Market Rent Study for bayside marketplace, Parking and Proposed Skyrise Tower 401 and 501 biscayne boulevard, Miami, Florida 33132. The property is currently developed with the Bayside Marketplace, a festival retail center with associated parking. The allowable FLR, based on the original approvals for the development, were 267,000 SF for the retail component and 420,000 SF for parking.
Market Rent Study for bayside marketplace, Parking and Proposed Skyrise Tower 401 and 501 biscayne boulevard, Miami, Florida 33132. The property is currently developed with the Bayside Marketplace, a festival retail center with associated parking. The allowable FLR, based on the original approvals for the development, were 267,000 SF for the retail component and 420,000 SF for parking.
Market Rent Study for bayside marketplace, Parking and Proposed Skyrise Tower 401 and 501 biscayne boulevard, Miami, Florida 33132. The property is currently developed with the Bayside Marketplace, a festival retail center with associated parking. The allowable FLR, based on the original approvals for the development, were 267,000 SF for the retail component and 420,000 SF for parking.
and Proposed Skyrise Tower 401 and 501 Biscayne Boulevard Miami, Miami-Dade County, FL 33132
Prepared For: Mr. Henrique Torre Director - Public Facilities Division City of Miami 444 SW 2nd Avenue, 3rd Floor Miami, FL 33130
Prepared By: Joseph J. Blake and Associates, Inc. 4000 Ponce de Leon Boulevard, Suite 410 Miami, FL 33146
Joseph J. Bl ake and Associ at es, I nc. Real Estate Valuation and Consulting 4000 Ponce De Leon Boulevard, Suite 410 | Miami, Florida 33146 | Phone: 305-448-1663 | Fax: 305-448-7077 | www.josephjblake.com Corporate Headquarters: 425 Broad Hollow Road, Suite 429 | Melville, New York 11747 | (516) 827-0222 Regional Offices: Atlanta | Boston | Chicago | Dallas | Los Angeles | Miami | New York City | San Francisco | Washington D.C. Blake & Sanyu Alliance: Tokyo | Osaka | Nagoya | Sendai April 29, 2014 Mr. Henrique Torre Director - Public Facilities Division City of Miami 444 SW 2nd Avenue, 3rd Floor Miami, FL 33130
Re: Market Rent Study for Bayside Marketplace, Parking and Proposed Skyrise Tower 401 and 501 Biscayne Boulevard Miami, Florida 33132
Dear Mr. Torre: As requested, we have prepared a market rent study of the property referenced above. The purpose of this report is to provide opinions of the market and percentage rent for the subject, assuming its continued use as festival retail center, Bayside Marketplace and associated parking, as of the date of inspection, March 25, 2014. We have also provided our opinion of the market rent and percentage rent for the subject, as proposed, which includes additional retail space, additional parking spaces and the proposed Skyrise Tower, as of the date of inspection, March 25, 2014. It is noted that the study is to result in specific conclusions regarding the market rent. The opinions of market rent are in terms of cash or of financing terms equivalent to cash. The property is currently developed with the Bayside Marketplace, a festival retail center with associated parking. The allowable FLR, based on the original approvals for the development, were 267,000 SF for the retail component and 420,000 SF for the parking structures, approximately 1,200 parking spaces, 687,000 of FLR. The property owner is considering additional development for the site that will include additional parking of 216,660 SF above the existing parking garages, additional retail of 17,255 along the ground floor of the parking garages and a new Skyrise Tower that will contain approximately 277,177 SF of which 4,470 SF will be set aside for the City of Miamis marina and fire department offices. The increased approvals, which are based on a gross buildable square footage, have also taken into consideration the actual square footage that was built on the site, after the original approvals for the property in 1985. April 29, 2014 Mr. Henrique Torre Page 2 of 3
Buildable Component (FLR) Original Approvals (FAR) Increased Approvals (FLR) Commercial (Retail and Office) 267,000 561,432 Parking SF 420,000 636,660 Less: City of Miami Space - (4,470) Net Buildable FLR 687,000 1,193,622 Parking Spaces (Above and Below Grade) 1,242 1,944 Less: City of Miami Parking Spaces (42) (42) Net Parking Spaces 1,200 1,902
The site that will be developed with the Skyrise Tower will require the relocation of some of the City of Miamis offices and the parking that is associated with the Miamimarina, approximately 4,470 SF of office space and 42 parking spaces. This office space and the 42 parking spaces are not included in the revenue generating components for the property. Therefore, the revised approved developable square footage for the site is 1,193,622 SF, an FLR of 1.63, based on the size of the site. Within the City of Miamis zoning code, FLR is considered the total gross building area, including parking and common areas. The proposed FLR of a property is based on the site plan approvals for the property. The subject consists of two contiguous parcels of land that contain a total of approximately 733,929 SF or approximately 16.85 acres of land. The tracts are irregular in shape and are level and at street grade. The property is zoned "T6-8 O," Urban Core Transect District Open, under the jurisdiction of the City of Miami, under the Miami 21 zoning code. The site is owned by the City of Miami and leased to the owner of Bayside Marketplace, Bayside Center Ltd. Partnership, a subsidiary of General Growth Properties. The center was completed in 1987. There are two separate leases in place for the retail and parking components both of which originated in 1987 and were for terms of 45 years with two, 15-year options. As of the date of value, the subject is being utilized as a festival retail center with associated parking, subject to the development restrictions imposed by the original development approvals for the Bayside Marketplace. For the purposes of this report, the subject will be analyzed based on the original development approvals and under a second scenario with the additional proposed development, based on the new proposed components and increased FLR. This letter must remain attached to the report, which contains 70 pages plus related exhibits, in order for the value opinion set forth to be considered valid. The ensuing report, in a self-contained report, has been prepared in conformity with and is subject to the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP). The report is subject to the attached Assumptions and Limiting Conditions and Definition of Market Value. We performed a market rental rate study for the subject in May of 2013. We have not provided any other services regarding the subject within the prior three years, as appraisers or in any other capacity. April 29, 2014 Mr. Henrique Torre Page 3 of 3
After an inspection of the subject, and analysis of pertinent physical and economic factors that impact value, we are of the opinion that the market rent for the site underlying the Bayside Marketplace and parking structures, assuming its continued use as a festival retail center, as of the date of inspection, March 25, 2014, is: $3,200,000/Year THREE MILLION TWO HUNDRED THOUSAND DOLLARS Plus, an additional 6.00% percentage rent on gross retail revenues over a natural breakpoint and an additional 15.00% percentage rent on gross parking revenues over a natural breakpoint. We are of the opinion that the market rent for the site underlying the Bayside Marketplace, parking structures and proposed Skyrise Tower, based on the proposed development plans, as of the date of inspection, March 25, 2014, is: $4,600,000/Year FOUR MILLION SIX HUNDRED THOUSAND DOLLARS Plus, an additional 6.00% percentage rent on gross retail revenues over a natural breakpoint and an additional 15.00% percentage rent on gross parking revenues over a natural breakpoint. We invite your attention to the ensuing report, which details the documentation and analysis in support of our conclusion. If you have any questions or require further information about the ensuing report, please feel free to contact the undersigned. We thank you for retaining the services of our firm for your valuation and related needs.
Respectfully submitted,
Joseph J. Blake and Associates, Inc. DRAFT Tracy Gaskins-Courtney Assistant Director State-Certified General Real Estate Appraiser No. RZ2076
DRAFT Ted Allen, MAI Managing Partner State-Certified General Real Estate Appraiser No. RZ426
14-108-02 Bayside Marketplace Land TABLE OF CONTENTS
___________________Joseph J. Blake and Associates, Inc.__________________ Real Estate Valuation and Consulting Title Page Transmittal Letter Table of Contents Executive Summary ......................................................................................................... 1 Photographs of the Subject .............................................................................................. 4 Certification of the Report ................................................................................................ 7 Assumptions and Limiting Conditions ................................................................................ 9 Identification of Report Format ......................................................................................... 11 Purpose of the Report ..................................................................................................... 11 Intended User and Use of the Report ................................................................................ 11 Pertinent Dates of Inspection, Report Value and Report ..................................................... 11 Definition of Market Value ................................................................................................ 11 Scope of the Report ........................................................................................................ 11 Identification of the Property ............................................................................................ 13 Current Use of the Subject ............................................................................................... 13 History of the Subject ...................................................................................................... 14 Area Analysis .................................................................................................................. 16 Neighborhood Analysis .................................................................................................... 23 Market Analysis ............................................................................................................... 28 Description of the Site ..................................................................................................... 49 Zoning and Taxes ............................................................................................................ 51 Highest and Best Use ...................................................................................................... 52 The Sales Comparison Approach ....................................................................................... 56 Reconciliation and Final Value .......................................................................................... 70
ADDENDA Miami Dade County Property Record Cards 2013 Tax Bills Zoning Information Flood Zone Legal Descriptions Bayside Marketplace Lease (Retail) Garage Parcel Lease 2013 Bayside Operating Statement Site Plans Engagement Contract Qualifications of the Appraisers 14-108-02 Bayside Marketplace Land EXECUTIVE SUMMARY
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 1 PROPERTY APPRAISED: Bayside Marketplace Land PROPERTY ADDRESS: 401 and 501 Biscayne Boulevard Miami, Miami-Dade County, FL 33132 FOLIO #: 01-0100-000-0525 01-0100-000-0522 01-0100-000-0523 PROPERTY LOCATION: East side of Biscayne Boulevard, at NE 4th Street, Miami, Miami-Dade County, FL 33132 PURPOSE OF THE REPORT: The purpose of this report is to provide opinions of the market and percentage rent for the subject, assuming its continued use as festival retail center, Bayside Marketplace and associated parking, as of the date of inspection, March 25, 2014. We have also provided our opinion of the market rent and percentage rent for subject, as proposed, which includes additional retail space, additional parking spaces and the proposed Skyrise Tower, as of the date of inspection, March 25, 2014. The opinions of market rent are in terms of cash or of financing terms equivalent to cash. PERTINENT DATES Date of Inspection: March 25, 2014 Effective Date of Report: March 25, 2014 Effective Date of Report: March 25, 2014
HIGHEST AND BEST USE
As Improved: The existing use, a festival retail center and associated parking with the proposed Skyrise Tower, subject to the most recent approvals by the City of Miami.
As If Vacant: Construction of a festival retail development associated parking and proposed Skyrise Tower up to the maximum allowable FLR, per the most recent approvals by the City of Miami. 14-108-02 Bayside Marketplace Land EXECUTIVE SUMMARY
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 2 IMPROVEMENT DATA: The property is currently developed with the Bayside Marketplace, a festival retail center with associated parking, 1,200 spaces within two, five-story parking garages. The allowable FLR, based on the original approvals for the development, is 267,000 SF for the retail component. The actual square footage of the parking structures is approximately 420,000 SF for a total of 687,000 SF of FLR. The property owner is considered additional development for the site that will include additional parking of 216,660 SF above the existing parking garages, additional retail of 17,255 along the ground floor of the parking garages and a new Skyrise Tower that will contain approximately 277,177 SF of net rentable area. Therefore, the revised approved developable square footage for the site is 1,193,622 SF, an FLR of 1.63, based on the size of the site. PARKING: Based on the original approvals for the site, there were 1,200 parking spaces to be built between two multi-story parking structures, approximately 420,000 SF (350 SF per space). Documents provided by the client indicate that there are an additional 131 parking spaces on a surface lot that are divided between Bayside parkers (89 parking spaces) and the City of Miamis Miamimarina (42 spaces). The developer of Skyrise Tower is required to relocate these 131 parking spaces to the existing parking structures. The Skyrise Tower will be situated on this surface parking area. The Skyrise developer will add 596 parking spaces for the replacement and required parking for the Skyrise Tower commercial space and 148 parking spaces below the Skyrise Tower, for a total of 1,944 total parking spaces on the site, upon completion of the additions to the property. Of the total, 42 spaces will be assigned to the Miamimarina and are not included in the revenue generating components of the project, as proposed. SITE DESCRIPTION: The subject consists of a two, contiguous parcels of land that contain a total of approximately 733,929 SF or approximately 16.85 acres of land. The tracts are irregular in shape and are level and at street grade. The property is zoned "T6-8 O," Urban Core Transect District Open, under the jurisdiction of the City of Miami, under the Miami 21 zoning code. The site is owned by the City of Miami and leased to the owner of Bayside Marketplace, Bayside Center, Ltd, a subsidiary of General Growth Properties. 14-108-02 Bayside Marketplace Land EXECUTIVE SUMMARY
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 3 CURRENT USE: As of the date of value, the subject is being utilized as a festival retail center with associated parking, subject to the development restrictions imposed by the original development approvals for the Bayside Marketplace. For the purposes of this report, the subject will be analyzed based first on the original development and second with the additional proposed development, based on the new proposed components and FLR. ZONING: "T6-8 O," Urban Core Transect District Open Conclusions: Market Rent As Is $3,200,000/Year THREE MILLION TWO HUNDRED THOUSAND DOLLARS Plus, an additional 6.00% percentage rent on gross retail revenues over a natural breakpoint and an additional 15.00% percentage rent on gross parking revenues over a natural breakpoint. Market Rent As Proposed $4,600,000/Year FOUR MILLION SIX HUNDRED THOUSAND DOLLARS Plus, an additional 6.00% percentage rent on gross retail revenues over a natural breakpoint and an additional 15.00% percentage rent on gross parking revenues over a natural breakpoint. 14-108-02 Bayside Marketplace Land PHOTOGRAPHS OF THE SUBJECT
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 4
Aerial Photo of Bayside Marketplace
Land Underlying the Retail Component
Land Underlying the Parking Garage Component 14-108-02 Bayside Marketplace Land PHOTOGRAPHS OF THE SUBJECT
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 5
Hard Rock Cafe Surface Parking Area on East Side of Site
Surface Parking Area (Future Skyrise Site) View of Bayside from East Side of Site
Bayside Exterior Entrance to Parking Garages 14-108-02 Bayside Marketplace Land PHOTOGRAPHS OF THE SUBJECT
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 6
Interior of Parking Garages Adjacent Property (American Airlines Arena)
Exterior of Shop Space Exterior Walkways
Exterior Seating Areas and Bay Walk Main Entrance 14-108-02 Bayside Marketplace Land CERTIFICATION OF REPORT
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 7 We, the undersigned, certify that, to the best of our knowledge and belief: Tracy Gaskins-Courtney and Ted Allen, MAI, have made a personal inspection of the property that is the subject of this report. As of the date of this report, Ted Allen, MAI has completed the continuing education program for Designated Members of the Appraisal Institute. As of the date of this report, Ted Allen, MAI, has completed the continuing education requirements for designated members of the Appraisal Institute. The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 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. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 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 report. The report is not based on a requested minimum valuation, a specific valuation, or the approval of a loan. In addition, our engagement was not contingent upon the report producing a specific value and neither engagement, nor employment, nor compensation, is based upon approval of any related loan application. Our analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. No one provided significant real property assistance to the persons signing this certificate. The use of this report is subject to the requirements of the State of Florida relating to review by the Real Estate Appraisal Subcommittee of the Florida Real Estate Commission. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 14-108-02 Bayside Marketplace Land CERTIFICATION OF REPORT
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 8 We have not performed any services regarding the subject within the prior three years, as appraisers or in any other capacity.
After an inspection of the subject, and analysis of pertinent physical and economic factors that impact value, we are of the opinion that the market rent for the site underlying the Bayside Marketplace and parking structures, assuming its continued use as a festival retail center, as of the date of inspection, March 25, 2014, is: $3,200,000/Year THREE MILLION TWO HUNDRED THOUSAND DOLLARS Plus, an additional 6.00% percentage rent on gross retail revenues over a natural breakpoint and an additional 15.00% percentage rent on gross parking revenues over a natural breakpoint. We are of the opinion that the market rent for the site underlying the Bayside Marketplace, parking structures and proposed Skyrise Tower, based on the proposed development plans, as of the date of inspection, March 25, 2014, is: $4,600,000/Year FOUR MILLION SIX HUNDRED THOUSAND DOLLARS Plus, an additional 6.00% percentage rent on gross retail revenues over a natural breakpoint and an additional 15.00% percentage rent on gross parking revenues over a natural breakpoint. We invite your attention to the ensuing report, which details the documentation and analysis in support of our conclusion. If you have any questions or require further information about the ensuing report, please feel free to contact the undersigned. We thank you for retaining the services of our firm for your valuation and related needs.
Respectfully submitted,
Joseph J. Blake and Associates, Inc. DRAFT Tracy Gaskins-Courtney Assistant Director State-Certified General Real Estate Appraiser No. RZ2076
DRAFT Ted Allen, MAI Managing Partner State-Certified General Real Estate Appraiser No. RZ426
14-108-02 Bayside Marketplace Land ASSUMPTIONS AND LIMITING CONDITIONS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 9 General Assumptions and General Limiting Conditions This Report is subject to underlying assumptions and limiting conditions qualifying the information contained in the Report as follows: The valuation estimate applies only to the property specifically identified and described in the ensuing Report. Information and data contained in the Report, although obtained from public record and other reliable sources and, where possible, carefully checked by us, is accepted as satisfactory evidence upon which rests the final expression of property value. We have made no legal survey, nor have we commissioned one to be prepared, and therefore, reference to a sketch, plat, diagram or previous survey appearing in the report is only for the purpose of assisting the reader to visualize the property. It is assumed that all information known to the client and relative to the valuation has been accurately furnished and that there are no undisclosed leases, agreements, liens or other encumbrances affecting the use of the property. Ownership and management are assumed to be competent and in responsible hands. No responsibility beyond reasonableness is assumed for matters of a legal nature, whether existing or pending. We, by reason of this report, shall not be required to give testimony as expert witness in any legal hearing or before any Court of Law unless justly and fairly compensated for such services. By reason of the Purpose of the Report and the Intended User and Use of the Report herein set forth, the value reported is only applicable to the Property Rights Appraised, and the Report should not be used for any other purpose. Disclosure of the contents of this Report is governed by the By-Laws and Regulations of the Appraisal Institute. Neither all nor any part of the contents of this Report (especially any conclusions as to value, our identity, or the firm with which we are connected, or any reference to the Appraisal Institute or to the MAI Designation) shall be reproduced for dissemination to the public through advertising media, public relations media, news media, sales media or any other public means of communication without our prior consent and written approval. We have not been furnished with soil or subsoil tests. In the absence of soil boring tests, it is assumed that there are no unusual subsoil conditions or, if any do exist, they can be or have been corrected at a reasonable cost through the use of modern construction techniques. This report is based on the conditions of local and national economies, purchasing power of money, and financing rates prevailing at the effective date of value. We are not engineers, and any references to physical property characteristics in terms of quality, condition, cost, suitability, soil conditions, flood risk, obsolescence, etc., are strictly related to their economic impact on the property. No liability is assumed for any engineering-related issues. 14-108-02 Bayside Marketplace Land ASSUMPTIONS AND LIMITING CONDITIONS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 10 Unless otherwise stated in this report, we did not observe the existence of hazardous materials, which may or may not be present on the property. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials, may affect the value of the property. The market rent opinion is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for the expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. Toxic and hazardous substances, if present within a facility, can introduce an actual or potential liability that may adversely affect marketability and value. Such effects may be in the form of immediate clean-up expense or future liability of clean-up costs (stigma). In the development of our opinion of value, no consideration was given to such liabilities or their impact on value. The client releases Joseph J. Blake and Associates, Inc., from any and all liability related in any way to environmental matters. Possession of this report or a copy thereof does not imply right of publication, nor use for any purpose by any other than the client to whom it is addressed, without our written consent. Cash flow projections are forecasts of estimated future operating characteristics and are based on the information and assumptions contained within the report. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may well vary from the projections contained herein. We do not warrant that these forecasts will occur. Projections may be affected by circumstances beyond our current realm of knowledge or control. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific compliance survey and analysis of this property to determine whether it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements for the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non-compliance with the requirements of the ADA in estimating the value of the property. Extraordinary Assumptions This report is not based on any extraordinary assumptions. Hypothetical Conditions This report is not based on any hypothetical conditions. 14-108-02 Bayside Marketplace Land INTRODUCTION
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 11 IDENTIFICATION OF REPORT FORMAT This report is presented within a complete, self-contained format. PURPOSE OF THE REPORT The purpose of this report is to provide opinions of the market and percentage rent for the subject, assuming its continued use as festival retail center, Bayside Marketplace and associated parking, as of the date of inspection, March 25, 2014. We have also provided our opinion of the market rent and percentage rent for the subject, as proposed, which includes additional retail space, additional parking spaces and the proposed Skyrise Tower, as of the date of inspection, March 25, 2014. It is noted that the study is to result in specific conclusions regarding the market rent. The opinions of market rent are in terms of cash or of financing terms equivalent to cash. It is noted that the study is to result in specific conclusions regarding the market rent. The opinions of market rent are in terms of cash or of financing terms equivalent to cash. INTENDED USER AND USE OF THE REPORT The intended user of this report is the client, the City of Miami. The intended use of the report is to assist the client in leasing decisions regarding the property. This report is not intended to be relied upon by anyone other than its intended user or for any purpose other than that which is stated here. PERTINENT DATES OF INSPECTION, MARKET RENT AND REPORT This report, with its analyses, conclusions and final expressions of market value, is specifically applicable to the following pertinent dates: Date of Inspection: March 25, 2014 Effective Date of Market Rent: March 25, 2014 Effective Date of Report: April 29, 2014
DEFINITION OF MARKET RENT Market rent is defined as the rental income that a property would most likely command in the open market; indicated by the current rents paid and asked for comparable space as of the date of the appraisal 1
SCOPE OF THE REPORT The scope of the assignment is relative to the intended use of the report. The following outlines the extent of property inspection, market data collection, verification and analysis performed for this assignment.
1 Appraisal Institute, The Dictionary of Real Estate Appraisal, 5 th Edition (Chicago, Illinois; Appraisal Institute, 2010) 14-108-02 Bayside Marketplace Land INTRODUCTION
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 12 Inspection Tracy Gaskins-Courtney and Ted Allen, MAI, have made a personal inspection of the property that is the subject of this report. The inspection was visual in nature, to assess the economic condition of the property, in order to effectively compare it to other properties in the market. We are not engineers, and we did not assess the property from the standpoint of its environmental integrity, or to determine whether any latent defects were present. Subject Physical and Economic Characteristics Information regarding the subject was obtained from representatives of the City of Miami and a representative of the subjects tenant. Site and building measurements were obtained from site plans provided to the consultants. Interviews with both the owner and the tenant were conducted for other relevant physical and economic data. The subjects year built and lease information was obtained from public records and City of Miami officials. Information pertaining to the modifications and additions proposed for the property were provided by the client and the proposed developer of the Skyrise Tower. Type of Analysis Applied The client has requested a market study be performed on the property such that market rents for the facility are determined assuming its continued use as a waterfront restaurant. As such, the Cost, the Sales Comparison and Income Capitalization Approaches to value were not performed as a market value for the subject was not requested. We have included a Sales Comparison Approach for the valuation of the site in order to determine an appropriate rental rate for the ground lease. It is noted that the study is to result in specific conclusions regarding the market rent under the previously described scenario. Extent of Data Research General economic data and market data were reviewed. Comparable sales were compiled from published sources, including CoStar Comps and Loopnet. Market data compiled for this report include a variety of land sales. These data are a result of research specific to the subject's area and pertinent to the subject. The data were verified by buyers, sellers, brokers, managers, government officials or other sources regarded as knowledgeable and reliable. Information specific to the subjectsuch as site dimensions, subject history and legal description was provided by the City of Miami and public records and is assumed to be correct. The information appeared reliable, based on an inspection of the property on March 25, 2014. Other information, such as zoning and tax records, was obtained from governmental sources. Specific estimates concerning land value, etc., reflect our judgment based on interpretation of the market data. The reasoning behind such estimates is illustrated throughout the relevant approach to value. 14-108-02 Bayside Marketplace Land INTRODUCTION
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 13 IDENTIFICATION OF THE PROPERTY The property is currently developed with the Bayside Marketplace, a festival retail center with associated parking, within two, five-story parking garages. The allowable FLR, based on the original approvals for the development, is 267,000 SF for the retail component. The actual square footage of the parking structures is approximately 420,000 SF for a total of 687,000 of FLR. The property owner is considered additional development for the site that will include additional parking of 216,660 SF, additional retail of 17,255 along the ground floor of the parking garages and a new Skyrise Tower that will contain approximately 277,177 SF. Therefore, the revised approved developable square footage for the site is 1,193,622 SF, an FLR of 1.63, based on the size of the site. Buildable Component (FLR) Original Approvals (FAR) Increased Approvals (FLR) Commercial (Retail and Office) 267,000 561,432 Parking SF 420,000 636,660 Less: City of Miami Space - (4,470) Net Buildable FLR 687,000 1,193,622 Parking Spaces (Above and Below Grade) 1,242 1,944 Less: City of Miami Parking Spaces (42) (42) Net Parking Spaces 1,200 1,902
The subject consists of two contiguous parcels of land that contain a total of approximately 733,929 SF or approximately 16.85 acres of land. The tracts are irregular in shape and are level and at street grade. The property is zoned "T6-8 O," Urban Core Transect District Open, under the jurisdiction of the City of Miami, under the Miami 21 zoning code. The property is commonly known as: Bayside Marketplace Land 401 and 501 Biscayne Boulevard Miami, FL 33132 The property is also identified by the Miami-Dade County Tax Assessor's Office as tax parcel numbers 01-0100-000-0523 (Parking Garage Land), 01-0100-000-0525 (Marketplace Land). The legal description of the property is found in the Addenda. The legal description was provided by representatives of the owner and is assumed to be correct. We have not commissioned a survey, nor have we had one verified by legal counsel. Therefore, we suggest legal counsel verify this legal description before it is used for any other purpose. CURRENT USE OF THE SUBJECT As of the date of value, the subject is being utilized as a festival retail center with associated parking, subject to the development restrictions imposed by the original development approvals for the Bayside Marketplace. For the purposes of this report, the subject will be analyzed first based on the original development and second with the additional proposed development, based on the new proposed components and FLR. 14-108-02 Bayside Marketplace Land INTRODUCTION
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 14 HISTORY OF THE SUBJECT Bayside Marketplace was part of the Festival Marketplace concept developed by the Rouse Companies during the 1980s in the major urban markets across the country.Festival marketplaces were a leading downtown revitalization strategy in American cities during the 1970s and 1980s. The guiding principles are a mix of local tenants instead of chain stores, design of shop stalls and common areas to energize the space, and uncomplicated architectural ornament in order to highlight the goods. In the second half of the 20th century, Rouse and his company became major developers of suburban strip shopping centers and pioneered large shopping malls. In many cities, these were seen as escalating the failure of retail businesses and causing further deterioration of older, downtown core areas. In the late 1970s, Rouse and his company responded to critics of their suburban development by studying inner cities for similar development potential despite the widely held belief of investors and developers that downtown areas were both dirty and dangerous and not desirable destinations for their residents. In response, inspired by projects such as Ghirardelli Square in San Francisco, the Rouse Company worked with architects, urban planners, and city governments to develop the festival marketplace concept as a way to reverse the negative trends and to attract both suburban residents and out-of-town visitors to the downtown areas. A typical festival marketplace would include local involvement in the creation of a safe and trendy attraction intended to serve as a major catalyst for other redevelopment. Generally, a festival marketplace offers major restaurants, specialty retail shops, and an international food court. Often, there is an exciting nightlife with music, dancing and live entertainment. The more successful projects seemed to benefit from waterfront locations and secure parking. The City of Miami has historically been protective of its waterfront property and owns the majority of the sizeable tracts of land that border Biscayne Bay, along the downtown waterfront and in Coconut Grove to the south. In order to protect against unrestrained development, strict development regulations in terms of height and density have been implemented through zoning designations and design criteria. The City of Miami retained the land underlying the Bayside Marketplace and leased the property to the original developer, the Rouse Companies, in 1985 prior to the commencement of the construction. The original lease was for a term of 45 years with two 15-year options commencing after the construction of the project was complete and the occupancy of the property had reached at least 80%. The lease calls for the greater of the minimum base rent or 35% of net rental income available for distribution. With the base rent increasing periodically. Rental Years Minimum Base Rate 1-2 $325,000.00 3-6 $650,000.00 7-35 $1,000,000.00 36-45 Average of the last 3 years Within the lease, the City of Miami established design and density parameters for the property. The tenant is responsible for all operating expenses and property taxes. 14-108-02 Bayside Marketplace Land INTRODUCTION
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 15 There is a separate lease for the parking areas that serve Bayside. This lease is also for a term of 45 years with two 15-year options. This lease calls for a base rental payment of $10,000 per annum with additional rent of $80,000 when the parking is generating sufficient revenue to pay that additional rent and then 50% of net income, after distributions. The performance of the Bayside Marketplace has fluctuated over the years with sales in the first year exceeding expectations and then falling sharply in the 1990s. The center struggled through the 1990s and was adversely affected by the drop in tourism associated with 9/11. Many of the visitors to the center are international visitors to Miami. On November 12, 2004, the Rouse Company was sold to Chicago-based General Growth Properties Inc., another shopping mall developer and Baysides ownership changed to General Growth Properties. General Growth Properties filed for bankruptcy in 2009 and put Bayside on the market. GGP has managed to emerge from bankruptcy and has posted a profit for 2011. Baysides sales and occupancy have been on the upswing recently but many of the leases currently in place were negotiated during the economic downturn. Most recently, Bayside is in the process of renegotiating their ground lease with the City of Miami for the underlying site. A developer is interested in subleasing a portion of the site, approximately 80,797 SF or 1.85 acres for the development of a Skyrise Tower, a retail-office-entertainment structure that will be the focal point of the City of Miamis bayfront. The tower will occupy a strip of land situated to the east of the Bayside Marketplace, currently utilized for surface parking. The proposed square footage of the structure is 277,177 SF. Based on the Miami 21 zoning code, street level retail bays will be added to the parking garages as part of the modifications. This is necessary to improve the appearance of the parking garages at street level and comply with the current zoning code. Based on the original approvals for the site, there were 1,200 parking spaces to be built between two multi-story parking structures, approximately 420,000 SF (350 SF per space). Documents provided by the client indicate that there are an additional 131 parking spaces on a surface lot that are divided between Bayside parkers (89 parking spaces) and the City of Miamis Miamimarina (42 spaces). The developer of Skyrise Tower is required to relocate these 131 parking spaces to the existing parking structures. The Skyrise Tower will be situated on this surface parking area. The Skyrise developer will add 596 parking spaces for the replacement and required parking for the Skyrise Tower commercial space and 148 parking spaces below the Skyrise Tower, for a total of 1,944 total parking spaces on the site, upon completion of the additions to the property. Of the total, 42 spaces will be assigned to the Miamimarina and are not included in the revenue generating components of the project. We are not aware of any other real property transactions pertaining to the subject in the three years prior to the date of value, other than that which is reported here. 14-108-02 Bayside Marketplace Land AREA ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 16
14-108-02 Bayside Marketplace Land AREA ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 17 INTRODUCTION The Miami-Fort Lauderdale-West Palm Beach Metropolitan Statistical Area (MSA) encompasses Broward, Miami-Dade, Monroe and Palm Beach counties. The subject is located in Miami-Dade County, Florida. Miami-Dade County is located in the southeast portion of Florida's east coast and is the southernmost county situated on Florida's mainland. Miami is the county seat of Miami-Dade County, which includes many other incorporated areas such as Miami Beach, Key Biscayne, Coral Gables, South Miami, Pinecrest, Aventura, Hialeah and Homestead. The major portion of the county is on the west side of Biscayne Bay, the entryway of all docking facilities in the city. The Atlantic Ocean is the eastern boundary of the county. The county is accessible via four causeways in the city proper. Miami-Dade County is Florida's largest county, with an estimated population of 2,547,708 persons living in a 1,946 square-mile area. Miami-Dade County boasts an excellent geographic location, allowing it to serve as a gateway to the Caribbean and Latin America. A tourist destination in itself, it is also within a day's drive to some of Florida's major tourist destination cities, as shown in the following table: City Miles From Miami Fort Lauderdale 25 West Palm Beach 74 Key West 160 Orlando 232 Daytona Beach 259 Clearwater 286 Tampa 309 Source: Rand McNally Florida Mileage Chart
Development and growth in Miami-Dade County are often attributed to the climate, which draws the northern United States tourist trade during the winter months. Miami-Dade County remains to be recognized as a center for international business, especially with Latin America, the Caribbean, and increasingly with Europe and Asia. Tourism, construction and trade are the area's economic mainstays, with international commerce and finance becoming rapidly growing segments of the economy. Area development can be characterized as light industrial/commercial in the western and northern sections of the city; the southern and southwestern sections consist of residential and light industrial/commercial activity. The growth in business relations between Latin America and Miami-Dade County has been accompanied by ongoing growth in tourism from Latin America. Latin American tourists who enjoy shopping in the United States represent a major demand segment in Miami-Dade County's lodging and retail markets. POPULATION Miami-Dade County officials project that the local economy's outlook is one of growth. Annual population increases are projected to continue. This growth may be attributed to Miami-Dade County's continuing emergence as an international business center, which has the effect of broadening the area's economic base and reducing the impact of cyclical variations on the nation's economy. 14-108-02 Bayside Marketplace Land AREA ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 18 Miami-Fort Lauderdale-West Palm Beach MSA Population Trends County 2013 2009-2013 Average Annual Growth Broward 1,833,666 1.42% Miami-Dade 2,598,976 1.34% Monroe 75,022 0.81% Palm Beach 1,389,931 1.58% Florida 19,661,546 1.21% Source: Florida Trend Economic Yearbook April 2013
The largest age group represented in Miami-Dade County is the population aged 40 to 64, followed by persons ranging in age from 20 to 39 years old. Younger children aged 0 to 14 years are the third largest age group within this area. Retirees aged 65 and over represent a small group that comprises only 14.7% of the local population. Miami-Dade County has a younger overall population than the state of Florida as a whole. The following chart displays the regional population by age. County 014 1519 2039 4064 65+ Total Broward 17.9% 6.1% 26.3% 35.0% 14.8% 1,833,666 Miami-Dade 17.5% 6.3% 27.7% 33.9% 14.7% 2,598,976 Monroe 12.7% 4.1% 23.5% 41.0% 19.0% 75,022 Palm Beach 16.5% 5.8% 23.0% 32.6% 22.2% 1,389,931 Florida 17.2% 6.0% 25.1% 33.3% 18.3% 19,661,546 Source: Florida Trend Economic Yearbook April 2013
PERSONAL AND HOUSEHOLD INCOME With regard to per capita income, the Miami-Fort Lauderdale-West Palm Beach MSA exhibits income levels that compare favorably with national averages. Historical and current per capita personal income for the counties within the Miami-Fort Lauderdale-West Palm Beach MSA is summarized on the following chart: Per Capita Personal Income Miami-Fort Lauderdale-West Palm Beach MSA County 2012 2013 Broward $45,540 $44,786 Miami-Dade $41,106 $39,617 Monroe $65,651 $63,313 Palm Beach $59,096 $55,980 Florida $41,903 $41,418 Source: Florida Trend Economic Yearbook April 2013
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_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 19 ECONOMIC BASE/EMPLOYMENT The following table outlines total employment and employment by county for the Miami-Fort Lauderdale-West Palm Beach metropolitan statistical area: County Labor Force Employed Jobless Jobless Rate Broward 1,025,039 971,664 53,375 5.2% Miami-Dade 1,276,537 1,186,585 89,952 7.0% Monroe 48,691 46,882 1,809 3.7% Palm Beach 636,413 595,815 40,598 6.4% Region 3,046,680 2,800,846 185,734 5.6% Florida 9,395,000 8,796,000 599,000 6.4% Source: Florida Department of Economic Opportunity, November 2013
According to the Florida Department of Economic Opportunity, the total civilian labor force in Miami-Dade County as of November 2013 was 1,276,537, of which 1,186,585 were employed and 89,952 were unemployed. The unemployment rate was 7.0%. The following chart outlines the labor force, employment and unemployment information for Miami-Dade County and Florida. Area Civilian Labor Force Number Employed Number Unemployed Unemployment Rate Miami-Dade 1,276,537 1,186,585 89,952 7.0% Florida 9,395,000 8,796,000 599,000 6.4% Source: Florida Department of Economic Opportunity, November 2013
The major industries in MiamiDade County with more than 40,000 total employees are indicated below. The largest major industry sector was Health Care and Social Assistance, followed by Retail Trade, and then Accommodation and Food Services. Major Industries in Miami-Dade County Industry Establishments Employees Health Care and Social Assistance 8,722 140,920 Retail Trade 11,754 121,018 Accommodation and Food Services 5,096 93,054 Education Services 871 72,866 Public Administration 242 65,813 Wholesale Trade 9,254 61,358 Professional, Scientific & Technical Svc. 12,921 58,100 Transportation and Warehousing 3,001 55,781 Admin., Support, Waste Mgmt., Remediation 4,371 55,502 Source: Florida Research and Economic Database
Miami-Dade County is a recognized banking and finance center, with over 120 financial institutions featuring a growing community of international banks serving Latin America. This international activity has emerged due to the more than 150 multi-national firms that have established their offices in Miami-Dade in order to direct their Latin American, Caribbean and in some cases, worldwide operations. 14-108-02 Bayside Marketplace Land AREA ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 20 The following chart outlines the average wage information for Miami-Dade County and Florida. The average hourly wage estimate for Miami-Dade County in 2013 is $19.03. This would be equivalent to $761 per week or $39,619 per year, assuming a 40-hour week worked the year around. Area Average Weekly Wage Miami-Dade County $761 Florida $796 Source: Florida Trend Economic Yearbook April 2013 EDUCATION Miami-Dade County is served by more than 900 public and private secondary and elementary schools. Seven colleges and universities are located in the county. Miami-Dade College currently offers more than 175 programs and 1,500 courses, with enrollment of over 160,000 students. The University of Miami in Coral Gables has more than 15,000 degree- seeking students and offers 150 undergraduate and 192 graduate degree programs. Florida International University, with two campuses, 36,000 students and more than 800 full-time faculty, received the nations fifth largest philanthropic gift in the history of public higher educationthe Wolfsonian Museum on Miami Beach, with 70,000 artifacts worth an estimated $75 million. It was donated to the college in 1997 and features a wide array of objects ranging from high art to pop culture. Four-year degree programs are also available at Barry University, St. Thomas University, Florida Memorial College and Miami Christian College. HOUSING According to the 2010 U.S. Census, the total number of occupied households throughout Miami- Dade County was 989,435. This represents 827,556 households and a total of 2.88 persons per household for the 2006-2010 timeframe. The percentage of housing that is multi-family is also a reflection of the density of Miami-Dade Countys population and the countys development. The concurrency provision in the 1985 Growth Management Act requires that all water, sewer, roads, schools, parks and storm water facilities necessary to support existing improvements be in place before new construction is permitted. Thus, if a location is deficient in one or more categories, the affected infrastructure component must be expanded to support any new construction. A developer may choose to provide the various facilities and/or services necessary to support their project. However, in some cases the expense associated with offsite improvements may render a project economically unfeasible. TRANSPORTATION Due to its strategic location and design, Miami International Airport (MIA) has exceeded JFK as the number one airport in the country in terms of handling international cargo. The airport administration has embarked on a $5.4 billion capital improvement plan that includes an extensive ground transportation component. An FAA study indicated that MIA continues to grow faster than nearly any other airport in the nation, as traffic between the United States and Latin America outpaces that of nearly every other region. To meet this demand, the airport continues a massive expansion of its facilities, including adding a fourth runway. 14-108-02 Bayside Marketplace Land AREA ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 21 Also, $1.3 billion are earmarked for a four-story transit hub and new roads east of the airport. Once the 25-acre hub is complete, passengers will shuttle between the terminal and the hub, called the Miami Intermodal Center, aboard automated trains. It will be a central destination and departure point for Amtrak, Tri-Rail, Metrorail, Greyhound, county buses and rental cars. It is to connect to the Port of Miami, so that cruise passengers arriving by plane will be able to hop onto a train that will take them to the port. The Port of Miami is a leader in the maritime industry and home to nearly a dozen of the worlds most distinguished cruise lines. The port offers more cargo sailings to more destinations in the Western hemisphere than any other port, and offers access to virtually every port in the world. Metrorail is a 21-mile rapid transit system on an elevated railway providing access to Downtown Miami from portions of both south and north Miami-Dade County. It connects with Metromover, a 30-station, five-mile system, that loops through the center of Downtown Miami's CBD. Metrobus provides the feeder system to Metrorail and bus service to all other parts of Miami-Dade County. A network of 5,640 miles of roadway serves Miami-Dade County, of which I-95, I-75, Floridas Turnpike, and the Palmetto Expressway (SR-826) are the most utilized north/south highways, while SR-112, SR-826 and SR-836 are the most utilized east/west expressways. US-1 and SR-A1A are also components of this network. Other primary thoroughfares include I-395 (east/west), I-195 (east/west), SR-9, SR-94, SR-874, US-27, US-41 and US-441. TOURISM/RECREATION Known mainly for its trendy nightclubs and oceanfront resorts, Miami-Dade County is also a recognized center for the fine arts and the performing arts, offering an array of enriching cultural activities. These include the Miami Art Museum, Museum of Contemporary Art, Miami Art Central, Wolfsonian-FIU, and the Lowe Art Museum, which are filled with collections and exhibitions from all parts of the world. Broadway plays, the Repertory Theater, the Philharmonic, the Opera Guild, and a large number of historical attractions and exhibits are also favorites. Every year, numerous art festivals make their homes in Miami, including the world-renowned Coconut Grove Arts Festival and Art Basel. The Miami Beach Symphony Orchestra and the Greater Miami Opera Association both offer top- notch performances throughout the year. In addition, the Coconut Grove Playhouse, the Actors Playhouse and the Gusman Center features a variety of plays and dance pieces from local, regional and national troupes. MEDICAL According to the Greater Miami Chamber of Commerce, Miami-Dade County boasts two major medical networks: the Jackson Health System and Baptist Health South Florida. Jackson Health System, the largest group of medical services in the Southeastern United States, is assembled in a medical complex just west of Downtown Miami. At its hub is the University of Miami School of Medicine/Jackson Memorial Medical Center, ranked in the top 10 of more than 8,000 hospitals in the nation and situated in the city limits of Miami. In Miami-Dade County alone, there are more than 29,000 health care professionals and 28 hospitals. The extensive network of community hospitals includes: Mount Sinai Medical Center, Columbia Cedars Medical Center, Hialeah Hospital, Baptist Hospital, Jackson Memorial Hospital, Mercy Hospital and Miami Children's Hospital. 14-108-02 Bayside Marketplace Land AREA ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 22 UTILITIES The following utility companies serve Miami-Dade County: Telephone: AT&T Electric: Florida Power and Light Gas: Florida Gas Transmission Company Water and Sewer: Miami-Dade Water & Sewer Department
COMMUNICATIONS Superior communication facilities are available in the area. Telephone service is consistently fast and efficient on local, out-of-town and international calls. Multilingual telephone operators are available for assistance on foreign calls, an important factor for businesses with Latin American operations in Miami-Dade County rather than in South America. There are 12 television stations, three cable systems, 28 radio stations, four daily newspapers, seven weekly newspapers, three monthly magazines and an assortment of other periodicals servicing Miami-Dade County. CONCLUSION An analysis of South Florida and more specifically, Miami-Dade County, demonstrates that the area has historically been on a path of growth. Previous population growth is primarily due to in- migration, which exhibits a trend toward an increasing number of working-aged families moving to the area. Most of the growth within the area is occurring towards the southwestern portion of the region. The recent recession appears to have significantly affected the values of the Countys office, industrial, commercial and residential properties, with increased vacancies appearing in office complexes, industrial neighborhoods, and shopping centers that historically have been fully occupied, and homes declining in value or falling into foreclosure. These trends however, are not unique to Miami-Dade County or the South Florida area. They are common throughout the State of Florida. Despite the effects of the recent recession, many of the factors that lead to Miami-Dade Countys historical success remain in place. Therefore, it can be surmised that once the effects of the recent recession subside, the county will likely continue to grow. 14-108-02 Bayside Marketplace Land NEIGHBORHOOD ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 23
14-108-02 Bayside Marketplace Land NEIGHBORHOOD ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 24 LOCATION The subject is located on the east side of Biscayne Boulevard (US-1) at NE 4 th Street, north of Miamis Bayfront Park and south of the American Airlines Arena. Miamimarina, the city marina, is located along the subject, to the east, in Biscayne Bay and the causeway to the Port of Miami, is directly north. Bayside Marketplace and Bayfront Park are the primary tourist attractions that highlight Miamis downtown neighborhood. There is a bay front walkway that commences at Chopin Plaza near the Intercontinental Hotel and travels north to the American Airlines Arena, through the Bayside Marketplace. The subjects neighborhood is considered the Miami Central Business District (CBD) of Miami, and can be defined by variations in dominant land use, in rent and occupancy levels, in the credit worthiness of occupants, and in the ages of buildings. Over the past decade the Miami CBD has seen tremendous growth. Miami's downtown employee population has grown 27% in ten years. More recently, the downtown area has experienced revitalized community interest and growth. Much of the growth has been from large scale residential and mixed-use projects aimed at drawing residents back into Miamis CBD and the Brickell Avenue corridor. The area has become popular as an evening and weekend destination with the addition of retail, restaurants and night clubs within some of the developments. The boundaries for the downtown district are limited to a relatively well-defined area as are most central business districts. The eastern boundary is Biscayne Bay. Development in the downtown area runs almost the entire length of Biscayne Bay, varying from offices and hotels to outdoor malls and parks. The western boundary for the downtown district is I-95. Primary land use beyond I-95 is less intense with a mixture of low- to mid-rise residential and commercial buildings. The southern boundary for the neighborhood is the Miami River. The northern boundary for the neighborhood is Interstate-395. ACCESSIBILITY Metrorail, Miami's 22-mile elevated rapid transit system with 22 stations, transports over 22,000 people per day. Metromover, located adjacent to the east of the subject, has three different loops: Downtown, Omni and Brickell. There are nine stations covering a 1.9-mile loop in the downtown area, with links to Metrorail to provide easy access to downtown businesses, shopping and cultural facilities. The Metrorail and Metromover schedules are integrated into the 60 Metrobus routes covering all of Miami-Dade County. Transportation to and from the downtown area is provided via many different routes. I-95 runs north and south on the western border of the CBD. Flagler Street bisects the district running east/west. SR-836, the primary east/west expressway, provides access to the CBD from the western portions of Miami-Dade County and the Miami International Airport. Biscayne Boulevard (US-1) runs north/south through the downtown area along the eastern portion of the CBD. DEVELOPMENT Miamis CBD has recently experienced a historic residential construction boom and is being transformed into more of a mixed use neighborhood featuring shopping, working, living and entertainment venues. A major investment in infrastructure is also underway to facilitate the new development. Recent upgrades to the area include $12 million in renovations to Flagler Street, the expansion of the Port of Miami and the Brickell Village revitalization. 14-108-02 Bayside Marketplace Land NEIGHBORHOOD ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 25 The newly-completed residential projects within the neighborhood will be a large factor in the CBDs transformation from a banking and legal center to a 24-hour city. There have been several projects serving as catalysts for the growing downtown district. The two major projects that were developed in the early 1980s include Bayfront Park and the Bayside Marketplace. These projects were intended to revitalize the CBD, specifically the waterfront. Miami Bayfront Park is located between the Bayside Marketplace project on the north and Miami Center on the south, is a 28-acre park that has been redesigned by world-renowned sculptor Isasmu Naguchi. The layout includes a natural amphitheater, an outdoor cafe, a rock garden, a monumental fountain, a light tower and a bay walk. Downtown Miami also benefits from Flagler's Gusman Cultural Center with its array of programs from ballet to jazz, the James L. Knight Convention Center, and the Cultural Center for Fine Arts. The financial and business backbone of the CBD is enhanced by dozens of foreign banks, several national law firms and several national accounting firms. According to realtor.com, condominiums/townhomes in the subjects zip code (33132) are listed between $60,000 and $8,830,000. Rentals within the subjects zip code have monthly rental rates ranging from $1,250 to $20,000. Ring Study Map
14-108-02 Bayside Marketplace Land NEIGHBORHOOD ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 26 The following are the demographics for the 1-, 2- and 3-mile radius surrounding the subject: Demographics 2013 2018 Radius 1 mile 2 mile 3 mile 1 mile 2 mile 3 mile Population 30,275 110,783 209,123 33,378 119,690 223,546 Households 15,945 51,791 91,798 17,728 56,481 98,677 Families 5,560 22,337 43,860 6,091 23,955 46,550 Average Household Size 1.75 2.06 2.04 1.75 2.03 2.20 Owner Occupied Housing Units 3,464 11,142 10,439 3,943 11,795 24,299 Renter Occupied Housing Units 12,481 37,666 41,352 13,786 44,686 74,378 Median Age 34.6 36.4 37.4 35.1 36.7 37.8 Population by Age 0 - 4 4.8% 4.4% 4.6% 4.7% 4.3% 4.6% 5 - 9 3.5% 3.5% 4.0% 3.4% 3.8% 4.2% 10 - 14 2.3% 3.8% 4.3% 2.7% 3.7% 4.2% 15 - 19 2.6% 7.7% 7.4% 2.5% 7.7% 7.2% 20 - 24 8.6% 22.5% 19.9% 9.0% 21.8% 19.4% 25 - 34 29.2% 16.7% 16.0% 27.5% 15.9% 15.3% 35 - 44 19.2% 13.0% 13.5% 17.9% 12.3% 12.6% 45 - 54 12.4% 10.0% 10.5% 12.3% 10.5% 11.1% 55 - 64 9.0% 6.8% 7.3% 9.8% 7.9% 8.5% 65 - 74 5.1% 4.2% 4.7% 6.4% 4.5% 5.1% 75 - 84 2.3% 1.8% 2.0% 2.8% 1.9% 2.1% 85+ 0.8% 0.0% 0.0% 0.9% 0.0% 0.0% Households by Income <$15,000 26.70% 12.90% 14.60% 24.80% 9.30% 10.70% $15,000 - $24,999 10.10% 11.80% 13.10% 7.00% 11.00% 12.40% $25,000 - $34,999 11.20% 12.30% 13.40% 10.00% 12.30% 13.40% $35,000 - $49,999 13.50% 12.50% 12.50% 13.00% 12.60% 12.60% $50,000 - $74,999 13.30% 6.70% 6.00% 13.20% 8.50% 8.00% $75,000 - $99,999 8.00% 8.10% 7.00% 9.70% 11.10% 9.60% $100,000 - $149,999 10.40% 2.90% 2.70% 13.90% 3.70% 3.40% $150,000 - $199,999 3.00% 3.60% 3.20% 3.90% 4.10% 3.60% $200,000+ 3.90% 3.60% 3.20% 4.40% 4.10% 3.60% Median Household Income $36,712 $55,331 $52,565 $43,315 $65,508 $61,784 Average Household Income $60,701 $26,446 $23,387 $71,742 $31,452 $27,566 Per Capita Income $32,590 $26,446 $23,387 $38,605 $31,452 $27,566 Population Area State National Households 1.97% 0.99% 0.71% Families 2.14% 0.98% 0.74% Owner HHs 1.84% 0.87% 0.63% Median Household Income 2.62% 1.32% 0.94% 3.36% 3.47% 3.03%
Source: US Bureau of the Census, 2000 Census of Population and Housing, and ESRI forecasts for 2010 and 2015 14-108-02 Bayside Marketplace Land NEIGHBORHOOD ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 27 LIFE CYCLE A neighborhoods life cycle usually consists of four stages. The growth stage, a period during which the neighborhood gains public favor and acceptance; stability, a period of equilibrium without marked gains or losses; decline, a period of diminishing demand; revitalization, a period of renewal, modernization, and increasing demand. 2
The subjects area is approximately 95% built-out with a variety of retail, office and cultural buildings. There is limited land available for future development. The subjects neighborhood is considered to be in the revitalization stage of its development with a number of large-scale projects underway for existing property and any remaining vacant land. Miamis CBD appears to be rebounding from the economic recession and there are over 20 new residential projects planned or under construction for the area that will add over 2,500 units within the next three years. There is substantial investment in the area from abroad. Projections from this sector are difficult to gauge. Levels of investment from various parts of the world seem to rise and fall based on the economic conditions in that particular area rather than in the United States. CONCLUSION In conclusion, we researched all the germane influences that could possibly affect the value of properties in the area. This research showed that the neighborhood is being well maintained and does not illustrate factors that could be classified as negative or undesirable. The subject is located in the heart of the major employment centers in Miami-Dade County. Overall, several factors have combined for the success of this area. Accessibility, location, and demographics have been a positive influence. It is our opinion that the neighborhood should experience continued revitalization due to the solid foundation that is currently in place.
2 Appraisal Institute, The Appraisal of Real Estate, 14 th Ed. (Chicago, Illinois: Appraisal Institute, 2013) 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 28 MIAMI-DADE COUNTY RETAIL MARKET According to the Reis Observer, fourth quarter 2013; Miami-Dades low development profile may be raised if developers proposing several huge projects have their way. Development here has not been easy, even when market conditions lean favorably toward it. For one thing, an inviolable boundary protecting the wetlands in the western reaches of the South Florida counties (now under challenge by the way) has prevailed against development of all types. And land is expensive and relatively scare otherwise. In downtown Miami, the huge planned Miami Worldcenter mixed-use development has attracted commitments from Macys (195,000 SF) and Bloomingdales (120,000 SF) to anchor a 475,000 SF retail mall component, the Miami Herald reported in December. Late 2016 openings are anticipated. Miami Worldcenter Associates is master developer. A total of 505,000 SF of retail are under development for completion in June of 2015 at the Related Groups three tower $1.05 billion Brickell City Center mixed-use development in the CBD. North Miamis $3 billion Biscayne Landing master planned development from Boca Developers has 850,000 SF of retail in the pipeline. Developer Turnberry Associates is proposing a violation of the sacrosanct urban development boundary (UDB) with plans for a huge upscale mall-entertainment complex to the west. In addition, an early 2014 ground breaking is anticipated for the $1 billion, 120-acre Downtown Doral mixed-use projected planned by developers Codina Partner and Lennar. Build-out plans include 180,000 SF of retail. Development otherwise has been sparse. Including 102,000 SF in the expansion of Dadeland Mall, only 170,000 SF of retail will comprise the 2013 completion total (all had delivered per the date of this report). In addition to Brickell CityCenter, a 416,000 SF IKEA free standing project is underway in western suburban Sweetwater. Also a February ground breaking is planned for 475,000 SF of retail at the River Landing mixed-use development in Miami. Indeed, the standard community and neighborhood center sector sees little activity, only 13,600 SF of such space was completed all told in 2013. Only a single project, the 60,500 SF Grove Village Shopping Center, scheduled for delivery in March in Miami, was underway per the report date. Only one power center, with an unspecified construction schedule, is found in the planned proposed pipeline. Not surprisingly, both the community-neighborhood and power center markets are tight. Reis put respective third quarter vacancies at 7.1% and 4.6%, down 10 and 20 basis points year over year. Vacancies, in both, run well below rates reported for their respective national markets (10.5% and 5.6%). The low-key community neighborhood center market saw 30,000 SF of net absorption year to date through the third quarter, a rough doubling of its negligible portion of new supply. Rent growth in both markets has been positive but anemic. At $24.47/SF and $20.86/SF, asking and effective averages for community-neighborhood center space were up 0.4% each for the quarter and were up 0.8% and 0.7% year over year. A small sum of negative net absorption in October was accompanied by increases of 0.1% for both rates (and no change in vacancy). The third quarter mean asking price for non-anchor power center space was $33.76/SF, also up 0.4% for the period, up 1.1% year over year. With the bulk of the action taking place in large mixed-use developments, the community- neighborhood sector should maintain its low profile. Construction is expected to increase but should remain modest in scale. Tight conditions should persist in this sector while rent growth gradually improves. Gains of 2.0% currently are anticipated for 2014. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 29 Transaction Analysis The $161.5 million in 27 retail property sales completed during the third quarter brought the year to date total to $670.3 million for 85 transactions, a sum barely shy of the dollar total recorded for all of 2012. Average selling prices for the latest quarter and year to date were high at $290/SF and $294/SF. The mean cap rate for third quarter deals was low at 5.0%. The 12-month rolling mean cap rate per quarter-end was 6.3%, down from 6.9% a year earlier. In the latest quarters largest sale, MS Shopping Center, LLC paid Fraga CR, LLC $26.9 million or ($260/SF) in August for 103,566 SF Cutler Bay Towne Center on S. Dixie Highway in Miami. The following chart shows the current metro rental rate details for neighborhood shopping centers.
Non-anchor rental rate growth for neighborhood shopping centers is as follows:
14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 30 The following chart shows the current metro rental rate details for community shopping centers.
Non-anchor rental rate growth for community shopping centers is as follows:
The vacancy rate trends for neighborhood shopping centers are as follows:
The vacancy rate trends for community shopping centers are as follows:
14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 31 The following chart summarizes the amount of new construction, the amount of absorption and the vacancy rate from the period of 2008 to the present and projections until the year 2007.
Submarket Analysis Miami/Miami Beach Retail The subject is situated in the Miami CBD within the Miami/Miami Beach retail submarket which is defined by the Atlantic Ocean to the east, Douglas Road to the west, the Aventura city limits to the north and Coral Way to the south.
The subjects Miami/Miami Beach submarket contains approximately 5.78 million SF of neighborhood and community retail space considered the subjects market set. The subject is a large, festival retail center which contains a mix of specialty retail space, restaurant space and entertainment space. According to the REIS report for the fourth quarter of 2013, the subjects overall Miami/Miami Beach submarket indicated an average asking rental rate of $28.16/SF and an overall vacancy rate 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 32 of 8.7%. The asking rental rate is relatively high compared to the county overall and the vacancy rate is similar. Expenses for this type of space are averaging approximately $7.38/SF which is in line with the subjects quoted figures. The average lease term for this type of space is approximately 3.9 years.
The size of the submarket has grown incrementally since 2008, likely due to the market downturn that impacted South Florida commercial and residential markets. Only three retail centers have been completed since then.
Rental rates have remained virtually unchanged over that period of time, with effective rates at $24.26/SF as of the most recent survey. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 33
New construction is expected to increase substantially over the next three year with nearly 4.276 million SF under construction or proposed for the subjects submarket.
The new and proposed projects for the subjects submarket are outline in the following table: 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 34
CONCLUSION Overall, the subject is located in a market that is considered to be strong, and benefits from the high average incomes in the area, as well as continued positive growth to the surrounding community. The available information suggests that that the positive forces that have led to the subjects success are still present, and should lead to the subjects continued success for the foreseeable future. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 35 According to information provided by the Bayside leasing personnel, Bayside Marketplace indicated that the quoted rates for the available and rolling space at the property range from $40.00/SF to $50.00/SF on a gross basis. Expense pass through were running approximately $13.50/SF. For the older leases, expenses are passed through to the tenant. For newer leases, some of which were signed during the economic downturn, the lease structure is gross with no pass through of expenses. According to the draft financial statements for the property for 2013, gross revenues from the retail component of Bayside Marketplace were approximately $25,400,000 or approximately $112.00/SF. We have assumed that this figure includes the base rents, expense pass throughs and any percentage rents that the tenants may be paying. Occupancy was approximately 84.3% based on the most recent rent roll submitted by the property manager. This occupancy is consistent with historical figures and similar to that observed during the property inspection. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 36 GROUND LEASE COMPARABLES The subject is a commercially zoned parcel of approximately 733,929 SF with a waterfront location, adjacent to a marina, and within walking distance of hotel and condominium units, office buildings, restaurants, luxury residences, and open park space. The site has approvals in place for approximately 267,000 SF of festival retail space with supporting parking structures. The neighborhood is considered to be one of the more popular in Miami, and is very popular with locals and tourists alike. We searched for ground lease comparables within the subjects immediate neighborhood, specifically. Due to the lack of directly comparable properties we have extended our search to include other parts of Miami-Dade County and sites featuring other types of development. Comparable 1 Lease: Chase Bank Location: Pembroke Pines, FL Size: 77,667 SF or 1.783 acres Lease Commencement: December 2012 Rent: $280,000 or $3.61/SF Term: 20 years Options: 4, 5-years Increases 10% every 5 years Sale Price: $5,600,000 Sale Date: 3/29/2013 Estimated Capitalization Rate: 5.00% Comparable 2 Lease: CVS Location: Miami, FL Size: 95,396 SF or 2.19 acres Lease Commencement: January 2007 Rent: $725,000 or $7.60/SF Term: 30 years Options: 4, 5-year Increases 10% every 5 years Sale Price: $12,120,000 Sale Date: 12/20/2012 Estimated Capitalization Rate: 5.98%
14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 37 Comparable 3 Lease: BB & T Bank. Location: Fort Lauderdale, FL Size: 38,768 SF or 0.89 acre Lease Commencement: January 2008 Rent: $280,000 or $7.22/SF Term: 20 years Options: N/A Increases N/A Sale Price: $4,488,000 Sale Date: 12/7/2010 Estimated Capitalization Rate: 6.24% Comparable 4 Lease: JP Morgan Chase Bank Location: Miami, FL Size: 38,333 SF or 0.88 acres Lease Commencement: September 2010 Rent: $235,000 or $6.13/SF Term: 20 years Options: 4, 5-years Increases 17% in Year 6, 12% in Year 11 and 12% in Year 16 Sale Price: $3,615,000 Sale Date: $9/17/2010 Estimated Capitalization Rate: 6.50% Comparable 5 Lease: Bank United Location: North Miami Size: 30,928 SF or 0.71 acres Lease Commencement: June 2012 Rent: $260,000 or $8.41/SF Term: 15 years Options: 4, 5 years Increases 10% every 5 years Sale Price: $4,650,000 Sale Date: 12/31/2012 Estimated Capitalization Rate: 5.59%
14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 38 Comparable 6 Lease: Harbor Beach Marriot Resort and Spa Location: Fort Lauderdale Beach Size: 714,820 SF or 16.41 acres Lease Commencement: January 2007 Rent: $2,076,360 or $2.90/SF Term: 99 years Options: N/A Increases: 10% every 5 years Sale Price: $48,625,000 Sale Date: 11/30/2011 Estimated Capitalization Rate: 4.27% Comparable 7 Lease: Sweet Tomatoes Location: West Palm Beach, FL Size: 48,352 SF or 1.11 acres Lease Commencement: August 2004 Rent: $140,000 or $2.90/SF Term: 20 years Options: 1, 5-years Increases CPI every 5 years Sale Price: $1,935,000 Sale Date: 6/21/2012 Estimated Capitalization Rate: 7.23% We have also included information from a national market survey of sites that are under ground lease with particular property types. The subject would fall under the retail category which indicated average land lease rates of 7.05%. This represents a slight increase over prior periods.
14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 39 Based on the comparables, we have concluded that an appropriate overall rate for the subject should be at the lower end of the range, due to the quality and condition of the development and the strength of the subjects market and the long-term nature of the subjects lease with the City of Miami. Therefore, we have concluded to an overall rate toward the lower end of the range indicated by the comparables. We have concluded to an overall rate for the subject of 6.00% which is within the range indicated by the comparables and supported by ground lease comparables researched for large commercially developed sites, nationwide. Percentage Rents We have researched other municipal owned properties (land) that are leased to the developer or owner of the improved property. We are attempting to determine the appropriate percentages to apply to the subjects various development components, as percentage rent that will be paid to the City of Miami Beach for the rights to the underlying site. Case Study 1 Grove Key Marina and Scottys Landing (Restaurant and Marina) The site is owned by the City of Miami and is leased to a lessee (Grove Key Marina) and a sub- lessee (Scotty's Landing Bar). In early 2012, the City of Miami published a request for proposals (RFP) for bids on a new, 40-year lease on the property. A substantial tenant improvement is required in the RFP as the city seeks a state-of-the-art marina and bar. The winning bidder must make required minimum renovations including renovating the hangars, pavement, and bar kitchen, and repairing the dock and seawall. In exchange, the lease would be 40 years with a 10-year renewal option. Per the RFP, the successful proposer must pay a minimum base rent and percentage rent. Some of the City's proposed lease details were as follows: Minimum Annual Rent: $500,000 and: Percentage Rent: Marina Operations Minimum 15% of gross revenue Bar/Restaurant Sales Minimum 10% of gross revenue Marine Fueling Facility Minimum 10% of gross revenue
The RFP call for substantially higher minimum annual rent and a higher percentage of sales from the revenue generating components on the site. A complete redevelopment of this property is being proposed which would likely result in further negotiations regarding the lease. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 40 Case Study 2 Biscayne Landing (Mixed Use Project Retail/Office/Residential) The site is owned by the City of North Miami and is leased to a lessee (Oleta Partners, LLC). The lease was negotiated in 2012 and is based on a proposed build out of the 183.8-acre site with approximately 900,000 SF of retail, hotel, residential and recreational space. The ground lease is for 99 years, NNN, with increases in the base rental rate of 15% every ten years. The lease calls for development deadlines for the construction of the project, a public park and community center and future rights to developable land with participation in the revenues from this property. Some of the lease details are as follows: Base Rent: $1,500,000 Percentage Rent: Residential Revenues 1.75% of gross revenue Retail Revenues 1.75% of gross revenue Hotel Revenues 2.25% of gross revenue Sales (Condo or ALF Units) 3.25% or gross revenues
Case Study 3 Village of Merrick Park (Mixed Use Retail/Office/Residential) This is a mixed use project on an 18 acre site located in the City of Coral Gables. Coral Gables has a 99-year ground lease in place with the developer of the property with a base rent of $300,000 with increases of $50,000 every 10 years. The city receives 10% of the propertys net cash flow as percentage rent and has received approximately $90,000 to $100,000 in additional rent from this percentage rent clause. The city is also entitled to any proceeds from any sale or refinance in the amount of 10% of the net proceeds. The residential component was subleased to a residential developer at the onset of the project. The city is entitled to only the revenues from the retail and office components. Case Study 4 Biltmore Hotel (Hotel) There is a 99-year ground lease in place between the City of Coral Gables and the current hotel operator that calls for annual rental payments of 3.5% of net hotel revenues. In hindsight, there are numerous articles pertaining to the City of Coral Gables dissatisfaction with the structure of this lease, based on net revenues, rather than gross revenues. Due to the property owners renovations and upgrades to the hotel over the past years, net revenues have been negligible and the rental payments to the City of Coral Gables almost non-existent. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 41 Case Study 5 Jungle Island (Entertainment) This property is a tourist attraction that is situated on a waterfront site on Watson Island, off of downtown Miamis mainland. The site is approximately 18.61 acres and is developed with a $50,000,000 attraction and convention venue. The development was built in 2003 with the City of Miami providing the underlying site, via a ground lease for 60 years, with options. The lease calls for base yearly payments of $400,000 and 2.5% of gross revenues from the attraction and other revenue generating sources within the attraction. Presently, Jungle Island is negotiating for 13.0 more acres adjacent to the Jungle Island property to develop with a retail and hotel component. They are offering fixed rental payments during the construction period with 5% of gross revenues after the completion of the construction. After the completion of the construction, the base rent for the entire property will increase to $750,000 and the existing 60 year lease will roll into a 99 year lease. This new lease is in the negotiation stage. Case Study 6 - Subject Bayside Marketplace (Retail and Parking Garage) This property is a 16.85-acre site that is developed with an open-air festival retail center with approximately 1,200 parking spaces in two, five-story parking structures. The site features a waterfront location in Miamis CBD. The City of Miami owns the underlying land and leased the site to Bayside Center Partnership in 1985. There is a 45-year ground lease, with two, 15-year options, between the City of Miami and Bayside Center Partnership that calls for a base annual rent of the greater of $1,000,000 or 35% of net income. There is a separate lease on the parking structure that calls for a similar lease term with a $10,000 base rent and additional rent of $80,000 after the structure reached stabilized occupancy and then 50% of net income after those benchmarks. Case Study 7 The Palace at Coral Gables (Residential) The Palace at Coral Gables is a 240-unit senior housing community located just south of Miracle Mile in Coral Gables. This 0.75 acre site is leased from the City of Coral Gables for a base rent of $237,500 annually with percentage rents of 2.0% of property revenues. The city is entitled to 10% of any net proceeds from any sale or refinance of the property. We have concluded that, in general, percentage rents are based on the gross retail revenues generated by a property rather than the net operating income. In the case of the subject, the developer is paying a higher percentage rent but of the lesser income figure. The calculation of the gross retail rent is generally a less subjective figure as the number represents the total collections of rent by the property owner, and does not considered operating expenses or any other type of obligations. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 42 We have concluded that it would be a more market oriented situation for the tenant to pay a percentage of gross retail revenues of between 3% and 10%, going forward. In order to determine a market oriented rent for the property, we have utilized the subjects historical gross retail revenues as a starting point. With regards to the subjects rental rate, it is noted that there are a number of City of Miami waterfront developments in Miami-Dade County that are leased with the propertys rental rate stipulated on a base amount, base amount plus percentage rent, percentage rent or the greater of percentage rent or base rent. Detailed below is information regarding several comparables within the market: Comparable Base Rent % Rent Confidential $320,000 and 10% of gross receipts Bayshore Montys $277,586 and 15% of gross receipts Miami Yacht Club $49,080 and 9.0% of gross revenue in excess of $380,000 Miami Outboard Club $35,004 and 10.0% of Gross revenue in excess of $120,000 for restaurant Coconut Grove Sail Club $30,000 or 7.5% of gross revenues Grove Harbour Marina $550,000 or 15% of gross revenue for marina 10% of gross revenue for boatyard 10% of gross revenue for restaurants 5% of gross revenue for service/fuel Rickenbacker $360,000 and 15.00% of gross revenues for wet slips 12.00% of gross revenues for dry slips Increasing by 1% after 4.5 years
The Rusty Pelican lease, along the Rickenbacker Causeway, stipulates that it will pay base rent of $360,000/year plus a variable percentage rate, starting at 2.5% and rising to a maximum of 8% of gross revenues over sales of $12,000,000. The New Spanish Concepts lease states that they will pay a minimum annual rent of $57,375 plus 11% over a $2,200,000 breakpoint. We were also able to obtain several new confidential leases of recently opened restaurants within the City of Miami, in comparable locations. These leases, of spaces over 7,000 SF, are $40/SF and $45/SF plus real estate taxes and insurance. Based on the expenses for the properties, roughly $10/SF, the rental rates on a net basis would be from $30/SF to $35/SF. The current agreement with the City of Miami calls for a base rent of the greater of $1,000,000 or 35% of net operating income. According to Baysides 2012 financial statement, the rental payment for the retail component was $1,000,000, basically the base rent with no percentage rent. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 43 Conclusion Subject Revenues (Bayside Marketplace) The subjects historical revenues that have been provided by the City of Miami and verified by the Bayside, LLC financial statements are shown below: FYE Subject 2009 Subject 2010 Subject 2011 Subject 2012 Retail Revenues: $20,494,908 $17,622,546 $23,697,604 $24,600,776 Retail Revenues/SF: $84.69 $72.82 $97.92 $112.71 Retail Rental Payment: $1,000,000 $1,010,000 $1,000,000 $1,000,000
The subjects retail revenues/SF is calculated based on the actual square footage developed on the site, thus far, 218,258 SF. This figure was taken from the General Growth Properties financial statement as the net rentable area of the center. As shown above, the retail and parking garage revenues for the subject property are on the upswing from the economic downturn experienced in 2007 and 2008. We have projected that the retail center will continue to generate revenues of approximately $100.00/SF and have applied this figure to the total allowable square footage for the site of 267,000 SF for total projected revenues, going forward of approximately $26,700,000 (RD). Based on the comparable figures included in this analysis, we have determined that a base rent of approximately 6.00% of gross revenues over the natural breakpoint would be a market oriented rent, going forward. This estimate is based on on-going retail revenues of approximately $100.00 per square foot for the propertys allowable square footage of 267,000 SF and includes base rent, expense recoveries and overage or percentage rents from the tenants. Garage revenues have been excluded from these calculations. It is unclear why Bayside has not historically paid a portion of the net income generated by the center, over the current base rent. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 44 Skyrise and Liner Retail Under the second scenario, with the addition of the Skyrise Tower (195,920 NRA SF) and approximately 17,255 NRA SF of liner retail space around the ground floor of the parking structures, approximately 213,175 SF of additional net rentable commercial space will be added as revenue generating components to the property.
Original and New Revenue Component (SF/Spaces) Commercial (Bayside) 267,000 Liner Retail 17,255 Skyrise 195,920 NRA 480,175 First, we have arrived at an appropriate market rental rate for the tower and the liner retail space. Most emphasis has been placed on the rental rates that are being quoted at Bayside and the surrounding retail and commercial properties in the area. The following chart summarizes current offerings of retail space in the buildings located on along Biscayne Boulevard, in the vicinity of the subject. Address: 275 NW 18 th
Street, Miami, FL 33132 1900 North Bayshore Drive, Miami, FL 33132 1750 N Bayshore Drive, Miami, FL 33132 1040 Biscayne Blvd., Miami, FL 33132 900 Biscayne Blvd. Miami, FL 33132 900 Biscayne Blvd., Miami, FL 33132 SF: 16,268 SF 5,304 SF 7,060 SF 11,270 SF 6,000 SF 9,360 SF Rental Rate: $45-$55/SF $28-$32 $45 $48/SF $40/SF $50-$35/SF Rental Type: NNN NNN NNN NNN NNN NNN
Comparable 1 is located on the ground floor of a mixed-use property facing Biscayne Boulevard. This second generation space can be configured into smaller spaces ranging in size from 1,570 SF to 7,029 SF. Comparable 2 is first generation space located in the ground floor of Quantum on the Bay, a 698- unit tower, with 12,000 SF of ground floor retail space. Comparable 3 is ground floor space in a condominium building, facing Biscayne Boulevard. This space can be broken into smaller spaces, ranging in size from 1,532 SF to 1,985 SF. Comparable 4 is located on the ground floor of a high-rise condominium building. This space can be broken into two smaller spaces. Comparable 5 is located at 900 Biscayne Boulevard, and was formerly occupied by Hoops Sports Bar. This space, which sits across the street from American Airlines Arena, contains 6,000 SF. Comparable 6 is also located at 900 Biscayne Boulevard but can be broken into spaces ranging in size from 1,050 SF to 5,000 SF. This space ranges in price from $35/SF to $50/SF. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 45 Based on the information presented, we conclude that the rental rates for the liner retail space along the ground floor of the parking garage will be similar to the rates currently quoted in the Biscayne Boulevard retail corridor, approximately $35.00/SF to $45.00/SF, triple net. Expenses for retail properties generally range from $7.00/SF to $8.00/SF, according to the Reis Report for the 4 th quarter of 2013. We have projected revenues for the 17,255 SF of liner retail space based on a gross market rate of $53.00/SF ($45.00/SF rent plus $8.00/SF expenses) for total revenues of $914,515. For the Skyrise Tower, we have assumed a somewhat lower figure, based on the lack of direct access and visibility of the commercial space, within the structure. We have assumed a rental rate of $35.00/SF and expenses of $8.00/SF for the space for gross rents of $43.00/SF for the 195,920 SF. Projected total revenues would be $43.00/SF ($35.00/SF rent plus $8.00/SF expenses) x 195,920 SF for total revenues of $8,424,560. The percentage rent comparables offer a wide array of rental scenarios, with some tenants paying a percentage of gross revenue, others paying a percentage of net revenue. Some other tenants pay a base rent, plus percentage rent, or a base rent plus percentage rent over a breakpoint. Some other tenants pay varying percentage rents based on the type of use, typically with a higher percentage for higher margin activities. For parcels where the lessee is required to incur significant construction costs, the rents tend to be lower than for properties where the improvements already are in existence, or little or no improvements are required. One of the most recent lease comparable properties is Jungle Island, which is renegotiating with the City of Miami for future development rights. They would like to develop and operate new retail space and hotel rooms on the land that is currently leased from the City of Miami. The developer is offering to pay 5% of gross revenue after the completion of construction. This is the developers offer, and would represent the minimum percentage rent that would be expected in the market. The upper end of the comparables would be the Rusty Pelican lease which stipulates rents going up to 8% of gross revenue, for sales above $12,000,000/year. Based on these comparables, we conclude to a rental rate in the range of 5% to 8% of gross revenues for the proposed components at the subject property. The proposed components, the additional parking, the liner retail and the Skyrise Tower, will require a significant investment by the developer who will actually be a subtenant of the original lessor, Bayside Marketplace. The existing development on the site currently represents an underutilization of the parcel under the current zoning code. The City of Miami has approved the proposal to increase the developable SF allowed on the site. Based on the substantial expenditures required for the increased development on the property as well as the risk associated with a development, like the Skyrise Tower, we have conclude that the appropriate rental rate for the underlying land would be toward the lower end of the previously established range. We have concluded that it would be market oriented for the tenant to pay a percentage of gross revenues of between 5.0% and 7.0%. We conclude to a base rental rate of approximately 6.00% of gross revenues, which includes base rent, expense recoveries and overage or percentage rents from all tenants, once the project is completed and reaches stabilized occupancy. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 46 PARKING GARAGE MARKET STUDY The Bayside Parking garages are two, five-story parking structures with approximately 1,200 spaces, situated at the front of the property, fronting on Biscayne Boulevard. The parking is available to the public with no restrictions. The parking is intended for visitors to Miamis Bayfront Park, the Bayside Marketplace, the Miamimarina, the American Airlines Arena and other water front venues and activities. In the parking calculation, we have utilized the 1,200 parking spaces that were originally approved for the site for the as is scenario and 1,902 spaces in the additional development scenario which represent parking spaces for the additional square footage associated with the Skyrise Tower, replacement parking spaces from the surface lot that will be developed with the Skyrise Tower and some underground parking proposed for the Skyrise site. There are 42 parking spaces associated with the City of Miamis marina operations that must also be relocated to the parking garage by the Skyrise developer but these spaces will not be a revenue generating component of the site for the lessor, Bayside Marketplace, LLC. There is currently a management contract in place between Bayside Marketplace and the operator of the parking garage, Standard Parking. Details pertaining to the management contract rates and terms were not available. We have assumed a competent operator of the parking garage. The current ground lease between the City of Miami and Bayside calls for a base rental rate of $10,000 per year with additional rent of $80,000 per year and percentage rent of 50% of net operating income. For FYE 2012, Bayside paid the City of Miami the $90,000 base rent payment and percentage rent of $693,764 which would be approximately 50% of net operating income, therefore we have assumed that the net operating income of the parking facility was $1,387,528 ($693,764/50%) or approximately 26% of the gross parking revenues. Gross parking revenue for the property was provided in the Bayside Marketplace, LLC financial statements. Figures for 2013 are not yet available but the trend at the property appears to be positive. We have compared the revenues generated by the subject parking garage to those generated by the City of Miami parking authoritys properties, most of which are located within a five mile radius of the subject. We researched the income that is generated by other parking garages in the subjects immediate submarket. The City of Miami operates a total of nearly 36,000 parking spaces, both garages and surface lots. There are 11,300 on street parking spaces and 24,400 off-street spaces. There are a total of 86 surface lots and 14 parking garages. These parking garages serve the needs of area businesses, as well as the office buildings, hotels and residences in the area that lease spaces on a short-term and long-term basis. The parking charges at the City of Miami garages set the standard for the area private parking garages, as private operators compete with the city to attract patrons. According to the parking authoritys financial statements, the average revenue per space for the City of Miami owned and operated parking garages was $1,191.18 or $3.26 per day. Operating expenses do not include property taxes, as the City of Miami is exempt from paying real estate taxes for municipal garages. In the case of the subject, Baysides owner is responsible for the property taxes associated with the parking garage. 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 47 We have focused on the average revenue per space generated by the Citys municipal parking spaces, as well as the net income to total revenues ratios which ranged from 13.31% to 26.71% of total revenues. The City of Miamis revenue per space ranged from $820.93 to $1,246.26 which is somewhat lower than the subjects historical figures. The Citys surface parking lots represent the majority of the parking spaces and charge rates that are somewhat lower than the garage rates. The subject caters mainly to short-term parkers which generally generates higher levels of income on a per space basis due to the higher turnover ratio. As such, we have also included information from Miami Beach parking facilities which are typically geared to more short-term users, shoppers and beach goers. Miami Beach Parking Garages 7 th Street 12 th Street 13 th Street 16 th Street 17 th Street Total Entries 360,627 89,612 165,318 409,139 1,098,582 Average Daily Entries 988.0 245.5 452.9 1,120.9 3,009.8 Spaces in Garage 646 134 286 803 1,460 Utilization Ratio 1.53 1.83 1.58 1.40 2.06 Annual Revenue $2,124,660 $558,768 $1,147,828 $3,076,654 $3,791,220 Revenue/Entry $5.89 $6.24 $6.94 $7.52 $3.45 Revenue/Space $3,289 $4,170 $4,013 $3,831 $2,597 Revenue/Space/Day $9.01 $11.42 $10.99 $10.50 $7.12 Operating Expenses $794,567 $228,626 $302,359 $600,778 $1,271,057 Profit $1,330,093 $330,141 $845,470 $2,475,876 $2,520,164 Profit/Space $2,059 $2,464 $2,956 $3,083 $1,726 Profit/Entry $3.69 $3.68 $5.11 $6.05 $2.29 Expenses/Space $1,230 $1,706 $1,057 $748 $871 Expenses/Entry $2.20 $2.55 $1.83 $1.47 $1.16 Expenses % 37.4% 40.9% 26.3% 19.5% 33.5%
The subjects historical figures are as follows: Bayside Parking Garage (1,200 spaces) Year 2009 2010 2011 2012 Parking Garage Revenues*: $4,018,039 $3,268,470 $4,491,808 $5,359,383 Parking Garage Revenue/Space: $3,348 $2,723 $3,743 $4,466 Revenue/Space/Day $9.17 $7.46 $10.25 $12.24 Base Rental Rate (Ground Lease) $90,000 $90,000 $90,000 $90,000 Percentage Rent (50% of NOI) $201,976 $78,390 $240,307 $693,764 Total Garage Rent Payment*: $291,976 $168,390 $330,307 $783,764 Implied NOI $403,952 $156,780 $480,614 $1,387,528 Implied NOI/EGI Ratio 10.05% 4.80% 10.70% 25.89% * From Bayside Marketplace, LLC financial statements 14-108-02 Bayside Marketplace Land MARKET ANALYSIS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 48 The subjects revenues appear to be more in line with the Miami Beach parking garages in terms of the revenues per space because the garage caters mainly to the hourly parkers that are visiting Bayside or at a special event at the American Airlines Arena rather than daily or monthly parkers. Based on the subjects historical revenue figures, the comparable properties in the market and the market trends, which appear to be upward, we have projected annual revenue per space for the subjects existing 1,200 spaces, going forward, of approximately $4,500. This revenue per space figure takes into consideration the historical occupancy of the parking garage. Based on the 1,200 existing parking spaces, garage revenues are projected to be approximately $5,400,000 going forward. Although the current lease agreement calls for a base rent of approximately $90,000 with additional percentage rent of 50% of net operating income, we have concluded to a base market rental rate for the underlying site of 15.00% of gross parking revenues, a base rate of approximately $810,000 with percentage rent of 15.00% of additional revenues, over the base rate. Under the second scenario, there are a total of 1,902 spaces that will generate revenue for the property between the garages and the underground parking on the Skyrise site. Based on the annual revenue per space of $4,500, projected garage revenues would be $8,559,000. In addition to base rent, we conclude to a percentage rent of 15% of all garage revenues over the base rate with a natural break point. 14-108-02 Bayside Marketplace Land DESCRIPTION OF THE SITE
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 49 Address: 401 and 501 Biscayne Boulevard, Miami, FL 33132 Location: East side of Biscayne Boulevard, at NE 4 th Street, Miami- Dade County, FL Size: 733,929 SF or 16.85 acres
Zoning: The parcel is zoned T6-8 O, Urban Core Transect Open, under the jurisdiction of Miami-Dade County, FL. Shape: Irregular Frontage: The subject has direct frontage on Biscayne Boulevard. Access/Visibility: The subject has good visibility from Biscayne Boulevard. Access is provided to the site from Biscayne Boulevard. Parking: There are 1,200 parking spaces on the site that are divided between the two parking garages. There are also 87 surface spaces on the east side of the site. Street Improvements: There are paved roads throughout the property. Adjacent Properties: North: American Airline Arena South: Miami Bayfront Park West: Residential East: Biscayne Bay
Topography: Level and at street grade Flood Zone: The site lies within Zone AE and VE an area inundated by 1% annual chance flooding, for which BFEs have been determined and an area inundated by 1% annual chance flooding with velocity hazard (wave action); BFEs have been determined. This information was obtained from the National Flood Insurance Rate Map Number 12086C0319L dated September 11, 2009. Other Hazards: None known Soil Conditions and Drainage: We know of no environmental or engineering study made to determine the subsoil conditions. Upon inspection of the subject and surrounding improvements, conditions appear adequate to support the subject structure. From an inspection of the property, drainage also appears to be adequate. 14-108-02 Bayside Marketplace Land DESCRIPTION OF THE SITE
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 50 Utilities and Services: Public utilities are available to the site and services are provided as follows: electricity is provided by Florida Power and Light, water and sewer as well as police and fire protection is provided by the City of Miami. Easements and Encroachments: No title search or review of title for the subject was performed by us. In the performance of this report, we did not find nor were made aware of any easements or encroachments (other than standard utility easements) that would have an adverse effect on the subject. We suggest that legal opinion be obtained to ensure no adverse easements or encroachments exist. Environmental Hazards: The existence of hazardous materials, which may or may not be present on the property, was not observed by us. We have no knowledge of the existence of such materials on or in the property. We, therefore, suggest that a professional in the field be employed to detect any environmental problems which might exist, as we are not qualified in this area of expertise. Conclusion: Based on the surrounding sites and the existing improvements, the site appears to be well suited for use as a festival retail and entertainment center.
14-108-02 Bayside Marketplace Land ZONING AND TAXES
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 51 ZONING The subject is located within the City of Miami and is zoned T6-8 O Urban Core Transect Zone under the jurisdiction of the City of Miamis new Miami 21 Zoning Code, which took effect on May 20, 2010.
Some of the main restrictions outlined within the T6-8 O zoning code include: Lot Area - 5,000 SF Min. Lot Width- 50 Ft. Min. Lot Coverage- 80% Max Density- 150 DU/Acre FLR- 5.00 Front Setback- 10 Ft. Min. Side Setback- 0 Ft. Min. Rear Setback- 0 Ft. Min. Principal Building- 2 Min. 48 Max The improvements appear to be a legally conforming use. A copy of the zoning description from the Miami 21 zoning code can be found in the Addenda section of this report. It should be noted that the maximum FLR that could be developed on the site under the zoning designation would be approximately 3.67 million square feet on the 733,929 SF site. The original approvals for Bayside, prior to the implementation of the Miami 21 zoning code, limit development to 267,000 SF for the retail component and 420,000 SF for the parking garage for a total of 687,000 SF. This is an FLR of 0.94 versus the allowable of 5.00 under the T6-8 O zoning. TAXES The owner of the improvements Bayside, LLC pays the property taxes on the improvements and the land.
Subject 14-108-02 Bayside Marketplace Land HIGHEST AND BEST USE
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 52 Highest and best use, as defined in The Dictionary of Real Estate Appraisal, fifth edition, published by the Appraisal Institute, is: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. 3
In determining the highest and best use of the property, careful consideration was given to the economic, legal, and social factors that motivate investors to develop, own, buy and sell, manage, and lease real estate. In estimating the highest and best use of a vacant parcel of land, there are essentially four stages of analysis: Physically Possible Use: What uses of the site in question are physically possible? Legally Permissible Use: What uses are permitted by zoning and deed restrictions on the site in question? Financially Feasible Use: Which possible and permissible uses will produce a gross return to the owner of the site? Maximally Productive: Among the feasible uses, which will produce the highest gross return or highest present worth of the site in question? Highest and best use of land or a site as though vacant may be defined as: Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements. 4
The highest and best use of property, as improved, pertains to: The use that should be made of a property as it exists. An existing improvement should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one. 5
The following tests must be met in estimating the highest and best use of a vacant parcel: the potential use must be physically possible and legally permissible, there must be a profitable demand for such a use, and it must return to the land the highest net return for the longest period of time. These tests have been applied to the subject site and are discussed as follows: Physically Possible The subject site is an irregularly-shaped parcel which contains approximately 733,929 SF or approximately 16.85 acres. The site is located within the City of Miami on a waterfront parcel in Miamis CBD. There is access to the site from Biscayne Boulevard.
3 Appraisal Institute, The Dictionary of Real Estate Appraisal, 5 th Ed. (Chicago: Appraisal Institute, 2010) 4 Appraisal Institute, The Dictionary of Real Estate Appraisal, 5 th Ed. (Chicago: Appraisal Institute, 2010) 5 Appraisal Institute, The Dictionary of Real Estate Appraisal, 5 th Ed. (Chicago: Appraisal Institute, 2010) 14-108-02 Bayside Marketplace Land HIGHEST AND BEST USE
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 53 The configuration of the parcel does not appear to impose any development restrictions, nor does it limit the type of use. In terms of subsoil conditions, no environmental or engineering study has been commissioned or made by us; however, in researching the surrounding improvements, the site appears to be well suited for any type of development. Physically, the subject appears well suited for nearly any type of use. Researching the surrounding improvements, which consist of large scale residential and commercial development, similar developments would in all likelihood be physically possible for the site. Considering the above information, the physical attributes of the site would most likely not hinder any type of development. The subjects waterfront location and proximity to the Miamimarina would make the site highly desirable to a residential developer. Legally Permissible The subject site is zoned T6-8 Open, Urban Core Transect Open, under the jurisdiction of Miami, Miami-Dade County, FL. The purpose of the T6-8 Open designation is intended to apply to areas within Miamis Urban Core and is intended to encourage large scale commercial and residential development up to a maximum height of 8 stores and a maximum FLR of 5.0. Bonuses are granted for developments that provide public benefits, up to 12 stories and an additional FLR of 25%, 6.25. This is a new zoning designation for the subject since the implementation of the Miami 21 zoning code. The subject site is owned by the City of Miami and is part of the City of Miamis protected water frontage. The subject was subdivided from Bayfront Park as a means to upgrade downtown Miamis water frontage and make repairs and renovations to the park and bay front walkway and Miamimarina. The original approvals for the property allowed for the development of a 242,000-SF festival retail center and associated parking garage by the Rouse Companies, a developer specializing in urban waterfront redevelopment projects. In exchange for the development site, the City of Miami signed a long-term lease with the developer and also dictated the allowable density of the property and approved the style and design of the center. A 25,000 SF existing restaurant was included in the original development plan for a total of 267,000 SF on the site. As such, the legally permissible use of the site is dictated by the original approvals for the propertys development which were granted in 1985. We are of the opinion that a festival retail development and parking of such intensity that would fully maximize the allowable density as per the City of Miamis approvals would be the highest and best use of the site as it pertains to the legally permissible uses. Financially Feasible Analysis for financially feasible uses for the site, as if vacant, involves consideration of several criteria. Unlike the physically possible and legally permissible aspects of the highest and best use analysis, many external economic factors serve to prove or disprove financial feasibility. The cost of acquisition, sources of capital, forecast of potential revenue/expenses, reversionary price forecast, property tax implications and measures of risk and yield are all determinant to this analysis. The above financial measures serve to eliminate the uses that would not provide a reasonable return to the land based on investors expectations. 14-108-02 Bayside Marketplace Land HIGHEST AND BEST USE
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 54 The cost of land and its development limits the highest and best use of the site, generally to only those uses which are financially feasible. The cost of the land acquisition and development are considered to be in a reasonable range to justify commercial development. The subjects area is currently in the revitalization stage of the life cycle, with numerous tracts of land (both improved and vacant) available for sale and development. The majority of the vacant or undeveloped sites within Miamis CBD have been purchased or planned for high density development of some type. Upon our inspection there were a number of older buildings in the neighborhood that have been demolished or are being demolished to make way for new development. The majority of the new development is high rise residential towers. Most zoning in the area allows density up to 500 units per acre, building heights unlimited and floor area ratios of up to 24. Most parcels of land in the subjects general neighborhood, especially those parcels that are relatively small, have been assembled and purchased for the construction of high rise commercial or residential properties. The majority of the current developments are in the pre-sale and construction phase and there are a number that have been announced but not yet commenced. With the steady increase in the number of residential units in the surrounding area, the need for supporting retail as well as green space and recreational areas will continue to increase, as well. We believe that the most financially feasible use of the site is for some type of waterfront retail development of that conforms with the existing approvals by the City of Miami. Maximally Productive Those uses as aforementioned that meet the physically possible, legally permissible, and financially feasible tenets of the highest and best use explanation have been considered. The final criteria for full compliance with the highest and best use of the site as if vacant, is that of maximally productive use. A festival retail development is the use among all alternative uses that would satisfy the maximally productive definition of the highest and best use criteria. Highest and Best Use, As If Vacant Therefore, the highest and best use of the site, as if vacant, is for the development of a festival retail property that maximizes the density allowed under the site plan approval. Highest and Best Use, As Improved The highest and best use of the subject, as improved, must also be determined by analyzing occupancy levels of various surrounding improvements, as well as the general needs within the area. We conclude that the highest and best use of the site, as improved, is to maintain the existing improvements and go forward with the additional proposed improvements up to the increased FLR approved by the City of Miami for the site. Conclusion Therefore, we conclude that the highest and best use of the subject appears to be the existing use. 14-108-02 Bayside Marketplace Land VALUATION PROCESS
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 55 LAND VALUATION The land, as if vacant, is valued by direct sales comparison, in which sales of comparable sites located within the subject area are analyzed in context with the subject site. Adjustments are made to compensate for differences between the submitted sales data and the subject for such factors as location, size, shape, topography, utility, and marketability, etc. The price per buildable square foot and price per allowable unit are employed as the units of comparison. The technique involved in the value estimate of the land uses the principle of substitution as the basis for analysis, and the methodology includes an analysis of what buyers in the area have been paying for properties. The value of the property, therefore, is derived from sales and listings of comparable properties in the area. It is necessary to evaluate such factors as the time of sale, location, physical characteristics, and other items when making adjustments. In an effort to locate comparable land sales, a search throughout the subjects area was conducted. The presented sales are deemed by us to be valid indicators of land values in the subjects area. Information pertaining to these sales has been verified by the buyer, seller, broker or other sources considered reliable and having knowledge of the particular transaction. We have utilized a price/FLR analysis. We have attempted to include sales of similarly zoned and developed parcels that are located in the subjects area. Due to the lack of comparable transactions, we have extended our search to outside of the City of Miami, into Coral Gables and points north. Due to the lack of similarly developed parcels, we have included similarly zoned property that may be planned for a different use, such as residential or office, versus retail and parking. In researching previous Miami Beach land sales transactions, information was compiled from published sources, including CoStar Comps, Loopnet and Miami-Dade County public records. Unless indicated in the individual property notes, all sales were verified by buyers, sellers, brokers, government officials or other sources regarded as knowledgeable and reliable.
14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 56 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 57 LAND SALE 1 Location:
3250 NE 188th Street Aventura, Miami-Dade County, FL 33180 Sales Data Date of Sale: January 10, 2013 Sale Price: $27,000,000 Recording Data: 28440-2240 Financing: Cash to Seller Property Rights Sold: Fee Simple Estate Condition of Sale: Arm's length Grantor: Happiness, Inc. Grantee: PMG Aventura, LLC Verified By: Knowledgeable Third Party
Site Data Parcel Size: 308,510 SF or 7.08 acres Topography: Level and at street grade Required Site Work: Typical Clear and Grade Utilities: All Available Zoning: RMF-3B Proposed Use: 190-unit condominium Number of Units: 190 Density/Acre: 26.84 FLR: 2.45
Units of Comparison Price/SF: $87.52 Price/Unit: $142,105 Price/FLR: $35.66
Comments This parcel is located at the terminus of NE 188th Street along Biscayne Bay in the city of Aventura. The land has been approved to be developed with an 11-story condominium building known as Echo Aventura. This building is expected to contain 190 units and 499,382 SF of net sellable area. Assuming parking of approximately 2 spaces per unit, we have estimated gross building area for the property, including common areas of 757,228 SF, an FLR of 2.45. 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 58 LAND SALE 2 Location:
659-737 West Avenue Miami Beach, Miami-Dade County, FL 33139 Sales Data Date of Sale: December 31, 2012 Sale Price: $8,000,000 Recording Data: 28428-0056 Financing: Cash to Seller Property Rights Sold: Fee Simple Estate Condition of Sale: Arm's length Grantor: West Alton Corporation Grantee: KGM Equities, LLC Verified By: Knowledgeable Third Party
Site Data Parcel Size: 49,000 SF or 1.12 acres Topography: Level and at street grade Required Site Work: Typical Clear and Grade Utilities: All Available Zoning: RM-2 Proposed Use: Hold for Development Number of Units: N/A Density/Acre: N/A FLR: 2.00
Units of Comparison Price/SF: $163.27 Price/Unit: N/A Price/FLR: $81.63
Comments This parcel is located along the east side of West Avenue and was being utilized as a parking lot. The site was purchased by the adjacent property owner. Based on the allowable FLR of 2.0, a total building area allowed equates to 98,000 SF. 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 59 LAND SALE 3 Location: 600-616 Washington Avenue Miami Beach, Miami-Dade County, FL 33139 Folio #: 02-4203-009-1710; 1720
Sales Data Date of Sale: November 15, 2012 Sale Price: $5,100,000 Recording Data: 28363-3931 Financing Terms: Cash to Seller Property Rights Sold: Fee Simple Estate Condition of Sale: Arm's length Grantor: Jacobson 6 th Street, LLC Grantee: LBL Development, LLC Verified By: Knowledgeable Third Party (See Comments)
Site Data Parcel Size: 20,473 SF or 0.47 acres Topography: Level and at Street Grade Required Site Work: Typical Clear and Grade Utilities: All Available Zoning: RM-2, Multifamily, Medium Intensity Proposed Use: Residential Development Density/Acre: N/A FLR: 2.00
Units of Comparison Price/SF: $249.11 Price/Unit: N/A Price/FLR: $124.55
Comments This sale was confirmed via public records. According to the original listing on Loopnet, the property was marketed for the construction of a residential development. Parking must be included within the maximum allowable FLR for new construction. 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 60 LAND SALE 4 Location: Commercial Site (the Roads) 1833-1859 SW 3 rd Avenue East side of SW 3 rd Avenue, south of SW 18 th Street Miami, Miami-Dade County, FL 33135 Sales Data Date of Sale: November 13, 2012 Sale Price: $4,500,000 Recording Data: 28366-4990 Financing Terms: Cash to Seller Property Rights Sold: Fee Simple Estate Condition of Sale: Arm's length Grantor: Starlight Export Finance, Inc. Grantee: Le Venir Investments Verified By: Broker
Site Data Parcel Size: 37,462 SF or 0.86 acres Topography: Level and at street grade Frontage: SW 3 rd Avenue Required Site Work: Typical Clear and Grade Utilities: All Available Zoning: T6-8 O, Urban Core Transect Zone Proposed Use: Apartment FLR: 5.00
Units of Comparison Price/SF: $120.12 Price/Unit: $41,667 Price/FLR: $24.00
Comments This site was marketed as a potential apartment, condo or hotel site, with potential for approximately 108 units in a five-story structure. The potential FLR based on the zoning would be 187,500 SF which yields a price per FLR of $24.00/SF. This square footage would have to include parking for the property. 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 61 LAND SALE 5 Location: 3860 3880 SW 40 th Street 3040 SW 38 th Street Miami, Miami-Dade County, FL 33146 Folio #: 01-4117-003-2100, 2180, 2190, 2200, 2210, 2220, 2230, 2240
Sales Data Date of Sale: July 5, 2012 Sale Price: $10,303,982 Recording Data: 28188-2217, 2221 & 2224 Financing Terms: Cash to Seller Property Rights Sold: Fee Simple Estate Condition of Sale: Assemblage Grantor: 4001 Corp., Gables Lincoln-Mercury, Inc. and Ponce & Bird, LLC Grantee: Ponce & Bird Miami Development, LLC Verified By: Broker
Site Data Parcel Size: 94,371 SF or 2.1665 acres Topography: Level and at street grade Frontage: Bird Road Required Site Work: Typical Clear and Grade Utilities: All Available Zoning: T6-12-O (formerly C-2), City of Miami, General Commercial FLR: 4.85
Units of Comparison Price/SF: $109.19 Price/Unit: $37,333 Price/FLR $22.51
Comments The site is located on the south side of SW 40 th Street (Bird Road), between SW 39 th Avenue and SW 38 th Court. The combined site will be developed with approximately 276 apartment units plus one, eight-floor parking structure containing 423 parking stalls, plus amenities, containing 247,700 SF of NRA. Including an additional 25% for common areas and approximately 350 SF per parking space, the total allowable SF would be 457,675 SF, an FLR of 4.85. 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 62 LAND SALE 6 Location: Office Building Site at 4311 Ponce De Leon Blvd. East side of Ponce De Leon Boulevard, north of San Lorenzo Avenue Coral Gables, Miami-Dade County, FL 33146 Sales Data Date of Sale: February 29, 2012 Sale Price: $2,400,000 Recording Data: 288014-4214 Financing Terms: Cash to Seller Property Rights Sold: Fee Simple Estate Condition of Sale: Arms length Grantor: 64 Development Corp (Oxford Development) Grantee: 4311 Ponce De Leon, LLC Verified By: Broker
Site Data Parcel Size: 15,028 SF or 0.34 acres Topography: Level and at street grade Frontage: Ponce Required Site Work: Typical Clear and Grade Utilities: All Available Zoning: C, Commercial, City of Coral Gables Proposed Use: Mixed Use FLR: 7.23
Units of Comparison Price/SF: $159.70 Price/Unit: N/A Price/FLR: $22.09 Comments This site had been proposed for an eight-story mixed-use office-retail property with 53,000 SF of GBA. The FLR limitations in the City of Coral Gables do not include parking. With the addition of approximately 350 SF per parking space, the allowable building area has been estimated to be 108,650 SF, an FLR of $22.09. 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 63 Land Sale 7 Location:
4701 North Meridian Avenue Miami Beach, Miami-Dade County, FL 33140 Sales Data Date of Sale: February 8, 2012 Sale Price: $20,000,000 Recording Data: 27993-3934 Financing: Cash to Seller Property Rights Sold: Fee Simple Estate Condition of Sale: Arm's length Grantor: Mount Sinai Medical Center of Florida, Inc. Grantee: 4701 North Meridian, LLC Verified By: Broker
Site Data Parcel Size: 308,579 SF or 7.08 acres Topography: Level and at street grade Required Site Work: Renovation of existing improvements Utilities: All Available Zoning: RM-1 and RS-4 Proposed Use: 126-unit residential development Number of Units: 126 Density/Acre: 17.80 FLR: 2.16
Units of Comparison Price/SF: $64.81 Price/Unit: $158,730 Price/FLR: $30.00
Comments At the time of purchase, the site was developed with the former Miami Heart Institute building. The improved portion of the parcel was zoned "HD," Hospital District. Since purchasing this site, the grantees have had the zoning changed on the HD portion of the site to "RM-1," Residential Multi-family Low Intensity, as well as having the land use changed to Multi-family. They have also received approvals from the city of Miami Beach to redevelop the property to a multi-family residential building retaining the existing nonconforming height, setbacks, floor area, and off-street parking. The new development will contain approximately 111 units within the existing building, eight newly constructed villas within the north parcel, and seven newly constructed villas in the south parcel. The site has been approved to be developed with a total net sellable area of 405,000 SF (See documents in the Addenda). With approximately 350 SF per parking space for the 455 parking spaces on the site, the total allowable square footage is estimated to be 666,798, an FLR of 2.16. 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 64 LAND SALES SUMMARY Sale Date Acres Price Zoning FLR Price/SF Price/FLR 1 01/13 7.08 $27,000,000 RMF-3B 2.45 $87.52 $35.66 2 12/12 1.12 $8,000,000 RM-2 2.00 $163.27 $81.63 3 11/12 0.47 $5,100,000 RM-2 2.00 $249.11 $124.55 4 11/12 0.86 $4,500,000 T6-8 O 5.00 $120.12 $24.00 5 07/12 2.17 $10,303,982 T6-12 O 4.85 $109.19 $22.51 6 02/12 0.34 $2,400,000 C 7.23 $159.70 $22.09 7 02/12 7.08 $20,000,000 RM-1; RS-4 2.16 $64.81 $30.00
LAND SALES ANALYSIS In order to derive an estimated value of the site, an analysis of the land comparables and adjustments to them is utilized. The performance of this analysis and adjustment process reflects the influence that the following factors have on the purchase price: Property Rights Conveyed Conditions of Sale Financing Terms Market Conditions Location Site Work Size Density and Zoning
Property Rights Conveyed The sales researched and used in this report were all transferred on the basis of a fee simple estate. The subject's site is valued in this report on the basis of a fee simple estate. Therefore, no adjustments are made to any of the sales for this factor. Conditions of Sale All the sales noted in this section were reported to be arm's length transactions, sold after appropriate marketing endeavors, and all parties were knowledgeable about the marketplace. No adjustments are needed for conditions of sale. Financing Terms The comparable sales were noted as being sold for cash or on a cash equivalent basis. Therefore, no adjustments are made to any of the sales for financing terms. 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 65 Market Conditions The sales presented took place over a 25-month period prior to the date of value. Miami Dade County appears to be recovering substantially from the economic downturn experienced in 2007 through 2009. Land prices appear to be rising throughout the county, rental rates for both residential and retail components are increasing and transactions are taking place among all sectors of the real estate market. We have made upward adjustments for market conditions for the sales that transpired in 2012. The lack of recent transaction more likely stems from the lack of supply of available land rather than the lack of demand for sites. Location The adjustment for location realizes that properties in areas of active growth and development, as well as those easily accessible and highly visible usually sell for more per unit than properties in areas that do not offer these attributes. The subject features a premier location on downtown Miamis bay front adjacent to Miami Bayfront Park and the Miamimarina. If there were no development restrictions in place for the City of Miamis bay front property, this would be a premier development site. The subjects location is considered superior to all of the comparables included in this analysis. Upward locational adjustments are made to Comparable Sales 1 through 7. Site Work Further adjustments are made to those sales that required site work that was unusual or atypical, including extending unavailable utilities to the site. All of the sales were considered to be in developable condition at the time of the transaction. No adjustments are made to the comparable sales for site work. Size In terms of size adjustments, it is typically found that the smaller the parcel, the higher the price per SF with all factors held constant. Thus, a smaller parcel generally warrants a downward adjustment on a price per SF basis when compared to a larger parcel and vice versa. The subject parcel is 733,929 SF or approximately 16.85 acres. The subject is substantially larger than the comparables included in this analysis. There have not been any transactions of large parcels like the subject in Miamis downtown or surrounding neighborhood over the past few years. Due to the subjects unique location, we have determined that including transactions involving larger sites, outside of the area, would not be appropriate in the valuation of the subject. In terms of the price per SF, more emphasis has been placed on Sales 1 and 7 which are somewhat similar to the subject in terms of size. The comparables have varying sizes as illustrated in the following table: 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 66 Sale Acres Adjustment 1 7.08 None 2 1.12 Downward 3 0.47 Downward 4 0.86 Downward 5 2.17 Downward 6 0.34 Downward 7 7.08 None Density and Zoning A zoning adjustment takes into account the intensity of use or degree of density a property is permitted. The greater either of these parameters, the more the property is worth, with all other factors held constant. In terms of density and zoning, it is generally ascertained that the more square footage permitted per SF, the higher the price per SF with all other factors held constant. In the selection of the comparable sales, we have attempted to include sales that were similar to the subject in terms of FLR (potential and actual). We have not included sales in the subjects immediate area (CBD, Brickell and Omni neighborhoods) that were smaller parcels with much higher allowable densities. We have made adjustments to the sales to reflect their sale price based on the gross square footage planned for the site. In the case where only the net rentable or net saleable square footage was known we have estimated the square footage associated with parking and common areas to arrive at a gross buildable area for a site. We are analyzing the subject based on the total potential developable square footage, in terms of gross square feet, including parking and common areas so we have attempted to extrapolate similar indicators for each of the land sales. The subject site has a zoning designation of T6-8 O, Urban Core Transect District Open under the jurisdiction of the City of Miami, under the Miami 21 zoning code. This zoning would typically allow an FLR of 5.00 or developable square feet on the subject site of approximately. The actual development approvals imposed by the City of Miami prior to the development of the Bayside Marketplace supersede the subjects current zoning which took affect with the approval of the Miami 21 zoning code in October of 2009. Therefore, in terms of the subjects zoning and density, we have utilized the approved developable square footage of 687,000 SF or an FLR of 0.94 for the subject as is. For the proposed development scenario, the subjects approved FLR would be approximately 1,193,622 SF or an FLR for the site of 1.63. This proposed density is more in line with the comparable sales. Due to the large discrepancies in the allowable densities between the subject and the comparable land sales, we have not considered the price per square foot basis. 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 67
Price/FLR Adjustment As Is Price/FLR Adjustment As Proposed Sale Zoning FLR 0.94 1.63 1 RMF-3B 2.45 Upward Upward 2 RM-2 2.00 Upward Upward 3 RM-2 2.00 Upward Upward 4 T6-8 O 5.00 Upward Upward 5 T6-12 O 4.85 Upward Upward 6 C 7.23 Upward Upward 7 RM-1; RS-4 2.16 Upward Upward The aforementioned analysis and adjustments to the preceding land sales are presented in the following grid: Land Sales Adjustment Grid Price Per FLR As Is "As Is" FLR 0.94 Land Sale 1 2 3 4 5 6 7 Sales Price/SF $35.66 $81.63 $124.55 $24.00 $22.51 $22.09 $30.00 Property Rights Conveyed 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Conditions of Sale 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Financing Terms 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Market Conditions 0.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Adjusted Price/SF $35.66 $85.71 $130.78 $25.20 $23.64 $23.19 $31.50 Location 10.00% 10.00% 10.00% 15.00% 15.00% 15.00% 5.00% Site Work 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Size 0.00% -10.00% -15.00% -15.00% -10.00% -15.00% 0.00% Density/Zoning 5.00% 5.00% 5.00% 10.00% 10.00% 15.00% 5.00% Overall Net Adjustment 15.00% 5.00% 0.00% 10.00% 15.00% 15.00% 10.00% Adjusted Price/SF $41.01 $90.00 $130.78 $27.72 $27.18 $26.67 $34.65
The adjusted prices per FLR range from $27.18/FLR to $130.78/FLR with an average of $54.00/FLR. The subjects allowable FLR of 0.94 is at the lower end of the range indicated by the sales which would typically lead to a price per FLR at the higher end of the range. We have placed primary emphasis on the two larger transactions, Land Sale 1 and Land Sale 7 which involved parcels intended for larger scale residential or mixed use development. These sales indicated Price/FLR, after adjustments of $41.01/SF and $34.65/SF. Additionally, we have placed emphasis on the two sales that have the lower FLR ratios, Sales 2 and 3. We are of the opinion that an appropriate Price/FLR value for the subject should be between $70.00/FLR and $80.00/FLR. We have concluded to $75.00/FLR based on the subjects water front location and low allowable density. The land value of the subject is calculated as follows: SAY: $51,500,000 (RD) Original FLR X Price per FLR = Value Conclusion 687,000 SF X $75.00 = $51,525,000 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 68 Land Sales Adjustment Grid Price Per FLR As Proposed "As Proposed" FLR 1.54 Land Sale 1 2 3 4 5 6 7 Sales Price/FAR $35.66 $81.63 $124.55 $24.00 $22.51 $22.09 $30.00 Property Rights Conveyed 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Conditions of Sale 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Financing Terms 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Market Conditions 0.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Adjusted Price/FAR $35.66 $85.71 $130.78 $25.20 $23.64 $23.19 $31.50 Location 10.00% 10.00% 10.00% 15.00% 15.00% 15.00% 5.00% Site Work 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Size 0.00% -10.00% -15.00% -15.00% -10.00% -15.00% 0.00% Density/Zoning 2.50% 2.50% 2.50% 5.00% 5.00% 7.50% 2.50% Overall Net Adjustment 12.50% 2.50% -2.50% 5.00% 10.00% 7.50% 7.50% Adjusted Price/FAR $40.12 $87.85 $127.51 $26.46 $26.00 $24.93 $33.86
The adjusted prices per FLR range from $24.93/FLR to $127.51/FLR with an average of $52.39/SF. The subjects allowable FLR of 1.54 is at the lower end of the range indicated by the sales which would typically lead to a price per FLR at the higher end of the range. We have placed some emphasis on the two larger transactions, Land Sale 1 and Land Sale 7 which involved parcels intended for large scale residential or mixed use development. These sales indicated Price/FLR, after adjustments of $40.12/SF and $33.86/SF. Additionally, we have placed emphasis on the two sales that have the lower FLR ratios, Sales 2 and 3. We are of the opinion that an appropriate Price/FLR value for the subject should be between $60.00/FLR and $70.00/FLR based on the proposed increased density under the new development approvals. We have concluded to $65.00/FLR based on the subjects water front location and low allowable density. The land value of the subject is calculated as follows: SAY: $77,600,000 (RD) New Allowable FLR X Price per FLR = Value Conclusion 1,193,622 SF X $65.00 = $77,585,430 14-108-02 Bayside Marketplace Land THE SALES COMPARISON APPROACH
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 69 CONCLUSION One accepted method was utilized in order to determine the indicated values for the subject under the as is and as proposed development scenarios. The indicated land values for the subject are as follows: As Is 687,000 SF of allowable development $51,500,000 As Proposed 1,130,984 SF of allowable development $77,600,000 We have utilized the estimated land values for the subject under the two scenarios to support the market rent determination for the site under the two development plans. Previously, in the market analysis section of the report, we concluded that an appropriate land overall rate for a property similar to the subject would be between 5.00% and 7.00% and have concluded to 6.00%. Based on this overall rate, market rental rates can be estimated based on the land values. We have calculated a market rental rate for the subject, based on the current developed square footage, as follows: SAY: $3,100,000 (RD) We have calculated a market rental rate for the subject, based on the proposed developed square footage, as follows: SAY: $4,700,000 (RD)
Estimated Land Value X Overall Rate = Market Rental Rate $51,500,000 X 6.00% = $3,090,000 Estimated Land Value X Overall Rate = Market Rental Rate $77,600,000 X 6.00% = $4,656,000 14-108-02 Bayside Marketplace Land FINAL RECONCILIATION
_____________________Joseph J. Blake and Associates, Inc.___________________ Real Estate Valuation and Consulting 70 After an inspection of the subject, and analysis of pertinent physical and economic factors that impact value, we are of the opinion that the market rent for the site underlying the Bayside Marketplace and parking structures, assuming its continued use as a festival retail center, as of the date of inspection, March 25, 2014, is: $3,200,000/Year THREE MILLION TWO HUNDRED THOUSAND DOLLARS Plus, an additional 6.00% percentage rent on gross retail revenues over a natural breakpoint and an additional 15.00% percentage rent on gross parking revenues over a natural breakpoint. We are of the opinion that the market rent for the site underlying the Bayside Marketplace, parking structures and proposed Skyrise Tower, based on the proposed development plans, as of the date of inspection, March 25, 2014, is: $4,600,000/Year FOUR MILLION SIX HUNDRED THOUSAND DOLLARS Plus, an additional 6.00% percentage rent on gross retail revenues over a natural breakpoint and an additional 15.00% percentage rent on gross parking revenues over a natural breakpoint.
ADDENDA
QUALIFICATIONS OF TRACY COURTNEY
CORPORATE POSITION Ms. Courtney is an Assistant Director employed by the firm of Joseph J. Blake and Associates, Incorporated, in the Southeast Regional Office at 4000 Ponce de Leon Boulevard, Suite 410, Miami, Florida. Responsibilities include preparation of full narrative appraisal and market study reports for a wide variety of property types and purposes, including but not limited to business parks, office buildings, industrial buildings, shopping centers, multi-family projects, hotels and land. FORMAL EDUCATION The University of Michigan - Ann Arbor, Michigan Bachelor of Arts, Economics Major
REAL ESTATE AND APPRAISAL EDUCATION Real Estate Appraisal I A.I.B. Construction Lending - Nova University
Appraisal Institute: #1A-1 - Real Estate Appraisal Principles & Practices #1A-2 - Basic Valuation Principles #1B-A - Capitalization Theory and Techniques, Part A #1B-B - Capitalization Theory and Techniques, Part B #SPP - Standards of Professional Practice, Part A #SPP-B - Standards of Professional Practice, Part B #2-1 - Case Studies in Real Estate Valuation
RELATED WORK EXPERIENCE Florida National Bank - Real Estate Loan Officer Chase Manhattan Bank - Real Estate Analyst
PROFESSIONAL AFFILIATIONS State-Certified General Real Estate Appraiser - State of Florida, #RZ0002076
QUALIFICATIONS OF TRACY COURTNEY
QUALIFICATIONS OF TED ALLEN, MAI
CORPORATE POSITION Mr. Allen currently holds the position of Managing Partner in the Southeast Regional Office of Joseph J. Blake and Associates, Incorporated, at 4000 Ponce de Leon Boulevard, Suite 410, Miami, Florida. He has been associated with the firm since 1979. FORMAL EDUCATION University of Texas - Austin, Texas Bachelor of Business Administration
PROFESSIONAL AFFILIATIONS
The Appraisal Institute MAI #6949, Certified through December 31, 2016 State-Certified General Real Estate Appraiser - State of Florida, #RZ 0000426 State-Certified General Real Property Appraiser - State of Georgia, #CG001855
CLIENTS
Clients served by Mr. Allen include banks, savings and loans, institutional investors, pension funds, private individuals, development companies, real estate syndicators, and various other entities. A specific client list or references will be furnished upon request. APPRAISAL ASSIGNMENTS Mr. Allen has been involved in real estate appraising since the completion of his formal education. Real estate appraisal assignments have been performed in Florida and the Southeast United States. The scope of these real estate assignments has included raw land, subdivisions, multi- family projects, retail properties, office properties, historical properties, industrial properties, lodging facilities, restaurants, and special purpose properties. Additionally, he has performed marketability, consultation and feasibility reports. Specific project experience will be furnished upon request.