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Integra Realty Resources
Caribbean
Appraisal of Going Concern
IGY American Yacht Harbor Marina
Mixed Use Property
18A-1, 18-B1,18-B and 18-W Remainder Estate Smith Bay
East End Quarter, St. Thomas, Virgin Islands
Client Reference: 23559
Prepared For:
Banco Popular de Puerto Rico
Effective Date of the Appraisal:
November 25, 2015
Report Format:
Appraisal Report —Standard Format
IRR - Caribbean
File Number: 172-2015-0181
IGY American Yacht Harbor Marina
18A-1, 18-61,18-B and 18-W Remainder Estate Smith Bay
East End Quarter, St. Thomas, Virgin Islands
Integra Realty Resources
Caribbean
December 15, 2015
Roberto A. Soltero
Vice President
Banco Popular de Puerto Rico
PO Box 362708
San Juan, PR 00936-2708
6500 Red Hook Plaza Suite 201
St. Thomas, VI 00802
U.S. Virgin Islands
T 340-714-7325
T 844-952-7304
caribbean@irr.com
www.irr.com
SUBJECT: Market Value Appraisal
IGY American Yacht Harbor Marina
18A-1, 18-61,18-B and 18-W Remainder Estate Smith Bay
East End Quarter, St. Thomas, Virgin Islands
Client Reference: 23559
IRR - Caribbean File No. 172-2015-0181
Dear Mr. Soltero:
Integra Realty Resources — Caribbean is pleased to submit the accompanying appraisal of
the referenced property. The purpose of the appraisal is to develop an opinion of the
market value of the leased fee (going concern) interest in the property. The client for the
assignment is Banco Popular de Puerto Rico, and the intended use is for Commercial credit
administration.
The appraisal is intended to conform with the Uniform Standards of Professional Appraisal
Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal
Practice of the Appraisal Institute, the Principles of Appraisal Practice and Code of Ethics of
the American Society of Appraisers, the RICS Valuation Professional Standards, the
International Valuation Standards, applicable jurisdictional appraisal regulations, and the
appraisal guidelines of Banco Popular de Puerto Rico. The appraisal is also prepared in
accordance with the appraisal regulations issued in connection with the Financial
Institutions Reform, Recovery and Enforcement Act (FIRREA).
To report the assignment results, we use the Appraisal Report option of Standards Rule 2-
2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an
Appraisal Report depending on the intended use and intended users of the appraisal, we
Roberto A. Soltero
Banco Popular de Puerto Rico
December 15, 2015
Page 2
adhere to the Integra Realty Resources internal standards for an Appraisal Report —
Standard Format. This format summarizes the information analyzed, the appraisal methods
employed, and the reasoning that supports the analyses, opinions, and conclusions.
The subject is an existing 250-slip marina with 5 commercial buildings containing a mixture
of retail and office space types. The buildings contain 48,661 square feet of rentable area
and were constructed in multiple stages; with the majority of the construction completed in
1993. The commercial space is 85% leased as of the effective appraisal date. The marina
docks were constructed in multiple phases between 1991-1995 and are 52.8% occupied as
of the effective appraisal date. The total site area is 2.76 acres or 120,226 square feet, which
includes 0.64 acre or 27,878 square feet, that is re-claimed land. The property also includes
3.2 acres of seabed under the marina dock structures which is leased to the property owner
from the Government of the Virgin Islands.
Based on the valuation analysis in the accompanying report, and subject to the definitions,
assumptions, and limiting conditions expressed in the report, our opinion of value is as
follows:
Value Conclusion*
Appraisal Premise
Market Value
Interest Appraised Date of Value Value Conclusion
Leased Fee (Going Concern) November 25, 2015 $24,360,000
*Values expressed in United States Dollars
Allocation of Going Concern Value
Amount   % of Total
Tangible Property
Land & Improvements   $24,250,000   99.5%
Tangible Personal Property (FF&E)   $110,000   0.5%
Total Tangible Property   $24,360,000   100.0%
I nta ngi ble Assets   $0   0.0%
Market Value*   $24,360,000   100.0%
*Specifically excluded from the valuation are cash and equivalents and current liabilities.
The allocation of value components is based on the going-concern premise, which holds that
the value of a business as a going-concern is equal to the sum of the values of the tangible
and intangible assets. The allocation assumes continued operation of the marina business.
Were the marina business to cease operations, the values of the individual components
would likely be different from the allocated values of the going concern.
Roberto A. Soltero
Banco Popular de Puerto Rico
December 15, 2015
Page 3
Extraordinary Assumptions and Hypothetical Conditions
The value conclusions are subject to the following extraordinary assumptions that may affect the assignment
results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to
be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions.
1. The subject property has a fueling dock and four fuel storage tanks located on site; including three diesel
and one gasoline. There were no signs of contamination during our inspection and we have assumed that
there is no adverse environmental impact in connection with the existing fuel equipment used on the
subject property.
2. The parking garage at the subject slightly encroaches on the neighboring property to the immediate
northwest. This land is owned by the Government of the Virgin Islands and we have assumed that no claim
will arise from the encroachments.
3. For this analysis, we have valued the going concern interest in the subject property and have allocated the
value of the personal property from the value of the real property. We were provided with financial
statments from ownership that indicates the depreciated book value of these assets. It is beyond our scope
to value these assets in use; therefore, we have assumed that the book values of teh personal property
items shown in the statments provided by ownership are reasonably accurate for the purpose of this
allocation exercise.
The value conclusions are based on the following hypothetical conditions that may affect the assignment
results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal
but is supposed for the purpose of analysis.
1. No hypothetical conditions were employed in this analysis.
The opinions of value expressed in this report are based on estimates and forecasts that are
prospective in nature and subject to considerable risk and uncertainty. Events may occur
that could cause the performance of the property to differ materially from our estimates,
such as changes in the economy, interest rates, capitalization rates, financial strength of
tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and
forecasts are based partly on data obtained from interviews and third party sources, which
are not always completely reliable. Although we are of the opinion that our findings are
reasonable based on available evidence, we are not responsible for the effects of future
occurrences that cannot reasonably be foreseen at this time.
irr.
Roberto A. Soltero
Banco Popular de Puerto Rico
December 15, 2015
Page 4
If you have any questions or comments, please contact the undersigned. Thank you for the
opportunity to be of service.
Respectfully submitted,
Integra Realty Resources - Caribbean
Mark J. Weathers
Certified General Real Estate Appraiser
VI Certificate # 1-21738-1B
Telephone: 340-714-7325
Email: mweathers@irr.com
James V. Andrews, MAI, CRE, FRICS, ASA, CVA
Certified General Real Estate Appraiser
VI Certificate # 0-14194-1B
Telephone: 345-746-3110
Email: jandrews@irr.com
El
Table of Contents
Summary of Salient Facts and Conclusions   1   Income Capitalization Approach   57
General Information   3   Market Rent Analysis — General Retail
Identification of Subject   3   Space   59
Sale History   3   Market Rent Analysis — General Office
Pending Transactions   3   Space   65
Purpose of the Appraisal   4   Market Rent Analysis — Restaurant Space   71
Basis of Value   4   Market Rent Analysis — Marina Slip Rentals78
Definition of Property Rights Appraised   4   Reconciliation and Conclusion of Value   106
Definition of Going-Concern Premise   4   Exposure Time   107
Intended Use and User   5   Marketing Period   107
Applicable Requirements Prior Services   5 5   Allocation of Going-Concern Value 108 Value of Furniture, Fixtures and Equipment
Cornpetency   5   (FF&E)   108
Independence   6   Value of Intangible Assets   109
RICS Valuer Registration   6   Allocation of Going-Concern Value   109
Currency   6   Insurable Replacement Cost   110
Scope of Work   6   Certification   111
Economic Analysis   8   Assumptions and Limiting Conditions   113
Area Analysis   8   Addenda
Surrounding Area Analysis   22   A. Appraiser Qualifications
Marina Market Analysis   25   B. Financials and Property Information
Property Analysis   36   C. Comparable Data
Land Description and Analysis   36   D. DCF Reports
Improvements Description and Analysis   42   E. Engagement Letter
Real Estate Taxes   52
Highest and Best Use   54
Valuation   56
Valuation Methodology   56
IGY American Yacht Harbor Marina
ID,
Summary of Salient Facts and Conclusions 1
Summary of Salient Facts and Conclusions
Property Name
Address
Property Type
Owner of Record
Parcel ID
Legal Description
IGY Ameri can Yacht Harbor Marina
18A-1, 18-B1,18-B and 18-W Remainder Estate Smith Bay
East End Quarter, St. Thomas, Virgin Islands
Mixed Use- Marina
IGY-AYH ST. Thomas Holdings, LLC
1-07702-0135-00, 1-07702-0134-00, 1-07702-0133-00, and
1-07702-0198-00
Parcel Nos. 18A-1 Remainder, 18B-1 Remainder, 18B
Remainder Estate and 18-W Estate Smith Bay, Nos. 1,2 and
3 East End Quarter, St. Thomas, U.S. Virgin Islands
Land Area
Number of Units
Gross Building Area
Rentable Area
Percent Leased
Year Built; Year Renovated
2.76 acres; 120,226 SF
105
72,808 SF
48,652 SF
85%
1992; N/A
Zoning Designation
Highest a nd Best Use-As if Vacant
Highest a nd Best Use-As Improved
Exposure Time; Marketing Period
Effective Date of the Appraisal
Date of the Report
Property Interest Appraised
W-1, Waterfront- Pleasure
Marina oriented commercial use
Continued marina and commercial use
12-24 months; 12-24 months
November 25, 2015
December 15, 2015
Leased Fee (Going Concern)
Market Value Indications
Cost Approach
Sales Comparison Approach
Income Capitalization Approach
Market Value Conclusion*
Not Used
Not Used
$24,360,000
$24,360,000
*Values expressed in United States Dollars
The values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompa nying report of which this
summary is a part. No party other than Banco Popular de Puerto Rico may use or rely on the information, opinions, and conclusions contained in
the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting
conditions contained therein.
IGY American Yacht Harbor Marina
Summary of Salient Facts and Conclusions 2
Extraordinary Assumptions and Hypothetical Conditions
The value conclusions are subject to the following extraordinary assumptions that may affect the assignment
results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to
be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions.
1. The subject property has a fueling dock and four fuel storage tanks located on site; including three diesel
and one gasoline. There were no signs of contamination during our inspection and we have assumed that
there is no adverse envi ronmental i nnpact i n connection with the existi ng fuel equi pment used on the
subject property.
2. The parking garage at the subject slightly encroaches on the neighboring property to the immediate
northwest. This land is owned by the Government of the Virgin Islands and we have assumed that no claim
will arise from the encroachments.
3. For this analysis, we have valued the going concern interest in the subject property and have allocated the
value of the personal property from the value of the real property. We were provided with financial
statments from ownership that indicates the depreciated book value of these assets. It is beyond our scope
to value these assets in use; therefore, we have assumed that the book values of teh personal property
items shown in the statments provided by ownership are reasonably accurate for the purpose of this
allocation exercise.
The value conclusions are based on the following hypothetical conditions that may affect the assignment
results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal
but is supposed for the purpose of analysis.
1. No hypothetical conditions were employed in this analysis.
IGY American Yacht Harbor Marina
General Information 3
General Information
Identification of Subject
The subject is an existing 250-slip marina with 5 commercial buildings containing a mixture of retail
and office space types. The buildings contain 48,661 square feet of rentable area and were
constructed in multiple stages; with the majority of the construction completed in 1993. The
commercial space is 85% leased as of the effective appraisal date. The marina docks were constructed
in multiple phases between 1991-1995 and are 52.8% occupied as of the effective appraisal date. The
total site area is 2.76 acres or 120,226 square feet, which includes 0.64 acre or 27,878 square feet,
that is re-claimed land. The property also includes 3.2 acres of seabed under the marina dock
structures which is leased to the property owner from the Government of the Virgin Islands. The legal
description of the property is shown below.
Property Identification
Property Name IGY American Yacht Harbor Marina
Address 18A-1, 18-61,18-B and 18-W Remainder Estate Smith Bay
East End Quarter, St. Thomas, Virgin Islands
Parcel ID 1-07702-0135-00, 1-07702-0134-00, 1-07702-0133-00, and 1-07702-0198-00
Owner of Record IGY-AYH ST. Thomas Holdings, LLC
Legal Description Parcel Nos. 18A-1 Remainder, 18B-1 Remainder, 18B Remainder Estate and 18-W
Estate Smith Bay, Nos. 1,2 and 3 East End Quarter, St. Thomas, U.S. Virgin Islands
Sale History
The most recent closed sale of the subject is summarized as follows:
Sale Date January 19, 2007
Seller MOF VI Limited Partnership
Buyer IGY-AYH ST. Thomas Holdings, LLC
Sale Price $25,500,000
Recording Instrument Number document number 2007000531
Expenditures Since Purchase Unknown
The sale price is consistent with our market value conclusion considering the date of the transaction
and the market fluctuation since that time. To the best of our knowledge, no sale or transfer of
ownership has taken place within a three-year period prior to the effective appraisal date.
Pending Transactions
To the best of our knowledge, the property is not subject to an agreement of sale or an option to buy,
nor is it listed for sale, as of the effective appraisal date.
IGY American Yacht Harbor Marina
irr.
General Information 4
Purpose of the Appraisal
The purpose of the appraisal is to develop an opinion of the market value of the leased fee (going
concern) interest in the property as of the effective date of the appraisal, November 25, 2015. The
date of the report is December 15, 2015. The appraisal is valid only as of the stated effective date or
dates.
Basis of Value
Market value is defined as:
"The most probable price which a property should bring in a competitive and open market under all
conditions requisite to a fair sale, 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 date and the passing of title from seller to buyer under conditions whereby:
• Buyer and seller are typically motivated;
• Both parties are well informed or well advised, and acting in what they consider their own
best interests;
• A reasonable time is allowed for exposure in the open market;
• Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and
• 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 sale."
(Source: Code of Federal Regulations, Title 12, Chapter!, Part 34.42[g]; also Interagency Appraisal and
Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472)
Definition of Property Rights Appraised
Leased fee interest is defined as, "A freehold (ownership interest) where the possessory interest has
been granted to another party by creation of a contractual landlord-tenant relationship (i.e., a lease)."
Lease is defined as, "A contract in which rights to use and occupy land or structures are transferred by
the owner to another for a specified period of time in return for a specified rent."
(Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois,
2010)
Definition of Going-Concern Premise
Going-Concern Premise is defined as, "one of the premises under which the total assets of a business
can be valued; the assumption that a company is expected to continue operating well into the future
(usually indefinitely). Under the going-concern premise, the value of a business as a going concern is
equal to the sum of the value of the tangible assets and the value of the intangible assets, which may
IGY American Yacht Harbor Marina
General Information 5
include the value of excess profit, where asset values are derived consistently with the going-concern
premise."
(Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois,
2010)
Intended Use and User
The intended use of the appraisal is for Commercial credit administration. The client and intended
user is Banco Popular de Puerto Rico. The appraisal is not intended for any other use or user. No party
or parties other than Banco Popular de Puerto Rico may use or rely on the information, opinions, and
conclusions contained in this report.
Applicable Requirements
This appraisal is intended to conform to the requirements of the following:
• Uniform Standards of Professional Appraisal Practice (USPAP);
• Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal
Institute;
• The Principles of Appraisal Practice and Code of Ethics of the American Society of Appraisers
• The RICS Valuation Professional Standards;
• The International Valuation Standards of the IVSC;
• Applicable jurisdictional regulations;
• Appraisal requirements of Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA), revised June 7, 1994;
• Interagency Appraisal and Evaluation Guidelines issued December 10, 2010;
• Appraisal guidelines of Banco Popular de Puerto Rico.
Prior Services
USPAP requires appraisers to disclose to the client any other services they have provided in
connection with the subject property in the prior three years, including valuation, consulting, property
management, brokerage, or any other services. The RICS Red Book also contains requirements for
valuers to disclose previous involvement with the subject property within twelve months. We have
not performed any services, as an appraiser or in any other capacity, regarding the property that is the
subject of this report within the three-year period immediately preceding acceptance of this
assignment.
Competency
We hereby confirm that we possess adequate knowledge and skills to perform the assignment
competently, including an understanding area/regional market conditions, and factors which pertain
to the property type in question.
IGY American Yacht Harbor Marina
General Information 6
Independence
We hereby confirm that we have no conflicts of interest or material involvement in the property which
is the subject of this valuation; and that we are acting as unbiased, independent, external valuers.
RICS Valuer Registration
We confirm that we are in compliance with the RICS Valuer Registration program, which is mandatory
for RICS members in the Caribbean region.
Currency
Unless otherwise stated, all financial figures in this report are expressed in United States Dollars.
Scope of Work
To determine the appropriate scope of work for the assignment, we considered the intended use of
the appraisal, the needs of the user, the complexity of the property, and other pertinent factors. Our
concluded scope of work is described below.
Valuation Methodology
Appraisers usually consider the use of three approaches to value when developing a market value
opinion for real property. These are the cost approach, sales comparison approach, and income
capitalization approach. Use of the approaches in this assignment is summarized as follows:
Approaches to Value
Approach
Applicability to Subject Use in Assignment
Cost Approach Not Applicable Not Utilized
Sales Comparison Approach Not Applicable Not Utilized
Income Capitalization Approach Applicable Utilized
The income capitalization approach is the most reliable valuation method for the subject due to the
following:
• The probable buyer of the subject would base a purchase price decision primarily on the
income generating potential of the property and an anticipated rate of return.
• Sufficient market data regarding income, expenses, and rates of return, is available for
analysis.
The sales comparison approach is not applicable to the subject because:
• This approach does not reflect the primary analysis undertaken by a typical investor-
purchaser.
• There are insufficient sales of comparable properties in this market from which to derive a
credible value conclusion.
The cost approach is not applicable to the subject considering the following:
IGY American Yacht Harbor Marina
General Information 7
• The age of the property makes estimates of accrued depreciation very subjective.
• This approach is not typically used by market participants, except for new properties.
Research and Analysis
The type and extent of our research and analysis is detailed in individual sections of the report. This
includes the steps we took to verify comparable sales, which are disclosed in the comparable sale
profile sheets in the addenda to the report. Although we make an effort to confirm the arms-length
nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary
verification from sources deemed reliable.
Inspection
Mark J. Weathers conducted an interior and exterior inspection of the property on November 25,
2015. James V. Andrews, MAI, CRE, FRICS, ASA, CVA, also conducted an interior and exterior
inspection on November 25, 2015.
IGY American Yacht Harbor Marina
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Area Analysis 8
Economic Analysis
Area Analysis
Location
The U.S. Virgin Islands are located in the Caribbean Sea and the Atlantic Ocean, about 90 miles (140
km) east of Puerto Rico and immediately west of the British Virgin Islands.
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The territory consists of four main islands: Saint Thomas, Saint John, Saint Croix, and Water Island, as
well as several dozen smaller islands. The combined land area of the islands is roughly twice the size of
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IGY American Yacht Harbor Marina
Area Analysis 9
1
A mild tropical climate, scenic beauty, and status as a U.S. territory make Virgin Islands appealing for
vacationers from United States and Europe. The islands host over 2.5 million visitors per year, most of
whom arrive by cruise ship, and tourism is the dominant economic engine of the islands, accounting
for roughly 70 percent of the total gross territorial product.
Each district has its own distinct landscape, mix and intensity of land uses, cultural identity, and
prospects for future development. St Thomas is home to the capital and the territory's largest city,
Charlotte Amalie, which has an estimated population of roughly 19,000 persons. St Thomas is the
primary center for resort tourism, government, finance, trade, and commerce, but its rugged
landscape limits the land available for agriculture and other types of land-intensive development.
Charlotte Amalie is also home to a major deepwater harbor that is along major shipping routes to the
Panama Canal, and it is just east of the Cyril E King International Airport — one of the busiest airports in
Caribbean. St. Thomas has two cruise ship docks, and is the most frequented cruise ship port in the
Caribbean.
The island of St John is just under 3 miles to the east of St Thomas. Cruz Bay is located on the western
coast of the island and serves as its primary port and link to St Thomas. Nearly two thirds of St John is
owned by the National Park Service and is off-limits to commercial development.
St Croix is largest of the three islands, in both land area and population. It is roughly 45 miles to the
south of St Thomas. Its primary towns are Christiansted and Frederiksted. Overall the island is flatter
and has more land available for additional agricultural, commercial and residential development than
St Thomas. St Croix is also the primary manufacturing center for the Virgin Islands, with rum
distilleries, a major watch-assembly plant, and; until February 2012, one of the world's largest
petroleum refineries (which recently ceased refining operations).
History
The Virgin Islands were originally settled by the Ciboney, Carib, and Arawaks. The islands were named
by Christopher Columbus on his second voyage in 1493 for Saint Ursula and her virgin followers. Over
the next three hundred years, the islands were held by many European powers, including Spain,
England, the Netherlands, France, and Denmark-Norway. The Danes developed the islands with
plantation estates, and the estates boundaries are still used in legal descriptions for land to this day.
The U.S. took possession of the islands on March 31, 1917 and the territory was renamed the Virgin
Islands of the United States. U.S. citizenship was granted to the inhabitants of the islands in 1927.
Government
The U.S. Virgin Islands are an organized, unincorporated United States territory. Even though they are
U.S. citizens, Virgin Islands residents cannot vote in presidential elections. Virgin Islands residents,
however, are able to vote in presidential primary elections for delegates to the Democratic National
Convention and the Republican National Convention.
The main political parties in the U.S. Virgin Islands are the Democratic Party of the Virgin Islands, the
Independent Citizens Movement, and the Republican Party of the Virgin Islands. Additional candidates
run as independents.
IGY American Yacht Harbor Marina
Area Analysis 10
At the national level, the U.S. Virgin Islands elects a delegate to Congress from its at-large
congressional district. However, the elected delegate, while able to vote in committee, cannot
participate in floor votes.
At the territorial level, 15 senators-seven from the district of Saint Croix, seven from the district of
Saint Thomas and Saint John, and one senator at-large who must be a resident of Saint John-are
elected for two-year terms to the unicameral Virgin Islands Legislature. The U.S. Virgin Islands has
elected a territorial governor every four years since 1970. Previous governors were appointed by the
President of the United States.
Population and Employment
In 2008, the residential population of the Virgin Islands peaked at an estimated 115,852 persons. This
follows five years of slow but steady growth of 1.0%, slightly slower than the U.S. annual average of
1.15%. Since 2008, population levels have fallen each year, to the 2014 estimated population of
103,961 persons.
Among the three islands, St Croix and St Thomas are nearly equally populous with St John having less
than 4 percent of the total population of the Virgin Islands.
USVI Economic Indicators
2005   2006   2007   2008   2009   2010   2011   2012   2013   2014   5 Yr Ann Growth
Population   111,470   113,689   114,743   115,852   107,343   106,405   105,784   105,169   104,563   103,961   -0.6%
St Croix   54,635   55,722   56,239   56,783   52,612   50,601   50,247   50,005   49,938   49,656   -1.1%
St. Thoma s   52,528   53,574   54,070   54,592   50,583   51,634   51,266   51,051   50,610   50,316   -0.1%
St. John   4,307   4,393   4,434   4,477   4,148   4,170   4,134   4,113   4,015   3,989   -0.8%
Civilian labor force   51,159   51,159   52,670   52,630   52,861   51,424   50,729   50,577   47,558   46,784   -2.3%
Civilian employment   47,301   48,640   49,547   49,589   48,863   47,272   46,121   44,659   41,207   40,687   -3.3%
Unemployment rate (percent)   7.1%   6.2%   5.9%   5.8%   7.6%   8.1%   8.9%   11.7%   13.4%   13.0%   14.2%
Gross Territorial Product (GTP, Millions)   $4,457   $4,635   $4,836   $4,851   $4,583   $4,660   $4,351   $3,778   $3,792   -4.4%
GTP Per Capita   $39,984   $40,769   $42,146   $41,872   $42,695   $43,795   $41,131   $35,923   $36,265   -2.7%
Personal income (PI)   $2,723   $2,777   $2,964   $2,606   $2,602   $2,704   $2,661   $2,586   $2,233   -2.9%
Per capita personal income ($)   $20,620   $21,711   $22,658   $22,847   $23,931   $25,603   $25,084   $23,388   $21,353   -1.3%
Total Exports (Millions of $1   $10,476   $11,627   $12,962   $17,249   $9,728   $11,930   $13,314   $2,263   $1,285   $1,671   -16.6%
Refined petroleum   $9,376   $10,463   $11,242   $13,592   $8,327   $9,759   $10,486   $932   $32   $7   -20.0%
Value of construction permits (Millions $)   $390.20   $442.70   $266.10   $273.30   $261.80   $187.20   $179.10   $141.40   $156.60   $201.40   -4.6%
St. Thomas/St. John   $274.30   $217.70   $172.90   $183.80   $79.00   $80.60   $87.90   $85.10   $114.80   $142.20   16.0%
St. Croix   $115.90   $225.00   $93.20   $89.50   $175.90   $106.50   $91.10   $56.20   $41.80   $59.20   -13.3%
Source: Vi Bureau of Economic Research
The territory's Labor Force has also declined slightly, and there has been a steady increase in the
unemployment rate; which was further affected by the closure of the Hovensa oil and gas refinery in
2012. Note that there was a slight dip in unemployement in 2014.
IGY American Yacht Harbor Marina
Area Analysis 11
Population and Employment
125,000
115,000
105,000
95,000
85,000
75,000
65,000
55,000
45,000
35,000
25,000
2007 2008 2009 2010 2011 2012 2013 2014
_ 16.0%
14.0%
- 12.0%
10.0%
_ 8.0%
6.0%
- 4.0%
- 2.0%
_ 0.0%
—Population Civilian employment --A—Unemployment Rate
Industry
The territory relies heavily on tourism for economic stability. Additional industries include the
production and export of rum; and until early 2012, the production of refined petroleum products (the
Hovensa Refinery in St. Croix closed in early 2012). The Gross Domestic Product peaked in 2007 at
$4.85 million, and declined to $4.14 million in 2012, and further declined to $3.79 million for 2013.
Personal income per capita is also in decline from over $25,000 in 2010 and 2011 to just over $21,000
in 2013.
IGY American Yacht Harbor Marina
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Area Analysis 12
Economic Indicators
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
2007 2008 2009 2010 2011 2012 2013 2014
-GTP Per Capita
Per capita personal income ($)
-41-Gross Territorial Product (GTP, Millions)
$5,000
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
The closure of the Hovensa refinery, which was one of the territory's largest employers, also had a
significant impact on exports which were prevously dominated by petrolium products. Otherwise, the
territory predominently relies on the tourism industry to support the economy.
Commerce and Trade (Millions of $ Unless Otherwise Noted)
5-Yr Annual
2007   2008   2009   2010   2011   2012   2013   2014 Growth
Total exports   $12,961.8   $17,249.4   $9,728.3   $11,929.5   $13,313.5   $2,263.2   $1,284.8   $1,671.4   -16.6%
To U.S.   $12,182.2   $14,496.3   $8,495.3   $9,992.5   $10,994.8   $1,377.7   $265.4   $225.8   -19.5%
Refined petroleum   $11,242.1   $13,591.9   $8,327.3   $9,759.4   $10,486.1   $932.4   $61.6   $6.5   -20.0%
Other   $940.1   $904.4   $168.0   $233.1   $508.7   $445.3   $233.8   $219.3   6.1%
To foreign   $779.6   $2,753.1   $1,233.0   $1,937.0   $2,318.7   $885.5   $1,019.4   $1,445.6   3.4%
Total imports   $12,251.0   $17,861.3   $10,289.9   $12,153.9   $13,972.7   $2,966.7   $2,590.1   $3,391.8   -13.4%
From U.S.   $1,261.0   $1,214.6   $1,139.3   $1,548.9   $1,767.6   $1,719.4   $2,119.2   $2,144.5   17.6%
Crude petroleum   $0.0   $0.0   $0.0   $0.0   $0.0   $0.0   $0.0   $0.0
Other   $1,261.0   $1,214.6   $1,139.3   $1,548.9   $1,767.6   $1,719.4   $2,119.2   $2,144.5   17.6%
From foreign   $10,990.0   $16,646.7   $9,150.6   $10,605.0   $12,205.1   $1,247.3   $470.9   $1,247.3   -17.3%
Crude petroleum   $8,204.7   $12,045.8   $7,085.9   $7,721.7   $10,340.9   $660.3   $0.0   $660.3   -18.1%
Other   $2,785.3   $4,600.9   $2,064.7   $2,883.3   $1,864.2   $587.0   $470.9   $1,247.3   -7.9%
Rum exports to U.S. (thous. of P.L.)   $28,725.1   $31,478.7   $38,445.3   $40,045.1   $35,801.2   $82,520.0   $68,335.4   $59,418.5   10.9%
Watch exports to U.S. (thousands)   $251.4   $183.6   $75.0   $52.0   $52.7   $55.6   $60.0   $76.8   0.5%
Ocean freight imports (thousands of tons)   1,092.0   1,080.0   1,065.0   1,091.0   1,157.0   1,975.0   931.0   866.0   -3.7%
To St. Thomas/St. John   851.0   774.0   685.0   612.0   720.0   1,199.0   564.0   558.0   -3.7%
To St. Croix (excluding petroleum)   241.0   306.0   380.0   479.0   436.0   776.0   367.0   308.0   -3.8%
Source: Vi Bureau of Economic Research
irr
IGY American Yacht Harbor Marina
Area Analysis
13
$20,000.0
$18,000.0
$16,000.0
$14,000.0
$12,000.0
$10,000.0
$8,000.0
$6,000.0
$4,000.0
$2,000.0
$0.0
USVI Commerce
$6,000
- $5,000
2007 2008 2009 2010 2011 2012
- $4,000
$3,000
- $2,000
- $1,000
$0
-Total Exports (Millions $) Total Imports (Millions $) -ik-GTP (Millions $)
Over ninety percent of non-farm jobs are in the service providing industries, with the remaining jobs
being in goods producing industries. Government, trade, transportation and utilities, and leisure and
hospitality remain the industries with the largest number of jobs.
These three sectors account for 69 percent of all jobs. Professional and business services, construction
and financial activities account for approximately 9 percent, 4 percent and 6 percent respectively.
Manufacturing and information sectors account for about 2 percent each, while educational and
health services account for 6 percent. Other services account for the remainder of jobs.
Tourism
The total number of visitor arrivals to the territory reached over 2.8 million in 2014, including both air
and cruise ship arrivals. This represents 4.2% growth over the prior year. Total visitor expenditures
are also growing, with annual growth in excess of 6% each of the last three years.
USVI Visitor Expenditures
2005   2006   2007   2008   2009   2010   2011   2012   2013   2014
Total Visitors (Thousands)   2,601.9   2,570.7   2,606.2   2,435.2   2,245.0   2,548.7   2,687.9   2,642.1   2,701.5   2,814.2
Growth   -1.2%   1.4%   -6.6%   -7.8%   13.5%   5.5%   -1.7%   2.2%   4.2%
Total Visitor Expenditures   $1,431.6   $1,467.6   $1,512.6   $1,157.1   $1,021.3   $1,012.5   $1,085.3   $1,152.8   $1,232.2
Growth   2.5%   3.1%   -23.5%   -11.7%   -0.9%   7.2%   6.2%   6.9%
From Stopover Tourists   $863.8   $883.2   $929.8   $686.4   $687.4   $678.2   $740.6   $784.7   $851.0
Day Trip Excursionists   $27.2   $25.6   $27.7   $29.7   $28.6   $28.0   $35.4   $35.4   $36.1
From Cruise Ship Passengers   $540.6   $558.8   $555.2   $441.0   $305.3   $306.3   $311.8   $332.7   $345.1
Source: Vi Bureau of Economic Research
IGY American Yacht Harbor Marina
El
Area Analysis
14
$1,000.0
$900.0
$800.0
$700.0
$600.0
2
$5000
$400.0
$300.0
$200.0
USVI Visitor Expenditures
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
4,000.0
- 3,800.0
- 3,600.0
- 3,400.0 -,,.,
-0
- 3,200.0 04/
0
3,000.0 g
-  n
2,800.0 0
In
- 2,600.0 $.
- 2,400.0
- 2,200.0
2,000.0
- -From Stopover Tourists (Mills) From Cruise Visitors (Mills) Number of Total Visitors
It is apparent, however, that the amount of visitor expenditures from cruise ship passengers has not
increased linearly with arrivals since 2009; whereby the ratio was more linear in prior years. Cruise
passenger arrivals grew 4.94% to over 2.08 million in 2014 following growth of 5.37% in the prior year.
Total expenditures from cruise ship visitors grew 3.73% to over $345 million in 2013, following growth
of 6.7% in 2012.
Cruise Ship Passenger Arrivals
2005   2006   2007   2008   2009   2010   2011   2012   2013   2014
St. Thomas / St. John   1,909,984   1,901,275   1,917,371   1,754,557   1,507,623   1,751,328   1,887,096   1,790,550   1,886,647   1,979,926
Growth   -0.46%   0.85%   -8.49%   -14.07%   16.16%   7.75%   -5.12%   5.37%   4.94%
St. Croix   54,502   35,191   7,146   2,510   105,093   149,418   158,186   117,165   116,436   138,055
Growth   -35.43%   -79.69%   -64.88%   4086.97%   42.18%   5.87%   -25.93%   -0.62%   18.57%
Total   1,912,539   1,903,533   1,917,878   1,757,067   1,582,264   1,858,946   2,008,991   1,904,468   1,998,579   2,083,890
Growth   -0.47%   0.75%   -8.38%   -9.95%   17.49%   8.07%   -5.20%   4.94%   4.27%
Cruise Visitor Expenditures (Millions)   $540.6   $558.8   $555.2   $441.0   $305.3   $306.3   $311.8   $332.7   $345.1
3.37%   -0.64%   -20.57%   -30.77%   033%   1.80%   6.70%   3.73%
Source:VI Bu rea u of Economic Research
Totals breach island include 1st and 2nd ports of call; totals for USVI include only lst port of call
irr
IGY American Yacht Harbor Marina
Area Analysis
15
USVI Cruise Ship Tourism
2,400,000   $800.0 - $700.0 $600.0 $500.0 $400.0 $300.0 - $200.0
2,200,000
2,000,000 1,800,000
1,600,000
1,400,000
1,200,000
1,000,000   $100.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
—Cruise Passenger Arrivals Cruise Visitor Expenditures (Millions)
In terms of stopover tourists, the U.S. Virgin Islands ranks 7th in the list of the top tourism markets in
the Caribbean, with 2014 stay-over arrivals of about 730,000. The year 2014 indicated modest growth
in arrivals, with 3.90% growth over the prior period. The chart below illustrates the relationship
between arrivals and GDP. We note that the continuing downturn in GDP is likely due to negative
influences outside the tourism sector, such as the 2012 closure of the Hovensa oil refinery in St. Croix.
IGY American Yacht Harbor Marina
i9
Area Analysis 16
Stay-Over Arrivals and GDP Per Capita
$60,000
800,000
780,000
$55,000
760,000
$50,000
740,000
$45,000
720,000
700,000
$40,000
680,000
$35,000
660,000
640,000
620,000   $30,000
600,000   2008   2009   2010   2011   2012   2013   2014   $25,000
683,294   666,051   691,194   678,962   737,651   702,963   730,367
-Stay-Over Arrivals
GDP Per Capita   $41,864   $42,712   $43,656   $40,557   $35,123   $33,375
Source: Virgin Islands Bureau of Economic Research, WorldBank, Integra Realty Resources
Hotel Performance
Data from Smith Travel Research indicates 2014 occupancy for reporting hotels of 67.8%, up 3.29%
over the prior year. The reported average daily rate (ADR) was $308.98 (up 0.51%), leading to
Revenue Per Available Room Night (RevPar) of $209.53 (up 5.63%).
Hotel Performance by Country - USVI
2013   2014   Growth
Sample Size (Rooms)   1,504
Room Nights Available (Supply)   $1,775,819   $1,750,284   -1.44%
Room Nights Sold (Demand)   $1,145,860   $1,186,924   3.58%
Occupancy   64.5%   67.8%   3.29%
Room Revenues   $352,268,119   $366,739,620   4.11%
ADR   $307.43   $308.98   0.51%
RevPar   $198.37   $209.53   5.63%
Rooms in Active Pipeline 12/31   0   453
Note: Values in United States Dollars
Source: Smith Travel Research: Note: Sa mole Size reflects the number of rooms within the STR participating hotels
IGY American Yacht Harbor Marina
irr.
Area Analysis 17
Hotel Performance
$330.00
$310.00
$290.00 $270.00
$250.00   -maiill
$230.00
$210.00
$190.00 $170.00
$150.00   2013   2014
ADR   $307.43   $308.98
NEN
RevPar   $198.37   $209.53
-6-Occupancy   64.5%   67.8%
Source: Smith Travel Research (STR Inc.)
74.0%
72.0%
70.0%
68.0%
66.0%
64.0%
62.0%
60.0%
According to STR, there are 453 rooms in the active pipeline, which would add 8.6% to the existing
room stock of 4,818 rooms. These projects include the 153-room, proposed Embassy Suites in the
mahogany Run area, and the 300-room, proposed Hyatt Regency in Mandal Bay. In addition, a hotel
project was recently announced on Water Island; however, the developers have not yet announced a
brand or number of proposed rooms.
Housing / Property
As the supply of housing has increased in the last two decades, homeownership rates have also
increased, although only slightly. Rates increased 1.9 percentage points between 2000 and 2010, and
increased an additional 3.8 percentage points from 2010 to 2012. Average home prices dropped by
11.8 percent in 2008, but then increased in 2009 and 2010 by 4 percent and 12.3 percent,
respectively. In 2012, average home prices fell 17.4% and then rebounded in 2013 with an increase of
22.1%. The average sales price in 2013 was $538,369. Presumably, much of the increased supply of
new homes and condominiums has gone to non-residents and vacationers. Over the past decade,
housing costs have accelerated at a far greater pace than resident incomes, putting home ownership
beyond the reach of all but a few relatively wealthy islanders.
In 2013, St. Thomas and St. John had an average home sale price of $713,183, while the average home
sale price in St. Croix was $306,083. While prices have not caught up with what they were in 2007, St.
Thomas and St. John have seen some recovery in the overall housing market. St. Croix, however,
continues to suffer from the closing of the Hovensa refinery. In 2014, the average single family home
sales price in St. Croix was $334,167, while in St. Thomas it was $909,839. 2015 year to date averages
are show an increase in average single family home price in St. Croix and a decrease in St. Thomas and
St. John, with averages of $414,178 and $759,811 respectively.
IGY American Yacht Harbor Marina
Area Analysis
18
The current situation is that the recovering housing market and general economic conditions on the
US mainland is slowly having a positive impact in the US Virgin Islands' real estate market in terms of
overall average home prices as well as the number of homes sold. Home sales in the territory, while
still lower than 2007 figures, have increased annually since 2012.
According to statistical data provided by the Multiple Listing Service, the value of real estate sales in
the St. Thomas-St. Croix MLS grew by 54% in 2014 to nearly $200 million on 883 transactions; volume
seen since 2008 and sales pace not seen since 2007. This growth follows 20% growth in 2013 which
came after six years of declines. The average sales price surpassed $300,000, a level also not seen
since 2008.
$400,000,000
$350,000,000
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
MLS Sales Volume - St. Thomas and St. Croix
2006 2007 2008 2009 2010 2011 2012 2013 2014
—Sales Volume Average Sale Price
Source: St. Thomas/St. Croix MLS
$350,000
$340,000
- $330,000
$320,000
1- $310,000
_ $300,000
$290,000
- $280,000
- $270,000
$260,000
$250,000
Real Estate Ownership and Taxation
Ownership is "fee simple", under the U.S. flag. There are no restrictions against purchasing solely for
investment, and no laws dictating when, if ever, you must build on undeveloped land. It should be
noted that for 2006 there was a reassessment, and the tax rate changed to $3.77 per $1,000 based on
100% of assessed value (for residential property); however, there was an ongoing court challenge to
the reassessment, and a federal injunction blocked tax bills until the issue could be resolved. As of
December, 2013, the 2006, 2007, 2008, 2009, 2010, 2011 and 2012 tax bills have all been issued under
the old 1999 assessed values and tax rates. This federal court injunction regarding the tax
reassessment of VI property values had previously prevented the government from collecting property
tax for at least four years, resulting in the government losing US$25 million a month. New assessed
values as well as amended tax rates were released in conjunction with the 2013 tax bills in August,
2014. Subsequent tax bills were issued at a rate of two per year until August 2015 when the 2015 bill
were released and the Virgin Islands became current with respect to its property taxes.
IGY American Yacht Harbor Marina
irr
Area Analysis 19
All real estate transactions also require a Government Transfer Tax (stamp tax), which can be paid by
the buyer or seller.
2% for property valued up to $350,000
2.5% for property valued from $350,001 to $1,000,000
3% for property valued from $1,000,001 to $5,000,000
3.5% for property valued over $5,000,001
Notable News and Developments
• On January 18, 2012, it was announced that the Hovensa refinery would be permanently shut
down. This has had a major impact causing an economic downturn on the island, leaving 1,158
former Hovensa workers unemployed and many more employed by the company's
contractors according to the United States Department of Labor. Recently, an auction of
Hovensa's assets was conducted in New York City with multiple qualified bidders, and the
assets were awarded to Limetree Bay Holdings, a subsidiary of ArcLight Capital Partners.
Pending approval by the Virgin Islands legislature, ArcLight's operation of the oil storage
facility will create a minimum of 80 jobs, with the possibility of more in the future. ArcLight
indicated there could be a possibility of a limited restart of some refinery units at some point
in the future.
• Both the Senate and the US House of Representatives passed the Coast Guard Reauthorization
Act, and President Obama signed the act into legislation in the fiscal year 2015 which should
help level the charter yacht industry playing field. Prior to 1993 and the imposition of a six-
passenger limitation on US uninspected vessels, the charter yacht industry in the US Virgin
Islands was thriving, contributing over $100 million in annual revenue and hundreds of jobs to
the local economy. A large chunk of the industry moved to the British Virgin Islands after the
six-passenger rule limitation was initiated by the US Government. The bill has recently been
enacted into law, and the ability of the USVI to compete in this industry should be significantly
improved.
• After an extensive search and vetting process, the USVI Government has selected a group of
local and regional investors to develop a hotel resort on Water Island, just off of St. Thomas.
There are apparently eight hotel brands in discussions with the developers for branding the
property.
• A Texas-based EB-5 Regional Center has announced an EB-5 funded commercial project
known as the Port of Mandahl Caribbean Conference Resort. When completed, the
development is reportedly planned to include two full-service hotels, a golf course, a state of
the art conference center, retail and commercial space, and high-end residential units. EB-5 is
a type of economic citizenship program whereby the United States grants citizenship to
investors of certain approved projects in areas where the economic boost is needed. Regional
Centers are tasked with selling the investments such as limited partnerships to international
buyers.
• The Margaritaville (Wyndham) Vacation Club is under construction in Water Bay on the East
End of the island of St. Thomas. The project is a renovation of the 290-room Renaissance
IGY American Yacht Harbor Marina
19
Area Analysis 20
Grand Beach Resort into 262 timeshare oriented condominium units. The first phase on this
project was completed in September 2015 and is open, while the second phase is currently
under construction.
• The University of the Virgin Islands has announced plans to develop a medical school on St.
Thomas, which will be operated in collaboration between the hospitals on St. Thomas and St.
Croix.
Conclusions
Economic conditions in the U.S. Virgin Islands appear to be slower to recover than many areas of the
region, particularly in St. Croix, where industrial development had previously been more of a focus
than tourism The closure of the Hovensa refinery and the failure to facilitate a sale to a buyer who can
re-open the facility as a refinery will continue to plague St. Croix until other new developments occur
that can create new jobs. The assets of the refinery were recently sold at auction, but operating
agreement with the USVI Government only states the buyers will use the oil storage portion in
addition to constructing an asphalt plant on the property, which projects to only 80 jobs created in the
immediate future. There appears to be ongoing resurgence in tourism for St. Thomas and St. John, and
real estate activity appears to be improving; however, many businesses — even those catering to cruise
ship passengers — continue to struggle. Our forecast is for continued improvement in arrivals and
hotel statistics, but only gradual economic improvement for the overall territory.
IGY American Yacht Harbor Marina
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Surrounding Area Analysis 22
Surrounding Area Analysis
Location
The subject is located in the town of Red Hook in the East End area of the Island known as Estate
Smith Bay. Red Hook is one of the three primary business districts on the island.
Access and Linkages
Primary access to the area is provided by Route 32 (Smith Bay Road), a major arterial that crosses the
east end of the island in a generally east-west direction. This is the primary route through the town of
Red Hook, one of the three major commercial centers of the island; with the others being the city of
Charlotte Amalie and the Tutu area. Overall, vehicular access is good.
Public transportation is provided by Safari Taxi and provides access to all relevant areas. The local
market perceives public transportation as average compared to other areas in the region. However,
the primary mode of transportation in this area is the automobile.
The Red Hook Ferry Terminal offers passenger ferries and car barges on regular schedules to and from
St. John. Passenger ferry service to the British Virgin Islands is also available.
The Cyril E. King International Airport is located about 8.4 miles from the property; travel time is about
25 minutes, depending on traffic conditions. The Charlotte Amalie CBD, the economic and cultural
center of the island, is approximately 7.0 miles from the property.
Demand Generators
The demand for commercial space in the area of the subject is fueled by the popularity of the Red
Hook business district. Red Hook is a centralized area serving the east end of St. Thomas, and features
marinas, restaurants, bars, retail shops, and office space.
The demand for office space in the area has been down due to overall economic conditions. As the
economy continues its recovery, the demand for well-located office space will increase as well. Retail
space; however, has seen an increase in demand in this area over the past 12-24 months as shown by
the low vacancy in the 3 major retail properties Red Hook; American Yacht Harbor (subject), Red Hook
Plaza and Galleria Shopping Center.
Compared to the territory area as a whole, the local area has higher income levels. Population trends
are similar except that the local area is growing at a faster rate than the territory.
Land Use
The area is suburban in character and approximately 65% developed.
Predominant land uses are retail and office uses, with some residential users nearby. Marina use is
also prevalent in this area. The area contains several neighborhood retail/office centers within a few
blocks of the subject along Smith Bay Road. These include East End Plaza which is three stories and
contains mostly office space, the aforementioned Galleria Shopping center which will is anchored by a
newly opened gourmet grocery store, and the aforementioned Red Hook Plaza which is a two story
IGY American Yacht Harbor Marina
Surrounding Area Analysis 23
building with a mixture of office and retail. There are other small retail commercial buildings both
along the waterfront and the inland side of the road; such as restaurants, bars and a convenience
store/gas outlet.
In addition to the drawing power of these retail users, the lvanna Eudora Kean High School is located
approximately 1,500 feet west of the subject property.
During the last several years, development has been predominantly of retail/office uses. The largest
recent development in this area has been East End Plaza, which was constructed in 2008. However,
the completion of this commercial building coincided with the downturn in the overall economy in the
territory, and the property has struggled to reach stabilization. There is also a newly constructed,
small commercial strip center in close proximity to the subject called Crosswinds Center that opened
approximately two years ago. Ace Hardware is the anchor tenant in this building, while the majority of
the other commercial bays remain vacant.
There have also been two notable bar/restaurant openings within the past two years, both at the
subject property. Near the subject, a Senor Frogs restaurant opened in November 2013 featuring a
dining and nightclub atmosphere. Additionally, a tavern/restaurant called Tap & Still has opened
approximately 450 feet southwest of the subject. A new Thai/Sushi restaurant is under construction
within Red Hook Plaza, just west of the subject. These new establishments are indicative of the
improving retail/commercial climate of the Red Hook area.
Outlook and Conclusions
The area is in the slow growth stage of its life cycle. There have been signs of increased demand as
existing commercial space has been leasing up more rapidly over the past six months, showing the
upside of the subject's area. We anticipate that property values will slightly increase in the near
future.
IGY American Yacht Harbor Marina
119
Surrounding Area Analysis
24
Surrounding Area Map
Urman Fredericks
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IGY American Yacht Harbor Marina
Marina Market Analysis 25
Marina Market Analysis
Marinas are not at all homogenous, and the various combinations of business and physical
components result in significantly different results for the owners and operators. The two major types
of marinas are coastal (usually found in saltwater inland waterways that lead to an ocean port), and
freshwater (found on lakes). Saltwater marinas tend to attract larger vessels and require a completely
different level of maintenance. Freshwater marinas typically cater more toward day-sailors and day-
boaters who do not have personal space with which to keep their boats.
Typical marinas in both coastal and freshwater locations can include any combination of the following
components:
• Wet Slips (covered and uncovered)
• Dry Storage (land)
• Dry Storage (stack)
• Maintenance and Repair Yard and Services
• Marine Dealerships (boat sales)
• Merchandise Sales (fishing, boating, sundries)
• Fuel Sales (gas and diesel)
• Equipment Rental
With regard to slip rentals (wet and dry), these spaces can be either rented (the traditional route), or
sold as "dockominiums" and "rackaminiums." The sellout component became very popular in the last
decade, and many marinas were converted to all or part sellout type enterprises. Part of the reason is
that developers in recent times prefer to develop real estate for sale (condominiums or homesites)
that surround the marina, and in turn could sell the boat spaces and then move on to another
investment. The market for dockominiums (wet and dry) somewhat dried up during the recent
recession, and many of the unsold units were subsequently rented instead of sold.
Another trend of development prior to the 2008 recession was for marinas within luxury resort
communities that also have a residential component. These include 4 and 5-star resorts in the
subtropical USA as well as the Caribbean. Typical luxury resort developments planned in the last
decade would include a hotel (which the developer would license to a "branded" operator),
condominiums and villas for sale, home sites for sale, and recreational components such as a golf
course and marina. The sellout types of dock spaces fit well into the business model of the developer,
as they sell other components and license the hotel operation to a separate entity.
Marinas also vary in size from small "mom and pop" or "lifestyle" businesses with less than 50 slips to
large enterprises that attract institutional purchasers. Across the board, marinas are affected by
economic downturns due to the leisure component of the boating hobby. During the last two
recessions (2000-2003 and 2008-2009), many marinas went into foreclosure. This created difficulty for
marinas to obtain financing.
irr.
IGY American Yacht Harbor Marina
Marina Market Analysis 26
Coastal marinas along the eastern seaboard were fairly successful until the recent recession, with
many documenting 100% occupancy or waiting lists. This may be partly due to increased
environmental regulation limiting dredging new bodies of water or deepening existing ones. As
marinas are typically close to inlets leading to the sea or inland waterways, they are typically in areas
that are rich with aquatic life.
National Boating Trends
Because of the age, size, design, tenancy, quality, and location of the subject, it is likely to appeal to
investors primarily on a national or regional basis. While national factors may or may not be indicative
of the subject's market area, the national trends exhibited are generally indicative of movement in all
submarkets. Real estate is typically analyzed on a market-by-market basis. Published secondary data
and market studies for the marina industry on a local or regional level are scarce. Nationwide, the
most comprehensive statistical reference guide for the marina industry is the Recreational Boating
Statistical Abstract, published annually by the National Marine Manufacturers Association (NMMA).
The most recent publication reports 2014 data.
According to NMMA, the boating industry generated $35.4 billion in sales and services in 2013, a 3.5%
decline from 2013. This represented the first year of decline after three consecutive years of growth
following the low point in 2010, of $30.4 billion, from the "great recession." The peak occurred in 2006
at $39.5 billion.
Of the 242.5 million adults living in the United States in 2014, 35.7%, or 87.3 million people,
participated in recreational boating; a 1.8% decline from 2013. This is within the range of participation
over the past four years which varies from 34.8% to 37.8% of the population.
New boat sales peaked at 912,130 in 2006, but have declined since that date with 2014 sales at
534,500 units, an increase of 0.44% from 2013. Before the recession in 2007, fuel prices increased,
followed by increased unemployment and tightening credit. Luxury and leisure goods such as boats
are typically the first things to be put on the back burner as people become more discretionary with
their income. As a result, pre-owned power boat represented 64% of all boat sales during 2014, and
new boat dealers have had to compete.
While boating participation declined recently, boat registrations have fallen. Boat registrations were
up 0.08% to 12 million in 2014 versus 11.99 million in 2013. Florida led all states in boat registrations
for 2014 followed by California, Minnesota, Michigan, and Wisconsin, in that order.
The demographic of boat owners is largely middle class. In 2014, 95% of registered mechanically
propelled boats were 26 feet or less, indicating more affordable, entry-level, trailerable boats. The
majority (71.5%) of boat owners earn an average household income under $100,000. Over 60% of
boating participants were between the age of 31 and 64 which signifies that the increase in boating
population is younger.
National Marina Industry
Every December/January, Marina Dock Age magazine publishes an issue dedicated to trends in the
marina industry. An article from the most recent issue in December 2014 indicates that the majority of
IGY American Yacht Harbor Marina
Marina Market Analysis 27
marinas and boatyards continue to improve net profits, overall revenues, and occupancy rates, with
82% expecting stable or increasing occupancy rates.
The table that follows details marina occupancy rates for 2014.
Marina Occupancy Rates - 2014
Occupancy Rate Range
Less than 50%   50% - 74%   75 - 84% 85% - 94%   95% - 99%   100%
Ownership Type/ Size   %of Respondents
Government Owner   4.4%   22.2%   17.8%   17.8%   22.2%   13.3%
Corporate Owner   4.0%   32.0%   18.0%   14.0%   25.0%   7.0%
Private Owner   2.0%   16.0%   19.0%   31.0%   14.0%   13.0%
Small (1 - 99 Slips)   5.0%   13.0%   11.0%   23.0%   15.0%   32.0%
Medium (100 - 249 slips)   5.0%   17.0%   21.0%   26.0%   21.0%   10.0%
Large (250- 749 slips)   0.0%   19.0%   21.0%   30.0%   17.0%   13.0%
Very Large (Over 750 slips)   0.0%   27.8%   16.6%   27.8%   27.8%   0.0%
Overall   3.0%   17.0%   18.0%   26.0%   18.0%   15.0%
Marina Dock Age publishes statistical information based on the percentage of overall respondents.
The subject is under private ownership and has 98 boat slips which are expected to be increased to
108 slips. The largest majority (31%) of private owner marinas reported 85% to 94% occupancy rates.
Overall, 58% of private owners reported occupancy rates of 85% to 100%. The largest majority (32%)
of small marinas reported occupancy rates of 100%, with 70% of small marinas reporting occupancy of
85% to 100%. The largest majority of medium marinas (26%) reported occupancy rates of 85% to 94%,
with 57% of medium marinas reporting occupancy of 85% to 100%.
The table that follows details boat slip and service rate changes in 2014 over 2013.
Slip/Service Rate Changes -2014 Over 2013
Decreased   Stayed Same   Increased
Marina Size   % of Respondents
Small (1 - 99 Slips)   1.9%   56.6%   41.5%
Medium (100 - 249 slips)   1.0%   62.0%   37.0%
Large (250 - 749 slips)   1.3%   53.2%   45.5%
Very Large (Over 750 slips)   0.0%   28.0%   72.0%
Overall   1.0%   55.0%   44.0%
The majority of marinas kept rates the same between 2013 and 2014.
The table that follows details rate changes by service type.
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Marina Market Analysis 28
Product/Service Revenues - 2014 Over 2013
Decreased   Stayed Same   Increased
Service   % of Respondents
Sailing! Training School   4.0%   48.0%   48.0%
Cabin/Campground/RV   0.0%   35.0%   65.0%
Event Services/Venue   8.0%   40.0%   52.0%
Tour Boat/Charter Fishing/Water Taxi   9.0%   45.5%   45.5%
Water Toy Rental   12.0%   18.0%   70.0%
Boat Rental   12.3%   16.3%   61.4%
Boat CI ub   13.0%   48.0%   39.0%
Pumpout   8.0%   65.0%   27.0%
Used Boat Sales/Brokerage   21.0%   32.0%   47.0%
New Boat Sales/Brokerage   18.0%   27.0%   55.0%
Self-Service Repair   7.3%   76.4%   16.3%
Haul-Out/Winterization Services   17.8%   54.6%   27.6%
Boat Mai ntenance/Repair   27.0%   30.0%   43.0%
Ship/Convenience Store   21.5%   36.7%   41.8%
Commercial/Retail Lease Space   4.4%   54.4%   41.2%
Restaurant   11.0%   28.0%   61.0%
Fuel   26.5%   18.0%   55.5%
Launch Ramp   8.7%   57.6%   33.7%
Moorings   11.0%   36.0%   53.0%
Dry Storage   15.0%   37.0%   48.0%
Transient SI i ps   17.0%   35.0%   48.0%
Leased Slips   16.0%   28.0%   56.0%
The subject has campground/RV pad sites and will also include cabins with 65% of respondents
indicating increases in their revenues for this department. The subject has dry (land) storage with 48%
of respondents indicating increases in this department. The subject has leased slips with 56% of
respondents indicating increases in this department.
The table that follows summarizes marina expenses by age of the marina.
Marina Expenses -2014 Over 2013
Decreased   Stayed Same   Increased
Facility Age   % of Respondents
New (Less than 7 Years)   15.0%   40.0%   43.0%
Medium (8 - 35 Years)   8.0%   27.0%   65.0%
Old (36+ Years)   6.0%   22.0%   72.0%
Overall   8.0%   25.0%   67.0%
The subject is 21-25 years old. The majority (72%) of marinas over 36 years of age indicated increases
in operating expenses.
IGY American Yacht Harbor Marina
Marina Market Analysis 29
The table that follows details whether or not marinas will post a gross profit for 2014, based on
marina size.
Marina Gross Profit - Will Report a Gross Profit
No   Do Not Know   Yes
Marina Size   % of Respondents
Small (1 - 99 Slips)   19.0%   17.0%   64.0%
Medium (100 - 249 slips)   16.0%   14.0%   70.0%
Large (250 - 749 slips)   9.2%   14.5%   76.3%
Very Large (Over 750 slips)   11.0%   11.0%   78.0%
Overall   14.5%   14.5%   71.0%
The majority of small marinas (64%) reported that they would report a gross profit in 2014. The
majority of medium marinas (70%) reported that they would report a gross profit in 2014.
The table that follows details changes in gross profit in 2014 over 2013.
Marina Gross Profit - 2014 Over 2013
Decreased   Stayed Same   Increased
Ownership Type/ Size/ Age   % of Respondents
Government Owner   9.0%   34.0%   57.0%
Corporate Owner   17.8%   28.6%   53.6%
Private Owner   22.4%   24.5%   53.1%
Overall   19.2%   28.8%   52.0%
New (Less than 7 Years)   53.8%   50.0%   68.0%
Medium (8 - 35 Years)   21.5%   20.0%   0.0%
Old (36+ Years)   24.7%   30.0%   32.0%
The majority (53.1%) of private owner reported that gross profit increased in 2014. The majority (32%)
of marinas over 36 years old reported that gross profit increased in 2014.
Conclusion
The majority of respondents indicated stable to increasing occupancy rates in 2014 over 2013. Most
respondents had an occupancy rate above 85%. Most respondents also indicated increased revenues.
These are all positive indications for the marina industry.
An article in Marina Dock Trends states that the market is improving for marina properties. The article
reports that pre-recession, marina capitalization rates were around 5% to 6%. Post-recession through
May 2014, capitalization rates were around 10%. Since May 2014, capitalization rates for marinas
began decreasing.
Though the boating industry experienced a decline in revenue and participation during the recession,
demand for slips far exceeds the current supply. Many industry experts as well as local brokers in
IGY American Yacht Harbor Marina
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Marina Market Analysis 30
marina sales have indicated that now is a good time to invest in a marina, despite the previous
recession and limited financing.
Competitive Marinas
The most significant supply and demand indicators for the subject are rental and occupancy rates
experienced by directly competing properties. The operation of a pleasure craft marina provides
revenue sources which include a mix of various rental, sales and services for the pleasure craft
operators. Principle revenue stream for pleasure craft marinas includes in-water slips, fuel sales, and
building rent.
The subject's asking and average contract rates are shown in the table that follows. The current
operator is leasing the marina slips by linear feet of vessel length. We have then converted this rental
income into a rental rate per linear foot of dock space. The subject offers slip rental on a daily, weekly,
monthly, seasonal and annual basis. The contracted rental rates represent a blend of these rates, from
daily tenants to long term tenants on annual leases. According to management, approximately 60% of
the occupants at any given time are seasonal or annual tenants.
Marina Rent Roll
Total   Annual   Average
# of   Average LF   Annual LF   Total LF   Occupancy   Total Rental   Monthly Rental
Year   Slips   per Slip   Available   Occupied   Rate   Revenue   Rate/LF
2010   105   53.29   2,042,170   1,379,235   67.5%   $1,551,721   $34.22
2011   105   53.18   2,038,110   1,298,157   63.7%   $1,490,744   $34.93
2012   105   54.24   2,078,880   1,155,377   55.6%   $1,290,526   $33.97
2013   105   54.10   2,073,200   1,206,388   58.2%   $1,362,951   $34.36
2014   105   54.10   2,073,200   1,233,672   59.5%   $1,513,100   $37.31
2015 (Annualized)   105   54.10   2,073,200   1,172,976   56.6%   $1,438,110   $37.29
Average   105   54   2,063,127   1,240,968   60.1%   $1,441,192   $35.35
We weren't provided with a current rent roll for the marina slips but we were provided with monthly
historical occupancy and rental rate data. With the transient nature of marina tenants, a historical
rent and occupancy figures are a more accurate indication of the income properties of the marina.
Rental rates at the subject, and in this market, are based on a rate per linear foot of vessel length. As
discussed earlier, the subject contains 105 wet slips with a total of 5,680 linear feet of rentable dock
space, which indicates a total of 2,073,200 rentable linear feet per year.
As of the effective valuation date, the subject marina has experienced an overall occupancy rate of
56.3% for the year to date 2015. We have looked at occupancy rates on an average, annual basis due
to the seasonal characteristics of this property type in this market. Again, due to the transient nature
of the tenants in this property type and the short term nature of the leases which can range from daily
to annually, the overall occupancy rate will be lower than other commercial property types such as
lodging, multifamily, retail and office. The subject's current occupancy rate is slightly lower than
historical rates, but the property is considered to be at stabilized occupancy.
The weighted average contract rate is $37.29 per linear foot per month for the year to date 2015,
which equates to an average contract rate of $447.50 per linear foot per year.
IGY American Yacht Harbor Marina
Marina Market Analysis 30
marina sales have indicated that now is a good time to invest in a marina, despite the previous
recession and limited financing.
Competitive Marinas
The most significant supply and demand indicators for the subject are rental and occupancy rates
experienced by directly competing properties. The operation of a pleasure craft marina provides
revenue sources which include a mix of various rental, sales and services for the pleasure craft
operators. Principle revenue stream for pleasure craft marinas includes in-water slips, fuel sales, and
building rent.
The subject's asking and average contract rates are shown in the table that follows. The current
operator is leasing the marina slips by linear feet of vessel length. We have then converted this rental
income into a rental rate per linear foot of dock space. The subject offers slip rental on a daily, weekly,
monthly, seasonal and annual basis. The contracted rental rates represent a blend of these rates, from
daily tenants to long term tenants on annual leases. According to management, approximately 60% of
the occupants at any given time are seasonal or annual tenants.
Marina Rent Roll
Total   Annual   Average
# of   Average LF   Annual LF   Total LF   Occupancy   Total Rental   Monthly Rental
Year   Slips   per Slip   Available   Occupied   Rate   Revenue   Rate/LF
2010   105   53.29   2,042,170   1,379,235   67.5%   $1,551,721   $34.22
2011   105   53.18   2,038,110   1,298,157   63.7%   $1,490,744   $34.93
2012   105   54.24   2,078,880   1,155,377   55.6%   $1,290,526   $33.97
2013   105   54.10   2,073,200   1,206,388   58.2%   $1,362,951   $34.36
2014   105   54.10   2,073,200   1,233,672   59.5%   $1,513,100   $37.31
2015 (Annualized)   105   54.10   2,073,200   1,172,976   56.6%   $1,438,110   $37.29
Average   105   54   2,063,127   1,240,968   60.1%   $1,441,192   $35.35
We weren't provided with a current rent roll for the marina slips but we were provided with monthly
historical occupancy and rental rate data. With the transient nature of marina tenants, a historical
rent and occupancy figures are a more accurate indication of the income properties of the marina.
Rental rates at the subject, and in this market, are based on a rate per linear foot of vessel length. As
discussed earlier, the subject contains 105 wet slips with a total of 5,680 linear feet of rentable dock
space, which indicates a total of 2,073,200 rentable linear feet per year.
As of the effective valuation date, the subject marina has experienced an overall occupancy rate of
56.3% for the year to date 2015. We have looked at occupancy rates on an average, annual basis due
to the seasonal characteristics of this property type in this market. Again, due to the transient nature
of the tenants in this property type and the short term nature of the leases which can range from daily
to annually, the overall occupancy rate will be lower than other commercial property types such as
lodging, multifamily, retail and office. The subject's current occupancy rate is slightly lower than
historical rates, but the property is considered to be at stabilized occupancy.
The weighted average contract rate is $37.29 per linear foot per month for the year to date 2015,
which equates to an average contract rate of $447.50 per linear foot per year.
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Marina Market Analysis 31
Competitive Marinas
The competitive marina rates are shown on the page that follows. It is our opinion that the subject's
rates are at market levels; based on its age, location, and condition.
Competitive Marinas - St. Thomas
Marina   # of Wet Slips   Length   Avg. Monthly Wet Slip Rental/IF   Avg. Annual Wet Slip Rental/IF
Sapphire Beach Resort and   67   50'   $18.00   $216.00
Marina
6720 Estate Smith Bay
St. Thomas, VI
Compass Point Marina   38   <30'   $18.30   $219.60
41-6-1 & 41-7 Estate Frydenhoj   59   31-40   $16.61   $199.32
St. Thomas, VI   46   41-50'   $16.89   $202.68
10   >50'   $17.67   $212.04
Yacht Haven Grande   46   <80'   $84.25   $1,011.05
Long Bay Rd, Charlotte Amalie   80475'   $129.12   $1,549.43
St. Thomas, VI   >175"   $164.40   $1,972.83
Services/Amenities
Crown Bay Marina   99   <55'   $82.13   $985.50
8167 Sub Base   56-75'   $109.50   $1,314.00
St. Thomas, VI   76-130'   $126.23   $1,514.75
131-200'   $142.96   $1,715.50
Oasis Cove Marina   26   <30'   $26.67   $320.00
135 Estate Frydenhoj   30'- 60'   $24.44   $293.33
St. Thomas, VI
American Yacht Harbor   <49'   $43.50   $521.95
98
18A-1, 18-B1,18-B and 18-W   50'- 79'   $50.80   $609.55
Remainder Estate Smith Bay   >80'   $102.81   $1,233.70
7
St. Thomas, VI   T-Heads   $102.81   $1,233.70
Marina is located in a beachfront resort
property. Arnenties include 24/7 security, dock
power/AC hookup, WI Fl, fret h water hookup,
showers and hotel resort a menties. Some of
these docks are privately owned, but rental
rates are typi cal throughout. This is an
u protected marina.
This marina is also located in Benner Bay and
includes a combination of apartments, retail
and office space containing 25,552 square feet
of rentable area. Amenities include, fresh water
and electricity and finger peirs.
This marina is located in Long Bay near
Charlotte Amalie in St. Thomas. This is
considered the premier luxury marina in the U.S.
Virgin Islands and has the ability to berth
megayachts up to 450 feet in length. There is
80,000 sf of high-end retail space at the
property. Marina amenities include electricity
and fresh water, shower facilities, swimming
pool and spa, business services, fueling, waste
management services, 24/7 security, laundry
service and provisioning options. The rental
rate displayed is an average of summer and
winter rates, and does not include utilities or
service amenities.
Full-service marina able to berth vessels up to
200 feet in length and located less than 2.0
miles from the Cyril E. King International
Ai rport. This property also contains a
significant amount of retail/commercial
building space with various shops, restaurants
and office space. Amenities include electricity,
fresh water, fueling, full-service conciege desk,
free wifi, satellite-1V, 24/7 security and
showers.
Located in Benner Bay, this marina was recently
renovated within the past two years. Amenities
include 24/7 security, fresh water hookups,
electricity, WIFI, and good overall construction.
The marina requires a one-year contract for wet
slip rentals.
Subject marina that is part of a full scale, mixed
use property that contains various retail and
office compontents. There are a total of 9
restaurants on this property and many more
shops and stores throughout. Marina amenities
include electricity, fresh water, 24/7 security,
WIFI and on-site fuel.
IGY American Yacht Harbor Marina
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Marina Market Analysis 32
Competitive Marinas - British Virgin Islands
Marina   # of Wet Slips   Length   Avg. Monthly Wet Slip Renta I /LF   Avg. Annual Wet Slip Rental/LF
Soper's Hole Marina   45   <80'   $38.02   $456.25
West End   >80'   $57.03   $684.38
Tortola, BVI
Nany Cay   180   35-49'   $43.95   $527.43
Tortola, BVI   50-100'   $51.86   $622.33
<100'   $78.32   $939.88
T-Head   $71.78   $861.40
Virgin Gorda Yacht Harbor   120   <55'   $34.98   $419.75
St Thomas Bay   56-79'   $76.04   $912.50
Virgin Gorda, BVI   <80'   $83.65   $1,003.75
Services/Amenities
Mixed-use marina property that contains
shops, restaurants, offices and water-
sports rentals in addition to 20 protected
moorings and 45 wet slips. Amenities
include electricity, fresh water, fueling,
showers, waste management, and free wifi
in addition to haul-out and repair and
maintenance services.
This is a protected marina located on the
southern coast of Tortola, between Road
Town and West End. The property contains
retail, office and hotel uses on site.
Amenities include electricity, fresh water,
showers, waste disposal and haul and
repairs and maintenance services. This
marina also includes dry slips which are
not included in this analysis.
This marina is located in Spanish Town on
the island of Virgin Gorda. Both wet and
dry slips are offered but the dry slip rates
have not been considered in this analysis.
There are some retail and office
components at the property. Marina
amenities include electricity, fresh water,
showers, garbage disposal, laundry,
provisioning and fueling.
IGY American Yacht Harbor Marina
Marina Market Analysis
33
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St. Thomas
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IGY American Yacht Harbor Marina
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Marina Market Analysis
34
British Virgin Islands
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IGY American Yacht Harbor Marina
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Marina Market Analysis 35
Of the comparable marinas in St. Thomas, Yacht Haven Grande is the most superior in terms of
location, quality and amenities. This marina is typically geared to extremely large vessels such as
mega-yachts. Crown Bay Marina is slightly inferior to Yacht Haven Grande, but is still superior to the
subject in quality and amenities. Sapphire Beach Resort, Compass Point and Oasis Cove are all
considered to be inferior marinas to the subject based on location, quality and amenities offered.
These marinas mostly cater to live-aboards and smaller vessels.
The most comparable properties are located in the British Virgin Islands (BVI). Nany Cay and Virgin
Gorda Yacht Harbor are slightly superior to Soper's Hole, but they are all similar in quality and
amenities as the subject property. The location of the subject in St. Thomas, and its specific location
within St. Thomas, is considered superior based on convenience.
The majority of the subject's wet slips (98 out of 105) allow for vessels less than 80'. In this size range,
the comparable marinas in St. Thomas range from $199.32 - $1,314 with an average of $578.38 per
linear foot. The comparable marinas in the BVI range from $419.75 - $912.50 with an average of
$587.65 per linear foot in this size range. The subject's asking rates for this size vessel averages
approximately $565.75, which is slightly below average but reasonable.
1
IGY American Yacht Harbor Marina
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Land Description and Analysis 36
Property Analysis
Land Description and Analysis
Land Area Summary
Parcel ID   Address   SF   Acres
1-07702-0135-00   18A-1 Remainder Smith Bay   9,583   0.22
1-07702-0134-00   18B-1 Remainder Smith Bay   20,909   0.48
1-07702-0133-00   18B Remainder Smith Bay   61,855   1.42
1-07702-0198-00   18-W (filled land)   27,878   0.64
Total   120,226   2.76
Source: Land survey by Brian Moseley dated 12/10/2010
Note that Parcel No 18-W was originally submerged seabed in Vessup Bay; however, this area was re-
claimed (filled) at an unknown date and subsequently improved upon. The subject property also
includes a leasehold interest in 3.2 acres of submerged seabed under the dock structures that is
owned by the Government of the Virgin Islands.
IGY American Yacht Harbor Marina
Land Description and Analysis 37
Land Description
Land Area
Source of Land Area
Primary Street Frontage
Shape
Corner
Water Frontage
Topography
Drainage
Environmental Hazards
Ground Stability
2.76 acres; 120,226 SF
Land survey by Brian Moseley dated 12/10/2010
Smith Bay Road -765 feet
Irregular
No
Yes
Genetly sloping east and towards the water
No problems reported or observed
None reported or observed
No problems reported or observed
Flood Area Panel Number
Date
Zone
Description
Insurance Required?
7800000029G
April 16, 2007
AE
Within 100-year floodpla in
Yes
Zoning; Other Regulations
Zoning Jurisdiction
Zoning Designation
Description
Legally Conforming?
Zoning Change Likely?
Permitted Uses
Minimum Lot Area
Minimum Street Frontage (Feet)
Minimum Lot Width (Feet)
Minimum Front Setback (Feet)
Minimum Side Yard (Feet)
Maximum Building Height
Maximum Site Coverage
Maximum Density
Rent Control
Other Land Use Regulations
U.S. Virgin Islands Department of Planning and Natural Resources
W-1
Waterfront- Pleasure
Appears to be legally nonconforming
No
Variety of commercial uses, oriented towards water recreation and
hospitality uses
10,000 s.f.
None
100'
25'
10'
3 stories
0.4
Maximum of 2 dwelling units per lot or 8.35 dwelling units per acre
No
None that we are aware
Utilities
Service
Provider
Water
Sewer
Electricity
Natural Gas
Local Phone
Reverse Osmosis/WAPA available
WAPA
WAPA
N/A
Various providers
It appears based the land survey provided that a portion of the building improvements does not meet
the setback requirements by zoning and that the subject is a legal, nonconforming use. However, we
IGY American Yacht Harbor Marina
Land Description and Analysis 38
1
1
I
are not experts in the interpretation of zoning ordinances. An appropriately qualified land use
attorney should be engaged if a determination of compliance with zoning is required.
The subject is located within a 100-year floodplain related to coastal flooding, which would require
additional insurance at the expense of the owner.
The subject site has 765 linear feet of frontage along Smith Bay Road. In addition, the subject has 846
linear feet of water frontage along Vessup Bay. There is no beach along the waterfront portion; with
the coastline being that of existing and former mangroves. It is assumed that dredging occurred at
some point in time which enabled dockage in close proximity to the water line.
Easements, Encroachments and Restrictions
Based upon a review of the deed and property survey, there do not appear to be any easements,
encroachments, or restrictions that would adversely affect value. According to the property survey
provided, the subject parking garage encroaches the neighboring parcel to the north in two separate
areas: an 82 square foot area encroaches onto Parcel 18N-1-A A, and a 105 square foot area
encroaches onto Parcel 18B-2 A. These areas are small in size and the parcels being encroached upon
are uneconomic remnants of land owned by the Government of the Virgin Islands. As a result, these
encroachments do not have an adverse effect on the overall value of the subject. Our valuation
assumes no adverse impacts from easements, encroachments, or restrictions, and further assumes
that the subject has clear and marketable title.
Conclusion of Land Analysis
Overall, the physical characteristics of the site and the availability of utilities result in functional utility
suitable for a variety of uses including those permitted by zoning. The subject's location along Smith
Bay Road in the heart of Red Hook, along with its extensive water frontage on Vessup Bay, are major
drivers of demand and value for marina and commercial use on the site. We are not aware of any
other particular restrictions on development.
IGY American Yacht Harbor Marina
Land Description and Analysis
39
Cadastral Map
Note that the area outlined in yellow above only includes the (upland) land area of the subject
property and not seabed beneath the marina.
IGY American Yacht Harbor Marina
19
Land Description and Analysis 40
Flood Map
JOINS PANEL
—ZONE VE
(EL 9)
COASTAL BARRIER
IDENTIFIED 11/16/1990
(SEE COASTAL BARRIER LEGEND)
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Land Description and Analysis 41
Site Plan
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Improvements Description and Analysis 42
Improvements Description and Analysis
The subject is an existing 250-slip marina with 5 commercial buildings containing a mixture of retail
and office space types. The buildings contain 48,661 square feet of rentable area and were
constructed in multiple stages; with the majority of the construction completed in 1993. The
commercial space is 85% leased as of the effective appraisal date. The marina docks were constructed
in multiple phases between 1991-1995 and are 52.8% occupied as of the effective appraisal date. The
total site area is 2.76 acres or 120,226 square feet, which includes 0.64 acre or 27,878 square feet,
that is re-claimed land. The property also includes 3.2 acres of seabed under the marina dock
structures which is leased to the property owner from the Government of the Virgin Islands.
Improvements Description
Name of Property IGY American Yacht Harbor Marina
General Property Type Mixed Use
Property Sub Type Marina
Competitive Property Class B
Occupancy Type Multi-Tenant
Percent Leased 85%
Number of Tenants 36
Tenant Size Range (SF) 292 - 6,000
Number of Buildings 5
Stories 3
Construction Class A
Construction Type Steel frame
Construction Quality Good
Condition Good
Units per Acre (Density) 38.0
Gross Building Area (SF) 72,808
Rentable Area (SF) 48,652
Land Area (SF) 120,226
Floor Area Ratio (RA/Land SF) 0.40
Floor Area Ratio (GBA/Land SF) 0.61
Building Area Source Rent roll and land survey by Brian Moseley dated 12/10/2010
Year Built 1992
Year Renovated N/A
Actual Age (Yrs.) 23
Esti mated Effective Age (Yrs.) 15
Estimated Economic Life (Yrs.) 55
Remaining Economic Life (Yrs.) 40
Number of Parking Spaces 167
Source of Parking Count Inspection
Parking Type 89 surface; 78 covered, underground
Parking Spaces/1,000 SF RA 3.43
IGY American Yacht Harbor Marina
Improvements Description and Analysis 43
Construction Details
Foundation
Structural Frame
Corridor
Exterior Walls
Windows
Roof
Interior Finishes
Floors
Walls
Ceilings
Lighting
Electrical
Plumbing
Heating
Air Conditioning
Utility Meters -Tenants
Elevators
Rest Rooms
Sprinklers
Other Fire Safety
Security
Reinforced concrete footings
Steel frame
Exterior breezeways
Painted ma nsory on the lower levels, wood-siding on the upper levels
Fixed commercial glass with wooden hurricane shutters
Pitched with standing seam metal roof
The subject property contains a total GBA of 72,808 and a rentable area of
48,652. The large difference in area totals is due to a sigi nifi cant amount of
exterior common areas as well as a 1,406 SF management office. The
improvements are contained within five total buildings varying from one
story to three stories. Each building contains a mixutre of retail and office
space, with the retail spaces generally on the ground levels and the office
spaces generally on the upper levels. The interior upfits of the spaces vary in
use, quality and condition but generally are considered to be of good quality
and condition. Based on the rent roll there are a total of 39 rentable spaces of
which 10 are upfit as bar/restaurants (3 which share a kitchen), 17 are
considered general retail spaces, 11 are considered general office spaces and
one is considered a storage space.
Combination of carpet, ceramic or porcelain tile, hardwood, and exposed
brick.
Combination of rendered and painted masonry and painted sheetrock.
Combination of suspended grid accoustic panels, painted sheetrock, and
tongue and groove or bead board.
Combination of incandescent and fluorescent lighting with fixtures ranging
from average to good quality.
Assumed typical installation to code
Assumed typical installation to code
None
Central
Individually metered for water and electricity
One
Common area bathroom are adequate. There are four full bathrooms of good
quality that are available to tenants of the marina.
None
Steel structural beams are fire coated with concrete
The subject is gated along the waterfront and interior/exterior security
cameras are installed throughout the property.
Site Improvements
Landscaping
No. of Customer Parking Spaces
Gates/Fencing
Paving
Average
167
Over 6' aluminum gate along the subject's waterfrontage
Combination of concrete and brick pavers
IGY American Yacht Harbor Marina
El
Improvements Description and Analysis 44
Improvements Analysis — Building Improvements
Quality and Condition
The quality and condition of the subject is considered to be superior to that of competing properties.
The interior and exterior building improvements are considered to be of good quality and in good
condition based on our inspection.
Functional Utility
The improvements appear to be adequately suited to their current use, and there do not appear to be
any significant items of functional obsolescence.
Deferred Maintenance
A few items of deferred maintenance were identified during our inspection and based on discussions
with management. These include repairs and replacement to the parking garage ceiling, replacing the
wooden deck on the upper level Building A, and re-facing various portions of the marina jettys. Note
that a detailed description of the marina improvements will be discussed in the following section of
this report. To estimate the cost to cure deferred maintenance, we rely on construction estimates
from management as shown below.
Deferred Maintenance
Item   Estimated Cost
Parking garage ceiling   $40,000
Wooden deck repair/replacement   $25,000
Marina decking and fenderi ng repair/replace   $96,000
Total   $161,000
*Values expressed in United States Dollars
Planned Capital Expenditures
From 2013 to 2015, a total of $771,460.93 has been spent on various capital expenditures. The major
improvements over the past three years were $84,088 for exterior column replacement, $62,172 for
security cameras, $62,013 for marina bathrooms, and $281,950 for hand rail replacement. Upcoming
expenditures for various capital items considered to be necessary are identified in the following table.
To estimate the amounts of these expenditures, we rely on discussions with management. Estimated
capital expenditures are as follows.
IGY American Yacht Harbor Marina
Improvements Description and Analysis 45
Capital Expenditures
Item   Year 1
Transformer   $10,000
Exterior stairwell repairs   $30,000
Total   $40,000
Percent Applied   100%
Net Total   $40,000
*Values expressed in United States Dollars
ADA Compliance
Based on our inspection and information provided, we are not aware of any ADA issues. However, we
are not expert in ADA matters, and further study by an appropriately qualified professional would be
recommended to assess ADA compliance.
Hazardous Substances
An environmental assessment report was not provided for review and environmental issues are
beyond our scope of expertise. No hazardous substances were observed during our inspection of the
improvements; however, we are not qualified to detect such substances. There are three 10,000
gallon diesel storage tanks and one 10,000 gallon gasoline storage tank located unground at the
subject site. In addition, there is a marine fueling dock located on the marina. We have assumed there
is no environment damage to the subject property as the result of these fuel stations and unless
otherwise stated, we assume no hazardous conditions exist on or near the subject.
Personal Property
No personal property items were observed that would have any material contribution to market
value.
Conclusion of Improvements Analysis
In comparison to other competitive properties in the region, the subject improvements are rated as
follows:
Improvements Ratings
Visibility/Exposure Above Average
Design and Appearance Above Average
Age/Condition Above Average
Adaptability of Space to other Retail Users Above Average
Bathrooms Average
Parking Ratios Below Average
Di stance of Parking to Building Access Average
Landscaping Average
IGY American Yacht Harbor Marina
Improvements Description and Analysis 46
Overall, the quality, condition, and functional utility of the improvements are above average for their
age and location. The subject benefits from good access and visibility from both the waterfront and
the main thoroughfare of Smith Bay Road. In addition, the overall quality and condition of the subject
is above average for this market. Due to the small site size and large number of commercial tenants,
there is insufficient parking at the subject based on market standards.
Improvement Analysis — Marina
The marina currently contains 105 wet slips, although that number can vary somewhat depending on
the size (width) of the occupying vessels. Each designated slip is supplied with its own electrical outlet
and fresh water supply, as well as access to a refueling line. The individual slip sizes can vary based on
boater needs, but they can accommodate a variety of vessels, typically within the range from 30 to 79
linear feet for the standard slips, and 79 to 110 linear feet for the T-head slips. In addition, some slips
have an attached finger for easier access, which is considered more desirable.
Generally the jetties and slips are constructed of PVC pilings bored and filled with concrete and steel;
and wood plank surfacing. Many of the smaller slips are horizontally separated by wooden columns
used to tie up vessels rather than there being jetties between each slip.
The physical docks were constructed over several years, from 1991-1995, and are considered to be in
average condition. Ongoing renovations have been made to the docks throughout the years, with
upcoming expenditures included a complete resurfacing as well as re-facing the wooden skirts on
most concrete pilings. The docks consist of mostly concrete pilings and cross braces with some wood,
along with wooden skirts and wood decking surface. There have been no major renovations to slip
structure within the past five years.
The subject marina benefits greatly from its location in Vessup Bay, which is well protected and
positioned in a convenient area at the heart of Red Hook. In addition, this bay has a direct route to St.
John and the British Virgin Islands and has a depth that will accommodate vessels with a maximum
draft of 10 feet and a maximum vessel length of 110 feet. The subject is one of the closest commercial
marinas to both St. John and the BVI, and this convenient location is a major demand generator for
commercial charters as well as vessels based in St. John and the BVI which are often in need of a
fueling station. The quality and condition of the docks is considered to be average; however, the
services and amenities offered at this marina are considered to be above average.
1
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Improvements Description and Analysis
47
Front exterior of commercial building
(Photo Taken on November 25, 2015)
Side exterior of commercial building
(Photo Taken on November 25, 2015)
Rear exterior of commercial building from marina dock
(Photo Taken on November 25, 2015)
IGY American Yacht Harbor Marina
Front and side exterior of commercial building
(Photo Taken on November 25, 2015)
Rear and side exterior of commercial building
(Photo Taken on November 25, 2015)
Rear exterior of commercial building
(Photo Taken on November 25, 2015)
iLl
Improvements Description and Analysis
48
Interior of management office
(Photo Taken on November 25, 2015)
Interior of restaurant space
(Photo Taken on November 25, 2015)
Interior of general retail space
(Photo Taken on November 25, 2015)
IGY American Yacht Harbor Marina
Bathrooms for marina tenants
(Photo Taken on November 25, 2015)
Interior of general retail space
(Photo Taken on November 25, 2015)
Interior of general retail space
(Photo Taken on November 25, 2015)
Improvements Description and Analysis
49
Interior of restaurant space
(Photo Taken on November 25, 2015)
Interior of vacant office space
(Photo Taken on November 25, 2015)
Interior of restaurant space
(Photo Taken on November 25, 2015)
Interior of restaurant space
(Photo Taken on November 25, 2015)
111
Interior of occupied office space
(Photo Taken on November 25, 2015)
Interior of restaurant space
(Photo Taken on November 25, 2015)
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Improvements Description and Analysis
50
Typical marina dock
(Photo Taken on November 25, 2015)
Fuel dock
(Photo Taken on November 25, 2015)
Overview of marina dock
(Photo Taken on November 25, 2015)
IGY American Yacht Harbor Marina
Marina dock looking back to main commercial building
(Photo Taken on November 25, 2015)
-
Close-up of dock surface
(Photo Taken on November 25, 2015)
Street view of Smith Bay Road looking northeast
(Photo Taken on November 25, 2015)