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<br />Abatements #4230 & #4231 - Kmart Properties Located on 13th Avenue S & University Dr S
<br />
<br />8
<br />
<br />The following table provides an assessment comparison as well as the applicant's opinion of
<br />value. The applicant, or Burr Wolff LP, as represented by JP Rand, requested this review
<br />on behalf of the lessee, or Kmart Corp; the owner's, Fargo Venture Corp. and Tri-City
<br />Assoc. L TD, did not request this review.
<br />
<br />Kmart Store Assessment Comparison
<br />
<br />Store
<br />Kmart -13th Ave S
<br />Applicant's Value
<br />
<br />Applicant's
<br />Year Assmt Size Size Assessment
<br />2000 95,096 $ 4,792,000
<br />2000 94,950
<br />
<br />Applicant's
<br />Value ValuelSF
<br />$ 50.39
<br />$ 3,4/)9,600 $ 35.91
<br />
<br />Kmart Plaza - University Drive S Segments:
<br />Kmart Bldg (wiLand & Paving) 2000
<br />Plaza Strip Center 2000
<br />Burger King 2000
<br />Fastbank ATM 2000
<br />
<br />Total Segments 1-4:
<br />Applicant's Value
<br />
<br />92,800
<br />12,500
<br />4,169
<br />60
<br />109,529
<br />
<br />$
<br />$
<br />$
<br />$
<br />$
<br />
<br />2,883,000
<br />316,000
<br />356,000
<br />19,000
<br />3,574,000
<br />
<br />$
<br />$
<br />$
<br />$
<br />$
<br />$ 3,170,400 $
<br />
<br />31.07
<br />25.28
<br />85.39
<br />316.67
<br />32.63
<br />30,lS
<br />
<br />lOS.lS6
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<br />Based on comparable sales, the current value on both Kmart properties are considered
<br />reasonable estimates of market value. It should also be noted the 13th Avenue Kmart is
<br />currently listed for sale with a local broker at $7,000,000 or $73.61 per square foot of building
<br />area.
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<br />LEASE AND INCOME COMPARISON - KMART PROPERTIES
<br />
<br />The Kmart representative submitted an income worksheet to support a request for a lower value.
<br />The mechanics of the income approach is to calculate a gross income based on typical rents,
<br />subtract typical operating expenses to arrive at a net income available to the property, and
<br />capitalize that net income into an estimate, or indication, of value. The calculations utilized by
<br />the applicant are recapped in the following grid:
<br />
<br />Applicant's Income Calculations with Incorrect Buildin2 Sizes
<br />
<br />Store
<br />13th Ave S Kmart
<br />University Dr S Kmart Plaza
<br />
<br />Size Rent/SF Gross Rent Expense Indicated Value Value/SF
<br />94,950 $ 5.00 $ 474,750 $ 99,697 $ 3,409,600 $ 35.91
<br />105,156 $ 4.31 $ 453,364 $ 104,620 $ 3,170,400 $ 30.15
<br />
<br />As previously indicated, our present value on 13th Avenue S Kmart is $4,792,000 and the
<br />University Drive S Kmart is $3,574,000, which are based on slightly different square footages of
<br />95,096 square foot and 109,529 respectively. It should be noted, these slight differences in
<br />building area will not significantly impact value.
<br />
<br />The table on the following page considers the existing leases on each Kmart property (which
<br />have expiration dates of 2016 for the 13th Avenue S Kmart and 2019 for the University Dr S
<br />Kmart), estimated rents for the Strip Center, and the ground lease on the Burger King (as
<br />provided by the applicant). Based on a review of the major (Kmart) leases, the tenants are
<br />responsible for all costs of occupancy with the exception of major maintenance. As such,
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