THURSTON, CASALE & RYAN, LLC

Transcription

1 APPRAISAL REPORT XXXX AVENUE TOWN OF XXXX XXXX COUNTY, NEW YORK f INDUSTRIAL OFFICE BUILDING OWNER OF RECORD XXXX PREPARED FOR XXXX DATE OF PREPARATION February XXXX DATE OF VALUATION February 10, XXXX Real estate appraisal and cnsulting 1080 State Fair blvd (315) Syracuse, NY (315) (fax)

2 1080 STATE FAIR BLVD SYRACUSE, NY Real Estate Appraisal and Cnsulting (315) (315) (fax) March 1, XXXX XXXX XXXX XXXX XXXX Re: Industrial Office Building XXXX Avenue Twn f XXXX, XXXX Cunty Dear XXXX: T fulfill my respnsibility utlined in the Letter f Engagement submitted XXXX, I present this Appraisal Reprt prepared XXXX. As agreed, the market value f subject s fee simple interest is prvided in the attached reprt, alng with the supprting data and analysis that this appraisal frmat affrds. The date f valuatin is February 10, XXXX. The pinins f value reprted herein are subject t thse General Assumptins and Limiting Cnditins n page 2, as well as thse Extrardinary Assumptins and Hypthetical Cnditins fund starting n page 5. The steps taken t research, analyze, and estimate market value are as utlined within my Scpe f Wrk n page 5. The client and intended user f this reprt are XXXX. The functin f the appraisal is restricted t the abve referenced parties fr XXXX. It may nt be reprduced in all r part, r emplyed by any ther entity, withut my written permissin. I inspected the prperty and prepared this reprt. Thank yu fr yur cnfidence in my services. If yu have any questins r cmments, please call at yur cnvenience. Respectfully submitted, Tdd P. Thurstn, MAI Principal NYS Certified General Real Estate Appraiser #

3 TABLE OF CONTENTS BODY OF REPORT: I. CERTIFICATION 1 II. GENERAL ASSUMPTIONS AND LIMITING CONDITIONS 2 III. QUALIFICATIONS: TODD P. THURSTON, MAI 3 IV. SUMMARY OF IMPORTANT CONCLUSIONS 4 V. IDENTIFICATION OF SUBJECT 5 VI. SCOPE OF WORK 5 VII. INTENDED USE/FUNCTION OF APPRAISAL 5 VIII. ASSIGNMENT CONDITIONS 5 IX. EXTRAORDINARY ASSUMPTIONS 5 X. HYPOTHETICAL CONDITIONS 6 XI. PROPERTY RIGHTS APPRAISED 6 XII. OWNER CONTACT AND PROPERTY INSPECTION 6 XIII. DATE OF VALUE ESTIMATE 6 XIV. DEFINITION OF VALUE 7 XV. HISTORY OF THE PROPERTY 7 XVI. CURRENT OCCUPANCY AND LEASES IN EFFECT 8 XVII. REGIONAL AND COUNTY/NEIGHBORHOOD ANALYSIS 8 XVIII. TRENDS IN REAL ESTATE PRICES, RENTS AND MARKETING 9 XIX. ASSESSMENT AND TAXES ANALYSIS 10 XX. SITE DATA AND ANALYSIS 11 XXI. IMPROVEMENT DATA AND ANALYSIS 12 XXII. HIGHEST AND BEST USE ANALYSIS 13 XXIII. SITE VALUATION 14 XXIV. COST APPROACH 15 XXV. SALES COMPARISON APPROACH 18 XXVI. INCOME CAPITALIZATION APPROACH 19 XXVII. RECONCILIATION OF VALUE INDICATORS 21 EXHIBITS (tabs): 1 SUBJECT AND NEIGHBORHOOD PHOTOS 2 DEED 3 COMPARABLE SYNOPSIS

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5 1 I. CERTIFICATION I CERTIFY THAT, TO THE BEST OF MY KNOWLEDGE AND BELIEF: The statements f fact cntained in this reprt are true and crrect. The reprted analyses, pinins, and cnclusins are limited nly by the reprted assumptins and limiting cnditins, are my persnal, impartial, unbiased prfessinal analyses, pinins, and cnclusins. I have n bias r a present r prspective interest in the prperty that is the subject f this reprt and n persnal interest with respect t the parties invlved. I have nt perfrmed services, as an appraiser r in any ther capacity, regarding the prperty that is subject f this reprt within the three-year perid immediately preceding acceptance f this assignment. I have n bias with respect t the prperty that is the subject f this reprt r t the parties invlved with this assignment. My engagement in this assignment was nt cntingent upn develping r reprting predetermined results. My cmpensatin fr cmpleting this assignment is nt cntingent upn the develpment r reprting f a predetermined value r directin in value that favrs the cause f the client, the amunt f the value pinin, the attainment f a stipulated result, r the ccurrence f a subsequent event directly related t the intended use f the reprt. I have made a persnal inspectin f the subject f this reprt. N ne prvided significant real prperty appraisal assistance t the persn(s) signing this certificatin. The reprted analyses, pinins and cnclusins were develped, and this reprt has been prepared, in cnfrmity with the requirements f the Cde f Prfessinal Ethics and the Standards f Prfessinal Practice f the Appraisal Institute. The use f this reprt is subject t the requirements f the Appraisal Institute relating t review by its duly authrized representatives. As f the date f this reprt, I have cmpleted the cntinuing educatin prgram fr Designated Members f the Appraisal Institute. Tdd P. Thurstn, MAI Principal NYS Certified General Real Estate Appraiser #

6 2 II. GENERAL ASSUMPTIONS AND LIMITING CONDITIONS This appraisal reprt is made with the fllwing general assumptins: 1. N respnsibility is assumed fr the legal descriptin r fr matters including title cnsideratins. Title t the prperty is assumed t be gd and marketable unless therwise stated. 2. The prperty is appraised free and clear f any r all liens r encumbrances unless therwise stated. 3. Respnsible wnership and cmpetent prperty management are assumed. 4. The infrmatin furnished by thers is believed t be reliable. Hwever, n warranty is given fr its accuracy. 5. All engineering is assumed t be crrect. The plt plans and illustrative material in this reprt are included nly t assist the reader in visualizing the prperty. 6. It is assumed that there are n hidden r unapparent cnditins f the prperty, subsil, structures that render it mre r less valuable. N respnsibility is assumed fr such cnditins r fr arranging fr engineering studies that may be required t discver them. 7. It is assumed that there is full cmpliance with all applicable federal, state, and lcal envirnmental regulatins and laws unless nncmpliance is stated, defined, and cnsidered in the appraisal reprt. 8. It is assumed that all applicable zning and use regulatins and restrictins have been cmplied with, unless a nncnfrmity has been stated, defined, and cnsidered in the appraisal reprt. 9. It is assumed that all required licenses, certificates f ccupancy, cnsents, r ther legislative r administrative authrity frm any lcal, state, r natinal gvernment r private entity r rganizatin have been r can be btained r renewed fr any use n which the value estimate cntained in this reprt is based. 10. It is assumed that the utilizatin f the land and imprvements is within the bundaries r prperty lines f the prperty described and that there is n encrachment r trespass unless nted in the reprt. 11. Unless therwise stated in this reprt, the appraiser did nt bserve the existence f hazardus materials, which may r may nt be present n the prperty. The appraiser has n knwledge f the existence f such materials n r in the prperty. The appraiser, hwever, is nt qualified t detect such substances. The presence f substances such as: asbests, urea-frmaldehyde fam insulatin, and ther ptential hazardus materials may affect the value f the prperty. The value estimated is predicated n the assumptin that there is n such material n r in the prperty that wuld cause a lss in value. N respnsibility is assumed fr such cnditins r fr any expertise r engineering knwledge required t discver them. The intended user is urged t retain an expert in this field, if desired. 12. The distributin, if any, f the ttal valuatin in this reprt between land and site imprvements applies under the stated prgram f utilizatin. The separate allcatins fr land and buildings must nt be used in cnjunctin with any ther appraisal and are invalid if s used. 13. Pssessin f this reprt, r a cpy theref, des nt carry with it the right f publicatin. 14. The appraiser, by reasn f this appraisal, is nt required t give further cnsultatin, testimny, r be in attendance in curt with reference t the prperty in questin unless arrangements have been previusly made. 15. Neither all nr any part f the cntents f this reprt (especially any cnclusins as t value, the identity f the appraiser, r the firm with which the appraiser is cnnected) shall be disseminated t the public thrugh advertising, public relatins, news, sales, r ther media withut prir written cnsent and apprval f the appraiser. 16. The Americans with Disabilities Act (ADA) became effective January 26, The appraiser has nt made a specific cmpliance survey r analysis f the prperty t determine whether r nt it is in cnfrmity with the varius detailed requirements f ADA. It is pssible that such a survey/analysis wuld reveal that the prperty is nt in cmpliance with ne r mre requirements f the act. If s, this fact culd have a negative impact upn the value f the prperty. Since the appraiser has n direct evidence relating t this issue, pssible nncmpliance was nt cnsidered in estimating a value fr the prperty.

7 3 III. QUALIFICATIONS: TODD P. THURSTON, MAI EMPLOYMENT HISTORY EDUCATION AND APPRAISAL RELATED COURSEWORK PROFESSIONAL AFFILIATION LICENSES COURT/TESTIMONY EXPERIENCE PROFESSIONAL EXPERIENCE EXPERIENCE HIGHLIGHTS 8/03-Current: Principal Thurstn, Casale & Ryan, LLC 11/01-7/03: President Thurstn Appraisal Cmpany, LLC 12/93-11/01: Vice President Pmery Appraisal Assciates, Inc. 06/91-12/93: Staff Appraiser Pmery Appraisal Assciates, Inc. Bachelr f Science in Finance: Rchester Institute f Technlgy (1991) Appraisal Institute (since 2003): 7-hur USPAP Update (03,05,07,09,11,13,15); Case Studies in Valuatin f Upstate NY (03,05,07-10,12,14-17), Slving Appraisal Prblems in Upstate NY (04), Apartment Appraisal Cncepts and Applicatins (06), Cndminiums, C-Ops, and PUDs (07), Business Practice and Ethics (07, 12), Appraisal f Nursing Facilities (10), Data Verificatin Methds (10), Appraising Cnvenience Stres (10), Fundamentals f Separating RP, PP, & IBA (12), Prblems in the Valuatin f Partial Acquisitins (12), Rates & Ratis: Making Sense f GIMs, OARs, & DCF (14), Analyzing Operating Expenses (14), Subdivisin Valuatin (16) IRWA: Principles f Real Estate Law (02), Principles f Real Estate Negtiatin (02), Easement Valuatin (04), Mbile Hme Relcatin (06) ASFRMA: Yellw Bk: Unifrm Appraisal Standards fr Federal Land Acq. (06) Member f the Appraisal Institute (MAI) Member f the Internatinal Right-f-Way Assciatin (IRWA) NYS Certified General Appraiser # Cnsultant Appraiser NYS Department f Transprtatin Expert witness in NYS Supreme Curt and NYS Curt f Claims Several assessment grievance bards (Hrnell, Osweg, Greece) Experience includes: airprts, apartments, autmbile dealerships, banks, farms, glf curses, gravel beds, htels/mtels, manufacturing plants, mini-marts, mbile hme parks, ffice buildings, ffice/warehuses, nursing hmes, railrads (active and abandned), residential dwellings, residential subdivisins, restaurants, shpping centers, utility prperties (i.e. gas, electric, telephne), etc. Extensive eminent dmain experience invlving prjects and claims f the NYS Departments f Transprtatin and Federal Aviatin Administratin. Frequent Presenter fr lcal chapters f Appraisal Institute and IRWA: Tpics have included: Crridr Valuatin, Extracting Capitalizatin Rates fr Single- and Multi-Family Dwellings, The Pitfalls f Expensing Capital Items, The Impact f Access n Visibility & Price, A Case Study in ATF Valuatin, and Extracting External Obslescence frm Cmparable Sales. Airprt Prjects ( ): Invlved in the valuatin f airprt prperties and/r neighbring lands fr federally funded prjects t determine cmpensatin resulting frm full r partial fee acquisitins and avigatin easements. List since 2005 includes: Lt. Warren Eatn (05), Massena Int l (06), Clumbia C. (05,08,12), Flyd Bennett Memrial (09,12,14,16), Orange C. (09), Elmira-Crning (09,16), Dansville Municipal (11), Finger Lakes (12), and Perry-Warsaw (13,14). Experience als includes appraisals f: Riverside Airprt NYSDOT apprpriatin (94), Hrnell Airprt certirari (99), Michael Airfield acquisitin (00), Syracuse Suburban Airprt acquisitin (00, 01); aircraft hangars at Fultn C., Hancck Int l, Clintn C., Elmira-Crning, Griffiss, and Tmpkins C. Airprts Native American Land Claims: Invlved in analysis and valuatin f disputed lands between several Irquis tribes and the State f New Yrk. Played significant rle in the research and develpment f histrical land values/trending and calculatin f applicable rental damages. Specific land claim areas include: Cuba Lake (99-01), Niagara River Islands (99), and Stckbridge-Munsee (95).

8 4 IV. SUMMARY OF IMPORTANT CONCLUSIONS Lcatin f Prperty: Type f Prperty: Site: Building Imprvement: XXXX Avenue Twn f XXXX, XXXX Cunty Industrial Office 29,394± sq.ft. (0.675± Ac.); crner lt with XXXX± f.f. n XXXX Avenue and XXXX ± f.f. n XXXX Street Tw-stry industrial ffice building (c.19xx) cntaining 10,683 sq.ft. f grss building area Tax Map # and Assessment: ASSESSMENT DATA EQUALIZATION DATA Tax Map # Acreage Land Imprvements Ttal Taxable Rate Value XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Highest and Best Use As Thugh Vacant: As Imprved: Zning Classificatin: Prperty Rights Appraised: Value Estimate Requested: Date f Value Estimate: Industrial Office Develpment Industrial Office Use XXXX District (XX) Fee Simple Market Value February 10, XXXX Summary f Values: Final Market Value: MARKET VALUE CONCLUSIONS OF APPROACHES TO VALUE Site Valuatin $32,000 Cst Apprach $417,000 Sales Cmparisn Apprach $353,000 Incme Capitalizatin Apprach Direct Capitalizatin $419,000 Discunted Cash Flw Analysis Nt Utilized THREE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($375,000)

9 5 V. IDENTIFICATION OF SUBJECT ***Picture f Subject The appraised cnsists f a tw-stry industrial building n a 0.675± Ac. site. It is cnstructed f cncrete blck and steel with a partial cedar clapbard facade. The structure cntains 10,683± sq.ft. (78% finished; remainder warehuse) and is apprximately XXXX years ld. Additinal phtgraphs f subject and neighbrhd are within Exhibit 1. VI. SCOPE OF WORK In accrdance with the Unifrm Standards f Prfessinal Appraisal Practice (USPAP), I: Made persnal inspectins f the site and interir/exterir f the building imprvement; Cllected and analyzed relevant infrmatin frm public/municipal surces; Researched and verified cmparable sales, reprductin cst new data, and rental data; Applied all three appraches t value. VII. INTENDED USE/FUNCTION OF APPRAISAL The client and intended user f this reprt is XXXX. The functin f the appraisal is restricted t the abve referenced parties fr XXXX. VIII. ASSIGNMENT CONDITIONS Reprt cnsiders the fllwing: This is an Appraisal Reprt in a frmat cnsistent with what was frmally knwn as a Summary Appraisal Reprt 1. It is prepared in cmpliance with the reprting requirements set frth in Standards Rule 2-2(a) f the Unifrm Standards f Prfessinal Appraisal Practice. IX. EXTRAORDINARY ASSUMPTIONS Extrardinary assumptins are defined as (a)n assumptin directly related t a specific assignment, as f the effective date f the assignment results, which, if fund t be false, culd alter the appraiser s pinins r cnclusins. Extrardinary assumptins presume as fact therwise uncertain infrmatin abut physical, legal, r ecnmic characteristics f the subject prperty; r abut cnditins external t the prperty such as market cnditins r trends; r 1 Term was revised in USPAP beginning January 2014

10 6 abut the integrity f data used in an analysis. 2 extrardinary assumptins: This reprt is subject t the fllwing Site size is based n a prperty survey, while building area is surced frm field measurements. Prperty is assumed t be free and clear f envirnmental cntaminatin r ther adverse cnditins. T the limited extent f my expertise, n ptential issues were bserved during my prperty inspectin r interview with wner/representative. Hwever, the client and intended users are urged t seek a qualified expert fr certainty. X. HYPOTHETICAL CONDITIONS Defined as a cnditin, directly related t a specific assignment, which is cntrary t what is knwn by the appraiser t exist n the effective date f the assignment results, but is used fr the purpse f analysis. Hypthetical cnditins are cntrary t knwn facts abut physical, legal, r ecnmic characteristics f the subject prperty; r abut cnditins external t the prperty, such as market cnditins r trends; r abut the integrity f data used in an analysis. 3 º N hypthetical cnditins are applicable t this valuatin. XI. PROPERTY RIGHTS APPRAISED Interest appraised is fee simple estate, defined as: "abslute wnership unencumbered by any ther interest r estate, subject nly t the limitatins impsed by the gvernmental pwers f taxatin, eminent dmain, plice pwer, and escheat". 4 XII. OWNER CONTACT AND PROPERTY INSPECTION The wner, XXXX, was cntacted in cnjunctin with this assignment by telephne. The inspectin f the prperty was set fr February 10, XXXX, which cnsisted f a detailed review f the imprvements and site. XXXX was present during the visit. XIII. DATE OF VALUE ESTIMATE Subject is valued as f February 10, XXXX. 2 The Appraisal Fundatin, Unifrm Standards f Prfessinal Appraisal Practice, Editin (Washingtn DC: Appraisal Standards Bard, 2012) U-3. 3 The Appraisal Fundatin. 4 Appraisal Institute, The Dictinary f Real Estate Appraisal, Fifth Editin (Chicag: Appraisal Institute, 2010) 78.

11 7 XIV. DEFINITION OF VALUE Market value is defined as "the mst prbable price which a prperty shuld bring in a cmpetitive and pen market under all cnditins requisite t a fair sale, the buyer and seller each acting prudently and knwledgeably, and assuming the price is nt affected by undue stimulus. Implicit in this definitin is the cnsummatin f a sale as f a specified date and the passing f title frm seller t buyer under cnditins whereby: 1) buyer and seller are typically mtivated; 2) bth parties are well-infrmed r well-advised, and acting in what they cnsider their wn best interests; 3) a reasnable time is allwed fr expsure in the pen market; 4) payment is made in terms f cash in United States dllars r in terms f financial arrangements cmparable theret; and 5) the price represents the nrmal cnsideratin fr the prperty sld unaffected by special r creative financing r sales cncessins granted by anyne assciated with the sale" 5. XV. HISTORY OF THE PROPERTY Mst recent transfer f the prperty tk place in the fllwing deed: Grantr: XXXX Grantee: XXXX Deed Date: May XX, 2000 Recrded: Octber XX, 2000 Purchase Price: XXXX ($XXXX /sq.ft.) Bk/Page: XXXX /XXXX Rights/Restrictins: N unusual encumbrances nted A cpy f this deed is included in Exhibit 2. Subject is nt actively marketed fr sale at this time, and n purchase cntracts are reprtedly pending. 5 Appraisal Institute 123.

12 8 XVI. CURRENT OCCUPANCY AND LEASES IN EFFECT Prperty is presently ccupied by XXXX. A nn-arm s lease is in place, subject t the fllwing terms: Term Cntract Rent (yrs.) Per Year Per Mnth Per Sq.Ft. 01/01/01 10,683 XXXX XXXX XXXX XXXX XXXX Nne Lease Date Leased Area N ther knwn lease agreements are in effect. Tenant Expenses Renewal Optins XVII. REGIONAL AND COUNTY/NEIGHBORHOOD ANALYSIS ***Area map Ttal Emplyment (thusands) XXXX New Yrk as a whle has experienced recessinary effects ver the last decade, and the XXXX Cunty area is Ttal Nn-Agricultural Emplyment n exceptin. Ttal XXXX Cunty (Dec) emplyment is imprving, but remains well belw 2008 peaks 6 (see chart left), while ppulatin grwth is stagnant 7 (see fllwing). Real estate value and rental trends, in general, have been stable in respnse. suth, and XXXX t the east Year Neighbrhd bundaries are lsely defined by XXXX t the nrth, XXXX t the west, XXXX t the 2000 Ppulatin 2010 Ppulatin Annual Change Immediate area is largely cmprised f City f XXXX XXXX XXXX XXXX light industrial uses. Cmmercial tenancies XXXX Cunty XXXX XXXX XXXX are als present and typically cncentrated at New Yrk State 18,976,457 19,378, % majr intersectins. Average building ages are 20 t 50 years, with ccupancies ranging frm 90% t 100%. In cnclusin, subject is lcated in a regin struggling t expand ecnmically. Ersin t its emplyment base and stagnant ppulatin grwth cntribute t a general stabilizatin in

13 9 real estate prices, with negative tendencies in sme areas. As recessinary effects linger, n majr changes are anticipated. XVIII. TRENDS IN REAL ESTATE PRICES, RENTS AND MARKETING Over the last three t five years, real estate prices have generally remained stable. Likewise, rent increases have been flat t slightly increasing, the latter lsely based n the CPI index in the case f grss lease arrangements. EXPOSURE TIME/MARKETING PERIOD: Subject s expsure time, defined as (t)he estimated length f time the prperty interest being appraised wuld have been ffered n the market prir t the hypthetical cnsummatin f a sale at market value n the effective date f appraisal; a retrspective estimate based n an analysis f past events assuming a cmpetitive and pen market 8, is estimated at ne year based n available cmparable data. Marketing time is (a)n pinin f the amunt f time it might take t sell a real r persnal prperty interest at the cncluded market value level during the perid immediately after the effective date f an appraisal 9. Based n current market cnditins, a marketing perid f ne year is prjected. 8 Appraisal Institute, The Dictinary f Real Estate Appraisal, Fifth Editin (Chicag: Appraisal Institute, 2010) Appraisal Institute 121.

14 10 XIX. ASSESSMENT AND TAXES ANALYSIS *** Tax Map ASSESSMENT DATA EQUALIZATION DATA Tax Map # Acreage Land Imprvements Ttal Taxable Rate Value XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Real estate taxes fr the current year amunt t XXXX. N delinquencies are nted. Subject is slightly ver-assessed based n the market value estimate prvided herein ($375,000).

15 11 XX. SITE DATA AND ANALYSIS ***Site sketch Size: Access: Frntage: Sil Cnditins/Drainage: Tpgraphy: Shape: Utilities: Street Imprvements: Water Features: Easements/Encrachments: Fld Zne Infrmatin: NYS Wetland Classificatin: Zning Designatin: Site Imprvements: 29,394± sq.ft.; 0.675± Ac. Rad frnt; curb cuts n bth frnting streets XXXX Avenue: XX± f.f.; XXXX Street: XX± f.f. Appears adequate Mstly level; frntage is at t 1-3 belw grade Essentially rectangular All public Asphalt surface and lighting; n sidewalks r curbing Nne Nne nted Outside 100 year fld plain (Zne C: XXXX; Dated X/XX/XXXX) Nne XXXX (XX): permits varius ffice and industrial Uses subject is cnfrming Asphalt parking and access, cncrete curbing and sidewalks, lawn area, mature plantings Site Data and Analysis Cnclusin: Site is adequate fr industrial ffice use. Physically, its tpgraphy, shape, access, drainage characteristics, etc., are cnducive fr develpment. Hwever, it is smewhat undersized, limiting expansin pssibilities and accessry usage. This is cnsidered a ptential surce f functinal bslescence as subject s land-t-building rati f 2.8:1 is inferir t ideal densities f 4:1. Refer t the Highest and Best Use sectin fr further discussin.

16 12 XXI. IMPROVEMENT DATA AND ANALYSIS ***Building sketch Imprvement Type: Industrial Office Stries: One and tw-stries; 51% f ttal area n secnd flr Grss Building Area: 10,683 sq.ft. [8,322± sq.ft. (78%) finished)] Basement: Nne Year Cnstructin: c.19xx; last renvated c.19xx Actual & Effective Ages: XX years; XX years effectively Fundatin: Reinfrced cncrete Frame: Cncrete blck and steel Rf: Flat, built-up cmpsitin (riginal) Exterir: Split-faced cncrete blck and painted cedar clapbard Windws: Fixed, aluminum framed, insulated glass (riginal) Office: Metal/wd studs; gypsum bard with papered, painted, r Interir Partitining: vinyl cvering; Warehuse: Minimal partitining; plywd/unpainted gypsum bard walls Office: Standard and textures acustical tile (suspended) and painted gypsum Ceilings/Lighting: bard; verhead flurescent and recessed incandescent lighting; Warehuse: taped, unpainted gypsum bard with verhead flurescent lighting Flr Cverings: Office: Wall-t-wall carpeting, vinyl sheet, slate; Warehuse: Cncrete HVAC: Office: Package units (rf munted; riginal); Warehuse: Gas-fired space heaters (ceiling munted) Plumbing: Fur restrms with ten fixtures ttal; Master Plumber 40-galln electric water Heater Electrical Service: 400 amp., three phase, fur wire Security/Fire Prtectin: Wet sprinkler system thrughut Elevatr: Nne One 10 x 10 grade level verhead dr (insulated steel); ne 8 x 8 Miscellaneus lading dck (insulated steel) with leveler and bumpers; 9 ceiling heights Features: in warehuse Imprvement Data and Analysis Cnclusin: Building is well suited fr industrial ffice usage. Layut is functinal, cnsisting mainly f perimeter ffices and large interir wrkspaces. Finishes are f average quality and are abut midway thrugh their ecnmic life. Secnd level is smewhat uncharacteristic f this prperty class, but was necessary due t the limited site area. Overall cnditin/appeal f the structure is average.

17 13 XXII. HIGHEST AND BEST USE ANALYSIS SITE AS THOUGH VACANT: Subject's XXXX zning allws fr a variety f light and heavy industrial uses, as well as ffice buildings. Industrial ffice develpment is therefre legally permitted. Site is capable f accmmdating a variety f uses as its slightly slping tpgraphy and rectangular shape are generally cnducive t a number f develpment pssibilities. It is smewhat undersized, but industrial ffice develpment remains physically pssible. Vacancy rates are lw and stable within the neighbrhd s that industrial ffice develpment prvides the highest return t the land, and therefre is financially feasible. Since n alternative t industrial ffice develpment exists that wuld result in a higher return t the land, Industrial Office Develpment represents the maximally prductive use. PROPERTY AS IMPROVED: Imprvement s use is legally permitted and cnfrms t existing bulk requirements. Physically, the imprvement is cnducive t industrial ffice usage, which is als financially feasible because f high ccupancy rates and the relatively tight supply f suburban ffice space. Since n alternative uses exist that wuld result in sufficiently higher rents, Industrial Office Use is maximally prductive.

18 14 XXIII. SITE VALUATION The fllwing cmparables are cnsidered in the valuatin f the site as thugh vacant: SELECTED COMMERCIAL/INDUSTRIAL SITES WITHIN XXXX COUNTY Site # Street # Street Name Twn Sale Date Sale Price Size (Ac.) Price/Ac. 1 XXXX XXXX XXXX XXXX $45, $37,975 2 XXXX XXXX XXXX XXXX 75, ,621 3 XXXX XXXX XXXX XXXX 16, ,118 4 XXXX XXXX XXXX XXXX 75, ,245 5 XXXX XXXX XXXX XXXX 23, ,327 Site Valuatin Cnclusin: After adjustment, these sales indicate a unit value range f $39,894 t $61,370 per Ac. Few adjustments were applied verall, and each is accrded equal weighting in the final value estimate. Refer t Exhibit 3 fr a brief synpsis f each cmparable. Based n available data, it is my pinin that subject s site has a unit value f $47,000 per Ac., and fr 0.675± Ac., a ttal site allcatin f $31,725 (runded) $32,000.

19 15 XXIV. COST APPROACH Marshall & Swift s Cmmercial Estimatr is utilized as the basis fr replacement cst new. Refer t the fllwing:

20 16 Direct and Indirect Csts: Marshall & Swift prvides fr direct csts and includes apprximately 10% f the expected 15% t 25% necessary fr indirect csts. Thus, an additinal alltment f 15% is prvided fr the estimatin f replacement cst new. Entrepreneurial Incentive: This differs frm cntractr s verhead and prfit, which is factred as a direct cst. Entrepreneurial incentive represents an entrepreneur s expected return n the ttal prject including land acquisitin, site develpment, and imprvement cnstructin. An additinal 5% is emplyed t acknwledge the prfit mtive fr the typical entrepreneur. The Breakdwn Methd is emplyed in cnsideratin f the subject s accrued depreciatin. Physical Deteriratin: N majr items f deferred maintenance were nted. Thus, physical deteriratin is analyzed as incurable, defined as "... a defect caused by physical deteriratin that cannt be practically r ecnmically crrected". 10 It is calculated based n the remaining reprductin cst after curable items have been deducted, and is further brken dwn int lng-lived and shrt-lived items. The frmer invlves building cmpnents that have an ecnmic r physical life equal t that f the imprvement (e.g. fundatin, wall studs, etc.). As implied by name, the latter needs t be replaced at shrter intervals ver the building's ttal physical life (e.g. rf, certain electrical cmpnents). Lng- and shrt-lived items are represented in the Lng-Lived Shrt-Lived table right. Effective Physical Effective Physical % % Life Life Life Life % % Functinal Obslescence: N functinal bslescence is applicable. External Obslescence: External frces such as the general state f the ecnmy, extent f ver-supply, availability f financing, unemplyment, etc. influence whether r nt external bslescence exists and t what degree. Current ecnmic cnditins require a prvisin here (20%). 2002) Appraisal Institute, The Dictinary f Real Estate Appraisal, Furth Editin (Chicag: Appraisal Institute,

21 17 Site Imprvements: Site imprvements include: asphalt parking and access, cncrete curbing and sidewalks, lawn area, and mature plantings. Based n bserved depreciatin/bslescence, a ttal enhancement value f $26,000 is estimated. Based n the freging, subject s market value by this apprach is prcessed as fllws: BREAKDOWN METHOD REPLACEMENT COST NEW: Direct Cst $712,260 Architect Fees 0.0% 0 Additinal Sft Csts 15.0% 106,839 Sub-Ttal: Direct & Indirect Csts $819,099 Entrepreneurial Incentive (based n ttal prject csts) 5.0% 43,855 TOTAL REPLACEMENT COST NEW $862,954 ACCRUED DEPRECIATION: Physical Deteriratin Deferred Main.(Curable) $0 Shrt-Lived Items (Incurable) 16 yrs./ 20 Yrs.= 80.0% x $215,739 = 172,591 Lng-Lived Items (Incurable) 28 yrs./ 75 Yrs.= 37.3% x $647,215 = 241,411 Ttal Physical Deteriratin $414,002 Functinal Obslescence Curable 0.0% x $448,952 = $0 Incurable 0.0% x $448,952 = 0 Ttal Functinal Obslescence 0 External Obslescence 20.0% x $448,952 = 89,790 TOTAL ACCRUED DEPRECIATION $503,792 DEPRECIATED VALUE OF IMPROVEMENT 41.6% $359,162 Site Value 32,000 Site Imprvement Value 26,000 MARKET VALUE INDICATED BY COST APPROACH $417,162 (runded) $417,000 Cst Apprach Cnclusin: Based n available data, it is my pinin that subject has a market value f $417,000 via this apprach.

22 18 XXV. SALES COMPARISON APPROACH The fllwing cmparables are cnsidered in the valuatin f the prperty as imprved: Imp. Sale # SELECTED INDUSTRIAL OFFICES WITHIN XXXX COUNTY Street # Street Name Twn Sale Date Sale Price Bldg. Size Price/ Sq.Ft. 1 XXXX XXXX XXXX XXXX $260,000 6,000 $ XXXX XXXX XXXX XXXX 205,000 5, XXXX XXXX XXXX XXXX 240,000 6, XXXX XXXX XXXX XXXX 195,000 5, Sales Cmparisn Apprach Cnclusin: After adjustment, these sales indicate a unit value range f $21.47 t $35.17 per sq.ft. Reasnable adjustments were applied verall, with Imprved Sales 2 and 4 accrded greatest weighting in the final site value estimate. Refer t Exhibit 3 fr a brief synpsis f each cmparable. Based n available data, it is my pinin that subject has a value f $33.00 per sq.ft., and fr 10,683± sq.ft., a ttal market value f $352,539 (runded) $353,000.

23 19 XXVI. INCOME CAPITALIZATION APPROACH The three basic cmpnents f this apprach (i.e. incme, expenses, and capitalizatin rate) are summarized as fllws: INCOME: rent: The fllwing cmparable rentals were analyzed in rder t estimate subject s market Rental# Street# Street Name Twn Lease Date Term (Yrs.) Leased Area Rent/ Sq.Ft. Landlrd Prvisins 1 XXXX XXXX XXXX XXXX 10 20,574 $7.53 Net 2 XXXX XXXX XXXX XXXX 5 5, Partial Grss (Taxes incl.) 3 XXXX XXXX XXXX XXXX 4 2, Grss Ptential Grss Incme Cnclusin: After adjusting these rents fr the varius physical and structural differences, a market rent, n a net basis, f $5.58 t $6.83 is derived. Assigning greatest weight t Rental 2, ptential grss incme is estimated at $5.75 per sq.ft. r $61,427 fr the ttal prperty. EXPENSES: The necessary expenses t maintain subject s incme stream are itemized as fllws: Vacancy Lss: A survey f the neighbrhd and analysis f this prperty class indicates vacancies f 0% t 10% are typical. Based n subject s varius physical factrs, 10% is cnsidered reasnable fr this analysis. Management: Fees fr managing single-tenant prperties cmmnly range frm 3% t 6% f effective grss incme (excludes leasing cmmissins). The middle f the range is applicable here (5%). Structural Repairs/Allwance fr Replacements: In net lease arrangements, the landlrd is typically respnsible fr the csts t repair/replace structural items. Based n available survey data and my experience, $0.20/sq.ft. is utilized t stabilize the incme stream fr such repairs. Miscellaneus: In rder t accunt fr the miscellaneus expenses related t wnership, a charge f 1% f effective grss incme is taken. Leasing Cmmissins: Typical leasing cmmissins amunt t 6% f ttal base rent ver the initial term (e.g. $20,000 in annual rent with 3 year term = $3,600 in leasing

24 20 cmmissins). Fr the purpses f this reprt, expense is stabilized n an annual basis (e.g. $1,200 deducted frm NOI). CAPITALIZATION RATE: Using varius methds, a market based capitalizatin rate is estimated as fllws: MARKET DERIVED: Imp. Sale Rate % BAND-OF-INVESTMENT: M/E Rati Rate Derivatin 75% 10.41% 7.81% 25% 13.00% 3.25% R = 11.1% DEBT COVERAGE RATIO: DCR LTV Rm Rate % 10.41% 10.2% SUMMARY/RECONCILED OVERALL RATE 11.0% INCOME AND EXPENSE STATEMENT/VALUE ESTIMATE: Based n the freging, subject s market value by this apprach is prcessed as: INCOME: Base Rent (B.R.) $5.75 /sq.ft.= $61,427 Ttal Reimburseables 0 TOTAL POTENTIAL GROSS INCOME $61,427 Less Vacancy and Cllectin 10.0% f PGI 6,143 EFFECTIVE GROSS INCOME $55,284 EXPENSES: Management Real 5.0% f EGI $2,764 Repairs & Maintenance: Structural/Allwance fr $0.20 /sq.ft.= 2, % f EGI 553 TOTAL OPERATING EXPENSES $5,454 NET OPERATING INCOME (befre L.C.) $49,830 Less Leasing Cmmissins 6.0% f B.R. 3,686 NET OPERATING INCOME $46,144 Capitalizatin 11.0% MARKET VIA BY DIRECT CAPITALIZATION $419,491 (runded) $419,000 Incme Capitalizatin Apprach Cnclusin: Based n available data, it is my pinin that subject has a market value f $419,000 via this apprach.

25 21 XXVII.RECONCILIATION OF VALUE INDICATORS Intended Use/Functin f Appraisal: The client and intended user f this reprt is XXXX. The functin f the appraisal is restricted t the abve referenced parties fr XXXX. Summary f Values: MARKET VALUE CONCLUSIONS OF APPROACHES TO VALUE Site Valuatin $32,000 Cst Apprach $417,000 Sales Cmparisn Apprach $353,000 Incme Capitalizatin Apprach Direct Capitalizatin $419,000 Discunted Cash Flw Analysis Nt Utilized Reasnability and Weight Determinatin: The sales cmparisn apprach is cnsidered mst reliable, as this prperty type is typically wner-ccupied. The cst and incme capitalizatin appraches are utilized in supprt. Cnclusin: Subject s ttal market value, as f February 10, XXXX, is estimated at: THREE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($375,000)