{"id":41880,"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-larkin-annex-building-south-miami-fl.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"appraisal-of-larkin-annex-building-south-miami-fl","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/land\/appraisal-of-larkin-annex-building-south-miami-fl.html","title":{"rendered":"Appraisal of Larkin Annex Building (South Miami, FL) &#8211; HealthSouth Corp. and Valuation Counselors Group Inc."},"content":{"rendered":"<pre>\n                                AN APPRAISAL OF\n                             LARKIN ANNEX BUILDING\n                                AND EXCESS LAND\n                              SOUTH MIAMI, 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\n\n                                                               February 11, 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 office building identified as follows:\n\n                             LARKIN ANNEX BUILDING\n                                AND EXCESS LAND\n                           6129 SOUTHWEST 70TH STREET\n                          SOUTH MIAMI, FLORIDA  33143\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 $11.00 per\nrentable square foot of building area associated with the building and 19,787\nsquare feet of land area and $120,000 of annual rental associated with 100,000\nsquare feet of excess land area.\n\nThis appraisal investigation includes 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\nHealthSouth Corporation\nFebruary 11, 1994\nPage Two\n\n\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\n                 of 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\nThe subject property includes a two-story specialty office\/storage building\nwhich is located on a 119,787 square foot site.  The office building is a\ntwo-story, Class C structure containing 10,255 square feet which is currently\n100 percent occupied by HealthSouth.  Approximately 19,787 square feet is\nassociated with the building with 100,000 square feet of the land site\nassociated with parking for the hospital.\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 property\nappraised is, as of September 29, 1993, to be reasonably represented as\nfollows:\n\n                 Larkin Annex Building Site        $1,100,000\n                                                   ==========\n                 Excess Land                       $1,200,000\n                                                   ==========\n\nHealthSouth Corporation\nFebruary 11, 1994\nPage Three\n\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\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\nPJS:jef\n\n                            APPRAISER CERTIFICATION\n\n\nI, the undersigned, do hereby certify that to the best of my 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         I have made a personal inspection of the property that is the subject\n         of this report.\n\n         No one provided significant professional assistance to the person\n         signing this report.\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\n\n\nGENERAL DATA\n- ------------\n                                                     \nEffective Date of Value:                                September 29, 1993\n\nLast Date of Inspection:                                September 29, 1993\n\nProperty Identification:                                Larkin Annex Building\n\nProperty Location:                                      6129 SW 70th Street, South Miami, Florida\n\nInterest Appraised:                                     Leased Fee Estate\n\nGross Building Area:                                    10,255 square feet\n\nNet Rentable Area:                                      10,255 square feet\n\nSubject Land Size:                                      119,787 square feet, or 1.072 acres\n\nImprovements Description:                               Two-story, Class C office\/specialty building that was constructed in 1970\n                                                        with remodeling to the building conducted in 1980.\n\nOccupancy Percentage:                                   100%\n\n\n\n\n<font size=\"2\">\nCONCLUSIONS                                               Building Site            Excess Land\n- -----------                                               -------------            -----------\n                                                                              \nCost Approach:                                              $800,000                $1,200,000\n\nDirect Sales Comparison Approach:                              N\/A                     N\/A\n\nIncome Approach:                                           $1,100,000               $1,200,000\n\n\nFinal Value Estimates:                                     $1,100,000               $1,200,000\n<\/font>\n\n\n\n\n                                       TABLE OF CONTENTS\n\n\n\n\n                                                                                             Page\n                                                                                             ----\n                                                                                            \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 Analysis                                                                          6\n     Neighborhood Analysis                                                                     10\n     Zoning                                                                                    11\n     Real Estate Taxes and Assessments                                                         11\n     Site Analysis                                                                             12\n     Building and Site Improvements                                                            13\n                                                                                    \nHIGHEST AND BEST USE                                                                           15\n                                                                                    \nVALUATION SECTION                                                                              19\n     Valuation Methodology                                                                     19\n     Cost Approach                                                                             20\n     Income Approach                                                                           31\n                                                                                    \nCORRELATION AND CONCLUSION                                                                     35\n\n\n                       TABLE OF CONTENTS\n\n\n\n\nEXHIBIT SECTION\n- ---------------\nExhibit A     -    Professional Qualifications\nExhibit B     -    Legal Description\nExhibit C     -    Metropolitan Area\/Neighborhood Map\nExhibit D     -    Tax Plat Map\nExhibit E     -    Land Sale Location Map\nExhibit F     -    Leasing Status Schedule\nExhibit G1    -    Building Description\nExhibit G2    -    Land Improvements Description\nExhibit H     -    Office Building Comparables\nExhibit I     -    Subject Photographs\nExhibit J     -    Lease Agreement\n\n                                  INTRODUCTION\n\n\nPROPERTY IDENTIFICATION\n\nThe subject of this appraisal is the Larkin Annex Building and associated\nexcess land.  The subject property includes a two-story specialty\noffice\/storage building which is located on a 119,787 square foot site.  The\noffice building is a two-story, Class C structure containing 10,255 square feet\nwhich is currently 100 percent occupied by HealthSouth.  Approximately 19,787\nsquare feet is associated with the building with 100,000 square feet of the\nland site associated with parking for the hospital.\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 inspection.\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\nfinal value conclusion considering the relevancy and quality of data presented\nin each of the approaches.\n\n\n\n\n\n                                      -1-\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\n                 of 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 was originally constructed in 1970 with renovation to the building\nconducted in 1980.  The building and land was purchased by HealthSouth\ncorporation in 1992 with their purchase of the adjacent hospital.  No other\ndeed transactions were recorded on the property over the last three years.  The\nbuilding is presently occupied with accounting and housekeeping departments\nassociated with the hospital.\n\nThe subject professional office building has reportedly not been marketed for\nsale and is not currently under an agreement of sale.  No other deed transfers\nwere noted in the 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 two-thirds of GDP, rose only 1.3 percent during the first half of\n1993. Non- residential Fixed Investment advanced 2.2 percent and Residential\nFixed Investment grew 1.7 percent.  Federal Government Purchases declined\n(0.6%) over the same period.\n\n\n\n\n\n                                      -3-\n\nFederal Government Purchases account for 7.2 percent of the total GDP, and this\ndecline 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\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 ANALYSIS\n\nSouth Miami is located on the southwest border of Coral Gables 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\npopu-lation of 1,982,901.  This figure represents a growth estimate of\napproximately 22 percent over 1980 levels.  The subject facility is located in\nthe eleventh largest municipality in the county and presently has an estimated\npopulation of 10,459.  It is anticipated, by the year 2000, that the\npopulation will continue to expand in the county to an estimated 2,201,836 with\nindividual communities in the region sharing in this growth.\n\nThe median age of the population in the community is estimated at 35.5 with 21\npercent of the population represented at under 18 years of age and 13 percent\nof the population represented above 65 years of age.  This compares to an\noverall median age of 34.2 for the county with 24 percent of the population\nrepresented at under age 18 and 14 percent of the population over the age of\n65.  This would tend to indicate that the South Miami region is occupied by\nfamilies with members older than the average in the county.\n\nThe racial and ethnic distribution of members in the South Miami community is\nestimated at 66.8 percent white, 29.6 percent black, and the remaining 3.6\npercent other races.  It is estimated that the hispanic community in South\nMiami is represented as 23.8 percent of the overall population.  These figures\nwould tend to indicate that the South Miami community is similar in ethnic\ndiversification as computed to the Dade County region which is 72.9 percent\nwhite, 20.6 percent black, and 6.5 percent other, with the hispanic population\nrepresented at 49.2 percent.\n\n\n\n\n\n                                      -6-\n\n                       POPULATION GROWTH BY MUNICIPALITY\n\n\n\n<font size=\"2\">\n                                   1980                    1992                    %\n                                POPULATION              POPULATION              GROWTH\n\n                                                                      \nDADE COUNTY                     1,625,509               1,982,901               22.0\nMiami                             346,865                 359,973                3.8\nHialeah                           145,254                 195,579               34.6\nMiami Beach                        96,298                  93,461               -2.9\nNorth Miami                        42,566                  50,090               17.7\nCoral Gables                       43,241                  40,700               -5.9\nNorth Miami Beach                  36,553                  35,268               -3.5\nHomestead                          20,688                  27,087               31.1\nOpa-Locka                          14,460                  15,255                5.5\nSweetwater                          8,251                  14,096               70.8\nMiami Springs                      12,350                  13,230                7.1\nSouth Miami                        10,944                  10,459               -4.4\nMiami Shores                        9,244                  10,097                9.2\nHialeah Gardens                     2,700                   9,259              242.9\nKey Biscayne**                         --                   8,897               N\/A\nFlorida City                        6,174                   6,067               -1.7\nWest Miami                          6,076                   5,712               -6.0\nNorth Bay Village                   4,920                   5,550               12.8\nBay Harbor Islands                  4,869                   4,721               -3.0\nSurfside                            3,763                   4,204               11.7\nBiscayne Park                       3,088                   3,081               -0.2\nBal Harbour                         2,973                   3,033                2.0\nEl Portal                           2,055                   2,461               19.8\nVirginia Gardens                    2,098                   2,199                4.8\nMedley                                537                     821               52.9\nGolden Beach                          612                     805               31.5\nIndian Creek Village                  103                      44              -57.3\nIslandia                               12                      13                8.3\nUnincorporated Dade               799,053               1,060,739               32.7\n\n*Population estimates subject to revision. **Key Biscayne incorporated in June 1991.\nSOURCE:  Dade County Planning Department, and Bureau of Economic Research.\n\n<\/font>\n\n                                      -7-\n\n\n\n\n\n                         \n                Dade County Population Growth\n                        1950 - 2000\n\n<font size=\"2\">YEAR                     POPULATION                    GROWTH\n\n1950                      495,100                        --\n1955                      709,800                       43%\n1960                      935,000                       32%\n1965                    1,097,200                       17%\n1970                    1,267,800                       16%\n1975                    1,452,000                       15%\n1980                    1,625,800                       12%\n1985                    1,775,000                        9%\n1990                    1,937,094                        9%\n1991*                   1,961,694                        1%\n1992*                   1,982,901                        1%\n1995**                  2,083,555                        5%\n2000**                  2,201,836                        6%\n\n*Estimate of population, subject to revision.\n<\/font>**Projection of population, which is subject to annual adjustment.\nSource:  Dade County Planning Department; Bureau of Economic and Business\nResearch, and U.S. Dept. of Commerce.\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 121.0 percent over the period and an 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 price increased 94.2\npercent.\n\nEMPLOYMENT\n\nEmployment growth grew rapidly in the region from 1980 through 1988 when 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\nthe largest component of this sector.  Wholesale and retail trade represents\nthe next largest employer in the region.  The remaining sectors, which follow\nin number of companies in their respective order, include finance\/real estate,\nconstruction, manufacturing, transportation, communications, public utilities,\nand finally agriculture, forestry, and fishing.\n\n\n\n\n\n                                      -9-\n\nAs of April 1993, the top five employers in the Dade County region were:\n\n\n<font size=\"2\">                                            \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<\/font>                                       \n\nINCOME\n\nThe per capita income in Dade County, Florida and the United States in 1990 was\n$17,823, $18,539, and $18,696, respectively.\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\nNEIGHBORHOOD ANALYSIS\n\nThe subject property is located in the center of South Miami approximately\nthree blocks west of the Central Business District.  The immediate neighborhood\nof the subject property is characterized by healthcare development including\nthe HealthSouth Hospital adjacent to the subject and South Miami Hospital two\nblocks south of the subject.\n\nThe neighborhood boundaries include U.S. 1, which runs diagonally south and\neast of the subject property; and the Palmetto Expressway, which runs in a\nnorth-south direction approximately two miles west of the subject.  The\nnorthern boundary of the subject's neighborhood extends to Southwest 56th\nStreet.\n\nThe residential neighborhoods surrounding the subject are diverse in character\nwith the residential area north of the subject generally consisting of lower\nincome families with the areas immediately west and south of the subject\nexperiencing higher income families.\n\n\n\n\n\n                                      -10-\n\nThe general neighborhood of the subject can be classified as stable and\nproviding a good location for a medical office structure serving the medical\ncommunity in the immediate area of the subject.\n\n\nZONING\n\nThe subject property is zoned 'Hospital-MO' by the city of South Miami.  This\nzoning district generally allows for the development of healthcare properties\nincluding hospital support function structures.\n\nGeneral requirements in the district require a minimum building site of 10,000\nsquare feet, with front, rear, and side setbacks of fifteen feet, ten feet and\nten feet, respectively.  Maximum height allowances of four stories or 50 feet\nis allowed with a maximum floor ratio of 1.6 feet.\n\nThe subject building contains 10,255 square feet.  In our determination of the\nbuilding's land site, we have estimated that 19,787 feet would be the adequate\namount of land which should be allocated to the subject building to meet all\nzoning requirements.  The remaining portion of the land would approximate\n100,000 square feet.\n\nBased upon our analysis of the zoning regulations, the property under the\nproposed allocation scenario would meet zoning requirements.\n\nA letter of zoning compliance from the City of South Miami is recommended for\nan official determination regarding any zoning conformity issues.\n\n\nREAL ESTATE TAXES AND ASSESSMENTS\n\nThe subject property is situated in South Miami, and subject to the taxing\nauthority of the City and Dade County.  Commercial properties in the City and\nCounty are assessed at 100 percent of tax-appraised value for tax purposes.\nThe 1993 millage rate is $28.60 per $1,000 of assessed value.  The property is\ntaxed under thirteen parcel numbers.  The amount of the assessment and taxes\nfor each parcel is shown on the following chart.  The total taxes due on the\nproperty $49,901.74.\n\n\n\n\n\n                                      -11-\n\n\n<font size=\"2\">Folio Number                    Assessment              Tax Amount\n- -----------                     ----------              ----------\n\n4025-028-179-00                $ 90,650(L)             $ 2,592.59\n4025-028-180-00                $ 84,525(L)               2,417.43\n4025-028-181-00                $ 84,525(L)               2,417.43\n4025-028-182-00                $ 84,525(L)               2,417.43\n4025-028-183-00                $169,050(L)               4,834.85\n4025-028-183-00                $  1,000(B)                  28.60\n4025-028-184-00                $ 84,525(L)               2,417.41\n4025-028-184-00                $  1,000(B)                  28.60\n4025-028-185-00                $ 84,525(L)               2,417.43\n4025-028-186-00                $ 57,428(L)               1,642.44\n4025-028-187-00                $202,983(L)               5,805.33\n4025-028-187-00                $  1,000(B)                  28.60\n4025-028-188-00                 127,995(L)               3,660.66\n4025-028-188-00                $  1,000(B)                  28.60\n4025-028-189-00                $103,500(L)               2,960.10\n4025-028-190-00                $200,790(L)               5,742.60\n4025-028-190-00                $ 62,791(B)               1,795.83\n4025-028-191-00                $103,500(L)               2,960.10\n4025-028-1921-00               $199,500(L)               5,705.71\n                                                       ----------\nTotal                                                  $49,901.74\n\n\n(L) = Land Assessment\n(I) = Improvement Assessment\n\n\n\n\n<\/font>SITE ANALYSIS\n\nThe subject site is an L-shaped parcel which is located on the northeast corner\nof Southwest 62nd Avenue and Southwest 70th Street.  The subject contains 285\nfeet of frontage on the north side of Southwest 70th Street and 200 feet of\nfrontage on the south side of Southwest 69th Street.  The property contains\n138 feet of frontage on the east side of Southwest 62nd Avenue.  The building\nimprovements are located on the southwest portion of the site.  The remaining\nportion of the site is improved with paved parking areas and concrete dividers.\n\nAdjacent to the site on its east border is vacant land.  The northwest\nboundaries are also adjacent to a site which is presently unimproved.  Across\nSouthwest 69th Street is\n\n\n\n\n\n                                      -12-\n\napartments; across Southwest 70th Street is the HealthSouth Hospital.  The\ntopography of the site is flat and at grade with all road frontages.  The site\nis accessed from Southwest 70th Street.  According to the records contained at\nthe Tax Assessors Office, the land site contains 119,787 square feet.\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 paving and curbing, some trees and general signage.\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.\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\nBUILDING AND SITE IMPROVEMENTS\n\nBuilding\n\nThe Larkin Annex Building was originally constructed in 1970 with some\nremodeling made to the building in 1980.  The building contains 10,255 square\nfeet in two stories.  The building is a Class C structure with concrete\nfoundations and footings.  Exterior walls consist of concrete block walls with\na stucco covering.  The building floors consist of concrete on grade with\nconcrete flooring over metal sheathing for the second level.  The roof of the\nbuilding is concrete over metal with a built-up tar and gravel covering.\n\nThe building's interior walls consist of drywall and concrete block\npartitioning.  The wall finishes generally consist of paint and paneling.\nPortions of the building's ceiling are unfinished with the remaining portion of\nthe building containing drop-down acoustical panels.  Floor finishes consist of\nunfinished concrete areas on the first floor with the remaining sections of the\nbuilding being carpeted.\n\n\n\n\n\n                                      -13-\n\nThe building contains five water closets, four ceramic sinks, two urinals, one\nslop sink and one water cooler.  The building is heated and cooled by roof-top\nunits.  The building contains incandescent and fluorescent light fixtures in\nconduit.  The building houses a two-stop elevator.\n\n\nSite Improvements\n\nSite improvements consist of asphalt paving, lighting and fencing.\n\nMore detail descriptions of the building and site improvements are included in\nthe Exhibit 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                                      -14-\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                                      -15-\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\n\nPHYSICALLY POSSIBLE\n\nThe size and shape of the subject site is adequate for the development of a\nnumber of alternative uses including small residential, commercial,\noffice\/institutional, industrial and special-purpose properties.  The site\npossesses good access and visibility.\n\n\nLEGALLY PERMISSIBLE\n\nAs stated earlier in the Zoning section of this report, the property is\ncurrently zoned 'Hospital-MO'.  Permitted uses in this general zoning are\nspecific and allow for healthcare and hospital-related uses.  Potential legal\nuses would include specialty and general hospitals, clinics, and hospital\nsupport buildings.\n\nSurrounding uses include the hospital, other professional office uses, some\napartments and some old single-family residential properties.  These use\npatterns would likely preclude industrial, retail or future single-family\ndevelopment on the site.\n\n\nFINANCIALLY FEASIBLE\n\nHaving established that the site is physically suited for and legally\nrestricted to institutional development, the next consideration is economic\nfeasibility.  Financially feasible uses for the site, if vacant, are those uses\nthat would generate an economic return to the land.  New hospital-related\ndevelopment on the north and east sides of the building indicate that new\ndevelopment is financially feasible.  HealthSouth Medical Center is planning an\nadditional office adjacent to the subject.\n\n\n\n\n\n                                      -16-\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 institutional development.\n\n\nAs Improved\n\nThe subject site is currently improved with a 10,255 rentable square foot\noffice\/specialty building, with an adjacent parking deck 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\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 the deferred maintenance items on the\nproperty.  The improvements are considered functional.\n\n\nLEGALLY PERMISSIBLE\n\nThe improvements, as improved, are a legal conforming use according to the City\nof South Miami, zoning guidelines.  Under the zoning, the property could remain\nas it is, be torn down or renovated.\n\n\nFINANCIALLY FEASIBLE\n\nThe highest and best use of the land, if vacant, was to develop with an\noffice\/institutional use based on the adjacent hospital's growth needs.  Of the\nphysically possible and legally permissible changes that could be made to the\nexisting facility, demolishing the building would significantly reduce the\ncurrent asset value, and would\n\n\n\n\n\n                                      -17-\n\nnot be financially feasible.  It would, however, be financially feasible to\ncorrect any deferred maintenance.\n\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 will 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                                      -18-\n\n                               VALUATION SECTION\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\nfinal opinion of value.  Due to the specialized nature of the subject property\nwith its limited zoning and the need to provide parking to the adjacent hospital\nfew similar transactions could be found to arrive at a reliable comparison. \nTherefore, we have not considered the Direct Sales Comparison Approach as being\nan appropriate valuation approach for the subject.  The application of the Cost\nand Income Approaches to value is further discussed in the appropriate sections\nwhich follow.\n\n\n\n                                     -19-\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                                     -20-\n\nLand Comparable Number 1\n\n\n                                        \nFolio Number:                              09-4025-028-1970, 1980, 1990, 2020, 2030, 2040, and 2041\n\nLocation:                                  5965 SW 70th Street\n\nSize:                                      65,550 square feet\n\nSale Date:                                 May 1991\n\nDeed Book\/Page:                            15020-0214\n\nGrantor:                                   Francisco Montana and W. Rosario\n\nGrantee:                                   Mauricio Montana\n\nSale Price:                                $1,100,000\n\nPrice Per Square Foot:                     $16.78\n\nTerms of Sale:                             All Cash\n\nShape:                                     Rectangular\n\nZoning:                                    South Miami Commercial\n\nUtilities:                                 All utilities are available.\n\nComments:                                  Property is two blocks east of subject and is presently improved with a five-story \n                                           parking garage.\n\n\n\n\n\n                                     -21-\n\n\n\nLand Comparable Number 2\n- ------------------------\n                                        \nFolio Number:                              09-4025-028-1940, 1960\n\nLocation:                                  6920 SW 59th Avenue\n\nSize:                                      9,450 square feet\n\nSale Date:                                 April 29, 1993\n\nDeed Book\/Page:                            15795-3698\n\nGrantor:                                   Imperial Bank\n\nGrantee:                                   A. Building, Inc.\n\nSale Price:                                $140,000\n\nPrice Per Square Foot:                     $14.81\n\nTerms of Sale:                             All Cash\n\nShape:                                     Rectangular\n\nUtilities:                                 All utilities are available.\n\nComments:                                  This parcel is presently vacant.\n\n\n\n\n\n                                     -22-\n\nLand Comparable Number 3\n\n\n                                        \nFolio Number:                              03-4120-017-1580\n\nLocation:                                  Northeast corner of San Lorenzo and LeJeune Road, 4251 LeJeune Road\n\nSize:                                      21,805 square feet\n\nSale Date:                                 February 1993\n\nDeed Book\/Page:                            15822-3213\n\nGrantor:                                   Commerce Bank\n\nGrantee:                                   Goldcoast Partners Properties Co.\n\nSale Price:                                $650,000\n\nPrice Per Square Foot:                     $29.80\n\nTerms of Sale:                             All Cash\n\nShape:                                     Rectangular\n\nZoning:                                    Coral Gables Commercial\n\nUtilities:                                 All utilities are available.\n\nComments:                                  This parcel is presently being improved with an office building.\n\n\n\n\n\n                                     -23-\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 COMPARABLE      LOCATION                      DATE            (SF)         PER SF\n\n                                                                   \n      1          5965 SW 70th Street           05\/91          65,550        $16.78\n      2          6920 SW 59th Avenue           04\/93           9,450        $14.81\n      3          4251 LeJeune Road             02\/93          21,805        $29.80\n   SUBJECT       6129 SW 70TH STREET                         119,787              \n<\/font>                                            \n\n\n\nDiscussion of Land Comparables\n\nLAND COMPARABLE 1 is approximately two blocks east of the subject in a very\ncomparable neighborhood as the subject.  This sale has been adjusted upward due\nto the age of the sale.  All factors for location, utility, topography appear\nto be equal and no adjustment for these occurrences appeared warranted.  A\ndownward adjustment is warranted for parcel size due to the comparable's\nsmaller size.  An additional downward adjustment has been made due to the\nsubject's limited zoning classification.  The adjustments are shown on a Land\nSale Adjustment Grid at the end of this discussion.  The adjusted price per\nsquare foot of this comparable is $14.10 per square foot.\n\nLAND COMPARABLE 2 is approximately one block east of the subject in a very\ncomparable neighborhood as the subject.  No time adjustments to this sale were\nmade.  All factors for location, utility, topography appear to be equal and no\nadjustment for these occurrences appeared warranted.  A large downward\nadjustment is warranted for parcel size due to the comparable's smaller size.\nAn additional downward adjustment has been made due to the subject's limited\nzoning classification.  The adjustments are shown on a Land Sale Adjustment\nGrid at the end of this discussion.  The adjusted price per square foot of this\ncomparable is $10.37 per square foot.\n\n\n\n\n                                     -24-\n\nLAND COMPARABLE 3 is a smaller sized parcel located on a heavily travelled\nthoroughfare approximately one mile east of the subject property.  No time\nadjustment was made to this sale.  A significant downward adjustment to this\nsale was made for location.  A slight downward adjustment was also made for\nsize.  An additional downward adjustment has been made due to the subject's\nlimited zoning classification.  The adjustments are shown on a Land Sale\nAdjustment Grid at the end of this discussion.  The adjusted price per square\nfoot of this comparable is $11.92 per square foot.\n\nThe adjusted land prices range from $10.37 per square foot to $14.10 per square\nfoot, with the prices of sales number one and two being the most representative\nof the subject parcel.  Based on our analysis of the subject versus these\ncomparables, it is our opinion that a land price of $12.00 per square is\nrepresentative of the subject site in its entirety.  The 19,787 square foot\nportion of the site which is will be allocated to the building should have a\nsquare foot estimate greater than the entire site due to its smaller size.\nBased upon its smaller size it is our opinion that a 25 percent, or $3.00,\npremium should be applied to this portion of the site.  The value of the\nsubject sites as portioned would reasonably be represented as follows:\n\n                                 ANNEX BUILDING\n\n            19,787 SF  x  $15.00\/SF  =  $296,805 rounded to $300,000\n\n                                  EXCESS LAND\n\n                      100,000 SF x $12.00\/SF = $1,200,000\n\n\n\n\n                                     -25-\n\n                          LAND SALE ADJUSTMENT GRID\n                            Larkin Annex Building\n                             South Miami, Florida\n\n\n<font size=\"2\">                           Subject     Land Comp   Land Comp   Land Comp\n  Element                                 #1          #2          #3\n\nSale Price\/SF                            $16.78      $14.81      $29.80\n\nProperty Rights           Fee Simple     Same        Same        Same\n  Adjustment                      \n                                    ------------------------------------\nAdjusted Price\/SF                        $16.78      $14.81      $29.80\n\nFinancing                    Cash        Cash        Cash         Cash\n  Adjustment\n                                    ------------------------------------\nAdjusted Price\/SF                        $16.78      $14.81      $29.80\n\nConditions of Sale                       None        None        None\n  Adjustment                       \n                                    ------------------------------------\nAdjusted Price\/SF                        $16.78      $14.81      $29.80\n\nMarket\/Time\n  Adjustment                                  5%          0%          0% \n                                    ------------------------------------\nAdjusted Price\/SF                        $17.62      $14.81      $29.80\n\nOther Adjustments:\n  Location Adjustment                         0%          0%        -40%\n  Topography Adjustment                       0%          0%          0%\n  Size Adjustment                           -15%        -25%        -15%\n  Zoning Adjustment                          -5%         -5%         -5%\n    Net Other Adjustments                   -20%        -30%        -60%\n\nFINAL ADJUSTED PRICE PER SF              $14.10      $10.37      $11.92\n                                    ====================================\n\n                                \n\n                           \n\n\n\n\n<\/font>                                     -26-\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 office is\nestimated to be $1,006,376.\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.\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 40 years.\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\n\n\n\n                                     -27-\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 originally constructed in 1970 with some renovations\nperformed in 1980, and it is in fair to good condition.  After taking into\nconsideration all significant physical factors affecting the subject property,\nit is judged that the subject office building and parking garage has an\neffective age equal to 20 years.  The remaining useful life is estimated to be\n20 years.  This translates into a physical depreciation estimate of 50 percent\n(20 years divided by 40 years).  The amount of depreciation attributable to the\nproperty has been estimated on a straight-line basis, which is founded on the\nassumption that depreciation of a property occurs equally throughout its\neconomic life.\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\nfive years.  Therefore, the depreciation rate attributable to the site\nimprovements on a straight-line basis is estimated to be approximately 50\npercent.  Entrepreneurial profit and miscellaneous replacement costs are\ndepreciated at a blended depreciate rate.\n\nThe total depreciated value for the office building is estimated to be\n$428,188.\n\n\n\n\n                                     -28-\n\nCOST APPROACH CONCLUSION\n\nThe schedule on the following page is a summary of the estimated replacement\ncost by category for the subject building and improvements plus estimates of\nall 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:\n\n                 Larkin Annex Building Site         $800,000\n                                                    ========\n                 Excess Land Site                 $1,200,000\n                                                  ==========\n\n\n\n                                     -29-\n\n                          SUMMARY OF REPLACEMENT COSTS\n\nLARKIN ANNEX BUILDING\n\n\n<font size=\"2\">\n                                                                                                     Replacement\n                                                                                                        Cost     \n                                                                                                     -----------\n                                                                                               \n         Excavation and Site Preparation                                                             $      977\n         Foundation                                                                                      20,865\n         Frame                                                                                           46,180\n         Exterior Walls                                                                                 108,106\n         Floors                                                                                          61,935\n         Roof                                                                                            38,350\n         Roof Cover                                                                                      13,775\n         Partitioning and Built-In Items                                                                173,242\n         Ceilings                                                                                        30,005\n         Floor Coverings                                                                                 29,766\n         Plumbing                                                                                        53,847\n         Heating, Ventilation and Air Conditioning (Net)                                                 58,371\n         Electrical                                                                                      61,674\n         Other Features                                                                                  33,916\n                                                                                                     ----------\n         Total Labor, Materials, Incidentals and Profit                                              $  731,009\n         Architect Fees, Plans and Specifications                                                    $   25,585\n         Architect Fees, Supervision                                                                     21,930\n         Add: Miscellaneous Fees                                                                         77,852\n                                                                                                     ----------\n         Total Replacement Cost of Building                                                          $  856,376\n            Less: Depreciation at 50%                                                                  (428,188)\n                                                                                                     ---------- \n         Total Depreciated Value of Building                                                         $  428,188\n         Land Improvement Replacement Cost                                              $  150,000\n            Less: Depreciation at 50% (5\/10)                                               (75,000)\n                                                                                        ----------\n         Depreciated Value of Land Improvements                                                      $   75,000\n         Add: Land Value of Building Site                                                               300,000\n                                                                                                     ----------\n         Total Value of Building Site                                                                $  803,188\n         Rounded to:                                                                                 $  800,000\n                                                                                                     ==========\n         Land Value of Excess Land Site                                                              $1,200,000\n                                                                                                     ==========\n<\/font>\n\n\n\n\n                                     -30-\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\nFor the purpose of our analysis we have separated the building site from the\nexcess land site in estimating values for the Income Approach to value.__\n\n\n\n\n                                     -31-\n\n\n\n\nBUILDING SITE\n\nBased upon the lease rental rate provided, the gross income for the subject\nproperty is calculated as follows:\n\n                      10,255 SF  x  $11.00\/SF  =  $112,805\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.  We have verified\nthe reasonableness of this rental rate by conducting a return analysis of the\nproperty based upon the expected remaining lives of the improvements and\ninvestments rates of return found in the marketplace.  A schedule of this\nanalysis is found in the Exhibit section of this report.  Based upon this\nanalysis, utilizing a required rate of return of 10 percent on land and 12\npercent to 14 percent rate on improvements, the annual rental rate would be\nanticipated to approximate $10.39 to $11.20 per square foot.  The rate\nestablished in the master lease appears to be reasonable.\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 five percent of effective gross income, or\n$5,640, based on the management experience of other properties.  The net\noperating income for the property is $112,805 less $5,640, or $107,165.\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 1992           10.18% \n<\/font>            \n\n\n\n\n                                     -32-\n\nThe direct capitalization, or overall rates, for these comparables ranged from\n10.18 percent to 11.33 percent.  We believe that the cap rate associated with\nthe subject property would fall below the rates found above due to the more\nstabilized nature of the present market and the overall reduction in interest\nrates since these sales occurred.  We believe that an overall capitalization\nrate of 9.5 percent would be appropriate for the subject property under its\nmaster lease agreement.\n\nTherefore, it is our opinion that the market value of the office site by the\nIncome Approach is calculated and rounded as follows:\n\n                  Net Operating Income\/OAR  =  Estimated Value\n\n                          $107,165\/.095  =  $1,128,053\n\n                            Rounded to:  $1,100,000\n                                         ==========\n\nExcess Land Site\n\nThe gross annual rental associated with the excess land site is stated at an\nannual rate of $120,000.  This rate represents a 10 percent annual return to\nthe investor and appears appropriate based upon the stability of land prices in\nthe immediate region of the subject.\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 five percent of effective gross income, or\n$6,000, based on the management experience of other properties.  The net\noperating income for the property is $120,000 less $6,000, or $114,000.\n\nWe believe that the overall cap rate associated with this income stream would\nbe similar to the office building site and have used an overall capitalization\nrate of 9.5 percent as being appropriate.\n\n\n\n\n                                     -33-\n\nTherefore, it is our opinion that the market value of the office building site\nby the Income Approach is calculated and rounded as follows:\n\n                  Net Operating Income\/OAR  =  Estimated Value\n\n                          $114,000\/.095  =  $1,200,000\n\n                            Rounded to:  $1,200,000\n                                         ==========\n\n\n\n                                     -34-\n\n                           CORRELATION AND CONCLUSION\n\n\nWe have considered two approaches to value in order to estimate the value of\nthe Larkin Annex and excess land site.  The two approaches are summarized as\nfollows:\n\n\n\n                                                              Building Site            Excess Land\n                                                              -------------            -----------\n                                                                                  \n         Cost Approach  . . . . . . . . . . . . . . . . . . . . $  800,000 . . . . . .  $1,200,000\n\n         Income Approach  . . . . . . . . . . . . . . . . . .   $1,100,000 . . . . . .  $1,200,000\n\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 an older building is unreliable.  For these reasons, this\napproach is considered only a fair indicator of value for 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 Larkin\nAnnex Building and excess land site, as of September 29, 1993, and based on the\nassumptions and limiting conditions in this report, is:\n\n\n                                                                        \n                 Larkin Annex Building Site                                $1,100,000\n                                                                           ==========\n\n                 Larkin Annex Excess Land Site                             $1,200,000\n                                                                           ==========\n\n\n\n\n\n                                     -35-\n\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-41880","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\/41880","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=41880"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41880"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41880"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41880"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}