Appraisal - Midway Hotel Group - 5001 79th Street, Burbank (1).pdf

8/11/2019 Appraisal - Midway Hotel Group - 5001 79th Street, Burbank (1).pdf

1/80

Appraisal Report

American Midwest Hotel

5001 West 79 Streetth

Burbank, Illinois

as of

February 20, 2013

by

Matthew R. Bulthuis, President

Certified General Real Estate AppraiserIllinois License No. 553.001385 (exp. 9-30-13)


2/80

Bulthuis

Realty

Consultants Inc.

15 E. Madison Street

Lombard, Illinois 60148-3478

(630) 353-1700

Fax (630) 353-1711

www.brcnet.com

February 22, 2013

Ms. Maddie Meskovich

Title?

Devon Bank

6445 N. Western Avenue

Chicago, Illinois 60645-5494

Dear Ms. Meskovich:

In accordance with your request for an opinion of market value of the property known as:

American Midwest Hotel

5001 West 79 Streetth

Burbank, Illinois

the undersigned submits the following report which describes our method of approach and contains

data gathered in our investigation.

The appraisal is made in accordance with the Code of Ethics of the Appraisal Institute. The report

conforms to the Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by the

Appraisal Standards Board of the Appraisal Foundation. All applicable approaches were utilized

and the conclusions are presented in a summary format. The property rights appraised are fee simple

estate and financing is available in the metropolitan area for this property type.

It is our opinion that the as-is value of the above-captioned hotel property, as of February 20, 2013,

subject to the contingencies and limiting conditions noted on page 18 of this report, is $1,125,000.

Respectfully submitted,


Certified General Real Estate Appraiser

Illinois License No. 553.001385 (exp. 9-13)


3/80

Subject Photographs

Front View

Front View

Bulthuis Realty Consultants Inc. American Midwest Hotel - 5001 W. 79 Street, Burbank, Illinois Page 2th


4/80

Subject Photographs

Rear View

West Elevation



5/80

Subject Photographs

East Elevation

Central Pool Area



6/80

Subject Photographs

Lobby Waiting Area

Nightclub



7/80

Subject Photographs

Deluxe (Whirlpool) Suite Requiring Repair

Deluxe (Whirlpool) Suite



8/80

Subject Photographs

Typical Renovated Room

Typical Renovated Bathroom



9/80

Subject Photographs

Banquet Room

Front Desk Area



10/80

Subject Photographs

First Floor Kitchen

Second Floor Kitchen



11/80

Subject Photographs

Basement Boiler Room

Basement Electrical Room



12/80

Subject Photographs

79 Street Looking Westth

79 Street Looking Eastth



13/80

Subject Photographs

Aerial View, Looking South



14/80

Area Map



15/80

Table of Contents

Letter of Transmittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Photographs of the Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Premises of the Appraisal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17- Purpose

- Scope of Work

- Contingencies and Limiting Conditions

- Property Rights

- Market Value Definition

- Exposure Time

Property Information.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20- Legal Description

- Zoning- Flood Information

- Real Estate Taxes

- Property History

- Property Renovation

- Environmental Factors

Property Location. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24- City Data/Trends

- Motel Industry Trends

Property Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28- Site

- Building Improvement

Highest and Best Use.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Land Value Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Sales Comparison Approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Final Reconciliation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Certification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Assumptions and Limiting Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Addenda- Survey

- Hotel Assessment Report

- Engagement Letter

- Qualifications of Appraisers



16/80

Executive Summary

Property Location 5001 W. 79 Street, Burbank, Cook County, Illinoisth

Building Description This is a two-story, 92-room hotel (with an estimated 75

rooms in useable condition) with a full-service

restaurant/tavern, banquet facilities for about 645 people,and an outdoor swimming pool. The construction design

resembles three connected buildings which have a total

gross building area of 59,820 square feet. The hotel

portion comprises 70% of the total building area and the

restaurant/banquet facilities comprise the remaining 30%.

The improvements were constructed circa 1965. The

building was partially lightly refurbished about five years

ago but has received minimal maintenance and no

renovations in the last five years. Currently the building

is unoccupied and maintained by a receiver.

The building design includes the 92 hotel rooms, a tavern

with seating for about 50 people, three to five banquet

rooms depending on the room divisions, entrance lobbies

for the hotel and tavern, and connecting corridors to each

building component including a covered walkway from

the lobby/restaurant to the hotel building(s). There are six

deluxe suites which feature whirlpool baths and some

special electronic equipment and 86 regular rooms. Most

of the rooms, including suites with whirlpools in the

bathrooms, approximate 285 square feet; about threedeluxe suites are larger with 430 square feet.

The largest banquet room can accommodate 300 guests

and the second largest 150 people. The remaining rooms

can seat 65 persons each and are used for small parties or

business meetings. Common areas shared by the hotel

and banquet/restaurant include the hotel lobby and

washroom facilities on both floors.

Site Description The site contains 161,000 square feet (3.7 acres) more or

less. It has asphalt paving throughout, with stripedspaces for about 180 vehicles. Some additional spaces

could be available on the southwest corner of the lot

which is currently fenced off for storage and a small

shed. The site is fenced on the rear and sides.

Occupancy The motel is currently closed for business. Prior to

closing in 2012 the front desk reported 32 rooms



17/80

Executive Summary

occupied on a typical weekday night (35%). Occupancy

was reportedly higher on weekends. Based on the current

number of rooms available for occupancy, indicated by

the front desk in 2011 as 75, and confirmed by my

inspection, the maximum attainable occupancy is 82%.

Zoning The property is zoned C, Commercial District.

Utilities Municipal water, sanitary sewer, electricity, gas, and

telephone service are all available.

Land-to-Building Ratio 2.69:1.0. The lot coverage is approximately 19%, not

including the pool area.

Approaches to Value

Cost Approach N/A

Sales Comparison Approach $1,125,000

Income Capitalization Approach N/A

Final Value (including FF&E) $1,125,000*

Land Value (as-vacant) $885,000

Final Value with the Hypothetical

Condition that there areno past-due taxes $1,575,000**

Furniture, Fixtures & Equipment $150,000

Date of Inspection and Valuation February 20, 2013

*Subject to the contingencies and limiting conditions noted on page 18.

**This is a hypothetical value since I am aware of the past due taxes and they must be paid, but this

value assumes that there are no past due taxes, or that they have been paid.



18/80

Premises of the Appraisal

Purpose The purpose of this appraisal is to provide an opinion of themarket value of the fee simple estate of the hotel property

located at 5001 W. 79 Street, Burbank, Cook County,th

Illinois as of the date of inspection. The appraisal is to be

used by our client, Devon Bank, for loan monitoring andinternal planning. It was ordered by Ms. Maddie Meskovich,

Loan Operations Manager with the client.

Scope of Work The scope of work for this appraisal included a completeappraisal of the property in a summary format. The interior

(including all of the 92 guest rooms) and exterior of the

property were inspected. We previously appraised the

property in January of 2008, November of 2009, and

September of 2011, and reviewed our previous appraisals and

workfile. We also previously appraised this property in 2002and we reviewed that prior appraisal and file contents. We

also reviewed a Hotel Assessment Report dated October

25, 2010 and prepared by Hotel Source, Inc. which was

provided by the client. This report is included in the

addendum.

The cost approach was not considered applicable because of

the lack of land sales, the deferred maintenance and limited

inspection of rooms, and the extent of estimation required for

obsolescence in this older building as it relates to its various

components in the current market. This approach would not

be used by the market participants in the valuation of this

property, the pricing of which primarily relies on its income

producing capabilities and sale prices of competing

properties.

A reasonably good selection of sales of similar motel/hotel

properties was reviewed and analyzed to determine the value

as found within the sales comparison approach.

The hotel has been vacant and closed for over a year. Nooperating information is, therefore, available for the property.

Additionally, significant expenditures will be required to

bring the hotel to a level where it could reasonably be

occupied. Many of the rooms are in a state of disrepair, the

exterior needs repairs, especially the west elevation, and the

condition of the mechanicals and kitchen equipment is not

known. Considering the lack of income and expense data,

coupled with the condition and somewhat unique nature of



19/80


this property, the income approach was not considered

applicable.

Additionally, in order to determine a land value for highest

and best use purposes, we developed an opinion of land valueby researching the limited land sale data available and

utilizing the sales comparison approach.

Contingencies and

Limiting Conditions Though the entire building was available for inspection, thecondition of the mechanicals, roof, and other systems was not

ascertainable. I recommend an inspection by a qualified

engineer or building inspector to determine if repairs are

required. For the purposes of this report, I considered the

condition of the property, and assumed that the mechanicaland structural systems were in operable condition. Readily

observable damage and deferred maintenance (holes in walls,

missing fixtures, damaged finishes, etc.) are considered in my

value opinion.

Finally, it is noted that the 2008, 2009, and part of the 2011

real estate taxes have not been paid and that the 2009 taxes

appear to have been sold. Though requested, we were not

provided with further information regarding the redemption

cost for these taxes and have estimated them at $450,000.

The first installment of the taxes for 2012 (payable 2013) also

has not been paid but is not yet due (due March 1). We

reserve the right to modify this appraisal and the value

opinion upon receipt of actual redemption information.

Property Rights The property rights appraised are fee simple estate. Thisinterest is defined by the Appraisal Institute's The Dictionary

of Real Estate Appraisal, 5 Edition, 2010, as "absoluteth

ownership unencumbered by any other interest or estate,

subject only to the limitations imposed by the governmentalpowers of taxation, eminent domain, police power, and

escheat."



20/80


Market Value Definition Market value, as used within this report, is defined as:The most probable price which a property should bring in a competitive and

open market under all conditions requisite to a fair sale, the buyer and seller

each acting prudently and knowledgeably, and assuming the price is not

affected by undue stimulus. Implicit in this definition is the consummation

of a sale as of a specified date and the passing of title from seller to buyerunder 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 interests;

(3) A reasonable time is allowed for exposure in the open market;

(4) Payment is made in terms of cash in United States 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 w ith the sale .1

Exposure Time The subject is situated along 79 Street which is a moderatelythtraveled road. The location is mixed in land use and has a

significant residential presence. There are, however, several

banquet facilities within two miles west of the subject, as

well as numerous motels/hotels along Cicero Avenue

between Midway Airport and 95 Street, which establishes ath

supporting market for this property type. Primary roadway

exposure, such as that afforded properties fronting Cicero

Avenue, is lacking. Although some demand exists for both

hotel and banquet/restaurant facilities in the supporting

market, the subjects somewhat dated design, fair condition

and required repairs, and distance from Midway Airport willincrease its exposure time. Additionally, the difficulty in

obtaining financing has greatly reduced the pool of potential

investors, especially for larger (25 plus rooms) hotel and

motel properties. Given these factors, the time the property

would have to be on the market, prior to the date of appraisal,

to achieve the indicated market value is estimated at 12 to 18

months.

12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register1

12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994.



21/80

Property Information

Legal Description LOT 2,LOT 3,LOT 4,LOT 5,LOT 6,LOT 9,LOT 10AND LOT 11IN BLOCK 1 IN GOLFMOOR, BEING A SUBDIVISION OF THE

NORTHEAST 1/4 OF SECTION 33, TOWNSHIP 38NORTH,

RANGE 13, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN

COOK COUNTY,ILLINOIS.

Zoning The property is situated in Zone C, Commercial District.

Permitted uses: Permitted uses include, but are not limited to, contract

services such as heating, plumbing, roofing, and showrooms,

as well as office supply stores, hardware stores, department

stores, variety stores, food stores, motor vehicle dealers,

home furnishing stores, restaurants including carry-out and

drive-thru windows excluding drive-in establishments, book

stores, florists, depository and nondepository creditinstitutions, real estate offices, insurance offices, veterinary

clinics, medical offices, and other business and professional

offices.

Additionally, more than 50 uses are permitted as special uses

including that of the subject, hotels and motels, but also

bowling alleys, bingo parlors, planned developments, public

warehouse and storage, residential care facilities, and truck

rental and leasing.

Parking: Parking requirements vary with the use. Hotels and motels

require one space per guest room, and one for each employee,

plus specified requirements for restaurants, meeting rooms,

and related facilities. Eating and drinking establishments

require one space for every 65 square feet of gross floor area

but in no event less than 12 spaces. Meeting rooms and

banquets are not considered separately; however, meeting

rooms may be closely represented by office properties at one

space per each 350 square feet. Banquet facilities will be

closely represented by eating and drinking establishments at

one space per each 65 square feet at a maximum and willmost likely require less. At these specifications, required

parking will approximate 150 to 200 spaces.

The subject is a special use per its zoning classification and

otherwise appears to be in compliance with code.



22/80


Flood Information The subject is not located in a flood zone area. There are nopanel maps printed for the community of Burbank.

Real Estate Taxes

Permanent

Index No.

2012 Assessed

Valuation

2008

Taxes

2009

Taxes

2010

Taxes

2011

Taxes

2012*

Taxes

19-33-208-003 $627,074 $145,875 $169,957 $61,154 $127,623 $93,806

19-33-208-007 $34,329 $11,026 $8,451 $6,106 $7,253 $4,439

19-33-208-009 $26,757 $8,747 $6,705 $6,521 $7,111 $4,003

19-33-208-010 $23,078 $7,535 $5,776 $5,454 $6,053 $3,452

19-33-208-011 $21,641 $7,087 $5,432 $5,508 $5,862 $3,237

19-33-208-015 $40,175 $13,071 $10,019 $8,616 $10,123 $6,010

19-33-208-016 $40,401 $13,143 $10,074 $8,627 $10,163 $6,044

$813,455 $206,484 $216,414 $101,986 $174,188 $120,991*

*First installment only, due March 1, 2013

The main parcel of the subject property was re-assessed in

2007, at which time the assessment nearly tripled from

$209,049 to $533,173, and it increased further in 2008 to

$696,750, where it remained until a 2010 appeal. The 2010

appeal resulted in an overall tax reduction to $101,986,roughly half of the previous years taxes. This reduced

burden increased again in 2011, and it appears it will increase

further in 2012, based on the first installment which will be

do on March 1, 2013.

Current real estate taxes (2011, payable 2012) are $2.91 per

square foot based on the gross building area of 59,820 square

feet. Taxes for similar hotels in southwestern Cook County,

which were newer or in renovated condition, ranged from

$2.00 to $4.00 per square foot. Considering the current

condition of the subject, that is it closed for business, and its

secondary location, as well as market conditions, reasonable

taxes would be at the low end of the range at $2.00 per square

foot or $120,000, as rounded.

It is noted that the taxes for 2008, 2009, and part of 2011

have not been paid for any of these parcels. The taxes for

2009 were reportedly sold to a tax buyer. Though redemption



23/80


details were not provided, the total taxes and penalties that

are past due, based on the Cook County Clerk data, are

$436,641. Assuming additional penalties and redemption

fees, the total cost to bring the taxes current (not including

any 2012 tax payable in 2013) is estimated at $450,000. Weare not experts in tax matters and strongly urge the client to

consult with a tax attorney or professional to determine the

exact costs, penalties, and risks involved with these unpaid

taxes. A typical buyer would reduce the price they would be

willing to pay by this amount, and it is subtracted from each

of the approaches to determine a final value indication.

Property History The subject was last purchased by Samuel Alexander, inOctober of 2002 for $3,400,000 including a reported

$600,000 in personal property, after listing for $4,400,000.The subject was previously purchased by Seong D. Lim in

1986, and had previously been a Best Western franchise. The

property was refurbished and updated in 1999. There are no

other transfers of the property reported.

Subsequent to the 2002 purchase, the property was operated

for a few years, then closed in 2005 for repairs and

renovation. It was vacant during that time as a drawn-out

renovation took place. This renovation was reportedly

completed in mid-2009, though there are items of deferred

maintenance that were never completed, and the hotel hasdeteriorated since that time. The details are discussed in the

following section. Upon completion, the property was re-

branded as the Midway Airport Hotel, and then, later, an

Americas Best Value Inn. Currently, the hotel is branded as

an American Midwest Hotel (non-chain).

The lender foreclosed on the property in 2012, and it is now

bank-owned. At that time, the property was also closed for

business; it has been closed for at least one year and is

currently maintained by a receiver.

The property is currently listed for sale with Keith Lord of

Lord Financial Advisors LLC (312.944.6270,

[email protected]) for $1,500,000.



24/80


Property Renovation According to Samuel Alexander, the total renovation costswere approximately $1,200,000, though information included

in our files indicates that previous totals were closer to

$1,535,000. Renovations included new windows, roof, and

exterior stucco, remodeled guest rooms with new doors,finishes, card locks, HVAC units, and furnishings, a new hot

water tank, new fire alarm system, some lobby upgrades, a

new fence, and a partially filled pool to eliminate the deep

end.

At the time of inspection, most of the rooms, the exterior, and

the common areas showed deferred maintenance and required

repairs. Items observed included holes in the walls, missing

ceiling tiles, unfinished wall and ceiling patching, damaged

or stained carpet, missing and broken tiles, an EIFS system

pulling away from the exterior walls (especially the westelevation), and a general lack of maintenance. The condition

of the mechanicals is unknown, and the water and gas utilities

have been shut off. The cost to bring the property to a

habitable state is not known, but is considered to be

significant.

Environmental Factors An environmental audit was not available. However, wenote that an old construction inspection identified an

asbestos-insulated, old, water drum/tank and recommended

its removal. The report did not, however, indicate if the

asbestos material was considered friable such that removal

was necessary immediately. Typically, older disconnected

equipment with such insulation are left unattended until the

building undergoes major renovation or demolition.

Consequently, until an environmental audit becomes

available, for purposes of valuation, we consider the property

free and clear of all hazardous materials and related

substances. Should the audit show otherwise, a deduction for

the market value of an clean-up costs indicated as of the date

of appraisal would be required. We recommend carefulreview of the environmental audit to be completed and

reserve the right to adjust the value herein based on its

findings and recommendations.



25/80

Property Location

City Data/Trends The City of Burbank is located 15 miles southwest of theChicago Metropolitan Business District. It is bounded by the

communities of Oak Lawn, Bridgeview, Hickory Hills,

Bridgeview, and Chicago. The population according, to the

2010 census, was 28,925, a 4% increase over the 2000 figureof 27,902, showing a relatively stable overall population for

this built-up community.

The community is largely residential in character and has a

resident composition mostly of homeowners. Housing styles

include ranches, brick bungalows, Cape Cods and split-levels.

Prices for single-family homes range from $25,000 to

$400,000. The average sale price in the last 12 months was

$130,247, showing continued annual declines since the 2007

height of the residential market when the average sale price

was $280,000. There are few attached housing alternatives,with only eleven sales in the last 14 months averaging

$62,254, also down dramatically from the high 2007 figure of

$160,000. Apartments with one and two-bedroom units are

available at about $700 to $950 per month; three bedrooms

are less frequent and rent for about $1,100 plus. Rental of

houses is not uncommon with most typical ranch and split-

level styles renting for $1,200 to $2,000 per month.

The community is conveniently located to recreation, schools

and public transportation. It is situated between Interstate 55

and the Tri-State Tollway and is a 30-minute drive to theChicago Loop. Midway Airport is 10 minutes away and

OHare Airport is a 45-minute ride. The Metra train offers

about a 30- minute ride to the Loop with stations in nearby

Oak Lawn and Summit.

Most concentrated retail and shopping is at the intersection of

79 Street and Cicero Avenue where there is a Jewel/Oscoth

and strip shopping center, Toy-R-Us, PetSmart, Sports

Authority, Sam Ash Music, OfficeMax, Kohls, Best Buy,

Circuit City, CostCo, Target, the Ford City Mall indoor

shopping center, and a large variety of local and smaller

retailers.

Burbank is an established community with stable community

values in all property sectors. Most development is old and

lacks modernization. That, in conjunction with the age and

overall average condition of the properties, will limit value

increases over time.



26/80

Property Location

Motel Industry Trends Based on market reports reviewed, performance in thehospitality industry bottomed out in 2009, and has seen

considerable positive trends in the last year.

National Trends Industry forecasts are positive for the hospitality industryaccording to market reports reviewed. In the March 2012

edition of Hotel Horizons, PKF Hospitality Research

predicts that as a result of a long span of occupancy growth

(growth in lodging demand has greatly exceeded the supply

increase since early 2010) and a 4.1% gain in average daily

room rates (ADR), revenue per available room (RevPar) for

U.S. hotels will rise 5.8% in 2012. PKF also observed new

records in metropolitan area lodging demand, and forecasts

greater profitability for the next two years, which will likely

result in an increase in hotel investment.

According to the August 2012Hospitality Directions - U.S.

Edition published by Pricewaterhouse Coopers, lodging

demand continues to expand, boosting occupancy. Moderate

economic growth is expected for 2012, firming in 2013.

They predict RevPAR growth of 7.2% in 2012, followed by

5.6% in 2013, building on the strong 8.2% increase in 2011.

According to the Hospitality Research Semiannual Report

(year end 2012) prepared by Marcus and Millichap, a

combination of steady room demand and limited construction

will generate a120-basis point

rise in national

occupancy in

2012 to 61.2%,

the highest year-

end level in five

years. Property

operators will

continue to push

daily rates higher

during the year,

resulting in a

4.2% bump in the ADR, despite value-conscious travelers

tempering the increase. RevPAR is increased 6.5% in 2012

due to minimal additions to supply. 2013 is projected to be

another positive year, though with tempered increases

compared to 2012.



27/80

Property Location

Local Trends In May 2012, the hospitality research firm STR Global

reported that RevPAR in Chicago rose 10.1% in 2012, one of

the leading markets nationwide. Occupancy rose in 2012 to

75.2%, from 72.2% in 2011. They anticipate continued ADR

growth into 2013. The data provided refers to the hospitalitymarket as a whole. The limited service/economy segment, of

which the subject is a part, is projected to experience similar

performance based on the reports and data we reviewed.

A similar positive outlook is expressed by Marcus and

Millichap in their Midwest regional report which shows

increases in occupancy, ADR and RevPAR, with overall

9.2% revenue growth in 2012.

Overall, the outlook for all motel and hotel properties is

positive with increases in room rates and occupancy expectedby major market analysts for the next few years.



28/80

Property Location



29/80

Property Description

SiteLocation The site is located on the south side of 79 Street nearth

LeClaire Avenue in Burbank, Illinois. It has frontage at

LeClaires intersection with 79 Place which runs along theth

southern site boundary.

Description The site has 161,000 square feet (3.7 acres) more or less.

With the exception of a roughly 120' x 167' extension on its

northeast corner, it is generally rectangular in shape. The

land to building ratio is 2.69 to 1 and the lot coverage is

approximately 19%, not including the pool area.

Site Improvements There are concrete service walks and asphalt paving

throughout with striped spaces for about 180 vehicles. Some

additional spaces could be available on the southeast corner

of the lot where currently there is a small shed and storagearea. The site has wood privacy fencing around the parking

areas. The site improvements are in average condition; the

parking lot is in fair condition requiring resurfacing and

restriping at the minimum.

Utilities All utilities, gas, water, sewer, are all connected.

Easements There were no adverse easements or encroachments noted on

the survey.



30/80


Building Improvement

General This is a two-story, 92-room hotel with a full-service

restaurant/lounge, banquet facilities for about 645 people, and

an outdoor swimming pool. Reportedly only 75 rooms arecurrently fit for occupancy, though my inspection revealed

additional rooms that required at least some refreshing. The

construction design resembles three connected buildings

which have a total gross building area of 59,820 square feet.

The hotel portion comprises 70% of the total building area

and the restaurant/banquet facilities comprise the remaining

30%.

The improvements were constructed circa 1965. The

building was recently lightly renovated, though it appears that

the renovation was not completed and there has been nominalmaintenance and no renovation in the last two years, resulting

in an overall below average condition for the subject as

compared with similar properties.

The building design includes the hotel rooms, a tavern which

seats about 50 people including the bar, up to three to five

banquet halls depending on the room divisions, entrance

lobbies for the hotel and restaurant, and connecting corridors

to each building component including a covered walkway

from the lobby/restaurant to the hotel building(s). There are

six deluxe suites which feature whirlpool baths and somespecial electronic equipment, and 86 regular rooms. Most of

the rooms, including suites with whirlpools in the bathrooms,

approximate 285 square feet; about three deluxe suites are

larger, containing 430 square feet.

The largest banquet room can accommodate 300 guests, and

the second largest 150 people. The remaining rooms can seat

65 persons each and are used for small parties or business

meetings. Common areas shared by the hotel and

banquet/restaurant include the hotel lobby and washroom

facilities on both floors.

Construction The building has concrete block support walls and stucco, or

other EIFS covering, with cedar trim frame exterior walls,

with partial brick veneer on the east side of the building. The

exterior of the building is partially renovated, though much of

it is in dilapidated condition. Windows are fixed and

casement combination with metal framing. The building has



31/80


a poured concrete foundation with a partial unfinished

basement housing the laundry facilities, mechanicals, and

storage. A single heating and air-conditioning unit provides

climate control to the building, the individual guest rooms

have wall-mounted HVAC units, many of which werereplaced in the last seven years. Electrical capacity has been

updated to 2,000 amperes. There are four public restrooms,

one womens and one mens on each floor. The total number

of fixtures includes roughly 10 wash sinks, 13 water closets,

and three urinals and is adequate for moderate use of the

banquet facilities. The first floor bathrooms were remodeled,

though some of the tile has fallen off and their condition is

deteriorating, while the upper floor bathrooms have not been

remodeled.

Floor Access The second level and basement are accessed by staircases, thelobby staircase having an open design with metal railings.

There is no elevator. A dumbwaiter lifts food and hotel

supplies to the second floor.

Finish The building has carpet and ceramic floor covering, with

marble in the lobby. Walls are wallpaper covered, stucco,

paneled, mirrored or painted. Door trim is average grade;

interior doors are recently replaced security doors with card

readers. Ceilings are acoustic tile, drywall with stucco finish,

or fire retardant sheeting.

Condition Below Average overall. About half of the individual guest

rooms have been lightly remodeled with new carpet, wall

covering or paint, and windows; the bathrooms have been

repaired, with modest remodeling where necessary. Some of

the finishes are still outdated. Some of the guest rooms

require refreshing or repairs, and 15 or so are gutted or in

poor condition. The banquet facilities and restaurant/lounge

have also been lightly remodeled but show wear. The

common hallways have been partially remodeled with new

carpet, repaired ceramic tile, paint and new light fixtures,

though some poor drywall repairs, holes, or missing tileswere noted. The two kitchens have equipment, but are dirty

and in a state of disuse. The lobby has been lightly

remodeled, as has the exterior, though there are missing wall

panels and unpainted areas, and much of the finish system,

especially on the west wall, is bubbling and peeling. The roof

has been replaced and appeared to be in good condition when

inspected in 2009; according to the receiver, any leaks have



32/80


been patched. Mechanical upgrades include many of the

individual room HVAC units and the updated electrical

service, but the condition of the mechanicals is not known.

The water heaters, common area heating/cooling, and pool

mechanicals are dated and their condition is unknown, butassumed to be functional.

Quality Average construction quality, typical for similar vintage

limited service hotels and motels.

Utility The layout of the facilities is average. Room sizes are typical,

although the lobby is small for a facility of its size and there

is no elevator, the latter being a negative factor for use of the

second floor banquet facilities and guest rooms.

ADA/IAC Compliance The Americans With Disabilities Act (ADA) took effect inJanuary 1992 and the Illinois Accessibility Code (IAC)

became effective in October 1997. Both of these laws are

subject to administrative and judicial interpretation. It is

noted that there is no elevator for access to the second floor;

however, there are rooms on the first floor and there is one

room specifically designed for handicap use.

A specific analysis of the property to determine its status in

relation to ADA/IAC is considered to be beyond the scope of

this assignment. No allowance for possible costs related to

ADA enforcement has, therefore, been included in thisvaluation.

Furniture, Fixtures, andEquipment No listing of furniture, fixtures, and equipment (FF&E) was

provided. FF&E includes a bed, dresser, night table,

television, lamp, and chair for each room, as well as roughly

750 chairs and 75 tables for the banquet facilities, and kitchen

equipment for two kitchens. The estimated depreciated value

for the room furnishings is $1,000 per room, or ($1,000 x 92)

$92,000. The estimated depreciated value of the banquet

chairs and tables is $20,000, and the depreciated value of thekitchen equipment is estimated at $40,000 for a total FF&E

of $150,000 (as rounded). Since it appears that computer and

phone systems have been removed, and the office furnishings

are in fair condition, no additional value is added for office

equipment or operation-related items. The total estimated

value of the FF&E is $150,000.



33/80

Highest and Best Use

Definition Highest and best use is described by the Appraisal Institute inThe Dictionary of Real Estate Appraisal, 5 Edition, 2010,th

as follows:

the reasonably probable and legal use of vacant land or an improved propertythat is physically possible, legally permissible, appropriately supported,

financially feasible, and that results in the highest value.

The purpose of the appraisal is to estimate market value. The

highest and best use analysis identifies the most profitable,

competitive use to which the property can be put. Therefore,

highest and best use is a market driven concept.

Procedure In reaching an opinion as to the highest and best use, we have

taken into consideration the previously mentioned definition.There are essentially four stages of analysis. The use must

be:

1. Legally Permissible

2. Physically Possible

3. Financially Feasible

4. Maximally Productive

As Vacant Physically Possible: The subject is a level site which is large

enough to support a variety of commercial uses. Itssurrounding district is a mix of commercial and residential

uses. Relative to its size, shape, and flat terrain, there would

be no reason to conclude that the site would not be similarly

able to support a building improvement.

Legally Permissible: The subjects zone permits a wide

variety of commercial uses. A purely residential development

would require a zoning change, which is not likely,

considering the adjacent commercial uses to the east and

west, and the desire of most municipalities to retain the tax

benefits of commercial development.

Financially Feasible: Commercial entities are supported in

the vicinity and have continued demand. A variety of service

business and/or commercial properties would have support,

particularly those which may require greater parking capacity

given the larger site size. Public transportation is available

nearby.



34/80

Highest and Best Use

Maximally Productive: The highest and best use will be that

use which generates the highest income to the supporting land

after all costs of development excluding land, i.e., labor,

capital, and entrepreneurship, are satisfied. The maximally

productive use will be one which will utilize the large sitesuch as a hotel/motel, medical office complex, senior

housing/assisted living complexes, storage facility, etc. A

variety of uses would provide a similar income to the

supporting land over a comparable period of time.

The highest and best use as vacant is for a commercial

development.

As Improved The subject property is improved with a hotel property which

continues to contribute to the total property value and isexpected to do so into the foreseeable future. To raze the

improvements and sell as vacant land is not financially

feasible considering the land value conclusion in this report

($885,000) and the demolition costs which would likely total

around $300,000 to $400,000, considering the size and

construction of the building, and the pool, which would need

to be removed and filled. To replace the structure with a new

building would not be likely given its less visible location off

79 Street which is a more moderately traveled road thanth

Cicero Avenue. There have been at least three hotels

constructed in the last decade, however, on Cicero Avenue,which supports the general demand for lodging in the area.

As noted in the market trends section of this report, the

hospitality market is doing quite well, and demand for rooms

continues to rise, while very little new hotel/motel

construction is planned. The highest and best use of the

improved property is to repair and renovate the building for

limited service hotel use.



35/80

Land Value Analysis

Land Value Analysis In order to determine the value of the land for thedetermination of a highest and best use, I utilized the

sales comparison approach and considered the following

land sales:

Comparable Land Sale SummarySale

No.Location

Sale

DateSale Price Zoning

SqFt Site

Area

Price/

Sq. Ft.

1 7143 W 64 Placeth

Chicago

11-11 $600,000 RT3.5

RM4.5

125,888 $4.77

2 6246 Joliet Road

Countryside

10-11 $600,000 B-1 113,282 $5.30

3 6125 East Avenue

Hodgkins

05-12 $400,000 C 62,600 $6.39

4 14230 Cicero Avenue

Crestwood

10-11 $450,000 C 57,000 $7.89

List 5 7511 S Harlem Avenue

Bridgeview

Listing $999,999 Comm. 191,664 $5.22

List 6 10604 S Southwest Highway

Chicago Ridge

Listing $319,000 C-2 72,250* $4.42

Subject 5001 W 79 Streetth

Burbank

- - - - C 161,000 - -

*Net buildable area



36/80

Land Value Analysis

Analysis Our search emphasized the most recent sales of reasonablysimilar zoned land parcels within similar locations in

southwest Chicago and the near west and southwest suburbs.

Active listings are also considered. Sales are very limited in

these fully built-up locations, and the sales and listingsincluded above are considered the most similar of the limited

data available.

All sales have access to sewer and water utilities and have

similar accessibility. All four sales closed during the past 18

months. The market for development land appears to have

been stable over this time period and no adjustments were

required for market conditions. Adjustments are summarized

as follows.

Land Sale No. 1 Land Sale No. 1 is a highly similar property. It has a similarlocation on a secondary street near the primary thoroughfare

of Harlem Avenue. This area is primarily residential and

industrial, with less commercial potential, and is adjusted

upward. Further upward adjustment is required for its more

restrictive zoning. The net adjustment is upward.

Land Sale No. 2 This property has a highly similar location on a secondary

arterial, a half mile from a primary arterial (Mannheim Road).

It also has a similar mixed area with commercial, service, and

residential properties. It is reasonably similar in size with a

similar zoning. No adjustment was necessary.

Land Sale No. 3 This is a parcel with a less-trafficked frontage, but more

commercial synergy, being located behind the Quarry

shopping center in Countryside, and across the street from a

Menards. A downward adjustment for location was required.

This sale is also adjusted downward for its smaller size. This

property was subject to foreclosure at the time of sale, but it

received significant market exposure (433 days) at higher

prices, and is considered indicative of the market. The net

adjustment for this sale is downward.

Land Sale No. 4 This property is located on a more heavily traveled

thoroughfare in a more dense retail location, and is adjusted

downward. It is also adjusted downward for its smaller size.

This was a short sale, but the property received adequate

market exposure (914 days) at higher prices, and is

considered indicative of the market. The net adjustment for

this sale is downward.



37/80

Land Value Analysis

Land Listing No. 5 This property has a relatively similar and nearby location, but

is on a busier street and is part of a Bridgeview

redevelopment effort with access to TIF funds. A downward

adjustment for location is required. This is a larger parcel

with an irregular shape which significantly limits its frontage.Upward adjustments are required for size and utility. The net

adjustment for this listing is upward, but as a listing, it will

represent the high end of the range.

Land Listing No. 6 This property has a similar location on a similarly-traveled

thoroughfare just east of Harlem Avenue. The rear of the site

backs the Cal-Sag Canal and is in a flood plain. Though the

analysis is based on price per net square foot, the Cal-Sag

frontage is considered a negative factor, requiring upward

adjustment. The net adjustment for this listing is upward, but

as a listing, it will represent the high end of the range.

Conclusion The greatest emphasis is afforded Land Sale Nos. 1 and 2,considering their similar sizes and locations. The other sales

and listings also support the value indicated by these two

sales after adjustment. The indicated value of the subject site,

as-vacant, is $5.50 per square foot, or ($5.50/SqFt x 161,000

SqFt), as rounded . . . . . . . . . . . . . . . . . . . . . . . . .$885,000.



38/80

Sales Comparison Approach

Definition The sales comparison approach is an appraisal technique bywhich a market value indication is derived by comparing the

subject property to current, comparable sales and offerings

relative to their respective prices. Variations in comparable

properties are analyzed, quantified and adjusted to moreclosely reflect the features of the subject property. The

adjusted values are then correlated to obtain a simulated value

of the subject property. The reliability of this technique is

dependent upon:

1. The availability of sales data.

2. The degree of comparability of each property with the

subject property.

3. Reliability of sales data.

4. Knowledge and adjustment of unusual conditions

effecting price or terms of sale.

The sales comparison approach is based upon the principle of

substitution. This implies that a prudent person will not pay

more to buy or rent a property than it will cost to buy or rent

a comparable property.

Procedure 1. Conduct research to obtain the most recent andcomparable property sales and listings in the subject

market area.

2. Analyze and make adjustments to comparable sales

considering all relevant differences including time of

sale, location, physical and functional features, financing

terms and other pertinent factors that affect value.

3. Analyze and interpret the data on the basis of a common

and relevant unit of comparison, such as price per square

foot of building area. Correlate the simulated values to

obtain a value indication for the subject property.

The following sales were utilized in the comparable sale

analysis. Aerial photographs are utilized to show the full

property of each comparable; actual photographs are retained

in our file.



39/80


COMPARABLESALENO.1

Location Days Inn Motel

1900 N. Mannheim Road, Melrose Park, Illinois

Description This is a 47-year-old, 99,034 square foot, two-story, three-

building, 121-room motel property which has a small

banquet/conference component. All rooms are standard sizes.It was in average to below average condition at the time of

sale. Its site size is 110,124 square feet indicating a land-to-

building ratio of 1.11 to 1 and a lot coverage of 40%.

Sale Information This property was sold in October of 2010 by Alfloop LLC to

Annie Hospitality in October of 2010 for $2,100,000

($17,355 per room; $21.20 per square foot). Financing was

conventional. The sale information was obtained from

CoStar COMPS and confirmed with public records as

document 1034233064. The property was previously sold in

March of 2005 for $3,700,000.

Comments The sale price included furniture, fixtures, and equipment

which was not broken out. Subsequent to sale the property

was renovated. The ADR for this motel was $50.00.



40/80


COMPARABLESALENO.2

Location Holiday Inn Matteson

500 Holiday Plaza Drive, Matteson, Illinois

Description This is a Holiday Inn hotel and conference center built in 1982. It

was in below-average condition at the time of sale. The propertyincludes 203 guest rooms on five floors, with 123 king beds, 72

doubles, and eight suites. It also includes 10,000 square feet of

meeting space (including a 1,200-seat theater style room), a

restaurant and lounge, indoor pool, sauna, and fitness room,

atrium, and adequate parking. Its total size is 149,995 square feet.

Its site size is 454,147 square feet, indicating a land-to-building

ratio of 3.03 to 1.0, with a lot coverage of 12%.

Sale Information This property was sold in April of 2011 by Illinois Lincoln

Hospitality Return LLC (Armed Forces Bank) as an REO property

to Matteson Hospitality Real Estate LLC for $2,625,000 ($12,931

per room; $17.50 per square foot). Financing was conventional

with a 43% down payment. This sale information was obtained

from CoStar COMPS , the Village of Matteson, and other public

resources. The document number is 1111818048.

Comments Furniture, fixtures, and equipment were included but not broken

out. The property required significant renovations.



41/80


COMPARABLESALENO.3

Location Baymont Inn & Suites

510 East End Avenue, Calumet City, Illinois

Description This is the sale of a 39,292 square foot, three-story with

elevators, 82-room hotel which has a fitness center, indoor

pool, business center, but one very small meeting space (12person capacity). There are king and double rooms, and

suites. It was 10 years old and in good condition at the time

of sale. The irregular site contains 130,680 square feet which

indicates a land-to-building ratio of 3.33 to 1.0 with an

approximate lot coverage of 10%.

Sale Information This property was sold in May of 2011 by Calu Hospitality

LLC to Vishnu Hospitality LLC for $2,300,000 ($28,049 per

room; $58.54 per square foot). Financing was conventional

with a 50% down payment. The sale information was

provided by CoStar COMPS , the Cook County Assessor,

aerial photographs, Sidwell Maps and an exterior inspection.

The document number is 1115340038.

Comments Room rates at the time of sale were $75 to $85. The sale

price includes FF&E.



42/80


COMPARABLESALENO.4

Location Hampton Inn

205 W. North Avenue, Carol Stream, Illinois

Description This is a six-story with elevator, 11-year-old, 110-room hotel

property which has a fitness center, business center, indoor

pool, and seven small meeting rooms with capacities from 35to 80 persons each. It contains 70,624 gross square feet. The

110 rooms are all either king or double rooms. The site size

is 144,184 square feet indicating a land-to-building ratio of

2.04 to 1 with a lot coverage of about 8%.

Sale Information This property was sold in April of 2011 by Chicago Title

Land Trust Company u/t/a 119984-08 to Blackhawk Lodging

Inc. for $3,000,000 ($27,273 per room; $42.48 per square

foot). Financing was conventional. The sale information was

provided by Hilton Inns, the Bloomingdale Township

Assessor and DuPage Recorder, and CoStar COMPS . The

document number is R2011-060651.

Comments The sale included a reported $1,000,000 in FF&E. Current

room rates are $120.00 to $150.00.



43/80


COMPARABLESALENO.5

Location Super 8 Bridgeview

7887 W. 79th Street, Bridgeview, Illinois

Description This is a 22-year-old, 24,327 square foot, three-story motel

property with 55 rooms in one building. All rooms are

standard sizes. It was in average condition at the time of sale.The site size is 54,200 square feet indicating a land-to-

building ratio of 2.23 to 1 and a lot coverage of 15%.

Sale Information This property was sold in January of 2011 by TJC Prop

Holdings LLC to Chicago Title Land Trust Co. Tr.

#8002356272 for $2,800,000 ($50,909 per room; $115.10 per

square foot). Financing was provided by the seller in the form

of a two year $2,250,000 loan. Details of the rate are not

known. The sale information was provided by LoopNet and

the Cook Country Recorders office. The document number

is 1102104098.

Comments The sale included all FF&E (allocation not disclosed).

Current room rates are $50.00 to $69.00.



44/80


COMPARABLELISTINGNO.6

Location Super 8 Motel

3010 N. Mannheim Road, Franklin Park, Illinois

Description This is a two-story, three-building, 47-year-old, 93-room

motel property which contains 61,968 square feet. Rooms are

standard size. Much of the main hotel building is firedamaged and requires significant renovation. The rear

buildings are fully intact. The site size is 53,250 square feet

indicating a land-to-building ratio of 0.86 to 1 and a lot

coverage of about 58%. There is apparently also

underground parking.

Sale Information This property was listed for sale at $1,500,000 ($16,129 per

room; $24.21 per square foot) with Koening and Strey Real

Living of Elmhurst.

Comments The asking price includes FF&E. Prior to sale, the motel wasin below-average condition. It was closed for business. After

listing for about a year, this property was destroyed by fire

and is currently a vacant lot.



45/80


COMPARABLELISTINGNO.7

Location Airport Inn

4419 S. 11 Street, Rockford, Illinoisth

Description This is a two-story (with a one-story office and banquet

section), 53-year-old, 110-room motel property which

contains 51,233 square feet. Rooms are standard size.Amenities include two banquet rooms, a bar, and an outdoor

pool. The site size is 177,282 square feet indicating a land-

to-building ratio of 3.46 to 1 and a lot coverage of about 17%.

This property is very distant, but was considered due to its

similar size, age, and very close proximity to Chicago

Rockford International Airport.

Sale Information This property is currently listed for sale at $1,250,000

($11,364 per room; $24.40 per square foot) with Baird &

Warner of Rockford.

Comments The asking price includes FF&E. This property previously

sold in fair condition in 2007 for $900,000. It is assumed that

this price did not include FF&E, since it is assessor-reported.

Based on August 2012 imagery, this property appears to be in

average condition.



46/80


Comparable Sale Data Summary

Sale

No.Size

Rooms

Sale

Date

SqFt/

RoomAge

Lot

coverage

Price/

Room

Price /

SqFt

Amenity

*

1 99,034 121 10-10 818 47 40% $17,355 $21.20 B

2 149,995 203 04-11 739 29 12% $12,931 $17.50 B,L,IP,F

3 39,292 82 05-11 479 10 10% $28,049 $58.54 S, B, IP, F

4 70,624 110 04-11 642 11 8% $27,273 $42.48 B,IP,F

5 24,327 55 01-11 442 22 15% $50,909 $115.10 N/A

List 6 61,968 93 2011 666 47 58% $16,129 $24.21 N/A

List 7 51,233 110 Curr. 466 53 17% $11,364 $24.40 B,P,L

Subj 59,820 92 650 47 19% S,B,L,P

*Amenities Coding: S=Suites, B=Banquet/Meeting Rooms, L=Lounge/Restaurant, P=Pool, IP=Indoor Pool, F=Fitness Center.

Comparable Sales Map



47/80


Analysis The subject is somewhat unique to the Chicagoland area,being an older, partially renovated motel displaying manyfeatures of a full service motel or conference center (largebanquet/meeting rooms, kitchens, pool) but with a

functionality, quality, and design more similar to an economyor limited service motel (no elevator, no room service, dateddesign, sprawling two-story layout). Very few truly similar

properties were found in our extensive search of theChicagoland area. As a result, we utilized sales of both motel

and hotel properties, limited and full service designs.

Our search extended throughout Chicagoland, but centeredprimarily on areas surrounding Chicagos OHare

International and Midway Airports. Our search alsoemphasized relatively recent sales (in the last three years) in

order to best reflect the current hospitality market. We alsosearched for listings of available hotel and motel properties

and found very few listing in the entire Chicagoland area.While this may indicate there is some pent up demand, it is

also an indication that in the current market almost all ownersare choosing to hold their investment until market conditions

improve. This is due to the very limited number of qualifiedbuyers that can provided 50% down payments for this

property type in the current lending climate.

Individual sale details and adjustments are as follows:

Sale No. 1 This is the most similar sale located in the Chicagoland area.It is at the relatively busy corner of North Avenue andMannheim Road, about five miles south of OHare Airport.This location was considered slightly superior due tovisibility and proximity to a busier airport. It is a largerbuilding with more rooms and is adjusted upward. At thetime of sale it was operating, but required significantrenovations and is considered slightly superior to the subjectin overall condition. It lacks the subjects amenities includinglarge banquet rooms and pool, and it has considerably less

parking. Overall this sale is adjusted upward 10% to $23.32per square foot and $19,091 per room.

Sale No. 2 This hotel is located in an area further from airports in the farsouth suburbs. It does have highway visibility from Interstate57 and good access, but the location overall is distant fromairports and considered significantly inferior. This is aformer Holiday Inn which was underperforming. It wasforeclosed on and displayed significant deferred maintenance



48/80


at the time of sale, similar to the subject. It is adjusted

upward for its considerably larger size. It has similaramenities overall, commensurate with its size, though the

indoor pool is considered superior. Overall, this sale is

adjusted upward 25% to $21.88 per square foot and $16,164per room.

Sale No. 3 This property is located in Calumet City with exposure toInterstate 94, but no airport proximity. It is adjusted upwardfor location. This is a smaller building and is much newerand in significantly superior condition, requiring downwardadjustments. It is adjusted upward for its inferior banquet andmeeting space, and a lack of a restaurant, though its indoorpool is superior. It requires upward adjustment on a per roombasis for the quite small average room size. The net

adjustment for this sale is downward 50% to $29.27 persquare foot and 25% to $21,037 per room.

Sale No. 4 This property is located in the western suburbs and is notclose to an airport or a major interchange. It caters moretoward residents and businesses in the area, but generatesmuch higher room rates than the subject. Locationadjustments are offset. It is a more modern facility withsuperior condition and appeal and is adjusted downwardsignificantly. It has inferior amenities overall with nobanquet or restaurant, requiring an upward adjustment. The

net adjustment for this sale downward 40% for adjusted priceindications of $25.49 per square foot and $16,364 per room.

Sale No. 5 This property is a Super 8 branded hotel that was in goodcondition at the time of sale. It is not truly comparable due to

its much smaller size and far superior condition. It isincluded due to its close proximity and similar location as the

subject, and to display ongoing demand and prices paid forwell-managed operating hotels. This sale would require

downward adjustments in excess of 50%

Listing No. 6 This is the only listing found of a similar property in theChicagoland area. This listing expired without a sale and the

building has since been razed. Since it was fire damaged, itwould have required significant renovations and upward

adjustment. As a listing, it is not really indicative of marketvalue except to set a high end of the range, and is included for

informational purposes only.



49/80


Listing No. 7 This listing is very distant, in Rockford. This listing was not

inspected, but a good selection of listing photos, and Google

imagery from August 2012 was reviewed. This listing was

included due to its very similar size, number of rooms, and

amenities, and its close proximity to a commercial airport.Downward adjustment is required for condition, and upward

adjustments are required for location, partially offset by the

low taxes ($36,000 for 2011) and immediate proximity to the

airport. Overall, this listing requires upward adjustment.

Conclusion After adjustments, the four primary sales have the followingadjusted prices:

Sale 1 2 3 4

$/SqFt $23.32 $21.88 $29.27 $25.49

$/Room $19,091 $16,164 $21,037 $16,364

Price Per Room On a price per room basis, after adjustment, the sales are

roughly in the $16,000 to $21,000 range. Sales 1 and 2 are

most similar overall with prices at both ends of the range.

The subject has quite a bit of non-room income potential

which will support a value near the higher end of the range,

but it also has significant deferred maintenance and 17 of the

rooms are completely unuseable. All sales are recent andrelatively mutually supportive. The indicated value for this

unit of comparison, considering the deferred maintenance and

required renovations, is $18,000 per room or ($18,000 per

room x 92 rooms, as rounded). . . . . . . . . . . . . . $1,660,000.

Price Per Square Foot On a price per square foot basis, after adjustment, the sales

are roughly in the $21.00 to $29.00 range. No single sale is

emphasized, though Sales 1 and 2 are most similar in

condition, but much larger overall, and Sale 4 is most similar

in square footage per room. Considering this, the indicated

value for this unit of comparison is at the middle of the range,at $25.00 per square foot or ($25.00 x 59,820 square feet, as

rounded).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,500,000.

Reconciling the two units of comparison, giving similar

emphasis to both units of comparison, the indicated value is

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,575,000



50/80


Deduction for Real Estate Taxes As discussed on pages 21-22 of this report, the past due real

estate taxes will require redemption before this property can

be sold and this cost is estimated at $450,000. Therefore, the

indicated value by the sales comparison approach as-adjusted

for the taxes is ($1,575,000 - $450,000). . . . . . $1,125,000.

The value indicated by the sales comparison approach is:

.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,125,000.



51/80

Final Reconciliation

Summary The values attributed to the various approaches are asfollows:

Sales Comparison Approach $1,125,000

Income Capitalization Approach N/A

Approaches to Value

Cost The cost approach was not utilized considering the atypical

design of the subject and the difficulty in estimating a base

cost figure. Also, the subject suffers all three forms of

depreciation: physical, due to typical wear and tear, deferred

maintenance, and the age of the building, functional, due to

its sprawling design and lack of elevators, and its excess landarea, and external due to its location more distant than typical

from Midway Airport, and its limited commercial exposure

on a primarily residential street. The level of uncertainty will

reduce the validity of this approach to a point where it is no

longer applicable.

Sales Comparison The sales comparison approach involves the comparison of

the subject to recent sale transactions of properties with

similar utility. Due to the subjects atypical design, with full-

service amenities and economy-class quality and design,

finding truly comparable properties was difficult. However,a reasonably comparable mix of recent sale transactions and

listings was researched and compared to the subject. This

data led to a reasonably supported conclusion. The sales

comparison approach is emphasized.

Income Capitalization The income capitalization approach is a good indicator of

value for investment-grade hospitality properties where a

strong income and expense and occupancy history is

available. This is certainly a property which would be

purchased for its income potential, but due to a complete lack

of any financial, occupancy, or historical data for the subject,coupled with its atypical design and income structure, with

banquet, tavern, and hotel components, as well as the current

condition and required repairs, results in an income approach

with little validity. The income approach was not considered

applicable or reliable, and was not utilized in this appraisal.



52/80

Final Reconciliation

Value Conclusion The sales comparison approach is the only meaningfulapproach for this property. It is our opinion that the market

value of the subject property, including FF&E, as of February

20, 2013, is. . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,125,000.

ONE MILLION ONE HUNDRED TWENTY-FIVE DOLLARS



53/80

Certification

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

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting

conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.

3. I have no present or prospective interest in the property that is the subject of this report, and no personal interest

with respect to the parties involved.

4. As stated in the Scope of Work, I have performed services, as an appraiser, regarding the property that is the

subject of this report within the three-year period immediately preceding accep tance of this assignment.

5. I have no bias with respect to the property that is the subject of this report or to the parties involved with the

assignment.

6. My engagement in this assignment was not contingent upon developing or reporting predetermined results.

7. My compensation for completing this assignment is not contingent upon the development or reporting of a

predetermined value or direction in value that fa vors the cause of the c lient, the a mount o f the valu e o pinion,

the attainment of a stipulated result, or the occurrence of a subsequ ent event directly related to the intended use

of this appraisal.

8. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with

the Uniform Standa rds of Professional Appraisal Practice.

9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly

authorized representatives.

10. I have made a personal inspection of the property that is the subject of this report.

11. No one provided significant real property appraisal assistance to the person signing this certification.

12. The reported analysis, 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.

13. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly

authorized representatives.

14. As of the date of this report, I have completed the continuing education program of the Appraisal Institute and

the Standards and Ethics Education Requirement of the Appraisal Institute for Associate Members.

Date: February 22, 2013


Certified General Real Estate Appraiser

Illinois License No. 553.001385 (exp. 9-30-13)



54/80

Assumptions and Limiting Conditions

This appraisal is subject to the accuracy of the legal description furnished the appraiser; however, we can assume no

responsibility of matters legal in nature, nor can we render an opinion as to the title which is assumed to be marketable. All

existing liens and encumbrances have been disregarded and the property is appraised as though under responsible ownership

and competent management.

The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy.

All engineering is assumed to be correct. Any plot plans and illustrative material in this report are included only to assist the

reader in visualizing the property.

It is assumed that there are no h idden or unapparent conditions of the property, subsoil, or structures that render it more or

less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required

to discover them.

It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws

unless otherwise stated in this report.

It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity

has been stated, defined, and considered in this appraisal report.

It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local,

state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which

the value estimates contained in this report are based.

Any sketch in this report may show approximate dimensions and is included to assist the reader in visualizing the property.

Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee as to accuracy is

expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report.

It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property

described and that the re is no encroachment or trespass unless otherwise stated in this report.

Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos,

polychlor inated biphenyls, petroleum leakage, or agricultural chemicals, which may or may not be present on the proper ty,

or other environmental conditions, were not called to the attention of nor did the appraiser become aware of such during theappraiser's inspection. The appraiser has no knowledge of the existence of such materials on or in the property unless

otherwise stated. The appraiser, however, is 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 no 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 rea l estate if so desired.

The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific compliance

survey and analysis of this property to determine whether it is in conformity with the various detailed requirements of the

ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the

ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact

could have a negative effect on the value of the property. Since we have no direct evidence relating to this issue, we did not

consider possible noncompliance with temporary easement requirements of the ADA in developing an opinion of value of

the property.

Any proposed improvements are assumed to be completed in a good workmanlike manner in accordance with the submitted

plans and specifications.

Any allocation of the total value opinion in this report between the land and the improvements applies only under the stated

program of use. The separa te values allocated to the land and improvements must not be used in conjunction with any other

appraisal and are invalid if so used. Any value opinion provided in the report applies to the entire property, and any proration

or division of the total into fractional interests will invalidate the va lue opinion unless such proration or division of interests

has been stated in the report.



55/80

Assumptions and Limiting Conditions

Possession of an original or a copy of this report does not carry with it the right of publication or reproduction, nor may an

original or a copy of the report be used for any purpose whatsoever by anyone except the client without the previous written

consent of the appraiser and the client. Out-of-context quoting from and partial reprinting of this appraisal report are

expressly prohibited. The omission or change of any part of this appraisal report without written authorization invalidates

the entire appraisal. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising,

public relations, news, sales or other media nor for any purpose by anyone but the client, withou t the written consent of the

author, particularly as to the valuation conclusions, the identity of the appraiser or firm with which it is connected or any

reference to the Appraisal Institute or to the designations conferred upon the appraiser. Ple ase n

Date post:	02-Jun-2018
Category:	Documents
Upload:	jorge-newbery
View:	219 times
Download:	0 times

Appraisal - Midway Hotel Group - 5001 79th Street, Burbank (1).pdf

Documents