COMPLETE APPRAISAL

OF REAL PROPERTY

IN A SELF-CONTAINED REPORT

 

Crimson Cliff Townhomes

Phase I of a Proposed Residential Townhouse Project

1422 Animas View Drive

City of Durango, La Plata County, Colorado

 

 

 

As of:

 

 November 3, 2004 (As Is Market Value)

April 1, 2005 (Prospective Value Upon Completion)

 

 

 

Prepared For:

 

Pine River Valley Bank

848 East 2^nd Avenue

Durango, Colorado  81301

 

 

 

Prepared By:

 

Gregory M. Owen, MAI

EquiReal, Inc.

10901 West 120^th Avenue, Suite 315

Broomfield, Colorado  80021

 

 

 

      Comparable Market Price Levels

      We analyzed comparable properties and sales of units in recently constructed, high-end residential townhouse projects in Durango.  A summary of a sample of unit sales, contracts and listings among several projects is exhibited on the following page, followed by a map of the comparables.  Photographs and more detail are presented in the Addenda.  All the projects consisted of a large number of sales, contracts and listings.  We have provided a sample of prices, which is indicative of the prices of the remaining units in each project.  It is common to price townhouse units in the Durango market based on a price per square foot.  A premium is often placed on corner or end units and those with views.

 

      These competitive properties are among the newest good to excellent quality townhouse projects in Durango.  Most are under construction.  The Mears House was finished in 2003 and was completely sold out upon completion.  The remaining include asking prices for most units, or prices among units that are under contract for sale.  The sales will close upon construction completion.  Though these are not closed sales, the prices are established, and we were informed that the units will close at these price levels.  We have relied on this data.

 

      We included prices for two and three-bedroom units of varying size.  The pricing of the comparables varies substantially depending on size, therefore, we analyzed the price per square foot.  The projects vary in terms of location, quality, age, unit amenities, project amenities, and various other factors.  Comparbles 1 and 2 are located along Animas View Drive, near the subject; Comparable 3 is located on the east side of town along Florida Road; Comparable 4 and 6 are located downtown; Comparables 7 and 8 are located along north Main Avenue; and Comparables 5 and 9 are located on the southern fringe of the city.  A comparison summary is as follows:

 

·            Elkton Townhomes - This project is located on the east side of Animas View Drive, overlooking the river and valley, south of the subject site.  The locational aspects are relatively similar to the subject.  The units are of good to excellent quality like the subject.  Several units are under contract with one that has sold, which is intended to be the model unit until all the units are sold.  Construction is nearing completion on the first several units.  Prices are from approximately $186.00 to $200.00 per square foot for relatively large units, similar in size to the subject’s 2,200 square-foot units.

 

·            Skydancer Townhomes - This project is located on the west side of Animas View Drive, on a narrow site that is inferior to the subject.  The shape and location of the site results in lack of views and many units facing each other.  The units are of average to good quality, inferior the subject.  Prices are from approximately $160.00 to $173.00 per square foot for units that are similar in size to the subject’s 1,780 square-foot units.

 

·            Dakota Ridge - This project is located toward the east side of town along Florida Road.  The location is inferior and this project lacks some of the natural amenities that the subject project enjoys.  The units are of average to good quality, inferior the subject.  Prices are from approximately $172.00 to $180.00 per square foot for units that are within the range in size of the subject units.

 

·            The Boulevard - This excellent quality project is located toward the southeast end of the CBD.  This project includes two-story townhouse type units with parking garages, rather than flats.  The quality and location are superior to the subject.  Prices are more reflective of the current market in the CBD and are higher than the Mears House.  The Boulevard prices are generally from $260.00 to over $300.00 per square foot.

 

·            Rivergate Lofts – This is a major new mixed use development occurring south of town overlooking the Las Animas River.  This project is located approximately 1 ½ miles south of Durango’s CBD on the east side of the Animas River, with good views but the access is somewhat cumbersome.  The low-end units began at $177,240 and the higher end units are over $750,000.  The low-end units were priced at $210.00 per square foot, while high-end units were priced at $275.00 per square foot.  Overall, this project is similar in location and quality, but will have good project amenities.  This will create a town center, urban type property with its own shops, etc.

 

·            The Mears House - This project is located south of the core of the CBD, southeast of Main Avenue.   This was among the first high-end townhouse projects in Durango, and was built on a site where two houses were razed.  The quality is good, but location is substantially superior, as downtown land values and unit pricing is at the upper end of the ranges.  Prices among units were generally around $260.00 per square foot.  Since this project was built, it appears that pricing levels have increased for high-end townhouses downtown.

 

·            Durango Uptown – This is mid-rise type project with 17 commercial units and 15 residential units.  The location is superior, being located on north Main Avenue, north of the CBD. 

 

·            Villas at La Campanella - This development is located on the northern fringe of the City of Durango.  This project is under construction on a site where a motel and restaurant were demolished to make room for it.  This is an excellent-quality project, with a location that is slightly superior to the subject.  The project will have residential townhouses and parking garages, as well as retail and office space for lease.  A total of 26 units are priced from $250.00 to $275.00 per square foot. 

 

·            Villa Escalante - This development is located on the southern fringe of the City behind the Home Depot.  This project is of inferior quality with a slightly superior location.  Overall, this project is relatively similar and priced from $161.00 to $182.00 per square foot. 

 

       A comparison grid is as follows:

 

                        Price Range                  Overall

      No.             Project                          Per SF                          Comparison       Reason

      1                Elkton Townhomes         $186.00-$200.00            Similar              Location, quality

      2                Skydancer                     $160.00-$173.00            Inferior               Views, location, quality

      3                Dakota Ridge                 $172.00-$180.00            Inferior               Location, quality

      4                The Boulevard                $260.00-$302.00            Superior            Location, quality

      5                Rivergate Lofts               $193.00-$275.00            Superior            Project Amenities

      6                The Mears House           $243.00-$267.00            Superior            Location

      7                Durango Uptown            $200.00                         Superior            Location

      8                La Campanella               $250.00-$276.00            Superior            Location

      9                Villa Escalante              $161.00-$182.00            Similar              Location, quality

                        Subject Developer          $164.00-$174.00            Similar 

Comparables 2 and 3 are inferior with unit prices from approximately $160.00 to $180.00 per square foot.  These projects indicate market pricing for the subject units of at least $180.00 per square foot.  Superior projects are priced from $193.00 to $302.00 per square foot, indicating market pricing of less than $190.00 per square foot for the subject.  Comparables 1 and 9 are the most similar price from $161.00 to $200.00 per square foot, with a predominant pricing from $182.00 to $186.00 per square foot.  These two projects suggest pricing of approximately $185.00 per square foot for the subject units.

 

The subject developer’s pricing is toward the lower end of the range among the comparables.  It is common for some developers to price units below typical market levels in order to generate high demand when a project is first introduced.  We believe a typical investor would project higher unit pricing in line with market prices.  

 

Conclusion of Unit Prices

The subject’s market pricing for the units is concluded as follows.  Larger units are typically priced lower per square foot than smaller units.  Based on this analysis, we have concluded market prices of $175.00 per square foot for the 2,200 square-foot units and $185.00 per square foot for the 1,780 square-foot units.  Revenues from unit sales is projected as follows:

 

                    Unit           Unit           Beds/          Living Area       Concluded               Price

       #           Type          #               Baths          Size (SF)         Market Price            Per SF

       1           A              51             3/2.5           2,200               $385,000                 $175.00

       2           A              52             3/2.5           2,200               $385,000                 $175.00         

       3           A              53             3/2.5           2,200               $385,000                 $175.00

       4           A              54             3/2.5           2,200               $385,000                 $175.00

       5           A              55             3/2.5           2,200               $385,000                 $175.00

       6           A              56             3/2.5           2,200               $385,000                 $175.00

       7           A              57             3/2.5           2,200               $385,000                 $175.00

       8           B              39             2/2.5           1,780               $329,300                 $185.00

       9           B              40             2/2.5           1,780               $329,300                 $185.00

       10         B              41             2/2.5           1,780               $329,300                 $185.00

       11         B              42             2/2.5           1,780               $329,300                 $185.00

       12         B              43             2/2.5           1,780               $329,300                 $185.00

       13         B              44             2/2.5           1,780               $329,300                 $185.00

       14         B              45             2/2.5           1,780               $329,300                 $185.00

       15         B              46             2/2.5           1,780               $329,300                 $185.00

                                                                       29,640             $5,329,400              $179.80 average

 

       The overall average unit price of $179.80 is within the ranges of the market comparables and well supported.  We believe the developer’s pricing is below market.  We have projected higher unit prices.