Page 1

Section V – Statements of Estimated Annual Operating Results

V-19

Port Lawrence Hotel Palm Springs VALUATION - DISCOUNTED CASH FLOW Unrounded Number of Projected 11.00% Present Period Months NOI PV Factor Value 2015 12 $ 3,836,000 0.900901 $ 3,455,856 2016 24 4,698,000 0.811622 3,813,002 2017 36 5,618,000 0.731191 4,107,833 2018 48 6,177,000 0.658731 4,068,981 2019 60 6,382,000 0.593451 3,787,406 2020 72 6,583,000 0.534641 3,519,541 2021 84 6,776,000 0.481658 3,263,717 2022 96 7,004,000 0.433926 3,039,221 2023 108 7,225,000 0.390925 2,824,431 2024 120 7,443,000 0.352184 2,621,309 Reversion $87,624,333 0.352184 30,859,930 $65,361,229

Year 11

Present Value of the TOT Rebate

$15,043,079

ROUNDED

$80,400,000

Value of the Reversion NOI Before Property Taxes

$

8,540,000

Terminal Capitalization Rate Effective Levy Rate

8.500000% 1.100000%

Combined Cap Rate

9.600000%

Indicated Value at Reversion (Fee Simple Interest) Less Selling Costs Net Reversion

$

88,958,333 (1,334,000) 87,624,333

Thus, based on the income generated from the hotel operations, retail rental income, and the full value of the TOT rebate, we are of the opinion that the estimated market value upon completion of the subject as of January 1, 2015 is approximately $80.4 million. Valuation Upon Stabilization In addition in deriving the subject’s stabilized value, we must also calculate the present value of the future TOT rebate monies that will be paid to ownership by the City of Palm Springs in the future years following stabilization. As noted previously, the developer’s agreement with the City provides for a term of 30 years, covering the time period from the subject’s opening in 2015 to 2044. Being that the prospective stabilized value of the proposed subject was based on the subject reaching stabilized levels in 2018, we have calculated the present value for the TOT rebate contributions to the subject for years 2018 to 2044, or over the remaining 27year operation period. Similar to the upon completion valuation, we have also utilized a discount rate of 8.0 percent for this calculation.

Proposed Port Lawrence Hotel, Palm Springs, California


Section V – Statements of Estimated Annual Operating Results

V-20

Proposed Port Lawrence Hotel – Value of the TOT Rebate Operating 11.9% %To Discount Rate Present Years Years TOT Owner @ 8.0% Value 1 2018 $1,468,698 75% 0.735030 $809,653 2 2019 1,514,394 75 0.680583 773,003 3 2020 1,559,971 75 0.630170 737,285 4 2021 1,605,548 75 0.583490 702,616 5 2022 1,655,766 75 0.540269 670,919 6 2023 1,705,865 75 0.500249 640,018 7 2024 1,756,083 75 0.463193 610,055 8 2025 1,808,765 75 0.428883 581,811 9 2026 1,863,028 75 0.397114 554,876 10 2027 1,918,919 75 0.367698 529,187 11 2028 1,976,487 75 0.340461 504,688 12 2029 2,035,781 75 0.315242 481,322 13 2030 2,096,855 75 0.291890 459,039 14 2031 2,159,761 75 0.270269 437,787 15 2032 2,224,553 75 0.250249 417,519 16 2033 2,291,290 75 0.231712 398,190 17 2034 2,360,029 75 0.214548 379,755 18 2035 2,430,830 75 0.198656 362,174 19 2036 2,503,754 75 0.183941 345,406 20 2037 2,578,867 75 0.170315 329,415 21 2038 2,656,233 75 0.157699 314,165 22 2039 2,735,920 75 0.146018 299,620 23 2040 2,817,998 75 0.135202 285,749 24 2041 2,902,538 75 0.125187 272,520 25 2042 2,989,614 75 0.115914 259,903 26 2043 3,079,302 75 0.107328 247,870 27 2044 3,171,681 75 0.099377 236,395 TOTAL $12,640,940

Based on the subject’s location, facilities, and quality level we are of the opinion that a capitalization rate of 8.25 percent, applied to our stabilized year NOI estimate is appropriate to value the subject. Based on our projection of net operating income for a stabilized year, and the selected overall capitalization rate, the market value of the subject as if stabilized is estimated to be as follows. Port Lawrence Hotel Palm Springs Stabilized Value Conclusion Year of Stabilization Stabilized NOI before Property Taxes & TOT Rebate Stabilized Capitalization Rate Effective Levy Rate Combined Cap Rate Value Before TOT Rebate Present Value of Remaining TOT Rebate

2018 $6,917,000 8.25% 1.10% 9.35% $73,978,610 $12,640,940

Value (Rounded) as of January 1, 2018

$86,600,000

Thus, based on the income generated from the hotel operations, retail rental income, and the value of the remaining TOT rebate, we are of the opinion that the estimated prospective market value as stabilized of the subject as of January 1, 2018 is approximately $86.6 million.

Proposed Port Lawrence Hotel, Palm Springs, California

pkf study  

pkf study pkf study