Appraisal Gordon October 2013

REAL ESTATE SELF-CONTAINED APPRAISAL REPORT Subject

Value of She w~h ExlsUng Improvements located at

625 Gordon Street Corpus Christi, Texas

MARKET VALUE: October 29, 2013

ALSO KNOWN AS: ~;nr1st1- t.>oraon Street Apartmen1s REVISED

PREPARED FOR: Azeneth Hernandez Plains CapHal Bank

505 South McColl Road Edinburg, Texas 78539

PREPARED BY: David E. Jones

State Certified General Real Estate Appraiser P.O. Box 152513

AusUn. Texas 78715-2513

DAVID E. JONES

Dovid f . J•n.s T".J<p)oor.c (800) 551•2532

P.O· 8"" 152513

lluttln, r..,., 7nt5·2513

November 1, 2013

Azenelh Hernandez

Plains Cap~al Bank

505 s. McColl Road

Edinburg, Texas 78539

Dear Ms. Hernandez:

Corpus Christi- Gordon Street Apartments- REVISED

As you requested. we have completed an appraisal for MARKET VALUE orthe real estate located at 625 Gordon

Street, Corpus Christi, Texas. The legal descr1pUon is "Lot 9, Block 40, Lindale Park #4," Nueces County, Texas

subject to all restrictions, easements, teases and other encumbrances.

The PURPOSE orthe appraisal is to communicate the appraise(s opinion or MARKET VALUE as defined herein.

The date or value and the dale or the last inspedion is October 29, 2013. The RIGHTS appraised are FEE SIMPLE

INTEREST In lhe surface estate subject to all tease agnaements, nastrictions and easements or nacord. limitations

caused by eminent domain, s1andby fees, taxes. assessments by taxing authOnties, esCheat, pollee power and

taxaUon. The FUNCTlON or lhe report Is to provide a basis for loan consideration.

The appraisal study contained within the attached report has been prepared in order to conform to FIRREA

Guidelines and the Uniform Standards of Professional Appraisal Practice (USPAP). The value listed below is

qualified by certain assumptions, lim~ing conditions, definitions, and certifications set forth In this report.

In our opinion, the FINAL OPINION OF CURRENT MARKET VALUE, unencumbered, for the appraised

property described herein (land with Improvements on site), "AS IS' Is $1 ,840,000:

II Dt~vid E· Jones & flssoclt~tcs

Azeneth Hernandez

November 1. 2013

Page 2

Corpus Christl- Gordon Street Apartments - REVISED

The folloWing five points velify our compliance wnh your Instructions and compliance with FIRREA Guidelines. A

copy or your instructions is included in the Addenda to this report.

FIR REA:

1. Conform to generally accepted appraisal standards as evidenced by the Uniform Standards of

Professional Appraisal Practice (USPAP) 2012 Edition effective January 1, 2012 promulgated by the Appraisal

Standards Board or the Appraisal Foundation. unless principles of safe and sound banking require compliance

with stricter standards. Entire report

2. Be written and contain sufficient information and analysis to support the institution's decision to

engage in the transaction. Entire report

3. Analyze and report appropriate deductions and discounts for proposed construe! ion or renovation,

partially leased buildings, non-market lease temns. and tract developments with unsold units. See Cost

Approach if applicable

4. Be based upon the definHion of market value as defined herein. See definition of Marl<et Value

5. Be performed by State licensed or certified appraisers in accordance with requirements set forth. See

Appraiser's Qualifications in the Addendum

I hereby certify that this appraisal complies with the applicable standard rules or the USPAP, the Intended use,

typical bank appraisal policies and to the appraiser's peer's standards.

Thank you for this opportunity to be of service to you. If you have any questions about the attached report,

please call.

Sincerely,

David E. Jones State Certified General Real Estate Appraiser TX 1322216-G

ill Daviti E· Jones & flssoeiates

Corpus Christi· Gordon street Apartments • REVISED

TABLE OF CONTENTS TABLE OF CONTENTS ........................................................................................................................................... iv

SECTION 1 .............................................................................................................................................................. 1

EXECUTIVE SUMMARY ........................................................................... ... ...... ... .......... ............................ ....... 2

SECTION 2 .............................................................................................................................................................. 4

CERTIFICATION .. .......... ....... ................................................................. ............................. ............................. ... 5

SCOPE OF WORK ........................................................... , ................... .. ...................... ....................... ................ 6

DEFINITION OF MARKET VALUE ....... ......... .......... .. ................... ................... ...... ...... ....... ................................ 8

APPRAISAL STANDARD RULES ....................................................................................................................... 9

PROPERTY RIGHTS APPRAISED ............................................ .......... ............ ............ ...................................... . 9

THREE YEAR OWNERSHIP HISTORY ........................................................................................................... 10

OVERVIEW ........................................................................................................................................................ 10

EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS ................................................... 11

ETHICS RULE ................................................................................................................................................... 11

COMPETENCY RULE ............................ ........................................................................................................... 11

SECTION 3 ............................................................................................................................................................. 12

TEXAS ECONOMIC TRENDS .......................................................................................................................... 13

CORPUS CHRISTl MSA PROFILE SUMMARY .......... .. .......... ........................................................................ . 18

CORPUS CHRISTl SALES TAX RECIEPTS ....................................................... ............................ ............ .... . 19

SUB-MARKET AREA ANALYSIS ......................................... .................... .................. ....................................... 20

SECTION 4 ............................................................................................................................................................ 24

SITE DESCRIPTION & ANALYSIS .............. ......................................... ............................................................ 25

HIGHEST AND BEST USE ............................................................................................................................... 35

DESCRIPTION OF IMPROVEMENTS ........................................ ...................................................................... 38

SECTION 6 ............................................................................................................................................................ 42

SALES COMPARISON APPROACH ....................................................... ......................................................... 43

COMPARABLE SALES MAP ........................................................................................................... ................. 44

COMPARABLE BUILDING SALES ............... ..................... ...................................................... ......................... 45

BUILDING SALES ADJUSTMENT GRID ...... .............................. ................. ..... ................... ............ ....... .......... 50

SUMMARY OF BUILDING SALES ............................................................... ..... ... ...... ................ .... .. , ............... . 51

SECTION 6 ................. ........................................................................................................................................... 53

INCOME APPROACH TO AN INDICATION OF VALUE ....... ............ .. ............. ................................................ 54

CONTRACT/MARKET RENT ............................................................. ....... ...... ........................................... .... ... 55

INCOME PROFORMA .......................................................................................................................... ............ . 64

CAP IT ALIZA TION RATE ................................................................................................................................... 65

SECTION 7 ............................................................................................................................................................ 68

EXPOSURE TIME ............................................................................................................................................. 69

CORRELATION AND FINAL VALUE CONCLUSION ....................................................................................... 70

CERTIFICATION AND STATEMENT OF LIMITING CONDITIONS ................................................................. 72

lv Dovid c· Jones & l'issociot;os


SEC110N 8 ................................................................................................................................................ ............. 76

ENGAGEMENT LETTER ........... ....... ............. ...... ........................................................ ..................................... 76

TAX DATA ...... ...... ................ .... ......... ............. ...... .......... ... ... ......... ......... .................... .. ......... ............................ 79

RENT ROLL ...... .......... .... ................................ .. ................ ............. ..... ........ ..... ............. ...................... ............... 81

SUBJECT PHOTOGRAPHS .................... ............................................ .. .......... .......... .. ................ ................ ... .. 82

SECTION 9 ............................................................................................................................................................ 93

QUAUFICATlONS OF DAVID E. JONES ................ ...... ................................................................................... 94

INVOICE ................................................................... ...... ............................................. ...................................... 98

v David £• Jones & 11ssociates


SECTION 1

1 David 13· Jones & l'l«ociat'-S

DATE OF INSPECTION:

DATE OF REPORT:

EFFECTIVE DATE OF

VALUATION:

LOCATION:

LEGAL DESCRIPTION:

SITE DATA:

Sile Size

Excess Land

Zoning

Highest & Best Use

Utililies

BUILDING DATA:

Construction C lass & Type

Construction Qualily

Overall Cond~lon

Highest & Best Use

Gross Building Area

Net Rentable Area

Number of Unil.s

VALUE INDICATIONS:

S.C. Approach

Income App(oach

VALUE OF NON-REALTY

INTEREST:

COST OF REPAIRS OR

ADDITIONS:

CONDITIONS OF APPRAISAL:


EXECUTIVE SUMMARY

October 29. 2013

November 1, 2013

October 29, 2013

625 Gordon Street, Corpus Christi, Texas

Lindale Par1< #4, Block 40, Lot 9, Nueces County, Texas

''As Is"

- 69,675 sguare feet(+,-) or 1.5995 acres(+,-)

None

"RM-1"

Mutti-Famlly Residential Development

Public

EXISTING

Class "D" Type ·Apartments"

Fair-to-Average

Fair-to-Average

Apartment Complex

38,102 square feet(+,-)

28,947 square feet(+,-)

42

11ASISfl

$1,840,000

$1 ,840,000

Not considered - FFE

Assumed none

"fls is"

2 David li· jone$ & II$$Ociate$

FINAL CONCLUSION OF

VALUE:

CRITERIA OF CONCLUSION:


Real Estate

FFE

Goodwill

TOTAL

"As Is"

$1 .840,000

$0

so $1 ,840,000

The final opinion of value was based on a weighted average applying

the Sales Comparison and Income Approaches to Value.

3 Dovit! t· Jt>n&S & flssociotes

Corpus Christi- Gordon Street Apartments - REVISED

SECTION 2

4 Dovid t:· Jon.s & 11ssocl•t•r


CERTIFICATION (AS REQUIRED BY USPAP)

I certify that, to the best of my knowledge and belief:

-the statements of fact contained in this report are true and correct.

-the reported analyses, opinions, and conclusions are limited only by the reported assumptions

and limiting conditions and are my personal, impartial, and unbiased professional analyses,

opinions, and conclusions.

- I have no present or prospective interest In the property that is the subject of this report and no

personal interest with respect to the parties Involved.

• I have no bias with respect to the property that Is the subject of this report or to the parties

involved with this assignment.

- my engagement in this assignment was not contingent upon developing or reporting

predetermined results.

- my compensation for completing this assignment is not contingent upon the development or

reporting of a predetermined value or direction in value that favors the cause of the client, the

amount of the value opinion, the attainment of a stipulated result, or the occurrence of a

subsequent event directly related to the intended use of this appraisal.

• my analyses, opinions, and conclusions were developed, and this report has been prepared, in

conformity with the Uniform Standards of Professional Appraisal Practice.

·David Jones made a personal inspection ofthe property that is the subject of this report.

• Kamle Dorris provided significant real property appraisal assistance to the person(s) signing this

certification.

- I appraised this property last year for the First National Bank of Edinburg who was bought out

by Plains Capital Bank therefore I appraised the subject for the same client about a year ago.

Dated: November 1, 2013

Appraiser

5 DRvid €· Jones & llsso&IRt•s


SCOPE OF WORK

The appraiser performed the following scope ofwor11 regarding the subject apartments:

1. The appraiser received the assignment verbally and via written Engagement letter from the client.

z. The appraiser discussed the assignment with the client and identified the problems to be solved regarding

the wor11.

3.

•

10

"

12.

'"'

It is understood that the client has requested the following: a self· contalned appraisal format using an "as

Is" condition. The va lue will not include FF&E per client. It Is further understood that the client is the sole

and exclusive intended user of the appraisal and the only intended use Is for the client lo make

underwriting decision regarding this property which win be used as collateral •

A written request was made to the client to provide any Information in their possession not found in pubfic

records regarding the property that would impact the appraisal process including matters of physical, legal

or economic Characteristlcs. Information requested Included: a survey, property tax ID number, income &

expenses for the past 3 years and year to-<late and a copy of the current rent roll.

USPAP Standard 1 was used to develop the appraisal. The appraiser followed USPAP Standard 2 in

writing the report.

A typical physical inspection was performed of the entire stte and an interior Inspection of the

Improvements on sne. We are not state certified Inspectors therefore we are not trained nor qualified to

judge the structural integrity of improvemenls We recommend that a certified inspection be completed on

all structures or improvements to deal w"h suCh matters as the structura I integrity of Improvements and

any repair needs. The land and building size data was obtained from government sources or from data

provided by the criBnl This data was not lndependenUy verified by the appraiser.

A physical inspection was performed of the neighborflood.

Nueces County Appraisal District (CAD) was interviewed about the history ofthe property. They provided

the current lax assessed value and the "land card." A search of comparable sales was conducted through

CAD records. Property tax rates were provided by CAD. We reviewed tax values of similar properties and

compared their assessed value with the subject's assessed value.

Prior deed records and a tax map were researched using county cler11 or appraisal district records.

The owner was interviewed by the appraiser regarding his knowledge of the property

The appraiser gathered add"lonal Information regarding the physical Characteristics of lhe subject

property.

Purchasers, sellers, real estate brokers, attorneys, tHie agents, appraisers and lenders in the marllet area

were inteNiewed for additional mar11et information.

Research and inspection of the available apartment sales proved to be reliable and adequate to analyze

and support the conclusions relative to the assignment

6 David €· Jonu & flssoc/atar

.. 111. ,.

17

IS

Corpus Christl- Gordon street Apartments - REVISED

Area economic Information was obtained from local banks, chambers of commerce, public libraries,

census data, and other sources.

Demographic data was obtained from the appraiser's proprietary databank.

The information necessary for this appraisal assignment was then compiled to produce this report in

accordance w~h the Uniform Standards of Professional Appraisal Practice (USPAP), as well as, add~ional

Instructions to the appraiser from the cfient.

Data requested from the Client deemed necessary for the dewlopment of a credible report but not

provided included the following.: None

Data requested from others deemed necessary for the development of a credible report but not provided

included the following : None

7 Doviri €· Jones & flssociot;er

Corpus Christi- Gordon street Apartments - REVISED

DEFINITlON OF MARKET VALUE

Marl<et Value is the major focus of most real property appraisa l assignments. Both economic and legal definitions

of mafl(et value have been developed and refined. A current economic definition agreed upon by agencies that

regulate federal financial institutions in the United States is:

Market yalue means the most probable price which a property should bring, ina competitive and open market wider all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assunting the pricej s not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically mctivated;

2. Botlt parties are weU infonned or well advised. and acting in wllattlley consider their own best intereslS;

3. A reasonable time is allowed for ewosure in the open market;

4. ,Payment is made in terms of cash in U.S. dollars or in terms of financial arrangemeotscomparnblc thereto; and

5. The price represeDtS !he normal consideration for the property sold unaffec.ted by special or creative financing or sales concessions granted by anyone associated wilh lhc sale.

Source: Mafl(et Value Definition follows the Uniform Standards of Professional Appraisal Practice (USPAP) and

meets the requirements of the occ Regulation 12 CFR Part 34, FDIC Regulation 12 CFR Part 323, n ue XI of

the Financial lnsmutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and the Office ofThrifl

Supervision Regulation 564.2(1) and Trtle XI of the Financial Institutions Reform, Recovery, and Enforcement

Act (FIRREA) , 12CFR 34.42(9).

Adjustment to the comparable sales must be made for special or creative financing or sales concessions. No

adjustments are necessary for those costs which are normally paid by sellers as a result of tradnion or law in a

mafl(et area; these costs are readily identifiable since the seller pays these costs In virtually all sales .transactions.

Special or creative financing adjustments can be made to the comparable property by comparisons to financing

terms offered by a third party instnutionallender that is not already involved in the property or transaction. Any

adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession but the

dollar amount of any adjustment should approximate the market's reaction to the financing or concessions based

on the appraiser's judgment

8 David E· .Jones & flrsocioter


APPRAISAL STANDARD RULES

According to US PAP standards Rule 2-2 (a): The oontenl or a Self-Contained Appraisal Report must be

consistent with the intended use of the appraisal and, at a minimum:

(i) state the identity of the dient and any Intended users, by name or type;

(10 state the Intended use or the appraisal;

(Ill) describe information sufficient to Identify the real estate involved in the appraisal Including the

physical and economic property characteristics relevant to the assignment;

(lv) stale the real property interest appraised;

(v) state the type and definition or value and cite the source or the definition;

(vi) state the elf~lve date of the appraisal and the date of the report;

(vii) describe the scope or work used to develop the appraisal;

(viii) describe the information analyzed, the appraisal methods and techniques employed, and the

reasoning that supports the analyses, opinions, and condusions; exclusion of the sales oomparison

approach, cost approach, or income approach must be explained;

(lx) state the use or the real estate existing as of the date of value and the use or the real estate

reflected In the appraisal; and, when an opinion or highest and best use was developed by the

appraiser, describe the support and rationale for that opin ion;

(x) dearly and conspicuously:

state all extraordinary assumptions and hypothetical cond~ions; and

state that their use might have affected the assignment results;

(xiO lndude a signed certification In accordance wtth Standards Rule 2-3.

PROPERTY RIGHTS APPRAISED

Property rights appraised were "Fee Simple." Fee Simple is defined as "Absolute ownership unencumbered by

any other Interest or estate; subject only to nmnauons of eminent domain, escheat, pollee power, and taxation.

(American lnsmute or Real Estate Appraiser, The Appraisal or Real Estate, 8th ed.; Chicago: American lnsmute

of Real Estate Appraisers) This appraisal, however, only considers surface rights.

9 Dt:vid £· Jones & flssoelobcs

Corpus Chr lstl- Gordon Street Apartments- REVISED

THREE YEAR OWNERSHIP HISTORY

The Unifonn Standan:ls of Professional Appraisal Practice requires a three-year sales history or property being

appraised. We are required to consider, analyze and report pending recent agreements, options, lisUngsand sales

lnvollllng the property being appraised. Texas laws relating to the disclosure and confidentialky or real property

sales dala often resutts In undisclosed sales prtces. A reasonable effort was made 10 oblaln Information not

available to the public.

The current owner of the property is Gordon Street Apartments LLC per tax records.

The owner (Gon:lon Street Apartments LLC) reports that the subject property Is not under current agreement or

option and is nol offered for sale on the open market. Accon:ling to public records, the subject property has not

otherwise changed hands during the past three years.

OVERVIEW

The appraiser was contacted in October 2013 by Plains Capital Bank. the intended user, to conduct an appraiSal

for market value. The subject property iS genera lly described as 69,675 square feet or 1.5995 acres :tor land

improved with an apartment complex. The sfie abuts single-family residences to lhe north, single-family

residences to the south, Gordon Street & beyond are apartments to the east and Swanther Drfva & beyond is

vacant land to the west. The intended use of this appraisa l is for the client's use as a tool for making an

underwriting decision using the subject property as collaleral. This is the only Intended use or the appraisal and

does not Include further use of the report for any reason. The knowledge level of the cllenl and their customer of

this property were considered in the appraisal process. Others may not have the same knowledge level or intended

use. The report is not intended to be used as a marketing tool by the owner, buyer, seder or their agents. Land

and building siZe data was obtained from government sounces or from recon:ls provided by the c~ent and were

not Independently verified by the appraiser. The appraiser used an appropriate approaches and methodology to

complete the assignment and produce a credible report In compliance whh USPAP Standan:ls 1 & 2 and in

accon:lance wfih the appraiser's peers with similar experience appraising similar property. The approaches used

were the Sales Comparison Approach and the Income Approach. The Cost Approach was not considered

significant because of the age of the property. The Inclusion or this approach would nol have added to the

credibility or the appraisal process but could have actually detracted from the analysis. The deletion of the Cost

Approach In this particular appraisal compiles with the Scope of Work rule which states "The scope of work is

acceptable when it meets or exceeds: the expectations of parties who are regularly Intended users for similar

assignments; and what an appraiser's peers' aelions would be in performing the same or similar assignment"

10 David £· Jon.s & flttoclotes

Corpus 01rlstl- Gordon Street Apartments - REVISED

EXTRAORDINARY ASSUMP110NS AND HYPOTHETICAL CONDI110NS

There are no extraordinary assumptions or hypothetical condHions regarding this appraisal assignment

ETHICS RULE

The appraiser recognizes and accepts his fiduciary relationship with the client, Plains Capital Bank, and complies

with the defined requirements of said ru le as mandated by the USPAP. Full disclosure of these rules will be

provided upon request.

COMPETENCY RULE

USPAP Competency Rules: •pnor to accepting an assignment or entering into an agreement to perfonn any

assignment, an appraiser must prope~y identify the problem to be addressed and have the knowledge and

experience to complete the assignment competently; or anematively, must

1. disclOse the laCk or knowledge and/or experience to the Client before accepting the assignment,

2. take all steps necessary or appropriate to complete the assignment competently: end

3. describe the lack of knowledge and/or experience and the steps taken to complete the assignment

competently In the report.•

The appraiser has ample experience appraising similar property In the market area and thereby satisfies the

competency rule.

11 Davit/ E· .Jo"cs & fl ssot:iatos


SECTION 3

12 David E· Jon.s & flssociotes


TEXAS ECONOMIC TRENDS

Key Texas Economic Indicators r .... -~ nortarm employment II>Ut'65ed byo.<~oo jobs clJmo Al9J>t :!013.-August:t012endAug\dt :!013, r..., .,..1 11Clr0m"''"*"""'"lnoeasedby274)110jobsor25percmt

Consunwr Pr1c(!o index

ikr..Ot - ~ ... ,....,... ... m .l ll.l.•.!!iO _.,_ ] Dl.9 .u.s. ...... - - - - u.s. .......... ..,,.,__

.... lllllllle\ .. 11).1 ...... ,..

w 1,.,.,.. .... 100 1111

- Oon:I-JOEWII--lllll0 11i16!!10 ]-Ill(· - 11.1. 99.1

9111 IllS. I» w ---·-o---Teu•Hooulng Porm<U

To .. , No .. Reslolontl.ll Buldlng Con51Ncllon Contr.ltts - -~~-':w-:r-" ll ~-· ~ ----~~ ~ .Afl.l

:w~ ..... _ .... _ .. ,'

~~~~~1 ----------------~w~

13

Ow<tt<o Pil" yoar, Te<o• oddod jobs In oU at mo 11 mojo< lndus17io<, Including ~lend bushH> ~ ll3do. lrlinlpOrtotlon end udllloi, ll!isureend l1<lopllallly, tdiJCal!o<\lllld ,_, '"""(I)Mirucdon,rrirlrgand~--ocMlo!. lr'onNI!on.-......OS.end~

Untmplo~on!Rot• .. - a. .... _,.., .... .OC4 ll lli410

l"....'t: .. ] ~ - u - us. -I 73'11

Uli w 1111

lou Nonl;um Employmtnt

.. -. (hoogo ... _,...,.. . ,

:1----------------__.nJ w

lll>ngt In NOIIf>nn EmploJTODIII

Mortgogo Forodosum

David c· JDnos & FlssDdates


ltvu l Tracking the Texas Economy, continued -

.. ~-

~dynamic Texas economy Is ever-<hanglng as It responds to ntWchall~nges and opporiUnltles. Go 10 our website at www.ThtTtxr11honomy.org to find ma<e dct•lk'<l ~t~llstlcs on the Trns economy In addllloo to timely updates.

Soa~tl of the state's ~ e<onomlc lndJrata<s are pUblished In every Issue of the CDmpuolle<'s F&al Nom newslenet which also offen an In-depth loot at mpkS and Issues affealng the Tem economy. To gfl J<IUI frtt sulnalption to lls<alllotes. go to IJWW.Filto/Hotts.com.

Sign up11lrtaMMWI ~on Tlilding the laas ra..c.r,llrJight to )CHIT

lnbax" www.wlnd<lw.lllltt.tr;usl~-

14 David E· Jones & flssoclates

Nonfilnn Emplovment Texas United States

Priv;ne Employment Texas United Slnles


Table I Texas :and U.S. U.bor Mlrlceu

August 2013 II,IS4,700

135.961.000

Ausust20!3 9.426,400

I IS.21R.OOO

AuGust 2012 10.896,200

Ill. 753.000

AUe:\!l!l 2012 9. 17 M OO

112.927.000

Change Absolute Pc:ra:nt

258.SOO 2.~ 2.208.000 L 7

Absolute 247.800

2.291.000

£mml 2.1 2.0

Actual Seasonally Adju<to!l Unemployment k;ste Augu<!2013 Ausust2012 Augu.st2013 Augu<t 2012 Tc<as 6.3 6.9 6.4 6.8 United St.ates 7.3 R.2 7.3 8.! Sources: Texas Worlcforoe Commi1Sioo ond U.S. Bureau or LA!x>r Statistics

Table2 T eus lndunrid and Go• ern.mc:nt Se<:tor JUnked by Employment Growth Rate

fmm AU!!!!!! 2012to August 2013

S::b!na' ~ lndu.<UV August 2013 Augyst 2012 Abwlutc ~

I Mining :and Logging 291 ,700 276,900 14,800 S.3 2 ConstnJction 623,400 595,600 27,800 4.7 3 Ld.!ure & Hospitality l.ISS,IOO 1.109,SOO 45.600 4.1 3 Professional & Ouslnes~ Scrvicd I,4R6,SOO 1.427,900 SR.600 4.1 5 lnfonnndoo 203,100 196,800 6,300 3.2 6 Tmdt 1,781,000 1,734,400 46.600 2.7 7 Financial Acti,,itie:s 680,100 665,AOO 14,700 2.2 8 Education & Health Services 1,492.800 1.463,000 29.800 2.0 9 Otbcr Servi<>cs 390,300 385,400 4,900 1.3

10 Governrncnt 1,728,300 1.717,600 10,700 0,6 II MGrlufncturing 871 ,900 &11,200 700 0 I 12 Tm:nsnonar:ion. Warehnudna1 lJt1l11iet 4S0,500 4S2.SOO -2,000 -04 Sources: Texu Workforce Comrru~lon and Reo! ll<tat< Center at Texu A&M University

Tobie J Texas Industries· and Qovcmment' • Shores of Employment

lndustrv Mining and Logging Cun.•troction Manufacturing Tmde Trnnsponation. Wan:housmg, Utilities lnfonru~tion

Fin:mcw Activities Pmf=ional 3Dd Business Services Educ:~tion and Health Serv!Cfi Letsure and Hospotality OU~er SeMccs

August 2013 2.6 5.6 7.&

16.0 4.0 1.8 6.1

13.3 13.4 10.4 3.5

August

l22Q 2.3 5.0

13.4 17.9 4.3 2.S 6.S 9.2 9.6 11.7 3.8

Oo"UDITX:nt Sector I 5 5 16 7 Sourc<>: Ttx~< \Vorl< force Commini0t1 and Real Estate Cmtcr at TCX8S A&M Unh·mity Nme: Components may not add to 100 due to rounding.

15

Rank I 2 3 4 5 6 6

8 9

10 II 12 12 12 15 16 16 18 18 20 20 22 23 24 25 26


Table4 Texas Metropolitan Areas Ranked by Employment Growth Rate,

August 2012 to August2013

Metro Are-.1 Percent Growth Rate Odessa 5.2 Midland 4.6 Dallas-Plano-Irving 3.7 Fort Worth-Arlingion 3.6 Houston-Sugar Land-Baytown 3.0 Corpus Christi 2.9 Austin-Round Rock-San Marcos 2.9 Texas 2.4 Longview 2.4 Laredo 2.3 College Station-Bryan 1.9 Abi lene 1.7 Victoria 1.5 San Angelo 1.5 Lubbock 1.5 Amarillo 1.3 McAllen-Edinburg-Mission 1.2 Waco 1.2 Killeen-Temple-Fort Hood l.t Brownsville-Harlingen 1.1 Sherman-Denison 0.9 San Antonio-New Brnunfels 0.9 Beaumont-Port Arthur 0.7 EI Paso 0.6 Wichita Fulls 0.2 Tyler 0.1 Texarkana 0.0

Source: Texas Workforce Commission

16 /)avid c· .Jones & flssociat es


Table 5 Texas Metropolitan Areas Ranked bv Unemployment Rate, August 2013

Rank Metro Area I Midland 2 Odessa 3 Amarillo 4 Abilene 5 SanAngclo 5 Lubbock 7 Austin-Round Rock-San Marcos 8 Victoria 9 College Station-Bryan

10 Longview II Wichita Falls 12 Corpus Christi 12 Fon Worth-Arlington 14 Dallas-Plano-living 14 Sao Antonio-New Braunfels 16 Houston-Sugar Land-Bay1own 16 Waco

Tens 18 Shennan- Denison 19 Laredo 20 Tyler 21 Killeen-Tcmplc-Fon Hood 22 Texarkana 23 El Paso 24 Beaumont-Pan Arthur 25 Brownsville-Harlingen 26 McAllen-Edinburg-Mission Source: Texas Workforce Commission

17

Unemployment Rate, Percent 3.2 3.9 4.7 5.0 5.1 5. 1 5.2 5.3 5.5 5.6 5.8 5.9 5.9 6.0 6.0 6.1 6. 1 6.3 6.4 6.6 6.8 7.1 7.2 8.7 9.8

10.0 10.8

!>avid li· .Jones & llssociatcs

Corpus Christl - Gordon Street Apartments - REVISED

CORPUS CHRISTI MSA PROFILE SUMMARY Corpus Clui~li MSA Augusl 2013 ( /va"'U\. tJI.Ii<e5. Son PT.rkiol

Industry Composition ·-··-·--

-Employment by Industry t..&<nh f Cl\anqe

., " "'" ... .. ..... .. ,,.._ 191,0l0 191JDD ... .., ITlO 04"

!"'••1..1Qj;Jr"4. ..W CI.JMwdul 71, 100 - ,.., ... .... ~ ...... .,.,. ..... 10.(1)) 100 .... T~, ~.andt.dl!w.s 33,<QO 33,400 »..ll> 0 .... - 2,000 l/1<» 2,10l 0 00'1< -- >:roo ..... 7,T'O) 0 .... ""*'--• Wid~ s..vites 1S,11X! ...... 1$,&0) :!00 ,..,. EdtUJOn lltiCI tteMh~ 32,000 3 1,1100 31,ti:IJ 200 .... ........ ond~ 2<,000 - 23,70!1 - ·I"' ov...s..- 1,100 $.200 7,80:1 .... ·1.210

""""'"""' "'·""' ..... 31110:1 ·100 ..... ' !lnmml ('rnwlh Rai P. for Total Nonagnr.ullural Fmploymenl

tUN

'"'

Wages by Industry (In millions) Ut OU.n&r 2013

lndusiJy Soze Class Uucn 2013 AMWJ 01<.-q< ""' - ....... , ......... ~ · ... ..... ... c~ ...... ··- .. o. t bo•~·"' ..... 2..,. • IIIlO• .. ..... 22ft ....,. ,...,. • - ,. 11111 ._ ... .... .. "" r - Sf 18~1 10"" .,. 1 .... • .,.,., •• 20313 1 .....

·100 ...... ' ~- 301 11,901 1t.a%

0 o ... • ,...., ..., 141,427 ..,.., .,.. "'"" • 10.1P 1 .... 14,1JO '·"' 1,000 ,,.., 2 ... I{>M '·'"" ....

1,2)0 .6.1 .. 1 , .. ...... 1,. 14 .... ""' '·"' 0 0 ... 0 ..... .... ·2.~ '""' I.Oll 1 012 100,~

~ ~-----------------------------------------------------------4

Avatoble at t ffp·ffW'.w. llacel'l oom

18 David Ei· Jooes & flsroclot es

Cltv;

Mondo

JAH

fEB MAR

APR MAY IUN

I UL

AUG

SEP OCT NOV DEc

AHNUI\l TOTAl

MOHllllY AVG

Corpus Christi- Gordon street Apartments- REVISED

CORPUS CHRISTl SALES TAX RECIEPTS COrpus Christi -· Annual -· An.nu.l

ZOB lOU lOU 2010 llo6 llo6 llo6 '16

SSA-,7~291 3.41" $5,3LS,948 II.ZJK $4,496,430 ll.B4K ~020,475 ·lli.SSK $7,/m.sso L24" $7,537,147 u.a&K 56.619,275 12.49% $5,884, 361 ·13.31" $5,598,195 7.25% ss.zu.~ :U.UK $5,891,775 0.95% $3,855,0!1 ·U.SOK ss.M:z.n• S.lB')! $5,411,310 n.•:z% $4;457,638 ·2.5~ $4,574,1142 ·1.16K $7,240,784 8.26" $6,638.241 9.89!1 $5,086,211 12.90% $5,390,957 LUK $5,81.8,085 o.sm $5,437,803 IO.S3" $4,902,182 LS.35% $4,249,670 0.40% S5.960,5S5 6.36% $3,622,132 IUS!! $4,934,!107 1G.l3% $4,480,$10 7.nK $6,999,820 3.2~ $6,778,701 7.34!1 S5,3B,148 32.30% S4,rn,l47 ·9.A4K $6,2&S,087 1.0$" $6,099,182 21.29!1 S$,028,492 13.:24% $4;440,731 LOl!l $5,315,027 1.n" $6,208,534 7.64!1 $5,767,858 2S.50ll $4,5!15,903 7.56!1

$6,366,855 2.~ S6,196,US 13.92!1 $5,439,022 U.SA!I S5,8'U,481 46.39% $4,0lS,7&4 -6.09!! S4.286,805 LlS!I

$7Ual.1:10 U.nK $62. 721.4Jii l.2.lmli $55,'191,660 · l.JCIK

$6.3o5.9U 5.S1K $6,-,411 17- $5,226,716 lL69% S&,OiiS,sn ·L11K

MSAMAP

$t PIUI ----··-Mo1gon Sinton

F'a!mAttl

"'Soon ... ., RoliSlO<o'<l

~"!! r.cen-Ten voro. , .... p

Tift Taft AauchwHI

19

0 "9'>ry

Fulkm

Rockpol1

® Amnsas

Pooo

P<~tt Ar.ansat

-Z009 llo6

$&.S17,9ZO 3.0S!I

$5,717.4S4 10.47K

$4,405.~ .O.U!I $4,628,34.S 3.61"

SS.UL923 ·9.82!1

$&,212,597 ·14.96K

S4,1.S9,514 ·U.44K

SS,l7L19l ·10.45K

$4,1'16,241 ·LS.46!1

$&,272.111 · 10.97K

S4.m,76J ·14.90% S4,229,690 ·17.92!1

$S1 ,31.1,1All ·1.61"

S&,ns,"7 l · 7.64!1


SUB-MARKET AREA ANALYSIS

The purpose of analyzing the sub-mar1<et area is to determine how the operation of social, economic,

governmental, and environmental forces influence property values in the specific area in which the subject

property is located. The sub-mar1<et area analysis provides a means of analyzing the general influences on all

property values and the study of a particular subject property.

A SUB-MARKET AREA is defined by this appraiser as a portion of a larger communny, or an entire communny,

in which there is a homogeneous grouping of lnhaMants, buildings, or building enterprises. lnha b~ants of a sub

mar1<et area usually have a more than casual comm~ment of Interest. Sub-mar1<et area boundaries may consist

of well-defined distinct change In land use or in the character of the inhab~a nts. The area most closely surrounding

the subject property, whether it contains residential properties only or a mixture of commercial and residential

properties, is called a sub-mar1<et area. A sub-!f1ar1<et area may also designate an area comprised solely of

commercial or industrial properties, atthough tha term 'district" is often used for such properties.

SUB-MARKET AREA ANALYSIS - The objective analysis of observable andfor quan11fiable data Indicating

discernible patterns of urban growth, structure. and change th.at may detract from or enhance property values.

SUB-MARKET AREA LIFE CYCLE - The life of a sub-mar1<et area usually involves the following states, varying

only in intensfty and duration: growth and development, stabilny, transition and decline. This pattern may be

followed by renewal and rebabi!Halion (revitalization), at which point the cycle is repeated.

SUB-MARKET AREA BOUNDARIES are identifted by determining the area in which the forces !Jperate on

properties in the same way that they operate on the property being appraised. II may be seen as a grouping of

properties w~in physical boundaries. Physical boundaries are tess significant than are the boundaries of

influences on property values, even though influences may end at observable physical points.

20 David £· Jonu & flssociates

Caoani>S Fiald Naval Ourlv!nn.+.

{


AREA MAP

~ @)

Corpus Chrlsll

SUB-MARKET AREA DATA

LOCATION: The subject sub-marl<et area Is located Inside the Corpus Christi MSA.

CENSUS TRACT: The sub-marl<et area is within the foDowing census tract: 48355-0021.00

BOUNDARIES- We have defined the subject sub-mar1<et area wnh the following boundaries:

North - Interstate Highway 37

East - Corpus Christi Bay

South - State Highway 358

West - State Highway 286

MAJOR HIGHWAYS: Major highway serving the defined sub-marl<et area is State Highway 37.

SCHOOL DISTRICT: Corpus Christi Independent School District Is the school disll1ct covering the subject sub

marl<et area.

21 Davit/ li· Jones & llssociatos


LAND USE - We have surveyed the sub-mar11et area and found these general uses of both developed and

undeveloped land.

DEVELOPED:

Single-Family Residential - 55%

Multi-Family Resldentlal - 10%

Office - 10%

Retail - 12%

Industrial- 5%

Other-3%

UNDEVELOPED:

Vacant- 5%

ZONING: The predominant zoning within the sub-marl<et area is single-family residential. Other zoning

designations include oommerdal, retail and industrial.

CHANGING LAND USE: Within the last few years, we have noted that land use has not changed significantly.

SUB-MARKET AREA CHARACTERISTICS: The following describes sub-mar1<el area characteristics.

Life State - The subject sub-market area Is growing at a steady pace at this lime.

Maintenance & Condition - Maintenance and property cond~ions are generally considered

average w~hin the sub-market area.

Property compatibility - There are a variety of property types within this sub-marl<et area which

Is typical and average of other sub-mar11et areas in the region. Therefore, property oompatibilily

is oonsidered average.

Appeal & Appearance- The sub-mar1<et area has appeal and appearance.

Protection & Adverse Influence -Corpus Christi is subject to Hooding and wind damage from

hurricanes due to the proximlty to the ooasL

Developmental Potential- Corpus Christi has good potential for development due to liS many

appealing characteristics.

Rental Demand - Residential rental demand Is good and retail rental demand Is good at this

time.

Public Transportation- The sub-market area has average public transportation service.

Access - One of Corpus Christi's best features is liS Central Business District

Police & Fire Protection - Police and fire protection is oonsidered average.

22


UTlLmES-Corpus Christi has an adequate municipal and private utilay infrastructure to accommodate continued

growth. The following seNices are available:

Water- Municipal water along major highways and streets

Sewer- MuniCipal sewer along major highways and streets

Electric- Underground or ovemead power lines

Gas - Natural gas lines along major highways and streets

Telephone- Underground or overhead phone lines

TYPICAL RESTRICTIONS: The sub-market area has typical private deed restrictions, cky zoning and building

codes.

AGE RANGE OF IMPROVEMENTS: Buildings within the sub-market area range In age from 0 to 50+ years.

VALUE RANGE OF IMPROVEMENTS: Values range from multi-minion dollar shopping centers to $180.000

single-family residential homes.

VACANCY RANGE AND TIME - From our survey or the sub-market area, we have estimated the following

average vacancy rate and time on the market

Single-Family - 5%, 90 days

Multi-Family - >5%, 30 days

Retaii -10%,1BOdays

Office -10%, 180 days

Industrial - >10%, 280 days

RECENT DEVELOPMENTS: There are no major recent developments in the area to report.

APPARENT EASEMENTS: The sub-market area has typical utility and public easements.

DETRIMENTAL INFLUENCES: We observed no detrimental influences on the subject sub-market area.

COMMENTS: The subject sub-market area is average and typical of surrounding and compethive sub-market

areas. There is ample land available for development with utilities, zoning, and easy access. A majority of the

buildings in the subject sut>-mari<et area are tenant-occupied. Sub-mari<et area trends are average.

23 DavitJ Ei· Janes & flsso<iate<


•

SECT/ON4

24 David £· Jon.s & flssoclates


SITE DESCRIPTION & ANALYSIS

In describing land or sites we have detailed a list of factual data, induding a legal description and infonnation on

pertlnenl physical characteristics. Land is known as a site when it is improved to the extenl thai it is ready to be

used for the purpose for which H was intended.

A site can have off-site improvements only, such as sewers, ulllity lines. access to roads, and so forth, thai make

It ready for its Intended use or development; or it can have on-site improvements, such as buildings, driveways,

landscaping, ate.

We carefully studied factual data In relation 10 the sub-market area characteristics that create, enhance, or detract

from the utifrty and marketability of the land or site as compared with competing comparable land or sites.

The purpose of site or land description and analysis is to provide the following: (1) a description of the property

being appraised; (2) a basis for an analysis of comparable sales; (3) a basis for allocating values to land and

Improvements; (4) an understanding of the property being appraised and its present use: and (5) a foundation for

detennlning the property's highest and best use.

One principa l objective of a land or site analysis Is to gather the data that tends to indicate the highest and best

use of the land or site as though vacant and to opinion land value in tenns of that use.

Fee simple ownership is the most common ronn or property ownership. It affords the most rights of ownership.

We routinely make visual chedks for easements and encroachments. However, a title report, deed search,

abstract or other means may be needed by the users or this report.

Site Sl:te. shape, dimensions, street frontage, width, depth and other factors may enhance or detract from value.

Comer loiS are considered more desirable for commercial tracts but of no greater value ror residential tracts.

Excess land is the portion of a property that is not necessary to serve existing improvements. Land-to-building

ratios are considered in this report.

25 David E· Jones & flssocial:es


LOCATION MAP

(Approximate Boundaries- For Illustration Only)

Lo·

SITE DATA

The following data serves as general descriptions of the subject. Attached maps further identify and describe the

stte.

LEGAL DESCRIPTION: The legal description is •Lot 9, Block 40, Lindale Par1<. #4," Nueces County, Texas.

26 David E· Jonct & !lstociates


LOCATION/ACCESS: The subject property is located at 625 Gordon Street, Corpus ChristL The she is accessed

by Swanther Drive. There are two driveways Into the sHe. Traffic speed is approximately 30 mph along Swanther

Drille & approximately 20 mph along Gordon Street. There are two traffic lanes at the site. The she is not a comer

lot. We observed moderate and typical passenger car traffiC on swanther Drille & Gordon street during our

Inspection. The Texas Highway Depanment has furnished us wnh a Traffic Count Map which shows the nearest

traffic count to be 380 vehicles per day along Botsford Street as of the 201 o traffic count period.

Traffic Count Map

~70

'0 14190

27 David E· Jones & flssociat•s

Corpus Oulstl- Gordon Street Apartments - REVISED

PHYSICAL CHARACTERISTICS: The total size is 69,675 square feet or 1.5995 acres according to Nueces

County tax maps and records. The property is slightly Irregular in shape. The sHe has about 250-feet fronting

Swanther Drive & about 215-feet fronting Gordon Street. The present improvements use all of the land available

therefore, there is no excess land Due to the location or the Improvements in relationship to Swanther Drive &

Gordon Street. the improvements have average commercial vlslblltty. The stte parking has about 13,824 square

reel being asphatt surface In average condttion. There are 42 covered parking spaces (or 1 parking space per

unft) as well as additional uncovered spaces at the property entrance. The City of Corpus Christi requires multi

famDy developments to have at leaS1 one parking space for every 2 bedrooms. This amount of pa!l(ing surface

does comply wHh current use and zoning regulations. When appraising a sHe with existing improvements and wtth

no change In Intended use being considered, the appraiser relies on the assumpllon lhat current utiiHies are

adequate based on questions posed to the property owner and our research with the appropriate utiltty companies.

TOPOGRAPHY & VEGETATION: The subject site is level to street grade. Topography maps show the site to be

at about 30-feet above mean sea level. The vegetation on site is native grass and trees. At the time or the sHe

visit, we found no standing ftood water on the subject We are not qualified to comment on designated wetlands.

Topography Map

28 David €· J onos & ll«ociates

COrpus Christi- Gordon ~Apartments- REVISED

FLOOD ZONE: According to the Federal Emergency Management (FEMA) Community Panel #485<4640169C

dated July 18, 1985, the subject appears to be located in a Zone C or -areas detennined to be outside 1 DO-year

Hood plain. • Due to the natura of our resource, we racommend a civil engineer surwy the sfte.

Flood Map

Moderate to Low Risk Areas

tnecttw Ott• Ju!y 11, I t&

In communtiH th.ll P¥11ct>ate illlle NFI>, llood lm .. lnCt II--to II P<opet1y o""""sllldrlftors 111 thtst lonK

ZONE DeSCN>IIOII

AlGa of moderate Oood P\a~td, UIUDIIy lt'lt are; between the lrnrts o111\e 100-yea1 and SOO.,.::at ftoo<H. Art

8 Olld X (IIIOded) arso used ro designate base noooPiaiM orresser nuaras. such as •ra•s ~rotecled DY rr-ees ~om tOO·ve•r flood, or shallownoQdlng artat w.th avttagt dtp!M of len than Qnetoot or dra111•1a• •rees tttt ttltn • square mile.

Cane! X AJoa of mtnrmat nood nauAl, usutll'f dtpt<ttd on FIRMs as abOVt tht SOOo-,.or nooa tawl tun~-dl

29 David It· Jon•s & llsso<iot•s


APPARENT EASEMENTS/ ENCROACHMENTS: A professional engineering survey was not provided and would

be needed to establish easements on the stte. We do, however, assume typical utiltty easements. We assume

there are no adverse easements or encroachments.

30 David € · Jonu & llnociat es


ZONING: The C~y or Corpus Christi provided us with zoning maps, which show the subject to be located in an

"RM-1 • Multi-Family One" zoned area. Generally, this zoning designation is intended to provide a variety or

housing types at multi-family densHies. Current business use appears to be allowed by the "RM-1" zoning

regulations. We found no signs or apparent zoning change on the subject property or adjacent properties at the

time of the lnspec1lon. Our appraisal is subject to there being no zoning change that would affect the subject s~e

or adjacent sites.

Zoning Map

31 David 13· Jon•s & flssodates

Corpus Chrlstl- Gordon Street Apartments - REVISED

ABUTTING PROPERTY -We physically observed the abutting property in all directions to report the following

land use to the reader: north - single-family residences, east - Gordon Street & beyond are apartments, south -

s ingle-family residences and west - Swanther Drive & beyond is vacant land. The subject s~e and the adjacent

sHes seem to conform to each other from a marlletabiltty standpoint There is no negative Impact created by use

and physical appearance from the adjacent sites.

Aerial Photograph

(Approximate Boundaries- For Illustration Only)

32 David c· Jonos & flssociatos


OFF..SI'TE (STREETS) IMPROVEMENTS: Swanther Drive & Gordon street are aspha~·paved, two-lane streets

with concrete curbs, storm drains and concrete sldewall<s. These off-site improvements appear to be in good

shape and are maintained for public use. We observed no alleys or railroad rights-of-way on or through the site.

Traffic speed is approximately 30 miles-per-hour along Swanther Drive & approximately 20 mnes-per-hour along

Gordon Street. The nearest stop sign Is about 650-feet to the east ofthe subject site at the Intersection of Gordon

Street and Alameda Street.

TAX DATA: The subject property is assessed for property taxes by the Nueces County Appraisal District (CAD)

as found in Tax Account #260812. The real property is currently assessed at S1, 114,671 . Estimated annual

property taxes are S28,609 based on 20t 3 rates of 2.566544%. Because CADs are public Institutions, there are

often limitations on the comparable data which the CAD may use to assess a property. It Is likely the CAD did

not have access to the same breadth of comparable data that we had for this report. It is likely, for that reason,

that over my last 28 years of appraising properties in Nueces County, I have consistently found that assessed

values are typically 50% to 200% lower than property sales prices or pending sales prices within a three-year

time period. It should be noted, however, that many of the taxing jurisdictions w~hin Nueces County, collectively

(when combining county, city, school. EMS, college, etc.) are among the highest tax rates In the State of Texas.

Based on my experience and knowledge of this market, it seems reasonable to conclude that the Nueces

County tax rates are high to ofiset the fact that the appraisal district is unable to assess properties at or even

close to their market values.

33 David £· Jones & llssotlates


SUMMARY: In summary, the subject has the following posHive and negative characteristics.

PosHive:

Location - highly desirable in growth area near employment centers

GOOd % of usable area

Good frontage-to-depth ratlo

Positive surrounding properties

All util~les

Good access - driveways, tum lanes, moderate traffiC speed

Good visibility without restrictiOns and at road grade

Proper zoning

Typical easements

Not within 1 00-year flood zone

Level topography

Negative:

Unlikely sul>-dMdable

The subject site is typical and average of surrounding sites. WHh average exposure and vislbifHy, the sHe Is suited

for its current use. The frontage-to-depth ratio is considered adequate for typical utilization. Ingress and egress

has been rated as average from our obServation.

DEED RESTRICTIONS: A deed search is beyond the scope of this appraisal assignment. We, however, assume

no deed restrictions exist that would adversely affect the value, use or marl<.etabllity of the subject site. If the

subject sHe is restricted by private deed restrictions not provided to the appraiser the impact on value could be

significant. We have relied on the client's !Hie company to provide us with deed restrictions and have received

none.

HAZARDOUS MATERIALS & WASTE: We observed no material considered by us to be hazardous. However,

please see our Hazardous Material Disclaimer section set forth In the limiting Conditions.

DATA SOURCE/DISCLAIMER: Data used In the appraisal report regarding the stte was provided from various

outside sources deemed to be accurate. However, we make no warranties, expressed or imprled, regarding t~te,

son condHions, flood hazard, hazardous material, detrimental easements, encroachments, siz.e, z.onlng, traffic or

public and private utilities. \Nhen applicable the appraiser used the following sources: the client, Nueces County

Appraisal District, Nueces courthouse records, the Geological Survey and National Ocean Service, Federal

Emergency Management Agency, Texas Department of Transportation, C~y of Corpus Christi Utility Department

and CHy of Corpus Christi Planning Department

34 David g. .Jonas & llsrodot"r


HIGHEST AND BEST USE

The Dictionary of Real Estate Appraisal defines Highest and Best Use as follows:

•The reasonably probable and legal usa of vacant land or an Improved property, wtlich Is physically

possible, appropriately supported, financially feasible, and that results in the highest value. •

Implied wHhln these definitions is recognition of the contrlbutlon of that speclnc use to community environment or

community developed goals, in addition to wealth maximizing or individual property owners .

The subject property is compatible with the surrounding sub-market area. SHe use along SwantherOrlve & Gordon

Street is predominantly muft~family and single-family residential. There is some vacant land that could be used

for development In the immediate area.

The four criteria the highest and best use must meet are as follows:

1. Physically Possible Use

2. Legally Permissible Use

3. Financially Feasible Use

4. Maximally Productive Use

1. Physical possibility use dealS with issues of land development, construction on the developed site, and the

location attributes of the she such as:

• Site- access, geological features (topography, etc.) & utility lines

• Improvements

• Location - linkages - a relationship a user has wi1h other land users

Physically Feasible: The subject propeny consists of 69,675 square feet or 1.5995 acres of land that is slightly

Irregular In shape. The lot Is relatively level and not located In a nood plain nor adversely affected by any

easements. The tract is not located along a major thoroughfare. All utilities are currently available to the site.

Therefore site size, general location, zoning, configuration, and topography would allow, but not necessarily be

limited to the uses: residential use

2. Legal permissible use deals with Issues of that control or limits the site development and construction of the

Improvements. Some examples are:

• Zoning (usually the principal legal consideration

• Subdivision regulations

• Construction codes

35 David £· Jones & flssociotcs


• Prtvate restrictions (easements, restrictive covenants. etc.)

Legally Pennlsslble: Legal restrictions as they apply to the subject property are prtvate restrictions and the

public restrictions of zoning. The appraiser is not aware of any private restrictions affecting the development of

the sne. cny of Corpus Christi "RM-1" MuiU-FamRy One zoning regulations generally allow a variety of housing

types at multi-famllydensnies. II appears thai the mulli-family apartments_are allowed by this zoning, bull he owner

should look to his own investigation to confirm this assumption. A deed search Is beyond the scope of this

assignment. We have no knowledge of deed restrfctJons on this sne. Multi-family and single-family residential uses

appear to be the only physically feasible and legally permissible uses.

3. Financial feasible focuses on the Income and cost aspects of the specific uses that are physically and legally

possible on the sne such as:

• Income considerations

• Operating expenses

• sne acquisnion cos1s

• sne development costs

• Construction costs

Financially Feasible Use: There are many factors that dictate financial feasibilny such as supply, demand, utillly

(use). economic trends, ava ilabilny of financing, and others. The supply and demand for residential land around

the subject sne is mos11y in balance. The site is not located on a major thoroughfare, Swanther Drive & Gordon

Street. As shown in the balance of this report, the existing apartments are financially feasible under current ma!Xet

and economic conditions. Research has shown that the ma!Xet rental rates currently yield the potential of a net

operating Income, which when capnBlized, would exceed the estimated land value. Therefore, removal of the

existing Improvements and placing a new structure there may not yield the highest return,

36 David ~· jones & flssociates

Corpus Christl- Gordon Street Apartments - REVISE.D

4. Maximum productivity deals with the judgment about which of the financially feasible uses generates the highest

value for the land.

Maximally Productive Use: For a sHe to be used at Its highest and best use, that use must have the highest net

return to the land while in context with the other limitation. and the proposed development must also be financially

feasible. As noted above, some foiTTl of muHI-famlly residential development would be most appropriate to the

site and most compatible with the immediale neighborhood.

Conclusion: It is my conclusion that the Highest and Best use of the site, as is, is use as an apartment complex.

The Highest and Best Use of the property, as If vacant. would be to develop as a mult~famlly residential

development.

A feaslbliHy study should be conducted before changing the current use.

37 David li· Jones & flssoeiotcs


DESCRIPTION OF IMPROVEMENTS EXPLANATION OF TERMS

The purpose· of the building description section of this report is to convey to the reader the building's design and

layout and its construction details.

An accurate building description is needed to analyze comparable sales, rental property and replacement values.

All three approaches to value rely upon the accuracy of the bu ilding description.

Many times we do not know the exact age ofthe subject's improvements. However, we can determine the effective

age by inspecting the condition of the improvements. AlSo considered is the remaining economic life of the

Improvements. The remaining economic life is the estimated period over which Improvements continue to

contribute to property value.

Gross area is de.termined by physical measurements, unless otherwise noted. Net area is determined by

estimating the usable space. Local customs call for the use of gross area to determine leasable space in most

cases. However, ifthere is a great loss of usable space in the building, net area square footage Is used for leasable

calculations.

style and classification ratings were taken from data provided by the Marshall & Swift Cost Handbook. A thoro ugh

description is provided for each clas.sification of building improvements.

The functional layout of the rooms was analyzed. Functional obsolescence can be found to be either curable or

incurable. A cure may be reached by additions to the building, modernization or superadequacy curement. In

each case an appraiser must consider the feasibility of curing the inadequacy. Incurable functional obsolescence

caused by a superadequacy is measured by capitalizing the net income loss due to the superadequacy.

Building compalibillly means that the build ing is in harmony with its use or us.es an.d its environment. Market value

is frequently diminished by incompatibility of design. Compatibility is influenced by :zoning, historical districts,

construction and maintenance costs, land value, physical features, trends and technology. Conformity means

that the form, manner, and character of structures correspond to one another.

38 David fi· Jones & llssat:iatos


DESCRIPTION OF EXISTING IMPROVEMENTS

The following data serves as the general description of the subject's existing improvements.

The subject stte has five buildings each wtth two floor elevation. It is a construction class ·o· apartment complex

with approxlmately 38,102 square feet. Construction Class D is defined by Marshall Valuation Service as building

with combustible wood· or metal- frame construction. Exterior walls are typically non-bearing wood or sandwich

panel, or non-bearing masonry veneer. Floors and roofs are supported on wood or steel joists or trusses, or the

floor may be a poured concrete slab on the ground. The quality is Fair-to-Average and the condition is Fair-to

Average. Quality and condition ratings are defined as follows: EXCELLENT - most expensive material available;

GOOD · slightly less expensive but better than average comparable; AVERAGE . typical of market; FAIR. slightly

below typical and average; and POOR · minimum material and workmanship. The subject is 50 years old with an

effective age of 25 years and 20 years of remaining economic life. The building is divided up into four, 3 bedroom/2

bath units; four, 2 bedroom/2 bath units; fourteen, 2 bedroom/1 bath units; sixteen, 1 bedroom/1 ba1h units; four

efficiency studios, an office, self-serve laundry facility and a swimming pool. It has central heat and air. The

subject has asphalt paved parking.

Building Description:

Foundation:

Structure/E.xtertor Walls:

Root:

Ceilings:

Aoors:

Partitions & Wall:

HVAC:

EledricaJ:

Plumbing:

Windows:

Restrooms:

Elevators/Stairs:

Project Amennies:

The subject buildings have reinforced concrete slab foundations.

The exterior wa lis are wood framed with brick veneer.

The roof is gabled with composition shingle covering.

The ceilings are blown-on texture over dry wall panels. There _are

decorative, incandescent light fixtures throughout the interior.

The floors are covered with ceramic tile and carpet throughout the

interior.

The rooms are textured and painted drywall over wood framing; 2' x

4• studs on 16" o.c.

The entire building has central heat and air conditioning.

It is assumed that the subject's electrical wiring complies with city

building codes.

It is assumed that the subject's plumbing complies with city building

codes

The windows are ftxed pane in aluminum framing.

The restrooms have ceramic sink and commode, mirror and

.ceramic tile fioor covering.

The subject displays no elevator. There are stairways on the

exterior of each building that lead to the 2"" floor.

The building has a sprinkler system. wnh smoke and fire detection

39 David £· Jones & flssodot;es

Site Improvements:

Handicap Faeiltties:

Land to Building Ratio:

Par!{lng lo Building Ratio:


systems.

The subject par!{ing area and driveways are asphak paved. There

is typical landscaping throughout the property.

The subject does not appear to comply wfth ADA requirements

1.83 to 1

0.36 to 1

40 DovitJ Fi· .Jones & flssoclotes


DISCLAIMER.: We make no warranties, implied or expressed, regarding the cond~ion or structural soundness of

the improvements. The scope of our assignment is limited to a walk-through and site inspection. Our estimate or

dimensions, layout, overall size, condition, and structural qual~y should not be considered the final authority and

should not take the place of a professional engineering report. It is assumed, but not warranted, that the

improvements meet all property zoning and building codes.

SOURCE.S:

Appraisers opinion

Marshall Valuation SeNice

Nueces County Appraisal District

41 David E· Jon« & flsrociato$

Corpus Chrlstl- Gordon Street Apartments · REVISED

SECTION 5

42 David E· Jones & llnoclates


SALES COMPARISON APPROACH

The Safes Comparison Approach to Value is based on sales of comparable improved properties. The sales are

analyzed as to Improvements, construction types. size, age and condition. Consideration Is also given to the

circumstances surrounding the saJe. Under the definnlon of fair mar1<et value. a sate must be between a wllfing

serrer and an Informed buyer. Safes analysis rs norma fly done by breaking down comparable sales Into un~ price

such as price per square foot. Adjustments are made to the unit values to compensate for dissimilarities in

financing terms, condHions of safe, market conditions, location and physical characteristics. Two types of

adjustments are common - percentages and doffars. Adjustments for market conditions and location are usually

derived fn percentage terms. We have chosen to use percentage adjustments throughout the process. We convert

to dollar adjustments at the summation.

COMPARABLE BUILDING SALES SEARCH SUMMARY

Typically, we would focus on the subject's sub-market for comparable sales; however, due to the lack of recent

sales acllvny, we expanded our search to Include the foffowlng Characteristics:

1. Location: The City of Corpus Christi, Nueces County, Corpus Christi MSA or South Texas

2. Improvement Size: 10 units to 100 units

3. Sources: MLS, Loopnet.com, Real Estate Brokerage Firms and Lenders

A sequence of adjustments is required wlhenever percentage adjustments are used. The first two adjustments

are for financing tenms and conditions of sale. The resulting value equals normal sales pnce. Next. any

adjustment for market condition Is made. Market condition adjustments usually represent Changes in value over

time. Finally, adjustments are made for dissimilarities in location and physical characteristics. The resulting value

reprasents the adjusted sa.les price which can be compared to the subject property. In searching the local marl<et

and surrounding areas, we found the following comparable building sales:

43 David £· Jortet & flssoe/at&s


COMPARABLE SALES \ .. 4 .. ~~

·,, . \\ -··----· l ~ • -.......; _ _...__ ..-

~.-: ·,} Nt~t~it 8<ty

44 David £· Jonu & fissodot;t<S

.,, II

COrpus Christl- Gordon street Apartme.nts • REVISED

COMPARABLE BUILDING SALES

Comparable No. 1 Identification: 238382 location: 2630 Waldron Road City: Corpus Christi, Texas Legal Description: GLENOAK PARK#2, BLK 1. LOT 1, Nueces County Land Size: 4.1607 acres (161 ,240 square reet) Building Size: 61,786 square feet II of Unit.s: 89 units Average Unit Size: 694 square feet Building Description: Class D, Garden style apartments Building Quality: Average Building Condition: Fair-to-Average Utilities: Municipal Use at Time of Sale: Apartment Complex Data Source: loopnet, Nueoes County Records Date of Sale: 4/112011 Recorded:2011011353 Grantor: CORPUS CHRISTl PROP MGMT IILP Grantee: SYMMETRY INVESTMENTS Ill L TO Tenns and Conditions: Cash to Seller Sales Price: $5,170,000 Unit Price: 556,090 per un~

45 DRvitJ E· Jonos & flsso<iRtor

Corpus Chrlstl- Gordon street Apartments - REVISED

Comparable No. 2 Identification: 238382 Location: 1901 Rodd Field Road City: Corpus Christi, Texas Legal Description: l.AKEVlEW ACRES, BLK 2, LOT 13, Nueces County Land Size: 4.837 acres (210,700 square feet) Building Size: 81,786 square feet II of Units: 98 dwelling units Average Unit Size: 844 square feet Building Description: Class D, Garden style apartments Building Quality: Average Building Condition: Average Utilities: Municipal Use at Time of Sale: Rental apartments Data Source: Loopnet, Nueces County Records Date of Sale: 41112011 Recorded:2011011358 Grantor: CORPUS CHRISTl PROP MGMT II LP Grantee: SYMMETRY INVESTMENTS II LTD Tenns and Conditions: Cash to Seller Sales Price: $3,316,000 Unit Price: $34,542 per unn

46 D11vid E· Jonu & flsroclat:u

Corpus Christi- Gordon Street Aparbnents- REVISED

Comparable No. 3 Identification: 207348 Location: 1001 Cannel Parkway City: Corpus Christi, Texas Legal Description: Lot1, Block 1, Cannel Vlllage, Nueces County, Texas Land Size: 2.97 acres Building Size: 72,549 SF #or Units: 74 Average Unit Size: 949 square reel Building Description: Class D, Apartment Complex Building Quanty: A~~erage Building Condition: Average Utilities: Pubflc Use at nme or Sale: Apartments Data Source: Loop Nel, Nueces CAD Date or Sale: 05/06/2013 Recorded: 2013017632 Grantor: 1001 Cannel LTD Grantee: ComCapp Cannel Manor LLC Terms and Conditions: Cash to seller Sales Price: $2,645,000 Unit Price: 535,743 per unh

47 David €· JtJn•s & llssot:ictes

Corpus Chrlst.l- Gordon Street Apartments - REVISED

Comparable No. 4 Identification: 213747 Location: 6730 Everhart Road City: Corpus Christi, Texas Legal Description: Lot 28, Block 11, Club Eslates #1 . Nueces County, Texas Land Size: 8.0 acres Building Size: 117.442 SF #of Units: 165 Average Unit Size: 712 square feet Building Description: Class ·o· Apartment Complex Building Quality: Average Building Condition: Average Utilities: Public Use at Time of Sale: Apartment Complex Data Source: Loop Net, Nueces CAD Date of Sale: 0612512013 Recorded:2013025861 Grantor: Chicago Trtle Ins Co Grantee: CaHon Investments Inc. Terms and Conditions: Cash to seller Sales Price: $5,625,000 Unit Price: 534,091 per untt

48 David li· Jones & llssoclotcs


Comparable No. 5 Identification: 248694 Location: 3150 Peachtree street City: Corpus Christi, Texas Legal Description: Lot 9 & 10, Block J, Jackson Woods, Nueces County, Texas Land Size: 6.36 acres Building Size: 124,640 square feet #or Units: 136 dwelling units Average Unit Size: 916 square feet Building Oe.scription: Class D, Garden style apartments Building Quality: Average-to-Good Building Condition: Average-to-Good U111itles: Public Use at Time of Sale: Apartment Complex Data Source: Loopnet, Nueces County Records Date of Sale: 12128/2012 Recorded:2012050673 Grantor: Corral street LTD Grantee: Peachtree Holdings LLC Tamns and Conditions: Cash to Seller Sales Price: $8,487,500 Unit Prtce: $82,408 per unij

49 !>avid II· Jonu & flssodal:cs


BUILDING SALES ADJUSTMENT GRID

ITE!I SU8.1£Cl Comp..-oble t1 Comparable 12 Comparable '3 Comparable ... C~fi

T~ Unit Site a Price m.oto SJ.C,S<2 Sl$,743 U •M1 sn.-Pr-rty Riohto co,.,...yed FeeS. FeeS. IIlii fees. !!l! feeS.

""" f•• $, !Ill feeS. ~ ~~~sted Sales Price Ul,oto ~ Sl5,743 Sl.&,Oll1 S4Z;I08

flnanctna Terme Cash Ceth !Ill Ceoh l!ll Caeh !!l! Caeh l!ll Ceoh l!ll Adju.stad Stlaa Price SA1otO SJ-4,542 $35,143 $34091 $62,408

ConcUtlon of $ale Nonnal H.orrnal o,; Normal ~ Normal ()')l ""'"""'' Jl! HOtmal !!! Normal Slle 1 Price SRotO SJ.C,542 5:15,743 S340V1 sn.-Marketing Condition tTime) C-urTent -'111 1l! -'111 1l! 5113 .all 6113 .all 12112 2li Time Adluattel Prlee $62,116 s~- Sl5743 Sl4.0V1 $C,656

Phyalcal Adiuotments:

L-Ion cc cc 011 cc 011 cc """

cc 0'11 cc ll'lo

SWt (IQUire IHII 42 .. 11'11 .. "" 74 ... 116 20'4 136 16'1.

Qualrty Fair1AY<I AY<I -6'11 AY<I .6!( ..... .n Ava ~ AYQIGd -101fo

Condhlon flirlA"!! folr1AV!I 011 ..... - Avg -6'1 A"!! -Avg~Gd -IO'JI

Avo'"" lllllt Sue 8S4 "' " 144 S'i - "" 712 .,. !116 0'11

Tolal Phyaleal Acfiuatment !1l! ~ ,2li ill! ~ Arllw_S.,_ Prlco '"9113 $39,111 $35,028 UIM4 S$1.f10

Total & 01 Phyalcal A~u:stments 3 3 • Total I 01 AdJustments 4 6 J • • llot Phyolul Adluotments tl% ... -2% 14% -4% Grose Phyalt:l l Adfuatments 21% m4 1 8'JI, 34% 36%

Median Veluo Per SF $39,178 Mun Value Per SF $48,635

EXPLANATION OF ADJUSTMENTS:

Tile appraiser explained adjustments as required . No explanation was narrated when adjustments were not

necessary.

Marketing Conditions crunel: Real estate values tend to move upward or downward over time due to economic

conditions. We have studied the mal1<et and interviewed ma11<et participants to determine the affect or these

trends on our subject property. Uke-kind analysis was used to chart these trends. In this analysis we Isolate the

time factor <rom other tactorn to plot the effect of market condnions. When we Interviewed ma11<et participants

such as buyers, sellern and agents , we found that multi-family developments increased in value by about 5% per

year In 2006 and 2007. Values peaking in mld-2008 then began dropping until mid-201 0. Property values have

Increase at a rate of roughly 3% per year since mld-2010. Comparable sales were adjusted accordingly.

~If all other factorn are equal. larger sites and/or Improvements tend to sell for less per unit than smaller sttes

and/or improvements. Tills factor is based on the supply of capital. Fewer people have a large amount of capital

to invesl Therefore, there are fewer qualified lnvestorn for large purchases. From Interviewing market

partlclpants, buyern, sellers and brokers, we have found that for every halving in size a -1 0% adjustment to the

comparable Is appropriate. For each doubling In size. a +10% adjustment reflects the typical buyers attitude about

value. Adjustments were made accordingly.

50 David €· Jones & flssociaeos


quality: Buyers are typically motivated to pay more for higher quality improvements than for poor quality

improvements. Quality of construction material and wor1<manship for each comparable was considered and

compared to the subject. The subject was rated as Fair-to-Average in quality. Marshall & Swift Valuation Service

indicates a 10% difference in the cost of an average quality construction Class D building and a good quality

construction Class D building. Adjustments were made accordingly.

Condition: Age and physical condition Is also a motivating factor for buyers and sellers. Each comparable was

compared to the subject. Those improvements In superior condition were given a negative adjustment. Those

comparables with improvements in inferior condition were given a positive adjustment. The subject was rated as

Fair-to-Average regarding condition. Adjustments were made accordingly.

Average Unit Size: Based on our research, we have estimated that for every 200 square feet of additional square

feet per unit there was a 5% increase in rental income. Adjustments were made accordingly.

SUMMARY OF BUILDING SALES

In order to detennine the most appropriate unit value, we look at several factors and the overall picture created

by comparable sales. We pay special attention to the number of overall adjustments, net percentage adjustments,

gross percentage adjustments, mean (average), and median adjusted va lue.

Number of Adjustments: The comparable sales required between 3 and 4 physical adjustments and 3 and 5

adjustments including economic adjustments. This Is a typical and reasonable number of adjustments for this

type orland.

Net Percentage A.djustments: Net adjustments are used to calculate the final adjusted value of a comparable.

The net adjustments ranged from -4% to 14%. This Is a typical and reasonable r~ or adjustments for the

improvement(s) on the subject site.

Gross Percentage Adjustments: Gross adjustments are calculated by dropping the posnive and negative factors

and looking at the total adjustments. The gross adjustments ranged from 18% to 36%. Again, this Is a typical and

reasonable range for the improvement(s) on the subject site.

Median: The median value was found by dropping the highest and lowest adjusted values, which left an Indicated

value of $39,178 per unit.

Mean: We have totaled all adjusted values for an Indicated untt value of $48,635 per unit.

51 Dovitl li· jones & flssociot;cs


Conclusion: All things considered, ~Is our conclusion that the best indication of value for the subject property is

somewhere between the adjusted mean and median prices, say $43,900. Since the subject has 42 un~. we now

multiply the indicated price per un~ limes the number of un~ for an indicated Improvement value of S1 ,843,800.

$1 ,840,000 (Sales Comparison Value)

The conclusion cited above falls w~hln the range of the comparable both before and after the adjustment process.

52 David E· Jon•t & Assodatcs


SECTION6

53


INCOME APPROACH TO AN INDICATION OF VALUE

The Income Approach is based on an assumption that there Is a defin~e relationship between the amount of dollar

income a property will produce and ~s wlue. The Income approach is defined as wluing the present worth of

Mure benefds accruing to the rights of ownership of the property.

In this analysis, "future benefrts" are defined as the income to be received from rental Qease) of the property. A

discounted cash flow analysis Is constructed to convert this rental income into an Indication ofwlue. The purpose

of this analysis is to detemnine the !l(esentwlue or an income stream to be receiwd during the holding period, if

any, and disposHion or the property.

This anatyai& oooollta for:

1) Ma1ket rents for comporable space;

2) Gross annual ex+~enaea Incurred in procuring the Income:

3) Olscolried prasent 11111\lt of net operating lnoomt.

Maillet rent is deflned as "The rental income that a property would most probably command on the open martlet

or indicated by current rents being paid for comparable space, (as of the effective date of the appraisal). •

The first step is to estimate the gross annual income the property can demand on the market. The martlet rent

was estimated by analyzing comparable rental properties and actual contract rent, if applicable.

After the gross annual income was estimated, a vacancy and collection loss was deducted, resulting In the

effective gross income. The operating expenses are then deducted from the effective gross income to derive the

net operating Income.

Net operating Income may then be discounted to its present wlue over a projection (holding) period or directly

capitaliZed when a holding period is not needed."

54 Davit/ E· Jort• $ & flsrociatu

Corpus Christl - Gordon Street Apartments - REVISED

CONTRACT/MARKET RENT

Contract rent is the actual rental income accruing to a property under terms of a lease or contract. This amount

can be higher or lower than mart.et rent. Market rent is the rental income that a property would most probably

command In the open marxet as Indicated by current rents being paid and asked for comparable space as of the

date of the appraisal. Overage rent is percentage rent paid over and above the level or a guaranteed minimum

rent.

Gross rental basis calls for the lessor to pay all operating expenses. Net rents have the tenant paying all such

expenses. Leases may be from month·to-month, short-term of tess than 5 years, or long-term of over 5 years.

Short-term leases usually command a higher unn lease rate.

Lease agreements may have a foced payment and terms or they may have an e51:Sialion clause. The valuation

of rea simple interests in real eslate is based on the mar1<et rent the property is capable or achieving.

Both existing contract rent (If applicable) and market (potential) rent is considered in the valuation process. Other

lease considerations are escape clauses, tenant Improvements, purchase options. escalation clauses, renewal

options and the division of expenses between the lessor and lessee. All of these considerations may have an

effect on lease values.

Comparable leases are analyzed for dlsslmllarftles In characteristics such as size, location. appeal, construction

quality, condition, etc. The following comparable leases were analyzed and later adjusted to equal the subject

property:

55 Davie/ c· Jone1 & flssoclates


COMPARABLE LEASES

Lease Comparable 111 : Regency Square Apartments is a multi-famDy apartment complex located at 3333 S .

Alameda, Corpus Christi, Texas. The apartment complex offers one bedroom/1 bathroom, two bedroom/lwo

bathroom and three bedroom/two bathroom apartments. Rental rates range from $640 for 1/1 units which are 650

square feet, $750 for 212 units which are 900 square feet, and $880 for 312 units whiCh are 1,000 square feet. The

site amenities include an outdoor swimming pool, small basketball courts, small playground, gazebo and laundry

facility.

Unit Type 1bl1b

2b/2b

3b/2b

56

Sq. ft. 650 900

1000

Rent $640

$750

5880

David t· Jonu & fltso<iat41

Corpus Christi· Gordon Street Apartments - REVISED

Lease Comparable #2: The Fountains is a muHi-famity apartment complex located at 1601 Ait1ine Road,

Corpus Christi, Texas. The apartment complex offers one, two and three bedroom apartments. Rental rates

range from $675 per un~ to $675 per un~. The sHe amenHies include an outdoor swimming pool.

Unit Type Sq. Ft. 1bl1b 685 2bl1b 907 2bl2b 1040 3bl2b 1150

57

Rent 5650

S725 $775 S875

David ff· Jones & flssociato.s


Lease Comparable #3: Churchill Square Apartmenls is a mu~i-family apartment complex located at 4302

Western Drive, Corpus Chlisti, Texas. The apartment complex offers one and two bedroom apartmenls. Rental

rates range from S665 per unit to $900 per unit. The site amenities include an outdoor swimming pool, frtness

center and playground.

Unit Type Sq. Ft. Rent 1b/1b 652 $665 1bl1.5b 849 $795 2bl1b 817 $765 2bl2b 890 $795

2b/2.5b 1165 $900

68 David E· Jones & flssoclotcs


Lease Comparable #4: Peachtree Apar1ments is a multHamHy apartment complex located at 3150 Peachtree

Street, Corpus Christi, Texas. The apar1ment complex offers one, two and three bedroom apartments. Rental

rates range from $475 per unit to $900 per unit. The site amenities include an outdoor swimming pool,

basketball courts, tennis courts and laundry facility.

UnrtType Effl1b 1b/1b 2b/2b 3b/2b

69

Sq. Ft. J90 672

1042 1059

Rent $475 $683

$815 $900

D~>vid £ · Jon•s & flsst>clt>t•s

COrpus Christi- Gordon Street Apartments- REVISED

Lease Comparable #5; Harper's Comer Apartments is a mutti-famUy apartment complex located at 6602

Evertlart, Corpus Christi, Texas. The apartment complex offers one and two bedroom apartments. Rental rates

range from $645 per unit to $815 per unit. The she amenities include an outdoor swimming pool, basketball

courts, tennis courts and laundry facility.

Unit Type Sq. FL Rent

1bl1b 650 $645

1bl1b 700 $675 1bl1b 775 $725

2bl1b 850 $785

2bl2b 910 $815

Lease Comparable Summary; In general, the comparable data had an Indicated rent rate range of $475 to 5900

per unit per month. Ba.s.ed on the subject's quality. condition, location and available amenities. we have estimated

a mar1<et derived rental rate for each unlllo be $685 on average, which equates to $28,770 per month for all units

combined times 12 months plus the additional annual income of $468 the laundry room reported by the owner on

the rent roll (annualized) for an annual potential Income of $5,616. Aithough the subject was reported to be 100%

occupied as of September 2.4, 2013, based on our survey, tne average vacancy rate (including collections loss)

for similar facilities In Corpus Chrtstlls 7 .5%. We chose not to use a discounted cash flow analysis for stabilization

because the subject is currently at100% occupancy. The following Proforma reflects one year, but with average

vacancy rates and average operating eos1s.

60 David c· Jonas & ,qssoc/otcs

Corpus Chr istl- Gordon Street Apartments - REVISED

RENT ROLL

BLDG SOFT TENANT ..B!.!i Water ~otal L.fJ 1 >4 Juanita ~ 16 ~

UNIT

1 A Tra<:v Wrioht S55 '2 $62 Jr.l014 1 M:uv Pena s~no 16 $536 ?130/201 0 1lff 754 linda Bullard 5555 552 ill Jllf2014

-~--+--[~[)~+-~~ 1237 LisaG rza $85 i886 ~ 1237 'rado ~;......+---; i922

2/11RI 1064 Dustin ate S&!i >727 3/31/2014 2m8R 1125 Kala A.kmc s655 S90 74

2i2JBR I RUdY SiW 70 ~J::::---1-----F~+-=="ffi~~ ~---;~ t,

UNIT Rtnr. TYPE: SQFf l t NANI Rftf Water IRentTotal I LEI SE 22G A 1BR ~ $555 5627

~ A Paul

=m jJ6

Sal rna ~ i36 - June l!MCV 17 11/20 - 1 i4 LJnda Hoooar s;; $609 - TE!R ]5; Brenciilbarra .S555 ~;4 $60 c iii l lawa S495

1--1 '5 Evlllvn lindlev ~ - c 1 i4 Paul Vela 11/2Jr.l~ 2I2BR 1125 -Mir\llo1 T allez S655 578 1733 . 3/31/2014

3/2/BR S850 ~

215/2014 3: e

I Laura 38riil 815/20

_ l4i F .isa M liZ 3 ichibi - · Mana - EFf 607 TesterE tilev $36 31 5131/2014

3 2f1IBj ache~ 5650 212E

~ I Cadrief 5/31

;....,;., 7, 1 6R -754 Glfb&rt S72 S6 1/31/2014 1BR 754 LOrlil8' sm 572 $627

I TOTAL $14.070

Laundry Income I $468 528.947 GRAtiD TOTAL

61 David € · Jonu & flssoclatas


INCOME APPROACH (Continued)

INCOME STATEMENT

In analyzing the mar1<et rent of various comparable properties, we have estimated the annual gross income for

the subject property. As an appraiser we must look at !he property as if n were on the open mar1<et for lease or

sale. A Discounted Cash Flow Analysis was not required since the facility has reached stabilization. Instead, a

Direction Capttalization method will be used using a one-year proforma. An Income Statement Proforma for one

yea r is found in the following section. We will now define and explain the items as follows:

Potential Gross Income (PGI) Is defined as !he total Income attributable to a real property at t OO% occupancy

before deduction for operating expenses. As previously shown, we have arrived at an estimated PGI of $350,856

via mar1<et renlal rates and the subject's most current (annualized) figures for addnional income.

Other Income is income derived from other sources other than rental income. In this sttuation, we included the

average monthly income for lhe coin laundry facility and water reimbursement from !he tenants which was

reportedly S5,616 per year.

Vacancy and Collection Loss (VCL) is defined as an allowance for reductions in potential rental income because

space is not leased or rents that are due cannot be collected. Our survey of the local market found the subject

property wm likely have an average 7.5% VCL

Effective Gross Income (EGI) is defined a.s the anticipated income from all operations of the real property after

allowance for VCL.

Operating Expenses are defined as periodic expendttures necessary to maintain the real property and to

continue the production of the EGI Income. Operating Expenses are explained as follows:

Property Taxes were based on our estimated assessed value of the subject property after reviewing current tax

records and interviewing the county Appraisal District. Earlier in the report, we estimated annual taxes to be

$28,609.

Utilities Expenses include electrical, natural gas and water charges. These charges may or may not be paid by

the landlord. We looked to the market area via a survey to determine whether to expect the landlord or tenant to

pay these expenses.

Property Insurance costs as reported on the owner's most recent profit and loss statement of $4,003.85 for the

first 8 months of 2013 seemed much lower th an what we typically see for older apartment complex developments

62

Corpus Oulstl- Gordon Street Apartments - REVISED

as this equates to $0.16 per square foot per year ($4,003.85 / 8 months x 12 months= $6005.78 annualized I

38,102 square feet= $0.1576 per square foot per year). For this reason, we have chosen to estimate the subject's

property insurance expenses at $0.35 per square foot based on our experience appraising similar properties in

the mar1<et area.

Maintenance and Repair expenses are lncurTed on all property whh improvements. We have studied the market

for several years and found \his expense to be relative to the occupancy rate of the improvements and the physical

condition of the improvements. Our survey found that EGi times 5% is average and typical of similar buildings in

this particular sub-mar1<el area. Under a triple net lease, the tenant pays these expenses except when vacant.

Management charges are usually expressed as percentages of EGI as compared to local patterns. In this

appraisal s~uation we interviewed local leasing agents and found that typically the charge for outside management

is based on 8% of EGI. Even if the property is owner-managed, this expense must be considered in an appraisal

process.

Reserve for Replacement Expenses provide for the periodic replacement of buiiQing componenls that wear out

over a period of time greater than one year. Examples Include roof covering, carpeting, plumbing equipment,

compressors, sidewalks, driveways and exterior painting. A certain amount of money should be sal aside for future

replacement of these hems. Appraisal standards call for allowance of2.5% times EGI.

Miscellaneous Expenses are contingencies for unforeseen expenses. We have noted that mu~lplying 1% times

EGI is typically ample for these contingencies.

Net Operating Income (NO!) is the estimated net Income after fixed and variable expenses. H does not indude

debt repayment, depreciation or federal income tax. NOI Is used by appraisers as a factor In capitalization to

deterTnlne value in the Income Approach.

The following page represents our estimated income proforTna for the first year of operating relative to the

appraised property:

63 Davit! e· .Jonu & flssociotos

Corpus Chrlstl- Gordon Street Apartments- REVISED

INCOME PROFORMA

Gross Income As Estimated Annual Rental Income S28,no $345,240 Other Income (Laundry) $468 $6,616 Potential Gross Income $360 856

Less Vacancy Credit Loss (VCL) 7.5% $26,314 Effective Gross Income $324,642 Operating Expenses: Property Tax $28,609 $28,609 Utilities $49,550 $49 650 Property Insurance $13,500 $13,500 Maintenance & Repair (5% of EGI) $16,227 $16 227 Management (8%) $25,963 $25,963 Miscellaneous (1%) $3,245 $3245 Reserve for Replacement (2.6% of EGI) $8,114 $8114

Total Operating Expenses $145,208

Potential Net Income $179,333 Value ~ NOI divided by Cap Rate of 9.76% $1 839,317

ROUNDED TO: $1 ,840,000 (As Is)

64 David I!· Jonu & flssoelotes


CAPITAUZATlON RATE

The Direct Cap~aliz:ation Rate is a method used to convert a single year's estimate of Income into a value

indication In the income cap~lization approach. This may be a conversion in one step by dividing the income

estimate by an appropriate income rate or by muhiplying the Income estimate by an appropriate Income factor.

The relationship of Income and value is expressed by tne Income rates. The market comparables must reftect

risk, Income, expenses, and physical and locatlonal characterist ics similar to those of the property being

appraised.

Several techniques are used to estimate an overall capitalization rate. The accepted methods include:

(1) Derivation from comparable sales;

(2) Derivation from effective gross Income

multipflers:

(3) Band or investment- mortgage and equay components:

(4) Band or investment- land and building components; and

(5) The debt service coverage formula.

The direct capitalization formula applicable to this type of valuation is;

Va lue = Net Operation Income (NOt) I Overall Capitalization Rate

Over the past twenty plus years, we have analyzed all types of real estate sales to arrive at the following conClusion

which represents our best estimate of today's direct capitalization rates relative to the subject property.

Comparable Sates: Location, surrounding property use, potential property use, zoning, utilhles, growth direction,

restrictions and investor's perceptlon of risk are all Important to determine capitalization rates. For example, two

otherwise equal properties, one located in a highly developed sub-market area and one located on the outskirts,

are usually judged differently for risk and potential. Likewise, an income producing property with a history or high

vacancy rates may be less favorable than a similar property with a history of low vacancy rates. Higher risk

requires higher capitalization rates and tower risk requires lower capitalization rates. Over the past twenty plus

years we have analyzed all types of apartment complex sales to arrive at the following conclusion which represents

our best estimate of Ieday's direct cap~allzation rete relative to the subject property. Average and typical real

estate Investors seek a cap~atization rate of between 8.5% and 13% for simnar properties.

65 David E· Jonu & flssociates

Corpus Christl- Gordon Street Aparbnents- REVISED

CAPITAL.IZATION RATE (Continued)

The following data rejjarding the Band of Investment Method and the Debt Service Coverage Technique was

provided by Rea~y Rates. Realty Rates is a nationally recognized, independent research firm specializing In

surveys of discount rates and cap~allzatlon rates.

Band of Investment (Weighted Average Cost of Capital/ Method. Rates are extracted from the marl<et utilizing

a "safe" rate, usually Treasury Bills or 5 year to 10 year U.S. Bonds, then building rates by adding for factors of

risk, liquidrty, and management. The result is a marl<et derived caprtalization rate. The formula is (loan to Value

Ratio x Mortgage Constant) + ((1 - Loan to Value Ratio) x Equrty Dividend Rate or (M x Rm) + ((1 -M) x Re) = Ro

(75% X 6.6913%) + (25% X 10.6120%) = 7.67%

Spread Ove-r 10-Year Treasurv

Otbt Covt-r• Ratio

lrlttrest R.\tt

Amortizi tion

Mortgag .. Constant

Lo.on·too·Value Ratio

Equity Ql..,idtnd A.itt

M•almum

Sprtad Over W·Ytat l rt asury

Otbc Cout r lgt Rldo

tlttrur ~tt

Amortiuticn

Mort91 g• Const.wtt

l o.tn-to·Valle Aatic

Ec;,uRijiOi'.Jidend Rate

Av.np

Over I~ 'tear Tte.asu~

OebtCoveuge Ratio

nttltst Aa.tt

Amorlintion

Mong~g•Conslant

loan-to·V~Iu&Ratio

REALTY RATE SURVEY

2.63X Moftg.agt

40 Equity

0.040439 OAR

sox Sur~s~d Aat.• s

S.SIY.

5.42;. OCR Trchniqu~

U) ~C4C~ OJO

90>< O.C4 a 439 o.ro;ms Kl:< o.OS8110 o.oossn

1.71 0.1Xl221 o.so \71 8~nd of lnv•stm•nt Teehniq~•

7.35:1. Mo rt9.t9_• _ SO"/. 0 .1(1221 O.OS6133

t5 E.quii!J 40X 0.152576. 0.061030

0.110221 OAR

60-'X S-u JV~Jed RatH

15.2$><

Mort~·

EqlitJ

OAR

Su rv•ted Rato.s

7!5Y. 0.066913

2!5'/. 0.108120

7 .G7

66 [)ovid g. Jones & fl srociote<


Debt SeN/ce Coverage Technique. This is a reliable method used to derive a capitalization rate. This ratio is

the rate, or ratio, of net operating income to annual debl service. The Debt Service Coverage Ratio (DSCR) was

provided by local banks. The fonnula is OSCR x Mortgage Constant (Rao) x Loan To Value Ratio (L TVR) =

Overall Rate (OAR).

1.36 X 6.6913% X 75%" 6.83%

Summary and Conclusion: The approaches provided the following range of capita&zation rates: 8.05% average

based on Realty Rates national survey, 6.83% average based on OCR Technique and 7.67% average based on

the Band or Investment TeChnique. Aner conslde~ng all methods, we have chosen 9.75% a.s the most

appropriate capitafization rate. Our decision was heavily influenced by the age and condition of the

improvements.

67 David f· jones & Associates

Corpus Chrlst.l- Gordon Street Apartments - REVISED

SECTION 7

68 David !!· Jones & llssoclat•s


EXPOSURE TIME

There are basically two marl<ets for real property - lhe investor and the end user. Investors usually purchase for

speculative purposes. They anticipate that profits from holding the property will not only excaed cost but that return

on capital from real estate investments will oulpertonm other investments. For example, they may Invest in a single

tract and sell for a net profrt at the most opportune time. Or. they may buy a tract of land, subdMde It, sell

subdivided tracts and realize an overall profit. Or, they may lnveSI in an income producing property such as an

office or apartment complex.

End users purChase for additional reasons. They, too, expect a return on and return of capHal. They may avoid

lease payments. build equity and customize their improvements to their needs.

Meriteting time is a factor or competitive price, terms, cond~ion of the property, location of the property, appeal,

number of competitive properties on the marital. abil~ of the sales agent. interest rates, general and local

economic conditions and other factors.

Previously, we stated similar sales in our Comparable Sales Section. These sales represent a good sample of the

confinmed sales of similar properties over I he past few years. Our survey fou nd that these Comparable sales were

on the mari<el between three months and two years. The time frame of those sales and the number of competing

properties allows us to estimate a likely mari<etlng/exposure time ror the subject property of one year. That, of

course, Is based on the subject property being placed on the mari<et at a competitive prlca and with competitive

tenms.

69 David €· Jonc< & flstoaotet

Corpus Chr isti - Gordon street Apartments - REVISED

CORRELATION AND FINAL VALUE CONCLUSION

To detennine the value of a property an appraiser identifies, gathers, and analyzes general and property-specific

data; detennines highest and best use; and applies the Sales Comparison, Income Cap~allzatlon , and/or Cost

Approaches, as warranted. When using more than one approach, each approach results In a separate and usually

different Indication of value.

The Sales Comparison Approach to Value extracts mari(et data from the lransactions ln110lvlng comparable

properties In similar mari(ets. Appraisal principles of Supply and Demand, Balance, Substhutlon and Externalities

all apply to this approach to value. The Principle or SubstHution holds that the value of a property that is

replacaable In the market tends to be set by the cost of acquiring an equally desirable substhute property. It

suggests that when substitute properties ara not available in the mari(et, the reliability of the sales comparison

approach may be less than that of the other approaches. The Sales Comparison Approach was considered

s~gnlfiCBnt because a typical buyer would look to the marl<et to detennine a fair buying prica. The quality and

quantity of the data available was adequate with ample comparable sales data available from the local mar1<et.

The Income Approach is based on marl<et nentals for similar or comparable properties pnevalllng in the anea. An

income-producing property is typically purchased by an investor for the purpose of maximizing his return .

Basically, the higher the earnings the higher the value will be. An investor trades a sum or pnesent dollars for the

right to receive future dolla rs. Appraisal principles of Anticipation and Change, Supply & Demand, Substitution,

Balance and Externalities are considered In this approach. The Principle of Ant icipation suggests that value is

created by the expecta~on or benefits to be derived In the future, and value may be defined as the present worth

of an rights to future benetHs. The Income Approach was considered significant because mun~famlly apartments

are often used as income producing properties. The quality and quantity of the data available was adequate with

data lease lnfonnation from the market anea.

70 D•vid €· J ones & Assor.i•tos


CORRELATION AND FINAL VALUE CONCLUSION (Continued)

The reconciliation step in the valua,tion process is the process in which an appraiser considers and selects from

attemate value indicators to arrive at a final value opinion. We have weighed all the significant and applicable data

of each of the two values to determine the following resufts:

Sales Comparison Approach - $1,840,000

Income Approach - $1,840,000

We have chosen to use the Weighted Average to obtain the final indication of value. The Weighted Average is

defined by The Dictionary of Real Estate Apprai§al 4"' Addition as •An average in which each component is

adjusted by a factor that reflects its retati.ve imporiance to the whole; obtained by multiplying each component by

its assigned weight, adding the products, and dividing the sum of the products by the sum of the weights. • The

USPAP Appraisal Standard No. 1-5 (3) states •consider and reconcile the quaiHy and quantny of data available

and analyzed within the approaches used and the appllcabllity orsuHablltty of the approaches used." We interpret

this to mean that all three approaches should be considered and weighed. Using a scale of one (1) to ten (10),

wHh 10 being the most weight, the Sales Comparison Approach was given a weight of four (4), and the Income

Approach was given a weight of six (6). The following calculates the Weighted Average. Following the

spreadsheet we have explained each row of this weighted method.

FINAL OPINION OF MARKET VALUE "AS IS"- EFFECTIVE October 29, 2013

Weight S.C. Approach 4 Income Approach li FINAL VALUE 10

Value $1 ,840,000 $1 .840.000 $1,840,000

ROUNDED TO: $1,840,000

71 David E· Jones & flsscdaces


CERnFICATION AND STATEMENT OF UMITING CONDITIONS (SPECIFIC TO THIS APPRAISAL ASSIGNMENT)

CERTIFICATION: The Appraiser certifies and agrees that 1. The Appraiser has no present or contemplated future interest in !he property appraised; and neHher !he employment to make !he appraisal, nor the compensation for n. Is contingent upon the appraised value of the property. The appraisal contained herein Is not contingent upon a required minimum value, specific value or approval of a loan. There are no undisclosed payments of fees, commissions or other things of value connected in the procurement of this appraisal. 2. The Appraiser has no personal interest in or bias with respect to the subject matter or the appraisal report or the participants to the sale. The "Opinion of Value" In the appraisal report is not based In whole or In part upon the race, color, or national ortgln of the present owners or occupants of !he properties In the vicinHy of the property appraised. 3. The Appraiser has personally Inspected the property, both inside and out, and has made an exterior Inspection of all comparable sales listed In the report. To !he best of the Appraiser's knowledge and belief. all statements and infomnation in this report are true and correct, and the Appraiser has not knowingly overlooked or withheld any significant information. 4. All contingent and limHing condHions are contained herein {imposed by !he terms of the assignment or by !he undersigned affecting the analyses, opinion, and condusions contained in !he report). 5. The Appraiser's analyses, opinions, and conclusions were developed to conform wHh the requirements of the Code of Ethics and Standards of Professional Practice ofthe professional appraisal organizations wilh which !he Appraiser is affiliated, and in accordance wHh the standards and reporting requirements of the FDIC, FSLIC, FHLBB, the Office of the Comptroller of Currency, and the Texas Real Estate Commission. 6. All conclusions and opinions concerning the real estate are set forth in the appraisal report by the appraiser, unless indicated as "Review Appraiser." No change of any item In the appraisal report shall be made by anyone other than the Appraiser, and the Appraiser shall have no responsibility for unauthorized changes. 7. The use of this report is subject to review by duly authorized representatives of the professional appraisal organizations of which the Appraiser Is affiliated. 8. David Earl Jones is state Certified as a General Real Estate Appraiser by the TALCB, Certificate Number: TX 1322216-G, which expires on January 31, 2014. The appraiser(s) has extensive experience appraising commercial property. Kamle Dorrts provided significant real property appraisal assistance other !han those signing the report

CONTINGENT AND UMITED CONDITIONS: The certification of !he Appraiser appearing in the appraisal report Is subject to the following conditions and to such other specifiC and limiting conditions as are set forth by !he Appraiser in the report. 1. The legal description used in !he report Is assumed to be correct. 2. The Appraiser assumes no responsibilfty for matters of a legal nature affecting the property. appraised or the title thereto, nor does the Appraiser render any opinion as to the mte, which is assumed to be good and marketable. All mortgages. liens, encumbrances, leases, and servitude have been disregarded unless specified within the report. 3. ills assumed that there Is full compliance wit.h all applicable federal, slate and local environmental regulations and laws, unless a non-conformity has been stated, defined and considered in the appraisal report. 4. The property is appraised as though under responsible ownership and competent management. 5. Any sketch in the report may show approXImate dimensions and is Included to assist the reader in visualizing the property. The Appraiser has made no survey of the property. 6. It Is assumed that all applicable zoning and use regulations and restrictions have been complied with , unless a non-conformity has been stated, defined and considered In !he appraisal report. 7. It is assumed that the utiliZation of !he land and Improvements is wHhin the boundaries or property lines of the property described and that there is no protrusion, encroachment or trespass unless noted wHhin the report. 8. All references to square footage or dimensions of e~her land or improvement is considered to be approximate. 9. Age for the purpose of depreciation Is considered to be Effeelive Age by obstruction. Actual age may or may not be as stated, and was detemnlned by whatever records were available or estimated by comparison wfth other properties, or construction techniques of a specific lime period.

72 David E· Jones & flstoelotet

Corpus Chrlstl- Gordon street Apartments - REVISED

1 o. An appraisal at a later date than that used in the report could indicate com parables that were unavailable to the appraiser as of the date of value. The comparables used were considered to be the best the appraiser could validate at the time of the assignment. 11 If improvements are located on the property, H should be noted that termHes are prevalent in the area, and a termHe inspection and certificate is recommended. 12. Wrthout prior agreement the Appraiser Is not required to give testimony or appear In court because of having made the appraisal wtlh reference to the property In question. 13. Any distribution of the valuation in the report between land and improvements applies only under the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid If so used. 14. The Appraiser assumes that there am no hidden or unapparent conditions of the property, subsoil, or structures, which should render conditions of the property more or less valuable. This includes problems relating to roofs, foundations, plumbing, eledrical, HVAC, appliances and others, which require an evaluation by experts In these respedive disciplines. The Appraiser assumes no responsibility for such factors. 15. Information, estimates. and opinions furnished to the Appraiser, and contained In the report, were obtained from sources considered reliable and believed to be true and correct. A reasonable effort has been made to verify such infomnation; however. no responsibiiHy for accuracy of such Hems furnished to the Appraiser can be assumed by the Appraiser. 16. This appraisal report may not be reviewed by anyone other than the person(s) and/or organization for whom the raport was addressed wHhout written permission from the undersigned appraiser. Compensation lor the appraisal report does not depend upon the acceptance of the report by a reviewer. 17. Disclosure or the corrtents of the appraisal report is governed by the Bylaws and Regulations of the professional appraisal organization wnh Which the Appraiser Is affiliated. 18. Nefther all, nor any part of the content of the report, or copy thereof (including conclusions as to the property value, the identity of the Appraiser, professional designations, reference to any professional appraisal organizations, or the firm with which the Appraiser Is connected), shall be used for any purposes by anyone but the client specified in the report, the borrower If the appraisal fee Is paid by same, the mortagee or its successors and assigns, mortgage insurers, any state or federally approved financial Institution, any department, agency, or instrumentaity ofthe United States or any state or the District of Columbia, wHhout the previous written conserrt of the Appraiser; nor shall it be conveyed by anyone in the public domain, other appraisers, real estate agerrts. news agencies, sales agencies. or other media, without the written consent and approval of the Appraiser. Any person distributing any part of this report or any conclusion of this report to any person or agency wtlhout permission from David Earl Jones will be held fiable for damages caused thereof to the signers oflhis report. 19. On all appraisals, subjed to satisfactory completion, repairs, or amerations, the appraisal report and value conclusion are contingent upon completion of the improvements in a wortunanNke manner and in a timely manner before marl<et conditions change. 20. As part of the compensation agreement relatlng to this report the sefter{s), buyer{s), lender;(s) andfor anyone else benefrtlng from the use of this report are required to thoroughly read this report and notify the appraiser in writing within five wor11ing days of any errors or omissions, significant or otherwise, related to factual data or reasoning. The appraiser has a reasonable time to respond to this notification and make adjustments, if In the appraisers sole opinion corrections ere necessary, without penaity. Those using or benefiting from this report agree to hold harmless and defend the appraiser against liability arising from the users failure to comply with the agreement. 21. Unplatted property located within the jurisdiction or a municipality may require permits, which may or may not be obtainable, and extensive expenses to plat or develop. It is beyond the scope of this appraisal to obtain bids lor platting or developing. Any person or company relying on an appraisal of unplatted land and desiring to develop the land should seek bids from qualified developerrouilders and obtain a feasibil~y study before accepting the opinion value herein. Sellers or unplatted land may be subject to fines, fees or assessments when selling unplatted land to others wtlhln the jurisdiction of a munidpalily. This appraisal does not account for such fines, fees or assessments (past, present or future) and assumes there are none. However, if fines are levied in these situations there could be an impact on value not accounted lor In this appraisal. These are legal matters beyond the scope of this appraisal. 22 A real estate property inspection Is recommended by any purchaser of real estate. It Is also recommended that this inspection be completed by a licensed professional. Real estate appraisers are not qualified to complete a property inspection. This appraisal was completed wnhout knowledge of an inspection.

73 David €· .Jones & llssoclatos

Corpus Christi- Gordon street ApartJnents- REVI SED

Should an inspection report become available we reserve the right to revise the appraisal report and value.

ENVIRONMENTAL DISCLAIMER: The value opinion in this report is based on the assumption that the property is not negatively affected by the existence of hazardous substances or detrimental envfronmemal condijions. The appraisefs routine inspection of and inquiries about the subject property did not unveil any Information that signifies the presence of environmental contamination. If such a condition exists it may or may not affect the property negatively. Due to the "Jurisdictional Exception" rule of the USPAP we cannot comment on the existence or lead paint, asbestos or radon. Il ls possible that tests and inspections made by a qualified hatardous substance and environmental expert would reveal the existence of hazardous materials and/or environmental conditions on or around the property that would negatively affect its value. An Environmental Site Assessment is recommended for any property constructed prior to 1979.

ACCEPTANCE OF THIS REPORT VERIFIES ACCEPTANCE OF ALL PROVISIONS TO THE CERTIFICATION AND STATEMENT OF LIMITING CONDITION

Dated: November t 2013

~ Appraiser: ~

74 Davit! c· Jones & flssot:.latcs

Corpus Chr istl- Gordon Street Apartments - REVISED

SECTIONS

75 Daviti £· Jonas & lissoci•t•s


ENGAGEMENT LETIER

76


Oclob<r 17, 2013

Do\id EJones Do\!id E loues & AsSO<iAI .. 8700 Manchaca, Suitt 300 Ausbn, TX 78748

R.E: 13-001354-01-01 GORDO:< STREET APARU'IEl''TS LLC I 260004486 625 Gordon Su'ttl Corpu< Cboiso1, TX 78-16.1

""""""pilot~ 50S S. M<C.oD Rd. Edinb<q. lX 7lSl9 ww-K.wcbfilb.com

Lladalt Park if <4, BlO<:k -40, Lot 9,10,11,.11 and 13 t'u«ts County, Ts

Thi$ l~er. along ui lh lhe anotch~ .. Assignment Swnmru'Y"' will ~ol"CUr engagt'211~ to prepare n real estate appnrisnJ on the referenced llfOI)el1y oo bebalf ofPf41!15Capotal · llus eugagenl.nlos sub;ecllo tilt specific 1erms and ronditions out.ltned in il~ R~r for Proposalln RIMS including, but not limited to the comments ~non lttld IllY rmaclled RefeteOC'e Doc:'llmerus.

The purpose of the valu.otion ts to ~timate trutr:hi value ru. defined by the Baud of Govnnors of the Federnt ReSet\'e Syslem, m ao<'O!drulc. with TiUt XI ofFIRliEA { 1989). Rtproseotativ .. of PlainsCapilal BMI< may pecfonu an ad.ministrnth-:eQf ltcbaic& ~view of the- report. Your futl~tion in tl:le reviewpnxtSs is de-emed to be- an iwtgral part of thi~ valuation aWgwueJ.U~

It is mutunlly agreed thnt your completed report, in the spcc.i.fic.d number of c:opies, will be de.U-,·ertd to tbe undmi111"«l on cr before lhe date specified below, and lhal lh• total fee (including •XJl"'l-'05) will 1101 txoeed th> fee sptedied below. A lale penally IDllybe ..,essed atth> rate ofSIOO per day foreacb clay !be ffj>Orl rellllins outslandmg beyood five bu'""'-<s days of tbe scheduled delivery date. PlairuCapiuU Bank res<n-.s Ill< righl to rejecllhe report aod deny paynlelll for unoimely deli\""}', Pleas• ..-. on the invoice your Tax ID #, unique invoice#, the Appntisal O:der ;; nnd propMy rd'~.

On.rt Apprnis~LDut: t J/0412013 Total Fet: S2,800 (inclusive ofaU expenses)

Where app1kable, lhe vllluntion and report ""' lo bt prepared in collfonnanoe with !he .-.quiml~ of the FiruulciAIJJlstitutioru; Reform, R«.O\'ety :md Enf=emenl Act {FIRREA); lhelnt=gency Appraisal and EvalliOiioo Owdelin.s; lhe PlllinsCapitai.Bttnk Apprnisal S!Jindards; and lhe Vnif<nm St:mdaids of PIOfessiooal Prncboe {USPAP). The report shoold wclode a staoement oflhe exposure tomtw>pbot mill< value {s)

PIJliniCapital BMI< reserves me ri~t to provtde a ropy ofUtt r.port ro lbe borrow..-, the borrowtr's ...,....,tative, or any fllird parly P"lllin.sc.piiAI BMI< may deem appropriat.. Furth..-, Plamsc.pibl B.1nk rtSM"es tM tWrl to terminate t:hU essignme.nt at any time \\itbout nny further liabiltty or obbgatioo owed to yon. tf in the jud8Jl""t of PlaiasC.pital Bank you have l'alled to pa'fon:n in am>rdaoce wilh lh• tmm and conditions 5<1 forth in this togaso-ulleU<'f. You will main!Jlin lhe coufidentialily and pnvacy ofcusto.,.,i:nform3rion ObL1ined in the course of this a.ssillllUleDt in complimce with USPAP aod ~non P. TitleV of !he Grnmm • t.ach - Bliley Financial Modeniizalion Act. Ple""' include o signed copy of UU. lett..- as llll a<ldendum 1o lh.compl.,edreport.

Sinoerely •

.4p<al,.t.t, .... -y Apprnisal Department Pl!Ull5Capilal Bonk

~~ AcoepoedBy:~----~'-----

i'Toj<et# ll-0013~1-<ll Plsc 1 ofl

P.rinted Name: Dal.'ld E. Jones

10/18/2013

77 David li· Jones & IJ$$OCiate$

As.~lgnment Summary

Inj~ndrd Unr:

ApproacbH to Yaluto:

Addition. I Work SroP":

R•porl Typ<:

VnluAtioa Scenarios:

As:s!gum•ot Commnt,s:

Coutact Info•·mati.ou:

R•port Di<hibution:


U"' - l<>m Uodmvriling The intrnded US< of this appnisal is for loan und<rnTiting ;wd-« crtdit ~nons by PlainsCapit:ll B:mlc >nd-or p:ltticipants

US«- B:wk Ik intonded users of this report is PlaiosCapttal B:mlc :utd-or affiliates

Approach - Sales Comp3rison Sales Comparison Approach

Appro>ch - Income Income Approach

Appro>ch - Cost Cosf Approach '

Inspect - Full Subject An interior :utd cxtmor inspection of the subject propetty insufficient det1il to detennine marx.tability

Self-Contained / Naffi\tivc

Premist MorketV>Iu.

Ou.alifier As-Is

Any >pproaches not utilize must be expl>tned in tho report I When completed. please uplo3d an e.lectranic: copy of your report and invoic.c to hrtp:l/www .rimscen~Lc.otn

CADI SHUSHAN. Property Owner !'hone: 361 ·332·9889

PlainsCaplrnl Bonk Contoct: Azenetb H•rnnud•z Appraisal Oep:trtn=J 956·393·6873 JuenethJ{c:m.mdez@plainseapi!al coro

78 David £· Jones & fissociot.s

.Propony

Account Propes1y o: leCI12 O"'Qraphc D-. 441$-0040-00tO

T)'pt R.tal Propeny tat Coc!.e APTCOMP

Prvptr.y Lse Oe>s~ AP.t..ATVDtT COUPUX

Locr.ton

moo~ .. ,..,, U4DAU ,AAJC N

SU71

Corpus Christl- Gordon Street Apartments • REVISED

TAX DATA

le;ai De•c.~· LllOAU PAR.K4W 2,,4"LT &All LTS IOTHRU 12W&4 48LT 13 8LK40

lie.p D.

Ownu

tcame GOROO\J STRF.n ARART\I.Hns llC Owner 0' SSSI653 !.lUng Adl:nu : PO eox l111 "OwnrullliX tOO ooooaoa-DOG%

CORPUS CHUT\ TX 7&-'ti

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sa.t.57! Ai/TirCerUttVaW

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1 1, 114.07t

•• st, 114.8n .. St.U4E11

79 David £· Jones & flssadates


% Owner~hlp: 100 0000000000%

To!a!Value: 51 ,1,.,671

Entity De aortptton Tax RAte Appraised Value Taxable Value Estimated Tox

C03 CITY OF CC 0 585264 51.114,671 s1 .11•.en 50.1'23.77

CAD Al'I'RAISAl. DISTRr 0.000000 $1.1,.,671 su r•.671 so.oo GllU NUECES COUIITY 0.3-10999 51,114.671 $1,114,671 S3.a01 .02

HOSP HOSPITAL IXSTIIICT 0,1l8077 51,114,671 S1 , 1 14,671 S1,6SO.S7

JRC DEL MAR JR COLL 0 250666 SI,11U71 51' 1 14,671 S2,79o4.10

RFLI FARIJ TO LIICT ROAO 0004188 '51, 114,671 $1,114,671 546.68

SE CCISD I 237350 $1.11 4,871 51.114,671 513,792.38

To~ITax !!Ale: 2.588SU

Taxes w/Curre,t Ex~ns 526,608.52

Taxts wlo Exef1l)tl:lns: 526.603.52

• Improvement I Building

A.Jilmprovmeta valued at In tome

Improvement *1 : COYUERCII.I. SUteCode: 81 l!Ying Area: 38102.0 aqft Value: NIA

Type Dualpbon 9w..lOil Exte.nor Wa1 YearBul SOFT

MA lo!Ail AREA. APTC2 BR 1963 381020

CPY CANOPY APTC2 1963 4598.0

Ul1L UTILITY ROO!~ APTC2 1963 SJ.I.O

CP CARPOI!T A.PTC2 1963 6912.0

SP SWIII~JIG POOL APTC2 1963 1 0 ASD ASP!W.T AI'1'C2 1963 13824.0

tmprCNement : .2: COIIIJfRCII>.l.-l'ERS.I'AOPERlY State Code: Bt Uving Area: Sllft value: NIA

L Type Oe&criptlon t!tlu'g Exterior Wall Yur Bull SOFT C:..pP P.;RSONAL PROPERTY APTC2 0 42.0

... Land

# Typo Ooecription Aor110 Sqft Elf Front Eff Oep1t1 Marital Value Prod. Value'

Al APARTliEIIT I.AI<O u~s 6967S.co o.oo o.oo so so • DeiHl History • (uot 3 Deed Transacdons)

• Oeoct Otto TYPo OeacrtpUOn Gr.tntor Grantee Volume P•g• Deed Humber

I 1/ 14120081200,00A.M W0V \'VIO&VA.H K6elRUST OOROOH $TR!ET APA.R" 20ti8001807M"'-VL

2 .cJ$1200• 12'00·00 ALl SV.TN SPWIOViMH ":.SON OROV::!UEE I( a 8 TRUST 2CG&Ct&.c. 'vswav 20-J.401&.4..14t/S\\'nV

80 David €· Jones & flssociotcs

Corpus Olrlstl- Gordon Street Apartments- REVISED

RENT ROLL

... ,...,

81 David li· Jon•• & fissodat-.s


----------~SUBJECT PHOTOGRAPHS

82 David !!· .Jones & flssociates


83 ])avid E· Jon• s & llssoclat•s


84 Dovid €· Jones & flssociotes


85


Back of apt. buildings from Swatner Street

86 David €· Jones & llssoclat •s


87 Dwitl E· Jonat & flssoci•tes


88 David £· Janos & flsro<ioter


89 David E· Jones & llssociatos


90 J)ovid li· .:fonct & llnociotct


,.

' ..

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91 David ff· Jones & llsso<iotes


92 Dovid €· Jones & flstociotu

Corpus Christ I- Gordon street Apartments - REVISED

SECTION9

93 Dovid I!· Jon.r & flssoclotcs


QUALIFICATIONS OF DAVID E. JONES David E. Jones graduated in 1969, receiving his Bachelor of Science in Business AdminiSlnltion from Louisiana Tech UniversHy. He concentrated on Business Administration while at Louisiana Tech. He later went on to do graduate wor1< at Texas A&M University, Corpus Christi. Mr. Jones wor1<ed as an Admlnlstratlw Manager for Brown & Root, Inc. before moving into real estate. Mr. Jones obtained his real estate salesman license In 1974 and his broke(s license In 1979. He fanned David E. Jones & Associates in 1986. The following year he earned his designation as a Master Senior Appraiser. In 1991 he added to his qualifications by acquiring his State Certified General Real Estate Appraisa l Certification. Since 1974 he has been brokerlng and appraising commercial property throughout Texas. Mr. Jones has qualified and testified as an expert wHness In District Court. Bankruptcy Court and State Court on several occasions. He has been a guest lecturer at several real estate lnsUiutions. A partial resume of specific qualifications are outlines as follows:

Educational BaCkground B.S. Degree from Louisiana Tech University, Ruston. Louisiana Texas Real Estate BrokerUcense#0190997 State Certified, Texas, General Real Estate Appraiser, TX·1322216-G

Designations - Present and Former State Certified General Real Estate Appraiser State Certified Tax Consuttant Texas Real Estate Broker Master Senior Appraiser, MSA Environmental Assessment Consultant, EAC Certified Commercial investment Member Candidate, CCIM

Specific Real Estate Courses and Seminars Real Estate Appraising Effective Court Testimony Financial Analysis Direct CapHallzation Yield CepHalization Environmental S~e Assessment Commerciallnwstment Appraisal

Guest Lecturerf Teaching Experiences National Association or Master Appraiser Real Estate lnstHute HalllnstHute of Real Estate Austin lnstffute of Real Estate

Professional Memberships - Present & Fonner National Association or Master Appraisers National Assoclallon of ConsuHants National Society of Environmental Consultants Certified Commercial investment Member Candidate. CCIM

Community Service and Awards Mr. Jones was a member of Rotary International for several years. He was a charter member and President of Optimist Club International. He was also an assistant Boy Scout Leader for two years and the coach for LHtle Dribblers Basketban Association. Mr. Jones was a parent volunteer for the elementary school his children attended. He also served two years on the County appraisal Review Board.

Types of Real Estate Appraisals The following is a breakdown of the type commercial real estate appraisals performed by the firm over the past

94 David £· Jon• t & flstoclates


few years: commercial appraisals, industrial appraisals, business enterprise appraisals, feasibility studies, site evaluation and selection, marlteting studies, lease analysis, property tax evaluation, minority interest in LLC and Um~ed Family Partnerships, multiple family housing, subdivision development and review appraising.

Types of Business Appraisals Mr. Jones has appraised appliance stores, agricu"uratlmplement business, agnculfural supply, an airport, athletic clubs. auto parts. auto service, bakery, bed and breakfast, buDding supply, cafeteria, camp ground, car wash, clothing store, computer center, construction company, convenience store, credit bureau, day care, dry cleaners, electrical contractor, electrical supply, employment agency, fabric store, fanns, fast rood restaurant, florist, rood processing plants, franchises, gift shop, glass Installation facility, grocary store, gun shop, imports, laundry, liquor store, locksmith, lots and acreage, lumber retailer, machine shop, manufacturing plants, marine sales/service, mobile home park, motels, office supply, oilfield service, pest control, plant nursery, plumbing, printing, private utility company, ranches, rental tools. restaurant, RV sales/service, servlca station, shopping canters. sports complex, engine repair, sports awards store, subdivisions, title company, tire store. travel agency, trucking business. truCk stop. western wear, and wholesale distributor.

Special Assignments David E. Jones end Associates was awarded a contract to appraise three resort community golf course projects consisting or a golf couJSe, country club, pro shop, driving range, condominiums, marina, subdivision lots and townhouse. The assignment was due in three months with locations in Texas, North Carolina and Florida. The finn added and trained additional staff members and accomp6shed the task on time and below budget. The finn has completed other special assignments such as an island in Corpus Christi Bay.

References Provided upon request

95 David €· Jones & flssoclatas


COURSE STUDIES .,. r .... ,,.,. Hour, >No:101 j

.~ 'of . No. 1~5 n2 I Mar ket . No_ 125

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96 Davit/ €· jonos & flssoelatos

Corpus Christi· Gordon Street Apartments - REVISED

'OI:txas appraiser 'Etcenstng anb €trtiftration j§oarb P.O. Box 12188 Austin, Texas 78711-2188

Certified General Real Estate Appraiser

Number:

Issued:

TX1322216 G 01/25/2012 Expires: 01/31/2014

Appraiser: DAVID EARL JONES

Having provided satisfactory evidence of the qualifications required by the Texas Appraiser Licensing and Certification Act, Texas Occupations Code, Chapter 1103, Is authorized to use this title, Certified General Real Estate Appraiser.

Jj:£(1:i.:; Commissioner

97 David t· Jones & llssodot:.s

BILLED TO:

ADDRESS:

CITY/STATE/ZIP:

ATIENTION:

PAYABLE TO:

ADDRESS

CITY/STATE/ZIP:

PHONE:

FAX:

TAX ID#:

TYPE SERVICE:

SUBJECT ADDRESS:

SUBJECT CITY:

ALSO KNOWN AS:

COMMENTS:

FEE QUOTE:

FILE NUMBER:

DATE COMPLETED:

PLEASE PAY:

PLEASE PAY AFTER:


INVOICE

Plains Capital Bank

505 S. McColl Road

Edinburg, Texas 78539

Ms. Hemande;z:

DAVID E. JONES

P.O. BOX 152513

AUSTIN, TX 78715-2513

800-551-2532

956-692-8273

459-94-8929

APPRAISAL

625 Gordon Street

Corpus Christi

Corpus Christi- Gordon Street Apartments

Multi-family residential

$2,800

102913

November 1, 2013

$2,800

$2,950 if paid after December 2, 2013

98 Daviri c· Jones & flssociatcs

Appraisal Gordon October 2013

Documents

Transcript of Appraisal Gordon October 2013