EFTA00787768.pdf

AMERICAN YACHT HARBOR & MARINA 6100 Red Hook Quarters #2 St. Thomas, USVI CBRE File No. 07-396OR-0510 Self Contained Appraisal Report Prepared for: Mark Lande IGY-AYH ST. THOMAS HOLDINGS, LLC 717 Fifth Avenue, 18th Floor New York, NY 10022 AND Cassandra P. Webster-Hodge Assistant Vice President BANCO POPULAR VIRGIN ISLANDS St. Thomas, VI 00801 VALUATION & ADVISORY SERVICES CBRE CB RICHARD ELLIS © 2007 CB Richor EFTA00787768 VALUATION & ADVISORY SERVICES CBRE CU RICHARD ELLIS 777 Brickell Avenue, Suite 910 Miami, Florida 33131 T F June 30, 2007 Mark Lande IGY-AYH ST. THOMAS HOLDINGS, LLC 717 Fifth Avenue, 18th Floor New York, NY 10022 AND Cassandra P. Webster-Hodge Assistant Vice President BANCO POPULAR VIRGIN ISLANDS St. Thomas, VI 00801 RE: Appraisal of American Yacht Harbor & Marina 6100 Red Hook Quarters #2 St. Thomas, County, USVI CBRE File No 07-396OR-0510 Dear Ms. Webster-Hodge: At your request and authorization, CBRE hos prepared an appraisal of the market value of the referenced property and presented our analysis in the following Self Contained Appraisal Report. The subject is an existing mixed use retail/office/marina property that was developed as it is now in 1992 and situated adjacent to a 2.12-acre upland site and 3.20-acre submerged land in Red Hook, St. Thomas, USVI. The majority of the property is submerged land owned by the St. Thomas Coastal Zone Management Commission and assigned to the current owners of the marina. The submerged land area is located along the southeastern boundary of the upland site. Currently the property is operated as a mixed use properly including retail and office on the landside site and a marina facility, with 130 dock slips, fuel docks, in-dock fueling and dock master's office. Of the 130 slips, 25 slips known as P Dock are leased to the owner's of American Yacht Harbor via a management agreement. The subject is more fully described, legally and physically within the enclosed report. Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. Based on the analysis contained in the following report, the market value of the subject is concluded as follows: O 2007 CB Richard Ellis, Inc. EFTA00787769 Mark Lande and Cassandra P. Webster-Hodge Assistant Vice President June 30, 2007 Page 2 MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Exposure Time Value Conclusion As Is Leased Fee/Leasehold Interest June 19, 2007 6 Months 521,000,000 Compiled by CURE The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Title XI Regulations. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES Buddy R. Urban, MAI James E. Agner, MAI Vice President Managing Director Florida St. Cert. Gen. REA RZ2815 Florida St. Cert. Gen. REA R/382 1=. Phone: Phone: Fax: Fax: Email: Email: CBRE Ca RICI4ARO ELLIS O 2007 CB Richard Ellis, Inc. EFTA00787770 AMERICAN YACHT HARBOR & MARINA CERTIFICATION OF THE APPRAISAL CERTIFICATION OF THE APPRAISAL We certify to the best of our knowledge and belief: 1. The statements of fact contained in this report ore true and correct. 2. The reported analyses, opinions, and conclusions ore limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3. We hove no present or prospective interest in or bins with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment. 4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 5. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 6. This appraisal assignment was not based upon o requested minimum valuation, o specific valuation, or the approval of a loan. 7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal, as well as the requirements of the State of Florida. 8. The reported analyses, opinions, and conclusions were developed, and this report hos been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice. 9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 10. As of the dote of the report, Buddy R. Urban, MAI and James E. Agner, MAI have completed the requirements of the continuing education program of the Appraisal Institute. 11. Buddy R. Urban, MAI hos and James E. Agner, MAI has not made a personal inspection of the property that is the subject of this report. 12. Donna Urban provided significant real property appraisal assistance to the persons signing this report. 13. Valuation & Advisory Services operates as on independent economic entity within CBRE. Although employees of other CBRE divisions may be contacted as a port of our routine market research investigations, absolute client confidentiality and privacy are maintained at all times with regard to this assignment without conflict of interest. te" Buddy R. Urban, MAI James E. Agner, MAI Florida St. Cert. Gen. REA RZ2815 Florida St. Cert. Gen. REA RZ382 CBRE CH RICHARD ELLIS © 2007 CB Richard Ellis, Mc. EFTA00787771 AMERICAN YACHT HARBOR & MARINA SUBJECT PHOTOGRAPHS SUBJECT PHOTOGRAPHS 1 TYPICAL VIEW OF THE RETAVOFFICE PORTION 0 FTHE SUBJECT TYPICAL VIEW OF THE SUBJECT MARINA II t 2007 CB Richord Ellis, Inc. EFTA00787772 AMERICAN YACHT HARBOR & MARINA SUMMARY OF SALIENT FACTS SUMMARY OF SALIENT FACTS Properly Name American Yacht Harbor & Marina Location 6100 Red Hook Quarters #2, St. Thomas, USVI Assessor's Parcel Number 1-07702-0134-00 1-07702-0133-00 1-07702-0135-00 Properly Type Retail/Office/Marina Highest and Best Use As Though Vacant Retail/Office/Marina As Improved Retail/Office/Marina Properly Rights Appraised Fee Simple Land Area (Landside) 2.12 AC 92,347 SF Submerged Land Area 3.20 AC 139,392 SF Improvements Number of Buildings - Retail/Office 6 Number of Dock Slips 130 Net Rentable Area - Retail/Office 47,344 SF Site Amenities Fuel Dock, In-dock Fueling, Dock Master's Office, Retail & Restuarants Year Built 1992 Condition Average Estimated Exposure Time 9 Months Financial Indicators Stabilized Occupancy 80.0% Stabilized Average Wet Slip Rate/Foot 527.00 Income Growth Rate 3.0% Expense Growth Rate 3.0% Going-In Capitalization Rate 9.00% Terminal Capitalization Rate 9.50% Discount Rate 11.50% iii W' 2007 CB Richard Ellis, Mc. EFTA00787773 AMERICAN YACHT HARBOR 8 MARINA SUMMARY OF SALIENT FACTS Stabilized Operating Data Total Per Slip Total Revenue 56,626,402 550,972 Operating Expenses 54,730,646 536,390 Expense Ratio 71.39% Net Operating Income 51,895,756 514,583 VALUATION Sales Comparison Approach 521,200,000 5163,077 Income Capitalization Approach 521,000,000 5161,538 CONCLUDED MARKET VALUE Appraisal Premise Interest Appraised Date of Value Value As Is Leased Fee/Leasehold Interest June 19, 2007 521,000,000 Compiled by CAE SPECIAL ASSUMPTIONS The portion of the value attributed to the marina is based on on approved permit from the Coastal Zone Management Commission. Operation of the marina would not be possible if the permit were not in place or available to the marina operator. As such, our value is assumes the permit will continue to be renewed and the existing operations not be interrupted or halted. The subject property is currently granted on exemption from real estate taxes through December 31, 2011. The exemption was granted via the Economic Development Commission in on effort to promote development and/or redevelopment in the Red Hook area. Our value assumes the exemption will be extended after the current exemption expires and that the subject will remain 100% real estate tax free. iv © 2007 CB Richard Ellis, Inc. EFTA00787774 AMERICAN YACHT HARBOR & MARINA TABLE OF CONTENTS TABLE OF CONTENTS CERTIFICATION OF THE APPRAISAL SUBJECT PHOTOGRAPHS ii SUMMARY OF SALIENT FACTS iii TABLE OF CONTENTS INTRODUCTION 1 AREA ANALYSIS 6 NEIGHBORHOOD ANALYSIS 11 SITE ANALYSIS 15 IMPROVEMENT ANALYSIS 19 ZONING 24 TAX AND ASSESSMENT DATA 25 HIGHEST AND BEST USE 26 APPRAISAL METHODOLOGY 29 SALES COMPARISON APPROACH 30 INCOME CAPITALIZATION APPROACH 40 RECONCILIATION OF VALUE 77 ASSUMPTIONS AND LIMITING CONDITIONS 78 ADDENDA A Glossary of Terms B Additional Photographs C Improved Marina and Retail/Office Soles D Competitive Marinas and Retail/Office Rentals E Historical Operating Statements F CZM Permits G Legal Description H Engagement Letter I Qualifications O 2007 CB Richard Ellis, Inc. EFTA00787775 AMERICAN YACHT HARBOR & MARINA INTRODUCTION INTRODUCTION PROPERTY IDENTIFICATION The subject property consists of a fully developed marina currently operating os American Yacht Harbor & Marina, as well as 47,344 square feet of retail and office space situated on the landside portion of the site. The subject's street address is 6100 Red Hook Quarters #2, in St. Thomas, USVI. OWNERSHIP AND PROPERTY HISTORY Title to the upland portion of the property is currently vested in the name of IGY-AYH St. Thomas Holdings, LLC, who acquired title to the property in January 2007, os recorded in the St. Thomas/St. Johns Deed Records. The submerged land is currently under the ownership of the Coastal Zone Management Commission and leased to IGY-AYH St. Thomas Holdings, LLC through September 14, 2010 via an assignment under a Coastal Zone Management Permit (CZM). The current lease began on September, 2000 with a ten year term. Renewal of the CZM permits is not prohibitive and will likely be granted upon expiration of the current permit. The total consideration for the January 2007 transaction was $25,500,000. The subject was part of a larger purchase of four marinas properties in the Caribbean. The seller was Sun Resorts, which owned the subject outright and various interests in the other three marinas. The sale price is slightly higher than our value estimate, which could be the result of allocated costs of the portfolio sale. Other than that noted herein, there hos been no other ownership transfer of the property during the previous three years. As of the dote of value, the subject is not being marketed for sale. RELEVANT DATES The following table illustrates the various dotes associated with the valuation of the subject property: RELEVANT DATES Date of Report: June 30, 2007 Date of Inspection: June 19, 2007 Date of Value As Is June 19, 2007 Compiled by CBRE PURPOSE OF THE APPRAISAL The purpose of this appraisal is to estimate the market value of the leasehold interest in the subject property. The current economic definition agreed upon by agencies that regulate federal financial institutions in the U.S. (and used herein) is as follows: 1 2007 CB Richard Ellis, Inc. EFTA00787776 AMERICAN YACHT HARBOR & MARINA INTRODUCTION The most probable price which o property should bring in a competitive and open market under all conditions requisite to a fair sole, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified dote and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 2. both parties ore well informed or well advised, and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cosh in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sole. PREMISE OF THE APPRAISAL The premise of this appraisal valuation is "as is" and leased fee/leasehold interest on the dote of value. TERMS AND DEFINITIONS The Glossary of Terms in the Addenda provides definitions for terms that ore, and may be used in this appraisal. INTENDED USE AND USER OF REPORT This appraisal is to be used for internal decision making by the client, Banco Popular Virgin Islands. PROPERTY RIGHTS APPRAISED The interest appraised represents the leased fee/leasehold estate. SCOPE OF WORK The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered and analysis is applied, all based upon the following problem-identifying factors stated elsewhere in this report: • Client • Intended use • Intended user • Type of opinion Office of Comptroller of the Currency (OCC), 12 CFR Pall 34, Subpart C - Appraisals, 34.42 (g); Office of Thrih Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP). 2 (6) 2007 CB Richard Ellis, Inc. EFTA00787777 AMERICAN YACHT HARBOR & MARINA INTRODUCTION • Effective dote of opinion • Relevant characteristics about the subject • Assignment conditions This appraisal of the subject has been presented in the form of a Self-Contained Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of USPAP. That is, this report incorporates, to the fullest extent possible, practical explanation of the data, reasoning and analysis that were used to develop the opinion of value. This report also includes thorough descriptions of the subject and the market for the property type. CBRE completed the following steps for this assignment: Extent to Which the Property is Identified CBRE collected the relevant information about the subject from the owner (or representatives), public records and through an inspection of the subject. The property was legally identified through its postal address, assessor's records and legal description. Economic characteristics of the subject were identified via an analysis of a recent rent roll for both the marina and retail/office space and historical operating statements. Extent to Which the Property is Inspected CBRE inspected both the interior and exterior of the subject, os well as its surrounding environs on the effective date of appraisal. Type and Extent of the Data Researched CBRE reviewed the micro and/or macro market environments with respect to physical and economic factors relevant to the valuation process. This process included interviews with regional and/or local market participants, available published data, and other various resources. CBRE also conducted regional and/or local research with respect to applicable tax data, zoning requirements, flood zone status, demographics, income and expense data, and comparable listing, sale and rental information. Type and Extent of Analysis Applied CBRE analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. Approaches to value used include the Sales Comparison Approach and the Income Approach. The steps required to complete each approach are discussed in the methodology section. CBRE then correlated and reconciled the results into a reasonable and defensible value conclusion, as defined herein. A reasonable exposure time and marketing time associated with the value estimate presented hos also been concluded. 3 O 2007 CB Richard Ellis, Inc. EFTA00787778 AMERICAN YACHT HARBOR & MARINA INTRODUCTION SPECIAL APPRAISAL INSTRUCTIONS There have been no special appraisal instructions for this assignment. EXPOSURE/MARKETING TIME Current appraisal guidelines require an estimate of a reasonable time period in which the subject property could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historic analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. It is different for various types of real estate and under various market conditions. A discussion of an appropriate exposure/marketing time estimate for the subject properly is presented in the following sections. In consideration of these factors, we have analyzed the following: • exposure periods for comparable sales used in this appraisal; • marketing time information from the CBRE National Investor Survey; and • the opinions of market participants. The following table presents the information derived from these sources. EXPOSURE TIME INFORMATION Exposure Time (Months) Data Source Range Average Strip Centers Class A 3.0 - 12.0 6.6 Class B 6.0 - 12.0 7.8 Class C 6.0 - 12.0 9.0 Local Market Professionals 3.0 - 9.0 6.0 CBRE Estimate 9 Months Source: CBRE National Investor Survey The CBRE Notional Investor Survey does not have a classification for marinas; therefore we have chosen the asset class most similar to the ownership position in the subject site. In addition to the survey data, we have also reviewed the assumptions and conclusions reached in the Valuation section of this report, particularly the income estimates and rotes of return. Based on these analyses, we hove concluded an exposure/marketing time of 9 months or less would be considered reasonable for the subject property. 4 O2007 CB Richard Ellis, Inc. EFTA00787779 AMERICAN YACHT HARBOR & MARINA INTRODUCTION This exposure/marketing time reflects current economic conditions, current real estate investment market conditions, the terms and availability of financing for real estate acquisitions, and property and market-specific factors. It assumes that the subject property is (or has been) actively and professionally marketed. The marketing/exposure time would apply to all valuation premises included in this report. 5 O 2007 CB Richard Ellis, Inc. EFTA00787780 AMERICAN YACHT HARBOR & MARINA AREA ANALYSIS AREA ANALYSIS 'firteicoa• till BAHAWI linao na,""" Sep, b ...Not •lat• lis..... Osr. pin* .e.. 1 ..." c.a..: .e.a amt. Lnxe ., 70 .. •••• CUBA pan. 8 rm.. ton Tos e . .111fles ....... Wads , jib% • ". M ts . • ''.1 . , .C•ena. .1w1)0••• o r Caaal . a .. SW MP r g,„,rf e, ' t. ;It. o.......,:. /egg? HAT .. sante ::!,-.7: T in ••••• "'e. Th. Vet. 'steer. 0,......., M.n9o® . • aoto, _ .W. hob Pin mann us....” La.... "ns". .. sods c•-•.• ONiunkli. • JAIAMC A 1010.A•S r. . • 4' %sr ruiltdefine, C6-01431A IIICAFWOUA .•••••• • v .., „ LOCATION THE U.S. US VIRGIN ISLANDS General Data - U.S. US Virgin Islands The U.S. US Virgin Islands, formed by the islands of Saint Croix, Saint John and Saint Thomas and several islets, were acquired by the United States from Denmark in 1917 for military purposes. This group of 3 islands and about 50 islets, most of which ore uninhabited, lie in the Lesser Antilles chain of the West Indies, east of Puerto Rico and between the Caribbean Sea and the Atlantic Ocean approximately 1,000 miles southeast of Miami. The three islands total an area of 133 square miles. The islands were first administered by the U.S. Navy, and in 1931 come under the administration of the U.S. Department of the Interior. Currently, local government organization is derived from the U.S. Congress under the revised Organic Act of 1954, which declared the islands to be an unincorporated territory of the United States. Some decision-making power still rests with the U.S. Congress and Federal agencies. 6 S 2007 CB Richard Ellis, Mc. EFTA00787781 AMERICAN YACHT HARBOR & MARINA AREA ANALYSIS The temperature in the US Virgin Islands ranges from 70.90 degrees year-round, with relatively low humidity. Prolonged periods of rain ore rare, but the islands ore subject to occasional hurricanes. The US Virgin Islands hove no rivers, streams or lakes. The islands are of volcanic origin and hove mainly a hilly topography Population The population of the US Virgin Islands had increased 7% from 1990 to 2000, the most current data available, from 101,809 habitants in year 1990 to 108,612 habitants in year 2000. The sharp rise in population from 1990 to 2000 was followed by a similar increase in the number of housing units. The principal industries of the US Virgin Islands ore tourism and manufacturing. Between 1970 and 1990, tourist expenditures increased more than 30% and now ore estimated to be $500 million annually. The government of the US Virgin Islands conducts a tax incentive program to encourage foreign capitol investments and the establishment of new industries. Special tax incentives on worldwide exports have enticed over 2,500 foreign soles corporations to be established. This has helped spur a related growth in financial service industries taking advantage of the US Virgin Islands good infrastructure, modern communications, excellent transportation links and U.S. currency and postage Government Under legislation passed in 1968, the US Virgin Islands hove had a democratically elected form of government since 1970. Prior to 1970, the Governor of the US Virgin Islands was appointed to by the president of the United States and reported to the Secretory of the Interior under the territory's 1954 revised Organic Act. Internal affairs are under the jurisdiction of on elected Governor, who together with the Lieutenant Governor is elected for a four-year term. A 15-member unicameral Legislature is elected for a two- year term. The legislative consists of seven senators from St. Croix, seven from St. Thomas, and one senator-at-large who must reside in St. John. The Member of Congress from the US Virgin Islands possesses the same powers and privileges as Representatives from the States, with the exception of voting on the House floor. Employment The main employment sources in the U.S.V.I. are tourism and local government. The following table and graphic show the employed civilian population of the U.S.V.I. as 2000 as per the 2000 Census of the U.S. Census Bureau. 7 S 2007 CB Richard Ellis, Mc. EFTA00787782 AMERICAN YACHT HARBOR & MARINA AREA ANALYSIS Industry Employment: U.S.V.I. 2000 Industry Group Average Employment Level Agriculture. forestry. fishing and hunting. and mining 324 0.70% Construction 4900 10.52% Manufacturing 2754 5.91% Wholesale trade 912 1.96% Retail trade 6476 13.91% Transportation and warehousing. and utilities 3321 7.13% Information 931 2.00% Finance. insurance. real estate. and rental and leasing 2330 5.00% Professional, scientific. management. administrative. and waste manage 3058 6.57% Educational. health and social services 6742 14.48% Arts. entertainment. recreation. accomodation and food services 7351 15.79% Other services (except public administration) 2535 5.44% Public administration 4931 10.59% All Industries 46565 100.00% THE ISLAND OF SAINT THOMAS Geographic Location and Physical Environment The appraised property lies at the Red Hook Quarter #2 in the southeastern part of the island of Saint Thomas, about 20 miles east of the Charlotte Amalie Town, Capital of the U.S.V.I. Saint Thomas lies approximately 1,000 miles southeast of Miami between the Atlantic Ocean and the Caribbean Sea. It has on area of 32 square miles and a mostly hilly topography. There are several major roads servicing Saint Thomas. Route 30 is the major road of Saint Thomas, which connects the Fortuna Community in the east with the airport in the southwest and with the town of Nadir in the eastern section of the island passing through Charlotte Amalie. Other major roods are 32, 33, 35, 38 and 40. The Cyril E. King Airport lies at the southwest section of the island and its main carrier is American Airlines. Main cruise ship and ferry docks lie at Long Bay in the Charlotte Amalie town at the south section of the island. Government The administrative political unit is the Government of the United States US Virgin Islands. A Governor and a Lieutenant Governor form the executive body. A unicameral 15-member legislative is the law- making body. There ore 14 branch departments administered by commissioners appointed by the governor and approved by the Legislature. The Planning and Natural Resources Department is responsible for the development of land use and urban development policy and regulations in Saint Thomas. A zoning code classifying and regulating uses, densities and constructions is currently in effect. The enforcement and management of the land use policies is also the function of the Planning and Natural Resources Department. 8 Ce 2007 CB Richard Ellis, inc. EFTA00787783 AMERICAN YACHT HARBOR & MARINA AREA ANALYSIS Population and Social Trends As per the 2000 Census of Population, the total population of Saint Thomas was 51,181 persons. Of the total population 49,263 persons (96%) lived in urban areas and 1,918 (4%) in rural areas. There are a total of 19,458 households and 12,378 families in Saint Thomas as of 2000. The average household and family sizes for 2000 were 2.60 and 3.32. Saint Thomas counts with public and private schools. Higher education options include a campus of the University of the US Virgin Islands. Economy As of 1999, the median household income for Saint Thomas was $26,893, higher than the U.S.V.I. median household income for the same period ($24,704). The population growth hos fueled the increased demand for residential, commercial and industrial developments. Today, Saint Thomas's main economic sectors ore tourism, service and retail. Average employment for calendar 2000 was 24,181 persons. The following table shows Saint Thomas' average employment by industry category for 2000. Industry Employment: Saint Thomas 2000 Industry Group Average Employment Level Agriculture. forestry. fishing and hunting, and mining 133 0.55% Construction 2045 8.46% Manufacturing 518 2.14% Wholesale trade 536 2.22% Retail trade 3924 16.23% Transportation and warehousing. and utilities 2038 8.43% Information 551 2.28% Finance. insurance, real estate. and rental and leasing 1185 4.90% Professional, scientific. management. administrative. and waste manage 1598 6.61% Educational. health and social services 3160 13.07% Arts. entertainment, recreation, accomodation and food services 4329 17.90% Other services (except public administration) 1356 5.61% Public administration 2808 11.61% All Industries 24181 100.00% As is reflected in the table the industry groups contributing more to the island employment level are ads-entertainment-recreation-food, retail trade and public administration. In 2000, 17.90% of the total employment was in the arts•entertainment-recreation-food sector, 16.23% in retail trade and 11.61% in the public administration category. 9 S 2007 CB Richard Ellis, inc. EFTA00787784 AMERICAN YACHT HARBOR & MARINA AREA ANALYSIS Urban Growth Trend St. Thomos had followed a sectorial urban growth trend. Most of the urban growth has followed government and military built infrastructure and tourist developments. There were a total of 24,030 housing units in Saint Thomas as of 2000. Of the total number of units, 23,083 were urban units and 947 rural units. About 81% of the units (19,458) were occupied and 19% were vacant (4,572). Of the occupied housing units about 41% (8,048) were owner occupied and about 59% (11,410) were rented units. The median age of the housing units is 25 years as of 2000. As the figures reveal Saint Thomas is predominantly a housing rental market. St. Thomos' retail and institutional activities have historically taken place around its traditional core towns. There are numerous standalone retail and office buildings within the Charlotte Amalie core urban center and along the principal roads and avenues. The Havensight commercial area and shops along the boulevards and alleys of the Charlotte Amalie district cater mostly the cruise ship tourist population. Red Hook hos two retail centers, American Yacht Harbor and Red Hook Plaza. Adjacent to the east side of the Red Hook Plaza is a new retail/office development under construction. This center is known as East End Plaza and will contain about 72,000 square feet of retail and office. According to the leasing agent, the center has secured two banks, several fast food restaurants and several economic groups moving from established business in Charlotte Amalie. Rents are quoted at $50 to $60 per square foot with a pass through of $5.00, excluding real estate taxes and insurance. The center has applied for an exemption of real estate taxes; however, it has not yet been granted. The leasing agent indicated pass-throughs would increase by $3.00 per square foot if the exemption is not granted. In general, real estate values and rents are expected to remain at the current levels, which is proportionate to the area economic growth. Rental rates hove not changed significantly in a number of years, although in centers in the Red Hook area, rents have increased as the area attracts more attention from businesses wanting to move from the central business district. Further, economic incentives offered to new developments, or developments planning significant capital improvements hos also had a positive effect on rental rate growth in Red Hook. 10 O 2007 CB Richard Ellis, Inc. EFTA00787785 AMERICAN YACHT HARBOR & MARINA NEIGHBORHOOD ANALYSIS NEIGHBORHOOD ANALYSIS LOCATION The neighborhood is located on the island of St. Thomas and is considered a suburban location. The city of Red Hook is located in southeastern portion of the island, about 20 mile east of the Charlotte Amalie Business District. The subject property lies within the Red Hook, Quarter #2, which lies within the east portion of the neighborhood. 11 S 2007 CB Richard Ellis, Mc. EFTA00787786 AMERICAN YACHT HARBOR & MARINA NEIGHBORHOOD ANALYSIS BOUNDARIES The neighborhood boundaries are detailed os follows: North: Highway 38 South: Vessup Boy East: Atlantic Ocean West: Highway 32 LAND USE Land uses within the subject neighborhood consist of a mixture of commercial and residential development. The immediate area surrounding the subject consists of the major commercial developments in Red Hook. The ferry dock for the connection to St. John is adjacent to the east line of the subject and is a major generator of tourist traffic for the area. The majority of the single-family residential development within a one mile radius of the subject may be described as rural homes in the $100,000 to over $1,000,000 price range for homes on the waterfront. The area is somewhat remote and interior subdivision roads ore one-lane asphalt paved facilities. The topography of the subject area is generally sloping, with numerous properties built with the terrain incorporated in to the design. Most of the single-family residences appear to hove been constructed over twenty years ago and are generally in average to good condition. GROWTH PATTERNS Growth patterns on the island generally follow the tourist industry and concentrate mainly in the Charlotte Amalie and Havensight areas, west of the subject. As mentioned, the Red Hook area houses one of the ferries used for inter-island transportation to and from St. Johns and Tortola, BVI. Cowpet Bay, just south of Red Hook is on upscale residential area featuring water views and frontage. In general, the growth patterns of St. Thomas are tied to the cruise lines and tourist, but also depend heavily on improvements made by the local government in terms of roads, utility services and other municipal services. There is limited vacant developable commercial land available; however, there appears to be ample vacant residential land. In most cases, the residential land is along the slopes of the mountains and is difficult to develop. Most sites that have been developed are developed with the improvements on the high side of the lot, affording the best views possible. ACCESS Primary access to the subject neighborhood is provided by Highwoy 30 to Highway 32. Highway 30 and Highway 32 are part of the circular highway around the island. The highway numbering changes several times as it traverses the island; however, Highway 30 is the southern most and busiest portion. Highwoy 30 provides access to and from the Cyril E. King Airport, Charlotte Amalie and Havensight, the predominant developments on the island. Highway 32 provides access to Red Hook and more or 12 O 2007 CB Richard Ellis, Inc. EFTA00787787 AMERICAN YACHT HARBOR & MARINA NEIGHBORHOOD ANALYSIS less forms a circle from Highway 30 to the west as Highway 38 further north and west. For the most port, these highways are two lane asphalt paved facilities with no shoulder. The commute to the Charlotte Amalie Business District from the subject neighborhood is about thirty minutes. The drive to the Cyril E. King Airport takes about forty minutes. The airport provides service to American Airlines and several smaller airlines. CONCLUSION The neighborhood appears to be predominately rural residential in nature with the American Yacht Harbor and Red Hook Plaza, for the most part, comprising the commercial deve