Appraisal Report of Park at San Tan, Chandler, Arizona

  • Property Overview

    • Location: Park at San Tan, 3075, 3225, 3235, and 3245 West Ray Road, Chandler, Arizona 85225
    • Property type: Mixed-use (Multi-tenant office and retail space)
    • Total area: 217,345 net rentable square feet (office) + 19,888 gross leasable square feet (retail)
    • Office: Built in 2007, 5-story Class A office building, 77.8% leased
    • Retail: Built in 2006, three 1-story retail buildings, 100% leased

  • Market Value Analysis

    • Overall consideration: $65,000,000 (currently under contract)

    • Market value conclusion (Office):

    • As Is Value (Leased Fee Interest) as of Nov 23, 2020: $60,500,000

    • As Stabilized Value (Leased Fee Interest) as of Nov 23, 2022: $69,000,000

    • Market value conclusion (Retail):

    • As Is Value (Leased Fee Interest) as of Nov 23, 2020: $7,000,000

    • As Stabilized Value (Leased Fee Interest) as of Nov 23, 2022: $7,600,000

  • Portfolio Conclusion

    • Total Market Value (Portfolio):
    • As Is Value: $67,500,000
    • As Stabilized Value: $76,600,000

  • Impacts of COVID-19

    • Market affected nationally; recovery timelines uncertain
    • Appraisal prepared under the guidelines of USPAP and FIRREA
    • Recommendations for ongoing market value assessments due to economic instability

  • Strengths and Opportunities

    • Above-average historical occupancy
    • Excellent freeway access (Ray Road and Loop 101)
    • Multi-tenant structure with a stable income stream from leases
    • Comparatively less severe employment loss in Phoenix versus other metropolitan areas

  • Weaknesses and Threats

    • Higher than typical near-term capital expenditures/deferred maintenance observed
    • Office leasing below stabilization levels, higher vacancy rates anticipated post-COVID
    • Increased uncertainty regarding economic recovery due to pandemic

  • Market Conditions

    • Projections indicate gradual return to normalcy with pent-up demand post-COVID
    • Evaluation of risk in investing in similar properties advised

  • Valuation Standards Applied

    • Conformance to Uniform Standards of Professional Appraisal Practice (USPAP)
    • Recommendations to review for changing market conditions regularly

  • Owner and Transaction History

    • Current ownership by The Realty Associates Fund X, L.P.
    • Previous transaction price: $68,000,000 date: Aug 22, 2014

  • Occupancy Analysis

    • Office: Current occupancy at 77.8%, target stabilization at 93.0%
    • Retail: 100% leased and historically stable occupancy

  • Tenant Composition

    • Notable tenant: NCS Pearson, Inc. (91,111 sq. ft. until Feb 2026)
    • Overall tenant mix primarily local and regional.