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Appraisal Report

Prepared for

Mr. Enrique Torre, Director

City of Miami

Public Facilities Division/Asset Management Division

Property Appraised

Market Rent of the

Bayside Marketplace Land Parcel

(16.85 acres)401 and 501 Biscayne Boulevard

Miami, Florida 33132

Date of Valuation

March 19, 2014

Prepared by

Waronker & Rosen, Inc.

5730 SW 74th

Street, Suite 200

South Miami, Florida 33143

LEE H. WARONKER, MAI, SRA

CARLOS A. DIEZ

File # 7740



Waronker & Rosen, I nc. Real Estate Appraisers & Consultan ts Page 1

Waronker &R osen, Inc.

Real Estate Appraisers and Consultants

Miami-Dade County Office Broward / Palm Beach County Office5730 SW 74th Street, Suite 200 10242 NW 47th Street, Suite 40South Miami, Florida 33143 Sunrise, Florida 33351

Lee H. Waronker, MAI, SRA Phone: (305) 665-8890 / Fax: (305) 665-5188 Josh L. Rosen, MAI [email protected] www.waronkerandrosen.com [email protected]

April 24, 2014

Mr. Enrique Torre, DirectorCity of MiamiPublic Facilities Division/Asset Management Division

444 SW 2nd Avenue, 3rd FloorMiami, Florida 33130

Re: Market Rent of the Bayside Marketplace Land Parcel401 and 501 Biscayne BoulevardMiami, Florida 33132WRI File No. 7465

Dear Mr. Torre:

We have prepared an appraisal report of the above referenced property for the purpose of

estimating the annual market rental rate of the fee simple interest in the land as if vacant as ofMarch 19, 2014, under two valuation scenarios. Scenario 1 assumes that development would besubject to the same provisions stipulated in the existing leases to Bayside Center LimitedPartnership. Scenario 2 assumes that development would be subject to the modified provisionsstipulated in a Warrant Permit approved by the City of Miami Planning and Zoning Departmenton January 10, 2014. The analysis only considers the land as though vacant and the

allowable uses to be discussed herein, with no consideration to the existing building

improvements or their current design. The terms market value, fee simple interest and marketrent are defined in this report. This report has been prepared based on the scope of the workwhich is detailed on a following page. The reader of the appraisal is strongly advised to read thescope of work so as to understand the scope of this appraisal.




Mr. Enrique Torre, DirectorCity of MiamiPublic Facilities Division/Asset Management DivisionApril 24, 2014

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

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

located at the northwest corner of the site.

The site has been leased to Bayside Center Limited Partnership since January 1985 on two leases(one for the retail parcel and one for the garage parcel), on original terms of 45 years with two 15-year renewal options. At the expiration of the renewal options in 2060, new market rent and percentage rents are to be established by way of appraisals. The retail parcel lease includesrestrictive covenants limiting allowable uses to “retail, recreation, parking and office (provided

that such office uses shall be limited to management offices and other office uses commonly foundin retail centers)”, and explicitly prohibiting “temporary housing or sleeping quarters” and “casino

gambling”. A clarification by the City confirmed that hotel uses are not allowed. According to theclient, the existing lease limits the buildable floor area to 267,000 sq. ft. of retail development anda 420,000 sq. ft. parking garage with 1,156 spaces. These limitations correspond to Scenario 1 inthis valuation. Any change in the sizes provided would cause a change in the estimated

market rent.

In January 2014 a proposal to modify the original development guidelines was approved by theCity’s Planning and Zoning Department. The intent of the modification was to bring the projectmore in compliance with the new Miami 21 zoning code and to enable a proposed developmentcalled SkyRise Miami to proceed. The SkyRise project includes a 1,000 foot observation towerwith restaurant, night club, ballroom, exhibit space and amusement center components to beconstructed on the east (bay front) portion of the Bayside retail parcel. The modification increasesthe buildable floor area to a total of 1,193,622 sq. ft., of which 556,962 sq. ft. consists of retail andrecreation space with some small amount of office space, and 636,660 sq. ft. consists of the

parking garage area. The approval is based on the premise that the existing improvements will beutilized, and specifies the amount of additional gross area that may be added to the existing retailand garage structures. However, since this valuation is based on the market value and market rentof the land as though vacant, valuation Scenario 2 is based on the total approved gross area underthe January 2014 zoning warrant. Any change in the sizes provided would cause a change in

the estimated market rent.





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

Scenario 1 Scenario 2

Land Area (sq. ft.) 734,156 734,156

Retail, Office,

Recreation

Retail, Office,

Recreation

Main Retail Building Area 267,000 267,000

Additional Retail Parking Liner 0 17,255

Additional Retail Area per Warrant 0 277,177

Less: Fire and Marina Offices 0 -4,470

Total Gross Area Excluding Parking 267,000 556,962

Parking Garage 420,000 636,660

Total Gross Area 687,000 1,193,622

Floor Area Ratio (FAR)* 0.94 1.63

* including parking garage (this is called "Floor Lot Ratio" in the City of Miami Zoning Code)

Allowable Uses

The subject property is zoned T6-8-O, Urban Core Open Transect Zone by the city of Miami,Florida. However, note that the development provisions stipulated in the original leases(applicable to Scenario 1) and in the January 2014 modifications (applicable to Scenario 2) allow amuch lower density of development and a more limited range of uses than the T6-8 zoningdistricts. In particular, residential uses (including high-rise residential development) and hotels arenot allowed on the subject site (under either valuation scenario). These limitations have asignificant impact on the type of development that would be most profitable (i.e., the highest and best use of the site), and therefore on the market value (and market rent) of the land as thoughvacant. This is especially true under current market conditions, in which luxury high-rise

waterfront residential projects and hotels, which are prohibited on the subject site, are among themost profitable types of development for urban waterfront sites in Miami. Therefore, anydeviation from the development provisions specified for the two valuation scenarios would resultin a change in the values estimated herein.





In order to prepare the analysis, we were supplied with the following items:

Copies of ground leases and addendums

Surveys of the site

Breakdown of buildings sizes and allowable uses, in writing and verbally

Architects’ site data, development program and building area breakdown for the SkyRiseMiami project

City of Miami Warrant Permit approving proposed SkyRise Miami project

2012 audited financial statements for Bayside Marketplace

Any deviation from the information supplied and assumptions used herein will likely result in a

change of value.

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

Scenar io 1 Scenar io 2

Market Value of the Land as Though Vacant $50,000,000 $73,000,000

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

The analysis only considers the land area as vacant and the allowable uses discussed herein, withno consideration to the existing building improvements. The market rent estimate is based on a99-year lease term with cumulative CPI increases every five years, which are typical for themarket.

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

Very truly yours,

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




Table of Contents

Title Page

Letter of Transmittal 1Table of Contents 5

Scope of Work 6Certification 7General Assumptions and Limiting Conditions 9

INTRODUCTION 11

Summary of Pertinent Data 12Miami-Dade County Map 13Site Plan 16Survey 17Subject Photographs 18Appraiser Qualifications 24

DESCRIPTION & ANALYSES 28

Purpose of the Appraisal 29Client, Intended User and Use of the Appraisal 29Definition of Real Property Interest Appraised 29Definition of Market Rent 29Definition of Market Value 30Location and Address 31Legal Description 31Owner of Record 31History of the Subject Property 31Site Data 32Zoning 32Flood Zone 33Real Estate Assessment and Taxes 34 Neighborhood Overview 36Supply and Demand 37Exposure Time 42Typical Purchaser of the Subject 42Highest and Best Use 43Appraisal Process 45Cost Approach 46Income Capitalization Approach 47Sales Comparison Approach 48Reconciliation of Value 70

ADDENDA

Addendum A – County Area DescriptionAddendum B – Legal Description




Scope of Work

The appraisal problem herein is to estimate the market rent of the land as though vacant. In orderto estimate the market rent, the analysis includes an estimate of the market value of the land as

though vacant. Market rent was estimated by analysis of land capitalization rates from markettransactions and investor surveys.

The approach to value applied in this appraisal is the sales comparison approach. Also, incomecapitalization techniques were employed in order to estimate an appropriate capitalization ratefor use in estimating the market land rent from the estimated land value. As the valuation is based on the land as though vacant, the income capitalization and cost approaches are notapplicable. The analysis herein is considered sufficient to develop credible assignment results insolving the appraisal problem.

All appraisals begin by identifying the appraisal problem. Data on the subject property can be

derived from various sources including but not limited to, the property owner, the county property appraiser’s office, surveys and building plans. When possible, more than one source isutilized to confirm data and the data sources are acknowledged. Land size is based on surveys(when available), public records and recorded plats. Land measurements are not performed.

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

CoStarImapp Newspaper clippings

Board of Realtors’ Multiple Listing Service Loopnet.comCounty Property Appraiser Records

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

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




Certification

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

1. The statements of fact contained in this report are true and correct.2. The reported analyses, opinions, and conclusions are limited only by the reported

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

3. I have no present or prospective interest in the property that is the subject of this reportand no personal interest with respect to the parties involved.

4. I have no bias with respect to the property that is the subject of this report or to the partiesinvolved with this assignment.

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

6. My compensation for completing this assignment is not contingent upon the developmentor reporting of a predetermined value or direction in value that favors the cause of theclient, the amount of the value opinion, the attainment of a stipulated result, or theoccurrence of a subsequent event directly related to the intended use of this appraisal.

7. My analyses, opinions and conclusions were developed, and this report has been prepared,in conformity with the following requirements.

Uniform Standards of Professional Appraisal Practice (USPAP) The Code of Professional Ethics and Standards of Professional Practice of the

Appraisal Institute

The State of Florida requirements for state-certified appraisers

8. I have complied with the USPAP Competency Rule.

9. This appraisal report sets forth all of the limiting conditions imposed by the terms of thisassignment or by the undersigned affecting the analyses, opinions and conclusionscontained in this report.

10. No one provided significant real property appraisal assistance to the person signing thiscertification.

11. The use of this report is subject to the requirements of the Appraisal Institute relating toreview by its duly authorized representatives. Additionally, it is subject to review by thestate of Florida relating to review by the real estate appraisal subcommittee of the FloridaReal Estate Commission.

12. As of the date of this report Lee H. Waronker, MAI, SRA has completed the continuingeducation program of the Appraisal Institute.

13. I, Lee H. Waronker, MAI, SRA have made a personal inspection of the property that isthe subject of this report.

14. I, Carlos Diez have made a personal inspection of the property that is the subject of thisreport.




15. Acknowledgement is given to Josh L. Rosen, MAI in the preparation and review of thisappraisal report.

16. It should be noted that the valuation herein does not include any furniture, fixtures orequipment necessary to operate any business, or businesses occupying the subject property. The valuation herein does not include a value for any business entity, or entities

occupying the subject property.17. Waronker & Rosen, Inc. have previously performed an appraisal on the subject property

in the past three years. We were not then, and are not now involved with themanagement, leasing, disposition, or any similar service regarding the subject property inthe past three years.

_______________________________

Lee H. Waronker, MAI, SRAState-Certified General Real Estate AppraiserLicense No. RZ162

_______________________________Carlos DiezState-Certified General Real Estate AppraiserLicense No. RZ3420

Date of Report March 25, 2014




General Assumptions and Limiting Conditions

This appraisal report has been made with the following general assumptions:

1. No responsibility is assumed for the legal description or for matters pertaining to legal or

title considerations. Title to the property is assumed to be good and marketable unlessotherwise stated.

2. The property is appraised free and clear of any or all liens or encumbrances unlessotherwise stated.

3. Responsible ownership and competent property management are assumed.

4. The information furnished by others is believed to be reliable but, no warranty is givenfor its accuracy.

5. All engineering studies are assumed to be correct. Any plot plans or illustrative materialin this report are included only to help the reader visualize the property.

6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, orstructures that render it more or less valuable. No responsibility is assumed for suchconditions or for obtaining the engineering that may be required to discover them. Thevalues estimated herein are subject to typical inspections such as roof, structural, andtermite, if applicable.

7. It is assumed that the property is in full compliance with all applicable federal, state andlocal environmental regulations and laws unless the lack of compliance is stated,described and considered in the appraisal.

8. It is assumed that the property conforms to all applicable zoning and use regulations andrestrictions unless a non-conformity has been identified, described and considered in the

appraisal.9. It is assumed that all required licenses, certificates of occupancy, consents, and other

legislative or administrative authority from any local, state or national government or private entity or organization have been or can be obtained or renewed for any use onwhich the opinion of value contained in this report is based.

10. It is assumed that the use of the land and improvements is confined within the boundariesor property lines of the property described and considered in the appraisal.

11. Unless otherwise stated in this report, the existence of hazardous materials, which may ormay not be present on the property, was not observed by the appraiser. The appraiser hasno knowledge of the existence of such materials on or in the property. The appraiser,

however, is not qualified to detect such substances. The presences of substances such asasbestos, urea formaldehyde foam insulation or other potentially hazardous materials mayaffect the value of the property. The value estimated is predicated on the assumption thatthere is no such material on or in the property that would cause a loss in value. Noresponsibility is assumed for any such conditions, or for any expertise or engineeringknowledge required to discover them. The intended user is urged to retain an expert inthis field, if desired.




12. The physical condition of the improvements, if any, described herein was based on visualinspection. No liability is assumed for the soundness of structural members, since noengineering tests were made of same.

13. Neither all nor any part of this appraisal report shall be disseminated to the general publicusing the appraiser’s name or appraisal designation, without prior written consent of the

appraisers signing this appraisal report.

14. Authorization is not allowed for the out-of-context quoting from, or partial reprinting of,this appraisal report.

15. By reason of the report, there is no requirement to testify with reference to the propertyherein appraised, unless arrangements have been previously made.

16. The reader should be advised that our employment was not contingent on the appraisal providing a minimum valuation, a specific calculation or the approval of a loan.Additionally, we have complied with the USPAP Competency Rule.

L imiting Conditions:

1. The allocation of total value between land and improvements applies only under thedescribed utilization. The separate valuations for land and improvements must not beused in conjunction with any other appraisal and are invalid if so used.

2. The Americans with Disability Act (ADA) became effective January 26, 1992. Theappraiser has not made a specific compliance survey and analysis of this property todetermine whether or not it is in conformity with the various detailed requirements of therequirements of the ADA. It is possible that a compliance survey of the property and adetailed analyses of the requirements of the ADA, could reveal that the property is not in

compliance with one or more of the act. If so, this fact could have a negative impact uponthe value of the property. Since the appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of ADA was not considered in estimatingthe value of the property.



I ntroduction Market Rent of Bayside Marketplace Land Parcel


INTRODUCTION





Summary of Pertinent Data

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

Address: 401 and 501 Biscayne BoulevardMiami, FL 33132

Type of Use: Valued as vacant land. Currently improved withthe Bayside Marketplace retail center and parkinggarage

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

Flood Zone: AE (Map12086C0314L)

Land Area: 734,156 square feet (approximately), equal to16.85 acres) broken down as follows:

Garage Parcel 164,535 sq. ft. (3.78 acres)

Retail Parcel 569,621 sq. ft. (13.08 acres)

Total 734,156 sq. ft. (16.85 acres)

Value Summary:


Cost Approach Not applicable Not applicable

Income Capitalization Approach Not applicable Not applicable

Sales Comparison Approach

Land Value Estimate $50,000,000 $73,000,000

Annual Market Rent $3,500,000 $5,100,000

Date of Inspection: March 19, 2014

Date of Valuation: March 19, 2014

Date of Report: April 24, 2014





Miami-Dade County Map

Subject





Aerial Photograph

Retail Parcel





Site Plan





Survey





Subject Photographs

Street view looking south alongBiscayne Boulevard

Street view looking north alongBiscayne Boulevard

View looking east on Port Boulevard, alongthe north side of the garage parcel (subject

property on right, American Airlines Arenavisible at left)

View looking west on Port Boulevard alongthe north side garage parcel

(subject property on left)





North entrance to parking garage, lookingsoutheast

Main signage along sidewalk on BiscayneBoulevard on west side of garage parcel

South entrance to parking garage,

looking north

View of interior of parking garage





View of main pedestrian entrance to retail parcel, looking east from near sidewalk on

Biscayne Boulevard

Typical view of shops and restaurants alongmain east-west walkway

Typical view of kiosks along main east-west

walkway

South side of north building





Covered area along east side of north building, along waterfront facing marina

Covered interior walkway/atrium in north building

Entrance to covered walkway/atrium ofmarket building (looking south)

North side of south building, lookingsoutheast from south side of north building





Area along east side of market building atwater’s edge, looking north

Interior of south building

East side of south building, looking west North side of south building, lookingsouthwest from just west of Hard Rock Café





Hard Rock Café building View of waterfront along north side of south building (at left) and east side of north

building (at rear of photo). American AirlinesArena and neighborhood residential towers

visible in background.

Area along east side of Hard Rock Café,looking southwest (bayfront at left)

Walkway along bay side of parking lot atnortheast end of site, looking northeast

(bayfront at right, parking at left)





Appraiser Qualifications

CARLOS A. DIEZ

______________________________________________________________________

Education: University of Florida (Gainesville, FL)Bachelor of Arts. Major: EconomicsStevens Institute of Technology (Hoboken, NJ)Substantial progress towards the degree of Master of Engineering

Affiliations: State-certified general real estate appraiser, State of Florida, RZ3420The Appraisal Institute, Candidate for DesignationCCIM Institute, Candidate Member

Appraisal Experience: Waronker & Rosen, Inc. September, 2007 to Present

Appraised a wide variety of property types, including:

Vacant land Office buildingsRestaurants Shopping centersHotels Free-standing retail propertiesIndustrial properties Apartment buildingsResidential and Commercial Condominiums Condominium UnitsLand leases (leased fee and leasehold interests) Fractured Condominium InterestsEasements (including aerial and sub-surface) Special Purpose Properties

Appraisal, Investment Analysis and General Real Estate Education:

The Appraisal Institute100, 101: Basic Appraisal Principles and Procedures

202: Residential Sales Comparison and Income Approaches 300: Real Estate Finance, Statistics and Valuation Modeling 400: General Market Analysis and Highest & Best Use402: General Appraiser Site Valuation and Cost Approach403, 404: General Appraiser Income Approach (Parts 1 and 2) 405: General Appraiser Report Writing and Case Studies420: Business Practices and Ethics510: Advanced Income Capitalization550: Advanced Applications530: Advanced Sales Comparison and Cost ApproachesSeminar: Hotel Appraising – N ew Techniques for Today’s Uncertain Times 500: Advanced Market Analysis and Highest & Best Use833: Fundamentals of Separating Real Property, Personal Property, and Intangible Business AssetsSeminar: Marketability Studies: Advanced Considerations and Applications

CCIM InstituteCI 101: Financial Analysis for Commercial Investment Real Estate CI 102: Market Analysis for Commercial Investment Real Estate CI 103: User Decision Analysis for Commercial Investment Real Estate CI 104: Investment Analysis for Commercial Investment Real Estate FANSC: Feasibility Analysis for Retail PropertiesMIMK: Advanced Market Analysis for Commercial Real Estate

Baruch College (CUNY) / Steven L. Newman Real Estate Institute NCP2000: Urban Land Economics NCP9000: Real Estate Development





Partial Client List

LENDER

Amerasia BankApollo BankBAC BankBank of AmericaBank of Coral GablesBank LeumiBNY Mellon BankBranch Banking and Trust (BB&T)Broward Bank of CommerceC1 BankCNL BankCapital BankCigna Investments, Inc.

Citibank and CiticorpCity National Bank of FloridaCoconut Grove BankComerica BankCredit Suisse First Boston Mortgage

Capital, LLCEnterprise Bank of FloridaEspirito Santo Bank of FloridaExecutive National BankFifth Third BankFirst Bank of MiamiFirst National Bank of South MiamiFirstBank FloridaFlorida Community BankGibraltar Private Bank and Trust

Great Florida BankHSBC Bank, N.A.Holliday Fenoglio Fowler, LPInternational Finance BankIsrael Discount Bank of New YorkJP Morgan Chase BankLloyds Int’l. Bank (Lloyds of

London)Lutheran BrotherhoodMarine BankMarquis BankMorgan Stanley Mortgage Capital

Northern Trust BankOcean BankOptimum Bank

Popular Community BankProfessional BankRegions BankSabadell United BankSpace Coast Credit UnionSunTrust BankTerrabank, N.A.

TD Bank, N.A.TotalbankU.S. Century BankWells Fargo BankWestern Bank – Puerto RicoZions Bank

LIFE INSURANCE COMPANIES

Allstate Insurance CompanyAmerican General Life Insurance Co.Fortis Capital Corp. & Life Insurance

CompanyFranklin Life Insurance Company

General American Life Insurance Co.Independent Order of ForestersJohn Alden Life Insurance CompanyKansas City Life Insurance CompanyLumberman's Life Insurance CompanyOmaha Woodmen Life Insurance

SocietyStandard Life Insurance CompanySun Life Insurance Co. of America

CORPORATIONS

Church of Jesus Christ of theLatter-Day Saints

Florida Power and Light Corp. (FPL)JC Penny Corporation

Wendy’s International Corporation Chevron U.S.A., Inc.Johnson and Johnson Company

DEVELOPERS AND INVESTORS

Berkowitz Development GroupBristol Group, Inc.Franklin Street PropertiesFlagler Development CorporationGoldman PropertiesHampshire Real Estate CompaniesLennar CorporationMDM Development, Inc.

Napolitano Realty and Harnap Corp. Noble House Resorts and HotelsOcean Properties, Ltd.Panther Real EstatePLC Investments, LLCR.K. Associates, Inc.The Scott Robins CompaniesWometco Enterprises, Inc.

GOVERNMENT AGENCIES

Broward County School BoardCity of Coral GablesCity of Miami BeachCity of Miami General Services

AdministrationFederal Deposit Insurance Corp. (FDIC)Federal Home Loan Mortgage Corp.

(FHLMC)Florida Dept. of Environmental

ProtectionFlorida Department of TransportationFlorida Keys Aqueduct AuthorityMiami-Dade Water and Sewer

AuthorityMiami-Dade Co. -Aviation AuthorityMiami-Dade Co. - County Attorney’s

OfficeMiami-Dade Co. - General Services AdmiMiami-Dade Co. - Housing & Urban Dev.Miami-Dade Co. - Public Works Dept.Miami-Dade Co. - School Board

Nature Conservancy, Florida ChapterSouth Florida Water Management DistrictUnited States Department of JusticeUnited Stated General Services

AdministrationUnited States Postal Services

Village of Pinecrest

LAW FIRMS

Akerman, Senterfitt & EidsonBarranco and Kircher, P.A.Berman, Wolfe Rennart Vogel &

Mandler, P.A.Colson Hicks Eidson, P.A.Greenberg Traurig, P.A.Gunster Yoakley Valdes-Fauli &

Stewart, P.A.Holland & KnightKirkpatrick and LockhartShutts & Bowen, LLPStearns, Weaver, Miller, Weissler,

Alhadeff & Sitterson, P.A.Steel Hector and DavisTabas, Freedman, Soloff, Brown, &

Rigali, P.ATripp Scott





Notable Properties Appraised

Miami-Dade County

Miami Seaquarium Virginia Key Miami Free Zone – Global Trade Cntr MiamiMiami International Airport Miami Metropolitan Hospital of Miami MiamiCity of Miami Correctional Facility Miami Spinnaker Marina North MiamiCountry Club of Miami Golf Course Miami Virginia Key & Rickenbacker Marinas Key BiscayneMel Reese Golf Course Miami Waterways Yacht Basin MiamiBurger King Headquarters – Waterford Miami Porto Vita Club and Spa AventuraDoctors Hospital Coral Gables Ocean Steps Entertainment Center S. Miami BeachBeacon Centre Development Miami Indian Creek Country Club Indian CreekFBI Headquarters Miami BIV Tower MiamiGables Waterway Executive Center Coral Gables Courthouse Tower MiamiJoe’s Stone Cra b restaurant Miami Beach South Shore Hospital Miami BeachDoral Ocean Beach Resort (formerly) Miami Beach SouthCom Headquarters MiamiMetro-Dade Bus Facility Miami

Fort Lauderdale/Broward County Florida Medical Center (Hospital) Ft. LauderdaleJackson Marine Center Ft. LauderdaleLas Olas Centre Office Building Ft. LauderdaleMartha's Restaurant HollywoodVarious Luxury Single Family Homes Fort LauderdaleSeneca Industrial Park Pembroke Park

Monroe County/Florida Keys Marriott Key Largo Bay Beach Resort Key LargoIslander Resort IslamoradaHawk's Cay Resort, Marina and DRI Duck KeyWestin, formerly Hilton Resort and Sunset Key Island Key WestLittle Palm Island Little Torch KeyLouis' Backyard Restaurant Key West

Ocean Key Resort Key WestSloppy Joe's Bar Key WestTruman Annex - Navy Base Key West

Other F lor ida CountiesJupiter Beach Resort Jupiter, Palm Beach CountyLa Playa Beach Resort Naples, Collier CountySheraton Four Points Orlando, Orange CountySpring Hill Suites Tampa, Hillsborough CountyHilton Carillon Park St. Petersburg, Pinellas County

Outside of the United StatesVarious Single Family Homes Cat Cay, BahamasSingle Family Home Casa de Campo, Dominican RepublicSapphire Beach Resort St. Thomas, U.S. Virgin Islands

Hotel Site Grand Turks and Caicos IslandsMontego Beach Resort Montego Bay, JamaicaBotany Bay Subdivision (400 acres) St. Thomas, U.S. Virgin IslandsOcean Club Resort Grand Turks and Caicos IslandsLand lease under Ritz Carlton San Juan, Puerto RicoVarious Land Holdings St. Croix, U.S. Virgin IslandsVacant Land West End, Grand Bahama IslandBuccaneer Hotel and Golf Course St. Croix, U.S. Virgin Islands



Description & Analyses Market Rent of Bayside Marketplace Land Parcel


DESCRIPTION &

ANALYSES





Purpose of the Appraisal

The purpose of this appraisal is to estimate the annual market rent of the land as though vacant as

of March 19, 2014 under two valuation scenarios. Scenario 1 assumes that development would be subject to the same provisions stipulated in the existing leases to Bayside Center LimitedPartnership. Scenario 2 assumes that development would be subject to the modified provisionsstipulated in a Warrant Permit approved by the City of Miami Planning and Zoning Departmenton January 10, 2014. In order to estimate the market rent, the market value of the land as ifvacant was also estimated. The terms fee simple interest and market rent are defined below andthe term market value is defined on the following page.

Client, Intended User and Use of the Appraisal

The intended user of this appraisal is the city of Miami (client). The intended use of thisappraisal is for setting an annual market rent for the subject property of the land as vacant asidentified herein. No additional intended users are identified or intended.

Definition of Real Property Interest Appraised

The real property interest appraised herein is that of the fee, defined as follows:

Fee Simple Interest: an absolute fee without limitations to any particular class of heirs, but subject to the limitations of eminent domain, escheat, police power and taxation. Aninheritable estate.

Definition of Market Rent

Market Rent is defined as:

The most probable rent that a property should bring in a competitive and openmarket reflecting all conditions and restrictions of the lease agreement, including permitted uses, use restrictions, expense obligations, term, concessions, renewaland purchase options, and tenant improvements (TIs).1

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





Definition of Market Value

Market Value is the major focus of most real property appraisal assignments. Both economic andlegal definitions of market value have been developed and refined.1 The Uniform Standards ofProfessional Appraisal Practice (USPAP) states Market Value is “a type of value, stated as an

opinion, that presumes the transfer of property (i.e., a right of ownership or a bundle of suchrights), as of a certain date, under specific conditions set forth in the definition of the termidentified by the appraiser as applicable in the appraisal”.

2 This requires the appraiser to identifythe definition of market value and its authority. The definition that follows is the basis of thevaluation in this appraisal and the source is the Federal Register.

“For example, the following definition of Market Value is used by agencies that regulatefederally insured financial institutions in the U.S.:

Market Value is defined as “the most probable price which a property should bring in acompetitive and open market under all conditions requisite to a fair sale, the buyer andseller each acting prudently, knowledgeably and assuming the price is not affected byundue stimulus. Implicit in this definition is the consummation of a sale as of a specifieddate and the passing of title from seller to buyer under conditions whereby:

Buyer and seller are typically motivated;

Both parties are well informed or well advised, and acting in what he or she considers hisor her own best interest;

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

Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements

comparable thereto; and The price represents the normal consideration for the property sold unaffected by special or

creative financing or sales concessions granted by anyone associated with the sale.”3

This market value definition is referenced within the appraisal regulations of the followinggovernmental agencies;

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of1989

Department of the Treasury

The Federal Reserve System (FRS)

Federal Deposit Insurance Corporation (FDIC) Office of Thrift Supervision (OTS)

Office of Comptroller of the Currency (OCC)

1 Appraisal of Real Estate, 14th Edition, page 58 2 USPAP 2014-2015, page U-33 Appraisal of Real Estate, 14th Edition, page 55





Site Data

The subject is an irregular 16.8539 acre site with frontage on Biscayne Boulevard, Port

Boulevard and Biscayne Bay consisting of a 13.0767 acre retail parcel and a 3.7772 sq. ft. garage parcel. The subject property is accessible from the east side of Biscayne Boulevard and the southside of Port Boulevard. The site is level and at approximate street grade. Utilities available to thesite are:

Electric: Florida Power and LightTelephone: AT&TWater: Miami-Dade County Water and Sewer AuthoritySewer Disposal: Miami-Dade County Water and Sewer Authority

Zoning

The subject property is zoned T6-8-O, Urban Core Open Transect Zone by the city of Miami,Florida. This zoning district allows the highest density and greatest variety of uses, includingcivic buildings of regional importance. It is characterized by a network of small blocks,thoroughfares with wide sidewalks, steady tree planting and buildings set close to the frontagewith frequent doors and windows. The allowable residential density in this zoning is 150 to1,000 units per acre. The allowed uses under the open zoning include, but are not limited toresidential, lodging, office, commercial, civic, civil support and educational.

This is a general description of the cur rent zoning. H owever, the subject property was until

recently restr icted to the density and uses as descri bed under Scenar io 1 below, with a zoningmodif ication approved in January 2014 increasing the all owable buil ding area as shown

under Scenar io 2.

Scenario 1 Scenario 2

Land Area (sq. ft.) 734,156 734,156

Retail, Office,

Recreation

Retail, Office,

Recreation

Main Retail Building Area 267,000 267,000

Additional Retail Parking Liner 0 17,255

Additional Retail Area per Warrant 0 277,177Less: Fire and Marina Offices 0 -4,470

Total Gross Area Excluding Parking 267,000 556,962

Parking Garage 420,000 636,660

Total Gross Area 687,000 1,193,622

Floor Area Ratio (FAR)* 0.94 1.63

* including parking garage (this is called "Floor Lot Ratio" in the City of Miami Zoning Code)

Allowable Uses





Flood Zone

The subject property is located in Flood Zone AE. This identification was located on FloodInsurance Rate Map, Community Panel No.12086C0314L, revised September 11, 2009. For

insurance purposes, a surveyor should be contacted to verify the exact zone by a flood

elevation certificate, as well as its impact on insurance.

Source: www.interflood.com





Real Estate Assessment and Taxes

Taxing Authority: Miami-Dade CountyAssessment Year: 2013

Millage Rate: 23.1295

Folio Number: 01-0100-000-0523

01-0100-000-0522

Following is a summary of the assessments:

01-0100-000-0523 (Garage Parcel)

TAX ASSESSMENT

ANALYSIS ASSESSMENT

SQ.FT.

SIZE*

ASSESSMENT

PER SQ.FT.

Assessed Land Value $11,517,450 164,535 $70.00

Assessed Value of Improvements 5,282,550 269,579 $19.60

Total Assessed Value $16,800,000 269,579 $62.32

* This is the size as per the survey provided.

Outlined in red below is the area identified as tax folio 01-0100-000-0523 by the Miami-DadeCounty Property Appraiser’s office.





01-0100-000-0522 (Retai l Parcel)

TAX ASSESSMENTANALYSIS ASSESSMENT

SQ.FT.SIZE*

ASSESSMENTPER SQ.FT.

Assessed Land Value See footnote 1 569,621 N/A

Assessed Value of Improvements See footnote 1 303,597 N/A

Total Assessed Value $51,200,000 303,597 $168.64

* This is the size as per the survey provided.

Outlined in red below is the area identified as tax folio 01-0100-000-0522 by the Miami-DadeCounty Property Appraiser’s office.

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

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





Neighborhood Overview

General Neighborhood Data

Location: UrbanBuilt Up: 100%Growth Rate: StableProperty Values: IncreasingDemand/Supply: In balancePresent Land Use: Mixed-use commercial and residentialChange in Present Land Use: Not likelyPredominant Use: Commercial on east side of Biscayne Boulevard; and

commercial and residential on west side of BiscayneBoulevard

Property Compatibility: Above averageGeneral Appearance of Properties: Above averageAppeal to Market: Very good

Adjacent Uses

East: Marina, Biscayne Bay and PortMiamiWest: Multi-family residential, office and commercialSouth: Bayfront Park, offices and hotel North: American Airlines Arena

Linkages Distance Access

Public Transportation: Within a few blocks ExcellentEmployment Centers: Within a few blocks ExcellentExpressway Access: 1/2 mile Very goodMiami International Airport: Five to seven miles Very good





Supply and Demand

This appraisal estimates the market rent and the market value of the subject site as though vacant

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

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





The data shows that the market shocks of the recent recession hit the downtown retail markethard, pushing vacancy rates above the 10% level, and that the growth in demand during therecovery of the last three years or so has been in sufficient to bring vacancy rates down

significantly from those levels. As a result, average rental rates have declined significantly fromthe peak levels observed before the recession. Across the broader Miami-Dade County market,the rise in vacancy rates resulting from the recession was less severe, and the recovery hasgenerated sufficient demand to bring vacancy rates back down below the 5% level. As a result,rental rates have managed to recover and even surpass their pre-recession levels.

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

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





The chart below shows the historical trend in passenger traffic at Port Miami. Note that the year-to-date totals for prior years incorrectly reflect results through June and not through September,the latest month available for 2013. Considering year-to-date results through September,

passenger arrivals at the cruise port declined in 2009, increased in 2010, declined again in 2011and 2012, and increased in 2013, with figures for 2013 still lagging behind 2008 levels. Some ofthese declines are attributable to the effects of the recession, and some to a repositioning of somecruise ships from Port Miami to Port Everglades in Fort Lauderdale. However, it is important tonote that Port Miami, located just a few hundred yards across the bay from the subject property,remains the busiest cruise port in the world. Notably, the second and third busiest cruise ports arePort Everglades (about 26 miles up the coast) and Port Canaveral (near Cape Canaveral, about200 miles up the coast).

Also relevant in this regard is the performance of area hotels. Though hotels are not an alloweduse at the subject property (if they were it is likely that the highest and best use would include alodging component, which would result in a change in the value estimate), the recent performance of area hotels does provide an indication of the strength of potential demand for aretail/recreation complex at the subject site that would draw a significant share of its customersfrom outside the area. To that end, the following chart plots average room rates (Average DailyRare, or ADR) against occupancy rates for Miami-Dade County hotels since 2007. After a sharpdecline in 2009 when the effects of the recession and market decline most severely affected thearea’s lodging industry, both ADR and occupancy levels have made strong and steady gainsduring the past four years. The robust increases in room rates occurring simultaneously with

rapid gains in occupancy levels (which under more stable market conditions would typicallydecline with increases in room rates) provide evidence of very strong growth in demand for hotelrooms. This suggests that the outlook for demand growth for a retail/recreation complex at thesubject location with a significant tourist orientation is very strong.





72.4%71.4%

65.2%

70.4%

75.6% 76.5%

77.9%

$158.41 $160.14

$140.73 $143.98$152.95

$163.44

$176.66

$0

$50

$100

$150

$200

$250

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

2007 2008 2009 2010 2011 2012 2013

Occupancy and ADRMiami-Dade County

Occupancy (L) ADR (R)

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

increased residential activity.

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

Conclusion

Recent trends in retail activity, increases in airport passenger arrivals and tourist traffic, the verylarge volume of passenger traffic going through the nearby cruise port, and the significantgrowth in the population of occupied residential condominiums in the neighborhood, all make





for a very positive outlook for demand for a large retail/recreation complex with a touristorientation at the subject location.

The existing improvements were developed in 1987, 27 years prior to the valuation date. It wasdeveloped as a “festival marketplace”, a type of retail center conceived as a key part of the

downtown redevelopment strategy of many American cities during the 1970s and 1980s. Theconcept included, among other elements, an emphasis on local tenants. During that time, theretail industry has seen significant changes, with the design and format of large retail centersundergoing significant evolution. As a result, many older centers suffer from various degrees offunctional obsolescence as their design has fallen further behind the latest trends, limiting theirmaximum achievable rents. In addition, the subject development’s tenant mix and customer

profile has evolved significantly during that time, with a larger share of national retailers andrestaurants in the tenant mix. It is likely that if a new center were to be constructed on the subjectsite today, the target market (and therefore the design) would be different.





Exposure Time

Exposure time is the “estimated length of time that the property interest being appraised wouldhave been offered on the market prior to the hypothetical consummation of a sale at market valueon the effective date of the appraisal. Exposure time is a retrospective opinion based on ananalysis of past events assuming a competitive and open market”

1.

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

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

Typical Purchaser of the Subject

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

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





Highest and Best Use

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

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

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

1. Legally Permissible. What uses are legally permitted on the subject site withrespect to zoning ordinances and deed restrictions?

2. Physically Possible. What uses of those legally allowed are physically possible

on the subject site?

3. Financially Feasible. Of those uses determined to be physically possible andlegally permissible, which ones will produce a positive return?

4. Maximally Productive. Of those that are feasible, legally permissible, and physically possible, which will produce the highest rate of return or value?

As Vacant

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

Under current market conditions, the most profitable use for urban waterfront sites zoned for

high density typically include a mix of uses including residential and/or lodging, with asignificant retail component at the ground level. Therefore, the fact that development ofresidential and lodging uses on the subject site is prohibited has a significant impact on highestand best use. Given these constraints, the most profitable development is likely to be a mixed-usecomplex consisting of predominantly retail and recreation uses.





As Improved

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

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





Appraisal Process

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

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

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

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

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

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



Cost Approach Market Rent of Bayside Marketplace Land Parcel


Cost Approach

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

Following are the procedures for preparing the cost approach.

1. Estimate the value of the land as though vacant and available to be developed to itshighest and best use.

2. Determine which cost basis is most applicable to the assignment: reproduction cost orreplacement cost.

3.

Estimate the direct (hard) and indirect (soft) costs of the improvements as of the effectiveappraisal date.

4. Estimate an appropriate entrepreneurial profit or incentive from analysis of the market.

5. Add estimated direct costs, indirect costs, and the entrepreneurial profit or incentive toarrive at the total cost of the improvements.

6. Estimate the amount of depreciation in the structure and, if necessary, allocate it amongthe three major categories: physical deterioration, functional obsolescence, and externalobsolescence.

7. Deduct the estimated depreciation from the total cost of the improvements to derive anestimate of their depreciated cost.

8.

Estimate the contributory value of any site improvements that have not already beenconsidered. (Site improvements are often appraised at their contributory value - i.e.,directly on a depreciated-cost basis - but may be included in the overall cost calculated inStep 3 and depreciated, if necessary).

9. Add land value to the total depreciated cost of all the improvements to develop themarket value of the property.

10. Adjust for personal property (e.g., furniture, fixtures, and equipment) or intangible assetsthat are included in the appraisal.

11. Adjust the value conclusion, which reflects the value of the fee simple estate, for the property interest being appraised to arrive at the indicated value of the specified interestin the property. 1

As the subject property is being appraised as unimproved vacant land, the cost approach is notapplicable.

1 The Appraisal of Real Estate, 14th Edition, 2013, Pages 568 and 569



I ncome Capitali zation Approach Market Rent of Bayside Marketplace Land Parcel


Income Capitalization Approach

Income producing real estate is typically purchased as an investment, and from an investor’s

point of view earning power is the critical element affecting property value. One basicinvestment premise holds that the higher the earnings, the higher value, provided the amount ofthe risk remains constant. An investor who purchases income-producing real estate is essentiallytrading present dollars for the expectation of receiving future dollars. The income capitalizationapproach to value consists of methods, techniques, and mathematical procedures that anappraiser uses to analyze a property’s capacity to generate benefits (i.e., usually the monetary benefits of income and reversion) and convert these benefits into an indication of present value.1

In the income capitalization approach, an appraiser analyzes a property’s capacity to generatefuture benefits and capitalizes the income into an indication of present value. The principle ofanticipation is fundamental to the approach.2

1 Appraisal of Real Estate, 14th Edition, 2013, Page 4392 Ibid., 439



Sales Compari son Approach Market Rent of Bayside Marketplace Land Parcel



The sales comparison approach is based on the principle of substitution. The principle of

substitution holds that the value of property tends to be set by the cost of acquiring a

substitute or alternative property of similar utility and desirability within a reasonableamount of time.

1

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

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

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

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

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

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





Vacant Land Sales Grid

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

Sale

No.

Sale

Date Location Zoning

Sale

Price

Sq. Ft.

Size

Price /

Sq. Ft.

Buildable

Sq. Ft

Floor

Area Ratio

(FAR)

Price /

Buildable

Sq. Ft.

1 1/14 3055 N. Miami AvenueMiami

T6-24-O $8,200,000 185,131 $44 203,000 (a, b) 1.10 (a, b) $40

2 9/13 246 NE 26th TerraceMiami

T6-36A-O $8,834,700 58,645 $151 703,740 (c, a) 12.0 (b, c) $13

3 11/12 NEC of NW 18th Streetand 117th Avenue

Sweetwater

C $31,500,000 635,748 $50 417,000 (d) .66 (d) $76

4 3/12 644 Andrews AvenueFort Lauderdale

RAC-CC $6,500,000 83,123 $78 410,000 (a, b) 4.93 (a, b) $16

5 6/11 13401 South Dixie HighwayPinecrest BU-1A $11,500,000 215,186 $53 51,836 (d) .24 (d) $222

Subj. 401 and 501 Biscayne

Boulevard

Miami

T6-8-O* 734,156 687,000

(Scenario 1)

1,193,622

(Scenario 2)

.94

(Scenario 1

1.63

(Scenario 2)

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

(a)

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

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





Vacant Land Sales Map





Comparabl e Land Sale 1

Location

3055 North Miami Avenue

Miami, FL 33129

Property Type

Vacant Commercial

Square Feet

185,131

Price/Sq.Ft.

$44.29

WAR No.

303578

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

Financing & Prior Sale

Financing: All cash to the sellerPrior Sale: None in the past five years

Property DescriptionZoning: T6-24-O, Urban Core Open Transect Zone by the city of

Miami, FLShape: TrapezoidalTopography: Grade level

Comments

This parcel is located at the southeast corner of North Miami Avenue and NE 31st Street, at thesouth end of the Midtown Miami complex, a large mixed-use urban development project. The

purchaser is Wal-Mart Stores, a major national retailer with plans to construct a 174,390 sq. ft.store with an attached parking structure for 577 cars. Under an agreement with the seller, a14,809 sq. ft. portion of the site is to be conveyed back to the seller as a "retail liner" property to be improved with retail storefronts lining the ground level of the Wal-Mart store. The seller alsoretained a right of repurchase and first refusal. The land area shown reflects deduction of theretail liner property. The total size of the structure to be built is 203,000 sq. ft., for a total FloorLot Ratio of 1.1.






Location

246 NE 26th Terrace

Miami, FL 33137

Property Type

Vacant Commercial

Square Feet

58,645

Price/Sq.Ft.

$150.65

WAR No.

303165R

Recording InformationSale Price: $8,834,700Sale Date: September 2013ORB/Page: 28700/2265 (Parcel 1); 28700/2268 (Parcel 2); 28784/815

(Parcel 3); 28840/2604 (Parcel 4)Grantor: Mecca, LLC (Parcel 1); Mecca III, LLC (Parcel 2); Carlisle

Investments of South Florida, LLC (Parcel 3); Townpoint, Inc.(Parcel 4)

Grantee: Fairholme Midtown Association, LLCLegal Description: Lengthy legal description. Refer to the recording instrument.

Folio No.: 01-3230-022-0060 (Parcel 1); 01-3230-022-0090 Parcel 2); 01-3230-022-0110 (Parcel 3); 01-3230-020-0150 (Parcel 4)

Financing & Prior Sale Financing: All cash to the sellerPrior Sale: Parcel 3 (5,000 sq. ft. lot) was purchased by the seller in May

2013 on a short sale.

Property Description

Zoning: T6-36A-O, Urban Core Open Transect Zone by the city ofMiami, FL

Shape: Rectangular

Topography: Grade levelComments

This property is located on the west side of Biscayne Boulevard, with double corners andsignificant additional frontage on NE 26th Street and 26th Terrace. It is an assemblage of fourcontiguous parcels acquired from three different sellers on June 18, 2013 (Parcels 1 and 2 fromrelated sellers), August 15, 2013 (Parcel 3) and September 20, 2013. The purchaser is aninvestment and a mutual fund company who will construct an office building for partial owneroccupancy.






Location

Northeast corner of NW 18thStreet and NW 117thAvenue/Florida Turnpike

Sweetwater, FL 33172

Property Type

Vacant Commercial

Square Feet

635,748

Price/Sq.Ft.

$49.55

WAR No.

303066R

Recording Information

Sale Price: $31,500,000Sale Date: November 2012ORB/Page: 28361/5000Grantor: Procacci Crossroads 117, LLCGrantee: IKEA Property, Inc.Legal Description: Lengthy legal description. Refer to the recording instrument.

Folio No.: 25-3031-029-0014

Financing & Prior Sale Financing: All cash to the sellerPrior Sale: None in the past five years

Property DescriptionZoning: C, Commercial District by the city of Sweetwater, FLShape: RectangularTopography: Grade level

Comments

This is the sale of an approximately 15 acre site adjacent to the high traffic Dolphin Mall withvisibility from the Florida Turnpike. The buyer is IKEA, a major international retail chain whichis planning to build their second largest store. The sellers sold the property because they receivedsuch a substantial offer. IKEA has announced they plan to build a 417,000 sq. ft. store, for aFloor Area Ratio of .66. There will also be 1,500 parking spaces.






Location

644 Andrews Avenue

Ft. Lauderdale, FL 33301

Property Type

Vacant Commercial

Square Feet

83,123

Price/Sq.Ft.

$78.20

WAR No.

303162R

Recording InformationSale Price: $6,500,000Sale Date: March 2012ORB/Page: 48602/1025Grantor: Legacy Development of Broward, LLCGrantee: Broward CountyLegal Description: Parcel A, COCA-COLA SUBDIVISION, Plat Book 71, Page 2Folio No.: 50-42-10-80-0010


Property DescriptionZoning: RAC-CC, City Center District by the city of Ft. Lauderdale, FLShape: L ShapeTopography: Grade level

CommentsThis site is located in downtown Fort Lauderdale. It was improved with a parking lot and anolder structure. The site was purchased by Broward County for the construction of a 410,000 sq.ft. parking garage with 497 spaces. The site was chosen following an open bid process. Based on

the proposed design the price paid equates to $15.85 per buildable sq. ft. and $13,000 (rounded) per space.






Location

13401 South DixieHighway

Pinecrest, FL 33156

Property Type

Vacant Commercial

Square Feet

215,186

Price/Sq.Ft.

$53.44

WAR No.

302776R

Recording Information

Sale Price: $11,500,000Sale Date: June 2011ORB/Page: 27718/130Grantor: ESF Holdings, LC and Joseph C. Hallet and Jeffrey L. SaueyGrantee: Publix Super Markets, Inc.Legal Description: Tract B, HALLET SUBDIVISION, as recorded in Plat Book

92, Page 19Folio No.: 20-5015-034-0070


Property Description

Zoning: BU-1A, General Business District by the Village of Pinecrest,FL

Shape: ElongatedTopography: Grade level

Comments

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





Adjustments With Respect to Scenario 1

Based on Land Area

Sale

No.

Price/

Sq. Ft of

Land

Conditions

of Sale

Market

Conditions Location Zoning*

Size/

Shape

Overall

Adjustment

1 $44 + + + = + + + - - - / = + + +

2 $151 = = + + - - - - - / = - - -

3 $50 = + + + = = / = + + +

4 $78 = + + + - - - - / = -

5 $53 = + + + = - / = + +

*Considers subject’s development constraints under Scenario 1.

Based on Buildable Square Feet

Sale

No.

Price/

Buildable

Sq. Ft

Conditions

of Sale

Market

Conditions Location Zoning**

Size/

Shape Other

Overall

Adjustment

1 $40 + + + = + + + - - / = = + + +

2 $13 = = + + - - - - / = + + + + + + +

3 $76 = + + + = = / = - - - =

4 $16 = + + + - - - / = + + + + +

5 $222 = + + + = - / = - - - - - -

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





Analysis of Adjustments

(Scenario 1)

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

Financing:

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

Conditions of Sale:

This category considers if the comparable sales were arm’s length. An arm’s length sale means

the buyer and sellers each acted prudently, knowledgeably, and were under no necessity to buyor sell, i.e., a sale that is other than a forced or liquidation sale. Also considered are if any of thesales were purchased by an adjoining owner, whereby a premium was paid. None of the salesrequired adjustment for this category. However, Sale 1 requires a positive adjustment forconditions of sale because under the agreement, the seller retained rights of re-purchase and firstrefusal, and because the deal required the buyer to convey back to the seller a portion of the site

after completion of development.

Market Conditions (Time):

This adjustment considers current market conditions as compared to market conditions in placeat the time of the respective sale. Sales selling when market conditions were inferior wereadjusted upward. Sales selling when market conditions were similar did not require adjustment.Sales 1 and 2 sold within the last year under market conditions similar enough that no adjustmentis indicated. Sales 3, 4 and 5 sold in 2011 and 2012 and values have increased since then.

Location:Sales considered inferior to the subject were adjusted upward and sales considered similar didnot require an adjustment. The subject property is located in the Central Business District (CBD)of the City of Miami and has frontage on Biscayne Bay. These are desirable characteristicsmaking the subject property superior to all of the sales.





Zoning:

The subject property has a T6-8-O zoning by the City of Miami, Florida. However, this appraisalestimated the land value based upon the allowable use of 267,000 square feet of retail area and a420,000 square foot garage. Based on this, the FAR for the subject property is .94 which is lowerthan what would be allowed by the T6-8-O zoning district. Sales 1, 2 and 4 require negativeadjustments for zoning. Sale 1 was purchased for development of a retail/garage complex at aslightly higher density, and under a zoning district that permits a wider variety of uses (includingretail liner space at the ground floor of the parking garage). Sales 2 and 4 have a much higherdensity zoning also permitting a wider variety of uses. Note that the zoning adjustments withrespect to the prices per buildable sq. ft. do not reflect allowable density, because density isalready reflected in the price per buildable sq. ft. As an example, consider two sites that sell forthe same price and are identical in every respect except allowable density. Though the sale price per sq. ft. of land will be the same, the sale price per buildable sq. ft. will be lower for the sitethat has a higher allowable density. Therefore, the zoning adjustments with respect to buildablesq. ft. consider only the differences in allowable uses.

Size and Shape:

The size adjustment is based on the principle of economies of scale whereby larger sites tend tosell for less per square foot. Smaller sites were considered superior and adjusted downward, andthe one sale similar in size was not adjusted. The subject is larger than all of the sales except Sale3 which is similar in size. Sales 1, 2, 4 and 5 therefore require negative adjustments. With respectto shape, the subject has an irregular shape which at smaller sizes would make it inferior to asquare or rectangular site, but due to its large size the site’s irregular shape would not place

significant constraints on development. This is especially true given the subject’s waterfront

location. Therefore, no shape adjustment is indicated.

Other:

For the adjustments with respect to prices per buildable sq. ft., an additional set of adjustments isrequired (shown in the “other” category). These adjustments consider the fact that the price per buildable sq. ft. on Sales 3 and 5 do not reflect a parking garage because these sales are insuburban locations where parking could be provided via surface parking lots. As a result, the building area – and therefore the price per buildable sq. ft. – do not reflect a parking structure.These prices per buildable sq. ft. require negative adjustments because if the building size hadincluded a parking garage the price per buildable sq. ft. would be lower. The price per buildable

sq. ft. for Sale 2 is based on the maximum allowable density as per the zoning code (the actualsize of the proposed building could not be confirmed). The zoning for Sale 2 allows an FAR of12.0 (including any parking structure). This is significantly higher than the density ofdevelopment allowed for the subject, and results in a much lower price per buildable sq. ft. thanif Sale 2 had the same FAR of .94. Sale 2 therefore requires a large positive adjustment.Similarly, the size of the proposed structure (including garage) in Sale 4 is much larger than whatis allowed for the subject. This sale also requires a positive adjustment.





Conclusion of Value

(Scenario 1)

The sales comparison approach compared similar properties to the subject property andadjustments were made for the pertinent characteristics. Based on these comparisons a value wasestimated for the subject property.

Sale prices of the five comparable land sales used range from $44 to $151 per square foot ofland. At the lower end of the price range are Sales 3 ($50 per sq. ft.) and 5 ($53 per sq. ft.) whichare suburban locations acquired for large retail use, and Sale 1 ($44 per sq. ft.) which is an urbanlocation but inferior to the subject. Sale 4 ($78 per sq. ft.) was acquired to construct a parkinggarage which is similar to one of the uses allowed on the subject property. Though the subject benefits from a superior location and this sale occurred under weaker market conditions, these

factors are offset by Sale 4’s superior zoning (permitting both higher density and a wider varietyof uses) and smaller size. Overall, Sale 4 is considered superior.

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

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

to a price per buildable sq. ft. of $73 (based on the 687,000 of buildable sq. ft. under Scenario 1),which is supported by the alternative analysis of price per buildable sq. ft.





Annual Market Rent of the Land as Though Vacant

(Scenario 1)

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

Land capitalization rates can be extracted from comparable sales and can also be supported byinvestor surveys. The grid below is a sample of capitalization rates for triple net properties all

which are smaller than the subject property. Comparable properties that are purchased withnational tenants tend to have lower capitalization rates based on being a secure investment withlower risk. The subject property, as improved with a large retail use and parking garage, wouldhave minimal risk as the lessee would be expected to make payments to protect their leaseholdinterest and likely a substantial investment.

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

It is important to note that the subject property is much larger than all the sales above and as aresult would be considered to have greater risk and thereby have a higher land capitalization rate.

Address City Name Sale Date Cap Rate

150 NW 180t Ave Pembroke Pines Chase Bank 3/13 4.90%

7999 Pines Blvd. Pembroke Pines TD Bank 11/12 5.50%

17355 Biscayne Blvd Miami Houston’s 12/12 3.94%

2391 W 68th St Hialeah CVS 9/12 5.85%

1000 E Tarpon Ave Tarpon Springs CVS Ground Lease 2/12 5.50%

4808 Coconut Creek Parkway Coconut Creek Regions Bank 5/13 5.10%

15050 Biscayne Boulevard North Miami Walgreens 3/13 5.95%

14190 SW 26th Street Miami Walgreens 2/13 6.79%

12290 Biscayne Boulevard North Miami BankUnited 12/12 5.59%

10760 Biscayne Boulevard Miami JPMorgan 9/10 6.50%

9801 South Dixie Highway Pinecrest Staples 3/11 5.75%

2400 S. University Dr. Davie PNC Bank 12/13 5.00%





Also considered was a 9.01-acre site at 3355 NW 22nd Street Road which is improved with a25,571 square foot rental car facility. The property was listed for sale in 2011 and taken off the

market in July 2013, the last asking price being $12,616,592. The property is net leased throughMay 2012 with a rent (inclusive of the improvements) of $883,161 per year with annualescalations. Based on the asking price of, the implied overall capitalization rate was 7%. Since itdid not sell at the asking price, this is an indication that the market value was likely lower, andtherefore the overall capitalization rate would have been higher than 7% if a sale at market valuehad been realized.

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

The survey above is for land lease rates based on the 4th Quarter of 2013, and published in the 1st Quarter of 2014. The capitalization rates range widely from 2.82% to 16.24%, however moreattention should be paid to the average rates which range from 6.79% to 9.02%. For retail use,the range is 2.85% to 11.87 with an average of 7.05%. The average capitalization rate for retail properties in the 1st Quarter 2013 report (one year prior) was 6.2%, indicating a slight increase.





Note that restaurant properties tend to reflect higher capitalization rates, though most of the properties included in the restaurant survey are free-standing restaurant buildings which over thelong term tend to experience higher rates of average vacancy than restaurant tenants in large

multi-tenant retail centers. Based on the range of average rates (6.79% to 9.02%) and thecomparable rates provided (3.94% to 6.79%) a rate of 7% was estimated as applicable to thesubject property.

The estimated annual market rent is calculated as follows;

Market Value x Land Capitalization Rate = Annual Market Rent

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

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





Adjustments With Respect to Scenario 2

Based on Land Area

Sale

No.

Price/

Sq. Ft of

Land

Conditions

of Sale

Market

Conditions Location Zoning*

Size/

Shape

Overall

Adjustment

1 $44 + + + = + + + - - / = + + + +

2 $151 = = + + - - - - / = - -

3 $50 = + + + + = / = + + + +

4 $78 = + + + - - - / = +

5 $53 = + + + + - / = + + +

*Considers subject’s development constraints under Scenario 1.

Based on Buildable Square Feet

Sale

No.

Price/

Buildable

Sq. Ft

Conditions

of Sale

Market

Conditions Location Zoning**

Size/

Shape Other

Overall

Adjustment

1 $40 + + + = + + + - - / = - - + +

2 $13 = = + + - - - - / = + + + + +

3 $76 = + + + = = / = - - - - -

4 $16 = + + + - - - / = + + +

5 $222 = + + + = - / = - - - - - - - -

**Considers subject’s development constraints under Scenario 1, and excludes consideration of allowable density

(already reflected in the price per buildable sq. ft.)





Analysis of Adjustments

(Scenario 2)

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

With respect to the adjustments based on land area, Sales 1, 2 and 4 require smaller negativeadjustments because under Scenario 2 the subject has a higher allowable FAR (closer to those ofthese sales). Similarly, Sales 3 and 5, which under Scenario 1 require no adjustment, require a

positive adjustment under Scenario 2’s higher FAR assumption. As a result, the overalladjustments indicate a value per sq. ft. of land above Sales 1, 3, 4 and 5 (a range of $44 to $78),and below Sale 2 at $151. The analysis would support a value estimate per sq. ft. in the range of$78 to $151. A value of $100 per sq. ft. is estimated. Based on the land area of 734,156 sq. ft.,this equates to a value indication of $73,000,000 (rounded).

With respect to the adjustments based on buildable sq. ft., Sale 2 and 4 require smaller positiveadjustments in the “other” category because the higher FAR of Scenario 2 is closer to the FAR ofthese sales. Similarly, larger negative adjustments are indicated for Sales 3 and 5 which are evenmore inferior to the subject under Scenario 2 than under Scenario 1. Sale 1, which underScenario 1 requires no adjustment, requires a negative adjustment under Scenario 2 because it

has a lower FAR. As a result, the alternative analysis based on buildable sq. ft. indicates a value per buildable sq. ft. above Sales 1, 2 and 4 (a range of $13 to $40), and below Sales 3 and 5 ($76and $222, respectively). The analysis would support a value estimate in the range of $40 to $76 per buildable square foot.

The value indication of $73,000,000 by analysis of price per square foot of land equates to a price of $61 per buildable square foot (based on the 1,193,622 of buildable sq. ft. under Scenario2). This is supported by the alternative analysis of price per buildable square foot.

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





Annual Market Rent of the Land as Though Vacant

(Scenario 2)

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

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

Market Value x Land Capitalization Rate = Annual Market Rent

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

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





ADDITIONAL ANALYSIS – LAND RESIDUAL TECHNIQUE

A land residual technique has been applied for demonstrative purposes as well as being asecondary method to support the prior analysis within this appraisal. This alternative method projects a value of the property from the actual historic financial statements. The indicated valueincludes land and improvements and deducts the value of the improvements. This indicates aland value that a developer would pay for the ability to construct the improvements and generatethe reported historical income levels. The previous analysis estimated the land value of thesubject property based upon comparable sales. Considered were a value per square foot of landarea and also a value per buildable square foot. The subject property is unique as within Scenario1 there is a lower than typical FAR as compared to comparable land sales. Typically, the lowerthe FAR the higher the value per buildable square foot.

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

Similar to other locations in South Florida with high retail traffic/demand, particularly SouthBeach, tenants pay rent for restaurant or retail space not only based upon the building area theyoccupy, but also the sidewalk or outside areas that is used as part of their seating area. This open

area is another revenue source not reflected in the FAR. Meaning, the open area is revenue producing even though it is not counted in the FAR. For the subject property the ability togenerate these additional revenues would cause the value per buildable square foot to be skewedupward.

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

2010 2011 2012 2013

Revenues $25,108,123 $28,189,473 $29,960,159 $30,886,787

Expenses -$20,990,004 -$25,097,421 -$24,122,993 -$24,527,723

NOI $4,118,119 $3,092,052 $5,837,166 $6,359,064

Add Backs

Ground Rent $3,257,414 $3,574,865 $4,488,994 $4,266,293

Depreciation &Amortization

$7,943,201 $12,235,949 $11,633,295 $11,525,978

Revised NOI $15,318,734 $18,902,866 $21,959,455 $22,151,335





The historical data indicates that revenues have consistently increased from 2010 to 2013 with2012 and 2013 being very consistent. For purposes of this land residual calculation the onlyadjustments made to the reported income and expenses was to add back the ground rent expense

to reflect the valuation as a leased fee value (not a leasehold value) and the add back for thedepreciation and amortization as these are not real estate expenses.

A capitalization rate can be applied to the net operating income to indicate a value.Capitalization rates for this type property can range from 6% to 8% for a leased fee interest.Using a net operating income of $22,000,000 which is between the 2012 ($21,959,455) and the2013 ($22,151,335) indications the value range would be $275,000,000 to $367,000,000(rounded).

Arguably this estimated value considers business or enterprise value which is often associatedwith a development of this nature. This value is not real estate value and can be deducted from

the estimated value. For demonstrative purposes a business value ranging from 20% to 30% wasdeducted. The implied value range is $192,500,000 ($275,000,000 less 30%) to $294,000,000($367,000,000 less 20%). Using a mid-range of the estimated values ($321,000,000) and a mid-range of the estimate for business/enterprise value (25%) the implied value is $241,000,000($321,000,000 less 25%). From this estimate is subtracted the depreciated value of theimprovements.

Based on the financials the balance sheet shows $201,000,000 (rounded) as the investment in thereal estate. This is the undepreciated value. The depreciated book value is $167,000,000(rounded). Based on the book depreciated value the implied land value would be $74,000,000($241,000,000 less $167,000,000). Book value is not the same as depreciated value for real

estate analysis. The actual age of the improvements is 17 years and with an economic life of 60years the depreciation would be 28% (17 years ÷ 60 years). Applying this 28% depreciation tothe $201,000,000 improvement cost yields an indication of $145,000,000 for the depreciatedimprovement value. Subtracting this from the $245,000,000 estimate yields a land indication of$100,000,000.

Of note is that the expense for ground rent in the financial statements is not consistent with theactual ground rent paid. In 2012 the actual ground rent, including overage rent, was stated to be$2,321,391 and $2,094,535 respectively. If the stated historical ground rent expense of$4,266,293 should actually include the amount above the actual ground rent, there would be anadditional expense of approximately $2,172,000 ($4,266,293 - $2,094,535) that should be

deducted from the net operating income. The revised value range based on this adjustment would be approximately $37,000,000 to $59,000,000.

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



Reconciliati on Market Rent of Bayside Marketplace Land Parcel


Reconciliation of Value

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


Cost Approach Not applicable Not applicable

Income Capitalization Approach Not applicable Not applicable


Land Value Estimate $50,000,000 $73,000,000

Annual Market Rent(Land as Though Vacant)

$3,500,000 $5,100,000

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

The income capitalization approach analyzes the projected income and expenses of a property

and capitalizes the net income into a value estimate. This method is not applicable to the subjectvacant land due to the lack of properties similar in size that were purchased based on incomegenerated. An income capitalization approach was not applicable and not applied herein.

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

As the subject property is considered vacant land total reliance was placed on the salescomparison approach. The market value of the fee simple interest of the subject property asthough vacant, as of March 19, 2014, is estimated at $50,000,000 under Scenario 1 and$73,000,000 under Scenario 2. The annual market rent of the land as though vacant, as of March19, 2014, is estimated at $3,500,000 under Scenario 1 and $5,100,000 under Scenario 2. Themarket rent estimate is based on a 99-year lease term with cumulative CPI increases every fiveyears, which are typical for the market.



Waronker & Rosen, Inc. Real Estate Appraisers & Consul tants

ADDENDA




ADDENDUM A

COUNTY AREA DESCRIPTION




Miami-Dade County and Area Description

General Overview

Miami-Dade County, often referred to as “Miami” is known internationally for its weather,

beaches, banking, find art, shopping, and Latin culture. While many pass through the CruiseCapital of the World, 2.5 million people call it home.

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

Demographics

As of the 2013 Census report, Miami-Dade County has 2,496,435 residents. Over half of thosewere born outside the United States; 70 percent fall between the ages of 25 and 55. As depicted

in the following graph, the county’s population has risen steadily since 1970.

Miami-Dade County Population Projections

2015 Projectionbased on 2011Estimate

Percentage change2011 to 2015

2020 Projectionbased on 2011Estimate

Percentage change2011 to 2020

2,591,790 3.8% 2,717,631 4.9%

Miami has a positive reputation for international business, and developers are marketing theirnew projects to those individuals. Therefore, the county’s population is expected to increase at an

even greater rate approaching the year 2020.




Miami is the largest city in the County. Other populous municipalities include Hialeah, MiamiGardens, Miami Beach, and unincorporated land. Actively growing are some new cities since2000 such as Cutler Bay and Doral.

Brief History

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

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

the tourism industry.

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

Government

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

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




Economic Base

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

Source: The Beacon Council

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

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Miami-Dade County

Demographics by Trade

No. of Companies




Transportation

Miami International Airport (MIA) and its linkages are considered to be the driving force forgrowth behind its surrounding area. Airport traffic in 2013 included over 40 million passengers,2 million tons of freight, and 2 million tons of cargo. Other airports within the county include

Kendall-Tamiami Airport and Opa-locka Executive Airport. The aviation industry directly andindirectly contributes $26.7 billion and 282,043 jobs to the local economy.

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

Within Miami-Dade County, major roads include the Palmetto Expressway (State Road No.

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

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

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

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

Broward and Palm Beach Counties.

Education

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




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

Medical

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

Sports

Professional, college and even local neighborhood sports draw spectators, participants and

investors to a high degree and create a positive atmosphere. Professional football (MiamiDolphins), basketball (Miami Heat), baseball (Miami Marlins) and ice hockey (Florida Panthers)are continual draws. As of January 2014, business negotiations are currently underway to bringMajor League Soccer to Miami. There are two horse tracks and a dog track. Several of thesetracks have been approved for slot gambling or table gambling, depending upon location in amunicipality or Indian reservation. Also offered are golf, tennis, as well as the numerous watersports, given the significant bodies of water.

Arts and Culture

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

Summary

During its history, Miami-Dade County and the Greater Miami area have experienced significantchanges and growth. Trends indicate that the growth will continue with Miami-Dade Countyrapidly becoming an international city with a diverse culture. The economic base and the

bilingual population should continue to attract new residents and businesses into Greater Miami.

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

http://quickfacts.census.gov/qfd/states/12/12086.html



http://www.miamidade.gov/



http://www.beaconcouncil.com/



http://research.stlouisfed.org/fred2/



http://www.miamiherald.com/











ADDENDUM B

LEGAL DESCRIPTION

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