stanley hotel, 36 blood alley sq., vancouver

8/20/2019 Stanley Hotel, 36 Blood Alley Sq., Vancouver

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74757-09 36 Blood Alley Square, Vancouver Stanley Hotel

Narrative Appraisal of

Stanley Hotel

Located at

36 Blood Alley Square, Vancouver, BC

Prepared For

PHS Community Services Society

As at

October 19, 2012

Appraised by

Simon Poon, AACI, P. App, B.Comm

Our Reference Number

500484-12


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1111 – 11871 Horseshoe Way, Richmond BC V7A 5H5T: 604.270.8885 F:604.270.8045

December 3, 2012

Reference # 500484-12

PHS Community Services Society20 W Hastings StreetVancouver BC

Dear PHS Community Services Society:

Re: Valuation of 36 Blood Alley Square, Vancouver, BC

In response to your recent instruction and authorization, Campbell & Pound Ltd haveappraised the referenced properties with the objective of estimating the current marketvalue of the fee simple interest. The data, information, and calculations leading to thevalue conclusion are incorporated in the Narrative report following this letter. Thereport, in its entirety, including all assumptions and limiting conditions, is an integral partof and inseparable from this letter.

As a result of our investigation and analyses, our final opinion of value as at October 19,2012, subject to all assumptions and limiting conditions contained herein, is as follows:

$9,510,000

(Nine Million Five Hundred Ten Thousand Dollars)

The analyses, opinions and conclusions prepared in this report were developed inconformance with our interpretation of the guidelines and recommendations set forth inthe “Canadian Uniform Standards of Professional Appraisal Practice” (CUSPAP 2003edition) and the requirements of the “Code of Professional Ethics and Standards of

Professional Appraisal Practice” of the Appraisal Institute of Canada. This appraisalreport has been prepared exclusively for PHS Community Services Society. If anyquestions arise by reason of this report, please contact the undersigned at yourconvenience.

Respectfully submitted,CAMPBELL & POUND, LTD. per:

_________________________________Simon Poon, AACI, P.App, B.Comm


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36 Blood Alley Square, Vancouver, BC I NTRODUCTION

3

TABLE OF CONTENTS

Letter of Transmittal

TABLE OF CONTENTS ...................................................................................................... 3

INTRODUCTION............................................................................................................. 4

TERMS OF R EFERENCE ..................................................................................................... 8 ASSUMPTIONS AND LIMITING CONDITIONS .................................................................... 10

FACTUAL DATA ........................................................................................................... 13

AREA DATA ................................................................................................................... 16 SITE DESCRIPTION ......................................................................................................... 18 LAND USE I NFORMATION ............................................................................................... 21 DESCRIPTION OF IMPROVEMENTS .................................................................................. 22

ANALYSIS AND CONCLUSIONS .............................................................................. 25

HIGHEST AND BEST USE ................................................................................................ 26 METHODS OF VALUATION .............................................................................................. 29 I NCOME APPROACH ....................................................................................................... 30 DIRECT COMPARISON APPROACH .................................................................................. 40 COMPARISON APPROACH – LAND .................................................................................. 61 LAND SALES A NALYSIS ................................................................................................. 62 R ECONCILIATION ........................................................................................................... 67 EXPOSURE TIME ............................................................................................................. 68 FINAL ESTIMATE OF VALUE ........................................................................................... 68 CERTIFICATION .............................................................................................................. 69

EXHIBITS AND ADDENDA ........................................................................................ 70

(A) DEFINITION OF TERMS (B) TITLE SEARCH (C) EXCERPTS FROM ZONING BY-LAW (D) QUALIFICATIONS OF APPRAISER (E) ADDITIONAL PHOTOS


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INTRODUCTION


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Subject Lane View

Subject Street View


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Aerial Photo


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EXECUTIVE SUMMARY

Property The subject is improved with a two OT heritage buildings, of twoand three storey designs. These are improved for use as 12 retailunits on the ground floor and as a 104 unit rooming house and

care facility above. The buildings appeared in average condition.

Property Address 36 Blood Alley Square, Vancouver, BC

Legal Description Lot 14, Block 2, District Lot OGT Gastown Men's ResidencePlan VAP168

PID 015-713-342, 015-713-326, 015-713-334, 015-713-318

Zoning HA-2 Gastown Historic, Heritage B(M)

Site Area 19060 sq. ft. (206.75’ x 92.19’)

Effective Improved Area +/-38112 sq.ft. (104 rooms, 12 retail unit approx. 14356 sq.ft.)

Remaining Economic Life +/- 30 years

2012 Property Assessments: Land: $1,352,001Improvements: $422,001Total: $1,774,002

2012 Gross Property Taxes: $5287.07

Neighbourhood Description The subject is located in the Gastown neighborhood

Highest And Best Use Highest and Best Use for the subject property is as aredevelopment and/or heritage restoration.

Stabilized Net Income: $552,066 per annum (based on projected stabilized rental rates)

Capitalization Rate 6.50%

Valuation Income Approach: $8,490,000

Direct Comparison Approach(As Improved): $9,510,000(As Development Land ) $9,530,000

Final Estimate of Value $9,510,000

Effective Appraisal Date October 19, 2012


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TERMS OF R EFERENCE

Purpose and Function of the ReportThe purpose of this report is to estimate the Market Value of the Fee Simple interest inthe properties legally described herein as of October 1, 2012. The function of this report

is to determine fair market value for security in first mortgage financing

This appraisal report has been prepared exclusively for PHS Community Services Societyto determine fair market value for security in first mortgage financing. Liability to othersor for any other uses is expressly denied.

The properties have been appraised free and clear of all encumbrances, financing, liens,easements and restrictions, except for those encumbrances required to permitdevelopment, subject to any leasehold interest, and as otherwise noted herein.

PROPERTY R IGHTS APPRAISED

The property rights appraised is the Fee Simple ownership in the property, except fornormal limitations.

SCOPE OF APPRAISAL

1) This report constitutes a self-contained, fully documented narrative appraisal,which has been prepared in accordance with the Canadian Uniform Standardsof Professional Appraisal Practice as adopted by the Appraisal Institute ofCanada to date. In the preparation of this appraisal we have conducted acomplete market analysis including the following steps which were taken in

the preparation of this appraisal:2) Inspected the property on October 19, 2012.

3) Surveyed the surrounding neighbourhood and documented existing land uses,access and traffic patterns, development trends and competitive facilities.

4) Reviewed the electronically obtained title search & tax assessment data forverification of ownership, property taxes and assessments.

5) Reviewed municipal zoning and land use data. Note however, no consultationwas made with City of Vancouver Planners at this time.

6) Reviewed the general market with emphasis on similar land uses in the area,

including existing inventory, potential new construction, and market rentalrates.

7) From an analysis of the site, existing improvements, land use trends andfinancial data, determined the probable highest and best use of the property.

8) Analyzed sales of comparable properties in the competitive market area, andwhere deemed appropriate, we interviewed market participants for analytical purposes.


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9) Concluded value estimates using the Direct Comparison Approach andIncome Approach.

10) Reconciled the value estimates for a final conclusion of Market Value as ofOctober 19, 2012.

DOCUMENTATION

For the purposes of this report, the following documents were relied upon:

BC Assessment Tax Report

Municipal Zoning Bylaw (included in Appendix)

Municipal Land Use Plan

BC Online Title Search (included in Appendix)

The following documents were provided by the client and were relied upon. All

information contained within these documents was assumed to be correct:

No supporting documents were received

A brief summary of some current leases was received from the client

The analysis set out in this report relied on written and verbal information obtained froma variety of sources we considered reliable. Unless otherwise stated herein, we did notverify client-supplied information, which we assumed to be correct.

No current building plan was received

No Current Leases were obtained No income or expense statements were received

No Rental details for the SRO operation were received.


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ASSUMPTIONS AND LIMITING CONDITIONS

The estimate of value in this report is based on a detailed analysis of information obtainedfrom various sources. Some of this data has required subjective interpretation and ourterms of reference have, in some instances, required us to make certain assumptions in

arriving at our value conclusion. As a result, the opinions and conclusions contained inthis report are subject to the following Assumptions and Limiting Conditions:

Terms

1. The estimated Market Value of the property appraised is based on theassumption that it would be sold on payment terms consistent with common practices in the real estate market and subject to the contractual encumbrancesoutlined in this report, unless otherwise stated.

Sources

2. The legal description of the property appraised and the dimensions and area ofthe site were obtained from several sources, including the Land Titles Office,the local municipal jurisdiction, and BC Assessments (BCA).

Legal

3. No responsibility is assumed for legal factors pertaining to the state of title orfor technical matters relating to hidden or unapparent conditions of the property, such as subsoil or structural problems which were not brought to ourattention and which may have an impact on value. Title to the property isassumed to be good and marketable unless otherwise stated.

Visual Reference

4. Maps or plans appearing in this report are included for the sole purpose ofvisual reference and should not be construed as legal surveys, since theappraiser has not completed a survey of the property, and assumes noresponsibility in connection with such matters.

Mineral Rights

5. The property rights appraised herein exclude mineral rights, if any.

Original Signature

6. This report is only valid if it bears the original signature of its author.

Compliance & Conformity

7. Unless otherwise stated, it is assumed that there are no outstandinggovernmental order or directives requiring upgrading of the property orlimiting its occupancy. It is assumed that the property is in full compliancewith all applicable federal, provincial and local environmental regulations andlaws, unless non-compliance is stated, described, and considered in theappraisal report.


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8. It is assumed that all applicable zoning, land use regulations and restrictionshave been complied with, unless non-conformity has been identified,described, and considered in the appraisal report.

9. It is assumed that all required licences, occupancy certificates, consents, orother legislative or administrative authority from any federal, provincial or

local governments have been or can be obtained or renewed for any use onwhich the value estimate contained in this report is based.

10. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is noencroachment or trespass unless noted in the report.

Hazardous Material

11. Unless otherwise stated in this report, the existence of hazardous material,which may or may not be present on the property, was not observed by theappraiser. The appraiser has no knowledge of the existence of such materialsin or on the property, and is not qualified to detect such substances.

12. The presence of substances such as asbestos, urea formaldehyde foaminsulation, or other potentially hazardous materials may affect the value of the property. The value estimate reported herein is predicated on the assumptionthat there is no such material in or on the property that would cause a loss invalue. No responsibility is assumed for any such conditions or for anyexpertise or engineering knowledge required for their discovery.

Improvements

13. We have assumed that all heating, ventilation and electrical systems, plumbingand other mechanical systems are in good working order. No responsibility isassumed for any expertise or engineering knowledge required for making such

determination.

Furniture Fixtures & Equipment

14. This appraisal report considers the market value of the real estate only and doesnot include any business that may be carried on in this subject. Anycontribution value of Furniture, Fixtures, and Equipment(FF&E) would beincluded only to the extent that such items contribute to the normal operationof the property, and are not separable as such. No list of FF&E or other chattel property was supplied to the appraisers.

Use

15. This report is intended for the use of the Addressee, and shall not bedistributed, copied or reproduced in whole or in part without prior writtenconsent of Campbell & Pound Ltd. Further, neither all, nor any part of thisappraisal report shall be used in any marketing of financing package or in anyadvertising, public relations, news, sales or other media for public or third party communication without prior written consent from an authorizedrepresentative of Campbell & Pound Ltd.


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16. The appraiser, by reason of this appraisal, is not required to give testimony,appear in court, or attend any hearing, arbitration proceeding or other meeting,unless prior arrangements have been made.

Statement of Competency

17. The professional staff at Campbell & Pound, Ltd., and Simon Poon, AACI,P.App, B.Comm, have experience in the valuation of similar properties. In thisregard, we have the knowledge and experience to complete this assignment andhave appraised and analyzed this type of property before.

EXTRAORDINARY ASSUMPTIONS & LIMITING CONDITIONS

Development Potential For the purposes of this valuation, we have assumed a buildabe area of 5.0FSR. The majority of the properties in the area show a similar density.Sales in the area have shown some higher densities, however, these arecase by case with approval from the City. The heritage designation andthe need for discussion with the City of Vancouver means that the acutaldensity will vary.

No consultation has been made with City Planners regarding thedevelopment potential of this property. We have assumed a minimalallowable density based on surrounding uses. The subject’s heritagedesignation and SRO use will restrict redevelopment. Actualredevelopment may involve heritage restoration and incentives from theCity. As no plans or proposals have been submitted at this time, we haveassumed an allowable density of 5.0 FSR.


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36 Blood Alley Square, Vancouver, BC FACTUAL DATA

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FACTUAL DATA


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CIVIC ADDRESS


LEGAL DESCRIPTION

Lot 14, Block 2, District Lot OGT Gastown Men's Residence Plan VAP168

PARCEL IDENTIFIER

015-713-342, 015-713-326, 015-713-334, 015-713-318

CERTIFICATE OF TITLE NUMBER

BV112001

R EGISTERED OWNERS IN FEE SIMPLE

The property is registered to City of Vancouver

R EGISTERED CHARGES A title search revealed the following charges on title:

HERITAGE DESIGNATION BY-LAW, VANCOUVER

PARTY WALL AGREEMENT (1925)

3EASEMENT AND INDEMNITY AGREEMENTS (1970, 1970, 1970)

OPTION TO PURCHASE (2003, PORTLAND HOTEL SOCIETY)

No further investigation has been made. A copy of the title search has been

included in the appendix. Note that this should not be construed as a legalopinion of title. We did not obtain a legal opinion of the state of title or any of theencumbrances, we have not read the documents registered against title. Ourappraisal therefore assumes that title is good and marketable and thatencumbrances do not affect the value of the appraised interest.

ASSESSMENT INFORMATION

BCA Roll Number: 026589172650000

Actual Assessment Values (2009)BC Assessment (Land) $1,352,001BC Assessment (Improvements) $422,001BC Assessment (Total) $1,774,002

BC Assessed Taxes $5287


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SALES HISTORY

A search of public records indicates that the last transfer of the subject propertytook place in 3/1/2003 under transfer document BV112001 for the amount of$2,000,000. This was reported as a non-market transaction. A search on the MLSsystem revealed no active listings for the subject


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AREA DATA

NEIGHBOURHOOD DATA

Neighbourhood Map of Subject Property

NEIGHBORHOOD SUMMARY

The subject property is located at the edge of the Gastown Historic section of thedowntown east side of the City of Vancouver. The area which comprise the immediatelocation are a collection of old factory and hotel buildings which have been convertedinto stylish retail, office properties, plus numerous restaurants, and mixedcommercial/residential buildings. The entire neighborhood carries a Heritage designationwhich strictly controls development in preserve the character of the neighborhood.

The streets which are considered to form the Gastown neighborhood include Abbot,Cambie, Water, and Carrall Streets. Except for Water Street which traverses theneighborhood, all the others are no more than two blocks long.

Water Street between the square and its end at the intersection of Cordova and RichardsStreets, is the main commercial and tourist oriented section of Gastown. Throughout theneighborhood extensive upgrading of old factory and hotel buildings is underway.Development is spilling out of the specific Gastown blocks onto streets south of the


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neighborhood. All of this new development activity is slowly improving what isconsidered to be one of the poorest and most run down districts-the Downtown East Side.

In general the subject neighborhood is a unique area, a tourist destination, and anemerging inner city residential neighborhood. Full municipal services are available in the

city core. These include regular police/fire services, sanitary and storm sewers, centralwater supply, electricity, natural gas source, communications lines. Local public transitservice operates on the main routes along Hastings Street adjacent to the Gastown interior blocks. The Waterfront SkyTrain rapid transit station is to the west of the end of WaterStreet.

The City of Vancouver has instituted the Carrall Street Greenway Concept DesignProgram. The goal of this program has to create a greenway that connects Gastown, theDowntown Eastside, and with a greenway that completes the downtown recreationalseawall loop by linking False Creek to Burrard Inlet and a greenway that encouragesactive ground floor uses and facilitates economic revitalization and community

development.

The completion of the Woodwards project has spurred increased revitalization of theneighbourhood, with recent refurbishment of the properties along Hasting Street andincreasing retail tenancy. The section of Hastings Street between Cambie Street andCarrall Street remains in the revitalization phase, but appeal of the properties in this areais steadily increasing.


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Figure 4 Plan of Subject Property

LOT SHAPE AND SIZE

Shape of lot: RectangularTotal Area: +/- 19060 sq. ft.

Total lot area is from current municipal tax records. (note previoustax records had shown an area of 18783 square feet)

LOT FRONTAGE AND DEPTH

Frontage: +/- 206.75 ftDepth: +/- 92.19 ft

TOPOGRAPHY

As at the date of inspection, the subject was generally level.

We have assumed that soil conditions are stable and that the underlying geology isadequate to support the existing improvements on the subject site. Norepresentations, however, are made as to soil conditions.

SERVICES AND ACCESS Access: The subject property include a pedestrian access from

West Cordova Street as well as from Blood AlleySquare. Vehicular access is available from the TrounceAlley.

Parking: The subject lot included no offstreet parking stalls.

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Traffic Patterns/Volume: The subject street had average traffic volumes alongWest Cordova, and mainly local traffic along TrounceAlley and Blood Alley Square.

VISUAL EXPOSURE

The subject property had good visual exposure to traffic along Cordova.

STREET IMPROVEMENTS & UTILITIES

Sidewalks: YesCurbs and Gutters: YesLighting: Yes

Sanitary Sewer: YesWater: MunicipalElectrical: Yes


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LAND USE INFORMATION

LAND USE CONTROLS

The subject property is zoned HA-2 District Schedule according to the City of Vancouver

“Zoning and Development Bylaw No. 3575”, as amended. (Enacted 1956)

The intent of this Schedule is to recognize the history of Gastown-the old Granville

Townsite dating back to the turn of the 20th

century and the late 1800’s, and to maintain

the historical and architectural character of the small neighborhood. Permitted uses

include a long list of commercial, institutional, residential, service, and industrial. Any

and all proposed alterations or changes to the exterior appearance of any building is

requires approval by the Development Permit Board and consultation by an approved

advisory group for the area. The entire HA-2 zone is designated a Heritage section. Someregulations include a maximum building height of 75 feet at the street line, a minimum

building height of 40 feet. Regulations with respect to setbacks, yards, site coverage, and

floor space ratios are not a part of this By-Law as many buildings are close to or over 100

years old..

Heritage Registry

The subject property is listed within the Vancouver Heritage Register, within the ‘B(M)’category.“An “M” or “P” following the building evaluation, indicates buildings orsites that are protected by a legal heritage designation by the City ofVancouver (“M”) or the Province of British Columbia (“P”). Some of themunicipally designated sites in Chinatown and Gastown may not have an“A”, “B” or “C” category. However, they may still have historic value.”

There is a Heritage Designation registered on title. The presence of the listing in theVancouver Heritage Register essentially creates the situation where it will be virtuallyimpossible to legally demolish the subject improvements.

Typically, the City is willing to negotiate re-development concessions such as density bonuses or relaxation of Parking requirements in order to retain the façade of the building.


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DESCRIPTION OF IMPROVEMENTS

Subject Property

The subject property includes two interconnected buildings, consisting of a 2 and 3 storeywood frame and masonry rooming house. The property includes 104 bedding units and12 retail units facing Cordova and Blood Alley Square. The exterior includes brick trim

with older single pane wood frame windows, and tar and gravel roof.

Site

The site includes a rear courtyard along Trounce Alley, with a open street plaza design.The courtyard includes direct access to the mezzanine level of the retail units frontingonto Cordova, as well as limited access to the SRO portion of the buildings. The front ofthe site includes a small covered landing in front of the retail units, which has been gatedfor security.

Structure & Exterior

The property includes brick/masonry construction and a three storey design over aa partial basement. The main entrance to the SRO is located at the front of the property atgrade. Each streetfront retail unit includes at grade access from W Cordova. Some of therear portions have access from the courtyard and from the 2nd floor balcony. There is arear 2

nd floor balcony running the length of the building. Windows were mainly older

single glaze wood frame designs, with some updated windows and commercial display


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windows for the retail units. The roof was not viewed and is assumed to be a torch onmembrane.

Ground Floor

The ground floor retail includes main entrances off of Cordova Street, with recessed andgate secured entryways. There are approximately six individual retail units, althoughonly four units were inspected. Each includes a split level design, with a ground levelstorefront portion and rear upper and lower section. Each unit is reported to have a 2pcwashroom.

There were also six reported retail units facing the rear of the building, fronting ontoBlood Alley. Original submitted plans show a total of 9 retail spaces with access to bothCordova and Blood Alley Square. The current configuration is reported to have sixindividual units facing each side of the building, for a total of 12 units. Note that wewere unable to confirm this at the inspection due to lack of access to some of the units.

Rooming House

The 2nd through 3rd floors included 104 rooms of varying sizes. Rooms were generallyin average/fair condition, with linoleum floors, painted drywall and standard lighting.Most of the units included a single sink and closet. Heating was provided by hot waterradiators throughout the buildings.

Common area facilities included 6 shared washrooms, 2 shared kitchens, 2 offices andcommon area utility and laundry rooms. The central area between the two buildingsincludes a glass skylight atrium area as well as open hallways and activity rooms. Otherfeatures include roughly 10’ ceilings, numerous balconies overlooking the lane, someolder hardwood flooring and large display windows facing Cordova.

Overall, the property was in average condition, with some recent maintenance andupkeep upgrades evident.

Total area is derived from plans submitted by the owners. Estimated main floor retailarea is 14,356 square feet. Second floor area is estimated at 14,356 square feet. 3rd floorarea is estimated at 9400 square feet. The total area of 38112 does not include the basement portions of the retail spaces.

FLOOR AREA Number of stories: 3 plus basementTotal Units: 116Gross Building Area (GBA): +/-38,112 ft

2 plus basement


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Total Retail Leaseable Area: +/-14356 ft2

Total Rentable Units: 116

104 rooms

12 retail units, +/-14356 square feet

The above descriptive information is for the purposes of this report only. It is not to beregarded as being an architect’s survey. All dimensions/floor area estimates are subjectto survey. Electrical, mechanical, plumbing, and fire and security protection equipmentwere not tested by us for operation. These are presumed to be in operating order.

EFFECTIVE AGE & OVERALL CONDITION

The subject building was reported to be built in the 1900s.. The client was unable to provide a summary of recent renovations. However, there is evidence of some newfeatures and fixtures:

The retail units vary in condition and repairs, from fair condition in some of theoffices facing the alley, to recently renovated and good condition in some of theretail units off of Cordova.

The SRO portion included some renovations in the interior cosmetics. Noindication of when major systems and upgrades were received.

As of the date of our inspection, the subject property improvements appeared to be inaverage to fair condition.. No roof, structural, mechanical or other professionalinspections were made (See Assumptions and Limiting Conditions).

The original total economic life of buildings similar to the subject property is generally inthe vicinity of 65 years, according to our information. This is the time period over whichthe improvements generally contribute to the value of the overall property.

The exterior, and the visible interior of the subject property appeared to have received below average maintenance during this period. We have estimated that the effective ageis approximately +/-35 years.

The subject is considered to have an estimated remaining economic life expectancy of+/-30 years.

The estimate of remaining economic life is assuming acceptable maintenance standard iscontinued. This remaining economic life takes into account the renovations and theupkeep that has taken place on the property.


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36 Blood Alley Square, Vancouver, BC A NALYSIS ANDCONCLUSIONS

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ANALYSIS AND CONCLUSIONS


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36 Blood Alley Square, Vancouver, BC A NALYSIS ANDCONCLUSIONS

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HIGHEST AND BEST USE

The concept of Highest and Best Use represents the underlying premise on which realestate value is based (refer to appendix for definition).

The determination represents an opinion, rather than a fact, based on analysis and judgement, giving consideration to the following types of factors affecting real property:

Marketability;

Profitability;

Financial Constraints;

Statutory Limitations;

Regulatory Controls;

Title Restrictions;

Physical and Functional Limitations.

It is to be recognised that in cases where a site has existing improvement on it, the highest

and best use may very well be determined to be different from the existing use. Theexisting use will continue, however, unless and until land value in its highest and best useexceeds the total value of the property is its existing use. Implied within these definitionsis recognition of the contribution of that specific use to community environment or tocommunity development goals in addition to wealth maximisation of individual propertyowners.

It is customary that the highest and best use of the land to be determined separately fromthe highest and best use of the improvements. The highest and best use of the land isconsidered with respect to four factors, legal permissibility, physical possibility, financialfeasibility and maximum profitability.

1) Legal Permissibility“A test of legal permissibility helps the appraiser

determine which uses are permitted by current zoning,

which uses could be permitted if a zoning change were

granted, and which uses are restricted by private

restrictions on the site.”

2) Physical Possibility“A test of physical possibility addresses the physical

characteristics of the site that may affect the

highest and best use. The size, shape, terrain, andaccessibility of land and risk of natural disasters

affect the uses to which land can be put.”

3) Financial Feasibility“Income producing properties are said to be

financially feasible if the net revenue capable of

being generated from a use is sufficient to satisfy


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the required market rate of return on the investment.

Other types of properties rely on an analysis of uses

that will create a value or result in a profit equal

to or greater than the amount needed to develop and

market the property.”

4) Maximum Profitability“This test addresses not only the value created under

the maximally productive use but also the costs to

achieve the value, if any.”

Discussion - As if Vacant

The highest and best use of the land as vacant is considered with respect to four factors:

(1) Legal Permissibility: the subject property is zoned HA-2. This zoning allows a

building height of 75 feet, with no specific density allowance. Estimated effectivedensity is between 5.0 and 6.0 based on building height requirements. As each propertyis a heritage building, new development is limited. If the property were vacant, a highdensity residential use or mixed use residential would be likely.

(2) Physical Possibility: given the regular shape and size of the site, as well as thelocation, potential improvements are varied. The site has access, topography and area toaccommodate a variety or residential and mixed uses. The traffic along Cordova would be sufficient for commercial uses.

(3) Financial Feasibility: based on our analysis of the subject property and thesurrounding uses, it is our opinion that it is financially feasible for a high densitydevelopment.

(4) Maximum Profitability (as vacant): amongst the legally permissible andfinancially feasible uses the maximum profitability is as a mixed use retail and residentialdevelopment.


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Discussion - As Improved

Existing improvements are built up to about 2.0 FSR and are in average condition. TheGastown area has seen rapid redevelopment and revitalization. The property would be a prime location for high density retail and residential development.

However, the subject property’s existing heritage designation and rental assisted housinguse makes any redevelopment of the property difficult. The City’s heritage revitalization program would undoubtedly be involved in any redevelopment attempts. In addition, theassisted housing would be retained or relocated, as the City is currently intent on preserving rental assisted housing in this area.

As a result, the most likely use of the property would be as a heritage restoration with anagreement with the City for a cash allowance or density transfer.

According to the City of Vancouver, “Any redevelopment of heritage and SRA buildings

is subject to special review and conditions, to ensure that established objectives are met.In addition, Gastown (HA-2) and Chinatown (HA-1) are municipally designated historicareas, and have specific guidelines that apply to all development.”

The subject would be redeveloped on site specific agreement with the City. Noredevelopment plans or consultation have been made thus far with the City. For thisappraisal report, we assume that the highest and best use of the property would involve aredevelopment with an effective FSR of 5.0, whither this is achieved through densitytransfers or other incentives.


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METHODS OF VALUATION

The appraisal process involves a systematic analysis of the factors that bear upon thevalue of real estate. The three common approaches, namely the Cost Approach, theDirect Comparison Approach, and the Income Approach, are available for analysis.

INCOME APPROACH

Under the Income Approach potential gross income is estimated for the subject, based onthe existing income generated by the subject, and/or rental rates for similar use propertiesin the area. An income/expense statement is developed, based on area vacancy rates andthe operating expenses of the subject and those of similar properties. The net operatingincome derived from this process is then capitalised at a market overall rate to arrive atthe indication of value by the Income Approach.

DIRECT COMPARISON APPROACH

Under the Direct Comparison Approach, also known as the Market Approach, a marketvalue per unit for the subject is derived from comparison to similar properties, utilizingthe selling price and an appropriate unit of comparison. Such units of comparison mayinclude either price per: apartment; square foot; acre of land area; price per build-ablesquare foot of potential building area for vacant sites; and, price per square foot of building area for developed sites. For most categories of property, the DirectComparison Approach is considered to be a reliable and appropriate method of Appraisal.

COST APPROACH

In the Cost Approach, the land value is typically estimated from comparable land salesfound throughout the general area. The reproduction cost new of the improvements isestimated from cost data contained in office files and from the national cost service ofMarshall-Swift Valuation Services. The reproduction cost new (less accrueddepreciation) of improvements is added to the value of the land, contribution value of siteimprovements and entrepreneurial profit to reach a value via the Cost Approach. TheCost Approach is most appropriate in the valuation of the full bundle of rights in real property, i.e. fee simple.

Although recognized as one of the three main methods of valuation, the Cost Approach isconsidered inappropriate for use with properties exceeding fifteen years of age unlessthey are of a class of property not normally bought and sold on the market. The CostApproach can be employed so as to show a breakdown between land and building valueif requested by the client.

SELECTION OF APPRAISAL METHODS

The following approaches will be used in this report: Direct Comparison Approach andIncome Approach.


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INCOME APPROACH

The first step in the completion of the income approach is to ascertain the income earningcapabilities of the subject property. Under this approach, potential gross income is estimated forthe subject based on the existing leases and/or rental rates for similar use properties. A potential

income stream is developed based on area vacancy rates, the operating expenses of the subject, plus similar properties. The net operating income derived from this process is then capitalized ata market rate to arrive at the indication of stabilized value by the Income Approach.

In addition to information on any leases in-place at the subject property, a survey of competing properties was conducted. These comparable rental properties help establish the market rentalincome applicable to the subject. To this end we have surveyed areas in the Lower Mainland forrecent leases of similar type and have selected the following indicators from a wider range as being most representative of the subject property’s earning capability.

SUMMARY OF PRESENT LEASES

No rent roll or lease statement was received. The client reports that 93 rooms are rented out for$375 per month in the Stanley Hotel. Details of the commercial rentals received from the clientare as follows:

DTES Janitorial Supplies: $1000 per month gross, month to month

Nightclub: $5200 per month gross, month to month

Salome Community Office: $600 per month gross, month to month

Community Thrift Store: $600 per month gross, month to month

Tenancy and Income details for both portions of the subject are incomplete. The commercial

leases appear to be short term and below market. We will estimate market rents for both portionsof the property.


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ANALYSIS OF LEASE INFORMATION

In analyzing market rental rates for the subject, we have utilized the comparison approach byresearching recent rents and asking rents for similar properties to the subject.

The primary factors affecting rental rates are:1) The level of competition offered by similar properties;2) Location factors;3) Project amenities and appearance; and4) Landlord’s leasing policies and procedures.

Room Rentals

# Address City Units Average Indicated Rental Rate Type Mix Comments

1103-105 Hastings

StVan 17 units $350-450 gross Rooming House

15 sleep.

2 housekeep

Rooming house located at E

Hastings and Columbia. Two

double occupancy renting at $450

2 568 Powell St Van 17 units $325-600 average gross Rooming House16 housekeep.

1 self contained

DEOD rooming house. Older

building. Housekeeping units rent

between $325 and $400.

3 259 Powell St Van 34 units $357 average gross Rooming House 34 sleep.DEOD rooming house. Older

building.

4 466 Union St Van 16 units $400 average gross Rooming House14 sleeping

2 self contained

Chinatown rooming house. Older

building

5 565 Powell St Van 11 units $350-$375 average gross Rooming House 11 housekeepingDEOD rooming house. Older

building, some renovations

6 90 Alexander Van 59 units $410-$550 gross Rooming House45 housekeeping

14 self contained

Gastown rooming house. Older

building

7 488 Carrall Van 98 Units$400-$525 gross

$600 gross (SC)Rooming House

14 self contained

84 Sleep.

Downtown rooming house. Older

buildng. Central location. Some

double rooms

8 369 Columbia Van 27 Units $475 average gross Rooming House 27 sleepingNewly Renovated DTES rooming

house

9 230 Princess Van 12 units $325 average gross Rooming House 12 sleep.DEOD rooming house. Older

building.

10 872 Hastings E Van 8 units $350-$450 gross Rooming House

4 1Bed

3 Bach

1 Retail

Long term tenants, 3 parking

stalls, 1 bedroom units are self

contained with kitchens and

bathrooms. No reported vacancy.

11 221 E Georgia St Van 13 units $302 average gross Rooming House 13 unitsChinatown rooming house. Older

building. Busy commercial area

12 221 Abbott Van 91 Units $370 average gross Rooming House 91 sleeping unitsGastown rooming house. Older

building

13 1125 Granville Van 76 units $390-$450 gross Rooming House 76 SleepingDowntown rooming house. Older

buildng. Central location

14 316-324 Powell Van 79 Units $375-$425 gross Rooming House 78 Sleeping UnitsDTES rooming house. Older

building.

Summary of Rental Comparables

Rates for rooming houses run in the general rate of $350 per unit to $600 per unit. The higherend rates of $550 and $600 are for fully self contained units with one bedroom, kitchen and bathroom. The lower rates at around $375 are generally for smaller sleeper units and propertiesin poor condition.


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For rooming houses, there are three basic types of room: sleeping units, which includes just asingle bedroom with shared facilities; housekeeping units with a bedroom and kitchenette andshared bathrooms; rarely seen are self contained units with a bedroom, kitchen and bathroom.Most SROs have sleeping or housekeeping units with shared washroom faculties on each floor.

For a large percentage of SRO rentals, all furnishings, including bedding are included in therental. Some operations included a cleaning service for the bedding, cablevision, and in somecases, common cooking facilities. These are widely varied and differ from property to property.The subject units provide beds and include utilities, but no cablevision, telephones, laundryfacilities or other services.

Note that these rates are considerably lower than the average rental rates for apartment units,which rent for about $824 for one bedrooms (2010 CMHC Rental Survey for East Hastings) andfor bachelors in the area, which rent for an average of $762 per month. The average apartmentunit includes a living and dining area, making it superior to the self contained units. They also

differ in that this rate does not include electricity, whereas rooming house rates typically includeall utilities.

Excerpt from CHMC Rental Survey 2010

The subject consists of older housekeeping rooms. The rooms are average in size and condition.Utilities were included but no additional services were provided. The building did include ashared kitchen and the ratio of rooms to washrooms are typical in this type of property. Themedian rent in the apartment is $375 per room per month.

East Hastings average rates for Bachelors units are $734 in 2009. The immediate location isThe Carnegie Community Action Project, a non-profit group advocating social housing in theDowntown Eastside, has provided annual reports on SRO housing and rents since 2008. In their2011 report, they have provided some significant statistics:

Only 7% of rooms surveyed included rents that were under $375 per month, down from

12% in 2010 and 29% in 2009 47% of the rooms surveyed had rents of $425 and above Of the 90 hotels checked, only 17 had vacancies

Average rents for privately run renovated rooms were reported at $400 to $500 per month, withsome reported at $700 for the newer buildings.


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The CCAP report is one of the most comprehensive rental surveys available for SROs, as itconsists of direct primary research for 90 buildings and 3600 rooms in the Downtown Eastside.

We have estimated market rates based on the reported size, design and layout of each room as$375 per room per month.

Retail Lease

Address City TypeArea

(sf)Date Net Rate Comments

1 33 W Hastings Van Retail 3900 Ask 2012 $10.00Older ground floor retail space. Asking

$10 plus $5 CAE

2 573 E Hastings Van Retail 1587 2010 $17.00 Older streetfront retail. $2248/mo net

3 386 Powell St Van Retail 2000 Ask 2012 $20.00Ground floor retail space, DEOD. $3.80

CAE

4 280 Carrall Van Retail 6802007, 5years

$20.72Ground floor retail space in mixed use

building. $8 CAE.

5291-297 E

GeorgiaVan Retail 3008 2011 $21.94

HA1A zoned ground floor retail spacegood exposure. Bonuse basement space.

$7.70 CAE

6 158 Powell St Van Retail807 to1195

2012 $22.00Four retail street front spaces. New shellretail. HVAC, U/G Parking. $11 CAE

7 320 W Cordova Van Retail 2957 2009 $24.00Streetfront Gastown retail. Older heritage

storefront, high ceilings. Estimated $8CAE

8 243 Union Street Van Retail 1047Term

undisclosed(2011)

$24.07 Newer ground floor retail space.Chinatown. Reported CAE $4.58

9 495 Main Van Retail 2000July 2008,

10 yearterm

$24.25Corner café located in Chinatown. High

exposure, good improvements

10122 W Hastings,

MainVan Retail 9000 Ask, 2011 $25.00

Newly renovated building across fromWoodwards. Demisable to 3000 sf.

11 636 Main Street Van Retail 10043 years,

2008$26.07 Ground floor retail space, Chinatown.

Retail Lease Rates

The subject ground floor includes one retail unit with estimated leasable areas of about 14356square feet, divided into twelve tenancies, averaging 1196 square feet per tenancy. The front

spaces have high ceilings with average streetfront exposure. However, the rear spaces are morelimited in exposure and access.

Streetfront retail units in the neighborhood are obtaining rates between $20 and $35 per squarefoot with widely varying rates between the older retail and the newer boutique retail. In theneighbouring area and in Chinatown, units are listed for lease for amounts between $10 and $20 per square foot.


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At the higher end of the range are the newly renovated retail storefront units along HastingsStreet, across from Woodwards. These appear to be the upper end of the retail rates in the area.The majority of spaces appear to be fairly stable at around $20 to $25 per square foot forstreetfront retail in reasonable condition. There appears to be a significant drop-off from the 100 block of West Hastings to the subject block in terms of tenant quality and appeal. However,

given the proximity, there should be a trickledown effect as revitalization of the area continues.

The lower listing, in the neighboring building is an older space that appears to require extensiverenovations. The lower rate is an indication that some tenant improvements would be necessaryfor the space to be functional. The remainder of the comparables are fairly consistent, around$20 to $25 per square foot.

In the current market, the area remains a less desirable but improving area of the downtown core,with a mix of older businesses. We have adopted a market rate of $20 per square foot net forthe subject spaces. This is at the mid end of the market and reflects the location appeal andexposure for the subject area and the subject street.

VACANCY and BAD DEBT

Potential income reflects the properties full income generation potential. However, income properties are rarely, if ever, fully occupied over their economic lives and for this reason vacancyand collection losses must be considered. This factor, the "vacancy rate" is normally expressedas a percentage. While this factor takes into account the current level of vacancies it is in effect along-term average and may well be at variance with either the typical vacancy in the area of thesubject or, indeed, the actual level of vacancies within the subject.

Vacancies for apartment units typically are in the 0.5% to 2% range for Vancouver. However,rooming houses show higher vacancies and turnover.

Rooming houses in the area show vacancies that have dropped in the past few years as rents inVancouver has increased steadily. The lower rental SROs are generally fully occupied.However, turnover and bad debt would be a larger factor without the existing governmentassistance programs. Historical vacancy and bad debt rates are in the 10% to 20% range.

The subject is reported at 89% occupancy, with a reported 11 vacancies out of 104 units.However, the operation of the SRO as an emergency shelter may distort these figures. We haveobserved a typical vacancy for SROs in the area of about 3% to 6% for the newer or bettermaintained SRO rentals.

The vacancy estimate reflects long term vacancy over the life of the property. We estimate along term stabilized rate of 6% vacancy/bad debt. This factor will be adopted for this analysis.

The retail portion of the property has an average traffic location and has moderate demand.There is average retail vacancy in the neighborhood. We estimate the retail vacancy at 3%.


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Bad debt allowance is related to vacancy rate and is a risk factor that arises from leasing and thereceiving of rents. The average for bad debt allowance is 0.5 to 1%. The subject would likely bemuch higher than this if we disregard the government subsidized nature of the tenants. Thisfactor has been included in the vacancy estimate

OPERATING EXPENSE ANALYSIS

For the income analysis, an expense statement must be reconstructed, as follows in the NOIchart. No expense statements were received for this property.

The factor to allow for the expenses is based mainly upon investigations of other properties, anddiscussions with persons familiar with the type of investment. Commercial properties aretypically rented out on a net basis, where most of the landlord’s costs are recovered from thetenant. Expenses not covered by the triple net tenancy include management fees and structuralreserve/non recoverable expenses.

We have based the expense projections on projected rates with the following assumptions:

10% maintenance and misc. expense per annum, which should be average for this type of property.

2.5% insurance

12% utilities have been projected based on utility rates for SROs. The projected rate isslightly higher than average due to the observed design of the building, which includeshigher ceilings and more communal area than most typical SROs

8% management fees. Typically, for SROs there are onsite managers or a managementteam responsible for multiple SRO buildings. A typical property management company

would not be responsible for these buildings and if any were to take on the responsibility,the management fees would be much higher, likely in the double digits. The typicalmanagement team or onsite manager for this type of property is a resident of the buildingor maintains a permanent office nearby, and would charge fees roughly equivalent to the projected amounts.

2012 actual taxes

The commercial units would typically be on a triple net lease with full recovery ofexpenses

Other typical expenses include 1-3% for other miscellaneous expenses and a structural reserve

allocation, which are not covered by the triple net tenancy. We have used these rates for thesubject. The resulting expense ratio is 32% of EGI, which is at the lower end of the typical rangefound in similar buildings. The lower expenses are mainly due to the lower maintenance andutilities costs.

The retail portion of the property would pay a triple lease, that would cover a portion of the property taxes and maintenance costs. We have estimated an additional income expense of $6 per square foot, making the rental rate about $26 per square foot gross. $5 to $6 per square foot


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is roughly comparable to some of the properties in the area, although these rates vary widely.The total estimated gross income is roughly 44% to the retail portion and 56% to the SRO portion.

CAPITALIZATION RATE ANALYSIS

The Capitalization Rate is a mathematical relationship which exists between the net incomederived from the property and the value or price which a probable purchaser would pay for the privilege of receiving that income stream. Influences most affecting the price an investor would pay are the quality, quantity, and probable duration of the net income expectancy.

Address City TypeSale

Date

Bldg

SizePrice

Annual

Potential

Income

Overall

Cap

Rate

1 33 W Hastings VanRooming

HouseJan 2012 33 $1,500,000 $80,000 4.91%

2 1123-1127Granville

Van RoomingHouse

Apr 2010 76 $4,500,000 $270,000 5.52%

3259 Powell

StreetVan

RoomingHouse

Nov2011

35 $1,650,000 $105,000 5.85%

4 466 Union St VanRooming

HouseApr,2009

16 $720,000 $51,800 6.62%

5 111 E Pender VanRooming

HouseMay,2009

8 $1,015,000 $87,000 7.89%

61168 E

Hastings

VanRooming

House

Mar

2010

33 $1,100,000 $96,778 8.09%

71190 E

HastingsVan

RoomingHouse

Nov2010

32 $1,100,000 $107,000 8.95%

AssumptionsVacancy& Misc

8.0%

Summary of Capitalization Rate Comparables

Cap rates are based on the most recent available sales, with additional assumptions of 6% forvacancy and 2% for misc. expenses.

The Capitalization Rate is a mathematical relationship which exists between the net incomederived from the property and the value or price which a probable purchaser would pay for the privilege of receiving that income stream. Influences most affecting the price an investor would pay are the quality, quantity, and probable duration of the net income expectancy.

Multifamily cap rates have dropped dramatically in recent years, with premium properties sellingfor sub 4% returns. The subject property represents a higher risk. Historically, rooming houses


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in this area have sold in the 8%+ range. As shown by the cap rate chart above, sales of similar properties have been in the 5.5% to 8.95% range. Many of the more recent sales includeexpectations of rental increases and/or development potential.

The recent sale of the Chelsea Hotel showed a fairly low sub 5% cap rate based on an NOI of

$80,000. However, this does not take into account any potential rental from the ground floor,which was vacant at the time. If we project the rents for this space, the cap rate jumps to about6.67%. The subject should have a similar or slightly lower cap rate.

Sale 2 is the 2010 sale of the Clifton Hotel, located on Granville Street with superior location andoverall appeal. The subject should have a higher cap rate.

Sale 3 is the sale of the York Rooms, a similar SRO with ground floor retail. The sale is from2011, with comparable overall appeal as the subject.

Sales 4 through 7 are all older SRO sales with inferior location and appeal. The caps are much

higher, between 6.6% and 9%. The subject property should have a lower rate.

The subject building is in the edge of the downtown core. Its SRO design increases risk, as thereis little room for rental growth and fairly high management responsibilities.

The ground floor retail is currently leased at a rate that is approx. 1/3rd

higher than the projectedrental rates. The lease is signed through 2014. However, the lease does include unfinished basement space, which is not leasable space. Due to these inconsistencies, we have projected afair market rental rate for the space, and adopted a slightly lower cap rate to account for thecurrent above market lease income.

The subject property includes an estimated 58% of its income from the SRO portion and 42%from the retail portion. The actual income is closer to 50/50. This is significant because theretail portion of the building has a lower risk factor than the SRO.

A typical SRO would have a cap rate of about 5.5% to 6.5%. This is far low than the historic caprates for SROs, which were 8 to10%. Recent sales show much lower caps, however and are bringing this property type in line with other commercial properties in the City. The subject property would likely have a rate in this range, between 5.5% and 6.5%.

From the above information, we conclude that a 6.50% overall capitalization rate is suitable.


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Income and Expense Statement

Description Area (SF) RateEstimated Annual

Amount

Estimated Potential Income

SRO Rooms (104) $375/mo $ 468,000

Ground Retail 14,356 20.00$ 287,120$

Additional Rent

(Triple Net Recovery )14,356 6.00$ 86,136$

Total Gross SRO Income 468,000$

Total Gross Retail Income 373,256$

Potential Income 841,256$

Less Vacancy & Bad Debt Expense SRO 6.0% 28,080-$

Vacancy & Bad Debt Expense Retail 3.0% 11,198-$

Effective Gross Income (EGI) 801,978$Operating Expenses

Maintenance, Misc projected 10.0% 80,198$

Taxes 2012 actual. 0.7% 5,287$

Utilities (% of SRO Rent) projected 12.0% 56,160$

Insurance projected 2.5% 20,049$

Management projected 8.0% 64,158$

Structural Reserve & Non

Recoverable Expenses projected 3.0% 24,059$

Less Total Operating Expenses 31% 249,912$

Annual Net Operating Income (NOI) 552,066$Cap Rate 6.50%

Value by Income Approach 8,493,329$

Summary of Income Approach


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VALUATION

The value of the subject property is best done by a method known as Discounting. This type ofanalysis is applicable to long term lease revenues, and to those contracts which feature periodicincreases in the rental payments. As outlined in the above table, we have subtracted the annual

expenses from the Gross Rental income of the building to result in the Net Operating Income.This income is divided by the capitalization rate, which results in the final estimate of value viathe income capitalization method. The value of the subject property can now be estimated viathe Income Approach as follows:

NOI divided by Cap Rate = Value

$552,066 / 6.50% = $8,493,329

rounded to $8,490,000

ESTIMATE OF VALUE BY THE INCOME APPROACH (VIA CAPITALIZATION)

$8,490,000


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DIRECT COMPARISON APPROACH

The Direct Comparison Approach (DCA) is based upon the principle of substitution which statesthat a prudent investor would pay no more for a property than the cost of acquiring an alternative property with the same utility.

The Comparison Approach involves the investigation and analysis of recent, similar sales andlistings of properties coupled with a process of comparison with the subject. Adjustments aremade to account for relevant differences between each comparable sale and the subject. Such anadjustment process derives from each comparable an expected price that it would have sold forhad it possessed the relevant characteristics that the subject possesses. From these adjusted sales prices an estimate of value for the subject is made. In applying this approach various units ofcomparison can be selected depending upon the nature of the property. For multiple residentialor commercial/residential investment properties a price per revenue producing unit can beapplied.

Where the subject consists of SRO, the commonly used measure is per income generating unit orrentable area. For this analysis, we have compared the subject to other SRO with ground floorretail. The price per unit will be used, with consideration given to the size and extent of theground floor retail units.

Information on current market rental rates for comparable properties was obtained by reviewingdata on similar properties, published rent surveys, analysis of the comparisons, a market rentsurvey of properties with a similar use as the subject, discussions with professionals withknowledge about the type of property as is the subject.

The information was examined and qualified for use in the formation of the final value

conclusion. All relevant aspects of the data relied upon, as known to the appraisers, are reportedwithin the text of this report. Following are details of the available sales/listing data withcomments, photographs of the respective properties, plus map(s) showing their approximatelocation.


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Sale Number: #1

Property Type Palace Hotel

Civic Address 35-37 W Hastings Street

Short Legal Description Lot A of Lots 13 to 15, Block 3, Old Granville Townsite

1193PID 014-879-697

PROPERTY INFO

Lot Size (sq.ft) 4356

Units 33

Estimated Age OT

Condition Average

Zoning DD-C2

SALES INFO

Date of Sale June 2012 (Foreclosure)

Sale Price $2,071,300

Vendor 0847566 B.C. Ltd.

Purchaser Laurelwood Ventures Inc.

Price per unit $62,767

COMMENTS

Located on the north side of West Hastings Street, east of Abbott Street. The property is

improved with one three-storey plus basement, wood-framed, rooming containing 32

residential suites one ground floor commercial unit operating as a pub. This transaction

was pursuant to a Foreclosure Order dated June 25, 2012 in which the Laurelwood

Ventures Inc., et. al. is named as the Plaintiff and 0847566 B.C. Ltd., et. al. is named asthe Defendants. The asking price for the property was approximately $3,198,000.


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Sale Number: # 2

Property Type North Star Hotel

Civic Address 5 W Hastings Street

Short Legal Description The East 26 Feet of Lot 16, Block 3, Old Granville

Townsite, Plan 168

PID 014-235-234

PROPERTY INFO


Units 31

Estimated Age OT

Condition Average

Zoning HA2

SALES INFO

Date of Sale Apr 2012


Vendor 469346 B.C. Ltd.

Purchaser Five West Hastings Holdings Ltd.


COMMENTSLocated on the north side of West Hastings Street, west of Carrall Street. The property is

improved with a four-storey rooming house containing 30 rooms and a ground floor

retail component. The retail unit was vacant a t the time of sale.


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Sale Number: # 3

Property Type Chelsea Hotel

Civic Address 33 W Hastings Street

Short Legal Description Lot B of Lot 13 to 15, OGT 1193

PID 011-698-641

PROPERTY INFO


Units 32 + retail

Estimated Age OT

Condition Average-Fair

Zoning DD-C2SALES INFO

Date of Sale Jan 2012


Vendor Gemz Holdings Ltd

Purchaser 0927000 B.C. Ltd.


COMMENTS

Three storey wood frame and masonry SRO with vacant ground floor retail and full

unfinished basement. The property included 32 sleeping rooms with shared facilities.

Ground floor included a vacant retail tenancy with good exposure along Hastings Street

near Abbott Street. No heritage designation.


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Sale Number: # 4

Property Type Rooming House

Civic Address 259 Powell Street

Short Legal Description Lot 17, Block 4, District Lot 196, Plan 184

PID 015-701-476

PROPERTY INFO


Units 35 (including 1 commercial unit)

Estimated Age 1935Condition Average-Fair

Zoning DEOD

SALES INFO

Date of Sale Oct 2011


Purchaser 59 Powell Holdings Ltd.

Price per unit

COMMENTS

York Rooms Located on the north side of Powell Street, west of Gore Avenue. The

property is improved with one four-storey rooming house containing a total of 34 rooms

and one ground floor commercial unit.


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Sale Number: # 5


Civic Address 242 E Hastings Street

Short Legal Description Lot 32, Block 11, District Lot 196, Plan 184

PID 011-692-103

PROPERTY INFO


Units 26 (including 1 commercial unit)

Estimated Age 1910, 1955

Condition Fair

Zoning DEOD

SALES INFO

Date of Sale Oct 2011



COMMENTS

Everest Rooms, or the former F. Morgan Building. Located on the south side of East

Hastings Street, east of Main Street. Three storey plus basement SRO with ground floor

retail.


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Sale Number: # 6


Civic Address 403 Vernon Drive, 1190 E Hastings St

Short Legal Description Lot A Plan 355

PID 007-763-301

PROPERTY INFO


Units 32

Estimated Age OT

Condition Average

Zoning RT3SALES INFO

Date of Sale Aug 2011


Vendor Big City Holdings Ltd


COMMENTS

Three storey, 32 unit SRO on East Hastings Street and Vernon Drive. Located in the

Strathcona neighbourhood of Vancouver. The property included 28 sleeping units, 3 self

contained units and one retail unit. The property is a legal and non-conforming use to

the RT zoning.


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Sale Number: # 7


Civic Address 928 Main Street

Short Legal Description Lot s 6 & 7, Plan 184, Portion of Lot 8, Plan 184

PID 014-568-845, 014-568-853, 014-568-888

PROPERTY INFO


Units 39 (including 2 retail units)

Estimated Age OT

Condition FairZoning FC1

SALES INFO

Date of Sale Jun 2010


Vendor GS0137 Ventures Ltd.

Purchaser 928 Main Street Holdings Ltd


COMMENTS

American Hotel. Old three storey SRO located on Main Street, near Prior Street. Goodlocation, with 51’ of frontage along Main Street. The property was reported to be vacant

at the time of sale, and appeared in below average condition. The building consisted of a

reported 37 rooms, plus ground floor retail, assumed to be an additional 2 units. Possible

redevelopment site given the condition of the improvements, location, and zoning.


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Sale Number: # 8


Civic Address 341-343 E Hastings Street

Short Legal Description Lot 28, Plan 196

PID 015-584-771

PROPERTY INFO


Units 25

Estimated Age OT

Condition Average

Zoning DEOD

SALES INFO

Date of Sale April 2010


Purchaser Thuan Phouc Hotel Ltd


COMMENTS

Sunwest Hotel. Four storey plus basement SRO unit with 24 housekeeping units and one

ground floor retail unit. The property was located near the Chinatown neighborhood,

with moderate traffic and exposure along Hastings Street. Formerly known as the

‘Tweedale Block’. The property last sold in 2005 for the amount of $550,000


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Sale Number: # 9


Civic Address 1123-1127 Granville Street

Short Legal Description Lots 33 & 34, Plan 210

PID 003-533-476, 003-533-484

PROPERTY INFO


Units 76

Estimated Age OT

Condition Average

Zoning DD-K3

SALES INFO

Date of Sale Aug 2010Sale Price $4,500,000

Purchaser Persepolis Investments Inc


COMMENTS

‘Clifton Hotel’. Four storey masonry SRO with ground floor retail and full unfinished

basement. The property included 74 sleeper rooms with shared facilities. Ground floor

included 2 retail tenancies with excellent exposure along Granville Street. Heritage ‘C’

designation.


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Sale Number: # 10

Property Type Heatley Block

Civic Address 684-688 E Hastings Street, Vancouver BC

Short Legal Description Lot 14, 15, & 16, Plan 196

PID 015-576-515, 015-576-507, 015-576-493

PROPERTY INFO

Lot Size (sq.ft) 9,148

Units 24

Estimated Age 1889 (year built)

Condition Average

Zoning DEOD

SALES INFO

Date of Sale January 28, 2010


Vendor City of Vancouver

Purchaser Atira Development Society


COMMENTS

Heatley Block is an improved 2 storey, wood framed rooming house with a ground

floor retail component and two, 2 storey wood framed multi-family residential dwellings.

20 of the 24 units are single room occupancy.


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Sale Number: # 11


Civic Address 7-11 W Hastings Street, Vancouver BC


PID 015-713-164

PROPERTY INFO

Lot Size (sq.ft) 5,227

Units 44

Estimated Age OT

Condition Average

Zoning HA2

SALES INFO

Date of Sale July 15, 2009


Vendor 0823550 BC Ltd.

Purchaser Provincial Rental Housing Corporation- Government


COMMENTS

The Backpackers Inn is improved with one four storey wood framed rooming housecontaining 42 residential rooms and two commercial units. Property appeared in average

condition at the time of sale.


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Sale Number: # 12


Civic Address 210-216 Abbott Street


PID 015-713-237

PROPERTY INFO


Units 71

Estimated Age OT

Condition Renovated

Zoning HA2

SALES INFODate of Sale Feb 2009


Vendor Water Street Projects Ltd

Purchaser Provincial Rental Housing Corporation


COMMENTS

‘Dominion Hotel’, located on the corner of Abbott and Water Streets, in the Gastown

neighbourhood of Vancouver. The property consists of a three storey rooming house

with 67 rooms on the upper floor and 4 retail units on the ground floor. The property

was in good condition, with renovations reported in 2005, 2008, and 2009. Vancouver

Heritage List ‘B’ Designation


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ANALYSIS OF COMPARABLE SALES

In order to apply the Comparison Approach it is necessary to make adjustments to the abovedetailed Comparables to reflect the varying differences with the subject. As such the sales search

utilized in this report was directed towards similar or similar use properties in the area.

For properties the nature of the subject adjustments traditionally involve the following:1. Location Factors2. Physical Characteristics3. Zoning and Land Use Factors4. Time/Market Conditions5. Financing Terms6. Motivating Forces and/or Conditions of Sale

LOCATIONAL FACTORS

Location has a significant effect on value.

Area: Geographic location within the community, proximity to other commercially andresidentially zoned properties, accessibility for transportation of goods, surrounding area usessuch as residential, industrial or commercial, proximity to amenities or market. Comparableshave been selected nearby in the same or similar areas as the subject.

Exposure/Locale: Traffic levels on the street, sites which are located on street corners, or havemore than one frontage, have a higher value than those that do not. Adjustments have been madewhere appropriate. Commercial property values are dramatically affected by their exposure tohigh traffic locations. Accessibility is the main concern for industrial properties, whileresidential properties values are affected by amenities, neighbourhood appeal and low trafficstreets.

PHYSICAL CHARACTERISTICS

Size: Historic research has indicated that larger properties sell for a slightly lower price per unit,due to economies of scale in development or use. Larger properties as a result tend to sell for alower square foot value than a smaller property. Adjustments have been made where the size ofthe comparables differ from the subject.

Configuration: The configuration of the property does typically not affect the value of the property except where it is a detriment. Irregular shapes, lack of access, panhandle lots all lowerthe value of the property. Adjustments have been made where appropriate.

Improvements and Condition: We have considered the quality of construction and condition ofmaintenance of the comparables relative to the Subject.


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ZONING AND LAND USE

All of the comparable properties were zoned for the same or similar uses as is the subject. Theexisting improvements on the subject lands are considered to be the highest and best use in their

location, within the given zoning.

TIME ADJUSTMENT

The data of sale identifies market conditions prevailing when the particular transaction occurred.Market conditions may change between the data of sale of a Comparable and the effective dateof the appraisal. Changing market conditions often result from various causes such as inflation,economic recession, changing demand, changing supply and the cost or availability of mortgagefunding. The cause of the adjustment is not time itself but a change in market conditions.

The 2009 market saw dramatic drops in value across all market segments. Mid 2009 saw a

recovery and gradually increasing values in most markets and asset classes. 2010 through 2012saw an overall stabilization of the market, with some increases in the residential and investmentmarkets.

MOTIVATION ADJUSTMENT

When conditions motivating the Vendor or Purchaser are at variance, the price for the sale maydiffer from that involving a more normal transaction. Such circumstances may include a Vendorunder pressure to sell quickly or an adjoining owner acquiring a property to enhance thedevelopment potential of the existing holding.

A review of the transactions used in this report did not reveal any unusual circumstances whichwould require this adjustment. All appeared to be on an arm’s length basis.

FINANCING ADJUSTMENT

The sale price of one property may differ from that of an otherwise substantially identical property due to the impact of the financing arrangements. This becomes a crucial variable wheneither the subject or one or more of the comparables has a preferential financing arrangementwhen contrasted to that typically offered by the market as at the relevant date of the appraisal.This is most often the case with Vendor take-back financing or when existing financing isassumed. In these circumstances the Purchaser may have paid a premium. No financingvariables are known of.


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Improved Sales Comparable Location Map


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SUMMARY OF SRO SALES USED

A total of 12 comparables were used in this analysis. All are sales of SRO buildings inthe subject neighbourhoods. All are recent sales from 2009 through 2012. The units aregenerally smaller in size as the subject property, with the exception of #9 and 12.However, given the lack of SRO transactions, these remain the most relevant indicatorsof value for the subject. Overall, the main adjustment factor for the comparables was forimprovements due to the subject’s recent renovations.

The unadjusted range was from $40,000 per unit to $111,831 per unit. After adjustmentsthe range narrows to $43,000 per unit and $96,000 per unit. The average adjusted valueof the comparables was $63,900 per unit, with a median value of $60,000 per unit.

Sale 1 is the most recent SRO sale in the area. However, it is a distress sale that appearedto be under full market value. The property itself is fairly similar to the subject, with afull ground floor commercial pub and upper floor SRO units. The subject would likelyhave a higher value.

Sale 2 is a recent sale of a smaller SRO on W Hastings Street. It has a HA2 zone, but is 4storeys with a small lot. The subject should have a higher value.

Sale 3 is recent sale of a SRO located next to the subject. The value appears somewhat below market, given that the property was on the market for an extended period. Thecomparable had superior improvements but was superior in condition. The subjectshould have a higher value.

Sales 4 through 6 are recent sales of similarly sized SROs in generally inferior areas.These showed lower o

stanley hotel, 36 blood alley sq., vancouver

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