Page 45 - MFM May 2015 C

Montana Freemason May 2015
• Valuation reflects sales in the immediate area since
January 2013 (3)
• Given the historical income, the 2014 return on
investment at the low value of $700,000 is 1.5%
• This does not take into consideration any expenses
(taxes, insurance, repairs etc.)
406 Acre Parcel: $ 1,100,000 - $1,300,000
• 406 acre parcel with approximately 276 acres
irrigated via wheel lines (not included)
• Big Valley Storage is located in the North-East
corner. It is anticipated that a 10 acre parcel will be
created so that the storage facility may stand alone,
maximizing value
• Gross cropland lease based on $22/acre on 212.5
acres is $4,675 in 2014
• Gross pasture lease income based on $22/acre on
133 acres is $2926 in 2014
• Valuation reflects sales in the immediate area since
January 2013 (3)
• Total gross income estimated at $7,601 in 2014
• Given the historical income, the 2014 return on
investment at the low value of
$1,100,000 is .69%
• This does not take into consideration any expenses
(taxes, insurance, repairs etc.)
Property Valuation provided by
Green and Green Realty Associates
Subject: Market Valuation for [Masonic Home
commercial property located at 2010 Masonic Home
Road, Helena, Montana.
Thank you for the opportunity to offer a price opinion
for the property located at 2010 Masonic Home Road,
Helena, Montana. I am not a licensed appraiser but
have extensive experience and specific training in
the valuation process for commercial real estate. The
focus of this evaluation is on pricing the land and
the building (not the business) to be competitive for
possible sale within a 12- to 24-month period.
In my approach to this assignment I made adjustments
for age, physical and functional obsolescence,
evaluated the projected commercial rental income of
the property, estimated value of the property based
on cost approach and estimated value based on a local
market analysis of comparable sales.
The existing structure appears to be in average condition Outreach Program Study
for its age and type of use. With few comparable
properties, the task was difficult and reflected in the
range of values from the various approaches to valuation
(replacement cost, actual income, and comparable
sales per square foot comparison) summarized in the
report. I made a substantial downward adjustment in
estimated building value based on obsolescence. Using
the income approach the Net Operating Income was
adjusted by 25% to reflect the location and limited
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potential users of a property of this nature. When
comparing like property sales the task was difficult
as few properties in the area that have sold reflect the
size of the building and industry. The per square foot
comparable sales value was reduced by 40% due to
realizing one of the comparable sales had a substantial
effect on the overall square foot value that may not be
realistic for the subject property being valued.
A review of the financial performance of the Masonic
Home has been provided. The lacking performance of
the assisted living facility may have a substantial effect
on the actual sales price of the home compared to the
estimated value. Based on RMA industry standards
an assisted living facility with revenue between
$1,000,000.00 and $3,000,000.00 maintains an average
operating profit of 7.4% of sales. Based on a limited
income and expense analysis the Masonic Home had
a net loss in 2011 of $399,193.00, a net loss in 2012 of
$497,244 and a net loss in 2013 of $604,316. Donations
were added to the net loss total as the private market
would not look at a donation as a revenue source. The
continued net loss compared to the industry average
net operating profit as a percentage of sales establishes
a dramatic income loss. In 2013 the difference between
the net loss of $604,316 and an industry average profit
as a percentage of sales of 7.4% was $757,738.00.
Based on the financial information provided above, the
estimated asset value of $2,600,000.00 to $2,700,000.00
could be difficult to finance based on prior performance
of the assisted living facility. Therefore, an interested
purchaser would potentially lower its risk level by
establishing a lower value on the property than what
has been provided.
Please note that no value was placed on the buildings
associated with the Masonic Home other than the main
approximate 33,000 square foot facility. Although the
garages, outbuildings and shops have a value, the
value is potentially limited. Please recognize that the
boiler unit housed in a separate building is potentially
an increased expense for a potential buyer. Newer
facilities have heat supply units constructed within the
facility itself limiting associated expenses.
It is my opinion as a broker of commercial real estate a
conservative marketing price would be: $2,600,000.00
to $2,700,000.00
As directed by GMR No. R-2014-01 (Amended) the
Special Committee is to find a means to utilize the
remaining assets of the Masonic Home received from
their sale to provide charity to our needy brothers
and family members in their local areas, within the
jurisdiction of the Grand Lodge of Montana.
The Special Committee has been in communication
with and has received oral information from the
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