Warronker Bayside SkyRise

Appraisal Report
Prepared for
Mr. Enrique Torre, Director
City of Miami
Public Facilities Division/Asset Management Division

Property Appraised
Market Rent of the
Bayside Marketplace Land Parcel
(16.85 acres)
401 and 501 Biscayne Boulevard
Miami, Florida 33132

Date of Valuation
March 19, 2014

Prepared by
Waronker & Rosen, Inc.
5730 SW 74
th
Street, Suite 200
South Miami, Florida 33143

LEE H. WARONKER, MAI, SRA

CARLOS A. DIEZ

File # 7740

Waronker & Rosen, I nc. Real Estate Appraisers & Consultants Page 1
Waronker &Rosen, Inc.
Real Estate Appraisers and Consultants
Miami-Dade County Office Broward / Palm Beach County Office
5730 SW 74th Street, Suite 200 10242 NW 47th Street, Suite 40
South Miami, Florida 33143 Sunrise, Florida 33351
Lee H. Waronker, MAI, SRA Phone: (305) 665-8890 / Fax: (305) 665-5188 Josh L. Rosen, MAI
lee@waronkerandrosen.com www.waronkerandrosen.com josh@waronkerandrosen.com

April 24, 2014

City of Miami
444 SW 2nd Avenue, 3rd Floor

Re: Market Rent of the Bayside Marketplace Land Parcel
401 and 501 Biscayne Boulevard
WRI File No. 7465

Dear Mr. Torre:

We have prepared an appraisal report of the above referenced property for the purpose of
estimating the annual market rental rate of the fee simple interest in the land as if vacant as of
March 19, 2014, under two valuation scenarios. Scenario 1 assumes that development would be
subject to the same provisions stipulated in the existing leases to Bayside Center Limited
Partnership. Scenario 2 assumes that development would be subject to the modified provisions
stipulated in a Warrant Permit approved by the City of Miami Planning and Zoning Department
on January 10, 2014. The analysis only considers the land as though vacant and the
allowable uses to be discussed herein, with no consideration to the existing building
improvements or their current design. The terms market value, fee simple interest and market
rent are defined in this report. This report has been prepared based on the scope of the work
which is detailed on a following page. The reader of the appraisal is strongly advised to read the
scope of work so as to understand the scope of this appraisal.

City of Miami
April 24, 2014

This report is intended for use only by the client and intended users as noted herein. No
additional intended users are identified or intended. Use of this report by others is not intended
by the appraiser. No one else, or any other entities, should rely on this appraisal other than those
noted herein.

The subject property is located at the southeast corner of Biscayne Boulevard, US. Highway No.
1 and Port Boulevard in Downtown Miami, fronting Biscayne Bay, in Miami-Dade County, FL.
The site consists of a 734,156 square foot (16.85 acre) site. The site is improved with Bayside
Marketplace, a two-level retail complex having approximately 267,000 square feet of rentable
area which includes the Reflections Restaurant. In addition, there is a parking garage that is
located at the northwest corner of the site.

The site has been leased to Bayside Center Limited Partnership since January 1985 on two leases
(one for the retail parcel and one for the garage parcel), on original terms of 45 years with two 15-
year renewal options. At the expiration of the renewal options in 2060, new market rent and
percentage rents are to be established by way of appraisals. The retail parcel lease includes
restrictive covenants limiting allowable uses to retail, recreation, parking and office (provided
that such office uses shall be limited to management offices and other office uses commonly found
in retail centers), and explicitly prohibiting temporary housing or sleeping quarters and casino
gambling. A clarification by the City confirmed that hotel uses are not allowed. According to the
client, the existing lease limits the buildable floor area to 267,000 sq. ft. of retail development and
a 420,000 sq. ft. parking garage with 1,156 spaces. These limitations correspond to Scenario 1 in
this valuation. Any change in the sizes provided would cause a change in the estimated
market rent.
In January 2014 a proposal to modify the original development guidelines was approved by the
Citys Planning and Zoning Department. The intent of the modification was to bring the project
more in compliance with the new Miami 21 zoning code and to enable a proposed development
called SkyRise Miami to proceed. The SkyRise project includes a 1,000 foot observation tower
with restaurant, night club, ballroom, exhibit space and amusement center components to be
constructed on the east (bay front) portion of the Bayside retail parcel. The modification increases
the buildable floor area to a total of 1,193,622 sq. ft., of which 556,962 sq. ft. consists of retail and
recreation space with some small amount of office space, and 636,660 sq. ft. consists of the
parking garage area. The approval is based on the premise that the existing improvements will be
utilized, and specifies the amount of additional gross area that may be added to the existing retail
and garage structures. However, since this valuation is based on the market value and market rent
of the land as though vacant, valuation Scenario 2 is based on the total approved gross area under
the January 2014 zoning warrant. Any change in the sizes provided would cause a change in
the estimated market rent.

City of Miami
April 24, 2014

This valuation considers two scenarios: Scenario 1 is based on the development provisions
stipulated in the original lease, and Scenario 2 is based on the modified provisions stipulated in the
January 2014 Planning and Zoning approval. These provisions are summarized in the table below:

Scenario 1 Scenario 2
Land Area (sq. ft.) 734,156 734,156
Retail, Office,
Recreation
Retail, Office,
Recreation
Main Retail Building Area 267,000 267,000
Additional Retail Parking Liner 0 17,255
Additional Retail Area per Warrant 0 277,177
Less: Fire and Marina Offices 0 -4,470
Total Gross Area Excluding Parking 267,000 556,962
Parking Garage 420,000 636,660
Total Gross Area 687,000 1,193,622
Floor Area Ratio (FAR)* 0.94 1.63
* i ncl udi ng parki ng garage (thi s i s cal l ed "Fl oor Lot Rati o" i n the Ci ty of Mi ami Zoni ng Code)
Allowable Uses

The subject property is zoned T6-8-O, Urban Core Open Transect Zone by the city of Miami,
Florida. However, note that the development provisions stipulated in the original leases
(applicable to Scenario 1) and in the January 2014 modifications (applicable to Scenario 2) allow a
much lower density of development and a more limited range of uses than the T6-8 zoning
districts. In particular, residential uses (including high-rise residential development) and hotels are
not allowed on the subject site (under either valuation scenario). These limitations have a
significant impact on the type of development that would be most profitable (i.e., the highest and
best use of the site), and therefore on the market value (and market rent) of the land as though
vacant. This is especially true under current market conditions, in which luxury high-rise
waterfront residential projects and hotels, which are prohibited on the subject site, are among the
most profitable types of development for urban waterfront sites in Miami. Therefore, any
deviation from the development provisions specified for the two valuation scenarios would result
in a change in the values estimated herein.

City of Miami
April 24, 2014

In order to prepare the analysis, we were supplied with the following items:
Copies of ground leases and addendums
Surveys of the site
Breakdown of buildings sizes and allowable uses, in writing and verbally
Architects site data, development program and building area breakdown for the SkyRise
Miami project
City of Miami Warrant Permit approving proposed SkyRise Miami project
2012 audited financial statements for Bayside Marketplace

Any deviation from the information supplied and assumptions used herein will likely result in a
change of value.

As a result of our analysis, it is our opinion that the market value of the fee simple interest in the
land as though vacant and the market rent of the land as though vacant, as of March 19, 2014, are
as follows:

Market Value of the Land as Though Vacant $50,000,000 $73,000,000
Annual Market Rent of the Land as Though Vacant $3,500,000 $5,100,000

The analysis only considers the land area as vacant and the allowable uses discussed herein, with
no consideration to the existing building improvements. The market rent estimate is based on a
99-year lease term with cumulative CPI increases every five years, which are typical for the
market.

On the following pages is the scope of work, certification and general assumptions and limiting
conditions. It is advised that these items be reviewed so the reader has an understanding of the
limitations of this letter.

Very truly yours,

_______________________________ _______________________________
Lee H. Waronker, MAI, SRA Carlos A. Diez
State-Certified General Real Estate Appraiser State-Certified General Real Estate Appraiser
License No. RZ162 License No. RZ3420

Table of Contents

Title Page
Letter of Transmittal 1
Table of Contents 5
Scope of Work 6
Certification 7
General Assumptions and Limiting Conditions 9
INTRODUCTION 11
Summary of Pertinent Data 12
Miami-Dade County Map 13
Site Plan 16
Survey 17
Subject Photographs 18
Appraiser Qualifications 24
DESCRIPTION & ANALYSES 28
Purpose of the Appraisal 29
Client, Intended User and Use of the Appraisal 29
Definition of Real Property Interest Appraised 29
Definition of Market Rent 29
Definition of Market Value 30
Location and Address 31
Legal Description 31
Owner of Record 31
History of the Subject Property 31
Site Data 32
Zoning 32
Flood Zone 33
Real Estate Assessment and Taxes 34
Neighborhood Overview 36
Supply and Demand 37
Exposure Time 42
Typical Purchaser of the Subject 42
Highest and Best Use 43
Appraisal Process 45
Cost Approach 46
Income Capitalization Approach 47
Sales Comparison Approach 48
Reconciliation of Value 70
ADDENDA
Addendum A County Area Description
Addendum B Legal Description


Scope of Work

The appraisal problem herein is to estimate the market rent of the land as though vacant. In order
to estimate the market rent, the analysis includes an estimate of the market value of the land as
though vacant. Market rent was estimated by analysis of land capitalization rates from market
transactions and investor surveys.

The approach to value applied in this appraisal is the sales comparison approach. Also, income
capitalization techniques were employed in order to estimate an appropriate capitalization rate
for use in estimating the market land rent from the estimated land value. As the valuation is
based on the land as though vacant, the income capitalization and cost approaches are not
applicable. The analysis herein is considered sufficient to develop credible assignment results in
solving the appraisal problem.

All appraisals begin by identifying the appraisal problem. Data on the subject property can be
derived from various sources including but not limited to, the property owner, the county
property appraisers office, surveys and building plans. When possible, more than one source is
utilized to confirm data and the data sources are acknowledged. Land size is based on surveys
(when available), public records and recorded plats. Land measurements are not performed.

A search was performed for comparables to the subject property. Research of comparables and
market data include, but is not limited to, using the following data sources:

CoStar
Imapp
Newspaper clippings
Board of Realtors Multiple Listing Service
Loopnet.com
County Property Appraiser Records

Comparables are inspected and the transactional information is reported. Sale prices are from
public records and are typically confirmed with a party to the transaction, i.e. buyer, seller, real
estate agent, or closing attorney. All information is analyzed in processing the appraisal report
and as support for the estimated value.

The scope of work for this assignment has been described above and is considered typical for an
assignment of the nature of the subject appraisal problem.

Certification

The undersigned does hereby certify that, to the best of my knowledge and belief:

1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the reported
assumptions and limiting conditions and are my personal, impartial, and unbiased
professional analyses, opinions, and conclusions.
3. I have no present or prospective interest in the property that is the subject of this report
and no personal interest with respect to the parties involved.
4. I have no bias with respect to the property that is the subject of this report or to the parties
involved with this assignment.
5. My engagement in this assignment was not contingent upon developing or reporting
predetermined results.
6. My compensation for completing this assignment is not contingent upon the development
or reporting of a predetermined value or direction in value that favors the cause of the
client, the amount of the value opinion, the attainment of a stipulated result, or the
occurrence of a subsequent event directly related to the intended use of this appraisal.
7. My analyses, opinions and conclusions were developed, and this report has been prepared,
in conformity with the following requirements.
Uniform Standards of Professional Appraisal Practice (USPAP)
The Code of Professional Ethics and Standards of Professional Practice of the
Appraisal Institute
The State of Florida requirements for state-certified appraisers

8. I have complied with the USPAP Competency Rule.
9. This appraisal report sets forth all of the limiting conditions imposed by the terms of this
assignment or by the undersigned affecting the analyses, opinions and conclusions
contained in this report.
10. No one provided significant real property appraisal assistance to the person signing this
certification.
11. The use of this report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives. Additionally, it is subject to review by the
state of Florida relating to review by the real estate appraisal subcommittee of the Florida
Real Estate Commission.
12. As of the date of this report Lee H. Waronker, MAI, SRA has completed the continuing
education program of the Appraisal Institute.
13. I, Lee H. Waronker, MAI, SRA have made a personal inspection of the property that is
the subject of this report.
14. I, Carlos Diez have made a personal inspection of the property that is the subject of this
report.

15. Acknowledgement is given to Josh L. Rosen, MAI in the preparation and review of this
appraisal report.
16. It should be noted that the valuation herein does not include any furniture, fixtures or
equipment necessary to operate any business, or businesses occupying the subject
property. The valuation herein does not include a value for any business entity, or entities
occupying the subject property.
17. Waronker & Rosen, Inc. have previously performed an appraisal on the subject property
in the past three years. We were not then, and are not now involved with the
management, leasing, disposition, or any similar service regarding the subject property in
the past three years.

_______________________________
Lee H. Waronker, MAI, SRA
State-Certified General Real Estate Appraiser
License No. RZ162

_______________________________
Carlos Diez
State-Certified General Real Estate Appraiser
License No. RZ3420

Date of Report March 25, 2014

General Assumptions and Limiting Conditions

This appraisal report has been made with the following general assumptions:
1. No responsibility is assumed for the legal description or for matters pertaining to legal or
title considerations. Title to the property is assumed to be good and marketable unless
otherwise stated.
2. The property is appraised free and clear of any or all liens or encumbrances unless
otherwise stated.
3. Responsible ownership and competent property management are assumed.
4. The information furnished by others is believed to be reliable but, no warranty is given
for its accuracy.
5. All engineering studies are assumed to be correct. Any plot plans or illustrative material
in this report are included only to help the reader visualize the property.
6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or
structures that render it more or less valuable. No responsibility is assumed for such
conditions or for obtaining the engineering that may be required to discover them. The
values estimated herein are subject to typical inspections such as roof, structural, and
termite, if applicable.
7. It is assumed that the property is in full compliance with all applicable federal, state and
local environmental regulations and laws unless the lack of compliance is stated,
described and considered in the appraisal.
8. It is assumed that the property conforms to all applicable zoning and use regulations and
restrictions unless a non-conformity has been identified, described and considered in the
appraisal.
9. It is assumed that all required licenses, certificates of occupancy, consents, and other
legislative or administrative authority from any local, state or national government or
private entity or organization have been or can be obtained or renewed for any use on
which the opinion of value contained in this report is based.
10. It is assumed that the use of the land and improvements is confined within the boundaries
or property lines of the property described and considered in the appraisal.
11. Unless otherwise stated in this report, the existence of hazardous materials, which may or
may not be present on the property, was not observed by the appraiser. The appraiser has
no knowledge of the existence of such materials on or in the property. The appraiser,
however, is not qualified to detect such substances. The presences of substances such as
asbestos, urea formaldehyde foam insulation or other potentially hazardous materials may
affect the value of the property. The value estimated 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 any expertise or engineering
knowledge required to discover them. The intended user is urged to retain an expert in
this field, if desired.

12. The physical condition of the improvements, if any, described herein was based on visual
inspection. No liability is assumed for the soundness of structural members, since no
engineering tests were made of same.
13. Neither all nor any part of this appraisal report shall be disseminated to the general public
using the appraisers name or appraisal designation, without prior written consent of the
appraisers signing this appraisal report.
14. Authorization is not allowed for the out-of-context quoting from, or partial reprinting of,
this appraisal report.
15. By reason of the report, there is no requirement to testify with reference to the property
herein appraised, unless arrangements have been previously made.
16. The reader should be advised that our employment was not contingent on the appraisal
providing a minimum valuation, a specific calculation or the approval of a loan.
Additionally, we have complied with the USPAP Competency Rule.

Limiting Conditions:
1. The allocation of total value between land and improvements applies only under the
described utilization. The separate valuations for land and improvements must not be
used in conjunction with any other appraisal and are invalid if so used.

2. The Americans with Disability Act (ADA) became effective January 26, 1992. The
appraiser has not made a specific compliance survey and analysis of this property to
determine whether or not it is in conformity with the various detailed requirements of the
requirements of the ADA. It is possible that a compliance survey of the property and a
detailed analyses of the requirements of the ADA, could reveal that the property is not in
compliance with one or more of the act. If so, this fact could have a negative impact upon
the value of the property. Since the appraiser has no direct evidence relating to this issue,
possible noncompliance with the requirements of ADA was not considered in estimating
the value of the property.

I ntroduction Market Rent of Bayside Marketplace Land Parcel

INTRODUCTION

Summary of Pertinent Data

Location: On the east side of Biscayne Boulevard, south of
Port Boulevard, along the west side of Biscayne
Bay, in the downtown area of the city of Miami,
Miami-Dade County, FL

Address: 401 and 501 Biscayne Boulevard
Miami, FL 33132

Type of Use: Valued as vacant land. Currently improved with
the Bayside Marketplace retail center and parking
garage

Zoning: T6-8-O, Urban Core Open Transect Zone by the
city of Miami, Florida.

Flood Zone: AE (Map12086C0314L)

Land Area: 734,156 square feet (approximately), equal to
16.85 acres) broken down as follows:
Garage Parcel 164,535 sq. ft. (3.78 acres)
Retail Parcel 569,621 sq. ft. (13.08 acres)
Total 734,156 sq. ft. (16.85 acres)

Value Summary:
Cost Approach Not applicable Not applicable
Income Capitalization Approach Not applicable Not applicable
Sales Comparison Approach
Land Value Estimate $50,000,000 $73,000,000
Annual Market Rent $3,500,000 $5,100,000

Date of Inspection: March 19, 2014
Date of Valuation: March 19, 2014
Date of Report: April 24, 2014
Miami-Dade County Map

Subject

Aerial Photograph
Garage Parcel


Aerial Photograph
Retail Parcel


Site Plan


Survey


Subject Photographs

Street view looking south along
Biscayne Boulevard

Street view looking north along
Biscayne Boulevard

View looking east on Port Boulevard, along
the north side of the garage parcel (subject
property on right, American Airlines Arena
visible at left)
View looking west on Port Boulevard along
the north side garage parcel
(subject property on left)

North entrance to parking garage, looking
southeast
Main signage along sidewalk on Biscayne
Boulevard on west side of garage parcel

South entrance to parking garage,
looking north
View of interior of parking garage

View of main pedestrian entrance to retail
parcel, looking east from near sidewalk on
Biscayne Boulevard
Typical view of shops and restaurants along
main east-west walkway

Typical view of kiosks along main east-west
walkway
South side of north building

Covered area along east side of north
building, along waterfront facing marina
Covered interior walkway/atrium in north
building

Entrance to covered walkway/atrium of
market building (looking south)
North side of south building, looking
southeast from south side of north building

Area along east side of market building at
waters edge, looking north
Interior of south building

East side of south building, looking west North side of south building, looking
southwest from just west of Hard Rock Caf

Hard Rock Caf building View of waterfront along north side of south
building (at left) and east side of north
building (at rear of photo). American Airlines
Arena and neighborhood residential towers
visible in background.

Area along east side of Hard Rock Caf,
looking southwest (bayfront at left)
Walkway along bay side of parking lot at
northeast end of site, looking northeast
(bayfront at right, parking at left)
Appraiser Qualifications
LEE H. WARONKER, MAI, SRA

Education: Master of Science in Management, School of Business and Organizational
Science, Florida International University, 1981 (Major Real Estate)

Bachelor of Science Degree, The Florida State University, Tallahassee, Florida
1976 (Major Real Estate)

Affiliations: MAI Designation (No. 6738) awarded by the Appraisal Institute in 1983.
SRA (SRPA) Designation awarded by the Appraisal Institute in 1981.
State Certified General Appraiser, State of Florida, License Number RZ162,
May 1990.
Registered Real Estate Broker, State of Florida, License #BK0152877 (1978)

Experience: Appraised various types of properties, including:
Industrial Buildings Restaurants Warehouses
Office Buildings Hotels and Motels Hospitals
Service Stations Retail Stores Marinas
Churches & Synagogues U.S. Post Offices Historical Buildings
Residences Condominiums Special Purpose Properties

President, Waronker & Rosen, I nc., (formerly Waronker & Associates, Inc.)
Miami, Florida, from 1987 to present. Vice President, Property Consultants,
I nc. from 1979 to 1986. Appraiser, The Keyes Company, 1978 to 1979.
Appraiser, Miami-Dade County Department of Right-of-Way, 1977 to 1978.

Instructor: Appraisal Institute. Taught Courses 1A-1, 1A-2, 8-2, 1B-A, 1B-B, 110, 120,
210, 310, 320, 410, 420, 430, 510, 550, 600, 610 and 620, et al

Author: Seminars entitled Dynamics of Office Building Valuation, Why the
Capitalization Rate is Always 10 and the Appraisal of Real Estate 10
th
vs.
11
th
Edition.

Other: Special Master for the Dade County Valuation Adjustment Board, 1989 to
1996.Assisted in the editing of The Appraisal of Real Estate, 11
th
Edition and
13
th
Edition.

President of the Miami Chapter of the Appraisal Institute, 1990 to 1991.

Appraiser Qualifications
CARLOS A. DIEZ
______________________________________________________________________
Education: University of Florida (Gainesville, FL)
Bachelor of Arts. Major: Economics
Stevens Institute of Technology (Hoboken, NJ)
Substantial progress towards the degree of Master of Engineering
Affiliations: State-certified general real estate appraiser, State of Florida, RZ3420
The Appraisal Institute, Candidate for Designation
CCIM Institute, Candidate Member
Appraisal Experience: Waronker & Rosen, Inc. September, 2007 to Present
Appraised a wide variety of property types, including:
Vacant land Office buildings
Restaurants Shopping centers
Hotels Free-standing retail properties
Industrial properties Apartment buildings
Residential and Commercial Condominiums Condominium Units
Land leases (leased fee and leasehold interests) Fractured Condominium Interests
Easements (including aerial and sub-surface) Special Purpose Properties
Appraisal, Investment Analysis and General Real Estate Education:
The Appraisal Institute
100, 101: Basic Appraisal Principles and Procedures
202: Residential Sales Comparison and Income Approaches
300: Real Estate Finance, Statistics and Valuation Modeling
400: General Market Analysis and Highest & Best Use
402: General Appraiser Site Valuation and Cost Approach
403, 404: General Appraiser Income Approach (Parts 1 and 2)
405: General Appraiser Report Writing and Case Studies
420: Business Practices and Ethics
510: Advanced Income Capitalization
550: Advanced Applications
530: Advanced Sales Comparison and Cost Approaches
Seminar: Hotel Appraising New Techniques for Todays Uncertain Times
500: Advanced Market Analysis and Highest & Best Use
833: Fundamentals of Separating Real Property, Personal Property, and Intangible Business Assets
Seminar: Marketability Studies: Advanced Considerations and Applications
CCIM Institute
CI 101: Financial Analysis for Commercial Investment Real Estate
CI 102: Market Analysis for Commercial Investment Real Estate
CI 103: User Decision Analysis for Commercial Investment Real Estate
CI 104: Investment Analysis for Commercial Investment Real Estate
FANSC: Feasibility Analysis for Retail Properties
MIMK: Advanced Market Analysis for Commercial Real Estate
Baruch College (CUNY) / Steven L. Newman Real Estate Institute
NCP2000: Urban Land Economics
NCP9000: Real Estate Development
Partial Client List

LENDER
Amerasia Bank
Apollo Bank
BAC Bank
Bank of America
Bank of Coral Gables
Bank Leumi
BNY Mellon Bank
Branch Banking and Trust (BB&T)
Broward Bank of Commerce
C1 Bank
CNL Bank
Capital Bank
Cigna Investments, Inc.
Citibank and Citicorp
City National Bank of Florida
Coconut Grove Bank
Comerica Bank
Credit Suisse First Boston Mortgage
Capital, LLC
Enterprise Bank of Florida
Espirito Santo Bank of Florida
Executive National Bank
Fifth Third Bank
First Bank of Miami
First National Bank of South Miami
FirstBank Florida
Florida Community Bank
Gibraltar Private Bank and Trust
Great Florida Bank
HSBC Bank, N.A.
Holliday Fenoglio Fowler, LP
International Finance Bank
Israel Discount Bank of New York
JP Morgan Chase Bank
Lloyds Intl. Bank (Lloyds of
London)
Lutheran Brotherhood
Marine Bank
Marquis Bank
Morgan Stanley Mortgage Capital
Northern Trust Bank
Ocean Bank
Optimum Bank
Popular Community Bank
Professional Bank
Regions Bank
Sabadell United Bank
Space Coast Credit Union
SunTrust Bank
Terrabank, N.A.

TD Bank, N.A.
Totalbank
U.S. Century Bank
Wells Fargo Bank
Western Bank Puerto Rico
Zions Bank

LIFE INSURANCE COMPANIES
Allstate Insurance Company
American General Life Insurance Co.
Fortis Capital Corp. & Life Insurance
Company
Franklin Life Insurance Company
General American Life Insurance Co.
Independent Order of Foresters
John Alden Life Insurance Company
Kansas City Life Insurance Company
Lumberman's Life Insurance Company
Omaha Woodmen Life Insurance
Society
Standard Life Insurance Company
Sun Life Insurance Co. of America
CORPORATIONS
Church of Jesus Christ of the
Latter-Day Saints
Florida Power and Light Corp. (FPL)
JC Penny Corporation
Wendys International Corporation
Chevron U.S.A., Inc.
Johnson and Johnson Company
DEVELOPERS AND INVESTORS
Berkowitz Development Group
Bristol Group, Inc.
Franklin Street Properties
Flagler Development Corporation
Goldman Properties
Hampshire Real Estate Companies
Lennar Corporation
MDM Development, Inc.
Napolitano Realty and Harnap Corp.
Noble House Resorts and Hotels
Ocean Properties, Ltd.
Panther Real Estate
PLC Investments, LLC
R.K. Associates, Inc.
The Scott Robins Companies
Wometco Enterprises, Inc.

GOVERNMENT AGENCIES
Broward County School Board
City of Coral Gables
City of Miami Beach
City of Miami General Services
Administration
Federal Deposit Insurance Corp. (FDIC)
Federal Home Loan Mortgage Corp.
(FHLMC)
Florida Dept. of Environmental
Protection
Florida Department of Transportation
Florida Keys Aqueduct Authority
Miami-Dade Water and Sewer
Authority
Miami-Dade Co. -Aviation Authority
Miami-Dade Co. - County Attorneys
Office
Miami-Dade Co. - General Services Admin.
Miami-Dade Co. - Housing & Urban Dev.
Miami-Dade Co. - Public Works Dept.
Miami-Dade Co. - School Board
Nature Conservancy, Florida Chapter
South Florida Water Management District
United States Department of Justice
United Stated General Services
Administration
United States Postal Services
Village of Pinecrest

LAW FIRMS
Akerman, Senterfitt & Eidson
Barranco and Kircher, P.A.
Berman, Wolfe Rennart Vogel &
Mandler, P.A.
Colson Hicks Eidson, P.A.
Greenberg Traurig, P.A.
Gunster Yoakley Valdes-Fauli &
Stewart, P.A.
Holland & Knight
Kirkpatrick and Lockhart
Shutts & Bowen, LLP
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Steel Hector and Davis
Tabas, Freedman, Soloff, Brown, &
Rigali, P.A
Tripp Scott

Notable Properties Appraised
Miami-Dade County
Miami Seaquarium Virginia Key Miami Free Zone Global Trade Cntr Miami
Miami International Airport Miami Metropolitan Hospital of Miami Miami
City of Miami Correctional Facility Miami Spinnaker Marina North Miami
Country Club of Miami Golf Course Miami Virginia Key & Rickenbacker Marinas Key Biscayne
Mel Reese Golf Course Miami Waterways Yacht Basin Miami
Burger King Headquarters Waterford Miami Porto Vita Club and Spa Aventura
Doctors Hospital Coral Gables Ocean Steps Entertainment Center S. Miami Beach
Beacon Centre Development Miami Indian Creek Country Club Indian Creek
FBI Headquarters Miami BIV Tower Miami
Gables Waterway Executive Center Coral Gables Courthouse Tower Miami
Joes Stone Crab restaurant Miami Beach South Shore Hospital Miami Beach
Doral Ocean Beach Resort (formerly) Miami Beach SouthCom Headquarters Miami
Metro-Dade Bus Facility Miami
Fort Lauderdale/Broward County
Florida Medical Center (Hospital) Ft. Lauderdale
Jackson Marine Center Ft. Lauderdale
Las Olas Centre Office Building Ft. Lauderdale
Martha's Restaurant Hollywood
Various Luxury Single Family Homes Fort Lauderdale
Seneca Industrial Park Pembroke Park
Monroe County/Florida Keys
Marriott Key Largo Bay Beach Resort Key Largo
Islander Resort Islamorada
Hawk's Cay Resort, Marina and DRI Duck Key
Westin, formerly Hilton Resort and Sunset Key Island Key West
Little Palm Island Little Torch Key
Louis' Backyard Restaurant Key West
Ocean Key Resort Key West
Sloppy Joe's Bar Key West
Truman Annex - Navy Base Key West
Other Florida Counties
Jupiter Beach Resort Jupiter, Palm Beach County
La Playa Beach Resort Naples, Collier County
Sheraton Four Points Orlando, Orange County
Spring Hill Suites Tampa, Hillsborough County
Hilton Carillon Park St. Petersburg, Pinellas County
Outside of the United States
Various Single Family Homes Cat Cay, Bahamas
Single Family Home Casa de Campo, Dominican Republic
Sapphire Beach Resort St. Thomas, U.S. Virgin Islands
Hotel Site Grand Turks and Caicos Islands
Montego Beach Resort Montego Bay, Jamaica
Botany Bay Subdivision (400 acres) St. Thomas, U.S. Virgin Islands
Ocean Club Resort Grand Turks and Caicos Islands
Land lease under Ritz Carlton San Juan, Puerto Rico
Various Land Holdings St. Croix, U.S. Virgin Islands
Vacant Land West End, Grand Bahama Island
Buccaneer Hotel and Golf Course St. Croix, U.S. Virgin Islands

Description & Analyses Market Rent of Bayside Marketplace Land Parcel

DESCRIPTION &
ANALYSES

Purpose of the Appraisal
The purpose of this appraisal is to estimate the annual market rent of the land as though vacant as
of March 19, 2014 under two valuation scenarios. Scenario 1 assumes that development would
be subject to the same provisions stipulated in the existing leases to Bayside Center Limited
Partnership. Scenario 2 assumes that development would be subject to the modified provisions
stipulated in a Warrant Permit approved by the City of Miami Planning and Zoning Department
on January 10, 2014. In order to estimate the market rent, the market value of the land as if
vacant was also estimated. The terms fee simple interest and market rent are defined below and
the term market value is defined on the following page.

Client, Intended User and Use of the Appraisal
The intended user of this appraisal is the city of Miami (client). The intended use of this
appraisal is for setting an annual market rent for the subject property of the land as vacant as
identified herein. No additional intended users are identified or intended.

Definition of Real Property Interest Appraised
The real property interest appraised herein is that of the fee, defined as follows:
Fee Simple Interest: an absolute fee without limitations to any particular class of heirs,
but subject to the limitations of eminent domain, escheat, police power and taxation. An
inheritable estate.

Definition of Market Rent
Market Rent is defined as:
The most probable rent that a property should bring in a competitive and open
market reflecting all conditions and restrictions of the lease agreement, including
permitted uses, use restrictions, expense obligations, term, concessions, renewal
and purchase options, and tenant improvements (TIs).
1

1
The Dictionary of Real Estate, 5
th
Edition, page 121

Definition of Market Value

Market Value is the major focus of most real property appraisal assignments. Both economic and
legal definitions of market value have been developed and refined.
1
The Uniform Standards of
Professional Appraisal Practice (USPAP) states Market Value is a type of value, stated as an
opinion, that presumes the transfer of property (i.e., a right of ownership or a bundle of such
rights), as of a certain date, under specific conditions set forth in the definition of the term
identified by the appraiser as applicable in the appraisal.
2
This requires the appraiser to identify
the definition of market value and its authority. The definition that follows is the basis of the
valuation in this appraisal and the source is the Federal Register.
For example, the following definition of Market Value is used by agencies that regulate
federally insured financial institutions in the U.S.:
Market Value is defined as the most probable price which a property should bring in a
competitive and open market under all conditions requisite to a fair sale, the buyer and
seller each acting prudently, knowledgeably and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale as of a specified
date and the passing of title from seller to buyer under conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised, and acting in what he or she considers his
or her own best interest;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and
The price represents the normal consideration for the property sold unaffected by special or
creative financing or sales concessions granted by anyone associated with the sale.
3

This market value definition is referenced within the appraisal regulations of the following
governmental agencies;
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of
1989
Department of the Treasury
The Federal Reserve System (FRS)
Federal Deposit Insurance Corporation (FDIC)
Office of Thrift Supervision (OTS)
Office of Comptroller of the Currency (OCC)

1
Appraisal of Real Estate, 14
th
Edition, page 58
2
USPAP 2014-2015, page U-3
3
th
Edition, page 55

Location and Address

The subject property is located on the east side of Biscayne Boulevard (a/k/a US Highway No.
1), south of Port Boulevard, along the west side of Biscayne Bay, in the downtown area of the
city of Miami, Miami-Dade County, FL

Address: 401 and 501 Biscayne Boulevard
Miami, FL 33132

Legal Description

Lengthy. Refer to Addenda B.

Owner of Record

City of Miami
Department of F & D
Asset Management Division
444 SW 2
nd
Avenue
Miami, Florida 33130-1910

Source: www.miamidade.gov

History of the Subject Property

There have been no recorded sales of the subject property in the past five years. The subject
property is not under contract nor listed for sale.

Source: www.miamidade.gov

Site Data
The subject is an irregular 16.8539 acre site with frontage on Biscayne Boulevard, Port
Boulevard and Biscayne Bay consisting of a 13.0767 acre retail parcel and a 3.7772 sq. ft. garage
parcel. The subject property is accessible from the east side of Biscayne Boulevard and the south
side of Port Boulevard. The site is level and at approximate street grade. Utilities available to the
site are:
Electric: Florida Power and Light
Telephone: AT&T
Water: Miami-Dade County Water and Sewer Authority
Sewer Disposal: Miami-Dade County Water and Sewer Authority

Zoning
The subject property is zoned T6-8-O, Urban Core Open Transect Zone by the city of Miami,
Florida. This zoning district allows the highest density and greatest variety of uses, including
civic buildings of regional importance. It is characterized by a network of small blocks,
thoroughfares with wide sidewalks, steady tree planting and buildings set close to the frontage
with frequent doors and windows. The allowable residential density in this zoning is 150 to
1,000 units per acre. The allowed uses under the open zoning include, but are not limited to
residential, lodging, office, commercial, civic, civil support and educational.
This is a general description of the current zoning. However, the subject property was until
recently restricted to the density and uses as described under Scenario 1 below, with a zoning
modification approved in J anuary 2014 increasing the allowable building area as shown
under Scenario 2.
Land Area (sq. ft.) 734,156 734,156
Retail, Office,
Recreation
Retail, Office,
Recreation
Main Retail Building Area 267,000 267,000
Additional Retail Parking Liner 0 17,255
Additional Retail Area per Warrant 0 277,177
Less: Fire and Marina Offices 0 -4,470
Total Gross Area Excluding Parking 267,000 556,962
Parking Garage 420,000 636,660
Total Gross Area 687,000 1,193,622
Floor Area Ratio (FAR)* 0.94 1.63
* i ncl udi ng parki ng garage (thi s i s cal l ed "Fl oor Lot Rati o" i n the Ci ty of Mi ami Zoni ng Code)
Allowable Uses


Flood Zone

The subject property is located in Flood Zone AE. This identification was located on Flood
Insurance Rate Map, Community Panel No.12086C0314L, revised September 11, 2009. For
insurance purposes, a surveyor should be contacted to verify the exact zone by a flood
elevation certificate, as well as its impact on insurance.

Source: www.interflood.com


Real Estate Assessment and Taxes

Taxing Authority: Miami-Dade County
Assessment Year: 2013
Millage Rate: 23.1295
Folio Number: 01-0100-000-0523
01-0100-000-0522

Following is a summary of the assessments:

01-0100-000-0523 (Garage Parcel)

TAX ASSESSMENT
ANALYSIS ASSESSMENT
SQ.FT.
SIZE*
ASSESSMENT
PER SQ.FT.
Assessed Land Value $11,517,450 164,535 $70.00
Assessed Value of Improvements 5,282,550 269,579 $19.60
Total Assessed Value $16,800,000 269,579 $62.32

* This is the size as per the survey provided.

Outlined in red below is the area identified as tax folio 01-0100-000-0523 by the Miami-Dade
County Property Appraisers office.


01-0100-000-0522 (Retail Parcel)
TAX ASSESSMENT
ANALYSIS ASSESSMENT
SQ.FT.
SIZE*
ASSESSMENT
PER SQ.FT.
Assessed Land Value See footnote
1
569,621 N/A
Assessed Value of Improvements See footnote
1
303,597 N/A
Total Assessed Value $51,200,000 303,597 $168.64

* This is the size as per the survey provided.

Outlined in red below is the area identified as tax folio 01-0100-000-0522 by the Miami-Dade
County Property Appraisers office.

The two folio numbers above have a total land area of 16.85 acres. The Miami-Dade County
Property Appraiser does not indicate a size for the retail parcel, and shows the size of the garage
parcel at 3.77 acres (164,221 sq. ft.). The difference between this size and the size indicated by
the survey (3.7772 acres) is due to rounding.

1
There are not separate assessments for land and improvements for this tax folio number.

Neighborhood Overview

General Neighborhood Data

Location: Urban
Built Up: 100%
Growth Rate: Stable
Property Values: Increasing
Demand/Supply: In balance
Present Land Use: Mixed-use commercial and residential
Change in Present Land Use: Not likely
Predominant Use: Commercial on east side of Biscayne Boulevard; and
commercial and residential on west side of Biscayne
Boulevard
Property Compatibility: Above average
General Appearance of Properties: Above average
Appeal to Market: Very good

Adjacent Uses

East: Marina, Biscayne Bay and PortMiami
West: Multi-family residential, office and commercial
South: Bayfront Park, offices and hotel
North: American Airlines Arena

Linkages Distance Access

Public Transportation: Within a few blocks Excellent
Employment Centers: Within a few blocks Excellent
Expressway Access: 1/2 mile Very good
Miami International Airport: Five to seven miles Very good

Supply and Demand

This appraisal estimates the market rent and the market value of the subject site as though vacant
based upon the allowable uses and development provisions stipulated in the ground lease
(Scenario 1) and in the modifications of the January 2014 development order (Scenario 2).
Values are affected by supply and demand for the product type allowable on the subject property.
As the primary allowable use under both scenarios is retail, a Costar Analytics study was made
of the current market conditions for retail properties in the local and broader market areas. The
charts below indicate the results of this study, which show the historical trend for the last 10
years in net absorption (space leased minus space vacated), new deliveries and vacancy rates,
and average rental rates plotted against vacancy rates, for Downtown Miami retail properties

The charts below show the same information for the Miami-Dade County market.

The data shows that the market shocks of the recent recession hit the downtown retail market
hard, pushing vacancy rates above the 10% level, and that the growth in demand during the
recovery of the last three years or so has been in sufficient to bring vacancy rates down
significantly from those levels. As a result, average rental rates have declined significantly from
the peak levels observed before the recession. Across the broader Miami-Dade County market,
the rise in vacancy rates resulting from the recession was less severe, and the recovery has
generated sufficient demand to bring vacancy rates back down below the 5% level. As a result,
rental rates have managed to recover and even surpass their pre-recession levels.

The Costar data indicates that market conditions for retail properties in the downtown area are
weaker than across the broader market. However, it should be noted that much of the retail
inventory in downtown Miami consists of neighborhood-oriented retail uses which depend on
occupancy levels and disposable income levels among neighborhood households. The subject
site being a large, prominent bay front site, it is likely to attract development of retail uses with a
much wider trade area (the geographic area from which a retail property draws most of its
customers). This means that market conditions for local neighborhood retail properties are a poor
indicator of the strength of demand for a destination type retail project at the subject location.
The existing Bayside Marketplace is a large open-air retail center with 140 stores and
restaurants, including many national and regional retailers. Notably, the Bayside Marketplace
marketing materials claim that it is the most visited attraction in Miami and that 63% of its traffic
consists of non-local residents. This suggests that much of the demand for retail uses at the
subject location is likely to come from outside of the local area. To that end, a review of recent
trends in Miami International Airport and Port Miami passenger arrivals provides some insight
into potential retail demand at the subject site.

The chart below shows the historical trend in combined domestic and international passenger
traffic at Miami International Airport. It shows very robust increases during the last four years
(averaging 4.74% per year since 2009 on a compound basis).

The chart below shows the historical trend in passenger traffic at Port Miami. Note that the year-
to-date totals for prior years incorrectly reflect results through June and not through September,
the latest month available for 2013. Considering year-to-date results through September,
passenger arrivals at the cruise port declined in 2009, increased in 2010, declined again in 2011
and 2012, and increased in 2013, with figures for 2013 still lagging behind 2008 levels. Some of
these declines are attributable to the effects of the recession, and some to a repositioning of some
cruise ships from Port Miami to Port Everglades in Fort Lauderdale. However, it is important to
note that Port Miami, located just a few hundred yards across the bay from the subject property,
remains the busiest cruise port in the world. Notably, the second and third busiest cruise ports are
Port Everglades (about 26 miles up the coast) and Port Canaveral (near Cape Canaveral, about
200 miles up the coast).

Also relevant in this regard is the performance of area hotels. Though hotels are not an allowed
use at the subject property (if they were it is likely that the highest and best use would include a
lodging component, which would result in a change in the value estimate), the recent
performance of area hotels does provide an indication of the strength of potential demand for a
retail/recreation complex at the subject site that would draw a significant share of its customers
from outside the area. To that end, the following chart plots average room rates (Average Daily
Rare, or ADR) against occupancy rates for Miami-Dade County hotels since 2007. After a sharp
decline in 2009 when the effects of the recession and market decline most severely affected the
areas lodging industry, both ADR and occupancy levels have made strong and steady gains
during the past four years. The robust increases in room rates occurring simultaneously with
rapid gains in occupancy levels (which under more stable market conditions would typically
decline with increases in room rates) provide evidence of very strong growth in demand for hotel
rooms. This suggests that the outlook for demand growth for a retail/recreation complex at the
subject location with a significant tourist orientation is very strong.

72.4%
71.4%
65.2%
70.4%
75.6%
76.5%
77.9%
$158.41
$160.14
$140.73
$143.98
$152.95
$163.44
$176.66
$0
$50
$100
$150
$200
$250
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
2007 2008 2009 2010 2011 2012 2013
Occupancy and ADR
Miami-Dade County
Occupancy (L) ADR (R)

The subject property is located with frontage on Biscayne Bay and is improved with Bayside
Marketplace, a tourist oriented retail center. Also positively affecting the subject property is the
resurgence in the sale of residential condominium units located along the west side of Biscayne
Boulevard within buildings that just a few years prior were virtually vacant. The sale and leasing
of these condominium units has increased the residential population of the CBD, which
previously was minimal. Retail uses at the subject property will continue to benefit from this
increased residential activity.

It should also be noted that there is likely to be demand for parking at the subject location
beyond the parking demand generated by development on the subject property (i.e., from
adjoining and nearby uses). To that end, current market conditions were discussed with parking
operators experienced in the downtown area to assess potential demand. The consensus is that
there is significant additional demand for parking from events at the American Airlines Arena,
from increased activity of restaurant patrons (supported by the increase in the local residential
population), and from a general improvement in economic conditions. This could be sufficient to
support additional parking capacity beyond what would be required to support a development on
the subject property.

Conclusion

Recent trends in retail activity, increases in airport passenger arrivals and tourist traffic, the very
large volume of passenger traffic going through the nearby cruise port, and the significant
growth in the population of occupied residential condominiums in the neighborhood, all make
for a very positive outlook for demand for a large retail/recreation complex with a tourist
orientation at the subject location.

The existing improvements were developed in 1987, 27 years prior to the valuation date. It was
developed as a festival marketplace, a type of retail center conceived as a key part of the
downtown redevelopment strategy of many American cities during the 1970s and 1980s. The
concept included, among other elements, an emphasis on local tenants. During that time, the
retail industry has seen significant changes, with the design and format of large retail centers
undergoing significant evolution. As a result, many older centers suffer from various degrees of
functional obsolescence as their design has fallen further behind the latest trends, limiting their
maximum achievable rents. In addition, the subject developments tenant mix and customer
profile has evolved significantly during that time, with a larger share of national retailers and
restaurants in the tenant mix. It is likely that if a new center were to be constructed on the subject
site today, the target market (and therefore the design) would be different.


Exposure Time

Exposure time is the estimated length of time that the property interest being appraised would
have been offered on the market prior to the hypothetical consummation of a sale at market value
on the effective date of the appraisal. Exposure time is a retrospective opinion based on an
analysis of past events assuming a competitive and open market
1
.

This analysis considers the exposure time of the vacant land at a market related price such as the
estimated market value herein. In estimating exposure time, sales are analyzed, real estate
brokers and property owners are interviewed and statistics from published surveys are
considered. The subject property site is very desirable given the improvement in the market.
Retail, restaurant and parking facilities are very desirable in the Downtown area, due to the high
density surrounding uses and the very limited waterfront land.

The exposure time for the subject as vacant land with the specific allowable uses is estimated at
nine to 12 months. This estimate considers that the property would have been properly marketed
and priced. If the property were not to have been priced correctly or marketed through proper
channels, then it is not likely that the estimated market value nor the estimated exposure time
would have been achieved.

Typical Purchaser of the Subject

The subject is being appraised as vacant land. The immediate area of the subject consists of
office buildings with first floor retail, residential condominiums, hotels and restaurants. Also a
significant presences is the American Airlines Arena and the waterfront. The typical purchaser
of the subject as vacant land would be a retail developer with experience in developing large
high-end retail properties.

1
Uniform Standards of Professional Appraisal Practice (USPAP) 2014-2015 Edition, Page U-3
Highest and Best Use

The site is valued for its highest and best use, which may be defined as follows:

That reasonable and probable use that will support value
as defined as of the effective date of the appraisal.

In analyzing the highest and best use, the following four questions are answered:

1. Legally Permissible. What uses are legally permitted on the subject site with
respect to zoning ordinances and deed restrictions?
2. Physically Possible. What uses of those legally allowed are physically possible
on the subject site?
3. Financially Feasible. Of those uses determined to be physically possible and
legally permissible, which ones will produce a positive return?
4. Maximally Productive. Of those that are feasible, legally permissible, and
physically possible, which will produce the highest rate of return or value?

As Vacant

The subject property is being appraised as vacant land. Zoning is T6-8-O, Urban Core Open
Transect Zone by the city of Miami, Florida. However, the subject property is subject to
development parameters stipulated in the original land lease limiting the developable building
area to 687,000 sq. ft., representing a floor area ratio (FAR) of .94. These parameters correspond
to Scenario 1. In January 2014, a modification to these development parameters was approved,
increasing the total developable building area to 1,1,193,622 sq. ft., representing an FAR of 1.63.
These parameters correspond to Scenario 2. Under both scenarios, allowable uses are limited to
retail, office and recreation uses. This includes restaurants, assembly/meeting space and other
similar uses. Excluded under both scenarios are residential and lodging uses.

Under current market conditions, the most profitable use for urban waterfront sites zoned for
high density typically include a mix of uses including residential and/or lodging, with a
significant retail component at the ground level. Therefore, the fact that development of
residential and lodging uses on the subject site is prohibited has a significant impact on highest
and best use. Given these constraints, the most profitable development is likely to be a mixed-use
complex consisting of predominantly retail and recreation uses.


As Improved

The subject property is being appraised solely as vacant land and therefore an analysis of the
highest and best use as improved is not applicable.

However, given the age and design versus the change in the subject property surrounding area, it
is not likely that the existing design would reflect what would be built today.

Appraisal Process

An analysis of three separate approaches to value; sales comparison approach, cost approach,
and income capitalization approach, will be considered to estimate the value of the subject
property. Although these three approaches to value are considered within every appraisal report,
they may not be applicable to each and every property being appraised.

The cost approach is based on the principle of substitution which states that an informed
purchaser would not pay more for a property than the cost of reproducing a property with the
same utility. The cost approach can often yield reliable estimates of value for new construction.
This approach entails estimating the cost of producing the improvements, deducting an estimate
of depreciation, then adding the value of the site as if vacant. To this value an entrepreneurial
incentive is added to arrive at the estimated value by the cost approach.

The income capitalization approach is based on the concept that value is created by the
expectations of future benefits and higher earnings should result in higher values. Income
producing real estate is purchased for the right to receive future income. The income
capitalization approach consists of methods to analyze a property's capacity to generate income,
and a reversion, and convert these monetary benefits into an estimate of value.

The sales comparison approach is based on the principle of substitution which suggests that,
within competitive markets, similar products will realize similar prices. Inherent in this concept
is the premise that a purchaser would not pay more for a property than the cost to acquire another
property with the same amenities and utility.

The final steps in the appraisal process are review and reconciliation of the data and conclusions.
In reaching a final conclusion of value, the entire process involving the approaches that were
estimated must be reviewed for accuracy, completeness and consistency. After analysis,
evaluation and reconciliation of the indications a value is estimated. The essence of this final
reconciliation should be a defensible and rational conclusion of value.

The only approach used in this appraisal is the sales comparison approach to estimate the As Is
value of the land only as the basis for estimating the market rent. The income capitalization
approach and the cost approach are not applicable to the valuation of the subject property.

Cost Approach Market Rent of Bayside Marketplace Land Parcel
Cost Approach

The basis of the cost approach is the principle of substitution. This principle suggests that a
prudent buyer would not pay more for a property than the cost to acquire a similar site and
construct comparable improvements.
Following are the procedures for preparing the cost approach.

1. Estimate the value of the land as though vacant and available to be developed to its
highest and best use.
2. Determine which cost basis is most applicable to the assignment: reproduction cost or
replacement cost.
3. Estimate the direct (hard) and indirect (soft) costs of the improvements as of the effective
appraisal date.
4. Estimate an appropriate entrepreneurial profit or incentive from analysis of the market.
5. Add estimated direct costs, indirect costs, and the entrepreneurial profit or incentive to
arrive at the total cost of the improvements.
6. Estimate the amount of depreciation in the structure and, if necessary, allocate it among
the three major categories: physical deterioration, functional obsolescence, and external
obsolescence.
7. Deduct the estimated depreciation from the total cost of the improvements to derive an
estimate of their depreciated cost.
8. Estimate the contributory value of any site improvements that have not already been
considered. (Site improvements are often appraised at their contributory value - i.e.,
directly on a depreciated-cost basis - but may be included in the overall cost calculated in
Step 3 and depreciated, if necessary).
9. Add land value to the total depreciated cost of all the improvements to develop the
market value of the property.
10. Adjust for personal property (e.g., furniture, fixtures, and equipment) or intangible assets
that are included in the appraisal.
11. Adjust the value conclusion, which reflects the value of the fee simple estate, for the
property interest being appraised to arrive at the indicated value of the specified interest
in the property.
1

As the subject property is being appraised as unimproved vacant land, the cost approach is not
applicable.

1
The Appraisal of Real Estate, 14th Edition, 2013, Pages 568 and 569
I ncome Capitalization Approach Market Rent of Bayside Marketplace Land Parcel

Income Capitalization Approach

Income producing real estate is typically purchased as an investment, and from an investors
point of view earning power is the critical element affecting property value. One basic
investment premise holds that the higher the earnings, the higher value, provided the amount of
the risk remains constant. An investor who purchases income-producing real estate is essentially
trading present dollars for the expectation of receiving future dollars. The income capitalization
approach to value consists of methods, techniques, and mathematical procedures that an
appraiser uses to analyze a propertys capacity to generate benefits (i.e., usually the monetary
benefits of income and reversion) and convert these benefits into an indication of present value.
1

In the income capitalization approach, an appraiser analyzes a propertys capacity to generate
future benefits and capitalizes the income into an indication of present value. The principle of
anticipation is fundamental to the approach.
2

1
th
Edition, 2013, Page 439
2
Ibid., 439
Sales Comparison Approach Market Rent of Bayside Marketplace Land Parcel

The sales comparison approach is based on the principle of substitution. The principle of
substitution holds that the value of property tends to be set by the cost of acquiring a
substitute or alternative property of similar utility and desirability within a reasonable
amount of time.
1

In the Sales Comparison Approach, an opinion of market value is developed by comparing
properties similar to the subject property that have recently sold, are listed for sale, or are
under contract (i.e., for which purchase offers and a deposit have been recently submitted). A
major premise of the sales comparison approach is that an opinion of the market value of a
property can be supported by studying the markets reaction to comparable and competitive
properties.

Qualitative analysis is a relative comparison process without mathematics. Sales are ranked
based upon their desirability as compared to the subject. Comparisons can be expressed as
plus or minus as opposed to dollar or percentage adjustments.

Quantitative analysis is the process of applying mathematical techniques. Sales are adjusted to
the subject property on a dollar or a percentage basis. One method of supporting adjustments
is through paired data analysis. This method analyzes two sales and attributes the difference
in their sales prices to the characteristic which is different. This analysis requires an
abundance of sales data which is frequently not available.

Qualitative analysis is used herein to estimate a value by the sales comparison approach.
Characteristics of the sales considered superior to the subject are given a minus (-) adjustment.
Those characteristics of the sales considered inferior to the subject are given a plus (+)
adjustment. Each sale is given an overall adjustment indicating how it compares to the subject.

On the following page is a grid of the sales used for comparison to the subject property.

1
The Appraisal of Real Estate 14
th
Edition, 2013, page 379

Vacant Land Sales Grid

Following is a grid of the comparable properties used for comparison to the subject property. The
reader should note that numerous sales of development sites were considered, but most sales
were properties purchased for development of high-rise residential or lodging uses, or projects
involving significant lodging and/or residential components. The analysis herein focuses
primarily on the five sales below, all of which are properties purchased for retail/commercial
development.

Sale
No.
Sale
Date Location Zoning
Sale
Price
Sq. Ft.
Size
Price /
Sq. Ft.
Buildable
Sq. Ft
Floor
Area Ratio
(FAR)
Price /
Buildable
Sq. Ft.
1 1/14 3055 N. Miami Avenue
Miami
T6-24-O $8,200,000 185,131 $44 203,000 (a, b) 1.10 (a, b) $40
2 9/13 246 NE 26
th
Terrace
Miami
T6-36A-O $8,834,700 58,645 $151 703,740 (c, a) 12.0 (b, c) $13
3 11/12 NEC of NW 18
th
Street
and 117
th
Avenue
Sweetwater
C $31,500,000 635,748 $50 417,000 (d) .66 (d) $76
4 3/12 644 Andrews Avenue
Fort Lauderdale
RAC-CC $6,500,000 83,123 $78 410,000 (a, b) 4.93 (a, b) $16
5 6/11 13401 South Dixie Highway
Pinecrest
BU-1A $11,500,000 215,186 $53 51,836 (d) .24 (d) $222
Subj.

401 and 501 Biscayne
Boulevard
Miami
T6-8-O* 734,156 687,000
(Scenario 1)

1,193,622
(Scenario 2)
.94
(Scenario 1

1.63
(Scenario 2)

On the following page is a sales map indicating the subject property and the above sales,
followed by data sheets for each sale.

(a) Based on proposed building size
(b) Includes parking structure
(c) Based on maximum allowable under zoning (proposed building size unknown)
(d) Based on proposed building size, which does not include a parking structure (surface parking only)

* Allowable uses and development parameters are superseded by those stipulated by existing ground lease (under
Scenario 1) and by the January 2014 zoning approval (under Scenario 2)


Vacant Land Sales Map

Comparable Land Sale 1

Location

3055 North Miami Avenue
Miami, FL 33129
Property Type

Vacant Commercial
Square Feet

185,131
Price/Sq.Ft.

$44.29
WAR No.

303578
Recording Information
Sale Price: $8,200,000
Sale Date: January 2014
ORB/Page: 28994/4832
Grantor: DDR Miami Avenue, LLC
Grantee: Wal-Mart Stores East, LP
Legal Description: Lengthy legal description. Refer to the recording instrument.
Folio No.: 01-3125-078-0060

Financing & Prior Sale
Financing: All cash to the seller
Prior Sale: None in the past five years
Property Description
Zoning: T6-24-O, Urban Core Open Transect Zone by the city of
Miami, FL
Shape: Trapezoidal
Topography: Grade level
Comments
This parcel is located at the southeast corner of North Miami Avenue and NE 31st Street, at the
south end of the Midtown Miami complex, a large mixed-use urban development project. The
purchaser is Wal-Mart Stores, a major national retailer with plans to construct a 174,390 sq. ft.
store with an attached parking structure for 577 cars. Under an agreement with the seller, a
14,809 sq. ft. portion of the site is to be conveyed back to the seller as a "retail liner" property to
be improved with retail storefronts lining the ground level of the Wal-Mart store. The seller also
retained a right of repurchase and first refusal. The land area shown reflects deduction of the
retail liner property. The total size of the structure to be built is 203,000 sq. ft., for a total Floor
Lot Ratio of 1.1.


Location

246 NE 26th Terrace
Miami, FL 33137
Property Type

Vacant Commercial
Square Feet

58,645
Price/Sq.Ft.

$150.65
WAR No.

303165R
Sale Date: September 2013
ORB/Page: 28700/2265 (Parcel 1); 28700/2268 (Parcel 2); 28784/815
(Parcel 3); 28840/2604 (Parcel 4)
Grantor: Mecca, LLC (Parcel 1); Mecca III, LLC (Parcel 2); Carlisle
Investments of South Florida, LLC (Parcel 3); Townpoint, Inc.
(Parcel 4)
Grantee: Fairholme Midtown Association, LLC
Folio No.: 01-3230-022-0060 (Parcel 1); 01-3230-022-0090 Parcel 2); 01-
3230-022-0110 (Parcel 3); 01-3230-020-0150 (Parcel 4)
Prior Sale: Parcel 3 (5,000 sq. ft. lot) was purchased by the seller in May
2013 on a short sale.
Zoning: T6-36A-O, Urban Core Open Transect Zone by the city of
Miami, FL
Shape: Rectangular
Comments
This property is located on the west side of Biscayne Boulevard, with double corners and
significant additional frontage on NE 26th Street and 26th Terrace. It is an assemblage of four
contiguous parcels acquired from three different sellers on June 18, 2013 (Parcels 1 and 2 from
related sellers), August 15, 2013 (Parcel 3) and September 20, 2013. The purchaser is an
investment and a mutual fund company who will construct an office building for partial owner
occupancy.

Location

Northeast corner of NW 18th
Street and NW 117th
Avenue/Florida Turnpike

Sweetwater, FL 33172
Property Type

Vacant Commercial
Square Feet

635,748
Price/Sq.Ft.

$49.55
WAR No.

303066R
Sale Price: $31,500,000
Sale Date: November 2012
ORB/Page: 28361/5000
Grantor: Procacci Crossroads 117, LLC
Grantee: IKEA Property, Inc.
Folio No.: 25-3031-029-0014

Zoning: C, Commercial District by the city of Sweetwater, FL
Shape: Rectangular
Comments
This is the sale of an approximately 15 acre site adjacent to the high traffic Dolphin Mall with
visibility from the Florida Turnpike. The buyer is IKEA, a major international retail chain which
is planning to build their second largest store. The sellers sold the property because they received
such a substantial offer. IKEA has announced they plan to build a 417,000 sq. ft. store, for a
Floor Area Ratio of .66. There will also be 1,500 parking spaces.


Location

644 Andrews Avenue
Ft. Lauderdale, FL 33301
Property Type

Vacant Commercial
Square Feet

83,123
Price/Sq.Ft.

$78.20
WAR No.

303162R
Sale Date: March 2012
ORB/Page: 48602/1025
Grantor: Legacy Development of Broward, LLC
Grantee: Broward County
Legal Description: Parcel A, COCA-COLA SUBDIVISION, Plat Book 71, Page 2
Folio No.: 50-42-10-80-0010

Zoning: RAC-CC, City Center District by the city of Ft. Lauderdale, FL
Shape: L Shape
Comments
This site is located in downtown Fort Lauderdale. It was improved with a parking lot and an
older structure. The site was purchased by Broward County for the construction of a 410,000 sq.
ft. parking garage with 497 spaces. The site was chosen following an open bid process. Based on
the proposed design the price paid equates to $15.85 per buildable sq. ft. and $13,000 (rounded)
per space.


Location

13401 South Dixie
Highway

Pinecrest, FL 33156
Property Type

Vacant Commercial
Square Feet

215,186
Price/Sq.Ft.

$53.44
WAR No.

302776R
Sale Price: $11,500,000
Sale Date: June 2011
ORB/Page: 27718/130
Grantor: ESF Holdings, LC and Joseph C. Hallet and Jeffrey L. Sauey
Grantee: Publix Super Markets, Inc.
Legal Description: Tract B, HALLET SUBDIVISION, as recorded in Plat Book
92, Page 19
Folio No.: 20-5015-034-0070

Zoning: BU-1A, General Business District by the Village of Pinecrest,
FL
Shape: Elongated
Comments
This sale is the site of a former automobile dealership. It consists of an almost rectangular site
located along the east side of South Dixie Highway (U.S. Highway No. 1), north of SW 136th
Street within the Village of Pinecrest. The property still has the dated automobile dealership
buildings, but it has been closed for some time. The buyer is a large chain of grocery stores in
Florida. The purchase contract was signed towards the end of 2010 and was contingent on the
purchaser being able to obtain city approvals to build a store. Completed in 2012, the new one-
story grocery store building has a gross building area of 51,836 sq. ft., for an actual Floor Area
Ratio of .24.

Adjustments to Comparable Sales

On the following page are grids which illustrate qualitative adjustments used to compare the
comparable sales to the subject property. Percentage adjustments were not utilized. In order to
utilize percentage adjustments it would be necessary to pair (compare) sales to extract value
differences. This is difficult as there is normally insufficient data to provide pairings for all value
differences. Below is a grid which illustrates the adjustments made. A plus (+) sign indicates the
unit of comparison of the sale must be adjusted upward as that characteristic is inferior to the
subject. A minus () sign indicates the unit of comparison of the sale must be adjusted downward
since the characteristic is superior to the subject. An equal (=) sign indicates the comparable sale
characteristic is similar to the subject.

After considering the individual differences, either a plus (+), minus () or equal (=) sign has
been placed in the "Overall" column. This indicates the overall adjustment that the sale would
require as compared to the subject property.

The analysis separately considers the adjustments with respect to the two valuation scenarios
previously described. For each scenario, adjustments are considered both in terms of price per sq.
ft. of land, and in terms of price per buildable sq. ft. (sq. ft. of building area planned for the site
or allowed under zoning). The indications from the two methods are then reconciled to derive an
overall value indication.


Adjustments With Respect to Scenario 1

Based on Land Area

Sale
No.
Price/
Sq. Ft of
Land
Conditions
of Sale
Market
Conditions Location Zoning*
Size/
Shape
Overall
Adjustment
1 $44 + + + = + + + - - - / = + + +
2 $151 = = + + - - - - - / = - - -
3 $50 = + + + = = / = + + +
4 $78 = + + + - - - - / = -
5 $53 = + + + = - / = + +

*Considers subjects development constraints under Scenario 1.

Based on Buildable Square Feet

Sale
No.
Price/
Buildable
Sq. Ft
Conditions
of Sale
Market
Conditions Location Zoning**
Size/
Shape Other
Overall
Adjustment
1 $40 + + + = + + + - - / = = + + +
2 $13 = = + + - - - - / = + + + + + + +
3 $76 = + + + = = / = - - - =
4 $16 = + + + - - - / = + + + + +
5 $222 = + + + = - / = - - - - - -

**Considers subjects development constraints under Scenario 1, and excludes consideration of allowable density
(already reflected in the price per buildable sq. ft.)

Analysis of Adjustments
(Scenario 1)

Following is the discussion and comparison of various characteristics of the sales as compared to
the subject property. The adjustments shown on the previous page were made both with respect
to the price per sq. ft. of land area (based on the land area of the subject property and the
comparable sales), and with respect to the price per buildable sq. ft. (based on the allowable or
proposed building size).

Financing:
The financing of the sales did not indicate any adjustments of their sale prices are warranted for
favorable financing. The sales were all financed with loans at or near market rates, or purchased
for all cash.

Conditions of Sale:
This category considers if the comparable sales were arms length. An arms length sale means
the buyer and sellers each acted prudently, knowledgeably, and were under no necessity to buy
or sell, i.e., a sale that is other than a forced or liquidation sale. Also considered are if any of the
sales were purchased by an adjoining owner, whereby a premium was paid. None of the sales
required adjustment for this category. However, Sale 1 requires a positive adjustment for
conditions of sale because under the agreement, the seller retained rights of re-purchase and first
refusal, and because the deal required the buyer to convey back to the seller a portion of the site
after completion of development.

Market Conditions (Time):
This adjustment considers current market conditions as compared to market conditions in place
at the time of the respective sale. Sales selling when market conditions were inferior were
adjusted upward. Sales selling when market conditions were similar did not require adjustment.
Sales 1 and 2 sold within the last year under market conditions similar enough that no adjustment
is indicated. Sales 3, 4 and 5 sold in 2011 and 2012 and values have increased since then.

Location:
Sales considered inferior to the subject were adjusted upward and sales considered similar did
not require an adjustment. The subject property is located in the Central Business District (CBD)
of the City of Miami and has frontage on Biscayne Bay. These are desirable characteristics
making the subject property superior to all of the sales.

Zoning:
The subject property has a T6-8-O zoning by the City of Miami, Florida. However, this appraisal
estimated the land value based upon the allowable use of 267,000 square feet of retail area and a
420,000 square foot garage. Based on this, the FAR for the subject property is .94 which is lower
than what would be allowed by the T6-8-O zoning district. Sales 1, 2 and 4 require negative
adjustments for zoning. Sale 1 was purchased for development of a retail/garage complex at a
slightly higher density, and under a zoning district that permits a wider variety of uses (including
retail liner space at the ground floor of the parking garage). Sales 2 and 4 have a much higher
density zoning also permitting a wider variety of uses. Note that the zoning adjustments with
respect to the prices per buildable sq. ft. do not reflect allowable density, because density is
already reflected in the price per buildable sq. ft. As an example, consider two sites that sell for
the same price and are identical in every respect except allowable density. Though the sale price
per sq. ft. of land will be the same, the sale price per buildable sq. ft. will be lower for the site
that has a higher allowable density. Therefore, the zoning adjustments with respect to buildable
sq. ft. consider only the differences in allowable uses.

Size and Shape:
The size adjustment is based on the principle of economies of scale whereby larger sites tend to
sell for less per square foot. Smaller sites were considered superior and adjusted downward, and
the one sale similar in size was not adjusted. The subject is larger than all of the sales except Sale
3 which is similar in size. Sales 1, 2, 4 and 5 therefore require negative adjustments. With respect
to shape, the subject has an irregular shape which at smaller sizes would make it inferior to a
square or rectangular site, but due to its large size the sites irregular shape would not place
significant constraints on development. This is especially true given the subjects waterfront
location. Therefore, no shape adjustment is indicated.

Other:
For the adjustments with respect to prices per buildable sq. ft., an additional set of adjustments is
required (shown in the other category). These adjustments consider the fact that the price per
buildable sq. ft. on Sales 3 and 5 do not reflect a parking garage because these sales are in
suburban locations where parking could be provided via surface parking lots. As a result, the
building area and therefore the price per buildable sq. ft. do not reflect a parking structure.
These prices per buildable sq. ft. require negative adjustments because if the building size had
included a parking garage the price per buildable sq. ft. would be lower. The price per buildable
sq. ft. for Sale 2 is based on the maximum allowable density as per the zoning code (the actual
size of the proposed building could not be confirmed). The zoning for Sale 2 allows an FAR of
12.0 (including any parking structure). This is significantly higher than the density of
development allowed for the subject, and results in a much lower price per buildable sq. ft. than
if Sale 2 had the same FAR of .94. Sale 2 therefore requires a large positive adjustment.
Similarly, the size of the proposed structure (including garage) in Sale 4 is much larger than what
is allowed for the subject. This sale also requires a positive adjustment.
Conclusion of Value
(Scenario 1)

The sales comparison approach compared similar properties to the subject property and
adjustments were made for the pertinent characteristics. Based on these comparisons a value was
estimated for the subject property.

Sale prices of the five comparable land sales used range from $44 to $151 per square foot of
land. At the lower end of the price range are Sales 3 ($50 per sq. ft.) and 5 ($53 per sq. ft.) which
are suburban locations acquired for large retail use, and Sale 1 ($44 per sq. ft.) which is an urban
location but inferior to the subject. Sale 4 ($78 per sq. ft.) was acquired to construct a parking
garage which is similar to one of the uses allowed on the subject property. Though the subject
benefits from a superior location and this sale occurred under weaker market conditions, these
factors are offset by Sale 4s superior zoning (permitting both higher density and a wider variety
of uses) and smaller size. Overall, Sale 4 is considered superior.

The adjustments indicate that the subject would achieve a sale price per sq. ft. of land above
Sales 1, 3 and 5 (a range of $44 to $53) and below Sales 2 and 4 (a range of $78 to $151). A
value per sq. ft. of $65 to $70 per sq. ft. of land times 734,156 sq. ft. equates to a value of
$48,000,000 to $51,000,000. The analysis would support a value estimate of $50,000,000.

The alternative analysis based on buildable sq. ft. indicates that the subject would achieve a sale
price per buildable above Sales 1, 2, and 4 (a range of $13 to $40), below Sale 5 at $222 and near
Sale 3 at $78. The value indication of $50,000,000 by analysis of price per sq. ft. of land equates
to a price per buildable sq. ft. of $73 (based on the 687,000 of buildable sq. ft. under Scenario 1),
which is supported by the alternative analysis of price per buildable sq. ft.


Also considered are the following listings:

Listing
No. Address
Asking
Price
Land Size
(Sq.Ft.)
Price/
Sq.Ft. Zoning
1 Okeechobee Rd. and Hialeah
Gardens Blvd.
$35,000,000 1,084,644 $32 B-2
2 NW 41
st
St and NW 112
th
Ave $32,750,000 1,110,780 $29 CC
3 NW 102
nd
Ave.
and NW 66
th
St
$16,200,000 362,855 $45 IC
4 7400 Biscayne Blvd $14,171,250 135,391 $105 T5-O
5 826-932 NW 103
rd
St $14,000,000 196,020 $71 B-3
6 11240 Biscayne Blvd $9,100,000 140,263 $65 BU-1A/
RU-3M
7 7790 SW 87
th
Ave $8,200,000 102,366 $80 AU

The subject property is superior in location to all of these listings and inferior in zoning to
Listing 4.

Of note, the 2013 assessed land value for the garage parcel is $70 per square foot (see page 34).
Based on a typical assessment ratio of 85%, the implied market value is $82 per square foot ($70
sq. ft. .85) for the garage site having no water frontage and being less desirable than the retail
portion. While this is not a market indication, it does provide a value reference point.

Sale 4 was purchased to construct a 497-space garage with a price paid of $13,000 per space.
The subject garage has 1,156 spaces and applying the $13,000 per space indicates a value of
$15,000,000 (rounded). The garage parcel has 3.777 acres (164,535 sq. ft. per the Miami-Dade
County Property Appraiser). Applying the price per buildable space indicated by Sale 4 yields a
value indication of $15,000,000 or $92 per sq. ft. of land for the subject garage parcel. However,
it should be noted that the garage proposed for Sale 4 also includes some ground floor retail liner
space which, due to the higher rents that street retail space is able to achieve in downtown
locations, would have increased the value of that project in comparison to an otherwise similar
project with only a parking garage.

Based on the analysis, a value of $50,000,000 is estimated under Scenario 1. Based on the total
land area of 734,156 sq. ft., this equates to a value of $68 per sq. ft.

Annual Market Rent of the Land as Though Vacant
(Scenario 1)

On the previous pages, a market value was estimated for the subject property as vacant land. In
addition to estimating the vacant land, required was an estimate of the annual market rent.
Market rent can be estimated by either, or both of two methods; comparison of comparable land
leases and/or applying a land capitalization rate to the estimate land value. The subject is a large
and unique property and there are insufficient current land leases of comparable properties to
make this method reliable. There is better data of large land sales that can be utilized to estimate
a market value. To the estimated market value is then applied a land capitalization rate.

Land capitalization rates can be extracted from comparable sales and can also be supported by
investor surveys. The grid below is a sample of capitalization rates for triple net properties all
which are smaller than the subject property. Comparable properties that are purchased with
national tenants tend to have lower capitalization rates based on being a secure investment with
lower risk. The subject property, as improved with a large retail use and parking garage, would
have minimal risk as the lessee would be expected to make payments to protect their leasehold
interest and likely a substantial investment.

Below is a table of overall capitalization rates for triple net leased properties to national tenants.

It is important to note that the subject property is much larger than all the sales above and as a
result would be considered to have greater risk and thereby have a higher land capitalization rate.
Address City Name Sale Date Cap Rate
150 NW 180
th
Ave Pembroke Pines Chase Bank 3/13 4.90%
7999 Pines Blvd. Pembroke Pines TD Bank 11/12 5.50%
17355 Biscayne Blvd Miami Houstons 12/12 3.94%
2391 W 68th St Hialeah CVS 9/12 5.85%
1000 E Tarpon Ave Tarpon Springs CVS Ground Lease 2/12 5.50%
4808 Coconut Creek Parkway Coconut Creek Regions Bank 5/13 5.10%
15050 Biscayne Boulevard North Miami Walgreens 3/13 5.95%
14190 SW 26
th
Street Miami Walgreens 2/13 6.79%
12290 Biscayne Boulevard North Miami BankUnited 12/12 5.59%
10760 Biscayne Boulevard Miami JPMorgan 9/10 6.50%
9801 South Dixie Highway Pinecrest Staples 3/11 5.75%
2400 S. University Dr. Davie PNC Bank 12/13 5.00%

Also considered was a 9.01-acre site at 3355 NW 22
nd
Street Road which is improved with a
25,571 square foot rental car facility. The property was listed for sale in 2011 and taken off the
market in July 2013, the last asking price being $12,616,592. The property is net leased through
May 2012 with a rent (inclusive of the improvements) of $883,161 per year with annual
escalations. Based on the asking price of, the implied overall capitalization rate was 7%. Since it
did not sell at the asking price, this is an indication that the market value was likely lower, and
therefore the overall capitalization rate would have been higher than 7% if a sale at market value
had been realized.

In addition to the overall rates on the previous page from market transactions also reviewed were
investor surveys. Below is a survey published by RealtyRates.com of land capitalization rates for
various property types.

The survey above is for land lease rates based on the 4
th
Quarter of 2013, and published in the 1
st

Quarter of 2014. The capitalization rates range widely from 2.82% to 16.24%, however more
attention should be paid to the average rates which range from 6.79% to 9.02%. For retail use,
the range is 2.85% to 11.87 with an average of 7.05%. The average capitalization rate for retail
properties in the 1
st
Quarter 2013 report (one year prior) was 6.2%, indicating a slight increase.
Note that restaurant properties tend to reflect higher capitalization rates, though most of the
properties included in the restaurant survey are free-standing restaurant buildings which over the
long term tend to experience higher rates of average vacancy than restaurant tenants in large
multi-tenant retail centers. Based on the range of average rates (6.79% to 9.02%) and the
comparable rates provided (3.94% to 6.79%) a rate of 7% was estimated as applicable to the
subject property.

The estimated annual market rent is calculated as follows;

Market Value x Land Capitalization Rate = Annual Market Rent

$50,000,000 x 7% = $3,500,000

The market rent estimate above is based on a 99-year lease term with cumulative CPI increases
every five years, which are typical for the market.


Adjustments With Respect to Scenario 2

Based on Land Area

Sale
No.
Price/
Sq. Ft of
Land
Conditions
of Sale
Market
Conditions Location Zoning*
Size/
Shape
Overall
Adjustment
1 $44 + + + = + + + - - / = + + + +
2 $151 = = + + - - - - / = - -
3 $50 = + + + + = / = + + + +
4 $78 = + + + - - - / = +
5 $53 = + + + + - / = + + +

*Considers subjects development constraints under Scenario 1.

Based on Buildable Square Feet

Sale
No.
Price/
Buildable
Sq. Ft
Conditions
of Sale
Market
Conditions Location Zoning**
Size/
Shape Other
Overall
Adjustment
1 $40 + + + = + + + - - / = - - + +
2 $13 = = + + - - - - / = + + + + +
3 $76 = + + + = = / = - - - - -
4 $16 = + + + - - - / = + + +
5 $222 = + + + = - / = - - - - - - - -

**Considers subjects development constraints under Scenario 1, and excludes consideration of allowable density
(already reflected in the price per buildable sq. ft.)


Analysis of Adjustments
(Scenario 2)

For purposes of comparative analysis, the only difference between Scenario 1 and Scenario 2 is
the allowable sq. ft. of building area. Therefore, all adjustments to conditions of sale, market
conditions, location and size/shape are the same as under Scenario 1. The differences in the
adjustments under Scenario 2 are noted below.

With respect to the adjustments based on land area, Sales 1, 2 and 4 require smaller negative
adjustments because under Scenario 2 the subject has a higher allowable FAR (closer to those of
these sales). Similarly, Sales 3 and 5, which under Scenario 1 require no adjustment, require a
positive adjustment under Scenario 2s higher FAR assumption. As a result, the overall
adjustments indicate a value per sq. ft. of land above Sales 1, 3, 4 and 5 (a range of $44 to $78),
and below Sale 2 at $151. The analysis would support a value estimate per sq. ft. in the range of
$78 to $151. A value of $100 per sq. ft. is estimated. Based on the land area of 734,156 sq. ft.,
this equates to a value indication of $73,000,000 (rounded).

With respect to the adjustments based on buildable sq. ft., Sale 2 and 4 require smaller positive
adjustments in the other category because the higher FAR of Scenario 2 is closer to the FAR of
these sales. Similarly, larger negative adjustments are indicated for Sales 3 and 5 which are even
more inferior to the subject under Scenario 2 than under Scenario 1. Sale 1, which under
Scenario 1 requires no adjustment, requires a negative adjustment under Scenario 2 because it
has a lower FAR. As a result, the alternative analysis based on buildable sq. ft. indicates a value
per buildable sq. ft. above Sales 1, 2 and 4 (a range of $13 to $40), and below Sales 3 and 5 ($76
and $222, respectively). The analysis would support a value estimate in the range of $40 to $76
per buildable square foot.

The value indication of $73,000,000 by analysis of price per square foot of land equates to a
price of $61 per buildable square foot (based on the 1,193,622 of buildable sq. ft. under Scenario
2). This is supported by the alternative analysis of price per buildable square foot.

The analysis supports the value indication of $100 per sq. ft. of land, or $73,000,000 (rounded)
under Scenario 2.


Annual Market Rent of the Land as Though Vacant
(Scenario 2)

On the previous pages, land capitalization rate of 7.0% was estimated for the subject property
under Scenario 1. The only difference between Scenario 1 and Scenario 2 is the allowable sq. ft.
of building area. This difference would not result in a change in the required rate of return or the
perceive risk profile of the subject property from the perspective of the typical investor.
Therefore, it is appropriate to use the same capitalization rate to estimate the market land rent
under Scenario 2.

Based on the land value estimate of $73,000,000 under Scenario 2, the annual market rent is
therefore calculated as follows:

Market Value x Land Capitalization Rate = Annual Market Rent

$73,000,000 x 7% = $5,100,000 (rounded)

The market rent estimate above is based on a 99-year lease term with cumulative CPI increases
every five years, which are typical for the market.

ADDITIONAL ANALYSIS LAND RESIDUAL TECHNIQUE

A land residual technique has been applied for demonstrative purposes as well as being a
secondary method to support the prior analysis within this appraisal. This alternative method
projects a value of the property from the actual historic financial statements. The indicated value
includes land and improvements and deducts the value of the improvements. This indicates a
land value that a developer would pay for the ability to construct the improvements and generate
the reported historical income levels. The previous analysis estimated the land value of the
subject property based upon comparable sales. Considered were a value per square foot of land
area and also a value per buildable square foot. The subject property is unique as within Scenario
1 there is a lower than typical FAR as compared to comparable land sales. Typically, the lower
the FAR the higher the value per buildable square foot.

The subject parcel has a benefit, although not reflected in the FAR that is reflected in the income
generated. This benefit is the ability to generate income from revenue sources other than those
that are based on the constructed building area. For example, kiosks, and carts which reportedly
generated about $2.1 million dollars in 2013. There is no FAR associated or needed for these
revenue sources. The Bayside development provides the ability to generate these additional
revenues. Another revenue source that does not require FAR is the open parking lot where the
proposed SkyRise Development is planned. This lot had a reported income of $409,000 in 2013.

Similar to other locations in South Florida with high retail traffic/demand, particularly South
Beach, tenants pay rent for restaurant or retail space not only based upon the building area they
occupy, but also the sidewalk or outside areas that is used as part of their seating area. This open
area is another revenue source not reflected in the FAR. Meaning, the open area is revenue
producing even though it is not counted in the FAR. For the subject property the ability to
generate these additional revenues would cause the value per buildable square foot to be skewed
upward.

Following is a summary of the financial historical data provided for Bayside.

2010 2011 2012 2013
Revenues $25,108,123 $28,189,473 $29,960,159 $30,886,787
Expenses -$20,990,004 -$25,097,421 -$24,122,993 -$24,527,723
NOI $4,118,119 $3,092,052 $5,837,166 $6,359,064
Add Backs
Ground Rent $3,257,414 $3,574,865 $4,488,994 $4,266,293
Depreciation &
Amortization
$7,943,201 $12,235,949 $11,633,295 $11,525,978
Revised NOI $15,318,734 $18,902,866 $21,959,455 $22,151,335

The historical data indicates that revenues have consistently increased from 2010 to 2013 with
2012 and 2013 being very consistent. For purposes of this land residual calculation the only
adjustments made to the reported income and expenses was to add back the ground rent expense
to reflect the valuation as a leased fee value (not a leasehold value) and the add back for the
depreciation and amortization as these are not real estate expenses.

A capitalization rate can be applied to the net operating income to indicate a value.
Capitalization rates for this type property can range from 6% to 8% for a leased fee interest.
Using a net operating income of $22,000,000 which is between the 2012 ($21,959,455) and the
2013 ($22,151,335) indications the value range would be $275,000,000 to $367,000,000
(rounded).

Arguably this estimated value considers business or enterprise value which is often associated
with a development of this nature. This value is not real estate value and can be deducted from
the estimated value. For demonstrative purposes a business value ranging from 20% to 30% was
deducted. The implied value range is $192,500,000 ($275,000,000 less 30%) to $294,000,000
($367,000,000 less 20%). Using a mid-range of the estimated values ($321,000,000) and a mid-
range of the estimate for business/enterprise value (25%) the implied value is $241,000,000
($321,000,000 less 25%). From this estimate is subtracted the depreciated value of the
improvements.

Based on the financials the balance sheet shows $201,000,000 (rounded) as the investment in the
real estate. This is the undepreciated value. The depreciated book value is $167,000,000
(rounded). Based on the book depreciated value the implied land value would be $74,000,000
($241,000,000 less $167,000,000). Book value is not the same as depreciated value for real
estate analysis. The actual age of the improvements is 17 years and with an economic life of 60
years the depreciation would be 28% (17 years 60 years). Applying this 28% depreciation to
the $201,000,000 improvement cost yields an indication of $145,000,000 for the depreciated
improvement value. Subtracting this from the $245,000,000 estimate yields a land indication of
$100,000,000.

Of note is that the expense for ground rent in the financial statements is not consistent with the
actual ground rent paid. In 2012 the actual ground rent, including overage rent, was stated to be
$2,321,391 and $2,094,535 respectively. If the stated historical ground rent expense of
$4,266,293 should actually include the amount above the actual ground rent, there would be an
additional expense of approximately $2,172,000 ($4,266,293 - $2,094,535) that should be
deducted from the net operating income. The revised value range based on this adjustment would
be approximately $37,000,000 to $59,000,000.

While the above is only for demonstrative purposes it does indicate the potential land value and
supports the land value estimated by the sales comparison approach within the appraisal
($50,000,000 by Scenario 1 and $73,000,000 by Scenario 2).

Reconciliation Market Rent of Bayside Marketplace Land Parcel
Reconciliation of Value

The reconciliation process considers the approaches which were utilized in this report. Each
approach to value is analyzed as to its reliability and applicability. These approaches indicated
the following values of the land as though vacant:

Cost Approach Not applicable Not applicable
Income Capitalization Approach Not applicable Not applicable
Land Value Estimate $50,000,000 $73,000,000

Annual Market Rent
(Land as Though Vacant)
$3,500,000 $5,100,000

The cost approach estimates the land value and adds the depreciated value of the improvements.
As the subject property is being appraised as vacant land, this approach does not apply. Vacant
land value was estimated in the sales comparison approach.

The income capitalization approach analyzes the projected income and expenses of a property
and capitalizes the net income into a value estimate. This method is not applicable to the subject
vacant land due to the lack of properties similar in size that were purchased based on income
generated. An income capitalization approach was not applicable and not applied herein.

The sales comparison approach compares sales of similar properties to the subject property and
is the only applicable approach to value. These sales were analyzed for differences such as
conditions of sale, financing, market conditions, location, zoning, shape/size, and other
characteristics. The strength of this approach relies on the quality of the comparable sales. Sales
which closely resemble and can be compared easily with the subject are most desirable. The
sales utilized were considered comparable and make the sales comparison approach the only
reliable indication of value.

As the subject property is considered vacant land total reliance was placed on the sales
comparison approach. The market value of the fee simple interest of the subject property as
though vacant, as of March 19, 2014, is estimated at $50,000,000 under Scenario 1 and
$73,000,000 under Scenario 2. The annual market rent of the land as though vacant, as of March
19, 2014, is estimated at $3,500,000 under Scenario 1 and $5,100,000 under Scenario 2. The
market rent estimate is based on a 99-year lease term with cumulative CPI increases every five
years, which are typical for the market.

Waronker & Rosen, I nc. Real Estate Appraisers & Consultants

ADDENDA


ADDENDUM A
COUNTY AREA DESCRIPTION

Miami-Dade County and Area Description

General Overview

Miami-Dade County, often referred to as Miami is known internationally for its weather,
beaches, banking, find art, shopping, and Latin culture. While many pass through the Cruise
Capital of the World, 2.5 million people call it home.

Miami-Dade County is at the southeastern tip of Florida and is the south-easternmost state in the
continental United States. Its land area is approximately 1,946 square miles and is bordered by
Broward, Collier, and Monroe Counties to the north, southwest, and south, respectively. The
county is bordered by the Atlantic Ocean to the East and Everglades National Park to the West.

Demographics

As of the 2013 Census report, Miami-Dade County has 2,496,435 residents. Over half of those
were born outside the United States; 70 percent fall between the ages of 25 and 55. As depicted
in the following graph, the countys population has risen steadily since 1970.

Miami-Dade County Population Projections
2015 Projection
based on 2011
Estimate
Percentage change
2011 to 2015
2020 Projection
based on 2011
Estimate
Percentage change
2011 to 2020
2,591,790 3.8% 2,717,631 4.9%

Miami has a positive reputation for international business, and developers are marketing their
new projects to those individuals. Therefore, the countys population is expected to increase at an
even greater rate approaching the year 2020.


Miami is the largest city in the County. Other populous municipalities include Hialeah, Miami
Gardens, Miami Beach, and unincorporated land. Actively growing are some new cities since
2000 such as Cutler Bay and Doral.

Brief History

Miami was founded in 1866 after the end of Spanish rule in Florida. Before the turn of the
century, prominent figures such as William and Mary Brickell and Henry Flagler established a
community and connected the young city to the rest of the United States. Island people moved
here for work.

In 1910, John Collins discovered fresh water on Miami Beach, and within a decade, the
population sored, and businessmen bought up the land. The city quickly became a popular spot
for tourists, but it crumbled under the hurricane of 1926. During the decades of war, parts of
Miami-Dade County became training grounds for military. Residents then slowly built back up
the tourism industry.

The early 1960's marked the beginning of the arrival of large numbers of Cuban Refugees into
Miami-Dade County and South Florida. In the years following, significant numbers of
immigrants have come from Haiti, Cuba and other Latin American countries.

Government

Miami-Dade County has a strong mayor form of government, with nine elected individuals (one
mayor and eight commissioners) making up the Miami-Dade County Board of Commissioners.
The mayor appoints a professional administrator to manage the daily activities of the county
government and a county attorney to handle its legal matters.

Some governmental activities, services and functions previously handled by individual
municipalities are now handled by the county. Among these are real property assessment and
valuation, health and welfare, most water and sewers, traffic engineering, public libraries, public
transportation, public housing, urban renewal, seaport, airport, regional parks and air and water
pollution control. In addition to these, Miami-Dade County provides services to the
unincorporated areas of the county such as: police and fire protection, building and zoning
regulation, trash and garbage collection and disposal, parks and recreation, consumer protection
and corrections and rehabilitation of adults and youth offenders.

Economic Base

The primary industries that support Miami-Dade Countys economy through employment are
trade, transportation and utilities, followed by education/health services and government. The
most known is tourism, a major industry for Miami-Dade County. The following chart reflects
the countys demographics by trade, with tourism ranking the highest number of companies,
followed by retail and finance, insurance and real estate.

Source: The Beacon Council

A year-round growing season allows the agricultural industry to be the top vegetable supplier
and producer in the country. The industry employs more than 20,000 people and produces more
than $2.7 billion in economic benefits each year. As a result, agritourism has sprouted an
industry throughout the agricultural area where visitors can sample and purchase locally grown
products.

0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Miami-Dade County
Demographics by Trade
No. of Companies

Transportation

Miami International Airport (MIA) and its linkages are considered to be the driving force for
growth behind its surrounding area. Airport traffic in 2013 included over 40 million passengers,
2 million tons of freight, and 2 million tons of cargo. Other airports within the county include
Kendall-Tamiami Airport and Opa-locka Executive Airport. The aviation industry directly and
indirectly contributes $26.7 billion and 282,043 jobs to the local economy.

PortMiami annual activity includes 4.3 million cruise passengers and 7.4 millions of tons of
cargo. The port contributes more than $27 billion annually to the South Florida economy and
helps provide direct and indirect employment for more than 207,000 individuals. It is currently
undergoing construction for a two-way underwater tunnel between the port and downtown
Miami. Scheduled to be completed in 2015 is the Deep Dredge Project, set to deepen the
channel from its current 42-foot depth to minus 50 feet in order to accommodate super cargo
ships now being constructed.

Within Miami-Dade County, major roads include the Palmetto Expressway (State Road No.
826), a major north/south expressway; the Dolphin Expressway (State Road No. 836), a major
east/west expressway; Interstate 95 and the Florida Turnpike. All of these represent Miami's
expressway network and make almost any destination in Miami-Dade County within 30 to 45
minutes driving time.

Transportation systems include a Busway in south Miami-Dade County linking to Metrorail, an
elevated rail rapid transit system connecting portions of Miami-Dade County. In July 2012, a
new Metrorail station in MIA links south Miami-Dade County, downtown Miami and the entire
elevated rail line. The enables seamless connections to the Metromover systems and to a web of
transportation arteries in neighboring counties leading to the rest of Florida.

The Miami Intermodal Center (MIC) links the airport, East/West Rail, Amtrack, Tri-Rail,
Airport/Seaport Connector and Metrorail mainline rail. Located near the State Road No.
836/State Road 112 Connector, it presently contains the bulk of the rental car agencies. East of
the airport in the future it will contain retail, commercial, residential and tourist-designed
development.

The Metromover automated people mover system is located in downtown Miami and is an off-
shoot of the Metrorail system. There are also Metrobus buses, most of which are in service daily
throughout the county. The Metromover system includes the Brickell Avenue financial district
and also runs north to the Omni area. Other transportation services in Miami-Dade County
include Tri-Rail, railroads and taxicabs. Railroad service by Amtrak is accessible in northwest
Miami-Dade. Tri-Rail is South Florida's commuter train system which services Miami-Dade,
Broward and Palm Beach Counties.

Education

Based upon student population, the Miami-Dade County School system is the fourth largest
public school system in the nation with 415 institutions including elementary, middle, high, K-8,
charter, alternative and magnet schools. Many private institutions exist as well.


Several colleges and universities located in the county are University of Miami, Barry
University, Florida International University, Miami-Dade Community College, St. Thomas
University, Florida Memorial College and Johnson & Wales University.

Medical

Miami-Dade County has the largest concentration of medical facilities in Florida. The largest
institution is Jackson Memorial Medical Center, the second largest public hospital in the nation
which shares many teaching, treatment and research capacities with the University of Miami.
Private hospitals include Baptist Health System, Mercy, Miami Childrens, and Mount Sinai.

Sports

Professional, college and even local neighborhood sports draw spectators, participants and
investors to a high degree and create a positive atmosphere. Professional football (Miami
Dolphins), basketball (Miami Heat), baseball (Miami Marlins) and ice hockey (Florida Panthers)
are continual draws. As of January 2014, business negotiations are currently underway to bring
Major League Soccer to Miami. There are two horse tracks and a dog track. Several of these
tracks have been approved for slot gambling or table gambling, depending upon location in a
municipality or Indian reservation. Also offered are golf, tennis, as well as the numerous water
sports, given the significant bodies of water.

Arts and Culture

Known for the wealth of ethnic diversity and heritage, Miami-Dade County has a cultural mix of
festivals, concerts, theater, and dance performances. Adrienne Arsht for the Performing Arts of
Miami-Dade County opened in 2006 and is home to the Concert Association of Florida, Florida
Grand Opera, Miami City Ballet, and the New World Symphony. The county is also home to
several museums and wildlife attractions.

Summary

During its history, Miami-Dade County and the Greater Miami area have experienced significant
changes and growth. Trends indicate that the growth will continue with Miami-Dade County
rapidly becoming an international city with a diverse culture. The economic base and the
bilingual population should continue to attract new residents and businesses into Greater Miami.

Sources including, but not limited to:
United States Census Bureau (Jan. 2014). http://quickfacts.census.gov/qfd/states/12/12086.html
Miami-Dade County Portal (Jan. 2014). www.miamidade.gov
The Beacon Council (Jan. 2014). www.beaconcouncil.com
Federal Reserve Economic Data (Jan. 2014). http://research.stlouisfed.org/fred2/
Miami Herald (various articles). http://www.miamiherald.com/


ADDENDUM B

LEGAL DESCRIPTION


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