Kitsap County Assessor Narrative for Countywide Model Tax Year: 2018 Appraisal Date: 1/1/2017 Property Type: Quick Service Restaurants (QSR) Updated 5/30/2017 by CM20 Area Overview Countywide models are for properties located throughout Kitsap County, rather than by neighborhood. Property Type Overview Quick Service Restaurants (QSR), also known as fast food restaurants, contain limited seating in relation to preparation area, and typically include drive-up windows. Economic Overview: The overall economic condition is improving with several sales typically occurring each year. Sales prices show a positive trend in sales price per square foot. Kitsap county has 53 QSR properties with one currently vacant. QSR properties are reviewed countywide and are ranked based on eleven individual charateristics that are rated on a 6+ point scale. The total points reflect the cumulative effect each charateristic has upon the real estate. Each score categorizes the property into one of five classes. Valuation Summary Approach Used: Income Analysis and Conclusion Summary: The three approaches to value were considered. The cost approach was given little consideration in the appraiser's final analysis. Cost approach components such as replacement cost new, effective age, and depreciation are difficult to accurately calculate in a mass appraisal model. A market/sales comparison approach uses sale prices of comparable properties to calculate value. The market/sales approach was not applied as Kitsap County lacks sufficient, recent sales. The income approach was selected as the best method for valuing these properties. The data used to develop our current model data was collected from our mail survey, site visits, local sales, national publications, and data supplied for review or appeal. Market sales were used to calibrate the income model. No paired resales were available for trend analysis, however, comparison of price per square foot between equally rated sales allowed for the development of a conservative trend rate of 1 per year for sales occurring in 2013. No trend was applied for sales occurring in 2014, 2015 or 2016. The mean, median, and COD are calculated from the 11 Kitsap County sales based on the valued computed from the income approach. No market/sales comparison model was developed. Model Calibration Preliminary Ratio Analysis: Analysis of sales resulted in a mean ratio of 85%, a median ratio of 83%, and a coefficient of disperson (COD) of 12.92. Market/Sales Comparison Approach Data and Analysis Printed 5/31/2017
Property type: Quick Service Restaurants (QSR) (continued) Sales: Range of Sale Dates: 1/1/2013 to 12/31/2016. A total of 11 local sales, and 36 regional sales, and 0 national sales were used in the sales analysis. Additional information is provided on the sales analysis data sheet. Kitsap County attempts to review, analyze, and validate via telephone, mail, or in person interviews, all commercial sales within the county for inclusion or exclusion in our market/sales approach. Market/Sales Rates: Sales ranged from $325.63 to $1,052.05 per square foot. Insufficient local sales were available across the property classification to develop a market/sales comparison model. Additional regional sales were reviewed to quantify the range of values. Income Approach and Data Analysis Values were calculated using a triple net (NNN) income model. Income and expense information was collected from mailed surveys, property representatives, on-site visits, and market research (publications, newsletters, websites, etc.) Income information from Kitsap County was limited, but sufficient regional information was obtained to develop an income model. Additional information from national publications was reviewed to determine industry standards. Rent Data: The Assessor validated rents from 39.6% of the market. Typical reported rents had a range of $5.46 to $80.73. We selected $15.81 to $51.75 for our model. Vacancy Data: Typical reported vacancy had a range of to 5%. We selected 5% to 5% for our model. Expense Data: Typical reported expense had a range of to 25%. We selected 6% to 6% for our model. Capitalization Rate (Cap) Data: Typical sale cap rates ranged from 4.71% to 7.91%. We selected 6.25% to 8% for our model. Income Model Value Range: square foot. The income approach calculates a range of values from $176.51 to $739.4 per Final Ratio Analysis: Analysis of sales resulted in a mean ratio of 92%, a median ratio of 93%, and a coefficient of disperson (COD) of 11.45. Sources Kitsap County Board of Equalization appeal documentation. Washington State Board of Tax appeal documentation. Kitsap County income and expense surveys. Kitsap County sales questionaires. The Dictionary of Real Estate Appraisal, Appraisal Institute, Third Edition, 1993 Property Appraisal and Assessment Administration, IAAO, 1990 Glossary for Property Appraisal and Assessment, IAAO,1997 LoopNet - www.loopnet.com Commercial Brokers Association - www.commercialmls.com Boulder Group, The Net Lease QSR Market Report Q2 2016 Calkain Companies, Cap Rate Report Q4 2016 Location Analysis for the Fast Food Restaurant, The Canadian Appraiser, Winter 1992 The Valuation of Fast Food Outlets: Analysis, Methodology, and Reliability. Peter Elliott and Richard Reed, 1999 Printed 5/31/2017
Property type: Quick Service Restaurants (QSR) (continued) The Valuation of Fast Food Restaurants, J. Scott Renne, CAE, MAI, IAAO, September/October 2004 Washington State Department of Transportation, 2011 Annual Traffic Report, www.wsdot.wa.gov City of Poulsbo, www.cityofpoulsbo.com City of Bremerton, www.ci.bremerton.wa.us Printed 5/31/2017
QUICK SERVICE RESTAURANT CLASSIFICATION Class A >= +6 Class B 4 to 5 Class C 2 to 3 Class D 0 to 1 Class E <= - 1 2 Points 1 Point 0 Points -1 Points -2 Points Lot Size 1.00 acre <= 1.20 acres 1.20 acres - 0.40 acres < 0.40 acres Multiple Access Shopping center, or front, back and adjacent properties Front & Back, or Corner Road frontage only Lighted Access Available Yes No Fronts Shopping Center Yes No Adjacent to Hwy or Hotel/Motel Yes No Heavy Noon Traffic Yes No Lot Shape Rectangular Square Odd shaped Traffic Count > 30,000 20,000 < 30,000 15,000 < 20,000 10,000 < 15,000 < 10,000 Competition None Building Size (do not include basements or play areas) < 1,000 1,000 < 3000 3,000 < 4,000 4,000 < 5,000 > 5,000 Building Age/Condition Brand new in prime location (+ 1) New or excellent condition, clean, landscaped, well lighted. Built > 2000 or older with recent remodel. (+ 0) Typical age and condition QSR; Built < 2000 and mostly original or older with recent RA. (- 1) Old or poor condition, obsolete design, visible deferred maintenance http://ikitsap/assr/dc/commercial/18_fast_food_model
Kitsap County Assessor Tax Year: 2018 Property Type: Quick Service Rest Neighborhood: Countywide Not Used Not Used QSR QSR Bsmt QSRPlaylnd Class A Rent 51.75 13.00 Vac % Exp % Cap Rate 6.25 6.25 Market Class B Rent 43.01 10.00 Vac % Exp % Cap Rate 6.250 6.250 Market Class C Rent 33.06 7.00 Vac % Exp % Cap Rate 6.50 6.50 Market Class D Rent 23.81 5.50 Vac % Exp % Cap Rate 7.00 7.00 Market Class E Rent 15.81 4.00 Vac % Exp % Cap Rate 8.00 8.00 Market Income Mode 302017 5/31/2017
Kitsap County Assessor Tax Year 2018 Local Income Survey for Fast Food PGI per Unit Vacancy EGI per Unit Expense % $80.73 $80.72 $63.30 $63.30 $62.09 $62.09 1% $61.09 5% $58.03 5% $58.60 $58.60 $54.50 $54.50 $52.76 $52.76 $51.09 $51.09 $46.88 $46.87 12% $46.34 $46.34 $46.25 $46.25 $44.08 $44.08 25% $44.08 $44.08 $39.45 $39.45 $37.45 $37.45 $35.43 $35.43 $34.05 $34.05 $33.93 $33.93 $33.66 $33.66 $32.14 $32.14 $32.11 $32.11 $32.11 $32.11 $32.11 $32.11 $26.70 $26.70 $26.23 $26.23 $25.52 $25.52 $25.52 $25.52 $25.43 $25.43 $24.28 $24.28 $16.33 $16.33 $5.46 $5.46 NOI per Unit $80.71 $63.30 $61.46 $55.13 $58.60 $54.50 $52.76 $51.09 $41.25 $46.34 $46.24 $33.06 $44.08 $39.45 $37.45 $35.43 $34.04 $33.93 $33.66 $32.14 $32.11 $32.11 $32.11 $26.70 $26.23 $25.52 $25.52 $25.43 $24.27 $16.33 $5.46 Printed: 5/30/2017
Tax Year 2018 Quick Service Restaurant Sales Sales from 01/01/2013-12/31/2016 Income Approach Analysis Local Sales 1 # NBRHD PARCEL# PROJECT VC EXCISE# DATE PRICE TRENDED UNITS TRENDED RENT PRICE $/UNIT CLASS 2018 Model Other Value Ratio 1 8401101 162501-2-085-2002 KFC Silverdale V 2013EX03699 06/03/2013 $ 1,100,000 $ 1,384,192 2,242 $ 617.39 B $ 1,377,780 $ - 10 2 8100502 3787-000-022-0007 Taco Bell - Kitsap Way V 2014EX01458 03/12/2014 $ 1,325,000 $ 1,325,000 2,155 $ 601.55 B $ 1,324,320 $ 28,650 102% 3 8401508 262501-4-119-2006 Taco Time - Highway 303 V 2014EX02451 04/30/2014 $ 1,595,900 $ 1,595,900 2,456 $ 649.80 B $ 1,509,280 $ - 95% 4 8402307 312402-2-020-2001 Taco Bell - Mile Hill V 2014EX03553 06/09/2014 $ 1,950,000 $ 1,950,000 2,752 $ 708.58 B $ 1,691,180 $ - 87% 5 8401101 5053-000-003-0002 Skippers of Silverdale V 2015EX06018 08/19/2015 $ 845,000 $ 845,000 2,595 $ 325.63 D $ 788,230 $ - 93% 6 8400203 152601-4-031-2003 Poulsbo Perk Expresso - Poulsbo V 2015EX07903 10/23/2015 $ 300,000 $ 300,000 512 $ 493.18 C $ 232,550 $ 47,490 93% 7 8401101 5053-000-002-0003 Jack in the Box- Silverdale V 2016EX00220 01/15/2016 $ 1,638,000 $ 1,638,000 2,361 $ 693.77 B $ 1,450,910 $ - 89% 8 8401101 5053-000-002-0003 Jack in the Box- Silverdale V 2016EX02458 04/20/2016 $ 2,320,000 $ 2,320,000 2,361 $ 982.63 B $ 1,450,910 $ - 63% 9 8400202 102601-4-054-2000 Sonic Fast Food V 2016EX06954 09/08/2016 $ 2,600,000 $ 2,600,000 2,403 $ 1,052.05 A $ 1,776,780 $ 71,930 71% 10 8401101 212501-2-020-2003 Taco Time Bucklin Hill V 2016EX08202 10/20/2016 $ 1,200,000 $ 1,200,000 2,393 $ 501.46 B $ 1,470,560 $ - 123% 11 8100506 022401-1-043-2002 Arby's Wheaton Way V 2016EX08240 10/21/2016 $ 1,375,000 $ 1,375,000 2,831 $ 608.60 B $ 1,739,730 $ (347,950) 101% NBRHD Neighborhood VC Validity Codes Count 11 8100502 West Bremerton V Valid Sale High 123% 8400202 Highway 305 Low 63% 8400203 Viking Way Median 93% 8400207 College Marktplace Mean 92% 8401101 Silverdale AAD 11% 8401506 Wheaton Way COD 11.47 8402307 South Kitsap UGA http://ikitsap/assr/dc/commercial/18_fast_food_model
OTHER COUNTY QUICK SERVICE RESTAURANT (QSR) SALE COUNTY ACCOUNT NUMBER PROJECT SIZE YEAR TRAFFIC NOI/SF EXCISE# DATE PRICE $UNIT CAP Quick Service Restaurant, Fast Food Chelan 26987 Sonic 1804 2009 170580 6/30/2016 $1,640,000 $909.09 0.0 $0.00 Clark 110794005 Starbuck's 2241 1979 45,000 712216 7/14/2014 $1,450,000 $647.03 5.56% $3 Clark 30250996 Dairy Queen Grill & Chill 1328 18,000 713437 8/5/2014 $1,500,000 $1,129.52 6.0 $67.76 Grays Harbor Starbucks Aberdeen 1656 2006 20,000 E220162 6/23/2016 $1,145,000 $691.43 5.44% $37.59 King 516970-0092 Starbucks 2796 1982 2611357 6/11/2013 $1,200,000 $429.18 0.0 $0.00 King 092104-9292 former Taco Bell 1566 1979 25,650 2651086 1/24/2014 $630,000 $402.30 0.0 $0.00 King 2500600701 Church's Chicken 2112 1972 33,000 2665183 4/16/2014 $485,000 $229.64 7.73% $17.75 King 312305-9167 former Wendy's 2889 2003 2666953 5/7/2014 $1,192,000 $412.60 0.0 $0.00 King 322305-9087 Arby's 3441 2000 2683630 8/4/2014 $1,825,000 $530.37 7.54% $4 King 3622059070 Wendy's 3227 2015 2717402 3/9/2015 $2,550,000 $790.21 5.01% $39.60 Lewis '018083001006 Starbucks Napavine 3250 2014 3431609 6/1/2015 $1,670,000 $513.85 6.23% $32.00 Pierce 3830000090-60-70- Jack in the Box 2580 1999 4301923 1/17/2013 $1,675,000 $649.22 0.0 $0.00 Pierce 6026190010 Jack in the Box 2599 2012 4302367 1/17/2013 $2,000,000 $769.53 0.0 $0.00 Pierce 250060-0701 former KFC 2112 1972 2665183 4/16/2014 $485,000 $229.64 0.0 $0.00 Pierce 2200001000 Jack in the Box 2604 2014 130,000 4346363 8/4/2014 $2,465,000 $946.62 5.37% $50.87 Pierce 0419107031 former Herfy Burger 2059 1984 45,619 4347851 8/19/2014 $800,000 $388.54 0.0 $0.00 Pierce 0220025023 Sonic Drive In 2151 2010 4354270 11/12/2014 $2,571,429 $1,195.46 0.0 $0.00 Pierce 2008120011 McDonalds 4274 1972 4357191 11/14/2014 $2,210,000 $517.08 0.0 $0.00 Pierce 5025001946 Burger King 3259 2015 43,000 4365098 4/10/2015 $2,620,000 $803.93 5.15% $41.42 Pierce 9010050010 Ivar's at Willow Hill 2232 2007 4366639 4/28/2015 $1,360,000 $609.32 5.74% $34.24 Pierce '0420127012 Bigfoot Java 630 2014 4369830 6/10/2015 $750,000 $1,190.48 6.4 $76.19 Pierce '0419107035 Taco Bell 2266 1987 4377856 8/31/2015 $1,661,538 $733.25 0.0 $0.00 Pierce 3515000072 Starbucks 824 2007 43,000 9/11/2015 $1,090,000 $1,322.82 5.39% $71.34 Pierce '0519032073 Sonic 1752 2009 4386872 12/21/2015 $1,625,000 $927.51 0.0 $0.00 Pierce '0219211088 Popeye's 1936 2014 4392132 3/8/2016 $3,000,000 $1,549.59 0.0 $0.00 Pierce '9830000051 Popeye's 3211 1996 4412575 10/7/2016 $2,500,000 $778.57 0.0 $0.00
COUNTY ACCOUNT NUMBER PROJECT SIZE YEAR TRAFFIC NOI/SF EXCISE# DATE PRICE $UNIT CAP Pierce '0220022031 Arby's 2594 1978 4420095 12/24/2016 $1,000,000 $385.51 0.0 $0.00 Skagit P83926 Wendy's 2960 1994 20132618 6/19/2013 $1,230,391 $415.67 0.0 $0.00 Skagit P26248 Burger King 3752 1979 20144176 10/29/2014 $1,250,000 $333.16 0.0 $0.00 Snohomish 00593200000100 Carls Jr 2904 2009 1021685 4/1/2013 $900,000 $309.92 0.0 $0.00 Snohomish 00439163000900 Taco Bell 2163 1977 1040009 11/27/2013 $2,251,271 $1,040.81 5.91% $61.50 Snohomish 27042000301900 Jack in the Box 2421 1979 1051782 6/6/2014 $1,082,000 $446.92 0.0 $0.00 Thurston 73680000200 Church's Chicken 2430 2016 732346 8/8/2016 $2,182,000 $897.94 0.0 $0.00 Thurston 73680000300 Sonic 1798 2016 384162 8/24/2016 $2,105,000 $1,170.75 0.0 $0.00 Thurston 73660000100 Sonic 1629 2016 733055 9/26/2016 $2,660,000 $1,632.90 0.0 Whatcom '3803290254000000 Starbuck's 923 2016 203470 6/30/2016 $1,890,000 $2,047.67 0.0 $0.00
MARKET SURVEY REPORTS - Cap Rates Quick Service Restaurant (QSR) Source Boulder Group Date Cap Rate Cap Rate Range The Net Lease QSR Market Report Q2 2016 Franchisee Properties Median Asking Cap Rates 7/1/2016 5.73% 5.15%-6.0 Q2 2016 Corporate Properties Median Asking Cap Rates 7/1/2016 5.05% 4.0-5.45% Source Calkain Companies Date Cap Rate Cap Rate Range Cap Rate Report Q4 2016 1/1/2017 5.85% 3.28% - 11.01% Page 1 of 1