{"id":41877,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/appraisal-of-healthsouth-sports-medicine-and-rehabilitation.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"appraisal-of-healthsouth-sports-medicine-and-rehabilitation","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/land\/appraisal-of-healthsouth-sports-medicine-and-rehabilitation.html","title":{"rendered":"Appraisal of HealthSouth Sports Medicine and Rehabilitation Center (Coral Gables, FL) &#8211; HealthSouth Corp. and Valuation Counselors Group Inc."},"content":{"rendered":"<pre>\n                                AN APPRAISAL OF\n                        HEALTHSOUTH SPORTS MEDICINE AND\n                             REHABILITATION CENTER\n                             CORAL GABLES, FLORIDA\n\n(LOGO)  VALUATION COUNSELORS GROUP, INC.\n\n        340 Interstate North Parkway\n        Atlanta, Georgia 30339\n        (404) 955-0088\n        (Fax) 955-0466\n\n\n\n                                        February 7, 1994\n\n\nHealthSouth Corporation\nTwo Perimeter Park South\nBirmingham, Alabama  35243\n\nAttention:  Mr. Mike Martin, Treasurer\n\nGentlemen:\n\nIn accordance with your request, we are pleased to submit this appraisal report\ncovering the market value of the professional office building identified as\nfollows:\n\n             HEALTHSOUTH SPORTS MEDICINE AND REHABILITATION CENTER\n                          3280 PONCE DE LEON BOULEVARD\n                             CORAL GABLES, FLORIDA\n\nThe purpose of this valuation is to estimate the market value of the subject\nproperty's leased fee estate as of September 29, 1993, the effective date of\nthis report.  The report is to be used for asset valuation purposes.\nHealthSouth Corporation is selling nine professional office buildings for the\npurpose of establishing a real estate investment trust (REIT).  This valuation\nassumes that the prospective REIT is the owner of the property, with\nHealthSouth Corporation guaranteeing annual net rental income of $18.00 per\nrentable square foot.\n\nThis appraisal investigation included visits to the facility, discussions with\nthe current owners and management of the property, a review of available\nfinancial data, discussions with local brokers and government offices, and\nresearch and analysis of the market.\n\n'Market value' is defined as:\n\n         'The most probable price which a property should bring in a\n         competitive and open market under all conditions requisite to a fair\n         sale, the buyer and seller each acting prudently and knowledgeably,\n         and assuming the price is not affected by undue stimulus.  Implicit in\n         this definition is the consummation of a sale as of a specified date\n         and the passing of title from seller to buyer under conditions\n         whereby:\n\n         o       Buyer and seller are typically motivated;\n\nHealthSouth Corporation\nFebruary 7, 1994\nPage Two\n\n\n         o       Both parties are well informed or well advised, and  acting \n                 in what they consider their own best interests;\n\n         o       A reasonable time is allowed for exposure in the open market;\n\n         o       Payment is made in terms of cash in U. S. dollars or in terms \n                 of financial arrangements comparable thereto; and\n\n         o       The price represents the normal consideration for the \n                 property sold unaffected by special or creative financing or \n                 sales concessions granted by anyone associated with the sale.'\n\n         [The Appraisal of Real Estate, p. 21, 10th Ed., published by The\n         Appraisal Institute.]\n\nThe subject property is a two-story, Class C, rehabilitation clinic containing\n14,538 rentable square feet located on a 20,167 square foot land site.  The\nfacility was originally constructed in 1960, but was totally renovated in 1986\nto accommodate a full-service rehabilitation clinic.  The improvement is\nlocated on the southern boundary of the site with an asphalt parking area\nlocated north of the subject.  The building is presently 100 percent utilized\nby HealthSouth.\n\nIn arriving at the opinion expressed in this report, it is assumed that the\ntitle to the property is free and clear and held under responsible ownership.\nThe information furnished us by others is believed to be reliable, but no\nresponsibility for its accuracy is assumed.  The value reported herein is based\nupon the integrity of the information provided.\n\nBased upon the procedures, assumptions and conditions outlined in this report,\nwe estimate the market value of the leased fee interest in the HealthSouth\nSports Medicine and Rehabilitation Center, as of September 29, 1993, to be:\n\n                                   $2,300,000\n                                   ==========\n\nWe have no responsibility to update our report for events and circumstances\noccurring after the date of this report.\n\nNeither the whole, nor any part of this appraisal or any reference thereto may\nbe included in any document, statement, appraisal or circular without Valuation\nCounselors Group, Inc.'s prior written approval of the form and context in\nwhich it appears.\n\nHealthSouth Corporation\nFebruary 7, 1994\nPage Three\n\n\nThis appraisal report consists of the following:\n\n         o       This letter outlining the services performed;\n\n         o       Certification of the appraiser;\n\n         o       A Statement of Facts and Limiting Conditions;\n\n         o       A Summary of Salient Facts and Conclusions;\n\n         o       A Narrative Section detailing the appraisal of the property; \n                 and\n\n         o       An Exhibit Section containing supplementary data.\n\nA copy of this report and the working papers from which it was prepared will be\nkept in our files for eight years.\n\n                                                Respectfully submitted,\n\n                                                VALUATION COUNSELORS GROUP, INC.\n\n                                                \/s\/ Patrick J. Simers\n                                                ---------------------\n                                                Patrick J. Simers\n                                                Managing Director\n\n\n                            APPRAISER CERTIFICATION\n\n\nI, the undersigned, do hereby certify that to the best of our knowledge and\nbelief:\n\n         The statements of fact contained in this report are true and correct.\n\n         The reported analyses, opinions, and conclusions are limited only by\n         the reported assumptions and limiting conditions and are our personal,\n         unbiased professional analyses, opinions, and conclusions.\n\n         I have no present or prospective interest in the property that is the\n         subject of this report, and have no personal interest or bias with\n         respect to the parties involved.\n\n         My compensation is not contingent on an action or event resulting from\n         the analyses, opinions, or conclusions in or the use of this report.\n\n         My analyses, opinions, and conclusions were developed, and this report\n         has been prepared in conformity with the requirements of the Code of\n         Professional Ethics, the Appraisal Institute, American Society of\n         Appraisers, and the Uniform Standards of Professional Appraisal\n         Practice.\n\n         The use of this report is subject to the requirements of the Appraisal\n         Institute and American Society of Appraisers relating to review by its\n         duly authorized representatives.\n\n         Patrick J. Simers has made a personal inspection of the property that\n         is the subject of this report.\n\n         No other person has provided significant professional assistance to\n         the person signing this report.\n\n\n\n\n         \/s\/ Patrick J. Simers\n         ----------------------\n         Patrick J. Simers\n         Managing Director\n\n                   STATEMENT OF FACTS AND LIMITING CONDITIONS\n\n\nValuation Counselors Group, Inc. strives to clearly and accurately disclose the\nassumptions and limiting conditions that directly affect an appraisal analysis,\nopinion, or conclusion.  To assist the reader in interpreting this report, such\nassumptions are set forth as follows:\n\nAppraisals are performed, and written reports are prepared by, or under the\nsupervision of, members of the Appraisal Institute in accordance with the\nInstitute's Standard of Professional Practice and Code of Professional Ethics.\n\nAppraisal assignments are accepted with the understanding that there is no\nobligation to furnish services after completion of the original assignment.  If\nthe need for subsequent services related to an appraisal assignment (e.g.,\ntestimony, updates, conferences, reprint or copy services) is contemplated,\nspecial arrangements acceptable to Valuation Counselors Group, Inc. must be\nmade in advance.  Valuation Counselors Group, Inc. reserves the right to make\nadjustments to the analysis, opinions and conclusions set forth in the report\nas we may deem necessary by consideration of additional or more reliable data\nthat may become available.\n\nNo opinion is rendered as to legal fee or property title, which are assumed to\nbe good and marketable.  Prevailing leases, liens and other encumbrances,\nincluding internal and external environmental conditions and structural\ndefects, if any, have been disregarded, unless otherwise specifically stated in\nthe report.  Sketches, maps, photographs, or other graphic aids included in\nappraisal reports are intended to assist the reader in ready identification and\nvisualization of the property and are not intended for technical purposes.\n\nIt is assumed that:  no opinion is intended in matters that require legal,\nengineering, or other professional advice which has been or will be obtained\nfrom professional sources; the appraisal report will not be used for guidance\nin legal or professional matters exclusive of the appraisal and valuation\ndiscipline; there are no concealed or dubious conditions of the subsoil or\nsubsurface waters including water table and floodplain, unless otherwise noted;\nthere are no regulations of any government entity to control or restrict the\nuse of the property unless specifically referred to in the report; and the\nproperty will not operate in violation of any applicable government\nregulations, codes, ordinances or statutes.\n\nIn the absence of competent technical advice to the contrary, it is assumed\nthat the property being appraised is not adversely affected by concealed or\nunapparent hazards, such as, but not limited to, asbestos, hazardous or\ncontaminated substances, toxic waste or radioactivity.  The appraiser is not\nqualified to detect such substances.\n\n                   STATEMENT OF FACTS AND LIMITING CONDITIONS\n\n\nNo engineering survey has been made by the appraiser.  Except as specifically\nstated, data relative to size and area were taken from sources considered\nreliable, and no encroachment of real property improvements is considered to\nexist.\n\nInformation furnished by others is presumed to be reliable, and where so\nspecified in the report, has been verified; however, no responsibility, whether\nlegal or otherwise, is assumed for its accuracy, and cannot be guaranteed as\nbeing certain.  All facts and data set forth in the report are true and\naccurate to the best of Valuation Counselors Group, Inc.'s knowledge and\nbelief.  No single item of information was completely relied upon to the\nexclusion of other information.\n\nIt should be specifically noted by any prospective mortgagee that the appraisal\nassumes that the property will be competently managed, leased, and maintained\nby financially sound owners over the expected period of ownership.  This\nappraisal engagement does not entail an evaluation of management's or owner's\neffectiveness, nor are we responsible for future marketing efforts and other\nmanagement or ownership actions upon which actual results will depend.\n\nNo effort has been made to determine the impact of possible energy shortages or\nthe effect on this project of future federal, state or local legislation,\nincluding any environmental or ecological matters or interpretations thereof.\n\nThe date of the appraisal to which the value estimate conclusions apply is set\nforth in the letter of transmittal and within the body of the report.  The\nvalue is based on the purchasing power of the United States dollar as of that\ndate.\n\nNeither the report nor any portions thereof, especially any conclusions as to\nvalue, the identity of the appraiser, or Valuation Counselors Group, Inc.,\nshall be disseminated to the public through public relations media, news media,\nsales media or any other public means of communications without the prior\nwritten consent and approval of Valuation Counselors Group, Inc.\n\nUnless otherwise noted, Valuation Counselors Group, Inc. assumes that there\nwill be no changes in tax regulations.\n\nNo significant change is assumed in the supply and demand patterns indicated in\nthe report.  The appraisal assumes market conditions observed as of the current\ndate of our market research stated in the letter of transmittal.  These market\nconditions are believed to be correct; however, the appraisers assume no\nliability should market conditions materially change because of unusual or\nunforeseen circumstances.\n\n                   STATEMENT OF FACTS AND LIMITING CONDITIONS\n\n\nThe report and the final estimate of value and the prospective financial\nanalyses included therein are intended solely for the information of the person\nor persons to whom they are addressed, solely for the purposes stated and\nshould not be relied upon for any other purpose.  Any allocation of total price\nbetween land and the improvements as shown is invalidated if used separately or\nin conjunction with any other report.\n\nA copy of this report and the working papers from which it was prepared will be\nkept in our files for eight years.\n\n                    SUMMARY OF SALIENT FACTS AND CONCLUSIONS\n\n                                                        \n                                                         \nGENERAL DATA\n                                                                                                                      \nEffective Date of Value:                                    September 29, 1993                                        \n                                                                                                                      \nLast Date of Inspection:                                    October 18, 1993                                          \n                                                                                                                      \nProperty Identification:                                    HealthSouth Sports Medicine and Rehabilitation Center     \n                                                                                                                      \nProperty Location:                                          3280 Ponce de Leon Boulevard                              \n                                                            Coral Gables, Florida                                     \n                                                                                                                      \nInterest Appraised:                                         Leased Fee Estate                                         \n                                                                                                                      \nGross Building Area:                                        14,538 square feet                                        \n                                                                                                                      \nNet Rentable Area:                                          14,538 square feet                                        \n                                                                                                                      \nSubject Land Size:                                          0.46 acres, or 20,167 square feet                         \n                                                            \nImprovements Description:                                   Two-story, Class C structure, rehabilitation clinic, containing 14,538\n                                                            square feet.  Originally constructed in 1960 with a total renovation in\n                                                            1986.\n\nOccupancy Percentage:                                       100%\n\n\nCONCLUSIONS\n\nCost Approach:                                              $2,060,000\n\nDirect Sales Comparison Approach:                           N\/A\n\nIncome Approach:                                            $2,365,000\n\nFinal Value Estimate:                                       $2,300,000\n                                                            ==========\n\n\n                               TABLE OF CONTENTS\n\n\n\n                                                                  Page\nTransmittal Letter\nAppraiser Certification\nStatement of Facts and Limiting Conditions\nSummary of Salient Facts and Conclusions\n\nINTRODUCTION                                                       1\n     Property Identification                                       1\n     Purpose and Effective Date of the Appraisal                   1\n     Function of the Appraisal                                     1\n     Scope of the Appraisal                                        1\n     Property Rights Appraised                                     2\n     Definition of Value                                           2\n     History of the Property                                       3\n     History and Nature of the Business Environment                3\n\nDESCRIPTIVE DATA                                                   6\n     Regional Data                                                 6\n     Neighborhood Analysis                                        11\n     Zoning                                                       11\n     Real Estate Taxes and Assessments                            12\n     Site Analysis                                                13\n     Building and Site Improvements                               14\n\nHIGHEST AND BEST USE                                              16\n\nVALUATION SECTION                                                 20\n     Valuation Methodology                                        20\n     Cost Approach                                                22\n     Income Approach                                              33\n\nCORRELATION AND CONCLUSION                                        36\n\n                               TABLE OF CONTENTS\n\n\n\nEXHIBIT SECTION\n\nExhibit A    -    Professional Qualifications\nExhibit B    -    Legal Description\nExhibit C    -    Metropolitan Area Map\nExhibit D    -    Neighborhood Map\nExhibit E    -    Tax Plat Map\nExhibit F    -    Land Sale Location Map\nExhibit G    -    Building Floor Plans\nExhibit H    -    Building Description\nExhibit I    -    Land Improvements Description\nExhibit J    -    Estimation of Annual Rental Value\nExhibit K    -    Office Building Comparables\nExhibit L    -    Subject Photographs\nExhibit M    -    Curvilinear Depreciation Chart\n\n                                  INTRODUCTION\n\n\nPROPERTY IDENTIFICATION\n\nThe subject of this appraisal is the HealthSouth Sports Medicine and\nRehabilitation Center located at 3280 Ponce de Leon Boulevard, Coral Gables,\nFlorida.  The building is a two-story, Class C, building which is presently\ndesigned as a physical therapy clinic.  The building was originally constructed\nin 1960 with a complete renovation in 1986.  The building is located on a\n20,167 square foot land site with adequate parking located adjacent to the\nsubject building.  The building is presently 100 percent utilized and occupied\nby HealthSouth.\n\n\nPURPOSE AND EFFECTIVE DATE OF THE APPRAISAL\n\nThe purpose of this appraisal is to estimate the market value of the real\nproperty identified above.  The effective date of valuation is September 29,\n1993.  The date of our last site inspection was October 18, 1993.\n\n\nFUNCTION OF THE APPRAISAL\n\nThe report is to be used for internal financial valuation purposes.  The owners\nare considering the sale of nine professional office buildings for the purpose\nof establishing a real estate investment trust (REIT).\n\n\nSCOPE OF THE APPRAISAL\n\nThis appraisal engagement includes all three of the standard valuation\napproaches and is in conformity with the requirements of the Code of\nProfessional Ethics and Standards of Professional Practice of the Appraisal\nInstitute and Society of Real Estate Appraisers.  The scope of our assignment\nincluded collecting, verifying and analyzing market and property data\napplicable to the three approaches and consistent with the property's highest\nand best use.  The results of the three approaches are then reconciled into a\n\n\n\n\n\n                                      -1-\n\nfinal value conclusion considering the relevancy and quality of data presented\nin each of the approaches.\n\n\nPROPERTY RIGHTS APPRAISED\n\nThe property right appraised herein is the Leased Fee Estate.\n\n'Leased Fee Estate' is:\n\n         'an ownership held by the landlord with the right of use and occupancy\n         conveyed by lease to others; the rights of lessor (the leased fee\n         owner) and leased fee are specified by contract terms contained within\n         the lease.'\n\n         [The Appraisal of Real Estate, p. 123, 10th Ed., published by The\n         Appraisal Institute.]\n\n\nDEFINITION OF VALUE\n\nFor the purpose of this valuation, 'market value' is defined as follows:\n\n         'The most probable price which a property should bring in a\n         competitive and open market under all conditions requisite to a fair\n         sale, the buyer and seller each acting prudently and knowledgeably,\n         and assuming the price is not affected by undue stimulus.  Implicit in\n         this definition is the consummation of a sale as of a specified date\n         and the passing of title from seller to buyer under conditions\n         whereby:\n\n         o    Buyer and seller are typically motivated;\n\n         o    Both parties are well informed or well advised, and  acting in \n              what they consider their own best interests;\n\n         o    A reasonable time is allowed for exposure in the open market;\n\n         o    Payment is made in terms of cash in U.S. dollars or in terms of \n              financial arrangements comparable thereto; and\n\n         o    The price represents the normal consideration for the property \n              sold unaffected by special or creative financing or sales \n              concessions granted by anyone associated with the sale.'\n\n         [The Appraisal of Real Estate, p. 21, 10th Ed., published by The\n         Appraisal Institute.]\n\n\n\n\n\n                                      -2-\n\nHISTORY OF THE PROPERTY\n\nThe subject professional building was reportedly constructed in 1960.  In March\nof 1985 the facility was purchased by Raul I. Lopez and Ray Lopez for\n$1,500,000 and totally renovated to accommodate a rehabilitation center.  The\ncost of the renovation in 1986 approximated $500,000.  In May of 1986 the\nlandlord leased the facility to the Miami Rehabilitation Institute at an annual\nrental rate of $15.00 per square foot adjusted for refinancing terms through\nthe life of the lease.  The lease term was structured for an original lease\nterm of five years with two identical option periods.  HealthSouth subsequently\nbought out the tenant and purchased the facility in July 1992 for $2,600,000.\nThis is recorded in Deed Book 15587, Page 0901, in Dade County, Florida.\n\nThe subject building has reportedly not been marketed for sale and is not\ncurrently under an agreement of sale.  No other deed transfers were noted in\nthe last three years.  A title search is recommended for official\ndetermination.\n\n\nHISTORY AND NATURE OF THE BUSINESS ENVIRONMENT\n\nUnited States Economic Performance and Outlook\n\nThe value of the business enterprise value is influenced by potential returns\navailable from alternative investments.  These return expectations are affected\nby economic conditions as they impact the ability of a business enterprise to\ngenerate a return on its invested capital.  Perhaps the most important economic\nindicator affecting potential investor returns is the aggregate demand for\ngoods and services.  Aggregate demand is measured by a country's Gross Domestic\nProduct (GDP), which is the sum of all domestic expenditures for consumption,\ngovernment services, and net exports.\n\nAs of the valuation date, the United States economy is currently mired in a\nperiod of slow economic growth.  Gross Domestic Product (GDP) increased at a\n2.1 percent annual rate during 1992 after declining (1.2%) during 1991.  The\nGDP was 0.7 percent and 1.6 percent, respectively, for the first and second\nquarters of 1993, or an annualized rate of 1.1 percent.\n\nThe components of GDP indicate that the economic recovery is affecting many\nsectors of the economy.  Personal consumption expenditures, which account for\napproximately\n\n\n\n\n\n                                      -3-\n\ntwo-thirds of GDP, rose only 1.3 percent during the first half of 1993.\nNon-residential Fixed Investment advanced 2.2 percent and Residential Fixed\nInvestment grew 1.7 percent.  Federal Government Purchases declined (0.6%) over\nthe same period.  Federal Government Purchases account for 7.2 percent of the\ntotal GDP, and this decline is limited to the rate of overall GDP growth.\n\nThe value of the business enterprise value is also affected by the current and\nexpected levels of inflation and interest rates.  Inflation creates uncertainty\nin the mind of investors as they attempt to estimate future investment returns.\nThis uncertainty is incorporated into both the required return on equity and\ndebt capital.\n\nThe economic downturn has resulted in sharply lower inflation.  The Consumer\nPrice Index (CPI) ended 1992 with a 3.0 percent increase compared to a 4.2\npercent increase during 1991.  The CPI for 1993 is currently estimated at 3.3\npercent.  The GDP Deflator, a much broader price level index, ended 1992 with a\n2.6 percent annual increase compared to a 4.0 percent increase during 1991.\nThe GDP Deflator is currently estimated at 2.5 percent for 1993.\n\nThe Federal Reserve Bank has adopted a relatively easier monetary policy as a\nresult of the recession.  Interest rates, as represented by long-term Treasury\nbond yields, declined approximately ten basis points compared to rates existing\na year earlier.  Long-term  corporate bond rates have also decreased and the\nFederal Reserve's discount rate reductions have prompted commercial banks to\nlower their prime lending rate to 6.0 percent.  Selected monetary statistics\nare presented in the following table.\n\n\n                     INTEREST RATES AND SELECTED STATISTICS\n\n\n<font size=\"2\">\n                                                        JUNE 30, 1993           JANUARY 2, 1992              \n\n                                                                                                    \n        Federal Fund Rate                                   3.0%                      3.9%                   \n        90-Day Treasury Bill Rate                           3.1%                      3.9%                   \n        30-Year Treasury Bond                               6.9%                      7.5%                   \n        Aaa Bond Yield                                      7.4%                      8.2%                   \n        Prime Rate                                          6.0%                      6.5%                   \n<\/font>            \n\n\n\n\n\n                                      -4-\n\nEconomic Outlook\n\nAccording to Value Line's Quarterly Economic Review, dated June 30, 1993, the\neconomic recovery is now two years old, but shows much slower growth than\nnormal for a mature recovery.  Among factors cited by Value Line for\ncontributing to the slow growth are 'high debt, stagnant personal income, low\nconsumer confidence and a troubling unemployment rate'.  Value Line's Quarterly\nEconomic Review identified the following estimates for selected economic\nstatistics from 1993 to 1995.\n\n\n\n<font size=\"2\">\n                                                             1993           1994           1995                  \n\n                                                                                                     \n      Real GDP                                               2.7%           3.2%           3.3%                  \n      Personal Consumption Expenditures                      2.8%           2.7%           2.5%                  \n      Federal Government Purchases                          (5.2%)         (3.0%)         (4.0%)                 \n      30-Year Treasury Bond Yields                           7.1%           7.2%           7.2%                  \n      Prime Rate                                             6.0%           6.3%           6.7%                  \n      Consumer Price Index                                   3.5%           3.5%           3.6%                  \n<\/font>         \n\n\n\n\n\n                                      -5-\n\n                                DESCRIPTIVE DATA\n\nREGIONAL DATA\n\nCoral Gables is located on the southwest border of Miami in Dade County,\nFlorida.  The area is generally known for its fine residential areas,\neducational facilities, its quality of life, and is one of the nation's leading\nlocations for multi-national corporate headquarters.\n\nTrends in population, housing, employment and income are contributing social\nand economic forces that impact property values.  Each of these elements is\ndiscussed separately.\n\nPOPULATION\n\nThe Dade County region encompasses 26 municipalities with an estimated 1992\npopulation of 1,982,901.  This figure represents a growth estimate of\napproximately 22 percent over 1980 levels.  The subject facility is located in\nthe fifth largest municipality in the county and presently has an estimated\npopulation of 40,700.  It is anticipated by the year 2000 that the population\nwill continue to expand in the county to an estimate of 2,201,836 with\nindividual communities in the region sharing in this growth.\n\nThe median age of the population in the Coral Gables community is estimated at\n36.9 years with 15 percent of the population represented at under 15 years of\nage and 17 percent of the population represented above 65 years of age.  This\ncompares to an overall median age of 34.2 for the county with 24 percent of the\npopulation represented at under age 15 and 14 percent of the population over\nthe age of 65.  This would tend to indicate that the Coral Gables region is\noccupied by families with members older than the average in the county.\n\nThe racial and ethnic distribution of members in the Coral Gables community is\nestimated at 93.0 percent white, 3.4 percent black, 3.5 percent of other races.\nIt is estimated that the hispanic community in Coral Gables is represented as\n41.9 percent of the overall population.  These figures would tend to indicate\nthat the Coral Gables community is slightly less ethnically diversified in\ncomparison to the Dade County region which is 72.9 percent white, 20.6 percent\nblack, and 6.5 percent other with the hispanic population represented at 49.2\npercent.\n\n\n\n\n\n                                      -6-\n\n   \n<font size=\"2\"> \n\n\n                            POPULATION GROWTH BY MUNICIPALITY\n                                                               \n          \n          \n                                   1980                  1992*                   %                                   \n                                POPULATION             POPULATION              GROWTH                                 \n\n                                                                                                          \n  DADE COUNTY                   1,625,509              1,982,901                22.0                                  \n  Miami                           346,865                359,973                 3.8                                  \n  Hialeah                         145,254                195,579                34.6                                  \n  Miami Beach                      96,298                 93,461                -2.9                                  \n  North Miami                      42,566                 50,090                17.7                                  \n  Coral Gables                     43,241                 40,700                -5.9                                  \n  North Miami Beach                36,553                 35,268                -3.5                                  \n  Homestead                        20,668                 27,087                31.1                                  \n  Opa-Locka                        14,460                 15,255                 5.5                                  \n  Sweetwater                        8,251                 14,096                70.8                                  \n  Miami Springs                    12,350                 13,230                 7.1                                  \n  South Miami                      10,944                 10,459                -4.4                                  \n  Miami Shores                      9,244                 10,097                 9.2                                  \n  Hialeah Gardens                   2,700                  9,259               242.9                                  \n  Key Biscayne**                     -                     8,897                 N\/A                                   \n  Florida City                      6,174                  6,067                -1.7                                  \n  West Miami                        6,076                  5,712                -6.0                                  \n  North Bay Village                 4,920                  5,550                12.8                                  \n  Bay Harbor Islands                4,869                  4,721                -3.0                                  \n  Surfside                          3,763                  4,204                11.7                                  \n  Biscayne Park                     3,088                  3,081                -0.2                                  \n  Bal Harbor                        2,973                  3,033                 2.0                                  \n  El Portal                         2,055                  2,461                19.8                                  \n  Virginia Gardens                  2,098                  2,199                 4.8                                  \n  Medley                              537                    821                52.9                                  \n  Golden Beach                        612                    805                31.5                                  \n  Indian Creek Village                103                     44               -57.3                                  \n  Islandia                             12                     13                 8.3                                  \n  Unincorporated Dade             799,053              1,060,739                32.7                                  \n\n<\/font>\n * Population estimates, subject to revision. \n** Key Biscayne incorporated in June 1991.\n\nSOURCE: Dade County Planning Department, and Bureau of Economic Research.\n                                                                              \n\n\n\n\n                                      -7-\n\n                                TABLE 2\n\n\n                              DADE COUNTY\n                            POPULATION GROWTH\n                               1950-2000\n\n<font size=\"2\">               YEAR            POPULATION             GROWTH                  \n               1950              495,100                -                     \n               1955              709,800               43%                    \n               1960              935,000               32%                    \n               1965            1,097,200               17%                    \n               1970            1,267,800               16%                    \n               1975            1,452,000               15%                    \n               1980            1,625,800               12%                    \n               1985            1,775,000                9%                    \n               1990            1,937,094                9%                    \n               1991*           1,961,694                1%                    \n               1992*           1,982,901                1%                    \n               1995**          2,083,555                5%                    \n               2000**          2,201,836                6%                    \n\n  *Estimate of population, subject to revision.\n\n  **Projection of population, which is subject to annual adjustment.\n\n<\/font>SOURCE: Dade County Planning Department; Bureau of Economic and Business\nResearch, and U.S. Dept. of Commerce\n\n\n\n\n\n                                      -8-\n\nHOUSING\n\nThe growth of the region's population has helped to foster a steady residential\nmarket.  The total household units have increased over the past four decades\nfrom 348,946 in 1960 to 771,288 in 1990.  This represents an overall increase\nof 121 percent over the period and annual compound rate of growth of 2.0\npercent.  The Dade County real estate market reached its peak in 1980 with over\n50,145 residences sold.  This figure has dipped and climbed over the past\ndecade, but has generally declined with 36,521 sales reported in 1992.  Average\nhome prices in the region have generally increased though, indicating that the\narea has generally been built-out and that demand in the area remains strong.\nFrom 1980 through 1992 the average single-family residential home price\nincreased 58.3 percent.  The average condominium residence increased 94.2\npercent.  According to the Coral Gables Development Department, the Coral\nGables residential market has experienced higher rates of growth than the\nneighboring communities in the County.\n\nEMPLOYMENT\n\nEmployment growth grew rapidly in the region from 1980 through 1988 where it\nappeared to hit its peak at 891,788.  From 1980 through 1988 this represented\nan overall growth of 18.69 percent.  In 1992 the employment in the region was\nestimated at 878,028 or a drop of 1.54 percent.  This rate of employment\nappears to be stabilized and one would not anticipate further large drops in\nthis figure.  The labor force in the area has continued to increase with an\noverall growth rate of 19.4 percent over the period 1980 through 1992.  The\npresent labor force is estimated at 976,024.  During the 1980s, the average\nannual unemployment rate ranged from a low of 5.3 percent to a high of 10.0\npercent with an overall average of 7.67 percent.  The average unemployment at\nthe end of 1992 was estimated at 10.0 percent compared to 7.4 percent for the\nU.S.\n\nFrom 1980 through 1992 the diversity of the employment in the region has\ngreatly increased with 60,364 firms active in the Dade County market.  This\nrepresents a 32.5 percent change over 1980 levels.  The service industry is\nrepresented by the largest number of firms with healthcare firms ranking as the\nlargest component of this sector.  Wholesale and retail trade represents the\nnext largest employers in the region.  The remaining sectors, which follow in\nnumber of companies in their respective order,\n\n\n\n\n\n                                      -9-\n\ninclude finance\/real estate, construction, manufacturing, transportation,\ncommunications, public utilities, and finally agriculture, forestry, and\nfishing.\n\n<font size=\"2\">As of April 1993, the top five employers in the Dade County region were:\n\n                Dade County Public Schools                    38,310\n                Metropolitan Dade County                      23,000\n                Federal Government                            18,800\n                State of Florida                              14,900\n                Publix Super Markets, Inc.                     8,000\n\nAs of April 1993, the top-five employers in Coral Gables were:\n\n                University of Miami                            5,390\n                Klostner Cruise Lines                          1,045\n                Doctors Hospital                                 950\n                City of Coral Gables                             850\n                Coral Gables Hospital                            551\n\n\nINCOME\n\n<\/font>The per capita income in Dade County, Florida and the United States in 1990 was\n$17,823, $18,539, and $18,696, respectively.  The average household income in\n1992 for Coral Gables and the United States was $84,610 and $35,294,\nrespectively.  This would tend to indicate that the residents in Coral Gables\nare far above the average in total household income.\n\nIn summary, the region of the subject property enjoyed rapid growth in the\nearly 1980s which has stabilized in the early 1990s.  Its economic base is\ndiverse, which bodes well for stabilized growth patterns in the foreseeable\nfuture.  The economy has recovered from Hurricane Andrew, which occurred in\n1992, and is well positioned to post economic gains.\n\n\n\n\n\n                                      -10-\n\nNEIGHBORHOOD ANALYSIS\n\nThe subject is located on the eastern border of Coral Gables, approximately one\nand one-quarter miles south of the central business district of Coral Gables.\nThe neighborhood of the subject is bounded on the north by the Tamiami Trail,\nthe south by the South Dixie Highway, the east by S.W. 37th Avenue and the west\nby Grenada Boulevard.  As one heads east from the subject, a dramatic change in\nneighborhood demographics is experienced as one heads into the south side of\nMiami.  A map of the neighborhood is located in the Exhibit Section.\n\nImmediately west of the subject are single-family residential homes.  As one\nheads north along Ponce de Leon Boulevard one encounters single-tenant and\nsmall multi-tenant office structures which turn retail in nature as Ponce de\nLeon Boulevard approaches the central business district.  As one heads south on\nPonce de Leon Boulevard, the character of the boulevard becomes mixed with\nresidential and light commercial structures.  Approximately two blocks east of\nthe subject is Coral Gables Hospital.  The subject is located two blocks east\nof LeJeune Road, which is a major north\/south thoroughfare connecting the Coral\nGables region to Miami International Airport.\n\nIn the immediate region of the subject are Doctor's Hospital and Coral Gables\nHospital.  Other hospitals in the subject's service region include HealthSouth\nHospital, South Miami Hospital and Vencor Hospital.  There is a 20-bed nursing\nhome located in Coral Gables.  Approximately 304 physicians are located within\nthe subject's marketing area.\n\nIn general, the subject's neighborhood is well suited to support a specialty\nclinic.\n\n\nZONING\n\nThe subject property is zoned 'C-B', Commercial Business District, by the City\nof Coral Gables.  This zoning district generally allows for the development of\ncommercial and retail establishments.  According to the City zoning\nrequirements, this district provides for the orderly arrangement of\ninstitutional, clerical and administrative space.  Permitted uses include\npublic, semi- private or private office; public or semi-private, religious,\neducational or charitable institutions; and, other similar uses consistent with\nthis zoning code's purpose and surrounding uses.  This zoning shall not include\nproperties with industrial characteristics, communal living facilities or\ncorrectional institutions.\n\n\n\n\n\n                                      -11-\n\nOther general conditions of the 'C-B' zoning include a minimum lot size of\n2,500 square feet, setbacks from fronting streets of 20 feet, and setbacks for\nside yards and rear boundaries of 15 feet and 15 feet, respectively.  The\nmaximum height limitation is 35 feet.\n\nA letter of zoning compliance from the City of Coral Gables is recommended for\nan official determination regarding any zoning conformity issues.\n\n\nREAL ESTATE TAXES AND ASSESSMENTS\n\nThe subject property is assessed and taxed by the Dade County Property\nAssessor.  Properties are assessed at 100 percent of their market value for tax\npurposes.  The property is taxed under six separate folio numbers,\n4117-007-059-00 through 4117-007-064-00.  Commercial properties in Coral Gables\nare taxed at $23.9042 per $1,000 of assessed value.  The following assessments\nand taxes have been placed on the subject property.\n\n<font size=\"2\">         Folio Number               Assessment               Tax Amount       \n         ------------               ----------               ----------       \n         [S]                         [C]                       [C]            \n         4117-007-059-00             $112,500 (L)               $2,689.22     \n         4117-007-060-00             $112,500 (L)                2,690.27     \n         4117-007-061-00             $114,165 (L)                2,729.00     \n         4117-007-062-00             $114,165 (L)                2,729.00     \n         4117-007-063-00             $114,210 (L)                2,730.09     \n         4117-007-064-00             $780,520 (L)               18,657.65     \n                                                               ----------     \n         Total                                                 $40,340.00     \n\n(L)  =  Land Assessment\n(I)  =  Improvement Assessment\n\n\n\n\n\n<\/font>                                      -12-\n\nSITE ANALYSIS\n\nThe subject site is a rectangularly-shaped parcel and fronts approximately 200\nsquare feet on the west side of Ponce de Leon Boulevard.  The site contains a\ndepth of approximately 100 feet throughout with some slight fluctuations.  The\nsubject site's south border is Sarto Avenue with its northern border the south\nside of Romano Avenue.  The subject site contains 20,167 square feet.\n\nThe west border of the site is an alley which is adjacent to single-family\ndwellings.  The site is accessed from the rear of the site off Romano Avenue.\nIn addition, the rear alley is used as an entrance from Sarto Avenue.  The site\nenjoys good frontage on Ponce de Leon Boulevard and is of adequate size to\nprovide parking, which is not typical of other small offices in the immediate\nneighborhood of the subject.\n\nThe topography of the site is generally flat.  The building improvements are\nlocated on the southern half of the site with a paved parking area located on\nthe northern half.  The subject building does not appear to be located in a\nflood plain.\n\nUtilities serving the site include water, sewer, telephone, gas and\nelectricity.  Police services and fire protection are located in the\nneighborhood.\n\nOther site improvements consists of general landscaping, asphalt paving,\nconcrete walkways and curbing, some shrubs and general signage.  The parking\nlot is designed to accommodate 40 automobiles.\n\nWe are not aware of any detrimental easements or encroachments encumbering the\nsite.  Further, we assume that the subject site is not encumbered with\ndetrimental easements or encroachments.  A copy of a Coral Gables\/Dade County\ntax plat map is included in the Exhibit Section.\n\nTo our knowledge, no environmental study has been conducted on the subject\nsite.  As appraisers, we are not qualified to detect hazardous materials.\nConsequently, our report assumes that there are no environmentally hazardous\nmaterials in the site or building that would adversely affect the subject\nproperty's value.\n\n\n\n\n\n                                      -13-\n\nBUILDING AND SITE IMPROVEMENTS\n\nBUILDING IMPROVEMENTS\n\nThe HealthSouth Sports Medicine and Rehabilitation Center building contains\n14,538 square feet of gross and rentable square feet.  Due to the specialized\nnature of the structure, it is our belief that the gross and rentable square\nfeet is equal.  The building is a Class C, two-story, structure which was\noriginally built in 1960 and completely renovated in 1986.\n\nThe building is a concrete block and steel structure, with concrete block\nexterior walls with stucco finish.  The front of the building has decorative\nglass designed with glass block and storefront glass.  The building is accessed\nthrough a double glass door entrance-way in front and an automatic door\nadjacent to its parking area.  A rear metal door is located in the alleyway.\nThe building's ground floor is concrete slab on grade.  The second floor is\nconcrete supported on a metal frame.  The roof structure is a metal deck roof\ncovered with lightweight concrete and finished with tar and gravel.\n\nThe interior of the structure is finished with metal stud partitions in\nfinishes typical of a hospital setting.  This would include fine wood finishes\nalong hallways and staircases.  Ceiling finishes consist of drop-down acoustic\npanels and finished drywall.  Wall finishes include vinyl covering, with mirror\nwalls in some patient treatment areas.  Floor finishes consist of carpet, vinyl\ntile and ceramic finishes in bath and shower areas.  The building is\npartitioned-off into therapy treatment rooms, office areas, a conference room,\nand a swimming pool area.\n\nHeating and air conditioning is supplied via Carrier roof-mounted package\nunits.  Hot water is supplied by commercial hot water heaters.  The building's\nelectrical wiring is in conduit and supplies incandescent and fluorescent\nfixtures throughout the structure.  Plumbing in the building includes ceramic\nfixtures, with shower areas provided in the pool area downstairs and adjacent\nto the therapy rooms upstairs.  In addition, each therapy room is separately\nplumbed to provide hydrotherapy.  The building is served by two elevators.\n\n\n\n\n\n                                      -14-\n\nSITE IMPROVEMENTS\n\nSite improvements include asphalt paving and landscaping.\n\nA detail description of the building and site improvements is included in the\nExhibit Section of this report.\n\n\nCONDITION OF IMPROVEMENTS AND OBSOLESCENCE\n\nThe building is in good overall condition.  It appears to have been adequately\nmaintained.  No significant deferred maintenance was indicated from the\nappraiser's inspection of the property.  There does not appear to be any\nfunctional or economic obsolescence.\n\n\n\n\n\n                                      -15-\n\n                              HIGHEST AND BEST USE\n\n\nThe Appraisal Institute defines 'highest and best use' as follows:\n\n         'The reasonably probable and legal use of vacant land or an improved\n         property, which is physically possible, appropriately supported,\n         financially feasible, and that results in the highest value'\n\n         [The Appraisal of Real Estate, P. 45, 10th Ed. published by The\n         Appraisal Institute.]\n\n<font size=\"2\">The four categories of highest and best use analysis are:\n\n         1.      Physically Possible - Uses which are physically possible for\n                 the site and improvements being analyzed.\n\n         2.      Legally Permissible - Uses permitted by zoning and deed\n                 restrictions applicable to the site and improvements being\n                 analyzed.\n\n         3.      Financially Feasible  - This step identifies if the physically\n                 possible and legally permitted alternatives produce a net\n                 income equal to or greater than the amount needed to satisfy\n                 operating expenses.\n\n         4.      Maximally Productive - This step clarifies which of the\n                 financially feasible alternatives provides the highest value\n                 consistent with the rate of return warranted by the market for\n                 a particular use.\n\n<\/font>There are two types of highest and best use:  THE HIGHEST AND BEST USE OF LAND\nAS VACANT and THE HIGHEST AND BEST USE OF A PROPERTY AS IMPROVED.  Both types\nare discussed as follows using the four categories of highest and best use.\n\n\n\n\n\n                                      -16-\n\nAs Vacant\n\nThe purpose of this analysis, given the site is vacant or can easily be made\nvacant, is to determine if something should be constructed on the site, and if\nso, what should be constructed on the site.\n\nPHYSICALLY POSSIBLE\n\nThe size and shape of the subject site is adequate for the development of a\nnumber of alternative uses including residential, commercial, retail, and\noffice\/institutional properties.  The site possesses good access and\nvisibility.  The size of the parcel would preclude any large developments.\n\nLEGALLY PERMISSIBLE\n\nAs stated earlier in the Zoning Section of this report, the property is\ncurrently zoned 'C-B', Commercial Business.  Permitted uses in this general\nzoning category vary widely.  Potential legal uses would include some retail\nand restaurants, office\/institutional, hotels, hospitals and other\nmedical-oriented uses.\n\nSurrounding uses include residential, other professional office uses, small\nretail and vacant land.  These use patterns would likely preclude industrial,\nor future single-family development on the site.\n\nFINANCIALLY FEASIBLE\n\nHaving established that the site is physically suited for and legally\nrestricted to office\/institutional development, the next consideration is\neconomic feasibility.  Financially feasible uses for the site, if vacant, are\nthose uses that would generate an economic return to the land.  Other\noffice-related development east and north of the subject indicates that new\ndevelopment is financially feasible.\n\n\n\n\n\n                                      -17-\n\nMAXIMALLY PRODUCTIVE\n\nThe maximally productive use is a financially feasible use that would produce\nthe greatest land value.  Office\/institutional use is physically possible and\nlegally permissible, and new development is financially feasible.  Based on\nthis analysis, the current highest and best use of the land, if vacant, would\nbe for office\/institutional development.\n\n\nAs Improved\n\nThe subject site is currently improved with a 14,538 rentable square foot\nspecialty rehabilitation clinic with adjacent parking and associated site\nimprovements.  The purpose of this discussion is to determine whether to leave\nthe improvements as they are, to modify the improvements, or to remove the\nimprovements.\n\nPHYSICALLY POSSIBLE\n\nIt would obviously be physically possible to leave the improvements as they\nare, to demolish the existing improvements and replace them with new\nimprovements, or to make minor repairs to any deferred maintenance items on the\nproperty.  The improvements are considered functional.\n\nLEGALLY PERMISSIBLE\n\nThe improvements, as improved, are a legal conforming use according to the City\nof Coral Gables' zoning guidelines.  Under the zoning, the property could\nremain as it is, be torn down or renovated.\n\nFINANCIALLY FEASIBLE\n\nThe highest and best use of the land, if vacant, was to develop with an office\/\ninstitutional use based on the general demand of medical space in the\nneighborhood of the subject.  Of the physically possible and legally\npermissible changes that could be made to the existing facility, demolishing\nthe building would significantly reduce the current asset value and would not\nbe financially feasible.\n\n\n\n\n\n                                      -18-\n\nMAXIMALLY PRODUCTIVE\n\nThe maximally productive use for the existing property is the financially\nfeasible use that produces the greatest property value.  The only financially\nfeasible use is to correct any deferred maintenance that currently exists.\nThis would enable to the property to remain competitive in the leasing market.\nThe highest and best use, as improved, is to not make any major changes to the\ncurrent asset use.  The improvements represent the current highest and best use\nof the property.\n\n\n\n\n\n                                      -19-\n\n                               VALUATION SECTION\n\n\nVALUATION METHODOLOGY\n\nThere are three principal methods to estimate the market value of the assets of\nthe subject property.  These are summarized as follows:\n\n         COST APPROACH:  This method is based on the principle of substitution,\n         whereby no investor would prudently pay more for a property than it\n         costs to buy land and build a comparable new building.  The market\n         value is estimated by calculating the replacement costs of a new\n         building and subtracting all forms of depreciation and obsolescence\n         present in the existing facility.  This provides a depreciated value\n         of the subject improvements if replaced new.  The estimate of the\n         current value of the subject land is then added to provide a market\n         value of the property.\n\n         DIRECT SALES COMPARISON APPROACH:  The principle of substitution also\n         says that market value can be estimated as the cost of acquiring an\n         equally desirable substitute property, assuming no costly delay in\n         making the substitution.  This method analyses the sales of other\n         comparable improved properties.  Since two properties are rarely\n         identical, the necessary adjustments for differences in quality,\n         location, size, services and market appeal are a function of appraisal\n         experience and judgment.\n\n         INCOME APPROACH:  This method is based on the principle of\n         anticipation, which recognizes that underlying value of the subject\n         property can be estimated by its cash flow or stream of earnings.\n         This approach simulates the future earnings for the property, and\n         converts those earnings into a present market value estimate.\n\nConsideration has been given to each of the three methods to arrive at a final\nopinion of value.  Due to the specialized nature of the subject property, we\nhave not considered the Direct Sales Comparison Approach as being appropriate\nfor the subject property.  The subject property has been specifically designed\nto accommodate a freestanding rehabilitation clinic.  An alternative use for\nthis structure would require extensive renovation and remodeling and as such,\ncomparisons to medical office space or\n\n\n\n\n\n                                      -20-\n\ncommercial office sales would be inappropriate.  We did not find any sales of\ncomparable specialized facilities in the region which were similar in size or\nuse and as such, due to the lack of reliable comparable data, we have not\nconsidered this approach as an appropriate determinant of value  The\napplication of the Cost and Income Approaches to value is further discussed in\nthe appropriate sections which follow.\n\n\n\n\n\n                                      -21-\n\n                                 COST APPROACH\n\n\nIn the Cost Approach, the subject property is valued based upon the market\nvalue of the land, as if vacant, to which is added the depreciated replacement\ncost of the improvements.  The replacement cost new of the improvements is\nadjusted for accrued depreciation resulting from physical deterioration,\nfunctional obsolescence, and external (or economic) obsolescence.\n\nThe cost analysis involves three basic steps:\n\n         o       Land value estimate.\n\n         o       Estimated replacement cost of the improvements.\n\n         o       Estimation of the accrued depreciation from all causes.\n\nThe sum of the market value of the land and the depreciated replacement cost of\nthe improvements and equipment is the estimated market value via the Cost\nApproach.\n\n\nLand Valuation\n\nLand valuation, assuming the site is vacant, is based upon the following steps:\n\n         o       A comparison with recent sales and\/or asking prices for \n                 similar land.\n\n         o       Interviews with reliable real estate brokers and other \n                 informed sources who are familiar with local real estate\n                 activity.\n\n         o       Our experience in estimating land values.\n\nThe following sales are located within the general market area of the subject\nproperty and are considered to be representative of market activity and\nconditions as of the valuation date.  Unless otherwise indicated, the sales\ninvolved arm's length transactions that conveyed a fee simple interest, and\nonly real property was included in the transactions.\n\n\n\n\n\n                                      -22-\n\nLand Comparable Number 1\n\n\n                                                                                                              \nParcel Number:                   Lots 12-19 and S 1\/2 of Lot 20, Block 9 of Coral Gable Ind. Sec pb 28-22           \n                                                                                                                    \nLocation:                        Northeast Corner of San Lorenzo and LeJeune \n                                 Road                                   \n                                                                                                                    \nSize:                            21,805 square feet                                                                 \n                                                                                                                    \nSale Date:                       February 1993                                                                      \n                                                                                                                    \nDeed Book\/Page:                  15822\/3213                                                                         \n                                                                                                                    \nGrantor:                         Commerce Bank                                                                      \n                                                                                                                    \nGrantee:                         Gold Coast Partners Properties Co.                                                 \n                                                                                                                    \nSale Price:                      $650,000                                                                           \n                                                                                                                    \nPrice Per Square Foot:           $29.81                                                                             \n                                                                                                                    \nTerms of Sale:                   All Cash                                                                           \n                                                                                                                    \nShape:                           Rectangular                                                                        \n                                                                                                                    \nZoning:                          Coral Gables, Commercial                                                           \n                                                                                                                    \nUtilities:                       All available                                                                      \n                                                                                                                    \nComments:                        At the present time an office building is under \n                                 construction on the site.          \n                                   \n\n\n\n\n\n                                      -23-\n\nLand Comparable Number 2\n\n\n                                        \nParcel Number:                             03-4120-022-3380,3420,3430\n\nLocation:                                  4720 LeJeune Road, on the west side of LeJeune \n                                           Road across Granello Avenue.\n\nSize:                                      8,300 square feet\n\nSale Date:                                 May 1993\n\nDeed Book\/Page:                            15916\/0494\n\nGrantor:                                   Nathan Tartak\n\nGrantee:                                   Riveria Partnership\n\nSale Price:                                $285,000\n\nPrice Per Square Foot:                     $34.33\n\nTerms of Sale:                             Purchase money mortgage at market rates for \n                                           $200,000 remaining balance at cash\n\nShape:                                     Rectangular\n\nZoning:                                    Coral Gables Commercial\n\nUtilities:                                 All available\n\nComments:                                  Present improvements are not deemed to have \n                                           value.\n\n\n\n\n\n\n                                      -24-\n\nLand Comparable Number 3\n\n\n                                        \nParcel Number:                             03-4117-006-0010\n\nLocation:                                  Southwest Corner of Coral Way and SW 37th Street\n\nSize:                                      32,705 square feet\n\nSale Date:                                 June 1992\n\nDeed Book\/Page:                            15571\/4531\n\nGrantor:                                   First Tropical Savings Bank\n\nGrantee:                                   IBEX Miracle Group\n\nSale Price:                                $1,350,000\n\nPrice Per Square Foot:                     $41.28\n\nTerms of Sale:                             All Cash\n\nShape:                                     Rectangular\n\nZoning:                                    Coral Gables Commercial\n\nUtilities:                                 All available\n\nComments:                                  Site remains vacant.\n\n\n\n\n\n\n                                      -25-\n\nA summary of the land sales is shown as follows:\n\n\n\n<font size=\"2\">\n                                    SUMMARY OF LAND COMPARABLES                                                   \n\n        LAND                                                   SALE           SIZE        PRICE                     \n        COMP        LOCATION                                   DATE           (SF)        PER SF                    \n                                                                                                    \n         1          San Lorenzo &amp; LeJeune                      02\/93         21,805       $29.81                  \n         2          LeJeune &amp; Granello                         05\/93          8,300       $34.33                  \n         3          Coral Way &amp; SW 37th Street                 06\/92         32,705       $41.28                  \n      SUBJECT       PONCE DE LEON                                            20,167                               \n<\/font>               \n\n\n\nDiscussion of Land Comparables\n\nLAND COMPARABLE 1 is located approximately one-half-mile southwest of the\nsubject on LeJeune Road.  The sale is very comparable to the subject in terms\nof its overall size, topography, intended use, etc.  We have made a slight\ndownward adjustment to the sale for location as LeJeune Road is a more\ntravelled thoroughfare than Ponce de Leon Boulevard and may be a more favorable\nlocation.  The adjustment is shown on a Land Sale Adjustment Grid at the end of\nthis discussion.  The adjusted price per square foot of this comparable is\n$28.32 per square foot.\n\nLAND COMPARABLE 2 was a parcel containing an old house.  The site was purchased\nby the developer to construct a commercial use on the site.  Downward\nadjustments to this sale are warranted for its superior location and its size.\nA downward adjustment for size has been made as smaller parcels tend to sell at\nhigher unit costs than larger parcels due to a higher utility.  The\nimprovements were not considered to have any significant value.  The adjusted\nprice per square foot of this comparable is $29.18.\n\nLAND COMPARABLE 3 is an older sale which has been adjusted upward for time.\nThis sale was adjusted significantly downward for location as this sale is\nlocated in the center of the central business district of Coral Gables.  A\nslight upward adjustment for parcel size has been made.  The adjusted price for\nthis comparable is $34.01 per square foot.\n\n\n\n\n\n                                      -26-\n\nThe adjusted land prices range from $28.32 per square foot to $34.01 per square\nfoot, with the prices of the most comparable sites being at the lower end of\nthis range.  Based on our analysis of the subject versus these comparables, it\nis our opinion that a land price of $28.50 per square is representative of the\nsubject site.  The subject land value is estimated as follows:\n\n                       20,167  x  $28.50\/SF  =  $574,759\n\n                             Rounded to:   $575,000\n                                           ========\n\n\n\n\n                                      -27-\n\n   \n<font size=\"2\"> \n                                              LAND SALE ADJUSTMENT GRID\n                                           HealthSouth Sports Medicine and\n                                                Rehabilitation Center \n                                                Coral Gables, Florida\n                                       \n\n\n          \n          \n                               Subject                  Land Comp                   Land Comp                 Land Comp\n                                                                                                  \n  Element                                                   #1                         #2                        #3\n\n  Sale Price\/SF                                           $29.81                     $34.33                   $41.28\n\n  Property Rights             Fee Simple                  Same                       Same                     Same\n   Adjustments\n                                               ----------------------------------------------------------------------\nAdjusted Price\/SF                                         $29.81                     $34.33                   $41.28\n\n  Financing                   Cash                        Cash                       Cash                     Cash\n    Adjustment\n\n                                              -----------------------------------------------------------------------\nAdjusted Price\/SF                                         $29.81                     $34.33                   $41.28\n\n  Conditions of Sale                                      None                       None                     None\n    Adjustment\n\n                                             ------------------------------------------------------------------------\n  Adjusted Price\/SF                                       $29.81                     $34.33                   $41.28\n\n  Market\/Time                                                  0%                         0%                        3%\n    Adjustment\n\n                                             -------------------------------------------------------------------------\n  Adjusted Price\/SF                                       $29.81                     $34.33                   $42.52\n\n\n\n  Other Adjustments:\n   Location Adjustment                                        -5%                        -5%                      -25%\n   Topography Adjustment                                       0%                         0%                        0%\n   Size Adjustment                                             0%                       -10%                        5%\n   Zoning Adjustment                                           0%                         0%                        0%\n    Net Other                                                 -5%                       -15%                      -20%\n  Adjustments\n\n\n\n  FINAL ADJUSTED PRICE                                    $28.32                     $29.18                   $34.01\n  PER SF\n                                          ============================================================================\n<\/font>\n\n\n\n\n\n                                      -28-\n\nBuilding and Site Improvements\n\nThe building and site improvements have been valued on the basis of replacement\ncost less accumulated depreciation.  The cost new was estimated via the\nsegregated cost method, with cost factors obtained from Marshall Valuation\nServices, Inc., a national cost manual.  The unit cost includes both direct and\nindirect costs, with adjustments made for special building features,\nconstruction quality, time and location.  The composite unit cost has then been\napplied to the gross square footage of the building to derive the replacement\ncost new.  The total project replacement costs for the subject building are\nestimated to be $1,586,833.\n\nThe total accumulated depreciation of a structure represents the loss in value\ndue to physical deterioration, functional obsolescence, or external (or\neconomic) obsolescence.  Economic life of a structure or improvement is the\nperiod over which they contribute to the value of the property.  These terms\nare defined as follows:\n\n        Physical Deterioration:  The loss in value due to deterioration or\n        ordinary wear and tear, i.e., natural forces taking their toll of the\n        improvements.  This begins at the time the building is completed and\n        continues throughout its physical life.  In developing our estimate of\n        physical depreciation for the building we have utilized the curvilinear\n        tables developed by the Marshall Valuation Service.  This method of\n        depreciation is founded on the assumption that depreciation of a\n        structure is accelerated in the later stages of its overall useful\n        life.\n\n        Functional Obsolescence:  The loss in value due to poor plan,\n        functional inadequacy, or super-adequacy due to size, style, design, or\n        other items.  This form of depreciation occurs in both curable or\n        incurable forms.\n\n        External (or Economic) Obsolescence:  The loss in value caused by\n        forces outside the property itself.  It can take many forms such as\n        excessive noise levels, traffic congestion, abnormally high crime\n        rates, or any other factors which affect a property's ability to\n        produce an economic income, thereby causing a decline in desirability.\n        Other forms of economic obsolescence may include governmental\n        restrictions, excessive taxes, or economic trends.\n\n        Economic Life:  The economic life of a good quality medical office\n        buildings is typically 40 to 50 years.  For the subject Class C\n        building, we have assumed an economic life of 45 years.\n\n\n\n\n\n                                      -29-\n\n        Remaining Economic Life:  Remaining economic life can be defined as the\n        number of years remaining in the economic life of the structure or\n        structural components as of the date of the appraisal.\n\nMarshall Valuation Services, Inc., and the actual experience of other buildings\nin the market, were use to estimate the overall economic life of the\nimprovements.  The assignment of economic lives assumed that, except for the\nbuilding shell and foundation, building components would be replaced\nperiodically over the life of the building.\n\n\nPhysical Depreciation\n\nThe amount of physical depreciation and obsolescence in the subject building is\njudged normal for a building of this age.  Observation of the subject property\nindicated that the structure and related component parts have been adequately\nmaintained through a continuous maintenance service program.\n\nThe subject property was constructed in 1960 with a major renovation of the\nbuilding conducted in 1986.  The building is in good to very good condition.\nAfter taking into consideration all significant physical factors affecting the\nsubject property, it is judged that the subject has an effective age equal to\n15 years.  The remaining useful life is estimated to be 30 years.  This\ntranslates into a physical depreciation estimate of 14 percent according to the\nMarshall Valuation depreciation tables.\n\nThe elements which make up site improvements have shorter economic lives than\nthe building.  We have estimated the aggregate useful lives of these items to\nbe 15 years with an effective age of seven years and a remaining useful life of\neight years.  Therefore, the depreciation rate attributable to the site\nimprovements on a straight-line basis is estimated to be approximately 47\npercent.\n\n\n\n\n\n                                      -30-\n\nCost Approach Conclusion\n\nThe schedule which follows is a summary of the estimated replacement cost by\ncategory for the subject building plus estimates of all forms of depreciation.\n\nBased on the investigation as previously defined, the market value of the\nsubject property by the Cost Approach, as of September 29, 1993, is estimated\nin the rounded amount of:\n\n                                   $2,060,000\n                                   ==========\n\n\n\n\n                                      -31-\n\n\n<font size=\"2\">                                                                 \n  TOTAL RECAPITULATION:    HEALTHSOUTH CORAL GABLES\n  BUILDING NUMBER:         2 OF 3\n\n  EXCAVATION AND SITE PREPARATION                                           1,303\n  FOUNDATION                                                               29,579\n  FRAME                                                                    65,467\n  EXTERIOR WALLS                                                          119,467\n  FLOORS                                                                   88,054\n  ROOF                                                                     54,675\n  ROOF COVER                                                               19,638\n  PARTITIONING &amp; BUILT-IN ITEMS                                           320,550\n  CEILINGS                                                                 70,862\n  FLOOR COVERINGS                                                          68,719\n  PLUMBING                                                                176,343\n  HEATING, VENTILATION &amp; AIR CONDITIONING (NET)                            82,750\n  ELECTRICAL                                                              189,361\n  OTHER FEATURES                                                           67,762\n                                                                        ---------\n  TOTAL LABOR, MATERIALS, INCIDENTALS AND PROFIT                        1,354,530\n  ARCHITECTS FEES, PLANS AND SPECIFICATIONS                                47,409\n  ARCHITECTS FEES, SUPERVISION                                             40,636\n  ADD FOR MISCELLANEOUS FEES                                              144,258\n                                                                        ---------\n  TOTAL REPRODUCTION COST                                               1,586,833\n\n\n  TOTAL OVERALL LIFE                                       45\n  EFFECTIVE AGE                                            15\n  CURVILENEAR DEPR RATE                                 10.00%            158,683\n  DEPRECIATED VALUE OF BUILDING                                         1,428,150\n\n  REPRODUCTION COST OF LAND IMPROVEMENTS                                  100,000\n  LESS DEPRECIATION OF IMPROVEMENTS @ 47%                                 -47,000\n                                                                        ---------\n  DEPRECIATED VALUE OF LAND IMPROVEMENTS                                   53,000\n\n  TOTAL DEPRECIATED VALUE OF IMPROVEMENTS                               1,481,150\n\n  ADD LAND VALUE                                                          575,000\n                                                                        ---------\n\n  TOTAL VALUE COST APPROACH                                            $2,056,150\n<\/font>\n\n\n\n\n\n                                      -32-\n\n                                INCOME APPROACH\n\n\nThe Income Approach is based on the principle of anticipation, and has as its\npremise that value is represented by the present worth of expected future\nbenefits.  The price that an investor will pay for an income property usually\ndepends on the anticipated income stream.  The Income Approach represents an\nattempt to simulate the future cash flows for the property, and to quantify the\nfuture benefits in present dollars.\n\nThe subject property is one of nine professional office buildings that\nHealthSouth is selling for the purpose of establishing a real estate investment\ntrust (REIT).  HealthSouth Corporation, the seller, will provide a net rental\nguarantee in the form of a master lease.  The REIT, as the new property owner,\nwill receive the net rental master lease rate per square foot of rentable\noffice area regardless of the rental rates charged or received from the actual\nphysician\/tenants.\n\nThis master lease is a credit enhancement vehicle that will enable the REIT\nissuer to sell the REIT shares.  It will also allow HealthSouth leasing\nflexibility for the office space.  HealthSouth can lease office space to\nvarious physicians at different rates and terms, or they can use the office\nspace for hospital purposes.\n\nThe appraisers received a draft of the form of the master lease agreement, but\nthe actual master lease agreements for each property are not yet available.\nFor the purpose of our Income Approach, the gross income will be the master\nlease rate for each property times the rentable building area.  We reserve the\nright to modify the Income Approach valuation if the actual master lease for\neach property differs significantly from the draft lease presented to us.\n\nThe gross income for the subject property is calculated as follows:\n\n                      14,538 SF  x  $18.00\/SF  =  261,684\n\nWe have verified the reasonableness of this rental rate by conducting a return\nanalysis of the property based upon the expected remaining lives of the\nimprovements and investments rates of return found in the marketplace.  A\nschedule of this analysis is found in the Exhibit Section of this report.\nBased upon this analysis, utilizing a required rate of return of 10 percent on\nland and 12 percent to 14 percent rate on improvements,\n\n\n\n\n\n                                      -33-\n\nthe annual rental rate would be anticipated to approximate $16.79 to $18.68 per\nsquare foot.  The rate established in the master lease appears to be\nreasonable.\n\nThe subject appraisal assumes that 100 percent of the income is guaranteed\nthrough the master lease agreement.  Since the leased fee interest is being\nappraised, there is no deduction for vacancy or credit loss.\n\nSince the master lease provides for an income level to the REIT net of all\noperating expenses, the only out-of-pocket expenses to the REIT will be\naccounting, legal and internal administration or management expenses.  These\nmanagement expenses are estimated at 5.0 percent of effective gross income, or\n$13,084, based on the management experience of other properties.  The net\noperating income for the property is $261,684 less $13,084, or $248,600.\n\nAlthough we have not utilized the Direct Sales Comparison Approach to arrive at\nan indication of value for the subject property, we have conducted a survey of\noffice building sales in the region of the subject in order to abstract an\noverall rate for capitalization.  The full details of these sales are located\nin the Exhibit Section of this report and are summarized as follows:\n\n\n<font size=\"2\">\n Sale No.     Property Location                                   Sale Date               OAR (%)                 \n\n                                                                                                      \n     1        One 7000 Place, South Miami, Florida              October 1992              11.33%                  \n     2        Professional Arts Center, Miami, Florida         September 1992             10.45%                  \n     3        Kingston Plaza, Broward County, Florida           August 19921              10.18%                  \n<\/font>        \n\nThe direct capitalization, or overall rates, for these comparables ranged from\n10.18 percent to 11.33 percent.\n\nA capitalization rate at 10.5 percent is considered appropriate because of the\nquality of the tenant and the overall reasonableness of the rental rate\nnegotiated.\n\n\n\n\n\n                                      -34-\n\nTherefore, it is our opinion that the market value of the subject property by\nthe Income Approach is calculated and rounded as follows:\n\n                  Net Operating Income\/OAR  =  Estimated Value\n\n                          $248,600\/.105  =  $2,367,619\n\n                            Rounded to:  $2,365,000\n                                         ==========\n\n\n\n\n                                      -35-\n\n                           CORRELATION AND CONCLUSION\n\n\nWe have considered three approaches to value in order to estimate the value of\nthe HealthSouth Sports Medicine and Rehabilitation Center.  The three\napproaches are summarized as follows:\n\n        Cost Approach   . . . . . . . . . . . . . . . . . . .  $2,060,000\n        Direct Sales Comparison Approach  . . . . . . . . . .  N\/A\n        Income Approach   . . . . . . . . . . . . . . . . . .  $2,365,000\n\nThe Cost Approach involved a detailed analysis of the individual components of\nthe property.  These costs were estimated using sources which were considered\nto be reliable.  However, estimating the replacement cost and all forms of\ndepreciation for a twelve- year-old building is difficult.  For this reason,\nthe Cost Approach is considered only a fair indicator of value for the subject\nproperty.\n\nThe Direct Sales Comparison Approach was not utilized due to the specialized\nnature of the subject property.\n\nThe Income Approach normally provides the most reliable value estimate for\nprofessional office buildings such as the subject.  Although many buyers of\nprofessional office buildings are owner\/occupants, these buyers are generally\naware of a property's cash flow potential and its value from an investor's\nperspective.  For this reason, the Income Approach is considered the best\nindicator of value for the subject property.\n\nBased on this analysis, it is our opinion that the market value of the\nHealthSouth Sports Medicine and Rehabilitation Center, as of September 29,\n1993, and based on the assumptions and limiting conditions in this report, is:\n\n                                   $2,300,000\n                                   ==========\n\n\n\n\n                                      -36-\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7751],"corporate_contracts_industries":[9438],"corporate_contracts_types":[9587,9579],"class_list":["post-41877","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-healthsouth-corp","corporate_contracts_industries-health__misc","corporate_contracts_types-land__fl","corporate_contracts_types-land"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41877","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41877"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41877"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41877"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41877"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}