Integra Realty Resources Tulsa/OKC. Appraisal of Real Property

Transcription

1 Integra Realty Resources Tulsa/OKC Appraisal of Real Property Vacant Land 425, 475 S Broadway Ave. Oklahoma City, Oklahoma County, Oklahoma Client Reference: Job No (04) Prepared For: Oklahoma Department of Transportation Effective Date of the Appraisal: August 6, 2015 Report Format: Appraisal Report Standard Format IRR - Tulsa/OKC File Number:

2 425, 475 S Broadway Ave. Oklahoma City, Oklahoma

3 Integra Realty Resources N MacArthur Blvd T Tulsa/OKC Suite G2 F Oklahoma City, OK August 25, 2015 Todd Gore GIS/Disposal Manager Oklahoma Department of Transportation 200 NE 21st Street Oklahoma City, Oklahoma SUBJECT: Market Value Appraisal 425, 475 S Broadway Ave. Oklahoma City, Oklahoma County, Oklahoma Client Reference: Job No (04) IRR - Tulsa/OKC File No Dear Mr. Gore: Integra Realty Resources Tulsa/OKC 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 fee simple interest in the property. The client for the assignment is Oklahoma Department of Transportation, and the intended use is for property disposition purposes. 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, applicable state appraisal regulations, and the appraisal guidelines of Oklahoma Department of Transportation. 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 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.

4 Todd Gore Oklahoma Department of Transportation August 25, 2015 Page 2 The subject is a parcel of vacant land containing an area of 1.98 acres or 86,246 square feet. The property is zoned DBD, with DP overlay which permits a wide array of commercial uses. The northernmost Part 1 and southernmost Part 2 each comprise portions held in fee simple as well as perpetual easement. Valuation of each part reflects a discount for the cost to secure quiet title in fee simple for land presently held in leasehold (perpetual easement). 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 Conclusions Parcel Interest Appraised Date of Value Value Conclusion Part 1 Fee Simple August 6, 2015 $1,580,000 Part 2 Fee Simple August 6, 2015 $1,290,000 Total $2,870,000 Rounded $2,870,000 Summary of Land Values Parcel Total SF Indicated Value per Square Foot Value Prior to Adjust. Discount: Perpetual Esmt (20% of 31,363 SF x $37/SF) Total Adjustments Indicated Value Rounded Part 1 49,020 $37.00 $1,813,740 -$232,086 -$232,086 $1,581,654 $1,580,000 Part 2 37,226 $35.00 $1,302,910 -$15,764 -$15,764 $1,287,146 $1,290,000 Total 86,246 $36.14 $3,116,650 -$247,850 -$247,850 $2,868,800 $2,870,000 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. None 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. None

5 Todd Gore Oklahoma Department of Transportation August 25, 2015 Page 3 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 - TULSA/OKC Darin Andrew Dalbom, MAI Certified General Real Estate Appraiser Oklahoma Certificate # 12774CGA Telephone: , ext adalbom@irr.com Owen S. Ard, MAI Certified General Real Estate Appraiser Oklahoma Certificate # 11245CGA Telephone: , ext oard@irr.com

6 Table of Contents Summary of Salient Facts and Conclusions 1 General Information 2 Identification of Subject 2 Sale History 2 Pending Transactions 2 Purpose of the Appraisal 2 Definition of Market Value 2 Definition of Property Rights Appraised 3 Intended Use and User 3 Applicable Requirements 3 Report Format 3 Prior Services 4 Scope of Work 4 Economic Analysis 6 Oklahoma City MSA Area Analysis 6 Surrounding Area Analysis 14 Retail Market Analysis 19 Property Analysis 21 Land Description and Analysis 21 Real Estate Taxes 25 Highest and Best Use 26 Valuation 28 Valuation Methodology 28 Sales Comparison Approach Part 1 29 Analysis and Adjustment of Sales 33 Land Value Conclusion Part1 35 Sales Comparison Approach Part2 36 Analysis and Adjustment of Sales Part2 39 Land Value Conclusion Part2 41 Reconciliation and Conclusion of Value 42 Exposure Time 43 Marketing Period 43 Certification 44 Assumptions and Limiting Conditions 46 Addenda A. Appraiser Qualifications B. Property Information C. Comparable Data D. Engagement Letter

7 Summary of Salient Facts and Conclusions 1 Summary of Salient Facts and Conclusions Property Name Address Property Type Owner of Record Tax ID Land Area - Total Part 1 Part 2 425, 475 S Broadway Ave. Oklahoma City, Oklahoma County, Oklahoma Land State of Oklahoma None 1.98 acres; 86,246 SF 1.13 acres; 49,020 SF 0.85 acres; 37,226 SF Zoning Designation DBD, with DP overlay, Downtown Business District Highest and Best Use Commercial use Exposure Time; Marketing Period 6-12 months; 6-12 months Effective Date of the Appraisal August 6, 2015 Date of the Report August 25, 2015 Property Interest Appraised Fee Simple Value Conclusions Part 1-49,020 SF $1,580,000 ($32.23/SF) Part 2-37,226 SF $1,290,000 ($34.65/SF) Total $2,870,000 ($33.28/SF) The values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than Oklahoma Department of Transportation and the client's designees 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. Summary of Land Values Parcel Total SF Indicated Value per Square Foot Value Prior to Adjust. Discount: Perpetual Esmt (20% of 31,363 SF x $37/SF) Total Adjustments Indicated Value Rounded Part 1 49,020 $37.00 $1,813,740 -$232,086 -$232,086 $1,581,654 $1,580,000 Part 2 37,226 $35.00 $1,302,910 -$15,764 -$15,764 $1,287,146 $1,290,000 Total 86,246 $36.14 $3,116,650 -$247,850 -$247,850 $2,868,800 $2,870,000 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. None 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. None

8 General Information 2 General Information Identification of Subject The subject is a parcel of vacant land containing an area of 1.98 acres or 86,246 square feet. The property is zoned DBD, with DP overlay which permits a wide array of commercial uses. The northernmost Part 1 and southernmost Part 2 each comprise portions held in fee simple as well as perpetual easement. Valuation of each part reflects a discount for the cost to secure quiet title in fee simple for land presently held in leasehold (perpetual easement). A legal description of the property is in the addenda. Property Identification Property Name Address 425, 475 S Broadway Ave. Oklahoma City, Oklahoma Tax ID None Owner of Record State of Oklahoma Sale History To the best of our knowledge, no sale or transfer of ownership has occurred within the past three years. 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. However, the client is considering disposition of the subject property. The purpose of this appraisal is to assist the client in matters relevant to that end. Purpose of the Appraisal The purpose of the appraisal is to develop an opinion of the market value of the fee simple interest in the property as of the effective date of the appraisal, August 6, The date of the report is August 25, The appraisal is valid only as of the stated effective date or dates. Definition of Market 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;

9 General Information 3 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 I, 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 Fee simple estate is defined as, Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. (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 property disposition purposes. The client and intended user is Oklahoma Department of Transportation, and other intended users are the client's designees. The appraisal is not intended for any other use or user. No party or parties other than Oklahoma Department of Transportation and the client's designees 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; Applicable state appraisal regulations; Appraisal guidelines of Oklahoma Department of Transportation. Report Format This report is prepared under 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 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.

10 General Information 4 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. 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. 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 Applicable Utilized Income Capitalization Approach Not Applicable Not Utilized We use only the sales comparison approach in developing an opinion of value for the subject. This approach is applicable to the subject because there is an active market for similar properties, and sufficient sales data is available for analysis. The cost approach is not applicable because there are no improvements that contribute value to the property, and the income approach is not applicable because the subject is not likely to generate rental income in its current state. 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 Darin Andrew Dalbom, MAI, conducted an on-site inspection of the property on August 6, Owen S. Ard, MAI, did not conduct an on-site inspection. Clay Murray conducted an on-site inspection on August 6, 2015.

11 General Information 5 Significant Appraisal Assistance It is acknowledged that Clay Murray made a significant professional contribution to this appraisal, consisting of participating in the property inspection, conducting research on the subject and transactions involving comparable properties, performing appraisal analyses, and assisting in report writing, under the supervision of the persons signing the report.

12 Oklahoma City MSA Area Analysis 6 Economic Analysis Oklahoma City MSA Area Analysis The subject is located in the Oklahoma City, OK Metropolitan Statistical Area, hereinafter called the Oklahoma City MSA, as defined by the U.S. Office of Management and Budget. The Oklahoma City MSA is 5,512 square miles in size, and ranks 42 in population out of the nation s 381 metropolitan statistical areas. Population The Oklahoma City MSA has an estimated 2015 population of 1,351,550, which represents an average annual 1.5% increase over the 2010 census of 1,252,987. The Oklahoma City MSA added an average of 19,713 residents per year over the period, and its annual growth rate exceeded the State of Oklahoma rate of 0.8%. Looking forward, the Oklahoma City MSA's population is projected to increase at a 1.3% annual rate from , equivalent to the addition of an average of 18,051 residents per year. The Oklahoma City MSA's growth rate is expected to exceed that of Oklahoma, which is projected to be 0.8%. Population Trends Population Compound Ann. % Chng 2010 Census 2015 Est Est Oklahoma City 579, , , % 1.4% Oklahoma County 718, , , % 1.3% OKC MSA 1,252,987 1,351,550 1,441, % 1.3% Oklahoma 3,751,351 3,898,675 4,059, % 0.8% United States 308,745, ,459, ,689, % 0.7% Source: Claritas

13 Oklahoma City MSA Area Analysis 7 Employment Total employment in the Oklahoma City MSA is currently estimated at 629,600 jobs. Between yearend 2004 and the present, employment rose by 70,500 jobs, equivalent to a 12.6% increase over the entire period. There were gains in employment in nine out of the past ten years despite the national economic downturn and slow recovery. The Oklahoma City MSA's rate of employment growth over the last decade surpassed that of Oklahoma, which experienced an increase in employment of 10.8% or 163,300 jobs over this period. A comparison of unemployment rates is another way of gauging an area s economic health. Over the past decade, the Oklahoma City MSA unemployment rate has been slightly lower than that of Oklahoma, with an average unemployment rate of 4.9% in comparison to a 5.0% rate for Oklahoma. A lower unemployment rate is a positive indicator. Recent data shows that the Oklahoma City MSA unemployment rate is 3.6% in comparison to a 3.8% rate for Oklahoma, a positive sign that is consistent with the fact that the Oklahoma City MSA has outperformed Oklahoma in the rate of job growth over the past two years. Employment Trends Total Employment (Year End) Unemployment Rate (Ann. Avg.) Year Oklahoma City MSA % Change Oklahoma % Change Oklahoma City MSA Oklahoma ,100 1,516, % 4.9% , % 1,562, % 4.4% 4.5% , % 1,591, % 4.1% 4.0% , % 1,617, % 4.2% 4.1% , % 1,627, % 3.8% 3.7% , % 1,557, % 6.2% 6.4% , % 1,580, % 6.5% 6.8% , % 1,607, % 5.5% 5.9% , % 1,644, % 5.0% 5.3% , % 1,654, % 5.1% 5.4% , % 1,679, % 4.4% 4.5% Overall Change , % 163, % Avg Unemp. Rate % 5.0% Unemployment Rate - December % 3.8% Source: Bureau of Labor Statistics and Economy.com. Employment figures are from the Current Employment Survey (CES). Unemployment rates are from the Current Population Survey (CPS). The figures are not seasonally adjusted. Employment Sectors The composition of the Oklahoma City MSA job market is depicted in the following chart, along with that of Oklahoma. Total employment for both areas is broken down by major employment sector, and the sectors are ranked from largest to smallest based on the percentage of Oklahoma City MSA jobs in each category.

14 Oklahoma City MSA Area Analysis 8 Employment Sectors % 5% 10% 15% 20% 25% Government Trade; Transportation; and Utilities Education and Health Services Professional and Business Services Leisure and Hospitality Manufacturing Financial Activities Other Services Information Mining & Construction 6.5% 5.7% 4.8% 3.9% 3.5% 1.4% 1.3% 0.0% 11.4% 11.1% 9.1% 8.3% 8.3% 15.6% 13.8% 14.2% 22.1% 21.2% 19.5% 18.4% Oklahoma City MSA Oklahoma Source: Bureau of Labor Statistics and Economy.com The Oklahoma City MSA has greater concentrations than Oklahoma in the following employment sectors: 1. Government, representing 22.1% of Oklahoma City MSA payroll employment compared to 21.2% for Oklahoma as a whole. This sector includes employment in local, state, and federal government agencies. 2. Trade; Transportation; and Utilities, representing 19.5% of Oklahoma City MSA payroll employment compared to 18.4% for Oklahoma as a whole. This sector includes jobs in retail trade, wholesale trade, trucking, warehousing, and electric, gas, and water utilities. 3. Education and Health Services, representing 15.6% of Oklahoma City MSA payroll employment compared to 13.8% for Oklahoma as a whole. This sector includes employment in public and private schools, colleges, hospitals, and social service agencies. 4. Professional and Business Services, representing 14.2% of Oklahoma City MSA payroll employment compared to 11.4% for Oklahoma as a whole. This sector includes legal, accounting, and engineering firms, as well as management of holding companies. The Oklahoma City MSA is underrepresented in the following sectors: 1. Manufacturing, representing 6.5% of Oklahoma City MSA payroll employment compared to 8.3% for Oklahoma as a whole. This sector includes all establishments engaged in the manufacturing of durable and nondurable goods.

15 Oklahoma City MSA Area Analysis 9 2. Mining & Construction, representing 0.0% of Oklahoma City MSA payroll employment compared to 8.3% for Oklahoma as a whole. This sector includes construction of buildings, roads, and utility systems, as well as mining, quarrying, and oil and gas extraction. Major Employers Major employers in the Oklahoma City MSA are shown in the following table. Major Employers - OKC MSA Name Industry Number of Employees 1 State of Oklahoma Government 42,400 2 Tinker Air Force Base Military 27,000 3 OU-Norman Campus Higher Education 11,900 4 FAA Mike monroney Aeronautical Center Aerospace 7,500 5 INTEGRIS Health* Health Care 6,000 6 City of Oklahoma City Government 4,500 7 OU Health Sciences Center Higher Education 4,200 8 Hobby Lobby Stores Inc* Wholesale & Retail 4,000 9 Chesapeake Energy Corp* Oil & Gas 3, Mercy Health Center* Health Care 3, OGE Energy Corp* Utility 3, Deveon Energy Corp* Oil & Gas 3, AT&T Telecommunications 3, SSM Health Care of Oklahoma, Inc* Health Care 2, University of Central Oklahoma Higher Education 2, Norman Regional Hospital Health Care 2, OU Medical Center Health Care 2, Sonic Corp* Wholesale & Retail 2, LSB Industries, Inc* Manufacturing 1, Dell Sales & Business Services 1, Hertz Corporation Rental Services 1, UPS Transportation 1, Farmers Insurance Group Customer Service 1, Great Plains Coca-Cola Bottling Company Beverage Distribution 1, Cox Communications* Telecommunications 1, The Boeing Company Aerospace 1, Deaconess Hospital* Health Care 1, Johnson Controls Manufacturing 1, Midfirst Bank* Finance 1, American Fidelity* Finance/Insurance 1, Rose State College Higher Education 1, Continental Resources Oil & Gas 1,000 * Indicates private headquarters in metro area; employee counts s ubject to change Source: The Greater Oklahoma City Partnership; OKC MSA Major Employers List, July 2014

16 Oklahoma City MSA Area Analysis 10 Gross Domestic Product The Oklahoma City MSA ranks 44 in Gross Domestic Product (GDP) out of the nation s 381 metropolitan statistical areas. Economic growth, as measured by annual changes in GDP, has been somewhat higher in the Oklahoma City MSA than Oklahoma overall during the past eight years. The Oklahoma City MSA has grown at a 2.3% average annual rate while Oklahoma has grown at a 2.1% rate. As the national economy improves, the Oklahoma City MSA has recently underperformed Oklahoma. GDP for the Oklahoma City MSA rose by 3.9% in 2013 while Oklahoma's GDP rose by 4.2%. The Oklahoma City MSA has a per capita GDP of $49,441, which is 16% greater than Oklahoma's GDP of $42,670. This means that Oklahoma City MSA industries and employers are adding relatively more value to the economy than their counterparts in Oklahoma. Gross Domestic Product ($ Mil) Year Oklahoma City MSA % Change ($ Mil) Oklahoma % Change , , , % 145, % , % 150, % , % 146, % , % 148, % , % 153, % , % 157, % , % 164, % Compound % Chg ( ) 2.3% 2.1% GDP Per Capita 2013 $49,441 $42,670 Source: Bureau of Economic Analysis and Economy.com; data released September The release of state and local GDP data has a longer lag time than national data. The data represents inflation-adjusted "real" GDP stated in 2009 dollars. Household Income The Oklahoma City MSA has a higher level of household income than Oklahoma. Median household income for the Oklahoma City MSA is $50,747, which is 7.9% greater than the corresponding figure for Oklahoma. Median Household Income Median OKC MSA $50,747 Oklahoma $47,049 Comparison of OKC MSA to Oklahoma + 7.9% Source: Claritas The following chart shows the distribution of households across twelve income levels. The Oklahoma City MSA has a greater concentration of households in the higher income levels than Oklahoma.

17 Oklahoma City MSA Area Analysis 11 Specifically, 32% of Oklahoma City MSA households are at the $75,000 or greater levels in household income as compared to 29% of Oklahoma households. A lesser concentration of households is apparent in the lower income levels, as 35% of Oklahoma City MSA households are below the $35,000 level in household income versus 38% of Oklahoma households. Household Income Distribution $500,000 and more $250, ,999 $200,000 - $249,999 $150,000 - $199,999 $125,000 - $149,999 $100,000 - $124,999 $75,000 - $99,999 $50,000 - $74,999 $35,000 - $49,999 $25,000 - $34,999 $15,000 - $24,999 Less than $15, % 0.5% 1.7% 1.3% 1.5% 1.2% 3.9% 3.2% 4.5% 3.8% 7.8% 7.0% 12.0% 11.4% 14.4% 15.1% 11.2% 11.7% 11.2% 12.1% 12.7% 14.1% 18.4% 18.5% 0.0% 5.0% 10.0% 15.0% 20.0% Source: Claritas OKC MSA Oklahoma Education and Age Residents of the Oklahoma City MSA have a higher level of educational attainment than those of Oklahoma. An estimated 28% of Oklahoma City MSA residents are college graduates with four-year degrees, versus 24% of Oklahoma residents. People in the Oklahoma City MSA are younger than their Oklahoma counterparts. The median age for the Oklahoma City MSA is 35 years, while the median age for Oklahoma is 37 years.

18 Oklahoma City MSA Area Analysis 12 Education & Age Percent College Graduate Median Age 80% 70% 60% 50% 40% 30% 20% 10% 28% OKC MSA 24% Oklahoma OKC MSA Oklahoma Source: Claritas Conclusion The Oklahoma City MSA economy will benefit from a growing population base and higher income and education levels. The Oklahoma City MSA experienced growth in the number of jobs and has maintained a slightly lower unemployment rate than Oklahoma over the past decade. Moreover, the Oklahoma City MSA exhibits both a higher rate of GDP growth and a higher level of GDP per capita than Oklahoma overall. We anticipate that the Oklahoma City MSA economy will grow, strengthening the demand for real estate.

19 Oklahoma City MSA Area Analysis 13 Area Map

20 Surrounding Area Analysis 14 Surrounding Area Analysis Location The subject is located on the west side of S Broadway Ave between 3 rd and 4 th Streets SW. This location is just west of S Shields Blvd in the Core to Shore District of Downtown Oklahoma City. This location is approximately three blocks south of the OKC central business district. The downtown area is generally delineated as follows: North South East I-235 West NW 13 th Street Oklahoma River Western Avenue A map identifying the location of the property follows this section. Access and Linkages The subject is located three blocks south of the central business district. Interstate 235 and Interstate 40 are both easily accessible to the site from multiple locations in the area and both provide easy access to the remainder of the area expressway system. Public transportation provided by EMBARK serves the entire metropolitan area including Edmond. The nearest private bus station is located one mile east of the central business district. The local market perceives public transportation as good compared to other market areas in the region. However, the primary mode of transportation in this area is the private automobile. Will Rogers World Airport is located about ten miles from the property; travel time is about twenty minutes, depending on traffic conditions. Demand Generators The subject is extremely well-located with regard to demand generators: all of the major employers within the CBD such as Devon Energy are located within one mile of the property. The state capitol complex is located 2 miles north, and additionally Tinker Air Force Base is located eight miles southeast. Combined, the subject is located within a short drive or walk of all of the largest employers in the Oklahoma City metro area. Other sources of demand include its proximity to the dining and entertainment opportunities in the Bricktown district, including Chesapeake Arena which is home to the Oklahoma City Thunder NBA team.

21 Surrounding Area Analysis 15 Demographics A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table. As shown above, the current population within a 3-mile radius of the subject is 80,409, and the average household size is 2.5. Population in the area has grown since the 2010 census, and this trend is projected to continue over the next five years. Compared to the Oklahoma City MSA overall, the population within a 3-mile radius is projected to grow at a slower rate. Median household income is $56,572, which is higher than the household income for the Oklahoma City MSA. Residents within a 3-mile radius have a lower level of educational attainment than those of the Oklahoma City MSA, while median owner occupied home values are lower. Retail and Public Services The core to shore area is an older industrial area which originally built-out between the 1920s and 1950s. The district remained in the stability/decline phase until the recent relocation of I-40 southward toward the Oklahoma River. IH-40 was the CBD and Bricktown s south boundary both physically and psychologically. Recent relocation of IH-40 has opened the former industrial district to redevelopment possibilities. The subject is an ideal site for redevelopment because it is just one block south of the Chesapeake Energy Arena. This location is easily accessible from Shields Boulevard which is the primary connection between CBD/ Bricktown and the new Interstate 40.

22 Surrounding Area Analysis 16 The subject location is proximal to both the CBD core office district, the Chesapeake Energy Arena, the to-be-built Oklahoma City Convention Center just west of the arena, and the Bricktown Entertainment district. The Bricktown district has several hotels; however, these are less proximal than the subject to both the Chesapeake Arena, proposed convention center, and core office district. The subject core to shore district is also proximal to adjacent neighborhoods north of Bricktown and the CBD such as Midtown and Deep Deuce. These areas have attracted a significant amount of new apartment and residential condominium development over the past five years. Most are new urban living developments with contemporary loft or townhouse design. Several other pockets of restaurants exist on the perimeter of the downtown area. Land Use In the immediate vicinity of the subject, land uses include a mix of multifamily housing (both rental and condominium), retail and office uses. Other land use characteristics are summarized as follows: Subject s Immediate Surroundings North South West East Former I-40 ROW line. Lowrise industrial and OG&E substation. Lowrise commercial and vacant land. Lowrise commercial and vacant land. Development Activity and Trends In the past ten years there has been significant development activity within Bricktown and the Central Business District. Bricktown development includes several new hotels plus renovations of lowrise industrial and commercial structures for retail and office use. Impetus for these developments owes to Bricktown s continued acceptance as an entertainment destination in conjunction with residential condo and apartment development in Deep Deuce which is now spreading to Automobile Alley and Midtown. The CBD has also experienced new development. In October 2012, Devon Energy completed constructed of a new 50 story, 1.8 million square foot highrise office building at the south end of the CBD. This property was the first new CBD highrise development in Oklahoma since the late 1980 s. The continuation of the MAPS bond funding project will continue to help spur development throughout downtown and bordering areas. New development and renovation of existing development in the Bricktown area is continuing. New properties have been announced in Bricktown as well as in the Deep Deuce area to the northeast of the CBD. New supportive businesses have opened throughout the area to service demand created by these developments. Future trends expect continued rehabilitation of existing multistory structures, and new infill construction in locations to compliment both the Chesapeake Arena and Bricktown Ballpark. The momentum provided by the existing downtown developments should continue with the passing of the MAPS 3. This sales tax funded bond issue will provide for many new developments including a new 70 acre central park, a new rail based streetcar system, a new downtown convention center, and

23 Surrounding Area Analysis 17 significant infrastructure development including sidewalks, streetscaping, and biking and walking trails, and improvements to the Oklahoma River. Recent apartment developments proximal to the CBD and Bricktown include the Level Urban Apartments in 2012, Maywood Apartments in 2013, and the Edge Apartments later in Apartments presently under construction include the Metropolitan (330 units) and the Steel Yard phase 1 (250 units). The subject is specifically located in the core to shore district just south of the former Interstate 40 right of way line. This area is expected to attract significant redevelopment capital over the next decade due to the elimination of IH-40 as a psychological boundary between downtown/bricktown and areas immediate south. Outlook and Conclusions The area is in the redevelopment stage of its life cycle. Given the history of the area and the growth trends, it is anticipated that property values will increase over the foreseeable future. In comparison to other areas in the region, the area is rated as follows: Surrounding Area Attribute Ratings Highway Access Demand Generators Convenience to Support Services Convenience to Public Transportation Employment Stability Police and Fire Protection Property Compatibility General Appearance of Properties Appeal to Market Barriers to Competitive Entry Price/Value Trend Above Average Above Average Average Above Average Above Average Average Average Average Above Average Average Above Average

24 Surrounding Area Analysis 18 Surrounding Area Map SUBJECT

25 Retail Market Analysis 19 Retail Market Analysis The subject is located in the West retail submarket according to the year end 2014 survey by CBRE- Oklahoma. Supply and demand indicators for community and neighborhood shopping center space are summarized in the following table.

26 Retail Market Analysis 20 The West submarket vacancy rate is presently 5.8%. Citywide vacancy has been declining over the past two years due to strong net absorption during 2013 and Rental rates have returned to costbased levels in all strong market areas such as Midtown. The Price Edwards survey West-Central submarket boundaries are very similar to the CBRE West submarket boundaries. The Year-End 2014 Price Edwards survey shows positive absorption in the subject submarket since Overall, market conditions are strong. Due to its desirable location with ample parking in an emerging retail district, the subject property can be expected to maintain favorable market acceptance for the foreseeable future.

27 Land Description and Analysis 21 Property Analysis Land Description and Analysis Land Description Land Area 1.98 acres; 86,246 SF Source of Land Area ODOT Primary Street Frontage SW 3rd feet feet Secondary Street Frontage S Broadway Ave feet feet Shape Rectangular Corner Yes Topography Generally level and at street grade Drainage No problems reported or observed Environmental Hazards None reported or observed Ground Stability No problems reported or observed Flood Area Panel Number 40109C0285H Date December 18, 2009 Zone X Description Outside of 500-year floodplain Insurance Required? No Zoning; Other Regulations Zoning Jurisdiction City of Oklahoma City Zoning Designation DBD, with DP overlay Description Downtown Business District Legally Conforming? Appears to be legally conforming Zoning Change Likely? No Permitted Uses A wide array of commercial uses Minimum Lot Area None Minimum Street Frontage (Feet) None Minimum Lot Width (Feet) None Minimum Setbacks (Feet) The first two floors of new construction shall be placed at or within 10 ft of the right-of-way Parking Requirement Per use units Other Land Use Regulations No other land use regulations observed Utilities Service Provider Water City of Oklahoma City Sewer City of Oklahoma City Electricity OG&E (Oklahoma Gas & Electric) Natural Gas ONG (Oklahoma Natural Gas) Local Phone AT&T, Others

28 Land Description and Analysis 22 Land Area Summary Tax ID Address SF Acres None (Pt.1-North) 425 S Broadway Ave. (64.0% Perpetual Esmt., or 31,363 SF) 49, None (Pt.2-South) 475 S Broadway Ave. (6.0% Perpetual Esmt., or 2,252 SF) 37, Total 86, Source: ODOT

29 Land Description and Analysis 23 Ownership Interest Each subject part (north and south) is comprised of areas owned in fee simple and leased fee (perpetual easement). Although landlord and tenant are relatively equal partitions, the tenant in this case owes no rent. Consequently, the subject owner s perpetual easement possesses significant positive leasehold value. From a practical standpoint, the perpetual easement is tantamount to fee simple interest in many respects. Nonetheless, each value estimate reflects a discount for ownership in leased fee (perpetual easement) to account for a buyer s obligation and cost to acquire 100% fee simple ownership by securing quiet title. Each value estimate also reflects a discount to account for lack of ownership contiguity across the property as a whole. Zoning We 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. Easements, Encroachments and Restrictions We were not provided an ALTA/ACSM land survey; however, there do not appear to be any easements, encroachments, or restrictions other than those that are typical for the property type. Exceptions to title of this type would not appear to adversely affect value. 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. We are not aware of any other particular restrictions on development.

30 Land Description and Analysis 24 View NE across subject (Photo Taken on August 6, 2015) View NW across subject (Photo Taken on August 6, 2015) View south across subject (Photo Taken on August 6, 2015) View SE across subject (Photo Taken on August 6, 2015) Street view north on S Broadway Ave (Photo Taken on August 6, 2015) Street view south on S Broadway Ave (Photo Taken on August 6, 2015)

31 Real Estate Taxes 25 Real Estate Taxes Real estate tax assessments are administered by the Oklahoma County Assessor for taxation within the following districts: Oklahoma County, Oklahoma City, and Oklahoma City Schools. Real estate taxes in this jurisdiction constitute ad valorem taxes, meaning a tax applied in proportion to value. The real estate taxes for an individual property may be determined by dividing the assessed value for a property by 1,000, then multiplying the estimate by the composite rate. The composite rate is based on a blended tax rate from several local taxing district rates. The assessed value is based upon the current conversion assessment rate of 11.0% of Assessor s market value. Real estate taxes and assessments for the current tax year are shown in the following tables. Note below that the subject is not assessed because it is owned by a tax-exempt entity. Assessor's Market Value Tax ID Land Improvements Total None (Pt.1-North) $0 Taxes and Assessments Assessed Value Taxes and Assessments Ad Valorem Tax ID Land Improvements Total Tax Rate Taxes Total None (Pt.1-North) $0 $0 $0 $ $0 $0 Note that Oklahoma is not an equalization state. By law, county assessors can increase assessments 1) at a maximum rate of 3.0% to 5.0% annually; 2) in accordance with values reported on building permits for additions or refurbishments; or 3) in the event of sale, to an amount commensurate with the recorded sale price where deemed to be arm s length. Consistent with this law, tax comparables are not germane to this analysis. Rather, the tax burden relevant to the valuation herein would be based on the concluded value estimate representing an arm's length sale price employed by the assessor for purpose of re-assessment upon sale. Based on the concluded market value As Is of the subject, the assessed value appears low.

32 Highest and Best Use 26 Highest and Best Use Process Before a property can be valued, an opinion of highest and best use must be developed for the subject site, both as vacant, and as improved. By definition, the highest and best use must be: Physically possible. Legally permissible under the zoning regulations and other restrictions that apply to the site. Financially feasible. Maximally productive, i.e., capable of producing the highest value from among the permissible, possible, and financially feasible uses. As Vacant Physically Possible The physical characteristics of the site do not appear to impose any unusual restrictions on development. Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses. Legally Permissible The site is zoned DBD, with DP overlay, Downtown Business District. Permitted uses include a wide array of commercial uses. To our knowledge, there are no legal restrictions such as easements or deed restrictions that would effectively limit the use of the property. Given prevailing land use patterns in the area, only commercial use is given further consideration in determining highest and best use of the site, as though vacant. Financially Feasible Based on our analysis of the market, there is currently adequate demand for commercial use in the subject s area. It appears that a newly developed commercial use on the site would have a value commensurate with its cost. Therefore, commercial use is considered to be financially feasible. Maximally Productive There does not appear to be any reasonably probable use of the site that would generate a higher residual land value than commercial use. Accordingly, it is our opinion that commercial use, developed to the normal market density level permitted by zoning, is the maximally productive use of the property. Conclusion Development of the site for commercial use is the only use that meets the four tests of highest and best use. Therefore, it is concluded to be the highest and best use of the property as vacant.

33 Highest and Best Use 27 As Improved No improvements are situated on the subject. Therefore, a highest and best analysis as improved is not applicable. Accordingly, the highest and best use is to redevelop the site for commercial use. Most Probable Buyer Taking into account the functional utility of the site and area development trends, the probable buyer is a developer.

34 Valuation Methodology 28 Valuation Valuation Methodology Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach and the income capitalization approach. The cost approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties. The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data. The sales comparison approach is less reliable in an inactive market or when estimating the value of properties for which no directly comparable sales data is available. The sales comparison approach is often relied upon for owner-user properties. The income capitalization approach reflects the market s perception of a relationship between a property s potential income and its market value. This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied, as appropriate. This approach is widely used in appraising income-producing properties. Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type. The methodology employed 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 Applicable Utilized Income Capitalization Approach Not Applicable Not Utilized

35 Sales Comparison Approach Part 1 29 Sales Comparison Approach Part 1 To develop an opinion of the subject s land value, as if vacant and available to be developed to its highest and best use, we utilize the sales comparison approach. This approach develops an indication of value by researching, verifying, and analyzing sales of similar properties. Our sales research focused on transactions within the following parameters: Location: Core to Shore/Bricktown and vicinity Size: Less than three acres Use: Retail Transaction Date: Last three years For this analysis, we use price per square foot as the appropriate unit of comparison because market participants typically compare sale prices and property values on this basis. The most relevant sales are summarized in the following table.

36 Sales Comparison Approach Part 1 30 Summary of Comparable Land Sales - Part 1 No. Name/Address Sale Date; Status Effective Sale Price SF; Acres Zoning $/SF Land $/Acre 1 Vacant Land Feb-15 $2,008,000 59,677 Downtown $33.65 $1,465, S. Walker Ave. Closed 1.37 Business Oklahoma City Oklahoma County OK District Comments: Rectangular shaped parcel located one block north of the new I-40 ROW line acquired for hotel development. The adjusted sale price includes a $30,000 estimated cost incurred by the buyer to raze two existing steel framed buildings of no contributory value. 2 Parking Lot Sep-14 $2,900,000 79,902 $36.29 $1,580,985 NW. 4th St. Closed 1.83 Oklahoma City Oklahoma County OK Comments: An 1.84 acre property currently used as a parking lot with 18,000 SF paved parking area. It is located on the S/s of NW 4th Street; four blocks north of W Reno Avenue. The subject sold on 8/17/2012 for $1,885,000, which equates to a 37.24% yearly increase in price. 3 Future Hotel Site May-14 $1,375,000 30,749 Downtown $44.72 $1,947,868 5 SW. 5th Closed 0.71 Oklahoma City Oklahoma County OK Comments: Acre commercial site acquired for razing and hotel redevelopment. The effective sale price reflects a $75,000 upward adjustment for cost to raze a 30,119 SF storage warehouse built in Note that the doc stamps indicate a price of $1,250,000; however, the buyer reported that the transaction does not account for an additional $50,000 for nonrefundable escrow paid in advance. 4 Stage Center Site Jul-13 $4,775, ,136 Downtown $34.82 $1,516, W. Sheridan Ave. Closed 3.15 Design District Oklahoma City Oklahoma County OK Comments: Site of the former Stage Center theater acquired for razing and highrise office redevelopment. The adjusted sale price reflects addition for demolition cost estimated at $500,000, or $4/SF of GBA. Subject 49,020 Vacant land - part of 1.13 parcels Oklahoma City, OK Business District Downtown Business District

37 Sales Comparison Approach Part 1 31 Comparable Land Sales Map

38 Sales Comparison Approach Part 1 32 Land Sale 1 Vacant Land Land Sale 2 Parking Lot Land Sale 3 Future Hotel Site Land Sale 4 Stage Center Site

39 Sales Comparison Approach Part 1 33 Analysis and Adjustment of Sales The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factor Accounts For Comments Effective Sale Price Real Property Rights Financing Terms Conditions of Sale Market Conditions Location Access/Exposure Size Shape and Topography Zoning Entitlements Atypical economics of a transaction, such as demolition cost or expenditures by buyer at time of purchase. Fee simple, leased fee, leasehold, partial interest, etc. Seller financing, or assumption of existing financing, at non-market terms. Extraordinary motivation of buyer or seller, assemblage, forced sale. Changes in the economic environment over time that affect the appreciation and depreciation of real estate. Market or submarket area influences on sale price; surrounding land use influences. Convenience to transportation facilities; ease of site access; visibility; traffic counts. Inverse relationship that often exists between parcel size and unit value. Primary physical factors that affect the utility of a site for its highest and best use. Government regulations that affect the types and intensities of uses allowable on a site. The specific level of governmental approvals attained pertaining to development of a site. The following table summarizes the adjustments we make to each sale. No adjustment required No adjustment required No adjustment required No adjustment required All sales adj. up by 2% per year for annual appreciation observed throughout the market No adjustment required Sale 1 adj. up for inferior access/exposure. Sales 3 & 4 adj. down for superior access/exposure. Sale 2 & 4 adj. up for larger size on basis of 5% upward adjustment per each halving in size. No adjustment required No adjustment required No adjustment required

40 Sales Comparison Approach Part 1 34 Land Sales Adjustment Grid - Part 1 Subject Comparable 1 Comparable 2 Comparable 3 Comparable 4 Name Vacant land - part Vacant Land Parking Lot Future Hotel Site Stage Center Site of parcels Address 425, 475 S Broadway Ave. 722 S. Walker Ave. NW. 4th St. 5 SW. 5th 400 W. Sheridan Ave. City Oklahoma City Oklahoma City Oklahoma City Oklahoma City Oklahoma City County Oklahoma Oklahoma Oklahoma Oklahoma Oklahoma State Oklahoma OK OK OK OK Sale Date Feb-15 Sep-14 May-14 Jul-13 Sale Status Closed Closed Closed Closed Sale Price $1,978,000 $2,900,000 $1,300,000 $4,275,000 Other Adjustment $30,000 $0 $75,000 $500,000 Description of Adj. Razing Razing Razing Effective Sale Price $2,008,000 $2,900,000 $1,375,000 $4,775,000 Square Feet 49,020 59,677 79,902 30, ,136 Acres Usable Square Feet 49,020 59,677 79,902 30, ,136 Price per Square Foot $33.65 $36.29 $44.72 $34.82 Property Rights Fee Simple Fee Simple Fee Simple Fee Simple % Adjustment Financing Terms Cash to seller Cash to seller Cash to seller Cash to seller % Adjustment Conditions of Sale Arm's Length Arm's Length Arm's Length Arm's Length % Adjustment Market Conditions 8/6/2015 Feb-15 Sep-14 May-14 Jul-13 Annual % Adj. 2% 1% 2% 3% 4% Cumulative Adjusted Price $33.98 $37.02 $46.06 $36.21 Location Access/Exposure 10% -20% -10% Size 2.5% 7.5% Shape and Topography Zoning Entitlements Net $ Adjustment $3.40 $0.93 -$9.21 -$0.91 Net % Adjustment 10% 3% -20% -3% Final Adjusted Price $37.38 $37.95 $36.85 $35.31 Overall Adjustment 11% 5% -18% 1% Range of Adjusted Prices Average Indicated Value $ $37.95 $36.87 $37.00

41 Sales Comparison Approach Part 1 35 Land Value Conclusion Part1 Prior to adjustment, the sales reflect a range of $ $44.72 per square foot. After adjustment, the range is narrowed to $ $37.95 per square foot, with an average of $36.87 per square foot. We give greatest weight to sales 1 and 3 and arrive at a land value conclusion as follows: Land Value Conclusion Part 1 Indicated Value per Square Foot $37.00 Subject Square Feet 49,020 Indicated Value $1,813,740 Adjustments Discount: Perpetual Esmt (20% of 31,363 SF x $37/SF) -$232,086 Total Adjustments -$232,086 Indicated Value $1,581,654 Rounded $1,580,000 The previous adjustment is calculated in the schedule below. Land Value Adjustment - Part 1 I -Valuation of 31,363 SF Leasehold SF (Perpetual Esmt.) 31,363 Concluded Value Estimate in Fee X $37.00 = Value Estimate in Fee Simple $1,160,431 Less 20% discount for Leasehold Ownership (31,363 x 20% x $37.00/SF) ($232,086) Subtotal Value Estimate in Fee Simple ($1,160,431 - $232,086) II -Valuation of 17,657 SF Concluded Value Value Estimate in Fee Simple Size Estimate in Fee Fee Simple 17,657 X $37.00 = $653,309 III -Valuation of 49,020 SF $928,345 Total Value Estimate in Fee Simple ($928,345 + $653,309) $1,581,654 Rounded $1,580,000

42 Sales Comparison Approach Part2 36 Sales Comparison Approach Part2 To develop an opinion of the subject s land value, as if vacant and available to be developed to its highest and best use, we utilize the same sale parameters, unit of comparison, and methodology as for Part 1. Summary of Comparable Land Sales - Part 2 No. Name/Address Sale Date; Status Effective Sale Price SF; Acres Zoning $/SF Land $/Acre 1 Vacant Land Feb-15 $2,008,000 59,677 Downtown $33.65 $1,465, S. Walker Ave. Closed 1.37 Business Oklahoma City Oklahoma County OK District Comments: Rectangular shaped parcel located one block north of the new I-40 ROW line acquired for hotel development. The adjusted sale price includes a $30,000 estimated cost incurred by the buyer to raze two existing steel framed buildings of no contributory value. 2 Parking Lot Sep-14 $2,900,000 79,902 $36.29 $1,580,985 NW. 4th St. Closed 1.83 Oklahoma City Oklahoma County OK Comments: An 1.84 acre property currently used as a parking lot with 18,000 SF paved parking area. It is located on the S/s of NW 4th Street; four blocks north of W Reno Avenue. The subject sold on 8/17/2012 for $1,885,000, which equates to a 37.24% yearly increase in price. 3 Future Hotel Site May-14 $1,375,000 30,749 Downtown $44.72 $1,947,868 5 SW. 5th Closed 0.71 Oklahoma City Oklahoma County OK Comments: Acre commercial site acquired for razing and hotel redevelopment. The effective sale price reflects a $75,000 upward adjustment for cost to raze a 30,119 SF storage warehouse built in Note that the doc stamps indicate a price of $1,250,000; however, the buyer reported that the transaction does not account for an additional $50,000 for nonrefundable escrow paid in advance. 4 Stage Center Site Jul-13 $4,775, ,136 Downtown $34.82 $1,516, W. Sheridan Ave. Closed 3.15 Design Oklahoma City Oklahoma County OK District Comments: Site of the former Stage Center theater acquired for razing and highrise office redevelopment. The adjusted sale price reflects addition for demolition cost estimated at $500,000, or $4/SF of GBA. Subject 37,226 Vacant land - part of 0.85 Oklahoma City, OK Business District Downtown Business District

43 Sales Comparison Approach Part2 37 Comparable Land Sales Map

44 Sales Comparison Approach Part2 38 Land Sale 1 Vacant Land Land Sale 2 Parking Lot Land Sale 3 Future Hotel Site Land Sale 4 Stage Center Site

45 Sales Comparison Approach Part2 39 Analysis and Adjustment of Sales Part2 The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factor Accounts For Comments Effective Sale Price Real Property Rights Financing Terms Conditions of Sale Market Conditions Location Access/Exposure Size Shape and Topography Zoning Entitlements Atypical economics of a transaction, such as demolition cost or expenditures by buyer at time of purchase. Fee simple, leased fee, leasehold, partial interest, etc. Seller financing, or assumption of existing financing, at non-market terms. Extraordinary motivation of buyer or seller, assemblage, forced sale. Changes in the economic environment over time that affect the appreciation and depreciation of real estate. Market or submarket area influences on sale price; surrounding land use influences. Convenience to transportation facilities; ease of site access; visibility; traffic counts. Inverse relationship that often exists between parcel size and unit value. Primary physical factors that affect the utility of a site for its highest and best use. Government regulations that affect the types and intensities of uses allowable on a site. The specific level of governmental approvals attained pertaining to development of a site. No adjustment required No adjustment required No adjustment required No adjustment required All sales adj. up by 2% per year for annual appreciation observed throughout the market. No adjustment required Sale 1 adj. up for inferior access/exposure. Sale 3 & 4 adj. down for superior access/exposure. Sales 2 & 4 adj. up for larger size on basis of 5% upward adj. per each halving in size. All sales adj. down for the subjects irregular configuration. No adjustment required No adjustment required

46 Sales Comparison Approach Part2 40 The following table summarizes the adjustments we make to each sale. Land Sales Adjustment Grid - Part 2 Subject Comparable 1 Comparable 2 Comparable 3 Comparable 4 Name Vacant land - part Vacant Land Parking Lot Future Hotel Site Stage Center Site of parcels Address 425, 475 S Broadway Ave. 722 S. Walker Ave. NW. 4th St. 5 SW. 5th 400 W. Sheridan Ave. City Oklahoma City Oklahoma City Oklahoma City Oklahoma City Oklahoma City County Oklahoma Oklahoma Oklahoma Oklahoma Oklahoma State Oklahoma OK OK OK OK Sale Date Feb-15 Sep-14 May-14 Jul-13 Sale Status Closed Closed Closed Closed Sale Price $1,978,000 $2,900,000 $1,300,000 $4,275,000 Other Adjustment $30,000 $0 $75,000 $500,000 Description of Adj. Razing Razing Razing Effective Sale Price $2,008,000 $2,900,000 $1,375,000 $4,775,000 Square Feet 37,226 59,677 79,902 30, ,136 Acres Usable Square Feet 37,226 59,677 79,902 30, ,136 Price per Square Foot $33.65 $36.29 $44.72 $34.82 Property Rights Fee Simple Fee Simple Fee Simple Fee Simple % Adjustment Financing Terms Cash to seller Cash to seller Cash to seller Cash to seller % Adjustment Conditions of Sale Arm's Length Arm's Length Arm's Length Arm's Length % Adjustment Market Conditions 8/6/2015 Feb-15 Sep-14 May-14 Jul-13 Annual % Adj. 2% 1% 2% 3% 4% Cumulative Adjusted Price Location Access/Exposure Size Shape and Topography Zoning $33.98 $37.02 $46.06 $ % -20% -10% 5% 10% -5% -5% -5% -5% Entitlements Net $ Adjustment $1.70 $0.00 -$ $1.81 Net % Adjustment 5% 0% -25% -5% Final Adjusted Price $35.68 $37.02 $34.54 $34.40 Overall Adjustment 6% 2% -23% -1% Range of Adjusted Prices $ $37.02 Average $35.41 Indicated Value $35.00

47 Sales Comparison Approach Part2 41 Land Value Conclusion Part2 Prior to adjustment, the sales reflect a range of $ $44.72 per square foot. After adjustment, the range is narrowed to $ $37.02 per square foot, with an average of $35.41 per square foot. We give greatest weight to sale 1 and 3, and arrive at a land value conclusion as follows: Land Value Conclusion Part 2 Indicated Value per Square Foot $35.00 Subject Square Feet 37,226 Indicated Value $1,302,910 Adjustments Discount: Perpetual Esmt (20% of 2,252 SF x $35/SF) -$15,764 Total Adjustments -$15,764 Indicated Value $1,287,146 Rounded $1,290,000 The previous adjustment is calculated in the schedule below. Land Value Adjustment - Part 2 I -Valuation of 2,252 SF Leasehold SF Concluded Value Value Estimate in (Perpetual Esmt.) Estimate in Fee Fee Simple 2,252 X $35.00 = $78,820 Less 20% discount for Leasehold Ownership (2,252 x 20% x $35.00/SF) ($15,764) Subtotal Value Estimate in Fee Simple ($78,820 - $15,764) $63,056 II -Valuation of 35,014 SF Concluded Value Value Estimate in Fee Simple Size Estimate in Fee Fee Simple 35,014 X $35.00 = $1,225,490 III -Valuation of 37,226 SF Total Value Estimate in Fee Simple ($63,056 + $1,225,490) Rounded $1,288,546 $1,290,000

48 Reconciliation and Conclusion of Value 42 Reconciliation and Conclusion of Value As discussed previously, we use only the sales comparison approach in developing an opinion of value for the subject. The cost and income approaches are not applicable, and are not used. Based on the preceding valuation analysis and subject to the definitions, assumptions, and limiting conditions expressed in the report, our value opinion follows: Value Conclusions Parcel Interest Appraised Date of Value Value Conclusion Part 1 Fee Simple August 6, 2015 $1,580,000 Part 2 Fee Simple August 6, 2015 $1,290,000 Total $2,870,000 Rounded $2,870,000 Summary of Land Values Parcel Total SF Indicated Value per Square Foot Value Prior to Adjust. Discount: Perpetual Esmt (20% of 31,363 SF x $37/SF) Total Adjustments Indicated Value Rounded Part 1 49,020 $37.00 $1,813,740 -$232,086 -$232,086 $1,581,654 $1,580,000 Part 2 37,226 $35.00 $1,302,910 -$15,764 -$15,764 $1,287,146 $1,290,000 Total 86,246 $36.14 $3,116,650 -$247,850 -$247,850 $2,868,800 $2,870,000 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. None 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. None

49 Reconciliation and Conclusion of Value 43 Exposure Time Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Based on the concluded market values stated previously, it is our opinion that the probable exposure time is 6-12 months. Marketing Period Marketing time is an estimate of the amount of time it might take to sell a property at the concluded market value immediately following the effective date of value. We estimate the subject s marketing period at 6-12 months.

50 Certification 44 Certification We certify that, to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. 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. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice as well as applicable state appraisal regulations. 9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 11. Darin Andrew Dalbom, MAI, made a personal inspection of the property that is the subject of this report. Owen S. Ard, MAI, has not personally inspected the subject. Clay Murray has personally inspected the subject.

51 Certification Significant real property appraisal assistance was provided by Clay Murray who has not signed this certification. 13. We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP. 14. As of the date of this report, Darin Andrew Dalbom, MAI and Owen S. Ard, MAIhave completed the continuing education program for Designated Members of the Appraisal Institute. Darin Andrew Dalbom, MAI Certified General Real Estate Appraiser Oklahoma Certificate # 12774CGA Owen S. Ard, MAI Certified General Real Estate Appraiser Oklahoma Certificate # 11245CGA

52 Assumptions and Limiting Conditions 46 Assumptions and Limiting Conditions This appraisal and any other work product related to this engagement are limited by the following standard assumptions, except as otherwise noted in the report: 1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use. 2. There are no existing judgments or pending or threatened litigation that could affect the value of the property. 3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property. 4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction. 5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes. 6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. This appraisal and any other work product related to this engagement are subject to the following limiting conditions, except as otherwise noted in the report: 1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised. 2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events. 3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated. 4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies. 5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment. 6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal

53 Assumptions and Limiting Conditions 47 covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct. 7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal. 8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability; and civil, mechanical, electrical, structural and other engineering and environmental matters. Such considerations may also include determinations of compliance with zoning and other federal, state, and local laws, regulations and codes. 9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal report shall be utilized separately or out of context. 10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the persons signing the report. 11. Information, estimates and opinions contained in the report and obtained from third-party sources are assumed to be reliable and have not been independently verified. 12. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results. 13. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate. 14. Unless otherwise stated in the report, no consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered. 15. The current purchasing power of the dollar is the basis for the values stated in the appraisal; we have assumed that no extreme fluctuations in economic cycles will occur. 16. The values found herein are subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions. 17. The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic

54 Assumptions and Limiting Conditions 48 conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material. 18. The Americans with Disabilities Act (ADA) became effective January 26, We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject with ADA regulations. Inasmuch as compliance matches each owner s financial ability with the cost to cure the nonconforming physical characteristics of a property, a specific study of both the owner s financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance. 19. The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk. 20. No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property. Integra Realty Resources Tulsa/OKC, Integra Realty Resources, Inc., Integra Strategic Ventures, Inc. and/or any of their respective officers, owners, managers, directors, agents, subcontractors or employees (the Integra Parties ), shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property. 21. The persons signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. We are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are nonexistent or minimal. 22. Integra Realty Resources Tulsa/OKC is not a building or environmental inspector. Integra Tulsa/OKC does not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended. 23. The appraisal report and value conclusions for an appraisal assume the satisfactory completion of construction, repairs or alterations in a workmanlike manner. 24. It is expressly acknowledged that in any action which may be brought against any of the Integra Parties, arising out of, relating to, or in any way pertaining to this engagement, the

55 Assumptions and Limiting Conditions 49 appraisal reports, and/or any other related work product, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with intentional misconduct. It is further acknowledged that the collective liability of the Integra Parties in any such action shall not exceed the fees paid for the preparation of the appraisal report unless the appraisal was fraudulent or prepared with intentional misconduct. Finally, it is acknowledged that the fees charged herein are in reliance upon the foregoing limitations of liability. 25. Integra Realty Resources Tulsa/OKC, an independently owned and operated company, has prepared the appraisal for the specific intended use stated elsewhere in the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided. Accordingly, the appraisal report is addressed to and shall be solely for the Client s use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report or any other work product related to the engagement (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable). 26. The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer-seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. The Integra Parties are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property. 27. All prospective value opinions presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future.

56 Assumptions and Limiting Conditions The appraisal is also subject to the following: 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. None 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. None

57 Addenda Addendum A Appraiser Qualifications

58

59

60

61

62 Integra Realty Resources, Inc. Corporate Profile Integra Realty Resources, Inc. offers the most comprehensive property valuation and counseling coverage in the United States with 61 independently owned and operated offices in 34 states and the Caribbean. Integra was created for the purpose of combining the intimate knowledge of well-established local firms with the powerful resources and capabilities of a national company. Integra offers integrated technology, national data and information systems, as well as standardized valuation models and report formats for ease of client review and analysis. Integra s local offices have an average of 25 years of service in the local market, and virtually all are headed by a Senior Managing Director who is an MAI member of the Appraisal Institute. A listing of IRR s local offices and their Senior Managing Directors follows: ATLANTA, GA - Sherry L. Watkins., MAI, FRICS AUSTIN, TX - Randy A. Williams, MAI, SR/WA, FRICS BALTIMORE, MD - G. Edward Kerr, MAI, MRICS BIRMINGHAM, AL - Rusty Rich, MAI, MRICS BOISE, ID - Bradford T. Knipe, MAI, ARA, CCIM, CRE, FRICS BOSTON, MA - David L. Cary, Jr., MAI, MRICS CHARLESTON, SC - Cleveland Bud Wright, Jr., MAI CHARLOTTE, NC - Fitzhugh L. Stout, MAI, CRE, FRICS CHICAGO, IL - Eric L. Enloe, MAI, FRICS CINCINNATI, OH - Gary S. Wright, MAI, FRICS, SRA CLEVELAND, OH - Douglas P. Sloan, MAI COLUMBIA, SC - Michael B. Dodds, MAI, CCIM COLUMBUS, OH - Bruce A. Daubner, MAI, FRICS DALLAS, TX - Mark R. Lamb, MAI, CPA, FRICS DAYTON, OH - Gary S. Wright, MAI, FRICS, SRA DENVER, CO - Brad A. Weiman, MAI, FRICS DETROIT, MI - Anthony Sanna, MAI, CRE, FRICS FORT WORTH, TX - Gregory B. Cook, SR/WA GREENSBORO, NC - Nancy Tritt, MAI, SRA, FRICS GREENVILLE, SC - Michael B. Dodds, MAI, CCIM HARTFORD, CT - Mark F. Bates, MAI, CRE, FRICS HOUSTON, TX - David R. Dominy, MAI, CRE, FRICS INDIANAPOLIS, IN - Michael C. Lady, MAI, SRA, CCIM, FRICS JACKSON, MS - J. Walter Allen, MAI, FRICS JACKSONVILLE, FL - Robert Crenshaw, MAI, FRICS KANSAS CITY, MO/KS - Kenneth Jaggers, MAI, FRICS LAS VEGAS, NV - Charles E. Jack IV, MAI LOS ANGELES, CA - John G. Ellis, MAI, CRE, FRICS LOS ANGELES, CA - Matthew J. Swanson, MAI LOUISVILLE, KY - Stacey Nicholas, MAI, MRICS MEMPHIS, TN - J. Walter Allen, MAI, FRICS MIAMI/PALM BEACH, FL - Scott M. Powell, MAI, FRICS MIAMI/PALM BEACH, FL- Anthony M. Graziano, MAI, CRE, FRICS MINNEAPOLIS, MN - Michael F. Amundson, MAI, CCIM, FRICS NAPLES, FL - Carlton J. Lloyd, MAI, FRICS NASHVILLE, TN - R. Paul Perutelli, MAI, SRA, FRICS NEW JERSEY COASTAL - Halvor J. Egeland, MAI NEW JERSEY NORTHERN - Matthew S. Krauser, CRE, FRICS NEW YORK, NY - Raymond T. Cirz, MAI, CRE, FRICS ORANGE COUNTY, CA - Larry D. Webb, MAI, FRICS ORLANDO, FL - Christopher Starkey, MAI, MRICS PHILADELPHIA, PA - Joseph D. Pasquarella, MAI, CRE, FRICS PHOENIX, AZ - Walter Tres Winius III, MAI, FRICS PITTSBURGH, PA - Paul D. Griffith, MAI, CRE, FRICS PORTLAND, OR - Brian A. Glanville, MAI, CRE, FRICS PROVIDENCE, RI - Gerard H. McDonough, MAI, FRICS RALEIGH, NC - Chris R. Morris, MAI, FRICS RICHMOND, VA - Kenneth L. Brown, MAI, CCIM, FRICS SACRAMENTO, CA - Scott Beebe, MAI, FRICS ST. LOUIS, MO - P. Ryan McDonald, MAI, FRICS SALT LAKE CITY, UT - Darrin W. Liddell, MAI, CCIM, FRICS SAN DIEGO, CA - Jeff A. Greenwald, MAI, SRA, FRICS SAN FRANCISCO, CA - Jan Kleczewski, MAI, FRICS SARASOTA, FL - Carlton J. Lloyd, MAI, FRICS SAVANNAH, GA - J. Carl Schultz, Jr., MAI, FRICS, CRE, SRA SEATTLE, WA - Allen N. Safer, MAI, MRICS SYRACUSE, NY - William J. Kimball, MAI, FRICS TAMPA, FL - Bradford L. Johnson, MAI, MRICS TULSA, OK - Owen S. Ard, MAI WASHINGTON, DC - Patrick C. Kerr, MAI, SRA, FRICS WILMINGTON, DE - Douglas L. Nickel, MAI, FRICS CARIBBEAN/CAYMAN ISLANDS - James Andrews, MAI, FRICS Corporate Office Eleven Times Square, 640 Eighth Avenue, 15th Floor, Suite A, New York, New York Telephone: (212) ; Fax: (646) ; info@irr.com Website:

63 Addenda Addendum B Property Information

64 Addenda

65 Addenda

66 Addenda Addendum C Comparable Data

67

68

69

70