APPRAISAL REPORT Of 1.1 Acres in Downtown Morristown. 304 E Main Street, Morristown, Hamblen County, TN As of April 6, 2016

Transcription

1 APPRAISAL REPORT Of 1.1 Acres in Downtown Morristown 304 E Main Street, Morristown, Hamblen County, TN As of April 6, 2016 Prepared For Mr. Rick Gray HomeTrust Bank 320 Ridgefield Ct Asheville, NC Client File: Prepared by BRAUN & ASSOCIATES INC. Creighton Cross, MAI, Tennessee-CG-3670 Chris Hodge, Trainee, Tennessee-5058 File Name:

2 BRAUN & ASSOCIATES INC. P.O. Box Knoxville, TN Fax: May 4, 2016 Mr. Rick Gray HomeTrust Bank 320 Ridgefield Ct Asheville, NC Re: Appraisal Report 1.1 Acres in Downtown Morristown 304 E Main Street, Morristown, Hamblen County, TN Dear Mr. Gray: File Name: At your request, we have prepared an appraisal for the above referenced property. Please reference page 9 of this report for important information regarding the scope of research and analysis for this appraisal, including property identification, inspection, highest and best use analysis and valuation methodology. This appraisal is developed in conjunction with the most recent USPAP editions. This appraisal has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP); with the appraisal requirements of Title XI of the Federal Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and all revisions thereof. We certify that we have no present or contemplated future interest in the property beyond this estimate of value. The appraiser has not performed any prior services regarding the subject within the previous three years of the appraisal date. Your attention is directed to the Limiting Conditions and Assumptions section of this report (page 7). Acceptance of this report constitutes an agreement with these conditions and assumptions. In particular, we note the following:

3 Mr. Gray HomeTrust Bank May 4, 2016 Page 3 Hypothetical Conditions: There are no hypothetical conditions for this appraisal. Extraordinary Assumptions: This value opinion is subject to the extraordinary assumption that the subject is free of contaminants. This property has been used for the storage and repair of auto related uses and could have brought petroleum products on site over time. The use of this assumption may have an affect the value opinion of this appraisal. Based on the appraisal described in the accompanying report, subject to the Limiting Conditions and Assumptions, Extraordinary Assumptions and Hypothetical Conditions (if any), we have made the following value conclusion(s): As Is Market Value: The As Is Market Value of the Fee Simple estate of the property, as of April 6, 2016, is $240,000 Two Hundred Forty Thousand Dollars The market exposure time preceding April 6, 2016 would have been 6-12 months and the estimated marketing period as of April 6, 2016 is 6-12 months. Respectfully submitted, Braun & Associates Inc. Creighton Cross, MAI Tennessee-CG-3670 Chris Hodge, Trainee Tennessee-5058

4 TABLE OF CONTENTS Summary of Important Facts and Conclusions... 5 Limiting Conditions and Assumptions... 7 Scope of Work... 9 Location Maps Aerial Photo Market Area Property Description Tax Map Subject Photographs Assessment and Taxes Zoning Zoning Map Highest and Best Use As Vacant Valuation Methodology Analyses Applied Sales Comparison Approach Land Valuation Land Comparables Comparables Map Analysis Grid Final Reconciliation Value Indications Value Conclusion(s) Certification Statement Addenda Glossary... 55

5 Summary of Important Facts and Conclusions Subject: GENERAL 1.1 Acres in Downtown Morristown 304 E Main Street, Morristown, Hamblen County, TN The subject consists of three parcels in the Morristown Central Business District on E Main Street. There is currently a body shop on a portion of the property. There had previously also been an auto parts store, but that building has been demolished. The existing body shop adds minimal value to the property compared to the potential uses available to the land. Owner: Legal Description: Kenneth E Solomon Metes & Bounds Tax Identification: Map 034I Group E Parcels 001 Date of Report: May 4, 2016 Intended Use: Intended User(s): Assessed Value and Taxes: Sale History: Current Listings, Options, or Contract(s): The intended use of this appraisal report is for determining loan and credit underwriting decisions that will be made by HomeTrust Bank and any additional participants for a federally related transaction. HomeTrust Bank The current assessed value for the subject property is $64,160 at a 40.00% commercial tax ratio, with an annual tax burden of $1,844. The Hamblen County Property Assessor s total implied market value for the subject property is $160,400. The subject has not sold in the last three years, according to public records. The subject is not currently listed for sale, or under contract. Braun & Associates, Inc Page 5

6 Land Area: PROPERTY Total: 47,916 square feet; 1.10 acres Usable: 47,916 square feet; 1.10 acres All of the subject land appears to be usable. Improvements: Building 1 Building ID: ABC Body Shop Year Built: 1970 Condition: Fair Gross Building Area (GBA): 2,136 Zoning: Highest and Best Use of the Site: Highest and Best Use as Improved: CB, Central Business District The highest and best use of the subject would be office use. The highest and best use would be for the body shop to be removed and for the property to be developed for office use. VALUE INDICATIONS Land Value: $240,000 Reconciled Value(s): As Is Value Conclusion(s) $240,000 Effective Date(s) April 6, 2016 Property Rights Fee Simple Braun & Associates, Inc Page 6

7 Limiting Conditions and Assumptions Acceptance of and/or use of this report constitutes acceptance of the following limiting conditions and assumptions; these can only be modified by written documents executed by both parties. This appraisal is to be used only for the purpose stated herein. While distribution of this appraisal in its entirety is at the discretion of the client, individual sections shall not be distributed; this report is intended to be used in whole and not in part. No part of this appraisal, its value estimates or the identity of the firm or the appraiser(s) may be communicated to the public through advertising, public relations, media sales, or other media. All files, work papers and documents developed in connection with this assignment are the property of Braun & Associates Inc.. Information, estimates and opinions are verified where possible, but cannot be guaranteed. Plans provided are intended to assist the client in visualizing the property; no other use of these plans is intended or permitted. No hidden or unapparent conditions of the property, subsoil or structure, which would make the property more or less valuable, were discovered by the appraiser(s) or made known to the appraiser(s). No responsibility is assumed for such conditions or engineering necessary to discover them. Unless otherwise stated, this appraisal assumes there is no existence of hazardous materials or conditions, in any form, on or near the subject property. Unless otherwise state in this report, the existence of hazardous substances, including without limitation asbestos, polychlorinated biphenyl, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, was not called to the attention of the appraiser nor did the appraiser become aware of such during the appraiser s inspection. The appraiser has no knowledge of the existence of such materials on or in the property unless otherwise stated. The appraiser, however, is not qualified to test for such substances. The presence of such hazardous substances may affect the value of the property. The value opinion developed herein is predicated on the assumption that no such hazardous substances exist on or in the property or in such proximity thereto, which would cause a loss in value. No responsibility is assumed for any such hazardous substances, nor for any expertise or knowledge required to discover them. Unless stated herein, the property is assumed to be outside of areas where flood hazard insurance is mandatory. Maps used by public and private agencies to determine these areas are limited with respect to accuracy. Due diligence has been exercised in interpreting these maps, but no responsibility is assumed for misinterpretation. Good title, free of liens, encumbrances and special assessments is assumed. No responsibility is assumed for matters of a legal nature. Braun & Associates, Inc Page 7

8 Necessary licenses, permits, consents, legislative or administrative authority from any local, state or Federal government or private entity are assumed to be in place or reasonably obtainable. It is assumed there are no zoning violations, encroachments, easements or other restrictions which would affect the subject property, unless otherwise stated. The appraiser(s) are not required to give testimony in Court in connection with this appraisal. If the appraisers are subpoenaed pursuant to a court order, the client agrees to pay the appraiser(s) Braun & Associates Inc. s regular per diem rate plus expenses. Appraisals are based on the data available at the time the assignment is completed. Amendments/modifications to appraisals based on new information made available after the appraisal was completed will be made, as soon as reasonably possible, for an additional fee. Americans with Disabilities Act (ADA) of 1990 A civil rights act passed by Congress guaranteeing individuals with disabilities equal opportunity in public accommodations, employment, transportation, government services, and telecommunications. Statutory deadlines become effective on various dates between 1990 and Braun & Associates Inc. has not made a determination regarding the subject s ADA compliance or non-compliance. Non-compliance could have a negative impact on value, however this has not been considered or analyzed in this appraisal. Braun & Associates, Inc Page 8

9 Scope of Work According to the Uniform Standards of Professional Appraisal Practice, it is the appraiser s responsibility to develop and report a scope of work that results in credible results that are appropriate for the appraisal problem and intended user(s). Therefore, the appraiser must identify and consider: the client and intended users; the intended use of the report; the type and definition of value; the effective date of value; assignment conditions; typical client expectations; and typical appraisal work by peers for similar assignments. This appraisal is prepared for Mr. Rick Gray, HomeTrust Bank. The problem to be solved is to estimate the 'as is' market value of the subject property. The intended use of this appraisal report is for determining loan and credit underwriting decisions that will be made by HomeTrust Bank and any additional participants for a federally related transaction. This appraisal is intended for the use of HomeTrust Bank Report Type: Property Identification: Inspection: Market Area and Analysis of Market Conditions: Highest and Best Use Analysis: Valuation Analyses Cost Approach: SCOPE OF WORK This is an Appraisal Report as defined by Uniform Standards of Professional Appraisal Practice under Standards Rule 2-2(a). The subject has been identified by the legal description and the assessors' parcel number. A complete interior and exterior inspection of the subject property has been made, and photographs taken. A complete analysis of market conditions has been made. The appraiser maintains a comprehensive database for this market area and has reviewed the market for sales and listings relevant to this analysis. A complete as vacant and as improved highest and best use analysis for the subject has been made. Physically possible, legally permissible and financially feasible uses were considered, and the maximally productive use was concluded. A cost approach was not applied as the subject property is land only and land value is determined Braun & Associates, Inc Page 9

10 through the sales comparison approach. Sales Comparison Approach: Income Approach: Hypothetical Conditions: Extraordinary Assumptions: Furniture, Fixtures, and Equipment (FF&E): A sales approach was applied as there is adequate data to develop a value estimate and this approach reflects market behavior for this property type. The land value was considered, plus contributory value of the improvements. An income approach was not applied as the subject is primarily vacant land. There is an automotive body shop on one of the parcels, but this business is not the highest and best use of the property. There are no hypothetical conditions for this appraisal. This value opinion is subject to the extraordinary assumption that the subject is free of contaminants. This property has been used for the storage and repair of auto related uses and could have brought petroleum products on site over time. The use of this assumption may have an affect the value opinion of this appraisal. No Furniture, Fixtures, and Equipment (FF&E) were considered in this analysis. Braun & Associates, Inc Page 10

11 Location Maps Regional Map Neighborhood Map Braun & Associates, Inc Page 11

12 Aerial Photo Braun & Associates, Inc Page 12

13 Market Area Analysis General Location & Surrounding Properties The subject is on E Main Street in Morristown, Tennessee. Morristown is the county seat of Hamblen County. It is on the eastern side of the Central Business District. Neighborhood The subject s neighborhood would be considered Morristown s Central Business District. The neighborhood is bound by James Street on the east, 2 nd North Street on the north, Jackson Street on the west and Morris Boulevard on the south. Morris Boulevard is the primary artery through Morristown. Main Street runs through the center of the Neighborhood from east to west. And Cumberland Street bisects it from north to south. Norfolk Southern operates a railroad track which runs through the center of the city and the neighborhood. The railroad is on the southern border of the subject property. According to a conversation with the director of the Lakeway Area Metropolitan Transportation Planning Organization (LAMTPO), approximately 40 trains per day pass through the city of Morristown. Norfolk Southern is considering adding an intermodal facility in nearby New Market, which could increase this number considerably. The city of Morristown, according to is the 6th largest industrialized area in Tennessee. The cities three major industrial parks are home to global and Fortune 500 companies such as, Koch Foods, JTEKT Automotive, Colgate Palmolive, Mahle, just to name a few. The largest employer is the Hamblen County Department of Education with 1,284 employees; the second largest employer is Mahle Engine Components USA, Inc. with 1,143 employees and third is Koch Foods with 997 employees. The city of Morristown also is home to 116 Churches with over 25 denominations, 11 Elementary Schools, 4 Middle Schools, 2 High Schools, and 1 Alternate School. In addition, Walters State Community College and Tennessee Technology Center are the city s higher education institutions. Morristown is served by two hospitals, Morristown-Hamblen Healthcare System and Lakeway Regional Hospital. As a regional center for health care it is home to many fine physicians within a broad range of specialties. There are also nursing home facilities, retirement communities, children and senior services working to improve the quality of care for the citizens. Morristown is home to College Square Mall which serves a trade area of over 300,000 people. Major retailers in the community include Belk, Home Depot, JC Penny, Kohl s, Lowe s, Sears and Wal-Mart. Locally owned specialty shops thrive in our unique downtown and throughout the city. There is an excellent mix of both national restaurant chains and homegrown establishments. The neighborhood also provides excellent access to S Davy Crockett Parkway and Interstate 81 and Highway 11E. The neighborhood consists of light commercial properties with some industrial mixed in to the west along E Morris Blvd and single family homes as well as large acreage tracts of land. This area is made up mostly of large rural acreage tracts once off of the main arterial roadways, with the majority of Braun & Associates, Inc Page 13

14 commercial development and activity taking place along the S. Davy Crockett, E Morris Blvd, and the E Andrew Johnson Hwy road frontage and at the S Davy Crockett exits at 2A and 2B. This are is mature in nature with a mix of older and newer homes just off the main roads. Located just off of S. Davy Crockett Parkway is an industrial district, north of Interstate 81. Some of the companies located in this district offering employment for the subject neighborhood and surrounding area are companies like Koch Foods, which is the 2 nd largest industrial employer in Morristown, Hamblen County, with over 900 employees that process poultry; Otics USA, Inc., an automotive parts manufacturer that employees 250+ people; and Wallace Hardware Co., Inc. which is a wholesale hardware distributor that employees 200+ people. The location at the Interstate 81 interchange, south of the neighborhood has spurred some recent development around the exit. Investors that are drawn by the interstate influence have come in and developed a Weigel s C-Store, Hardees, McDonald s, and another convenience store just north of Interstate 81. However, some of the older properties located in this sector include Cracker Barrel, Super 8 Motel, a Best Western, and Parkway Inn. The neighborhood is convenient to Witt Elementary School, Union Heights Elementary School, Walters State Community College, a Walmart and Hobby Lobby, and the College Square Mall approximately 4 miles west. The neighborhood provides adequate employment, shopping, dining, lodging, and educational options for its residents. The neighborhood has good linkages to Highways 11E, 25E, 11W, and Interstate 81. The police and fire protection are considered to be adequate. Market Area The market area for the subject property would include all of Hamblen County and surrounding counties. Supply & Demand Trends The supply and demand for commercial land in Morristown is stable. Both population and income are expected to rise slightly over the next few years. Most of recent commercial activity has occurred along Andrew Johnson Highway, to the west of downtown Morristown. Braun & Associates, Inc Page 14

15 Demographic Analysis Location & Climate Hamblen County was created in 1870 from parts of Jefferson, Grainger and Greene counties. The county is named in honor of Hezekiah Hamblen, an early settler, landowner, attorney, and member of the Hawkins County Court for many years. Hamblen County is located at the intersection of Interstates 40 and 81 and offers easy access to Interstate 75. All this places Hamblen County within a day s drive of half the nation s population. The climate for Hamblen County is predominantly temperate with long summers and mild winters. Average annual temperature is about 65 degrees. The average rainfall is about 55 inches which is rather uniform throughout the year. May is the wettest month with an average of 12 inches of rainfall and February is the driest with an average of 5 inches. Population and Households Population and household statistics for subject property area are summarized in the following table AREA POPULATION & HOUSEHOLD STATISTICS Summary Population 62,544 63,499 64,567 Households 24,560 24,824 25,198 Families 17,161 17,211 17,395 Avg. Household Size Owner Occupied HUs 17,004 16,323 16,548 Renter Occupied HUs 7,556 8,501 8,650 Median Age The chart above shows that this area is expected to increase in population and households over the next five years; generally consistent with the past decade and a half. Braun & Associates, Inc Page 15

16 Housing Housing statistics for the subject property area are summarized in the following table. AREA HOUSING STATISTICS 2010 Housing Units 26,963 Owner Occupied Housing Units 63.1% Renter Occupied Housing Units 28.0% Vacant Housing Units 8.9% 2015 Housing Units 27,443 Owner Occupied Housing Units 59.5% Renter Occupied Housing Units 31.0% Vacant Housing Units 9.5% 2020 Housing Units 27,855 Owner Occupied Housing Units 59.4% Renter Occupied Housing Units 31.1% Vacant Housing Units 9.5% The chart above shows that this area is projected to see an increase in housing units over the next five years as well as steady owner and renter occupied units. Employment and Economic Base There are wide arrays of occupations in Hamblen County which are fairly evenly dispersed among the population. The subject market area has a broad economic base ranging from tourism to industry. Historically, industry has been the major factor influencing the economy of this area. The economic outlook for Morristown is stable. Employment statistics for the subject area are summarized in the following table. AREA EMPLOYMENT STATISTICS 2015 Civilian Population 16+ in Labor Force Civilian Employed 91.0% Civilian Unemployed 9.0% 2015 Employed Population 16+ by Industry Total 25,119 Agriculture/Mining 1.1% Construction 6.3% Manufacturing 26.5% Wholesale Trade 2.2% Retail Trade 11.9% Transportation/Utilities 5.1% Information 1.6% Finance/Insurance/Real Estate 3.0% Services 38.7% Public Administration 3.6% Braun & Associates, Inc Page 16

17 The following table illustrates the largest employers in Hamblen County MAJOR EMPLOYERS Company # of Employees Koch Foods 1,125 MAHLE, Inc 1,006 JTEK Automotive, Inc 715 Howmet Corp 520 Lear Corporation 403 Rich Products Corporation 402 Meritor, Inc 319 Team Technologies, Inc 285 Tuff Torg 284 NCR Corporation 268 The area appears to be well balanced with a mixture of industry ranging from public services to manufacturing. The graph below shows the trend in the unemployment rate since 2004 for all of the United States, Tennessee, and Hamblen County. As seen below, Hamblen County is currently below the state and the same as the national rate. Unemployment Rate 16% 14% 12% 10% 8% 6% 4% 2% 0% Unemployment Rate Comparison US TN Hamblen Braun & Associates, Inc Page 17

18 Income Income statistics for the subject property area are summarized in the following table. AREA INCOME STATISTICS Households by Income <$15, % 16.4% 15.7% $15,000 - $24, % 15.3% 11.6% $25,000 - $34, % 12.9% 10.9% $35,000 - $49, % 17.3% 16.7% $50,000 - $74, % 17.7% 20.5% $75,000 - $99, % 9.7% 12.3% $100,000 - $149, % 7.7% 8.4% $150,000 - $199, % 2.0% 2.5% $200, % 1.2% 1.5% Median HH Income $40,848 $38,694 $44,543 Average HH Income $51,919 $51,332 $58,292 Per Capita Income $21,342 $20,241 $22,924 The area appears to have had a slight dip in median income; however, it appears the median income will increase into the future which will is likely due to a growing economy, inflation, and residents being more highly educated. Taxes Property owners in Morristown are taxed according to 40% of current market value for commercial properties and 25% for residential properties. The tax rate for properties in Morristown and Hamblen County is applied per $100 of assessed value, and the current tax rates are illustrated in the Tax Section of this appraisal. Government Morristown is governed by a council/mayor form of city government. Council members are elected for two-year terms on a rotating basis, and the elected council selects the mayor. The city is professionally managed by a city manager, and a master plan has been implemented for orderly city growth. Adequate police and fire protection are provided by the city and county. Utilities Water and sewage services in the subject neighborhood are typically provided by municipal utility districts. Electric services are provided by Morristown Utility Commission and the Tennessee Valley Authority, gas services are provided by Atmos Energy, telephone by BellSouth, and water and sewer services are provided by the Morristown Utility Commission. The water capacity is 24 million gallons per day and the sewage capacity is 12.7 million gallons per day. Braun & Associates, Inc Page 18

19 Zoning and Restrictions The city of Morristown currently enforces specific zoning restrictions on properties within its corporate limits, and most uses must conform to the city s master use plan. The primary corridors are primarily utilized commercial uses, and the secondary areas are typical reserved for residential uses. Schools The subject neighborhood is within the Morristown Public School District. The district houses 12 public schools, including 7 elementary (grades K-5), 3 middle schools (grades 6-8) and 2 senior high schools (grades 9-12). Average annual enrollment (1-12 is 7,264 students. On the basis of standardized test scores, the Morristown Public School District displays an average SAT (Scholastic Aptitude Test) Score that compares favorably to both and the state and national averages. Transportation The major thoroughfares in the area are US Highway 25E and US Highway 11E, both are four-lane, primary traffic carriers providing direct access to all major sectors of the city of Morristown. Furthermore, I-81 and I-40 are located just south of the subject s neighborhood and links the subject neighborhood to more regional areas such as other parts of Tennessee and North Carolina. As the hub of East Tennessee, Morristown serves as a major transportation and distribution center. More than 100 regional, national and international industries in Hamblen County export a broad range of products across the country and around the world. The neighborhood is served by major truck carriers and rail. Small municipal air service is available to the immediate area via the Hamblen County Municipal Airport located nearby. The McGhee-Tyson International Airport is located approximately 25 miles southwest of the subject neighborhood in Knoxville. HAMBLEN COUNTY LOCATION CHARACTERISTICS DISTANCE FROM TEN MAJOR U.S. CITIES Destination Distance Knoxville, TN 25 +/- miles Chattanooga, TN 115 +/- miles Asheville, NC 140 +/- miles Charlotte, NC 250 +/- miles Atlanta, GA 180 +/- miles Nashville, TN 180 +/- miles Lexington, KY 190 +/- miles Louisville, KY 270 +/- miles Birmingham, AL 250 +/- miles Memphis, TN 400 +/- miles As indicated by the chart above, the subject area is well positioned within 400 miles of many major southeastern cities. Braun & Associates, Inc Page 19

20 Conclusion In conclusion, it is our opinion the subject neighborhood has potential for continued future growth, which is expected to transpire with the strong economy. The subject property, being within an economically viable neighborhood, is also expected to increase in value as the economy continues to strengthen. Development in the neighborhood is expected to be moderate in the near term however. The past economic conditions in the Hamblen County Area leaves the majority of development in the subject neighborhood based on long-range planning. It is our opinion that property values in the area have continued a steady growth trend since approximately These conditions are expected to continue in the foreseeable future, followed by increasing property values as the local economy continues to strengthen. Braun & Associates, Inc Page 20

21 Property Description The following description is based on our property inspection, assessment records, property deeds and information provided by the property owner. Location: Current Use of the Property: Site Size: Shape: Frontage/Access: Visibility: Topography: Utilities: SITE The subject is located on the southeast side of the intersection of E Main Street and N Daisy Street in the downtown area of Morristown, Tennessee. Improved as an automobile body shop, which occupies one of the three parcels that make up the subject property. Total: 1.10 acres; 47,916 square feet All of the subject land appears to be usable. The site is roughly rectangular. The subject property has good access with frontage as follows: E Main Street: 273 feet The site has an average depth of 170 feet. It is not a corner lot. The subject was previously a corner lot, but S Daisy Street was closed at the railroad tracks adjacent to the subject. Average The subject has level topography at grade and no areas of wetlands. Utilities: The site is serviced by underground utilities. Electricity: The site is served by public electricity. Sewer: The site is served by public sewer. Water: The site is served by public water. Natural Gas: The site is served by public natural gas. Adequacy: The subject's utilities are typical and adequate for the market area. Site Improvements: Flood Zone: The subject's site improvements consist of a body shop, chainlink fencing and a vacant lot which has the foundation of previous structures. The subject is located in an area mapped by the Federal Emergency Management Agency (FEMA). The subject is located in FEMA flood zone X, which is not classified as a flood hazard area. Braun & Associates, Inc Page 21

22 FEMA Map Number: 47063C0133E FEMA Map Date: July 3, 2006 The subject is not in a flood zone. Encumbrance / Easements: Site Comments: There are no known easements or encumbrances that would negatively affect the value or marketability of the subject property other than typical utility easements and setbacks. The site has average and typical utility. Braun & Associates, Inc Page 22

23 Tax Map (Buildings may not provided value) Braun & Associates, Inc Page 23

24 Development/Property Name: Property Type: Overview: Building Identification: Building Description: Construction: Construction Quality: IMPROVEMENTS DESCRIPTION 1.1 Acres in Downtown Morristown Vacant Land The subject consists of three parcels in the Morristown Central Business District on E Main Street. There is currently a body shop on a portion of the property. There had previously also been an auto parts store, but that building has been demolished. The existing body shop adds minimal value to the property compared to the potential uses available to the land. GENERAL - ABC BODY SHOP ABC Body Shop This is a block building with 5 repair bays. Class C Average Year Built: 1970 Effective Age: Remaining Economic Life: Condition: Appeal/Appearance: Areas, Ratios & Numbers: 56 years 4 years Subject may not have any economic life remaining. Fair Fair Gross Leasable Area: 2,136 Braun & Associates, Inc Page 24

25 Foundation: FOUNDATION, FRAME & EXTERIOR - ABC BODY SHOP Poured concrete slab Structural Frame: Exterior: Windows: Roof/Cover: Service Access/ Overhead Doors: Interior Layout: Floor Cover: Walls: Heating: Cooling: Masonry Frame Concrete Block Fixed Casement Flat / Rubber Membrane The building is served by 5 overhead doors; 0 with levelers. INTERIOR - ABC BODY SHOP Average Concrete Concrete Block MECHANICAL SYSTEMS - ABC BODY SHOP None None PARKING Design & Functional Utility: Deferred Maintenance: Capital Improvements: Comments: PROPERTY ANALYSIS The body shop is functional, but isn't the highest and best use of the property. The inspection was from the street, at the client's request. Therefore, no deferred maintenance was observed. There are no planned capital improvements at this time. The body shop on parcel 3 does not contribute significantly to the property as the space required is insufficient on that parcel and they make use of some of the vacant parcels (1 & 2) to store vehicles. Braun & Associates, Inc Page 25

26 Subject Photographs Date Taken April 6, 2016 Date Taken April 6, 2016 Subject overview Subject from the north Date Taken April 6, 2016 Date Taken April 6, 2016 Closed road, S Daisy Street Buildings across the street Date Taken April 6, 2016 Date Taken April 6, 2016 View along E Main Street Body Shop Braun & Associates, Inc Page 26

27 Assessment and Taxes REAL ESTATE ASSESSMENT AND TAXES Taxing Authority Morristown & Hamblen County Assessment Year 2015 ASSESSED VALUES Tax Identification Number Map 034I Group E Parcels 001 Implied Land Value $33,800 Implied Building Value $3,400 Other Property Implied Value $0 Total Implied Value $37,200 Tax Identification Number Map 034I Group E Parcels 002 Implied Land Value $46,100 Implied Building Value $0 Other Property Implied Value $0 Total Implied Value $46,100 Tax Identification Number Map 034I Group E Parcels 003 Implied Land Value $42,300 Implied Building Value $34,800 Other Property Implied Value $0 Total Implied Value $77,100 Totals Total Implied Land Value $122,200 Total Implied Building Value $38,200 Total Other Implied Value $0 Total Tax Value $160,400 Total Assessment $64,160 Total Implied Value per GBA $75.09 Total Implied Value per Land Acre $145,818 Rates, Taxes, More City Tax Rate $1.114 County Tax Rate $1.76 Other Property Tax Rate $0.00 Combined Tax Rate $2.874 Total Tax Amount $1,844 Next Assessment Year 2020 Assessment Ratio 40.00% Implied Value $160,400 Braun & Associates, Inc Page 27

28 Property Tax Comments The land value conclusion in this appraisal report is significantly higher than the assessed value. If assessed at the appraised value, the tax burden would be approximately $3,300. This would likely have an effect on the marketability of the subject. Braun & Associates, Inc Page 28

29 Zoning Zoning Code Zoning Description Current Use Legally Conforming Zoning Change Likely Set Back Distance Side Yard Distance Zoning Comments LAND USE CONTROLS CB, Central Business District This district forms the urban center for commercial, financial and professional activities. The intent is to protect and improve the Central Business District for the performance of its primary functions. Uses requiring a central location are particularly encouraged. The subject is legal and conforming use. A zoning change is unlikely. n/a n/a The subject is currently vacant land. Braun & Associates, Inc Page 29

30 Zoning Map Braun & Associates, Inc Page 30

31 Highest and Best Use Highest and best use may be defined as The reasonably probable and legal use of vacant land or an improved property, that is legally permissible, physically possible, appropriately supported, financially feasible, and that results in the highest value. 1 As Vacant 1. Legally Permissible: The legally permissible uses of the subject property as vacant would include any permitted by the zoning restrictions of the Morristown Central Business District. 2. Physically Possible: The physically possible uses of the subject property as vacant would include any which could make use of the subject s 1.10 acres. 3. Financially Feasible: The financially feasible use of the subject property as vacant would be retail or office development. 4. Maximally Productive. The maximally productive use of the subject property as vacant would be office development. Highest and Best Use of the Site as Vacant The highest and best use of the subject would be office use. Comments The subject is in the downtown area of Morristown in the Central Business District. However, it is not on the more highly trafficked Morris Boulevard and therefore wouldn't be as successful as a retail store. While the property could have numerous uses, an office use seems to be the most likely to succeed at this location. The most likely owner would be one seeking investment income. The timeframe for development would be immediate. 1 The Appraisal of Real Estate 13 th Edition, Page 278, Appraisal Institute Braun & Associates, Inc Page 31

32 Highest and Best Use as Improved The highest and best use would be for the body shop to be removed and for the property to be developed for office use. Comments The subject is in the downtown area of Morristown in the Central Business District. However, it is not on the more highly trafficked Morris Boulevard and therefore wouldn't be as successful as a retail store. While the property could have numerous uses, an office use seems to be the most likely to succeed at this location. The body shop currently operating on a portion of the property does not provide the use that an office development would to the value of the property. Braun & Associates, Inc Page 32

33 Valuation Methodology Three basic approaches may be used to arrive at an estimate of market value. They are: 1. The Cost Approach 2. The Income Approach 3. The Sales Comparison Approach Cost Approach The Cost Approach is summarized as follows: Cost New - Depreciation + Land Value = Value Income Approach The Income Approach converts the anticipated flow of future benefits (income) to a present value estimate through a capitalization and or a discounting process. Sales Comparison Approach The Sales Comparison Approach compares sales of similar properties with the subject property. Each comparable sale is adjusted for its inferior or superior characteristics. The values derived from the adjusted comparable sales form a range of value for the subject. By process of correlation and analysis, a final indicated value is derived. Final Reconciliation The appraisal process concludes with the Final Reconciliation of the values derived from the approaches applied for a single estimate of market value. Different properties require different means of analysis and lend themselves to one approach over the others. Analyses Applied A cost analysis was considered and was not developed because the subject property is land only and land value is determined through the sales comparison approach. A sales comparison analysis was considered and was developed because there is adequate data to develop a value estimate and this approach reflects market behavior for this property type. This is for the land value with contributory value of the improvements as the land value is soon to exceed contribution of the improvements. An income analysis was considered and was not developed because the subject is primarily vacant land. There is an automotive body shop on one of the parcels, but this business is not the highest and best use of the property. Braun & Associates, Inc Page 33

34 Sales Comparison Approach Land Valuation The Sales Comparison Approach is based on the premise that a buyer would pay no more for a specific property than the cost of obtaining a property with the same quality, utility, and perceived benefits of ownership. It is based on the principles of supply and demand, balance, substitution and externalities. The following steps describe the applied process of the Sales Comparison Approach. The market in which the subject property competes is investigated; comparable sales, contracts for sale and current offerings are reviewed. The most pertinent data is further analyzed and the quality of the transaction is determined. The most meaningful unit of value for the subject property is determined. Each comparable sale is analyzed and where appropriate, adjusted to equate with the subject property. The value indication of each comparable sale is analyzed and the data reconciled for a final indication of value via the Sales Comparison Approach. The subject property currently has a body shop which is still an active business. There had also been an auto parts store on a different portion of the property, but that building has been demolished. The body shop was determined to add minimal value to the subject because the land s location in Morristown s Central Business District provides far superior uses for the land. Land Comparables We have researched several comparables for this analysis; these are documented on the following pages followed by a location map and analysis grid. All sales have been researched through numerous sources. COMPARABLE LAND SALES SUMMARY TABLE No. Location Sale Date Price Size in Acres Price/ Acre Dr. Martin Luther King Pkwy 02/11/2014 $460, $230, ( ) S. Cumberland Street 05/15/2012 $200, $197, ( ) Clara Barton Dr 09/14/2011 $400, $333, ( ) W Morris Boulevard 12/18/2015 $585, $319,672 Braun & Associates, Inc Page 34

35 Land Sale No. 1 Property Identification Record ID 3363 Property Type Office Property Name 2.00 Acres Address 220 Dr. Martin Luther King Parkway, Morristown, Hamblen County, Tennessee Location Behind Weigel's C-Store Tax ID Apart of Map 041C Group C Parcel Longitude, Latitude W , N City Lot 1R2 of Eagle Heights Resubdivision Legal Description Morristown Who Entered CRR Sale Data Grantor Lakeview Management & Development, LLC Grantee The Providence Group of East Tennessee, LLC Sale Date February 11, 2014 Deed Book/Page 1568/45 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Conventional Downward Adjustment Sale Price $460,000 Braun & Associates, Inc Page 35

36 Land Sale No. 1 (Cont.) Land Data Zoning Topography Utilities Flood Info Land Size Information Gross Land Size IB, Intermediate Business District Level All Utilities No Acres or 87,120 SF Indicators Sale Price/Gross Acre $230,000 Sale Price/Gross SF $5.28 User Comments The sales and physical data used in this report was taken from public records, aerial photos, Google Maps, the warranty deed, and a recorded plat. The sales data used in this report has not been verified by either party related to the transaction; however we have verified the sale through public records. The physical data used in this report has been verified by public records and aerial photographs. Remarks This is the sale of a 2 acre tract of land along Morris Blvd beside the new Weigel's C-Store. The site was a part of a large 30 acre tract and was purchased to build a medical office. The office is now in place and is called "Providence Clinic." The property is zoned IB for Intermediate Business District.. Braun & Associates, Inc Page 36

37 Land Sale No. 2 Property Identification Record ID 3365 Property Type Retail Property Name Dollar General Land Sale Address ( ) S. Cumberland Street, Morristown, Hamblen County, Tennessee Tax ID Map 034P Group D Parcels 046, 047, & 048 Longitude, Latitude W , N City Lot 2 of the Carl Ricker Jr Property Legal Description Morristown Who Entered CRR Sale Data Grantor Carl Ricker Jr Grantee Broadway Group, LL Sale Date May 15, 2012 Deed Book/Page 1491/63 Recorded Plat J/383 Property Rights Fee Simple Financing Conventional Downward Adjustment Sale Price $200,000 Braun & Associates, Inc Page 37

38 Land Sale No. 2 (Cont.) Land Data Zoning Topography Utilities Shape Flood Info Land Size Information Gross Land Size IB Level All Utilities Irregular No Acres or 44,126 SF Indicators Sale Price/Gross Acre $197,433 Sale Price/Gross SF $4.53 User Comments The sales and physical data used in this report were taken from public records. The sales data used in this report has not been verified by either party related to the transaction, however we have verified the sale through public records. The physical data used in this report has been verified by someone from this office in a visual inventory of the property and from aerial photographs. Remarks This is the sale of a 1.28 acre tract of land along S. Cumberland Street in Morristown that was purchased for the development of a Dollar General Store. The site was improved with a 9,100+/- Sf building in late The property has good road frontage along S. Cumberland Street, as well as good visibility and access. S. Cumberland Street is a four lane road with a middle turning lane. Braun & Associates, Inc Page 38

39 Land Sale No. 3 Property Identification Record ID 2597 Property Type Retail Property Name O'Reilly's Address ( ) Clara Barton Dr, Morristown, Hamblen County, Tennessee Location Barton Springs Resub Tax ID Longitude, Latitude W , N City Metes and Bounds Legal Description City of Morristown Who Entered ABJ MSA Knoxville Market Type Large Sale Data Grantor B. B. & J. Holdings Grantee O'Reilly Automotive Stores Inc. Sale Date September 14, 2011 Deed Book/Page 1462/130 Property Rights Fee Simple Conditions of Sale Arm s Length Transaction Downward Adjustment Sale Price $400,000 Braun & Associates, Inc Page 39

40 Land Sale No. 3 (Cont.) Land Data Topography Rolling Utilities Electric, Water, & Sewer Shape Rectangular Flood Info No Date Entered 4/5/2012 Land Size Information Gross Land Size Acres or 52,272 SF Indicators Sale Price/Gross Acre $333,333 Sale Price/Gross SF $7.65 User Comments The sales and physical data was taken from the public records. The sales data was verified through the tax records and warranty deed. The physical data was verified through the tax records, warranty deed, and aerial photos. Remarks This is the sale of a 1.20 tract of land located at the corner of Clara Barton Drive and E. Andrew Johnson Highway. The site was purchased as an outparcel of Food City for use as an O'Reilly Auto Parts. The site has all utilities available. Braun & Associates, Inc Page 40

41 Land Sale No. 4 Property Identification Record ID 4395 Property Type Retail Property Name SunTrust Bank Address ( ) W Morris Boulevard, Morristown, Hamblen County, Tennessee Tax ID Map 041C Group C Parcel Longitude, Latitude W , N City Lot 1R of Eagle Heights S/D Legal Description Morristown Who Entered TAL MSA Knoxville Market Type Large Sale Data Grantor L K M Properties Lp Grantee SunTrust Bank Sale Date December 18, 2015 Deed Book/Page 1645/544 Recorded Plat J/267 Property Rights Fee Simple Braun & Associates, Inc Page 41

42 Land Sale No. 4 (Cont.) Downward Adjustment Sale Price $585,000 Land Data Zoning IB, Intermediate Business District Topography Nearly Level Utilities All Utilities Shape Irregular Date Entered 3/18/16 Land Size Information Gross Land Size Front Footage Acres or 79,715 SF 295 ft Total Frontage: 295 ft W Morris Blvd; Indicators Sale Price/Gross Acre $319,672 Sale Price/Gross SF $7.34 Sale Price/Front Foot $1,983 User Comments The sales and physical data were taken from the public records and verified through the tax card, tax plat, aerial photos, and previous deed. Remarks This is the sale of an development tract of vacant land off W Morris Blvd in Morristown, TN. The site has good visibility and access. All utilities available. The site was purchased for use as a Weigel's convenience store initially; however, Weigel's sold the property to SunTrust Bank for a branch site. Braun & Associates, Inc Page 42

43 Comparables Map Analysis Grid The above sales have been analyzed and compared with the subject property. We have considered adjustments in the areas of: Property Rights Sold Financing Conditions of Sale Market Trends Location Physical Characteristics On the following page is a sales comparison grid displaying the subject property, the comparables and the adjustments applied. Braun & Associates, Inc Page 43

44 Land Direct Comparison Grid Subject No. 1 No. 2 No. 3 No. 4 Property ID 304 E Main Street 220 Dr Martin Luther King Parkway ( ) S Cumberland Street ( ) Clara Barton Drive ( ) W Morris Boulevard Transactional Adjustments Sales Price $460,000 $200,000 $400,000 $585,000 Gross SP/Acre $230,000 $197,433 $333,333 $319,672 Property Rights Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjustment/Acre $0 $0 $0 $0 Financing & Concessions Typical Typical Typical Typical Adjustment/Acre $0 $0 $0 $0 Conditions of Sale Equal Equal Equal Equal Adjustment/Acre $0 $0 $0 $0 Expenditures After Purchase None None None None None Adjustment/Acre $0 $0 $0 $0 Market Conditions 4/6/2016 2/11/2014 5/15/2012 9/14/ /18/2015 Adjustment/Acre $0 $0 $0 $0 Adjusted SP/Acre $230,000 $197,433 $333,333 $319,672 Quantitative Adjustments Land Size (Acre) % 0% 0% 10% Adjustment/Acre $23,000 $0 $0 $31,967 Location Downtown Off Morris Blvd Primarily New Food City Residential Development Morris Blvd -15% 15% -25% -25% Adjustment/Acre -$34,500 $29,615 -$83,333 -$79,918 Qualitative Considerations Visibility Secondary Secondary Secondary Arterial Arterial Rating Similar Similar Superior Superior Access 2 Sides Single Side Single Side Corner Corner Rating Inferior Inferior Superior Superior Zoning Central Business Intermediate Intermediate Planned Intermediate Business Business Commercial Business Rating Similar Similar Superior Similar Use Office Office Dollar General Auto Parts Bank Rating Similar Superior Superior Similar Overall Comparison Inferior Similar Superior Superior Final Value Indication $218,500 $227,048 $250,000 $271,721 Acre Weight Given 35% 35% 15% 10% Indicated Weighted Value/Acre $225,000 Min $218,500 Indicated Value $247,500 Max $271,721 Demolition Cost -$10,000 Final Value (Rounded) $240,000 Standard Dev. $23,965 Braun & Associates, Inc Page 44

45 Land Sales Analysis The sales used in this analysis were taken from a thorough search of office files, tax records, and MLS databases. The quantity and quality of the sales data was good and the sales used provide a reasonable and reliable indication of value for the subject s land. Attempts were made to verify the sales information with a party involved in each transaction although not every detail of each sale could be verified. The sales used were analyzed for inconsistencies and the sales that showed discrepancies were not used. Adjustments There were no adjustments necessary for the details surrounding each transaction. All of the sales transacted within a reasonable time period and reflect the current market conditions, thus no adjustments are necessary for market conditions. Next adjustments were made for the size of each comparable and that of the subject. The size adjustments are based on the relationship between the size and the sales price per square foot of the larger subset of comparable land sales data. This relationship can be seen in the graph below which is used to estimate the size adjustments. Diminishing Rate of Returns Price per Acre $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 y = 27330x Acreage The location, visibility, access, and topography were considered on a qualitative basis. Each of the ratings was considered, and was used, along with the quantitative adjustments, to determine the overall comparability of each sale to the subject. Braun & Associates, Inc Page 45

46 Final Land Value The adjusted values of the comparable properties range from $218,500 - $271,721 per square foot. Each of the adjusted value indications was weighted based on the amount of adjustments and the overall comparison. The final sales price per square foot indication for the subject was considered to be $225,000 per Acre based on the weights given, is considered reasonable, and within the range of the indications. The final land value calculations can be seen below. Final Land Value Conclusion Indicated Value per Acre $225,000 Subject Size: 1.10 Indicated Value: $247,500 Rounded: $240,000 Two Hundred Forty Thousand Dollars Braun & Associates, Inc Page 46

47 Final Reconciliation The process of reconciliation involves the analysis of each approach to value. The quality of data applied, the significance of each approach as it relates to market behavior and defensibility of each approach are considered and weighed. Finally, each is considered separately and comparatively with each other. Value Indications Sales Comparison Approach: $240,000 Sales Comparison Approach Land Value The quality and quantity of data used in this approach was sufficient enough to provide a reasonable and reliable indication of value for the subject property and most accurately reflects the value of the subject. Therefore this approach is meaningful and given heavy weight in the final value opinion. The body shop currently occupying a portion of the property was not given any weight in this analysis, as it does not meet the highest and best use of the property. The best use of the property would be for this building to be demolished and for the combined parcels to be used for office development. Braun & Associates, Inc Page 47

48 Value Conclusion(s) Based on the data and analyses developed in this appraisal, we have reconciled to the following value conclusion(s), as of April 6, 2016, subject to the Limiting Conditions and Assumptions of this appraisal. Reconciled Value(s): Premise: As Is Interest: Fee Simple Value Conclusion: $240,000 Two Hundred Forty Thousand Dollars Braun & Associates, Inc Page 48

49 Certification Statement We certify that, to the best of our knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, unbiased professional analyses, opinions and conclusions. 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. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 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. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. We have made a personal inspection of the property that is the subject of this report. Chris Hodge provided significant support with research, inventory, analysis and verification under the supervision of Creighton Cross. We certify sufficient competence to appraise this property through education and experience, in addition to the internal resources of the appraisal firm. The appraiser has not performed any prior services regarding the subject within the previous three years of the appraisal date. The value conclusion(s) and other opinions expressed herein are not based on a requested minimum value, a specific value or approval of a loan. Creighton Cross has made a personal inspection of the property that is the subject of this report. Braun & Associates, Inc Page 49

50 Chris Hodge has made a personal inspection of the property that is the subject of this report. The reported analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute. This report complies with the Uniform Standards of Professional Appraisal Practice. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report, Creighton Cross has completed the Standards and Ethics Education Requirement of the Appraisal Institute for Candidate for Designation. As of the date of this report, Creighton Cross has completed the continuing education program for Designated Members of the Appraisal Institute. Creighton Cross, MAI Tennessee-CG-3670 Chris Hodge, Trainee Tennessee-5058 Braun & Associates, Inc Page 50

51 Addenda Braun & Associates, Inc Page 51

52 CHARLES R ROLEN QUALIFICATIONS & RESUME Braun & Associates, Inc. 317 Ebenezer Road, Knoxville, Tennessee Office Phone: (865) / Cell Phone: (865) / Fax: (865) rusty@braunappraisal.com APPRAISAL EXPERIENCE Charles R. Rolen has been actively engaged in real estate appraisal since January He became a Certified General appraiser in March The appraiser has experience with a wide variety of property types including residential, agricultural land, development land, subdivisions, multi-unit residential, retail, offices, industrial, auto-related, selfstorage, churches, and restaurants. Additionally, more complex assignments have included funeral homes, lodging, and convenience stores. The appraiser also has knowledge of Discounted Cash Flow analysis dealing with income producing properties such as Net Lease and Land Lease properties. LICENSES/MEMBERSHIPS State Certified General Real Estate Appraiser Tennessee Department of Commerce and Insurance (CG-4568) March 2014 to Present Candidate for Designation for the Appraisal Institute January 2013 to Present UNIVERSITY EDUCATION Under Graduate work from Pellissippi State Technical Community College (Knoxville, TN). Completed May 2013 Associate of Arts degree from Pellissippi State Technical Community College (Knoxville, TN). Completed July 2005 PROFESSIONAL EDUCATION Real Estate Appraisal Courses Completed: - Basic Appraisal Principles, Appraisal Institute Louisville, KY February Basic Appraisal Procedures, Appraisal Institute Louisville, KY March Hour National USPAP Course, Appraisal Institute Louisville, KY March Market Analysis and Highest & Best Use, Appraisal Institute Louisville, KY December Site Valuation & Cost Approach, Appraisal Institute Louisville, KY February Income Approach/Part 1, Appraisal Institute Louisville, KY March 2011 Braun & Associates, Inc Page 52

53 - Income Approach/Part 2, Appraisal Institute Louisville, KY May Advanced Income Capitalization, Appraisal Institute Louisville, KY July Report Writing and Case Studies, Appraisal Institute Louisville, KY August Sales Comparison Approach, Appraisal Institute Louisville, KY September Advanced Concepts & Case Studies, Appraisal Institute Louisville, KY November Real Estate Finance Statistics & Valuation Modeling, Appraisal Institute Louisville, KY December Hour National USPAP Update Course, Appraisal Institute Lexington, KY January Hour National USPAP Update Course, Appraisal Institute-Knoxville, TN- December Litigation Skills for the Appraiser, Appraisal Institute-Knoxville, TN-May Complex Litigation Appraisal Case Studies, Appraisal Institute-Knoxville, TN- March Hour National USPAP, 16-17, Update Course, Bryan S. Reynolds & Associates-Knoxville, TN-Dec Cool Tools: New Technology for Real Estate Appraisers, Appraisal Institute- Online, Feb 2016 APPRAISAL & REAL ESTATE WORK HISTORY March 2014 to Present - Certified General Real Estate Appraiser at Braun & Associates, a full service real estate appraisal company in Knoxville, Tennessee. Duties include research, development, and production of appraisal reports, evaluations, and market studies. Clients include lending institutions, attorneys, government agencies, investors, and individuals. November 2009 to March Registered Appraisal Trainee at Braun & Associates. The trainee hours were accumulated under the supervision of Creighton R. Cross (CG-3670), current owner of Braun & Associates. Duties included research, development, and production of appraisal reports and evaluations. January 2006 to November Appraisal Assistant at Braun & Associates. Charles assisted David Braun, (CG- 283 MAI, SRA) and Creighton Cross (CG-3670) in various commercial appraisals throughout East Tennessee including but not limited to; subdivision developments and analysis, retail properties, office properties, industrial properties, convenience stores, multi-family and large and small land properties. Braun & Associates, Inc Page 53

54 Chris Hodge TN Appraiser Trainee Braun & Associates, Inc. 317 Ebenezer Road Knoxville, TN EDUCATION I have successfully completed the 75 course hours required for certification as a Registered Trainee. I am currently taking further classes in pursuit of my Certified General License. On 11/17/14 I received my approval as a Registered Trainee. In 2000, I received my Bachelor of Arts in Mass Communication from Carson-Newman College in Jefferson City, TN. PROFESSIONAL ORGANIZATION MEMBERSHIP I am a Registered Trainee in Tennessee (TN 5058) Exp. 11/30/ President of the Newell Village Homeowners Association Board of Directors Smoky Mountain Scottish Festival & Games Current Work: I am currently working as a trainee under Creighton Cross of Braun and Associates. During this time, I have assisted in various commercial appraisals throughout east Tennessee. These included: retail properties, offices, convenience stores, multi-family residential developments, Industrial sites and land sales of various size and complexity. COURSES COMPLETED Course Title Provider Location Date Taken Basic Appraisal Principles Bluegrass Chapter Louisville, KY 9/25/14 Basic Appraisal Procedures Bluegrass Chapter Louisville, KY 10/16/14 15-Hour National USPAP Course Bluegrass Chapter Louisville, KY 20/25/14 Market Analysis and Highest & Best Use Greater Tennessee Nashville, TN 4/23/15 Sales Comparison Approach Atlanta Area Chapter Atlanta, GA 5/14/15 Site Valuation & Cost Approach Greater Tennessee Nashville, TN 8/27/15 Income Approach/Part 1 Greater Tennessee Nashville, TN 11/19/15 Braun & Associates, Inc Page 54

55 Glossary This glossary contains the definitions of common words and phrases, used throughout the appraisal industry, as applied within this document. Please refer to the publications listed in the Works Cited section below for more information. Works Cited: Appraisal Institute. The Appraisal of Real Estate. 13th ed. Chicago: Appraisal Institute, Print. Appraisal Institute. The Dictionary of Real Estate Appraisal. 5th ed Print. Band of Investment A technique in which the capitalization rates attributable to components of a capital investment are weighted and combined to derive a weighted-average rate attributable to the total investment. (Dictionary, 5th Edition) Bulk Value The value of multiple units, subdivided lots, or properties in a portfolio as though sold to a single buyer in one transaction. Sometimes called bulk sale value. Bulk Sale Valuation Scenario In subdivision development analysis, a specific appraisal problem in which a group of properties is evaluated to form an opinion of bulk value. The underlying premise is the valuation of the entire group of lots or units to one purchaser as one sale. The valuation scenario considers the individual values of each property, the absorption period needed to sell the entire property inventory over time, and appropriate deductions and discounting for holding and sales costs as well as profit. Common Area 1. The total area within a property that is not designed for sale or rental but is available for common use by all owners, tenants, or their invitees, e.g., parking and its appurtenances, malls, sidewalks, landscaped areas, recreation areas, public toilets, truck and service facilities. 2. In a shopping center, the walkways and areas onto which the stores face and which conduct the flow of customer traffic. (ICSC) (Dictionary, 5th Edition) Common Area Maintenance (CAM) 1. The expense of operating and maintaining common areas; may or may not include management charges and usually does not include capital expenditures on tenant improvements or other improvements to the property. CAM can be a line-item expense for a group of items that can include maintenance of the parking lot and landscaped areas and sometimes the exterior walls of the buildings. CAM can refer to all operating expenses. CAM can refer to the reimbursement by the tenant to the landlord for all expenses reimbursable under the lease. Sometimes reimbursements have what is called an administrative load. An example would be a 15% addition to total operating Braun & Associates, Inc Page 55

56 expenses, which are then prorated among tenants. The administrative load, also called an administrative and marketing fee, can be a substitute for or an addition to a management fee. 2. The amount of money charged to tenants for their shares of maintaining a center s common area. The charge that a tenant pays for shared services and facilities such as electricity, security, and maintenance of parking lots. The area maintained in common by all tenants, such as parking lots and common passages. The area is often defined in the lease and may or may not include all physical area to be paid for by all tenants. Items charged to common area maintenance may include cleaning services, parking lot sweeping and maintenances, snow removal, security, and upkeep. (ICSC) (Dictionary, 5th Edition) Debt Coverage Ratio (DCR) The ratio of net operating income to annual debt service (DCR = NOI/Im), which measures the relative ability of a property to meet its debt service out of net operating income; also called debt service coverage ratio (DSCR). A larger DCR indicates a greater ability for a property to withstand a downturn in revenue, providing an improved safety margin for a lender. (Dictionary, 5th Edition) Discount Rate A yield rate used to convert future payments or receipts into present value; usually considered to be a synonym for yield rate. (Dictionary, 5th Edition) Disposition Value The most probable price that a specified interest in real property should bring under the following conditions: 1. Consummation of a sale within a future exposure time specified by the client. 2. The property is subject to market conditions prevailing as of the date of valuation. 3. Both buyer and seller are acting prudently and Knowledgably. 4. The seller is under extreme compulsion to sell. 5. The buyer is typically motivated. 6. Both parties are acting in what they consider their best interests. 7. An adequate marketing effort will be made during the exposure time specified by the client. 8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. 9. 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. Effective Age The age of property that is based on the amount of observed deterioration and obsolescence it has sustained, which may be different from its chronological age. (Dictionary, 5th Edition) Braun & Associates, Inc Page 56

57 Effective Date 1. The date on which the analyses, opinion, and advice in an appraisal, review, or consulting service apply. 2. In a lease document, the date upon which the lease goes into effect. (Dictionary, 5th Edition) Exposure Time 1. The time a property remains on the market. 2. The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based on an analysis of past events assuming a competitive and open market. (Dictionary, 5th Edition) External Obsolescence An element of depreciation; a diminution in value caused by negative externalities and generally incurable on the part of the owner, landlord, tenant. (Dictionary, 5th Edition) Extraordinary Assumption An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. (USPAP, ed.) (Dictionary, 5th Edition) Fee Simple Estate 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. (Dictionary, 5th Edition) Functional Obsolescence The impairment of functional capacity of a property according to market tastes and standards. (Dictionary, 5th Edition) Functional Utility The ability of a property or building to be useful and o perform the function for which it is intended according to current market tastes and standards; the efficiency of a building s use in terms of architectural style, design and layout, traffic patterns, and the size and type of rooms. (The Appraisal of Real Estate, 13th Edition) Gross Building Area (GBA) Total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the above-grade area. This includes mezzanines and basements if and when typically included in the region. (Dictionary, 5th Edition) Braun & Associates, Inc Page 57

58 Gross Leasable Area (GLA) Total floor area designed for the occupancy and exclusive use of tenants, including basements and mezzanines; measured from the center of joint partitioning to the outside wall surfaces. (Dictionary, 5th Edition) Highest & Best Use The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of land or improved property specific with respect to the user and timing of the use that is adequately supported and results in the highest present value. (Dictionary, 5th Edition) Highest and Best Use of Land or a Site as Though Vacant Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements. (Dictionary, 5th Edition) Highest and Best Use of Property as Improved The use that should be made of a property as it exists. An existing improvement should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one. (Dictionary, 5th Edition) Hypothetical Condition That which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. (Dictionary, 5th Edition) Leased Fee Interest A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord-tenant relationship (i.e., a lease). (Dictionary, 5th Edition) Liquidation Value The most probable price that a specified interest in real property should bring under the following conditions: 1. Consummation of a sale within a short time period. 2. The property is subject to market conditions prevailing as of the date of valuation. Braun & Associates, Inc Page 58

59 3. Both buyer and seller are acting prudently and Knowledgably. 4. The seller is under extreme compulsion to sell. 5. The buyer is typically motivated. 6. Both parties are acting in what they consider their best interests. 7. A normal marketing effort is not possible due to the brief exposure time. 8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. 9. 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. Market Area The area associated with a subject property that contains its direct competition. (Dictionary, 5th Edition) Market Rent The most probably rent that a property should bring is a competitive and open market reflecting all conditions and restrictions of the lease agreement, including permitted uses, use restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements (TIs). (Dictionary, 5th Edition) Market Value As defined by the Office of the Comptroller of Currency (OCC) under 12 CFR, Part 34, Subpart C-Appraisals, Definitions, the Board of Governors of the Federal Reserve System (FRS) and the Federal Deposit Insurance Corporation in compliance with Title XI of FIRREA, as well as by the Uniform Standards of Appraisal Practice as promulgated by the Appraisal Foundation, is as follows. Market value means 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, 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised, and acting in what they consider their own best interest; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and Braun & Associates, Inc Page 59

60 5. 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. Marketing Time An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of the appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. (Advisory Opinion 7 of the Standards Board of The Appraisal Foundation and Statement on Appraisal Standards No. 6, Reasonable Exposure Time in Real Property and Personal Property Market Value Opinions address the determination of reasonable exposure and marketing time). (Dictionary, 5th Edition) Net Operating Income (NOI) The actual or anticipated net income that remains after all operating expenses are deducted from effective gross income but before mortgage debt service and book depreciation are deducted. (Dictionary, 5th Edition) Obsolescence One cause of depreciation; an impairment of desirability and usefulness caused by new inventions, changes in design, improved processes for production, or external factors that make a property less desirable and valuable for a continued use; may be either functional or external. (Dictionary, 5th Edition) Parking Ratio A ratio of parking area or parking spaces to an economic or physical unit of comparison. Minimum required parking ratios of various land uses are often stated in zoning ordinances. (Dictionary, 5th Edition) Rentable Area For office buildings, the tenant s pro rata portion of the entire office floor, excluding elements of the building that penetrate through the floor to the areas below. The rentable area of a floor is computed by measuring to the inside finished surface of the dominant portion of the permanent building walls, excluding any major vertical penetrations of the floor. Alternatively, the amount of space on which the rent is based; calculated according to local practice. (Dictionary, 5th Edition) Replacement Cost The estimated cost to construct, at current prices as of the effective appraisal date, a substitute for the building being appraised, using modern materials and current standards, design, and layout. (Dictionary, 5th Edition) Scope of Work The type and extent of research and analyses in an assignment. (Dictionary, 5th Edition) Braun & Associates, Inc Page 60

61 Stabilized Occupancy An expression of the expected occupancy of a property in its particular market considering current and forecasted supply and demand, assuming it is priced at market rent. (Dictionary, 5th Edition) Tenant Improvements (TIs) 1. Fixed improvements to the land or structures installed and paid for use by a lessee. 2. The original installation of finished tenant space in a construction project; subject to periodic change for succeeding tenants. (Dictionary, 5th Edition) Vacancy and Collection Loss A deduction from potential gross income (PGI) made to reflect income reductions due to vacancies, tenant turnover, and non-payment of rent; also called vacancy and credit loss or vacancy and contingency loss. Often vacancy and collection loss is expressed as a percentage of potential gross income and should reflect the competitive market. Its treatment can differ according to the interest being appraised, property type, capitalization method, and whether the property is at stabilized occupancy. (Dictionary, 5th Edition) Braun & Associates, Inc Page 61

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71 CRS Data - Property Report for Parcel/Tax ID 034I E Page 1 of 2 4/1/2016 Creighton Cross President ccross@braunappraisal.com Powered by LOCATION Property Address Daisy South St TN Subdivision County PROPERTY SUMMARY Property Type Hamblen County, TN Commercial Land Use Retail Trade - Auto / Marine / Aircraft Improvement Type Square Feet GENERAL PARCEL INFORMATION Parcel/Tax ID 034I E Special Int 000 Alternate Parcel ID Land Map 034I District/Ward Census Trct/Blk 1002/1 CURRENT OWNER Name 50 feet 20 m 2016 Microsoft Corporation 2016 HERE Solomon Kenneth E Mailing Address Po Box 644 Morristown, TN Assessor Roll Year 2015 SALES HISTORY THROUGH 03/18/2016 Date Amount Buyer/Owners Buyer/Owners 2 Instrument No. Parcels Book/Page or Document# 10/15/1985 $10,000 Solomon Kenneth E Warranty Deed 341/539 6/20/1980 $15,000 Graham James R & Yvonne Warranty Deed 304/892 TAX ASSESSMENT Appraisal Amount Assessment Amount Jurisdiction Rate Appraisal Year 2015 Assessment Year 2015 Morristown Appraised Land $33,800 Assessed Land Hamblen 1.76 Appraised Improvements $3,400 Assessed Improvements Total Tax Appraisal $37,200 Total Assessment $14,880 Exempt Amount Exempt Reason TAXES Tax Year City Taxes County Taxes Total Taxes 2015 $ $ $ $ $ $ $ $ $ MORTGAGE HISTORY No mortgages were found for this parcel. PROPERTY CHARACTERISTICS: BUILDING

72 CRS Data - Property Report for Parcel/Tax ID 034I E Page 2 of 2 4/1/2016 No Buildings were found for this parcel. PROPERTY CHARACTERISTICS: EXTRA FEATURES Feature Size or Description Year Built Condition Asphalt Paving AVERAGE Chain Link Fence AVERAGE PROPERTY CHARACTERISTICS: LOT Land Use Retail Trade - Auto / Marine / Aircraft Block/Lot Lot Dimensions Lot Square Feet 90X186 IRR Latitude/Longitude / Acreage PROPERTY CHARACTERISTICS: UTILITIES/AREA Gas Source Private - Natural Gas Road Type Paved Electric Source Public Topography Level Water Source Public District Trend Stable Sewer Source Public Special School District 1 Zoning Code Special School District 2 Owner Type LEGAL DESCRIPTION Subdivision Plat Book/Page Block/Lot District/Ward 01 Description FLOOD ZONE INFORMATION Zone Code Flood Risk BFE Description FIRM Panel ID FIRM Panel Eff. Date X Minimal Area of minimal flood hazard, usually depicted on FIRMs as above the 500-year flood level C0133E 07/03/ Courthouse Retrieval System. All Rights Reserved. Information Deemed Reliable But Not Guaranteed.

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