129,892 132,490 135,140 137,843 140,600 143,412 146,280Management Fee 51,838 53,134 54,463 55,824 57,220 58,650 60,117 61,620 63,160 64,739 66,358Payroll 200,000 204,000 208,080 212,242 216,487 220,817 225,233 229,738 234,333 239,020 243,800Advertising & Promotion 5,000 5,100 5,202 5,306 5,412 5,520 5,630 5,743 5,858 5,975 6,095Replacement Reserves 50,000 51,000 52,020 53,060 54,121 55,203 56,307 57,433 58,582 59,754 60,949

Total Expenses $918,918 $937,147 $955,747 $974,724 $994,089 $1,013,847 $1,034,008 $1,054,581 $1,075,573 $1,096,992 $1,118,847

Net Income $809,030 $833,999 $859,678 $886,087 $913,241 $941,166 $969,881 $999,405 $1,029,763 $1,060,977 $1,093,071

Input:Income Growth N/A 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Vacancy & Credit Loss Allowance 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% Tax Expense Growth N/A 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%Op. Expense Growth N/A 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%Management Fee 3.00%Cost of Sale 2.00%

EGI, EXPENSES, AND NOI Sale / Yield Matrix

Terminal Cap Rate7.00% 7.25% 7.50%

IRR8.25% 12,979,292 12,740,456 12,517,5428.50% 12,750,732 12,517,343 12,299,5138.75% 12,527,364 12,299,285 12,086,411

Reconciled Value Indication: $12,517,343

Rent Loss: ($1,000,000)

As-Is Value Indication (Rounded): $11,500,000

$57,500/Unit

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

1 2 3 4 5 6 7 8 9 10Year

EGI Total Expenses NOI



CONCLUSION OF INCOME CAPITALIZATION APPROACH

The conclusions via the valuation methods employed for this approach are as follows:

INCOME CAPITALIZATION APPROACH VALUESDirect Capitalization Method $11,400,000

Discounted Cash Flow Analysis $11,500,000

Reconciled Value $11,500,000

Compiled by CBRE

Primary emphasis has been placed on the discounted cash. This method is considered to best

reflect the actions of buyers and sellers considering the unique nature of the subject’s operation

and transition to market rents.

Reconciliation of Value


Reconciliation of Value

The value indications from the approaches to value are summarized as follows:

SUMMARY OF VALUE CONCLUSIONSSales Comparison Approach $11,500,000

Income Capitalization Approach $11,500,000

Reconciled Value $11,500,000

Compiled by CBRE

In the sales comparison approach, the subject is compared to similar properties that have been

sold recently or for which listing prices or offers are known. The sales used in this analysis are

considered comparable to the subject, and the required adjustments were based on reasonable

and well-supported rationale. In addition, market participants are currently analyzing purchase

prices on investment properties as they relate to available substitutes in the market. Therefore,

the sales comparison approach is considered to provide a reliable value indication but has been

given secondary emphasis in the final value reconciliation.

The income capitalization approach is applicable to the subject since it is an income producing

property leased in the open market. Market participants are primarily analyzing properties based

on their income generating capability. Therefore, the income capitalization approach is

considered a reasonable and substantiated value indicator and has been given primary emphasis

in the final value estimate.

Based on the foregoing, the market value of the subject has been concluded as follows:

MARKET VALUE CONCLUSION

Appraisal Premise Interest Appraised Date of Value Value Conclusion

As Is Leased Fee Interest January 16, 2019 $11,500,000

Compiled by CBRE

Assumptions and Limiting Conditions



1. CBRE, Inc. through its appraiser (collectively, “CBRE”) has inspected through reasonable observation the subject property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil and the entire interior and exterior of the improvements on the subject property. Therefore, no representation is made as to such matters.

2. The report, including its conclusions and any portion of such report (the “Report”), is as of the date set forth in the letter of transmittal and based upon the information, market, economic, and property conditions and projected levels of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon the purchasing power of the U.S. Dollar on such date. The Report is subject to change as a result of fluctuations in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events or conditions which occur subsequent to such date.

3. Unless otherwise expressly noted in the Report, CBRE has assumed that:

(i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE has not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subject property) and makes no representations regarding title or its limitations on the use of the subject property. Insurance against financial loss that may arise out of defects in title should be sought from a qualified title insurance company.

(ii) Existing improvements on the subject property conform to applicable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. CBRE appraisers are not engineers and are not qualified to judge matters of an engineering nature, and furthermore structural problems or building system problems may not be visible. It is expressly assumed that any purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems.

(iii) Any proposed improvements, on or off-site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices.

(iv) Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property.

(v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no air or development rights of value may be transferred. CBRE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report.

(vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value of the subject property.

(vii) All required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be readily obtained or renewed for any use on which the Report is based.

(viii) The subject property is managed and operated in a prudent and competent manner, neither inefficiently or super-efficiently.

(ix) The subject property and its use, management, and operation are in full compliance with all applicable federal, state, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, and licenses.

(x) The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to assess the subject property’s compliance with the ADA, notwithstanding any discussion of possible readily achievable barrier removal construction items in the Report.



(xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property nor reviewed or confirmed the accuracy of any legal description of the subject property.

Unless otherwise expressly noted in the Report, no issues regarding the foregoing were brought to CBRE’s attention, and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the Report. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions regarding the foregoing, or for any expertise or knowledge required to discover them. Any user of the Report is urged to retain an expert in the applicable field(s) for information regarding such conditions.

4. CBRE has assumed that all documents, data and information furnished by or behalf of the client, property owner, or owner’s representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and information include, without limitation, numerical street addresses, lot and block numbers, Assessor’s Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report. Accordingly, if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report.

5. CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or information not provided to CBRE, including without limitation any termite inspection, survey or occupancy permit.

6. All furnishings, equipment and business operations have been disregarded with only real property being considered in the Report, except as otherwise expressly stated and typically considered part of real property.

7. Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predictions of the future. Actual results are affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic, market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections.

8. The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort, terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole purpose of providing the intended user with CBRE’s independent professional opinion of the value of the subject property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of CBRE to buy, sell, hold, or finance the subject property.

9. No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters.

10. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance.

11. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Report. It is the responsibility of the user of the Report to read in full, comprehend and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any situation arising out of the user’s failure to become familiar with and understand the same.

12. The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests.



13. The allocations of the total value estimate in the Report between land and improvements apply only to the existing use of the subject property. The allocations of values for each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use.

14. The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report.

15. The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall not be published, in whole or in part, in any public document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user.

Addenda

ADDENDA

Addenda

Addendum B

IMPROVED SALE DATA SHEETS

Addenda

Addendum C

RENT COMPARABLE DATA SHEETS

Addenda

Addendum D

OPERATING DATA

Addenda

Addendum E

LEGAL DESCRIPTION

Addenda

Addendum F

CLIENT CONTRACT INFORMATION

Addenda

Addendum G

QUALIFICATIONS

Addenda

CHRISTOPHER G. SAMSON, MAI Valuation & Advisory Services +1 561 227 1804 [email protected] JAMES E. AGNER, MAI Valuation & Advisory Services +1 305 381 6480 [email protected] www.cbre.com

CBRE VALUATION & ADVISORY SERVICES

APARTMENT SELF-CONTAINED FORMAT: 05.01.18

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Transcript of APARTMENT SELF-CONTAINED FORMAT: 05.01.18