VALUATION REPORT

Transcription

VALUATION REPORT

VALUATION REPORT
GLENBROOK COMMONS
4122 Lima Road
Fort Wayne, Allen County, Indiana 46805
CBRE, Inc. File No. 13-164CH-0855
Eyal Bartov
Chief Financial Officer
AVIV ARLON LTD
Moshe Aviv Tower, 47th Floor
7 Jabotinsky Street
Ramat Gan, Israel 52520
101 W. Washington Street, Suite 1000 E
Indianapolis, IN 46204
T (317) 269-1110
F (317) 637-4404
www.cbre.com
24 May, 2013
Mr Eyal Bartov, CFO
Aviv Arlon Ltd.
7 Jabotinsky St. Ramt Gan
Israel
To Whom It May Concern
RE: Appraisal for Glenbrook Commons
We understand that the appraisals carried out by our firm dated April 13, 2013 ("Appraisal Report")
will be used by Aviv Arlon Ltd. (“Aviv Arlon”) for the preparation of its quarterly financial statements for
the first quarter of 2013.
We consent to the use of our Appraisal Report in Aviv Arlon financial statements and to its publication
should Aviv Arlon be required to do so. However, we take no responsibility or liability for any
misrepresentation of the appraisal information in the financial statements or any other publication for
public disclosure.
Best regards,
Christopher Jarvis, MAI
VALUATION & ADVISORY SERVICES
101 W. Washington Street, Suite 1000 E
T (317) 269-1110
F (317) 637-4404
www.cbre.com
April 30, 2013
Eyal Bartov
Chief Financial Officer
AVIV ARLON LTD
7 Jabotinsky Street
Ramat Gan, Israel 52520
RE:
Appraisal of Glenbrook Commons
4122 Lima Road
Fort Wayne, Allen County, Indiana 46805
CBRE File No 13-164CH-0855
Dear Mr. Bartov:
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 Self-Contained Appraisal Report.
The subject property is a community retail center built in 1987 and renovated in 2006 and known as
Glenbrook Commons. The development is situated in the southeast quadrant of Lima Road and W.
Coliseum Boulevard in the northern portion of Fort Wayne, Allen County, Indiana. The common
street address is 4122 Lima Road. The center features 254,112 square feet and anchored with
several credited tenants. The center also includes junior anchor and inline retail space. The subject
site comprises a total of 24.21-acres and is 94.3% leased. Glenbrook Commons is adjacent to the
Glenbrook Square Regional Mall and shares a common access point with the retailer. The subject is
further described within the contents of this report.
MARKET VALUE CONCLUSION
Appraisal Premise
Interest Appraised
Date of Value
Value Conclusion
As Is
Leased Fee Interest
March 30, 2013
$15,300,000
Compiled by CBRE
Data, information, and calculations leading to the value conclusion are incorporated in the report
following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an
integral part of, and inseparable from, this letter.
April 30, 2013
Page 2
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, our interpretation of the guidelines
and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP),
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 is specifically named in our report as agreed upon in our
contract for services and/or reliance language found in 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 nonclient, non-intended users does not extend reliance to any other party and CBRE will not be
responsible for unauthorized use of the report, it’s conclusions or contents used partially or in its
entirety.
It has been a pleasure to assist you in this assignment. If you have any questions concerning the
analysis, or if CBRE, Inc. can be of further service, please contact us.
Respectfully submitted,
CBRE - VALUATION & ADVISORY SERVICES
Christopher E. Jarvis, MAI
Vice President
State Certified General Real Estate Appraiser
State of Indiana License No. CG40901182
Expires: 06/30/2014
Phone: 317-269-1110
Fax:
317-637-4404
Email: Christopher.jarvis@cbre.com
Les J. Linder, MAI, CCIM
Managing Director
State Certified General Real Estate Appraiser
Expires: 06/30/2014
Phone: 312-233-8680
Fax:
312-233-8660
Email: les.linder@cbre.com
GLENBROOK COMMONS | C ERTIFICATION OF THE A PPRAISAL
CERTIFICATION OF THE APPRAISAL
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 Indiana.
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 E. Jarvis, MAI and Les J. Linder, MAI, CCIM have
completed the continuing education program of the Appraisal Institute.
11. Christopher E. Jarvis, MAI has and Les J. Linder, MAI, CCIM 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. Although
employees of other CBRE 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 E. Jarvis, MAI and Les J. Linder, MAI, CCIM have both provided real estate related
services on this property on November 10, 2010. Otherwise, no other in the three years prior to
accepting this assignment.
Les J. Linder, MAI, CCIM
i
GLENBROOK COMMONS | S UBJECT P HOTOGRAPHS
SUBJECT PHOTOGRAPHS
AERIAL VIEW
ii
TYPICAL VIEW OF THE SUBJECT (FUTURE BURLINGTON SUITE)
TYPICAL VIEW OF THE SUBJECT
iii
TYPICAL VIEW OF THE PARKING AREA
TYPICAL INTERIOR VIEW OF THE SUBJECT
iv
VIEW OF THE ANCHORS
VIEW OF THE REAR ELEVATION
v
VIEW SOUTH ON LIMA ROAD
VIEW NORTH ON LIMA ROAD
vi
GLENBROOK COMMONS | S UMMARY OF S ALIENT F ACTS
SUMMARY OF SALIENT FACTS
Property Name
Glenbrook Commons
Location
4122 Lima Road, Fort Wayne, Allen County,
Indiana 46805
Assessor’s Parcel Number
02-07-26-128-009-000-073
Highest and Best Use
As If Vacant
To hold for future retail development
As Improved
Retail
Property Rights Appraised
Leased Fee Interest
Land Area
24.21 AC
1,054,588 SF
Improvements
(Neighborhood/Community Center)
Property Type
Retail
Number of Buildings
2
Number of Stories
1
Gross Leasable Area
254,112 SF
Year Built
1987
Condition
Average
Renovated
Major Tenants
45,495 SF
Toys R Us
12 Months
Estimated Exposure Time
Financial Indicators
Current Occupancy
94.3%
Stabilized Occupancy
95.0%
Stabilized Credit Loss
2.0%
Overall Capitalization Rate
8.75%
Discount Rate - As Is
9.50%
Terminal Capitalization Rate
9.00%
Total
Pro Forma Operating Data
Effective Gross Income
Operating Expenses
Expense Ratio
Per SF
$2,229,219
$8.77
$661,483
$2.60
29.67%
Net Operating Income
$1,567,736
vii
$6.17
VALUATION
Total
Market Value As Is On
Sales Comparison Approach
Per SF
March 30, 2013
$15,300,000
$60.21
Income Capitalization Approach
$15,300,000
$60.21
Insurable Value
$18,950,000
$74.57
CONCLUDED MARKET VALUE
Appraisal Premise
As Is
Interest Appraised
Date of Value
Leased Fee Interest
March 30, 2013
Value
$15,300,000
Compiled by CBRE
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT)
Strengths and weaknesses are internal to the subject; opportunities & threats are external to the
subject
Strengths
o
The subject property is very well located along an established traffic carrier
within a neighborhood shopping destination. Specifically, the subject is in
close proximity to Glenbrook Square Regional Mall.
o
The subject is currently anchored by two credited tenants.
Weaknesses
o
The subject’s submarket indicates occupancy and rental rates have declined
over the past five years.
Opportunities
o
Demand for most retail products is expected to modestly increase over the next
three to five years.
o
The weakened overall economy has contributed to depressed levels of
consumer spending; and
o
The current political environment is placing additional uncertainty in the
market
Threats
viii
GENERAL ASSUMPTIONS
A general assumption is defined as “an assumption directly related to a specific assignment, which, if
found to be false, could alter the appraiser’s opinions or conclusions. General assumptions presume
as fact otherwise uncertain information about physical, legal, or economic characteristics of the
subject property; or about conditions external to the property such as market conditions or trends; or
about the integrity of data used in an analysis.”
1
We have made the assumption the recently agreed commercial terms regarding new leases will
transpire as described within this report since they are appear to be in range with the market
comparables according to our analysis.
HYPOTHETICAL CONDITIONS
A hypothetical condition is defined as “that which is contrary to what exists but is supposed for the
purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about
physical, legal, or economic characteristics of the subject property; or about conditions external to the
property, such as market conditions or trends; or about the integrity of data used in an analysis.”
None noted.
1
Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010), 73.
2
Dictionary of Real Estate Appraisal, 97.
ix
2
GLENBROOK COMMONS | T ABLE OF C ONTENTS
TABLE OF CONTENTS
CERTIFICATION OF THE APPRAISAL .............................................................................................i SUBJECT PHOTOGRAPHS .......................................................................................................... ii SUMMARY OF SALIENT FACTS.................................................................................................. vii TABLE OF CONTENTS ................................................................................................................ x INTRODUCTION ...................................................................................................................... 1 AREA ANALYSIS ......................................................................................................................... 7 NEIGHBORHOOD ANALYSIS .................................................................................................. 10 MARKET ANALYSIS .................................................................................................................. 14 SITE ANALYSIS ........................................................................................................................ 44 IMPROVEMENTS ANALYSIS ...................................................................................................... 48 ZONING ................................................................................................................................ 53 TAX AND ASSESSMENT DATA .................................................................................................. 54 HIGHEST AND BEST USE ......................................................................................................... 56 APPRAISAL METHODOLOGY ................................................................................................... 58 SALES COMPARISON APPROACH ............................................................................................ 59 INCOME CAPITALIZATION APPROACH .................................................................................... 69 RECONCILIATION OF VALUE .................................................................................................. 98 ASSUMPTIONS AND LIMITING CONDITIONS .......................................................................... 99 ADDENDA
A Glossary of Terms B Improved Sale Data Sheets C Rent Comparable Data Sheets D Précis METRO Report - Economy.com, Inc. E Qualifications x
GLENBROOK COMMONS | I NTRODUCTION
INTRODUCTION
PROPERTY IDENTIFICATION
The subject property is a community retail center built in 1987 and renovated in 2006 and known as
Glenbrook Commons. The development is situated in the southeast quadrant of Lima Road and W.
Coliseum Boulevard in the northern portion of Fort Wayne, Allen County, Indiana. The common
street address is 4122 Lima Road. The center features 254,112 square feet and anchored with
several credited tenants. The center also includes junior anchor and inline retail space. The subject
site comprises a total of 24.21-acres and is 94.3% leased. Glenbrook Commons is adjacent to the
Glenbrook Square Regional Mall and shares a common access point with the retailer. The subject is
further described within the contents of this report.
OWNERSHIP AND PROPERTY HISTORY
Title to the property is currently vested in the name of Bon Aviv Investments who purchased the
property in January 2013 for $5,750,000 or $22.63 per square foot from Capmark Financial Group
as a distressed property. At the time of the purchase the subject had been only been roughly 40%
occupied. Since the purchase the new owners’ have signed the two large anchors and two junior
anchor tenants for an aggregate total of 156,443 square feet or 61.56% of the center. We are
aware our value is well above the most recent purchase; however, we do not consider the prior sale
“Arms Length” as well as we have supported our concluded value with recent sales and rents.
Prior to the most recent sale, HRI/Glenbrook Commons, LLC who purchased the property in June
2004 for $18,250,000 or $71.82 per square foot according to the Allen County Auditor.
Reportedly, in 2006 the subject underwent $3,000,000 in renovations to the buildings, signage and
parking area. However, in 2008 both Steve & Berry and Linen’s N Things both filed for bankruptcy,
on top of a very soft retail market the center spiral to its current vacancy rate.
To the best of our knowledge, there has been no other ownership transfer of the property during the
previous three years and not currently marketed for sale.
PREMISE OF THE APPRAISAL
The following table illustrates the various dates associated with the valuation of the subject, the
valuation premise(s) and the rights appraised for each premise/date:
1
PREMISE OF THE APPRAISAL
Item
Date
Interest Appraised
Date of Report:
April 30, 2013
Date of Inspection:
April 17, 2013
Dates of Value
As Is:
March 30, 2013
Leased Fee Interest
Compiled by CBRE
PURPOSE OF THE APPRAISAL
The purpose of this appraisal is to estimate the market value of the subject property. 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;
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
3
creative financing or sales concessions granted by anyone associated with the sale.
TERMS AND DEFINITIONS
The Glossary of Terms in the Addenda provides definitions for additional terms that are, and may be
used in this appraisal.
INTENDED USE OF REPORT
This appraisal is to be used to provide information for use in Financial Reporting Purposes, and no
other use is permitted.
3
Office of Comptroller of the Currency (OCC), 12 CFR Part 34, Subpart C – Appraisals, 34.42 (g); Office of Thrift
Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal
Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as
the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP).
2
INTENDED USER OF REPORT
This appraisal is to be used by for the use and benefit of, and may be relied upon by, Aviv Arlon LTD,
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. 4
SCOPE OF WORK
The scope of the assignment relates to the extent and manner in which research is conducted, data is
gathered and analysis is applied, all based upon the following problem-identifying factors stated
elsewhere in this report:







Client
Intended use
Intended user
Type of opinion
Effective date of opinion
Relevant characteristics about the subject
Assignment conditions
This appraisal of the subject has been presented in the form of a Self-Contained Appraisal Report,
which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of
USPAP. That is, this report incorporates, to the fullest extent possible, practical explanation of the
data, reasoning and analysis that were used to develop the opinion of value. This report also includes
thorough descriptions of the subject and the market for the property type. CBRE completed the
following steps for this assignment:
4
Appraisal Institute, The Appraisal of Real Estate, 13th ed. (Chicago: Appraisal Institute, 2008), 132.
3
Data Resources Utilized in the Analysis
RESOURCE VERIFICATION
Source/Verification:
Allen County
Allen County/Inspection
Improved Data
Gross Size/Units
Allen County
Net Size/Units
Rent Roll/Lease
Area Breakdown/Use
Rent Roll/Lease
No. Bldgs.
Inspection
YOC
Allen County
Economic Data
Deferred Maintenance:
Inspection
Income Data:
Rent Roll/Lease
Expense Data:
Operating History
Site Data
Size
Excess/Surplus
Compiled by CBRE
Extent to Which the Property is Identified
CBRE collected the relevant information about the subject from the owner (or representatives), public
records and through an inspection of the subject property.
The property was legally identified
through the following sources:



postal address
assessor’s records
legal description
Economic characteristics of the subject were identified via:



analysis of leases and/or lease briefs between the lessor and lessee
recent rent roll
historical operating statements
Extent to Which the Property is Inspected
CBRE inspected both the interior and exterior of the subject, as well as its surrounding environs on the
effective date of appraisal. This included the following:

a representation of the tenant suites
Type and Extent of the Data Researched
CBRE reviewed the micro and/or macro market environments with respect to physical and economic
factors relevant to the valuation process. This process included interviews with regional and/or local
market participants, available published data, and other various resources. CBRE also conducted
regional and/or local research with respect to the following:
4






applicable tax data
zoning requirements
flood zone status
demographics
income and expense data
comparable data
Type and Extent of Analysis Applied
CBRE 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. CBRE then
correlated and reconciled the results into a reasonable and defensible value conclusion, as defined
herein. A reasonable exposure time associated with the value estimate presented has also been
considered.
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 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 INFORMATION
Investment Type
Exposure/Mktg. (Months)
Range
Average
Comparable Sales Data
3.0
-
2.0
- 18.0
7.5
6.0
- 12.0
9.0
9.0
6.0
PwC Power Center
National Data
Local Market Professionals
CBRE Exposure Time Estimate
12 Months
Source: CBRE National Investor Survey & Korpacz Real Estate Investor Survey
5
In general, the improved sales indicate exposure times in the upper end of the range indicated by the
investor survey. In addition to the sales and survey data, we have also reviewed the assumptions and
conclusions reached, particularly the income estimates and rates of return and the potential impact on
exposure/marketing time. Based on these analyses, we have concluded an exposure/marketing time
of 12 months or less would be considered reasonable for the subject.
This exposure/marketing time reflects current economic conditions, current real estate investment
market conditions, the terms and availability of financing for real estate acquisitions, and property and
market-specific factors.
It assumes that the subject is (or has been) actively and professionally
marketed. The marketing/exposure time would apply to all valuation premises included in this report.
6
GLENBROOK COMMONS | A REA A NALYSIS
AREA ANALYSIS
LOCATION
The subject property is in Fort Wayne, Allen County, Indiana. The city of Fort Wayne is in northeast
Indiana and is both the county seat and geographic center of Allen County.
The Fort Wayne
Metropolitan Statistical Area (MSA) consists of Grant and Allen County.
Moody’s Economy.com provides the following Fort Wayne, IN metro area economic summary as of
Feb-13. The full Moody’s Economy.com report is presented in the Addenda.
FORT WAYNE, IN - ECONOMIC ANALYSIS
Indicators
Gross Metro Product (C$B)
% Change
Total Employment (000)
% Change
Unemployment Rate
Personal Income Growth
Population (000)
Single-Family Permits
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
16.7
17.0
17.4
16.8
15.7
16.7
17.3
17.7
17.9
18.5
19.1
2.1
2.0
2.1
-3.3
-6.8
6.4
3.8
2.2
1.4
3.2
3.5
19.6
2.4
213.8
217.2
217.7
214.7
201.2
201.3
205.8
215.0
215.9
219.9
225.2
229.4
1.0
1.6
0.2
-1.4
-6.3
0.1
2.2
4.5
0.4
1.8
2.4
1.8
5.1
4.9
4.7
6.0
10.7
10.3
9.0
7.7
7.1
6.5
5.9
5.6
1.7
6.4
4.2
1.8
-4.4
2.6
5.5
5.6
3.7
7.2
7.3
6.2
403.2
406.8
410.2
412.1
414.4
416.7
419.4
420.9
423.8
426.7
429.6
432.5
2,056.0
1,376.0
1,070.0
771.0
764.0
809.0
721.0
706.4
944.9
1,775.7
2,006.7
1,985.6
Multifamily Permits
485.0
212.0
45.0
245.0
120.0
76.0
22.0
516.2
114.4
134.6
132.8
125.2
Existing-Home Price ($Ths)
101.6
99.8
96.5
92.4
92.6
98.1
93.0
104.9
108.1
110.1
114.2
117.5
1,803.7
1,601.4
1,397.7
1,193.8
2,068.8
1,657.0
1,159.0
1,650.3
1,228.0
804.3
800.1
879.4
0.1
0.9
0.5
-1.2
-0.5
-0.4
0.1
-1.2
0.1
0.0
0.0
0.0
4,989.0
1,518.0
2,200.0
2,679.0
3,393.0
3,163.0
2,741.0
2,616.0
2,144.9
2,070.7
2,182.8
2,229.4
Mortgage Originations ($Mil)
Net Migration (000)
Personal Bankruptcies
Source: Moody's Economy.com
7
RECENT PERFORMANCE
After a strong showing during the first half of 2012, Fort Wayne's recovery is slowing. Payrolls in
private services such as professional/business have lost ground in recent months, and goodsproducing industries have been unable to pick up the slack. Factory employment is now trending
slightly lower. Moreover, workers exited the labor force in the second half of last year as employment
slumped. On the bright side, residential permits are rising. The median house price and sales are also
on the upswing, according to the Indiana Association of Realtors.
MANUFACTURING
Manufacturing was the key recovery driver, but payrolls are losing ground and a quick turnaround is
unlikely. Although national auto sales remain strong, General Motors' truck sales are unable to keep
pace. GM recently began offering hefty discounts in an effort to drain its large inventory of Silverado
and Sierra pickups, both of which are produced at its Allen County plant. The excess supply will
impede hiring not only at GM's operation but also among parts suppliers that cater to the plant.
However, this is likely to be only a short-term constraint to growth. Other longer-term drags stem from
federal policy uncertainty and the winding down of war in the Middle East. Fort Wayne is one of the
state's largest defense contractors, and its share of procurement dollars relative to GDP is significant.
Companies such as Raytheon and ITT have trimmed payrolls in recent years, and even if jobs remain
intact amid sequestration, expansion will be hindered.
GROWTH BARRIERS
Fort Wayne's reliance on manufacturing will make it difficult for the metro area to keep pace with the
nation in the longer term. Although right-to-work legislation and a declining state corporate income
tax rate create upside potential for manufacturing investment and hiring, factory payrolls are expected
to remain relatively flat in the medium term and stay below their prerecession peak. Hiring will mostly
stem from private services and downstream industries such as transportation/distribution that benefit
from factory production growth. Because these industries are lower-paying, they will not fill the
revenue void left by high-paying factory losses. Longer term, factory payrolls will continue their secular
decline, creating even more of a hindrance to employment and wage growth.
PRIVATE SERVICES
Private services will drive employment in Fort Wayne in the longer term more reliably than will
manufacturing. The recent uptick in business investment in capital goods and structures offers
optimism that companies will expand payrolls sooner rather than later. For example, Sweetwater
Sound is investing $20 million and hiring 400 workers to expand its Fort Wayne headquarters.
However, near-term expansion will be slow, and the expected downward revisions, as seen in the
complete count of employment though the second quarter of 2012, indicate that services played less
of a role in the expansion than preliminary estimates indicate. Notably, professional/business services
8
likely contracted. After the adjustment, the metro area's recovery has likely closely mirrored the state
average rather than outpaced it.
CONCLUSION
Fort Wayne's recovery will slow before accelerating in the second half of 2013. Although
manufacturing will not duplicate the robust gains of 2010, growth in output will contribute in many
ways to the economy. The labor market recovery will rest on services. In particular, healthcare will be
a strong performer thanks to large capital investments and an aging population. Job growth will
match the national average through the middle of the decade before decelerating as the cyclical
boost to manufacturing fades and middling population growth provides less impetus elsewhere.
9
GLENBROOK COMMONS | N EIGHBORHOOD A NALYSIS
NEIGHBORHOOD ANALYSIS
LOCATION
The subject is situated in the southwest quadrant of Lima Road and in Fort Wayne, Allen County,
Indiana. The neighborhood consists of uses in the northern portion of Fort Wayne about 6 miles from
the CBD. Fort Wayne is centrally located within Allen County in the northeastern portion of Indiana.
BOUNDARIES
The neighborhood boundaries are detailed as follows:
North:
South:
East:
West:
Interstate 69
W. State Boulevard
E. Coliseum Blvd
Interstate 69
LAND USE
The subject neighborhood is a mixed-use destination in the northern portion of Fort Wayne. The local
market is generally bound by Interstate 69 to the west and north. The bulk of the commercial
development within the neighborhood is concentrated along Lima Road or in close proximity to
Interstate 69.
The subject is located adjacent to Glenbrook Square Mall. The enclosed super regional mall is the
largest retail property in northeast Indiana. The mall consists of approximately 1.6 million square feet
10
and is a major draw to the area. The mall is over 90% occupied and is anchored by Macy’s, Sears,
and JC Penny.
Land uses near the intersection of Lima Road and Dupont Road in the subject’s immediate vicinity
traditionally included a combination of small strip shopping centers and freestanding commercial uses
oriented to the local neighborhood population. Users include a combination of banks, restaurants
and local service tenants. With the recent development of the subject property and the adjacent WalMart Supercenter, the immediate area has been reinforced as a neighborhood shopping destination.
Nearby outparcel developments along Lima Road include McDonald’s, Arby’s, Salin Bank, Taco Bell
and Starbucks. Areas north and west of the subject are primarily oriented to single-family residences
and agricultural land.
Land uses east of the subject include single and multifamily residential developments in addition to
neighborhood commercial uses near the intersection of Dupont and Coldwater Roads. Uses in this
node include Kroger, Walgreens, strip shopping centers, freestanding retail uses and professional
office developments. Land uses at the intersection of Dupont Road and Interstate 69 include the
Dupont Hospital medical complex, associated medical office developments and several hotel
developments.
As noted previously, the subject’s immediate area is a neighborhood shopping destination.
The
largest concentration of commercial development in the northern portion of Fort Wayne is centered
around the intersection of Lima Road and Interstate 69 approximately three-miles south of the subject.
Uses along Lima Road just north of Interstate 69 include Sam’s Club, Lowe’s Home Improvement and
CVS. Areas south of Interstate 69 along Lima Road and Coliseum Boulevard feature a wide array of
retail office and industrial development.
GROWTH PATTERNS
The area near the Lima Road/Interstate 69 is considered to be stable and largely built-out from a
commercial standpoint. As the Lima Road and Coliseum Boulevard corridors have become
increasingly built-out new development in the area has been limited to redevelopment projects or
smaller infill retail developments. Consequently, new construction projects have been pushed to the
northern portion of the neighborhood. The subject property and the adjacent Wal-Mart Supercenter
represent the primary new retail developments in the northern Fort Wayne area.
Additional
development has consisted largely of outparcel uses in close proximity to the subject and Wal-Mart.
The newest addition to the neighborhood is an ice rink complex located immediately southwest of the
subject property along Lima Road. Canlan Ice Sports recently opened up a state of the art
multipurpose facility in 2010. Ice Sports Fort Wayne features 3 NHL sized ice surfaces and offers a
full service restaurant and bar. Each ice surface has its own 4 locker rooms, complete with shower
and bathroom. The complex offers party rooms and banquet facilities to celebrate special events or
11
birthday parties. The facility will host non-ice activities during the spring/summer months such as
roller hockey, soccer, and lacrosse. This new development is expected to bring more consumers to
the area.
ACCESS
Primary access to the subject neighborhood is provided by Interstate 69. The highway runs in a
northeast/southwest direction, connecting Fort Wayne with Interstate 80 approximately 40-miles to the
north and Indianapolis approximately 90-miles to the southwest.
The subject site can be accessed from two major commercial thoroughfares in the area. Lima Road
provides north-south access to the subject and Coliseum Boulevard provides east-west access.
DEMOGRAPHICS
Selected neighborhood demographics in a three, five and ten-mile radius from the subject are shown
in the following table:
12
SELECTED NEIGHBORHOOD DEMOGRAPHICS
4122 Lima Road
Fort Wayne, IN
1 Mile
3 Miles
5 Miles
Population
2018 Population
4,298
72,602
165,025
2013 Population
4,218
70,931
162,184
2010 Population
4,162
69,836
160,405
2000 Population
4,869
69,779
159,333
Annual Growth 2013 - 2018
0.38%
0.47%
0.35%
0.10%
0.12%
0.08%
-1.56%
0.01%
0.07%
Households
2018 Households
1,691
30,801
67,611
2013 Households
1,659
29,986
66,040
2010 Households
1,634
29,414
64,923
2000 Households
2,322
30,413
64,598
0.38%
0.54%
0.47%
0.12%
0.15%
0.13%
-3.45%
-0.33%
0.05%
Income
2013 Median HH Inc
$34,494
$36,849
$38,964
2013 Estimated Average Household Income
$40,133
$45,120
$48,986
2013 Estimated Per Capita Income
$15,782
$19,074
$19,947
387
9,483
22,908
13.3%
17.6%
Age 25+ College Graduates - 2010
Age 25+ Percent College Graduates - 2013
18.6%
Source: Claritas
CONCLUSION
As illustrated, the population within the subject neighborhood has shown little change over the past
nine years. The neighborhood currently has a middle-income demographic profile. The outlook for
the neighborhood is for stable performance over the next several years. As a result, the demand for
existing developments is expected to be average. Combined with the subject’s reasonable access, its
proximity to the Glenbrook Square Mall and the new ice rink development, we believe that the subject
property should be competitive within its market for the foreseeable future.
13
GLENBROOK COMMONS |M ARKET A NALYSIS
MARKET ANALYSIS
INTRODUCTION
The market analysis forms a basis for assessing market area boundaries, supply and demand factors,
and indications of financial feasibility. We have divided the Market Analysis into several sections
including 1) Definition of the Subject, 2) National Retail Market Overview, 3) Retail Investment
Overview, 4) Retail Trade Area Analysis, 5) Louisville Retail Market Overview, 6) Lifestyle Overview
and 7) Competitor Survey.
Primary data sources used for this analysis includes CBRE Econometrics Research – a business unit of
CBRE, REIS, Costar, and various others (as identified).
DEFINITION OF SUBJECT
The subject is in the Louisville market within the Southern Indiana submarket and is considered a Class
A community/neighborhood center shopping center with a primary trade area of approximately three
miles. According to the Urban Land Institute (ULI) (in Dollars & Cents of Shopping Centers), the
following retail property definitions may be applicable towards the subject:
A shopping center is defined as a group of commercial establishments planned, developed,
owned, and managed as a unit related in location, size, and type of shops to the trade area it
serves. It provides on-site parking relating to the types and sizes of its stores.
Types of specific shopping centers are further defined below:
A convenience center (strip center) provides for the sale of personal services and convenience
goods similar to those of a neighborhood center. It contains a minimum of three stores, with
a total gross leasable area of up to 30,000 square feet. Instead of being anchored by a
supermarket, a convenience center usually is anchored by some other type of
personal/convenience service such as a minimarket.
A neighborhood center provides for the sale of convenience goods (foods, drugs and sundries)
and personal services (laundry and dry cleaning, barbering, shoe repair, etc.) for the day-today living needs of the immediate neighborhood. It is built around a supermarket as the
principal tenant and typically contains a gross leasable area of about 60,000 square feet. In
practice, it may range in size from 30,000 to 100,000 square feet.
In addition to the convenience goods and personal services offered by the neighborhood
center, a community center provides a wider range of soft lines (wearing apparel for men,
women and children) and hard lines (hardware and appliances). The community center
makes merchandise available in a greater variety of sizes, styles, colors and prices. Many
centers are built around a junior department store, variety store, super drugstore or discount
department store as the major tenant, in addition to a supermarket. Although a community
center does not have a full-line department store, it may have a strong specialty store or
stores. Its typical size is about 150,000 square feet of gross leasable area, but in practice, it
may range from 100,000 to 500,000 or more square feet. Centers that fit the general profile
14
of a community center but contain more than 250,000 square feet are classified as super
community centers. In extreme cases, these centers contain more than 1,000,000 square
feet. As a result, the community center is the most difficult to estimate for size and pulling
power.
A power center is a type of super community center. It contains at least four category-specific,
off-price anchors of 20,000 or more square feet. These anchors typically emphasize hard
goods such as consumer electronics, sporting goods, office supplies, home furnishings, home
improvement goods, bulk foods, drugs, health and beauty aids, toys, and personal computer
hardware/software. They tend to be narrowly focused but deeply merchandised “category
killers” together with the more broadly merchandised, price-oriented warehouse club and
discount department stores. Anchors in power centers typically occupy 85% or more of the
total GLA.
A regional center provides general merchandise, apparel, furniture, and home furnishings in
depth and variety, as well as a range of services and recreational facilities. It is built around
one or two full-line department stores of generally not less than 50,000 square feet. Its typical
size is about 500,000 square feet of gross leasable area; in practice, it may range from
250,000 to more than 900,000 square feet. The regional center provides services typical of
a business district yet not as extensive as those of the super regional center.
A super regional center offers extensive variety in general merchandise, apparel, furniture and
home furnishings, as well as a variety of services and recreational facilities. It is built around
three or more full-line department stores generally of not less than 75,000 square feet each.
The typical size of a super regional center is about 1,000,000 square feet of gross leasable
area. In practice, the size ranges from about 500,000 to more than 1,500,000 square feet.
NATIONAL RETAIL VACANCY TRENDS
The following information is from the CBRE Econometric Advisors (CBRE-EA) Retail Availability Index
Fourth Quarter 2012.
Consistent Quarterly Drops in Availability Rates in 2012
In the fourth quarter, the overall retail availability rate declined slightly to 12.8%, down 10 bps
compared to the previous quarter, and down 30 bps compared to the rate one year ago; we had
been predicting a 20 bps drop compared to Q3 2012. Presumably, this decline in availability
translated into modest net absorption gains in the fourth quarter. Notwithstanding 2012’s continuous
decline in availability rates, retailers remain wary of taking on a substantial amount new space. In the
current economic climate, that retailers and consumers remain cautious isn’t surprising.
15
With 2012’s holiday shopping season now behind us, we await the final tallies for sales performance.
October and November’s year-over-year core retail sales growth figures were 3% and 3.7%,
respectively; both figures are well below the long-term average of 4.5%. During the week of
Thanksgiving, some holiday sales at brick-and-mortar stores were lost to online retailers something
that is expected to have continued through December as well. Consumers and retailers are both
struggling to regain pre-downturn sales and spending levels.
A majority of the retail markets registered either flat or declining availability rates compared to one
quarter ago. Some notable performers were Denver, Cincinnati, Fort Worth, Kansas City and
Minneapolis; each of these markets recorded a decline of 60 bps or more. On the other end of the
spectrum, markets such as Tulsa, Long Island and Bakersfield recorded availability increases of 50 bps
or more in the fourth quarter. Comparison to year-ago rates shows some markets have made strides
in coming down from the highs set after the recession. Those farthest above year-ago rates are Long
Island, Jacksonville, Nashville, Richmond, and those farthest below are Cleveland, Cincinnati,
Columbus and Bakersfield. These markets are still recording double-digit availability rates, so even
though they have come down significantly from a year ago, there is more to go.
NATIONAL RETAIL OVERVIEW & OUTLOOK
The following information is from the CBRE Econometric Advisors (CBRE-EA) Retail Overview &
Outlook Fourth Quarter 2012.
Rent Growth in Q4
The retail recovery is well underway. As we leave the holiday shopping season of 2012 behind us and
move into 2013, the recovery is bolstered by six consecutive quarters of positive absorption and a 30basis point (bps) drop in availability rates for 2012. Even though core retail sales growth has dipped
below its historical average over the past three quarters, holiday shopping season growth was strong
16
enough to keep the recovery momentum going. As projected, the retail industry achieved rent growth
in the fourth quarter; rents hit their new low in Q3 2012. Currently matching rent levels recorded in
2002, this new low is very significant given that, after several years of declines, rents are 15% below
where they were prior to the recession. The rent recovery will be steady but subdued as retail centers
slowly regain their confidence in conjunction with the economic recovery picking up steam after 2013.
THE ECONOMY
As a gauge of brick and mortar store sales (those sales which would most affect the performance of
the major U.S. retail center types), core retail sales (which excludes auto sales and gas station sales) is
used. Judging by core retail sales trends in 2012, the consumer recovery seems to be intact: growth
was recorded each quarter in 2012. But that isn’t the whole story. Over the past three quarters (since
2Q12) year-over-year growth for core retail sales has been both below the long-term trend and
diminishing; this is the first time this has occurred since the consumer recovery was getting underway
in 2010. Consumers’ wariness about increasing their spending is understandable, given the current
economic environment: unemployment remains elevated and employment gains have been muted.
Core retail sales growth, though, has been expanding for several quarters now, and growth in retail
sales bodes well for a continuing retail recovery.
The lowest core retail sales growth since mid-2010 was recorded during the fourth quarter of 2012.
Using the fourth quarter as a measure of holiday shopping season performance, results are
17
disappointing, with each segment recording a weaker season in 2012 than 2011. The online
shopping effect continued in 2012, with electronics sales recording the largest year-over-year decline
out of the retail segments. General merchandise stores (discounters and department stores) also saw a
decline during the fourth quarter—their loss of sales is better attributed to weakness in department
store sales than discounter sales (consumers are still looking for a deal during the holiday shopping
season). The clothing and accessories segment recorded positive growth that was close to 2011’s
growth, but consumers did not seem willing to spend beyond what they spent a year ago. Though the
electronic shopping segment (which includes e-commerce sales as well as mail order sales) has seen
a deceleration from last year’s nearly 20% growth, its current double-digit year-over-year growth
remains well above that recorded by the other segments. Consumers continue to flock to the web for
discounts, promotions and free shipping.
It is speculated that some of those retailers to whom e-commerce poses a greater threat, and which
recorded weaker sales through the 2012 holiday shopping season, will be closing the most stores in
2013. According to a forecast from 24/7 Wall St., retailers such as Best Buy, Barnes & Noble,
RadioShack and Office Depot/OfficeMax (now merged) will stand out as retailers who close
significant numbers of their U.S. stores. JC Penney and Sears two retailers whose hard time with brickand-mortar sales in recent years have less to do with online competition are also on the list, so ecommerce isn’t the only factor playing into store closings, but it is certainly one of the great challenges
that retailers are still facing even now, years past the end of the recession.
18
The fourth quarter’s overall positive consumer trend has meant the continuation of the retail demand
recovery. As of Q4, the retail industry had recorded six consecutive quarters of positive absorption,
and 2012 was the first full year of positive quarterly absorption since the recession. Retailers remain
wary of expanding too quickly, but as the recovery progresses through this year and next, demand for
space should increase. This recovery, compared to past ones, remains muted: even when absorption
surpasses its long-term trend in 2014, it will be by only a slight amount and we do not expect
absorption levels to gain much more momentum than that.
The muted but consistent demand recovery will not be derailed by too much new supply. In 2013, the
lowest levels of completions since 1980 are projected even lower than 2012. The recession’s severe
impact on the retail industry gave developers pause, and they have been holding back on developing
too many new centers. Beyond 2013, completion levels will begin to accelerate, but even by 2017
they are expected to be comparable to 2009 levels nowhere near the long-term average. As a metric
of the change in stock, completions will not change if a center is demolished and then rebuilt an
expected trend for the coming years. Supply coming to market will not be excessive, then; rather,
recent trends in retail (smaller store sizes, lower store inventories) will cause developers to redevelop
some centers that currently exist.
19
DEMAND AND SUPPLY
The third quarter was the retail industry’s fifth consecutive quarter of positive absorption, solidifying the
staying power of the demand recovery. The more than 2 million square feet absorbed signifies
retailers’ willingness to expand, though this is slower than pre-recession rates. Retailers’ ongoing
cautiousness is unsurprising, and it will be some time before this circumspect behavior is eliminated;
absorption will remain positive but muted compared to previous recoveries. The demand recovery will
continue and we should see more than 15 million msf absorbed for 2012 the most since 2007. With
the economic recovery gaining more traction toward the end of 2013 and into 2014, absorption will
gain momentum as well; by 2014, absorption levels should slightly exceed their long-term average.
The demand recovery will not get more robust than this.
20
The consistency of the retail demand recovery prompted a steady decline of availability rates in 2012.
Neighborhood, community and strip centers recorded a drop of 30 bps in 2012, leaving the
availability rate at 12.8% as of the fourth quarter. At its peak, the availability rate hit 13.1%, which
was well above its Q4 2005 low of 7.4%; that spread is indicative of the recession’s effects.
Absorption levels tripled in 2012 over 2011, allowing availability rates to stabilize and even diminish
slightly. For 2013, absorption rates are projected to double again (forecasted at over 30 million
square feet [msf] for the year); this, coupled with historically low completion levels, will propel
availability rates to a 100-bps decline in 2013. As absorption levels stabilize at close to 40 msf per
year beginning in 2014 and beyond, availability rates will consistently decline. Unfortunately, the
great amount of space left available by the recession means that even by the end of 2018, availability
rates (forecasted to be 9.7%) will still be far above their previous low.
21
Over the next year, the great majority of markets will see availability rates decline. Only two: West
Palm Beach and Bakersfield are expected to record availability rate increases, and Oakland will be
flat. Of the markets with declining rates, the most notable will be San Antonio, Tucson, Raleigh,
Nashville, Austin and Denver. These markets will lead the pack in 2013 thanks to above-average
(more than 2%) absorption growth. Over a two-year horizon, the list does not change much: Tucson,
Nashville and Raleigh are still out front, in terms of availability rate declines. The significant
construction anticipated in San Antonio will be enough to move it out of the two-year list of top
performers, but construction there will be overshadowed by absorption growth, and availability rates
will still drop by more than 200 bps.
Availability trends in urban retail markets provide a supportive story for the steady decline in
availability rates in 2012. As of the fourth quarter, availability rates in each of the larger retail
markets’ downtown submarkets (or their proxies) are tracking below the overall Sum of Markets. At
centers in their downtown/urban submarkets, larger markets including Boston, Chicago, Los Angeles,
New York, San Francisco and Washington DC are recording availability rates below 9.6%; in
Manhattan, availability rates are tracking below 6%. Most of these submarkets (i.e. downtowns) are in
the 6% to 7% range; only the City North and City South Chicago submarkets are tracking closer to the
overall 9.6% figure.
22
As we anticipated, the steady demand recovery in 2012 has enabled rents to grow (on a quarterly
basis) for the first time since the recession began, rising by 0.2% in the fourth quarter. The Q3 trough
is 15% below the previous peak, however, so it will be some time before rents have fully recovered.
The rent recovery is expected to be steady but will be muted (due to the nature of the demand
recovery this time around), and in 2013 and 2014 rent growth will remain below 1%. Rents will be
heading in the right direction, but rent expansion is not expected until 2017. In total, peak-to-peak
recovery will have taken about 10 years.
23
When we drill down to the market level, the positive news continues. All of the largest retail markets
will record improving rent growth over the next two years and the next five years. Even as rents
improve, however, some markets will face more challenges than others. For example, over the past
two years, the greatest average rent declines were recorded in Phoenix, Atlanta and San Diego. Even
though the next five years will see their rents grow, it will take longer for their rents to fully recover.
Meanwhile, Houston, Los Angeles, Orange County, Washington DC and Chicago have already seen
rent growth over the past two years; with growth projected to continue, these markets will reach their
previous peaks more quickly.
24
OUTLOOK
The retail demand recovery remained intact in the fourth quarter (albeit at a muted pace compared to
other recoveries) thanks in part to a resilient consumer recovery. Although we’ve now seen six
consecutive quarters of positive absorption, retailers remain cautious about expanding and
demanding new space too rapidly. The demand recovery is not expected to stall again, but the nature
of the consumer recovery is such that, for retail centers, this recovery will be slower than previous
ones. There will be a lot of ground to make up on the demand side, given the significant declines in
absorption in 2008 and 2009. Thankfully, oversupply will not be a concern, as completions are
projected to remain below historical levels (and close to zero) for the next couple of years, for the
majority of retail center types. Availability rates continued to decline in the fourth quarter down to
12.8% from the new peak of 13.1%. Since the absorption recovery is not expected to be swift,
availability rates should not drop dramatically over the next couple of years, until substantial
downward influences emerge. The new rent trough—just one quarter behind us is 15% below the
previous peak, but with availability declines having finally brought the recovery’s first quarter of rent
growth, retail center owners will have enough leverage to consistently increase rents going forward.
Rent growth figures above 3% will not return until 2015, however, and rent expansion isn’t expected
until 2017.
25
TRADE AREA DEMOGRAPHICS
We have analyzed demographic data, competition and income levels for the subject trade area in the
following sections. In order to analyze the subject property and its anticipated change in
demographic characteristics, it is important to address changes in households, population and income
levels. These three factors will be of primary influence on the level of sales and the long-term viability
of the subject property. We have accomplished this through the use of a demographic study prepared
by Claritas, Inc.
Housing, Population and Household Formation
The following table illustrates the population and household changes for the subject neighborhood
with primary focus on the three-mile radius.
26
POPULATION AND HOUSEHOLD PROJECTIONS
1 Mile
Population
3 Miles
5 Miles
2018 Population
4,298
72,602
165,025
2013 Population
4,218
70,931
162,184
2010 Population
4,162
69,836
160,405
2000 Population
4,869
69,779
159,333
0.38%
0.47%
0.35%
0.10%
0.12%
0.08%
-1.56%
0.01%
0.07%
2018 Households
1,691
30,801
67,611
2013 Households
1,659
29,986
66,040
2010 Households
1,634
29,414
64,923
2000 Households
2,322
30,413
64,598
0.38%
0.54%
0.47%
0.12%
0.15%
0.13%
-3.45%
-0.33%
0.05%
Households
Source: Claritas
The sales potential of a retail center is directly related to its proximity to the number of potential
patrons. The historical and projected trends for the population base are important to examine when
analyzing the trade area of a retail center.
Income Distributions
Household income available for expenditure on consumer items is a primary factor in determining the
retail supply and demand levels in a given market area. In the case of this study, a projection of
household income identifies (in gross terms) the market from which the subject submarket draws. The
following table illustrates estimated household income distribution for the subject neighborhood.
27
HOUSEHOLD INCOME DISTRIBUTION
1 Mile
Households by Income Distribution - 2013
3 Miles
5 Miles
Less than $15K
15.19%
16.78%
15.70%
$15K - $25K
19.59%
14.25%
13.35%
$25K - $35K
15.97%
16.23%
15.61%
$35K - $50K
21.04%
19.57%
18.05%
$50K - $75K
18.51%
18.88%
19.41%
$75K - $100K
6.21%
8.08%
9.69%
$100K - $150K
2.89%
4.80%
6.04%
$150K - $250K
0.30%
0.81%
1.32%
$250K - $500K
0.18%
0.27%
0.38%
$500K or more
0.00%
0.08%
0.09%
Source: Claritas
As can be seen in the above table, the subject’s immediate area is comprised of middle income
households. In the secondary trade area, approximately 14.04% of households have an income of
more than $75,000.
The following table illustrates the median and average household income levels for the subject
neighborhood.
HOUSEHOLD INCOME LEVELS
1 Mile
Income
3 Miles
5 Miles
2013 Median HH Inc
$34,494
$36,849
$38,964
2013 Estimated Average Household Income
$40,133
$45,120
$48,986
2013 Estimated Per Capita Income
$15,782
$19,074
$19,947
Source: Claritas
The average household income in the subject’s trade areas ranges from $34,494 to $38,964. An
analysis of the income data indicates that the submarket is generally comprised of middle to lowermiddle income economic cohort groups, which include the target groups to which the subject property
is oriented.
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:
28
EMPLOYMENT BY INDUSTRY
1 Mile
Occupation
3 Miles
5 Miles
Agr/Frst/Fish/Hunt/Mine
0.05%
0.13%
0.29%
Construction
3.48%
4.08%
4.22%
16.73%
16.04%
17.37%
Total Manufacturing
Wholesale Trade
2.71%
3.45%
3.49%
16.97%
15.40%
14.10%
Transport/Warehse/Utils
5.85%
4.02%
4.17%
Information
1.93%
2.15%
2.24%
Fin/Insur/RE/Rent/Lse
4.50%
5.99%
5.95%
Prof/Sci/Tech/Admin
2.47%
4.23%
4.50%
Mgmt of Companies
0.00%
0.04%
0.07%
Admin/Spprt/Waste Mgmt
2.85%
3.31%
3.85%
Educational Svcs
4.55%
7.48%
7.52%
17.41%
15.49%
15.26%
1.69%
2.20%
2.00%
Retail Trade
Health Care/Soc Asst
Entertainment & Rec Services
Accommdtn/Food Svcs
12.91%
10.09%
8.89%
Oth Svcs, Not Pub Admin
4.84%
4.18%
4.22%
Public Administration
1.06%
1.74%
1.85%
Source: Claritas
The previous table illustrates the employment character of the submarket, indicating a predominantly
middle to upper-middle income employment profile, with the majority of the population holding
manufacturing, retail, and food services related careers.
EXPENDITURE POTENTIAL
Claritas, Inc. examines the product potential for various store types for each portion of the subject
trade area.
The following table illustrates the consumer expenditure for all the trade areas.
29
RETAIL EXPENDITURES ($000's)
SUBJECT'S SUBMARKET
1 Mile
Product Sample
All Retail Stores
2013
3 Miles
2018
%/Yr
2013
2018
5 Miles
%/Yr
2013
2018
48,047
1.4%
889,093
965,746
1.7%
Grocery Stores
7,445
7,825
1.0%
138,761
147,177
1.2%
313,336
330,747
1.1%
Eating Places
2,982
3,109
0.8%
58,158
61,220
1.0%
128,410
134,831
1.0%
1.0%
Drinking Places
1,980,993 2,145,732
%/Yr
44,803
1.6%
50
52
0.9%
1,129
1,191
1.1%
2,459
2,589
3,174
3,479
1.9%
59,696
65,950
2.0%
135,578
149,206
1.9%
Building Material & Garden Equipment & Supplies
779
829
1.3%
17,995
19,626
1.8%
43,074
46,886
1.7%
Hardware Stores
101
108
1.5%
2,284
2,509
1.9%
5,363
5,876
1.8%
Lawn & Garden Equipment & Supplies Dealers
132
141
1.4%
2,943
3,223
1.8%
6,999
7,653
1.8%
Furniture Stores
649
704
1.6%
13,002
14,334
2.0%
28,374
31,112
1.9%
Health and Personal Care Stores
Other Home Furnishing Stores
392
424
1.6%
8,163
8,959
1.9%
18,624
20,407
1.8%
Household Appliance Stores
137
157
2.8%
2,954
3,438
3.1%
6,854
7,942
3.0%
Radio/TV/Other Electronics Stores
558
807
7.7%
11,354
16,353
7.6%
25,173
36,014
7.4%
Department Stores (Excluding Leased)
3,211
3,627
2.5%
61,984
70,633
2.6%
140,576
159,409
2.5%
Clothing and Clothing Accessory Stores
2,501
2,783
2.2%
48,088
54,014
2.4%
109,639
122,607
2.3%
399
453
2.5%
7,227
8,250
2.7%
16,299
18,473
2.5%
General Merchandise Stores
6,504
7,225
2.1%
125,040
140,309
2.3%
282,519
315,511
2.2%
Warehouse Clubs and Superstores
2.0%
Shoe Stores
3,354
3,679
1.9%
64,257
71,264
2.1%
144,575
159,562
Full Service Restaurants
866
896
0.7%
17,633
18,482
0.9%
39,018
40,843
0.9%
Fast Food Restaurants
984
1,033
1.0%
18,527
19,591
1.1%
40,624
42,795
1.0%
Jewelry Stores
271
293
1.6%
6,191
6,783
1.8%
14,690
16,080
1.8%
Book Stores
240
266
2.1%
6,243
6,959
2.2%
12,310
13,699
2.2%
Gift, Novelty, and Souvenir Shops
109
120
1.8%
2,261
2,508
2.1%
5,140
5,686
2.0%
Florists
299
316
1.1%
6,997
7,562
1.6%
17,010
18,383
1.6%
Hobby, Toy, and Game Shops
156
173
2.1%
3,194
3,617
2.5%
7,490
8,458
2.5%
Sporting Goods Stores
309
403
5.5%
6,193
8,203
5.8%
14,154
18,557
5.6%
Camera/Photographic Supply Stores
35
47
6.2%
706
964
6.4%
1,623
2,204
6.3%
Luggage and Leather Goods Stores
31
34
1.7%
654
719
1.9%
1,490
1,635
1.9%
2.1%
Sew/Needlework/Piece Goods Stores
65
71
1.8%
1,295
1,440
2.1%
3,006
3,328
Convenience Stores
443
471
1.2%
8,404
9,078
1.6%
18,212
19,570
1.4%
Home Centers
366
391
1.4%
8,356
9,151
1.8%
19,829
21,667
1.8%
Nursery and Garden Centers
118
125
1.2%
2,637
2,857
1.6%
6,256
6,769
1.6%
Computer and Software Stores
178
256
7.5%
4,045
5,839
7.6%
8,976
12,920
7.6%
38
42
1.9%
745
830
2.2%
1,691
1,879
2.1%
13,048
13,497
0.7%
270,746
284,877
1.0%
589,942
620,714
1.0%
309
321
0.8%
6,609
6,890
0.8%
15,145
15,720
0.7%
3,642
3,664
0.1%
70,167
71,538
0.4%
154,198
156,409
0.3%
960
932
-0.6%
18,788
18,472
-0.3%
41,910
41,070
-0.4%
Electronic Shopping and Mail Order
1,536
1,812
3.4%
31,598
37,865
3.7%
70,665
84,340
3.6%
Total Accommodation and Food Services
4,063
4,228
0.8%
79,867
83,951
1.0%
177,551
186,148
1.0%
Clothing Accessory Stores
Auto Dealers
Automotive Part, Accessories & Tire Stores
Gasoline Stations with Convenience Stores
Gasoline Stations without Convenience Stores
Source: Claritas
30
GLENBROOK COMMONS | M ARKET A NALYSIS
FORT WAYNE MARKET SUMMARY
The following discussion illustrates some general observations in the surrounding market.
Market Summary
Market statistics for the Fort Wayne MSA and North Fort Wayne submarket are shown in the following
table:
RETAIL MARKET STATISTICS
Fort Wayne MSA
1,853
North Fort Wayne
626
27,752,820
10,828,448
YTD New Construction
9,026
0
YTD Net Absorption
Occupancy Rate
64,420
91.4%
-12,472
88.5%
Average Rent PSF
$9.15
$8.33
Number of Buildings
Existing Supply (SF)
Source: CoStar Retail Market Report
As shown above, the subject’s submarket accounts for approximately 39.0% of the overall Fort Wayne
market with respect to square footage.
The Fort Wayne retail market ended 2012 Q4 with a vacancy rate of 8.6%. The vacancy rate was
down over the previous quarter, with rental rates ended the year at $9.15. There were no reported
deliveries to the market in the quarter.
Inventory
The total retail inventory in the Fort Wayne market area amounted to 27,752,820 square feet in
1,853 buildings as of the end of 2012 Q4.
In the subject’s submarket, total retail inventory
amounted to 10,828,448 square feet in 626 buildings as of the end of 2012 Q4. Historic inventory
totals are illustrated in the following table.
HISTORIC INVENTORY
2007
Fort Wayne MSA
25,864,490
North Fort Wayne
10,898,835
2008
26,593,447
10,828,448
2009
26,630,569
10,828,448
2010
27,203,857
10,828,448
2011
27,752,820
10,828,448
2012 Q4
27,752,820
10,828,448
31
Annually, inventory has increased by 7.3% per year in the MSA and 0.6% per year in the submarket,
with most growth noted in 2007. As the market slumped during 2008 and 2009, there has been
virtually no new construction in the market or submarket. The lack of new speculative construction
has helped the local market maintain a somewhat stabilized occupancy rate despite declining market
conditions.
Vacancy Rates
The retail vacancy rate in the Fort Wayne market area increased to 9.0% at the end of 2012 Q4. The
vacancy rate was 9.1% at the end of 2009, 8.9% at end of 2008 and 8.2% at the end of 2007. For
the subject’s submarket, the retail vacancy rate for 2012 Q4 was 11.5%, a modest increase from the
year end 2011 vacancy rate of 11.3%.
HISTORIC VACANCY RATE
2007
Fort Wayne MSA
8.2%
North Fort Wayne
7.9%
2008
8.9%
9.1%
2009
9.1%
11.2%
2010
8.8%
11.3%
2011
8.8%
11.3%
2012 Q4
8.6%
11.5%
It should be noted that power center and freestanding retail vacancy rates tend to be at or below
market levels. Surveyed strip, neighborhood and community shopping centers tend to have vacancy
rates three to four hundred basis points higher than the rates indicated above.
Rental Rates
For the overall Fort Wayne retail market, the average quoted asking rental rate for available retail
space (all classes) was $9.15 per square foot at the end of 2012 Q4. The average quoted rate in the
subject’s submarket equated to $8.33 per square foot for 2012 Q4. This represented a decrease
from the reported 2010 average rental rate of $9.15 per square foot. Though down from 2007
totals, local rental rates have been on a modest downward trend in recent years.
32
HISTORIC RENTAL RATES
2007
Fort Wayne MSA
$10.24
North Fort Wayne
$9.79
2008
$9.64
$9.24
2009
$9.81
$9.18
2010
$9.88
$9.15
2011
$9.32
$8.64
2012 Q4
$9.15
$8.33
Overall, MSA rental rates have declined by 10.6% since 2007 while the subject submarket rate
decreased by 14.9%.
Absorption
Net absorption for the overall Fort Wayne retail market was negative 607 square feet in 2012 Q4.
Absorption was negative in the submarket as well, at 12,472 square feet. Both totals are higher than
cumulative totals for the previous year providing evidence for the beginning of an economic recovery
in the local retail market.
HISTORIC NET ABSORPTION
2007
Fort Wayne MSA
98,137
North Fort Wayne
(112,783)
2008
502,022
(36,058)
2009
(35,709)
(33,995)
2010
83,700
(45,721)
2011
(45,707)
4,991
2012 Q4
(607)
(12,472)
Shopping Center Survey
Details regarding the major shopping centers in the Fort Wayne area are presented in the table
below:
33
FORT WAYNE SHOPPING CENTER SURVEY
Name
Size (SF)
Year
Built
Coldwater Crossing
846,213
1988
Covington Plaza
399,069
1970
Jefferson Pointe
Northcrest Shopping Center
546,143
290,275
2000
1960
Dupont Village
Georgetown Square
Gateway Plaza
Village of Time Corners
Parkwest Center
Glenbrook Commons
Cross Creek
Maysville Pointe
Southgate Plaza
187,190
261,952
177,859
118,074
176,532
254,112
379,847
175,000
222,258
1974
1968
1958
1989
1975
1988
1994
2007
1969
Northwood Plaza
Apple Glen Crossing
234,316
150,446
1974
2000
JoAnn Plaza
Year
Renovated
Anchors
N/A Wal-Mart, Hobby Lobby,
Dollar Tree, Factory Card
Outlet, Family Christian
Stores
N/A Office Depot, The Fresh
Market
N/A
Barnes & Noble
1997 Best Buy, Kohl's, Value
City Furniture
N/A
2000 Scott's Food & Pharmacy
1998
Pro Bowl West
N/A
Stein Mart
2002
Big Lots
2006
Toys R Us
2000 Home Depot, Meijer
N/A
Wal-Mart, Kohl's
1977
Big Lots, Kroger,
Newberry's, Walgreen's
1988 Target, Cinema Grill
2002 Best Buy, Dick's Sporting
Goods, PetsMart
92,443
1985
1987
Glenbrook Plaza
162,741
NAV
N/A
Orchard Crossing
Southtown Centre
Chapel Ridge Shopping Center
338,695
426,763
431,067
2008
2006
2003
Low of Sample
High of Sample
Mean of Sample
92,443
846,213
293,550
1958
2008
1985
Joann Fabrics
Dick's Sporting Goods,
Ashley Furniture Home
Store
N/A
Target
N/A
Menards, Wal-Mart
N/A
Wal-Mart
1977
2006
1996
Low
Rent/SF
High
Rent/SF
85.2%
$5.00
$22.00
91.0%
NAV
NAV
100.0%
$12.00
$14.50
97.0%
80.3%
77.0%
81.9%
77.0%
48.4%
98.4%
41.3%
100.0%
$10.00
$6.00
$6.00
$7.00
$8.00
$10.00
$18.00
$15.00
NAV
$12.50
$11.00
$6.00
$16.00
$13.00
$14.00
$20.00
$15.00
NAV
93.1%
96.7%
$14.00
$6.12
$23.00
$24.00
Occupancy
92.0%
$12.00
$12.00
98.8%
$10.36
$10.36
89.0%
92.8%
95.6%
$18.00
$23.00
$14.00
$28.00
$23.00
$18.00
41.3%
100.0%
86.1%
$5.00
$23.00
$11.44
$6.00
$28.00
$16.61
Source: Various sources compiled by CBRE
Excluded from the above survey is the Glenbrook commons regional enclosed mall, which was built in
1966 and contains 1.2 million square feet. The mall is anchored by four large national department
stores and the average rental rate for the smaller mall tenants is $22.00 per square foot.
The
average occupancy rate of 86.1% is in-line with totals for strip, neighborhood and community
shopping centers. As noted, power center and freestanding retail vacancy rates tend to be at or below
these indicated levels.
Fort Wayne's substantial retail payroll cuts are expected to moderate over the coming months. Local
consumers have been hit hard by Fort Wayne's weakening labor market. The area's unemployment
rate is typically on par with the rest of the nation. However, there are still several positive signs for
Fort Wayne's retailers, which will limit their contraction. The metro area's credit conditions are still
relatively strong, with below average delinquency and default rates for most types of consumer debt.
Furthermore, Fort Wayne's houses are holding their value fairly well, limiting the negative wealth effect
as home equity declines. Given these advantages, some retailers are still expanding in Fort Wayne.
34
Barriers to Entry
The subject submarket is a wide geographic area with a combination of densely developed and lightly
developed nodes. Consequently, there are low physical barriers to entry in the MSA as a whole,
though the subject’s immediate area is not heavily built-out.
Demand Generators
Historically retail demand in the area has been largely tied to the regional economy as a whole.
During the late 1990s absorption and construction rates were strong as the economy soared, while
conversely the market softened in the early 2000s and again in the period from 2007 to 2010. In
recent quarters, the retail market has shown signs of recovery.
COMPETITIVE PROPERTIES
In order to identify the recent trends within a more confined area around the subject, we have
examined the data provided by CoStar, Inc. for the community and neighborhood shopping center
inventory contained within the subject neighborhood. We have surveyed all Classes of neighborhood
and community retail shopping centers within a 3-mile radius of the subject property. The following
map illustrates where the subject is located (blue star) in relation to its direct competitors. The map
illustrates that the subject is located within a retail cluster located along Lima Road just north of its
interchange with I-69 and E. Coliseum Boulevard.
35
The following chart summarizes the basic statistics for the subject neighborhood:
36
The overall 3-mile radius of community and neighborhood center retail inventory is estimated to
include 1,494,768 square feet in 42 properties. Existing retail in the market is somewhat dated, as
the average age of the inventory is 35.8 years. Direct vacancy is reported to be 20.1% overall.
The current overall vacancy level of 20.1% is above the overall Fort Wayne level of 8.6% and the
subject’s submarket at 11.5%. The below chart illustrates the absorption, deliveries, and vacancy in
bar graph form within the neighborhood and indicates the current average net asking rents is range
from $6.00 to $16.00, triple net, with an average of $9.00.
SUBJECT TRENDS AND PROJECTIONS
Occupancy
Occupancy rate is the relationship between the actual income received from a property and the
income that would be received if the entire space were occupied. Consequently, the occupancy rate
is a product of both (1) the relationship between the amount of occupied space in a building or
market (physical) and (2) the relationship between the contract rent for the occupied building or
market space and the total rent estimated for all space in the building or market (economic).
37
SUMMARY OF COMPARABLE RETAIL RENTALS
Comp.
No. Name
Location
1
Covington Plaza
2
Dupont Crossing Shopping Center 622 East Dupont Road,
Fort Wayne, IN
23%
3
Dupont Village
507 East Dupont Road,
Fort Wayne, IN
97%
4
Lima Marketplace
10001-10035 Lima Road,
Fort Wayne, IN
96%
5
Maplewood Plaza Shopping
Center
5950 - 5960 Stellhorn Rd,
Fort Wayne, IN
67%
6
Maysville Pointe
10300 Maysville Road,
Fort Wayne, IN
63%
4122 Lima Road,
Fort Wayne, Indiana
94%
Subject Glenbrook Commons
4130 West Jefferson Boulevard,
Fort Wayne, IN
Occupancy
Compiled by CBRE
Subject’s Historical Trends

The subject property is currently 94.3% leased.

The stabilized occupancy rate reflects a long-term occupancy rate.
Tenant Analysis
Toys “R” Us
According to Toys “R” Us company profile:
38
98%
Toys“R”Us, Inc. is the world’s leading dedicated toy and juvenile products retailer, offering a
differentiated shopping experience through its family of brands. Merchandise is sold in 868
Toys“R”Us® and Babies“R”Us® stores in the United States, and more than 520 international
stores and over 200 licensed stores in 33 countries and jurisdictions. In addition, it
exclusively operates the legendary FAO Schwarz® brand and sells extraordinary toys in the
brand’s flagship store on Fifth Avenue in New York City.
With its strong portfolio of e-commerce sites including Toysrus.com, Babiesrus.com,
eToys.com, FAO.com and babyuniverse.com, Toys“R”Us, Inc. provides shoppers with a
broad online selection of distinctive toys and baby products. The company also operates
Toys.com, which offers customers exclusive deals from the company’s e-commerce sites.
Headquartered in Wayne, NJ, Toys“R”Us, Inc. employs approximately 70,000 employees
worldwide. The company is committed to serving its communities as a caring and reputable
neighbor through programs dedicated to keeping kids safe and helping them in times of
need.
Toys“R”Us, Inc. operated as a public company from 1978 until July 2005. At that time, an
investment group consisting of affiliates of Bain Capital Partners LLC, Kohlberg Kravis
Roberts & Co. (KKR) and Vornado Realty Trust completed an acquisition of Toys“R”Us, Inc.
for $6.6 billion. The acquisition encompassed all worldwide operations of Toys“R”Us, Inc.,
including the Toys“R”Us and Babies“R”Us businesses. With the completion of this
transaction, each of the investors owns an equal stake in Toys“R”Us, Inc.
However, this tenant is not followed by Standard & Poor or Moodys.
Dunham’s
According to Hoovers:
It's all about athletic leisure at Dunham's Athleisure. The company's Dunham's Sports stores
sell sporting goods through about 125 locations in more than 10 Midwestern and
Northeastern states. The stores average 30,000 square feet and offer gear for team sports,
individual endeavors, and outdoor pursuits as well as apparel, fan merchandise, electronics,
and fitness machines (treadmills, stationary bikes, steppers, rowers, ellipticals). Dunham's
also carries a full line of casual apparel, footwear, and eyewear for men, women, and
children. The company began as Dunham's Bait and Tackle in 1937.
Dunham’s is a privately held company
Burlington Coat Factory Warehouse Corporation.
Burlington Coat Factory Warehouse has two de facto mottos: "not affiliated with Burlington
Industries" (thanks to a 1981 trademark-infringement lawsuit settlement) and "We sell more
than coats." The company operates about 425 no-frills retail stores offering current, brandname clothing at less than standard retail price. Although it is one of the nation's largest coat
sellers, it also sells children's apparel, bath items, furniture, gifts, jewelry, linens, and shoes.
39
The business operates under the names Burlington Coat Factory (98% of sales), Cohoes
Fashions, MJM Designer Shoes, and Super Baby Depot in some 45 states. Founded in
1972, Burlington was acquired by affiliates of buyout firm Bain Capital in 2006.
Under the terms of the buyout, Bain Capital acquired all of Burlington Coat Factory's
outstanding shares for about $2.1 billion. (The family of founder Monroe Milstein owned
about 62% of Burlington Coat Factory prior to the acquisition.)
The retailer is best known for its year-round selection of about 10,000 to 20,000 discounted
coats (compared to about 1,500 to 2,000 coats at the typical department store). Burlington
Coat Factory takes less of a markup than its department store competition and has lower
profit margins than other clothing retailers. It buys the coats early in the season (up to five
months before department store rivals) to lock in lower prices. Burlington Coat Factory
prefers to lease existing buildings and refurbish rather than build new stores, keeping
overhead low. Unlike other off-price retailers, it buys directly from manufacturers and does
not rely on leftovers or closeouts. The company also sells merchandise on the Internet at
Burlingtoncoatfactory.com and babydepot.com.
As part of its growth plan, the off-price retailer has acquired the rights for up to 24 leases
from Value City Department Stores owner Retail Ventures. The stores, located in Ohio,
Pennsylvania, New Jersey, and Maryland, are slated to open under the Burlington Coat
Factory banner in the fall of 2008 through spring 2009.
Burlington Coat Factory Warehouse Corporation recently announced that net sales from
continuing operations for the fourth quarter ended May 30, 2009 were $811.5 million
compared with $780.9 million for the comparative period ended May 31, 2008, a 3.9%
increase. Comparative store sales decreased 3.1% for the period.
Net sales from continuing operations for the twelve months ended May 30, 2009 were
$3.542 billion compared with $3.393 billion for the comparative period ended May 31,
2008, a 4.4% increase. These results reflect a 2.5% comparative store sales decrease for the
year.
Tom Kingsbury, Chief Executive Officer, stated, “We are very pleased to continue to report a
total sales and market share increase. In addition, the ongoing success of our cost reduction
initiative has enabled us to end the year with a more current inventory position as we move
into the 2010 fiscal year.”
During the twelve months ended May 30, 2009, the Company opened thirty–six net new
Burlington Coat Factory stores. Two stores closed as a result of hurricane “Ike” were
reopened during the fourth quarter of fiscal 2009.
As of May 30, 2009, the Company operated 433 stores in 44 states and Puerto Rico,
principally under the name “Burlington Coat Factory”
40
Conclusion
Based on the foregoing analysis, CBRE’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
Fort Wayne MSA
Occupied
Vacant
91.4%
8.6%
North Fort Wayne Submarket
88.5%
11.5%
Fort Wayne Retail Market - Community & Neighborhood Centers 3-Mile Radius
79.9%
20.1%
Rent Comparables
77.3%
22.7%
Subject's Current Occupancy
94.3%
5.7%
Subject's Stabilized Occupancy
95.0%
Lease-up Period
0 Months
Compiled by CBRE
CONCLUSION
The area retail market and the local submarket are exhibiting average to above average occupancy
levels and upward trending rental rates, while maintaining favorable absorption in recent years.
Considering the recent trends in absorption and the prospects for new construction, the local market
area should maintain a stabilized occupancy position. The addition of new product to the market may
create minor downward pressure on occupancy and on owners’ ability to obtain the effective rental
increases of the past several years. However, the long-term projection for the subject submarket is for
continued growth.
With respect to the subject in particular, we believe the subject is reasonably well located for a retail
project particularly adjacent to a larger retail center with additional pulling power. It is in reasonable
proximity to both employment centers and major roadways, and the surrounding retail developments
are experiencing average levels of demand. Based upon our analysis, the subject should continue to
enjoy good market acceptance.
41
GLENBROOK COMMONS | S ITE A NALYSIS
PARCEL MAP
42
SITE PLAN
43
SITE ANALYSIS
The following chart summarizes the salient characteristics of the subject site.
SITE SUMMARY
Physical Description
Gross Site Area
24.21 Acres
1,054,588 Sq. Ft.
Net Site Area
24.21 Acres
1,054,588 Sq. Ft.
Primary Road Frontage
Lima Road
Secondary Road Frontage
Mall Perimeter Road
Excess Land Area
None
Surplus Land Area
None
Primary Traffic Counts (24 hrs.)
Lima Road
30,000 (2008)
Zoning District
SC4, Regional Shopping Center
Flood Map Panel No. & Date
18003C0282G
Flood Zone
Zone X
3-Aug-09
LOCATION
The subject is located on the east side of Lima Road, just south of Coliseum Boulevard. The subject is
adjacent to the west of Glenbrook Square Mall. The street address is 4122 Lima Road, Anderson,
Indiana.
ASSESSOR’S PARCEL NUMBER
The Allen County Tax Assessor’s parcel number is:

02-07-26-128-009-000-07318-2029-1-003Z
LAND AREA
The land area size was obtained via Allen County assessment records.
The site is considered
adequate in terms of size and utility. There is no unusable, excess or surplus land area.
SHAPE AND FRONTAGE
The site is irregular in shape and has adequate frontage and access along one primary thoroughfare
within the neighborhood.
INGRESS/EGRESS
Ingress and egress is available to the site via one curb cut along Lima Road including access from the
Mall Perimeter Road.
44
Please refer to the prior site/plat exhibit for the layout of the streets that provide access to the subject.
TOPOGRAPHY AND DRAINAGE
The site is generally level and at street grade. The topography of the site is not seen as an impediment
to the development of the property. During our inspection of the site, we observed no drainage
problems and assume that none exist.
SOILS
A soils analysis for the site has not been provided for the preparation of this appraisal. In the absence
of a soils report, it is a specific assumption that the site has adequate soils to support the highest and
best use.
EASEMENTS AND ENCROACHMENTS
Based on an inspection and review of the site plan, the property does not appear to be adversely
affected by any easements or encroachments. It is recommended that the client/reader obtain a
current title policy outlining all easements and encroachments on the property, if any, prior to making
a business decision.
COVENANTS, CONDITIONS AND RESTRICTIONS
There are no known covenants, conditions and restrictions impacting the site that are considered to
affect the marketability or highest and best use.
UTILITIES AND SERVICES
The site is within the jurisdiction of the city of Fort Wayne and is provided all municipal services,
including police and fire. Refuse garbage collection is provided via private contractor. All utilities are
available to the site in adequate quality and quantity to service the highest and best use.
FLOOD ZONE
According to flood hazard maps published by the Federal Emergency Management Agency (FEMA),
the site is within Zone X, as indicated on the indicated Community Map Panel No. 18003C0282G.
FEMA Zone X: Areas determined to be outside the 500-year flood plain.
ENVIRONMENTAL ISSUES
CBRE has not observed and 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
45
has specifically assumed that the property is not affected by any hazardous materials that may be
present on or near the property.
ADJACENT PROPERTIES
The adjacent land uses are summarized as follows:
North:
South:
East:
West:
Retail shopping center
Glenbrook Square Regional Mall
CONCLUSION
The subject site has good frontage and visibility along the primary roadway within an established retail
market in the city of Fort Wayne. The traffic counts are strong. The size of the site is typical for a
retail center. Overall, there are no known factors which 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, other
than current market conditions.
46
GLENBROOK COMMONS | I MPROVEMENTS A NALYSIS
IMPROVEMENTS LAYOUT
47
IMPROVEMENTS ANALYSIS
The following chart shows a summary of the improvements.
IMPROVEMENTS SUMMARY
Property Type
Retail
Number of Buildings
2
Number of Stories
Year Built
1
1987
Gross Leasable Area
254,112 SF
(Neighborhood/Community Center)
Area Breakdown by Market Rent Categories
Anchors
95,682 SF
Jr. Anchors
88,918 SF
Large In-line
45,774 SF
Small In-line
23,738 SF
Major Tenants
Toys R Us
45,495 SF
Bay Depths
60' (Local Tenants) - 100' (Major Tenants)
Site Coverage
24.1%
Land-to-Building Ratio
4.15 : 1
Parking Improvements
Open
Total Spaces:
1426
Parking Ratio (per 1,000 SF GLA )
5.61
Building plans and specifications were not provided for the preparation of this appraisal.
The
following is a description of the subject improvements and basic construction features derived from
CBRE’s inspection.
YEAR BUILT
The subject was built in 1987 and renovated in 2006.
FOUNDATION
The foundation consists of a continuous monolithic slab poured on reinforced concrete footings.
CONSTRUCTION COMPONENTS
The construction components include a frame with steel beams and steel deck.
48
FLOOR STRUCTURE
The floor structure is summarized as follows:
Ground Floor:
Concrete slab on compacted fill
EXTERIOR WALLS
The center has face brick façade with brick support pillars, a cedar fascia and canopy cover. Retail
storefronts are plate glass set in anodized aluminum frames.
ROOF COVER
The buildings have a flat composition roof cover with parapet walls.
INTERIOR FINISHES
The typical interior finish of the retail shop space is summarized as follows:
Floor Coverings:
Commercial grade short loop carpeting and vinyl tile over
concrete.
Walls:
Textured and painted sheetrock.
Ceilings:
Combination textured and painted sheetrock and suspended
acoustical tile.
Lighting:
Standard commercial fluorescent fixtures.
Summary:
The interior areas are typical building standard retail
showroom finish, and are commensurate with competitors in
the area. The occupied space is in good condition, while
vacant spaces will likely require some tenant retrofit prior to
occupancy.
ELEVATOR/STAIR SYSTEM
The subject represents a ground floor retail use. As such, there are no elevators or stairwells.
HVAC
The HVAC system is assumed to be in good working order and adequate for the building.
ELECTRICAL
The electrical system is assumed to be in good working order and adequate for the building.
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PLUMBING
The plumbing system is assumed to be in good working order and adequate for the building.
RESTROOMS
The restrooms are adequate and are assumed built to local code.
FIRE PROTECTION
It is assumed the improvements have adequate fire alarm systems, fire exits, fire extinguishers, fire
escapes and/or other fire protection measures to meet local fire marshal requirements.
SECURITY
The security system is assumed to be in good working order and adequate for the building.
PARKING AND DRIVES
The property features 1,426 surface parking spaces, including reserved handicapped spaces. All
parking spaces and vehicle drives are asphalt paved and considered to be in average condition.
Patron parking areas are along the front and sides of the building. The number of parking spaces is
assumed to be legally conforming for the existing use and is typical of the market.
LANDSCAPING
Landscaping is considered to be in average condition and well maintained.
QUALITY AND STRUCTURAL CONDITION
The overall quality of the facility is considered to be average for the neighborhood and age. CBRE
did not observe any evidence of structural fatigue and the improvements appear structurally sound for
occupancy. However, CBRE is not qualified to determine structural integrity and it is recommended
that the client/reader retain the services of a qualified, independent engineer or contractor to
determine the structural integrity of the improvements prior to making a business decision.
FUNCTIONAL UTILITY
The overall layout of the property is considered functional in utility and provides adequate accessibility
and visibility to the individual retail spaces.
ADA COMPLIANCE
All common areas of the property appear to have handicap accessibility. The client/reader’s attention
is directed to the specific limiting conditions regarding ADA compliance.
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FURNITURE, FIXTURES AND EQUIPMENT
Any personal property items contained in the property are not considered to contribute significantly to
the overall value of the real estate.
ENVIRONMENTAL ISSUES
CBRE has not observed and is not qualified to detect the existence of any potentially hazardous
materials such as lead paint, asbestos, urea formaldehyde foam insulation, or other potentially
hazardous construction materials on or in the improvements. The existence of such substances may
affect the value of the property. For the purpose of this assignment, we have specifically assumed that
any hazardous materials that would cause a loss in value do not affect the subject.
DEFERRED MAINTENANCE
Property management has recently signed one large credit tenant, which plans to occupy the former
50,187 square foot Steve & Berry space in the 3rd Quarter of 2013. However, the landlord has
agreed to spend $17.00 per square foot in tenant improvement allowance, which equates to
$853,179. Further, property management has signed another credit tenant to occupy the former
Hancock Fabrics and suite A11, which they have agreed on a tenant improvement allowance of
$1,295,000, which has not been distributed. Although not a deferred maintenance issue, there is
also $40,000 of unpaid leasing commission for the space, which is also deducted from each
approach. The following chart shows the deferred maintenance items identified and their respective
estimated costs to cure.
ANALYSIS OF DEFERRED MAINTENANCE
Burlington Coat Factory TI
$853,179
Duhams's TI Allowence
$1,295,000
Total Deferred Maintenance:
$2,148,179
Unpaid Leasing Commission
Total Deductions
$40,000
$2,188,179
Source: Marshall & Swift / Property Management
The total deferred maintenance and leasing commission estimate will be deducted from each
approach in order to conclude the “as is” value for the subject.
ECONOMIC AGE AND LIFE
CBRE’s estimate of the subject improvements effective age and remaining economic life is depicted in
the following chart:
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ECONOMIC AGE AND LIFE
Actual Age
26 Years
Effective Age
15 Years
MVS Expected Life
45 Years
Remaining Economic Life
30 Years
Accrued Physical Incurable Depreciation
33.3%
Compiled by CBRE
The overall life expectancy is based upon our on-site observations and a comparative analysis of
typical life expectancies reported for buildings of similar construction as published by Marshall and
Swift, LLC, in the Marshall Valuation Service cost guide. While CBRE did not observe anything to
suggest a different economic life, a capital improvement program could extend the life expectancy.
CONCLUSION
The improvements are in average overall condition. Overall, there are no known factors that adversely
impact the marketability of the improvements.
52
GLENBROOK COMMONS | Z ONING
ZONING
The following chart summarizes the subject’s zoning requirements.
ZONING SUMMARY
Current Zoning
SC4, Regional Shopping Center
Legally Conforming
Yes
Uses Permitted
This district is provided to meet the need for
retail shopping facilities in planned shopping
centers in the sections of the city where no
clear pattern of business use now exists, to
accommodate the shopping needs of a
community.
Zoning Change
Not likely
Category
Maximum Height
Zoning Requirement
35 Feet
Minimum Setbacks
Front Yard
50 Feet
Street Side Yard
25 Feet
Interior Side Yard
25 Feet
Rear Yard
40 Feet
Maximum Bldg. Coverage
25%
Maximum FAR/Density
1.00 : 1
Subject's Actual FAR
0.24 : 1
Subject's Actual Density
0 Units/Acre
Parking Requirements
1.00 spaces / 400 sf of building
Subject's Actual Parking
2.24 spaces / 400 sf of building
Source: Planning & Zoning Dept.
ANALYSIS AND CONCLUSION
The improvements represent a legally-conforming use and, if damaged, may be restored without
special permit application. If additional information is required, please contact the local planning
and/or zoning office.
53
GLENBROOK COMMONS | T AX AND A SSESSMENT D ATA
TAX AND ASSESSMENT DATA
Historically, real estate in Indiana was assessed at true tax value. Prior to March 1, 2001, real estate
was assessed at one-third of the assessor's estimated value. In addition, prior to 2002, real estate
taxes in Indiana were based on a depreciated replacement basis less a credit for replacements. The
assessment was not market based. In 2002, the State of Indiana modified its tax laws, with a shift to a
market based system. Assessments in Indiana are now based on market value-in-use. Market valuein-use is defined by the 2002 Real Property Assessment Manual & Guidelines as follows:
“The value of property for a specified use. The concept that holds value to be inherent in a
property itself; this is, the value is based on the ability of the asset to produce revenue or
utility through ownership.”
Taxes in Indiana are paid one year in arrears. The 2011 tax liability is based on the 2010 assessment,
which represents the physical condition of the property and market conditions that existed on March 1,
2010. Tax bills are paid in two equal installments in May and November of each year.
In the March 2008 Indiana Legislative Session, the Indiana House and Senate voted to approve bill
HB 1001. The bill included a proposed constitutional amendment that placed caps on the property
tax rates that can be applied to various types of property. In the November 2010 General Election a
public referendum on the caps was approved by the public to allow for an amendment placing the
caps in the Indiana State Constitution. The caps are now permanently in place, barring an additional
amendment for removal. For single family residential property used as a primary residence, the rate is
capped at 1.0% of assessed value. For residential rental properties (including apartments, nursing
homes, assisted living facilities, etc), the tax rate cap is 2.0% of the assessed value. For general
commercial properties, the cap is 3.0% of assessed value. In the event that the tax rate for the taxing
district exceeds the capped tax rate for the property type, the lower of the two tax rates is used. The
assessment is further broken down within individual parcels by the nature of improvements and
specific improvements within a parcel can be taxed at differing rates. The replacement credits that
previously had been used have been eliminated.
Assessed values are not capped and are subject to annual reassessments. Theoretically, a sale of the
property could affect the taxes or assessment; however, whether a property is reassessed based upon
a transfer is dependent on the individual county where the property is located. The subject is located
in a Clark County, which does assess the property based on the sale.
The following summarizes the subject’s assessed value and estimated lax liability, and does not
include any furniture, fixtures and equipment.
54
GLENBROOK COMMONS | T AX AND A SSESSMENT D ATA
AD VALOREM TAX INFORMATION
Assessor's Market Value
2012/2013
02-07-26-128-009-000-073
$7,576,200
Subtotal
$7,576,200
Assessed Value @
General Tax Rate
100%
(per $100 A.V.)
Total Taxes
Pro Forma
$7,576,200
100%
$7,576,200
$7,576,200
3.026100
3.026100
$229,263
$229,263
Source: Assessor's Office
Based on the foregoing, the total taxes for the subject have been estimated as $229,263 for the base
year of our analysis, based upon an assessed value of $7,576,200 , or $30 per square foot. This was
estimated utilizing the subject’s most recent assessment applied against the most recent real estate tax
rate (2012 pay 2013) grown forward at 3.0%.
CONCLUSION
For purposes of this analysis we are assuming any outstanding property tax liability has been paid.
CBRE assumes that all taxes are current. If the subject sold for the value estimate in this report, a
reassessment at that value could occur. The consequences of this reassessment have been considered
in the appropriate valuation sections.
55
GLENBROOK COMMONS | H IGHEST AND B EST U SE
HIGHEST AND BEST USE
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:
* legal permissibility;
* physical possibility;
* financial feasibility; and
* maximum profitability.
Highest and best use analysis involves assessing the subject both as if vacant and as improved.
AS VACANT
Legal Permissibility
The legally permissible uses were discussed in detail in the Site Analysis and Zoning Sections.
Physical Possibility
The subject is adequately served by utilities, has an adequate shape and size, sufficient access, etc., to
be a separately developable site. The subject site contains 24.21-acres, or 1,054,588 square feet.
The site is irregularly shaped and level at street grade. There are no known physical reasons why the
subject site would not support any legally probable development. The existence of the present
development on the site provides additional evidence for the physical possibility of development.
Financial Feasibility
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 of this report, the subject retail market is generally stabilized. Development of new
retail properties has occurred in the past few years. Further, within the subject market, there are
proposed retail projects in the competitive market. These factors indicate that it would be financially
feasible to complete a new retail project if the site acquisition cost was low enough to provide an
adequate developer’s profit.
Maximum Profitability
The final test of highest and best use of the site as though vacant is that the use be maximally
productive, yielding the highest return to the land. In the case of the subject as if vacant, the analysis
has indicated that a new retail project would be most appropriate.
CONCLUSION: HIGHEST AND BEST USE AS VACANT
Based on the information presented above and upon information contained in the market and
neighborhood analysis, we conclude that the ultimate highest and best use of the subject as if vacant,
56
GLENBROOK COMMONS | H IGHEST AND B EST U SE
would be the development as a retail property. However, given current market conditions impacted
by a recessionary economy and difficulty in securing construction financing, the near-term highest and
best use of the site, as vacant, would be to hold for future retail development when economic
conditions improve.
AS IMPROVED
Legal Permissibility
As discussed, the subject site’s zoning and legal restrictions permit a variety of land uses. The site has
been improved with a 254,112 square foot retail development that is a legal, conforming use.
Physical Possibility
The physical characteristics of the subject improvements were discussed in detail in the improvements
analysis. Both the layout and positioning of the improvements are considered functional for retail 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 retail users would be the most
functional use.
Financial Feasibility
The financial feasibility of a retail 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. As will be indicated in the income capitalization approach, the subject
is producing a positive net cash flow and continued utilization of the improvements for retail purposes
is considered financially feasible.
Maximum Profitability
The maximally profitable use of the subject as improved should conform to neighborhood trends and
be consistent with existing land uses. Although several uses may generate sufficient revenue to satisfy
the required rate of return on investment and provide a return on the land, the single use that
produces the highest price or value is typically the highest and best use. As shown in the applicable
valuation sections, buildings that are similar to the subject have been acquired or continue to be used
by retail owners/tenants. None of the comparable buildings have been acquired for conversion to an
alternative use. These comparables would indicate that the maximally productive use of the property is
consistent with the existing use as a retail property.
CONCLUSION: HIGHEST AND BEST USE AS IMPROVED
Based on the foregoing, the highest and best use of the property, as improved, is consistent with the
existing use as a retail development.
57
GLENBROOK COMMONS | A PPRAISAL M ETHODOLOGY
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. The cost approach is not applicable in the estimation of market
value for the following reasons:


the age and resulting amount of and physical depreciation present in the property; and,
typical investors do not utilize the cost approach as a primary valuation technique for
income producing properties such as the subject.
58
GLENBROOK COMMONS | S ALES C OMPARISON A PPROACH
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.
59
SUMMARY OF COMPARABLE RETAIL SALES
No. Name
1
2
3
Listing
Pine Valley Shopping
Center ,
Fort Wayne, IN
Country Center Shoppes Sale
,
Greenwood, IN
Monticello Plaza,
Sale
Monticello, IN
Year
Built
GLA
(SF)
Actual Sale
Price
Adjusted
Price
Sale Price 1
Per SF 1
Occ.
NOI
Per SF
OAR
Apr-13
1974
91,986
$8,065,000
$8,065,000
$87.68
95%
$8.11
9.25%
Oct-12
1986
41,901
$3,000,000
$3,000,000
$71.60
75%
$7.33
10.24%
Feb-12
1968
189,330
$10,000,000
$10,000,000
$52.82
97%
$3.96
7.50%
4
Riverplace Plaza,
Noblesville, IN
Sale
Jun-12
1992
74,414
$4,350,000
$4,350,000
$58.46
94%
$6.24
10.68%
5
West Valley Shopping
Center,
Saginaw Township, MI
Sale
Nov-12
1996
287,691
$26,500,000
$26,500,000
$92.11
99%
$9.30
10.10%
6
Brook Park Plaza,
Brook Park, OH
Sale
Oct-12
1991
157,459
$10,140,000
$10,900,500
$69.23
88%
$5.54
8.00%
7
Golden Gate Shopping
Center,
Troy, MI
Sale
Jul-12
1974
100,585
$6,560,000
$6,560,000
$65.22
94%
$6.99
10.71%
---
---
1987
254,112
---
---
---
95%
$6.17
---
Subj. Glenbrook Commons,
Pro Fort Wayne, Indiana
Forma
1
Transaction
Type
Date
Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable)
Compiled by CBRE
DISCUSSION/ANALYSIS OF IMPROVED SALES
Improved Sale One
This active listing represents the Pine Valley Shopping Center located at the southeast corner of
Coldwater Road & Dupont Road in Fort Wayne. The property contains 91,986 square feet of gross
leasing area with an average lease rate ranging between $13.00 and $15.00 per square foot net
over a three- to five-year term. Operating expenses are estimated to be $3.00 per square foot.
Typical rent escalations range from 3% annually or $1.50 bump for the length of the lease. The
shopping center is currently 95% occupied. The center is currently being marketed for $8,065,000 or
$87.68 per square foot with an implied capitalization rate of 9.25%.
In terms of conditions of sale, this comparable was considered superior and received a downward
adjustment of -10% for this characteristic due to the differences between the asking price and the
anticipated sales price. Upon comparison with the subject, this comparable was considered superior
in terms of size and received a downward adjustment of -10% for this characteristic due to its smaller
square footage. In terms of age/condition, this comparable was judged inferior due to its older year
of construction and received an upward adjustment of 5% for this characteristic.
60
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 Country Center Shoppes, a 41,901 square foot unanchored
retail center built in 1978 and renovated in 2006. The 4.17-acre site is located along North State
Road in Greenwood, Johnson County, Indiana. The common street address is 1100-1140 North
State Road 135. The center has 507 feet of frontage along the west side of State Route 135 and 262
feet of frontage along the north side of Meridian Meadows Road. In October 2012, the property sold
for $3,000,000, or $71.60 per square foot. Per the broker, the capitalization rate of 10.24% was
based upon in place income. The property was listed for approximately 22 months with an asking
price is $3,500,000, or $83.53 per square foot.
Upon comparison with the subject, this comparable was considered superior in terms of size and
received a downward adjustment of -15% for this characteristic due to its smaller square footage. An
occupancy category adjustment was considered appropriate for this comparable given its lower
occupancy when compared to the subject's stabilized occupancy. Because of this inferior trait, an
upward adjustment of 5% 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 comparable represents the sale of a 189,330 square foot community shopping center located at
832-1108 N Main Street in Monticello, White County, Indiana. Known as the Monticello Plaza, the
improvements were developed in 1968. The property is located on Monticello's major north/south
thoroughfare. Retailers in the immediate area include Taco Bell, CVS, Arby's, Advance Auto Parts and
Wells Fargo.
The center was 96.6% occupied at the time of sale and is anchored by Kroger
supermarket (50,000 square feet), Rural King Supply (70,000 square feet) and Ace Hardware
(12,500 square feet). In February 2012, the property sold for an allocated consideration of
$10,000,000, or $52.82 per square foot. Based on the reported existing income, an overall
capitalization rate of 7.50% was indicated by the sale.
The 10% upward adjustment for location reflects this comparable's inferior feature with respect to the
inferior demographics of the Monticello market when compared to the subject's Fort Wayne market.
received a downward adjustment of -5% for this characteristic due to its smaller square footage. In
terms of age/condition, this comparable was judged inferior due to its older year of construction and
received an upward adjustment of 5% for this characteristic. Overall, this comparable was deemed
61
inferior in comparison to the subject and an upward net adjustment was warranted to the sales price
indicator.
Improved Sale Four
This comparable represents the sale of a neighborhood shopping center known as Riverplace Center.
The property is situated on a 12.56-acre site at the northeast corner of Logan and Nixon Streets in
Noblesville, Hamilton County, Indiana. The immediate area is a mixed-use destination featuring a
combination of neighborhood retail and professional uses in addition to single-family residences. The
subject was developed in 1992 and contains 74,414 square feet of gross leasable area. The center is
currently 94.1% leased. The shopping center is anchored by Kroger supermarket. The anchor suite
comprises 67% of the subject GLA and is leased through January 2017). In June 2012, the property
sold for an allocated consideration of $4,350,000, or $58.46 per square foot. Based on the reported
existing income, an overall capitalization rate of 10.68% was indicated by the sale.
received a downward adjustment of -10% for this characteristic due to its smaller square footage.
With respect to tenancy, this comparable was considered inferior in this aspect and received an
upward adjustment of 10% because of its lack of larger additional anchor tenants when compared to
the subject. Overall, the adjustments applied to this comparable resulted in a net adjustment of zero,
whereby the property was deemed similar in comparison to the subject.
Improved Sale Five
The comparable is a 287,691 square foot community shopping center located at 3111 Tittabawassee
Road, Saginaw Township, Saginaw County, MI. The improvements were constructed in 1996 with
various renovations through to the present. The property is located on a 40.97-acre site. Currently,
the property is 99.1% leased with the landlord currently building out space for DSW and Five Below
with anticipated commencement in January 2013. The property is anchored by a Dick's Sporting
Goods Store with Junior Anchors including Barnes & Noble, Babies ""R"" Us, Old Navy, TJ Maxx,
PetSmart and Michael's Stores. The property is in average overall condition. The landlord has been
successful in maintaining several key tenants as well as back filling several junior anchor vacancies
over the past several years, however many of the original tenants were granted rent reductions due to
violation of co-tenancy clauses and overall market conditions. Additionally, the landlord added onto
the property in 2012 to accommodate Ulta Salon with the suite built out to the tenant specifications
thus the high tenant improvement dollar amount. Within a three mile radius of the property there are
approximately 13,114 households with an average household income of $54,005.
The property was sold to Cole Real Estate Investments from the Sobel Company as part of the
purchase of this center and the adjacent East Valley Center. The purchase was an arm's length
transaction generally at market levels. The comparable property had many long term leases as
62
follows: Dicks (4/21), Barnes and Noble (2/17), Toys R Us (1/15), Old Navy (1/17), TJ Maxx (1/22),
PetSmart (1/17), Michaels (2/19), DSW (1/23). Sales figures for the property are $148/SF for anchor
space and $223-$267/SF for junior anchor space. The property was purchased at a sale price of
$92.11 per square foot with an implied capitalization rate of 10.10%.
In terms of age/condition, this comparable was judged superior due to its newer year of construction
and received a downward adjustment of -5% for this characteristic. With respect to tenancy, this
comparable was considered superior in this aspect and received a downward adjustment of -15%
because of its superior line of anchor tenants on long-term leases when compared to the subject.
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 Six
This comparable represents the sale of Brook Park Plaza located in densely populated Brook Park,
Ohio. This property is a 157,459 square foot neighborhood retail center comprised of one building
and a Get Go fuel center and situated on an 11.99 acre site. The center was originally developed in
1991 and Giant Eagle serves as the anchor tenant. At the time of sale, the center was 87.8%
occupied. Other tenants include Fresenius Medical Services, Goodwill, and Chengaworld Skate Park.
According to the buyer's SEC filings, the weighted average lease term of the existing tenants was
approximately 5.5 years. In October 2012, the comparable was sold for $10,140,000, or
approximately $64.40 per square foot. The buyer's broker confirmed the sale was arm's length. The
broker stated the comparable was not marketed; the buyer approached the seller directly. The broker
confirmed the buyer's underwriting equated to an 8.60% overall capitalization rate based upon
existing income (implying a net operating income of $872,040). The broker stated the overall
capitalization rate was somewhat high due to a loan assumption with a high interest rate, which was
self-amortizing. The buyer's broker stated without this unfavorable financing, the sale's overall
capitalization rate would have been approximately 8.00%. CBRE, Inc. has adjusted the sale for the
favorable financing within the write up of this comparable, implying a $10,900,500 sale price, or
approximately $69.23 per square foot.
received a downward adjustment of -5% for this characteristic due to its smaller square footage.
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 Seven
The comparable is a 100,585-square foot retail property (community center) located at 2891-2999
East Big Beaver Road, Troy, Oakland County, MI. The improvements were constructed in 1974 and
1976 and are situated on a 11.543-acre site. Currently, the property is 94.1% occupied and is
63
considered to be in average overall condition. The property is anchored by an Aldi grocery store and
includes a mixture of national (corporate and franchisee) and local operators. The property also has
an independent specialty grocery store (E-Mart) as well as Ace Hardware and Dollar General all as
tenants. The property has three total buildings, two retail and one medical office building. The
property has end cap units along Big Beaver and John R Roads which represent the higher end of the
rental rate range. Within a three mile radius of the property there are 33,740 households with an
average household income of $72,415. Traffic counts along Big Beaver Road are 32,484 cars per
day with Dequindre Road having traffic counts of 30,931 cars per day.
The property was purchased from Reed Holdings - Troy LLC to Thomas Hannawa for a purchase price
of $6,560,000. The buyer is a local real estate investor who was purchasing the property as a long
term investment based upon the tenant mix and strong location. The buyer considered the forward
looking in place income at the time of purchase as the primary indication of value for the property
with the purchase indicating an overall rate of 10.71%. Overall, the buyer planned to complete
renovations/tenant improvements in order to attract better and stronger tenants as a long term
strategy.
received a downward adjustment of -10% for this characteristic due to its smaller square footage. In
terms of age/condition, this comparable was judged inferior due to its older year of construction and
received an upward adjustment of 5% for this characteristic. 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.
64
RETAIL SALES ADJUSTMENT GRID
Comparable Number
1
2
3
4
5
6
7
Subj.
Pro
Forma
---
Transaction Type
Listing
Sale
Sale
Sale
Sale
Sale
Sale
Transaction Date
Apr-13
Oct-12
Feb-12
Jun-12
Nov-12
Oct-12
Jul-12
---
1974
1986
1968
1992
1996
1991
1974
1987
287,691
157,459
100,585
254,112
Year Built
GLA (SF)
Actual Sale Price
Adjusted Sale Price
1
Price Per SF 1
91,986
41,901
189,330
74,414
$8,065,000
$3,000,000
$10,000,000
$4,350,000
$26,500,000 $10,140,000
$6,560,000
---
$8,065,000
$3,000,000
$10,000,000
$4,350,000
$26,500,000 $10,900,500
$6,560,000
---
$87.68
$71.60
$52.82
$58.46
$92.11
$69.23
$65.22
---
Occupancy
95%
75%
97%
94%
99%
88%
94%
95%
NOI Per SF
$8.11
$7.33
$3.96
$6.24
$9.30
$5.54
$6.99
$6.17
9.25%
$87.68
10.24%
$71.60
7.50%
$52.82
10.68%
$58.46
10.10%
$92.11
8.00%
$69.23
10.71%
$65.22
---
OAR
Adj. Price Per SF
Property Rights Conveyed
Financing Terms 1
Conditions of Sale
Market Conditions (Time)
Subtotal - Price Per SF
Location
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
-10%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
$78.91
$71.60
$52.82
$58.46
$92.11
$69.23
$65.22
0%
0%
10%
0%
0%
0%
0%
-10%
-15%
-5%
-10%
0%
-5%
-10%
Age/Condition
5%
0%
5%
0%
-5%
0%
5%
Quality of Construction
0%
0%
0%
0%
0%
0%
0%
Traffic Counts/Exposure
0%
0%
0%
0%
0%
0%
0%
NOI/Economics
0%
0%
0%
0%
0%
0%
0%
Tenancy
0%
0%
0%
10%
-15%
0%
0%
Occupancy
Total Other Adjustments
0%
-5%
5%
-10%
0%
10%
0%
0%
0%
-20%
0%
-5%
0%
-5%
Indicated Value Per SF
$74.97
$64.44
$58.10
$58.46
$73.69
$65.77
$61.96
Size
1
Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable)
Compiled by CBRE
Overall, Comparables One, Two, Three, Four, Six and Seven were the most representative of the
subject, and warranted greatest consideration because their similarity in age, location, proximity to the
subject or low percentage of adjustment.
NET INCOME MULTIPLIER METHOD
As a cross check to the foregoing analysis, the net operating income (NOI) being generated by the
comparable sales as compared to the subject’s pro forma NOI estimated in the following income
capitalization approach has been analyzed. In this analysis, we have extracted a significant unit of
comparison from the improved sales after analyzing each comparable property, and then have
applied the appropriate unit of comparison to the subject property. In this case, we have identified a
relationship between the net operating income and the sales price of the property i.e. the higher the
net operating income per square foot generally corresponds to a higher sales price per square foot.
The equation for the net income multiplier (NIM), which is the inverse of the equation for the
capitalization rate (OAR), is calculated as follows:
NIM = Sales Price/Net Operating Income
65
The range of net income multipliers and going-in capitalization rates exhibited by the lifestyle center
sales are summarized on the following table.
NET INCOME MULTIPLIER
Sale No.
Price Per SF
/
NOI Per SF
=
1
2
3
4
5
6
7
$87.68
$71.60
$52.82
$58.46
$92.11
$69.23
$65.22
/
/
/
/
/
/
/
$8.11
$7.33
$3.96
$6.24
$9.30
$5.54
$6.99
=
=
=
=
=
=
=
Low
High
Mean
$52.82
$92.11
$71.02
$3.96
$9.30
$6.78
Net Income
Multiplier
10.81
9.77
13.34
9.37
9.90
12.50
9.33
9.33
13.34
10.72
Analysis prepared by CBRE
Valuation of the subject property utilizing the net income multipliers (NIM) from the comparable
properties accounts for the disparity of the net operating incomes ($NOI’s) per square foot between
the comparables and the subject. Within this technique, each of the adjusted NIM’s are multiplied by
the $NOI per square foot of the subject, which produces an adjusted value indication for the subject.
The net operating income per square foot for the subject property is typically calculated as the first
year of the holding period.
The stabilized net operating income as derived in the Direct Capitalization Analysis is estimated at
$6.17 per square foot of gross leasable area. Details of this analysis can be found in the Income
Capitalization Approach section.
66
NET INCOME MULTIPLIER ANALYSIS
SOUTHTOWN SHOPPING CENTER
Sale No.
1
2
3
4
5
6
7
Subject NOI
PSF
$6.17
$6.17
$6.17
$6.17
$6.17
$6.17
$6.17
x
x
x
x
x
x
x
x
Net Income
Multiplier
10.81
9.77
13.34
9.37
9.90
12.50
9.33
Low
High
Mean
=
=
=
=
=
=
=
=
Indicated Price
PSF
$66.70
$60.26
$82.29
$57.80
$61.10
$77.10
$57.56
$57.56
$82.29
$66.12
Analysis prepared by CBRE
SALE PRICE PER SQUARE FOOT CONCLUSION
Based on the sales comparison analysis, the indicated adjusted value range is to per square foot. The
average is per square foot. Based on the net income multiplier analysis, the indicated adjusted value
range is $58.10 to $74.97 per square foot, with the mid-aspect of the range at $65.34 per square
foot.
In the final analysis, considering both methods of extracting value, we have estimated the subject’s
value to be below the mean of the sales, at $60.00 to $75.00 per square foot.
Based on the preceding analysis of each comparable and the foregoing adjustment grid, a price per
square foot indication near the mid-range of the adjusted values per square foot was most
appropriate for the subject. The following table presents the valuation conclusion:
67
GLA (SF)
X
Value Per SF
=
Value
254,112
X
$60.00
=
$15,246,720
254,112
X
$75.00
=
$19,058,400
VALUE CONCLUSION
Indicated Stabilized Value
$17,700,000
Tenant Improvements - Burlington
($853,179)
Tenant Improvements - Dunhams
($1,295,000)
Unpaid Leasing Commissions - Dunhams
Lost Rent
($40,000)
($178,536)
Value Indication
$15,333,286
Rounded
$15,300,000
Value Per SF
$60.21
Compiled by CBRE
68
GLENBROOK COMMONS |I NCOME C APITALIZATION A PPROACH
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 period of time. The two common valuation
techniques associated with the Income Capitalization Approach are direct capitalization and the
discounted cash flow (DCF) analysis. For this income analysis, both valuation techniques have been
applied.
MARKET RENT ANALYSIS
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.
69
SUMMARY OF COMPARABLE RETAIL RENTALS
Comp. Property Name
No. and Location
1
2
3
4
5
6
Covington Plaza
4130 West Jefferson
Boulevard,
Fort Wayne, IN
Year
Built
Occ.
GLA (SF)
Quoted
Rental Rate
Expense
Basis
Pass Thru/
Stop Amt.
Tenant
Name
Lease
Area (SF)
Lease
Date
Lease
Term
1981
98%
183,659
$15.00 PSF
NNN
5.28
Plant Fitness
18,200
Feb-12
120.0 Yrs.
$9.00 PSF
Anytime Fitness
5,400
Feb-09
4.0 Yrs.
$13.00 PSF
PIC Medical Supplies
2,230
Jan-09
4.0 Yrs.
$13.00 PSF
Fresh Market
22,640
Jul-05
15.0 Yrs.
$10.00 PSF
Quoted
---
---
---
$15.00 PSF
Available
62,000
Apr-13
5.0 Yrs.
$8.00 PSF
Quoted
---
---
---
$14.00 PSF
Dupont Crossing Shopping
Center
Fort Wayne, IN
1987
Dupont Village
Fort Wayne, IN
1998
Lima Marketplace
10001-10035 Lima Road,
Fort Wayne, IN
2008
Maplewood Plaza Shopping
Center
5950 - 5960 Stellhorn Rd,
Fort Wayne, IN
1957
Maysville Pointe
10300 Maysville Road,
Fort Wayne, IN
2007
23%
97%
96%
67%
63%
85,000
$14.00 PSF
168,100
$14.50 PSF
93,601
$17.00 PSF
216,102
$10.00 PSF
137,957
$15.00 PSF
NNN
NNN
NNN
NNN
NNN
NNN
2.05
Base Rent
Available
1,400
Apr-13
5.0 Yrs.
$14.50 PSF
Kim Vu Restaurant
1,200
Jul-12
5.0 Yrs.
$10.00 PSF
Quoted
---
---
---
$14.50 PSF
Available
1,600
Apr-13
5.0 Yrs.
$17.00 PSF
$12.00 PSF
NNN
Aldi
16,555
Dec-09
15.0 Yrs.
PetSmart
20,234
Dec-09
10.0 Yrs.
$12.03 PSF
B. Antonio Pizza
3,257
Jun-09
11.0 Yrs.
$18.50 PSF
Quoted
---
---
---
$17.00 PSF
Available
1,000
Apr-13
3.0 Yrs.
$8.50 PSF
Quoted
---
---
---
$10.00 PSF
All
Taxes, Ins, CAM
Available
2,750
Apr-13
5.0 Yrs.
$19.00 PSF
PetsMart
20,087
Feb-08
10.0 Yrs.
$14.50 PSF
Quoted
---
---
---
$15.00 PSF
#REF!
Subj.
Glenbrook Commons
4122 Lima Road,
Fort Wayne, Indiana
1987
94%
254,112
---
---
---
Compiled by CBRE
The rentals utilized represent the best data available for comparison with the subject. They were
selected from our research within the subject’s immediate area.
The following table depicts a
summary of the space allocation for the subject.
MARKET RENT CATEGORIES
Space Allocation
Size
Anchors
95,682 SF
Jr. Anchors
88,918 SF
Large In-line
45,774 SF
Small In-line
23,738 SF
Compiled by CBRE
DISCUSSION/ANALYSIS OF RENT COMPARABLES
Rent Comparable One
Covington Plaza is a community shopping center located on the south side of Jefferson Boulevard,
south of Covington Road, in Fort Wayne, Allen County, Indiana. The center was originally developed
70
in 1981 and was renovated in the early 2000s with new leasing. The center contains 183,659
square feet of gross leasable area and is anchored by CVS, Office Depot and Anytime Fitness. The
anchor tenants have 2004 and 2005 leases and rental rates range from $8.00 to $14.00 per square
foot. Inline lease rates are quoted between $12.00 and $15.00 per square foot on a triple net basis.
The current occupancy is 97.5%.
Rent Comparable Two
This comparable, Dupont Crossing Shopping Center represents a community shopping center located
at the southwest corner of Dupont Road and Coldwater Crossings in Fort Wayne. The property was
built in 1987, contains 85,000 square feet. It is currently 23.5% occupied as Scotts Grocery store
vacated. The most recent leasing occurred in January 2010,Norma Pancake House with 5,040
square feet at $9.00 per square foot, triple net over a 5-year term. The average rental rate $13.00
per square foot net over a three- to ten-year term.
Rent Comparable Three
This comparable, Dupont Village, represents a neighborhood shopping center located at the
northwest corner of Dupont and Coldwater Roads in Fort Wayne, Allen County, Indiana. The property
was constructed between 1998 and 2000. It is currently 97% occupied. The asking rental rate
ranges between $10.00 and $15.50 per square foot NNN over a three to five-year term. Typical
terms do not include a tenant improvement allowance, while it does include rental escalations in the
third year ranging between 5% and 10%. Contract rental rates noted range from $9.00 to $11.00
per square foot, triple net.
Rent Comparable Four
This comparable is a retail power center built in 2008 and known as Lima Marketplace.
The
development is situated in the southwest quadrant of Lima Road and Dupont Road in the northern
portion of Fort Wayne, Allen County, Indiana. The common street address is 10001-10035 Lima
Road. The center features 84,901 square feet on inline and junior anchor retail space in addition to
an 8,700 square foot strip center outparcel. The center is 96.2% leased and anchored by PetSmart,
Office Depot and Aldi. Anchor rental rates range from $9.50 to $13.75 per square foot, inline rental
rates range from $18.50 to $19.50 per square foot and outlot rental rates range from $20.21 to
$25.40 per square foot.
Rent Comparable Five
This comparable, Maplewood Plaza Shopping Center, represents a community shopping center
located along Stellhorn Road in Fort Wayne. The property was constructed in 1957. It is currently
67.2% occupied with a traffic count of 23,000 per day. The asking rental rate ranges between $7.00
71
to $12.00 per square foot net over a three- to five-year term. Typical terms do not include a tenant
improvement allowance.
Rent Comparable Six
This rent comparable represents Maysville Pointe, a recently constructed power center located at
10250 Maysville Road in Fort Wayne, Indiana. Phase 1 of the center consists of 65,087 square feet
and is anchored by PetSmart and MC Sports. Phase 2 consists of 106,994. The development also
includes three leased outlots. While still in lease-up, the center is currently 63% occupied, with asking
rents for the inline space quoted at $19.00 per square foot on a triple net basis, compared to $15.00
per square foot for junior anchor suites. The development is adjacent to a Wal-Mart Supercenter and
shares a common access point.
ADDITIONAL RENT COMPARABLES
Anchor and Junior Anchor Rent Comparables
The subject property is anchored with 45,495 square feet with a rate of $8.43 per square foot;
50,187 square feet with a rate of $9.00 per square foot and 66,759 square feet at $4.75 per square
foot. The subject is junior anchored with 26,642 square feet at $5.75 per square foot. The following
table provides recent anchor and junior anchor leases within Indiana.
72
INDIANA LARGE RETAIL SPACES
Lease No.
Tenant
Location
Leased SF
Start Date
Term (Yrs)
Rental Rate
Expenses
1
TJ Maxx
Warsaw, IN
24,000
2012
10
$7.95
NNN
2
3
4
5
6
7
PetsMart
Ulta
Dollar Tree
HH Greg
JoAnn's Fabric
Kohl's
Warsaw, IN
Warsaw, IN
Warsaw, IN
Clarksville, IN
Clarksville, IN
Warsaw, IN
12,321
10,000
10,000
25,000
16,782
68,336
2012
2012
2012
2011
2011
2011
10
10
10
10
10
20
$13.00
$17.00
$9.00
$10.50
$11.00
$6.39
NNN
NNN
NNN
NNN
NNN
NNN
6
Hobby Lobby
Anderson, IN
55,668
2011
10
$5.00
NNN
7
Marsh
Connersville, IN
25,137
2010
10
$5.64
NNN
8
J&K Aquarium and Pets
Wabash, IN
29,000
2010
10
$2.07
NNN
7
Stein Mart
Lafayette, IN
36,000
2010
5
$5.00
NNN
8
PetsMart
Fort Wayne, IN
20,234
2009
$12.03
$10.00
NNN
9
Gordman's
Avon, IN
47,500
2009
10
10
10
Goodwill
Greenwood, IN
15,800
2009
10
$11.85
NNN
11
Harlem Furniture
Avon, IN
50,217
2009
10
$13.15
NNN
$18.50
NNN
NNN
12
MC Sports
Anderson, IN
15,000
2008
5
13
Dolllar Tree
Indianapolis, IN
10,388
2008
$11.00
$15.51
NNN
14
Harlem Furniture
Indianapolis, IN
29,979
2008
10
10
15
Ashley Furniture
Avon, IN
55,000
2008
10
$12.48
NNN
16
Dollar Tree
Avon, IN
12,000
2008
10
$9.00
NNN
17
Harlem Furniture
Indianapolis, IN
31,500
2008
MC Sports
Fort Wayne, IN
15,000
2008
10
10
$16.75
$11.00
NNN
18
19
Media Play
Mishwaka, IN
35,000
2007
7
$8.00
NNN
Low of Sample
10,000
5
$2.07
High of Sample
94,236
10
$18.50
Mean of Sample
33,271
10
$10.26
NNN
NNN
Compiled by CBRE, Inc.
The recent leasing at the comparable properties represents larger retail stores ranging in size from
10,000 to 68,336 square feet and average 28,255 square feet. The rents range from $2.07 to
$18.50 per square foot and average $10.26 per square foot with five to ten year terms common.
The majority of leases have a rent step midway through the lease term.
Given the subject’s location; we conclude the subject’s market rent is below the average at $10.26
per square foot.
SUBJECT RENTAL INFORMATION
The following chart shows the subject’s most recent contract rates plus quoted rates by management
representatives.
73
SUMMARY OF RECENT LEASES
Tenant
New/
Renewal
Term Commence
(Mo.)
Date
Asking Rates
Vacant Space
New
60
Actual Leases
---
---
Size
(SF)
Rental Rate
$/SF/Yr.
$/Yr.
14,457
$14.00
Free Expense
Escalations Rent Reimb.
$202,398
No
No
NNN
New
60
Jun-13
2,110
$15.00
$31,650
Yes
No
NNN
---
New
60
Apr-13
12,855
$8.50
$109,268
Yes
Yes
NNN
---
New
120
Aug-13
26,642
$5.75
$153,192
Yes
No
BY
---
New
120
Aug-13
50,187
$9.00
$451,683
Yes
No
BY
---
New
92
May-13
66,759
$4.75
$317,105
Yes
No
Gross
158,553
$6.70
$1,062,897
Subtotal Actual Leases
Compiled by CBRE
A lease was recently signed with a five year lease at $15.00 per square foot, triple net, which appears
to be above the current asking rate for the in-line spaces at $14.00 per square foot. 12,855 square
feet had recently signed at $8.50 per square foot, triple net, which is well below the prior asking rate.
The larger tenants signed at $5.75 per square foot, with a modified gross paying CAM charges only
at a fixed rate of $1.00 per square foot with 2.0% annual increases.
MARKET RENT ESTIMATE
The most recently executed leases within the subject have typically been consistent with trends
exhibited in the competitive market and by the rent comparables.
Base Rental Rate
The estimate of base rental rates is shown in the following chart.
BASE RENTAL RATES
Category
Anchors
Jr. Anchors
Large In-line
Small In-line
Rent Comparable Data
$2.07 - $18.50
$2.07 - $18.50
$9.00 - $19.00
$9.00 - $19.00
CBRE Estimate
$6.00 - $10.00
$7.50 - $11.00
$9.00 - $10.00
$10.00 - $12.00
Compiled by CBRE
Concessions
The estimate of concessions is shown in the following chart.
74
CONCESSIONS
Category
CBRE Estimate
Anchors
Jr. Anchors
Large In-line
Small In-line
0 - 6 Months
0 - 6 Months
0 - 6 Months
0 - 6 Months
3 Months
3 Months
3 Months
3 Months
Compiled by CBRE
Reimbursements
The estimate of reimbursements is shown in the following chart.
REIMBURSEMENTS
Category
Anchors
Jr. Anchors
Large In-line
Small In-line
NNN
NNN
NNN
NNN
CBRE Estimate
NNN
NNN
NNN
NNN
Compiled by CBRE
Escalations
Goodwill, YoGert Shop, Toys R Us, Ross Education and Burlington Coat have scheduled increases
throughout their term. Market rent escalations at the within the Fort Wayne market vary widely from
tenant to tenant. In our analysis, we have utilized market rent escalations of 2.5% annually, with the
exception of a 10% mid-term bump for the anchor and junior anchor tenants.
Tenant Improvements
The estimate of tenant improvements is shown in the following chart.
TENANT IMPROVEMENTS
Category
Anchors
Jr. Anchors
Large In-line
Small In-line
New Tenants
$0 - $10
$0 - $10
$0 - $10
$0 - $10
Renewals
$0 - $5
$0 - $5
$0 - $5
$0 - $5
New Tenants
$2.50
$2.50
$5.00
$5.00
Renewals
$1.00
$1.00
$2.50
$2.50
CBRE Estimate
Compiled by CBRE
75
Lease Term
The estimate of lease terms is shown in the following chart.
LEASE TERM
Category
CBRE Estimate
Anchors
Jr. Anchors
Large In-line
Small In-line
5 - 20 YRS
5 - 20 YRS
3 - 7 YRS
3 - 7 YRS
10 YRS
10 YRS
5 YRS
5 YRS
Compiled by CBRE
76
MARKET RENT CONCLUSIONS
The following chart shows the market rent conclusions for the subject:
MARKET RENT CONCLUSIONS
Category
Anchors
Jr. Anchors
Large In-line
Small In-line
GLA (SF)
95,682
88,918
45,774
23,738
37.7%
35.0%
18.0%
9.3%
$6.00 - $10.00
$7.50 - $11.00
$9.00 - $10.00
$10.00 - $12.00
Percent of Total SF
Market Rent ($/SF/Yr.)
Concessions
3 Months
3 Months
3 Months
3 Months
Reimbursements
NNN
NNN
NNN
NNN
Annual Escalation
10% Mid-term
10% Mid-term
2.5%
2.5%
$2.50
$2.50
$5.00
$5.00
Tenant Improvements (New Tenants)
Tenant Improvements (Renewals)
Average Lease Term
$1.00
$1.00
$2.50
$2.50
10 Years
10 Years
5 Years
5 Years
Compiled by CBRE
RENT ROLL ANALYSIS
The subject’s rent roll is illustrated as follows:
77
RENT ROLL ANALYSIS
Suite
No.
Lease
Start
Lease
Term
Expiration (Mos.)
B17
Jun-10
Jul-13
B6
Apr-13
B12
Aug-99
B14
Size (GLA)
SF
% Total
37
2,047
0.8%
Apr-18
60
12,855
Jan-17
209
5,397
Jan-93
May-14
256
B15
May-02
Sep-15
B17
Jun-13
B16
Contract Rental Rate
$/SF/Yr.
$/Yr.
$18.25
$37,358
5.1%
$8.50
$109,268
2.1%
$12.00
$64,764
2,456
1.0%
$13.68
$33,598
160
5,786
2.3%
$16.00
$92,576
Jun-18
60
2,110
0.8%
$15.00
$31,650
Jan-88
Jan-19
372
45,495
17.9%
$8.43
$383,523
A5
Oct-08
Jan-14
63
10,828
4.3%
$10.00
$108,280
A8
Nov-08
Nov-13
61
5,000
2.0%
$20.62
$103,100
A7
Sep-01
Jan-14
148
4,093
1.6%
$12.25
$50,139
A12
Aug-13
Aug-23
120
26,642
10.5%
$5.75
$153,192
BO
Aug-13
Aug-23
120
50,187
19.7%
$9.00
$451,683
E1
May-13
Jan-21
92
66,759
26.3%
$4.75
$317,105
239,655
94.3%
$8.08 $1,936,235
Occupied Subtotals
B-13
---
---
1,382
0.5%
$11.00
$15,202
A-1
---
---
5,908
2.3%
$9.50
$56,126
A-10
---
---
2,831
1.1%
$11.00
$31,141
B-16
---
---
4,336
1.7%
$11.00
$47,696
Property Totals - Contract Rent
254,112
100.0%
$8.21 $2,086,400
Property Totals - Market Rent
254,112
100.0%
$7.62 $1,936,948
Compiled by CBRE
Three of the tenants have three months of free rent which equates to $178,536 of lost rent.
Therefore, we have deducted this amount from both the Sales Approach and the Direct Capitalization
Method. We note the free rent has already been applied within our Discounted Cash Flow.
Anticipated Changes/Rollover to Rent Roll
The rollover schedule for the existing leases is illustrated in the following table. These rollovers may
be viewed in the Argus supporting schedule for lease expiration.
78
LEASE EXPIRATION SCHEDULE
Year
Ending
Sq. Ft.
% of Total
Year 1
Apr-14
16,968
6.68%
Year 2
Apr-15
2,456
0.97%
Year 3
Apr-16
5,786
2.28%
Year 4
Apr-17
5,397
2.12%
Year 5
Apr-18
12,855
5.06%
Year 6
Apr-19
76,863
30.25%
Year 7
Apr-20
2,456
0.97%
Year 8
Apr-21
72,545
28.55%
Year 9
Apr-22
5,397
2.12%
Year 10
Apr-23
0
0.00%
Year 11
Apr-24
113,298
44.59%
Compiled by CBRE
As noted, all of the tenants are scheduled to expire within the holding period. Rollover is fairly
balanced throughout the holding period, with the most significant exposure occurring in Year Six when
30.25% of GLA is scheduled to expire, Year Eight when 28.55% of the GLA is scheduled to expire
and Year Eleven when 44.59% of GLA is scheduled to expire. It is noted, given the high turn-over in
Year Eleven, the reversion year, we have extended our Argus holding period to Eleven Years with the
reversion year at Year Twelve.
The majority of the current tenants do not have renewal options. For those tenants with renewal
options, we have modeled in ARGUS only those renewals where it is clearly advantageous to the
tenant to exercise the option. However, we have not modeled any of the tenants’ renewal options.
For each lease we either assume the tenant exercises the renewal option (when applicable and
advantageous to the tenant) or roll to speculative renewal at our concluded renewal probability of
70%.
POTENTIAL RENTAL INCOME CONCLUSION
Within this analysis, potential rental income is estimated based upon the actual income in-place, as
well as the forward looking market rental rates over the next twelve months for the four vacant spaces.
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.
In estimating the subject’s pro forma operating data, the actual operating history and budgets have
been analyzed. The following table presents the available operating data history for the subject.
79
OPERATING HISTORY
2010
Total
Year-Occupancy
$/SF
2011
Total
2012
$/SF
Total
$/SF
Income
Rental Income
$1,081,440
$4.26
$1,013,379
$3.99
$1,123,078
Other Income
37,008
0.15
43,208
0.17
52,131
0.21
414,751
1.63
326,198
1.28
317,192
1.25
$1,533,199
$6.03
$1,382,785
$5.44
$1,492,401
$5.87
$329,002
$1.29
$250,744
$0.99
$270,729
$1.07
46,194
0.18
42,450
0.17
30,921
0.12
226,635
0.89
215,374
0.85
214,321
0.84
Expense Reimbursements
Expenses
Real Estate Taxes
Property Insurance
Common Area Maintenance
Management Fee
$4.42
65,206
0.26
52,437
0.21
54,296
0.21
121,845
0.48
27,865
0.11
8,630
0.03
Operating Expenses
$788,882
$3.10
$588,870
$2.32
$578,897
$2.28
$744,317
$2.93
$793,915
$3.12
$913,504
$3.59
Nonreimbursable Landlord Expense
Reserves for Replacement
Source: Operating statements
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
% PGI
Current
6%
CBRE Estimate
10%
Compiled by CBRE
PERCENTAGE RENT INCOME
According to the lease documents, some of the leases have a provision requiring percentage rent
payments. That is, in addition to the base rental charges, the tenant is responsible for paying the
landlord additional rent equal to a specified percentage of the tenant’s gross sales made in, upon, or
from the premises. Typically, percentage rent is paid only if the gross sales exceed a breakpoint
factor, usually calculated based on the annual basic rental charged divided by the percentage rent
amount. However, percentage rent clauses are negotiable and can vary significantly between tenants
and shopping centers.
Percentage rents are not typically included in discounted flow analyses performed by investors in the
current market when analyzing perspective centers for acquisition, unless substantial historical data
supports otherwise.
Therefore, for this assignment, we have not included any percentage rental
income due to the uncertainty involved.
80
OTHER INCOME
Other revenue is generated by contributions to the marketing fund for the center, late charges, and
other income.
OTHER INCOME
Year
Total
$/SF
2010
$37,008
$0.15
2011
$43,208
$0.17
2012
$52,131
$0.21
CBRE Estimate
$45,000
$0.18
Compiled by CBRE
The subject’s historical additional income ranges from $0.15 to $0.21 per square foot. Therefore, we
estimate the subject’s pro forma other revenue at $0.18 per square foot.
Although, we have not
included comparables for this line item, our pro-forma falls within the range based on the additional
income in 2011 and 2012.
EXPENSE REIMBURSEMENTS
The subject’s leases are typically based on a triple net structure whereby the tenant reimburses the
owner for a pro rata share of real estate taxes, property insurance, common area maintenance, and a
management fee or an administrative fee of 15% on top of CAM. The subject’s expense
reimbursements are detailed as follows:
EXPENSE REIMBURSEMENTS
Year
Total
2010
$414,751
$1.63
$/SF
2011
$326,198
$1.28
2012
$317,192
$1.25
CBRE Estimate
$265,610
$1.05
Compiled by CBRE
We recognize our estimate is below the range as expenses have trended downwards over the past
three years. However, the most recently signed leases for the larger spaces have either fixed expenses
or only paying over their base year.
CBRE’s estimate of expense reimbursement revenue in the direct capitalization is a stabilized estimate
and is based on each tenant’s contractual reimbursement obligations, as modeled in ARGUS, applied
to our estimate of expenses.
Based on the various expense reimbursements we have used Year 1 of
the Argus DCF.
81
EFFECTIVE GROSS INCOME
The subject’s effective gross income is detailed as follows:
EFFECTIVE GROSS INCOME
Year
Total
$/SF
2010
$1,533,199
$6.03
2011
$1,382,785
$5.44
2012
$1,492,401
$5.87
CBRE Estimate
$2,229,219
$8.77
Compiled by CBRE
CBRE’s estimate of effective gross income revenue in the direct capitalization is a stabilized estimate
and is based on each tenant’s contractual obligations and market rents and terms for existing and
near term vacancy, as modeled in ARGUS.
OPERATING EXPENSE ANALYSIS
Expense Comparables
The following chart summarizes expenses obtained from recognized industry publications and/or
comparable properties.
EXPENSE COMPARABLES
Comparable Number
1
2
3
Location
Indiana
Indiana
Indiana
GLA (SF)
159,682
165,270
118,436
Expenses
$19.29
$/SF
Real Estate Taxes
$9.99
$/SF
$11.25
$/SF
$4.41
$0.92
$1.56
Property Insurance
0.35
0.15
0.15
1.27
1.10
0.65
Management Fee
(as a % of EGI)
0.81
4.2%
0.43
4.3%
0.34
3.0%
0.05
0.03
-
-
-
-
Operating Expenses
Operating Expense Ratio
$6.85
35.5%
$2.65
26.5%
$2.73
24.3%
Source: Operating Statements
82
The following subsections represent the analysis for the pro forma estimate of each category of the
subject’s stabilized expenses.
Real Estate Taxes
The real estate taxes for the subject were previously discussed. The subject’s expense is detailed as
follows:
REAL ESTATE TAXES
Year
Total
2010
$329,002
$1.29
$/SF
2011
$250,744
$0.99
2012
$270,729
$1.07
Expense Comparable 1
N/A
$4.41
N/A
$0.92
N/A
$1.56
CBRE Estimate
$229,263
$0.90
Compiled by CBRE
The subject’s historical tax expense ranges from $0.99 to $1.29 per square foot, while the expense
comparable property tax expense ranges from $0.92 to $4.41 per square foot. We estimate the
subject’s pro forma expense at $0.90 per square foot, which is based on the current assessment.
Property Insurance
Property insurance expenses typically include fire and extended coverage and owner’s liability
coverage. The subject’s expense is detailed as follows:
PROPERTY INSURANCE
Year
Total
$/SF
2010
$46,194
$0.18
2011
$42,450
$0.17
2012
$30,921
$0.12
N/A
$0.35
N/A
$0.15
N/A
$0.15
$38,117
$0.15
CBRE Estimate
Compiled by CBRE
The subject’s historical insurance expense ranges from $0.12 to $0.18 per square foot, while the
expense comparable property insurance expense ranges from $0.15 to $0.35 per square foot. We
estimate the subject’s pro forma expense at $0.15 per square foot, which appears to be property
specific.
83
Common area maintenance expenses typically include utilities, parking lot sweeping and
maintenance, and routine repairs and maintenance of the building and site improvements.
The
subject’s expense is detailed as follows:
COMMON AREA MAINTENANCE
Year
Total
$/SF
2010
$226,635
$0.89
2011
$215,374
$0.85
2012
$214,321
$0.84
N/A
$1.27
N/A
$1.10
N/A
$0.65
CBRE Estimate
$279,523
$1.10
Compiled by CBRE
The subject’s historical CAM expense ranges from $0.84 to $0.89 per square foot, while the expense
comparable CAM expense ranges from $0.65 to $1.27 per square foot. We estimate the subject’s
pro forma expense at $1.10 per square foot, which is above the range of the historical expense but
within the range of the expense comparables.
Management Fee
Management expenses are typically negotiated as a percentage of collected revenues (i.e., effective
gross income). The subject’s expense is detailed as follows:
MANAGEMENT FEE
Year
Total
% EGI
2010
$65,206
4.3%
2011
$52,437
3.8%
2012
$54,296
3.6%
CBRE Estimate
$89,169
4.0%
Compiled by CBRE
Professional management fees in the local market range from 3.0% to 5.0% for comparable
properties. Given the subject’s size and the competitiveness of the local market area, we believe an
appropriate management expense for the subject would be within the market range.
84
Landlord expenses that are not eligible for tenant reimbursement typically include legal fees, utilities
on vacant spaces, travel costs, and any miscellaneous repair and maintenance items not covered in
CAM. The subject’s expense is detailed as follows:
NONREIMBURSABLE LANDLORD EXPENSE
Year
Total
2010
$121,845
$0.48
$/SF
2011
$27,865
$0.11
2012
$8,630
$0.03
N/A
$0.00
N/A
$0.05
N/A
$0.03
$25,411
$0.10
CBRE Estimate
Compiled by CBRE
The subject’s historical non-reimbursable expense ranges from $0.03 to $0.48 per square foot, while
the expense comparable expense ranges from $0.00 to $0.05 per square foot.
It is our
understanding the 2010 amount is an outliner likely due to a one-time charge for environmental fees.
Therefore, we estimate the subject’s expense at $0.10 per square foot, which is within the range of the
historical expense and the expense comparables.
Reserves for replacement have been estimated based on discussions with knowledgeable market
participants who indicate a range from $0.05 to $0.20 per square foot for comparable properties.
We have utilized reserves of $0.15 per square foot. Reserves are deducted after calculating NOI in
the DCF and are not included as an expense item in the Direct Capitalization Technique, per local
market practice.
OPERATING EXPENSE CONCLUSION
The subject’s expense is detailed as follows:
85
OPERATING EXPENSES
Year
Total
$/SF
2010
$788,882
$3.10
2011
$588,870
$2.32
2012
$578,897
$2.28
N/A
$6.85
N/A
$2.65
N/A
CBRE Estimate
$661,483
$2.73
$2.60
Compiled by CBRE
The subject’s per square foot operating expense estimate is within the total per square foot operating
expenses indicated by subject’s historical expense.
NET OPERATING INCOME CONCLUSION
The subject’s net operating income is detailed as follows:
NET OPERATING INCOME
Year
Total
$/SF
2010
$744,317
$2.93
2011
$793,915
$3.12
2012
$913,504
$3.59
$1,567,736
$6.17
CBRE Estimate
Compiled by CBRE
Our estimated is above the range due to the recently signed leases within the center.
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 for direct capitalization.
Comparable Sales
The overall capitalization rates (OARs) confirmed for the comparable sales analyzed in the sales
comparison approach are as follows:
86
COMPARABLE CAPITALIZATION RATES
Sale
Sale Price
Sale
Date
$/SF
Occupancy
OAR
1
Apr-13
$87.68
95%
9.25%
2
Oct-12
$71.60
75%
10.24%
3
Feb-12
$52.82
97%
7.50%
4
Jun-12
$58.46
94%
10.68%
5
Nov-12
$92.11
99%
10.10%
6
Oct-12
$69.23
88%
8.00%
7
Jul-12
$65.22
94%
10.71%
88%
7.50%-10.68%
Indicated OAR:
Compiled by: CBRE
The overall capitalization rates for these sales were derived based upon the pro-forma income
characteristics of the property. Sale One is currently an active listing, while Sale Nos. Two, Three,
Four, Five, Six, and Seven represent sales within the past year. Therefore, primary emphasis has been
placed upon the more recent data, which is generally reflective of current market trends, interest rates,
and buyer’s expectations and motivation in the market. Each of these sales depicts a similar tenancy
structure with regard to stability and credit rating, whereby little if any adjustment adjustments are
required when compared with the subject.
Overall, an OAR in the upper portion of the range
indicated by the comparables is considered appropriate.
Published Investor Surveys
The results of the most recent investor surveys are summarized in the following chart.
87
OVERALL CAPITALIZATION RATES
Investment Type
OAR Range
Average
CBRE Community Centers
Class A
5.00% -
9.50%
6.74%
Class B
6.00% - 12.00%
7.89%
Class C
7.00% - 14.00%
9.38%
CBRE Neighborhood Centers
Class A
5.00% -
9.50%
6.74%
Class B
6.00% - 12.00%
7.89%
Class C
7.00% - 14.00%
9.38%
Current Quarter
6.00% -
8.75%
6.98%
Last Quarter
6.00% -
8.75%
6.98%
Year Ago
6.25% -
9.00%
7.32%
PwC Power Center
Indicated OAR:
7.75% - 8.75%
Compiled by: CBRE
Market Participants
In estimating an appropriate capitalization rate for the subject property several knowledgeable market
participants were interviewed from CBRE. The consensus among those surveyed was that overall
capitalization rates for retail product have declined over the past twelve months due to optimism in the
market place. Furthermore, the participants generally agreed that the subject property would likely
command an overall capitalization rate in the low to upper eight percent range. Our estimate of
8.75% falls within the quoted range.
OVERALL CAPITALIZATION RATES - RETAIL
Respondent
Broker
Company
CB Richard Ellis, Inc.
OAR
8.0% - 9.0%
Indicated OAR:
Date of Survey
1Q 2013
8.0%-9.0%
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.
88
BAND OF INVESTMENT
Mortgage Interest Rate
5.50%
Mortgage Term (Amortization Period)
25 Years
Mortgage Ratio (Loan-to-Value)
75%
Mortgage Constant (monthly payments)
0.07369
Equity Dividend Rate (EDR)
12%
Mortgage Requirement
75% x
0.07369 =
0.05527
Equity Requirement
25% x
0.12000 =
0.03000
100%
0.08527
Indicated OAR:
8.50%
Compiled by: CBRE
Capitalization Rate Conclusion
The following chart summarizes the OAR conclusions.
OVERALL CAPITALIZATION RATE - CONCLUSION
Source
Indicated OAR
Comparable Sales
7.50%-10.68%
National Investor Survey
7.75% - 8.75%
Market Participants
8.0%-9.0%
Band of Investment
8.50%
CBRE Estimate
8.75%
Compiled by: CBRE
Direct Capitalization Summary
A summary of the direct capitalization at stabilized occupancy is illustrated in the following chart.
89
DIRECT CAPITALIZATION SUMMARY
Income
Potential Rental Income
$/Door/Mo.
$1,739
$/SF/Yr
$8.21
Total
$2,086,400
Vacancy
5.00%
(87)
(0.41)
(104,320)
Credit Loss
2.00%
(35)
(0.16)
(41,728)
Net Rental Income
Other Income
Expense Reimbursements
Vacancy & Credit Loss
$1,617
$7.64
$1,940,352
38
0.18
45,000
1.05
265,610
221
7.00%
(18)
$1,858
Expenses
Real Estate Taxes
(0.09)
(21,743)
$8.77
$2,229,219
$0.90
$229,263
Property Insurance
0.15
38,117
1.10
279,523
Management Fee
4.00%
Operating Expenses
0.35
89,169
0.10
25,411
0.00
$2.60
$661,483
Operating Expense Ratio
29.67%
$6.17
OAR
Indicated Stabilized Value
$1,567,736
/
8.75%
$17,916,984
$17,900,000
Rounded
(853,179)
Tenant Improvements - Burlington
(1,295,000)
Tenant Improvements - Dunhams
(40,000)
Unpaid Leasing Commissions - Dunhams
(178,536)
Lost Rent
Value Indication
$15,550,270
Rounded
$15,600,000
Value Per SF
$61.39
Matrix Analysis
Cap Rate
Compiled by CBRE
90
Value
8.50%
$16,077,200
8.75%
$15,550,300
9.00%
$15,052,600
DISCOUNTED CASH FLOW ANALYSIS (DCF)
The DCF assumptions concluded for the subject are summarized as follows:
SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS
General Assumptions
Start Date
Mar-13
Terms of Analysis
10 Years
Software
ARGUS
Growth Rate Assumptions
Income Growth
Yr 1 - 2 (1.5%),
Yrs 3 - 10 (3.0%)
Expense Growth
3.00%
Inflation (CPI)
3.00%
Market Leasing Assumptions
Category
Market Rent ($/SF/Yr.)
Concessions
Reimbursements
Annual Escalation
Tenant Improvements (New Tenants)
Tenant Improvements (Renewals)
Anchors
Jr. Anchors
Large In-line
Small In-line
$6.00
$7.50
$9.50
$11.00
3 Months
3 Months
3 Months
3 Months
NNN
NNN
NNN
NNN
10% Mid-term
10% Mid-term
2.5%
2.5%
$2.50
$2.50
$5.00
$5.00
$1.00
$1.00
$2.50
$2.50
Average Lease Term
10 Years
10 Years
5 Years
5 Years
Renewal Probability
70%
70%
70%
70%
New Leases
5.0%
5.0%
5.0%
5.0%
Renewal Leases
2.0%
2.0%
2.0%
2.0%
Down Time Before New Tenant Leases
12 Months
12 Months
6 Months
6 Months
Blended Down Time Between Leases
6 Months
6 Months
3 Months
3 Months
Leasing Commissions (Cashed-Out)
Occupancy Assumptions
Total Operating Expenses ($/SF/Yr.)
$2.60
Current Occupancy
94.31%
Stabilized Occupancy
95.00%
Credit Loss
2.00%
Stabilized Occupancy (w/Credit Loss)
93.00%
Estimated Lease-up Period
0 Months
Financial Assumptions
Discount Rate - As Is
9.50%
9.00%
Other Assumptions
Cost of Sale
Capital Expenses (Deferred Maintenance)
3.00%
$2,188,179
Compiled by CBRE
Provided on the following pages is a discussion of the leasing assumptions used in the discounted
cash flow analysis that were not analyzed in the direct capitalization approach.
91
General Assumptions
The DCF analysis utilizes a 11-year projection period due the reversion year not being stabilized. This
is consistent with current investor assumptions.
Growth Rate Assumptions
The inflation and growth rates for the DCF analysis have been estimated by analyzing the expectations
typically used by buyers and sellers in the local marketplace. Published investor surveys, an analysis of
the Consumer Price Index (CPI), as well as CBRE's survey of brokers and investors active in the local
market form the foundation for the selection of the appropriate growth rates. The compilation is
shown in the following chart.
SUMMARY OF GROWTH RATES
Investment Type
Rent Expenses
U.S. Bureau of Labor Statistics (CPI-U)
10-Year Snapshot Average as of Feb-13
Inflation
2.40%
Korpacz Power Center
National Data
1.17%
2.46%
n/a
CBRE Estimate
Yr 1 - 2
(1.5%), Yrs 3
- 10 (3.0%)
3.00%
3.00%
Compiled by: CBRE
Leasing Assumptions
The contract lease terms for the existing tenants are utilized within the DCF analysis, with market
leasing assumptions applied for renewals and absorption tenants. The previously concluded pro
forma income and expenses have been utilized as the basis for market leasing projected in Year 1 of
the holding period. All subsequent years vary according to the growth rate assumptions applied to the
Year 1 estimate.
Leasing Commissions
The following table presents the leasing commissions quoted for the subject, those prevalent in the
market as derived through the comparable properties, and our pro forma estimate.
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LEASING COMMISSIONS
Category
Anchors
Jr. Anchors
Large In-line
Small In-line
Rent Comparables and/or Broker Data
New Tenants
5.0%
5.0%
5.0%
5.0%
Renewals
2.0%
2.0%
2.0%
2.0%
New Tenants
5.0%
5.0%
5.0%
5.0%
Renewals
2.0%
2.0%
2.0%
2.0%
CBRE Estimate
Compiled by CBRE
Renewal Probability
The renewal probability incorporated within the market leasing assumptions has been estimated at
70%. This rate is considered reasonable based on the rent comparable data, a survey of market
participants, and our analysis of actual leasing activity at the subject.
Downtime Between Leases
The market leasing assumptions incorporates a downtime of 12 months for the anchor and junior
anchor tenants and 6 months for the remaining tenants.
Occupancy Assumptions
The occupancy rate over the holding period is based on the subject’s estimated stabilized occupancy
rate and estimated lease-up period to achieve a stabilized occupancy position.
Vacancy, Credit Loss and Absorption
We have included Toys R US and US Army Recruiters as credit tenants have not applied vacancy or
credit loss through the remainder of their terms.
Please refer to the market analysis of this report for a detailed discussion of these elements.
Financial Assumptions
Discount Rate Analysis
The results of the most recent investor surveys are summarized in the following chart.
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DISCOUNT RATES
Investment Type
Rate Range
Average
PwC Power Center
Current Quarter
6.00% - 10.00%
8.17%
Last Quarter
6.00% - 10.00%
6.00% - 11.00%
8.17%
Year Ago
CBRE Estimate - As Is
8.33%
9.50%
Compiled by: CBRE
The above table summarizes the investment parameters of some of the most prominent investors
currently acquiring similar investment properties in the United States. We realize that this type of
survey reflects target rather than transactional rates. Transactional rates are usually difficult to obtain
in the verification process and are actually only target rates of the buyer at the time of sale. The
property’s performance will ultimately determine the actual yield at the time of sale after a specific
holding period. We attempted to recognize this factor in our choice of a discount rate in our cash
flow model.
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. Typically, for properties
similar to the subject, terminal capitalization rates are 0 to 100 basis points higher than going-in
capitalization rates (OARs). This is a result of the uncertainty of future economic conditions and the
natural aging of the property. For the subject, we have concluded a load factor of 0 basis points to
be appropriate.
TERMINAL CAPITALIZATION RATES
Investment Type
Rate Range
Average
Korpacz Power Center
Current Quarter
6.00% -
9.00%
7.19%
Last Quarter
6.00% 6.00% -
9.00%
7.27%
9.00%
7.52%
Year Ago
CBRE Estimate
9.00%
Compiled by: CBRE
Discounted Cash Flow Conclusion
The DCF schedule(s) and value conclusions are depicted on the following page(s).
94
95
GLENBROOK COMMONS | R ECONCILIATION OF V ALUE
PRESENT VALUE ANALYSIS - AS IS
Analysis
Period
For the
Year
Ending
Annual
Cash Flow
P.V. of
Cash Flow
@ 9.25%
P.V. of
Cash Flow
@ 9.50%
($1,001,732)
P.V. of
Cash Flow
@ 9.75%
Year 1 Apr-2014
($1,096,896)
($1,004,024)
Year 2 Apr-2015
1,504,485
1,260,506
1,254,757
1,249,047
($999,450)
Year 3 Apr-2016
1,471,062
1,128,150
1,120,441
1,112,801
Year 4 Apr-2017
1,473,667
1,034,460
1,025,044
1,015,737
Year 5 Apr-2018
1,491,189
958,132
947,245
936,505
Year 6 Apr-2019
1,279,167
752,313
742,066
731,981
Year 7 Apr-2020
1,000,749
538,735
530,184
521,788
Year 8 Apr-2021
1,430,597
704,929
692,156
679,643
Year 9 Apr-2022
1,411,771
636,754
623,788
611,116
Year 10 Apr-2023
1,776,221
733,301
716,731
700,570
Year 11 Apr-2024
992,556
375,076
365,763
356,702
___________
___________
___________
___________
Total Cash Flow
12,734,568
7,118,332
7,016,443
6,916,440
Property Resale @ 9% Cap Rate
22,404,542
8,466,427
8,256,211
8,051,675
___________
___________
___________
$15,584,759
$15,272,654
$14,968,115
15,580,000
15,300,000
14,970,000
Total Property Present Value
Analysis prepared by CB Richard Ellis, Inc.
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CONCLUSION OF INCOME CAPITALIZATION APPROACH
The conclusions via the valuation methods employed for this approach are as follows:
INCOME CAPITALIZATION APPROACH VALUES
Direct Capitalization Method
$15,600,000
Discounted Cash Flow Analysis
$15,300,000
Reconciled Value
$15,300,000
Compiled by CBRE
Primary emphasis has been placed on the discounted cash flow method, which is considered to best
reflect the actions of buyers and sellers currently active in this market.
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RECONCILIATION OF VALUE
The value indications from the approaches to value are summarized as follows:
SUMMARY OF VALUE CONCLUSIONS
Sales Comparison Approach
$15,300,000
Income Capitalization Approach
$15,300,000
Reconciled Value
$15,300,000
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
somewhat comparable to the subject.
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
March 30, 2013
$15,300,000
Compiled by CBRE
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GLENBROOK COMMONS | A SSUMPTIONS AND L IMITING C ONDITIONS
ASSUMPTIONS AND LIMITING CONDITIONS
1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties
appraised 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 is not aware of any title defects nor has it been advised of any
unless such is specifically noted in the report. CBRE, however, has not examined title and makes no representations
relative to the condition thereof. Documents dealing with liens, encumbrances, easements, deed restrictions, clouds
and other conditions that may affect the quality of title have not been reviewed. Insurance against financial loss
resulting in claims that may arise out of defects in the subject’s title should be sought from a qualified title company that
issues or insures title to real property.
2. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on the
property or properties being appraised are structurally sound, seismically safe and code conforming; that all building
systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred
maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the
elements; that the property or properties have been engineered in such a manner that the improvements, as currently
constituted, conform to all applicable local, state, and federal building codes and ordinances. CBRE professionals are
not engineers and are not competent to judge matters of an engineering nature. 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. Unless otherwise specifically noted in the body of the report:
no problems were brought to the attention of CBRE by ownership or management; CBRE inspected less than 100% of
the entire interior and exterior portions of the improvements; and CBRE was not furnished any engineering studies by the
owners or by the party requesting this appraisal. If questions in these areas are critical to the decision process of the
reader, the advice of competent engineering consultants should be obtained and relied upon. It is specifically assumed
that any knowledgeable and prudent 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. Structural
problems and/or building system problems may not be visually detectable. If engineering consultants retained should
report negative factors of a material nature, or if such are later discovered, relative to the condition of improvements,
such information could have a substantial negative impact on the conclusions reported in this appraisal. Accordingly, if
negative findings are reported by engineering consultants, CBRE reserves the right to amend the appraisal conclusions
reported herein.
3. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the
property was not observed by the appraisers. CBRE has no knowledge of the existence of such materials on or in the
property. CBRE, however, is not qualified to detect such substances. The presence of substances such as asbestos,
urea formaldehyde foam insulation, contaminated groundwater or other potentially hazardous materials may affect the
value of the property. The value estimate is predicated on the assumption that there is no such material on or in the
property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or
engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.
We have inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect
conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in
the appraisal.
4. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real
property, have been disregarded with only real property being considered in the report unless otherwise stated. Any
existing or proposed improvements, on or off-site, as well as any alterations or repairs considered, are assumed to be
completed in a workmanlike manner according to standard practices based upon the information submitted to CBRE
This report may be subject to amendment upon re-inspection of the subject subsequent to repairs, modifications,
alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the
information, conditions and projected levels of operation.
5. It is assumed that all factual data furnished by the client, property owner, owner’s representative, or persons designated
by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal
report. Unless otherwise specifically noted in the appraisal report, CBRE has no reason to believe that any of the data
furnished contain any material error. Information and data referred to in this paragraph include, without being limited
to, 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 material error
in any of the above data could have a substantial impact on the conclusions reported. Thus, CBRE reserves the right to
amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should carefully review
all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report and
should immediately notify CBRE of any questions or errors.
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6. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of
Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power
of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this
appraisal. Under the terms of the engagement, we will have no obligation to revise this report to reflect events or
conditions which occur subsequent to the date of the appraisal. However, CBRE will be available to discuss the
necessity for revision resulting from changes in economic or market factors affecting the subject.
7. CBRE assumes no private deed restrictions, limiting the use of the subject in any way.
8. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposit or subsurface rights of
value involved in this appraisal, whether they be gas, liquid, or solid. Nor are the rights associated with extraction or
exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is
also assumed that there are no air or development rights of value that may be transferred.
9. CBRE is not aware of any contemplated public initiatives, governmental development controls, or rent controls that
would significantly affect the value of the subject.
10. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market
fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and
conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the
property, both physically and economically, on the open market.
11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics are predicated on the
information and assumptions contained within the report. Any projections of income, expenses and economic
conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market
expectations of future income and expenses. The achievement of the financial projections will be affected by fluctuating
economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary
from the projections considered herein. CBRE does not warrant these forecasts will occur. Projections may be affected
by circumstances beyond the current realm of knowledge or control of CBRE
12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct
or indirect recommendation of CBRE to buy, sell, or hold the properties at the value stated. Such decisions involve
substantial investment strategy questions and must be specifically addressed in consultation form.
13. Also, unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or
regulations governing use, density, or shape are being considered. The property is appraised assuming that 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 obtained or renewed for any use on which
the value estimates contained in this report is based, unless otherwise stated.
14. This study may not be duplicated in whole or in part without the specific written consent of CBRE nor may this report or
copies hereof be transmitted to third parties without said consent, which consent CBRE reserves the right to deny.
Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission to attorneys,
accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the report to any
court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this appraisal
was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any public
document without the express written consent of CBRE which consent CBRE reserves the right to deny. Finally, this
report shall not be advertised to the public or otherwise used to induce a third party to purchase the property or to make
a “sale” or “offer for sale” of any “security”, as such terms are defined and used in the Securities Act of 1933, as
amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised that they
should rely on their own independently secured advice for any decision in connection with this property. CBRE shall
have no accountability or responsibility to any such third party.
15. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into
fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in
the report.
16. The distribution of the total valuation in this report between land and improvements applies only under the existing
program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with
any other property or appraisal and are invalid if so used.
17. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and
are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data
relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and
reliable. None of the exhibits are to be removed, reproduced, or used apart from this report.
18. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or
knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that
100
environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not
limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density,
allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been
made known to CBRE unless otherwise stated within the body of this report. If the Consultant has not been supplied
with a termite inspection, survey or occupancy permit, no responsibility or representation is assumed or made for any
costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No
representation or warranty is made concerning obtaining these items. 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.
19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special
assumptions set forth in this report. It is the responsibility of the Client, or client’s designees, to read in full, comprehend
and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor CBRE
assumes responsibility for any situation arising out of the Client’s failure to become familiar with and understand the
same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting
profession if so desired.
20. CBRE assumes that the subject analyzed herein will be under prudent and competent management and ownership;
neither inefficient or super-efficient.
21. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and
laws unless noncompliance is stated, defined and considered in the appraisal report.
22. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be
correct. It is further assumed that no encroachments to the realty exist.
23. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of
possible readily achievable barrier removal construction items in this report, CBRE has not made a specific compliance
survey and analysis of this property to determine whether it is in conformance with the various detailed requirements of
the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the requirements of
the ADA could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this
fact could have a negative effect on the value estimated herein. Since CBRE has no specific information relating to this
issue, nor is CBRE qualified to make such an assessment, the effect of any possible non-compliance with the
requirements of the ADA was not considered in estimating the value of the subject.
24. Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client
misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client
approximately result in damage to Appraiser. Notwithstanding the foregoing, Appraiser shall have no obligation under
this Section with respect to any loss that is caused solely by the active negligence or willful misconduct of a Client and is
not contributed to by any act or omission (including any failure to perform any duty imposed by law) by Appraiser.
Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising
as a result of the Client's failure or the failure of any of the Client's agents to provide a complete copy of the appraisal
report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be
entitled to recover, from the other, reasonable attorney fees and costs.
25. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal
report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan
underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to
respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report
prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of
such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an
Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to
us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety
(but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance
letter.
26. As part of the client’s requested scope of work, an estimate of insurable value is provided herein. CBRE has followed
traditional appraisal standards to develop a reasonable calculation based upon industry practices and industry accepted
publications such as the Marshal Valuation Service handbook. The methodology employed is a derivation of the cost
approach which is primarily used as an academic exercise to help support the market value estimate and therefore is
not reliable for Insurable Value estimates. Actual construction costs and related estimates can vary greatly from this
estimate.
This analysis should not be relied upon to determine proper insurance coverage which can only be properly estimated
by consultants considered experts in cost estimation and insurance underwriting. 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
101
CBRE regarding the accuracy of this estimate and it is strongly recommend that other sources be utilized to develop any
estimate of insurable value.
102
GLENBROOK COMMONS | A DDENDA
ADDENDA
ADDENDUM A
GLOSSARY OF TERMS
assessed value Assessed value applies in ad valorem
taxation and refers to the value of a property according to
the tax rolls. Assessed value may not conform to market
value, but it is usually calculated in relation to a market
value base. †
cash equivalency
The procedure in which the sale
prices of comparable properties sold with atypical
financing are adjusted to reflect typical market terms.
contract rent The actual rental income specified in a
lease. ‡
disposition value
The most probable price which a
specified interest in real property is likely to bring under
all of the following conditions: 1) Consummation of a
sale will occur within a limited future marketing period
specified by the client; 2) The actual market conditions
currently prevailing are those to which the appraised
property interest is subject; 3) The buyer and seller is
each acting prudently and knowledgeably; 4) The seller
is under compulsion to sell; 5) The buyer is typically
motivated; 6) Both parties are acting in what they
consider their best interests; 7) An adequate marketing
effort will be made in the limited time allowed for the
completion of a sale; 8) Payment will be made in cash in
U.S. dollars or in terms of financial arrangements
comparable thereto; and 9) 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.‡
effective rent The rental rate net of financial concessions
such as periods of no rent during the lease term; may be
calculated on a discounted basis, reflecting the time value
of money, or on a simple, straight-line basis. ‡
excess land In regard to an improved site, the land not
needed to serve or support the existing improvement. In
regard to a vacant site or a site considered as though
vacant, the land not needed to accommodate the site’s
primary highest and best use. Such land may be
separated from the larger site and have its own highest
and best use, or it may allow for future expansion of the
existing or anticipated improvement. See also surplus
land. ‡
extraordinary assumption
An assumption directly
related to a specific assignment, which, if found to be
false, could alter the appraiser’s opinions or conclusions.
Extraordinary assumptions presume as fact otherwise
uncertain information about physical, legal, or economic
characteristics of the subject property; or about conditions
external to the property such as market conditions or
trends; or about the integrity of data used in an analysis.
See also hypothetical condition. ‡
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. ‡
floor area ratio (FAR) The relationship between the
above-ground floor area of a building, as described by
the building code, and the area of the plot on which it
stands; in planning and zoning, often expressed as a
decimal, e.g., a ratio of 2.0 indicates that the permissible
floor area of a building is twice the total land area; also
called building-to-land ratio. ‡
full service lease
A lease in which rent covers all
operating expenses. Typically, full service leases are
combined with an expense stop, the expense level
covered by the contract lease payment. Increases in
expenses above the expense stop level are passed
through to the tenant and are known as expense passthroughs.
going concern value Going concern value is the value
of a proven property operation.
It includes the
incremental value associated with the business concern,
which is distinct from the value of the real estate only.
Going concern value includes an intangible enhancement
of the value of an operating business enterprise which is
produced by the assemblage of the land, building, labor,
equipment, and marketing operation.
This process
creates an economically viable business that is expected
to continue. Going concern value refers to the total value
of a property, including both real property and intangible
personal property attributed to the business value. †
gross building area (GBA) The total floor area of a
building, including below-grade space but excluding
unenclosed areas, measured from the exterior of the
walls.
Gross building area for office buildings is
computed by measuring to the outside finished surface of
permanent outer building walls without any deductions.
All enclosed floors of the building including basements,
mechanical equipment floors, penthouses, and the like
are included in the measurement. Parking spaces and
parking garages are excluded. ‡
hypothetical condition That which is contrary to what
exists but is supposed for the purpose of analysis.
Hypothetical conditions assume conditions contrary to
known facts about physical, legal, or economic
characteristics of the subject property; or about conditions
external to the property, such as market conditions or
trends; or about the integrity of data used in an analysis.
See also extraordinary assumption. ‡
investment value Investment value is the value of an
investment to a particular investor based on his or her
investment requirements. In contrast to market value,
investment value is value to an individual, not value in the
marketplace. Investment value reflects the subjective
relationship between a particular investor and a given
investment. When measured in dollars, investment value
is the price an investor would pay for an investment in
light of its perceived capacity to satisfy his or her desires,
needs, or investment goals. To estimate investment value,
specific investment criteria must be known. Criteria to
evaluate a real estate investment are not necessarily set
down by the individual investor; they may be established
by an expert on real estate and its value, that is, an
appraiser. †
leased fee
See leased fee estate
leased fee estate
An ownership interest held by a
landlord with the right of use and occupancy conveyed by
lease to others. The rights of the lessor (the leased fee
owner) and the leased fee are specified by contract terms
contained within the lease.‡
leasehold
See leasehold estate
leasehold estate The interest held by the lessee (the
tenant or renter) through a lease conveying the rights of
use and occupancy for a stated term under certain
conditions.‡
liquidation value
The most probable price which a
specified interest in real property is likely to bring under
all of the following conditions: 1) Consummation of a
sale will occur within a severely limited future marketing
period specified by the client; 2) The actual market
conditions currently prevailing are those to which the
appraised property interest is subject; 3) The buyer is
acting prudently and knowledgeably; 4) The seller is
under extreme compulsion to sell; 5) The buyer is typically
motivated; 6) The buyer is acting in what he or she
considers his or her best interests; 7) A limited marketing
effort and time will be allowed for the completion of a
sale; 8) Payment will be made in cash in U.S. dollars or in
terms of financial arrangements comparable thereto; and
9) 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. ‡
market rent
The most probable rent that a property
should bring in a competitive and open market reflecting
all conditions and restrictions of the specified lease
agreement including term, rental adjustment and
revaluation, permitted uses, use restrictions, and expense
obligations; the lessee and lessor each acting prudently
and knowledgeably, and assuming consummation of a
lease contract as of a specified date and the passing of
the leasehold from lessor to lessee under conditions
whereby: 1) lessee and lessor are typically motivated; 2)
both parties are well informed or well advised, and acting
in what they consider their best interests; 3) a reasonable
time is allowed for exposure in the open market; 4) the
rent payment is made in terms of cash in U.S. dollars and
is expressed as an amount per time period consistent with
the payment schedule of the lease contract; and 5) the
rental amount represents the normal consideration for the
property leased unaffected by special fees or concessions
granted by anyone associated with the transaction. ‡
market value
Market value is one of the central
concepts of the appraisal practice.
Market value is
differentiated from other types of value in that it is created
by the collective patterns of the market. Market value
means the most probable price which a property should
bring in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller
each acting prudently and knowledgeably, and assuming
the price is not affected by undue stimulus. Implicit in this
definition is the consummation of a sale as of a specified
date and the passing of title from seller to buyer under
conditions whereby: 1) A reasonable time is allowed for
exposure in the open market; 2) Both parties are well
informed or well advised, and acting in what they
consider their own best interests; 3) Buyer and seller are
typically motivated; 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.§
marketing period The time it takes an interest in real
property to sell on the market subsequent to the date of
an appraisal. ‡
net lease Lease in which all or some of the operating
expenses are paid directly by the tenant. The landlord
never takes possession of the expense payment. In a
Triple Net Lease all operating expenses are the
responsibility of the tenant, including property taxes,
insurance, interior maintenance, and other miscellaneous
expenses. However, management fees and exterior
maintenance are often the responsibility of the lessor in a
triple net lease. A modified net lease is one in which
some expenses are paid separately by the tenant and
some are included in the rent.
net rentable area (NRA) 1) The area on which rent is
computed. 2) The Rentable Area of a floor shall be
computed by measuring to the inside finished surface of
the dominant portion of the permanent outer building
walls, excluding any major vertical penetrations of the
floor. No deductions shall be made for columns and
projections necessary to the building. Include space such
as mechanical room, janitorial room, restrooms, and
lobby of the floor. *
occupancy rate The relationship or ratio between the
income received from the rented units in a property and
the income that would be received if all the units were
occupied.‡
prospective value opinion A forecast of the value
expected at a specified future date. A prospective value
opinion is most frequently sought in connection with real
estate projects that are proposed, under construction, or
under conversion to a new us, or those that have not
achieved sellout or a stabilized level of long-term
occupancy at the time the appraisal report is written. ‡
reasonable exposure time The estimated length of
time the property interest being appraised would have
been offered on the market prior to the hypothetical
consummation of a sale at market value on the effective
date of the appraisal; a retrospective opinion based upon
an analysis of past events assuming a competitive and
open market. ††
rent
See
full service lease
net lease
market rent
contract, coupon, face, or nominal rent
effective rent
shell rent
The typical rent paid for retail, office, or
industrial tenant space based on minimal “shell” interior
finishes (called plain vanilla finish in some areas). Usually
the landlord delivers the main building shell space or
some minimum level of interior build-out, and the tenant
completes the interior finish, which can include wall,
ceiling, and floor finishes; mechanical systems, interior
electric, and plumbing. Typically these are long-term
leases with tenants paying all or most property expenses. ‡
surplus land Land not necessary to support the highest
and best use of the existing improvement but, because of
physical limitations, building placement, or neighborhood
norms, cannot be sold off separately. Such land may or
may not contribute positively to value and may or may not
accommodate future expansion of an existing or
anticipated improvement. See also excess land. ‡
†
The Appraisal of Real Estate, Thirteenth Edition, Appraisal
Institute, 2008.
‡
The Dictionary of Real Estate Appraisal, Fourth Edition,
Appraisal Institute, 2002.
§
Office of Comptroller of the Currency (OCC), 12 CFR Part
34, Subpart C – Appraisals, 34.42 (g); Office of Thrift
Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute,
th
The Dictionary of Real Estate Appraisal, 4 ed. (Chicago:
Appraisal Institute, 2002), 177-178. This is also compatible
with the RTC, FDIC, FRS and NCUA definitions of market
value as well as the example referenced in the Uniform
Standards of Professional Appraisal Practice (USPAP).
*
2000
BOMA
Experience
Exchange
Report,
Income/Expense Analysis for Office Buildings (Building
Owners and Managers Association, 2000)
††
Statement on Appraisal Standard No. 6, Appraisal
Standards Board of The Appraisal Foundation, September
16, 1993, revised June 15, 2004.
usable area 1) The area actually used by individual
tenants. 2) The Usable Area of an office building is
computed by measuring to the finished surface of the
office side of corridor and other permanent walls, to the
center of partitions that separate the office from adjoining
usable areas, and to the inside finished surface of the
dominant portion of the permanent outer building walls.
Excludes areas such as mechanical rooms, janitorial
room, restrooms, lobby, and any major vertical
penetrations of a multi-tenant floor. *
use value
Use value is a concept based on the
productivity of an economic good. Use value is the value
a specific property has for a specific use. Use value
focuses on the value the real estate contributes to the
enterprise of which it is a part, without regard to the
property’s highest and best use or the monetary amount
that might be realized upon its sale. †
value indication An opinion of value derived through
application of the appraisal process. ‡
ADDENDUM B
IMPROVED SALE DATA SHEETS
RETAIL SALE No. 1
Pine Valley Shopping Center
Location Data
Location:
10264 Coldwater Road
Fort Wayne, IN 46825
County:
Allen
Parcel No:
Atlas Ref:
Physical Data
Type:
Neighborhood/Community
Land Area:
12.000 Acres
Excess Land:
Gross Leaseable Area:
Occupancy / Lease Data
Total GLA:
91,986 SF
Source:
(not used)
GLA Purchased:
91,986 SF
Occupancy at Sale:
95.00%
Local Tenant GLA:
59,454 SF
Based On:
Existing Income
Anchor Tenant GLA:
32,532 SF
Anchors:
Stein Mart
32,532 SF
Total
Per SF
Potential Gross Inc:
$0
$0.00
Vacancy & Credit Loss:
$0
$0.00
Effective Gross Inc:
$0
$0.00
$0
$0.00
$746,012
$8.11
Expenses & Reserves:
Net Operating Inc:
Analysis
Year Built:
1974
Parking:
Condition:
Average
Exterior Walls:
Concrete Block
Sales Data:
Transaction Type:
Listing
Date:
4/2013
Marketing Time:
5 Months
Underwriting Criteria:
Overall Cap Rate (OAR): 9.25%
Projected IRR:
0.00%
Eff Gross Inc Mult
(EGIM):
Op Exp Ratio (OER):
0.00%
Price Per SF:
$87.68
Grantor:
Grantee:
Document No.:
Sale Price:
$8,065,000
Financing:
Cash Eq. Price:
$8,065,000
Req. Capital Cost:
$0
Adj. Sale Price:
$8,065,000
Verification:
NAI Global
Comments
This active listing represents the Pine Valley Shopping Center located at the southeast corner of Coldwater Road & Dupont Road in
Fort Wayne. The property contains 91,986 square feet of gross leasing area with an average lease rate ranging between $13.00 and
$15.00 per square foot net over a three- to five-year term. Operating expenses are estimated to be $3.00 per square foot. Typical rent
escalations range from 3% annually or $1.50 bump for the length of the lease. The shopping center is currently 95% occupied. The
center is currently being marketed for $8,065,000 or $87.68 per square foot with an implied capitalization rate of 9.25%.
RETAIL SALE No. 2
Country Center Shoppes
Location Data
Location:
1100-1140 N State Road 135
Greenwood, IN 46142
County:
Johnson
Parcel No:
41-03-26-011-062.002-040
Atlas Ref:
Physical Data
Type:
Land Area:
4.170 Acres
Excess Land:
None
Total GLA:
41,901 SF
Source:
Broker
GLA Purchased:
41,901 SF
Occupancy at Sale:
75.00%
Local Tenant GLA:
41,901 SF
Based On:
Existing Income
Anchor Tenant GLA:
0 SF
Anchors:
Total
Per SF
Net Operating Inc:
$307,200
Analysis
Year Built:
1978, renovated 2006
Exterior Walls:
Direct Cap
Parking:
Condition:
Average
Concrete Block
Sales Data:
Projected IRR:
0.00%
Eff Gross Inc Mult
(EGIM):
Op Exp Ratio (OER):
Transaction Type:
Sale
Date:
10/2012
Marketing Time:
22 Months
Grantor:
CLARK WILLIAM LEWIS & CLARK
JUDITH R
Grantee:
Tcp Greenwood LLC
Document No.:
Sale Price:
$3,000,000
Financing:
Market Terms
Cash Eq. Price:
$3,000,000
Req. Capital Cost:
$0
Adj. Sale Price:
$3,000,000
Verification:
Broker
Price Per SF:
$71.60
$7.33
RETAIL SALE No. 2
Comments
This comparable represents the sale of Country Center Shoppes, a 41,901 square foot unanchored retail center built in 1978 and
renovated in 2006. The 4.17-acre site is located along North State Road in Greenwood, Johnson County, Indiana. The common
street address is 1100-1140 North State Road 135. The center has 507 feet of frontage along the west side of State Route 135 and
262 feet of frontage along the north side of Meridian Meadows Road. In October 2012, the property sold for $3,000,000, or $71.60 per
square foot. Per the broker, the capitalization rate of 10.24% was based upon in place income. The property was listed for
approximately 22 months with an asking price is $3,500,000, or $83.53 per square foot.
RETAIL SALE No. 3
Monticello Plaza
Location Data
Location:
832 - 1108 N Main Street
Monticello, IN 47960
County:
White
Parcel No:
91-73-28-000-027.601-021
Atlas Ref:
Physical Data
Type:
Land Area:
18.000 Acres
Excess Land:
None
Total GLA:
189,330 SF
Source:
Broker
GLA Purchased:
189,330 SF
Occupancy at Sale:
96.60%
Based On:
Existing Income
Local Tenant GLA:
56,830 SF
Anchor Tenant GLA:
132,500 SF
Anchors:
Total
Per SF
$0
$0.00
Kroger
50,000 SF
$0
$0.00
Rural King Supply
70,000 SF
$0
$0.00
Ace Hardware
12,500 SF
$0
$0.00
$750,000
$3.96
Net Operating Inc:
Analysis
Year Built:
1968
Parking:
Open Asphalt
Condition:
Average
Exterior Walls:
Masonry
Sales Data:
Transaction Type:
Sale
Date:
2/2012
Marketing Time:
1 Months
Grantor:
The Hamstra Group
Grantee:
Confidential
Document No.:
Sale Price:
$10,000,000
Financing:
Market Terms
Cash Eq. Price:
$10,000,000
Req. Capital Cost:
$0
Adj. Sale Price:
$10,000,000
Verification:
Broker, IBJ
Direct Cap
Projected IRR:
0.00%
Eff Gross Inc Mult
(EGIM):
Op Exp Ratio (OER):
0.00%
Price Per SF:
$52.82
RETAIL SALE No. 3
Comments
This comparable represents the sale of a 186,700 square foot community shopping center located at 832-1108 N Main Street in
Monticello, White County, Indiana. Known as the Monticello Plaza, the improvements were developed in 1968. The property is
located on Monticello's major north/south thoroughfare. Retailers in the immediate area include Taco Bell, CVS, Arby's, Advance Auto
Parts and Wells Fargo. The center was 96.6% occupied at the time of sale and is anchored by Kroger supermarket (50,000 square
feet), Rural King Supply (70,000 square feet) and Ace Hardware (12,500 square feet). In February 2012, the property sold for an
allocated consideration of $10,000,000, or $52.82 per square foot. Based on the reported existing income, an overall capitalization
rate of 7.50% was indicated by the sale. .
RETAIL SALE No. 4
Riverplace Plaza
Location Data
Location:
152-180 West Logan Street
Noblesville, IN 46060
County:
Hamilton
Parcel No:
11-06-36-00-010.001, 019.000,
020.000
Atlas Ref:
Physical Data
Type:
Land Area:
13.510 Acres
Excess Land:
None
Total GLA:
74,414 SF
GLA Purchased:
74,414 SF
Local Tenant GLA:
13,614 SF
Anchor Tenant GLA:
60,800 SF
Source:
Broker
Occupancy at Sale:
94.10%
Based On:
Existing Income
Total
Per SF
Anchors:
Kroger
50,000 SF
Fashion Bug
10,800 SF
$802,143
$10.78
$337,713
$4.54
Net Operating Inc:
$464,430
$6.24
Analysis
Direct Cap
Year Built:
1992
Parking:
Surface
Projected IRR:
Condition:
Average
5.42
Exterior Walls:
Masonry
Eff Gross Inc Mult
(EGIM):
Op Exp Ratio (OER):
42.10%
Price Per SF:
$58.46
Sales Data:
Transaction Type:
Sale
Date:
6/2012
Marketing Time:
1 Months
Grantor:
Inland Real Estate
Grantee:
RCG Ventures
Document No.:
Sale Price:
$4,350,000
Financing:
Market Terms
Cash Eq. Price:
$4,350,000
Req. Capital Cost:
$0
Adj. Sale Price:
$4,350,000
Verification:
Broker, CBRE
RETAIL SALE No. 4
Comments
This comparable represents the sale of a neighborhood shopping center known as Riverplace Center. The property is situated on a
12.56-acre site at the northeast corner of Logan and Nixon Streets in Noblesville, Hamilton County, Indiana. The immediate area is a
mixed-use destination featuring a combination of neighborhood retail and professional uses in addition to single-family residences. The
subject was developed in 1992 and contains 74,414 square feet of gross leasable area. The center is currently 94.1% leased. The
shopping center is anchored by Kroger supermarket. The anchor suite comprises 67% of the subject GLA and is leased through
January 2017). In June 2012, the property sold for an allocated consideration of $4,350,000, or $58.46 per square foot. Based on the
reported existing income, an overall capitalization rate of 10.68% was indicated by the sale.
RETAIL SALE No. 5
West Valley Shopping Center
Location Data
Location:
3111 Tittabawassee Road
Saginaw Township, MI 48604
County:
Saginaw
Parcel No:
12-4-03-1054-000
Atlas Ref:
Physical Data
Type:
Land Area:
40.970 Acres
Excess Land:
Total GLA:
296,235 SF
Source:
Appraiser
GLA Purchased:
287,691 SF
Occupancy at Sale:
99.10%
Local Tenant GLA:
102,619 SF
Based On:
Pro Forma Income
Anchor Tenant GLA:
193,616 SF
Anchors:
Total
Per SF
$0
$0.00
Dick's Sporting Good
60,000 SF
$0
$0.00
TJ Max
30,000 SF
$0
$0.00
Pet Smart
26,040 SF
$0
$0.00
Michaels Store
27,703 SF
Net Operating Inc:
$2,675,981
$9.30
Babies "R" US
24,651 SF
Barnes & Noble
25,222 SF
Year Built:
1996
Parking:
Open Asphalt
Condition:
Average
Exterior Walls:
Brick Veneer
Sales Data:
Transaction Type:
Sale
Date:
11/2012
Marketing Time:
NA
Grantor:
West Valley Partnership, LLC
Grantee:
Cole Real Estate Investments
Document No.:
Sale Price:
$26,500,000
Financing:
All Cash
Cash Eq. Price:
$26,500,000
Req. Capital Cost:
$0
Adj. Sale Price:
$26,500,000
Verification:
Buyer, Seller
Analysis
Direct Cap and DCF
Projected IRR:
0.00%
Eff Gross Inc Mult
(EGIM):
Op Exp Ratio (OER):
0.00%
Price Per SF:
$92.11
RETAIL SALE No. 5
Comments
The comparable is a 287,691 square foot community shopping center located at 3111 Tittabawassee Road, Saginaw Township,
Saginaw County, MI. The improvements were constructed in 1996 with various renovations through to the present. The property is
located on a 40.97-acre site. Currently, the property is 99.1% leased with the landlord currently building out space for DSW and Five
Below with anticipated commencement in January 2013. The property is anchored by a Dick's Sporting Goods Store with Junior
Anchors including Barnes & Noble, Babies "R" Us, Old Navy, TJ Maxx, PetSmart and Michael's Stores. The property is in
average overall condition. The landlord has been successful in maintaining several key tenants as well as back filling several junior
anchor vacancies over the past several years, however many of the original tenants were granted rent reductions due to violation of
co-tenancy clauses and overall market conditions. Additionally, the landlord added onto the property in 2012 to accommodate Ulta
Salon with the suite built out to the tenant specifications thus the high tenant improvement dollar amount. Within a three mile radius of
the property there are approximately 13,114 households with an average household income of $54,005.
The property was sold to Cole Real Estate Investments from the Sobel Company as part of the purchase of this center and the
adjacent East Valley Center. The purchase was an arm's length transaction generally at market levels. The comparable property had
many long term leases as follows: Dicks (4/21), Barnes and Noble (2/17), Toys R Us (1/15), Old Navy (1/17), TJ Maxx (1/22),
PetSmart (1/17), Michaels (2/19), DSW (1/23). Sales figures for the property are $148/SF for anchor space and $223-$267/SF for
junior anchor space. The property was purchased at a sale price of $92.11 per square foot with a implied capitalization rate of 10.10%.
RETAIL SALE No. 6
Brook Park Plaza
Location Data
Location:
14650-14690 Snow Road
Brook Park, OH 44142
County:
Cuyahoga
Parcel No:
344-14-028
Atlas Ref:
Physical Data
Type:
Land Area:
11.990 Acres
Excess Land:
None
Total GLA:
157,459 SF
Source:
Broker
GLA Purchased:
157,459 SF
Occupancy at Sale:
87.80%
Based On:
Existing Income
Local Tenant GLA:
47,432 SF
Anchor Tenant GLA:
110,027 SF
Anchors:
Total
Per SF
$0
$0.00
Giant Eagle
82,000 SF
$0
$0.00
Chengaworld Skate
Park
28,027 SF
$0
$0.00
$0
$0.00
$872,040
$5.54
Net Operating Inc:
Analysis
Direct Cap
Year Built:
1991, 1996
Parking:
Surface
Projected IRR:
Condition:
Average
Exterior Walls:
Masonry
Eff Gross Inc Mult
(EGIM):
Sales Data:
Transaction Type:
Sale
Date:
10/2012
Marketing Time:
NA
Grantor:
Albrect, Incorporated
Grantee:
Brook Park Station, LLC
Document No.:
201210240233
Sale Price:
$10,140,000
Financing:
See Comments
Cash Eq. Price:
$10,900,500
Req. Capital Cost:
$0
Adj. Sale Price:
$10,900,500
Verification:
Broker, Public Records
0.00%
Op Exp Ratio (OER):
0.00%
Price Per SF:
$69.23
RETAIL SALE No. 6
Comments
This comparable represents the sale of Brook Park Plaza located in densely populated Brook Park, Ohio. This property is a 157,459
square foot neighborhood retail center comprised of one building and a Get Go fuel center and situated on an 11.99 acre site. The
center was originally developed in 1991 and Giant Eagle serves as the anchor tenant. At the time of sale, the center was 87.8%
occupied. Other tenants include Fresenius Medical Services, Goodwill, and Chengaworld Skate Park. According to the buyer's SEC
filings, the weighted average lease term of the existing tenants was approximately 5.5 years. In October 2012, the comparable was
sold for $10,140,000, or approximately $64.40 per square foot. The buyer's broker confirmed the sale was arm's length. The broker
stated the comparable was not marketed; the buyer approached the seller directly. The broker confirmed the buyer's underwriting
equated to an 8.60% overall capitalization rate based upon existing income (implying a net operating income of $872,040). The broker
stated the overall capitalization rate was somewhat high due to a loan assumption with a high interest rate, which was self amortizing.
The buyer's broker stated without this unfavorable financing, the sale's overall capitalization rate would have been approximately
8.00%. CBRE, Inc. has adjusted the sale for the favorable financing within the write up of this comparable, implying a $10,900,500
sale price, or approximately $69.23 per square foot.
RETAIL SALE No. 7
Golden Gate Shopping Center
Location Data
Location:
2883-2999 E. Big Beaver Road
Troy, MI 48084
County:
Oakland
Parcel No:
20-24-476-005
Atlas Ref:
Physical Data
Type:
Land Area:
9.630 Acres
Excess Land:
n/a
Total GLA:
100,585 SF
Source:
Appraiser
GLA Purchased:
100,585 SF
Occupancy at Sale:
94.10%
Based On:
Pro Forma Income
Local Tenant GLA:
51,200 SF
Anchor Tenant GLA:
49,385 SF
Anchors:
Total
Aco Hardware
12,292 SF
E-Mart, LLC
12,600 SF
Dollar General
6,400 SF
Aldi Grocery
18,093 SF
$10.11
$70,192
$0.70
$1,001,531
$9.96
$298,930
$2.97
Net Operating Inc:
$702,601
$6.99
Analysis
Year Built:
1974, 1976
Parking:
Open Asphalt
Condition:
Average
Exterior Walls:
Brick Veneer
Sales Data:
Transaction Type:
Sale
Date:
7/2012
Marketing Time:
2 Months
Grantor:
Reed Holdings - Troy LLC
Grantee:
Thomas Hannawa
Document No.:
Sale Price:
$6,560,000
Financing:
Market Terms
Cash Eq. Price:
$6,560,000
Req. Capital Cost:
$0
Adj. Sale Price:
$6,560,000
Verification:
PA, Buyer
Per SF
$1,017,279
Direct Cap and DCF
Projected IRR:
0.00%
Eff Gross Inc Mult
(EGIM):
6.55
Op Exp Ratio (OER):
29.85%
Price Per SF:
$65.22
RETAIL SALE No. 7
Comments
The comparable is a 100,585-square foot retail property (community center) located at 2891-2999 East Big Beaver Road, Troy,
Oakland County, MI. The improvements were constructed in 1974 and 1976 and are situated on a 11.543-acre site. Currently, the
property is 94.1% occupied and is considered to be in average overall condition. The property is anchored by an Aldi grocery store
and includes a mixture of national (corporate and franchisee) and local operators. The property also has an independent specialty
grocery store (E-Mart) as well as Aco Hardware and Dollar General all as tenants. The property has three total buildings, two retail
and one medical office building. The property has end cap units along Big Beaver and John R Roads which represent the higher end
of the rental rate range. Within a three mile radius of the property there are 33,740 households with an average household income of
$72,415. Traffic counts along Big Beaver Road are 32,484 cars per day with Dequindre Road having traffic counts of 30,931 cars per
day.
The property was purchased from Reed Holdings - Troy LLC to Thomas Hannawa for a purchase price of $6,560,000. The buyer is a
local real estate investor who was purchasing the property as a long term investment based upon the tenant mix and strong location.
The buyer considered the forward looking inplace income at the time of purchase as the primary indication of value for the property
with the purchase indicating an overall rate of 10.71%. Overall, the buyer planned to complete renovations/tenant improvements in
order to attract better and stronger tenants as a long term strategy.
ADDENDUM C
RENT COMPARABLE DATA SHEETS
RETAIL COMPARABLE No. 1
Covington Plaza
Location Data
Location:
4130 West Jefferson Boulevard
Fort Wayne,IN 46804
Allen
County:
Assessor's Parcel No: N/A
Atlas Ref:
N/A
Physical Data
Type:
Year Built:
Exterior Walls:
Condition:
Parking:
Anchors:
Fresh Market
Office Depot
Mitchell Books
183,806 SF
1981
Brick Exterior
Average
1,375 spaces
Lease Data
Occupancy:
Local:
Overall:
90%
90%
3,500 SF
Typical Size:
3 to 5 years
Term:
$7.00 to $15.00
Base Rent PSF:
Rent Escalations:
No
NNN
Basis:
Expense Pass-Thru: $3.32
Free Rent (months): None
Tenant Improvement: Negotiable
Leasing Agent:
N/A
Phone No.:
N/A
Survey Date:
2010
Anchor Tenant GLA: N/A
Local Tenant GLA: 183,806 SF
Total GLA:
183,806 SF
Recent Leases
Rent
(PSF)
TI
(PSF)
Anytime Fitness
$13.00
$0.00
4.00
2,230
PIC Medical Supplies
$13.00
$0.00
4.00
07/2005
22,640
Fresh Market
$10.00
$0.00
Flat
12/2004
21,944
Office Depot
$8.00
$0.00
Steps
Date
Size
(SF)
02/2009
5,400
01/2009
Tenant
Free Rent
(Months) Escalations
Term
(Yrs)
15.00
120.00
Comments
Covington Plaza is a community shopping center located on the south side of Jefferson Boulevard, south of Covington Road, in Fort
Wayne, Indiana. The center was originally developed in 1981 and was renovated in early 2000's with new leasing. The center
contains 183,806 square feet of gross leasable area and is anchored by Fresh Market, Office Depot, and Mitchell Books. All of these
tenants have 2004 and 2005 leases and rental rates range from $8.00 to $14.07 per square foot. Inline leases range from $7.00 to
$15.00 per square foot on a triple net basis. The rental rate is a function of tenancy, term and location within the center. The current
occupancy is 90%.
Dupont Crossing Shopping Center
Location Data
Location:
622 East Dupont Road
Fort Wayne,IN 46825
Allen
County:
Atlas Ref:
N/A
Physical Data
Type:
Year Built:
Exterior Walls:
Condition:
Parking:
Anchors:
Scott's Grocery
85,000 SF
1987
Concrete Block
Average
Surface
Lease Data
Occupancy:
Local:
Overall:
100%
100%
5,000 SF
Typical Size:
3-5 Years
Term:
$14.00
Base Rent PSF:
Rent Escalations:
N/A
NNN
Basis:
Expense Pass-Thru: NNN
Free Rent (months): 0
Tenant Improvement: N/A
Leasing Agent:
BND Commercial Real Estate
Phone No.:
(260) 407-711
Survey Date:
09/2010
65,000 SF
Anchor Tenant GLA: 65,000 SF
Total GLA:
85,000 SF
Recent Leases
Date
Size
(SF)
01/2010
5,040
Tenant
Norma Pancake House
Rent
(PSF)
$9.00
TI
(PSF)
$0.00
Free Rent
0
Bump Mid-term
Term
(Yrs)
5.00
Comments
This comparable, Dupont Crossing Shopping Center, represents a community shopping center located at the southwest corner of
Dupont Road and Coldwater Crossings in Fort Wayne. The property was built in 1987, contains 85,000 square feet. It is currently
100% occupied. The most recent leasing occurred in January 2010,Norma Pancake House with 5,040 square feet at $9.00 per
square foot, triple net over a 5-year term. The average rental rate $13.00 per square foot net over a three- to ten-year term.
Dupont Village
Location Data
Location:
507 East Dupont Road
Fort Wayne,IN 46825
Allen
County:
Atlas Ref:
N/A
Physical Data
Type:
Year Built:
Exterior Walls:
Condition:
Parking:
Anchors:
Kroger
168,100 SF
1998
Concrete Block/Brick
Good
Surface
Lease Data
Occupancy:
Local:
Overall:
97%
97%
5,000 SF
Typical Size:
3-5 Years
Term:
$10.00 - $15.50 PSF
Base Rent PSF:
Rent Escalations:
Varies
NNN
Basis:
Expense Pass-Thru: $2.05 PSF
Tenant Improvement: As Is
Leasing Agent:
BND Commercial
Phone No.:
N/A
Survey Date:
09/2010
80,000 SF
Total GLA:
168,100 SF
Recent Leases
Rent
(PSF)
TI
(PSF)
Confidential
$11.00
$0.00
Confidential
$9.00
$0.00
Date
Size
(SF)
Tenant
08/2010
800
08/2010
2,400
Free Rent
0
Term
(Yrs)
Annual Bumps
3.00
Annual Bumps
5.00
Comments
This comparable, Dupont Village, represents a community shopping center located at the northwest corner of Dupont and Coldwater
Roads in Fort Wayne. The property was constructed between 1998 and 2000. It is currently 97% occupied. The asking rental rate
ranges between $10.00 and $15.50 per square foot net over a three- to five-year term. Typical terms do not include a tenant
improvement allowance, while includes a rental escalation in the third year ranging between 5% and 10%.
Lima Marketplace
Location Data
Location:
10001-10035 Lima Road
Fort Wayne,IN 46818
Allen
County:
Assessor's Parcel No: 02-07-03-127-002.001-073 etc.
Atlas Ref:
N/A
Physical Data
Type:
Year Built:
Exterior Walls:
Condition:
Parking:
Anchors:
Office Depot
PetSmart
Aldi
Dollar Tree
Anchor Tenant GLA:
Local Tenant GLA:
Total GLA:
Power Center
94,163 SF
2008
Masonry and EIFS
Good
6.3 spaces per 1,000 sf
Lease Data
Occupancy:
Local:
Overall:
91%
91%
15,000 SF
Typical Size:
5 to 15 years
Term:
$9.50 to $25.40
Base Rent PSF:
Rent Escalations:
10% mid-term
NNN
Basis:
Expense Pass-Thru: $3.67
Tenant Improvement: $5.00 to $15.00
Leasing Agent:
N/A
Phone No.:
N/A
Survey Date:
2009
20,936 SF
20,234 SF
16,555 SF
12,500 SF
70,225 SF
23,938 SF
94,163 SF
Recent Leases
Rent
(PSF)
TI
(PSF)
Aldi
$12.00
$0.00
15.00
20,234
PetSmart
$12.03
$0.00
10.00
06/2009
3,257
B. Antonio Pizza
$18.50
$0.00
11.00
08/2008
1,400
My Menu
$25.40
$0.00
5.00
Date
Size
(SF)
12/2009
16,555
12/2009
Tenant
Free Rent
Term
(Yrs)
Comments
This comparable is a retail power center built in 2008 and known as Lima Marketplace. The development is situated in the southwest
quadrant of Lima Road and Dupont Road in the northern portion of Fort Wayne, Allen County, Indiana. The common street address
is 10001-10035 Lima Road. The center will features 85,463 square feet on inline and junior anchor retail space in addition to an
8,700 square foot strip center outparcel. The center is 91% leased and anchored by PetSmart (20,234 square feet), Office Depot
(20,936 square feet) and Aldi (16,555 square feet). Anchor rental rates range from $9.50 to $13.75 per square foot, inline rental
rates range from $18.50 to $19.50 per square foot and outlot rental rates range from $20.21 to $25.40 per square foot.
Maplewood Plaza Shopping Center
Location Data
Location:
5950 - 5960 Stellhorn Rd
Fort Wayne,IN 46815
Allen
County:
Atlas Ref:
N/A
Physical Data
Type:
Year Built:
Exterior Walls:
Condition:
Parking:
Anchors:
Big Lots
216,102 SF
1957
Concrete Block
Average
1,817 Surface Spaces
Lease Data
Occupancy:
Local:
Overall:
89%
89%
1,000 SF
Typical Size:
3-5 Years
Term:
$9.50 PSF
Base Rent PSF:
Rent Escalations:
Varies
NNN
Basis:
Expense Pass-Thru: All
Leasing Agent:
NAI Harding
Phone No.:
260-423-4311
Survey Date:
01/2010
30,792 SF
Total GLA:
216,102 SF
Recent Leases
Date
Size
(SF)
09/2009
1,692
Tenant
Jun Foot Massage
Rent
(PSF)
TI
(PSF)
$11.00
$0.00
Free Rent
Flat
Term
(Yrs)
3.00
Comments
This comparable, Maplewood Plaza Shopping Center, represents a community shopping center located along Stellhorn Road in Fort
Wayne. The property was constructed in 1957. It is currently 89% occupied with a traffic count of 23,000 per day. The asking rental
rate ranges between $7.00 to $12.00 per square foot net over a three- to five-year term. Typical terms do not include a tenant
improvement allowance.
Maysville Pointe
Location Data
Location:
10300 Maysville Road
Fort Wayne,IN 46825
Allen
County:
Atlas Ref:
N/A
Physical Data
Type:
Year Built:
Exterior Walls:
Condition:
Parking:
Anchors:
PetSmart
MC Sports
Power Center
137,957 SF
2007
Brick/Concrete
Excellent
Adequate surface
Lease Data
Occupancy:
Local:
Overall:
63%
63%
20,000 SF
Typical Size:
3 to 10 years
Term:
$11.00 to $18.00
Base Rent PSF:
Rent Escalations:
Varies
NNN
Basis:
Expense Pass-Thru: Taxes, Ins, CAM
Free Rent (months): Negotiable
Tenant Improvement: N/A
Leasing Agent:
NAI/Harding Dahm & Company
Phone No.:
260-423-4311
Survey Date:
N/A
20,087 SF
15,000 SF
Total GLA:
137,957 SF
Recent Leases
Date
Size
(SF)
02/2008
20,087
02/2008
15,000
Rent
(PSF)
TI
(PSF)
Free Rent
PetsMart
$14.50
$0.00
Fixed steps
MC Sports
$11.00
$0.00
Tenant
Term
(Yrs)
10.00
10.00
Comments
This rent comparable represents Maysville Pointe, a recently constructed power center located at 10250 Maysville Road in Fort
Wayne, Indiana. Phase 1 of the center consists of 65,087 square feet and is anchored by PetSmart and MC Sports. Phase 2
consists of 106,994. The development also includes three leased outlots. While still in lease-up, the center is currently 63%
occupied, with asking rents for the inline space quoted at $19.00 per square foot on a triple net basis, compared to $15.00 per square
foot for junior anchor suites. The development is adjacent to a Wal-Mart Supercenter and shares a common access point.
Meadowbrook Shopping Center
Location Data
Location:
910 Lincoln Hwy W
Fort Wayne,IN 46774
Allen
County:
Atlas Ref:
N/A
Physical Data
Type:
Year Built:
Exterior Walls:
Condition:
Parking:
Anchors:
Big Lots
74,922 SF
1967
Concrete Block/Brick
Average
164 Surface Spaces
Lease Data
Occupancy:
Local:
Overall:
88%
88%
2,000 SF
Typical Size:
3-5 Years
Term:
$9.00 PSF
Base Rent PSF:
Rent Escalations:
Varies
NNN
Basis:
Expense Pass-Thru: All
Leasing Agent:
NAI Harding
Phone No.:
260-423-4311
Survey Date:
01/2010
39,423 SF
Total GLA:
74,922 SF
Recent Leases
Rent
(PSF)
Free Rent
Date
Size
(SF)
06/2009
10,750
Surplus Grocery
$5.00
$0.00
3
Flat
03/2009
1,577
Papa Murphy's
$10.00
$0.00
3
Annual
Tenant
TI
(PSF)
Term
(Yrs)
10.00
5.00
Comments
This comparable, Meadowbrook Shopping Center, represents a neighborhood shopping center located along Lincoln Highway West
in Fort Wayne, Allen County, Indiana. The property was constructed in 1967. It is currently 88% occupied with a traffic count of
29,500 cars per day. The asking rental rate ranges between $9.00 per square foot net over a three- to five-year term. Typical terms
do not include a tenant improvement allowance with three months of free rent. Contract inline lease rates range from $5.00 to
$10.00 per square foot depending on suite size.
The Village at Time Corners
Location Data
Location:
6331 West Jefferson Boulevard
Fort Wayne,IN 46804
Allen
County:
Atlas Ref:
N/A
Physical Data
Type:
Year Built:
Exterior Walls:
Condition:
Parking:
Anchors:
Stein Mart
111,072 SF
1989
Brick Exterior
Average
Adequate
Lease Data
Occupancy:
Local:
Overall:
81%
81%
2,000 SF
Typical Size:
3 to 10 years
Term:
$8.00 to $15.00
Base Rent PSF:
Rent Escalations:
3% per year
NNN
Basis:
Expense Pass-Thru: Taxes, Ins, CAM
Tenant Improvement: Negotiable
Leasing Agent:
The Broadbent Company
Phone No.:
888-664-2900
Survey Date:
2009
Anchor Tenant GLA: N/A
Total GLA:
111,072 SF
Recent Leases
Rent
(PSF)
Free Rent
Date
Size
(SF)
04/2009
13,000
Celebrations Party Outlet
$7.00
$0.00
12/2008
10,048
Uncle Bill's Pet Center
$12.00
$0.00
3.00
08/2008
1,400
My Menu
$16.00
$0.00
5.00
Tenant
TI
(PSF)
0
Term
(Yrs)
3.00
Comments
This comparable, the Village at Time Corners, represents a neighborhood shopping center developed in 1989. The property is 81%
occupied with Stein Mart as the grocery store anchor tenant. The rental rates for inline tenants range between $12.00 and $16.00 per
square foot net, depending on the size of tenant, typically over a five-year term. Tenant improvement dollars are negotiable. Recent
leases have been signed for junior anchor space at $7.00 per square foot and large inline for $12.00 per square foot. Inline pace has
leased for $16.00 per square foot. Lease terms average 3 years, and all leases are triple net.
ADDENDUM D
PRÉCIS METRO REPORT - ECONOMY.COM, INC.
FORT WAYNE
EMPLOYMENT
GROWTH RANK
RELATIVE EMPLOYMENT PERFORMANCE (1997=100)
VITALITY
RELATIVE
99%
2011-2013
40
U.S.=100%
1st quintile
125
RANK
164
Best=1 Worst=384
RELATIVE COSTS
2011-2016
98
2nd quintile
LIVING
BUSINESS
86% 77%
Best=1, Worst=392
U.S.=100%
LIFE CYCLE PHASE
Mature
120
115
110
105
100
95
90
97
98
99
00
01
DataBuffet MSA code: MFOW
®
2005200620072008200920102011
02
03
04
05
06
07
U.S.
08
STRENGTHS
●● Low costs of living and doing business.
●● Highly affordable housing that is holding its
value.
●● Sturdy credit conditions.
●● Well-developed transportation hub.
WEAKNESSES
●● High dependence on durable goods
manufacturing.
●● Below-average educational attainment.
●● Low per capita income.
CURRENT EMPLOYMENT TRENDS
% change yr ago, 3-mo MA
Apr 12Aug 12 Dec 12
Total
5.1 5.43.7
Construction
3.32.2
-1.4
Manufacturing
1.7 1.32.5
Trade
4.6 6.44.3
Trans/Utilities
9.010.3 8.1
Information
2.4 3.72.1
Financial Activities
5.1
6.9
2.7
Prof & Business Svcs.
9.1
11.6
5.9
Edu & Health Svcs.
5.4
7.6
4.6
Leisure & Hospitality
7.3
8.3
5.9
Other Services
6.6
8.0
5.2
Government3.0
-4.1
-0.5
LONG
TERM
W
W
FORECAST RISKS
SHORT
TERM
RISK-ADJUSTED
RETURN, ’11-16
1.32%
UPSIDE
●● Diverse manufacturing recoups more lost jobs
than expected.
●● Highway construction increases area’s
importance as a transportation hub.
●● FOW increases its share of high-paying
services, resulting in faster income growth.
DOWNSIDE
●● Defense spending cuts lead to larger factory
job losses.
54
10
11 12F 13F 14F 15F 16F
FOW
Indicators
20122013201420152016
16.717.017.416.815.716.717.3 Gross metro product (C$B)
2.12.02.1-3.3-6.86.43.8
% change
213.8217.2217.7214.7201.2201.3205.8
Total employment (000)
1.01.60.2-1.4-6.30.12.2
% change
5.14.94.76.0
10.7
10.39.0
Unemployment rate
1.76.44.21.8-4.42.65.5 Personal income growth
403.2406.8410.2412.1414.4416.7419.4
Population (000)
2,056
1,376
1,070771764809721
Single-family permits
485212 45245120 76 22
Multifamily permits
101.699.896.592.492.698.193.0 Existing-home price ($ ths)
1,8041,6011,3981,1942,0691,6571,159 Mortgage originations ($ mil)
0.10.90.5-1.2-0.5-0.40.1
Net migration (000)
4,9891,5182,2002,6793,3933,1632,741
Personal bankruptcies
STRENGTHS & WEAKNESSES
09
17.717.918.5 19.119.6
2.21.43.2 3.52.4
215.0215.9219.9 225.2229.4
4.50.41.8 2.41.8
7.77.16.5 5.95.6
5.63.77.2 7.36.2
420.9423.8426.7 429.6432.5
706 9451,776 2,0071,986
516114135 133125
104.9108.1110.1 114.2117.5
1,650
1,228804 800879
-1.20.10.0-0.0-0.0
2,6162,1452,071 2,1832,229
ANALYSIS
Recent Performance. After a strong showing
during the first half of 2012, Fort Wayne’s recovery is slowing. Payrolls in private services such as
professional/business have lost ground in recent
months, and goods-producing industries have been
unable to pick up the slack. Factory employment
is now trending slightly lower. Moreover, workers
exited the labor force in the second half of last year
as employment slumped. On the bright side, residential permits are rising. The median house price
and sales are also on the upswing, according to the
Indiana Association of Realtors.
Manufacturing. Manufacturing was the key recovery driver, but payrolls are losing ground and a
quick turnaround is unlikely. Although national auto
sales remain strong, General Motors’ truck sales are
unable to keep pace. GM recently began offering
hefty discounts in an effort to drain its large inventory of Silverado and Sierra pickups, both of which
are produced at its Allen County plant. The excess
supply will impede hiring not only at GM’s operation
but also among parts suppliers that cater to the plant.
However, this is likely to be only a short-term constraint to growth. Other longer-term drags stem from
federal policy uncertainty and the winding down of
war in the Middle East. FOW is one of the state’s
largest defense contractors, and its share of procurement dollars relative to GDP is significant. Companies such as Raytheon and ITT have trimmed payrolls in recent years, and even if jobs remain intact
amid sequestration, expansion will be hindered.
Growth barriers. FOW’s reliance on manufacturing will make it difficult for the metro area
to keep pace with the nation in the longer term.
Although right-to-work legislation and a declining
state corporate income tax rate create upside potential for manufacturing investment and hiring, factory payrolls are expected to remain relatively flat in
the medium term and stay below their prerecession
peak. Hiring will mostly stem from private services
and downstream industries such as transportation/
distribution that benefit from factory production
growth. Because these industries are lower-paying,
they will not fill the revenue void left by high-paying factory losses. Longer term, factory payrolls will
continue their secular decline, creating even more
of a hindrance to employment and wage growth.
Private services. Private services will drive employment in FOW in the longer term more reliably
than will manufacturing. The recent uptick in business investment in capital goods and structures offers
optimism that companies will expand payrolls sooner
rather than later. For example, Sweetwater Sound is
investing $20 million and hiring 400 workers to
expand its FOW headquarters. However, near-term
expansion will be slow, and the expected downward
revisions, as seen in the complete count of employment though the second quarter of 2012, indicate
that services played less of a role in the expansion
than preliminary estimates indicate. Notably, professional/business services likely contracted. After the
adjustment, the metro area’s recovery has likely closely mirrored the state average rather than outpaced it.
Fort Wayne’s recovery will slow before accelerating in the second half of 2013. Although
manufacturing will not duplicate the robust
gains of 2010, growth in output will contribute
in many ways to the economy. The labor market recovery will rest on services. In particular,
healthcare will be a strong performer thanks to
large capital investments and an aging population. Job growth will match the national average
through the middle of the decade before decelerating as the cyclical boost to manufacturing
fades and middling population growth provides
less impetus elsewhere.
Marshall Carter
February 2013
MOODY’S ANALYTICS / Précis U.S. Metro / Midwest / February 2013
EMPLOYMENT & INDUSTRY
TOP EMPLOYERS
MIGRATION FLOWS
INDUSTRIAL DIVERSITY
Parkview Health Systems
Lutheran Health Network
General Motors Truck Group
Lincoln Financial Group
ITT Aerospace-Communications Division
Uniroyal Goodrich Tire Manufacturing
Indiana University-Purdue University
Frontier Communications Corp.
Raytheon Systems Co.
Norfolk Southern Corp.
B.A.E. Systems Platform Solutions
Steel Dynamics
Navistar International Corp.
Vera Bradley
IN Air National Guard Fort Wayne Metals Research Products Corp.
Edy’s Grand Ice Cream
Parker-Hannifin Corp.
American Welding Society
Ivy Tech Community College
4,710
4,302
3,341
1,750
1,581
1,580
1,255
1,125
1,040
942
899
825
800
789
588
539
525
500
496
496
Source: Fort Wayne Economic Development Alliance, September 2011
PUBLIC
2011
Indianapolis, IN
Chicago, IL
Warren, MI
Elkhart, IN
Detroit, MI
South Bend, IN
Gary, IN
Phoenix, AZ
Muncie, IN
Lafayette, IN
Total In-migration
1.00
0.80
0.59
0.60
0.40
0.20
0.00
Least Diverse
Indianapolis, IN
Chicago, IL
Gary, IN
South Bend, IN
Phoenix, AZ
Dallas, TX
Elkhart, IN
Muncie, IN
Houston, TX
Bloomington, IN
Total Out-migration
Relative to U.S.
100%
80%
60%
145
89%
100
20%
Due to U.S.
FOW
% of Total Employment
FOW INU.S.
0.1% 0.2%0.6%
4.5% 4.2%4.2%
16.0%16.4%8.9%
74.0% 71.4%62.0%
26.0% 28.6%38.0%
4.8% 4.5%3.7%
5.2% 4.1%4.2%
10.6% 10.8%11.2%
1.5% 1.2%2.0%
5.8% 4.6%5.9%
10.7% 10.1%13.2%
17.3% 15.1%15.1%
9.1% 9.8%10.2%
3.9% 3.9%4.1%
10.6% 15.0%16.8%
NET MIGRATION, FOW
Net Migration, FOW
Average Annual Earnings
FOW INU.S.
nd $56,241$80,442
$51,861 $55,554$57,059
$70,218 $74,899$76,451
nd $71,329$78,378
nd $83,692$73,303
nd $55,172$63,289
$67,606 $66,194$78,458
$26,232 $27,389$32,088
$61,146 $54,290$96,383
$38,827 $34,584$50,553
$41,634 $45,421$61,371
$50,592 $48,517$50,771
$16,410 $19,611$24,149
$30,399 $32,539$34,601
$54,557 $55,243$68,458
Sources: Percent of total employment — Moody’s Analytics & BLS, 2011; Average annual earnings — BEA, 2011
HOUSE PRICES
NAICS INDUSTRY
200
180
160
140
120
100
80
97
00
03
FOW
06
09
12
U.S.
Source: FHFA, 1996Q1=100, NSA
MOODY’S RATING
Aa2
COUNTY
AS OF Apr 22, 2011
08
09
10
11
2008 2009 20102011
Domestic
Foreign
Total
-2,014-1,263 -1,093 -282
790 783 631369
-1,224-480-46187
PER CAPITA INCOME
EMPLOYEES (000)
GVSL State & Local Government
7225 Restaurants and other eating places
6221 General medical and surgical hospitals
5613 Employment services
6211 Offices of physicians
5241 Insurance carriers
2382 Building equipment contractors
4841 General freight trucking
4529 Other general merchandise stores
6231 Nursing care facilities (skilled nursing facilities)
FR
Farms
5617 Services to buildings and dwellings
3342 Communications equipment manufacturing
3363 Motor vehicle parts manufacturing
5221 Depository credit intermediation
High-tech employment
As % of total employment
Sources: BLS, Moody’s Analytics, 2011
200
0
-200
-400
-600
-800
-1,000
-1,200
-1,400
Sources: IRS (top), 2010; Census Bureau, 2011
LEADING INDUSTRIES
220
-800
U.S.
COMPARATIVE EMPLOYMENT AND INCOME
Mining
Construction
Manufacturing
Durable
Nondurable
Transportation/Utilities
Wholesale Trade
Retail Trade
Information
Financial Activities
Prof. and Bus. Services
Educ. and Health Services
Leisure and Hosp. Services
Other Services
Government
1,103
244
117
116
111
105
101
97
87
87
11,668
Net Migration
0%
Not due to U.S.
Sector
544
299
201
120
112
105
100
100
94
83
10,868
FROM Fort Wayne, IN
EMPLOYMENT VOLATILITY
Due to U.S. fluctuations
40%
Federal1,993
State3,822
Local 16,043
INTO Fort Wayne, INNumber
of Migrants
Most Diverse (U.S.)
19.9
13.9
11.1
7.0
4.1
4.0
3.6
3.6
3.6
3.5
3.2
3.0
2.7
2.7
2.6
9.4
4.4
35,042
FOW
35,689
41,560
IN
U.S.
Source: Bureau of Economic Analysis, 2011
55
FORT WAYNE
Expected Downward Revisions…
…Likely to Reduce Fort Wayne’s Edge
Private services employment, % change yr ago
Employment, % change yr ago, 3-mo MA
6
10
QCEW
8
CES
4
6
2
4
0
2
-2
0
-2
-4
-4
-6
-6
09
10
11
U.S.
Indiana
Fort Wayne
-8
12
08
Sources: BLS, Moody’s Analytics
09
10
11
12
13
1
Foreclosure inventory per 1,000 households
% change yr ago
20
15
Industrial production (R)
10
15
21
10
19
0
0
-5
-5
Manufacturing employment (L)
-10
-15
-20
-25
10
11
15
13
11
-10
9
-15
7
-20
5
08
12
3
…But Supply-Side Fundamentals Are Strong
6
Excess supply single-family
houses, mo (L)
Overvaluation index, %
overpriced (R)
4
2
2.0
-6
1.5
-2
-12
-4
-6
12
09
10
11
Population, % change (R)
-0.5
-14
-1.0
-16
-1.5
1.2
1.0
0.8
0.0
12
4
1.4
0.5
0.6
Net migration, ths (L)
0.4
0.2
98 99 00 01 02 03 04 05 06 07 08 09 10 11
Source: Moody’s Analytics
Sources: Census Bureau, Moody’s Analytics
FOW’s inventory of foreclosed homes has risen above the U.S.
average, but there are other signs that the housing market is healing
on both the demand and supply sides. The months of supply of
unsold homes is falling and stands below the state average. Furthermore, Allen County home sales rose at a healthy clip in the fourth
quarter compared with a year earlier, while the median house price
increased at a double-digit pace, according to the Indiana Association of Realtors. House price gains should become more robust
next year after banks have worked through the backlog of foreclo-
5
56
11
1.0
-8
-10
08
10
Spotty In-Migration Subtracts From Potential
-4
0
07
09
Sources: RealtyTrac, Moody’s Analytics
06
U.S.
Indiana
Fort Wayne
17
5
5
09
2
Rising Share of Foreclosures Is a Drag…
Factories Have Enough Labor for Production
A lack of consistent in-migration subtracts from the metro area’s
growth potential. FOW’s relatively good population growth for the
Midwest is attributable to its above-average birth rate and belowaverage death rate. Net migration is often a drag on population
growth. FOW attracts international immigrants, but it routinely
loses more domestic residents than it acquires. Most residents who
leave move to Indianapolis, which offers a more diverse economy
and a higher concentration of well-paying service jobs. This likely
lessens the quality of the local labor force.
6
About Moody’s Analytics
Economic & Consumer Credit Analytics
Moody’s Analytics helps capital markets and credit risk management professionals
worldwide respond to an evolving marketplace with confidence. Through its team of
economists, Moody’s Analytics is a leading independent provider of data, analysis,
modeling and forecasts on national and regional economies, financial markets, and
credit risk.
Moody’s Analytics tracks and analyzes trends in consumer credit and spending, output and income, mortgage activity, population, central bank behavior, and prices. Our customized models, concise and timely reports, and one of the largest assembled
financial, economic and demographic databases support firms and policymakers in strategic planning, product and sales forecasting, credit risk and sensitivity management, and investment research. Our customers include multinational corporations,
governments at all levels, central banks and financial regulators, retailers, mutual funds, financial institutions, utilities, residential and commercial real estate firms, insurance companies, and professional investors.
Our web and print periodicals and special publications cover every U.S. state and metropolitan area; countries throughout
Europe, Asia and the Americas; and the world’s major cities, plus the U.S. housing market and other industries. From our offices
in the U.S., the United Kingdom, the Czech Republic and Australia, we provide up-to-the-minute reporting and analysis on the
world’s major economies.
Moody’s Analytics added Economy.com to its portfolio in 2005. Its economics and consumer credit analytics arm is based in
West Chester PA, a suburb of Philadelphia, with offices in London and Sydney. More information is available at www.economy.com.
© 2013, Moody’s Analytics, Inc. and/or its licensors and affiliates (together, “Moody’s”). All rights reserved. ALL INFORMATION CONTAINED HEREIN
IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER
TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY PURPOSE, IN WHOLE
OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by Moody’s from sources believed by it to be accurate and reliable. Because of the possibility of human
and mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. Under no
circumstances shall Moody’s have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or
relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of Moody’s or any of its directors,
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delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without
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statements of opinion and not statements of fact or recommendations to purchase, sell, or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED,
AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH OPINION OR
INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER. Each opinion must be weighed solely as one factor
in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own
study and evaluation prior to investing.
102
ADDENDUM E
QUALIFICATIONS
Page 1/1
QUALIFICATIONS OF
LES LINDER, MAI, CCIM
Managing Director
CB Richard Ellis Inc., Valuation and Advisory Services
311 South Wacker, Suite 400
Chicago, IL 60606
(312) 233-8665
Les.Linder@cbre.com
EDUCATIONAL
Bachelors of Science Degree, Business – Real Estate Administration
Indiana University, Bloomington, Indiana
CERTIFICATION
State Certified General Real Estate Appraiser: State of Michigan (No. 1201003343)
State Certified General Real Estate Appraiser: State of Illinois (No. 553.001947)
State Certified General Real Estate Appraiser: State of Indiana (No. CG-40801085)
PROFESSIONAL
Designated Member, Appraisal Institute (MAI), Member No. 37831
Member of the Commercial Investment Real Estate Institute (CCIM), Certificate No. 11264
EMPLOYMENT EXPERIENCE
1987-1994
1994-1994
1994-1996
1996-2004
2004-2008
2008-Present
Oetzel-Hanton-Williams, Inc.
Appraiser
National Realty Advisors
Senior Appraiser
Laurencelle Appraisal Company
Senior Appraiser
Bank One Inc.
Vice President
CB Richard Ellis, Inc
Managing Director
CB Richard Ellis, Inc
Managing Director
Troy, MI
Troy, MI
Birmingham, MI
Detroit, MI
Southfield, MI
Chicago, IL
Valuation assignments included all types of existing as well as proposed commercial,
industrial, multiple-family residential and special purpose properties throughout the midwest, including apartments, office buildings, industrial manufacturing and warehouse
facilities, shopping centers, restaurants, hotels, motels, manufactured home
communities and a wide variety of investment and special purpose properties and
unimproved land. In addition I have testified as an Expert Witness for US Bankruptcy
court.
QUALIFICATIONS OF
Vice President
CBRE Inc., Valuation and Advisory Services
101 West Washington Street, Suite 1000 E
(317) 269-1110
(317) 637-4404
christopher.jarvis@cbre.com
www.cbre.com/christopher.jarvis
EDUCATIONAL
Bachelor of Science Degree, International Trade & Finance
Chaminade University, Honolulu, Hawaii
LICENSES/CERTIFICATIONS
Illinois – State Cert General – 553.001832
Indiana – State Cert General – CG40901182
HUD MAP Certification
PROFESSIONAL
MAI – Appraisal Institute, Member # 398351
EMPLOYMENT EXPERIENCE
Valuation assignments included all types of existing as well as proposed commercial, industrial,
multi-family residential and special purpose properties throughout the United States including
Puerto Rico, including apartments, office buildings, industrial manufacturing and warehouse
facilities, shopping centers, restaurants, hotels, motels, manufactured home communities and a
wide variety of investment and special purpose properties and unimproved land.
2009-Present
CB Richard Ellis
Vice President
Chicago, IL
Indianapolis, IN
2007-2009
Collier’s International
Managing Director
Chicago, IL
2003-2007
CB Richard Ellis
Senior Real Estate Analyst
Seattle, WA
2002-2003
Deloitte & Touche
Senior Commercial Appraiser
Tampa, FL
1998-2002
Arthur Andersen
Staff Appraiser
St. Louis, MO
Chicago, IL
Page 1/1

VALUATION REPORT

Transcription

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