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ATTACHMENT 3
<br />Direct Capitalization Analysis - After Condition
<br />Annual
<br />$/Unit
<br />INCOME
<br />Rental Income
<br />$1,330,260
<br />$20,785
<br />Expense Reimbursements
<br />$60,000
<br />$938
<br />Other Income
<br />$10,750
<br />$168
<br />Potential Gross Income
<br />$1,401,010
<br />$21,891
<br />Vacancy & Collection Loss 5.01%
<br />-$70,215
<br />-$1,097
<br />Effective Rental Income
<br />$1,330,795
<br />$20,794
<br />Effective Gross Income
<br />$1,330,795
<br />$20,794
<br />EXPENSES
<br />Real Estate Taxes
<br />$207,394
<br />$3,241
<br />Insurance
<br />$9,600
<br />$150
<br />Utilities
<br />$64,000
<br />$1,000
<br />Repairs/Maintenance
<br />$48,000
<br />$750
<br />Painting & Decorating
<br />$9,600
<br />$150
<br />Payroll/Benefits
<br />$96,000
<br />$1,500
<br />Advertising & Marketing
<br />$6,400
<br />$100
<br />General/Administrative
<br />$13,341
<br />$208
<br />Management 3.01%
<br />$40,023
<br />$625
<br />Replacement Reserves
<br />$32,000
<br />$500
<br />Total Expenses
<br />$526,357
<br />$8,224
<br />NET OPERATING INCOME
<br />$804,438
<br />$12,569
<br />Capitalization Rate
<br />4.50%
<br />Indicated Value
<br />$17,876,391
<br />$279,319
<br />Rounded
<br />$17,880,000
<br />$279,375
<br />Severance Damages
<br />California Eminent Domain Law defines Damage to the remainder as the damage, if any, caused by either
<br />or both of the following: a) The severance of the remainder from the part acquired, b) The construction
<br />and use of the project for which the property is acquired in the manner proposed by the plaintiff whether
<br />or not the damage is caused by a portion of the project located on the part acquired.
<br />Damage considerations include issues related to air, light, and view obstruction, a change in utility due to
<br />shape, topography, access, or other physical impairment, or a reduction in site amenities enjoyed in the
<br />"before" condition.
<br />In the after condition, the shape and utility will not change in the after condition once the curative work
<br />is completed. However, the units along Bristol Street appear to be impacted due to its closer location to
<br />the units, which may impact their market appeal. Damages are shown, as follows:
<br />Severance Damages
<br />Value of the Remainder as Part of the Whole $17,935,613
<br />Value of the Remainder in the After Condition $17,876,391
<br />Severance Damages $59,222
<br />Page 9
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