Securities and Exchange Commission v. Nadel et al
Filing
718
OBJECTION re #706 Verified MOTION for miscellaneous relief, specifically to Approve the Sale of Real Property Located In Graham, Alamance County, North Carolina by Wells Fargo Bank, N.A., Wells Fargo Bank, N.A. by Wells Fargo Bank, N.A., Wells Fargo Bank, N.A.. (Attachments: #1 Exhibit A)(Shaheen, Louis)
APPRAISAL OF REAL PROPERTY
Rite Aid
Retail Property
841 S. Main Street
Graham, Alamance County, North Carolina 27253
Client Reference Number: WF-CWS-11-034839-01-1
PREPARED FOR:
Mr. L. Joseph Shaheen
Akerman Senterfitt
401 East Jackson Street, Suite 1700
Tampa, Florida 33602
EFFECTIVE DATE OF THE APPRAISAL:
December 13, 2011
REPORT FORMAT:
Summary
IRR - RALEIGH
File Number: 167-2011-0456
Rite Aid
841 S. Main Street
Graham, North Carolina
December 16, 2011
Mr. L. Joseph Shaheen
Akerman Senterfitt
401 East Jackson Street, Suite 1700
Tampa, Florida 33602
SUBJECT:
Market Value Appraisal
Rite Aid
841 S. Main Street
Graham, Alamance County, North Carolina 27253
Integra Raleigh File No. 167-2011-0456
Client Reference Number: WF-CWS-11-034839-01-1
Dear Mr. Shaheen:
Integra Realty Resources – Raleigh is pleased to submit the accompanying appraisal of the
referenced property. The purpose of the appraisal is to develop an opinion of the market value of
the leased fee interest in the property. The client for the assignment is Akerman Senterfitt, and
the intended use is for asset valuation purposes.
This appraisal is limited in scope because an applicable approach to value is not being used. We
determined that, notwithstanding the exclusion of an applicable approach, the scope of work
performed is sufficient to develop a credible opinion of value given the intended use. We have a
high degree of confidence in the value indication by the income capitalization approach and the
sales comparison approach.
The appraisal is intended to conform with the Uniform Standards of Professional Appraisal
Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal
Practice of the Appraisal Institute and applicable state appraisal regulations. The appraisal is also
prepared in accordance with the appraisal regulations issued in connection with the Financial
Institutions Reform, Recovery and Enforcement Act (FIRREA).
To report the assignment results, we use the self-contained report option of Standards Rule 2-2 of
USPAP. Accordingly, this report contains all information significant to the solution of the
appraisal problem.
The subject is a free standing, net leased retail property containing 13,824 square feet of gross
leasable area. The improvements were constructed in 2004 and are 100% leased by Rite Aid
(formerly Eckerd Corporation). The site area is 1.18 acres, or 51,401 square feet.
Mr. L. Joseph Shaheen
Akerman Senterfitt
December 16, 2011
Page 2
Based on the valuation analysis in the accompanying report, and subject to the definitions,
assumptions, and limiting conditions expressed in the report, our opinion of value is as follows:
VALUE CONCLUSION
Appraisal Premise
Market Value
Interest Appraised
Leased Fee
Date of Value
December 13, 2011
Value Conclusion
$4,140,000
The opinion of value expressed in this report is based on estimates and forecasts that are
prospective in nature and subject to considerable risk and uncertainty. Events may occur that
could cause the performance of the property to differ materially from our estimates, such as
changes in the economy, interest rates, capitalization rates, financial strength of tenants, and
behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based
partly on data obtained from interviews and third party sources, which are not always completely
reliable. Although we are of the opinion that our findings are reasonable based on available
evidence, we are not responsible for the effects of future occurrences that cannot reasonably be
foreseen at this time.
If you have any questions or comments, please contact the undersigned. Thank you for the
opportunity to be of service.
Respectfully submitted,
INTEGRA REALTY RESOURCES - RALEIGH
J. Todd Neal
Certified General Real Estate Appraiser
North Carolina Certificate # A7213
Email: tneal@irr.com
Chris R. Morris, MAI, MRICS
Certified General Real Estate Appraiser
North Carolina Certificate # A266
Email: cmorris@irr.com
RITE AID
TABLE OF CONTENTS
TABLE OF CONTENTS
SUMMARY OF SALIENT FACTS AND CONCLUSIONS............................................................. 1
GENERAL INFORMATION ...................................................................................................... 3
Identification of Subject.............................................................................................. 3
Current Ownership and Sales History......................................................................... 3
Type of Value, Property Rights and Effective Date ................................................... 3
Definition of Market Value......................................................................................... 3
Definition of Property Rights Appraised .................................................................... 4
Client, Intended User and Intended Use ..................................................................... 4
Applicable Requirements............................................................................................ 4
Prior Services .............................................................................................................. 4
Scope of Work ............................................................................................................ 5
ECONOMIC ANALYSIS ........................................................................................................... 7
Alamance County Area Analysis................................................................................ 7
Surrounding Area Analysis....................................................................................... 12
Net Lease Market Analysis....................................................................................... 15
PROPERTY ANALYSIS .......................................................................................................... 18
Land Description and Analysis................................................................................. 18
Improvements Description and Analysis .................................................................. 24
Real Estate Tax Analysis .......................................................................................... 29
Highest and Best Use Analysis ................................................................................. 30
VALUATION ANALYSIS ........................................................................................................ 32
Valuation Methodology ............................................................................................ 32
Sales Comparison Approach..................................................................................... 33
Income Capitalization Approach .............................................................................. 40
Reconciliation and Conclusion of Value .................................................................. 49
Insurable Value ......................................................................................................... 50
CERTIFICATION ................................................................................................................... 51
ASSUMPTIONS AND LIMITING CONDITIONS ....................................................................... 53
ADDENDA
A. Appraiser Qualifications
B. Definitions
C. Financials and Property Information
D. Comparable Data
Improved Sale Profiles
Lease Profiles
E. Letter of Authorization
© 2011 BY INTEGRA REALTY RESOURCES
RITE AID
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
Property Type
Owner of Record
Tax ID
PART ONE
Rite Aid
841 S. Main Street
Graham, North Carolina 27253
Retail - Free Standing Drug Store
Scoop Real Estate, L.P.
144069
Land Area
Gross Leasable Area
Percent Leased
Year Built
Year Renovated
1.18 acres; 51,401 SF
13,824 SF
100%
2004
N/A
Zoning Designation
Highest and Best Use
As if Vacant
As Improved
Exposure Time; Marketing Period
Effective Date of the Appraisal
Property Interest Appraised
B-2, General Business District
Future retail use
Continued retail use
12 months; 12 months
December 13, 2011
Leased Fee
Market Value Indications
Cost Approach
Sales Comparison Approach
Income Capitalization Approach
Market Value Conclusion
Not Used
$3,800,000
$4,140,000
$4,140,000
Appraisal Premise
VALUE CONCLUSION
Interest Appraised
Date of Value
Conclusion
Market Value
Leased Fee
$4,140,000
Property Name
Address
($274.88/SF)
($299.48/SF)
($299.48/SF)
December 13, 2011
PAGE 1
RITE AID
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
PART TWO
Number of Tenants
Average Contract Rent/SF
Average Market Rent/SF
Major Tenant and Expiration
Major Tenant SF and Contract Rent
1
$28.71
$25.00
Rite Aid (formerly Eckerd
Corporation)
13,824
Sales Comparison Approach
Number of Sales
Range of Sale Dates
Range of Unit Prices (Unadjusted)
Indicated Value
6
Jun-10 to Aug-11
$188.23 to $397.04
$3,800,000
01/31/24
$28.71
($274.88/SF)
Income Capitalization Approach
Potential Gross Income
Stabilized % Vacancy & Collection Loss
Effective Gross Income
Operating Expenses
Operating Expense Ratio
Net Operating Income
Capitalization Rate Applied and Value
Indicated Value
$396,877
0.0%
$396,877
$3,969
1.0%
$392,908
9.50%
$4,140,000
($28.42/SF)
$4,140,000
($299.48/SF)
Market Value Conclusion
$4,140,000
($299.48/SF)
($28.71/SF)
($28.71/SF)
($0.29/SF)
PAGE 2
RITE AID
GENERAL INFORMATION
GENERAL INFORMATION
IDENTIFICATION OF SUBJECT
The subject is a free standing, net leased retail property containing 13,824 square feet of
gross leasable area. The improvements were constructed in 2004 and are 100% leased by
Rite Aid (formerly Eckerd Corporation). The site area is 1.18 acres, or 51,401 square feet. A
legal description of the property is in the addenda.
Property Name
Address
Tax ID
PROPERTY IDENTIFICATION
Rite Aid
841 S. Main Street
Graham, North Carolina 27253
144069
CURRENT OWNERSHIP AND SALES HISTORY
The owner of record is Scoop Real Estate, L.P. This party acquired the property from
Graham EC, LLC on May 24, 2005 for a price of $5,310,000. The transaction is recorded in
Deed Book 2247, Page 702, of the Alamance County Register of Deeds office. Note that the
subject is currently held under receivership by the U.S. District Court and has been ordered
to be sold.
To the best of our knowledge, no other sale or transfer of ownership has occurred within the
past three years, and as of the effective date of this appraisal, the property is not subject to an
agreement of sale or option to buy.
TYPE OF VALUE, PROPERTY RIGHTS AND EFFECTIVE DATE
The purpose of the appraisal is to develop an opinion of the market value of the leased fee
interest in the property as of the effective date of the appraisal, December 13, 2011. The date
of the report is December 16, 2011. The appraisal is valid only as of the stated effective date
or dates.
DEFINITION OF MARKET VALUE
Market value is defined as:
“The most probable price which a property should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this
definition is the consummation of a sale as of a specified date and the passing of title from
seller to buyer under conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised, and acting in what they consider their
own best interests;
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RITE AID
GENERAL INFORMATION
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and
The price represents the normal consideration for the property sold unaffected by
special or creative financing or sales concessions granted by anyone associated with
the sale.”
(Source: Code of Federal Regulations, Title 12, Chapter I, Part 34.42[g])
DEFINITION OF PROPERTY RIGHTS APPRAISED
Leased fee interest is defined as, “A freehold (ownership interest) where the possessory
interest has been granted to another party by creation of a contractual landlord-tenant
relationship (i.e, a lease).”
(Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute,
Chicago, Illinois, 2010)
CLIENT, INTENDED USER AND INTENDED USE
The client is Akerman Senterfitt and the intended users are Akerman Senterfitt and Wells
Fargo Bank – RETECHS. The intended use is for asset valuation purposes. The appraisal is
not intended for any other use or user. No party or parties other than Akerman Senterfitt and
Wells Fargo Bank – RETECHS may use or rely on the information, opinions, and
conclusions contained in this report.
APPLICABLE REQUIREMENTS
This appraisal is intended to conform to the requirements of the following:
Uniform Standards of Professional Appraisal Practice (USPAP);
Code of Professional Ethics and Standards of Professional Appraisal Practice of the
Appraisal Institute;
Applicable state appraisal regulations;
Appraisal requirements of Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA), revised June 7, 1994
PRIOR SERVICES
USPAP requires appraisers to disclose to the client any services they have provided in
connection with the subject property in the prior three years, including valuation, consulting,
property management, brokerage, or any other services. We have previously appraised the
property that is the subject of this report for another client within the three-year period
immediately preceding acceptance of this assignment.
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RITE AID
GENERAL INFORMATION
SCOPE OF WORK
To determine the appropriate scope of work, we considered the client’s request in relation to
the intended use of the appraisal, the needs of the user, the complexity of the property, and
other pertinent factors. Our concluded scope of work is described below.
VALUATION METHODOLOGY
Appraisers usually consider the use of three approaches to value when developing a market
value opinion for real property. These are the cost approach, sales comparison approach, and
income capitalization approach. Use of the approaches in this assignment is summarized as
follows:
APPROACHES TO VALUE
Approach
Cost Approach
Sales Comparison Approach
Income Capitalization Approach
Applicability to Subject
Applicable
Applicable
Most applicable
Use in Assignment
Not Utilized
Utilized
Utilized
The income capitalization approach is the most reliable valuation method for the subject
due to the following:
The probable buyer of the subject would base a purchase price decision primarily on
the income generating potential of the property and an anticipated rate of return.
Sufficient market data regarding income, expenses, and rates of return, is available for
analysis.
The sales comparison approach is an applicable valuation method because:
There is an active market for similar properties, and sufficient sales data is available
for analysis.
This approach directly considers the prices of alternative properties having similar
utility.
The cost approach is an applicable valuation method; however, it is not necessary to
develop a credible opinion of value. The need to utilize this approach for this assignment is
reduced by the following:
We have a high degree of confidence in the value indication by the income
capitalization approach and the sales comparison approach due to the quantity and
quality of data available for this assignment.
The subject is an existing property rather than proposed construction.
The age of the property would limit the reliability of an accrued depreciation estimate.
This approach is not typically used by market participants, except for new or nearly
new properties.
The subject does not appear to be unusually complex.
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RITE AID
GENERAL INFORMATION
DATA RESEARCH AND ANALYSIS
The process employed to collect, verify, and analyze relevant data is detailed in individual
sections of the report. This includes the steps we took to verify comparable sales, which are
disclosed in the comparable sale profile sheets in the addenda to the report. Although we
make a concerted effort to confirm the arms-length nature of each sale with a party to the
transaction, it is sometimes necessary to rely on secondary verification from sources deemed
reliable.
PROPERTY INSPECTION
J. Todd Neal conducted an interior and exterior inspection of the property on December 13,
2011. Chris R. Morris, MAI, MRICS did not inspect the subject property, but did review the
report and concurs with the analysis and value conclusion.
REPORT FORMAT
The report has been prepared under the summary report option of Standards Rule 2-2(b) of
USPAP. As such, it contains summary discussions of the data, reasoning, and analyses that
are used in the appraisal process whereas supporting documentation is retained in our file.
The depth of discussion contained in this report is specific to the needs of the client and the
intended use of the appraisal.
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RITE AID
ALAMANCE COUNTY AREA ANALYSIS
ECONOMIC ANALYSIS
ALAMANCE COUNTY AREA ANALYSIS
Alamance County is located in central North Carolina. The county is approximately 430
square miles in size and has a population density of 350 persons per square mile. Alamance
County is part of the Burlington, NC Metropolitan Statistical Area, hereinafter called the
Burlington MSA, as defined by the U.S. Office of Management and Budget.
POPULATION
Alamance County has an estimated 2010 population of 150,355, which represents an average
annual 1.4% increase over the 2000 census of 130,800. Alamance County added an average
of 1,956 residents per year over the 2000-2010 period, but its annual growth rate lagged the
State of North Carolina rate of 1.7%.
POPULATION TRENDS
Alamance County
North Carolina
2000 Census
130,800
8,049,313
Population
2010 Est.
150,355
9,552,054
2015 Est.
161,508
10,345,227
Compound Ann. % Chng
2000 - 2010
2010 - 2015
1.4%
1.4%
1.7%
1.6%
Source: STDB/ ESRI
Looking forward, Alamance County's population is projected to increase at a 1.4% annual
rate from 2010-2015, equivalent to the addition of an average of 2,231 residents per year.
Alamance County's growth rate is expected to lag that of North Carolina, which is projected
to be 1.6%.
EMPLOYMENT
Total employment in Alamance County is currently estimated at 54,437 jobs. Between year
end 2000 and the present, employment declined by 10,877 jobs, equivalent to a 16.7% loss
over the entire period. Over the past decade, there were decreases in employment for seven
years out of ten.
Although many areas suffered drops in employment over the last decade, Alamance County
underperformed North Carolina, which experienced a decline in employment of 1.9% or
75,476 jobs over this period. Trends in employment are a key indicator of economic health
and strongly correlate with real estate demand.
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RITE AID
ALAMANCE COUNTY AREA ANALYSIS
EMPLOYMENT TRENDS
Total Employment (Year End)
%
Alamance County Change
North Carolina
65,314
3,888,490
62,218
-4.7%
3,766,715
60,843
-2.2%
3,764,582
59,749
-1.8%
3,760,183
60,991
2.1%
3,849,400
59,287
-2.8%
3,926,923
59,816
0.9%
4,054,039
61,006
2.0%
4,126,685
58,863
-3.5%
4,000,278
55,653
-5.5%
3,804,059
54,437
-2.2%
3,813,014
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010*
Overall Change 2000-2010
-10,877
Avg Unemp. Rate 2000-2010
Unemployment Rate - December 2010
Unemployment Rate (Ann. Avg.)
%
Change
-75,476
North Carolina
3.7%
5.6%
6.6%
6.5%
5.5%
5.3%
4.7%
4.7%
6.2%
10.6%
10.2%
6.9%
10.1%
-16.7%
-3.1%
-0.1%
-0.1%
2.4%
2.0%
3.2%
1.8%
-3.1%
-4.9%
0.2%
Alamance County
3.2%
5.6%
7.2%
7.2%
6.3%
6.0%
5.5%
5.1%
6.5%
12.0%
11.1%
6.3%
9.7%
-1.9%
*Total employment data is as of June 2010; unemployment rate data reflects the average of 12 months of 2010.
Source: Bureau of Labor Statistics and Economy.com. Employment figures are from the Quarterly Census of Employment and Wages (QCEW).
Unemployment rates are from the Current Population Survey (CPS). The figures are not seasonally adjusted.
Unemployment rate trends are another way of gauging an area’s economic health. Over the
past decade, the Alamance County unemployment rate has been generally higher than that of
North Carolina, with an average unemployment rate of 6.9% in comparison to a 6.3% rate for
North Carolina. This is another indication of weakness in the Alamance County economy
over the longer term.
At the current time, the Alamance County unemployment rate is 10.1% in comparison to a
9.7% rate for North Carolina, a sign that Alamance County has been harder hit in the recent
downturn.
Major employers in Alamance County are shown in the table below.
MAJOR EMPLOYERS
1
2
3
4
5
6
7
8
9
10
Alamance County
Name
Alamance-Burlington School System
Laboratory Corp of America Holdings
Alamance Regional Medical Center
Elon University
Alamance County Government
Wal-Mart Associates Inc.
Olsten Staffing
City of Burlington
Gate City of Burlington Inc.
Alamance Community College
Number of Employees
1,000+
1,000+
1,000+
1,000+
1,000+
500-999
500-999
500-999
500-999
500-999
Source: 1st Qtr 2011 NC Employment Security Commission
GROSS DOMESTIC PRODUCT
Gross Domestic Product (GDP) is a measure of economic activity based on the total value of
goods and services produced in a defined geographic area. Although GDP figures are not
available at the county level, data reported for the Burlington MSA is considered meaningful
PAGE 8
RITE AID
ALAMANCE COUNTY AREA ANALYSIS
when compared to the nation overall, as Alamance County is part of the MSA and subject to
its influence.
Economic growth, as measured by annual changes in GDP, has been considerably lower in
the Burlington MSA than the United States overall during the past eight years. The
Burlington MSA has declined at a 1.7% average annual rate while the United States has
grown at a 1.6% rate. The area appears to be harder hit in the recent downturn, as the
Burlington MSA's GDP declined by 10.3% in 2009 while the United States GDP declined by
2.1%.
The Burlington MSA has a per capita GDP of $24,641, which is 41% less than the United
States GDP of $42,031. This means that Burlington MSA industries and employers are
adding relatively less value to the economy than their counterparts in the United States
overall.
GROSS DOMESTIC PRODUCT
($ Mil)
Year
Burlington MSA
2002
4,177
2003
3,974
2004
4,093
2005
4,136
2006
4,249
2007
4,203
2008
4,129
2009
3,705
Compound % Chg (2002-2009)
GDP Per Capita 2009
$24,641
%
Change
-4.9%
3.0%
1.1%
2.7%
-1.1%
-1.8%
-10.3%
-1.7%
($ Mil)
US
11,560,300
11,807,800
12,212,600
12,554,500
12,895,900
13,162,800
13,181,900
12,903,800
%
Change
2.1%
3.4%
2.8%
2.7%
2.1%
0.1%
-2.1%
1.6%
$42,031
Source:Bureau of Economic Analysis and Economy.com
The figures in the table above represent inflation adjusted “real” GDP stated in 2005 dollars.
INCOME, EDUCATION AND AGE
Alamance County has a lower level of household income than North Carolina. Median
household income for Alamance County is $49,882, which is 2.0% less than the
corresponding figure for North Carolina.
MEDIAN HOUSEHOLD INCOME - 2010
Alamance County
North Carolina
$49,882
$50,887
Comparison of Alamance County to North Carolina
▼ 2.0%
Source: STDB/ ESRI
Residents of Alamance County have a lower level of educational attainment than those of
North Carolina. An estimated 23% of Alamance County residents are college graduates with
four year degrees, versus 27% of North Carolina residents. People in Alamance County are
PAGE 9
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ALAMANCE COUNTY AREA ANALYSIS
slightly older than their North Carolina counterparts. The median age for Alamance County
is 39 years, while the median age for North Carolina is 38 years.
EDUCATION AND AGE - 2010
Median Age
Percent College Graduate
80%
50
70%
45
60%
40
39
38
35
50%
40%
23%
27%
30
25
30%
20
20%
15
10
10%
Alamance County
North Carolina
Alamance County
North Carolina
Source: STDB/ ESRI
CONCLUSION
The recent downturn in the national economy has had a greater impact in Alamance County
than in many areas of the country.
Over the long term, Alamance County will be affected by a growing population base and
lower income and education levels. Alamance County experienced a substantial loss of jobs
over the past decade, and the future trend in employment is difficult to forecast. Moreover,
economic weakness is evident in the decline of Gross Domestic Product (GDP) at the
Burlington MSA level, of which Alamance County is a part. Based on these factors, we
anticipate that the Alamance County economy will recover and employment growth will
resume, strengthening the demand for real estate.
PAGE 10
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ALAMANCE COUNTY AREA ANALYSIS
AREA MAP
PAGE 11
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SURROUNDING AREA ANALYSIS
SURROUNDING AREA ANALYSIS
LOCATION
The subject is located in the central portion of Alamance County in the city of Graham.
ACCESS AND LINKAGES
Primary access to the area is provided by Interstate 40, a major arterial highway that cross the
Alamance County area in a east/west direction. Secondary access is provided by South Main
Street (US Highway 87) which runs in a north/south direction through the city of Graham.
Overall, vehicular access is average. The primary mode of transportation in this area is the
automobile.
DEMOGRAPHICS
A demographic profile of the surrounding area, including population, households, and
income data, is presented in the following table.
SURROUNDING AREA DEMOGRAPHICS
2010 Estimates
Population 2000
Population 2010
Population 2015
Compound % Change 2000-2010
Compound % Change 2010-2015
1-Mile Radius
4,565
4,770
4,956
0.4%
0.8%
3-Mile Radius
28,891
31,442
33,038
0.8%
1.0%
5-Mile Radius
67,454
74,339
78,507
1.0%
1.1%
Alamance
County
130,800
150,355
161,508
1.4%
1.4%
North Carolina
8,049,313
9,552,054
10,345,227
1.7%
1.6%
Households 2000
Households 2010
Households 2015
Compound % Change 2000-2010
Compound % Change 2010-2015
1,785
1,904
1,989
0.6%
0.9%
11,676
12,676
13,297
0.8%
1.0%
27,478
30,423
32,146
1.0%
1.1%
51,584
60,222
64,913
1.6%
1.5%
3,132,013
3,761,099
4,088,898
1.8%
1.7%
$53,616
2.4
25%
38
53%
36%
$121,700
1975
20
$47,240
2.4
18%
37
54%
37%
$98,331
1968
20
$46,338
2.4
21%
38
58%
33%
$102,061
1968
20
$49,882
2.4
23%
39
64%
27%
$108,553
1974
22
$50,887
2.5
27%
38
60%
27%
$132,772
1978
24
Median Household Income 2010
Average Household Size
College Graduate %
Median Age
Owner Occupied %
Renter Occupied %
Median Owner Occupied Housing Value
Median Year Structure Built
Avg. Travel Time to Work in Min.
Source: STDB/ ESRI
As shown above, the current population within a 3-mile radius of the subject is 31,442, and
the average household size is 2.4. Population in the area has grown since the 2000 census,
and this trend is projected to continue over the next five years. Compared to Alamance
County overall, the population within a 3-mile radius is projected to grow at a slower rate.
Median household income is $47,240, which is lower than the household income for
Alamance County. Residents within a 3-mile radius have a lower level of educational
attainment than those of Alamance County, while median owner occupied home values are
considerably lower.
LAND USE
The area is suburban in character and approximately 60% developed.
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SURROUNDING AREA ANALYSIS
Land uses immediately surrounding the subject are predominantly retail with typical ages of
building improvements ranging from new to 40 years. Land users in the area include: Rite
Aid (subject), Wendy's, Just Save, Crescent Oaks Apartments, Maaco, Advance Auto, RBC
Bank, Cruz Thru, Burger King, Dentist Office, Bojangles', Auto Park Plaza, County Ford,
Mid Carolina Bank, Graham Animal Hospital, AutoZone, O’Reilly Auto Parts, Champion
Automotive and Tire, More Than Fitness, Sonic, Crescent Square anchored by Family
Dollar, Pizza Hut, and Subway, and Lowe's Foods, BP, Express Care, Graham Market Place,
Quality Gas, McClure Funeral Services, Harbor House Seafood, Arby’s, Taco Bell, Citgo,
McDonald’s, CVS Pharmacy, Exxon, Curves, Carolina Square anchored by Food Lion, and
Michael Dawns Hair Center.
OUTLOOK AND CONCLUSIONS
The area is currently in the stability stage of its life cycle. Given the downturn in the
economy, we anticipate that property values will remain stable or decline slightly in the near
future, but should increase at a moderate pace once economic conditions improve.
PAGE 13
RITE AID
SURROUNDING AREA ANALYSIS
SURROUNDING AREA MAP
PAGE 14
RITE AID
NET LEASE MARKET ANALYSIS
NET LEASE MARKET ANALYSIS
The subject property is subject to a long-term net lease to Rite Aid (formerly Eckerd
Corporation), in which the tenant is responsible for nearly all operating expenses. Therefore,
the subject property has very strong appeal to an exceedingly desirable real estate market
segment comprised of Real Estate Investment Trusts (REIT), national investors, and 1031 tax
free exchange investors.
TAX FREE EXCHANGES
The Income Tax Reform Act of 1986 created the current vehicle which can be used to defer
capital gains taxes when a property is sold: the 1031 tax free exchange. This has created
significant demand for net leased properties. These transactions are often referred to as
Starker Exchanges in reference to a court decision of several years ago which clarified the
regulations that apply to such transactions.
Tax free exchanges can be very beneficial to individuals owning fully depreciated or nearly
fully depreciated real estate. Take for example an investor who owns a 30-year old apartment
complex now worth $5.0 million with a depreciated value of $2.0 million. If the investor
were to sell the apartment complex outright, a capital gains tax on $3.0 million would be
owed, the difference between the sales price and the depreciated basis. The investor, aware
that the complex is aging and wishing to move money to a safer investment vehicle, might
elect to affect a tax free exchange rather than sell the property outright and face a steep tax
bill. Upon securing a buyer for the property, the investor would arrange for a trustee, who
specializes in such transactions to simultaneously sell the apartment complex for $5.0 million
and exchange (purchase) an absolute net leased retail building for $5.0 million. The
investor’s taxable event is deferred and he now has control of a new or nearly new retail
property leased to a national credit tenant on a long term basis. This is almost the equivalent
of purchasing a corporate bond except that the investor also holds real estate should the
tenant default. The investor is even able to pick from a variety of retailers with credit ranging
from rock solid companies such as Wal-Mart to more “speculative” companies with lower
credit ratings but offering higher returns.
There are a number of rules regulating the type of property that can be purchased, the time
that the investor has to complete the exchange, the amount at which the exchange property
can be purchased, and other characteristics of the transaction. Exchanges can also be
arranged for investors selling property with little or no profit from the sale but huge potential
tax bills through the assumption of existing mortgages. As noted below, the underwriting of
mortgage loans on such properties focuses more upon the credit of the tenant rather than the
creditworthiness of the borrower, another factor in favor of using net leased property in
exchanges.
While individuals wanting to complete tax free exchanges are not the only investors buying
net leased property, the substantial volume of such transactions has a significant impact upon
the availability and pricing of these types of properties.
RETURNS SIMILAR TO CORPORATE BONDS
Capitalization rates for net leased properties are often several hundred basis points higher
than returns on corporate bonds for the tenant.
PAGE 15
RITE AID
NET LEASE MARKET ANALYSIS
Real estate is illiquid in comparison to corporate bonds and the investor faces the problem of
re-leasing or selling the building at the end of the lease, but many investors find that they
would rather own a well located retail store with a lease to a credit tenant than they would a
corporate bond issued by the same company. It is these factors that have influenced many
buyers of net leased properties, including REITs, partnerships, pension funds, and individual
investors.
SOURCES OF FINANCING
Because the leases for net-leased properties are generally secured by the credit of the tenant,
many lenders are able to underwrite such loans with higher loan to value ratios than typical
and with lower interest rates. Financing of 100% of the sales price is possible to obtain for
buildings with highly rated tenants, with the loan normally fully amortized in the primary
term of the lease. Loans are often made with debt coverage ratios of 1.05, a level unheard of
for more traditional real estate loans. The availability of such financing and the favorable
terms available has driven capitalization rates down, making it all the more attractive to
retailers or developers to sell properties.
NET LEASE MARKET CONCLUSION
The following is taken from the Second Quarter 2011 PwC Real Estate Investor Survey:
Investors eager to deploy capital are seeking the safety of fixed-income streams associated
with high-quality net lease assets. "Sales activity remains very strong for core assets, but is
light for everything else," remarks a participant. For the 12-month period ending March
2011, sales of net lease assets increased 83.0%, according to Real Capital Analytics. During
that time period, a total of 1,149 assets traded, exceeding $18.5 billion. Single-tenant office
properties represented roughly 53.0% of these sales, followed by industrial (28.0%) and retail
(19.0%) assets.
Many sellers of core net lease assets have benefitted from the reentry of institutional
investors into this market. This quarter, half of our surveyed investors view the current net
lease market as favoring sellers, while about 13.0% consider the market as favoring buyers.
The remainder believes the market is neutral - equally favoring buyers and sellers. These
positions have shifted from a year ago when financing was not as readily available and
institutional investors were sitting on the sidelines. At that time, Survey participants' views of
the market were divided between being neutral (57.0%) and favoring buyers (43.0%).
A predominance of credit net lease trades pushed this market's average overall capitalization
(cap) rate down for the fourth consecutive quarter. While the average overall cap rate slipped
16 basis points this quarter, it remains elevated from the recent cycle peak. Over the next six
months, the majority (75.0%) of Survey participants expect overall cap rates to hold steady,
an increase from last quarter when 50.0% foresaw stable cap rates.
Despite an uptick in sales and cap rate compression, a few investors believe current
economic and capital conditions present potential risks for the net lease sector. As one
participant summarizes, "The government is keeping interest rates historically low; lenders
are not lending without taking their pound of flesh; corporate America is flush with cash; real
estate values are down; and the FASB is threatening to do away with off-balance-sheet
accounting for leases – staying power is a must in this market."
PAGE 16
RITE AID
NET LEASE MARKET ANALYSIS
RITE AID ANALYSIS
Rite Aid is the third largest drug store chain behind Walgreens and CVS. After years of
sagging sales, same-store sales have increased in the past few quarters as a result of new
initiatives fostering to customer loyalty and reduction of store sizes.
Rite Aid was hit particularly hard by the recent economic conditions when stock shares
declined by 84% during a four year period, but has noticeably rebounded at mid-year 2011.
At one point, Walgreen purchased 20 existing Rite Aids throughout the country when Rite
Aid was deemed to be a take over target as it sold and closed stores. Coupled with a heavy
debt load, Rite Aid is considered to be a risky investment. Fidelity Brokerage Services cites
unproductive stores, undesirable locations, and tough lease terms as barriers to profitability.
The following chart shows Rite Aid’s position relative to Walgreens and CVS as reported by
The Boulder Group in September 2011.
The Boulder Group reports in its September 2011 “The Net Lease Drug Store Report,” that
“While Walgreens and CVS remain the center of investment activity within the net lease
drug store sector, Rite Aid is seeing a nascent resurgence of investor interest. Transaction
volume for Rite Aid properties has increased 23% on a year over year basis. Despite Rite
Aid’s long term leases, there has been limited demand from investors as Rite Aid is a noninvestment grade rated tenant. However, with a long term lease and a current median yield of
9.23%, investors are emerging to selectively pursue locations in primary metropolitan areas
with strong store sales.”
PAGE 17
RITE AID
LAND DESCRIPTION AND ANALYSIS
PROPERTY ANALYSIS
LAND DESCRIPTION AND ANALYSIS
LAND DESCRIPTION
Land Area - Acres
Land Area - Square Feet
Source of Land Area
Primary Street Frontage
Secondary Street Frontage
Shape
Corner
Topography
Drainage
Environmental Hazards
Ground Stability
1.18
51,401
Site Plan prepared by PM Engineering dated November 2004
South Main Street - 200 feet
W. Crescent Square Drive - 258 feet
Rectangular
Yes
Generally level and at street grade
No problems reported or observed
None reported or observed
No problems reported or observed
Flood Area Panel Number
Date
Zone
Description
Insurance Required?
3710888300J
September 6, 2006
X
Outside of 500-year floodplain
No
Zoning Jurisdiction
Zoning Designation
Description
Legally Conforming?
Zoning Change Likely?
Permitted Uses
Minimum Lot Width (Feet)
Minimum Setback (Feet)
Minimum Side Yard (Feet)
Minimum Rear Yard (Feet)
Maximum Building Height
Service
Water
Sewer
Electricity
Natural Gas
Local Phone
ZONING; OTHER REGULATIONS
City of Graham
B-2, General Business District
The B-2 General Business Districts are generally located on the major
thoroughfares and collector streets in the Graham planning area. They
are intended to provide personal services and the retailing of durable and
convenience goods for the community. Because these commercial uses
are subject to public view and are important to the economy of the area,
they should have ample parking, controlled traffic movement, and
suitable landscaping.
Yes
No
Various retail and office uses
60
20
10 adjacent to non-residential; 20 abutting street
20
35 feet and not over 2 stories
UTILITIES
Provider
City of Graham
City of Graham
Duke Power
Piedmont Natural Gas
Various Providers
PAGE 18
RITE AID
LAND DESCRIPTION AND ANALYSIS
EASEMENTS, ENCROACHMENTS AND RESTRICTIONS
We were not provided a current title report to review. We are aware of a cross access
easement for ingress and egress with the adjacent property. We are not aware of any other
easements, encumbrances, or restrictions that would adversely affect value. Our valuation
assumes no adverse easements, encroachments or restrictions and that the subject has a clear
and marketable title.
CONCLUSION OF SITE ANALYSIS
Overall, the physical characteristics of the site and the availability of utilities result in
functional utility suitable for a variety of uses including those permitted by zoning. With the
exception of the cross access easement, there are no other particular restrictions on
development noted in the analysis.
PAGE 19
RITE AID
LAND DESCRIPTION AND ANALYSIS
TAX MAP
PAGE 20
RITE AID
LAND DESCRIPTION AND ANALYSIS
AERIAL MAP
PAGE 21
RITE AID
LAND DESCRIPTION AND ANALYSIS
FLOOD MAP
PAGE 22
RITE AID
LAND DESCRIPTION AND ANALYSIS
SURVEY
PAGE 23
RITE AID
IMPROVEMENTS DESCRIPTION AND ANALYSIS
IMPROVEMENTS DESCRIPTION AND ANALYSIS
OVERVIEW
The subject is a free standing, net leased retail property containing 13,824 square feet of
gross leasable area. The improvements were constructed in 2004 and are 100% leased by
Rite Aid (formerly Eckerd Corporation). The site area is 1.18 acres, or 51,401 square feet.
The following description is based on our inspection of the property.
IMPROVEMENTS DESCRIPTION
Name of Property
General Property Type
Property Sub Type
Occupancy Type
Percent Leased
Number of Tenants
Number of Buildings
Stories
Construction Class
Construction Type
Construction Quality
Condition
Gross Leasable Area (SF)
Land Area (SF)
Floor Area Ratio (GLA/Land SF)
Building Area Source
Year Built
Year Renovated
Actual Age (Yrs.)
Estimated Effective Age (Yrs.)
Estimated Economic Life (Yrs.)
Remaining Economic Life (Yrs.)
Number of Parking Spaces
Parking Type
Parking Spaces/1,000 SF GLA
Rite Aid
Retail
Free Standing Drug Store
Single Tenant
100%
1
1
1
C
Masonry
Good
Good
13,824
51,401
0.27
Lease agreement
2004
N/A
6
5
45
40
55
Surface
3.98
PAGE 24
RITE AID
IMPROVEMENTS DESCRIPTION AND ANALYSIS
CONSTRUCTION DETAILS
Foundation
Structural Frame
Exterior Walls
Windows
Roof
Floors
Walls
Ceilings
Lighting
HVAC
Electrical
Plumbing
Rest Rooms
Sprinklers
Security
Poured concrete slab
Masonry/Steel
Brick veneer
Insulated glass/metal frame
Flat
Vinyl tile
Painted drywall
Suspended acoustical tile
Fluorescent
Assumed adequate
Assumed adequate
Assumed adequate
Adequate
Yes
Yes
IMPROVEMENTS ANALYSIS
Layout
The subject is an existing one-story Rite Aid Pharmacy. The interior includes a retail area,
walk-in cooler, pharmacy, receiving area, employee break room, manager’s office and
restrooms. The subject also has a drive-thru window for the pharmacy.
Quality and Condition
The improvements are of good quality construction and are in good condition. The quality of
the subject is considered to be consistent with that of competing properties, and maintenance
appears to have been consistent with that of competing properties. Overall, the market appeal
of the subject is consistent with that of competing properties.
Functional Utility
The improvements appear to be adequately suited to their current use. Based on our
inspection and consideration of the foregoing, there do not appear to be any significant items
of functional obsolescence.
Deferred Maintenance
No deferred maintenance is apparent from our inspection.
ADA Compliance
Based on our inspection and information provided, we are not aware of any ADA issues.
However, we are not expert in ADA matters, and further study by an appropriately qualified
professional would be recommended to assess ADA compliance.
Hazardous Substances
An environmental assessment report was not provided for review and environmental issues
are beyond our scope of expertise. No hazardous substances were observed during our
PAGE 25
RITE AID
IMPROVEMENTS DESCRIPTION AND ANALYSIS
inspection of the improvements; however, we are not qualified to detect such substances.
Unless otherwise stated, we assume no hazardous conditions exist on or near the subject.
Personal Property
There are no personal property items that would be significant to the overall valuation.
CONCLUSION OF IMPROVEMENTS ANALYSIS
In comparison to other competitive properties in the region, the subject improvements are
rated as follows:
IMPROVEMENTS RATINGS
Visibility
Design and Appearance
Age/Condition
Adaptability of Space to other Retail Users
% Sprinklered
Interior Amenities
Layout - Store to Store Proximity
Parking Ratios
Distance of Parking to Store Access
Average
Average
Average
Average
Average
Average
Average
Average
Average
Overall, the quality, condition, and functional utility of the improvements are average for
their age and location.
PAGE 26
RITE AID
IMPROVEMENTS DESCRIPTION AND ANALYSIS
Front and Side View of Subject
(Photo Taken on December 13, 2011)
Side View of Subject
(Photo Taken on December 13, 2011)
Front and Side View of Subject
(Photo Taken on December 13, 2011)
Interior View of Subject
(Photo Taken on December 13, 2011)
Interior View of Subject
(Photo Taken on December 13, 2011)
Interior View of Subject
(Photo Taken on December 13, 2011)
PAGE 27
RITE AID
IMPROVEMENTS DESCRIPTION AND ANALYSIS
Looking North on South Main Street
(Photo Taken on December 13, 2011)
Looking South on South Main Street
(Photo Taken on December 13, 2011)
Looking East on West Crescent Square Drive
(Photo Taken on December 13, 2011)
Looking West on West Crescent Square Drive
(Photo Taken on December 13, 2011)
PAGE 28
RITE AID
REAL ESTATE TAX ANALYSIS
REAL ESTATE TAX ANALYSIS
The real estate tax assessment of the subject is administered by both the City of Graham and
Alamance County. Real estate taxes in this state and this jurisdiction represent ad valorem
taxes, meaning a tax applied in proportion to value. The real estate taxes for an individual
property may be determined by dividing the assessed value for a property by 100, then
multiplying the estimate by the composite tax rate. The assessed values are based upon the
current conversion assessment rate of 100% of Assessor’s market value.
Real estate taxes and assessments for the current tax year are shown in the following table.
TAXES AND ASSESSMENTS - 2011
Assessed Value
Tax ID
144069
Land
$557,028
Improvements
$1,484,486
Total
$2,041,514
Taxes and Assessments
Ad Valorem
Direct
Tax Rate
Taxes
Assessments
$0.960
$19,599
$0
Total
$19,599
The composite tax rate for the subject for the 2011 tax year is $0.96 per $100 of assessed
value. This includes the Alamance County tax rate of $0.52 and the City of Graham tax rate
of $0.44. Application of this rate to the total assessed value of $2,041,514 results in a 2011
real estate tax liability of $19,599.
Based on the concluded as-is market value of the subject, the assessed value is low. The
assessed value is based on the last revaluation, which occurred January 1, 2009. The next
revaluation is scheduled for January 1, 2017.
PAGE 29
RITE AID
HIGHEST AND BEST USE ANALYSIS
HIGHEST AND BEST USE ANALYSIS
AS IF VACANT
Legally Permissible
The only permitted use under zoning that is consistent with prevailing land use patterns in the
area is retail use.
Physically Possible
There are no physical limitations that would prohibit development of a retail use on the site.
Financially Feasible
Based on our analysis of the market, there is limited demand for additional retail
development at the current time. It appears that a newly developed retail use on the site
would not have a value commensurate with its cost; therefore retail use is not considered to
be financially feasible. Nevertheless, we expect an eventual recovery of the market
accompanied by a rise in property values to a level that will justify the cost of new
construction. Thus, it is anticipated that retail development will become financially feasible
in the future.
Maximally Productive
There does not appear to be any reasonably probable use of the site that would generate a
higher residual land value than holding the property for future development of a retail use.
Accordingly, it is our opinion that holding the property for future retail use, based on the
normal market density level permitted by zoning, is the maximally productive use of the
property.
Conclusion
Holding the property for future development of a retail use is the only use that meets the four
tests of highest and best use. Therefore, it is concluded to be the highest and best use of the
property as if vacant.
AS IMPROVED
The subject site is developed with a Rite Aid pharmacy, which is consistent with the highest
and best use of the site as if it were vacant. The existing improvements are currently leased
and produce a significant positive cash flow that we expect will continue. Therefore, a
continuation of this use is concluded to be financially feasible. Based on our analysis, there
does not appear to be any alternative use that could reasonably be expected to provide a
higher present value than the current use, and the value of the existing improved property
exceeds the value of the site, as if vacant. For these reasons, continued retail use is concluded
to be maximally productive and the highest and best use of the property as improved.
MOST PROBABLE BUYER
Taking into account the size and characteristics of the property, the likely buyer is an
investor.
PAGE 30
RITE AID
VALUATION METHODOLOGY
VALUATION ANALYSIS
VALUATION METHODOLOGY
Appraisers usually consider three approaches to estimating the market value of real property.
These are the cost approach, sales comparison approach and the income capitalization
approach.
The cost approach assumes that the informed purchaser would pay no more than the cost of
producing a substitute property with the same utility. This approach is particularly applicable
when the improvements being appraised are relatively new and represent the highest and best
use of the land or when the property has unique or specialized improvements for which there
is little or no sales data from comparable properties.
The sales comparison approach assumes that an informed purchaser would pay no more for
a property than the cost of acquiring another existing property with the same utility. This
approach is especially appropriate when an active market provides sufficient reliable data.
The sales comparison approach is less reliable in an inactive market or when estimating the
value of properties for which no directly comparable sales data is available. The sales
comparison approach is often relied upon for owner-user properties.
The income capitalization approach reflects the market’s perception of a relationship
between a property’s potential income and its market value. This approach converts the
anticipated net income from ownership of a property into a value indication through
capitalization. The primary methods are direct capitalization and discounted cash flow
analysis, with one or both methods applied, as appropriate. This approach is widely used in
appraising income-producing properties.
Reconciliation of the various indications into a conclusion of value is based on an evaluation
of the quantity and quality of available data in each approach and the applicability of each
approach to the property type.
The methodology employed in this assignment is summarized as follows:
APPROACHES TO VALUE
Approach
Cost Approach
Sales Comparison Approach
Income Capitalization Approach
Applicability to Subject
Applicable
Applicable
Most applicable
Use in Assignment
Not Utilized
Utilized
Utilized
PAGE 31
RITE AID
SALES COMPARISON APPROACH
SALES COMPARISON APPROACH
The sales comparison approach develops an indication of value by comparing the subject to
sales of similar properties. The steps taken to apply the sales comparison approach are:
Identify relevant property sales;
Research, assemble, and verify pertinent data for the most relevant sales;
Analyze the sales for material differences in comparison to the subject;
Reconcile the analysis of the sales into a value indication for the subject.
To apply the sales comparison approach, we searched for sale transactions most relevant to
the subject in terms of property type, location, size, age, quality, and transaction date. Note
that we have expanded our search to include transactions in other states as there were limited
sales in the subject area. We use price per square foot of gross leasable area as the
appropriate unit of comparison because market participants typically compare sale prices and
property values on this basis. The most relevant sales are summarized in the following table.
SUMMARY OF COMPARABLE IMPROVED SALES
No. Name/Address
1 Rite Aid
1510 W O Ezell Blvd.
Spartanburg
Spartanburg County
SC
2 CVS Store
5100 S. Laburnum Ave.
Richmond
Henrico County
VA
3 Rite Aid
1900 Sandy Plains Rd.
Marietta
Cobb County
GA
4 Walgreens
2427 Springs Rd.NE.
Hickory
Catawba County
NC
5 Rite Aid
7505 Louisburg Rd.
Raleigh
Wake County
NC
6 Rite Aid
5915 Spout Springs Rd.
Flowery Branch
Hall County
GA
Sale
Date
Aug-11
Yr. Built
2002
Apr-11
1999
Sep-10
Acres;
FAR
1.00
0.25
Sale Price
$2,500,000
Leasable
SF
10,908
$/Leasable
SF
$229.19
Cap Rate
10.50%
1.24
0.19
$4,020,000
10,125
$397.04
7.82%
2003
1.97
0.16
$3,015,000
13,813
$218.27
12.50%
Sep-10
2007
1.78
0.19
$5,838,926
14,820
$393.99
7.45%
Aug-10
2003
2.73
0.09
$2,391,500
11,529
$207.43
9.00%
Jun-10
2004
1.68
0.18
$2,600,000
13,813
$188.23
11.41%
PAGE 32
RITE AID
SALES COMPARISON APPROACH
COMPARABLE IMPROVED SALES MAP
PAGE 33
RITE AID
SALES COMPARISON APPROACH
Sale 1
Rite Aid
Sale 2
CVS Store
Sale 3
Rite Aid
Sale 4
Walgreens
Sale 5
Rite Aid
Sale 6
Rite Aid
PAGE 34
RITE AID
SALES COMPARISON APPROACH
ADJUSTMENT FACTORS
The sales are compared to the subject and adjusted to account for material differences that
affect value. Adjustments are considered for the following factors, in the sequence shown
below.
ADJUSTMENT FACTORS
Effective Sale Price
Accounts for atypical economics of a transaction, such as
excess land, non-realty components, expenditures by the
buyer at time of purchase, or other similar factors. Usually
applied directly to sale price on a lump sum basis.
Real Property Rights
Leased fee, fee simple, leasehold, partial interest, etc.
Financing Terms
Seller financing, or assumption of existing financing, at nonmarket terms.
Conditions of Sale
Extraordinary motivation of buyer or seller, such as 1031
exchange transaction, assemblage, or forced sale.
Market Conditions
Changes in the economic environment over time that affect
the appreciation and depreciation of real estate.
Location
Market or submarket area influences on sale price;
surrounding land use influences.
Access/Exposure
Convenience to transportation facilities; ease of site access;
visibility from main thoroughfares; traffic counts.
Size
Inverse relationship that often exists between building size
and unit value.
Parking
Ratio of parking spaces to building area.
Building to Land Ratio
Ratio of building area to land area; also known as floor area
ratio (FAR).
Building Quality
Construction quality, amenities, market appeal, functional
utility.
Age/Condition
Effective age; physical condition.
Economic Characteristics
Non-stabilized occupancy, above/below market rents, and
other economic factors. Excludes differences in rent levels
that are already considered in previous adjustments, such as
for location or quality
Issues requiring elaboration are addressed in the following paragraphs.
Market Conditions
The sales took place from June 2010 to August 2011. In this analysis, no adjustments were
made for property rights conveyed, financing terms, or conditions of sale. Market conditions
generally have been stable over this period through the effective date of value. As a result,
we apply no adjustments to account for this trend.
PAGE 35
RITE AID
SALES COMPARISON APPROACH
ANALYSIS AND ADJUSTMENT OF SALES
The analysis and adjustment of the comparable sales is discussed in the following
paragraphs. Note that our adjustments for economic characteristics were based on the
difference between the comparables actual cap rates compared to our estimated market cap
rate at 9.50%.
Sale 1 is Rite Aid, located at 1510 W O Ezell Boulevard in Spartanburg, South Carolina. It is
a 10,908 square foot retail property. The property sold in August 2011 for $2,500,000, or
$229.19 per square foot. Sale one was given a positive adjustment for its inferior economic
characteristics. It is similar in location, size, age/condition, building quality and building to
land ratio and no adjustments were needed.
Sale 2 is CVS Store, located at 5100 South Laburnum Avenue in Richmond, Virginia. It is a
10,125 square foot retail property. The property sold in April 2011 for $4,020,000, or
$397.04 per square foot. Sale two was given a negative adjustment for its superior location
and economic characteristics. It is similar in size, age/condition, building quality and
building to land ratio and no other adjustments were needed.
Sale 3 is Rite Aid, located at 1900 Sandy Plains Road in Marietta, Georgia. It is a 13,813
square foot retail property. The property sold in September 2010 for $3,015,000, or $218.27
per square foot. Sale three was given a positive adjustment for its inferior economic
characteristics. It is similar in location, size, age/condition, building quality and building to
land ratio and no other adjustments were needed.
Sale 4 is Walgreens, located at 2427 Springs Road NE in Hickory, North Carolina. It is a
14,820 square foot retail property. The property sold in September 2010 for $5,838,926, or
$393.99 per square foot. Sale four was given a negative adjustment for its superior location,
age/condition and economic characteristics. It is similar in size, building quality and building
to land ratio and no other adjustments were needed.
Sale 5 is Rite Aid, located at 7505 Louisburg Road in Raleigh, North Carolina. It is a 11,529
square foot retail property. The property sold in August 2010 for $2,400,000, or $208.17 per
square foot. Sale five was given a positive adjustment for its inferior location. It is similar in
size, age/condition, building quality, building to land ratio, and economic characteristics and
no other adjustments were needed.
Sale 6 is Rite Aid, located at 5915 Spout Springs Road in Flowery Branch, Georgia. It is a
13,813 square foot retail property. The property sold in June 2010 for $2,600,000, or $188.23
per square foot. Sale six was given positive adjustments for its inferior location and
economic characteristics. It is similar in size, age/condition, building quality and building to
land ratio and no other adjustments were needed.
PAGE 36
RITE AID
SALES COMPARISON APPROACH
The following table summarizes the adjustments we make to each sale.
IMPROVED SALES ADJUSTMENT GRID
Property Name
Address
Subject
Rite Aid
841 S. Main Street
Graham
City
Alamance
County
State
NC
Sale Date
N/A
Sale Price
N/A
Gross Leasable Area
13,824
Land Acres
1.18
Year Built
2004
Building Quality
Good
FAR
0.27
Projected NOI Per Net SF
$28.42
Cap Rate
IRR Est. 9.50%
Database ID
Price Per SF of Gross Leasable Area
PROPERTY RIGHTS
% ADJUSTMENT
FINANCING TERMS
% ADJUSTMENT
CONDITIONS OF SALE
% ADJUSTMENT
See Comments
MARKET CONDITIONS
ANNUAL % ADJUSTMENT
CUMULATIVE ADJUSTED PRICE
LOCATION
% ADJUSTMENT
SIZE
% ADJUSTMENT
AGE/CONDITION
% ADJUSTMENT
BUILDING QUALITY
% ADJUSTMENT
BUILDING TO LAND RATIO
% ADJUSTMENT
ECONOMIC CHARACTERISTICS
% ADJUSTMENT
Net $ Adjustment
Net % Adjustment
Final Adjusted Price
Overall Adjustment
Range of Adjusted Prices
Average
Indicated Value
Comparable 1
Comparable 2
Comparable 3
Comparable 4
Rite Aid
CVS Store
Rite Aid
Walgreens
1510 W O Ezell 5100 S. Laburnum 1900 Sandy Plains
2427 Springs
Blvd.
Ave.
Rd.
Rd.NE.
Spartanburg
Richmond
Marietta
Hickory
Spartanburg
Henrico
Cobb
Catawba
SC
VA
GA
NC
Aug-11
Apr-11
Sep-10
Sep-10
$2,500,000
$4,020,000
$3,015,000
$5,838,926
10,908
10,125
13,813
14,820
1.00
1.24
1.97
1.78
2002
1999
2003
2007
Good
Good
Good
Good
0.25
0.19
0.16
0.19
$24.06
$31.05
$27.28
$29.35
10.50%
7.82%
12.50%
7.45%
502097
461200
427033
422885
$229.19
$397.04
$218.27
$393.99
Leased Fee
Leased Fee
Leased Fee
Leased Fee
0%
0%
0%
0%
Cash to Seller
Cash to Seller
Cash to Seller
Cash to Seller
0%
0%
0%
0%
Arms Length
Arms Length
Arms Length
Arms Length
0%
0%
0%
0%
Aug-11
Apr-11
Sep-10
Sep-10
0%
0%
0%
0%
$229.19
$397.04
$218.27
$393.99
Superior
Similar
Superior
Similar
0%
-10%
0%
-5%
Similar
Similar
Similar
Similar
0%
0%
0%
0%
Similar
Similar
Superior
Similar
0%
0%
0%
-5%
Similar
Similar
Similar
Similar
0%
0%
0%
0%
Similar
Similar
Similar
Similar
0%
0%
0%
0%
Superior
Inferior
Superior
Inferior
15%
-15%
25%
-15%
$34.38
-$99.26
$54.57
-$98.50
15%
-25%
25%
-25%
$263.57
$297.78
$272.84
$295.49
15%
-25%
25%
-25%
$248.92 - $297.78
$272.12
$275.00
Comparable 5
Rite Aid
7505 Louisburg
Rd.
Raleigh
Wake
NC
Aug-10
$2,391,500
11,529
2.73
2003
Good
0.09
$18.67
9.00%
424692
$207.43
Leased Fee
0%
Cash to Seller
0%
Arms Length
0%
Aug-10
0%
$207.43
Inferior
20%
Similar
0%
Similar
0%
Similar
0%
Similar
0%
Similar
0%
$41.49
20%
$248.92
20%
Comparable 6
Rite Aid
5915 Spout
Springs Rd.
Flowery Branch
Hall
GA
Jun-10
$2,600,000
13,813
1.68
2004
Good
0.18
$21.49
11.41%
427131
$188.23
Leased Fee
0%
Cash to Seller
0%
Arms Length
0%
Jun-10
0%
$188.23
Inferior
15%
Similar
0%
Similar
0%
Similar
0%
Similar
0%
Inferior
20%
$65.88
35%
$254.11
35%
–
–
–
–
–
–
PAGE 37
RITE AID
SALES COMPARISON APPROACH
VALUE INDICATION - SALES COMPARISON APPROACH
Prior to adjustments, the sales reflect a range of $188.23 to $397.04 per square foot of gross
leasable area. After adjustment, the range is narrowed to $248.92 - $297.78 per square foot of
gross leasable area, with an average of $272.12 per square foot of gross leasable area. To
arrive at an indication of value, we place equal weight on all six sales.
Based on the preceding analysis, we arrive at a value indication by the sales comparison
approach as follows:
SALES COMPARISON APPROACH
INDICATED VALUE
Indicated Value per SF
Subject Square Feet
Indicated Value
Rounded
$275.00
13,824
$3,801,600
$3,800,000
In addition, we have considered current Rite Aid listings. The Boulder Group reports in its
September 2011 “The Net Lease Drug Store Report,” that there are 71 Rite Aid properties on
the market and the median asking price per square foot is $254.00. The chart below includes
some of these current Rite Aid listings.
Location
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
ACTIVE LISTINGS
Building
Asking
Asking Asking
City, State
Size
Price
Price/SF Cap Rate
Millinocket, ME
11,180
$1,625,000
$145.35
9.25%
Jewett City, CT
20,854
$3,085,057
$147.94
9.21%
Piedmont, SC
10,908
$1,810,520
$165.98
10.00%
Bennington, VT
26,696
$4,787,500
$179.33
9.26%
Lawrenceville, GA
9,504
$1,718,909
$180.86
11.00%
High Point, NC
13,824
$2,877,049
$208.12
9.15%
Woodruff, SC
13,824
$2,881,780
$208.46
10.00%
Atlanta, GA
11,296
$2,670,435
$236.41
9.21%
Reading, MA
13,611
$3,469,425
$254.90
9.21%
Douglasville, GA
11,275
$2,950,289
$261.67
9.16%
Virginia Beach, VA
12,784
$3,945,000
$308.59
8.00%
Ann Arbor, MI
14,564
$4,656,000
$319.69
8.75%
Current listings shown above range in asking price from $145.35 to $319.69 per square foot,
with an average asking price of $218.11 per square foot. Capitalization rates range from
8.00% to 11.00%, with an average asking capitalization rate of 9.35%. As shown in the chart
above, our value conclusion is within the range of listings. It should be noted that properties
are typically sold for less than their asking prices.
PAGE 38
RITE AID
INCOME CAPITALIZATION APPROACH
INCOME CAPITALIZATION APPROACH
The income capitalization approach converts anticipated economic benefits of owning real
property into a value estimate through capitalization. The steps taken to apply the income
capitalization approach are:
Analyze the revenue potential of the property.
Consider appropriate allowances for vacancy, collection loss, and operating expenses.
Calculate net operating income by deducting vacancy, collection loss, and operating
expenses from potential income.
Apply the most appropriate capitalization methods to convert anticipated net income
to an indication of value.
The two most common capitalization methods are direct capitalization and discounted cash
flow analysis. In direct capitalization, a single year’s expected income is divided by an
appropriate capitalization rate to arrive at a value indication. In discounted cash flow
analysis, anticipated future net income streams and a future resale value are discounted to a
present value at an appropriate yield rate.
In this analysis, we use only direct capitalization because investors in this property type
typically rely most on this method.
LEASED STATUS OF THE PROPERTY
The property is leased to a single tenant. Pertinent lease terms are shown below.
LEASE SYNOPSIS
Lessor:
Lessee:
Leased SF
Lease Type
Tenant Paid Expenses
Owner Paid Expenses
Commencement:
Expiration:
Term:
Remaining Term:
Graham EC, LLC
Rite Aid (formerly Eckerd Corporation)
13,824
Triple Net
Property taxes, insurance, utilities and repairs/maintenance
Management
02/01/04
01/31/24
240
months
or
20.0 years
146
months
or
12.2 years
Period
02/01/04 - 01/31/24
02/01/24 - 01/31/29
02/01/29 - 01/31/34
02/01/34 - 01/31/39
02/01/39 - 01/31/44
Base Rent & Escalations
Base Term
Option Term
Option Term
Option Term
Option Term
Current Rent
Projected Rent - First Forecast Year
Comments:
Months
1 - 240
241 - 300
301 - 360
361 - 420
421 - 480
PSF/Yr
$28.71
$29.21
$29.71
$30.21
$30.71
Annual Rent
$396,877
$403,789
$410,701
$417,613
$424,525
$396,877
$396,877
The term of the lease is 20 years with an additional four, five-year options.
PAGE 39
RITE AID
INCOME CAPITALIZATION APPROACH
MARKET RENT ANALYSIS
Contract rents typically establish income for leased space, while market rent is the basis for
estimating income for current vacant space and future speculative re-leasing of space due to
expired leases. To estimate market rent, we analyze comparable rentals most relevant to the
subject in terms of location, property type, size, and transaction date. Note that we have
expanded our search to include transactions in other states as there were limited recent leases
in the subject area. Comparables used in our analysis are summarized in the following table.
SUMMARY OF COMPARABLE RENTALS - RETAIL
No. Property Information
1 CVS Store
5100 S. Laburnum Ave.
Richmond
Henrico County
VA
2 Walgreens
11200 Providence Rd.W.
Charlotte
Mecklenburg County
NC
3 Walgreens
801 Mebane Oaks Rd.
Mebane
Alamance County
NC
4 Rite Aid
2545 Millersport Hwy.
Getzville
Niagara County
NY
5 CVS Pharmacy
678 Johnson Ferry Rd.
Marietta
Cobb County
GA
6 Rite Aid
1216 Longreen Pky.
Columbia
Richland County
SC
Tenant
CVS Pharmacy
SF
10,125
Lease
Start
04/11
Term
(Mos.)
300
Rent/SF
$31.05
Lease Type
Absolute Net
2010
1
14,820
Walgreen Co.
14,820
03/11
900
$30.69
Absolute Net
Yr Blt.
Stories:
GLA:
2010
1
13,650
Walgreens
13,650
08/10
901
$25.05
Triple Net
Yr Blt.
Stories:
GLA:
2000
1
10,908
Rite Aid
10,908
08/10
180
$21.13
Absolute Net
Yr Blt.
Stories:
GLA:
2009
1
12,900
CVS Pharmacy
12,900
11/09
180
$27.00
Triple Net
Yr Blt.
Stories:
GLA:
2008
1
14,673
Rite Aid Corp.
14,673
03/09
240
$20.10
Triple Net
Description
Yr Blt.
Stories:
GLA:
1999
1
10,125
Yr Blt.
Stories:
GLA:
PAGE 40
RITE AID
INCOME CAPITALIZATION APPROACH
COMPARABLE RENTALS MAP
PAGE 41
RITE AID
INCOME CAPITALIZATION APPROACH
Lease 1
CVS Store
Lease 2
Walgreens
Lease 3
Walgreens
Lease 4
Rite Aid
Lease 5
CVS Pharmacy
Lease 6
Rite Aid
PAGE 42
RITE AID
INCOME CAPITALIZATION APPROACH
Rental Analysis Factors
The following elements of comparison are considered in our analysis of the comparable
rentals.
RENTAL ANALYSIS FACTORS
Expense Structure
Division of expense responsibilities between landlord and tenants.
Conditions of Lease
Extraordinary motivations of either landlord or tenant to complete the
transaction.
Market Conditions
Changes in the economic environment over time that affect the
appreciation and depreciation of real estate.
Location
Market or submarket area influences on rent; surrounding land use
influences.
Access/Exposure
Convenience to transportation facilities; ease of site access; visibility
from main thoroughfares; traffic counts.
Size
Difference in rental rates that is often attributable to variation in sizes
of leased space.
Building Quality
Construction quality, amenities, market appeal, functional utility.
Age/Condition
Effective age; physical condition.
Economic
Characteristics
Variations in rental rate attributable to such factors as free rent or other
concessions, pattern of rent changes over lease term, or tenant
improvement allowances.
Analysis of Comparable Rentals
The comparable rentals are compared to the subject and adjusted to account for material
differences that affect market rental value. The following table summarizes our analysis of
each comparable.
RENTAL ANALYSIS SUMMARY - RETAIL
No.
1
2
3
4
5
6
Property Name;
Tenant
Walgreens
Richmond, VA
Walgreens
Charlotte, NC
Walgreens
Mebane, NC
Rite Aid
Getzville, NY
CVS Pharmacy
Marietta, GA
Rite Aid
Columbia, SC
Leased SF
10,125
Rent/SF
$31.05
14,820
$30.69
13,650
$25.05
10,908
$21.13
12,900
$27.00
14,673
$20.10
Overall
Comparison
to Subject Comments
Superior Superior in location, but similar in building quality
and age/condition.
Superior Superior in location and age/condition, but similar
in building quality.
Inferior in location, similar in size and building
Similar
quality, and superior in age/condition.
Similar in location, age/condition and building
Similar
quality.
Superior Superior in location and age/condition, but similar
in size and building quality.
Inferior in location, similar in size and builidng
Inferior
quality, but inferior in age/condition.
PAGE 43
RITE AID
INCOME CAPITALIZATION APPROACH
Market Rent Conclusion
Based on the preceding analysis of comparable rentals, we conclude market lease terms for
the subject as follows:
CONCLUDED MARKET LEASE TERMS
Space Type
Retail
SF
13,824
Market Rent/
SF/Yr
$25.00
Rent
Escal.
Flat
Lease Type
Net
It is our opinion that the contract rent of $28.71, is higher than our projection of market rent.
STABILIZED INCOME AND EXPENSE ESTIMATE
Potential Gross Rent
Potential gross rent is based on contract rent from the existing lease in place. Income is
projected for the 12-month period following the effective date of the appraisal.
POTENTIAL GROSS RENT
Space Type
Retail
Total
1
Potential Rent Contract
Market
1
Rent/SF Rent/SF
SF
at Contract
13,824
$396,877
$28.71
$25.00
13,824
$396,877
$28.71
$25.00
Contract rent for leased space; vacant space at market.
Expense Reimbursements
Operating expenses are directly paid by the tenant; therefore, no reimbursement income is
due the owner.
Vacancy & Collection Loss
Based on the credit quality of the tenant, the length of the lease, and practices of typical
investors in the market, no deductions for vacancy and collection loss are appropriate.
Effective Gross Income
Effective gross income is calculated at $396,877, or $28.71 per square foot.
Expenses
The subject is leased on an absolute net basis and typical buyers purchase these properties on
the basis of their creditworthiness. As a result, no structural reserves were included in our pro
forma.
Management fees are considered an expense of operation, whether the services are contracted
or provided by the property owner. We estimate this expense at 1.0% of effective gross
PAGE 44
RITE AID
INCOME CAPITALIZATION APPROACH
income considering the limited managerial responsibilities associated with a property of this
type.
Net Operating Income
Based on the preceding income and expense projections, stabilized net operating income is
estimated at $392,908, or $28.42 per square foot.
CAPITALIZATION RATE SELECTION
A capitalization rate is used to convert net income into an indication of value. Selection of an
appropriate capitalization rate considers the future income pattern of the property and
investment risk associated with ownership. We use the following methods to derive a
capitalization rate for the subject: analysis of comparable sales, review of national investor
surveys, and interviews with market participants.
Analysis of Comparable Sales
Capitalization rates derived from comparable sales are shown in the following table.
CAPITALIZATION RATE COMPARABLES
No.
1
2
3
4
5
6
7
Year
Built
2002
2000
2004
1999
1995
2003
1997
Property Name
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Rite Aid
Sale
Date
Aug-11
Sep-11
Jun-11
Jan-11
Sep-10
Aug-10
Jul-10
Gross
Leasable
Area
10,908
10,908
14,569
10,908
15,103
15,103
13,397
Price
/SF
$229.19
$234.69
$190.40
$215.44
$225.12
$225.12
$207.51
Overall
Cap Rate
10.50%
9.00%
9.19%
9.25%
9.03%
9.03%
8.89%
Average (Mean) Cap Rate:
9.27%
Based on this information, a capitalization rate within a range of 8.89% to 10.50% could be
expected for the subject.
National Investor Surveys
Data pertaining to investment grade properties from the PwC, ACLI, and Viewpoint surveys
are summarized below. Note that Rite Aid is a non-investment grade rated tenant.
CAPITALIZATION RATE SURVEYS – RETAIL PROPERTIES
Range
Average
IRR-Viewpoint
Year End 2010
National
Neighborhood Strip
7.25% - 10.0%
8.48%
IRR-Viewpoint
Year End 2010
National
Community Center
7.0% - 10.0%
8.30%
PwC
3Q-2011
Natl Strip
Shopping Center
5.50%-9.50%
7.20%
PwC
3Q-2011
National Power
Center
6.0%-9.50%
7.50%
ACLI
2Q-2011
National
Retail
NA
7.2%
Source: IRR-Viewpoint 2011; PwC Real Estate Investor Survey; American Council of Life Insurers Investment
Bulletin.
PAGE 45
RITE AID
INCOME CAPITALIZATION APPROACH
9.
00
9.
20
CAPITALIZATION RATE TRENDS - RETAIL PROPERTIES
70
8.
7.
63
08
8.
0
7.
20
7.5
7. 7 .
20 33
48
7.
7.
40
7.70
80
7.
7.
80
8.
09
8.
38
38
8.
7.
90
8.20
55
8.
8.
49
8.70
60
8.
8.
8
20 .53
Cap Rate
9.20
4Q-09
1Q-10
2Q-10
3Q-10
4Q-10
1Q-11
2Q-11
3Q-11
ST RIP
8.53
8.49
8.38
8.09
7.63
7.40
7.33
7.20
PWR
8.60
8.55
8.70
8.38
8.08
7.80
7.48
7.50
ACLI
8.20
7.90
9.20
9.00
6.90
7.80
7.20
6.70
6.
90
7.20
Quarter/Year
STRIP - PwC Real Estate Investor Survey - National Strip Shopping Center Market
PWR - PwC Real Estate Investor Survey - National Power Center Market
ACLI - American Council of Life Insurers Investment Bulletin - Retail Properties
The Boulder Group reports in its September 2011 “The Net Lease Drug Store Report,” a
current asking capitalization rate of 6.80% for Walgreens, 6.90% for CVS and 9.23% for Rite
Aid. The following chart shows the median asking cap rate by building age. Note that the
subject was built in 2002.
Market Participant Interviews
The financial crisis that plagued the United States and global economies, also negatively
impacted net leased properties such as Rite Aid. However, in conversations with various
brokers familiar with this property type, it appears that capitalization rates began to stabilize
in 2010 and are trending downward.
PAGE 46
RITE AID
INCOME CAPITALIZATION APPROACH
Mr. Maurice Nieman, broker for Colliers International, has been involved with many Rite
Aid transactions. Mr. Nieman stated that capitalization rates are around 9.50% for deals that
have 17 to 18 years remaining on the lease and have high rents. He also stated that deals with
10 years remaining or less would be around a 10.50% to 14.00%. This higher rate is justified
due to Rite Aid’s non-investment grade rating and the higher risk when compared to a
Walgreens or CVS.
Mr. Ronnie Issenberg, broker for Marcus & Millichap, believes capitalization rates net leased
drug stores will continue to compress due to low interest rates and the limited amount of
inventory coming out of the ground. The demand is higher than ever as there are fewer
properties for sale now with long-term leases in place.
Capitalization Rate Conclusion
Based on the preceding analysis, a going-in capitalization rate for the subject is indicated
within a range of 9.00% to 10.00%. The subject is well located and has a high rent. Although
there is only 12 years remaining on the base term, there are four, five-year options remaining.
We conclude a capitalization rate as follows:
CAPITALIZATION RATE CONCLUSION
Going-In Capitalization Rate
9.50%
DIRECT CAPITALIZATION ANALYSIS
Net operating income is divided by the capitalization rate to indicate the stabilized value of
the subject. Valuation of the subject by direct capitalization is shown below.
DIRECT CAPITALIZATION ANALYSIS
SF
Potential Gross Rent
Vacancy & Collection Loss
Effective Gross Income
EXPENSES
Management
Total Expenses
NET OPERATING INCOME
Capitalization Rate
Indicated Value
Rounded
Rent
Applied
$/SF
Annual
$/SF Bldg.
13,824
Retail
Contract
$28.71
$396,877
–
$396,877
$0
$28.71
$0.00
$396,877
INCOME
Base Rent
Rite Aid (formerly Eckerd Corporation)
Type
$28.71
$3,969
$0.29
13,824
0.00%
1.00%
$3,969
$0.29
$392,908
9.50%
$4,135,876
$4,140,000
$28.42
$299.18
$299.48
The sole method used is direct capitalization. A discounted cash flow analysis is not used
because typical investors in this property type do not evaluate properties on this basis.
PAGE 47
RITE AID
RECONCILIATION AND CONCLUSION OF VALUE
RECONCILIATION AND CONCLUSION OF VALUE
The values indicated by our analyses are as follows:
SUMMARY OF VALUE INDICATIONS
Cost Approach
Sales Comparison Approach
Income Capitalization Approach
Not Used
$3,800,000
$4,140,000
Reconciled
$4,140,000
The income capitalization approach is given the greatest weight because it is the most
reliable valuation method for the subject. The sales comparison approach is given less weight
because it does not directly consider the income characteristics of the property. The cost
approach is not used even though it usually would be an appropriate valuation method for the
subject. Notwithstanding this limitation, we conclude that the scope of work performed is
sufficient to develop a credible opinion of value given the intended use of the appraisal. Our
value opinion follows.
VALUE CONCLUSION
Appraisal Premise
Market Value
Interest Appraised
Leased Fee
Date of Value
December 13, 2011
Value Conclusion
$4,140,000
The opinion of value expressed in this report is based on estimates and forecasts that are
prospective in nature and subject to considerable risk and uncertainty. Events may occur that
could cause the performance of the property to differ materially from our estimates, such as
changes in the economy, interest rates, capitalization rates, financial strength of tenants, and
behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are
based partly on data obtained from interviews and third party sources, which are not always
completely reliable. Although we are of the opinion that our findings are reasonable based on
available evidence, we are not responsible for the effects of future occurrences that cannot be
reasonably foreseen at this time.
EXPOSURE AND MARKETING TIMES
Our estimates of exposure and marketing times are as follows:
EXPOSURE TIME AND MARKETING
PERIOD
Exposure Time (Months)
Marketing Period (Months)
12
12
PAGE 48
RITE AID
INSURABLE VALUE
INSURABLE VALUE
PAGE 49
RITE AID
CERTIFICATION
CERTIFICATION
We certify that, to the best of our knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the reported
assumptions and limiting conditions, and are our personal, impartial, and unbiased
professional analyses, opinions, and conclusions.
3. We have no present or prospective interest in the property that is the subject of this
report and no personal interest with respect to the parties involved.
4. We have previously appraised the property that is the subject of this report for another
client within the three-year period immediately preceding acceptance of this
assignment.
5. We have no bias with respect to the property that is the subject of this report or to the
parties involved with this assignment.
6. Our engagement in this assignment was not contingent upon developing or reporting
predetermined results.
7. Our compensation for completing this assignment is not contingent upon the
development or reporting of a predetermined value or direction in value that favors
the cause of the client, the amount of the value opinion, the attainment of a stipulated
result, or the occurrence of a subsequent event directly related to the intended use of
this appraisal.
8. Our analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the Uniform Standards of Professional Appraisal
practice as well as applicable state appraisal regulations.
9. The reported analyses, opinions, and conclusions were developed, and this report has
been prepared, in conformity with the Code of Professional Ethics and Standards of
Professional Appraisal Practice of the Appraisal Institute.
10. The use of this report is subject to the requirements of the Appraisal Institute relating
to review by its duly authorized representatives.
11. J. Todd Neal made a personal inspection of the property that is the subject of this
report. Chris R. Morris, MAI, MRICS did not inspect the subject property.
12. No one provided significant real property appraisal assistance to the persons signing
this certification.
13. We have experience in appraising properties similar to the subject and are in
compliance with the Competency Rule of USPAP.
14. As of the date of this report, Chris R. Morris, MAI, MRICS, has completed the
continuing education program of the Appraisal Institute.
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CERTIFICATION
15. As of the date of this report, J. Todd Neal, has completed the Standards and Ethics
Education Requirement of the Appraisal Institute for associate members.
J. Todd Neal
Certified General Real Estate Appraiser
North Carolina Certificate # A7213
Chris R. Morris, MAI, MRICS
Certified General Real Estate Appraiser
North Carolina Certificate # A266
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ASSUMPTIONS AND LIMITING CONDITIONS
ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal is based on the following assumptions, except as otherwise noted in the report.
1. The title is marketable and free and clear of all liens, encumbrances, encroachments,
easements and restrictions. The property is under responsible ownership and
competent management and is available for its highest and best use.
2. There are no existing judgments or pending or threatened litigation that could affect
the value of the property.
3. There are no hidden or undisclosed conditions of the land or of the improvements that
would render the property more or less valuable. Furthermore, there is no asbestos in
the property.
4. The revenue stamps placed on any deed referenced herein to indicate the sale price are
in correct relation to the actual dollar amount of the transaction.
5. The property is in compliance with all applicable building, environmental, zoning,
and other federal, state and local laws, regulations and codes.
6. The information furnished by others is believed to be reliable, but no warranty is
given for its accuracy.
This appraisal is subject to the following limiting conditions, except as otherwise noted in the
report.
1. An appraisal is inherently subjective and represents our opinion as to the value of the
property appraised.
2. The conclusions stated in our appraisal apply only as of the effective date of the
appraisal, and no representation is made as to the effect of subsequent events.
3. No changes in any federal, state or local laws, regulations or codes (including, without
limitation, the Internal Revenue Code) are anticipated.
4. No environmental impact studies were either requested or made in conjunction with
this appraisal, and we reserve the right to revise or rescind any of the value opinions
based upon any subsequent environmental impact studies. If any environmental
impact statement is required by law, the appraisal assumes that such statement will be
favorable and will be approved by the appropriate regulatory bodies.
5. Unless otherwise agreed to in writing, we are not required to give testimony, respond
to any subpoena or attend any court, governmental or other hearing with reference to
the property without compensation relative to such additional employment.
6. We have made no survey of the property and assume no responsibility in connection
with such matters. Any sketch or survey of the property included in this report is for
illustrative purposes only and should not be considered to be scaled accurately for
size. The appraisal covers the property as described in this report, and the areas and
dimensions set forth are assumed to be correct.
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ASSUMPTIONS AND LIMITING CONDITIONS
7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any,
and we have assumed that the property is not subject to surface entry for the
exploration or removal of such materials, unless otherwise noted in our appraisal.
8. We accept no responsibility for considerations requiring expertise in other fields.
Such considerations include, but are not limited to, legal descriptions and other legal
matters such as legal title, geologic considerations such as soils and seismic stability,
and civil, mechanical, electrical, structural and other engineering and environmental
matters.
9. The distribution of the total valuation in the report between land and improvements
applies only under the reported highest and best use of the property. The allocations
of value for land and improvements must not be used in conjunction with any other
appraisal and are invalid if so used. The appraisal report shall be considered only in
its entirety. No part of the appraisal report shall be utilized separately or out of
context.
10. Neither all nor any part of the contents of this report (especially any conclusions as to
value, the identity of the appraisers, or any reference to the Appraisal Institute) shall
be disseminated through advertising media, public relations media, news media or
any other means of communication (including without limitation prospectuses,
private offering memoranda and other offering material provided to prospective
investors) without the prior written consent of the person signing the report.
11. Information, estimates and opinions contained in the report and obtained from thirdparty sources are assumed to be reliable and have not been independently verified.
12. Any income and expense estimates contained in the appraisal report are used only for
the purpose of estimating value and do not constitute predictions of future operating
results.
13. If the property is subject to one or more leases, any estimate of residual value
contained in the appraisal may be particularly affected by significant changes in the
condition of the economy, of the real estate industry, or of the appraised property at
the time these leases expire or otherwise terminate.
14. No consideration has been given to personal property located on the premises or to the
cost of moving or relocating such personal property; only the real property has been
considered.
15. The current purchasing power of the dollar is the basis for the value stated in our
appraisal; we have assumed that no extreme fluctuations in economic cycles will
occur.
16. The value found herein is subject to these and to any other assumptions or conditions
set forth in the body of this report but which may have been omitted from this list of
Assumptions and Limiting Conditions.
17. The analyses contained in the report necessarily incorporate numerous estimates and
assumptions regarding property performance, general and local business and
economic conditions, the absence of material changes in the competitive environment
and other matters. Some estimates or assumptions, however, inevitably will not
materialize, and unanticipated events and circumstances may occur; therefore, actual
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ASSUMPTIONS AND LIMITING CONDITIONS
results achieved during the period covered by our analysis will vary from our
estimates, and the variations may be material.
18. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We
have not made a specific survey or analysis of the property to determine whether the
physical aspects of the improvements meet the ADA accessibility guidelines. We
claim no expertise in ADA issues, and render no opinion regarding compliance of the
subject with ADA regulations. Inasmuch as compliance matches each owner’s
financial ability with the cost to cure the non-conforming physical characteristics of a
property, a specific study of both the owner’s financial ability and the cost to cure any
deficiencies would be needed for the Department of Justice to determine compliance.
19. The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries
and/or affiliates. It may not be used or relied upon by any other party. All parties who
use or rely upon any information in the report without our written consent do so at
their own risk.
20. No studies have been provided to us indicating the presence or absence of hazardous
materials on the subject property or in the improvements, and our valuation is
predicated upon the assumption that the subject property is free and clear of any
environment hazards including, without limitation, hazardous wastes, toxic
substances and mold. No representations or warranties are made regarding the
environmental condition of the subject property and the person signing the report
shall not be responsible for any such environmental conditions that do exist or for any
engineering or testing that might be required to discover whether such conditions
exist. Because we are not experts in the field of environmental conditions, the
appraisal report cannot be considered as an environmental assessment of the subject
property.
21. The person signing the report may have reviewed available flood maps and may have
noted in the appraisal report whether the subject property is located in an identified
Special Flood Hazard Area. We are not qualified to detect such areas and therefore do
not guarantee such determinations. The presence of flood plain areas and/or wetlands
may affect the value of the property, and the value conclusion is predicated on the
assumption that wetlands are non-existent or minimal.
22. Integra Realty Resources – Raleigh is not a building or environmental inspector.
Integra Raleigh does not guarantee that the subject property is free of defects or
environmental problems. Mold may be present in the subject property and a
professional inspection is recommended.
23. The appraisal report and value conclusion for an appraisal assumes the satisfactory
completion of construction, repairs or alterations in a workmanlike manner.
24. It is expressly acknowledged that in any action which may be brought against Integra
Realty Resources – Raleigh, Integra Realty Resources, Inc. or their respective
officers, owners, managers, directors, agents, subcontractors or employees (the
“Integra Parties”), arising out of, relating to, or in any way pertaining to this
engagement, the appraisal reports, or any estimates or information contained therein,
the Integra Parties shall not be responsible or liable for any incidental or
PAGE 54
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ASSUMPTIONS AND LIMITING CONDITIONS
consequential damages or losses, unless the appraisal was fraudulent or prepared with
gross negligence.
25. Integra Realty Resources – Raleigh, an independently owned and operated company,
has prepared the appraisal for the specific purpose stated elsewhere in the report. The
intended use of the appraisal is stated in the General Information section of the report.
The use of the appraisal report by anyone other than the Client is prohibited except as
otherwise provided. Accordingly, the appraisal report is addressed to and shall be
solely for the Client’s use and benefit unless we provide our prior written consent.
We expressly reserve the unrestricted right to withhold our consent to your disclosure
of the appraisal report (or any part thereof including, without limitation, conclusions
of value and our identity), to any third parties. Stated again for clarification, unless
our prior written consent is obtained, no third party may rely on the appraisal report
(even if their reliance was foreseeable).
26. The conclusions of this report are estimates based on known current trends and
reasonably foreseeable future occurrences. These estimates are based partly on
property information, data obtained in public records, interviews, existing trends,
buyer-seller decision criteria in the current market, and research conducted by third
parties, and such data are not always completely reliable. Integra Realty Resources,
Inc. and the undersigned are not responsible for these and other future occurrences
that could not have reasonably been foreseen on the effective date of this assignment.
Furthermore, it is inevitable that some assumptions will not materialize and that
unanticipated events may occur that will likely affect actual performance. While we
are of the opinion that our findings are reasonable based on current market conditions,
we do not represent that these estimates will actually be achieved, as they are subject
to considerable risk and uncertainty. Moreover, we assume competent and effective
management and marketing for the duration of the projected holding period of this
property.
27. All prospective value estimates presented in this report are estimates and forecasts
which are prospective in nature and are subject to considerable risk and uncertainty.
In addition to the contingencies noted in the preceding paragraph, several events may
occur that could substantially alter the outcome of our estimates such as, but not
limited to changes in the economy, interest rates, and capitalization rates, behavior of
consumers, investors and lenders, fire and other physical destruction, changes in title
or conveyances of easements and deed restrictions, etc. It is assumed that conditions
reasonably foreseeable at the present time are consistent or similar with the future.
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ADDENDUM A
APPRAISER QUALIFICATIONS
Professional Qualifications
I t
R
lt R
J. Todd Neal
Experience
Analyst with Integra Realty Resources - Charlotte. Began appraisal career in October 2006, working for Integra
Realty Resources - Charlotte after employment as an Insurance and Financial Products Specialist with State Farm
Insurance.
Has appraised a variety of property types including, but not limited to, vacant land, industrial, retail, office,
subdivisions, apartments, mixed-use and special purpose properties.
Licenses
North Carolina, Certified General, A7213, Expires June 2012
South Carolina, Certified General, CG6711, Expires June 2012
Education
B. S. Degree, Finance; Risk Management and Insurance; Real Estate, Appalachian State, Boone, NC (1997)
Appraisal courses completed are as follows:
R-1 Introduction to Real Estate Appraisal
Creative Education, LLC, Gastonia, NC
R-2, Valuation Principles and Practices
Central Piedmont Community College, Charlotte, NC
R-3, Applied Residential Property Valuation
Central Piedmont Community College, Charlotte, NC
USPAP, Uniform Standards of Professional Appraisal Practice
Appraisal Schools by M. Curtis West, Charlotte, NC
G-1, Introduction to Income Property Appraisal
North Carolina Real Estate Education, Inc., Charlotte, NC
G-2, Advanced Income Capitalization Procedures
North Carolina Real Estate Education, Inc., Charlotte, NC
G-3, Applied Income Property Valuation
North Carolina Real Estate Education, Inc., Charlotte, NC
510,
520,
530,
540,
550,
Advanced Income Capitalization
General Market Analysis & Highest and Best Use
Advanced Sales Comparison and Cost Approaches
Report Writing and Valuation Analysis
Advanced Applications
tneal@irr.com ● 704.206.8274
Copyright 2007 Integra Realty Resources, Inc.
Integra Realty Resources - Charlotte
Professional Qualifications
I t
R
lt R
Mr. Chris R Morris, MAI, MRICS
Experience
Managing Director of Integra Realty Resources - Raleigh. Mr. Morris has been actively engaged in real estate since
1986. He joined Integra after 11 years as a Principal with Shaw Boykin & Morris. Prior to becoming Principal, he
was a Staff Appraiser for 6 years with Shaw/Boykin & Associates. Before joining Shaw/Boykin & Associates, Mr.
Morris worked as a Staff Appraiser and Utilities Agent for the N.C. Department of Transportation. Mr. Morris has a
broad range of experience in valuation and analysis of many types of real estate.
Professional Activities & Affiliations
Member: Appraisal Institute, June 1992
Board of Directors: NC Chapter Appraisal Institute, January 2008 - December 2010
Royal Institute of Chartered Surveyors, Member (MRICS), December 2009
Member: International Right of Way Association, October 2010
Licenses
North Carolina, State Certified General Real Estate Appraiser, A266, Expires June 2012
North Carolina, State Licensed Real Estate Broker, 084603, Expires June 2012
Virginia, State Certified General Real Estate Appraiser, 4001 015036, Expires August 2012
Education
A. B. Degrees, Economics and Organizational Behavior & Management, Brown University, Providence, RI (1984)
Real Estate courses completed are as follows:
Report Writing and Valuation Analysis
Standards of Professional Practice
Case Studies in Real Estate Valuation
Capitalization Theory & Techniques, Part B
Capitalization Theory & Techniques, Part A
Residential Valuation
Basic Valuation Procedures
Real Estate Appraisal Principles
Principles of Real Estate Management
Commercial Real Estate Finance
Commercial/Industrial Real Estate
Cost Estimating
Construction Methods and Materials
Real Estate Brokerage Operations
Real Estate Finance
Real Estate Law
Fundamentals of Real Estate
cmorris@irr.com ● 919-847-1717 x101
Copyright 2007 Integra Realty Resources, Inc.
Integra Realty Resources - Raleigh
INTEGRA REALTY RESOURCES, INC.
CORPORATE PROFILE
Integra Realty Resources, Inc. offers the most comprehensive property valuation and counseling
coverage in the United States with 59 independently owned and operated offices in 33 states.
Integra was created for the purpose of combining the intimate knowledge of well-established
local firms with the powerful resources and capabilities of a national company. Integra offers
integrated technology, national data and information systems, as well as standardized valuation
models and report formats for ease of client review and analysis. Integra’s local offices have an
average of 25 years of service in the local market, and each is headed by a Managing Director
who is an MAI member of the Appraisal Institute.
A listing of IRR’s local offices and their Managing Directors follows:
ATLANTA, GA - Sherry L. Watkins., MAI, MRICS
AUSTIN, TX - Randy A. Williams, MAI, SR/WA, FRICS
BALTIMORE, MD - G. Edward Kerr, MAI, MRICS
BOISE, ID - Bradford T. Knipe, MAI, ARA, CCIM, CRE, FRICS
BOSTON, MA - David L. Cary, MAI, MRICS
CHARLOTTE, NC - Fitzhugh L. Stout, MAI, CRE, FRICS
CHICAGO, IL - Gary K. DeClark, MAI, CRE, FRICS
CHICAGO, IL - Eric L. Enloe, MAI, MRICS
CINCINNATI, OH - Gary S. Wright, MAI, SRA, FRICS
CLEVELAND, OH - Douglas P. Sloan, MAI
COLUMBIA, SC - Michael B. Dodds, MAI, CCIM, MRICS
COLUMBUS, OH - Bruce A. Daubner, MAI, FRICS
DALLAS, TX - Mark R. Lamb, MAI, CPA, MRICS
DAYTON, OH - Gary S. Wright, MAI, SRA, FRICS
DENVER, CO - Brad A. Weiman, MAI, MRICS
DETROIT, MI - Anthony Sanna, MAI, CRE, FRICS
FORT WORTH, TX - Donald J. Sherwood, MAI, SR/WA, FRICS
GREENVILLE, SC - Michael B. Dodds, MAI, CCIM, MRICS
HARTFORD, CT - Mark F. Bates, MAI, CRE, FRICS
HOUSTON, TX - David R. Dominy, MAI, CRE, FRICS
INDIANAPOLIS, IN - Michael C. Lady, MAI, SRA, CCIM, MRICS
KANSAS CITY, MO/KS - Kenneth Jaggers, MAI, FRICS
LAS VEGAS, NV - Shelli L. Lowe, MAI, SRA, MRICS
LOS ANGELES, CA - John G. Ellis, MAI, CRE, FRICS
LOS ANGELES, CA - Matthew J. Swanson, MAI
LOUISVILLE, KY - George M. Chapman, MAI, SRA, CRE, FRICS
MEMPHIS, TN - J. Walter Allen, MAI, MRICS
MIAMI/PALM BEACH, FL - Scott M. Powell, MAI
MILWAUKEE, WI - Gary K. DeClark, MAI, CRE, FRICS
MINNEAPOLIS, MN - Michael Amundson, MAI, CCIM, MRICS
NAPLES, FL - Carlton J. Lloyd, MAI
NASHVILLE, TN - R. Paul Perutelli, MAI, SRA, MRICS
NEW JERSEY COASTAL - Anthony Graziano, MAI, CRE, FRICS
NEW JERSEY NORTHERN - Barry J. Krauser, MAI, CRE, FRICS
NEW YORK, NY - Raymond T. Cirz, MAI, CRE, FRICS
ORANGE COUNTY, CA - Larry D. Webb, MAI, FRICS
ORLANDO, FL - Charles J. Lentz, MAI, MRICS
PHILADELPHIA, PA - Joseph Pasquarella, MAI, CRE, FRICS
PHOENIX, AZ - Walter Winius, Jr., MAI, CRE, FRICS
PITTSBURGH, PA - Paul D. Griffith, MAI, MRICS
PORTLAND, OR - Brian A. Glanville, MAI, CRE, FRICS
PROVIDENCE, RI - Gerard H. McDonough, MAI
RALEIGH, NC - Chris R. Morris, MAI, MRICS
RICHMOND, VA - Kenneth L. Brown, MAI, CCIM, MRICS
SACRAMENTO, CA - Scott Beebe, MAI, FRICS
ST. LOUIS, MO - Kenneth Jaggers, MAI, FRICS
SALT LAKE CITY, UT - Darrin Liddell, MAI, CCIM, MRICS
SAN ANTONIO, TX - Martyn C. Glen, MAI, CRE, FRICS
SAN DIEGO, CA - Jeff Greenwald, MAI, SRA, FRICS
SAN FRANCISCO, CA - Jan Kleczewski, MAI, FRICS
SARASOTA, FL - Carlton J. Lloyd, MAI
SARASOTA, FL- Craig L. Smith, MAI, MRICS
SAVANNAH, GA - J. Carl Schultz, Jr., MAI, SRA, CRE, FRICS
SEATTLE, WA - Allen N. Safer, MAI, MRICS
SYRACUSE, NY - William J. Kimball, MAI, FRICS
TAMPA, FL - Bradford L. Johnson, MAI, MRICS
TULSA, OK - Robert E. Gray, MAI, FRICS
WASHINGTON, DC - Patrick C. Kerr, MAI, SRA, FRICS
WILMINGTON, DE - Douglas L. Nickel, MAI, FRICS
IRR de MEXICO - Oscar J. Franck Terrazas, MRICS
Corporate Office
1133 Avenue of the Americas, 27th Floor, New York, New York 10036
Telephone: (212) 255-7858; Fax: (646) 424-1869; E-mail info@irr.com
Website: www.irr.com
RITE AID
DEFINITIONS
ADDENDUM B
DEFINITIONS
RITE AID
DEFINITIONS
DEFINITIONS
The source of the following definitions is The Dictionary of Real Estate Appraisal, Fifth
Edition, Appraisal Institute, Chicago, Illinois, 2010, unless otherwise noted.
As Is Market Value
The estimate of the market value of real property in its current physical condition, use, and
zoning as of the appraisal date.
Common Area
1. The total area within a property that is not designed for sale or rental but is available
for common use by all owners, tenants, or their invitees, e.g., parking and its
appurtenances, malls, sidewalks, landscaped areas, recreation areas, public toilets,
truck and service facilities.
2. In a shopping center, the walkways and areas onto which the stores face and which
conduct the follow of customer traffic.
Common Area Charges
Income collected from owners or tenants for the operation and maintenance of common
areas; typically specified in commercial and retail leases.
Common Area Maintenance (CAM)
1. The expense of operating and maintaining common areas; may or may not include
management charges and usually does not include capital expenditures on tenant
improvements or other improvements to the property.
a. CAM can be a line-item expense for a group of items that can include
maintenance of the parking lot and landscaped areas and sometimes the exterior
walls of the buildings.
b. CAM can refer to all operating expenses.
c. CAM can refer to the reimbursement by the tenant to the landlord for all expenses
reimbursable under the lease. Sometimes reimbursements have what is called an
administrative load. An example would be a 15% addition to total operating
expenses, which are then prorated among tenants. The administrative load, also
called an administrative and marketing fee, can be a substitute for or an addition
to a management fee.
2. The amount of money charged to tenants for their shares of maintaining a center’s
common area. The charge that a tenant pays for shared services and facilities such as
electricity, security, and maintenance of the parking lots. The area maintained in
common by all tenants, such as parking lots and common passages. The area is often
defined in the lease and may or may not include all physical areas to be paid for by all
tenants. Items charged to common area maintenance may include cleaning services,
parking lot sweeping and maintenance, snow removal, security, and upkeep.
Deferred Maintenance
Needed repairs or replacement of items that should have taken place during the course of
normal maintenance.
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DEFINITIONS
Depreciation
A loss in property value from any cause; the difference between the cost of an improvement
on the effective date of the appraisal and the market value of the improvement on the same
date.
Discounted Cash Flow (DCF) Analysis
The procedure in which a discount rate is applied to a set of projected income streams and a
reversion. The analyst specifies the quantity, variability, timing, and duration of the income
streams and the quantity and timing of the reversion, and discounts each to its present value
at a specified yield rate.
Disposition Value
The most probable price that a specified interest in real property should bring under the
following conditions:
1. Consummation of a sale within a future exposure time specified by the client.
2. The property is subjected to market conditions prevailing as of the date of valuation.
3. Both the buyer and seller are acting prudently and knowledgeably.
4. The seller is under compulsion to sell.
5. The buyer is typically motivated.
6. Both parties are acting in what they consider to be their best interests.
7. An adequate marketing effort will be made during the exposure time specified by the
client.
8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements
comparable thereto.
9. The price represents the normal consideration for the property sold, unaffected by
special or creative financing or sales concessions granted by anyone associated with
the sale.
This definition can also be modified to provide for valuation with specified financing terms.
Effective Date of Appraisal
The date on which the analyses, opinions, and advice in an appraisal, review, or consulting
service apply.
Entrepreneurial Profit
1. A market-derived figure that represents the amount an entrepreneur receives for his or
her contribution to a project and risk; the difference between the total cost of a
property (cost of development) and its market value (property value after
completion), which represents the entrepreneur’s compensation for the risk and
expertise associated with development. An entrepreneur is motivated by the prospect
of future value enhancement (i.e., the entrepreneurial incentive). An entrepreneur who
successfully creates value through new development, expansion, renovation, or an
innovative change of use is rewarded by entrepreneurial profit. Entrepreneurs may
also fail and suffer losses.
PAGE B2
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DEFINITIONS
2. In economics, the actual return on successful management practices, often identified
with coordination, the fourth factor of production following land, labor, and capital;
also called entrepreneurial return or entrepreneurial reward.
Excess Land; Surplus Land
Excess Land: Land that is not needed to serve or support the existing improvement. The
highest and best use of the excess land may or may not be the same as the highest and best
use of the improved parcel. Excess land may have the potential to be sold separately and is
valued independently.
Surplus Land: Land that is not currently needed to support the existing improvement but
cannot be separated from the property and sold off. Surplus land does not have an
independent highest and best use and may or may not contribute value to the improved
parcel.
Exposure Time
1. The time a property remains on the market.
2. The estimated length of time the property interest being appraised would have been
offered on the market prior to the hypothetical consummation of a sale at market
value on the effective date of the appraisal; a retrospective estimate based on an
analysis of past events assuming a competitive and open market.
Fee Simple Estate
Absolute ownership unencumbered by any other interest or estate, subject only to the
limitations imposed by the governmental powers of taxation, eminent domain, police power,
and escheat.
Floor Area Ratio (FAR)
The relationship between the above-ground floor area of a building, as described by the
building code, and the area of the plot on which it stands; in planning and zoning, often
expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a
building is twice the total land area.
Gross Building Area (GBA)
Total floor area of a building, excluding unenclosed areas, measured from the exterior of the
walls of the above-grade area. This includes mezzanines and basements if and when typically
included in the region.
Gross Leasable Area (GLA)
Total floor area designed for the occupancy and exclusive use of tenants, including
basements and mezzanines; measured from the center of joint partitioning to outside wall
surfaces.
Highest and Best Use
The reasonably probable and legal use of vacant land or an improved property that is
physically possible, appropriately supported, financially feasible, and that results in the
highest value. The four criteria the highest and best use must meet are legal permissibility,
physical possibility, financial feasibility, and maximum productivity. Alternatively, the
PAGE B3
RITE AID
DEFINITIONS
probable use of land or improved property – specific with respect to the user and timing of
the use – that is adequately supported and results in the highest present value.
Insurable Value
Value used by insurance companies as the basis for insurance. Often considered to be
replacement or reproduction cost plus allowances for debris removal or demolition less
deterioration and noninsurable items. Sometimes cash value or market value, but often
entirely a cost concept. (Source: Marshall Valuation Service)
Lease
A contract in which rights to use and occupy land or structures are transferred by the owner
to another for a specified period of time in return for a specified rent.
Leased Fee Interest
A freehold (ownership interest) where the possessory interest has been granted to another
party by creation of a contractual landlord-tenant relationship (i.e, a lease).
Leasehold Interest
The tenant’s possessory interest created by a lease.
Lease Type
Full Service Lease or Gross Lease: A lease in which the landlord receives stipulated rent
and is obligated to pay all of the property’s operating and fixed expenses.
Full Service + Tenant Electric Lease or Gross + Tenant Electric Lease: A lease in which
the tenant pays electric charges for its space but in other respects is a full service or gross
lease as defined above. Tenant electric is often abbreviated as “TE”. (Source: Integra Realty
Resources)
Modified Gross Lease: A lease in which the landlord receives stipulated rent and is obligated
to pay some, but not all, of the property’s operating and fixed expenses. Since assignment of
expenses varies among modified gross leases, expense responsibility must always be
specified. In some markets, a modified gross lease may be called a double net lease, net net
lease, partial net lease, or semi-gross lease.
Net Lease: A general term for a lease in which the tenant pays all or most of the operating
and fixed expenses of a property. Whenever the term net lease is used, an analyst should
identify the specific expense responsibilities of the tenant and owner. (Source: Integra Realty
Resources)
Triple Net Lease: A lease in which the tenant assumes all expenses (fixed and variable) of
operating a property except that the landlord is responsible for structural maintenance,
building reserves, and management. Also called NNN, net net net, or fully net lease.
Absolute Net Lease: A lease in which the tenant pays all expenses including structural
maintenance, building reserves, and management; often a long-term lease to a credit tenant.
PAGE B4
RITE AID
DEFINITIONS
Liquidation Value
The most probable price that a specified interest in real property should bring under the
following conditions:
1. Consummation of a sale within a short time period.
2. The property is subjected to market conditions prevailing as of the date of valuation.
3. Both the buyer and seller are acting prudently and knowledgeably.
4. The seller is under extreme compulsion to sell.
5. The buyer is typically motivated.
6. Both parties are acting in what they consider to be their best interests.
7. A normal marketing effort is not possible due to the brief exposure time.
8. Payment will be made in cash in U.S. dollars, or in terms of financial arrangements
comparable thereto.
9. The price represents the normal consideration for the property sold, unaffected by
special or creative financing or sales concessions granted by anyone associated with
the sale.
This definition can also be modified to provide for valuation with specified financing terms.
Marketing Time
An opinion of the amount of time it might take to sell a real or personal property interest at
the concluded market value level during the period immediately after the effective date of an
appraisal. Marketing time differs from exposure time, which is always presumed to precede
the effective date of an appraisal.
Market Rent
The most probable rent that a property should bring in a competitive and open market
reflecting all conditions and restrictions of the lease agreement, including permitted uses, use
restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant
improvements.
Market Value
The most probable price which a property should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this
definition is the consummation of a sale as of a specified date and the passing of title from
seller to buyer under conditions whereby:
buyer and seller are typically motivated;
both parties are well informed or well advised, and acting in what they consider their
own best interests;
a reasonable time is allowed for exposure in the open market;
payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and
PAGE B5
RITE AID
DEFINITIONS
the price represents the normal consideration for the property sold unaffected by
special or creative financing or sales concessions granted by anyone associated with
the sale.
(Source: Code of Federal Regulations, Title 12, Chapter I, Part 34.42[g])
Overage Rent
The percentage rent paid over and above the guaranteed minimum rent or base rent;
calculated as a percentage of sales in excess of a specified breakpoint sales volume.
Percentage Rent
Rental income received in accordance with the terms of a percentage lease; typically derived
from retail store and restaurant tenants and based on a certain percentage of their gross sales.
Prospective Opinion of Value
A value opinion effective as of a specified future date. The term does not define a type of
value. Instead, it identifies a value opinion as being effective at some specific future date. An
opinion of value as of a prospective date is frequently sought in connection with projects that
are proposed, under construction, or under conversion to a new use, or those that have not yet
achieved sellout or a stabilized level of long-term occupancy.
Replacement Cost
The estimated cost to construct, at current prices as of the effective appraisal date, a
substitute for the building being appraised, using modern materials and current standards,
design and layout.
Reproduction Cost
The estimated cost to construct, at current prices as of the effective date of the appraisal, an
exact duplicate or replica of the building being appraised, using the same materials,
construction standards, design, layout, and quality of workmanship and embodying all the
deficiencies, superadequacies, and obsolescence of the subject building.
Shopping Center Classifications
Convenience Center: provides for the sale of personal services and convenience goods
similar to those of a neighborhood center. It contains a minimum of three stores, with a total
GLA of up to 30,000 square feet. Instead of being anchored by a supermarket, a convenience
center is usually anchored by some other type of personal/convenience service such as a
minimarket. (Source: Dollars & Cents of Shopping Centers, Urban Land Institute,
Washington, DC, 2008[Dollars & Cents])
Neighborhood Center: provides for the sale of convenience goods (foods, drugs, and
sundries) and personal services (laundry and dry cleaning, barbering, shoe repairing, etc.) for
the day-to-day living needs of the immediate neighborhood. It is built around a supermarket
as the principal tenant and typically contains a GLA of about 60,000 square feet. In practice,
it may range in size from 30,000 to 100,000 square feet. (Source: Dollars & Cents)
Super Community / Community Center: any center larger than a neighborhood center but
with neither a traditional department store nor the trade area of a regional shopping center.
This includes traditional community shopping centers, power centers, town centers, lifestyle
PAGE B6
RITE AID
DEFINITIONS
centers, and outlet/off-price centers that meet these criteria. The traditional community
shopping center contains many of the convenience tenants that are found in the neighborhood
shopping centers, while offering a wider range of apparel, hardware, home furnishings, home
improvement, and specialty stores. In addition, the center also may include banking and
professional services, personal services, and recreational facilities. Many centers are built
around a discount department store, super drugstore, mixed apparel (women/men/children)
store, as well as a supermarket. (Source: Dollars & Cents)
Power Center: type of community center that contains at least four category-specific anchors
of 20,000 or more square feet. These anchors typically emphasize hard goods such as
consumer electronics, sporting goods, office supplies, home furnishings, home improvement
goods, bulk foods, drugs, health and beauty aids, toys, and personal computer
hardware/software. They tend to be narrowly focused but deeply merchandised “category
killers” together with the more broadly merchandised, price-oriented warehouse club and
discount department stores. Anchors in power centers typically occupy 85 percent or more of
the total GLA. (Source: Dollars & Cents)
Stabilized Income
Income at that point in time when abnormalities in supply and demand or any additional
transitory conditions cease to exist and the existing conditions are those expected to continue
over the economic life of the property; projected income that is subject to change, but has
been adjusted to reflect an equivalent, stable annual income.
PAGE B7
RITE AID
ADDENDUM C
FINANCIALS AND PROPERTY INFORMATION
Alamance County Tax Record Application - Parcel Ref No - 144069
Page 1 of 2
Property Owner as of January 1st
Owner's Mailing Address
Property Location Address
SCOOP REAL ESTATE LP
C/O ROGER JERNIGAN
1181 S SUMPTER BLVD SUITE 312
NORTH PORT, FL 34287
841 S MAIN ST
Administrative Data
Administrative Data
Valuation Information
Parcel ID No.
OLD Tax ID
GPIN
144069
6-8-72
8883196148
Legal Desc
Owner ID
435518
Deed Year Bk/Pg
Plat Bk/Pg
Tax District
11 - GRAHAM
Sales Information
Land Use Code
Land Use Desc
428
DRUG STORE
Neighborhood
GRC14
BL 841 S MAIN ST
Market Value $
2005 - 2247 / 702
/
Grantor
UNKNOWN
Sold Date
Sold Amount $
2004-02-11
2,000,000
2,041,514
Market Value - Land and all permanent improvements, if any,
effective January 1, 2009, date of County’s most recent General
Reappraisal
Assessed Value $
2,041,514
If Assessed Value not equal Market Value then subject parcel
designated as a special class -agricultural, horticultural, or
forestland and thereby eligible for taxation on basis of PresentUse.
Improvement Detail
(1st Major Improvement on Subject Parcel)
Year Built
Built Use/Style
Current Use
Grade
* Percent Complete
Heated Area (S/F)
Fireplace (Y/N)
Basement (Y/N)
** Bedroom(s)
** Bathroom(s)
*** Multiple Improvements
2004
DISCOUNT STORE
A / QUALITY GRADE A
A / QUALITY GRADE A
100
14,800
N
N
0
0 Full Bath(s) 0 Half Bath(s)
001
* Note - As of January 1
* * Note - Bathroom(s), Bedroom(s), shown for description only
* * * Note - If multiple improvements equal “MLT” then parcel includes additional major improvements
Sales History
2 Previous Sales Found for Parcel number 144069
Record Num
Sales Year
Name
Book/Page
Sale Price
1
2
2006
SCOOP REAL ESTATE LP
2247 / 702
$5,310,000.00
2005
GRAHAM EC LLC
2035 / 344
$2,000,000.00
http://alamance.ustaxdata.com/print.cfm?ownerID=&parcelID=144069
12/9/2011
Alamance County Tax Record Application - Parcel Ref No - 144069
Page 2 of 2
Building Sketch
No Sketch Available
Land Supplemental
Deeded Acres
Tax District Note
Present-Use Info
1.18
11 - GRAHAM
DRUG STORE
Improvement Valuation (1st Major Improvement on Subject Parcel)
* Improvement Market Value $
** Improvement Assessed Value $
1,484,486
1,484,486
* Note - Market Value effective Date equal January 1, 2009, date of County’s most recent General Reappraisal
** Note - If Assessed Value not equal Market Value then variance resulting from formal appeal procedure
Land Value Detail (Effective Date January 1, 2009, date of County’s most recent General Reappraisal)
Land Full Value (LFV) $
Land Present-Use Value (PUV) $ **
Land Total Assessed Value $
557,028
557,028
557,028
** Note: If PUV equal LMV then parcel has not qualified for present use program
http://alamance.ustaxdata.com/print.cfm?ownerID=&parcelID=144069
12/9/2011
RITE AID
ADDENDUM D
COMPARABLE DATA
RITE AID
IMPROVED SALE PROFILES
RETAIL SALE PROFILE
Sale No. 1
Location & Property Identification
Property Name:
Rite Aid
Sub-Property Type:
Retail-Commercial: Drug
Store
Address:
1510 W O Ezell Blvd.
City/State/Zip:
Spartanburg, SC 29301
County:
Spartanburg
Market Orientation:
Suburban
Lat./Long.:
34.936806/-81.990361
Improvement and Site Data
Sale Information
Sale Price:
$2,500,000
Eff. R.E. Sale Price:
Sale Date:
Sale Status:
08/04/2011
Closed
$/SF GBA:
$229.19
$/SF NRA:
$229.19
Case Study Type:
none
Grantor/Seller:
Grantee/Buyer:
DDR Southeast
Spartanburg
Blackstock, LLC
% of Interest Conveyed:
100.00
Terms of Sale:
Document Type:
Arm's Length, Cash to
seller
Deed
Recording No.:
98/749
Verified By:
Bo Shinn
Verification Date:
10/25/11
Verification Source:
Maurice Nieman with
Colliers International
949.724.5536
Confirmed-Seller Broker
MSA:
$2,500,000
Verification Type:
IRR Event ID ( 502097 )
Operating Data and Key Indicators
Net Operating Income:
Bldg. to Land Ratio FAR:
Flood Plain:
Improve. Info. Source:
Source of Land Info.:
In-Place Income
OAR(Cap. rate)Actual:
Shape:
Corner Lot:
Frontage Feet:
Frontage Desc.:
$262,500
Operating Data Type:
Legal/Tax/Parcel ID:
GBA-SF:
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
No. of Buildings/Stories:
Multi-Tenant/Condo.:
Air-Conditioning Type:
Roof Comm.:
Spartanburg, SC
Metropolitan Statistical
Area
6-20-04-001.01
10,908
10,908
1.00/1.00
43,560/43,560
1.00
2002
1/1
No/No
Central
Membrane roof; central
heat
Square
Yes
437
241' W O Ezell, 196'
Blackstock Rd
0.25
No
Public Records
Public Records
10.50%
Rite Aid
Copyright 2011 Integra Realty Resources, Inc.
RETAIL SALE PROFILE
Sale No. 2
Location & Property Identification
Property Name:
CVS Store
Sub-Property Type:
Retail-Commercial: Drug
Store
Address:
5100 S. Laburnum Ave.
City/State/Zip:
Richmond, VA 23231
County:
Henrico
Market Orientation:
Suburban
Lat./Long.:
IRR Event ID ( 461200 )
OAR(Cap. rate)Actual:
Sale Information
Sale Price:
$4,020,000
Eff. R.E. Sale Price:
$4,020,000
Sale Date:
Sale Status:
04/11/2011
Closed
$/SF GBA:
$397.04
$/SF NRA:
$397.04
Case Study Type:
none
Grantor/Seller:
Grantee/Buyer:
Beach Family Laburnum,
LLC
LPG Richmond, LLC
Property Rights:
Leased Fee
% of Interest Conveyed:
100.00
Terms of Sale:
Cash to seller
Document Type:
Deed
Recording No.:
4867/1409
Verified By:
Michael D. Rountrey, MAI,
SRA
Confirmed-Buyer
Verification Type:
37.515910/-77.349761
Operating Data and Key Indicators
Potential Gross Income:
MSA:
Legal/Tax/Parcel ID:
GBA-SF:
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
Building/M&S Class:
Improvements Cond.:
No. of Buildings/Stories:
Multi-Tenant/Condo.:
Bldg. to Land Ratio FAR:
Zoning Code:
Improve. Info. Source:
Source of Land Info.:
Richmond, VA
Metropolitan Statistical
Area
816-713-3177
10,125
10,125
1.24/1.24
54,014/54,014
1.00
1999
A/C
Good
1/1
No/No
0.19
B-3, M-1
Inspection
Public Records
No
Operating Data Type:
Improvement and Site Data
$314,381
Reserves Included:
No
$314,381
Net Operating Income:
Management Included:
$314,381
Effective Gross Income:
7.82%
In-Place Income
GRM Actual:
12.79
EGIM Actual:
12.79
CVS Store
Copyright 2011 Integra Realty Resources, Inc.
RETAIL SALE PROFILE
Sale No. 2
Comments
Located at the corner of S. Laburnum Ave. &
Williamsburg Rd. in the eastern part of the Richmond
area. Freestanding standard CVS Pharmacy, leased for
a 20-year term from 1999 to 2020. Rent had escalated
to $35.12/sf by time of sale, but sale was based on
beginning a new lease for 25 years at $31.05/sf, flat,
NNN. Economic indicators in this analysis are based on
the new lease.
CVS Store
Copyright 2011 Integra Realty Resources, Inc.
RETAIL SALE PROFILE
Sale No. 3
Location & Property Identification
Property Name:
Rite Aid
Sub-Property Type:
Retail-Commercial: Free
Standing
Address:
1900 Sandy Plains Rd.
City/State/Zip:
Marietta, GA 30066
County:
Cobb
Market Orientation:
Suburban
Lat./Long.:
33.995780/-84.507829
MSA:
Sale Information
Sale Price:
09/15/2010
Closed
$/SF GBA:
$218.27
$/SF NRA:
$218.27
Case Study Type:
none
Grantor/Seller:
Willie E. Hasty
Grantee/Buyer:
KFI Scufflegrit, LLC
Property Rights:
Leased Fee
No. of Buildings/Stories:
Shape:
Topography:
Corner Lot:
Bldg. to Land Ratio FAR:
Zoning Code:
Flood Plain:
Utilities:
Utilities Desc.:
Source of Land Info.:
Yes
0.16
Unincorporated
No
Water Public, Sewer
All available
Broker
$3,015,000
Sale Date:
Sale Status:
Atlanta-Sandy
Springs-Marietta, GA
Metropolitan Statistical
Area
16077600060
13,813
13,813
1.97/1.97
85,813/85,813
1.00
2003
Average
Typical Rite Aid
construction
1/1
Irregular
Gently Sloping
$3,015,000
Eff. R.E. Sale Price:
% of Interest Conveyed:
100.00
Terms of Sale:
Cash to Seller
Document Type:
Deed
Verified By:
J. Todd Neal
Verification Source:
Todd Ellis, Broker via
LoopNet
Secondary Verification
Verification Type:
Operating Data and Key Indicators
Net Operating Income:
$376,875
OAR(Cap. rate)Actual:
12.50%
Sale Analysis
Current Use:
IRR Event ID ( 427033 )
Legal/Tax/Parcel ID:
GBA-SF:
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
Improvements Cond.:
Construction Desc.:
Comments
Rite Aid Pharmacy
Improvement and Site Data
Absolute NNN lease to Rite Aid
remaining on lease at time of sale.
with
13
years
Rite Aid
Copyright 2011 Integra Realty Resources, Inc.
RETAIL SALE PROFILE
Sale No. 4
Location & Property Identification
Property Name:
Walgreens
Sub-Property Type:
Retail-Commercial
Address:
2427 Springs Rd.NE.
City/State/Zip:
Hickory, NC 28601
County:
Catawba
Market Orientation:
Suburban
IRR Event ID ( 422885 )
Sale Information
Sale Price:
$5,838,926
Eff. R.E. Sale Price:
$5,838,926
Sale Date:
Sale Status:
09/08/2010
Closed
$/SF GBA:
$393.99
$/SF NRA:
$393.99
Grantor/Seller:
Hickory Springs, LLC
Grantee/Buyer:
Sheftel Realty, LP
Property Rights:
Leased Fee
% of Interest Conveyed:
100.00
Terms of Sale:
Cash to Seller
Document Type:
Deed
Recording No.:
3040/1306
Verified By:
J. Todd Neal
Verification Source:
Peter Wenzler,
Broker-Marcus Millichap
Confirmed-Seller Broker
Verification Type:
Operating Data and Key Indicators
Net Operating Income:
$435,000
OAR(Cap. rate)Actual:
7.45%
Legal/Tax/Parcel ID:
GBA-SF:
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
Improvements Cond.:
Construction Desc.:
No. of Buildings/Stories:
Multi-Tenant/Condo.:
Shape:
Topography:
Frontage Feet:
Frontage Desc.:
Bldg. to Land Ratio FAR:
Zoning Code:
Flood Plain:
Utilities:
Utilities Desc.:
Improve. Info. Source:
Source of Land Info.:
372309166798
14,820
14,820
1.78/1.78
77,537/77,537
1.00
2007
Good
Typical Walgreens
construction
1/1
No/No
Irregular
Level
615
291'- Springs Rd NE;
324'-24th St NE
0.19
Pd-SC (N)
No
Water Public, Sewer
All available
Other
Other
Sale Analysis
Current Use:
Walgreen Pharmacy
Improvement and Site Data
MSA:
Hickory-Lenoir-Morganton,
NC Metropolitan Statistical
Area
Walgreens
Copyright 2011 Integra Realty Resources, Inc.
RETAIL SALE PROFILE
Sale No. 5
Location & Property Identification
Property Name:
Rite Aid
Sub-Property Type:
Retail-Commercial: Free
Standing
Address:
7505 Louisburg Rd.
City/State/Zip:
Raleigh, NC 27616
County:
Wake
Market Orientation:
Suburban
Lat./Long.:
Sale Information
Sale Price:
$2,391,500
Eff. R.E. Sale Price:
$2,391,500
Sale Date:
Sale Status:
08/01/2010
Closed
$/SF GBA:
$207.43
$/SF NRA:
$207.43
Grantor/Seller:
Grantee/Buyer:
DDR Southeast Raleigh
LLC
FRAD Holdings LLC
Property Rights:
Leased Fee
% of Interest Conveyed:
100.00
Terms of Sale:
Cash to seller
Document Type:
Deed
Recording No.:
13307/0974
Verified By:
Nan Delahunt
Verification Type:
Roof Comm.:
Shape:
Corner Lot:
Frontage Feet:
Frontage Desc.:
Bldg. to Land Ratio FAR:
Zoning Code:
Zoning Desc.:
Source of Land Info.:
118,919/118,919
1.00
2003
Exposed steel
construction. Brick
exterior.
Central heating and AC.
Irregular
Yes
405
Louisburg Road
0.09
NB & R4
NB & R4/Raleigh
Other
11/30/10
Verification Source:
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
Construction Desc.:
IRR Event ID ( 424692 )
John R. Hildebrand
Verification Date:
35.876060/-78.540376
Confirmed-Seller
Net lease investment with
investment. 9% cap rate.
10+
years
left
on
Improvement and Site Data
MSA:
Legal/Tax/Parcel ID:
GBA-SF:
GLA-SF:
Acres(Usable/Gross):
Raleigh-Cary, NC
Metropolitan Statistical
Area
1737641397
11,529
11,529
2.73/2.73
Rite Aid
Copyright 2011 Integra Realty Resources, Inc.
RETAIL SALE PROFILE
Sale No. 6
Location & Property Identification
Property Name:
Rite Aid
Sub-Property Type:
Retail-Commercial: Free
Standing
Address:
5915 Spout Springs Rd.
City/State/Zip:
Flowery Branch, GA 30542
County:
Hall
Market Orientation:
Suburban
Lat./Long.:
34.176625/-83.910011
MSA:
Sale Information
Sale Price:
$2,600,000
Sale Date:
Sale Status:
06/01/2010
Closed
No. of Buildings/Stories:
Shape:
Topography:
Gainesville, GA
Metropolitan Statistical
Area
08096-000001
13,813
13,813
1.68/1.68
73,180/73,180
1.00
2004
Average
Typical Rite Aid
construction
1/1
Rectangular
Gently Sloping
Corner Lot:
Bldg. to Land Ratio FAR:
Flood Plain:
Utilities:
Utilities Desc.:
Source of Land Info.:
Yes
0.18
No
Water Public, Sewer
All Available
Other
$2,600,000
Eff. R.E. Sale Price:
$/SF GBA:
$188.23
$/SF NRA:
$188.23
Case Study Type:
none
Grantor/Seller:
Property Rights:
Flowery Branch Holdings,
LLC
5915 Spout Springs Road,
LLC
Leased Fee
% of Interest Conveyed:
100.00
Document Type:
Deed
Recording No.:
6706/320
Verified By:
J. Todd Neal
Verification Type:
Confirmed-Seller Broker
Grantee/Buyer:
Operating Data and Key Indicators
Net Operating Income:
$296,780
OAR(Cap. rate)Actual:
11.41%
Legal/Tax/Parcel ID:
GBA-SF:
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
Improvements Cond.:
Construction Desc.:
Comments
Sold in 5th year of 20 year lease to Rite Aid
Sale Analysis
Current Use:
IRR Event ID ( 427131 )
Rite Aid Pharmacy
Improvement and Site Data
Rite Aid
Copyright 2011 Integra Realty Resources, Inc.
RITE AID
LEASE PROFILES
RETAIL LEASE PROFILE
Lease No. 1
Location & Property Identification
Property Name:
CVS Store
Sub-Property Type:
Retail-Commercial: Drug
Store
Address:
5100 S. Laburnum Ave.
City/State/Zip:
Richmond, VA 23231
County:
Henrico
Market Orientation:
Suburban
Lat./Long.:
Lease Information
Init Year Contract Rate:
Effective Lease Rate:
$31.05 /$/SF/YR
$31.05 /$/SF/YR
Lease Commencement:
Lease Expiration:
04/01/2011
Term of Lease:
Lease Type:
Space Type:
03/31/2036
300 months
Local
Retail
Transaction Reliability:
IRR Confirmed
NRA:
10,125
Leased Area:
10,125
37.515910/-77.349761
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
Building/M&S Class:
Improvements Cond.:
No. of Buildings/Stories:
Multi-Tenant/Condo.:
Bldg. to Land Ratio FAR:
Zoning Code:
Improve. Info. Source:
Source of Land Info.:
IRR Event ID (473972)
10,125
1.24/1.24
54,014/54,014
1.00
1999
A/C
Good
1/1
No/No
0.19
B-3, M-1
Inspection
Public Records
Lease Expense Information
Lease Reimburse. Type:
Absolute Net
Tenant Pays:
RE Taxes, Property
Insurance, Management
Fees, Administration Fees,
Utilities, Repairs &
Maintenance, Structural
Repairs, CAM
Comments
Building is twelve years old. A new lease was
negotiated with the purchase. Lease rate bumps up
5.0% every five years. There are five 5-year options.
Improvement and Site Data
MSA:
Legal/Tax/Parcel ID:
GBA-SF:
Richmond, VA
Metropolitan Statistical
Area
816-713-3177
10,125
CVS Store
Copyright 2011 Integra Realty Resources, Inc.
RETAIL LEASE PROFILE
Lease No. 2
Location & Property Identification
Property Name:
Walgreens
Sub-Property Type:
Retail-Commercial: Drug
Store
Address:
11200 Providence Rd.W.
City/State/Zip:
Charlotte, NC 28277
County:
Mecklenburg
Market Orientation:
Suburban
Lat./Long.:
Lease Information
Lessor:
DDG Enterprises III, LLC
Lessee:
Walgreen Co.
Init Year Contract Rate:
Effective Lease Rate:
$23.62 /$/SF/YR
$30.69 /$/SF/YR
Lease Commencement:
Lease Expiration:
03/13/2011
Term of Lease:
Space Type:
03/12/2086
900 months
Retail
Escalations:
Fixed Steps
Verified with:
Rent Roll
Transaction Reliability:
IRR Confirmed
NRA:
14,820
Leased Area:
14,820
Lease Expense Information
Lease Reimburse. Type:
Absolute Net
Landlord Pays:
Management Fees
Tenant Pays:
RE Taxes, Property
Insurance, Utilities,
Repairs & Maintenance
Improvement and Site Data
MSA:
CHARLOTTE-GASTONIA-C
ONCORD, NC-SC
METROPOLITAN
STATISTICAL AREA
35.056858/-80.769760
Legal/Tax/Parcel ID:
GBA-SF:
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
Improvements Cond.:
Construction Desc.:
No. of Buildings/Stories:
Total Parking Spaces:
Park. Ratio 1000 SF GLA:
No. Surface Spaces:
Park. Ratio 1000 SF GBA:
Fire Sprinkler Type:
Roof Comments:
Shape:
Topography:
Corner Lot:
Frontage Feet:
Frontage Desc.:
Bldg. to Land Ratio FAR:
Zoning Code:
Zoning Desc.:
Encumbrance/Easements:
IRR Event ID (492757)
223-134-86
14,820
14,820
2.20/2.20
96,006/96,006
1.00
2010
Excellent
Masonry/Steel frame;
brick veneer exterior.
1/1
62
4.18
62
4.18
Yes
Flat roof. HVAC-100%.
Rectangular
Gently Sloping
Yes
688
358' Johnston Rd; 311'
Providence Rd West
0.15
CC
Commercial Center
Development District
Yes
Walgreens
Copyright 2011 Integra Realty Resources, Inc.
RETAIL LEASE PROFILE
Lease No. 2
Improvement and Site Data (Cont'd)
Easements Desc.:
Landscape easement on
the southeast corner of
the site, as well as typical
cross parking and access
easements. No adverse
affect on value.
Environmental Issues:
Flood Plain:
Utilities:
No
No
Electricity, Water Public,
Sewer, Gas
All public and available.
Other
Other
Utilities Desc.:
Improve. Info. Source:
Source of Land Info.:
Comments
Typical Walgreen construction.
75 year lease. No free rent or TI. Lease has one initial
5-year base term, then seven additional 10-year base
periods with fixed steps. Rent begins at $23.62/sf/yr,
then increases every ten years as follows: $25.30,
$26.99, $28.88, $30.90, $33.06, $35.38, $37.86.
Walgreens
Copyright 2011 Integra Realty Resources, Inc.
RETAIL LEASE PROFILE
Lease No. 3
Location & Property Identification
Property Name:
Walgreens
Sub-Property Type:
Retail-Commercial: Free
Standing
Address:
801 Mebane Oaks Rd.
City/State/Zip:
Mebane, NC 27302
County:
Alamance
Market Orientation:
Suburban
IRR Event ID (423149)
Lease Information
Lessor:
Lessee:
Mebane Oaks
Development Group
Walgreens
Init Year Contract Rate:
Effective Lease Rate:
$25.05 /$/SF/YR
$25.05 /$/SF/YR
Lease Commencement:
Lease Expiration:
08/30/2010
Term of Lease:
Space Type:
08/31/2085
901 months
Retail
Escalations:
None
Verified with:
Transaction Reliability:
Peter Wenzler, Marcus &
Millichap, 248-415-2600
Confirmed
NRA:
13,650
Leased Area:
13,650
Full Building Lease:
Yes
Lease Expense Information
Lease Reimburse. Type:
Absolute Net
Improvement and Site Data
MSA:
Legal/Tax/Parcel ID:
GBA-SF:
Burlington, NC
Metropolitan Statistical
Area
9814970226, 9814878199
& 9814878320
13,650
GLA-SF:
Acres(Gross):
Land-SF(Gross):
Year Built:
Construction Desc.:
No. of Buildings/Stories:
Total Parking Spaces:
Park. Ratio 1000 SF GLA:
No. Surface Spaces:
Park. Ratio 1000 SF GBA:
Fire Sprinkler Type:
Air-Conditioning Type:
Roof Comments:
Shape:
Topography:
13,650
1.62
70,567
2010
Masonry
1/1
71
5.20
71
5.20
Wet
Roof Central Mounted
Rubber membrane roof.
Irregular
Level
Corner Lot:
Frontage Feet:
Frontage Desc.:
Yes
645
290' S 8th St, 127'
Mebane Oaks, 228' S 5th
0.19
B-3
Neighborhood Business
No
All public
Other
Bldg. to Land Ratio FAR:
Zoning Code:
Zoning Desc.:
Flood Plain:
Utilities Desc.:
Source of Land Info.:
Walgreens
Copyright 2011 Integra Realty Resources, Inc.
RETAIL LEASE PROFILE
Lease No. 4
Location & Property Identification
Property Name:
Rite Aid
Sub-Property Type:
Retail-Commercial: Drug
Store
Address:
2545 Millersport Hwy.
City/State/Zip:
Getzville, NY 14068
County:
Niagara
Market Orientation:
Suburban
Lat./Long.:
43.017020/-78.767169
IRR Event ID (480294)
No. of Buildings/Stories:
No. of Units / Unit Type:
Lease Information
Lessee:
Rite Aid
Init Year Contract Rate:
Effective Lease Rate:
$21.13 /$/SF/YR
$21.13 /$/SF/YR
Lease Commencement:
Lease Expiration:
08/01/2010
Term of Lease:
Lease Type:
Space Type:
07/31/2025
180 months
Local
Retail
Transaction Reliability:
Confirmed
NRA:
10,908
Full Building Lease:
Density-Unit/Gross Acre:
Density-Unit/Usable Acre:
0.41
0.41
Bldg. to Land Ratio FAR:
Source of Land Info.:
0.10
Broker
10,908
Leased Area:
1/1
1/Tenants
Yes
Comments
Building was originally constructed as an Eckerd.
Lease Expense Information
Lease Reimburse. Type:
Absolute Net
Improvement and Site Data
MSA:
GBA-SF:
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
Improvements Cond.:
Buffalo-Niagara MSA
10,908
10,908
2.43/2.43
105,850/105,850
1.00
2000
Good
Rite Aid
Copyright 2011 Integra Realty Resources, Inc.
RETAIL LEASE PROFILE
Lease No. 5
Location & Property Identification
Property Name:
CVS Pharmacy
Sub-Property Type:
Retail-Commercial: Free
Standing
Address:
678 Johnson Ferry Rd.
City/State/Zip:
Marietta, GA 30068
County:
Cobb
Market Orientation:
Suburban
Lat./Long.:
33.966005/-84.411581
Bldg. to Land Ratio FAR:
Source of Land Info.:
Lease Information
Lessee:
$27.00 /$/SF/YR
$27.00 /$/SF/YR
Lease Commencement:
Lease Expiration:
11/01/2009
0.14
Other
CVS Pharmacy
Init Year Contract Rate:
Effective Lease Rate:
IRR Event ID (357568)
Term of Lease:
Lease Type:
Space Type:
11/01/2024
180 months
Local
Retail
Transaction Reliability:
Confirmed
NRA:
12,900
Leased Area:
Comments
12,900
This class A property is located off of Johnson Ferry
Road and Lower Roswell Road. It is close to Bethel
Park in an affluent Atlanta neighborhood.
This is a new triple net least at $27/sf. As with most
drug stores, it is a 25 year lease.
Lease Expense Information
Lease Reimburse. Type:
Triple Net
Improvement and Site Data
MSA:
GBA-SF:
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
ATLANTA-SANDY
SPRINGS-MARIETTA, GA
METROPOLITAN
STATISTICAL AREA
12,900
12,900
2.00/2.00
87,120/87,120
1.00
2009
CVS Pharmacy
Copyright 2011 Integra Realty Resources, Inc.
RETAIL LEASE PROFILE
Lease No. 6
Location & Property Identification
Property Name:
Rite Aid
Sub-Property Type:
Retail-Commercial: Free
Standing
Address:
1216 Longreen Pky.
City/State/Zip:
Columbia, SC 29229
County:
Richland
Market Orientation:
Suburban
Property Location:
NEC of Clemson Road and
Longreen Pkwy
Lat./Long.:
Lease Information
Lessor:
SBRA Clemson, LLC
Lessee:
Rite Aid Corp.
Init Year Contract Rate:
Effective Lease Rate:
$20.10 /$/SF/YR
$20.10 /$/SF/YR
Lease Commencement:
Lease Expiration:
03/19/2009
Term of Lease:
Lease Type:
Space Type:
03/18/2029
240 months
Franchise
Retail
Escalations:
Fixed Percentage
Verified with:
Transaction Reliability:
Kase Abusharkh of Sperry
Van Ness
IRR Confirmed
NRA:
14,673
Leased Area:
14,673
Full Building Lease:
Yes
Lease Expense Information
Lease Reimburse. Type:
Absolute Net
Improvement and Site Data
MSA:
Legal/Tax/Parcel ID:
GBA-SF:
COLUMBIA, SC
METROPOLITAN
STATISTICAL AREA
R17400-05-45
14,673
34.008880/-81.012767
GLA-SF:
Acres(Usable/Gross):
Land-SF(Usable/Gross):
Usable/Gross Ratio:
Year Built:
Most Recent Renovation:
Improvements Cond.:
Construction Desc.:
IRR Event ID (367232)
No. of Buildings/Stories:
Multi-Tenant/Condo.:
Fire Sprinkler Type:
Air-Conditioning Type:
Shape:
Topography:
14,673
1.69/1.69
73,616/73,616
1.00
2008
N/A
Excellent
Concrete slab foundation,
masonry and stucco
exterior, flat roof
1/1
No/No
Wet
Central
Irregular
Level
Corner Lot:
Frontage Feet:
Frontage Desc.:
Traffic Count:
Bldg. to Land Ratio FAR:
Zoning Code:
Zoning Desc.:
Flood Plain:
Utilities Desc.:
Improve. Info. Source:
Source of Land Info.:
Yes
72
Clemson Road
Heavy
0.16
HI
Heavy Industrial
No
All available
Broker
Broker
Rite Aid
Copyright 2011 Integra Realty Resources, Inc.
RETAIL LEASE PROFILE
Lease No. 6
Comments
This property is located across Clemson Road from a
new Lowe's home improvement center.
There are 10% increases every 10 years. Six five-year
options. The tenant is responsible for taxes, insurance,
and all maintenance, including roof and structure.
Rite Aid
Copyright 2011 Integra Realty Resources, Inc.
RITE AID
ADDENDUM E
LETTER OF AUTHORIZATION
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Page 1 of 3
RIMS Customer: Wells Fargo
RETECHS #: WF-CWS-11-034839-01-1
Award Information
Date Awarded: 11/22/2011
Canceled: No
Directly Awarded: No
Delivery Date: 12/19/2011
Fee: $2,850.00
Award Comments: ATTENTION:
Report must be addressed to:
L. Joseph Shaheen
Akerman Senterfitt
401 East Jackson Street, Suite 1700
Tampa, FL 33602
813-223-7333
joseph.shaheen@akerman.com
INVOICE must be addressed as follows:
BILL TO: PAYOR, Wells Fargo RETECHS on behalf of its client, Akerman Senterfitt, for completion of attorney client privileged
appraisal.
Job Attachments:
File
Description
Date Uploaded
WF-CWS-11-034839-01 RFP.pdf
request for product (RFP)
Confirmation Number
11/15/2011 2:45:56 PM
Bid Information
Proposed Fee: $2,850.00
Proposed Delivery Date: 12/10/2011
Signatory Information: Chris R. Morris, MAI
Office Location: Raleigh, NC
Prior Services: Have you or your company performed or provided any professional services pertaining to -the subject property within the prior
three years, as an appraiser or in any other capacity, or is your company presently involved with the management, leasing,
disposition, or any similar service regarding the subject property. If Yes, please provide details in the Comments field.
Yes
Bid Comments: Last appraised for WF 11/10
RFP Information
Purpose Of Request: OREO/Pre-Foreclosure
Response Deadline: ASAP
Desired Delivery Date: 12/10/2011
ADDRESSEES:
RFP Contact: Denny Johnson, MAI (NC)
Contact Phone: 704-246-6255
First name
Last name
Company
Address
Joe
Sheehan
Akerman Senterfitt
401 East Jackson Street Suite 1700
Tampa, FL 33602
Total Addressees: 1
DISTRIBUTION:
Number Of
Copies
First
Name
Last Name
Company
Address
1
Ed
Poole (SSGDOM)
Wells Fargo
Bank
401 E. Jackson Street Suite
1450
Tampa, FL
33602
Total # Hard Copies: 1
SCOPE OF SERVICES:
RETECHS
Requirements
PLEASE NOTE: RETECHS is soliciting bids for this potential pre-foreclosure/ litigation appraisal
assignment on behalf of legal counsel, who will be the client that will formally engage the awardees.
This assignment is subject to Attorney Work Product Doctrine and is CONFIDENTIAL. Once awarded,
all correspondence will be directed to counsel whose contact information will be supplied. THE FEE
YOU WILL PROVIDE should NOT include any fees for any potential court appearances or any other
potential litigation expenses. Such fees and/or expenses will be negotiated separately, if and when
such a need should occur. PLEASE DO NOT ASSUME THAT ANY LEGAL ACTION, SUCH AS A
FORECLOSURE, WILL OCCUR. We are asking for a market value opinion, not a value assuming
foreclosure or liquidation.
Scope Of Work 3.A. Appraisal: Three Approaches to Value-Summary Report 1.USPAP Summary report 2.Preparer
inspects subject unless otherwise instructed 3.Preparer provides three approaches to value to be
presented in a Summary format. Should one of the three approaches to value be meaningless, please
discuss with Job Manager. 4.Additional services-as instructed- please reference LOB requirements.
Approach to
1. Income Approach 2. Sales Comparison Approach 3. Cost Approach (Not required, but can be
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Page 2 of 3
Value
included if considered applicable) A conclusion as to the remaining useful life of the improvements is
required, even if a Cost Approach is not undertaken.
Market
Conditions
Disclaimer
Due to concerns with changing market trends and conditions, we are requiring your analyses to
consider: 1. Market Participant Interviews: Discussions with real estate market participants (buyers,
sellers, property managers, real estate agents/brokers). Reference these interviews in a dedicated
section, and report and analyze the most pertinent comments and how they impact the subject value.
2. Comparable Listings: In addition to consummated comparable sales and leases, listings should be
considered, with the most pertinent ones reported and analyzed, and incorporated within your market
data. Appraisal must be both USPAP an FIRREA compliant. There may be other specific requirements
appended to this document below.
Report Type: Summary
Report Format: Narrative
VALUATION SCENARIOS:
Valuation Premise
Premise Qualifier
Property Interest
Market Value
As-Is
Leased Fee
RFP Comments: We will need the following values: (Edit the following as necessary) As-Is/As-Stabilized. Be specific about whether the
latter two should be as of a hypothetical current date of value or as of a prospective date of value. Should likely confirm
with the account officer. If the property, or any part thereof, has sold in the past three years; the sale/purchase price
must be reconciled with the applicable value conclusion. The same will apply if the subject is under contract to be
purchased. Cost Approach A quantitative adjustment grid with dollar or percentage adjustment is required for the land
sale analysis. It is necessary to derive a land value for the subject property, even if the Cost approach is not considered
applicable. Insurable Replacement Cost is required (see reference documents for template). Even if the Cost approach is
not found to be an applicable approach to value, it is necessary to provide a land value. Waver of the land value
conclusions will not be accepted. A quantitative analysis must be provided inclusive of an adjustment grid with $ or %
adjustments. Sales Comparison Approach Please pay particular attention that the improved sales selected are consistent
with the conclusion of the most probable buyer for the property & the most probable use (single or muli-tenant). As a
result, sales of like tenancy (single or multi-tenant) transactions of the same class & general location would be the most
applicable. If these types of sales are not included, please describe why they were not used & if this has an impact on
value. A quantitative adjustment grid with dollar or percentage adjustment is required. Adequate narrative to support the
adjustment process & the thinking associated with same is also to be provided. State the source of the income & expense
projections for the improved sales. If estimated by the appraiser, please state the basis for the estimates. To simply state
estimated by the appraiser is not adequate. If the improved sales are not stabilized, each should be stabilized for analysis
purposes if applicable. This includes stabilized income & expenses, as well as a stabilized purchase price. State the
occupancy for the improved sales, before & after stabilization. If the vacancy & collection loss in the stabilized projections
are different than estimated for the subject, please state that the sale is stabilized. Income Approach At least 50% of the
rental data used in the Income approach should reflect actual leases. Specifically, rental data from properties with the
same most probable use (singe or multi-tenant) as the subject, of the same class & general location are expected.
Specifically, data related to existing and/or anticipated tenants sizes (large block, medium site &/or smaller tenants)
should be used. If this data is not analyzed, please describe why they were not used & if this has an impact on value.
The rental data should be analyzed & an adjusted rental rate should be presented for each comparable. The analysis
should considered, at a minimum, differences in lease date, lease term, concessions, tenant improvements, rental rate
increases, lease type & physical characteristics. A quantitative adjustment grid with dollar or percentage adjustment is
required. Comparable & actual expense data should be used & analyzed to estimate the subject's projected expenses.
Expenses are to be analyzed on line item by item basis. Estimated expenses only at a specific dollar amount per square
foot is not appropriate. The derivation of an overall rate should include data from comparable properties of a similar
class, tenancy & location. Lease-up costs & absorption should be supported from comparable properties. Supplemental
support for most assumptions of the Income approach is expected from survey data. Yield capitalization is assumed to be
an appropriate method of valuation, so please use Argus & supply an electronic copy with the first submission of the
appraisal. If yield capitalization is not found necessary, please provide an adequate discussion in the appraisal for its
exclusion. This should also be discussed with the RETECHS job manager prior to its omission. Additional Appraisal
Requirements & Noteworthy Issues: Please note other parties that may be signing this report & if they have a general
appraisal certification or trainee designation. Please deliver an UNLOCKED electronic copy as of the agreed upon
completion date. Upon completion of the initial review, it will be requested that three final hard copies be sent to the
account officer via overnight delivery. RETECHS only requires a final electronic copy of the appraisal. A copy of the
appraisers state license/certification must be included in the Addenda of the appraisal report. The selected appraiser is
expected to obtain the necessary information to complete the assignment from the borrower and/or property contact. Be
sure to review all applicable Wells Fargo Appraisal guidelines. Please note that a penalty of 5% per day will be assessed
for late delivery of appraisal reports, for reasons deemed to be within your control. Contact job manager with any delays
or for additional required information. No extension of due date will be approved unless requested, in writing, no less
than eight days prior to the original due date. Revisions are expected within two business days, per Wells Fargo's
guidelines, from the date requested or the aforementioned penalty will be applied.
GENERAL PERFORMANCE STANDARDS Appraisal General Requirements
SPECIFIC PERFORMANCE STANDARDS APP-02 Specific Requirements
Property Information
Project Name: 841 S Main Street
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Property Description / Construction Type: 13,824 SF drug store leased to Rite-Aid
Property Comment: Lease expired in 2024.
Property Type: JD - Retail-Commercial - Free Standing Building-Free Standing - A single building designed for occupancy by a single
user. Building is typically set back from street to accommodate parking (as opposed to Street Retail - see below).
Address: 841 South Main Street, Graham, NC 27253
County: Alamance
Improvement Size (Primary): 13,824SF
Land Size: 1.18Acres
Number Of Tenants: 1
Occupancy: 100%
Parcel Numbers: 144069
Current Use: Drug store
Proposed Use: Same
Number Of Stories: 1
Number Of Buildings: 1
Year Built: 2004
Property Status: Existing
Property Tenancy: Single Tenant Investor
Parking Type: Surface Parking
Ground Lease?: No
Proposed Renovation?: No
Listed for Sale?: Yes
Copyright © 2011 ExactBid, Inc. All rights reserved.
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12/19/2011
The information contained in this award along with the information contained in the
General Appraisal Requirements, Specific Performance Standards, and the
General Contractual Requirements referenced in the RFP and all other RFP
information, serve as the contract for services to be rendered. If within 12 months of the
date of this assignment the vendor is contacted to appraise the subject property by any
other party than Wells Fargo RETECHS, vendor agrees to notify Wells Fargo
RETECHS in writing of this request.
Unless specifically stated otherwise, information provided by the bank or
borrower in conjunction with this assignment shall be considered confidential
and may not be used except as necessary for the completion of this assignment.
Additionally such information, may not be shared or provided any individual or
entity except as necessary for the completion of this assignment, or required by
law or appropriate professional standards or organizations such as USPAP and
the Appraisal Institute.
This Statement of Work and Award is entered into as of the date of the award by and
between Wells Fargo Bank, N.A. (Wells Fargo), and the awarded contractor pursuant to
the Master Agreement for Real Estate Services, dated September 15, 2010, all terms of
which are incorporated herein by reference.
Note: a penalty of 5% per day will be assessed for late delivery of appraisal if the
reason is within your control. Contact Denny Johnson (NC) 704-246-6255 for any
holds, delays or further required information.
1.
2.
3.
Project Name: 841 S Main Street
Description of Services: As indicated in the RFP
Performance Period
Start Date: 11/22/2011
End Date (if known): 12/19/2011
4.
5.
6.
Work Site: 841 South Main Street, Graham, NC 27253
Total Costs and Fees: $2,850
Wells Fargo Job Manager: Denny Johnson (NC)
Property Access and Contact Information:
Gianluca Morello
813-347-5100
gmorello@wiandlaw.com
Make contact immediately for access
Delivery Instructions:
(Unless otherwise specified in the attached addendum)
All valuation services requested which include the report with signatures, all associated
exhibits, and any other pertinent supporting documentation will be delivered online via
RIMSCentral to Wells Fargo Bank-RETECHS at a minimum and (if appropriate), a hard
copy to the Wells Fargo Banker or representative. In no case, will any valuation
services ever be solely delivered to a Wells Fargo Banker or representative without
written authorization from RETECHS. In addition, upload separately, the final invoice
for payment. The following provides more specific instructions:
1.
Upload to RIMSCentral under the appropriate assignment the following, a PDF
APPRAISAL REPORT to include:
•
•
The Recipient information [name, address, etc]
Wells Fargo Bank – RETECHS
Denny Johnson (NC)
5926 Weddington-Monroe Road
Wesley Chapel, NC 28104
WF-CWS-11-034839-01
Vendor digital signature
2.
Upload to RIMSCentral a copy of the appraisers state license / certification as an
addenda of the appraisal report.
3.
Upload to RIMSCentral any other property information to complete the assignments
as stated in the Request for Proposal (RFP)
4.
Upload to RIMSCentral the Original Invoice addressed to:
Wells Fargo Bank RETECHS
Denny Johnson (NC)
5926 Weddington-Monroe Road
Wesley Chapel, NC 28104
704-246-6255
Note: If uploading the documents to RIMSCentral is not feasible, then contact
RIMSCentral for upload assistance or the RETECHS Job Manager, Denny Johnson
(NC) for additional delivery instructions.
Only upon RETECHS e-mail authorization is vendor to deliver hard copy (copies):
Deliver to:
Ed Poole (SSG-DOM)
N2732-140
401 E. Jackson Street, Suite 1450
Tampa, FL 33602
Additional Requirements may be specified in an attached addendum.
ADDENDUM
Enclosures:
APP-1A; Wholesale Appraisal Engagement Contract
Lines of Business REG, PDF, CmBG, PDF VRL, PDFSL, PDF, REBG/MMRE,
PDFLTDSUM Summary
(Revised 3-12-2010)
PLEASE READ ADDENDUM AND AWARD COMMENTS
This assignment is being engaged by Wells Fargo RETECHS on behalf of the following
attorney:
L. Joseph Shaheen
Akerman Senterfitt
401 East Jackson Street, Suite 1700
Tampa, FL 33602
813-223-7333
joseph.shaheen@akerman.com
The client for this assignment is the attorney, and the intended users of the end
product(s) of this assignment are the attorney and Wells Fargo Bank. The work is being
commissioned in connection with or anticipation of litigation.
APP-15 AWP Attorney Work Product Appraisal Engagement Contract Addendum
(Revised 6-27-2011)
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