HomeMy WebLinkAbout869 S Woodrow FULL appraisalAn Appraisal Report
of
A 16,650 Square Foot
Industrial/Flex Warehouse
Located at 869 South Woodrow Lane,
Denton, Denton County, Texas 76205
TPA File #: 24.0803
As of
August 29, 2024
Prepared for
Mr. Mark Mastroleo
City of Denton
401 North Elm Street
Denton, Texas, 76201
Prepared by
6849 Elm Street
Frisco, Texas 75034
(214) 297-9000
www.ToddPropertyAdvisors.com
6849 Elm Street ▲ Frisco, Texas 75034 ▲ www.ToddPropertyAdvisors.com
TELEPHONE: (214) 297-9000 ▲ E-MAIL: mitchell@toddpa.com
August 29, 2024
Mr. Mark Mastroleo
City of Denton
401 North Elm Street
Dallas, Texas, 76201
RE: Valuation of a 16,650 square foot industrial warehouse located at 869 South
Woodrow Lane, in Denton, Denton County, Texas 76205.
Dear Mr. Mastroleo:
We have personally inspected the above-referenced property and have prepared an opinion of
value in accordance with your request. The objective of this appraisal is to provide an opinion of
market value of the fee simple estate of the subject in "as is" condition as of the effective date of
appraisal. All data considered pertinent to the preparation of this appraisal has been investigated
and analyzed and the results of the analysis together with our conclusions may be found in the
following report. Mitchell B. Todd, MAI, Kevin T. Peek, and Michael A. Keane, MAI have performed
numerous appraisals on similar properties and are sufficiently competent to complete this
assignment.
This appraisal involves an appraisal report in compliance with the Scope of Work Rule of the 2024
Edition of the Uniform Standards of Professional Appraisal Practice (USPAP) as provided by the
Appraisal Foundation. It involves the application of the Income Capitalization and Sales
Comparison Approaches to value, as well as a Certification. The exclusion of the Cost Approach
to Value is considered reasonable and its exclusion should not mislead the user of this appraisal.
The exclusion of the Cost Approach is considered reasonable given the difficulty in accurately
estimating the depreciation in an older property. The appraiser’s scope of work decision involved
the exclusion of the Cost Approach due to the fact that this approach would provide a less reliable
indication of value than the other two approaches. Additionally, please note the Assumptions and
Limiting Conditions located at the end of this report. For purposes of this report, we have only
been asked to provide an opinion of market value. The definition of market value utilized in this
report complies with Title 12, Code of Federal Regulations, Subpart C – Subsection 34.42(g),
Department of the Treasury, Office of the Comptroller of the Currency; USPAP; and FIRREA.
All methodology utilized to arrive upon the opinion of market value can be found in The Appraisal
of Real Estate, Fifteenth Edition, as published by The Appraisal Institute. This appraisal report
sets forth the identification of the subject property, information regarding the subject and its
surrounding area, comparable rental and sales data, the results of the investigations and
analyses, and the reasoning leading to our conclusions. The appraisal assignment was not based
on a requested minimum valuation, a specific valuation or the approval of a loan.
Mr. Mark Mastroleo
August 29, 2024
Page Two
To the best of our knowledge, the subject property has no natural, cultural, recreational, or
scientific value. As is discussed in the Estimate of Exposure Time section of this report, it is our
opinion that the sale of the subject property could be consummated within a twelve month period
at the opinion of value arrived herein.
In our opinion, the “as is” market value of the fee simple estate of the subject property, as of the
effective date of appraisal, August 20, 2024, was:
“As Is” Market Value:
TWO MILLION THREE HUNDRED THOUSAND DOLLARS
($2,300,000)
Furthermore, this opinion of value is contingent upon the subject property being free of any
hazardous wastes deposited thereupon by the present or previous owners/tenants of the site
which would adversely affect the value of the property. The existence of any such materials was
not observed upon the physical inspection of the property. However, we are not qualified to detect
these substances and it is recommended that an expert in this field be obtained if the client has
suspicion of these materials and substances existing on the property.
It is also assumed there is full compliance with all requirements of Title III, of the Americans with
Disabilities Act (ADA) which became effective January 26, 1992. No responsibility is assumed
by the appraisers for any such conditions, or for any expertise of architectural/design knowledge
and cost required identifying such non-compliance.
There was no information required or deemed pertinent to the completion of this appraisal, which
was not available to the undersigned. Additionally, the value conclusions found within this report
are exclusive of any personal property, fixtures, or intangible items that are not real property.
Thus, the reported values within this report pertain to the real property only. In order for the opinion
of value set forth herein to be considered valid this letter of transmittal must not be considered
separately or independently of the attached appraisal report, and this appraisal report must be
used in its entirety and must not be separated into parts. Should any questions regarding this
appraisal arise, please contact us.
Appraisal Institute General Demonstration of Knowledge - Capstone Program
Admissions Department March 14, 2018 Page Two Based on the data rendered via a physical inspection of the subject, as well as other pertinent information, it is my opinion that the market value of the fee simple interest in the subject property, as of March 6, 2018, is: “As Is" Market Value: ONE MILLION SEVEN HUNDRED FORTY THOUSAND DOLLARS ($1,740,000) Such opinion is subject to the general assumptions and limiting conditions found on page
?????. This letter must remain attached to the report, which contains ????? pages, in order for
the value opinion set forth to be considered valid. Particulars and supporting data are provided
in the accompanying report.
Respectfully submitted,
Michael A. Keane
State Certification #TX-1380384-G
michaelakeane@me.com
Respectfully submitted,
Mitchell B. Todd, MAI Michael A. Keane, MAI
President Senior Vice President
State Certification #TX-1323514-G State Certification #TX-1380384-G
mitchell@toddpa.com michael@toddpa.com
Kevin Peek
Appraisal Associate
State Certification #TX-1381324-G
kevin@toddpa.com
TABLE OF CONTENTS
Section I - Introduction
Executive Summary ........................................................................................................ 2
Identification of the Property ............................................................................................ 5
Objective of the Appraisal................................................................................................ 6
Identification of the Appraisal Problem ............................................................................ 6
Date of Value Opinion ..................................................................................................... 6
Date of Report ................................................................................................................. 6
Appraisal Report Option .................................................................................................. 6
Intended Use/Intended User ............................................................................................ 6
Statement of Prior Services Rendered ............................................................................ 6
Property Rights Appraised............................................................................................... 7
Definition of Market Value ............................................................................................... 7
Statement of Ownership .................................................................................................. 8
Scope of Work ................................................................................................................. 8
History of the Subject Property ........................................................................................ 9
Estimate of Exposure Time ............................................................................................. 9
Estimate of Marketing Time ........................................................................................... 10
Section II – External Influences
Regional Analysis .......................................................................................................... 13
City/Neighborhood Analysis .......................................................................................... 23
Denton Industrial Market Overview ................................................................................ 28
Section III - Factual Descriptions and Analyses
Site Description and Analysis ........................................................................................ 32
Zoning and Land Use Restrictions ................................................................................. 37
Tax Analysis .................................................................................................................. 39
Description of the Improvements ................................................................................... 40
Subject Property Photographs ....................................................................................... 43
Highest and Best Use Analysis ..................................................................................... 53
The Appraisal Process .................................................................................................. 57
Section IV – Income Capitalization Approach
Description of the Income Capitalization Approach ....................................................... 59
Comparable Rental Presentation................................................................................... 61
Discussion of Market Rent ............................................................................................. 66
Discussion of Market Occupancy and Vacancy and Collection Loss Estimate ............... 72
Discussion of Operating Expenses ................................................................................ 73
Estimate of Net Operating Income ................................................................................. 75
Selection of a Capitalization Rate .................................................................................. 76
Conclusion of the Income Capitalization Approach ........................................................ 77
Section V - Sales Comparison Approach
Description of the Sales Comparison Approach ............................................................ 79
Comparable Improved Sales Presentation .................................................................... 80
Improved Sales Analysis ............................................................................................... 86
Conclusion of the Sales Comparison Approach ............................................................. 91
Section VI - Valuation Conclusion
Reconciliation and Final Opinion of Value ..................................................................... 94
Section VII - Certification & Assumptions & Limiting Conditions
Certification ................................................................................................................... 96
Assumptions and Limiting Conditions ............................................................................ 98
Section VIII – Addendum
Qualifications/Certifications of Appraisers
Engagement Letter
SECTION I - INTRODUCTION
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EXECUTIVE SUMMARY
SALIENT FACTS & CONCLUSIONS
Property Appraised: South Woodrow Lane Industrial Flex Building
Property Type: Industrial/Flex
Location: 869 South Woodrow Lane, Denton, Denton County,
Texas, 76205
Date of Inspection: August 20, 2024
Date of Valuation: August 20, 2024
Date of Report: August 29, 2024
Property Rights Appraised: Fee Simple Estate
Ownership: City of Denton
Land Size: 1.94 acres (84,861 square feet)
Description of Improvements: The subject improvements consist of a 16,650
square foot office/warehouse building that was
constructed in 1994 and 2009. The building is
constructed of a concrete foundation, brick veneer
exterior walls, and a metal roof. The interior
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construction is comprised of vinyl/wood flooring and
hardener and sealer on concrete, exposed roof
structure and acoustic ceiling tile, and fluorescent
lighting. The subject facility is approximately 69
percent heated/air conditioned office space, has one
grade level loading door, and a clear height of 16
feet. The parking and driveway areas are concrete
paved.
Status of Property: As of the date of the appraisal, the subject was 100
percent owner occupied. The building and site
improvements are considered to be in excellent
condition with no significant items of deferred
maintenance noted upon inspection. The property
has all public utilities available from the City of
Denton.
Zoning: PF, Public Facilities
HIGHEST AND BEST USE:
As If Vacant: Industrial Flex Warehouse
As Improved: Continued use as an industrial flex warehouse
SCOPE OF WORK
Appraisal Problem Identification: Identifying the appraisal problem within the report
includes providing a credible opinion of the market
value of the fee simple estate of the subject property
in “as is” condition as of the effective date of
appraisal (August 20, 2024).
Objective of the Appraisal: The objective of the appraisal is to provide the client
with a current opinion of the market value of the fee
simple estate of the subject property in “as is”
condition as of the effective date of appraisal
(August 20, 2024). It is our understanding that this
appraisal report will be utilized by the client to
determine fair market value of the subject property.
Intended User: City of Denton
Client: City of Denton
Valuation Approaches Used: Income Capitalization and Sales Comparison
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CONCLUSION OF VALUES
Income Capitalization Approach: $2,250,000
Sales Comparison Approach: $2,470,000
Final “As Is” Market Value: $2,300,000
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IDENTIFICATION OF THE PROPERTY
The subject improvements consist of a 16,650 square foot office/warehouse building that was
constructed in 1994 and 2009. The building is constructed of a concrete foundation, brick veneer
exterior walls, and a metal roof. The interior construction is comprised of vinyl/wood flooring and
hardener and sealer on concrete, exposed roof structure and acoustic ceiling tile, and fluorescent
lighting. The subject facility is approximately 69 percent heated/air conditioned office space, has
one grade level loading door, and a clear height of 16 feet. The parking and driveway areas are
concrete paved. The subject property is physically located along the east line of South Woodrow
Lane, just north of Shady Oaks Drive and has a municipal address of 869 South Woodrow Lane,
Denton, Denton County, Texas. The following is a summarized legal description for the subject
site.
Being a tract of land in Tejas Testing Addition, Block A, Lot 1; City of Denton,
Denton County, Texas.
Subject Property
*Aerial photograph provided and boundary lines provided by the Denton Central Appraisal District.
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OBJECTIVE OF THE APPRAISAL
The objective of the appraisal is to provide the client with a current opinion of the market value of
the fee simple estate of the subject property in “as is” condition as of the effective date of appraisal
(August 20, 2024). It is our understanding that this opinion of value will be utilized by the client to
determine fair market value of the subject property.
IDENTIFICATION OF THE APPRAISAL PROBLEM
Identifying the appraisal problem within the report includes providing a credible opinion of the
market value of the fee simple estate of the subject property in “as is” condition as of the effective
date of appraisal (August 20, 2024).
DATE OF VALUE OPINION
An inspection of the property was conducted on August 20, 2024. The effective date of valuation
is August 20, 2024.
DATE OF REPORT
The transmittal date of this appraisal is August 29, 2024.
APPRAISAL REPORT OPTION
This is an Appraisal Report that complies with the reporting requirements set forth under
Standards Rule 2-2 (a) of the Uniform Standards of Professional Appraisal Practice (USPAP). As
such, it presents sufficient information to enable the client and other intended users as identified
to understand it properly. The depth of discussion contained in this report is specific to the needs
of the client and the intended use of the appraisal as noted herein.
INTENDED USE/INTENDED USER
This appraisal report has been prepared for the City of Denton and is intended to be used by the
City of Denton. It is our understanding that this appraisal report will be utilized by the client to
determine the fair market value of the subject property. Therefore, the intended users of this report
are the City of Denton. No one other than the intended users should rely on the opinion of value,
or any other conclusions contained in this report.
STATEMENT OF PRIOR SERVICES RENDERED
Todd Property Advisors, and Mitchell B. Todd, MAI, Kevin T. Peek, and Michael A. Keane, MAI
have rendered no services as appraisers or in any other capacity regarding the property that is
the subject of this report within the three-year period immediately preceding acceptance of this
assignment.
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PROPERTY RIGHTS APPRAISED
The fee simple estate is defined as "absolute ownership unencumbered by any other interest or
estate, subject only to the limitations imposed by the governmental powers of taxation, eminent
domain, police power, and escheat" 1 This differs from the leased fee estate. “In appraisal practice,
the lessor’s, or landlord’s, position is referred to as the leased fee. The rights of the lessor (the
leased fee owner) and the lessee (leaseholder) are specified by contract terms contained in the
lease". 2
The fee simple estate of the subject is being appraised, due to the lack of existence of any long-
term lease agreements encumbering the property. This ownership interest is subject to any zoning
ordinances, easements, restrictions of record and other applicable codes and ordinances of
record.
DEFINITION OF MARKET VALUE
The definition of value which will be referred to in this report is "market value". The following
definition of market value is used by agencies that regulate federally insured financial institutions
in the United States. The definition of market value utilized in this report complies with Title 12,
Code of Federal Regulations, Subpart C – Subsection 34.42(g), Department of the Treasury,
Office of the Comptroller of the Currency; USPAP; and FIRREA. According to Section 34 of Title
12, Code of Federal Regulations, “market value” means:
The most probable price which a property should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeable, 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:
1) Buyer and seller are typically motivated,
2) Both parties are well informed or well advised and acting in what they consider their
own best interest,
3) A reasonable time is allowed for exposure in the open market,
4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto, and,
5) 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
1 The Appraisal Institute, The Dictionary of Real Estate Appraisal (Sixth Edition), Chicago, Illinois, 2015, page 90.
2 The Appraisal Institute, The Appraisal of Real Estate (Fifteenth Edition), Chicago, Illinois, 2020, page 62.
3 The Appraisal Institute, The Appraisal of Real Estate (Fifteenth Edition), Chicago, Illinois, 2020, page 49.
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STATEMENT OF OWNERSHIP
According to the Denton Central Appraisal District, title to the subject property is vested in City of
Denton.
SCOPE OF WORK
The scope of work is defined as the type and extent of research and analyses in an assignment.
The scope of this appraisal assignment is to provide an opinion of market value of the property.
The client’s instructions were to appraise the subject property in "as is" condition as of the effective
date of appraisal (August 20, 2024). In compliance with the 2024 Edition of the Uniform Standards
of Professional Appraisal Practice (USPAP), and upon the request of the client, an appraisal
report has been prepared utilizing the Scope of Work Rule.
The Scope of Work Rule within USPAP emphasizes the requirements for problem identification,
determining the appropriate scope of work, and disclosure of the scope of work that was
performed in appraisal, appraisal review, and appraisal consulting assignments. The following is
a discussion of the scope of work undertaken within the context of this report.
The scope of work for this appraisal was determined by the complexity of the assignment and the
reporting requirements of this appraisal report type, including: the definition of market value, real
property interests valued, assumptions and limiting conditions, and certifications.
The appraisers considered this scope of work to be adequate to complete a credible appraisal of
the subject property. The appraisers believe that this scope of work would meet the expectations
and needs of parties who are regular intended users for similar assignments and that this scope
of work is substantially similar to what an appraiser’s peers actions would be in performing the
same or similar assignment.
The subject appraisal research began with a review of the history of the subject property by
conducting research of the Denton County public records for three years prior to the date of
appraisal. This research was facilitated by several on-line resources including CoStar.com, the
Denton Central Appraisal District, and Loopnet.com, as well as several other resources including
owners, buyers, lenders and other parties knowledgeable of the subject property. The Regional,
City, and Neighborhood Analyses are presented in a summarized format and include information
gathered through inspection of the areas, review of published secondary data, such as that
provided by the North Central Texas Council of Governments, and a variety of resources available
from the Cities of Dallas, Fort Worth, and other surrounding communities comprising the
Metroplex.
The site analysis included an inspection by the appraiser, aerial photographs via satellite, and the
FEMA flood insurance rate maps. The property inspection included a visual survey of the subject.
The inspection was conducted on August 20, 2024. The zoning of the subject property was
verified with the zoning records of the City of Denton. The tax rates, assessed values, and
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information regarding the subject's tax debt were verified by the Denton Central Appraisal District
and the individual taxing jurisdictions via the appraisal district’s website.
The analyses of the individual real estate markets which affect the subject property was performed
utilizing secondary data concerning the subject’s market found in various market surveys. Primary
data regarding the subject submarket and the immediate surrounding area was verified by the
appraisers through an inspection of the area, and interviews conducted with owners, real estate
brokers, and management company representatives.
To complete this appraisal assignment, the Cost, Income Capitalization, and Sales Comparison
Approaches were considered, while the Income Capitalization and Sales Comparison
Approaches were utilized. The exclusion of the Cost Approach to Value is considered reasonable
and its exclusion should not mislead the user of this appraisal. The exclusion of the Cost Approach
is considered reasonable given the difficulty in accurately estimating the depreciation in an older
property. The appraiser’s scope of work decision involved the exclusion of the Cost Approach due
to the fact that this approach would provide a less reliable indication of value than the other two
approaches. All data gathered within these approaches regarding properties similar to the subject
have been verified by the appraisers with the Grantor, the Grantee, or their representatives. A
more detailed explanation of the methods and techniques employed in both approaches is located
in the Valuation Process section of this report.
HISTORY OF THE SUBJECT PROPERTY
According to information provided by the client, title to the subject property is currently vested in
City of Denton. No arm's- length transactions involving the subject property were uncovered
during the last three years. To our knowledge, the property has not been listed or had any offers
for purchase.
ESTIMATE OF EXPOSURE TIME
A reasonable exposure period is the amount of time necessary to expose a property to the open
market in order to achieve a sale. According to USPAP 2024, exposure time is defined as, “an
opinion, based on supporting market data, of the 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.” It is our opinion that a period of six to
nine months, with a contract period of 90 days is reasonable. This results in a total exposure time
until closing at a title company of nine to twelve months. We performed due diligence in estimating
the exposure period for the subject property by surveying the marketing period for comparable
properties which had recently sold or were placed under contract. Additionally, the brokers
contacted in verifying the comparable improved sales within this report generally indicated that
exposure times during the last twelve months have typically ranged from six to twelve months.
It was observed that properties are often marketed for several months or years with very little
interest shown in the property. However, they eventually sell after significant price reductions. A
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common tendency among the majority of these sales is that once these properties experience
price reductions, which are believed to bring them into alignment with the rest of the market, their
exposure time was typically less than one year. The price reductions and recognition of market
derived values is reflected in the comparables' sales prices. This is to the extent that the sales
price as represented by the value conclusion for the subject is attractive to an investor today.
Thus, this attractive price should result in a normal exposure of less than one year. Therefore, it
is our opinion that had the subject property been marketed at or very near the "as is" value
conclusion contained herein, it would have been sufficiently attractive to entice an investor to
purchase the property within a nine to twelve month exposure period.
ESTIMATE OF MARKETING TIME
Marketing time is defined as “an opinion of the amount of time it might take to sell a real or
personal property interest at the concluded market value level during the period immediately after
the effective date of an appraisal. Marketing time differs from exposure time, which is always
presumed to precede the effective date of an appraisal.” 4 Thus, marketing time is an estimate of
the amount of time necessary to sell a property after the date of appraisal, which differs from
exposure time which is a retrospective estimate of the amount of time necessary to achieve a
sale prior to the effective date of appraisal.
It is our opinion that a marketing period of six to nine months, with a contract period of 90 days is
reasonable. This results in a total marketing time until closing at a title company of nine to twelve
months. We performed due diligence in estimating the marketing period for the subject property
by surveying the marketing period for comparable properties which had recently sold or were
placed under contract. A common tendency among the majority of the sales is that once these
properties experience price reductions which are believed to bring them into alignment with the
rest of the market, their marketing period is typically less than one year. For example, properties
are often marketed for several years with very little interest shown in the property. However, they
eventually sell after significant price reductions. The price reductions and recognition of market
derived values is reflected in the comparables' sales prices. This is to the extent that the sales
price as represented by the value conclusion for the subject is attractive to an investor today.
Thus, this attractive price should result in a normal marketing period of less than one year.
Therefore, it is our opinion that if the subject property is marketed at or very near the value
conclusion contained herein, it will be sufficiently attractive to entice an investor or user to
purchase the property within a twelve month marketing period.
4 The Appraisal Institute, The Dictionary of Real Estate Appraisal (Sixth Edition), Chicago, Illinois, 2015, page 140.
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HYPOTHETICAL CONDITIONS
According to the 2024 USPAP, a hypothetical condition is “a condition, directly related to a specific
assignment, which is contrary to what is known by the appraiser to exist on the effective date of
the assignment results but is used for the purpose of analysis.” There were no hypothetical
conditions utilized within this report.
EXTRAORDINARY ASSUMPTIONS
According to the 2024 USPAP, an extraordinary assumption is “an assignment-specific
assumption as of the effective date regarding uncertain information used in an analysis which, if
found to be false, could alter the appraiser’s opinions or conclusions.” We have not utilized an
extraordinary assumptions within this report.
SECTION II – EXTERNAL INFLUENCES
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REGIONAL ANALYSIS
Real Estate is an immobile asset, which is dependent upon the exterior environment for economic
viability. The economic climate in which a property is located is both general (the region or area
in which a property is located) and specific (the neighborhood). Four forces continually exert
influence on real estate values within any environment: social, economic, environmental and
governmental. The purpose of this section is to consider all pertinent forces that will have an effect
on the use and value of the subject property.
The Dallas-Fort Worth-Arlington Consolidated Metropolitan Statistical Area (CMSA)
encompasses approximately 9,289 square miles in north central Texas. The Dallas-Fort Worth-
Arlington CMSA is comprised of 12 counties: Collin, Dallas, Denton, Tarrant, Johnson, Kaufman,
Parker, Rockwall, Hunt, Wise, Delta and Ellis. This CMSA, which is also referred to as the D/FW
area or Metroplex, is located 203 miles northeast of Austin, 240 miles northwest of Houston and
206 miles south of Oklahoma City. On a national level, the Metroplex is located in the southern
central sector of the country. The Dallas/Fort Worth area is located approximately equidistant
from both coasts and from the four major concentrations of population in North America: New
York, Chicago, Los Angeles and Mexico City. The following is a discussion of the aforementioned
forces that exert influence on property value.
Subject Property
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Environmental
The Dallas-Fort Worth climate is humid subtropical with hot summers. It is also considered to be
continental, characterized by a wide annual temperature range. The amount of precipitation
usually varies and ranges from less than 20" to more than 50". D/FW winters are somewhat mild,
but occasionally there are sudden drops in temperature. Periods of extreme cold that occasionally
occur are short-lived, so that even in January mild weather occurs frequently. During the summer,
the high temperatures are associated with fair skies, westerly winds, and low humidity’s. Average
high and low temperatures range from 37 F in January to 98 F in August. Rainfall occurs
throughout the year, but usually occurs more frequently during the night and also during the
spring. Usually, periods of rainy weather last for only a day or two, and are followed by several
days with fair skies. Moderate hail may occur on about two or three days a year, only causing
slight and scattered damage. However, windstorms occurring during thunderstorm activity may
be destructive. Snowfall is rare. The average length of the warm seasons (freeze-free period) is
about 249 days, or about 8 months. Thus, the local climate is very conducive of real estate
development.
The area's topography is basically level in the northern sector to gently rolling in the southern
portion. The rolling terrain of the southern sector is due to a geologic formation known as the
escarpment. This escarpment consists of a chalky soil that rests on top of shales causing unstable
building foundations. The shale soil presents shrink-swell problems for the foundations of
buildings that are constructed on it, and the chalk is an unstable soil that crumbles easily, resulting
in minor landslides.
Transportation
As stated above, on a national basis, the Dallas/Fort Worth Metroplex is centrally located, which
has resulted in the development of a major transportation network that connects the Metroplex
with the rest of the country. This network consists of major thoroughfares, railroad lines and air
carriers. In regards to roadways, the Dallas/Fort Worth region is located at the convergence of
four Interstate Highways: north-south access is provided by Interstate Highways 35 and 45 (IH-
35 and IH-45); east-west access is provided by IH-20 and IH-30. Two major outer loops provide
internal accessibility to the region. LBJ Freeway (IH-635) surrounds Dallas, and IH-820
encompasses Fort Worth. Both of these arteries connect with the interstate highways as well as
local streets, thus affording the cities regional as well as internal access. In recent years, greater
access and mobility have been expanded to the Metroplex’s surrounding communities. The
President George Bush Toll Road (SH-190) is a loop encircling IH-635 that connects IH-30 in
Garland/Rockwall to IH-20 in Grand Prairie traversing the communities of Rowlett, Mesquite,
Garland, Richardson, Plano, Carrollton, Coppell, Irving, Arlington and Grand Prairie. Additionally,
the North Texas Tollway Authority (NTTA) recently opened the Chisholm Trail Parkway
connecting the Downtown Fort Worth Business District with communities to the south including
Benbrook, Crowley, Joshua and connecting with SH-67 in Cleburne.
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Two additional toll roads which serve the Metroplex are the Dallas North Tollway and the Sam
Rayburn Tollway (SRT). SH-121(located north of SH-190) has expanded to incorporate and
become the SRT. While SH-121 continues to run east-west from Fort Worth to McKinney
connecting DFW Airport to other areas of the Metropolitan area, the SRT has provided a larger
artery for traffic to flow between the communities of Grapevine, Coppell, Carrollton, Plano, Frisco,
Allen and McKinney. The Dallas North Tollway connects downtown Dallas to the rapidly growing
areas of Frisco and Prosper. The Sam Rayburn Tollway connects central Collin County to the
vicinity of the DFW International Airport.
Reference may be made to Mobility 2040 which was adopted by the Regional Transportation
Council in March of 2016. This long range strategic plan aims to define the vision for the Region’s
transportation system and identify solutions and options. The goals of the plan are to improve
mobility, quality of life, and air quality concerns for the cities of Dallas and Fort Worth as well as
the surrounding areas. In addition, properties located along or near new or improved
thoroughfares should benefit from this plan through better access and exposure. It is worthy to
note that the region is also serviced by multiple public transportation services including bus, rail
and light rail. These services include Dallas Area Rapid Transit (DART), DART Light Rail, the
Fort Worth Transportation Authority (FWTA or The T), the Trinity Railway Express (TRE), and the
Denton County Transportation Authority (DCTA).
In addition to the various modes of ground transportation, the Metroplex is serviced by a major
international airport as well as several other local and regional airports. D/FW International Airport,
located midway between Dallas and Fort Worth, has the 2nd largest land area of any other airport
in the nation with 17,207 acres and the fourth largest in the world. In 2016, D/FW was responsible
for 65,670,697 passengers reaching their destinations, making it the world’s 11th busiest airport
in number of passengers, with service provided by 9 international and 11 domestic airlines. As of
December 2018 DFW Airport provides transportation to more than 244 destinations including 62
international and 182 domestic destinations with the number of daily flights just under 3,000
including passenger and freight. Additionally, DFW is one of 3 domestic airports and 11 globally
providing service to more than 200 destinations around the world.
The City of Dallas owns and operates Dallas Love Field. The airfield is located six miles northwest
of the downtown central business district and is managed by the City's Department of Aviation.
Southwest Airlines is the predominant user of Love Field; however, Alaska Airlines and Delta
Airlines also utilize Love Field. In 1963, several airlines had all agreed to seek full repeal of the
Wright Amendment; which restricted direct flights to other states from Love Field. In 2008, the
airport handled approximately 8,060,000 passengers. On October 13, 2014, the Wright
Amendment had been repealed and new non-stop service to several cities began. This has led
to significant increases in passenger traffic. Southwest Airlines added numerous other cities in
the beginning of 2015. In 2016, the airport handled approximately 15,563,000 passengers. To
accommodate the increase in traffic construction on a new parking garage was constructed and
opened in 2018.
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Commercial air freight service is provided to the region by the Alliance International Centre which
is the first development of its type in the world. This Fort Worth based facility comprises a 3,000-
acre cargo airport/industrial park. Meacham Field (Fort Worth), Addison Airport (North Dallas)
and several other municipal airports, provide for the area’s general aviation needs.
Social
According to The Appraisal of Real Estate, Fifteenth Edition, social forces studied by appraisers
primarily relate to population characteristics. Because the demographic composition of the
population reveals the potential demand for real estate, proper analysis and interpretation of
demographic trends are required. Real property values are affected not only by population
changes and characteristics, but also by the entire spectrum of human activity. The total
population, its composition by age and gender, and the rate of household formation and
dissolution strongly influence real property values. Social forces are also manifest in attitudes
toward education, law and order, and lifestyle options. This section of the report will identify all
social forces that may have an effect on the value of the subject property.
According to the North Central Texas Council of Governments (NCTCOG) 2023 population
estimates, North Central Texas estimated that the region had added approximately 161,433 new
residents between 2022 and 2023 for a total population of 8,284,892. A chart detailing the
individual county growth rates is located below included the most recent year over year data.
The estimated January 1, 2023, population for the NCTCOG region is 8,284,892. Last year the
region added 161,433 people, over 4,000 more residents than were added in 2021. Fort Worth
(18,943) added more population than any other city, almost double compared to the next closest
city. Celina (9,787), Frisco (7,602), Arlington (5,861) and Mansfield (5,245) round out the top 5
growth cities. For the second straight year, Collin County added more than 40,000 new residents
while Denton County and Tarrant County each added over 30,000 new people. Since 2020,
453,000 new residents now call north Texas home.”
County Name
2012 Est.
Pop.
Apr. 1
2013 Est.
Pop.
Jan. 1
2014 Est.
Pop.
Jan. 1
2015 Est.
Pop.
Jan. 1
2016 Est.
Pop.
Jan. 1
2017 Est.
Pop.
Jan. 1
2018 Est.
Pop.
Jan. 1
2019 Est.
Pop.
Jan. 1
2020 Est.
Pop.
Jan. 1
2021 Est.
Pop.
Jan. 1
2022 Est.
Pop.
Jan. 1
2023 Est.
Pop.
Jan. 1
Jan. 2022
to Jan.
2023 Abs.
Change
Jan. 2022
to Jan.
2023 %
Change
Collin 795,390 827,780 851,920 873,840 901,170 932,530 969,780 1,010,330 1,039,540 1,082,760 1,135,058 1,175,974 40,916 3.60%
Dallas 2,383,790 2,415,060 2,435,800 2,455,050 2,478,970 2,502,270 2,529,150 2,554,770 2,593,570 2,619,040 2,656,297 2,675,009 18,712 0.70%
Denton 677,880 714,000 736,900 761,040 784,840 814,560 844,260 874,240 902,190 933,220 975,158 1,006,492 31,334 3.21%
Ellis 152,570 158,070 161,200 165,010 168,690 173,410 183,360 189,820 198,640 206,810 207,623 218,125 10,502 5.06%
Erath 38,340 40,700 41,010 41,460 43,540 43,850 44,200 44,700 45,670 46,180 43,322 43,287 (35)-0.08%
Hood 53,670 58,880 61,680 64,400 64,620 64,840 65,060 65,960 66,890 66,920 62,116 62,511 395 0.64%
Hunt 87,840 90,070 91,240 92,530 93,110 94,350 95,960 97,410 99,300 101,510 104,903 109,127 4,224 4.03%
Johnson 151,790 155,240 156,710 158,880 161,670 164,970 169,160 173,700 178,260 185,180 193,494 201,427 7,933 4.10%
Kaufman 104,050 106,400 108,120 109,300 113,530 116,140 119,670 124,850 128,520 132,250 153,130 158,672 5,542 3.62%
Navarro 47,940 48,470 48,590 48,900 49,030 49,170 49,740 50,250 50,870 51,670 53,612 55,639 2,027 3.78%
Palo Pinto 28,290 28,420 28,590 28,710 28,660 28,660 28,710 28,820 28,960 29,360 28,776 29,277 501 1.74%
Parker 118,040 120,640 121,830 124,630 127,980 130,150 131,210 134,620 136,600 139,180 152,928 155,607 2,679 1.75%
Rockwall 79,570 83,400 85,900 88,200 90,570 93,130 97,990 101,020 107,780 113,350 119,897 124,734 4,837 4.03%
Somervell 8,550 8,690 8,800 8,950 9,230 9,420 9,640 9,820 9,980 10,190 9,662 9,899 237 2.45%
Tarrant 1,832,660 1,875,930 1,899,900 1,922,470 1,945,320 1,966,440 1,989,810 2,024,030 2,064,340 2,091,320 2,157,741 2,188,951 31,210 1.45%
Wise 59,600 60,920 61,690 61,970 62,240 62,460 62,700 64,060 65,300 66,010 69,741 70,159 418 0.60%
16-County Region 6,619,970 6,792,670 6,899,880 7,005,340 7,123,170 7,246,350 7,390,400 7,548,400 7,716,410 7,874,950 8,123,458 8,284,890 161,432 1.99%
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Economic
Economic forces have a direct and obvious effect on property values. The condition of an area's
economy in great measure determines the growth or decline of the population, as well as its
purchasing power, which affect the demand for goods and services. If an area's economy is in a
growth stage, construction of new housing, retail centers and expansions of employment centers
occur to accommodate the needs of the population. Conversely, as the unemployment rate rises
because of an area's declining economy, some residents move from the area, and those who
remain may have decreased disposable incomes, both of which result in a diminished demand
for housing as well as goods and services. As occupancy rates for housing, retail facilities, and
employment centers decrease, demand for new construction either decreases or may even cease
altogether. Characteristics that are considered to be demand-oriented include employment levels,
the number and size of basic industries, and the availability of mortgage credit. Economic
characteristics that are considered to be supply-oriented include the stock of available vacant and
improved properties, occupancy rates, and rental rates.
Apartment markets continue to fare better than expected, with occupancy and rents improving in
most Texas metros. According to the 2nd Quarter 2024 CoStar analytics report, the Dallas/Fort
Worth area apartment asking rent has decreased approximately 1.5% (YOY). Additionally, CoStar
reports. “Multifamily demand in Dallas-Fort Worth is rebounding, reflecting greater confidence
among households to sign leases. CoStar reports renter demand of 5,100 units in the first quarter,
on par with pre-pandemic levels and signals a promising second quarter during prime leasing for
the year. Even so, the supply/demand imbalance persists with adding 10,900 units in the first
quarter, keeping vacancy elevated at 11%, up 210 basis points year-over-year and holding at a
20-year high. In turn, rent growth remains negative at 1.5%, dampened by supply-heavy
submarkets.”
The D/FW Metroplex has an excellent transportation network, a good central U.S. location, and a
relatively low cost of living compared to other parts of the U.S., which attracts major corporate
employers. D/FW is a major product distribution center and it is a major trade hub with Mexico
and other sectors across Latin America. The Emerging Trends in Real Estate markets-to-watch
survey for 2018 revealed the Dallas/Fort Worth market as the number-five market to watch. The
area is considered to continue strong growth due to projected population increases and corporate
relocations. Multiple survey respondents and interviewees mentioned the strong job growth
driving the local economy. (Emerging Trends in Real Estate, United States and Canada 2018,
PricewaterhouseCoopers LLP and Urban Land Institute). D/FW is also known for its large
technology influence, and provides business services such as advertising, data processing,
telecommunications, and other computer services. As mentioned previously, the transportation
industry will continue to play an important part of the economy, due to D/FW International Airport’s
large influence.
According to the NCTCOG Forecast 2040, total employment for the region is anticipated to grow
in excess of 2,750,000 jobs between 2010 and 2040. Dallas County alone is expected to
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encounter over 1.3 million new jobs during this time period accounting for more than 45% of the
projected growth. Collin and Denton counties will account for 18% of the region’s total growth by
adding approximately 314,000 and 196,000 new jobs respectively between 2010 and 2040.
Tarrant County is anticipated to add approximately 713,000 new jobs during this time period as
well. Employment is expected to increase tremendously over the next 20+ years which will only
continue to contribute to the growing economy of the region. The following page contains an
economic snapshot of the Dallas-Fort Worth-Arlington Metropolitan District (Dallas, Tarrant,
Collin, Denton, Rockwall, Johnson, Ellis, Hunt, Kaufman, Wise, Parker, Hood, and Somervell
Counties). This information was provided by the Texas Workforce Commission from their June
2024 Economic Profiles and is currently the most recent available.
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Dallas-Fort Worth-Arlington MSA June 2024
E l l i s
W i s e
H u n t
C o l l i n
D a l l a sP a r k e r
D e n t o n
T a r r a n t
K a u f m a n
J o h n s o n
H o o d
S o m e r v e l l
R o c k w a l l
MSA Labor Force Statistics
Jun-24 May-24 Jun-23 Yearly Change
Civilian Labor Force 4,462,840 4,425,687 4,366,866 95,974
Employed 4,271,252 4,267,136 4,196,886 74,366
Unemployed 191,588 158,551 169,980 21,608
Unemployment Rate 4.3%3.6%3.9%0.4%
Texas Labor Force Statistics
Jun-24 May-24 Jun-23 Yearly Change
Civilian Labor Force 15,436,594 15,284,078 15,067,871 368,723
Employed 14,736,520 14,709,352 14,440,713 295,807
Unemployed 700,074 574,726 627,158 72,916
Unemployment Rate 4.5%3.8%4.2%0.3%
US Labor Force Statistics
Jun-24 May-24 Jun-23 Yearly Change
Civilian Labor Force 169,007,000 167,576,000 167,910,000 1,097,000
Employed 161,774,000 161,341,000 161,559,000 215,000
Unemployed 7,233,000 6,235,000 6,351,000 882,000
Unemployment Rate 4.3%3.7%3.8%0.5%
Historical Unemployment Rates
Jun-14Aug-14Oct-14Dec-14Feb-15Apr-15Jun-15Aug-15Oct-15Dec-15Feb-16Apr-16Jun-16Aug-16Oct-16Dec-16Feb-17Apr-17Jun-17Aug-17Oct-17Dec-17Feb-18Apr-18Jun-18Aug-18Oct-18Dec-18Feb-19Apr-19Jun-19Aug-19Oct-19Dec-19Feb-20Apr-20Jun-20Aug-20Oct-20Dec-20Feb-21Apr-21Jun-21Aug-21Oct-21Dec-21Feb-22Apr-22Jun-22Aug-22Oct-22Dec-22Feb-23Apr-23Jun-23Aug-23Oct-23Dec-23Feb-24Apr-24Jun-240%
2%
4%
6%
8%
10%
12%
14%
16%
Texas US Dallas-Fort Worth-Arlington
Employment by Size Class (4th Quarter 2023)Wages by Industry (in millions) (4th Quarter 2023)
0 : 0.3%1-4 : 3.8%5-9 : 3.8%10-19 : 5.4%
20-49 : 9.2%
50-99 : 8.7%
100-249 : 12.8%
250-499 : 9.8%500-999 : 9.4%
1000 and over : 36.8%
Natural Resourcesand Mining $752.00Construction $5,240.87
Manufacturing $7,010.55
Trade, Transportationand Utilities $15,252.85
Information $2,579.05FinancialActivities $9,389.43
Professional andBusiness Services $18,965.61
Education andHealth Services $8,260.14
Leisure andHospitality $3,487.64
OtherServices $1,371.87
Government $8,165.59Unclassified $53.59
Annual Growth Rate Total Non-agricultural employment
Jun-14Aug-14Oct-14Dec-14Feb-15Apr-15Jun-15Aug-15Oct-15Dec-15Feb-16Apr-16Jun-16Aug-16Oct-16Dec-16Feb-17Apr-17Jun-17Aug-17Oct-17Dec-17Feb-18Apr-18Jun-18Aug-18Oct-18Dec-18Feb-19Apr-19Jun-19Aug-19Oct-19Dec-19Feb-20Apr-20Jun-20Aug-20Oct-20Dec-20Feb-21Apr-21Jun-21Aug-21Oct-21Dec-21Feb-22Apr-22Jun-22Aug-22Oct-22Dec-22Feb-23Apr-23Jun-23Aug-23Oct-23Dec-23Feb-24Apr-24Jun-24-15%
-10%
-5%
0%
5%
10%
15%
Rate
Employment by Industry (June 2024)Employment by Industry (June 2024)
Industry
Current Month
Employment
% Monthly
Change
% Yearly
Change
Total Nonfarm 4,290,500 0.0%1.5%
Mining, Logging and Construction 260,100 3.1%4.9%
Manufacturing 314,700 0.9%1.9%
Trade, Transportation, and Utilities 899,900 0.0%0.7%
Information 90,600 0.1%-2.5%
Financial Activities 372,700 0.3%0.9%
Professional and Business Services 775,500 0.1%0.2%
Private Education and Health
Services
513,400 -0.8%2.5%
Leisure and Hospitality 439,000 0.8%0.7%
Other Services 144,800 0.9%4.5%
Government 479,800 -2.6%3.4%
Mining, Loggingand Construction 6.1%
Manufacturing 7.3%
Trade, Transportation,and Utilities 21.0%
Information 2.1%Financial
Activities 8.7%
Professional andBusiness Services 18.1%
Private Education andHealth Services 12.0%
Leisure andHospitality 10.2%
OtherServices 3.4%
Government 11.2%
7/25/2024 4:09:42 PMPage 1 of 1
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Governmental
Although the Metroplex is governed by state and county agencies, the most direct influence on
properties lies with the municipalities. The majority of the cities within the nine county area have
council-manager forms of government. County and city governments are financed by a
combination of property taxes, sales taxes, and miscellaneous taxes, fees, and fines. Property
taxes are collected by the various taxing districts based upon market value assessments
determined each year by county appraisal districts. No personal or corporate income taxes are
levied by any city or county in the CMSA. The state of Texas does impose Franchise Taxes which
are an indirect form of corporate income tax.
The City of Dallas has a council-manager form of government with the mayor selected at-large,
14 single member district council members, and one city manager. In a council-city management
form of government, council members represent the people in their geographic districts. The City
Manager is responsible to the council for the administration of business policies that the council
has established. Services provided by the city include complete fire protection, police protection,
water, sewer and garbage disposal. Electric service is provided by Oncor Electric Company while
natural gas is provided by Atmos Energy. Telephone service is provided by AT&T. Fort Worth,
like Dallas, utilizes a Council-City Management form of government. The Fort Worth City Council
consists of an appointed City Manager, an at-large elected mayor and eight council members.
The City manager is the Chief Administrator of the city and is appointed by and accountable to
the council. Also, like Dallas, water, sanitation, sewer services, and police and fire protection, as
well as street and bridge maintenance are all provided by the City government. The other utility
carriers of electricity, gas and telephone are all provided by the companies serving Dallas.
Conclusion
Total Nonfarm employment was essentially unchanged in June as the series registered a drop of
1,200 positions over the month. Since June 2023, Total Nonfarm employment increased by
267,400 jobs as annual growth slowed to a rate of 1.9 percent. Private sector employment
declined over the month by 4,300 positions and grew by 1.8 percent annually. Four of 11 major
industries added jobs over the month, and 10 major industries grew over the year. Two private
industries achieved series highs.
Construction employment surged again in June with 5,100 jobs added over the month to reach a
fifth consecutive series peak. The annual gain of 36,100 jobs was the largest in a year as the
growth rate ticked up to 4.4 percent. With the addition of 3,900 jobs in June, Private Education
and Health Services employment reached a series employment high in the 11th consecutive
month. The Private Educational Services subsector added 3,100 jobs over the month while Health
Care and Social Assistance grew by 800 positions. Both subsectors recorded new series high job
counts in June. Manufacturing employment registered a third straight month of four-figure
increases with 2,500 positions gained in June. Durable Goods manufacturing drove the monthly
growth with 2,600 jobs added over the month.
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The Texas unemployment rate was unchanged over the month at 4.0 percent in June and has
declined 8.8 points compared to April 2020, when it peaked at 12.8 percent due to measures
taken to slow the spread of COVID-19. The U.S. unemployment rate rose by a tenth of a point
over the month and increased by half a point annually to 4.1 percent.
The Texas civilian labor force grew by 49,100 people over the month. The number of employed
increased in June by 38,900, while the unemployed increased by 10,300. The U.S. civilian labor
force increased by 277,000 individuals in June. The employed population expanded by 116,000
over the month.
As illustrated in the recent statistics, the Dallas-Fort Worth-Arlington Metroplex continues to be
one of the fastest growing areas of the United States. This trend is expected to continue in the
future and through the year 2030, as population is expected to reach 9.1 million. More employers
are expected to migrate to D/FW, and therefore provide an increased number of jobs. Dallas/Fort
Worth accounts for over 30 percent of the State’s gross regional product and is a national leader
in the creation of new jobs, corporate relocations, and technology-related businesses. One of the
primary factors in maintaining this employment growth is excellent access to the area provided
by a well-developed highway system and D/FW International Airport, as well as an extensive rail
transportation system. Since the late 1990s, the D/FW economy has shown good signs of growth
and stability. Many experts are guardedly optimistic about the current economic outlook as it
compares favorably to a softening national economy and the last two years of erratic energy
Civilian Labor Force Estimated for Texas and the United States
Seasonally Adjusted (In Thousands)
Yearly Yearly
Jun-24 May-24 Jun-23 Change Jun-24 May-24 Jun-23 Change
Civilian Labor Force 15,311,531 15,262,421 15,084,714 226,817 Civilian Labor Force 168,009,000 197,732,000 167,000,000 1,009,000
Employed 14,694,468 14,655,624 14,488,950 205,518 Employed 161,199,000 161,083,000 161,004,000 195,000
Unemployed 617,063 606,797 595,764 21,299 Unemployed 6,811,000 6,649,000 5,997,000 814,000
Unemployment Rate 4.0%4.0%3.9%0.1%Unemployment Rate 4.1%4.0%3.6%0.5%
TX Labor Force Statistics US Labor Force Statistics
Seasonally Adjusted (In Thousands)
Texas Employment by Industry
Total Nonagricultural 13,871,582 100.0%13,674,848 100.0%13,558,949 100.0%1.4%2.3%
Total Private 13,380,598 96.5%13,187,411 96.4%13,091,408 96.6%1.5%2.2%
Goods Producing 2,103,279 15.2%2,095,382 15.3%2,042,969 15.1%0.4%3.0%
Natural Resources and Mining 271,210 2.0%271,390 2.0%266,419 2.0%-0.1%1.8%
Construction 867,163 6.3%862,295 6.3%832,048 6.1%0.6%4.2%
Manufacturing 964,906 7.0%961,697 7.0%944,502 7.0%0.3%2.2%
Service Providing 11,768,303 84.8%11,579,466 84.7%11,515,980 84.9%1.6%2.2%
Trade, Transportation, and Utilities 2,905,417 20.9%2,836,929 20.7%2,870,910 21.2%2.4%1.2%
Information 238,570 1.7%240,486 1.8%242,954 1.8%-0.8%-1.8%
Financial Activities 890,117 6.4%890,733 6.5%880,331 6.5%-0.1%1.1%
Professional and Business Services 2,153,770 15.5%2,137,572 15.6%2,149,288 15.9%0.8%0.2%
Education and Health Services 3,210,798 23.1%3,088,620 22.6%3,094,456 22.8%4.0%3.8%
Leisure and Hospitality 1,508,801 10.9%1,531,709 11.2%1,450,075 10.7%-1.5%4.0%
Other Services 369,846 2.7%365,980 2.7%360,425 2.7%1.1%2.6%
Public Administration 490,984 3.5%487,437 3.6%467,541 3.4%0.7%5.0%0
% of Total % of Total % of Total Quarterly
Change
Yearly
ChangeINDUSTRY TITLE Q4 2023
Employment
Q3 2023
Employment
Q4 2022
Employment
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prices. Dallas/Fort Worth is larger today in population than 27 states, and is a major economic,
social, and political center of both Texas and the United States. Due to the changing
demographics, the regional economy in general, and the continued stability of the local
government, expectations for the region’s future are optimistic.
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CITY/NEIGHBORHOOD ANALYSIS
A neighborhood is defined in The Appraisal of Real Estate, Fifteenth Edition, published by the
Appraisal Institute, as a group of complementary land uses. 5 Land uses within a neighborhood
are not necessarily homogeneous, as in a district, but are related in that property values are
affected by the same factors. Neighborhood boundaries identify the physical area that influences
the value of a subject property. These boundaries may coincide with observable changes in
prevailing land use or occupant characteristics. Physical features such as the type of structures,
street patterns, terrain, vegetation, and lot sizes tend to identify land use districts. Transportation
arteries, bodies of water, and changing elevation can also be significant boundaries. To identify
the neighborhood boundaries, we have followed the following four steps (summarized), as
recommended within The Appraisal of Real Estate: 1) Examine the subject property; 2) Examine
the area's physical characteristics, 3) Determine preliminary boundaries on a map; and 4)
Determine how well the preliminary boundaries correspond to the demographic data. 6
5 The Appraisal Institute, The Appraisal of Real Estate (Fifteenth Edition), Chicago, Illinois, 2020, page 138.
6 Ibid. page 141-142.
Subject Property
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The following neighborhood description will include a definition of the boundaries of the subject
neighborhood, a discussion of the primary thoroughfares, types of improvements along these
thoroughfares, the density of development, secondary street infrastructure, and a discussion of
the type of commercial uses within the neighborhood. The subject neighborhood, as defined
herein, is considered to be the immediate competing trade area for the subject property, taking
into account the various types of land uses present or reasonably probable in the neighborhood,
patterns and rates of growth, traffic patterns and density, and the density of land use, among other
factors considered in the previously suggested steps. All of these factors are considered
influential in the determination of the value of the subject.
Neighborhood Boundaries
The subject site is physically located along the east line of South Woodrow Lane in Denton, Texas.
The neighborhood is defined as the city limits of Denton. The neighborhood has good accessibility
given its proximity to Interstate 35E and Interstate 35W and the major transportation nodes.
Location
The subject property is located in the City of Denton, Texas, in Denton County. The site is heavily
influenced by the Dallas/Forth Worth Metroplex. The subject property is located approximately
30-35 miles northwest of the Dallas Central Business District. Primary access to and from Denton
is provided by IH-35W from Fort Worth and IH-35E from Dallas. Major thoroughfares surrounding
Denton include Loop 288 to the north and east of Denton, and IH-35 to the south and west.
North/south access through Denton is provided by U.S. Highway 77 while major east/west
thoroughfares include McKinney, Oak, and Hickory Streets as well as University Drive.
Population
As can be seen in the following charts provided via the Site to do Business, the 2023 population
estimate was 149,125. The population has grown at a steady rate of 1.99%/annually since 2020.
Population between 2023 and 2028 is expected to grow at a steady rate of 2.47%/annually. The
charts for population and household growth are located below.
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Income
According to the Site to do Business, the 2023 median household income within the neighborhood
was $67,380, which is slightly below the national average of $72,603. Income is projected to grow
at a relatively steady rate of 2.96% over the next five years. Located below is a chart detailing the
median, average and per capita income for the subject neighborhood.
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Employment
According to the Site to do Business, employment was relatively high with an unemployment rate
of 4.1%. The main industries within the city include Management/Business/Financial, Professional
and Services. Approximately 64.8% of residents work in white-collar jobs.
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Conclusion
In recent years, the neighborhood has been impacted positively by a recovery and growth in the
local and national economy. The progress has continued into 2024 and is anticipated to continue
into the near future. The D/FW market in general experienced economic growth and remained
attractive for investment opportunities. Given this, indications are that market conditions within
this neighborhood are moving in a positive direction.
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DENTON INDUSTRIAL MARKET OVERVIEW
Chart provided by CoStar
Vacancy Rates
The industrial vacancy rate in the Denton Industrial Market has been increasing over the past five
years. The vacancy rate currently stands at 18.53 percent, compared to approximately 14.6
percent in the 2nd quarter of 2023. The five-year average vacancy rate is 8.99 percent.
Vacancy Rate
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Absorption
The five-year average net absorption has been 2,500,000 square feet.
Net Absorption
Rental Rates
The current average rental rate for the Subject industrial Market was $10.41 per square foot, and
the five-year average rental rate was $8.63 per square foot. The average rental rate has steadily
increased over the last five years.
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Market Asking Rent Per SF
Conclusion
As detailed on the previous pages, overall, the subject industrial market has been experiencing
decreasing occupancy rates, but positive absorption, and increasing rental rates over the last five
years. Current demand is anticipated to remain relatively stable, and the market is anticipated to
experience fairly steady growth over the next 3-5 years.
SECTION III - FACTUAL DESCRIPTIONS AND ANALYSES
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SITE DESCRIPTION AND ANALYSIS
Site description consists of comprehensive factual data, information on land use restrictions, a
legal description, other title and record data, and information on pertinent physical characteristics.
Site analysis goes further. It is a careful study of factual data in relation to the market area
characteristics that create, enhance, or detract from the utility and marketability of specific land
or a given site as compared with other sites that it competes with. 7
Location and Legal Description
The subject property is physically located along the east line of South Woodrow Lane, just north
of Shady Oaks Drive and has a municipal address of 869 South Woodrow Lane, Denton, Denton
County, Texas. The following is a summarized legal description for the subject site.
Being a tract of land in Tejas Testing Addition, Block A, Lot 1; City of Denton,
Denton County, Texas.
Access and Exposure
The subject property is physically located along the east line of South Woodrow Lane, just north
of Shady Oaks Drive, Denton County, Texas. At the subject, South Woodrow Lane is a four-lane,
bi-directional, concrete-paved, median divided, secondary roadway. Therefore, the subject is
considered to have average exposure and access characteristics.
Size and Shape
The subject tract is generally rectangular in shape and consists of 1.94 acres (84,861 square
feet). A parcel map for the subject is located as follows:
7 The Appraisal Institute, The Appraisal of Real Estate (Fifteenth Edition), Chicago, Illinois, 2020, page 165.
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Parcel Map
Subject Property
Topography
The topography of the subject tract is generally flat and level and is best described as being at
street grade. Furthermore, the topography should not limit the use of the property. Drainage of
the site appears to be adequate.
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Flood Zone
None of the subject tracts lie in the 100 or 500 year flood zone, according to Community-Panel
Number 48121C0380G, dated April 18, 2011, as prepared by the Federal Emergency
Management Agency (FEMA) National Flood Insurance Program. The subject tracts lie within a
shaded Zone X, which is an area protected from the 100-year flood by levee, dike or other
structure subject to failure or overtopping during larger floods. A copy of the FEMA map for the
subject property is located below.
Subject Property
Environmental Concerns
The existence of any hazardous substances or materials was not observed upon the physical
inspection of the tract. However, we are not qualified to detect these substances. It should be
noted that the opinions of value found within this report are contingent upon the subject property
being free of any hazardous wastes deposited thereupon by the present or previous
owners/tenants of the sites, which would adversely affect the value of the property.
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Surrounding Land Uses
The land uses immediately surrounding the subject include industrial development to the north,
vacant land to the east, south and west. The neighborhood is best described as predominantly
vacant land, industrial uses, and single-family. An aerial photo showing the surrounding land is
located as follows.
Subject Property
Soils
Strict attention should be taken to the soils, insofar as preliminary site work preparation and
excavation is concerned, as damage may occur to improvements if proper precautions are not
undertaken. However, these soil characteristics are very common throughout the region and
should not seriously hinder the development potential of the site, provided proper site preparation
and planning is undertaken. Based upon the extent of development in the subject neighborhood,
there is no anticipated difficulty with improvements built-upon these subsoil conditions, assuming
proper design and workmanship.
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Easements
We were not furnished, and it is beyond the defined scope of our assignment to obtain title work
and surveying for the subject property. For purposes of this analysis we are assuming that only
typical utility easements exist and that they would not, and/or have not adversely affected
development of the subject property. If this assumption is not correct it could necessitate re-
analysis.
Utilities and Public Services
The subject property appears to have access to all utilities. Telephone and electricity service are
available from multiple providers, and natural gas is provided to the area from Atmos Energy. The
subject is also serviced by public utility services, including police and fire protection.
Conclusion
The subject property is located in the City of Denton in Denton County. The site is comprised of
1.94 acres (84,861 square feet). The site is near rectangular in shape, and it has access to all
utilities. The site has average exposure and access characteristics for an industrial office
warehouse-oriented property. Furthermore, no portion of the subject property lies within the 100
year flood zone. The tract has a generally flat and level topography and adequate drainage. Soil
and subsoil conditions are not anticipated to severely restrict the development potential of the
site. The tract does not appear to be encumbered by any severe easements or encroachments.
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ZONING AND LAND USE RESTRICTIONS
The subject tract is within the corporate limits of the City of Denton. The tract is currently zoned
PF, Public Facilities. According to the Denton Code of Ordinances, the PF, Public Facilities District
is intended “to provide adequate lands for public and quasi-public community uses and services,
including but not limited to fire stations, schools, libraries, community centers, hospitals, civic
buildings, open space, parks, utilities, and other public-related facilities.” It appears the subject is
currently a legal use. A copy of the City of Denton zoning map as well as zoning requirements for
the subject can be found following this paragraph.
Zoning Map
Subject Property
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There are no other known deed restrictions, either public or private, that would further limit the
utilization of the subject property. This statement should not be taken as a guarantee or warranty
that no such restrictions exist. Deed and title examinations by a competent attorney on the
property appraised is recommended if any questions regarding such restrictions should arise.
Deed restrictions are matters legal in character within the State of Texas, and only title
examination by a qualified attorney can result in an informed opinion. Should there be a question
regarding the compliance with any existing deed restrictions, we recommend a title examination
by a licensed and qualified title attorney to the extent assurances to this matter are desired.
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TAX ANALYSIS
The Texas legislature has provided for a unified system of taxation for the assessment and
collection of real property taxes. In each county an appraisal district is established for the purpose
of listing and assessing all real estate within the county. Real property is presumably assessed at
100 percent of market value. Once the taxable value of the property is established by the appraisal
district, each of the individual taxing authorities within the county set their own tax rates.
The subject property is assessed by the Denton Central Appraisal District. The following table
depicts historical property tax rates for the taxing authorities.
As the above table indicates, the overall tax rate for property located within this portion of Denton
County have been decreasing by 4.40 percent per year during the five year period. Tax rates are
anticipated to continue to remain relatively stable in subsequent years. According to the Denton
Central Appraisal District records, the subject has a 2023 assessed value as follows:
The subject property has a 2023 assessed value of $923,422. This equates to a tax expense of
$31,505 based upon a 2023 tax rate of $1.909367/$100 of assessed value. Based upon the “as
is” value conclusion of this report, the subject property appears to be under assessed.
Compound
Rate of Change
Tax Authority 2023 2019-2023
Denton County $0.2252780 $0.2249850 $0.2330860 $0.2175430 $0.1894850 -4.23%
City of Denton 0.5904540 0.5904540 0.5658230 0.5606820 0.5606820 -1.29%
Denton ISD 1.4700000 1.4076000 1.3620000 1.3446000 1.1592000 -5.77%
Denton Central Appraisal District 0.0000000 0.0000000 0.0000000 0.0000000 0.0000000 0.00%
Total Tax Rate $2.285732 $2.223039 $2.160909 $2.122825 $1.909367 -4.40%
Denton County Tax Rates
Improvement Total Market
Tax I.D. Number Land Value Value Value
175165 $508,086 $415,336 $923,422
Total Assessment:$508,086 $415,336 $923,422
Assessment PSF:$6.00 $24.95 $55.46
Tax Summary
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DESCRIPTION OF THE IMPROVEMENTS
The subject improvements consist of a 16,650 square foot office/warehouse building that was
constructed in 1994 and 2009. The building is constructed of a concrete foundation, brick veneer
exterior walls, and a metal roof. The interior construction is comprised of vinyl/wood flooring and
hardener and sealer on concrete, exposed roof structure and acoustic ceiling tile, and fluorescent
lighting. The subject facility is approximately 69 percent heated/air conditioned office space, has
one grade level loading door, and a clear height of 16 feet. The parking and driveway areas are
concrete paved. The subject property is physically located along the east line of South Woodrow
Lane, just north of Shady Oaks Drive and has a municipal address of 869 South Woodrow Lane,
Denton, Denton County, Texas. Based upon a land area of 1.94 acre (84,861 square feet) and a
building size of 16,650 square feet, a land-to-building ratio of 5.10:1 results.
The following is a description of the building components of the subject's structure. The exact
building components were not provided; however, this is our best estimate of these building
components and is described using building component descriptions from the Marshall Valuation
Service.
Description of the Building's Components
Excavation and Site Preparation: Typical clearing and site preparation with no
significant excavation
Foundation: Concrete, bearing walls
Frame: Wood frame and Steel frame
Floor Structure: Concrete on ground
Floor Cover: Vinyl/wood and sealer on concrete
Ceiling: Exposed roof structure and acoustic ceiling
tile
Interior Construction: Interior construction, framed (warehouse
areas)
Plumbing: Plumbing (typical of industrial warehouse
construction)
HVAC: Package heating and cooling
Electrical: Electrical, finished (typical of industrial
warehouse construction)
Exterior Wall: Brick veneer and metal for warehouse
Roof Structure: Steel joists, steel deck
Roof Cover: Metal roof
Site Improvements: Concrete paving
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Condition of the Improvements
The subject improvements were completed in 1994 and 2009 and are considered to be
constructed of good construction and workmanship. Furthermore, the improvements were found
to be in excellent condition with no significant items of deferred maintenance noted upon
inspection. Given the current condition of the subject improvements, an effective age of 10 years
is forecast for the facility.
Estimate of Physical Life and Effective Age
According to the Marshall and Swift Valuation Service, the typical physical life expectancy of
buildings similar to the subject is 45 years. This estimate assumes prudent management and
proper maintenance of the improvements.
Considering the quality of the subject building’s components, and also the overall utility of the
structure, an estimate of 45 years appears to be an appropriate determination of the physical life
of the subject property. Thus, considering the 10 year effective age of the subject facility, a
remaining physical and economic life of 35 years is forecast for the facility.
Conclusion
The subject was constructed in 1994, and it is considered to be constructed of good construction
and workmanship. Furthermore, the facility was found to be in excellent condition with no
significant items of deferred maintenance noted upon inspection. The subject has an estimated
effective age of 10 years, and a remaining economic life of 35 years. The quality of the building
is considered to be comparable with respect to design and quality to competing buildings in the
immediate vicinity of similar age.
Finally, it is assumed that there is full compliance with all requirements of Title III of the Americans
With Disabilities Act (ADA). In the course of the inspection, no items of non-compliance were
observed. However, we are not qualified experts in detecting non-compliance and no
responsibility is assumed for any such conditions, or for any expertise or architectural/design
knowledge and cost required to identify such non-compliance. The opinions of value contained
herein are predicated upon the assumption that there is no non-compliance of the law. We urge
the client to retain an expert in this field, if so desired.
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Building Plans
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SUBJECT PROPERTY PHOTOGRAPHS
Exterior view of the subject property - Office
Exterior view of the subject property - Warehouse
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SUBJECT PROPERTY PHOTOGRAPHS
Exterior view of the subject property – Office
Lobby of the subject property
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SUBJECT PROPERTY PHOTOGRAPHS
Breakroom of the subject property
Breakroom of the subject property
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SUBJECT PROPERTY PHOTOGRAPHS
Office of the subject property
Individual office of the subject property
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SUBJECT PROPERTY PHOTOGRAPHS
Stained concrete flooring of subject property
Office of the subject property
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SUBJECT PROPERTY PHOTOGRAPHS
Hallway of the subject property
Individual office of the subject property
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SUBJECT PROPERTY PHOTOGRAPHS
Interior view of the subject property
Conference room of the subject property
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SUBJECT PROPERTY PHOTOGRAPHS
Warehouse of the subject property
Warehouse of the subject property
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SUBJECT PROPERTY PHOTOGRAPHS
Caged area of the subject property
Locker room in warehouse of the subject property
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SUBJECT PROPERTY PHOTOGRAPHS
Facing South on South Woodrow Lane
Facing North on South Woodrow Lane
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HIGHEST AND BEST USE ANALYSIS
The economic principles which affect the market value of real property also play a significant role
in forming the property's highest and best use. In all valuation assignments, value opinions are
based upon use. The highest and best use of a property provides the foundation for a thorough
investigation of the competitive positions of market participants. Consequently, highest and best
use can be described as the foundation upon which market value rests. The highest and best use
of a property is defined as follows:
The reasonably probable use of property that results in the highest value. The four
criteria that the highest and best use must meet are legal permissibility, physical
possibility, financial feasibility, and maximum productivity. 8
With regard to vacant land, the highest and best use is generally regarded as that use among all
reasonable, alternative uses, which yields the highest present land value, after payments are
made for labor, capital, and coordination. It is to be recognized that in cases where a site has
existing improvements on it, the highest and best use may very well be determined to be different
from the existing use.
Analysis of the highest and the best use of a property as improved implies that the existing
improvement should be renovated or retained as is so long as it continues to contribute to the
total market value of the property, or until the return from a new improvement would more than
offset the cost of demolishing the existing building and constructing a new one. Furthermore, the
existing use will continue, unless and until land value in its highest and best use exceeds the total
value of the property in its existing use.
Implied within this definition is recognition of the contribution of that specific use to community
environment or to community development goals in addition to wealth maximization of individual
property owners. In appraisal practice, the concept of highest and best use represents the
premise upon which value is based. In the context of most probable selling price (market value)
another appropriate term to reflect highest and best use would be most probable use. The most
probable use is defined as follows:
1) The use to which a property will most likely be put based on market analysis and
the highest and best use conclusion. The most probable use is the basis for the
most probable selling price of the property.
2) Highest and best use in the context of market value. 9
8 The Appraisal Institute, The Dictionary of Real Estate Appraisal (Sixth Edition), Chicago, Illinois, 2015, page 109.
9 Ibid. page 152.
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To test for the most feasible or the highest and best use for land as vacant all logical and feasible
alternatives must be analyzed. All alternative uses must meet four criteria. The criteria are as
follows:
1) The legal use of the site – what uses of the site are permitted under applicable
zoning ordinances and other legal restrictions.
2) The physical use of the site – what potential uses of the site are physically
possible.
3) The feasible use of the site – what possible and legally permissible use of the site
will produce a positive return.
4) The maximum productive use of the site – among the highest financially feasible
uses, the use that provides the highest rate of return, or value (given a constant
rate of return), is the highest and best use.
While some investors/developers seek to maximize their returns, most seem to operate on the
belief that the available information is too imperfect to permit optimization or maximization. It
appears that the typical investor is satisfied if their investment can be expected to return a yield
that will meet their standards. Thus, it is possible for more than one single use to be feasible for
a site if the uses meet an investment criteria of the typical investor/developer for a property.
Generally accepted professional appraisal practice dictates that in appraising improved property,
the highest and best use be estimated under two different premises. First, the highest and best
use of the site “as vacant and available” must be estimated. The second analysis estimates the
highest and best use of the property “as improved” or “proposed to be improved.”
Highest and Best Use as if Vacant
The first question to be answered, What uses are legally permissible? requires a review of the
zoning restrictions applicable to the site. As indicated in the Zoning and Land Use Restrictions
section of this report, the subject property is zoned PF, Public Facilities by the City of Denton.
According to the City of Denton Code of Ordinances, the purpose of the PF, Public Facilities is
“intended to provide adequate lands for public and quasi-public community uses and services,
including but not limited to fire stations, schools, libraries, community centers, hospitals, civic
buildings, open space, parks, utilities, and other public-related facilities.” Given the uses permitted
under the current zoning ordinances an industrial office warehouse development represents the
most intensive physically possible and legally permissible use for the subject tract.
Addressing the second question, What uses of the site are physically possible? requires a
review of the physical characteristics of the site. The subject property consists of 1.94 acres. The
size of a parcel of land is important in terms of feasible development alternatives, and, ultimately,
the value of the land. Optimal size is that which allows the highest marginal returns on investment
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after development. A tract of land which is too large is worth more in subdivided parcels whereas
a tract which is too small for development is worth more when combined with contiguous sites. A
less than optimally sized small tract may be further constrained if contiguous tracts are currently
developed to their highest and best use. In such a case, assemblage may not be a viable
alternative.
The subject tract is near rectangular in shape and is physically along the east line of South
Woodrow Lane, just north of Shady Oaks Drive. Thus, the subject is considered to have average
exposure and access characteristics for an industrial type use.
The site is generally level which is beneficial for most urban types of industrial development. The
site is not affected by adverse easements, flood plain, or encroachments. Thus, the topography
of the site does not significantly limit its use. Additionally, the site has access to public utilities.
Based upon an analysis of land uses within the subject neighborhood, it is our opinion that the
subject tract can be developed into an industrial office warehouse.
Answering the third and fourth questions, What uses are financially feasible? and What uses
are maximally productive? requires an analysis of potential income based on demand that could
be expected from all physically possible and legally permissible uses.
To test the feasibility of development of the subject tract, it is projected that rental rates for a new
facility similar to and in the vicinity of the subject would generate rent of $12.25 per square foot.
It is also anticipated that a new facility could attain an occupancy rate of 95 percent. The feasibility
of new retail development is indicated by the following calculations, which are based upon these
projected rental rates and occupancy levels.
Based upon cost projections available from the Marshall & Swift Cost Service, industrial facilities
of this size would generally cost approximately $80.00 to $87.00 per square foot including typical
entrepreneurial profit levels and exclusive of land costs. Upon inclusion of land value,
development of a new building appears to be at feasible levels. Therefore, the highest and best
use of the subject tract, as if vacant, is for an industrial office warehouse.
Gross Potential Rent/SF $12.25
Vacancy & Collection Loss 5.0%(0.61)
Effective Gross Income/SF $11.64
Less: Expenses/SF (3.79)
Plus: Reimbursables/SF 3.50
Net Operating Income/SF $11.35
Capitalization Rate 7.75%$146.45
Financial Feasibility Test
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Highest and Best Use, as Improved
The preceding analysis is for the 1.94 acre site, as if vacant. This section treats the highest and
best use of the property as improved. The subject site is improved with a 16,650 square foot
industrial warehouse. The improvements are in excellent condition, appear adequately functional
and contribute significantly to the total value of the property. The facility appears to conform to the
current zoning ordinance and the improvements do not appear to suffer from deferred
maintenance or curable, physical deterioration. Finally, the improvements are constructed of good
construction and workmanship and are considered to be competitive within their submarket.
The improvements do contribute to property value above and beyond the value of the underlying
land. Thus, it would be impractical to remove the improvements. Additionally, an alternative use
of the property would not result in as high a value as the current use. Therefore, the continued
operation of the existing industrial warehouse results in the highest overall value considering the
alternatives. This is in our opinion, the highest and best use of the site, as improved. Furthermore,
it is our opinion that an owner-user would be the most likely purchaser of the subject.
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THE APPRAISAL PROCESS
The appraisal process represents a logical analysis of the factors that bear upon the present value
of real estate. In this process, three basic approaches are typically used by appraisers: 1) the
Cost Approach, 2) the Income Capitalization Approach, and 3) the Sales Comparison Approach.
The Cost Approach is based upon the proposition that an informed purchaser would pay no more
than the cost of producing a substitute property with the same utility as the subject. First, the
subject's site is valued (as if vacant) by comparing it to the sale of similar sites using the Direct
Sales Comparison Approach. The reproduction cost new is then estimated for the subject
improvements, and from this, an amount is deducted for depreciation from all causes to arrive at
a value via the Cost Approach.
The Sales Comparison Approach is based upon the proposition that an informed purchaser would
pay no more for a property than the cost to him of acquiring a similar property with the same utility.
In this approach, similar properties that have recently sold are compared to the subject. Notable
differences in the utilized comparables are adjusted to the subject in the process. Comparisons
are made and are typically based upon the terms of sale, age, location, size, financing, and
physical characteristics. The adjustments are abstracted from and/or otherwise supported to
represent the actions of buyers and sellers in the market. The value range that is indicated by
the adjusted comparable sales is correlated or reconciled into a final value opinion via this
approach.
The Income Capitalization Approach is the process in which the anticipated flow of future benefits
(dollar income or amenities) is discounted to a present worth figure through a capitalization or
direct discount procedure. All expenses attributable to the real estate are deducted from an
effective gross income estimate to arrive at forecasts of applicable net income streams. The net
income streams are then "capitalized" or discounted into value by market abstracted rates. The
purpose of ownership is to generate income and provide to the owner a sufficient return on his/her
investment to make the purchase of such a property attractive.
To complete this appraisal assignment, the Cost, Income Capitalization, and Sales Comparison
Approaches were considered, while the Income Capitalization and Sales Comparison
Approaches were utilized. The exclusion of the Cost Approach to Value is considered reasonable
and its exclusion should not mislead the user of this appraisal. The exclusion of the Cost Approach
to Value is considered reasonable and its exclusion should not mislead the user of this appraisal.
The exclusion of the Cost Approach is considered reasonable given the difficulty in accurately
estimating the depreciation in an older property. The appraiser’s scope of work decision involved
the exclusion of the Cost Approach due to the fact that this approach would provide a less reliable
indication of value than the other two approaches.
SECTION IV – INCOME CAPITALIZATION APPROACH
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DESCRIPTION OF THE INCOME CAPITALIZATION APPROACH
Income-producing property is typically purchased based on the future income stream generated
during the holding period as well as the income from the sale of the property at the period's
termination. “In the income capitalization approach, the present value of the anticipated future
benefits of property ownership is measured. Income capitalization converts periodic future income
expectations into a lump-sum capital amount. The future income expectations include both a
property’s income and resale value. There are two methods of income capitalization: (1) direct
capitalization and (2) yield capitalization. In direct capitalization, the relationship between one
year’s income and value is reflected in either a capitalization rate or an income multiplier. In yield
capitalization, several years’ income and a reversionary value, if any, at the end of a designated
period are forecasted and converted to present value using a yield rate. The most common
application of yield capitalization is discounted cash flow analysis.” 10
This approach is based on the principles of anticipation and change because it concentrates on
how future change affects present property value, especially as to the forecasting of future net
income. The relationship of supply and demand for a property affects its probable income stream
as well as the rate of return that an investor would require. The rents, expenses and net income
streams of equally desirable substitute properties as well as the capitalization and yield rates
indicated by the sales of comparable properties can be used to derive an estimated net income
and appropriate capitalization rate for the subject property. Finally, the external forces that affect
the other two approaches to value also affect the incomes and capitalization rates, and thus the
indicated present value from the Income Capitalization Approach.
The Income Capitalization Approach, which is related to investor perceptions, is an appropriate
method for evaluating income-producing real estate. The basic steps involved in this approach
are:
1) Estimate the total potential gross income (PGI) expected to be generated by the subject
property at full occupancy before the deduction of operating expenses.
2) Estimate and deduct a vacancy and collection loss allowance; thereby arriving at an
estimate of effective gross income (EGI).
3) Estimate and deduct expenses, resulting in an estimate of net operating income (NOI.)
4) Estimate the duration and pattern of the income stream.
5) Select an applicable capitalization method and technique, such as direct capitalization or
yield capitalization.
6) Develop the appropriate rate.
10 The Appraisal Institute, The Appraisal of Real Estate (Fifteenth Edition), Chicago, Illinois, 2020, page 36.
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7) Complete the computations necessary to derive an economic value.
Gross income estimates are used primarily to calculate probable net income benefits that may be
derived from ownership of the property. In accepted appraisal practice, the usual basis for a gross
income projection is market rent (or economic rent), which is defined as being “the rental income
a property would have commanded had it been exposed to the market prior to the date of
appraisal. It is indicated by the current rents that are either paid or asked for comparable space
with the same treatment of expenses as of the date of value.” 11 If the property is encumbered by
a lease or leases, frequently it is necessary to include the contract rent specified in the leases in
the estimate of PGI, provided that the leases have fairly lengthy terms.
After the net income expected to be generated by the subject property is estimated, this income
can be converted into an estimated present value for the property by using direct capitalization
and/or yield capitalization techniques. Direct capitalization is defined as “a method used in the
income capitalization approach to convert a single year’s income expectancy into a value
indication. This conversion is accomplished in one step, either by dividing the net operating
income estimate by an appropriate income rate or by multiplying the income estimate by an
appropriate factor.” 12 Direct capitalization implies that the rate or multiplier used will reflect typical
investor expectations.
“Yield capitalization is used to convert explicit future economic benefits into an indication of
present value by applying an appropriate discount rate.” 13 This technique focuses on the future
expected income stream over the projected holding period and the reversion expected to be
recovered due to the sale of the property at the end of the holding period. This method is valuable
if market information concerning trends of changing incomes and expenses over the projected
holding period is available.
11 The Appraisal Institute, The Appraisal of Real Estate (Fifteenth Edition), Chicago, Illinois, 2020, page 420.
12 Ibid., page 459.
13 Ibid., page 475.
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COMPARABLE RENTAL PRESENTATION
To estimate market rent for the subject property, rental rates commanded by comparable buildings
were researched and analyzed. Appropriate consideration was given to any differences and the
necessary adjustments were made accordingly. Information was gathered regarding quoted and
contract rental rates to prospective tenants. The map located below reveals the comparables'
locations relative to the subject property.
Rental
Map #Size (SF)Rate PSF
1 12,000 $10.00
2 7,752 $12.00
3 337,607 $10.00
4 13,410 $10.00
5 15,876 $12.00
S 16,650 Subject
Map Comparable Summary
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
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Location:
Owner/Management:
Rental Rate:$10.00 per square foot
Lease Term:
Tenant's Expense Obligations:
Occupancy Rate:0.0%
Type of Construction:Net Rentable Area:12,000 square feet
Condition and Appearance:Area of Suite:7,465 square feet
Year of Construction:Space Available:12,000 square feet
Renovation/Expansion:Land Area:0.540 acres
Access and Visibility:Land-to-Building Ratio:1.96 to 1.0
Clear Height:Typical % Office Finish:3%
Parking, Drives, & Loading:Typical % HVAC:0%
Loading Facilities:
Contact Person:Telephone Number:
Position:
INCOME INFORMATION
Manor Farms LLC
1028 Shady Oaks Dr
Denton, TX
Average
1990
N/A
16
Open Surface, Concrete
DH & GL
Good
COMMENTS
COMPARABLE RENTAL NUMBER 1
Class S
PROPERTY IDENTIFICATION
PHYSICAL CHARACTERISTICS
VERIFICATION
NNN
972-979-2620
Negotiable
April Robert
Broker
This property is located at 1028 Shady Oak Drive Denton, Texas and is listed at an asking rate of $10.00/SF NNN.
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Location:
Owner/Management:
Rental Rate:$12.00 per square foot
Lease Term:
Tenant's Expense Obligations:
Occupancy Rate:0.0%
Type of Construction:Net Rentable Area:7,752 square feet
Condition and Appearance:Area of Suite:7,752 square feet
Year of Construction:Space Available:7,752 square feet
Renovation/Expansion:Land Area:0.620 acres
Access and Visibility:Land-to-Building Ratio:3.48 to 1.0
Clear Height:Typical % Office Finish:23%
Parking, Drives, & Loading:Typical % HVAC:23%
Loading Facilities:
Contact Person:Telephone Number:
Position:
John Withers
COMMENTS
Broker
Class S
Average
1986
INCOME INFORMATION
Negotiable
NNN
PROPERTY IDENTIFICATION
520 S Elm St
Denton, TX
N/A
14
VERIFICATION
Open Surface, Concrete
GL
Good
COMPARABLE RENTAL NUMBER 2
This property is located at 520 South Elm Street Denton, Texas and is listed at an asking rate of $12.00/SF NNN.
940-400-7824
Salt Crk Fam Cap LLC Series Re
PHYSICAL CHARACTERISTICS
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Location:
Owner/Management:
Rental Rate:$10.00 per square foot
Lease Term:
Tenant's Expense Obligations:
Occupancy Rate:94.2%
Type of Construction:Net Rentable Area:337,607 square feet
Condition and Appearance:Area of Suite:5,000 square feet
Year of Construction:Space Available:19,600 square feet
Renovation/Expansion:Land Area:27.760 acres
Access and Visibility:Land-to-Building Ratio:3.58 to 1.0
Clear Height:Typical % Office Finish:3%
Parking, Drives, & Loading:Typical % HVAC:3%
Loading Facilities:
Contact Person:Telephone Number:
Position:
MB Denton LLC
2321 N Masch Branch Rd
Denton, TX
Hannah Ribera
14
INCOME INFORMATION
Negotiable
Gross
PHYSICAL CHARACTERISTICS
Class S
Average
1998
Yes
Open Surface, Concrete
GL
Good
COMPARABLE RENTAL NUMBER 3
This property is located at 2321 N Masch Branch Road Denton, Texas and is listed at an asking rate of $10.00/SF Gross.
PROPERTY IDENTIFICATION
COMMENTS
940-566-0404
Broker
VERIFICATION
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Location:
Owner/Management:
Rental Rate:$10.00 per square foot
Lease Term:
Tenant's Expense Obligations:
Occupancy Rate:0.0%
Type of Construction:Net Rentable Area:13,410 square feet
Condition and Appearance:Area of Suite:13,410 square feet
Year of Construction:Space Available:13,410 square feet
Renovation/Expansion:Land Area:0.610 acres
Access and Visibility:Land-to-Building Ratio:1.98 to 1.0
Clear Height:Typical % Office Finish:35%
Parking, Drives, & Loading:Typical % HVAC:35%
Loading Facilities:
Contact Person:Telephone Number:
Position:
VERIFICATION
Class S
This property is located at 500 South Kealy Avenue Lewisville, Texas and is listed at an asking rate of $10.00/SF NNN.
Good
Open Surface, Concrete
GL
14
COMMENTS
Stacey Byassee
INCOME INFORMATION
Negotiable
TAMASU Properties LLC
500 S Kealy Ave
Lewisville, TX
COMPARABLE RENTAL NUMBER 4
PROPERTY IDENTIFICATION
Average
1986
N/A
Realtor
888-455-6040
PHYSICAL CHARACTERISTICS
NNN
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Location:
Owner/Management:
Rental Rate:$12.00 per square foot
Lease Term:
Tenant's Expense Obligations:
Occupancy Rate:0.0%
Type of Construction:Net Rentable Area:15,876 square feet
Condition and Appearance:Area of Suite:15,876 square feet
Year of Construction:Space Available:15,876 square feet
Renovation/Expansion:Land Area:1.110 acres
Access and Visibility:Land-to-Building Ratio:3.05 to 1.0
Clear Height:Typical % Office Finish:29%
Parking, Drives, & Loading:Typical % HVAC:100%
Loading Facilities:
Contact Person:Telephone Number:
Position:
PROPERTY IDENTIFICATION
2855 Trinity Square Dr
Red Tail Acquisitions
Good
COMPARABLE RENTAL NUMBER 5
Open Surface, Concrete
GL
INCOME INFORMATION
Negotiable
Sr. Vice President
Carrollton, TX
PHYSICAL CHARACTERISTICS
Justin Owen
This property is located at 2855 Trinity Square DriveCarrollton, Texas and is listed at an asking rate of $12.00/SF NNN.
VERIFICATION
COMMENTS
Masonry
Good
1985
N/A
14
214-253-0797
NNN
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DISCUSSION OF MARKET RENT
The Rent Comparables detailed on the previous pages are commercial properties that are similar
to the subject space. Information on these Comparable properties was researched in order to
estimate the market rent for the subject space. The Comparables were selected primarily due to
their physical similarity and proximity to the subject property. A summary of the Comparables is
presented below.
This survey of comparable properties revealed a range of rental rates from $10.00 to $12.00 per
square foot, with a mean of $10.80 per square foot. The rent comparables were analyzed (and
adjustments were made) in several categories to arrive at an estimated market rental rate (per
square foot) for the subject.
Expense Treatment
The subject is 100 percent owner occupied. Comparables 1, 2, 4, and 5 are leased on a NNN
basis, and thus, NNN lease terms will be utilized in this analysis. Therefore, no adjustments are
necessary. Rental 3 is structured on a gross lease; thus, we have adjusted downward for the
appropriate expenses.
Terms and/or Condition of Lease
Quoted rental rates were confirmed for all the comparables. Typically, an adjustment is required
to reflect that this is an offering rate and not a consummated lease. Therefore, a downward
adjustment of 5 percent was warranted in order to reflect the difference between quoted and
consummated lease rates.
Rental Tenant
Rent Location Year Year Sq. Ft.Suite Office HVAC Land to Clear Loading Rate Expense
No.(Address)Built Renv/Exp of NRA Sq. Ft.Ratio Ratio Building Ratio Height Facilities PSF Obligations
1 1028 Shady Oaks Dr 1990 N/A 12,000 7,465 3%0%1.96 to 1.0 16 DH & GL $10.00 NNN
Denton, TX
2 520 S Elm St 1986 N/A 7,752 7,752 23%23%3.48 to 1.0 14 GL $12.00 NNN
Denton, TX
3 2321 N Masch Brand Rd 1998 Yes 337,607 5,000 3%3%3.58 to 1.0 14 GL $10.00 Gross
Denton, TX
4 500 S Kealy Ave 1986 N/A 13,410 13,410 35%35%1.98 to 1.0 14 GL $10.00 NNN
Lewisville, TX
5 2855 Trinity Square Dr 1985 N/A 15,876 15,876 29%100%3.05 to 1.0 14 GL $12.00 NNN
Carrollton, TX
Subject:869 S Woodrow Lane 1994 N/A 16,650 16,650 69%69%5.10 to 1.0 16 GL --
Denton, TX
Summary of
Comparable Rents
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Location
The axiom that "location is the most important physical characteristic of real estate" suggests that
this component warrants paramount consideration in the adjustment process. Therefore, the
locations of the Comparables are the first of the physical characteristics to be considered. The
subject property is physically located along the east line of South Woodrow Lane, just north of
Shady Oaks Drive in Denton, Texas.
Comparables 1 and 2 are located proximate to the subject with similar accessibility and visibility;
thus, no adjustments were warranted.
Comparable 3 is northwest of the subject with inferior accessibility; thus, a 15 percent upward
adjustment was warranted.
Comparable 4 has a similar location to the subject and no adjustment is warranted.
Comparable 5 is to the southeast of the subject with superior accessibility to the highways in the
area; thus, a 5 percent downward adjustment was warranted.
Age/Condition of the Improvements
The subject improvements were constructed in 1994 and 2009 and have an effective age of 10
years. As with any asset, as the useful life decreases, the value follows. The Comparables were
compared to the subject property based upon their respective effective ages. The difference in
the age of the improvements was divided by their economic life in order to determine the
difference in the useful life of the rents vis-a-vis the subject property. The following calculations
were done to arrive at a percentage adjustment for differences in the effective ages of the
Comparables and the subject property.
Quality of Construction
The subject facility is constructed of a concrete foundation, brick veneer exterior walls, and a
metal roof. Comparables 1, 2, and 3 are inferior, Class S structures with metal exteriors; thus, a
Comparable Subject Age Econ. %% Attributable Indicated
Comparable Eff. Age Eff. Age Difference Life (Yrs)Difference to Building Adjustment
Number (CA)(SA)(CA-SA=AD)(EL)(AD÷EL=PD)(PAB)(PD x PAB = IA)
Comparable 1 20 10 10 45 22.22%65%14%
Comparable 2 20 10 10 45 22.22%65%14%
Comparable 3 15 10 5 45 11.11%65%7%
Comparable 4 20 10 10 45 22.22%65%14%
Comparable 5 20 10 10 45 22.22%65%14%
Adjustment for Age/Condition of the Improvements
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5 percent upward adjustment was warranted. Comparables 4 and 5 are similar to the subject in
terms of construction quality and no adjustments were necessary.
Land-to-Building Ratio
The subject has a land-to-building ratio of 5.10 to 1.0. Generally, the subject and all Comparables
are similar; thus, no adjustments were warranted.
Size
The size of a building determines the quantity of the income stream, and generally affects the
selling price although those differences are accounted for (to a certain extent) in the per square
foot comparison used here. Typically, the cost of construction decreases as the size of the building
increases, due to economies of scale associated with large projects. Additionally, the initial
investment outlay of larger properties is more than a comparable smaller property, but, slightly
lower prices on a per unit basis (i.e., square foot, unit, building, etc.) are very common. Upon
analyzing the rental comparables, there appears to be a trend showing smaller properties leasing
at higher per square foot prices than larger properties. Therefore, adjustments appear to be
needed for size. Typically, adjustments for size for industrial oriented facilities range from 5 to 15
percent per doubling/halving as compared to the subject. In this instance, a 5 percent adjustment
for each doubling/halving of size is considered reasonable. Thus, the Comparables are adjusted
as follows:
Building Amenities
This item relates to the overall quality of construction of the comparables and the amenities
associated with each. The projects have varying building features such as office ratios, amount
of HVAC, clearance heights, etc. The subject facility is approximately 69 percent heated/air
conditioned office space, has one grade level loading door, and a clear height of 16 feet. The
following table outlines the building amenities for the subject property and each of the
Comparables, as well as the percentage adjustments.
Comparable Comparable Subject % Difference Adj. Per Indicated
Number Size (SF)Size (SF)In Size Halving/Doubling Adjustment
Comparable 1 7,465 16,650 -55%5%-6%
Comparable 2 7,752 16,650 -53%5%-6%
Comparable 3 5,000 16,650 -70%5%-9%
Comparable 4 13,410 16,650 -19%5%-2%
Comparable 5 15,876 16,650 -5%5%-1%
Adjustment for Size
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Comparable Office HVAC Clear Loading Percentage
Number Ratio Ratio Height Facilities Adjustment
Comparable 1 3%0%16 DH & GL 15%
Comparable 2 23%23%14 GL 10%
Comparable 3 3%3%14 GL 15%
Comparable 4 35%35%14 GL 5%
Comparable 5 29%100%14 GL 0%
Subject 69%69%16 GL -
Adjustment for Building Amenities
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CONCLUSION OF MARKET RENT ESTIMATE
An adjustment grid for the Comparable Rents is located below, followed by the range, mean
(average), and standard deviation of the adjusted rates per square foot.
Rental Number 1 2 3 4 5
Rent/SF $10.00 $12.00 $10.00 $10.00 $12.00
Expense Treatment 0.00 0.00 -1.66 0.00 0.00
Terms/Conditions -0.50 -0.60 -0.50 -0.50 -0.60
Adjusted Rent/SF $9.50 $11.40 $7.84 $9.50 $11.40
Location 0%0%15%0%-5%
Age/Condition 14%14%7%14%14%
Quality of Construction 5%5%5%0%0%
Land-to-Building Ratio 0%0%0%0%0%
Size -6%-6%-9%-2%-1%
Building Amenities 15%5%15%5%0%
Total Adjustment 28%18%33%17%8%
Adjusted Rent/SF $12.16 $13.45 $10.43 $11.12 $12.31
Adjustment Grid
for Comparable Rentals
$/SF
Range $10.43 -$13.45 $11.12 -$12.31 -
Mean (Average)
Standard Deviation $0.65
All Data High and Low Extremes Adjustments <40%
Data Without Data with Absolute
$11.12 $13.45
$11.89 $11.86 $12.26
$1.16 $0.95
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All of the Comparables had a mean of $11.89 per square foot, while the mean of data without
high and low extremes is $11.86 per square foot, and the data with the least absolute adjustments
(<= 40%) had a mean of $12.26 per square foot. Therefore, given the foregoing analysis, market
rent for the subject is estimated to be $12.00 per square. The gross potential income for the
subject is calculated as follows:
16,650 SF x $12.00/SF = $199,800
DISCUSSION OF MARKET OCCUPANCY AND VACANCY AND COLLECTION LOSS ESTIMATE
An allowance for vacancy and collection loss is necessary to account for times of vacancy
between tenants. This vacancy allowance will be based upon a projected market stabilized
occupancy. The 4th Quarter 2023 Dallas/Fort Worth Industrial MarketView report by CBRE
revealed a total vacancy rate for industrial buildings of 4.3 percent. Additionally, according to
CoStar, the Denton submarket vacancy rate currently stands at 18.53 percent, compared to
approximately 14.6 percent in the 2nd quarter of 2023. The five-year average vacancy rate is 8.99
percent.
Vacancy Rate
Therefore, an estimated vacancy and collection loss of 5 percent is considered reasonable for the
subject facility over a typical term of ownership.
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DISCUSSION OF OPERATING EXPENSES
This section of the report involves the analysis of the cost of operation of the subject property.
Operating expenses are classified as fixed and variable. Fixed expenses are typically those cost
of operation, which do not vary with occupancy and must be paid whether the property is occupied
or vacant. Variable expenses are typically those costs, which vary with occupancy or other factors
and must be stabilized and estimated from market experience. The following table depicts
expenses of several similar properties, followed by the actual expenses of the subject property.
The expense comparables and the subject’s historical expenses will be utilized in estimating the
appropriate operating expenses for the subject. It should be noted that the reimbursable expenses
(Taxes, Insurance, CAM, Administrative & General, and Management) will be multiplied by a
stabilized occupancy.
Real Estate Taxes
The subject property has a 2023 assessed value of $923,422. This equates to a tax expense of
$17,632 based upon a 2023 tax rate of $1.909367/$100 of assessed value. Although real estate
is theoretically assessed at 100 percent of market value, commercial properties are typically
assessed in the 70-80 percent of the market value range. Based on our “as is” opinion of value,
the subject appears to be under assessed. It is reasonable to assume that the assessment will
increase to a value closer to the “as is” value conclusion of this report. Based upon the “as is”
market value opinion of the Income Capitalization Approach, and an assessment of approximately
75 percent of market value ($1,680,000), the subject would have a tax expense of $33,077 or
$1.93 per square foot.
Insurance
Annual insurance premiums are a customary cost of ownership associated with improved
properties. A typical policy will include fire, vandalism, liability, and extended coverage. The four
expense comparables reported insurance expenses of $0.18 to $0.52 per square foot, with a
mean of $0.31 per square foot. We have concluded at the upper end of the range given the recent
Number:1 2 3 4 Mean
Location:McKinney Alvarado Allen Carrollton -
Net Rentable Area/Sq.Ft.:34,775 36,172 88,572 77,039 -
Occupancy:100.0% 100.0% 100% 77% -
Year Built: -
Construction Type:Tilt-Wall Metal Tilt-wall Tilt-Wall -
Effective Gross Income:$388,179 $258,450 $1,485,720 $509,316 -
Expenses:PSF/%PSF/%PSF/%PSF/%
Taxes:$86,003 $2.47 $34,760 $0.96 $235,417 $2.66 $98,890 $1.28 $1.84
Insurance 18,247 0.52 6,594 0.18 22,241 0.25 20,832 0.27 0.31
CAM:33,393 0.96 3,000 0.08 128,094 1.45 13,110 0.17 0.66
General & Administrative:45,704 1.31 500 0.01 21,359 0.24 22,304 0.29 0.46
Management:13,690 3.5%0 0.0%50,758 3.4%20,000 3.9%0.03
Total Expenses:$197,037 $5.67 $44,854 $1.24 $457,870 $5.17 $175,136 $2.27 $3.59
Industrial Expense Comparables
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rise in insurance costs over the past year. Therefore, an insurance expense of $0.75 per square
foot is considered to be reasonable.
Common Area Maintenance
Electrical usage in the common areas (i.e. parking lot lighting, signage, etc.) is generally included
within the common area maintenance expenses. Furthermore, it is assumed that an orderly
maintenance program will be followed throughout the term of ownership for such things as HVAC,
plumbing, landscaping, parking lot, and other miscellaneous items. The four expense
comparables indicate common area maintenance expenses, ranging from $0.08 to $1.45 per
square foot, with a mean of $0.66 per square foot. The subject is single-tenant industrial property
where most tenants would pay out of pocket to address common areas. Therefore, we have
concluded at the lower end of the range with a common area maintenance expense of $0.10 per
square foot.
Administrative and General
These expenses pertain to atypical expenses, which are not day to day in nature. They include
such things as office expenses, promotions/advertising, and professional fees. This expense can
be very property specific, and typically, the actual expenses of the subject are given significant
emphasis. The four expense comparables indicate administrative and general expenses, ranging
from $0.01 to $1.31 per square foot, with a mean of $0.46 per square foot. Therefore, a common
area maintenance expense of $0.20 per square foot is considered to be reasonable.
Reserves for Replacement
Although, not always practiced in the market, this is the amount set aside by a prudent owner of
a property to provide a fund to replace short-lived items as they deteriorate and require
replacement. The following items are included in this category: floor coverings, acoustical ceiling
tiles, HVAC system, elevator, roof covering, and the parking and drive surface. The procedure
used in order to have sufficient funds available at such time as these items require repair or
replacement is to set aside money each year in an interest-bearing account. A reserve account
has been estimated in order to provide funds for the replacement of these items. The owner would
set aside funds each year, which would draw an estimated five percent interest. This is known as
the sinking fund factor, indicating the periodic amount that must be set aside at a specific
compound interest rate in order to provide for a recovery of the given investment amount. The 1st
Quarter 2024 PwC Real Estate Investor Survey (most recent with applicable data) reported a
reserve for replacement range of $0.00 to $0.30 per square foot for warehouse buildings
nationally. Therefore, a reserves expense of $0.10 per square foot is considered to be
reasonable.
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Management Fee
This is the only variable expense estimated for the subject property. Management fees are
typically based on a percentage of the effective gross income that a property produces. These
fees include personnel (off-site) for handling expenses and debt service payments and
professional general supervision for the handling of everyday problems associated with office
building operations. The four expense comparables indicate management expenses, ranging
from 0.0% to 3.5%. The 1st Quarter 2023 PwC Real Estate Investor Survey (most recent with
applicable data) reported a management fee range of 0.00 percent to 4.00 percent for warehouse
buildings nationally. Therefore, a management fee of 4.0 percent of effective gross income is
considered reasonable.
ESTIMATE OF NET OPERATING INCOME
The following table displays the estimated stabilized net operating income for the subject based
upon the preceding market rental estimate, projected stabilized vacancy and collection loss, and
the forecasted operating expenses.
The effective gross income (EGI), total expenses, and stabilized net operating income (NOI)
estimates are illustrated in the preceding table. Now that the net operating income for the subject
property has been estimated, through direct capitalization this figure can be transformed into an
opinion of value for the subject property. However, an appropriate capitalization rate must first be
selected.
Revenues:
Gross Potential Rental Income $199,800
Vacancy & Collection Loss 5%9,990
Effective Gross Rental Income $189,810
Plus: Reimbursables (Taxes, Ins, CAM, A&G, Mgmt x Occp)56,440
Effective Gross Income $246,250
Operating Expenses:PSF/%:Total:
Taxes $1.93 $32,077
Insurance 0.75 12,488
CAM 0.10 1,665
Administrative & General 0.20 3,330
Reserves for Replacement 0.10 1,665
Management 4.0%9,850
Total Expenses $61,075
Net Operating Income $185,175
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SELECTION OF A CAPITALIZATION RATE
An appropriate overall rate will be determined based upon the comparable sales utilized within
the sales comparison approach. The adjusted overall rates, as well as the occupancy at the time
of sale are presented within the following table.
The Comparable Sales indicate overall rates ranging from 6.65 to 8.09 percent with a mean of
7.22 percent.
The 4th Quarter 2023 PWC Investor Survey revealed a mean of 8.37 percent for the National
Warehouse Market. Furthermore, the 4th Quarter 2023 RealtyRates.com Market and Investor
Surveys indicated a mean of 8.37 percent for Warehouse & Distribution Centers Nationally and
7.80 percent for Warehouse & Distribution Centers in Texas.
We have considered the strength of the Dallas Industrial Market. The comparable sales cap rates
further indicate the demand in the area for smaller industrial warehouses. Additional consideration
was given to the D/FW Warehouse and Distribution Center Survey. We have concluded a rate in
between these of 7.50 percent.
Sales Expense
Sale Location Date Year Year NRA Office HVAC Land to Rent Price Stabilized Adjusted to Income
No.(Address)of Sale Built Renv/Exp (SF)Finsh Finish Bldg. Ratio PSF PSF NOI PSF GRM Ro Ratio
1 114 W Dickson Lane 10/16/2023 2008 N/A 14,518 5%5%6.63 to 1.0 $11.25 $130.87 $9.29 11.63 7.09%17.47%
Little Elm, Texas
2 2925 Merrell Rd 5/26/2023 1956 Yes 26,000 50%100%4.26 to 1.0 $8.00 $92.31 $7.47 11.54 8.09%6.63%
Dallas, Texas
3 2131 Progressive Dr 9/2/2022 1987 Yes 12,180 10%10%3.99 to 1.0 $6.50 $91.12 $6.06 14.02 6.65%6.85%
Dallas, Texas
4 7715 Sovereign Row 4/8/2022 1957 Yes 10,500 8%100%2.47 to 1.0 $9.50 $128.25 $8.85 13.50 6.90%6.89%
Dallas, Texas
5 2832 Blystone Ln 1/19/2022 1968 Yes 15,642 50%50%2.09 to 1.0 $9.50 $121.47 $8.95 12.79 7.36%5.84%
Dallas, Texas
Subject:869 S Woodrow Lane -1994 2008 16,650 69%69%5.10 to 1.0 ------
Denton, Texas
Summary of
Comparable Sales
Investor Surveys - Industrial Data 2nd Q 2022 2nd Q 2023 3rd Q 2023 4th Q 2023 1st Q 2024 2nd Q 2024 2 Yr ∆
PwC:
National Warehouse 4.37%4.96%4.97%5.23%5.38%5.48%1.11%
Averages: 4.22%4.82%4.96%4.96%5.23%5.48%1.26%
Realty Rates Market & Investor Surveys:
National Industrial (All Types)8.50%9.32%9.26%9.54%9.66%9.57%1.07%
National Warehouse & Distribution Ctrs 7.30%8.13%8.08%8.37%8.46%8.36%1.06%
National Flex/R&D 9.04%9.69%9.66%9.88%9.97%9.89%0.85%
National Climate Controlled/Manufacturing 8.41%9.05%9.02%9.24%9.32%9.24%0.83%
D/FW Warehouse & Distribution Ctrs 7.80%7.90%7.90%7.90%8.00%7.90%0.10%
D/FW Flex/R&D 8.40%8.60%8.70%8.80%8.90%8.80%0.40%
Texas Warehouse & Distribution Ctrs 7.70%7.80%7.90%7.80%7.90%7.80%0.10%
Texas Flex/R&D 7.80%8.00%8.00%8.00%8.10%8.00%0.20%
Averages:8.12%8.56%8.57%8.69%8.79%8.70%0.58%
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CONCLUSION OF THE INCOME CAPITALIZATION APPROACH
Based upon the foregoing analysis, the market value opinion of the subject property, via the
Income Capitalization Approach, is as follows:
Revenues:
Gross Potential Rental Income $199,800
Vacancy & Collection Loss 5%9,990
Effective Gross Rental Income $189,810
Plus: Reimbursables (Taxes, Ins, CAM, A&G, Mgmt x Occp)56,440
Effective Gross Income $246,250
Operating Expenses:PSF/%:Total:
Taxes $1.93 $32,077
Insurance 0.75 12,488
CAM 0.10 1,665
Administrative & General 0.20 3,330
Reserves for Replacement 0.10 1,665
Management 4.0%9,850
Total Expenses $61,075
Net Operating Income $185,175
Divided by Capitalization Rate 7.50%
Value Opinion Via Direct Capitalization $2,469,000
Rounded to:$2,470,000
"As Is"
Operating Statement
& Value Conclusion
SECTION V - SALES COMPARISON APPROACH
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DESCRIPTION OF THE SALES COMPARISON APPROACH
The Sales Comparison Approach, as it applies to the subject property, is based upon the premise
that the market value of the subject property can be estimated by analyzing sales of similar
properties. The principle of substitution is basic in this approach as it implies that a prudent person
will not pay more for a property than would be required for an acceptable alternative available in
the market. In the Sales Comparison Approach, the following methodology is used. An appraiser
follows a systematic procedure, comparing like with like. That is, the appraisers must adjust each
comparable property to the subject property to impute an indicated value to the subject property.
The steps of the procedure are as follows:
1) Research the competitive market for information on properties that are similar to
the property being appraised and that have been sold recently, or were listed for
sale, or are under contract. The characteristics of the properties such as property
type, date of sale, size, physical condition, location, and land use constraints
should be considered.
2) Verify the information by confirming that the data obtained is factually accurate and
that the transactions reflect arm’s-length market considerations.
3) Select the most relevant units of comparison used by participants in the market
(e.g., price per acre, price per square foot, price per front foot, price per dwelling
unit, price per lot or proposed lot, price per room) and develop a comparative
analysis for each unit.
4) Look for differences between the comparables being considered and the subject
property using all appropriate elements of comparison. Then adjust the price of
each comparable, reflecting how it differs to equate it to the subject property or
eliminate that property as a comparable.
5) Reconcile the various value indicators produced from the analysis of comparables
into a value indication from the sales comparison approach. A value can be
expressed as a single point estimate, as a range of values, or in terms of a
relationship (e.g., more or less than a given amount). 14
The procedure of comparative analysis typically is based upon various "units of comparison"
extracted from the market data. In the subject case, the Price Per Square Foot unit of comparison
is extracted since it appears to be the most recognized units of comparison by the commercial
markets. Typically, it is a reliable unit of comparison when the properties improvements are similar
in size, location, condition, quality, and age.
There are several approaches to application of the Sales Comparison Approach. One method of
valuation by the Sales Comparison Approach is to divide the estimated net income by the
purchase price with the result equaling the overall rate of each transaction studied. This gives an
overall rate of return used for direct capitalization in the Income Approach to value.
14 The Appraisal Institute, The Appraisal of Real Estate (Fifteenth Edition), Chicago, Illinois, 2020, pages 355.
TODD PROPERTY ADVISORS
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COMPARABLE IMPROVED SALES PRESENTATION
The subject market was searched for sales of comparable buildings similar in size, occupancy,
and tenant orientation to the subject. During our investigation, we were able to confirm information
on several buildings. Located on the following pages of this report are complete descriptions of
each of these Comparables. Presented below is a map depicting the location of each of the
Comparables.
Date Sales
Map #of Sale Size (SF)Price PSF
1 10/16/23 14,518 $130.87
2 5/26/23 26,000 $92.31
3 9/2/22 12,180 $91.12
4 4/8/22 10,500 $128.25
5 1/19/22 15,642 $121.47
S -16,650 Subject
Map Comparable Summary
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S
S
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PROPERTY IDENTIFICATION
Location:114 W Dickson Lane
Little Elm, Texas
Legal Description:A0331A G. W. Daniel, Tract 97
TRANSACTION DATA
Grantor:Dickson Real Estate Holdings, LLC
Grantee:Frisco Bluff LLC
Date of Sale:October 16, 2023
Recording Information:2023-112066
Property Rights Conveyed:Leased Fee Estate
Conditions of Sale:Arm's Length Transaction
Sales Price:$1,900,000
Participant's Sale Terms:Cash to Seller
Cash Equivalent Price:$1,900,000
PHYSICAL CHARACTERISTICS
Type of Construction:Class S Net Rentable Area:14,518 square feet
Condition and Appearance:Average Space Available:0 square feet
Year of Construction:2008 Percent Occupied @ Sale:100.0%
Renovation/Expansion:N/A Percent Unfinished Shell:0.0%
Tenant Orientation:Multi-Tenant Land Area:2.210 acres
Loading Facilities:GL Land-to-Building Ratio:6.63 to 1.0
Clear Height 14 Percent Office Ratio:5%
Parking, Drives, & Loading:Open Surface, Concrete Percent HVAC:5%
Access and Visibility:Average
INCOME INFORMATION Stabilized Per
Income & Expenses Projections Sq. Ft.
Potential Gross Income (PGI)$163,327.50 $11.25
Vacancy & Collection Loss 16,332.75 1.13 10%
Effective Gross Income (EGI)$146,994.75 $10.13
Less: Operating Expenses 52,264.80 3.60
Plus: Reimbursables 40,069.68 2.76
Net Operating Income (NOI)$134,799.63 $9.29
UNITS OF COMPARISON
Units of Comparison Actual Adjusted
Sales Price Per Square Foot:$130.87 $130.87
Gross Rent Multiplier:11.63 11.63
Overall Capitalization Rate:7.09%7.09%
Expense to Income Ratio:17.47%17.47%
1-(NOI/PGI)
VERIFICATION
Contact Person:Georgianna Anderson Telephone Number:
Position:Agent
COMMENTS
COMPARABLE SALE NUMBER 1
214-718-3096
This property is located at 114 W Dickson Lane and reportedly sold for $1,900,000 or $130.87 per square foot in October 2023. Income and
expenses have been estimated based off the appraisers' experience with similar properties.
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PROPERTY IDENTIFICATION
Location:2925 Merrell Rd
Dallas, Texas
Legal Description:William Mooneyham Survey, Tract
Number 946, City Block Number 6460,
City of Dallas, Dallas County, Texas
TRANSACTION DATA
Grantor:BT-OH, LLC
Grantee:Ash Family, LLC
Date of Sale:May 26, 2023
Recording Information:Doc #202300104857
Property Rights Conveyed:Leased Fee Estate
Conditions of Sale:Arm's Length Transaction
Sales Price:$2,400,000
Participant's Sale Terms:Cash to Seller
Cash Equivalent Price:$2,400,000
PHYSICAL CHARACTERISTICS
Type of Construction:Masonry Net Rentable Area:26,000 square feet
Condition and Appearance:Good Space Available:0 square feet
Year of Construction:1956 Percent Occupied @ Sale:100.0%
Renovation/Expansion:Yes Percent Unfinished Shell:0.0%
Tenant Orientation:Single-Tenant Land Area:2.541 acres
Loading Facilities:GL Land-to-Building Ratio:4.26 to 1.0
Clear Height 12'Percent Office Ratio:50%
Parking, Drives, & Loading:Open Surface, Concrete Percent HVAC:100%
Access and Visibility:Good
INCOME INFORMATION Stabilized Per
Income & Expenses Projections Sq. Ft.
Potential Gross Income (PGI)$208,000.00 $8.00
Vacancy & Collection Loss 6,240.00 0.24 3%
Effective Gross Income (EGI)$201,760.00 $7.76
Less: Operating Expenses 79,560.00 3.06
Plus: Reimbursables 72,020.00 2.77
Net Operating Income (NOI)$194,220.00 $7.47
UNITS OF COMPARISON
Units of Comparison Actual Adjusted
Sales Price Per Square Foot:$92.31 $92.31
Gross Rent Multiplier:11.54 11.54
Overall Capitalization Rate:8.09%8.09%
Expense to Income Ratio:6.63%6.63%
1-(NOI/PGI)
VERIFICATION
Contact Person:David Glasscock Telephone Number:
Position:Listing Broker
COMMENTS
(214) 979-6100
COMPARABLE SALE NUMBER 2
This property is physically located on the northwest corner of Merrell Road in Dallas, Texas. This property reportedly sold in May of 2023 for
$2,400,000, or $92.31 per square foot. The sale includes real estate only. It was reported that this property was fully leased at the time of sale. The
income and expenses were estimated based upon similar properties and the appraiser's experience within the market area.
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PROPERTY IDENTIFICATION
Location:2131 Progressive Dr
Dallas, Texas
Legal Description:Progresive Venture Addition, Block P,
City Block Number 7171, Lot 11/A,
City of Dallas, Dallas County, Texas
TRANSACTION DATA
Grantor:PSC Recovery Systems, LLC
Grantee:Elephant Industry, Inc.
Date of Sale:September 2, 2022
Recording Information:Doc #202200237293
Property Rights Conveyed:Fee Simple Estate
Conditions of Sale:Arm's Length Transaction
Sales Price:$1,109,788
Participant's Sale Terms:Cash to Seller
Cash Equivalent Price:$1,109,788
PHYSICAL CHARACTERISTICS
Type of Construction:Metal Net Rentable Area:12,180 square feet
Condition and Appearance:Average Space Available:0 square feet
Year of Construction:1987 Percent Occupied @ Sale:100.0%
Renovation/Expansion:Yes Percent Unfinished Shell:0.0%
Tenant Orientation:Single-Tenant Land Area:1.117 acres
Loading Facilities:GL & Ramped Land-to-Building Ratio:3.99 to 1.0
Clear Height 12'Percent Office Ratio:10%
Parking, Drives, & Loading:Open Surface, Concrete Percent HVAC:10%
Access and Visibility:Good
INCOME INFORMATION Stabilized Per
Income & Expenses Projections Sq. Ft.
Potential Gross Income (PGI)$79,170.00 $6.50
Vacancy & Collection Loss 2,375.10 0.20 3%
Effective Gross Income (EGI)$76,794.90 $6.31
Less: Operating Expenses 28,014.00 2.30
Plus: Reimbursables 24,969.00 2.05
Net Operating Income (NOI)$73,749.90 $6.06
UNITS OF COMPARISON
Units of Comparison Actual Adjusted
Sales Price Per Square Foot:$91.12 $91.12
Gross Rent Multiplier:14.02 14.02
Overall Capitalization Rate:6.65%6.65%
Expense to Income Ratio:6.85%6.85%
1-(NOI/PGI)
VERIFICATION
Contact Person:Keaton Duhon Telephone Number:
Position:Listing Broker
COMMENTS
This property is physically located along the northwest line of Progressive Drive, just east of Perimeter Road in Dallas, Texas. This property
reportedly sold in September of 2022 for $1,109,788, or $91.12 per square foot. The sale includes real estate only. The income and expenses were
estimated based upon similar properties and the appraiser's experience within the market area.
(214) 526-3626
COMPARABLE SALE NUMBER 3
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PROPERTY IDENTIFICATION
Location:7715 Sovereign Row
Dallas, Texas
Legal Description:Brook Hollow Industrial District 1, Part
of Block 8B, City Block Number 7940,
Abandoned DART Spur, City of
Dallas, Dallas County, Texas
TRANSACTION DATA
Grantor:BLCC Venture, LLC
Grantee:TIPC Real Estate, LLC
Date of Sale:April 8, 2022
Recording Information:Doc #202200099456
Property Rights Conveyed:Leased Fee Estate
Conditions of Sale:Arm's Length Transaction
Sales Price:$1,346,625
Participant's Sale Terms:Cash to Seller
Cash Equivalent Price:$1,346,625
PHYSICAL CHARACTERISTICS
Type of Construction:Masonry Net Rentable Area:10,500 square feet
Condition and Appearance:Good Space Available:0 square feet
Year of Construction:1957 Percent Occupied @ Sale:100.0%
Renovation/Expansion:Yes Percent Unfinished Shell:0.0%
Tenant Orientation:Single-Tenant Land Area:0.595 acres
Loading Facilities:DH & Ramped Land-to-Building Ratio:2.47 to 1.0
Clear Height 12'Percent Office Ratio:8%
Parking, Drives, & Loading:Open Surface, Concrete Percent HVAC:100%
Access and Visibility:Good
INCOME INFORMATION Stabilized Per
Income & Expenses Projections Sq. Ft.
Potential Gross Income (PGI)$99,750.00 $9.50
Vacancy & Collection Loss 2,992.50 0.29 3%
Effective Gross Income (EGI)$96,757.50 $9.22
Less: Operating Expenses 26,040.00 2.48
Plus: Reimbursables 22,155.00 2.11
Net Operating Income (NOI)$92,872.50 $8.85
UNITS OF COMPARISON
Units of Comparison Actual Adjusted
Sales Price Per Square Foot:$128.25 $128.25
Gross Rent Multiplier:13.50 13.50
Overall Capitalization Rate:6.90%6.90%
Expense to Income Ratio:6.89%6.89%
1-(NOI/PGI)
VERIFICATION
Contact Person:Caleb Bates Telephone Number:
Position:Listing Broker
COMMENTS
This property is physically located along the southwest line of Sovereign Row, just southeast of Metromedia Place in Dallas, Texas. This property
reportedly sold in September of 2022 for $1,346,625, or $128.25 per square foot. The sale includes real estate only. It was reported that this
property was fully leased at the time of sale. The expenses were estimated based upon similar properties and the appraiser's experience within the
market area.
COMPARABLE SALE NUMBER 4
(214) 630-7077
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PROPERTY IDENTIFICATION
Location:2832 Blystone Ln
Dallas, Texas
Legal Description:Walnut Hill Industrial District, Block A,
City Block Number 6455, Part of Lot
16, City of Dallas, Dallas County,
Texas
TRANSACTION DATA
Grantor:2832 Blystone LP
Grantee:Double O Partners, LLC
Date of Sale:January 19, 2022
Recording Information:Doc #202200011262
Property Rights Conveyed:Leased Fee Estate
Conditions of Sale:Arm's Length Transaction
Sales Price:$1,900,000
Participant's Sale Terms:Cash to Seller
Cash Equivalent Price:$1,900,000
PHYSICAL CHARACTERISTICS
Type of Construction:Masonry Net Rentable Area:15,642 square feet
Condition and Appearance:Very Good Space Available:0 square feet
Year of Construction:1968 Percent Occupied @ Sale:100.0%
Renovation/Expansion:Yes Percent Unfinished Shell:0.0%
Tenant Orientation:Single-Tenant Land Area:0.750 acres
Loading Facilities:DH Land-to-Building Ratio:2.09 to 1.0
Clear Height 16'Percent Office Ratio:50%
Parking, Drives, & Loading:Open Surface, Concrete Percent HVAC:50%
Access and Visibility:Good
INCOME INFORMATION Stabilized Per
Income & Expenses Projections Sq. Ft.
Potential Gross Income (PGI)$148,599.00 $9.50
Vacancy & Collection Loss 4,457.97 0.29 3%
Effective Gross Income (EGI)$144,141.03 $9.22
Less: Operating Expenses 38,635.74 2.47
Plus: Reimbursables 34,412.40 2.20
Net Operating Income (NOI)$139,917.69 $8.95
UNITS OF COMPARISON
Units of Comparison Actual Adjusted
Sales Price Per Square Foot:$121.47 $121.47
Gross Rent Multiplier:12.79 12.79
Overall Capitalization Rate:7.36%7.36%
Expense to Income Ratio:5.84%5.84%
1-(NOI/PGI)
VERIFICATION
Contact Person:Keenan Cook Telephone Number:
Position:Listing Broker
COMMENTS
(214) 814-5876
This property is physically located along the south line of Blyston Land, just east of Denton Drive in Dallas, Texas. This property reportedly sold in
January of 2022 for $1,900,000, or $121.47 per square foot. The sale includes real estate only. The expenses were estimated based upon similar
properties and the appraiser's experience within the market area.
COMPARABLE SALE NUMBER 5
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IMPROVED SALES ANALYSIS
Since no two properties are ever identical, dissimilarities between the subject property and the
comparable sales must be analyzed, with adjustments supported by market data. Elements of
comparison typically examined are: real property rights conveyed, financing terms, conditions of
sale, date of sale, location, physical characteristics, and income characteristics. The Comparable
Sales gathered were broken down into several units of comparison and indicators for use within
both the Sales Comparison Approach and the Income Approach to Value. A summary table of
these Sales is displayed below.
The prices per square foot exhibited by the improved Sales varied from $91.12 to $130.87 per
square foot, with an average of $112.80 per square foot.
Ideally, comparisons between the subject and sales of properties of similar age, condition,
location, occupancy rate, etc. should be made to reveal a value indication for the subject in its “as
stabilized” condition. All of the consummated Sales will be analyzed. These Sales will be analyzed
on a price per square foot of net rentable area (NRA) basis herein below. These units of
comparison were chosen due to the usage of these indicators of value by prospective buyers of
properties similar to the subject within their investment criteria.
Real Property Rights Conveyed
This adjustment involves the type of real property interest that is conveyed in a sales transaction.
This is particularly important when the property being sold is subject to a long-term lease that is
substantially below or above the market rent for the property. However, there were no long-term
leases in effect at the time of sale which were not at market levels. Thus, no adjustments were
necessary to the sales for real property rights conveyed as they were comparable to those
available from the subject.
Sales Expense
Sale Location Date Year Year NRA Office HVAC Land to Rent Price Stabilized Adjusted to Income
No.(Address)of Sale Built Renv/Exp (SF)Finsh Finish Bldg. Ratio PSF PSF NOI PSF GRM Ro Ratio
1 114 W Dickson Lane 10/16/2023 2008 N/A 14,518 5%5%6.63 to 1.0 $11.25 $130.87 $9.29 11.63 7.09%17.47%
Little Elm, Texas
2 2925 Merrell Rd 5/26/2023 1956 Yes 26,000 50%100%4.26 to 1.0 $8.00 $92.31 $7.47 11.54 8.09%6.63%
Dallas, Texas
3 2131 Progressive Dr 9/2/2022 1987 Yes 12,180 10%10%3.99 to 1.0 $6.50 $91.12 $6.06 14.02 6.65%6.85%
Dallas, Texas
4 7715 Sovereign Row 4/8/2022 1957 Yes 10,500 8%100%2.47 to 1.0 $9.50 $128.25 $8.85 13.50 6.90%6.89%
Dallas, Texas
5 2832 Blystone Ln 1/19/2022 1968 Yes 15,642 50%50%2.09 to 1.0 $9.50 $121.47 $8.95 12.79 7.36%5.84%
Dallas, Texas
Subject:869 S Woodrow Lane -1994 2008 16,650 69%69%5.10 to 1.0 ------
Denton, Texas
Summary of
Comparable Sales
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Financing Terms
A financing adjustment is necessary when a property is purchased and the corresponding
financing is at an interest rate which is not typical of interest rates generally available in the market
at the time of sale. All of the improved sales were purchased on an all "cash basis," or involved
financing equivalent to disinterested third party institutions. Therefore, no adjustments for cash
equivalency were considered necessary for the sales.
Conditions of Sale
Adjustments for this item usually reflect the motivation of the buyer and seller involved with a
transaction. Adjustments would be necessary for transactions where the seller wants to quickly
liquidate his assets or where there is an atypical financial, business, friend or family relationship
between the principals involved which affect the selling price of the property. All the comparables
are similar to the subject; thus, no adjustments were warranted.
Expenditures After Sale
This adjustment accounts for any expenses the purchaser of the property occurs immediately
after the purchase of the property. Some examples of these items could include environmental
clean-up, demolition costs, deferred maintenance, HVAC replacement/repair, renovations,
parking lot repair/replacement, cosmetic upgrades, etc... Adjustments for this item usually reflect
the motivation of the buyer and seller involved with a transaction. Adjustments would be
necessary for transactions where the buyer is aware that such expenditures after the sale must
occur in order to operate the property sufficiently. Any necessary adjustments for Expenditures
After Sale have been made within the individual Comparable write-ups. Therefore, no further
adjustments are necessary.
Market Conditions
This adjustment is generally made after the other transactional adjustments have been made
(property rights conveyed, financing, conditions of sale, and expenditures after sale). This
adjustment addresses potentially differing market conditions between the subject property (date
of appraisal), and the sales dates of the Comparables. As a test, the sales adjusted prices when
compared to the subject were chronologically arrayed by sale date and only adjusted for the
appropriate physical conditions in order to determine if adjustments for changing market
conditions is warranted.
The table below depicts the Price/Unit for each comparable which has been adjusted for the other
transactional adjustments (property rights conveyed, financing, conditions of sale, and
expenditures after sale). The % Physical Adjustment column indicates the total adjustments made
for all physical characteristics as shown in the adjustment grid at the conclusion of this section of
the report. The Adjusted Price/Unit is calculated by applying the % Physical Adjustment for each
sale to its Price/Unit. By analyzing the comparable sales adjusted prices per unit after all other
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adjustments have been made, trends in prices over the time period may become apparent.
However, given the small sample size, the appraisers’ judgment is also relied upon based upon
knowledge gained from experience in the market over this time period.
In closely analyzing the market comparables, there does not appear to have been a substantial
increase or decrease in market prices over this time period for this property type. After
conversations with market participants in the area, they indicate market conditions are increasing.
Therefore, each comparable will be adjusted upwards by 3 percent per year. Therefore, in our
opinion, the market conditions adjustment are considered reasonable.
Location
The axiom that "location is the most important physical characteristic of real estate" suggests that
this component warrants paramount consideration in the adjustment process. Therefore, the
locations of the Comparables are the first of the physical characteristics to be considered. The
subject property is physically located along the east line of South Woodrow Lane, just north of
Shady Oaks Drive in Denton, Texas.
Comparable 1 is to the east of the subject and is most proximate. It has a similar location to the
subject and no adjustment is warranted.
Comparables 2 and 5 are to the southeast of the subject with superior accessibility to the
highways in the region; thus, 5 percent downward adjustments were warranted.
Comparable 3 is located to the south of the subject with superior accessibility to highways in the
region; thus, a 10 percent downward adjustment was warranted.
Comparable 4 is located in an industrial node with superior accessibility to highways in the region.
Additionally, it has a superior buyer pool, as in addition to the typical industrial buyers there is
also interest from a portion of office and retail users. Therefore, a 10 percent downward
adjustment was warranted.
Comparable Date Unadjusted Physical %Adjusted
Number of Sale Price/Sq. Ft.*Adjustment Price/Sq. Ft.
Comparable 1 October 16, 2023 $130.87 14%$149.19
Comparable 2 May 26, 2023 $92.31 12%$103.39
Comparable 3 September 2, 2022 $91.12 21%$110.26
Comparable 4 April 8, 2022 $128.25 -2%$125.69
Comparable 5 January 19, 2022 $121.47 13%$137.26
*Inclusive of any necessary transactional adjustments
Market Conditions Comparison
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Age/Condition of the Improvements
The subject improvements were constructed in 1994 and 2009 and have an effective age of 10
years (See Description of Improvements). As with any asset, as the useful life decreases, the
value follows. The Comparables were compared to the subject property based upon their
respective effective ages. The difference in the age of the improvements was divided by their
economic life in order to determine the difference in the useful life of the sales vis-a-vis the subject
property. The following calculations were done to arrive at a percentage adjustment for differences
in the effective ages of the Comparables and the subject property.
Quality of Construction
The subject facility is constructed of a concrete foundation, brick veneer exterior walls, and a
metal roof. Comparable 1 and 3 are Class S structures lacking any exterior additions such as
brick or stone; thus, 5 percent upward adjustments were warranted. Comparables 2, 4, and 5 are
similar to the subject; thus, no adjustments were warranted.
Land-to-Building Ratio
The subject has a land-to-building ratio of 5.10 to 1.0. All Comparables are similar to the subject;
thus, no adjustments were warranted.
Size
The size of a building determines the quantity of the income stream, and generally affects the
selling price although those differences are accounted for (to a certain extent) in the per square
foot comparison used here. Typically, the cost of construction decreases as the size of a building
increases, due to economies of scale associated with large projects. Additionally, the initial
investment outlay of larger properties is more than a comparable smaller property, but, slightly
lower prices on a per unit basis (i.e., square foot, unit, building, etc.) are very common. Upon
analyzing the sale comparables, there appears to be a trend showing smaller properties selling
at higher per square foot prices than larger properties. Therefore, adjustments appear to be
needed for size. Typically, adjustments for size range from 5 to 15 percent per doubling/halving
Comparable Subject Age Econ. %% Attributable Indicated
Comparable Eff. Age Eff. Age Difference Life (Yrs)Difference to Bldg Adjustment
Number (CA)(SA)(CA-SA=AD)(EL)(AD÷EL=PD)(PAB)(PD x PAB = IA)
Comparable 1 10 10 0 45 0.00%65%0%
Comparable 2 20 10 10 45 22.22%65%14%
Comparable 3 20 10 10 45 22.22%65%14%
Comparable 4 15 10 5 45 11.11%65%7%
Comparable 5 20 10 10 45 22.22%65%14%
Adjustment for Age/Condition of the Improvements
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as compared to the subject. In this instance, a 5 percent adjustment for each doubling/halving of
size is considered reasonable. Thus, the Comparables are adjusted as follows:
Building Amenities
This item relates to the overall quality of construction of the comparables and the amenities
associated with each. The projects have varying building features such as office ratios, amount
of HVAC, clearance heights, etc. The subject facility is approximately 69 percent heated/air
conditioned office space, has one grade level loading door, and a clear height of 16 feet. The
following table outlines the building amenities for the subject property and each of the
Comparables, as well as the percentage adjustments.
Comparable Comparable Subject % Difference Adj. Per Indicated
Number Size (SF)Size (SF)In Size Halving/Doubling Adjustment
Comparable 1 14,518 16,650 -13%5%-1%
Comparable 2 26,000 16,650 56%5%3%
Comparable 3 12,180 16,650 -27%5%-3%
Comparable 4 10,500 16,650 -37%5%-4%
Comparable 5 15,642 16,650 -6%5%-1%
Adjustment for Size
Comparable Office HVAC Clear Loading Percentage
Number Ratio Ratio Height Facilities Adjustment
Comparable 1 5%5%14 GL 10%
Comparable 2 50%100%12'GL 0%
Comparable 3 10%10%12'GL & Ramped 15%
Comparable 4 8%100%12'DH & Ramped 5%
Comparable 5 50%50%16'DH 5%
Subject 69%69%16 GL -
Adjustment for Building Amenities
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CONCLUSION OF THE SALES COMPARISON APPROACH
An adjustment grid for the Comparable Sales is located below, followed by the range, mean
(average), and standard deviation of the adjusted sales prices per square foot.
Sale Number 1 2 3 4 5
Sales Price/SF $130.87 $92.31 $91.12 $128.25 $121.47
Financing Terms 0.00 0.00 0.00 0.00 0.00
Property Rights Conveyed 0.00 0.00 0.00 0.00 0.00
Conditions of Sale 0.00 0.00 0.00 0.00 0.00
Expenditures After Sale 0.00 0.00 0.00 0.00 0.00
Market Conditions 3.93 3.69 5.47 8.98 9.72
Conditions Adj. Price/SF $134.80 $96.00 $96.59 $137.23 $131.19
Location 0%-5%-10%-10%-5%
Age/Condition 0%14%14%7%14%
Quality of Construction 5%0%5%0%0%
Land-to-Building Ratio 0%0%0%0%0%
Size -1%3%-3%-4%-1%
Building Amenities 10%0%15%5%5%
Total Adjustment 14%12%21%-2%13%
Adjusted Price/SF $153.67 $107.52 $116.87 $134.49 $148.24
for Comparable Sales
Adjustment Grid
$/SF
Range $107.52 -$153.67 $116.87 -$148.24 -
Mean (Average)
Standard Deviation $15.72
$132.16
$19.80
$133.20
Data Without
High and Low ExtremesAll Data
Data with Absolute
$135.98
$20.62
Adjustments <40%
$107.52 $153.67
TODD PROPERTY ADVISORS
REAL PROPERTY ANALYSTS, INC.
24.0803 92
All of the Comparables had a mean of $132.16 per square foot, while the mean of data without
high and low extremes is $133.20 per square foot, and the data with the least absolute
adjustments (<= 40%) had a mean of $135.98 per square foot. Therefore, considering the
foregoing analysis, a market value opinion of $135.00 per square foot is very reasonable for the
subject property.
16,650 SF x $135.00/SF = $2,247,750
Rounded To: $2,250,000
SECTION VI - VALUATION CONCLUSION
TODD PROPERTY ADVISORS
REAL PROPERTY ANALYSTS, INC.
24.0803 94
RECONCILIATION AND FINAL OPINION OF VALUE
The subject consists of a 1.94 acre tract of land improved with a 16,650 square foot industrial
warehouse. The subject has a municipal address of 869 South Woodrow Lane, Denton, Denton
County, Texas.
The Income Capitalization and Sales Comparison Approaches were investigated for application
to the subject. Each have limitations, but in general are considered to be reliable indicators of
value. The indicated values from the approaches for the “as is” market value of the fee simple
estate are:
“As Is” Market Value:
Income Capitalization Approach .................... $2,250,000
Sales Comparison Approach.......................... $2,470,000
The Income Capitalization Approach is based on the principal of anticipation of future benefits,
the stream of annual net income from rental of the units. The analysis makes allowance for
vacancy, collection losses, and operating expenses.
The Sales Comparison Approach assumes that a prudent person will not pay more for the subject
property than is necessary to acquire an acceptable alternative. This approach is based upon
actual sales of similar properties. Dissimilarities between the subject property and each
comparable sale and the effect of the price are taken into consideration. This approach is also
considered to provide a reliable indication of market value for the subject.
In the final analysis, both approaches are considered well supported by the analysis of market
data and provide reliable indications of the market value for the subject property. However, given
that the most likely purchaser would be an owner-user, more weight will be given to the Sales
Comparison Approach.
Therefore, in our opinion, the “as is” market value of the fee simple estate of the subject property,
as of the effective date of appraisal, August 20, 2024, was:
“As Is” Market Value:
TWO MILLION THREE HUNDRED THOUSAND DOLLARS
($2,300,000)
SECTION VII - CERTIFICATION & ASSUMPTIONS & LIMITING CONDITIONS
TODD PROPERTY ADVISORS
REAL PROPERTY ANALYSTS, INC.
24.0803 96
CERTIFICATION
The undersigned hereby certifies that, to the best of their 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 the personal, impartial unbiased professional
analyses, opinions, and conclusions of the undersigned.
3) Neither the undersigned, nor any associate of the appraiser, have any present or
prospective interest in the property that is the subject of this report, and have no personal
interest with respect to the parties involved.
4) The undersigned have no bias with respect to the property that is the subject of this report
or to the parties involved with this assignment.
5) The engagement of the undersigned in this assignment was not contingent upon developing
or reporting predetermined results.
6) All analyses, opinions, and conclusions were developed, and this report has been prepared,
in conformity with the Uniform Standards of Professional Appraisal Practice.
7) All analyses, opinions, and conclusions were developed, and this report has been prepared,
in conformity with Title XI of the Federal Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA) and its regulations; in conformity with the Interagency
Appraisal and Evaluation guidelines issued by the Office of the Comptroller of the Currency
(OCC), the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit
Insurance Corporation (FDIC), the Office of Thrift Supervisions (OTS), and the National
Credit Union Administration (NCUA) on December 2, 2010.
8) The reported analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the Code of Professional Ethics and Standards of Professional
Appraisal Practice of the Appraisal Institute.
9) The use of this report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.
10) No one provided significant appraisal assistance in the preparation of this appraisal report
to the persons signing this certification.
11) As of the date of this report, Mitchell B. Todd, MAI and Michael A. Keane have completed
the continuing education program for Designated Members of The Appraisal Institute.
12) The undersigned's 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.
13) The appraisal report was not based on a requested minimum valuation, a specific valuation,
or the approval of a loan.
TODD PROPERTY ADVISORS
REAL PROPERTY ANALYSTS, INC.
24.0803 97
Appraisal Institute General Demonstration of Knowledge - Capstone Program
Admissions Department
March 14, 2018
Page Two
Based on the data rendered via a physical inspection of the subject, as well as other pertinent
information, it is my opinion that the market value of the fee simple interest in the subject
property, as of March 6, 2018, is:
“As Is" Market Value:
ONE MILLION SEVEN HUNDRED FORTY THOUSAND DOLLARS
($1,740,000)
Such opinion is subject to the general assumptions and limiting conditions found on page
?????. This letter must remain attached to the report, which contains ????? pages, in order for
the value opinion set forth to be considered valid. Particulars and supporting data are provided
in the accompanying report.
Respectfully submitted,
Michael A. Keane
State Certification #TX-1380384-G
michaelakeane@me.com
14) Neither the undersigned nor any associate of the appraisers considered race, color, religion,
sex, national origin, handicap, or familial status in determining the value of the subject
property.
15) Todd Property Advisors, and Mitchell B. Todd, MAI, Kevin T. Peek, and Michael A. Keane
have rendered no services as an appraiser or in any other capacity regarding this property
within the three-year period immediately preceding acceptance of this assignment.
16) Kevin T. Peek made a personal inspection of the property that is the subject of this report
on August 20, 2024. Mitchell B. Todd, MAI and Michael A. Keane did not conduct a physical
inspection of the subject property.
17) In our opinion, and after careful consideration of the various factors entering into this
appraisal, the “as is” market value of the fee simple estate of the subject property, as of the
effective date of appraisal, August 20, 2024, was:
“As Is” Market Value:
TWO MILLION THREE HUNDRED THOUSAND DOLLARS
($2,300,000)
Respectfully submitted,
Mitchell B. Todd, MAI Michael A. Keane, MAI
President Senior Vice President
State Certification #TX-1323514-G State Certification #TX-1380384-G
mitchell@toddpa.com michael@toddpa.com
Kevin Peek
Appraisal Associate
State Certification #TX-1381324-G
kevin@toddpa.com
TODD PROPERTY ADVISORS
REAL PROPERTY ANALYSTS, INC.
24.0803 98
ASSUMPTIONS AND LIMITING CONDITIONS
1) No responsibility is assumed for matters legal in character or nature, nor matters of survey, nor of any
architectural, structural, mechanical or engineering nature. No opinion is rendered as to the title of the subject
property, which is presumed to be good and marketable. The legal description is assumed to be correct as used
in this report.
2) The property is appraised as though free and clear of any or all liens or encumbrances unless stated.
3) The property is assumed to be under responsible ownership and competent management.
4) The appraisers have not independently verified all of the information furnished or assumptions made with
respect to the appraisal unless otherwise indicated and therefore is not responsible for their content or their
effect on the market value of the property. The information furnished by others is believed to be reliable.
However, no warranty is given for its accuracy.
5) All engineering is assumed to be correct. The maps or other illustrative materials included in this report are
intended only to depict spatial relationships. They are not measured surveys nor measured maps, and the
appraiser is not responsible for cartographic or surveying errors. Dimensions and areas of the subject property
and of the comparables were obtained by various means and are not guaranteed to be exact.
6) The appraisal is based on there being no hidden, unapparent, or apparent conditions of the property site,
subsoil, or structures or toxic materials which would render it more or less valuable. No responsibility is
assumed for any such conditions or for any expertise or engineering to discover them.
7) The appraisal is based on the premise that there is full compliance with all applicable federal, state and local
environmental regulations and laws unless otherwise stated in this report.
8) This appraisal is based on the assumption that all applicable zoning, building, and use restrictions for all types
have been complied with, unless a nonconformity has been stated, defined, and considered in report.
9) The assumption has been made that all required licenses, consents, permits or other legislative or
administrative authority, local, state, federal and/or private entity or organization have been or can be obtained
or renewed for any use considered in the value estimate.
10) Unless otherwise stated in this report, the existence of hazardous substances, including without limitation
asbestos, polychlorinated biphenyls, petroleum leakage, or agricultural chemicals, which may or may not be
present on the property, or other environmental conditions, were not called to the attention of nor did the
appraiser become aware of such during the appraiser's inspection. The appraisers have no knowledge of the
existence of such materials on or in the property unless otherwise stated. The appraisers, however, are not
qualified to test such substances or conditions. If the presence of such substances, such as asbestos, urea
formaldehyde, foam insulation, or other hazardous substances or environmental conditions, may affect the
value of the property, the value estimated is predicated on the assumption that there is not such condition on
or in the property or in such proximity thereto that it would cause a loss in value. No responsibility is assumed
for any such conditions, nor for any expertise or engineering knowledge required to discover them. The client
is urged to retain an expert in the field of environmental impacts upon real estate if so desired.
11) This appraisal is based on the assumption that the use of the land and improvements is within the boundaries
of the subject property and there is no trespass or encroachment unless otherwise noted in the report.
12) The distribution of the total valuation in this report between land and improvements applies only under the
existing program of utilization. The separate valuations for land and building must not be used in conjunction
with any other appraisal and are invalid if so used.
13) Possession of this report or any copy thereof does not carry with it the right of publication, nor may it be used
for other than its intended use. The Bylaws and Regulations of the Appraisal Institute require each Member and
Candidate to control the use and distribution of each appraisal report signed by such Member or Candidate;
this appraisal report shall not be given to third parties without the prior written consent of the signatory of this
appraisal report. Neither all nor any part of this appraisal report shall be disseminated to the general public by
use of advertising media, public relations, news, sales or other media for public communication without the
prior written consent of the appraisers.
TODD PROPERTY ADVISORS
REAL PROPERTY ANALYSTS, INC.
24.0803 99
14) The appraisers are not obligated to provide any other services, including but not limited to, testimony in court
or before any other body charged with interpretation of enforcement of the appraisal.
15) No portion of the appraisal may be reproduced in whole or in part without the prior written consent of the
appraisers. The validity of the appraisal is expressly conditioned upon consideration of its entirety.
16) Due to the nature of real estate valuation and the complexities of external and internal factors which dictate the
market value of any real estate, and the rapid changes and fluctuations with respect to the valuation of real
estate, the opinion of the appraisers set forth in the appraisal concerning the market value of the property is
reliable as of the effective date and should not be considered as reliable at any time thereafter.
17) The appraisers make no guarantee or warranty, whether implied or expressed, concerning the market value
set forth in the appraisal. The appraisal merely sets forth the appraisers opinion of such market value based
upon information obtained by the appraisers and assumptions made by the appraisers with respect to the
property.
18) The appraisers assume no responsibility for any costs or consequences arising due to the need, or the lack of
need for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to
determine the actual need for flood hazard insurance.
19) Subsurface Rights (minerals and oil) were not considered in this appraisal unless otherwise specifically stated.
20) The State of Texas does not have full disclosure laws regarding real estate transactions. Therefore, the
appraisers necessarily confirmed all sales and rental comparables with brokers, property managers, mortgage
brokers, grantors, grantees and other parties familiar with the transaction. The appraiser’s data is limited by the
accuracy of the information supplied by the aforementioned individuals. Whenever possible, the information
was verified by county records.
21) The value conclusion within this report is contingent upon the site being in full compliance with city codes, and
that no contamination has occurred at the site. A Phase I Environmental Study was not provided, and the
appraisers accept no responsibility as to the current status of property with respect to environmental
contaminants. It is recommended that if a Phase I study has not been performed, that an expert in this field be
engaged to identify any hazardous materials and substances existing on the property.
22) It is assumed there is full compliance with all requirements of Title III, of the Americans with Disabilities Act
(ADA) which became effective January 26, 1992 unless non-compliance is stated, defined, and considered in
the appraisal report. No responsibility is assumed by the appraisers for any such conditions, or for any expertise
or architectural/design knowledge and cost required to identify such non-compliance.
23) As used in professional appraisal practice the term “inspection” is “a personal observation of the exterior and/or
interior of the real property that is the subject of an assignment. The purpose of an appraiser’s inspection is to
identify the property characteristics that are relevant to the assignment, such as amenities, general physical
condition, and functional utility.” Inspection is considered a term of art in the appraisal profession and does not
have the same meaning as it might have in other professions such as engineering or architecture or in other
design or construction related professions. Additionally, it does not infer any obligation to investigate.
SECTION VIII – ADDENDUM
QUALIFICATIONS OF KEVIN T. PEEK
─────────────────── • ───────────────────
EXPERIENCE
01/20 to 4/24 Associate Appraiser – Valbridge Property Advisors.; Dallas, Texas
05/24 to Present Associate Appraiser – Todd Property Advisors, Real Property Analysts, Inc.;
Plano, Texas
During Mr. Peek’s time as a real estate appraiser, he has prepared valuations on a wide variety of real estate
developments. These assignments include single-tenant and multi-tenant office, retail, industrial, and medical
developments, as well as single-family and multi-family residential valuations. Some of the more complex
appraisals Mr. Peek has performed have involved large acreage ranches, anchored strip shopping centers,
and multi-property portfolios including mixed property types.
PROFESSIONAL LICENSE AND AFFILIATIONS
Certified General Appraiser
Texas Certificate #TX-1381324-G
EDUCATION
Bachelor of Arts – Speech Communication, Texas A&M University, College Station, Texas; 2005
Mr. Peek has completed all qualifying educational requirements to achieve Certified General Appraiser
licensure in the State of Texas.
QUALIFICATIONS OF MICHAEL A. KEANE, MAI
─────────────────── • ───────────────────
EXPERIENCE
8/15 to Present Senior Vice President – Todd Property Advisors, Real Property Analysts, Inc.;
Plano, Texas
10/12 to 8/15 Senior Appraiser – Todd Property Advisors, Real Property Analysts, Inc.:
Frisco, Texas
10/09 to 10/12 Appraisal Associate – Beers-Wells-Todd, Real Property Analysts, Inc.:
Frisco, Texas
During Michael's tenure as a real estate appraiser and appraisal research assistant, he has assisted in the
preparation and market research for numerous valuations on a variety of commercial real estate developments. These
properties consisted of various single and multiple tenant industrial, general office, medical office, and retail facilities as
well as residential subdivision developments, multifamily developments, and user specific and special purpose
properties such as automotive repair/service, full and self-serve car wash facilities, airplane hangars, fixed base
operations, flight schools, marinas, ice skating rinks, and billboard properties. Michael has also appraised properties for
eminent domain/partial taking purposes.
Michael’s responsibilities involve performing property inspections as well as analyzing market trends, collecting and
analyzing market data, analyzing subject property income and expense information, estimating reproduction costs and
depreciation as well as utilizing all aforementioned data to perform real property appraisals.
PROFESSIONAL LICENSE AND AFFILIATIONS
Designated Member of The Appraisal Institute - MAI
State Certified General Real Estate Appraiser
Texas Certificate # TX-1380384-G
EDUCATION
Master’s Degree - Land Economics and Real Estate - Texas A&M University, 2008 Bachelor of Science
Degree – Sport Management - Texas A&M University, 2007.
Minor in Business Administration
The Land Economics and Real Estate curriculum at Texas A&M University is one of only three degree programs in the
United States which have been sanctioned by The Appraisal Institute for post-graduate studies in commercial real estate
appraisal. During his pursuit of the Master's degree, Michael completed various real estate and financial oriented
courses including Real Property Valuation I & II, Real Property Finance, Real Estate Development, Financing Real
Estate Investments, Money and Capital Markets, and Commercial Real Estate Law. Michael received the Master's
degree in December 2008. Prior to his post-graduate studies, Michael received a Bachelor of Science Degree in
August 2007.
Texas Appraiser Licensing and Certification Board certified courses completed by Michael include: Appraisal Principles,
Appraisal Procedures, Sales Comparison Approach, Income Approach Parts 1 & 2, Finance Statistics and Valuation
Modeling, Site Valuation and Cost Approach, Business Practices and Ethics, and Uniform Standards of Professional
Appraisal Practice receiving a passing grade on all course examinations.
Appraiser: MICHAEL ANDREW KEANE
License #: TX 1380384 G License Expires: 11/30/2024
Chelsea Buchholtz
Commissioner
Certified General
Real Estate Appraiser
Having provided satisfactory evidence of the qualifications required
by the Texas Appraiser Licensing and Certification Act, Occupations
Code, Chapter 1103, authorization is granted to use this title:
Certified General Real Estate Appraiser
For additional information or to file a complaint please contact TALCB
at www.talcb.texas.gov.
MICHAEL ANDREW KEANE712 S WEATHERRED DRRICHARDSON, TX 75080
QUALIFICATIONS OF MITCHELL B. TODD, MAI
─────────────────── • ───────────────────
EXPERIENCE
1/94 to Present President – Todd Property Advisors, Real Property Analysts, Inc.; Plano, Texas
7/92 to 1/94 Vice President - Beer-Wells-Vaughan, Commercial Property Analysts; Dallas, Texas
6/86 to 7/92 Vice President - Noyd & O'Connell, Inc.; Real Estate Appraisers & Consultants; Dallas,
Texas (2/90-7/92); Houston, Texas (6/86-1/90)
During Mr. Todd's tenure as a real estate appraiser, he has prepared numerous valuations on a variety of high profile and
complex income producing real estate developments. Additionally, Mr. Todd has been involved in the valuation of
numerous single family and multi-family residential properties during his career. These assignments required analytical,
communication, and problem-solving skills which Mr. Todd has continually enhanced since his inception into the
profession. During the last several years, as the Dallas/Fort Worth residential market has expanded and mortgage
interest rates have been at attractive levels, Mr. Todd has gained significant experience in the appraisal of single family
residential properties for the purpose of obtaining mortgage financing.
Some of the more complex assignments in which Mr. Todd has completed appraisals involve numerous parcels
assembled by the City of Dallas for the American Airlines Center and the new performing arts center in the Arts District;
Reunion Arena and adjacent parking facilities, The Grand Hotel and the Mercantile Complex in the Dallas CBD; the
proposed Bank One Building in the Fort Worth CBD; the Hughes Aircraft Facility in Las Cruces, New Mexico; the
Stephens Graphics Manufacturing Facility in Dallas, Texas; the Radisson Inn Tulsa Airport in Tulsa, Oklahoma, the
Trophy Club Development (all remaining lots, acreage, and disputed acreage) of Denton County, Texas; the Eldorado
Subdivision (all remaining lots and acreage) in McKinney, Texas; the Stonebriar Community Church in Frisco, Texas; the
Trinity Terrace Retirement Center in Fort Worth, Texas; the San Antonio Savings Association Headquarters Building in
San Antonio, Texas and numerous portfolios of credit tenant retail projects, office buildings, charter schools, full service
car washes and extended stay lodging facilities across Texas and the United States.
PROFESSIONAL LICENSE AND AFFILIATIONS
Designated member of The Appraisal Institute - MAI #9379.
State Certified General Real Estate Appraiser
Texas Certificate # TX-1323514-G
Oklahoma Certificate # 1287CGA
Arkansas Certificate # CG3379
Registered Property Tax Consultant, State of Texas (Registration #00002555).
Licensed Broker by the Texas Real Estate Commission (License #0364803)
Member - Society of Texas A&M Real Estate Professionals
EDUCATION
Master's Degree - Land Economics and Real Estate, Texas A&M University, 1986.
Bachelor of Science Degree - Agricultural Economics, Texas A&M University, 1984.
The Land Economics and Real Estate curriculum at Texas A&M University is one of only three degree programs in the
United States which have been sanctioned by The Appraisal Institute for post-graduate studies in commercial real estate
appraisal. During his pursuit of the Master's degree, Mr. Todd served as a graduate teaching assistant for several
undergraduate courses, including real estate appraisal curriculum. Mr. Todd received the Master's degree in May 1986.
Prior to his post-graduate studies, Mr. Todd received a Bachelor of Science Degree in December 1984, graduating with
Magna Cum Laude honors.
The Appraisal Institute courses completed by Mr. Todd include: Standards of Professional Appraisal Practice, Principles
of Appraisal, Basic Valuation, Capitalization Theory - Part A, Capitalization Theory - Part B, Case Studies in Real Estate
Valuation, Report Writing and Valuation Analysis, and received a passing grade on both the Comprehensive Examination
and the Demonstration Report. Mr. Todd was awarded the designation of MAI in May 1992. The Appraisal Institute
conducts a program of continuing professional education for its designated members. MAI and SRA members who meet
the minimum standards of the program are awarded periodic educational certification. Mr. Todd is currently certified
under this program. Mr. Todd serves on the Region 8 Ethics and Counseling Regional Panel of the Appraisal Institute.
Other college level real estate courses and seminars completed by Mr. Todd include: Real Estate Development Analysis,
Real Property Valuation, Building Construction Practices, Rural Real Estate Appraisal, Understanding Limited Appraisals
and Reporting Options, ASB Informational Meeting, and Texas Property Tax Law.
Appraiser: Mitchell Brian Todd
License #: TX 1323514 G License Expires: 08/31/2026
Chelsea Buchholtz
Executive Director
Certified General
Real Estate Appraiser
Having provided satisfactory evidence of the qualifications required
by the Texas Appraiser Licensing and Certification Act, Occupations
Code, Chapter 1103, authorization is granted to use this title:
Certified General Real Estate Appraiser
For additional information or to file a complaint please contact TALCB
at www.talcb.texas.gov.
MITCHELL BRIAN TODD6420 ONEIDA DRIVEFRISCO, TX 75034