restricted appraisal report · 19-024 ml cain & associates, inc. 8 summary of salient facts...

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Property Two-story, 14-unit/suite condominium project utilized as a legal short-term vacation rental located at 1321 15 th Street, City of Miami Beach, Miami-Dade County FL 33139 Prepared For Gabriele Braha Red Group Development 435 21 st Street, #CU4 Miami Beach, Fl 33139 Prepared by M. L Cain & Associates 10312 SW 134 Pl Miami, FL 33186 Ph: (305) 408-6667 [email protected] www.mlcain.com Michael L. Cain, ASA This is a Restricted Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2 (b) of the 2018 -2019 Uniform Standards of Professional Appraisal Practice for a Restricted Appraisal Report. As such, it presents limited discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraisers’ opinion of value. Supporting documentation concerning the data, reasoning, and analyses it retained in the appraisers’ file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated below. The appraiser is not responsible for unauthorized use of this report. ==================================================================== Appraisal Date: April 20, 2019 Appraisal 19-024 RESTRICTED APPRAISAL REPORT

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Page 1: RESTRICTED APPRAISAL REPORT · 19-024 ML Cain & Associates, Inc. 8 SUMMARY OF SALIENT FACTS & CONCLUSIONS Type of Report: Restricted Appraisal Report Owner: See list of unit ownership

Property

Two-story, 14-unit/suite condominium project utilized as a legal short-term vacation rental located at 1321 15th Street,

City of Miami Beach, Miami-Dade County FL 33139

Prepared For

Gabriele Braha Red Group Development 435 21st Street, #CU4 Miami Beach, Fl 33139

Prepared by

M. L Cain & Associates 10312 SW 134 Pl Miami, FL 33186

Ph: (305) 408-6667 [email protected] www.mlcain.com

Michael L. Cain, ASA

This is a Restricted Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2 (b) of the 2018 -2019 Uniform Standards of Professional Appraisal Practice for a Restricted Appraisal Report. As such, it presents limited discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraisers’ opinion of value. Supporting documentation concerning the data, reasoning, and analyses it retained in the appraisers’ file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated below. The appraiser is not responsible for unauthorized use of this report. ====================================================================

Appraisal Date: April 20, 2019 Appraisal 19-024

RESTRICTED APPRAISAL REPORT

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10312 SW 134th Place Miami, Fl. 33186 Phone: 305-408-6667 Fax: 305-408-2911 Website: mlcain.com

M. L. Cain & Associates, Inc. Real Estate Appraisers and Consultants Michael L. Cain, ASA

Harris M. Millman, MAI, SRA May 9, 2019 Gabriele Braha Red Group Development 435 21st Street, #CU4 Miami Beach, Fl 33139 Re: Restricted Appraisal Report for a 14-unit/suite condominium project utilized as a legal

short-term vacation rental located at 1331 15th Street, Miami Beach, FL 33139 Dear Mr. Braha, I have completed an investigation and analysis in order to estimate the Market Value of the referenced property utilized as a legal vacation rental project. The Restricted Appraisal report has been prepared in conformance with the Uniform Standards of Professional Appraisal Practice (“USPAP”) and the appraisal standards adopted by The American Society of Appraisers, the Appraisal Institute, the Appraisal Foundation and if needed for a Federal Bank, FIRREA (12CFR34) as further described within the Appraisers’ Certifications contained herein. This Restricted Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2 (b) of the 2018 -2019 Uniform Standards of Professional Appraisal Practice for a Restricted Appraisal Report. As such, it presents limited discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraisers’ opinion of value. Supporting documentation concerning the data, reasoning, and analyses it retained in the appraisers’ file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated below. The appraiser is not responsible for unauthorized use of this report. This Restricted report can be upgraded to a full report in the future with additional fee and time to complete A summary of salient facts and conclusions is included herein and contains the value conclusion range which is subject to the enclosed Market Value definition, assumptions and limiting conditions and certifications. Respectfully submitted,

Michael L. Cain, ASA President, State Certified General Real Estate Appraiser License Number RZ 1967

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TABLE OF CONTENTS =================================================================== Page Letter of Transmittal ...................................................................................................................... 2 Table of Contents ........................................................................................................................... 3 Subject Photo ................................................................................................................................. 4 Aerial Maps .................................................................................................................................... 5 Summary of Salient Facts .............................................................................................................. 7 INTRODUCTION ........................................................................................................................ 12 

Identification of the Property .................................................................................................... 12 Swot Analysis ....................................................................................................................... 14 

Retrospective Appraisals .......................................................................................................... 15 Prospective Appraisals .............................................................................................................. 15 Property Rights Appraised ........................................................................................................ 15 Extraordinary Assumptions ...................................................................................................... 16 Hypothetical Conditions ........................................................................................................... 16 Estimated Exposure Time and Marketing Period ..................................................................... 16 Market Participant Interviews & Published Statements ........................................................... 17 Most Probable Purchaser .......................................................................................................... 17 Ownership and History of the Property .................................................................................... 17 Date of Inspection, Valuation and Date of Report .................................................................... 18 

MARKET VALUE DEFINED ..................................................................................................... 19 Additional Definitions ............................................................................................................. 20 

Highest and Best Use, As Improved ..................................................................................... 21 NEIGHBORHOOD MAP ............................................................................................................. 22 ZONING ....................................................................................................................................... 22 

Short Term Rental Map ........................................................................................................ 23 PROPERTY DESCRIPTION ....................................................................................................... 24 REAL ESTATE ASSESSMENT AND TAX DATA ................................................................... 25 VALUATION ............................................................................................................................... 26 

Appraisal Methodology ............................................................................................................ 26 ASSUMPTIONS AND LIMITING CONDITIONS .................................................................... 27 CERTIFICATION OF THE APPRAISER ................................................................................... 29 QUALIFICATIONS OF MICHAEL L. CAIN, ASA ................................................................... 30 ADDENDA ................................................................................................................................... 34 

�Survey ................................................................................................................................ 35 List of units ........................................................................................................................... 36 Sonder Monthly Projection ................................................................................................... 38 E & O Binder ........................................................................................................................ 39 Appraiser License ................................................................................................................. 40 

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SUBJECT

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AERIAL MAP North

Facing West Aerial

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AERIAL MAP Facing South

AERIAL MAP Facing East

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UN-ZOOMED AERIAL

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SUMMARY OF SALIENT FACTS & CONCLUSIONS

Type of Report: Restricted Appraisal Report Owner: See list of unit ownership in Addenda Location: 1321 15th Street, City of Miami Beach, Miami-Dade

County, FL. 33139 Property Type: Two-story, CBS walk up, 14-unit/suite condominium

project operated as a legal short-term vacation rental. Folio Number: 02-3233-088-0001 Reference for the condo project which

has 15 folio numbers (See Addenda). Improvements: Two-story, CBS walk up, 14-unit/suite condominium

project utilized as a legal short-term vacation rental constructed in 1951 and recently completed gut renovation. Renovations include new kitchens, bathrooms, electrical & plumbing, painting interior and exterior, impact windows and doors, roof repairs and fire system. Cost for renovations were not provided. The improvements are considered to be in well maintained, good condition with no significant deferred maintenance items notes, however an engineering report was not provided for my review.

Project includes six one-bedroom and eight 2-bedroom

suites. The square footage sizes of the units vary significantly, and six of the two-bedroom suites have a second bath.

Special Note: I have carefully reviewed income and expense projections

from Sonder. My value range estimated in this report considers this data in addition to my own market research.

Site Area: 7,546 square feet (.1732 acres) per County Plat Map. Parking: On street parking, typical for neighborhood Zoning RM-1; City of Miami Beach - Residential multifamily, low

density district and is designed for low intensity, low rise, single-family and multiple-family residences. Vacation rental is permitted for the subject property based upon a zoning overlay district.

Highest & Best Use As Improved: Present Use

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Property Rights Appraised: Fee Simple Estate Extraordinary Assumptions: 1) Any financial information reviewed and provided by

the client are considered correct and accurate. 2) Annual average occupancy will continue to increase with

aggressive effective management. This assumes no significant future negative impact on the overall hospitality business.

3) There are no significant structural issues or significant problems with building systems, including, roofing, plumbing, electrical and air conditioning. I am not a general contractor and have not completed a property inspection report. A general contractor’s inspection and estimate would be required if there are any structural repairs needed.

4) No significant zoning restrictions other than typical. 5) City of Miami Beach Certificate of Use permitting

Transient Short-Term Rental cannot be revoked if the property is meeting all requirements.

6) The insurance premium will not increase significantly from what was utilized for full coverage, including windstorm coverage

Hypothetical Conditions: None Marketing Time: Under 6 months, if listed at or near the estimated market

value. SPECIAL NOTE: Please keep in mind Value is a range and Not a point

estimate. There is no such thing as one number that is value for any property. However, price is a point and maybe within, above or below an acceptable value range as estimated by a very experienced, independent, unbiased, licensed appraiser. Additionally, the value range must be wider for more unique properties, especially non-stabilized properties were there are no non stabilized sales or listings of similar properties to the subject. Value is a range primarily because ADRs, REVPARs, cap rates and a non stabilized discount for As Is value are also ranges

I have estimated a stabilized occupancy range at between 70% & 80%, assuming aggressive competent management,

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based on occupancy ranges for B&B’s and other short-term vacation rental projects on South Beach with consideration for significant differences, including location. Below is my income proforma with estimated stabilized operations within 18 to 32 months.

19-024 INCOME PROFORMA Occupancy Opccupancy Opccupancy 1321 15 ST Projection Projection ProjectionMiami Beach Occ % Ranges 70.0% 80.0% 75.0%

Begining April Begining April Mid Point2021 2021

Year PROFORMA PROFORMA PROFORMATotal Units/Suites 14 14 14Total Days Open/Yr 365 365 365Total Rms Available 5,110 5,110 5,110Total Rms Rented 3,577 4,088 3,833Room Revenue Includes a cleaning fee $829,864 $948,416 $889,140ADR $232 $232 $232Occupancy 70.0% 80.0% 75.0%RevPAR $162 $186 $174

Market Value Estimate: Prospective Value as Stabilization (April 2021): $6,000,000 to $6,900,000 and I have utilized near

the mid-point at $6,400,000 as a point estimate

1321 15 ST 14 Suites

STABILIZED @ 70% to 80% OCC. GOING CONCERN VALUE

NOI before EBITDA & After Reserves ÷ Cap Rate Range = Indicated Value Range$449,098 6.50% $6,909,200$449,098 7.00% $6,415,686$449,098 7.50% $5,987,973

PROSPECTIVE STABILIZED VALUE- APRIL2021 $6,400,00014 Suites /Suite $457,143

LESS: AS IS VALUE DISCOUNT @ 15.0% (10% - 20%) $960,000AS IS VALUE GOING CONCERN $5,440,000

The Stabilized Prospective Value equates to $457,000 per unit/suite which is within a reasonable range per unit/suite based on sales of other stabilized short-term rental & B&B projects after appropriate adjustments for significant differences between the subject project and these other projects. SEE AS IS VALUE BELOW As Is Value

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As Is Value As Is value requires a significant discount to the above Stabilized Value since the subject has only a few months of operating history and is significantly below stabilized occupancy. I have estimated a stabilized occupancy at between 70% & 80%, assuming aggressive competent management, based on occupancy ranges for B&B’s and other short-term vacation rental projects on South Beach with consideration for significant differences, including location. A required discount for non-stabilized operations was estimated at between 10% to 20% and I have utilized 15%, applied to the Prospective Stabilized Value. As Is Value is calculated in the chart above: $5,440,000 RND. Special Notes: 1) The insurance premium will not increase

significantly from what was provided for full coverage, including windstorm coverage.

2) This property is valued as a standalone and

does not include any economies of scale provided by combining operations with a nearby project.

Date of Inspection, Appraisal and As Is Value: May 5, 2019 Date of Prospective Value: April 2021 Date of Report: May 9, 2019 Appraiser: Michael L. Cain, ASA President State Certified General Real Estate Appraiser,

License Number RZ 1967

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INTRODUCTION

Identification of the Property

The subject consists of a 2-story gut renovated 14-unit condominium CBS apartment building

constructed in 1951, operated as legal short-term vacation rental property. The building is on a

7,456 square foot site based on the County Plat Map and located on the north side of 15th Street,

approximately 104 feet west of West Avenue, Miami Beach, Miami-Dade County, Florida

33139.

Purpose, Intended Use and Intended User

The purpose of the appraisal is to provide the client with an estimate of the subject’s Market

Value “As Is” together with sufficient documentation and descriptive information in a format

complying with all UPSAP report writing requirements. The client/user, Gabriele Braha, Red

Group Development will use this Restricted appraisal for determining a listing price. There are

no other intended users or uses of this report.

Scope of the Appraisal

This is an Appraisal Report which is intended to comply with reporting requirements set forth

under Standard Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice

("USPAP").

The following is the scope of work and is defined by the purpose of this appraisal, which is to

estimate the “As Is” Market Value in the Fee Simple Estate.

Extent and type of information available to the appraiser: Upon receipt of the signed

engagement letter by the client a detailed information request is typically submitted to the client

for the physical (surveys and/or plans for the site and building) as well as the legal and economic

information required to complete the appraisal. In addition, the client typically provides

financial projections which included income and expenses on a pro forma basis. In this case, I

was provided with no financials regarding the subject property since the subject recently was put

in operation. I obtained a CBRE Horizons Hospitality report, September to November 2018

edition, for the Miami and Miami Beach hospitality market, which included specific information

about the historical, current and forecasted hotel market including smaller properties utilizing

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services such as Airbnb, Homeaway, Vrbo, Vacazon and Bookings.com to a lesser extent, for the

overall Miami area as well as the Miami Beach submarket. Additional information on the

subject property is based on information obtained from the County Property Appraisers office,

County Clerk’s Records, planning and zoning departments, Municodes, MLS, Real Estate

Services offered by CoStar and LoopNet, and individuals which may have knowledge about the

property (owners, managers, real estate agents, architects, engineers) if applicable.

Data Research: The traditional appraisal techniques require the collection and analysis of sales,

listings and comparable rental data on various properties having as many similar characteristics

to the property being evaluated as possible. The data is acquired from various public and private

resources, mentioned above, including, but not limited to Co Star, Loop net and MLS. Further,

often proprietary information is withheld from the appraisers and since that information is not

part of the public records and not available to the general market, the market is imperfect.

However, no legal or technical expertise is assumed and if agreements, leases and other factual

data under review appear on the surface to be reasonable, the information is accepted as accurate.

Type and extent of analyses: The overall scope of the appraisal involves the research and

analysis necessary for the development of one, two or all of the three traditional approaches to

valuation: the Cost Approach, the Sales Comparison Approach and the Income Approach. If

more than one of these three approaches have been deemed applicable, the values developed

within each of the applicable approaches are then reconciled into a final value conclusion for the

market value estimate. For this property, I utilized the Income and Sales Approaches with

primary weight on the Income approach. In this case, the Sales approach only serves as a check

on the income approach.

The Cost Approach was not considered applicable due primarily to the following:

1 The Cost Approach would not be utilized as a value indicator by market participants, 2 The subject was constructed in 1951 and although updated, renovated and well

maintained, total depreciation is difficult to accurately measure and 3 The subject is a legal non-conforming (grandfathered) structure as it does not meet

current zoning and building requirements.

Consequently, the combined effect of the preceding reduces the reliability of the Cost Approach

to a point where it is not meaningful in the valuation process.

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Swot Analysis

SWOT is an acronym for the internal strengths and weaknesses of an asset and the

environmental (external) opportunities and threats facing the property. Based on my analysis of

the subject property and its market I have identified the following strengths, weaknesses,

opportunities and threats

Strengths/ Opportunities

The overall short-term rental market on Miami Beach and especially South Beach should

continue to improve with the City of Miami Beach clamping down on illegally operated

properties which should put upward pressure on occupancy and rents in this submarket

over the long term.

The subject is conveniently located to amenities and supporting service linkages.

The subject has recently been gut renovated requiring less repairs and maintenance in the

near term.

Medium to high barriers to entry due a limited number of quality older projects located in

approved districts that require a high cost to renovate to required market standards.

The health of the overall economy and growth in personal income, very significant

factors impacting the hospitality industry are positive

The subject is a condominium project, therefore the units could be individually sold in

the future as an alternative exist strategy

Weaknesses/ Threats

Threats of interest rate increases

Walk ability is a significant factor for these property types in resort area where parking is

limited. The subject is not as close to Lincoln Road and the ocean/beach as are more

superior projects.

The subject has very limited operating history since it was recently renovated and put into

operation and therefore requires aggressive competent management to reach stabilized

operations which is projected to take up to 2.5 years.

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Retrospective Appraisals

The effective date of the appraisal prior to the date of the report may be required for property tax

matters, estate or inheritance tax matters, condemnation proceedings, suits to recover damages,

and similar situations. This is not a Retrospective Appraisal Report.

Prospective Appraisals

The effective date of the appraisal subsequent to the date of the report may be required for

valuations of property interests related to proposed developments, as the basis for value at the

end of a cash flow projection, and for other reasons such as a future projected date of

stabilization which considers proposed non-stabilized repair cost and/or an estimated lease-

up/absorption period.

This is a Prospective Appraisal since the subject is not yet at what is considered to be stabilized

operations.

Property Rights Appraised

The property is appraised as a Fee Simple Estate. A Fee Simple Estate is absolute ownership

unencumbered by any other interest or estate subject only to the limitations of eminent domain,

escheat, police power and taxation.

The most basic public limitation is property taxation. Other examples of governmental

limitations include eminent domain (the acquisition of all or part of a private real estate for a

public use or purpose) and through police power (for interest of public health, public safety

and/or the general welfare).

The exercise of private rights in realty can also be limited privately, either voluntarily or

involuntarily. Voluntary limitations are contractual and include leases, mortgages, easements,

and deed restrictions. They all come about through voluntary acceptance by the owner of the fee

simple estate of the property. Involuntary limitations are placed against the property by others,

usually because of some action or inaction on the part of the owner. They include liens,

encroachments, and prescriptive easements.

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The Market Value estimate reflects the rights in realty and not any value attributable to any

other interest including, but not necessarily limited to furniture, fixtures, equipment, goodwill,

going concern or business value, etc.

Extraordinary Assumptions

An extraordinary assumption is something that is assumed to be true, but is not certain. If it

turns out to be untrue, the value conclusion would be impacted. Extraordinary assumptions are

those assumptions that are specific to the particular assignment (e.g., that a possibly

contaminated site is not adversely impacted by contamination) as opposed to general

assumptions, which could be applicable to any assignment (e.g., that the tile is marketable). In

this case, the following extraordinary assumptions were utilized.

1) Any financial information reviewed and provided by the client are considered correct and accurate.

2) Annual average occupancy will continue to increase with aggressive effective management. This assumes no significant future negative impact on the overall hospitality business.

3) There are no significant structural issues or significant problems with building systems, including, roofing, plumbing, electrical and air conditioning. I am not a general contractor and have not completed a property inspection report. A general contractor’s inspection and estimate would be required if there are any structural repairs needed.

4) No significant zoning restrictions other than typical. 5) City of Miami Beach Certificate of Use permitting Transient Short-Term Rental cannot

be revoked if the property is meeting all requirements. 6) The insurance premium will not increase significantly from what was utilized for full

coverage, including windstorm coverage

Hypothetical Conditions

Hypothetical conditions are known to be false but are presumed to be true for the purpose of

reasonable analysis. For example, if the property is appraised as of today as thought the

improvements were complete, but the property currently consists of a vacant site, the valuation

of the improved property would be subject to the hypothetical condition that the improvements

are complete. In this case, there are no hypothetical conditions.

Estimated Exposure Time and Marketing Period

Exposure time is defined as the estimated length of time the subject property would have been

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offered on the market prior to the hypothetical sale at Market Value on the date of appraisal.

Marketing Period is defined as the most likely amount of time necessary to expose and actively

market the subject property to achieve a sale at the estimated Market Value subsequent to the

date of appraisal. The difference between Exposure Time and Marketing Period is that Exposure

Time is a retrospective estimate based upon an analysis of past events while Marketing Period

considers current and future market conditions.

Based on the characteristics of the subject and our analysis of the market, including discussions

with area Realtors, brokers and other informed market participants, it is our opinion that both the

reasonable exposure time and marketing period for the subject is under 6 months, if listed at or

near the estimated Market Value.

Market Participant Interviews & Published Statements

As stated in the Scope of Appraisal Section, the Appraiser’s have conducted interviews and

reviewed published statements with market participants. Those interviews and published

statements are considered in this valuation.

Most Probable Purchaser

The most probable purchaser of the subject property would be an investor or investor group

local, national or international due to the location, size and property type.

Ownership and History of the Property

The subject is owned as individual condominium units under several ownership names. See list

in Addenda). The subject project was purchase several years ago as an apartment project and

converted to condominium and gut renovated over the last several years. There have been a few

transfers of the individual units to reportedly related parties. The subject has reportedly been

operating for a short time as a short-term rental property and is in its ramp up stage, therefore

there is little operating history to utilize in projecting future stabilized operations.

The appraiser has carefully reviewed a current listing for sale on MLS and Loopnet with a

marketing package prepared by Neal R Deputy, agent with The Keyes Company. The listing

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began February 15, 2019 with a listing price at $6,550,000, equating to $467,857 per unit/suite.

This listing price is based on stabilized operations.

Date of Inspection, Valuation and Date of Report

The date of inspection and valuation April 20, 2019. The Prospective valuation date is April

2021. The date of report is May 9, 2019.

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MARKET VALUE DEFINED

Market Value* is defined as the most probable price which a property should bring in a

competitive and open market under all conditions requisite to a fair sale, the buyer and seller,

each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Implicit in this definition is consummation of a sale as of a specified date and passing of title

from seller to buyer under conditions whereby:

-Buyer and seller are typically motivated;

-Both parties are well informed or well advised and each acting in what they considered their own best interest;

-A reasonable time is allowed for exposure in the open market;

-Payment is made in terms of cash in U.S. dollars or in terms of financial

arrangements comparable thereto; and

-The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

*Department of the Treasury, Office of Comptroller of the Currency, under 12 CFR, Part 34, Real Estate Appraisals and Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") and the Uniform Standards of Professional Appraisal Practice ("USPAP") promulgated by the Appraisal Standards Board of the Appraisal Foundation

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Additional Definitions 1

“As Is” Market defined by the Appraisal Institute is the value of specific ownership rights to an identified parcel of real estate as of the effective date of the appraisal: relates to what physically exists and is legally permissible and excludes all assumptions concerning hypothetical market conditions or possible rezoning. “Prospective” Market Value defined by the Appraisal Institute as a forecast of the value expected at a specified future date. “Stabilized Income” defined by the Appraisal Institute as the income in a point in time when abnormalities in supply and demand or any other additional transitory condition ceased to exist and the existing conditions are those expected to continue over the economic life of the property; projected income that is subject to change, but has been adjusted to reflect any equivalent, stable annual income over the economic life of the property Business Enterprise Value. The value contribution of the total intangible assets of a continuing business enterprise, such as marketing and management skill, and assembled workforce, working capital, trade names, franchises, patents, trademarks, contracts, leases, customer base, and operating agreements2 Furniture, Fixtures and Equipment (FF&E) are items that are not real property but are considered essential to maintaining a lodging facility's quality, image, and income. Capitalized expenditures are not included in the hotel's operating statement, but since they affect an owner's cash flow this appraisal accounts for these expenses with an appropriate reserve for replacement. ADR (average daily room rate. (1) In the lodging industry, total guest room revenue divided by the total number of occupied rooms. (2) a ratio that indicates average room rate, and to what extent rooms are being up-sold or discounted; calculated by dividing rooms’ revenue by number of rooms sold. Also called average daily rate. RevPAR (revenue per available room). A unit of comparison applied in the appraisal of lodging facilities; calculated by multiplying a hotels percentage of occupancy by the average room rates. RevPAR is used throughout the lodging industry to compare the income of competing facilities. For example, a hotel operating as 75% occupancy rate with an average room rate of $275 has a RevPAR of $203 (75% x $275). A competitive hotel operating at an occupancy rate of 70% with an average room rate of $275 has a lower RevPAR of $193 (70% X $275).

1 Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed.(Chicago: Appraisal Institute, 2002) life of the property; 1 Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed.(Chicago: Appraisal Institute, 2002) life of the property; 2 Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed.(Chicago: Appraisal Institute, 2002)

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Highest and Best Use, As Improved

The Highest and Best Use as improved is the existing use.

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NEIGHBORHOOD MAP

ZONING

The subject is zoned RM-1 Residential Multifamily Low Density by the City of Miami Beach. Short term rentals are permitted. See short term rental map below.

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Short Term Rental Map

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PROPERTY DESCRIPTION

The subject site is 7,546 square feet located on the north side of 15th Street, approximately 104

feet west of West, Avenue.

The subject improvements consist of a custom 2-story recently completed gut renovated

condominium apartment building constructed in 1951 operating as a legal short-term vacation

rental property.

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REAL ESTATE ASSESSMENT AND TAX DATA

The subject property is assessed by the Miami-Dade County Tax Assessor. Assessed values are determined in January (but not released

until August) of each year. Subsequently, the millage rate is determined after the county's budget process for the subsequent year is

completed and then the tax bills are mailed in October and are due in March of the subsequent year. There is a 4% discount if the bill is paid

in November, declining 1% per month thereafter. Florida law dictates that properties be assessed at "just value" (market value less selling

costs); however, in most cases, the assessed value of a property is less than its current market value if the property is operating at or near

stabilized occupancy. Below is a summary chart of the individual unit assessments and the total

19-024 TAX CHART1321 15 STMiami Beach

Filename: 15th StreetMiami Beach, Miami-Dade County, FL SF 575 374 449 606 649 606 602 602 326 483 553 670 620 662

1/1 0/1 0/0 2/1 2/1 2/2 1/1 1/1 1/1 1/1 2/1 2/2 2/1 2/2#101 #102 #103 #104 #105 #106 #107 #201 #202 #203 #204 #205 #206 #207

Folio Number 02-3233-08 0020 0030 0040 0050 0060 0070 0080 0090 0100 0110 0120 0130 0140Year 2018 TOTALSBuilding Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Land Value: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Just Market Value: $283,500 $226,800 $258,336 $277,830 $277,830 $278,250 $289,170 $277,830 $209,790 $260,820 $272,160 $289,170 $277,830 $289,170 $3,768,486Total Assessed Value: $283,500 $226,800 $258,336 $277,830 $277,830 $278,250 $289,170 $277,830 $209,790 $260,820 $272,160 $289,170 $277,830 $289,170 $3,768,486Total Advalorem Taxes: $4,325 $3,516 $4,052 $4,558 $4,699 $4,558 $4,936 $4,528 $3,065 $4,360 $4,419 $4,788 $4,663 $4,979 $61,447Non Ad valorem Taxes: $0.00 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Taxes Due: $5,331 $4,265 $4,858 $5,224 $5,224 $5,232 $5,438 $5,224 $3,945 $4,905 $5,118 $5,438 $5,224 $5,438 $70,863Less 4% Discount $213 $171 $194 $209 $209 $209 $218 $209 $1,578 $196 $205 $218 $209 $218 $4,255Minimum Taxes Due $5,118 $4,094 $4,663 $5,015 $5,015 $5,023 $5,220 $5,015 $2,367 $4,708 $4,913 $5,220 $5,015 $5,220 $66,609Millage Rate 0.018804 0.018804 0.0188042 0.0188042 0.018804 0.018804 0.018804 0.018804 0.0188 0.0188042 0.018804 0.018804 0.018804 0.018804

The subject is assessed under 14 folio numbers. �According to the public records the 2018 taxes are paid and there are not delinquent taxes

on the subject property.

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VALUATION

Appraisal Methodology

Appraisal methodology is the orderly program in which the data used to estimate the value of the

subject property are acquired, classified, analyzed and presented. Appraisal methodology

applied to any specific property or property type may emulate the thinking of the most probable

purchaser. The basic tenet of the three classic appraisal approaches is the principle of

substitution which affirms that a prudent purchaser has three alternative courses of action

available: to buy a vacant site and build a similar property (Cost Approach), to acquire an

equally desirable existing property offering comparable utility (Sales Comparison Approach), or

to acquire a substitute income stream of comparable quality, quantity, and durability (Income

Approach).

The scope of the appraisal involves the research and analyses necessary for the development of

the Income and Sales Approaches.

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ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal report has been made with the following general assumptions and limiting conditions: 1. No responsibility is assumed for the legal description or for matters including legal or

title considerations. Title to the property is assumed to be good and marketable unless otherwise stated.

2. The property is assumed free and clear of any or all liens or encumbrances unless

otherwise stated. 3. Responsible ownership and competent property management are assumed. 4. The information furnished by others is believed to be reliable, however, no warranty is

given to its accuracy. 5. All engineering is believed to be correct. The plot plans and illustrative material in this

report are included to assist the reader in visualizing the property. 6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or

structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

7. It is assumed that there is full compliance with all applicable federal, state and local

environmental regulations and laws unless noncompliance is stated, defined and considered in the appraisal report.

8. It is assumed that all applicable zoning and use regulations and restrictions have been

complied with, unless a nonconformity has been stated, defined and considered in the appraisal report.

9. It is assumed that all required licenses, certificates of occupancy, consents, or other

legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based.

10. It is assumed that the utilization of the land and improvements is within the boundaries or

property lines of the property described and that there is no encroachment or trespass unless noted in the report.

11. The distribution, if any, of the total valuation in this report between land and

improvements applies only under the stated program of utilizations. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used.

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12. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event only with the proper written qualification and only in its entirety.

13. The appraiser herein by reason of this appraisal is not required to give testimony or be in

attendance in court with reference to the property in question unless arrangements have been previously made.

14. Neither all nor any of the contents of this report (especially any conclusions as to value,

the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser.

15. The appraiser is not qualified to detect hazardous waster and/or toxic materials. Any

comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The appraiser's value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraiser's descriptions and resulting comments are the result of the routine observations made during the appraisal process.

16. Unless otherwise stated in this report, the subject property is appraised without a specific

compliance survey having been conducted to determine if the property is or is not in conformance with the requirements of the Americans with Disabilities Act. The presence of architectural and communications barriers that are structural in nature that would restrict access by disabled individuals may adversely affect the property's value, marketability, or utility.

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CERTIFICATION OF THE APPRAISER

The undersigned do hereby certify that, to the best of our knowledge and belief: 1) The reported analyses, opinions and conclusions were developed, and this report has been

prepared, in conformity with the requirements of (1) the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation, including the Competency Provision, (2) the Code of Professional Ethics and the Standards of Professional Practice of the American Society of Appraisers, the Appraisal Institute and the Appraisal Foundation, (3) if for a financial institution, the Financial Institution Reform, Recovery and Enforcement Act of 1989 (FIRREA) relative to appraisal standards as enumerated in Title 12, Code of Federal Regulation, Part 34 (12CFR34), (4) and the State of Florida.

2) The statements of fact contained in this report are true and correct. 3) The reported analyses, opinions and conclusions are limited only by the reported assumptions and

limiting conditions, and are my personal, unbiased professional analyses, opinions and conclusions.

4) This assignment was not based on a requested minimum valuation, a specific valuation, or the

approval of a loan. 5) I have no present or prospective interest in the property that is the subject of this report and have

no personal interest or bias with respect to the parties involved. 6) I have not performed previous appraisals of the subject property the subject property within the

last three years. 7) My compensation is not contingent upon the reporting of a predetermined value or direction in

value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event.

8) The use of this report is subject to the requirements of the Appraisal Institute and the American

Society of Appraisers relating to review by its duly authorized representatives. 9) Michael L. Cain, ASA has made an exterior personal inspection of the subject property. 10) No one has provided significant professional assistance for the person signing this report 11) As of the date of this report, I Michael L Cain, ASA, State Certified General Real Estate

Appraiser RZ 1967, has completed the Standards and Ethics Education Requirement of the Appraisal Institute for Associate Members”, and completed the requirements of the continuing education program of the State of Florida and American Society of Appraisers.

Michael L. Cain, ASA, President State Certified General Real Estate Appraiser, License Number RZ 1967

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QUALIFICATIONS OF MICHAEL L. CAIN, ASA

Experience Mr. Cain is President of M. L. Cain & Associates, Inc., a commercial and residential real estate appraisal and consulting firm. Our objective is to provide exceptional service which includes well-supported appraisal values provided in a timely manner. Mr. Cain has over 40 years experience in the field of real estate. In addition to appraising, Mr. Cain's experience encompasses market analysis, feasibility analysis, property acquisition, financing, leasing, management and marketing. Mr. Cain specializes in income producing properties, land valuation, subdivision analysis, large scale residential projects and ultra luxury residential homes throughout 4 counties within South Florida, including 20 years appraising in Monroe County, the Florida Keys, all the way down to Key West. Mr. Cain was the commercial appraiser at Flagler Federal Savings and Loan for 12 years. Responsibilities included appraising all proposed and existing commercial property types and reviewing other commercial and residential appraisals. Prior to that, he was a residential appraiser at Flagler Federal and Biscayne Federal Saving and Loan. After leaving Flagler Federal, he was Senior Appraiser for 14 years with R. G. Davis & Associates, Inc, Robert Davis, MAI. Mr. Cain has been president of M. L. Cain and Associates, Inc. for 15 years providing appraisal and consulting services throughout Southeast Florida, including Miami-Dade, Broward, Palm Beach and Monroe Counties. In addition to market valuations and Insurable values for our many lender clients and others, Mr. Cain also provides litigation support and consultation services for numerous attorneys and accountants throughout the South Florida area. References are available upon request. My partner, Harris Millman, MAI, SRA is also both a Statewide General and Roofing contractor who provides very detailed Property Condition Assessment Reports (PCAs) for our lender clients and others. Please see my website for his qualifications. Education Bachelor of Business Administration, University of Miami, Coral Gables, Florida Major: Finance Minor: Economics Completed and passed the following courses in appraising: Standards of Professional Practice

Introduction to Appraising Real Property Principles of Income Property Appraisals Special Applications of Real Estate Analysis

Apartment Appraisal Attended the following appraisal-related seminars and conferences:

Affordable Housing Valuation Apartment Appraising Seminar

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Application of Market Extractions Appraisal Curriculum Overview Appraiser As an Expert Witness: Preparation & Testimony Appraising Distressed Real Estate: Here We Go Basic Argus Training Seminar Blueprint Reading and Cost Estimating Business Practices and Ethics Case Studies in Commercial Highest & Best Use Expert Witness Testimony Forecasting Revenue Hotel Appraising-New Techniques for Today’s Uncertain Times Internet and the Appraiser Introduction to Cash Flow and Risk Analysis Investment Feasibility Analysis Lease Abstracting and Analysis Lending World in Crisis Litigation Skills for Appraisers

Litigation Valuation Process Mock Trial for Real Estate Appraisers Market and Marketability Analysis Narrative Report Seminar Non-conforming Uses Out parcel Valuation Property Tax Assessment RE Market; How We Got Here, Where We are/Where we’re going Real Estate Market 2011 Roles/Responsibilities Supervising a Trainee Recent Developments in Income Property Valuation Small Hotel/Motel Valuation Supervisor Trainee Roles and Rules Tax Considerations in Real Estate Transactions The Appraiser as an Expert Witness: Preparation and Testimony The Real Estate Market, How We Got Here Understanding Limited Appraisals-General Participated in the following Webinar A Debate on the Allocation of Hotel Total Assets Contemporary Appraisal Issues with Small Business Administration Real Estate Industry Perspectives on Lease Accounting REIS & GIPS: Investment Firm and Institutional Investor Commercial Bankruptcy, Workouts, and the Valuation Process Completed and passed the following courses and examinations toward a MSM (Masters in Science and Management) in Real Estate at Florida International University:

Real Estate Investment Analysis Feasibility Analysis Website: mlcain.com

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Professional Memberships Senior Member, American Society Appraisers Associate Member, Appraisal Institute Professional Licenses Registered Florida Real Estate Broker License Number BR 0129199 State Certified General Real Estate Appraiser, License Number RZ 1967

ADDITIONAL INFO AND SOME REFERENCES

I specialize in commercial, industrial, very HI value homes/condos, affordable housing projects, all AG properties, subdivision analysis, short term rental and hotel properties in three counties. Short term rental and hotel properties, including all barrier island locations and Monroe County, primarily Key West. I have been one of the primary contract appraisers for US Century Bank, Ocean Bank, JPMorganChase, Chevy Chase Bank (Capital One) and Bank of America/US Trust, Capital Bank (Turnberry, Tibb, Metro) and others. I had been valuing primarily commercial REO or pre REO properties for my many of my lender clients during the Great Recession and after.

I provide superior quality reports which always attempts to answer any and all questions a good reviewer/underwriter might have before the report goes out. I don’t want to waste anyone’s time, including my own revisiting an assignment. I want the reviewer/underwriter to be very comfortable with the value I am supporting. I am also fully aware value is truly an acceptable value range and not a point estimate.

References Include:

Hugh Taylor, Chief Appraiser, State of Florida, Farm Credit Federal Bank, [email protected]

Lawrence Jakus, MAI, Appraisal Manager, JPMorganChase at [email protected]

Steven Weintraub, MAI, SRA, Regional Appraisal Manager, JPMorganChase at [email protected]

John R. Accornero, VP Appraisal officer, Capital Bank at [email protected]

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Sean Stinchfield, MAI, VP, Appraisal Officer, Bank of the Internet/Axom Bank [email protected]

Carlos Gonzalez, VP, Appraisal officer, Ocean Bank [email protected]

David Randall, MAI, Reviewer for US Century Bank and other banks

As a primary contract commercial appraiser for JPMorganChase, I have completed, in the last 18 years, 182 appraisals for them using the 71B, 71A and Narrative reports, primarily on properties in REO and Pre REO status.

Additional references are available from other Vice Presidents or South Florida Appraisal managers of my larger direct lender clients, including: Bank of America/US Trust, JPMorganChase, Capital Bank, Ocean Bank,US Century Bank, Iberia Bank, Total Bank, Regions Bank, Biscayne Bank, Farm Credit Federal Bank, The Bank of the Internet.

One of my specialties is the valuation of agricultural properties of all types in South Florida (4 counties) over many years with 40 years of valuation experience. I am the primary contract appraiser for Farm Credit Federal Bank in South Florida I have been hired by many brokers and others to value unique properties before a contract or a listing price is finalized for both residential and commercial properties, to assist in facilitating transactions, giving buyer and /or sellers greater confidence in the value range for the property.

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ADDENDA

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�Survey

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List of Units and Ownership

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Sonder Monthly Projection

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E & O Binder

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Appraiser License