Appraisal Report. The Young-Rainey Star Center Property 7887 Bryan Dairy Road Largo, Pinellas County, Florida Report Date: March 31, 2015

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1 Appraisal Report The Young-Rainey Star Center Property 7887 Bryan Dairy Road Largo, Pinellas County, Florida Report Date: March 31, 2015 FOR: Pinellas County Mr. Sean Griffin Real Estate Coordinator 509 East Avenue Clearwater, FL Valbridge Property Advisors Entreken Associates, Inc th Street North St. Petersburg, FL (727) phone Valbridge File Number: (727) fax FL valbridge.com

2 THE YOUNG-RAINEY STAR CENTER March 31, 2015 Mr. Sean Griffin Real Estate Coordinator Pinellas County 509 East Avenue Clearwater, FL RE: Appraisal Report Young-Rainey Star Center 7887 Bryan Dairy Road Largo, Pinellas County, Florida Dear Mr. Griffin: Attached is an appraisal report outlining our investigation and analysis of the captioned property. The total subject property (referred to as the parent tract) contains approximately 96.4 acres of industrial land that is improved with multiple buildings. Per our agreement, the appraisal considers the total parent tract as several smaller parcels as follows: Land Lease Parcels- Approximately acres located along the northerly portion of the property are under separate long term land leases with the improvements being owned by the lessee. In this area there are a total of eight parcels. Each parcel has been valued separately as vacant land, as encumbered by lease. On the master aerial, these parcels are identified as Star I A and B, Star II, Star III, Star IV, and Monin/Hit (Star V). Additionally, there is a very small parcel located just north of Star IB that is improved with a cell tower. The cell tower is considered a part of the Main Star Center Parcel and not a land lease parcel. Northeast Site (SCLVP)- The area of land described by the Department of Energy as the Northeast Site is located at the northeast corner of the overall property, adjoining the existing north pond to the west. This NE site was being actively remediated until late According to Joe Daniel, representative of on-site environmental consultant S.M. Stoller, all remediation activities are complete on this site and the property has received conditional closure by the Florida Department of Environmental Protection (FDEP). Our understanding is that this site contains approximately 5.09 acres and is proposed to be encumbered by Restrictive Covenants that will require the FDEP to monitor any development of the property. Per your request, this parcel has been appraised as a separate, unencumbered parcel with development potential. For the purpose of valuation, we have estimated the total size of the parcel (to include access area along 114 th Avenue) at 6.2 acres. On the master aerial, this parcel is identified as SCVLP. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 1

3 Mr. Sean Griffin Pinellas County March 31, 2015 Page 2 SCCCP-A 4.23+/- acre tract located along the Belcher Road Frontage is currently improved with modular improvements. Per our agreement, this parcel is appraised as if vacant and unencumbered. Per the U.S. Department of Energy s October-Dec Program Update, a minor portion of the southwest portion of this site is included within the contamination plume that runs east from Bldg. 100 to Belcher Road. This small area at the southwest corner of the parcel will be included within the Building 100 Restrictive Covenant area that is undergoing enhanced bioremediation. This parcel is identified on the aerial map as SCCCP. SCIP-A 2.5+ acre parcel located just south of the land lease parcels identified as SCIP has been appraised as a separate parcel. The SCIP parcel is improved with Building 400, reportedly containing approximately 15,405 square feet, including a common area tower. This building was originally constructed in 1968 with additions in The majority of this building (14,085 square feet) is included in the Master Raytheon Lease and is subleased to the United States Military. The building was substantially renovated within the last two years for use as a training facility and is considered functional and in good condition. Main Star Center Parcel-The remaining approximate acres is considered as the Main Star Center Property. A portion of this property has environmental contamination and is undergoing enhanced bioremediation. Please see the addenda for detail. This property contains the main star center building (Building 100) as well as several outbuildings containing a reported 661,697 square feet of building area. It should be noted that the Pinellas County Property Appraiser records were not available for these buildings and historical information provided by our client indicated a slightly different overall square footage. Based on the classified use of the majority of this area by Raytheon, the total area of the buildings could not be verified via physical inspection. Therefore, for the purpose of the appraisal, we have assumed that the provided total area of 661,697 square feet is accurate. This portion of the property will be appraised as encumbered by existing leases. Building Areas- Although the appraisal assumes that 661,697 square feet of improved area is accurate, this total includes Buildings 1500 and 1600 which are the modular improvements located on breakout parcel SCCCP. These two buildings contain a total of 12,798 square feet of leasable area. As noted above, the client has requested that the SCCCP area be appraised as if vacant. Therefore, the effective total improved area for the project is reported for the purposes of the appraisal to be 648,899 square feet (661,697-12,798). Environmental- The appraisers were provided with a history of the property that summarizes the use of the subject property for defense purposes by General Electric (GE) from 1957 to It is our understanding that GE utilized the Main Star Center site to house the engineering, development and manufacturing of components supporting the U.S. nuclear weapons program. In connection with historical waste disposal practices at this location, portions of the subsurface and the shallow surficial aquifer are contaminated with organic solvents and metals. See the extraordinary conditions of the appraisal, environmental factors as well as the addenda for detail relating to the status of the property relating to environmental conditions. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 2

4 Mr. Sean Griffin Pinellas County March 31, 2015 Page 3 A major factor in this appraisal is the potential for alternative uses of the Main Star Center Parcel. This potential is influenced by the probability of Raytheon exercising existing lease renewals, the potential for a zoning/land use change that may permit a broader range of uses of the property, and the impact of the pending restrictive covenants on the property which would influence redevelopment. At present, Raytheon continues to make significant investment in the property, the DOE has committed major resources to the current bioremediation program on the property with long term monitoring, and it is considered unlikely that Pinellas County would permit a commercial use of the property. Therefore, valuation assumes continued use of the existing improvements, with future redevelopment potential as encumbered by restrictive covenants. Should information become available that indicates Raytheon will not exercise future lease options, this appraisal would be subject to change. To the best of our knowledge and belief, this appraisal has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). Valuation is subject to the Extraordinary Assumptions and Hypothetical conditions page 11 and General Assumptions and Limiting Conditions contained within the Addenda section of the appraisal. Additional supporting information is available in file. Respectfully submitted, Valbridge Property Advisors Entreken Associates, Inc. Leslie A. McKeon, MAI, SRA Senior Appraiser State-Certified General Appraiser RZ272 John S. Menard, MAI Director State-Certified General Appraiser RZ133 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 3

5 Table of Contents Cover Page Letter of Transmittal... 1 Table of Contents... 4 Summary of Important Data and Conclusions... 5 Summary of Value...10 Extraordinary Assumptions...11 Regional and Market Area Analysis...13 Neighborhood Analysis...26 Subject Aerial Photographs...29 Definitions...31 Description of the Subject Property...32 Description of the Site...36 Description of the Improvements...62 Highest and Best Use...84 Method of Valuation...93 Land Valuation Land Lease Parcels...94 Land Valuation- Outparcels SCVLP AND SCCCP Land Valuation - Main Star Center Parcel Land Value Allocation - SCIP Parcel Summary of Land Valuation (Fee Simple) Income Capitalization Approach (Main Star Center Parcel) Sales Comparison Approach Allocation of Value to SCIP Building Environmental Factors Certification Addenda Last Deed of Conveyance Pinellas County Fact Sheet Program Update Land Sales Financial Information Provided by Pinellas County Area of Restrictive Covenants Qualifications VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 4

6 Summary of Important Data and Conclusions SUBJECT IDENTIFICATION/ LOCATION PURPOSE OF THE APPRAISAL The Young-Rainey Star Center Located at the northwest corner of Bryan Dairy and Belcher Roads within unincorporated Pinellas County, Florida. The physical address is 7887 Bryan Dairy Road Largo, Fl Estimate the market value for the various components of the subject property real estate as outlined in the letter of transmittal as of February 18, PROPERTY RIGHTS INTENDED USE INTENDED USER NEIGHBORHOOD SITE SIZE Generally Leased Fee with exception of two vacant, unencumbered tracts (SCVLP and SCCCP). Asset valuation Pinellas County and assigns. Pinellas Mid-County Per the Pinellas County tax roll, GIS services, the land lease agreements, an older survey of the property, and a more recent legal description, we have allocated the total size of the parent tract as follows: Parcel Identification Size Star 1A 4.07 Star I B 2.70 Star II 2.76 Star III 1.23 Star IV 8.51 Cell Tower 0.10 Hit 4.16 Monin 4.18 NE Parcel (SCVLP) 6.2 SCCCP 4.23 SCIP 2.5 Star Center Parcel Total Acreage 96.4 ZONING LAND USE M-1 (Light Manufacturing and Industry) Pinellas County IL (Industrial Limited) Pinellas County VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 5

7 IMPROVEMENTS: As noted, the northerly portion of the parent tract consists of various parcels consisting of land leases which are improved with large industrial buildings. The central and southerly portions of the property (the Main Star Center Property) are improved as the Young Rainey STAR Center- the conversion of a former U.S. Department of Energy defense manufacturing facility to a technology center. The majority of the former facility has been leased over time to Raytheon, a local defense contractor. The primary buildout of this area reportedly contains offices and HVAC Research and Development/Production areas. Additionally, there are smaller high tech tenants as well as general office use (Pinellas County Tax Collector). Some of the technology tenants are located within outbuildings that are located west and north of the Main Star Center Building 100. The main building includes a full service cafeteria and meeting/conference rooms that serve as common area for the facility. According to the STAR Center Operations representatives, the facility contains a total of 661,697 feet of total area. As noted above, the appraisal assumes that the SCCCP parcel is vacant and available for development; therefore, buildings 1500 and 1600 containing 12,798 square feet have been excluded from the total improvement area, indicating an effective total improvement area of 648,899 square feet. Building Allocation 100 Main Star Center Parcel 587,060 Building ,029 Building 400 Raytheon (sublease) + tower 15,405 Building 500 Engineering/Control Room 18,229 Building 550 (Industrial Waste Neutralization) 339 Building 600 Storage 3,339 Building 700 Tractor Shed 4,867 Building 800 Precision Circuit Solutions 3,631 Buildings Total 648,899 Of this area, approximately 11% is common area/tenant support area. Based on existing leases, the facility is currently approximately 88% leased. Raytheon accounts for 78% of the leased area. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 6

8 HIGHEST AND BEST USE AS VACANT: HIGHEST AND BEST USE AS IMPROVED: If the subject property was vacant, the highest and best use would be for aggressive remediation (environmental cleanup) for development of the property per existing zoning, land use and Declaration of Restrictive Covenant. This analysis assumes that the Department of Energy would be responsible for the cleanup cost and would lease the land necessary for clean up from Pinellas County during the remediation process. The most logical redevelopment would include a phased, master plan development permissible under existing zoning and land use regulations that would allow for marketing of perimeter sites during the cleanup. It is our opinion that the highest and best use of the subject property, as improved, is for continued use under the existing scenario providing for income from existing land leases and income from the Main Star Center building and surrounding outbuildings. This assumes that two parcels (SCLVP and SCCCP) would be available to be sold off or leased as separate parcels for uses permissible under existing zoning and land use designation. See highest and best use section for detail ASSESSED VALUE/TAXES The Pinellas County Property Appraiser identifies the subject property under multiple parcel ID numbers. The Main Star Center Parcel includes some governmental exemptions. As discussed, the subject property includes an interest in land only for the HP Star Center land leases. Several of the reported Ad Valorem and Non Ad Valorem amounts include improvements as reported below: Pinellas County Tax Data Millage Parcel # ID Size (ac.) Land/Acre Land PSF Ad Valorem Non Ad Total* Paid* (per tax roll) market value land assess taxable value 2014* Valorem Main Parcel $13,300,000 $5,305,860 $11,039,000 $77,787 $1.79 $227,941 $82,198 $310,139 $297, Star IA 4.05 $3,956,600 $529,254 $3,844,500 $130,680 $3.00 $80,263 $7,366 $87,629 $84, Star IB 2.9 $322,575 $322,575 $322,575 $111,233 $2.55 $6,661 $0 $6,661 $6,394 (land only) Star II 2.8 $2,263,000 $366,000 $2,263,000 $130,714 $3.00 $46,728 $4,756 $51,484 $49, Star III 0.87 $96,638 $96,638 $96,638 $111,078 $2.55 $1,995 $2,123 $4,118 $3,954 (land only) Star IV 8.5 $6,345,900 $1,110,780 $6,345,900 $130,680 $3.00 $131,035 $15,498 $146,532 $140, Cell Tower $7,769 $7,769 $7,478 $73,990 $1.70 $157 $46 $203 $ Monin 4.1 $290,488 $290,488 $290,488 $70,851 $1.63 $5,998 $5,997 $11,995 $11,516 (land only) Hit 4.15 $306,638 $306,638 $306,638 $73,889 $1.70 $6,332 $6,044 $12,375 $11,880 (land only) Totals/Avg $8,336,002 $87,119 $2.00 $507,109 $124,027 $631,136 $605,891 * includes improvements VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 7

9 MARKETABILITY Discussions with brokers active in the local and regional industrial market indicate that the subject property would have limited marketability based on the following factors: 1. The existing lease with Raytheon ties the property up (potentially) for 18+/- years, but allows for little rental escalation. If Raytheon were to fail to exercise their remaining lease options, it is likely that any new tenant would require significant tenant improvements. Additionally, the time and marketing effort/expense to find another suitable tenant (s) would be considerable. 2. Due to the age and superadequacy of the existing improvements, the property requires intense management and maintenance. 3. The existing environmental contamination is a factor. While the Department of Energy currently has a bioremediation program underway, this is a long term process that will require monitoring and restrictive covenants for any redevelopment of the property. Any investor in the property must consider the viability of the Raytheon lease in the context of the short and long term redevelopment potential of the Main Star Center property based on the remediation status. 4. Due to the existing environmental contamination under the main Star Center Parcel, financing sources may be limited. On the positive side, this is one of the largest industrial sites within the mid-county area located at the intersection of two major roadways with reasonable access to I-275 and U.S. Highway 19 and is proximate to a highly skilled labor force. MARKETING TIME The probable time frame required to successfully sell a particular property depends on a number of factors. In projecting a marketing time, major influences are: Location; Property type; Asking price; Type and extent of marketing effort; Economic conditions throughout the marketing period; and Motivations of seller and buyer. Based on a limited market for the subject property, the property would typically require an extended marketing period. We have estimated that a reasonable extended marketing period of months would be considered appropriate assuming a professional marketing effort. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 8

10 EXPOSURE TIME Marketing time is a concept which is a projection forward from the date of the appraisal. Exposure time is the time the property is anticipated to have been exposed to the market preceding the date of value. In this case there is no significant difference between marketing and exposure times. SCOPE OF THE APPRAISAL The scope of the appraisal is to collect, analyze and report data in a narrative appraisal report format adequate to support a final estimate of market value for the subject property. The subject property and the surrounding neighborhood were physically inspected. Factual data regarding the property was researched from appropriate governmental authorities. Relevant market activity was researched and documented. These factors were considered in estimating the highest and best use of the subject property. Valuation is based on the Highest and Best Use Analysis. For the land lease parcels, vacant outparcels, and the main Star Center Property, the Sales Comparison Approach (as outlined in the Method of Valuation) has been used to estimate land value. For the Main Star Center Property, both the Income Approach to Value (via a discounted cash flow analysis) and the Sales Comparison Approach to Value have been used to estimate the value of the property as improved. The impact of existing environmental contamination was researched and is discussed within the appraisal as it relates to the general industrial market and subject property specifically. OWNER OF RECORD Pinellas County Industrial Development Authority 7887 Bryan Dairy Road Suite 120 Largo, Florida VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 9

11 Summary of Value Summary of Value Market Leasehold Leased Fee Pinellas County Identification Acreage Value Interest Interest Interest Land Leases Star 1A 4.07 $709,000 $9,000 $700,000 $700,000 Star 1B 2.7 $519,000 $54,000 $465,000 $465,000 Star II 2.76 $452,000 $37,000 $415,000 $415,000 Star III 1.23 $241,000 $51,000 $190,000 $190,000 Star IV 8.51 $1,391,000 $115,000 $1,276,000 $1,276,000 Monin 4.16 $683,000 $96,000 $587,000 $587,000 Hit 4.18 $680,000 $93,000 $587,000 $587,000 Total $4,675,000 $455,000 $4,220,000 $4,220,000 Fee Simple Vacant Out Parcels Acreage Square Feet Price/PSF Value Rounded SCVLP ,072 $5.00 $1,350,360 $1,351,000 SCCCP ,259 $5.50 $1,013,425 $1,014,000 Total Out Parcels ,331 $5.21 $2,363,785 $2,365,000 Main Star Center Parcel* Acreage Square Feet Price/PSF Value Rounded ,542,162 $2.50 $6,355,404 $6,356,000 Improvements 648,899 $11.73 $6,144,000 $6,144,000 Total $12,500,000 Total Estimated Value $19,085,000 Includes*: SCIP Land $462,825 $463,000 Improvements $453,000 $453,000 Total $915,825 $916,000 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 10

12 Extraordinary Assumptions 1. As a condition of the original sale of the Star Center property to Pinellas County, the Department of Energy identified environmental contamination on the property and accepted responsibility to monitor the site and provide cleanup activities as needed for public safety. This appraisal assumes that these conditions are still in force. 2. The U.S. Department of Energy Legacy Management maintains an online Fact Sheet for the Star Center Property (see addenda). This fact sheet outlines the environmental history and status of the property. The subject property has three areas of environmental contamination stemming from historical waste disposal practices. The result has been that portions of the subsurface and the shallow aquifer were contaminated with organic solvents and metals. These sites are currently described as the NE site, the Wastewater Neutralization area, and Building 100. Included within the Site Description portion of the appraisal is an aerial showing the approximate areas of the NE Site, the Wastewater Neutralization Area (WWNA), and the Building 100 as legally described by the DOE for the purpose of proposed restrictive covenants. A summary of our understanding of the current status of each area is as follows: The NE site has underdone intense bioremediation. Reportedly, the NE site has received a conditional closure of remediation activities. Any development of the site would be monitored by the Florida Department of Environmental Protection. Development of the property would be subject to the proposed Declaration of Restrictive Covenants. The Wastewater Neutralization site was found to contain arsenic, trichloroethene, and vinyl chloride. Groundwater cleanup took place in this area between FDEP issued an approval to proceed with closure of the WWNA. Reportedly, the area was excavated and backfilled with clean soil, but still indicates trace readings. DOE is reportedly working with DEP to establish institutional controls to ensure safe levels. Site closure will reportedly proceed once controls are adequately established. The site would be subject to the proposed Declaration of Restrictive Covenants. The Building 100 area contains two distinct contaminant plumes containing organic solvents and metals. These plumes originate beneath Building 100 and extend beyond the property to the south and east. Monitoring conducted in 2013 and 2014 indicated that these plumes were unstable. At present, Building 100 and the Wastewater Neutralization Area are currently undergoing enhanced bioremediation. Overall, this is a long term remediation project that is funded by the Department of Energy and monitored by an on-site DOE contractor (SM Stoller Corporation). According to the Stoller representative, the contamination is contained below the level of the existing ponds and poses no threat to public safety as long as the Building 100 remains in place and there is no unmonitored development of the property. This appraisal assumes that the current bioremediation program will continue (with monitoring) and that the existing use of the property will continue for the foreseeable future with potential for future redevelopment in accordance with proposed restrictive covenants. The appraisal further assumes that that there is nothing within the proposed Declaration of Restrictive Covenant that would be in conflict with current site conditions. A copy of the Fact Sheet and Program Update for October-December 2014 relating to groundwater cleanup is included within the addenda section of the appraisal. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 11

13 3. The initial land lease area for the Star III parcel was reported as 42,720 square feet or.981 acres per the provided lease agreement. The Pinellas County Tax Roll indicates a slightly smaller size of.87 acres. A subsequent lease added additional area to the parcel sufficient to support the existing building. Therefore, the appraisal indicates the amended site size of 1.23 acres as opposed to the parcel indicated by Pinellas County Aerial GIS photographs and maps. 4. This appraisal considers identified sites SCVLP and SCCCP has potential outparcels. This appraisal assumes that each of these sites have adequate physical and legal characteristics for development. Of specific note- we assume that adequate drainage capacity is available in the existing drainage structures to support additional development. This has been confirmed on a preliminary basis via a review of the Master Property Drainage plan by Pinellas County Development Review. Furthermore, this appraisal assumes that adequate physical access could be obtained to SCVLP located at the Northeast corner of the property to support typical industrial (flex space, light industrial) uses of the property. This access would be obtained via 114 th Avenue North and/or easement access across adjoining parcels. 5. A major factor in this appraisal is the potential for alternative uses of the Main Star Center Parcel. This potential is influenced by the probability of major tenant Raytheon exercising existing lease renewals. In consideration of the significant tenant improvements which have been made to the property, the suitability of the property for defense related manufacturing due to supporting infrastructure, and the reasonable rental rate, this appraisal assumes that Raytheon will exercise existing lease options to extend to a typical investment holding period. 6. According to Pinellas County Planning officials, based on existing zoning and land use designations, existing land uses, and Pinellas County policy to maintain the existing industrial base, it is our opinion that a land use change or zoning change to permit an intense commercial use of the subject property is unlikely. The conclusions of this appraisal would be subject to change should this philosophy change dramatically. 7. The appraisal relies upon historic income and expense for the subject property as provided by Pinellas County, to include estimates of scheduled future capital expenditures. We did not engage a private contractor to review the reasonableness of these capital expenses and reserve the right to amend the appraisal should subsequent data indicate that the estimated capital expenditures are inaccurate. Hypothetical Conditions 1. No current survey or dimensioned building plans were made available to the appraisers. Property size and factual data relating to the property are based on physical inspection, GIS aerials, a dated survey, and the provided Pinellas Plant Growth Plan that indicated the year of construction for additions to the property. Per the client s request, this appraisal assumes that the SCCCP parcel is vacant. We reserve the right to amend the appraisal should more accurate data become available. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 12

14 Regional and Market Area Analysis VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 13

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18 Employment by Industry - Tampa-St. Petersburg- Clearwater, FL Metropolitan Statistical Area ACS Estimate Percent of Industry Employment Agriculture, forestry, fishing and hunting 9, % Mining, quarrying, and oil and gas extraction 1, % Construction 77, % Manufacturing 78, % Wholesale trade 38, % Retail trade 160, % Transportation and warehousing 43, % Utilities 10, % Information 31, % Finance and insurance 85, % Real estate and rental and leasing 30, % Professional, scientific, and technical services 91, % Management of companies and enterprises % Administrative and support and waste mgmt services 64, % Educational services 99, % Health care and social assistance 171, % Arts, entertainment, and recreation 30, % Accommodation and food services 92, % Other services, except public administration 62, % Public administration 50, % Total 1,229, % Source: Site-to-Do-Business (STDB Online) VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 17

19 National Small Business Optimism Index Small Business Optimism Index Source: National Retail Sales $320,000 Monthly National Retail Sales (excl. autos & parts) $300,000 Sales in Millions $280,000 $260,000 $240,000 $220,000 $200,000 Source: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 18

20 Consumer Confidence Consumer Confidence Index Florida U.S Sources: U.S. states/consumer confidence Florida VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 19

21 Conclusions The subject s location within the Tampa-St. Petersburg-Clearwater MSA within the Tampa Bay Regional Market Area offers quality employment, schools, higher learning education opportunities, retail and industry along with a high quality of life due to a multitude of year round recreational options. INDUSTRIAL OUTLOOK - TAMPA BAY It is the consensus of published market indicators that the Tampa Bay Industrial Market reached a peak between 2005 and 2008 and sharply declined during the recession until evidence of a mild recovery between 2011 and The market appeared to have stabilized during 2013, with evidence of growth in As of the fourth Quarter of 2014, there is industrial activity from both users and investors. Limited new speculative construction is occurring, particularly in the Hillsborough and Polk County distribution markets. In 2014, the overall market is still well below the average delivery trend line. Overall, the market is described as being in the late recovery mode with decreasing vacancy rates, low rates of new construction, moderate absorption, moderate+ employment growth and negligible to low rental rate growth. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 20

22 The overall industrial market is bolstered by positive economic indicators such as increasing GDP, increasing housing starts, increased availability of capital, and job growth. As of the end of 2014, Tampa Bay unemployment was 5.8%, down from 6.8% in July This is still slightly higher than the State of Florida at 5.6%, and higher than Orlando Market (5%) and Miami Market (5.6%). CoStar reports that the Tampa/St. Petersburg Industrial Market ended the fourth quarter 2014 with an overall vacancy rate of 8.1%, down from 9.3% at the end of the first quarter The declining vacancy trend line is consistent with, but slightly above, the overall U.S. industrial market. Flex space has a substantially higher vacancy rate than traditional warehouse (14.4% vs. 7.4%). VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 21

23 Furthermore, there were a total of six buildings delivered to the market in the quarter totaling 464,505 square feet, with 108,000 still under construction. Net absorption was a positive 961,345 square feet in Q4 2014, up significantly over prior periods. The increase in net absorption was heavily influenced by tenants moving into large blocks of space. As some tenants moved into larger space, vacant sublease space consequently increased during the same time period. Some industrial market overviews noted that many industrial properties within the Tampa Bay Area are outdated and reflect functional obsolescence requiring significant upgrading/renovation in order to be marketable. Therefore, while there is space noted as available in the market, tenants and buyers are having difficulty find space that serves current business needs. While generally flat, the average quoted rental rate for available industrial space in Quarter was $5.23 per square foot per year, which has been gradually increasing since the low at $4.96 in Brokers VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 22

24 report that tenants in certain market sectors are particularly active- construction/building materials, medical device manufacturing, assembly, and general manufacturing. Total year-to-date industrial building sales activity in 2014 is up compared to the previous year. In the first nine months of 2014, the market saw 98 industrial sales transactions with a total volume of $232,924,729. The price per square foot has averaged $39.70 this year. In the first nine months of 2013, the market posted 70 transactions with a total volume of $132,979,987. The price per square foot averaged $ Cap rates have been lower in 2014, averaging 9.04%, compared to the first nine months of last year when they averaged 9.30%. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 23

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26 CENTRAL PINELLAS COUNTY AREA AND NEIGHBORHOOD MAPS VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 25

27 Neighborhood Analysis GENERAL DESCRIPTION BOUNDARIES TRANSPORTATION The subject property is located in the Pinellas Farms area of central Pinellas County. This area has transitioned from former citrus, cattle, dairy, and agricultural land to a major employment center. The area is now dominated by major corporate/office parks, hospitals and research centers, traditional industrial and manufacturing uses, and machine and service shops. Some scattered residential uses are found in the interior neighborhood, and commercial uses are prevalent along major roadways. The general neighborhood is loosely defined as Ulmerton Road to the north, Park Boulevard to the south, Starkey Road to the west, and 49th Street to the east. Much of this area is within the city limits of Pinellas Park. The immediate neighborhood is defined as the Bryan Dairy Road corridor from Starkey Road to the west to 66th Street to the east. This area is west of the core Gateway area. The area is well connected with major north/south and east/west arteries traversing the neighborhood. Starkey Road, Belcher Road, 66th Street, and U.S. Highway 19 provide good north/south routes through the County. Ulmerton Road, Bryan Dairy Road/118th Avenue, and Park Boulevard provide good east/west routes through the County. Ulmerton Road and Bryan Dairy Road/118th Avenue also provide access to Interstate-275 approximately six miles east of the subject property, providing highway access to Tampa in Hillsborough County and south through St. Petersburg and across the Sunshine Skyway Bridge into Manatee County. The St. Petersburg/Clearwater International Airport is located five miles northeast of the subject property. The Bryan Dairy Road corridor predominately consists of large scale corporate office parks, and general commercial and office uses on the smaller platted sites. The interior neighborhood is primarily older traditional industrial, machine shops and service shops. Numerous banks, multi-tenant retail and office developments occupy the frontage along Bryan Dairy Road. In addition, Bardmoor Medical Center (Morton Plant) and Young-Rainey Star Center (Subject Property) are located on the north side of Bryan Dairy Road in the immediate neighborhood. This segment of Bryan Dairy Road measures approximately 2 miles and is a 4-6 laned, signalized arterial. Annualized Average Daily Traffic (AADT-2013) count is 42,093 vehicles per day. Road improvements were recently completed along Bryan Dairy Road in this area, including the intersection with Belcher Road. The other main frontage road relevant to the appraisal is Belcher Road. Belcher Road is a major north-south thoroughfare running 17 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 26

28 miles from central to north Pinellas County. Traffic counts just north of Bryan Dairy along Belcher Road indicate AADT traffic counts (2013) at 20,922. Within the immediate subject area the land uses along Belcher Road are largely industrial in nature. Further north and south uses vary and include residential and commercial. Overall, the immediate subject area is a solid mid-county industrial market that has good industrial mix and provides adequate workforce and linkages for industrial use. However, based on overall location, the area is considered inferior to the core Gateway areas and the I-75 corridor in Hillsborough County. Pinellas County Industrial Summary The unemployment rate in Pinellas County was 5.3% at the end of 2014, the lowest since May 2008, and down 0.4 percentage points from a year ago. The metro area gained 12,900 new jobs over the year, led by the trade, transportation & utilities, professional/business and leisure/hospitality sectors. Activity and tenant expansion slowed in the last half of 2014 due in part to a lack of available space options in the market. Brokers indicate that Pinellas County has historically been more oriented to the smaller manufacturing/production market while Hillsborough and Polk are more closely tied to larger distribution operations due to their proximity to I-75 and I-4. Partially due to very limited available industrial land, Pinellas County has had extremely limited delivery of new product. As the economy has recovered, vacancy has declined, absorption has increased, and deliveries are minimal. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 27

29 Overall vacancy for the south Pinellas market (7.2%) is lower than the overall Tampa Bay market average, while the blended quoted rental rate of $5.66 per square foot is above the Tampa Bay area average. The following graphic from the Cushman & Wakefield Q Industrial Snapshot for Pinellas County indicates that vacancy rates have decreased since 2010 while overall rental rates have increased significantly since the bottom of the market in Source: Cushman & Wakefield Q Pinellas Industrial Snapshot Summary Market participants predict that rental rates will continue to rise, as they have done for the past four years, new additions to the inventory will be limited to build-to-suits with very little speculative construction occurring because of a lack of development land options. While current trends are generally positive, Price Waterhouse Coopers (PwC) indicates that all real estate will be impacted by the exponential expansion of technology. Technology is pushing change in space use, locations, and demand levels. Due to lack of available land, the Pinellas County industrial market will have to look to serious adaptations to the existing industrial stock or wholesale redevelopment to be competitive. Local brokers indicate the cost to adapt existing buildings to current technology requirements is a major reason that larger spaces in the mid- County area are still available. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 28

30 Subject Aerial Photographs Star Center Looking West Star Center Looking East Source: Valbridge Entreken March 2015 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 29

31 Subject Aerial Photograph Hit Star IV Tower Star II Star IA NE Site/ SCLVP Monin SCIP Star IB Star III Electric Substation WWNA SCCCP Bldg. 100 Site Identification Map Source: Pinellas County VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 30

32 Definitions NEIGHBORHOOD A neighborhood is defined as follows: A portion of a larger community, or an entire community, in which there is a homogeneous grouping of inhabitants, buildings or business enterprises. Inhabitants of a neighborhood usually have a more than casual community of interest. Neighborhood boundaries may consist of well-defined natural or man-made barriers or they may be more or less well-defined by a distinct change in land use or in the character of the inhabitants. 1 MARKET VALUE According to the Dictionary of Real Estate Appraisal, 5th Edition, as published by the Appraisal Institute, the definition of market value is as follows: The most probable price that the specified property interest should sell for in a competitive market after a reasonable exposure time, as of a specified date, in cash, or in terms equivalent to cash, under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, for self-interest, and assuming that neither is under duress. This value definition is considered consistent with the definition described in the Uniform Standards of Professional Appraisal Practice. LEASED FEE INTEREST A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlordtenant relationship (i.e., a lease). Dictionary of Real Estate, 5 th Edition 1 Dictionary of Real Estate Appraisal, 2nd Edition, A.I.R.E.A. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 31

33 Description of the Subject Property SUBJECT IDENTIFICATION/ LOCATION The Young-Rainey Star Center Located at the northwest corner of Bryan Dairy and Belcher Roads within unincorporated Pinellas County, Florida. The physical address is 7887 Bryan Dairy Road Largo, Fl PROPERTY OWNER NAME Pinellas County Industrial Development Authority AND ADDRESS 7887 Bryan Dairy Road Suite 120 Largo, Fl LEGAL DESCRIPTION The legal description above was taken from a survey of the subject property prepared by Harry W. Marlow, land surveyor as of December 16, Additionally, a legal description of the overall site was found in a notice of commencement for the property recorded January 15, 2002 in O.R. Book 1788 Page 987 as shown below: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 32

34 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 33

35 A more recent survey was not available. The dimensions from the legal description were checked against the GIS records of Pinellas County and were found to be reasonably accurate, but apparently do not allow for minor right of way acquisitions. Based on deedplot of the individual land leases, the allocations for outparcels and the U.S. Military sublease, as well the Pinellas County Property Appraiser s estimate of the Main Star Center Parcel, we have estimated the total effective property size at acres. This appraisal would be subject to change should a more recent survey indicate a significantly different legal description. PROPERTY INSPECTION The subject property (interior and exterior) of Building 100 was made on February 9, A subsequent inspection of the satellite buildings was made on February 18, The inspections were made by Leslie A. McKeon, MAI and John S. Menard, MAI in the company of chief engineer Dana Riiska. HISTORY (per web site) In 1956, General Electric (GE) constructed the original 161,000 square feet facility, situated on 97+/- acres in the center of Pinellas County, formally known as Bryan s Dairy Farm. GE sold the facility to the Atomic Energy Commission (AEC) in June of In return, GE was awarded a contract to operate the facility for 25 years. The facility became known as the Pinellas Plant. The sole intended use of the facility was to house the engineering, development and manufacturing of components supporting the nation s nuclear weapons program. Out buildings and additions were constructed on the property through the years and the total area contained approximately 750,000 square feet at one time. The AEC was abolished in the 1970s and the Department of Energy (DOE) assumed responsibility for the nuclear weapons program. In 1992, after the end of the Cold War, the DOE formally announced that the Pinellas Plant would be closed in In that same year, GE announced that they no longer would continue on as the prime contractor. The DOE awarded the contract to Martin Marietta. In 1994, Lockheed merged with Martin Marietta and became Lockheed Martin, who continued on as the prime contractor. From 1993 through 1995, the DOE and local public and private entities struggled with decisions to either bulldoze the entire site or to redevelop the facility. The ultimate decision was to renovate and market the existing facility. In March 1995 via OR Book 8939 Page 1357, the United States of America through the Department of Energy quit claimed the Pinellas Plant to the Pinellas County Industry Council (PCIC) for $1. Later, the PCIC was abolished and the property was quit claimed (OR Book Page 163) from Pinellas County to the Pinellas County Industrial Development Authority. The name of the facility was changed to the Pinellas Science, Technology and Research (STAR) Center. The mission of the Star Center was to encourage entrepreneurial effort for emerging technologies. Through the efforts of late Congressman Bill Young and others, The Raytheon Company became the STAR Center s anchor tenant in August 1998 and VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 34

36 currently leases 78% of the total leasable area. The DOE provided substantial monies for the conversion of the property. Starting in 1999, the PCIC leased several individual parcels of land along the north side of the subject property to industrial developer Gary Harrod of Harrod Properties. These parcels have been successfully developed with large, industrial buildings. Star I A and B, Star II, and Star III are under the ownership of HP Star (Harrod Properties). Star IV and Star V (Now identified as Monin and Hit) were developed by Harrod and subsequently sold. The owners of those improvements were also assigned the existing lease agreements. There is also a tower license agreement for a cell tower. These properties contribute income from land leases as well as reimbursement for utilities/capital costs to the property. The U.S. Department of Energy Legacy Management maintains an online Fact Sheet for the Star Center Property. A copy of the Fact Sheet and Program Update for October-December 2014 relating to groundwater cleanup is included within the addenda section of the appraisal. As noted above, the NE site (SCLVP) has received a conditional closure of remediation activities. The WWNA has had remediation, but still indicates evidence of trace contamination. This parcel is being monitored. The Building 100 Area contains two distinct contaminant plumes. These plumes originate beneath Building 100 and extend beyond the property to the south and east. Monitoring conducted in 2013 and 2014 indicated that these plumes were unstable. Included within the appraisal is an aerial showing the approximate areas of the NE Site, Building 100 Site, and the Wastewater Neutralization Area (WWNA). At present, Building 100 is undergoing enhanced bioremediation. Details relating to these activities are included within the program update within the addenda. Overall, this is a long term remediation project that is funded by the Department of Energy and monitored by an on-site DOE contractor (SM Stoller Corporation). According to the Stoller representative, the contamination is contained below the level of the existing ponds and poses no threat to public safety as long as the Building 100 remains in place and there is no unmonitored development of the property. This appraisal assumes that the current bioremediation program will continue (with monitoring) and that the existing use of the property will continue for the foreseeable future with potential for future redevelopment in accordance with proposed restrictive covenants. To our knowledge, there have been no further transfers of the property. The property has recently been declared surplus property by Pinellas County. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 35

37 Description of the Site Area, Shape & Dimensions: Frontages: Ingress/Egress/Access: Topography: Per the previously referenced survey of the total subject property, a deed plot (with minor closure error) is included below indicating an overall site size of acres. For the purpose of the appraisal we have utilized a total of size of 96.4 acres that considers deedplots from land leases, allocated outparcels, and the Raytheon sublease property to the U.S. Military. Note that there was a recent road improvement project that required a temporary construction easement from the subject property. This TCE has since been terminated. We were not provided with any title work relating to any property acquired in fee for the project. The subject property has approximately 1,351 feet of frontage along the north side of Bryan Dairy Road. Bryan Dairy Road is a multi-lane, divided roadway with signalized turning lanes at the intersection with Belcher Road. There is also a signal along Bryan Dairy Road at the main entry point into the Star Center. The site also has 1,930 feet of frontage along the west side of Belcher Road. At this intersection, Belcher Road is a median divided, multi-lane lane signalized intersection with dedicated turn lanes. There are sidewalks, curb/gutter and streetlights along both Bryan Dairy and Belcher Roads. Additionally, the subject site contains right of way for 114 th Avenue North, an asphalt paved private roadway that runs westerly from Belcher Road through the northerly portion of the site, providing access to both the Main Star Center Parcel as well as the existing land lease properties. There is a traffic signal at the intersection of Belcher Road and 114 th Avenue. There is also access via easement from 118 th Avenue to the north. An active CSX rail line runs diagonally along the western boundary of the property. At this time, there are no active spurs at the subject property. Vehicular ingress/egress to the Main Star Center Parcel is via two dedicated driveways along Bryan Dairy Road, one with signal. There are median openings along this area to permit ingress/egress from both east and west bound traffic, with a traffic signal at the easterly driveway. Currently, the only access from Belcher Road is via 114 th Avenue North (signalized) toward the northerly portion of the property. According to the Pinellas County Public Works Department, there is some potential for an additional right in, right out access point along Belcher Road which would service a future outparcel (SCCCP site). The Hit Property (land lease) further obtained an easement which provides access to the property from 118 th Avenue to the north. Appears to be level, upland and useable (see the Photographs). VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 36

38 Flood Zone: According to the FEMA Flood Insurance Rate Maps for the subject area, the subject property is located on four separate flood zone panels identified as 12103C0119G, 12103C138G, 12103C0182G, and 12103C0201H. Our best interpretation of the available maps indicates that the subject property is located within Flood Zone X, an area of minimal flooding. Drainage: The subject property is served by a comprehensive ground water control system under a master drainage plan. All site run-off is diverted to six on-site ponds. The ponds are inspected annually for algae and have control collection boxes for silt. No pond dredging is necessary. Soil Characteristics: Comprehensive soil analysis and environmental reports are available in file and within County records. With the exception of noted reported contaminants, the soil is assumed to be adequate to support industrial use. Utilities: The subject property is connected to Pinellas County Public Water and Sewer. Water is available from existing lines along both Bryan Dairy and Belcher Roads. Sub-meters are provided for land lease parcels Star I-IV. Star V (now Monin and Hit) reportedly has its own service. In addition to Pinellas County Sanitary Sewer Service, the subject property also contains an on-site Industrial Wastewater Neutralization Facility (IWNF). This facility cleans (PH balances) wastewater created by processing at the facility and then sends it to the sanitary sewer system where it is mixed with the overall sewage and sent to the County Wastewater System. This IWNF is maintained by Pinellas County and monitored by S.M. Stoller Corporation as a DOE contractor. Included on site is an easement for an existing Duke Energy substation. This substation is located along the west-central portion of the property butting up to the CSX rail line. According to the Star Center chief engineer, this substation provides 69 Kilovolts of Power accessed via dual underground feeds into the property. The subject property has its own fire pumps and an on-site 500 gallon water tank for the wet fire sprinkler system that is monitored by Pinellas County. Pinellas County is the secondary water source for the fire sprinkler system. Operation/Maintenance for the fire sprinkler system is billed to the land lease parcels on a pro-rata basis. Police protection is by the Pinellas County Sheriff s Department. Garbage Collection is also through Pinellas County. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 37

39 Environmental Factors: See transmittal letter, extraordinary assumptions and last deed of conveyance (addenda) for detail relating to status of environmental contamination. The areas that are proposed to be encumbered by pending Declaration of Restrictive Covenant are shown below. This graphic was prepared by the appraisers based on legal descriptions attached to the DOE letter to Paul Sacco dated June 24, According to these descriptions the NE site contains approximately 5.09 acres, the Bldg. 100 site contains 17.9 acres, and the WWNA site contains approximately 2.59 acres. Note that the subject property is designated as a Brownsfield site. As such, the DOE and the Florida Department of Environmental Protection are committed to encouraging redevelop of the property in accordance with Brownsfield incentives such as business tax incentives, job creation tax credits, and loan guarantees. In Pinellas County, this makes the site eligible for certain financial and development incentives associates with cleanup of the property. Due to the governmental ownership of the subject property and the obligation of DOE for monitoring and cleanup activities on the property into the foreseeable future, the impact of the Brownsfield designation would apply to the property under the ownership of a private (non-government) user or investor. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 38

40 Easements/Encroachments Restrictions: LAND USE PLAN Per the deed of conveyance from the DOE to Pinellas County, the DOE retains an easement for access and for other work which may be required for response or corrective action found necessary by the existing environmental contamination. Additionally we understand that the site has existing restrictive covenants and additional pending covenants which potentially impact use of the property. These restrictions are discussed in detail in a later section of the appraisal. However, the most significant impact appears to affect the ability to alter, modify or expand existing stormwater retention facilities. Industrial Limited (IL), Pinellas County It is the purpose of this category to depict those areas of the County that are now developed, or appropriate to be developed, in a limited industrial manner; and so encourage the reservation and use of consolidated areas for industrial use in a manner and location consistent with surrounding use, transportation facilities, and natural resource characteristics. Primary uses include research/development; light manufacturing/assembly; light manufacturing/assembly (Class A), wholesale/distribution; storage/warehouse. Secondary uses include office, retail commercial, personal service/office support, commercial/business service; transient accommodations within permanent structures, institutional, transportation/utility. Compatible zonings include M-1, C-3, IPD and C-T Overlay. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 39

41 ZONING M-1, Light Manufacturing The M-1, light industrial and industry district will provide areas for light manufacturing, industry, industrial support facilities, and certain public service functions. It is intended that this district will provide low intensity general industrial development which will have minimal impact on the surrounding areas. This district differs from the next lower industrial district (IDP) in that a more broad range of uses is permitted. In general, light industrial and professional office uses are permitted. Minimum lot area is 12,000 square feet. Permitted Uses include the following: Light manufacturing and industry, except concrete and asphalt products and processing of fiberglass products, Food processing, Ice plants, Machine shops, Bottling plants, Tobacco processing, Heavy equipment repair, Shops, offices and storage for contractors, Storage of products manufactured on site, Wholesale bakeries, Lumberyards, including truss plants and similar operations, Solid waste management facilities which are operated from within completely enclosed buildings, Business services, Carpet cleaning plants, Retail commercial uses shall be allowed only as accessory uses, located on the parcel to which such use is accessory, and shall not exceed 25 percent of the floor area of the principal use to which it is accessory, Wholesaling, distributing and warehousing, Research and development centers, Wholesale storage of gasoline, liquefied petroleum gas, oil or other flammable liquids or gases, Crematoriums, Dairying, including maintaining and raising of cattle, milk bottling and processing, Government buildings, Marinas, full service; Professional offices, Public or private utility rights-of-way or substations, Radio and television transmitting stations, Recreation areas such as parks, tennis and basketball courts, jogging trails, picnic areas and similar outdoor recreation facilities, Accessory dwellings, and such other uses that would be similar to those listed in this section and which would be consistent with the definition of this district. Additional special exception and conditional uses may also be permitted. According to Pinellas County, accessory retail use for the subject property may be subject to interpretation but it would unlikely that a use would be permitted that was perceived to primarily serve the general public. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 40

42 SURROUNDING PROPERTIES North- Industrial South- Vacant M-1 Site (City of Pinellas Park-planned for a freestanding commercial bank branch). Existing office/warehouse. East- Pinellas County School Board Facility/Industrial/Flex Complex West- CSX rail line/industrial SUMMARY Large, corner industrial parcel with mid-county location at the corner of two arterials with adequate public services. Major factor affecting the site is existing environmental contamination. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 41

43 Description of Land Lease Parcels: For purposes of this restricted appraisal, seven parcels of leased land are considered separately (Star I A & B, Star II, Star III, Star IV, Monin Land Lease and Hit Land Lease). The overall characteristics such as flood zone, zoning, land use, that apply to the overall site generally apply to the land lease parcels as well. An aerial, legal description and deed plot of each land lease parcel follows. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 42

44 STAR IA: th Avenue North 65 year ground lease with 2 ten year options commencing 10/1/2000 Triple net, including reimbursement for utilities Currently improved with 80,000 square foot industrial building VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 43

45 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 44

46 STAR IB: th Avenue North 65 year ground lease with 2 ten year options commencing 5/17/99 Triple net, including reimbursement for utilities Currently improved with a 26,370 square foot industrial building VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 45

47 *lease description lesses out small area for cell tower of 4,600 square feet for net area of 2.7 acres. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 46

48 STAR II: TH Avenue North 65 year ground lease with 2 ten year options commencing 9/26/2000 Triple net lease, with reimbursement for utilities Currently improved with 45,000 square foot industrial building VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 47

49 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 48

50 38(S) 192(S) 34(S) 610(S) BELCHER RD The Young-Rainey Star Center Property STAR III: TH Avenue North* 65 year ground lease with 2 ten year options commencing 10/1/99, amended in 2002 to include supporting parking area. Triple net, including reimbursement for utilities Currently improved with two industrial bldgs. Totaling 22,660 square feet / A C (C) BELCHER RD /012 14/ TH AVE N TH AVE N /01 *Property Appraiser aerial does not show amended parcel. This aerial was sketched using Pinellas County GIS. 23 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 49

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52 STAR IV: th Avenue North Ground lease executed 11/25/2003 to include acres, 65 years term with 2 ten year options. Amended 10/6/2006 to assign lease to EJB Star IV, LLC. All other elements of lease are still in effect. Lease has been prepaid to November 24, Triple net, including reimbursement for utilities. Currently improved with one industrial building totaling 151,810 square feet. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 51

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54 STAR V: th Avenue (Hit Land Lease) Original ground lease covered acres commencing 10/1/ year ground lease with 2 ten year options to renew. Amended 6/24/08 to exclude south portion of property. Pre-paid through 7/9/ Improved with 50,000 square foot, industrial building. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 53

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57 STAR V: th Avenue North (Monin Land Lease) Original 65 year ground lease with 2 ten year options on 8/19/09 Lease amended in 6/16/2010 assigning lessee from HP Star V, LLLP to Hit Promotional Products. Improved with 50,000 square foot, industrial. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 56

58 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 57

59 192(S) 34(S) 610(S) ELCHER RD The Young-Rainey Star Center Property Additional Outparcels: In addition to the seven land lease parcels, our client has requested that two potential outparcels be identified and valued separately as vacant land. According to Pinellas County Building and Development Review Services, there is sufficient land area to support these outparcels as well as adequate drainage capacity in the overall master drainage plan. No surveys of the sites were provided, the site areas were estimated via Pinellas County GIS mapping. SCLVP: The area of land described by the Department of Energy as the Northeast Site is located at the northeast corner of the overall property, adjoining the existing north pond to the west. This NE site was being actively remediated until late According to Joe Daniel, representative of on-site environmental consultant S.M. Stoller, all remediation activities are complete on this site and the property has received conditional closure by the Florida Department of Environmental Protection (FDEP). Our understanding is that this site contains approximately 5.09 acres and is proposed to be encumbered by Restrictive Covenants that will require the FDEP to monitor any development of the property. Per your request, this parcel has been appraised as a separate, unencumbered parcel with development potential. For the purpose of valuation, we have estimated the total size of the parcel (to include access area along 114th Avenue) at 6.2 acres to include frontage along 114 th Avenue. We have also assumed that adequate easements would be provided to allow functional use. On the master aerial, this parcel is identified as SCVLP TH AVE N (S) (S) (S) (S) / BELCHER RD A C (C) /012 14/ TH AVE N BELCHER RD TH AVE N VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 58

60 SCCCP-The second outparcel is identified as SCCCP, a 4.23+/- acre tract located along the Belcher Road Frontage that is currently improved with modular improvements. Per our agreement, this parcel is appraised as if vacant and unencumbered. Per the U.S. Department of Energy s October-Dec Program Update, a minor portion of the southwest portion of this site is included within the contamination plume that runs east from Bldg. 100 to Belcher Road. This small area at the southwest corner of the parcel will be included within the Building 100 Restrictive Covenant area that is undergoing enhanced bioremediation. According Pinellas County Public Works, there is the potential for right in, right out access to this site from Belcher Road, as well as existing access from 114 th Avenue North. This site size is estimated at 4.23 acres and identified as SCCCP. 114TH AVE N BELCHE BELCHER RD 114TH AVE N 117TH AV SCCCP VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 59

61 SCIP-Last, we must deduct the SCIP parcel that is subleased to the U.S. Military from Raytheon. This parcel contains 2.5 acres and is considered part of the Main Star Center Parcel and part of the Raytheon Lease. 114TH AVE N VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 60

62 MAIN STAR CENTER PROPERTY: The following aerial depicts the Pinellas County Property Appraiser s estimate of the Main Star Center Property at acres. For the purpose of the appraisal, the effective Net Star Center Site size is allocated as follows: Total Acreage 96.4 Less: Land Lease Parcels* Less: Outparcels Main Star Center Parcel *net of cell tower VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 61

63 Description of the Improvements The Main Star Center parcel (58.36 acres) is improved with one major building (Building 100) as well as several satellite buildings located to the west and north. Included below is a graphic of the property indicating the general location of the buildings and the dates of initial construction and additions. Buildings 900, Building 1000, Building 1040 and Building 1100 have been demolished. Building 1200 became part of Star I Building and Building 1400 is now a part of Star III. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 62

64 The drawing below indicates the approximate layout of the Satellite Buildings in relation to the Building 100 (primarily leased by Raytheon). An aerial view indicating the relevant building numbers is shown below: 114TH AVE N TH AVE N BELCHER RD Substation Building 100 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 63

65 LAYOUT OF STAR CENTER PROPERTY WITH PONDS Star IV Star II SCLVP Monin/Hit Star IB Star IA SCIP Satellite Buildings Star III SCCCP Utility Substation Bldg. 100 SCCCP VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 64

66 OVERVIEW: As shown in the aerial photograph, sketches and layout above, the Main Star Center building is located along the Bryan Dairy Road and Belcher Road frontage with the satellite buildings located to the north and west. The property has been renovated from a defense manufacturing facility to a quasi-governmentalcommercial technology center. At present, the majority of the space has been leased to Raytheon, a local defense contractor. The majority of the Raytheon space is located in Building 100. It is our understanding that Raytheon paid for the majority of the tenant improvements/renovations on their existing lease area. Other spaces are leased by offices/technology companies. The Star Center paid for the renovation to these spaces. The Young Rainey STAR Center was intended to encourage the development of economic/technology. Until recently, Building 200 and a part of the Main Star Center Building were leased for $1 per year to start up technology companies and are identified as incubator space for emerging technologies. In an effort to consolidate and provide more cohesive facilities, the incubator was recently relocated to downtown St. Petersburg. While Pinellas County is still obligated to support this program, this expense is reportedly no longer specifically tied to the Star Center. The total amount of building area in the Main Star Center Property is reported by Star Center Management to be 661,697 square feet. As will be noted within the discussion below, several minor support buildings are not included within this total. The 661,697 square feet includes modular buildings 1500 and 1600 that contain a total of 12,798 square feet. For the purpose of the appraisal, the land supporting the two modular buildings (SCCCP) is being considered as vacant; therefore the two buildings have been excluded from the total building areas for a net of 648,899 square feet. Management reports 1,414 surface parking spaces scattered around the site indicating a ratio of 2.18 spaces per 1,000 square feet of overall industrial space. The property FAR (Floor Area Ratio) for the reported acreage associated with the Main Star Center Buildings is.27. Maximum FAR under current zoning is.6. According to Pinellas County Zoning and Site Plan Review Divisions, is appears that there is ample land to support the existing improvements with apparent room for building additions or break-out parcels. The allocation of the total area of the buildings is estimated based on the best information available as follows: Building Allocation 100 Main Star Center Parcel 587,060 Building ,029 Building 400 Raytheon (sublease) + tower 15,405 Building 500 Engineering/Control Room 18,229 Building 550 (Industrial Waste Neutralization) 339 Building 600 Storage 3,339 Building 700 Tractor Shed 4,867 Building 800 Precision Circuit Solutions 3,631 Buildings Total 648,899 Note that the allocation may not include the total building size of Building 600, and does not include minor buildings 710, 910, 920 and 1225 which are all considered as common area but not included in overall area calculations. The overall property is serviced by significant infrastructure. In addition to the retention pond system discussed in the Site Description Section, improvements include a Central Energy Plant, Master Fire Water VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 65

67 Sprinkler System with 500 gallon tank and two pumps, Sanitary Sewer System with 7 lift stations throughout the property, Industrial Waste Neutralization Facility tied to chemical lift stations, etc. Central Energy System The utility substation housed on the existing utility easement is fed from two off site Progress Energy substations (Cross Bayou and Largo) which provide 69KV to the on-site substation. According to the project engineer, there are two 10,000 KVA transformers owned by the Star Center that provide power to the property. Primary voltage is KV, 3 Phase. The annual operating cost of this equipment is $15,000 with a recurring cost of $75,000 every three years. The substation feeds the Central Energy Plant generally located in Building 500. Emergency electrical power is available via generators. Substation The Fire Protection System provides for all buildings (including Star Center Lease Properties) being 100% sprinklered (wet system). There is a 500,000 gallon on-site tank with back up (redundancy system) from Pinellas County Water. The system utilizes diesel driven fire pumps with jockey pump to maintain necessary pressure. There is a dedicated 2000 diesel fuel tank to supply this system. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 66

68 WWNA The Wastewater Neutralization Area surrounding Building 550 cleans wastewater created by the processing of chemicals (acids and alkalines) from the Star Center (not sewage) and sends the clean wastewater to the Sanitary Sewer System, where it is mixed with the regular Sewer and sent to the Pinellas County Wastewater System. This facility operates under a Regulatory Discharge Permit as administered by on-site tenant SM Stoller. There are various other systems for gaseous hydrogen, gaseous oxygen, gaseous nitrogen, liquid nitrogen, gaseous argon, etc. Items of this type are considered personal property. Note that during our physical inspection of the property, our cameras were not permitted in the Raytheon Areas. The balance of the inspection of Building 100 took place subsequent to the Raytheon tour and therefore there are limited interior photographs. Some of the following photographs were taken during our 2012 inspection. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 67

69 Building 100-Main Star Center Building Photographs Bryan Dairy Road Frontage- Bldg. 100 Looking West Front View West Side of Bldg. 100 West Side of Building 100- Raytheon Space One of Four Elevators Located Along Building 100 Front Common Area Conference Room Star Center Training Room VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 68

70 Typical Renovated Restroom Space Typical Hallway Freight Elevator Typical Mechanical Room Conference Room-Tax Collector (2012) Common Area-Former Tampa Bay Innovation (2012) VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 69

71 Typical Transmission Room (2012) Typical Unrenovated Area (2012) Cafeteria Food Service Area Cafeteria Dining Area Star Center Lobby VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 70

72 Building 100 Description: Based on provided leases, rent rolls, building layouts, and information obtained from engineering and management, the current use of Building 100 is allocated as follows: Summary of Building 100 Leased Area 479,398 Common Area 26,585 Tenant Support Area 24,115 Unleased Area 56,962 Total Bldg. 100 Area 587,060 Presently, Raytheon leases 430,025 square feet of space in Building 100 or approximately 80% of the total leasable area in the building. Raytheon occupies most of the west and central portions of the building. Constellation Technologies occupies 26,846 square feet on the east end of the ground level of Building 100 which is built out for research/production while the Pinellas County Tax Collector occupies the southeast corner of the second floor including 9,249 square feet of office space. Miscellaneous small tenants are generally located in the former Tampa Bay Innovation Area. Star Center Management and Common Area are located along the building frontage. The appraisers were unable to verify the percentage of buildout associated with office, research & development, manufacturing, storage, etc. On a broad brush basis, we have estimated that approximately 200,000 square feet of the leased area is office space with the balance being laboratory/manufacturing/warehouse space. The building approaches 100% HVAC and sprinklered. A portion of the unleased area on the second level is considered functionally obsolete due to limited access. According to the provided plant growth graphic, Building 100 was generally constructed between 1957 and The building has basic construction of reinforced concrete slab foundation and load bearing concrete block walls which support the mezzanine and roof areas. The ground level consists of poured concrete slab built on a concrete foundation and column footings. The mezzanine areas have light weight concrete floors supported by steel joists with the roof consisting of metal decking with composition (built up) covering. Reportedly, Raytheon recently switched lease areas out between a mezzanine area and a ground level storage area because the mezzanine area could not support the weight of their proposed use. Along the Bryan Dairy Road building frontage is a covered metal walkway that connects four stairway/elevator towers for outside access to the second floor. There is a central lobby area with administrative offices, restrooms, conference rooms, lecture galleries, etc. located along the building frontage. The lobby and tenant support areas have typical institutional finish with vinyl tile flooring, upgraded drop acoustical ceiling grids with florescent fixtures, painted drywall, and standard 8-10 foot ceiling heights. Some offices and conference rooms are upgraded. One internal elevator was noted in this area. The front portion of the building generally contains two traditional floors of average quality office space. The frontage portion of the east end of the building has the Constellation Technology space on the ground level and office space for the Pinellas County Tax Assessor on the second level. The Tax Assessor is traditional office space finish with adequate restrooms, large break room and computer room. Also on the second level is the former office space supporting Tampa Bay Innovation (Star Tec support) and office VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 71

73 space for CVS. Both these areas are currently vacant and available for lease. It should be noted that the CVS office space is dated with very narrow hallways and would require significant renovation to lease. Scattered throughout the building/mezzanine areas are electric distribution rooms, mechanical rooms, computer clean rooms, breakrooms, restrooms, etc. There are 3-4 mezzanine equipment rooms. The building has several freight elevators that have utility access shafts used to replace equipment in these areas. We were unable to photograph the Raytheon space. However, most of the non-office area was open ceiling area with suspended LED lighting, central bus duct electric distribution system through the ceiling, 30 foot ceiling height, industrial grade finish suitable for research or production/manufacturing of high technology equipment. Electric service 480V, 3 phase systems distributed through main bus ducts. Office space build out is typical with ceiling heights varying and typical cubicle layouts with some private offices. Restrooms and support areas are adequate, including a health/fitness area with showers. Building 100 also includes a common area full service cafeteria with adequate seating areas. Smaller break areas are scattered throughout the building. There are two dock areas with truck well and load levelers along the north end of the building. Raytheon has a covered dock on the west side while there is an open dock along the east side. In summary, the Raytheon Space and other specifically demised tenant spaces are assumed to be in average or better condition with reasonable efficiency for the intended tenant use. Those leasable spaces which are not currently occupied are generally in below average condition and not necessarily functional for tenant use. Nuisances such as poor/limited access and limited ceiling height limit the potential for leasing these spaces at market rates. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 72

74 Building 200-Former Star Tec/Tampa Bay Innovation Building Photographs Exterior View- Bldg. 200 Bldg. 200 Typical Research Area Typical Restroom Area Break Area Common Area Conference Room Unrenovated Area VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 73

75 Building 200 is a freestanding masonry building containing 16,029 square feet. Construction is poured concrete foundation walls and column footings with concrete slab, concrete block and precast concrete panel exterior walls, flat metal deck with built up roofing, central zoned HVAC system, fully sprinklered. The building was constructed between 1959 and 1988 and was originally used for the testing of warhead components. Reportedly, the building was gutted and substantially renovated approximately 8-10 years ago, with the exception of the bunker used for testing. Until recently, the building was utilized as part of the entrepreneurial program associated with the Star Center for entrepreneurial technology. This program was recently moved to downtown St. Petersburg. A small portion of the building is leased on a short term basis, but the current layout with small tech spaces and substantial common area is somewhat dysfunctional for typical tenants. The area has typical office/industrial finish as well as restrooms/breakroom with kitchen. One older half- bath, one renovated common restroom area. The building is considered to be in average condition. Building 400- Former Thermo Electric Facility. Building 400. Exterior View- Bldg. 200 Lobby Area Typical Restroom Area Break Area Building 400 is currently included in Raytheon Lease and subleased to U.S. Military. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 74

76 The appraisers were permitted to inspect all but the classroom portion of this building. According to Star Center Management, the building contains a total of 15,405 square feet, although a building layout available at inspection showed a slightly smaller area of 15,314 square feet. The Raytheon lease (U.S. Military sublease) is for 14,085 square feet of the building which excludes the attached 4 story security tower and some storage. The building was reportedly constructed between 1968 and Construction is poured concrete foundation walls and column footings with concrete slab, concrete block exterior walls, flat metal deck with built up roofing, central zoned HVAC system, fully sprinklered. Approximately ceiling height reported at 14 feet. The building contains approximately 2,419 square feet of lobby/office area, 2,347 square feet of classroom space, 3,304 square feet of maintenance area serviced by two overhead doors, and 7,244 square feet of storage/shipping area to include the tower. Ceramic tile and carpet in foyer, lay-in drop ceiling panels with florescent lighting. Production/maintenance area has painted concrete flooring, painted block walks, and exposed ceiling joists. The building also contains a former vault area and clean room. The building was substantially renovated in and is in good condition with good functional utility for office/production/maintenance use. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 75

77 Building 500- Central Energy Plant (Utility Building) Rear View of Building 500 Adjoining Cooling Towers Interior View- Utility Bldg. (2012) Control Room (2012) Building 500 was constructed between 1964 and 1991 and is used to house the main control room, offices, machine shop, welding shop, switch gear and equipment such as the HVAC system for the facility. This building is considered as tenant support area. Construction is poured concrete foundation walls and column footings with concrete slab, concrete block exterior walls, flat metal deck with built up roofing, zoned HVAC system in finished areas. Fully sprinklered. Ceiling height is approximately 24 feet. Cooling Towers and related equipment are to the east of the building. This is a chilled water/hot water loop system with primary pumps for pump looping and 5 chillers (4 active/centrifugal) with supporting pumps. Four of the chillers are 900 tons and one is 550 ton capacity. The chillers are being replaced periodically and have been accounted for in the capital improvement program. Outside the building are 5 cell cooling towers and associated pumps. There are two boilers with 4 total pumps. Also included in this area are compressed air tanks and diesel fueling stations. Planned replacement of all major equipment items are included in the CIP report included within file. The building is considered to be in average condition. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 76

78 Building 550- Control Room for Industrial Waste Neutralization Area Facility Small 339 square foot concrete block building used as a control room for the IWMF. The overall IWNF plant was constructed in 1986 and modified in August Construction date for control building is unknown. The building is considered to be in average condition. Building 600- Former Hazardous Storage Material Building. A portion of this building is leased to Raytheon and they have reportedly subleased a portion of the building to Haas. Currently used for storage (Star Center) and Machine Shop. Fully grounded with explosion proof electrical system for previous use. Exterior View Typical Interior View (2012) Building 600 was constructed in 1980 and reportedly contains approximately 7,000 square feet. However, Star Center Management only identifies 3,339 square feet of this building specifically on their overall square footage report. This area is leased to Raytheon. The balance is considered as common support area. Similar to other satellite buildings, the construction is poured concrete foundation walls and column footings with concrete slab, concrete block exterior walls, flat metal deck with built up roofing. Approximate 18 foot ceiling height. The building is divided into four separate bays with an overhead door at the end of each bay. The entire building has HVAC and is fully sprinklered. The building is considered to be in average condition. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 77

79 Building 700- Former Vehicle/Fire Maintenance Building Exterior View Janus Lease Area Typical Area Star Center Storage Building 700 was constructed from and contains a total of 4,867 square feet. Janus Technologies currently leases 2,980 square feet of this building which is used to service vehicles associated with Raytheon. The Star Center uses part of the building for storage. Construction is poured concrete foundation walls and column footings with concrete slab, concrete block exterior walls, flat metal deck with built up roofing. Shed type sloped ceiling with clear height from feet. The building has no HVAC, but has large fans for circulation and supplemental electric heat. Four overhead service doors are located along the building front. There is a wet sprinkler system. The building is considered to be in average condition. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 78

80 Building 800- Precision Circuit Solutions Typical Interior Buildout Exterior View Building 800 was built between 1973 and 1987 and contains a total of 3,631 square feet. At present, 2,584 square feet is leased to a technology company manufacturing semi-conductors. Construction is poured concrete foundation walls and column footings with concrete slab, concrete block exterior walls, flat metal deck with built up roofing. Ceiling height is feet. The building is fully HVAC with a wet sprinkler system. The interior finishes include asphalt tile flooring, lay-in acoustical ceiling tile ceiling panels with florescent lighting, and painted block walls. Unleased space is in need of renovation. The building is considered to be in average condition. Building 910- Former Fire Pump Bldg. Used for Storage. Minor concrete building located next to utility building. Not included on Star Center square footage report. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 79

81 Building 920- Fire Pump Building Exterior View Interior View (2012) Minor concrete block building located next to 500 gallon water tank on west side of property. Not included in Star Center square footage report. Contains two pumps. Building North Gate Security- Raytheon Security Department Minor concrete block building located north of utility building. Not included in Star Center square footage report. Site Improvements: Site improvements consist of extensive pavement utilized for parking and driveway areas; lighting system, ponds, sprinkler system, and dedicated monument signage. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 80

82 Parking Area at East End of Property Modular Buildings 1500/1600- Not included Monument Sign Covered Walk along Bldg. 100 Front Main Entry Area from Bryan Dairy Road Star Center Dock Area (East) VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 81

83 Looking South along Belcher Road Bryan Dairy Road Looking West from Belcher Road Bryan Dairy Road Looking East from Belcher Road Looking South Along Belcher Road at Bryan Dairy VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 82

84 Summary: Summary of Total Star Center Bldg. 100 Satellite Total Percent Leased Area 479,398 26, , % Common Area 26,585 1,582 28, % Tenant Support Area 24,115 21,775 45, % Unleased Area 56,962 11,596 68, % Totals 587,060 61, , % Building Allocation 100 Main Star Center Parcel 587,060 Building ,029 Building 400 Raytheon (sublease) + tower 15,405 Building 500 Engineering/Control Room 18,229 Building 550 (Industrial Waste Neutralization) 339 Building 600 Storage 3,339 Building 700 Tractor Shed 4,867 Building 800 Precision Circuit Solutions 3,631 Buildings Total 648,899 Total Star Center Leasable Area Bldg. 100 Satellite Total Percent Leased Area 479,398 26, , % Unleased Area 56,962 11,596 68, % Totals 536,360 38, , % The improvements located on the acre Main Star Center Parcel reflect a dated defense manufacturing facility that has been retrofitted for use as a commercial technology center. On a physical basis, the renovated portions of the property are generally in above average to average condition and functional while most of the unleased area either require significant renovation and/or have limited appeal to the market. Based on the nature of the improvements as a retrofit property with high common/support area percentages and redundant infrastructure, the overall facility exhibits functional obsolescence compared to contemporary, efficient construction. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 83

85 Highest and Best Use The 5 th Edition of the Dictionary of Real Estate published by the Appraisal Institute defines Highest and Best Use as follows: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use analysis must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. In determining the highest and best use, there are four basic stages of analysis: 1. Possible Uses: Uses which are physically possible considering the physical characteristics of the site. 2. Legally Permissible Uses: Uses that the present public and private restrictions (e.g., zoning regulations and deed restrictions) permit. 3. Feasible Uses: Uses from among the possible and permissible uses which will provide a net positive return on the site. 4. Highest and Best Use: That use from among all feasible uses which provides the highest net return on the site. In an analysis of the highest and best use of the subject property, the highest and best use of the site as vacant must first be considered. The highest and best use of the property as improved may be determined using the former as a guide in the analysis. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 84

86 Discussion of Highest and Best Use The subject property is being appraised in several specific parts. Part I is the appraisal of the land lease parcels located along the northerly portion of the property. These parcels are all improved with relatively new, large industrial facilities that are generally occupied, functional, and consistent with current zoning and land use designations. For the purposes of the appraisal, we have assumed that these land lease parcels have a highest and best use for industrial use. Part II is the appraisal of two potential outparcels consisting of the 6.2 acres located at the northeast corner of the property and the 4.23 acre parcel (SCCPC) that currently house the modular buildings. This site is being appraised as if vacant. Part III is the appraisal of the Main Star Center Parcel containing acres improved with 648,899 square feet of building area. Part IV is the allocation of the value to the SCIP parcel (Raytheon sub-lease to the U.S. Military). This is an existing industrial property which is surrounded by various industrial buildings. Again, for the purposes of the appraisal, we have assumed that this parcel (as vacant) has a highest and best use for industrial development in conjunction with the balance of the Main Star Center property. The property has recently been renovated, and is considered functional and in good condition. Included below is a detailed highest and best use discussion for Parts II and III. See separate discussion of Environmental Factors in the last section of the appraisal. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 85

87 AS VACANT Physical: Part II- Two Potential Outparcels as Vacant This portion of the appraisal includes the physical discussion of two potential outparcels of land located along the easterly border of the Young-Rainey Star Center property. SCVLP- The area of land described by the Department of Energy as the Northeast Site is located at the northeast corner of the overall property, adjoining the existing north pond to the west. This NE site was being actively remediated until late According to Joe Daniel, representative of on-site environmental consultant S.M. Stoller, all remediation activities are complete on this site and the property has received conditional closure by the Florida Department of Environmental Protection (FDEP). Our understanding is that this site contains approximately 5.09 acres and is proposed to be encumbered by Restrictive Covenants that will require the FDEP to monitor any development of the property. Per your request, this parcel has been appraised as a separate, unencumbered parcel with development potential. For the purpose of valuation, we have estimated the total size of the parcel (to include access area along 114th Avenue) at 6.2 acres to include frontage along 114 th Avenue. We have also assumed that adequate easements would be provided to allow functional use. The majority of the property is upland and level, is located in a nonflood prone area and is assumed to be adequately drained. All necessary utilities and services are available and adequate. See separate section for discussion of environmental factors. The subject property has generally good location and physical characteristics for development within a mid county area with adequate visibility from a heavily traveled corridor. The immediate neighborhood is dominated by major corporate/office parks, hospitals and research centers, as well as traditional industrial and manufacturing uses. The immediate adjoining uses are industrial in nature. On a physical basis, there appear to be no undue development limitations, with the exception that pending restrictive covenants require that FDEP monitor (approve) any development activities on the site. SCCCP- The second outparcel is identified as SCCCP, a 4.23+/- acre tract located along the Belcher Road Frontage that is currently improved with modular improvements. Per our agreement, this parcel is appraised as if vacant and unencumbered. Per the U.S. Department of Energy s October-Dec Program Update, a minor portion of the southwest portion of this site is included within the VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 86

88 contamination plume that runs east from Bldg. 100 to Belcher Road. This small area at the southwest corner of the parcel will be included within the Building 100 Restrictive Covenant area that is undergoing enhanced bioremediation. According Pinellas County Public Works, there is the potential for right in, right out access to this site from Belcher Road, as well as existing access from 114th Avenue North. 114 th Avenue North is a private road running through the northerly portion of the Star Center property to provide ingress/egress to several industrial parcels. Belcher Road is a major north/south divided roadway. This is a signalized intersection. As noted in the earlier description of the site section, this site is rectangular in shape and is estimated to contain 4.23 acres. The site has good frontage and visibility along Belcher Road as well as 114 th Avenue North. This appraisal assumes that adequate access could be obtained from 114 th Avenue North or via other easements to support independent development of the property. The site is upland and level, is located in a non-flood prone area and is assumed to be adequately drained. All necessary utilities and services are available and adequate. The subject property has generally good location and physical characteristics for development within a mid county area with good frontage and visibility from a heavily traveled corridor. The immediate neighborhood is dominated by major corporate/office parks, hospitals and research centers, as well as traditional industrial and manufacturing uses. The immediate adjoining uses are industrial in nature. On a physical basis, there appear to be no undue development limitations, with the exception of the area encumbered with restrictive covenants pertaining to the existing contaminant plume. Legal: Both of the parcels (SCVLP and SCCCP) are zoned M-1, Light Manufacturing and Industry district within unincorporated Pinellas County with a consistent future land use designation of Light Industrial. The Pinellas County Development Code relating to M-1 zoning is included within the addenda section of the appraisal. The primary intent of this zoning district is to provide for light manufacturing, industry, industrial support facilities, and certain public functions. A number of uses are permitted as detailed within the addenda section. These would include light industrial uses, certain specific more intense industrial uses, as well as professional offices and VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 87

89 government uses. Both of the identified parcels well exceed all minimum site requirements for development. As part of the overall Star Center property, we have contacted Pinellas County Planning, Zoning, and Site Plan Review representatives as to the legal potential for development of these parcels. No definitive answers can be obtained without a formal site plan submission; however, the initial opinion was that adequate land area exists in the overall property to support development of these parcels. The maximum FAR (Floor Area Ratio) under the M-1 zoning is.60. The balance of the Star Center Parcel (excluding these two parcels) indicates an approximate FAR of.28. The total Star Center property (including the land lease parcels as improved), indicates a FAR of.26 Therefore, for the purpose of the appraisal, we have assumed that adequate site area exists to legally permit development of the two parcels. It must be noted that we further assume that adequate drainage capacity is available in the existing drainage structures to support additional development. Feasible: As noted in the neighborhood section of the appraisal, indications from recent activity indicate that the Tampa Bay industrial market is improving, sales activity is from both users and investors, and limited new construction is underway. Based on the subject location at the intersection of two heavily traveled corridors dominated by major corporate/office parks, hospitals and research centers, as well as traditional industrial and manufacturing uses, it is our opinion that the two outparcels have reasonable potential for near term development. HIGHEST AND BEST USE In consideration of the physical, legal, and economic factors summarized above and detailed within the neighborhood analysis, it is our opinion that the two subject outparcels have a highest and best use for near term development in accordance with permissible uses under the M-1 zoning. Again, this opinion assumes adequate drainage capacity and conformance with any existing or pending restrictive covenants. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 88

90 Part III--Main Star Center Parcel containing acres AS VACANT Physical: This portion of the appraisal includes the physical discussion of the Main Star Center parcel, net of the two potential outparcels discussed above but including the SCIP parcel which is subleased to the U.S. Military. As noted in the description of the site section, the net Main Star Center Parcel is located at the northwest corner of Bryan Dairy and Belcher Roads. The west boundary of the site is the CSX rail line. There are no rail spurs to the subject property as this time. The parcel is irregular in shape and contains a total of acres, including an easement for an existing Progress Energy Substation along the westerly boundary of the property. The property has significant frontage along Bryan Dairy Road, Belcher Road and 114th Avenue North. Bryan Dairy Road and Belcher Road are both major divided roadways that carry high traffic volume. There is signalized access to the Star Center from both Bryan Dairy and Belcher Road. 114th Avenue North is a private run running through the northerly portion of the Star Center property to provide ingress/egress to several industrial parcels. Frontage, visibility and access to the site are considered good. The site also has access to 118 th the north via easements across the land lease parcels. The site is generally upland and level, above street grade, located in a non-flood prone area and serviced by an existing drainage system. All necessary utilities and services are available and adequate. As discussed, there are two areas of the Main Star Center Parcel that are considered to contain environmental contamination. These are the area immediately under Bldg 100 (containing approximately 17.9 acres) and the land under the Wastewater Neutralization Facility, containing approximately 2.59 acres. The Building 100 area contains two distinct contaminant plumes that are associated with the prior use property. These plumes originate in the central portion of the site and extend beyond the property to the south and east. According to Pinellas County, these plumes are chemical, not nuclear in nature. The area under the Wastewater Neutralization facility currently has only trace levels of contaminants. Currently, the contaminated areas in the Building 100 area are undergoing enhanced bioremediation. This is a long term process which is being monitored by an on-site DOE contractor. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 89

91 The highest and best use of the subject property as vacant is theoretical since, if the site were vacant, the DOE would be able to aggressively remediate the site, similar to what was done on the NE site. Accordingly, any buyer of the property could most probably proceed with a phased redevelopment of the Main Star Center during remediation. Any redevelopment would be subject to existing or pending Restrictive Covenants which would include FDEP approval and monitoring. Overall, the subject property has generally good location and physical characteristics for development within a mid county area with good frontage and visibility from heavily traveled corridors. The immediate neighborhood is dominated by major corporate/office parks, hospitals and research centers, as well as traditional industrial and manufacturing uses. The immediate adjoining uses are industrial in nature. On a physical basis, there appear to be no undue development limitations, outside of environmental contamination. Legal: The subject site is zoned M-1, Light Manufacturing and Industry district within unincorporated Pinellas County with a consistent future land use designation of Light Industrial. The Pinellas County Development Code relating to M-1 zoning is included within the addenda section of the appraisal. The primary intent of this zoning district is to provide for light manufacturing, industry, industrial support facilities, and certain public functions. A number of uses are permitted as detailed within the addenda section. These would include light industrial uses, certain specific more intense industrial uses, as well as professional offices and government uses. The main Star Center parcel exceeds all minimum site requirements for development. As noted, the land lease parcels located to the north of the main Star Center Parcel have non-exclusive easements from the Main Star Center Parcel for ingress, egress, drainage and utilities and access to the main water, sanitary sewer, storm sewer and utility lines, as well as the right to tie into said lines, reasonably necessary for Lessee s use of the premises. Feasible: According to the Industrial Market Outlook included within the appraisal report, net absorption of industrial space within the Tampa Bay market was a positive 961,345 square feet in Q4 2014, up significantly over prior periods. The increase in net absorption was heavily influenced by tenants moving into large blocks of space. As some tenants moved into larger space, vacant sublease space consequently increased during the same time period. Some industrial market overviews noted that many industrial properties within the VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 90

92 Tampa Bay Area are outdated and reflect functional obsolescence requiring significant upgrading/renovation in order to be marketable. Therefore, while there is space noted as available in the market, tenants and buyers are having difficulty find space that serves current business needs. Based on the subject location at the intersection of two heavily traveled corridors dominated by major corporate/office parks, hospitals and research centers, as well as traditional industrial and manufacturing uses, it is our opinion that subject property, as vacant, would have good potential for near term development as if vacant, as permitted under Restrictive Covenants. HIGHEST AND BEST USE HIGHEST AND BEST USE AS IMPROVED: In consideration of the physical, legal, and economic (feasibility) factors summarized above and detailed within the neighborhood analysis, it is our opinion that the Main Star Center Parcel would have a highest and best use for phased industrial development upon successful completion of bioremediation per restrictive covenants and in accordance with permissible uses under the M-1 zoning. The Main Star Center Parcel is improved with substantial improvements that include significant infrastructure such as master retention system, utility substation with dual feeds into the property, freestanding 500,000 water tank for fire sprinkler system, waste water neutralization facility, central bus-duct electric delivery system throughout main building, freestanding engineering building, etc. These features are expensive to maintain and operate and would be generally considered a superadequacy in the marketplace. Outside of governmental or government contractor use, it is doubtful that the private sector would be willing to support this type of improvement in light of other more efficient alternatives. At present, the subject property s major tenant is Raytheon. Raytheon is a local defense contractor and leases the majority of the leasable area within the facility. Raytheon s most current lease runs through November 30, 2018, with existing five year options running through Raytheon expanded their lease area in 2013 and continues to make significant investment in the facility via tenant improvements. The building is well suited for use by Raytheon due to the unique infrastructure features as noted above that virtually guarantee that the facility could continue to operate barring a catastrophic event. The property location provides a skilled workforce. Lastly, the existing lease calls for rental rates which basically cover the operating costs and a minor reinvestment rate to cover ongoing capital improvements. Assuming no significant additional tenant improvement cost will be required going forward, the Raytheon lease rate is basically paying holding costs of the property. Assuming Raytheon values the superadequacy of the existing improvements, it VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 91

93 is reasonable to assume that the existing lease options would be exercised. If Raytheon chooses not to renew lease options, it is reported that the DOE would strongly prefer locating another major tenant or group of tenants as opposed to demolition of the existing facility. Demolition of the facility would be expensive and would trigger the cleanup of the Building 100 and Wastewater Neutralization areas. Based on information supplied by S.M. Stoller, the success of the bioremediation that is currently in process may take several years to evaluate. Accordingly, if Raytheon does not exercise future options, it is likely that time and expense would be put into marketing the property for alternative tenant(s) rather than demolition for redevelopment which would trigger cleanup. Therefore, while we are somewhat limited in our analysis by lack of communication directly with Raytheon and unknowns relating to the outlook for the defense industry, it is our opinion that the highest and best use of the subject property, as improved, is for continued use under the existing scenario providing for income from existing land leases and income from the Main Star Center building and surrounding outbuildings. This assumes that two parcels (SCLVP and SCCCP) would be available to be sold off or leased as separate parcels for uses permissible under existing zoning and land use designation. Furthermore, it is possible that the demolition of some of the existing satellite buildings could allow for additional development of the main Star Center site. For the purpose of this appraisal, no discount has been made for environmental contamination. This is based on a number of factors, primarily that the site is currently undergoing enhanced bioremediation, supports a substantial industrial building that is leased to a credit tenant, and the DOE ultimately has the responsibility for cleanup. See discussion relating to environmental factors located at the end of the appraisal. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 92

94 Method of Valuation The subject property is being appraised in four parts: 1. Market Value of Land Lease Parcels-land only. Includes analysis of leased fee interest. 2. Market Value of two potential outparcels SCLP and SCCCP- land only- fee simple 3. Market Value of Main Star Center Property and Improvements-fee simple and leased fee 4. Allocation of Value-SCIP Parcel- fee simple and leased fee In valuing Numbers One and Two above, all three approaches to value have been considered with both the Sales Comparison Approach and Income Approaches estimated to be valid approaches to value. The Cost Approach was not considered applicable. Due to the lingering effects of economic/real estate recession, there has been an extremely limited amount of industrial land sale activity as existing improvements are absorbed at discount prices. Presently, there is a perceived shortage in certain market segments and industrial brokers/market participants are beginning limited new construction. However, at present, land sale activity is limited and primarily directed for a specific use. Overall however, we believe there is adequate data to form an estimate of market value. We have utilized the existing income stream from the land leases to allocate any leasehold or leased fee positions via a discounted cash flow analysis (DCF). The valuation of item Number Three above involves the value of the land and existing improvements located on the Main Star Center parcel. Due to the age of the property and the nature as a retrofitted defense manufacturing facility to a commercial technology facility (indicating functional obsolescence), the Cost Approach to Value is not considered applicable. However, the Sales Comparison Approach and Income Approaches to Value are considered valid. Adequate improved sales and rental/expense comparables were available for reasonable comparison to the subject in estimating market value. It should be noted that the leased fee analysis is somewhat limited due to historical non-real estate related expenses that were tied to the current use as a center for public/private economic development incentives for technology. Alternatively, the Income Approach to value utilizes a hybrid model that reflects current contract rents, makes assumptions regarding the renewals of short term leases and somewhat normalizes expenses. The valuation of item Number Four included an estimate of land value via the Sales Comparison Approach and the estimate of the contribution of improvements via the Sales Comparison Approach and Income Approach to Value. Adequate market data was considered available for reasonable comparison. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 93

95 Land Valuation Land Lease Parcels As discussed, the northerly portion of the overall subject property is under separate long term land leases with improvements being owned by the lessee In this area there are a total of eight parcels, however the cell tower lease parcel is considered a license agreement and has not been valued separately. The parcels below will be valued separately as vacant land, both unencumbered and as encumbered by existing lease agreement. The parcels are identified as follows: Pinellas County Property ID Size (ac.) Appraiser Identification Star IA Star IB Star II Star III Star IV Monin Hit 4.18 Totals/Avg The parcels are located on the aerial below. Please note that the tower lease is not valued as an individual land lease parcel. The income from this tower lease is included in the Main Star Center Parcel. The seven identified parcels are interior parcels within an established industrial park setting. In general, the land leases commenced between 1999 and 2005 and were for 65 years with two additional ten year options. Most of the leases included a significant pre-payment, although most of these are now paying annually. Only Star IV and Star V (Monin & Hit) still have prepaid rent, with lease payments commencing for Star IV in 2017 and Star V (Monin & Hit) commencing in Each individual lease parcel pays a portion of utility reimbursements to the Star Center as well as their own real estate tax bill. Furthermore, the lessee pays for building insurance and all other related expenses. Therefore, the land leases are considered to be on a triple net basis. Access to all parcels is available either directly from private 114 th Avenue North (signalized at Belcher Road) or via easements across parcels. The master drainage plan provides adequate drainage for all parcels. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 94

96 Included below is a location map and brief discussion of one current listing and five closed transactions of smaller to mid-sized industrial land properties located within the Tampa Bay Area. A complete write-up and analysis of each sale is included within the addenda section of the appraisal. LAND LEASE LAND SALE LOCATION MAP DISCUSSION OF THE LAND SALES An extensive search for industrial land sales within the Tampa Bay area was conducted. As noted in the industrial market analysis, there has been some new development of industrial product, but it has mainly been limited to the major distribution corridors with very limited infill development activity in Pinellas County. For the purpose of this analysis we have utilized a blend of Pinellas and Hillsborough County transactions in order to most accurately reflect overall market trends. The sales data summarized above reflects one current listing and five settled transactions which were verified to be fee simple, arm s length transactions. Properties were transferred on a cash to seller basis or with a cash equivalent instrument and therefore no adjustment for financing is necessary. No evidence was found to warrant a specific adjustment for time (market conditions) or sales concessions, however it is generally considered that market conditions are improving and that has been considered in the final estimate of value. Any extraordinary costs after sale have been discussed and analyzed within the write-up of each sale within the addenda of this report. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 95

97 The six comparables indicate an overall range of value from $2.88- $5.49 per square foot with an average of $4.19 per square foot. A discussion of the individual sales is as follows: LAND SALE NO. 1 This comparable property is a current listing of property located within the Gateway Business Center with frontage and visibility (but no access) along both Gandy Boulevard and I-275, St. Petersburg, Pinellas County, Fl. This location is approximately 6 miles southeast of the subject property within the more desirable Gateway area of Mid-Pinellas County. Access to the property is via internal roads within the business park and zoning is EC (Employment Center) with a LI (Light Industrial) land use designation. This irregularly sized parcel of land contains 3.74 acres. This parcel was originally part of a larger parcel containing 5.36 acres that was sold by a financial institution in July 2011 for $1,000,000 to the City of St. Petersburg Housing Authority. The indicated unit value of the earlier sale was $4.28 per square foot. The City of St. Petersburg Housing Authority purchased the property to construct an office and a small housing project. After the purchase, the Housing Authority found that housing was prohibited on the property. They constructed their office headquarters and now have the balance of the property (161,912 square feet or 3.74 acres) for sale at $750,000 or $4.60 per square foot. A recent contract fell through because the buyer planned to build a charter school, which would have required a land use change. The offer was withdrawn. This property has been for sale for an extended period of time. However, the property is marketed through the City of St. Petersburg and there is no professional broker involved. While the general location in the Gateway area is superior to the subject, access to the property is via internal roads in the Gateway Business Center, which is somewhat circuitous. Visibility of the property is good. Overall, lack of direct access and professional brokerage offsets overall location. However, the nature as listing would tend to indicate an upper limit of value on a price per square foot basis LAND SALE NO. 2 This transaction represents a bank (REO) sale of a property located at Belcher Road, just north of the subject area along the Belcher Road corridor. This property was reportedly listed for sale for over two years, with the initial listing price at $1,250,000 which was ultimately reduced to $550,000. The site is long and narrow and contains a total of 4.7 acres. The site sold in November 2013 for $580,000, or slightly above current listing price, equivalent to approximately $2.88 per square foot. The site is zoned CH, Heavy Commercial within the City of Pinellas Park with a IL (Industrial Limited) land use designation. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 96

98 The site is vacant, but is being marketed for build to suit flex warehouse space. This transaction indicates a lower limit of value due to the extended marketing period created by the initial high listing price, lack of business park setting (master retention) and lack of median cut allowing full turning movement along Belcher Road. However, the zoning, size and proximity to the subject indicate limited demand for industrial sites. LAND SALE NO. 3 This sale reflects a relatively recent transaction of an industrial parcel located just west of I-75 between Causeway Boulevard and Madison with the general Riverview area of Hillsborough County. This slightly irregular shaped property is located within the Interchange Center planned business park which includes on-site retention. The site contains a total of 328,007 square feet or 7.53 acres. The site is zoned Planned Development with a CMU-12 (Community Mixed Use) land use designation. The property sold in June 2014 for $1,800,000 or $5.49 per square foot. The property has development rights for 120,000 square feet of office space and 85,000 square feet of warehouse space (FAR.62) and directly adjoins the Brighthouse Corporate Offices. This is a highly functional industrial site within a planned business park environment within close proximity to I-75 as well as east-west distribution corridors. Overall, based on location, this transaction is estimated to reflect an upper limit of value on a price per square foot basis. LAND SALE NO. 4 This sale reflects a recent transaction of an infill industrial parcel accessed via an easement agreement via Johns Road, in close proximity to the Veteran s Expressway and Sligh Avenue. The property is just north of the Tampa International Airport in Tampa, Hillsborough County. This slightly irregular property contains a total of 14.6 Acres. However, the site contains significant wetland areas with only 422,746 square feet or 9.7 acres being upland and useable. The site is zoned M (Manufacturing) with an SMU-6 (Suburban Mixed Use) land use designation. The site sold in September 2014 for $1,542,500 or $3.65 per square foot of upland area. The site requires on site retention for development. Plans have been submitted and are being reviewed for construction of a two phased corporate industrial facility for SLV Lighting North America. A total of 114,440 square feet containing office and warehouse space is planned, reflecting an upland FAR of.27. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 97

99 Overall, the interior location and lack of frontage/visibility are offset by superior location in relation to distribution channels. This is considered an adequate indication of value on a price per square foot basis. LAND SALE NO. 5 This transaction reflects the sale of an infill property close to the I-275 and 22 nd Avenue North with the core area of the City of St. Petersburg, Pinellas County. This property consists of two noncontiguous parcels containing a total of 63,233 square feet or 1.45 acres. The site is zoned IT (Industrial Traditional) with an LI (light Industrial) land use designation. The property sold in July 2014 for $285,000 or $4.51 per square foot. The site was sold subject to a declaration of restrictive covenants due to environmental contamination which restricts the property to mainly industrial uses. The property was reportedly purchased for fenced RV & Boat Storage by a local dealer. It should be noted that there is a very limited amount of industrial land available within this area. Factors of superior location in proximity to a major interstate interchange and the small size of the site tend to offset inferior factors of lack of visibility and access from a major thoroughfare. Overall, this appears to be reasonable indication of value. LAND SALE NO. 6 This site is located at the northeast corner of Bryan Dairy Road and 69 th Street North within the City of Pinellas Park, Pinellas County, FL approximately.75 miles east of the subject property. This rectangular shaped site contains 1.93 acres with frontage along both Bryan Dairy Road and 69 th Street within the Pinellas Industrial Center Business Park. The vacant site sold in December 2011 for a total sale price of $330,000 or $3.92 per square foot. The property was zoned B-1 prior to sale and generally adjoins office and business park uses. A recent road improvement project to Bryan Dairy Road limited the access from Bryan Dairy Road to right in, right out only. The broker indicated that this changed the highest and best use of the site from commercial (restaurant, bank, etc.) to office/industrial use. Based on this perceived change in highest and best use, the property owner changed brokers and significantly reduced the listing price of the property. The property sold within six months of the listing price being reduced. Factors which must be considered when analyzing this sale are the older date of sale and lack of full turning movement along Bryan Dairy Road. These factors are somewhat offset by superior visibility along Bryan Dairy Road. Overall this is considered an adequate VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 98

100 indication of value for the subject land lease parcels, after considering the size of each individual parcel. OTHER ACTIVITY While not specifically comparable to the subject property, a recent sale at the southwest corner of Bryan Dairy and Belcher Roads should be acknowledged. This 1.49 acre parcel of land (64,904 square feet) was the site of a former service station. The improvements were demolished and the site was sold as vacant land in May 2014 for $1,500,000 or $23.11 per square foot. (OR Book 18262/918, Pinellas County) The site was purchased for development of a Bank of Tampa branch. The bank originally was planning a large facility on the site, but has decided to scale down the branch size and possibly partner with another retail use on the property. Again, while this size/use is not directly comparable to the subject property, it is an indication of activity and upward trending within the area. SUMMARY GRID COMPARABLE LAND SALES FOR LAND LEASES Sale # Subject OR Book/Page N/A 17666/ / / / / /27274 Location Interior Parcels NEC I 275 & Gandy 1220 Belcher Rd. S. Camden Field Parkway 6101 Johns Road th Avenue N Bryan Dairy Rd. In Star Center St. Petersburg Largo Tampa Tampa St. Petersburg Pinellas Park Date of Sale N/A Listing Nov 13 Jun 14 Sep 14 Jul 14 Dec 11 Sale Price (Adj.) N/A $750,000 $585,000 $1,800,000 $1,542,000 $285,000 $330,000 Net Size SF 162, , , ,746 63,233 82,114 Net Size Acres Price Per SF N/A $4.60 $2.88 $5.49 $3.65 $4.51 $4.02 Zoning/Land Use M 1/LI EC/IL CH/IL PD/CMU 12 M/SMU 6 IT/LI B 1/CG Jurisdiction Pinellas County St. Petersburg Pinellas Park Hillsborough County Hillsborough County St. Petersburg Pinellas Park Use Light Industrial/ Vacant Site in Vacant Marketed for Approved Office/ SLV Lighting Office/ Fenced Storage for 30,000 SF Office/ Office Gateway Business Center Build to Suit Light Industrial Warehouse RV & Boat Dealer Lt. Manufacturing Comparison Superior Inferior Superior Reasonable Slightly Superior Reasonable SUMMARY AND VALUATION As noted, the data above indicates a range of value from a low of $2.88 per square foot (REO Sale) to a high of $5.49 (recent business park sale near I-75). In our opinion, the subject range of value is between these values as the lower and upper limits, with consideration given to specific size and characteristics of each land lease parcel. It must be noted that the subject land lease parcels are considered to be in a business park environment with common retention and multiple access points including signalized entries along Bryan Dairy Road and Belcher Road. Note the additional access point from the north into the Monin/Hit land lease areas. Considering these factors, we have estimated the fee simple, unencumbered market value of the land lease parcels to be as follows: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 99

101 Parcel Identification Size Sq. Ft. Unit Value Fee Simple Rounded Star 1A ,202 $4.00 $708,808 $709,000 Star I B ,099 $4.25 $518,921 $519,000 Star II ,313 $3.75 $451,174 $452,000 Star III ,492 $4.50 $240,714 $241,000 Star IV ,870 $3.75 $1,390,763 $1,391,000 Hit ,056 $3.75 $682,710 $683,000 Monin ,152 $3.75 $679,320 $680,000 Total Acreage ,207,184 $3.87 $4,672,409 $4,675,000 The valuation above assumes fee simple, unencumbered market value. As noted, each of the seven parcels is under a long term land lease which yields annual income according to its individual lease agreement. Income-producing properties, by nature, are developed and purchased for investment purposes. The fee simple market value of each individual parcel as if vacant was estimated above utilizing the Sales Comparison Approach. However, because parcels are under land leases which were negotiated 20+/- years ago, we must allocate the value between leasehold and leased fee interests. If the lease agreement is generally estimated to reflect market rent and analyzed under market investment criteria, the leased fee estate should approximate fee simple market value. However, if the leases do not reflect current market conditions, a positive or negative leasehold position may exist. In the case of the Star Center, the land leases were negotiated between 1999 and 2005 and included significant discounts for prepaid rent and infrastructure. Our original appraisal of the property utilized direct capitalization to estimate the value of the leasehold interest because significant prepaid rent in the early years of the cash flow skewed value. Yield capitalization recognizes changes in income patterns over a holding period and is most applicable to properties with anticipated changes in income patterns, such as the subject periodic lease escalations. Pinellas County has provided the remaining term of each lease, the current annual rental payment, rate of escalation and the index dates. Generally, the land leases are triple net and are indexed up 3% each year cumulatively, with the actual rental payment adjusting every 5 (five) years. It should be noted that some of the land leases receive utilities through the Star Center, but these expenses are passed through to the land lease tenants on a prorated basis. Included within this section of the report is a spreadsheet showing the scheduled rent amount and annual rent payments until each of VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 100

102 the leases expire. Upon termination of the leases, the existing buildings will be over 60 years old and assumed to be at the end of their economic lives. Therefore, the reversionary value is based on the prior year rental rate capitalized less costs of sale. This reversion is added to the last year of the lease payment less 10% estimated cost of sale. The estimate of appropriate rates of return is integral to the valuation process using a Discounted Cash Flow. The investment must be considered in terms of location (market), property profile, strength of the tenant, relative risk, and alternative rates of return in the market. Included below is data on lease capitalization rates and discount (yield) rates from RealtyRates and the Real Estate Research Council (REAC) Real Estate Report REALTYRATES RealtyRates is private company that provides investment, financial and market data for market participants. RealtyRates publishes a quarterly Investor Survey that includes national mortgage and equity requirements, capitalization and discount rates, and other financial indicators. The RealtyRates Q report indicates land lease capitalization rates for industrial property ranging from a low of 2.78% to a high of 10.38% with an average of 6.5%. Furthermore, RealtyRates indicates a discount rate range of % with an average of 7.5%. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 101

103 RERC REAL ESTATE REPORT The Real Estate Research Corp (RERC) publishes a quarterly report for Valuation Rates and Metrics. The Winter 2015 Volume summarizes the overall investment environment. The Metropolitan Investment Criteria Section for the Tampa Bay Area indicates the following for First Tier Investment Properties: Generally, yield rates for Industrial Warehouse and R & D ranged from %, going-in cap rates were 7-7.3% and Terminal cap rates were %. Anticipated 1 year growth rates were % in the southern market. Note that these rates assume First-tier investment properties of new or newer quality. On an overall basis, the appraisers tend to place more emphasis on the RERC data because it is specific to the Tampa market. As noted, the RERC data is generally for first tier, newer properties. Due to age and secondary location in relation to distribution channels, the subject property land leases would tend to classified as a somewhat lower tier investment, and accordingly would require a higher return. Furthermore, the escalation of the leases at 3% annually higher than indicated growth rates (South Rent), increasing the associated risk. For the analysis, we have utilized a 10% discount rate and a terminal capitalization rate of 9%. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 102

104 LAND LEASE DISCOUNTED CASH FLOW Size 177,220 Size 117,530 Size 120,318 Size 53,504 Size 370,860 Size 181,152 Size 182,056 Star 1A Schedule Payment Star 1B Schedule Payment Star II Schedule Payment Star III Schedule Payment Star IV Schedule Payment Monin Schedule Payment Hit Schedule Payment 2005 $ 38, $ 38, $ 25, $ 25, $ 81, $ 40, $ 38, $ 26, $ 25, $ 84, $ 41, $ 38, $ 27, $ 25, $ 86, $ 42, $ 38, $ 28, $ 25, $ 89, $ 43, $ 38, $ 29, $ 25, $ 91, $ 45, $ 45, $ 29, $ 29, $ 12, $ 12, $ 94, $ 46, $ 45, $ 30, $ 29, $ 27, $ 27, $ 12, $ 12, $ 97, $ 47, $ 45, $ 31, $ 29, $ 28, $ 27, $ 12, $ 12, $ 100, $ 49, $ 45, $ 32, $ 29, $ 29, $ 27, $ 13, $ 12, $ 103, $ 50, $ 45, $ 33, $ 29, $ 30, $ 27, $ 13, $ 12, $ 106, $ 52, $ 52, $ 34, $ 34, $ 31, $ 27, $ 14, $ 14, $ 109, $ $56, $ $56, $ $ 53, $ 52, $ 35, $ 34, $ 32, $ 32, $ 14, $ 14, $ 112, $ $57, $ $57, $ $ 55, $ 52, $ 36, $ 34, $ 33, $ 32, $ 15, $ 14, $ 116, $ 109, $59, $ $59, $ $ 57, $ 52, $ 37, $ 34, $ 34, $ 32, $ 15, $ 14, $ 119, $ 109, $61, $19, $61, $19, $ 58, $ 52, $ 39, $ 34, $ 35, $ 32, $ 15, $ 14, $ 123, $ 109, $63, $56, $63, $56, $ 60, $ 60, $ 40, $ 40, $ 36, $ 32, $ 16, $ 16, $ 127, $ 127, $64, $64, $64, $64, $ 62, $ 60, $ 41, $ 40, $ 37, $ 37, $ 16, $ 16, $ 130, $ 127, $66, $64, $66, $64, $ 64, $ 60, $ 42, $ 40, $ 38, $ 37, $ 17, $ 16, $ 134, $ 127, $68, $64, $68, $64, $ 66, $ 60, $ 44, $ 40, $ 39, $ 37, $ 17, $ 16, $ 138, $ 127, $70, $64, $70, $64, $ 68, $ 60, $ 45, $ 40, $ 40, $ 37, $ 18, $ 16, $ 143, $ 127, $73, $64, $73, $64, $ 70, $ 70, $ 46, $ 46, $ 41, $ 37, $ 19, $ 19, $ 147, $ 127, $75, $75, $75, $75, $ 72, $ 70, $ 48, $ 46, $ 43, $ 43, $ 19, $ 19, $ 151, $ 151, $77, $75, $77, $75, $ 74, $ 70, $ 49, $ 46, $ 44, $ 43, $ 20, $ 19, $ 156, $ 151, $79, $75, $79, $75, $ 76, $ 70, $ 51, $ 46, $ 45, $ 43, $ 20, $ 19, $ 161, $ 151, $82, $75, $82, $75, $ 79, $ 70, $ 52, $ 46, $ 47, $ 43, $ 21, $ 19, $ 165, $ 151, $84, $75, $84, $75, $ 81, $ 81, $ 54, $ 54, $ 48, $ 43, $ 22, $ 22, $ 170, $ 170, $87, $87, $87, $87, $ 84, $ 81, $ 55, $ 54, $ 49, $ 49, $ 22, $ 22, $ 176, $ 170, $89, $87, $89, $87, $ 86, $ 81, $ 57, $ 54, $ 51, $ 49, $ 23, $ 22, $ 181, $ 170, $92, $87, $92, $87, $ 89, $ 81, $ 59, $ 54, $ 52, $ 49, $ 24, $ 22, $ 186, $ 170, $95, $87, $95, $87, $ 91, $ 81, $ 60, $ 54, $ 54, $ 49, $ 24, $ 22, $ 192, $ 170, $98, $87, $98, $87, $ 94, $ 94, $ 62, $ 62, $ 56, $ 49, $ 25, $ 25, $ 198, $ 198, $101, $101, $101, $101, $ 97, $ 94, $ 64, $ 62, $ 57, $ 57, $ 26, $ 25, $ 204, $ 198, $104, $101, $104, $101, $ 100, $ 94, $ 66, $ 62, $ 59, $ 57, $ 27, $ 25, $ 210, $ 198, $107, $101, $107, $101, $ 103, $ 94, $ 68, $ 62, $ 61, $ 57, $ 27, $ 25, $ 216, $ 198, $110, $101, $110, $101, $ 106, $ 94, $ 70, $ 62, $ 63, $ 57, $ 28, $ 25, $ 222, $ 198, $113, $101, $113, $101, $ 109, $ 109, $ 72, $ 72, $ 65, $ 57, $ 29, $ 29, $ 229, $ 229, $117, $117, $117, $117, $ 112, $ 109, $ 74, $ 72, $ 67, $ 67, $ 30, $ 29, $ 236, $ 229, $120, $117, $120, $117, $ 116, $ 109, $ 77, $ 72, $ 69, $ 67, $ 31, $ 29, $ 243, $ 229, $124, $117, $124, $117, $ 119, $ 109, $ 79, $ 72, $ 71, $ 67, $ 32, $ 29, $ 250, $ 229, $128, $117, $128, $117, $ 123, $ 109, $ 81, $ 72, $ 73, $ 67, $ 33, $ 29, $ 258, $ 229, $131, $117, $131, $117, $ 127, $ 127, $ 84, $ 84, $ 75, $ 67, $ 34, $ 34, $ 266, $ 266, $135, $135, $135, $135, $ 130, $ 127, $ 86, $ 84, $ 77, $ 77, $ 35, $ 34, $ 274, $ 266, $140, $135, $140, $135, $ 134, $ 127, $ 89, $ 84, $ 80, $ 77, $ 36, $ 34, $ 282, $ 266, $144, $135, $144, $135, $ 138, $ 127, $ 92, $ 84, $ 82, $ 77, $ 37, $ 34, $ 290, $ 266, $148, $135, $148, $135, $ 143, $ 127, $ 94, $ 84, $ 85, $ 77, $ 38, $ 34, $ 299, $ 266, $153, $135, $153, $135, $ 147, $ 147, $ 97, $ 97, $ 87, $ 77, $ 39, $ 39, $ 308, $ 308, $157, $157, $157, $157, $ 151, $ 147, $ 100, $ 97, $ 90, $ 90, $ 41, $ 39, $ 317, $ 308, $162, $157, $162, $157, $ 156, $ 147, $ 103, $ 97, $ 92, $ 90, $ 42, $ 39, $ 327, $ 308, $167, $157, $167, $157, $ 161, $ 147, $ 106, $ 97, $ 95, $ 90, $ 43, $ 39, $ 337, $ 308, $172, $157, $172, $157, $ 165, $ 147, $ 110, $ 97, $ 98, $ 90, $ 44, $ 39, $ 347, $ 308, $177, $157, $177, $157, $ 170, $ 170, $ 113, $ 113, $ 101, $ 90, $ 46, $ 46, $ 357, $ 357, $182, $182, $182, $182, $ 176, $ 170, $ 116, $ 113, $ 104, $ 104, $ 47, $ 46, $ 368, $ 357, $188, $182, $188, $182, $ 181, $ 170, $ 120, $ 113, $ 107, $ 104, $ 49, $ 46, $ 379, $ 357, $193, $182, $193, $182, $ 186, $ 170, $ 123, $ 113, $ 110, $ 104, $ 50, $ 46, $ 390, $ 357, $199, $182, $199, $182, $ 192, $ 170, $ 127, $ 113, $ 114, $ 104, $ 52, $ 46, $ 402, $ 357, $205, $182, $205, $182, $ 198, $ 198, $ 131, $ 131, $ 117, $ 104, $ 53, $ 53, $ 414, $ 414, $211, $211, $211, $211, $ 204, $ 198, $ 135, $ 131, $ 121, $ 121, $ 55, $ 53, $ 427, $ 414, $218, $211, $218, $211, $ 210, $ 198, $ 139, $ 131, $ 124, $ 121, $ 56, $ 53, $ 440, $ 414, $224, $211, $224, $211, $ 216, $ 198, $ 143, $ 131, $ 128, $ 121, $ 58, $ 53, $ 453, $ 414, $231, $211, $231, $211, $ 222, $ 198, $ 148, $ 1,463, $ 132, $ 121, $ 60, $ 596, $ 466, $ 414, $238, $211, $238, $211, $ 229, $ 2,296, Reversion $ 1,332, $ 136, $ 1,349, Reversion $ 542, $ 480, $ 480, $245, $245, $245, $245, Reversion $ 2,067, NPV $464, Reversion $ 1,227, NPV $189, $ 495, $ 480, $252, $245, $252, $245, NPV $ 700, PSF $ 3.95 NPV $414, PSF $ $ 510, $ 480, $260, $245, $260, $245, PSF $ 3.95 PSF $ $ 525, $ 5,209, $268, $245, $268, $245, Reversion $ 4,728, $276, $2,732, $276, $2,732, NPV $1,276, Reversion $2,487, Reversion $2,487, PSF $ 3.44 NPV $586, NPV $586, PSF $3.24 PSF $3.22 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 103

105 SUMMARY OF DISCOUNTED CASH FLOW ANALYSIS (Leased Fee Interest) Parcel Identification Size Sq. Ft. NPV Rounded PSF Star 1A ,202 $700,162 $700,000 $3.95 Star I B ,099 $464,258 $465,000 $3.81 Star II ,313 $414,207 $415,000 $3.45 Star III ,492 $189,176 $190,000 $3.55 Star IV ,870 $1,276,455 $1,276,000 $3.44 Hit ,056 $586,568 $587,000 $3.22 Monin ,152 $586,568 $587,000 $3.24 Total Acreage ,207,184 $4,217,394 $4,220,000 $3.50 SUMMARY OF LEASED FEE/LEASEHOLD POSITIONS FOR LAND LEASES Parcel Identification Size Sq. Ft. Unit Value Fee Simple Rounded Leased Fee Leasehold Star 1A ,202 $4.00 $708,808 $709,000 $700,000 $9,000 Star I B ,099 $4.25 $518,921 $519,000 $465,000 $54,000 Star II ,313 $3.75 $451,174 $452,000 $415,000 $37,000 Star III ,492 $4.50 $240,714 $241,000 $190,000 $51,000 Star IV ,870 $3.75 $1,390,763 $1,391,000 $1,276,000 $115,000 Hit ,056 $3.75 $682,710 $683,000 $587,000 $96,000 Monin ,152 $3.75 $679,320 $680,000 $587,000 $93,000 Total Acreage ,207,184 $3.87 $4,672,409 $4,675,000 $4,220,000 $455,000 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 104

106 192(S) 34(S) 610(S) ELCHER RD The Young-Rainey Star Center Property Land Valuation- Outparcels SCVLP AND SCCCP In addition to the seven land lease parcels, our client has requested that two potential outparcels be identified and valued separately as vacant land. According to Pinellas County Building and Development Review Services (BDRS), there is sufficient land area to support these outparcels as well as adequate drainage capacity in the overall master drainage plan. No surveys of the sites were provided; the site areas were estimated via Pinellas County GIS mapping and input from the chief engineer. The first parcel is generally located at the northeast of the property. The area of land described by the Department of Energy as the Northeast Site is located at the northeast corner of the overall property, adjoining the existing north pond to the west. This NE site was being actively remediated until late According to Joe Daniel, representative of on-site environmental consultant S.M. Stoller, all remediation activities are complete on this site and the property has received conditional closure by the Florida Department of Environmental Protection (FDEP). Our understanding is that this site contains approximately 5.09 acres and is proposed to be encumbered by Restrictive Covenants that will require the FDEP to monitor any development of the property. Per your request, this parcel has been appraised as a separate, unencumbered parcel with development potential. For the purpose of valuation, we have estimated the total size of the parcel (to include access area along 114th Avenue) at 6.2 acres to include frontage along 114th Avenue. We have also assumed that adequate easements would be provided to allow functional use. On the master aerial, this parcel is identified as SCVLP TH AVE N (S) (S) (S) (S) / BELCHER RD A C (C) /012 14/ TH AVE N BELCHER RD TH AVE N VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 105

107 The second outparcel is identified as SCCCP, a 4.23+/- acre tract located along the Belcher Road Frontage that is currently improved with modular improvements. Per our agreement, this parcel is appraised as if vacant and unencumbered. Per the U.S. Department of Energy s October-Dec Program Update, a minor portion of the southwest portion of this site is included within the contamination plume that runs east from Bldg. 100 to Belcher Road. This small area at the southwest corner of the parcel will be included within the Building 100 Restrictive Covenant area that is undergoing enhanced bioremediation. According Pinellas County Public Works, there is the potential for right in, right out access to this site from Belcher Road, as well as existing access from 114 th Avenue North. This site size is estimated at 4.23 acres and identified as SCCCP. 114TH AVE N BELCHE BELCHER RD 114TH AVE N 117TH AV SCCCP Included below is a summary grid of five settled sales of smaller to mid- sized land parcels that have industrial (or commercial industrial) zoning within the Mid-Pinellas County area. These sales all have frontage/ visibility along a major roadway. While this data is limited, it is assumed to be adequate for valuation purposes. A complete write-up and analysis of each sale is included within the addenda section of the appraisal. A map of the each sale is followed by discussion of each transaction and summary grid: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 106

108 OUTPARCEL LAND SALE LOCATION MAP DISCUSSION OF THE LAND SALES An extensive search for industrial land sales within the Tampa Bay area was conducted. The subject outparcels have the advantage of being within a business park environment in terms of master drainage, common access roads with signalization, central signage, etc. Additionally, these parcels have good visibility along Belcher Road, a major north/south corridor. However, the parcels would have limited commercial use, except perhaps for accessory use. Office use is permitted. As noted in the industrial market analysis, there has been some new development of industrial product, but it has mainly been limited to the major distribution corridors. Development within Pinellas County has been sparse and is generally for specific infill use. The sales data summarized above reflects five settled transactions which were verified to be fee simple, arm s length transactions. Properties were transferred on a cash to seller basis or with a cash equivalent instrument and therefore no adjustment for financing is necessary. No evidence was found to warrant a specific adjustment for time (market conditions) or sales concessions, however it is generally considered that market conditions are improving and that has been considered in the final estimate of value. Any extraordinary costs after sale have been discussed and analyzed within the write-up of each sale within the addenda of this report. The comparables indicate an overall range of value from $2.88-$8.41 per square foot with an average of $5.71 per square foot. A discussion of the individual sales is as follows: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 107

109 LAND SALE NO. 1 Land Sale Number One is located at the south corner of Ulmerton Road and Automobile Boulevard within a heavily traveled portion of the Gateway area. The reported traffic count along this area of Ulmerton road was over 40,000 vehicles per day. This generally rectangular site contains 1.91 acres with approximately 230 feet of frontage along the south side of Ulmerton Road (non signalized with median cut at property) and 365 feet of frontage along Automobile Boulevard. The vacant site sold in August 2013 for $700,000 or $8.41 per square foot. The property is zoned IPD (Industrial Planned Development) with a Manufacturing land use designation. The site was purchased for development of Shoot Straight, an indoor shooting range with retail gun sales. Despite being a bank sale, this transaction sets the upper limit of value on a price per square foot basis due to the smaller site size, superior frontage along Ulmerton Road, and the permissible retail component. LAND SALE NO. 2 This transaction represents the sale of an irregularly shaped site located at the apex of Gandy Boulevard and Dr. Martin Luther King, Jr. Street at 94 th Avenue North within the northerly portion of the City of St. Petersburg. This area is considered to be within the desirable Gateway area. This site is commercially zoned and was formerly occupied by a K-Mart. The site was purchased in January 2012 for $4,140,000. Reportedly, the site required approximately $150,000 in demolition and extraordinary fill costs. Therefore, the effective acquisition cost is adjusted to $4,300,000. The site contains 13 acres, indicating a unit value of $7.59 per square foot as adjusted. The site was purchased for construction of ASI insurance corporate headquarters containing 2 three story towers and a structured parking garage. It should be noted that office is a permitted use on the subject parcels. The site is considered superior to the subject outparcels in terms of zoning flexibility, location in the Gateway area, and three street frontages. This is somewhat offset by the larger site size and date of sale. Overall, this transaction is estimated to reflect an upper limit of value on a price per square foot basis. LAND SALE NO. 3 This transaction represents a bank (REO) sale of a property located at Belcher Road, just north of the subject area along the Belcher Road corridor. This property was reportedly listed for sale for over two years, with the initial listing price at $1,250,000 which was ultimately reduced to $550,000. The site is long and narrow and contains a total of 4.7 acres. The site sold in November 2013 for $580,000, or slightly above current listing price, equivalent to approximately $2.88 per square foot. The site is zoned CH, Heavy VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 108

110 Commercial within the City of Pinellas Park with a IL (Industrial Limited) land use designation. The site is vacant, but is being marketed for build to suit flex warehouse space. This transaction indicates a lower limit of value due to the extended marketing period created by the initial high listing price, lack of business park setting (master retention) and lack of median cut allowing full turning movement along Belcher Road. However, the zoning, size and proximity to the subject indicate limited demand for industrial sites. LAND SALE NO. 4 Land Sale No. 4 is a very irregularly shaped site located along the north side of Gandy Boulevard at Grand Avenue within the Gateway Centre Business Park (Gateway area), in the City of Pinellas Park. This is a signalized intersection with dedicated turn lanes. Gandy Boulevard has a reported traffic count of 62,500 vehicles per day within this area. This site contains a total of 6.5 acres, including one small pond area. The site is zoned B-1 (Business) within the City of Pinellas Park with a CB (Commercial General) land use designation. While the site is located within the business park, this specific site permits commercial uses. The site sold in January 2015 for a recorded sale price of $1,600,000, indicating a unit price of $5.63 per square foot. The site was purchased by Tampa Bay Luxury Imports for the development of a new luxury automobile dealership. Based on the superior location along Gandy Boulevard at a signalized intersection that permits commercial use, this sale is estimated to reflect an upper limit of value. This is somewhat offset by the irregular shape of the site and the small pond. LAND SALE NO. 5 This property is located at the northeast corner of Bryan Dairy Road and 69 th Street North within the City of Pinellas Park, approximately.75 miles east of the subject property. This rectangular shaped site contains 1.93 acres with frontage along both Bryan Dairy Road and 69 th Street within the Pinellas Industrial Center Business Park. The vacant site sold in December 2011 for a total sale price of $330,000 or $3.92 per square foot. The property was zoned B-1 prior to sale and generally adjoins office and business park uses. A recent road improvement project to Bryan Dairy Road limited the access from Bryan Dairy Road to right in, right out only. The broker indicated that this changed the highest and best use of the site from commercial (restaurant, bank, etc.) to office/industrial use. Based on this perceived change in highest and best use, the property owner changed brokers and significantly VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 109

111 reduced the listing price of the property. The property sold within six months of the listing price being reduced. The site has subsequently been improved with a 30,000 square foot office/warehouse. Factors which must be considered when analyzing this sale are the considerably older date of sale, relatively small size of the site which would tend to limit utility for business park use and lack of full turning movement along Bryan Dairy Road. Overall this sale is considered a lower limit of value when valuing the two subject outparcels that front Belcher Road. SUMMARY OF LAND SALES FOR SUBJECT OUTPARCELS Sale # Subject OR Book/Page 18343/ / / / /27274 Location Subject 4594 Ulmerton Road 9500 MLK Jr. Street 1220 Belcher Rd. S Gandy Blvd Bryan Dairy Rd. Outparcels Clearwater St. Petersburg Largo Pinellas Park Pinellas Park Date of Sale Star Center Aug 13 Feb 12 Nov 13 Jan 15 Dec 11 Sale Price (Adj.) N/A $700,000 $4,300,000 $585,000 $1,600,000 $330,000 Net Size SF N/A 83, , , ,185 82,114 Net Size Acres 4.23 & Price Per SF $8.41 $7.59 $2.88 $5.63 $4.02 Zoning/Land Use M 1/LI IPD/M CCS 1/PRD CH/IL B 1/CG B 1/CG* Jurisdiction Pinellas County Pinellas Park St. Petersburg Pinellas Park Pinellas Park Pinellas Park Use Vacant Gun Store/ ASI Insurance Vacant Marketed for Automobile Dealership 30,000 SF Office/ Indoor Gun Range Corp. Headquarters Build to Suit Lt. Manufacturing Comparison Superior Superior Inferior Superior Inferior SUMMARY AND VALUATION As noted, the data above indicates a range of value from a low of $2.88 per square foot to a high of $8.41 per square foot. In our opinion, the subject range of value would fall between these values as the lower and upper limits, with consideration given to location in terms of visibility/traffic count/signalization, zoning, as well as the specific size and physical characteristics of the outparcels. Considering these factors, we have estimated the fee simple, unencumbered market value of the outparcels to be as follows: SCVLP- 6.2 acres is equal to 270,072 SF 270,072 $5.00 PSF = $1,350,360 Rounded to $1,351,000 SCCCP acres is equal to 184,259 SF 184,259 $5.50 PSF = $1,013,425 Rounded to $1,014,000 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 110

112 Land Valuation - Main Star Center Parcel The Main Star Center Parcel site area is estimated to contain acres as summarized below: Total Acreage 96.4 Less: Land Lease Parcels* Less: Outparcels Main Star Center Parcel *net of cell tower This irregularly shaped parcel of land is located at the northeast corner of the intersection of two arterial roads, Bryan Dairy Road and Belcher Road, as well as having frontage along private 114 th Avenue North and a CSX rail corridor. There is signalized access into the property from both Bryan Dairy Road and Belcher Road (at 114 th Avenue), as well as access from 118 th Avenue to the north via easements. The site is zoned M-1 (Manufacturing) with an LI (Light Industrial) land use within unincorporated Pinellas County. Based on historic land uses and the county s desire to maintain existing industrial areas, county officials have indicated it is unlikely that the subject property zoning or land use could be changed. Included below is a summary grid of four sales of larger tracts of land that give an indication of value for the subject main star center parcel. As noted in the industrial market overview, there has been virtually no speculative industrial development since the beginning of the market adjustment in mid 2008 and these sales represent specific user sales. While this data is limited, it is assumed to adequate for valuation purposes. A complete write-up and analysis of each sale is included within the addenda section of the appraisal. A summary grid of the data is as follows: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 111

113 LAND SALE LOCATION MAP FOR MAIN STAR CENTER PARCEL DISCUSSION OF THE LAND SALES An extensive search for industrial land sales within the greater Tampa Bay area was conducted. As discussed, there has been extremely limited land sale data in the industrial sector of the market, particularly for the larger sized parcels. While limited, the four sales which were located and researched are found to be adequate for valuation purposes. The four settled transactions were verified to be fee simple, arm s length transactions. Properties were transferred on a cash to seller basis or with a cash equivalent instrument and therefore no adjustment for financing is necessary. No evidence was found to warrant a specific adjustment for time (market conditions) or sales concessions, however the specific date of transaction has been considered in the final analysis. The four comparables indicate an overall range of value on a gross basis from $2.36 to $4.22 per square foot with an average of $3.02 per square foot. A discussion of the individual sales is as follows: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 112

114 LAND SALE NO. 1 This transaction reflects the sale of the former Paradyne (now Zhone Technologies) headquarters in the Tampa Bay Area. The property is located within the mid-county area at th Avenue North, Largo, approximately one mile northwest of the subject property. The total site reportedly contains approximately acres. The property is improved with one single story office building and one two story office/manufacturing/warehouse facility containing a total of 318,781 square feet constructed in At the time of sale, only 40% of the property was occupied, with a lease running until June Reportedly, the property was in below average condition at the time of sale with considerable functional obsolescence. This was a distressed property that was marketed over an extended period of time and ultimately sold via Auction by Wells Fargo. The buyer was adjoining property owner Harrod Properties. The buyer reportedly has no concrete plans for the property yet, but will probably hold until the existing lease expires for redevelopment. We have estimated an interim contribution for the existing improvements/lease at $1,912,500 ($15.00 per sq. ft. of leased area), leaving land contribution at $2,088,401 or $2.55 per square foot. Additional detail is located within the sale write-up in the addenda section of the appraisal. Overall, lack of major road frontage and condition of sale (auction) are largely offset by the considerably smaller site size. LAND SALE NO. 2 This transaction reflects one of the last major vacant sites located in the Gateway Area of Pinellas. The 96 acre property includes 63 acres of upland area (net of retention) and is located between I-275 and 28 th Street North, North of Gandy Boulevard and south of the existing ValPak facility within the City of St. Petersburg. This location is approximately 5.5 miles east of the subject property. The property was transferred in February 2012 for $9,750,000. We were recently able to confirm that the site required extraordinary fill with an estimated cost of $1,500,000. Therefore, the total adjusted acquisition cost was $11,250,000 or $2.68 per square foot gross. This included on-site existing drainage. The site is zoned EC (Employment Center) with an Industrial Limited land use designation with Activity Center Overlay. The site was originally planned for a mixed use project and was touted as a possible relocation site for Tropicana Field Baseball Stadium. Great Bay Distributors is currently under construction with a (green) warehouse, distribution facility and administrative offices. The superior Gateway location and visibility from I-275 and generally good accessibility are considered substantially offset by the earlier date of sale. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 113

115 LAND SALE NO. 3 This transaction reflects a somewhat controversial sale of a acre parcel of land located along the south side of Drew Street, just east of McMullen-Booth Road within the City of Clearwater, Fl. This location is approximately 7 miles northeast of the subject property. The property transferred in February 2012 for $4,380,000 or $2.52 per square foot. The site was formerly a low income housing development which was razed for construction of the corporate headquarters (office) for BayCare Health Systems. The site is zoned Office with a land use designation of Residential-Office Limited. The site was sold by the Clearwater Housing Authority. The adjoining church/school property objected and in order to facilitate the transaction, BayCare agreed to limit development to 300,000 square feet of office space reflecting a FAR of.2 for a period of 20 years. While the size is considerably smaller than the subject which would typically indicate a higher unit value, size is more than offset by the date of sale, limitation of zoning and the development agreement. Overall, this transaction represents a reasonable indication of value for the subject property on a per unit basis. Again, note that office development is permitted in M-1 zoning. LAND SALE NO. 4 This property is located in the Ruskin area of southern Hillsborough County generally at the NWQ of I-75 and College Avenue (SR 674). This irregular shaped site contains 79.5 acres of land. The site sold in October 2013 for a total sale price of $14,629,400 or $4.22 per square foot. This sale reflects the most recent large industrial transaction within the Tampa Bay area. Reportedly, USAA Real Estate Company purchased the land to construct a major distribution facility to be leased to Amazon for a fulfillment center. In return for constructing the facility, Hillsborough County granted economic incentives of $6.4 million in property tax breaks over seven years plus an additional $1.1 million in other incentives. The facility is currently under construction. Although the site is larger than the Main Star Center Parcel, due to the location along a major distribution corridor and the economic incentives offered, this sale represents the upper limit of value on a price per square foot basis. The four comparable land sales are summarized below: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 114

116 LAND SALE SUMMARY CHART MAIN STAR CENTER PARCEL Sale # Subject OR Book/Page Subject 18311/ / / /30943 Location Main Star th Avenue N. Valpak Avenue 2995 Drew Street th Street NE Center Parcel Largo St. Petersburg Clearwater Ruskin Date of Sale N/A Dec 14 Feb 12 Feb 12 Oct 13 Sale Price (Adj.) N/A $2,088,401 $11,250,000 $4,380,000 $14,629,400 Net Size SF 818,057 4,193,957 1,731,074 3,464,278 Net Size Acres Price Per SF $2.55 $2.68 $2.53 $4.22 Zoning/Land Use M 1/LI M 1/IL EC/IL Activity Center O/R/OL PD/SMU 6 Jurisdiction Pinellas County Pinellas County St. Petersburg Clearwater Hillsborough County Use Office/Production/ Interim Use Older Bldg. Distribution Facility 156,000 SF Corporate Amazon Distribution/ Warehouse Future Redevelopment Anheuser Busch Office for Baycare Fulfillment Center Comparaison Overall Reasonable Overall Reasonable Overall Reasonable Superior Summary Sales 1-3, all located in mid-pinellas County, have offsetting factors that indicate a relatively tight range of value from $2.53-$2.68 per square foot. Sale 4, located along I-75 in Hillsborough County, represents the upper limit of value including significant economic incentives. Considering all factors, we have estimated the market value for the Main Star Center Parcel as vacant and available for development at its highest and best use as follows: acres is equal to 2,542,162 Square Feet 2,542,162 $2.50 Per Sq. Ft. = $6,355,404 Rounded $6,356,000 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 115

117 Land Value Allocation - SCIP Parcel The last land valuation is the SCIP parcel that is subleased to the U.S. Military from Raytheon. Exact dimensions were not provided to the appraiser, but the contract site size is approximately 2.5 acres, shown on the Pinellas County GIS system as follows: This property is an interior parcel within an established industrial park setting. Access to the property is available directly from private 114 th Avenue North via Belcher Road or via easements across the Main Star Center Parcel or other land lease parcels. The master drainage plan provides adequate drainage for this property. Included below is a map and discussion of one listing and three settled sales of similarly sized industrial properties located within the Pinellas County market. As noted in the industrial market overview, there has been very limited speculative industrial development since the beginning of the market adjustment in mid 2008 and these sales represent specific infill sales. While this data is limited, it is assumed to be adequate for valuation purposes. A complete write-up and analysis of each sale is included within the addenda section of the appraisal. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 116

118 LAND SALE LOCATION MAP-SCIP ALLOCATION DISCUSSION OF THE LAND SALES An extensive search for industrial land sales within the Mid-Pinellas County area was conducted. As discussed, due to recessionary conditions since mid 2008, there has been extremely limited land sale data in the industrial sector of the market. While limited, the three sales and one listing which were located and researched are found to be adequate for valuation purposes. The three settled transactions were verified to be fee simple, arm s length transactions. Properties were transferred on a cash to seller basis or with a cash equivalent instrument and therefore no adjustment for financing is necessary. No evidence was found to warrant a specific adjustment for time (market conditions) or sales concessions, however it is generally considered that current market conditions are improving and that has been considered in the final estimate of value. The four comparables indicate an overall range of value from $2.88 to $4.60 per square foot. A discussion of the individual sales is as follows: LAND SALE NO. 1 This comparable property is a current listing of property located within the Gateway Business Center with frontage and visibility (but no access) along both Gandy Boulevard and I-275, St. Petersburg, Pinellas County, Fl. This location is approximately 6 miles southeast of the subject property within the more desirable Gateway area of VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 117

119 Mid-Pinellas County. Access to the property is via internal roads within the business park and zoning is EC (Employment Center) with a LI (Light Industrial) land use designation. This irregularly sized parcel of land contains 3.74 acres. This parcel was originally part of a larger parcel containing 5.36 acres that was sold by a financial institution in July 2011for $1,000,000 to the City of St. Petersburg Housing Authority. The indicated unit value of the earlier sale was $4.28 per square foot. The City of St. Petersburg Housing Authority purchased the property to construct an office and a small housing project. After the purchase, the Housing Authority found that housing was prohibited on the property. They constructed their office headquarters and now have the balance of the property (161,912 square feet or 3.74 acres) for sale at $750,000 or $4.60 per square foot. A recent contract fell through because the buyer planned to build a charter school, which would have required a land use change. The offer was withdrawn. This property has been for sale for an extended period of time. However, the property is marketed through the City of St. Petersburg and there is no professional broker involved. While the general location in the Gateway area is superior to the subject, access to the property is via internal roads in the Gateway Business Center, which is somewhat circuitous. Visibility of the property is good. Overall, lack of direct access and professional brokerage offsets overall location. However, the nature as listing would tend to indicate an upper limit of value on a price per square foot basis LAND SALE NO. 2 This transaction represents a bank (REO) sale of a property located at Belcher Road, just north of the subject area along the Belcher Road corridor. This property was reportedly listed for sale for over two years, with the initial listing price at $1,250,000 which was ultimately reduced to $550,000. The site is long and narrow and contains a total of 4.7 acres. The site sold in November 2013 for $580,000, or slightly above current listing price, equivalent to approximately $2.88 per square foot. The site is zoned CH, Heavy Commercial within the City of Pinellas Park with a IL (Industrial Limited) land use designation. The site is vacant, but is being marketed for build to suit flex warehouse space. This transaction indicates a lower limit of value due to the extended marketing period created by the initial high listing price, lack of business park setting (master retention) and lack of median cut allowing full turning movement along Belcher Road. However, the zoning, size and proximity to the subject indicate limited demand for industrial sites. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 118

120 LAND SALE NO. 3 This transaction reflects the sale of an infill property close to the I-275 and 22 nd Avenue North with the core area of the City of St. Petersburg, Pinellas County. This property consists of two noncontiguous parcels containing a total of 63,233 square feet or 1.45 acres. The site is zoned IT (Industrial Traditional) with an LI (light Industrial) land use designation. The property sold in July 2014 for $285,000 or $4.51 per square foot. The site was sold subject to a declaration of restrictive covenants due to environmental contamination which restricts the property to mainly industrial uses. The property was reportedly purchased for fenced RV & Boat Storage by a local dealer. It should be noted that there is a very limited amount of industrial land available within this area. Factors of superior location in proximity to a major interstate interchange and the small size of the site tend to offset inferior factors of lack of visibility and access from a major thoroughfare. Overall, this appears to be reasonable, if slightly superior, indication of value. LAND SALE NO. 4 This site is located at the northeast corner of Bryan Dairy Road and 69 th Street North within the City of Pinellas Park, Pinellas County, FL approximately.75 miles east of the subject property. This rectangular shaped site contains 1.93 acres with frontage along both Bryan Dairy Road and 69 th Street within the Pinellas Industrial Center Business Park. The vacant site sold in December 2011 for a total sale price of $330,000 or $4.02 per square foot. The property was zoned B-1 prior to sale and generally adjoins office and business park uses. A recent road improvement project to Bryan Dairy Road limited the access from Bryan Dairy Road to right in, right out only. The broker indicated that this changed the highest and best use of the site from commercial (restaurant, bank, etc.) to office/industrial use. Based on this perceived change in highest and best use, the property owner changed brokers and significantly reduced the listing price of the property. The property sold within six months of the listing price being reduced. Factors which must be considered when analyzing this sale are the older date of sale and lack of full turning movement along Bryan Dairy Road. These factors are somewhat offset by superior visibility along Bryan Dairy Road. Overall this is considered an adequate indication of value for the subject SCIP Allocation. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 119

121 SUMMARY GRID COMPARABLE LAND SALES FOR SCIP ALLOCATION Sale # Subject OR Book/Page N/A 17666/ / / /27274 Location SCIP Allocation NEC I 275 & Gandy 1220 Belcher Rd. S th Avenue N Bryan Dairy Rd. In Star Center St. Petersburg Largo St. Petersburg Pinellas Park Date of Sale N/A Listing Nov 13 Jul 14 Dec 11 Sale Price (Adj.) N/A $750,000 $585,000 $285,000 $330,000 Net Size SF 162, ,406 63,233 82,114 Net Size Acres Price Per SF N/A $4.60 $2.88 $4.51 $4.02 Zoning/Land Use M 1/LI EC/IL CH/IL IT/LI B 1/CG Jurisdiction Pinellas County St. Petersburg Pinellas Park St. Petersburg Pinellas Park Use Light Industrial/ Vacant Site in Vacant Marketed for Fenced Storage for 30,000 SF Office/ Office Gateway Business Center Build to Suit RV & Boat Dealer Lt. Manufacturing Comparison Superior Inferior Slightly Superior Reasonable SUMMARY AND VALUATION As noted above, the data above indicates a range of value from a low of $2.88 per square foot (REO Sale) to a high of $4.60 (listing). In our opinion, due to the business park setting of the subject to include the benefit of master retention, signalized access from major thoroughfares, and the relatively small size of the site, we have estimated that value allocation for the SCIP property should fall toward the upper end of the indicated range. Considering these factors, we have estimated the fee simple, unencumbered market value allocation of the SCIP Parcel to be as follows: 2.5 acres X 43,560 square feet = 108,900 square $4.25 per square foot = $462,825 Rounded $463,000 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 120

122 Summary of Land Valuation (Fee Simple) Parcel Identification Size Sq. Ft. Unit Value Fee Simple Rounded Star 1A ,202 $4.00 $708,808 $709,000 Star I B ,099 $4.25 $518,921 $519,000 Star II ,313 $3.75 $451,174 $452,000 Star III ,492 $4.50 $240,714 $241,000 Star IV ,870 $3.75 $1,390,763 $1,391,000 Hit ,056 $3.75 $682,710 $683,000 Monin ,152 $3.75 $679,320 $680,000 SCLVP ,072 $5.00 $1,350,360 $1,351,000 SCCCP ,259 $5.50 $1,013,423 $1,014,000 MAIN STAR CENTER ,542,162 $2.50 $6,355,404 $6,356,000 TOTAL ACREAGE ,203,676 $3.19 $13,391,596 $13,396,000 ALLOCATION TO SCIP ,900 $4.25 $462,825 $463,000 Allocation between Leased Fee and Leasehold Interests Parcel Identification Size Sq. Ft. Unit Value Fee Simple Rounded Leased Fee Leasehold Star 1A ,202 $4.00 $708,808 $709,000 $700,000 $9,000 Star I B ,099 $4.25 $518,921 $519,000 $465,000 $54,000 Star II ,313 $3.75 $451,174 $452,000 $415,000 $37,000 Star III ,492 $4.50 $240,714 $241,000 $190,000 $51,000 Star IV ,870 $3.75 $1,390,763 $1,391,000 $1,276,000 $115,000 Hit ,056 $3.75 $682,710 $683,000 $587,000 $96,000 Monin ,152 $3.75 $679,320 $680,000 $587,000 $93,000 Total Acreage ,207,184 $3.87 $4,672,409 $4,675,000 $4,220,000 $455,000 Pinellas County Interest Parcel Identification Size Sq. Ft. Leased Fee Star 1A ,202 $700,000 Star I B ,099 $465,000 Star II ,313 $415,000 Star III ,492 $190,000 Star IV ,870 $1,276,000 Hit ,056 $587,000 Monin ,152 $587,000 Fee Simple SCLVP ,072 $1,351,000 SCCCP ,259 $1,014,000 MAIN STAR CENTER ,542,162 $6,356,000 TOTAL ,203,676 $12,941,000 ALLOCATION TO SCIP ,900 $463,000 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 121

123 Income Capitalization Approach (Main Star Center Parcel) Methodology The income approach is developed by converting a forecast of future installments of income into a present value by a capitalization process. There are two types of capitalization: direct capitalization and yield capitalization, also known as discounted cash flow (DCF) analysis. Direct capitalization involves developing a stabilized forecast of income, and capitalizing the income into value using a capitalization rate. Direct capitalization assumes the income forecast and value change will be similar for the subject and comparables analyzed. Yield capitalization requires a forecast of the income stream a property may produce during its remaining useful life or during a specific holding period, and a value reversion (i.e., resale of the property) at the end of the holding period. Development of the cash flow is a forecast predicated upon various assumptions about the property s future performance. The income stream and reversion are discounted to a present value at an appropriate yield rate. Yield capitalization allows modeling of an income stream to reflect potential fluctuations over the holding period, and is of particular importance to investors as it enables one to compare the financial return of the subject with alternative investments. Income-producing properties, by nature, are developed and purchased for investment purposes, where earning power, including an income stream and return of investment, are the most critical elements affecting value. The forecast of income and selection of appropriate rate(s) are therefore important aspects of the valuation process. The steps in developing the income approach are as follows: Analysis of existing lease agreements Market Rent Analysis Vacancy Analysis Expense Analysis Rate Analysis Application of Methodologies Direct capitalization is most applicable to stabilized properties with level income. Yield capitalization recognizes changes in income patterns over a holding period and is most applicable to investment-grade properties, particularly those with multiple tenants, anticipated changes in income patterns and/or anticipated lease turnover. In the case of the subject property, due to emergency repairs and significant capital expense obligation in the current year, direct capitalization has not been deemed an appropriate reflection of value for the property. Yield capitalization (discounted cash flow analysis) is deemed to be the best indication of market value. As previously described in detail, the Main Star Center Property is identified as the Young-Rainey STAR Center. This property is the conversion of a former U.S. Department of Energy defense manufacturing facility to a hybrid (semi-governmental) technology center. The Star Center has recently been declared as surplus property and is proposed to be offered for sale on the open market. Accordingly, this Income Approach attempts to reflect the property as if operated by the private sector, and not by a government entity. The majority of the income stream is attributable to the existing Raytheon lease, which includes renewal options through The income attributable to this lease is closely tied to expense escalation and is considered to have fairly stable income, assuming all lease options are exercised. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 122

124 Historical operating expenses are considered above market due to functional obsolescence inherent with super adequacy and historical governmental expenses to include expenses specifically associated with the Tampa Bay Innovation Center (now relocated), and other intergovernmental costs that would not apply to the private sector. Finally, historical and budgeted capital expenditures for the Star Center are institutional in scope, and are estimated to be above what would typically be proposed by the private sector. This appraisal attempts to adjust expenses where reasonable to reflect market conditions. As noted, the majority of the former facility has been leased over time to Raytheon, a local defense contractor. The primary buildout of this area reportedly contains offices and HVAC Research/Development area which was paid for by the tenant. Additionally, there are smaller high tech tenants as well as professional office tenants such as the Pinellas County Tax Collector. Some of the technology tenants are located within outbuildings that are located west and north of the Main Star Center Building 100. The main building includes a full service cafeteria and meeting/conference rooms that serve as common area for the facility. According to the STAR Center Operations representatives, the facility contains a total of 661,697 feet of total area. As noted, Building 1500 and 1600 areas have been excluded for the purpose of the appraisal. Therefore, the total effective area appraised contains 648,899 square feet (661,697 SF less 12,798 SF). The total effective area is currently 88.07% leased, with 77.84% being represented by the Raytheon lease. A spreadsheet summarizing the existing area within the Main Star Center is as follows: Bldg. 100 Leased Area Constellation Tech. 149 A C; 114 A J; 111 A H; 26,846 Homeland Intelligence Tech., Inc. (336A & 327A 6,486 Homeland Intelligence Tech., Inc. (309A D) 3,107 Pinellas County Tax Collector (Area 357) 9,249 RWR Consulting 320 Raytheon Company Bldg ,013 Raytheon Company Area 149 5,614 Raytheon Storage 7,224 Raytheon Engineering 58,174 S.M. Stoller Corporation 170 I, J & K 1,330 S.M. Stoller Corporation (133 G) 217 Kadoura 133 A& X, 134 K 576 Midwest Technologies 351C 145 Know Howe 451J 163 UAW 136V (2nd Floor Vault) 784 Wildbright Technologies 351D 150 Total Building 100 leased 479,398 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 123

125 Common Areas Bldg. 100 Mail Room (Area 124 K2) 146 General Conference Room (170 N) 1, W Meeting Room 433 STAR Showcase 904 Planning Center 950 Food Service Hallways/Lobby 9037 Stairwells 1797 Elevator #6 174 Bldg. 100, Area 351L 1,307 Total Common Area Bldg ,585 Tenant Support Area Bldg. 100 Young Rainey Star Center Administration 5524 Electrical Mechanical Area 9070 Freight Elevator (mezzanine area used for equipment) 9,066 Total Tenant Support Area Bldg 1. 24,115 Summary of Building 100 Leased Area 479,398 Common Area 26,585 Tenant Support Area 24,115 Unleased Area 56,962 Total Bldg. 100 Area 587,060 Satellite Building Leases Alltorr Building 200 Area Alltorr Building 200 Area Mikros Building 200 Area 5 2,753 Tattle Trail Building 200 Area Precision Circuit Solutions Building 800 2,584 Raytheon Company Sublease Bldg ,085 Raytheon Building 600 Areas A, B, C 3,339 Janus Research Group Building 700 2,980 Total Other Building Leases* 26,886 *Excludes Modular Bldgs. 1500/1600 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 124

126 Satellite Buildings Unleased Bldg ,131 Bldg ,047 Total Satellite Unleased 13,178 Satellite Building Common Area Bldg. 200 Star Tec Center 1,582 Total Satellite Common Area 1,582 Satellite Building Tenant Support Areas Bldg. 400 Tower 1,320 Building 500 Utility Bldg. 18,229 B550 IWNF Bldg. 339 Building 700 Tractor Shed 1,887 Total Satellite Bldg. Tenant Support Area 21,775 Summary of Satellite Buildings Leased Area 26,886 Common Area 1,582 Tenant Support Area 21,775 Unleased Area 13,178 Total Satellite Building Area 61,839 Utility Access Agreements or Licenses Brighhouse Networks Fiberlight Verizon Metro PCS (Tower) Ground Leases Homeland Intelligence Technologies 2,075 Raytheon 53,158 Stoller 9,900 As noted, the majority of the Main Star Center Facility is leased to Raytheon. Other major tenants include the Pinellas County Tax Collector and Constellation Technologies. A summary of the current rental payment for each tenant is included within our appraisal file. A digest is as follows: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 125

127 RAYTHEON LEASE DIGEST- per 26 rd Amendment to Lease Agreement (November 25, 2014) LESSEE: LEASE AREA: Raytheon Company Total building lease square footage increased to 447,449 square feet Additionally Raytheon lease includes the following: 114 parking spaces in Area 1 (East Parking) 240 parking spaces in Area 2 (West Parking) 53,158 square feet in Area 3 (North Parking) All of Area 4 (Northeast Parking) All of Area 5 (West Parking) LEASE TERM: Current lease term runs to 11/30/2018 Existing renewal options: 12/1/ /30/ /1/ /30/ /1/ /30/2033 Lessee may add or reduce building area at their option. The total leased square footage in the property may not fall below 325,000 square feet. RENT: Generally, the rental rate is based on an administrative and operational reimbursement as well as a reinvestment reserve (capital improvement fund). The base ad/op reimbursement is $5.10 per square foot. The capital fund reimbursement varies depending on the specific area. Area 149 includes a plant maintenance charge. Sublease Bldg. 400 is billed separately and includes ad/op reimbursement, reinvestment reserve, fixed rate utilities are $4.00 per square foot and annual Ad Valorem tax. Customer Parking for Area 3 is charged at $0.31 per square foot. Administrative Maintenance/Operational Reimbursement rate- $5.10 per square foot- subject to annual CPI adjustment at a minimum of 2%. The majority of the Raytheon lease is based on a base rate of $1.35 per square foot (subject to adjustment) plus an operational (plant maintenance) cost of $5.10 per square foot plus utility reimbursement. Pro-rata real estate taxes are billed by Pinellas County and are reflected on Income/Expense statements as real estate tax reimbursement. UTILITIES: Lessee will be billed monthly on a prorated basis for all utility cost. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 126

128 PINELLAS COUNTY TAX COLLECTOR- LEASE DIGEST LESSEE: Pinellas County Tax Collector LEASE AREA: 9,249 square feet, second floor east, Bldg. 100 Area 357 LEASE TERM: Five year term- 11/1/2011-8/31/2016 One (1) five year renewal option. Plus up to three (3) successive one year periods. Either party may terminate this Lease for any reason with sixty (60) days notice. RENT: Rental Facility Space $5.07 psf Plant Maintenance $5.10 psf Utilities and Janitorial $3.26 psf Total $13.43psf or $124,215/current yr. As a government entity, the PCTC is exempt from real estate taxes. ESCALATIONS: UTILITIES: TENANT IMPROVEMENTS: LESSEE OBLIGATIONS: 3% per year Included above Star Center Paid for tenant improvements- amount not noted in lease. Routine, non structural repairs and maintenance. CONSTELLATION TECHNOLOGY 2 nd Amendment - LEASE DIGEST LESSEE: Constellation Technology Corporation LEASE AREA: Young Rainey Star Center LMS Areas: 149 A, B, and C; Areas 114 A through J; Areas 111 A-H; Areas 351 A through H- total 26,846 square feet LEASE TERM: Five year term- 8/1/2012-7/31/2017 Three (3) successive one year renewal periods. RENT: Lease amendment removes the prior administrative, maintenance and operations reimbursement and incorporates into one lease rate at $8.37 (current rate) per square foot. Pro-rata real estate taxes are billed by Pinellas County and are reflected on Income/Expense statements as real estate tax reimbursement. ESCALATIONS: Maximum annual CPI increase cap is 6%. UTILITIES: TENANT IMPROVEMENTS: LESSEE OBLIGATIONS: Utilities billed monthly by Star Center. Star Center Paid for tenant improvements- amount not noted in lease. Routine, non structural repairs and maintenance. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 127

129 OTHER TENANTS In addition to the tenants noted above, there are other tenants in the facility that are either very minor in size, have minimal time remaining on their lease, have a lease that is cancellable with short term notice, or are currently tenants at will. HOMELAND TECHNOLOGY INC. Lease includes 3,107 square feet of office space, 6,486 square feet of manufacturing space, and 2,075 square feet of land. Lease commenced 10/1/2010 for one year with three successive one year renewal options. They are currently in the fourth year of the lease. The fifth amendment to the lease calls for one additional one year renewal option. The office space rent includes the $5.10 per plant maintenance/operational expense, $4.08 psf rental, and $1.82 psf fixed utility cost for a total of $11.00 psf. The manufacturing space rent includes the $5.10 per plant maintenance/operational expense, $1.26 psf rental, and $1.82 psf fixed utility cost for a total of $8.18 psf. The ground lease was at $0.31 per square foot. These rates are subject to CPI escalation with a minimum of 6% and a maximum of 18% per year. PRECISION CIRCUIT SOLUTIONS- 2,584 square feet of flex and light manufacturing space located in Building 800. Initial three year term commencing 6/1/2011 through 5/31/2014 plus three successive one year renewal period, unless either party provides written notice of election not to renew within 90 days. Contractual rent calls for minimal base rental rate plus plaint maintenance and monthly utility reimbursement. Current rate is $5.85 per square foot. JANAUS RESEARCH GROUP-2,980 square feet in Building 700. Second amendment to the lease extends the lease term to December 30, Current lease rate is based on rental rate of $4.64 psf, fixed rate utilities at $2.13 psf, and reimbursement of Ad Valorem taxes at $0.42 psf for a total of $7.19 per square foot. Either party can terminate lease within 90 days. MIKROS SYSTEMS CORPORATION-2,753 square feet in Building 200 (Area 5) for one year term commencing October 1, Current lease rate is for base rental rate of $2.76 psf, plant maintenance of $5.10 psf, and fixed utility charge of $2.11 psf for a total of $9.97 per square foot. SM Stoller- This company is the environmental company contracted by the DOE to conduct ground water remediation at the Star Center. They lease a total of 1,330 square feet of space plus they ground lease 9,900 square feet of space. One year lease with successive one year renewal options. Contractual lease agreement rate is well above what other tenants are paying with base rental rate of $9.40 psf plus plant maintenance of $5.10 psf with utilities expenses billed monthly and paid by tenant. EUREST/COMPASS- This is the food concession that runs the on-site cafeteria. The Star Center has extended their contract for Cafeteria Operations through 12/31/2016 and the vendor agreed to make a minimum $30,000 investment in the Café. The current contract rate if $2,675 per year. Smaller tenants- There are a total of seven small tenants who currently lease areas of less than 800 square feet with a remaining lease term of less than one year. Rental rates generally run from $9.97-$11.18 per square foot and include the $5.10 plant maintenance fee, a base rental fee, and fixed utility pass through. All tenants are responsible for pro-rata real estate taxes are billed by Pinellas County and are reflected on Income/Expense statements as real estate tax reimbursement. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 128

130 LICENSE AGREEMENTS- Bright House Networks, LLC- Utility Access Agreement extended to November 30, 2015 to provide digital cable, digital phone and high speed internet to the Star Center. No rent scheduled. Fiberlight, LLC designs, constructs, and maintains an extensive Fiber Optic Infrastructure for a diverse customer base. Fiberlight has a Utility Access Agreement that allows them to provide telecommunication services to the Star Center through November 30, No rent scheduled. Verizon Wireless- Ground and Tower Lease. Ten year license agreement commencing 8/1/ % annual escalation. Current monthly rent is $2,534 per month. Scheduled rent for 2015 is $30,555 per year. MetroPCS- 10 year license agreement for tower commencing 9/1/2006. Current monthly rent is $2,407 per month and will escalate 3% annually. Current scheduled annual rent for 2015 is $28,955 Additional detail available in file for specific tenants. Tenants not detailed are considered to be transitory or tenants at will. MARKET RENT In attempting to analyze the existing contract rent vs. market rent, we have researched the area for market rent comparables for demised lease spaces that would be somewhat comparable with the Raytheon Space which accounts for 78% of the total leased area within the Star Center. A summary and map of this data follows: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 129

131 COMPARABLE RENTAL FACILITY #1 Rental #1 LOCATION: th Street North Pinellas Park, Fl Gateway Business Centre OWNER: TENANT: TERM: RATE: Gateway Business Centre Limited C/O Pridgen Management Inc. Lockheed-Martin Reportedly, there was an extension and expansion of the existing lease including one freestanding building and a portion of a second building located in the Gateway Centre Business Park commencing mid 2011 for 7 year term. This agreement reportedly covered the extension of an existing lease of a 197,504 square foot heavy manufacturing facility and a new lease for 56,700 square foot warehouse/distribution facility. $5.00 per square foot tenant improvement allowance. Blended lease rate was reportedly $5.65 per square foot, NNN. Management reported that the current lease rate is at $6.35 per square foot, triple net. CAM is approximately $2.40 per square foot. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 130

132 IMPROVEMENTS: TH Street- Tilt up panel, rigid frame roof with metal cover, built Approximately 15,490 square feet office and 182,014 square feet manufacturing. 100% HVAC, fully sprinklered upland acres. FAR Gateway Centre Parkway- Tilt up panel, rigid frame roof with metal cover, 56,700 square foot warehouse/distribution facility built ,500 square foot office space, 28 foot ceiling height, fully sprinklered. FAR.39 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 131

133 COMPARABLE RENTAL FACILITY #2 (listing) Rental #2 LOCATION: OWNER: TENANT: TERM: RATE: EXPENSES: IMPROVMENTS: Bryan Dairy East Bryan Dairy Road, Largo, Fl Located at the rear of the Bryan Dairy East Business Park. BACM Bryan Dairy Industrial LLC Listing only Negotiable This property has been listed for several years due to issues relating to foreclosure. Listing rate is $5.50 per square foot triple net. Typical CAM (Insurance, taxes and common area maintenance) runs approximately $2.00-$2.40 per square foot. The business park is comprised of 5 buildings totaling 280,000± SF of industrial, flex and warehouse space situated on 22 acres (FAR.29). This comparable is a listing in the rear building of the park containing 81,000 square feet of space with 12,000 being office, built in % A/C space, dock high and grade level loading doors, 20 to 27 ceiling height, concrete tilt-up construction, sprinklered, 3 phase power, 277/480 volt, 2,400 amps. Metal halide lights, sealed (epoxy) floors, compressed Air. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 132

134 COMPARABLE RENTAL FACILITY #3 Rental #3 LOCATION: 2007 Gandy Boulevard North, St. Petersburg, Florida Gateway Business Park. OWNER: TENANT: Gateway Business Centre Limited C/O Pridgen Management Inc. Jagged Peak (ecommerce platforms) TERM: 7 year term commencing 2013 RATE: EXPENSES: IMPROVMENTS: $5.75 per square foot, triple net. Typical CAM (Insurance, taxes and common area maintenance) runs approximately $2.40 per square foot. Former Jabil Circuits manufacturing facility. Lease encumbers a reported 140,000 square feet of ground floor area and 8,000 square feet of mezzanine space. Specific breakdown between office/production areas not available. Built in Tilt up panels, 8,000 amps of power, non-static flooring, 28 foot ceiling height, fully sprinklered, 100% HVAC, one dock/grade level. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 133

135 COMPARABLE RENTAL FACILITY #4 (listing) Rental #4 LOCATION: OWNER: TENANT: TERM: RATE: EXPENSES: Largo Lakes III, 8575 Largo Lakes Drive, Largo, Florida Largo Lakes HP Largo Lakes III LP Listing only- Former Val Pak. While the property has been marketed for a year, the space has only recently been vacated and available since Val Pak just moved into their new Gateway facility. Negotiable Office space is offered at $6-7 per square foot, triple net. Production space and bulk warehouse is offered at $4.00 per square foot, triple net. Overall blended list rate is $5.22 per square foot. Typical CAM (Insurance, taxes and common area maintenance) runs approximately $2.50 per square foot for office area and $2.00 per square foot for the production/warehouse space- blended rate approximate $2.25 per square foot. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 134

136 IMPROVMENTS: Former Val Pak facility that includes a 60,000 square foot freestanding office building and two contiguous buildings that contain a total of 79,000 square feet of office space and 135,000 square feet of production space. The buildings were constructed between and have tiltwall construction with built up metal roof system. Reported clear height on the production warehouse space is 24 feet, with 100% HVAC area. 12,000 square feet of the office space has mezzanine space above. Fully sprinklered. FAR.47. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 135

137 COMPARABLE RENTAL FACILITY #5 (listing) Rental #5 LOCATION: OWNER: TENANT: TERM: RATE: IMPROVEMENTS: th Avenue North, Largo, Florida (land Lease Star IV), FL Pinellas County Industrial Development Authority (Land Owner). EJB IV LLC Lease Vacant- Formerly Salon Centric Lockheed-Martin Two year sublease only. Sublease listing is at $5.00 per square foot blended rate, triple net. CAM information provided not provided. 120,000 square feet of a 150,000 square foot building including 23,000 square feet of office space and 97,000 square feet of warehouse space. Tilt-wall construction built in % HVAC 30 foot clear height, fully sprinklered, shared truck court with 14 dock high doors. 3 Phase power, 120/240V/2000 Amp power. Indicated FAR.41. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 136

138 COMPARABLE RENTAL FACILITY #6 (listing) Rental #6 LOCATION: OWNER: TENANT: TERM: 8285 Bryan Dairy Road, Largo, Fl, 33773, Bardmoor Palms-East BP Land Holdings LLLP Vacant- Former Eckerd Drug Headquarters. Was occupied by Raytheon until recently. Negotiable. RATE: Leasing agent reports that low clear manufacturing space (75,000 Square Feet) is available at $5.00 per square foot triple net and second floor office space (57,000 square feet) is available at $7.00 per square foot, triple net. Direct Market currently occupies 80,000 square feet of office space at approximately $8.00 per square foot. Renew Life leases office/production space with approximately 80% warehouse area at $5.00 per square foot. A defense contractor leases space (30% office, 70% warehouse) at a blended rate of $6.00 per square foot. CAM runs between $2.00-$2.50 per square foot depending on buildout. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 137

139 IMPROVEMENTS: Formerly the corporate Headquarters for Eckerd Drug, Harrod Properties purchased the property in 2006 and completed a $30 million rehabilitation and expansion of the facility to include updated HVAC systems, new roofs and three level parking structure. Total size of Bardmoor Palms is 564,000 square feet. The main buildings were constructed in 1973 and A 44,000 square foot expansion was completed in 2007 and a three level parking structure was completed in Tilt-wall construction, flat metal frame roofing. The property has 100% generator backup power, clear height varies from 28-36, dock high loading, full sprinklered. A vacant parcel 4.6 acre parcel in the north portion of this development was recently improved with a new YMCA facility. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 138

140 COMPARABLE RENTAL LOCATION MAP Rental Comparables Located Within the Immediate Subject Area Rental Comparables Located Within the Gateway Area VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 139

141 CONTRACT VS. MARKET RENT On a an overall basis, analysis of the six comparables indicates that market rent for large, mixed use office, R&D and manufacturing space in the Mid-County area would range from approximately $5-6 per square foot on a triple net basis. However, this would depend on the amount of tenant improvements which were required, the term of the lease, and the efficiency of the property. In the case of the subject property, the existing Raytheon leased is skewed because Raytheon paid for the majority of their tenant improvements, and must pay the higher than typical utility and plant/maintenance reimbursement rates caused by the age and redundant infrastructure of the subject property. Furthermore, the institutional/governmental grade construction and equipment in the facility have created a significant on-going annual capital expense that would be considered above market. Accordingly, it is very difficult to directly compare the existing Raytheon lease to typical market terms. On a broad brush basis however, CAM (expense pass through) to major industrial tenants typically ranges from $2.00-$2.50 per square foot, to include real estate taxes, building insurance, water/sewer/garbage collection, maintenance and management. Adding the CAM to the $5-6 per square foot market rent above, indicates effective gross rent of $7- $8.50 per square foot. The majority of the Raytheon space is currently leased at rates ranging from $6.45-$6.97 per square foot plus a pass through of real estate taxes and water/sewer/garbage expense. Historical real estate taxes for the subject property are relatively low (approximately $ per square foot), while water/sewer/garbage is expense is high (approximately $0.50 per square foot). Therefore, adding approximately $1.00 per square foot for recent real estate tax and W/S/G pass-thru indicates an effective rent for the Raytheon Lease from $7.45-$7.97 per square foot. While direct comparison is difficult due to differences in overall expense rates (to include capital expenditures), the effective Raytheon lease rate appears generally within the range of the market. There are only six other tenants in the Main Star Center that lease over 2,500 square feet of space. These lease rates range from $5.85-$13.43 per square foot. The lowest lease at $5.85 per square foot does not include fixed utility pass-through, so the equivalent lease would be somewhere in the range of $9.00 per square foot to include utilities. Therefore, the effective range of the existing significant leases is $9.00- $13.43 per square foot plus real estate tax reimbursement; assume approximately $0.47 per square foot. These leases are generally adjusted per CPI. For the purpose of the appraisal, we have assumed that market rent for non-raytheon space would be approximately $10.00 per square foot to include base rent, plant maintenance and fixed utilities, plus real estate tax reimbursement. MARKET VS. HISTORICAL OPERATING EXPENSES Historical operating expenses are considered above market due to functional obsolescence inherent with super adequacy as well as some additional expenses specifically associated with the Tampa Bay Innovation Center (now relocated) and other intergovernmental costs that would not apply to the private sector. Finally, historical and budgeted capital expenditures for the Star Center are institutional in scope, and are estimated to be above what would typically be proposed by the private sector. This appraisal attempts to adjust expenses where reasonable to reflect market conditions. The cash flow analysis presented in this approach is basically a hybrid that attempts to bridge the historical income and governmental expenses of the property with expenses that are market driven. Some expenses, such as utility costs, have not been adjusted. Other expenses, such as contractual obligations for (Star Tec) Tampa Bay Innovation Center and intergovernmental costs have been excluded. Other costs, such as VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 140

142 salaries, overtime and benefits have been adjusted to market. Due to the fact that 78% of the facility is leased to Raytheon and is assumed to be stable- renewal adjustments, estimated marketing time, tenant improvements, leasing commissions, rent abatements, and commissions represent a relatively minor expense. For this analysis, we have utilized a 10-year discounted cash flow analysis. The detail pertaining to tenant income was provided by Pinellas County and checked for accuracy against provided lease summaries. As noted, 78% of the total rentable area is under lease (with multiple options) to Raytheon. Based on historical precedent, we have assumed that any tenant improvements within the existing Raytheon lease or future expansion area will be paid by Raytheon. Generally, the other relatively long term tenants (Pinellas County Tax Collector, Constellation Technologies, Precision Circuit, Homeland Intelligence, etc.) are considered stable with no imminent tenant improvements necessary and generally at or below market rent. Other existing leases are very small, short term and approximately at market rent. Overall, the total property is 88% leased. Total Potential Gross Income- See the Addenda section for detail pertaining to provided budget and historical income/expense data for the subject property. This information in conjunction with review of tenant lease and lease summaries have been utilized in estimating the hybrid income and expense data which has been relied upon for valuation. Scheduled Base Rental Revenue- This is generally based on reported contractual rent assuming that the one year lease renewal options will be exercised. This is very different than when analyzing a property under traditional market scenarios where lease terms are typically for a minimum of three years. Rent has been divided into base rental revenue, base rental step revenue (plant maintenance/operations subject to CPI or other scheduled escalation), and fixed real estate tax/utility reimbursements. Other income is then considered which includes ground leases for parking areas, license agreements, the cafeteria operation, non-fixed utility reimbursements, real estate tax reimbursements and other income. The provided spread sheet provides the breakout for each income item for all existing leases and licenses/agreements. For the purpose of the DCF analysis, base rent is assumed to escalate at 2%, while plant maintenance is estimated to escalate at 3%. Fixed utility reimbursements are estimated to escalate at 5%, which is consistent with the expense escalation. Additionally we have estimated income from new tenant leases. See following discussion for detail. Absorption/Turnover Vacancy- The subject property is currently 88% leased. There are areas within the center such as the former CVS office space that will require substantial tenant improvements in order to be considered leasable at market rates. Other space, generally due to accessibility or other functional issues, will be extremely difficult to lease at any rate. Accordingly, we have estimated that a reasonable stabilized occupancy rate for the subject would be 92%, which is consistent with the overall Pinellas County Industrial Vacancy Rate (Q4 2014) at 8.1%. For renewals or new leases, office tenants are estimated at a base rental rate of $10.00 per square foot including base rent, plant/maintenance and fixed utilities. Additional income would be attributable real estate tax reimbursements. Reasonable tenant improvements are assumed and discussed below. For the Raytheon space, we have generally accepted the existing Raytheon rent structure and assumed reasonable and historically supported escalations. Note that this analysis generally assumes that Raytheon will remain VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 141

143 at the current level of leased area (over 447,000 square feet) and will not exercise their option to downsize to no less than 325,000 square feet. Operating Expenses Personnel Services- The last three years payroll expenses for the subject property are as follows: Payroll $1,476,562 $1,434,208 $1,229,010 This historical expense included full time employees including Division Manager, Professional engineer, HVAC Mechanic, Electrician, Maintenance workers, Craftworkers, and Administrative/ and IT Specialists. Market participants indicate that this level of personnel is excessive. For the purpose of the appraisal, we have estimated 2015 Personnel Expense assuming that two unfilled positions will not be filled and that salaries will be generally based on the mid-level range as published by Pinellas County. For 2016, we have assumed that four craftworkers and the IT positions will be eliminated. We have further assumed annual 3% escalations. Detail is as follows: Position Base # Index Stabilized Pre Index Div. Mgr $95,000 1 $95,000 0 $0 Prof. Eng. $90,000 1 $90,000 1 $90,000 HVAC Mech. $50,000 1 $50,000 1 $50,000 Electrician $45,000 1 $45,000 1 $45,000 Craftworker 3 $45,000 3 $135,000 1 $45,000 Crafterworker 2 $40,000 3 $120,000 1 $40,000 Maint. $38,000 1 $38,000 1 $38,000 Office Spec. $35,000 1 $35,000 1 $35,000 IT $54,000 1 $54,000 0 $0 Subtotal 13 $662,000 7 $343,000 Summary of Personnel Expense: Exec. Salaries $185,000 $90,000 Reg. Salaries $477,000 $253,000 Benefits $231,700 $120,050 Overtime $23,170 $12,005 $916,870 $475,055 Contract Services Contract Services $45,595 $113,197 $129, estimated expense ($136,488) is based on historical data and future budgets with a 5% annual escalation. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 142

144 Star Tec- Pinellas County has a $500,000 annual contractual obligation for Star Tec (Tampa Bay Innovation Center). This entity has relocated and is no longer associated with the Star Center. No ongoing expense has been estimated. Insurance Insurance $286,170 $306, data was not provided. Pinellas County indicated that 2013 and 2014 rates were based on a pool rate including all Pinellas County real estate. As a check for the reasonableness of actual expense vs. market rates, we consulted with a private investor owning several large industrial facilities in the Gateway area. Overall, it was indicated that the 2014 rate for the subject property at approximately ($0.47 per square foot of gross area) was relatively consistent with the market ($ psf). Therefore, we have relied upon the 2014 expense and assumed a 3% annual escalation. Repairs and Maintenance Repairs/Maintenance $745,963 $923,960 $902,297 Pinellas County has reported that the 2014 and 2015 repair and maintenance category includes extraordinary expenses such as emergency roof/misc. repairs and pond maintenance in order to qualify for surface water tax credits. Whereas 2015 expenses will be consistent with 2014, the 2016 budget should be normalized. Reportedly, the 2013 expenses included $86,085 in shutdown expense. Reportedly, every three years there is required shutdown for maintenance on the electrical switchgear and all major power distribution panels as well as maintenance on the facility heating and air conditioning. We have assumed this is a legitimate expense necessary to service the existing infrastructure. Pinellas County has estimated that the budgets for shutdown should be indexed at 20%. Therefore, the estimated repair and maintenance expense items include the noted emergency repair expense in 2015, a stabilized repair and maintenance estimate plus the referenced shutdown expense every three years Repairs/Maintenance $ 930,000 $ 640,025 $ 661,602 $ 681,450 $ 701,894 Shutdown Expense $ $ 103,302 $ $ $ 123,962 Total Repairs/Maintenance Expense $ 930,000 $ 743,327 $ 661,602 $ 681,450 $ 825, Repairs/Maintenance $ 722,950 $ 744,639 $ 766,978 $ 789,987 $ 813,687 $ 838,098 Shutdown Expense $ $ $ 148,752 $ $ $ 178,502 Total Repairs/Maintenance Expense $ 722,950 $ 744,639 $ 915,730 $ 789,987 $ 813,687 $ 1,016,600 Promotion Promotion $14,893 $15,000 $6,225 Historical expense appears low. Assuming non-governmental use, promotional expense was increased to a base level (2015) of $24,000 per year, indexing up 3% annually. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 143

145 Fleet Expense Fleet $16,445 $31,070 $30,674 The 2015 estimated expense ($32,208) is based on historical data and indexed 5% annually. General Administrative General Administrative $83,000 $81,800 $54, expense ($75,000) is based on historical data and future budgets and indexed 3% annually for inflation. Utility Services Utility Services $2,844,781 $2,673,538 $2,720, expense is based on provided operating history (above) and future budgets to include applicable electricity, water/sewer, gas, diesel fuel, and waste management. All utilities in this category are reported as reimbursable with tenant reimbursement loaded for common area. Some utility reimbursement is a part of the monthly rent payments; others are billed separately for reimbursement. The property has a very complex reimbursement schedule. Detail is available in file and includes reimbursement from Star Center land leases. Real Estate Taxes- The last three years real estate tax expense to include a non-ad valorem charge for surface water is noted as follows: Other Charges/Real Estate Tax $240,190 $349,130 $262,372 The 2013 expense is skewed by the payment of excess surface water charges that are proposed to be partially credited back to the subject for 2013 and 2014 (maximum credit $75,000 total). We have estimated a 2015 expense at $300,000, increasing to $345,000 (approx. $0.60 per rentable square foot) in 2016 as the property is privatized. Thereafter, a 5% annual increase has been estimated. The majority of this expense is reimbursable as noted in the historical data and budgets. Net Operating Income- Annual net operating income is estimated based on total income less total operating expenses. Leasing and Capital Costs- Absorption Total rentable area is 574,842 square feet. At 92%, stabilized occupancy would reflect 528,055 square feet leased. Current lease occupancy is 506,284 square feet. Therefore an additional 22,571 square feet must be leased to achieve stabilized occupancy. The majority of this space could be allocated from the former Star- Tec space (containing 26,992 square feet) which is in relatively good condition and would require minor tenant improvement. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 144

146 Tenant Improvements For the purpose of analysis, with a professional marketing effort, we have assumed that the 22,571 square feet (+/-) necessary to reach stabilized occupancy could be absorbed in Year 2 of the cash flow. Furthermore, we have assumed that the tenant improvements for this area would take place in calendar Year 2015 with the lease commencing in Therefore, tenant improvements in 2015 are estimated at $338,565 or $15.00 per square foot for 22,571 square feet. Thereafter, we have assumed a similar expense (indexed up 5% per year) every third year for frictional vacancy. Other years assume minor tenant improvement cost starting at $150,000 and indexing up 5% per year. Again, we are assuming no tenant improvements to the Raytheon space. Leasing Commissions Leasing commissions will be a relatively minor expense due to the majority of the space being under long term lease with options to Raytheon. For purpose of the analysis, we have assumed a leasing commission will be paid in Year 1 of the cash flow for leasing the approximate 22,571 square foot space at $10.00 per square foot with a three year term. A 3% commission on the gross fee would be $20,314, which is equivalent to approximately 6% of estimated TI. A similar ratio is estimated throughout the cash flow. Capital Expenses The scheduled capital expenses provided by Pinellas County over the next 10 years are a staggering $9,802,260. This includes replacement of three chillers for $800,000 each plus replacement of electric switchgear for $1,950,000. According to the chief engineer, there are potential alternatives for these major capital expenditures which would eliminate or reduce the capital cost but potentially increase contract services or other operating expenses. It is our opinion, that a private party would fully investigate these options. For the purpose of the analysis, we have accepted the county s budget for 2015 which includes the replacement of a chiller, air handlers and other miscellaneous items for a total of $1,560,000. Thereafter, we have assumed that the balance of the scheduled expenses ($8,242,260) could be reduced by at least 25% to $6,182,000 (rounded). We have further assumed that these capital expenditures could be harmonized (leveled) throughout the remaining years of the cash flow. DISCOUNTED CASH FLOW ANALYSYS The Discounted Cash Flow Analysis includes a 10-year hold, allowance for tenant improvements, leasing commissions, and scheduled capital investments as discussed. Proceeds at sale are based on Year 11 Net Operating Income capitalized at a 9% terminal cap rate less 2.5% commissions and adjustments. Industrial brokers interviewed noted that conventional financing would be difficult to place for this property and that the probable fund or investor in the subject would be on an unleveraged basis. While traditionally the risk rate would be high based on the unique property type, the fact that the DOE is tied to any future long term redevelopment of the property offsets this risk as well as the significant tenant improvements invested by Raytheon and significant annual capital outlays by Pinellas County. The discount rates tested range from 11 to 13%. See supporting market reports. RealtyRates is private company that provides investment, financial and market data for market participants. RealtyRates publishes a quarterly Investor Survey that includes national mortgage and equity requirements, capitalization and discount rates, and other financial indicators. The RealtyRates Q Investor Survey indicates that overall capitalization rates for Industrial-Climate Controlled/Manufacturing facilities ranges from a low of 5.32% to a high of 12.8% with an average of 9.11% Reported Equity Rates ranged from % with an average of 11.39%. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 145

147 As previously introduced in the appraisal, the RERC report generally reflects yield rates for Industrial Warehouse and R&D ranging from %, going-in cap rates from 7-7.3% and Terminal cap rates from %. Anticipated 1 year growth rates were % in the southern market. Note that these rates assume First-tier investment properties of new or newer quality. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 146

148 Reconciliation Due to the subject property s age and secondary location in relation to distribution channels, the Main Star Center Property would tend to classified as a somewhat lower tier investment, and accordingly would require a higher return than the rates reflected in the Tampa Bay RERC report. Conversely, the Realty Rates Data includes a broad spectrum of properties where the central tendency would more closely reflect the subject age/profile. Accordingly, we have utilized a terminal capitalization for resale at the end of the cash flow based on 9%. As noted, due to the unique nature of the property with environmental concerns, it is likely that the subject would be sold on an equity basis to a specialty fund or well funded private investor. RealtyRates indicates an equity yield rate range from % with an average of 11.39%. For the subject valuation, we utilized test rates at 11, 12 and 13%. On the following page is a rent summary provided by Pinellas County of current leases within the Star Center. Immediately following the rent summary is the discounted cash flow analysis (DCF) reflecting the income and expenses discussed above over a forecast ten year hold. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 147

149 STAR Center Lease Summary Lease# Current Current Rental Term Start Date Term End Date Renewal Options Leased Area Annual Rent Escalation Current Contract ed Rent $/SQFT Base Rent Total Current Plant Maint. $/SQFT Maintenance Total Current Utilities $/SQFT Utilities Total Total Annual Rent Altorr Corporation yr 10/1/2014 9/30/2015 n/a 644 n/a $ 2.76 $ 1, $ 5.10 $ 2.11 $ 1, $ 9.97 $ 6, Bright House Networks (Utility Access Agreement) yr 12/1/ /30/2015 n/a 0 n/a $ - $ - $ - $ - $ - Compass Group (cafeteria operations) yrs 1/1/ /31/2016 n/a 0 n/a $ - $ 30, $ - $ - $ - $ 30, Constellation Technology Corporation yrs 9/1/2012 8/31/ yr 26,846 CPI (Max 6%) $ 8.37 $ 224, $ - $ - $ - $ 8.37 $ 224, Fiberlight (Utility Access Agreement) yr 12/1/ /30/2015 n/a 0 n/a $ - $ - $ - $ - Homeland Intelligence Technologies, Inc yr 10/1/2014 9/30/2015 n/a 6,486 CPI (Min 6%) $ 1.26 $ 8, $ 5.10 $ 33, $ 1.82 $ 11, $ 8.18 $ 53, Homeland Intelligence Technologies, Inc yr 10/1/2014 9/30/2015 n/a 3,107 CPI (Min 6%) $ 4.08 $ 12, $ 5.10 $ 15, $ 1.82 $ 5, $ $ 34, Homeland Intelligence Technologies, Inc. (ground lease) yr 10/1/2014 9/30/2015 n/a 2,075 n/a $ 0.31 $ $ - $ - $ - $ - $ 0.31 $ Janus yr 1/1/ /31/2015 n/a 2,980 3% $ 4.64 $ 13, $ 0.42 $ 1, $ 2.13 $ 6, $ 7.19 $ 21, Kadoura & Co, LLC yr 12/1/ /30/2015 n/a 430 n/a $ $ 5, $ 5.10 $ 2, $ 2.58 $ 1, $ $ 9, Kadoura & Co, LLC yr 12/1/ /30/2015 n/a 146 n/a $ 6.87 $ 1, $ 5.10 $ $ 2.58 $ $ $ 2, MetroPCS Florida LLC ~ Tower (monthly rent $2,406.86) yrs 8/24/2006 8/23/2016 n/a 0 3% $ - $ 28, $ - $ - $ - $ 28, Midwest Technology Ventures yr 10/1/2014 9/30/2015 n/a 145 n/a $ 3.01 $ $ 5.10 $ $ 2.98 $ $ $ 1, Mikros Systems Corporation yr 10/1/2014 9/30/2015 n/a 2,753 n/a $ 2.76 $ 7, $ 5.10 $ 14, $ 2.11 $ 5, $ 9.97 $ 27, Nancy Howe yr 10/1/2014 9/30/2015 n/a 163 n/a $ 3.01 $ $ 5.10 $ $ 2.98 $ $ $ 1, Pinellas County Tax Collector yrs 9/1/2011 8/31/2016 n/a 9,249 3% $ 5.07 $ 46, $ 5.10 $ 47, $ 3.26 $ 30, $ $ 124, Precision Circuit Solutions yr 6/1/2014 5/31/ yr 2,584 CPI $ 0.75 $ 1, $ 5.10 $ 13, $ - $ - $ 5.85 $ 15, Raytheon - Main Area yrs 12/1/ /30/ yr 359,013 2% $ 1.35 $ 484, $ 5.10 $ 1,830, $ - $ - $ 6.45 $ 2,315, Raytheon - Area yrs 12/1/ /30/ yr 5,614 2% $ 9.42 $ 52, $ 5.10 $ 28, $ - $ - $ $ 81, Raytheon - Building yr 5/1/2014 4/30/ yr 14,085 2% $ 3.56 $ 50, $ 5.10 $ 71, $ 4.59 $ 64, $ $ 186, Raytheon - Storage yrs 12/1/ /30/ yr 7,224 2% $ 1.87 $ 13, $ 5.10 $ 36, $ - $ - $ 6.97 $ 50, Raytheon - Engineering yrs 12/1/ /30/ yr 58,174 2% $ 1.87 $ 108, $ 5.10 $ 296, $ - $ - $ 6.97 $ 405, Raytheon - Building A, B, C yrs 12/1/ /30/ yr 3,339 2% $ 1.96 $ 6, $ 5.10 $ 17, $ - $ - $ 7.06 $ 23, Raytheon - Parking yrs 12/1/ /30/ yr 53,158 2% $ 0.31 $ 16, $ - $ - $ - $ - $ 0.31 $ 16, RWR Consulting yr 3/1/2014 2/28/ yr 320 6% $ 2.36 $ $ 5.10 $ 1, $ - $ - $ 7.46 $ 2, S M Stoller Corporation yr 12/1/ /30/2015 n/a 1,330 CPI $ 9.40 $ 12, $ 5.10 $ 6, $ - $ - $ $ 19, S M Stoller Corporation - Ground Lease yr 12/1/ /30/2015 n/a 9,900 CPI $ 0.29 $ 2, $ - $ - $ - $ - $ 0.29 $ 2, S M Stoller Corporation yr 12/1/ /30/2015 n/a 217 CPI (Min 6%) $ $ 2, $ 5.10 $ 1, $ 1.00 $ $ $ 3, Tattle-Trail yr 10/1/2014 9/30/2015 n/a 501 n/a $ 2.76 $ 1, $ 5.10 $ 2, $ 2.11 $ 1, $ 9.97 $ 4, UAW Local yr 12/1/ /30/2015 n/a 784 n/a $ 4.88 $ 3, $ 5.10 $ 3, $ 1.20 $ $ $ 8, Verizon Wireless Communications (monthly rent $2,533.54) yrs 7/5/2006 7/4/2016 n/a 0 3% $ - $ 30, $ - $ - $ - $ 30, WildBright yr 12/1/ /30/2015 n/a 150 n/a $ 3.01 $ $ 5.10 $ $ 2.98 $ $ $ 1, $ 915, $ 2,427, $ 130, $ 3,734, ` VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 148

150 Income ScheduledTenant Base Rent $ 915,526 $ 933,837 $ 952,513 $ 971,564 $ 990,995 $ 1,010,815 $ 1,031,031 $ 1,051,652 $ 1,072,685 $ 1,094,139 $ 1,116,021 Scheduled Tenant Maintenance $ 2,427,903 $ 2,500,740 $ 2,575,762 $ 2,653,035 $ 2,732,626 $ 2,869,258 $ 3,012,720 $ 3,163,356 $ 3,321,524 $ 3,487,600 $ 3,661,980 Tenant Utilities- Fixed $ 130,842 $ 211,687 $ 222,271 $ 233,385 $ 245,054 $ 257,307 $ 270,172 $ 283,680 $ 297,865 $ 312,758 $ 328,396 Utility Reimbursements (net of fixed) $ 2,539,041 $ 2,676,577 $ 2,810,406 $ 2,950,926 $ 3,098,473 $ 3,253,396 $ 3,416,066 $ 3,586,869 $ 3,766,213 $ 3,954,524 $ 4,152,250 Tax Reimbursements $ 264,000 $ 317,400 $ 333,270 $ 349,934 $ 367,430 $ 385,802 $ 405,092 $ 425,346 $ 446,614 $ 468,944 $ 492,392 Misc. $ 25,000 $ 25,750 $ 26,523 $ 27,318 $ 28,138 $ 28,982 $ 29,851 $ 30,747 $ 31,669 $ 32,619 $ 33,598 Income from new tenant lease(s) $ $ 241,450 $ 248,694 $ 256,154 $ 263,839 $ 271,754 $ 279,907 $ 288,304 $ 296,953 $ 305,862 $ 315,037 Total Income $ 6,304,327 $ 6,909,457 $ 7,171,456 $ 7,444,334 $ 7,728,574 $ 8,079,333 $ 8,446,860 $ 8,831,977 $ 9,235,546 $ 9,658,470 $ 10,101,699 Less: Expenses Payroll $ 916,870 $ 489,307 $ 503,986 $ 514,105 $ 534,679 $ 550,719 $ 567,241 $ 584,258 $ 601,785 $ 619,839 $ 638,434 Contract Services $ 136,488 $ 143,312 $ 150,478 $ 158,002 $ 165,902 $ 174,197 $ 182,907 $ 192,052 $ 201,655 $ 211,738 $ 222,325 Star Tec $ $ $ $ $ $ $ $ $ $ $ Insurance $ 315,571 $ 325,038 $ 334,789 $ 344,833 $ 355,178 $ 365,833 $ 376,808 $ 388,113 $ 399,756 $ 411,749 $ 424,101 Repairs/Maintenance $ 930,000 $ 743,327 $ 661,602 $ 681,450 $ 825,856 $ 722,950 $ 744,639 $ 915,730 $ 789,987 $ 813,687 $ 1,016,600 Promotion $ 24,000 $ 24,720 $ 25,462 $ 26,225 $ 27,012 $ 27,823 $ 28,657 $ 29,517 $ 30,402 $ 31,315 $ 32,254 Fleet Expense $ 32,208 $ 33,818 $ 35,509 $ 37,285 $ 39,149 $ 41,106 $ 43,162 $ 45,320 $ 47,586 $ 49,965 $ 52,463 General Administrative $ 75,000 $ 77,250 $ 79,568 $ 81,955 $ 84,413 $ 86,946 $ 89,554 $ 92,241 $ 95,008 $ 97,858 $ 100,794 Utility Services $ 2,856,295 $ 2,999,110 $ 3,149,065 $ 3,306,518 $ 3,471,844 $ 3,645,437 $ 3,827,708 $ 4,019,094 $ 4,220,049 $ 4,431,051 $ 4,652,604 Other Charges/Real Estate Tax $ 300,000 $ 345,000 $ 362,250 $ 380,363 $ 399,381 $ 419,350 $ 440,317 $ 462,333 $ 485,450 $ 509,722 $ 535,208 Total Operating Expenses $ 5,586,432 $ 5,180,883 $ 5,302,709 $ 5,530,736 $ 5,903,414 $ 6,034,361 $ 6,300,994 $ 6,728,657 $ 6,871,678 $ 7,176,923 $ 7,674,782 Net Operating Income $ 717,895 $ 1,728,574 $ 1,868,747 $ 1,913,598 $ 1,825,160 $ 2,044,972 $ 2,145,867 $ 2,103,320 $ 2,363,868 $ 2,481,546 $ 2,426,917 Less: Leasing & Capital Costs Tenant Improvements $ 338,565 $ 150,000 $ 157,500 $ 392,931 $ 173,644 $ 182,326 $ 453,709 $ 201,014 $ 211,065 $ 525,225 Leasing Commissions $ 20,314 $ 9,000 $ 9,450 $ 23,576 $ 10,419 $ 10,940 $ 27,223 $ 12,061 $ 12,664 $ 31,514 Capital Expenses $ 1,569,000 $ 687,000 $ 687,000 $ 687,000 $ 687,000 $ 687,000 $ 687,000 $ 687,000 $ 687,000 $ 687,000 Total Capital and Leasing Costs $ 1,927,879 $ 846,000 $ 853,950 $ 1,103,507 $ 871,063 $ 880,266 $ 1,167,932 $ 900,075 $ 910,729 $ 1,243,739 Cash Flow Before Debt Service $ (1,209,984) $ 882,574 $ 1,014,797 $ 810,091 $ 954,097 $ 1,164,707 $ 977,935 $ 1,203,245 $ 1,453,139 $ 1,237,808 (Potential) Resale Amount $ 26,965,744 Less Commissions & Adjustments $ 674,144 Net Proceeds from Sale $ 26,291,600 Cash Flow $ (1,209,984) $ 882,574 $ 1,014,797 $ 810,091 $ 954,097 $ 1,164,707 $ 977,935 $ 1,203,245 $ 1,453,139 $ 27,529,408 11% $ 13,347,443 $ 12,307,925 13% $ 11,359,693 Est. Real Estate Taxes $ 345,000 $ 362,250 $ 380,363 $ 399,381 $ 419,350 $ 440,317 $ 462,333 $ 485,450 $ 509,722 $ 535,208 Reimbursement 92% $ 317,400 $ 333,270 $ 349,934 $ 367,430 $ 385,802 $ 405,092 $ 425,346 $ 446,614 $ 468,944 $ 492,392 Space Leased with Fixed Utility Reimbursement Fixed Utility Reimbursement Rate $ 3.13 $ 3.29 $ 3.45 $ 3.62 $ 3.80 $ 3.99 $ 4.19 $ 4.40 $ 4.62 $ 4.86 $ 5.10 Fixed Utility Reimbursement $ 130,959 $ 211,687 $ 222,271 $ 233,385 $ 245,054 $ 257,307 $ 270,172 $ 283,680 $ 297,865 $ 312,758 $ 328,396 Total Utiity Reimbursement $ 2,670,000 $ 2,888,264 $ 3,032,677 $ 3,184,311 $ 3,343,527 $ 3,510,703 $ 3,686,238 $ 3,870,550 $ 4,064,077 $ 4,267,281 $ 4,480,645 Net Utility Reimbursements $ 2,539,041 $ 2,676,577 $ 2,810,406 $ 2,950,926 $ 3,098,473 $ 3,253,396 $ 3,416,066 $ 3,586,869 $ 3,766,213 $ 3,954,524 $ 4,152,250 Repairs/Maintenance $ 930,000 $ 640,025 $ 661,602 $ 681,450 $ 701,894 $ 722,950 $ 744,639 $ 766,978 $ 789,987 $ 813,687 $ 838,098 Shutdown Expense $ $ 103,302 $ $ $ 123,962 $ $ $ 148,752 $ $ $ 178,502 Total Repairs/Maintenance Expense $ 930,000 $ 743,327 $ 661,602 $ 681,450 $ 825,856 $ 722,950 $ 744,639 $ 915,730 $ 789,987 $ 813,687 $ 1,016,600 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 149

151 Reconciliation- Income Approach to Value The Discounted Cash Flow Model relies upon a 10-year holding period that assumes that the Raytheon Lease and the other existing tenants will remain at existing lease rates with generally CPI escalation of base rent, 3% escalation of plant maintenance, and 5% escalation of utility reimbursements. Stabilized occupancy is estimated at 92%, which is estimated to be achieved during Year 2 of the cash flow. Leasing costs to achieve stabilized occupancy as well as frictional vacancy are accounted for in annual tenant improvements and leasing commission expense. Expenses are largely based on operating history with market adjustments made for personnel expense and capital expenses. The terminal cap rate is 9% based on Year 11 Net Operating Income. Discounted rates assuming unleveraged returns were selected between 11 and 13%. These rates are supported by published investor surveys and market reports, as well as discussions with industrial market participants. At the mid-point of the discount rate range, the indicated value is equal to $12,300,000 (rounded), which appears reasonable and supported. In our opinion, this Discounted Cash Flow or Yield Model is the best reflection of the actual income potential of the property in consideration of the existing Raytheon lease and historic expenses to include significant capital expenditure necessary to maintain the property over a typical holding period. Accordingly, our estimate of market value via the Income Approach to Value for the Main Star Center property (leased fee interest) as of February 18, 2015 was $12,300,000. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 150

152 Sales Comparison Approach Methodology This 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. In the sales comparison approach, an indication of market value is developed by analyzing closed sales, listings, or pending sales of properties similar to the subject property, using the most relevant units of comparison. The comparative analysis focuses on the difference between the comparable sales and the subject property using all appropriate elements of comparison. A systematic procedure for applying the sales comparison approach includes the following steps: (1) researching and verifying transactional data, (2) selecting relevant units of comparison, (3) analyzing and adjusting the comparable sales for differences in various elements of comparison, and (4) reconciling the adjusted sales into a value indication for the subject. Unit of Comparison The primary unit of comparison selected depends on the appraisal problem and nature of the property. Industrial property is typically measured on physical basis (price per unit/per square foot) as well as on economic basis if the property is leased. Elements of Comparison Elements of comparison are the characteristics or attributes of properties and transactions that cause the prices of real estate to vary. The main elements of comparison that are typically relevant when considering comparables sales are real property rights conveyed, financing terms, conditions of sale, expenditures made immediately after purchase (if applicable), market conditions, (6) location, (7) physical characteristics, (8) economic characteristics, (9) zoning/use, and (10) non-realty components of value, if applicable. Comparable Sales Data A search of data sources and public records, a field survey, and interviews with knowledgeable real estate professionals in the area is also conducted to obtain and verify properties comparable to the subject property that have sold or been listed recently in the competitive market. After researching the market, we have utilized the information pertaining to five closed sale transactions that are all located within the Tampa Bay area. These sales were judged to be the most useful in developing an indication of the market value of the subject property. However, all five sales are significantly smaller than the subject property and, with one exception, were at least partially purchased for owner/occupancy. Overall motivation and scope (size) of the comparable sales found within the market required significant adjustments and therefore, we have placed less emphasis on this approach to value. Included below is a map showing the location of each comparable sale in relation to the subject property. The map is followed by the detail of each comparable as well as a chart summarizing the financial and physical details as well as other motivating/relevant factors. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 151

153 COMPARABLE SALE LOCTION MAP- MAIN STAR CENTER VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 152

154 INDUSTRIAL COMPARABLE 1 Property Identification Property/Sale ID 18301/31799 Property Type Industrial Address 8155 Bryan Dairy Road City, State Zip Largo, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Pinellas Industrial/South Pinellas Industrial Latitude/Longitude / Tax ID Traffic Count 28,500 Bryan Dairy Road Transaction Data Sale Date October 1, 2013 Sale Status Closed Grantor LN45, LLC Grantee HIT Promotional Products, Inc. Property Rights Fee Simple Financing Conventional Conditions of Sale Arm's Length Deed Book/Page 18182/1803 Days on Market 500+ days Sale Price $5,000,000 Adjusted Price $5,000,000 Site Improvements Older rail spur is not active, on-site drainage. Prior to sale some frontage along Bryan Dairy Road was acquired by Pinellas County for roadway improvements which decreased site circulation. Fenced yard, trailer parking. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 153

155 Property Description Gross Building SF 118,897 Net Rentable SF 111,874 Stories 1 Building Condition Average Building Quality Average Construction Class C-Tilt Wall Year Built 1975 Clear Height (ft) 24 Dock-High Doors 11 Sprinklers Wet system Rail Access Inactive rail spur Parking Spaces 200 Pkg/1,000 SF GBA 1.68 Pkg/1,000 SF NRA 1.79 Gross Acres Usable Acres Flr. Area Ratio (FAR) 0.46 Gross Land to Bldg 2.20 Usable Land to Bldg 2.20 Access Bryan Dairy Road Flood Hazard Zone X Future Land Use IL Zoning Jurisdiction Pinellas county Zoning Code M-1 Additional Building Data Demised for two tenants, was purchased by a single owner-user. Dock high (11 doors) and grade level loading. Building contains 15,498 square feet of office area (13.9%) and 96,376 square feet of industrial area (86.1%). 61,874 square feet of the property was reportedly HVAC. New roof in 2013 prior to sale. Tax Data 2014 Taxable Value $4,157,900, Millage Gross Ad Valorem $85,855 Non-Ad Valorem $9,790 Total Taxes $95,645 Physical Indicators $/SF GBA $42.05 $/SF NRA $44.69 Verification Confirmed With Confirmed By John Jenkins, listing broker Leslie A. McKeon Remarks X 2/29/2012 sale (OR Page 547) for $3,555,300 reflects a note of foreclosure. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 154

156 Property was marketed based on 111,874 square feet of gross building area although Pinellas County Property Appraiser indicates size at 121,007 square feet. Buyer was a tenant in half of the building and the sale was conditional upon the other tenant vacating so HIT Promotional could occupy 100% of the building. Subsequent to sale it appears that new HVAC and fire sprinkler system have been updated. Property was reportedly listed for 18+/- months prior to sale. The buyer owns/leases several other properties within the immediate area. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 155

157 INDUSTRIAL COMPARABLE 2 Property Identification Property/Sale ID 18304/31802 Property Type Industrial Address th Avenue North City, State Zip Clearwater, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Pinellas Industrial/South Pinellas Industrial Latitude/Longitude / Tax ID Traffic Count 38, th Avenue, east of 49 th Street North Transaction Data Sale Date June 1, 2014 Sale Status Closed Grantor MDL 1, LLC Grantee Squared Martello LLC Property Rights Fee Simple Financing Industrial Revenue Bonds Conditions of Sale Arm's Length Deed Book/Page 18448/564 Days on Market 345 Sale Price $5,000,000 Adjusted Price $5,000,000 Additional Financing Information Transaction included the assignment of proceeds from Pinellas County Industrial Development Authority for industrial revenue bonds in the amount of $4,845,000 through BB&T. The proceeds are used for acquisition and renovation and are tax free, below market rate. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 156

158 Site Improvements On-site drainage, access from two rights of way, adequate parking. Property Description Gross Building SF 107,500 Building Condition Average Building Quality Average Construction Class Block/Metal Construction Year Built 1989 Clear Height (ft) 24 Dock-High Doors 9 Sprinklers Wet system Whs HVAC % Rail Access No Gross Acres Usable Acres Flr. Area Ratio (FAR) 0.28 Gross Land to Bldg 3.58 Usable Land to Bldg 3.58 Access Bryan Dairy Road and 47th Street North Flood Hazard Zone X Future Land Use IL Zoning Jurisdiction Pinellas Park Zoning Code M-1 Additional Building Data 100% HVAC allocated: 15,000 square feet of office space, 30,000 square feet of HVAC production area with ceiling and 62,500 square feet of HVAC warehouse space. Tax Data 2014 Taxable Value $3,326,700, Millage Gross Ad Valorem $72,160 Non-Ad Valorem $0 Total Taxes $72,160 Physical Indicators $/SF GBA $46.51 Verification Confirmed With Confirmed By Deron Thomas, listing broker Leslie A. McKeon Remarks X The property transferred in May 2013 for $3,193,986. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 157

159 According to the listing broker, the property required partial roof replacement, restroom renovation, and electrical upgrade. Additionally, the buyer opted to install new roll up door and ramps, the exterior was painted and new pain/carpet was put in the office area. The buyer will occupy a portion of the building and intends to lease 30,000-50,000 square feet to a tenant. Initial asking price for the tenant space will be $5.75 per square foot, triple net. Tenant improvements will be negotiable depending on lease terms. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 158

160 INDUSTRIAL COMPARABLE 3 Property Identification Property/Sale ID 18313/31811 Property Type Industrial Address 8700 East Adamo Drive City, State Zip Tampa, Florida County Hillsborough MSA Tampa-St. Petersburg-Clearwater Submarket East Hillsborough Industrial/East Side Industrial Latitude/Longitude / Tax ID Traffic Count 40,000 Adamo Drive Transaction Data Sale Date March 14, 2014 Sale Status Closed Grantor Loebox Company LLC Grantee Family Ford, Inc. Property Rights Fee Simple Financing Cash to Seller Conditions of Sale Arm's Length Deed Book/Page 22467/1255 Sale Price $4,311,760 Adjusted Price $4,311,760 Environmental The property was sold subject to Declaration of Environmental Covenants releasing the seller from and against claims. See OR 22467/1259 Hillsborough County, Fl VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 159

161 Property Description Gross Building SF 145,000 Building Quality Average Construction Class C-Tilt Wall Year Built addition in 1998 Clear Height (ft) 20 Dock-High Doors 5 Sprinklers Wet system Whs HVAC % 7.3 Rail Access Yes Gross Acres Usable Acres Flr. Area Ratio (FAR) 0.17 Gross Land to Bldg 5.92 Usable Land to Bldg 5.92 Access Adamo Drive Flood Hazard Zone X Future Land Use LI-P Zoning Jurisdiction Hillsborough County Zoning Code M Tax Data 2014 Taxable Value $3,820,608, Millage Gross Ad Valorem $77,906 Non-Ad Valorem $1.906 Total Taxes $79,812 Physical Indicators $/SF GBA $29.74 Verification Confirmed With Confirmed By Brian Rettig, broker Leslie A. McKeon Remarks No recent sale history X Sale of former box production plant (International Paper) with large yard storage area/excess land area. The building was purchased by the owners of the nearby Ford dealership to use as a Collision Center and Parts Warehouse. Reportedly, over $2,000,000 is being spent to convert the existing shell. The majority of the building is not HVAC and required a new roof. Reportedly the site had trace levels of arsenic and the buyer purchased subject to release of seller from any claims against the property. The property was offered for lease prior to the sale at $4.00 psf triple net. Reportedly the property was put under contract within weeks of coming to market, but took several months to closing. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 160

162 INDUSTRIAL COMPARABLE 4 Property Identification Property/Sale ID 18315/31813 Property Type Industrial Address 4506 East Acline Drive East City, State Zip Tampa, Florida County Hillsborough MSA Tampa-St. Petersburg-Clearwater Submarket East Hillsborough Industrial/East Side Industrial Latitude/Longitude / Tax ID Transaction Data Sale Date May 29, 2014 Sale Status Closed Grantor TCG I Tampa LLC Grantee GPT Tampa Acline Owner LLC Property Rights Leased Fee Financing Cash to Seller Conditions of Sale Arm's Length Deed Book/Page 22604/38 Sale Price $9,500,000 Adjusted Price $9,500,000 Property Description Gross Building SF 175,535 Building Condition Average Building Quality Average Construction Class C-Tilt Wall Year Built 1986 Dock-High Doors 14 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 161

163 Usable Acres Flr. Area Ratio (FAR) 0.31 Gross Land to Bldg 3.27 Usable Land to Bldg 3.27 Access E. Acline and 45th Street Flood Hazard Zone AE Future Land Use HI Zoning Jurisdiction Tampa Zoning Code IH Sprinklers Wet system Whs HVAC % 11.4 Rail Access Unknown Parking Spaces 125 Pkg/1,000 SF GBA 0.71 Gross Acres Tax Data 2014 Taxable Value $6,488,510, Millage Gross Ad Valorem $135,791 Non-Ad Valorem $3,383 Total Taxes $139,174 Physical Indicators $/SF GBA $54.12 Verification Confirmed With Confirmed By Co-Star and Press Release only Leslie A. McKeon Remarks X $7,500,000 on OR Book Page 1787 Hillsborough County This was an arm's length purchase of a 176,000 square foot production and warehouse bottling facility 100% leased (long term through 2020) to Cott Corporation. The buyer reports that the Year 1 capitalization rate based on the existing lease was 7.9%, while the annualized straight line cap rate was 8.2% including lease escalations. Reportedly, the property was not openly brought to market but was brought to the buyer by a broker they have worked with before. The property was in average condition at the time of sale with no significant deferred maintenance. The representative of the buyer indicated that the property has excess land with the potential for some expansion of the facility. Indicated maximum eave height was 24 feet. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 162

164 INDUSTRIAL COMPARABLE 5 Property Identification Property/Sale ID 18314/31812 Property Type Industrial Address 9105 Sabal Industrial Boulevard City, State Zip Tampa, Florida County Hillsborough MSA Tampa-St. Petersburg-Clearwater Submarket East Hillsborough Industrial/East Side Industrial Latitude/Longitude / Tax ID Transaction Data Sale Date April 11, 2014 Sale Status Closed Grantor International Paper Company Grantee RBX Industrial, LLC Property Rights Fee Simple Financing Conventional Conditions of Sale Sale/Partial Leaseback Deed Book/Page 22517/1647 Sale Price $4,325,000 Adjusted Price $4,325,000 Property Description Gross Building SF 126,930 Building Condition Average Building Quality Average Construction Class C-Tilt Wall Year Built 1982 Clear Height (ft) 29 Dock-High Doors 12 Sprinklers Wet system Whs HVAC % 22.0 Rail Access Yes Parking Spaces 165 Pkg/1,000 SF GBA 1.30 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 163

165 Gross Acres Usable Acres Flr. Area Ratio (FAR) 0.25 Gross Land to Bldg 3.98 Usable Land to Bldg 3.98 Access Sabal Industrial Boulevard Future Land Use CMU-12 Zoning Jurisdiction Hillsborough County Zoning Code M Tax Data 2014 Taxable Value $3,937,956, Millage Gross Ad Valorem $73, Non-Ad Valorem $1,850 Total Taxes $75,076 Physical Indicators $/SF GBA $34.07 Verification Confirmed with Confirmed by Public Records/Press Release. Broker did not return calls. Leslie A. McKeon Remarks No recent sale history. X Sale of traditional warehouse/distribution facility. Sale/Leaseback with seller leasing back the 27,390 square feet of office space. The balance of the space will be leased to new tenant. Property was on the market for over three years prior to sale and sold for 67% of asking price. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 164

166 Transaction Adjustments These items are applied prior to the application of property adjustments. Transaction adjustments include 1. Real Property Rights Conveyed 2. Financing Terms 3. Conditions of Sale 4. Expenditures Made Immediately After Purchase 5. Market Conditions The factors are discussed as follows: The subject property is appraised on a leased fee basis, considering all existing lease obligations. Sales 1, 2, 3 and 5 were transferred on a fee simple basis and were at least partially purchased for owner occupancy. Sale 4 is 100% leased through 2020 to a credit tenant. No specific adjustments have been made to allow for leased fee vs. fee simple conveyance, however, this factor has been considered in the final value estimate. All the properties considered were estimated to be financed with either cash or terms equivalent to cash and no adjustments were considered necessary. The buyers of the properties generally purchased for a specific use and accordingly, some expenditures were made subsequent to sale. This would include a wholesale renovation to Sale 4 that was a box production facility that will be converted for use supporting a major car dealership. For the purpose of comparison, we are analyzing each sale based on the condition/use at time of sale and no adjustments have been made to the sale price for expenditures after sale. All sales have taken place within the last 18 months are considered to reflect current market conditions. No adjustments for market conditions are considered necessary. Property Adjustments Property adjustments are usually expressed quantitatively as percentages that reflect the increase or decrease in value attributable to the various characteristics of the property. In some instances, however, qualitative adjustments are utilized. Property adjustments are applied after the application of transaction adjustments, and include: 1. Locational Characteristics 2. Physical Characteristics 3. Economic Characteristics 4. Use 5. Non-Realty Components of Value, if applicable The adjustments are discussed as follows: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 165

167 Location The subject property is located within the Mid-Pinellas County market at the intersection of two major roadways. Sale 1 is located within the immediate subject rea (just west along Bryan Dairy Road) and has similar locational influences. No adjustment for location is considered necessary. Sale 2 is located along the south side of 118 th Avenue North, just east of 49 th Street North, on the fringes of the popular Gateway area. While this site is not at an intersection, it is closer to I-275 and is considered slightly superior. A 5% downward adjustment has been made to Sale 2 for location when compared to the subject. Sale 3 is located along heavily traveled Adamo Drive, a major industrial/commercial corridor of Tampa, Hillsborough County, FL. Due to the location in Tampa, closer to distribution channels, as well as the commercial/industrial influence of the Adamo Drive frontage, we have made a downward adjustment of 15% to Sale 3 for location. Sales 4 and 5 are located within established business parks within proximity to the prime industrial/distribution corridors of Tampa. While these properties do not have the frontage/visibility of the subject, the overall location is more favorable for industrial use. A downward adjustment of 10% has been made for Sales 4 and 5 when compared to the subject property. When compared with the proposed subject property: Land to Building Ratio Land to Building ratio reflects the ratio between gross land area to gross building area. The inverse of this ratio is Floor Area Ratio (gross building area divided by gross land area). Under M-1 zoning, the maximum floor area ratio (FAR) is.60, which is the equivalent of a land to building ratio. While this FAR/Land to Building ratio is permissible, it is typically considered sub-standard for typical industrial use after consideration of adequate parking, and dock area for truck access. The subject property indicates a land to building ratio of 3.92 to 1 or a FAR of.255, which implies expansion potential. Sale 1, which was noted in the write-up as being subject to recent right of way taking for Bryan Dairy Road improvements, indicates a much lower land to building ratio of A 10% upward adjustment was made to Sale 1 for inferior land to building ratio when compared to the subject. Sales 2, 4, and 5 have similar land to building ratios as the subject property, and no adjustment was considered necessary. Sale 3 has a considerably higher land to building ratio of 5.91 to 1, and was adjusted downward 20% when compared to the subject property. Size (Gross Area) All other factors being equal, based on economy of scale, a smaller property will typically sell for a higher unit value than a larger one. The appraisers found no comparables that were similar in size/use to the subject property. Accordingly, the sales that are utilized in this approach, while significant, are substantially smaller than the subject. The size of the comparables properties ranges from 107,500 square feet to 175,000 square feet. The subject property at 648,899 gross square feet is over 3.7 times larger than the VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 166

168 largest comparable sale. For the purpose of analysis, we have adjusted each comparable sale downward 35% to reflect the size differentials. Load Factor The subject property is a multi-tenant facility that has significant common area and tenant support area equaling approximately 11.4% of the total building. Conversely, the comparables sales were generally purchased as single user facilities that will be virtually 100% rentable. Accordingly, we have made an across the board downward adjustment of 10% to each of the comparables to reflect superior efficiency. Age/Condition On an overall basis, the subject property and all of the comparables are considered in average condition. As noted, the subject was constructed over a period of years from with a significant portion of the bone structure being approximately 50 years old. Sale 1 was constructed in 1975, having an actual age of 40 years. A 10% downward adjustment has been made for age. Sale 2 was constructed in 1989, having an actual age of 26 years. A 15% downward adjustment has been made for age. Sale 3 was constructed in 1968 with an actual age of 47 years. No adjustment was considered necessary for age. Sale 4 was constructed in 1986, having an actual age of 29 years. A 15% downward adjustment has been made for age. Sale 5 was constructed in 1982, having an actual age of 33 years. A 15% downward adjustment has been made for age. Buildout The subject property is nearly 100% HVAC with the majority of the space reflecting production, R&D or office space. Sale 1 was reportedly 52% HVAC with significant production area and minor office space. A 10% upward adjustment has been made for buildout. Sale 2 was reportedly 100% HVAC space with significant office, production and warehouse space. No adjustment is considered necessary for buildout. Sale 3 reportedly has only minor HVAC and office area, accordingly an upward adjustment of 20% has been made for buildout. Sale 4 is a functioning bottling plant. We were unable to confirm the exact percentage of HVAC area, but did confirm office buildout of 11.4%. A 10% upward adjustment has been made for buildout. Sale 5 is a more traditional warehouse with 22% office area. We have made an upward adjustment for buildout of 20%. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 167

169 Clear Height Clear height in industrial property dictates use with higher clear height allowing the flexibility of cranes and other equipment sometimes necessary in production. Typically, higher eave height reflects a premium in the market. The subject property varies, with the majority of the space being 30 clear. Sale 1, 2 and 4 have a clear height of 24 which is a typical industrial height and generally functional in the market. A 10% upward adjustment has been made for inferior clear height. Sale 3 reflects a clear height of 20. A 14% upward adjustment has been made for inferior clear height. Sale 5 reflects a clear height of 29. No adjustment is considered necessary when compared to the subject. Improved Sales Summary- Main Star Center Subject Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5 Sale ID Location 7887 Bryan Dairy Rd Bryan Dairy Rd th Ave. N E. Adamo Dr E. Acline Dr Sabal Industrial Largo, Fl Largo, Fl Clearwater, Fl Tampa, Fl Tampa, Fl Tampa, Fl Sales Data Date of Sale Current Oct 13 Jun 14 Mar 14 May 14 Apr 14 Grantor LN45, LLC MDL 1, LLC Loelox Company LLC TCGI Tampa LLC International Paper Grantee HIT Promotional Squared Family Ford, Inc. GPT Tampa RBX Industrial LLC Products, Inc. Martello LLC Acline Owner LLC Transactional Factors Property Rights Leased Fee Fee Simple Fee Simple Fee Simple Leased Fee Fee Simple Financing Conventional Ind. Rev. Bonds Cash Cash to Seller Conventional Conditions of Sale Arm's Length Arms's Length Arm's Length Arm's Length Arms's length Sale Price $5,000,000 $5,000,000 $4,311,760 $9,500,000 $4,325,000 Price PSF (Gross) $42.06 $46.51 $29.74 $54.12 $34.07 Physical Charactoristics Property Type Industrial Industrial Industrial Industrial Industrial Industrial Use Office/ R & D/Production Manufacturing/Whse. Production/Whse. Former Box Production Bottling Plant Whse./Distribution Gross Bldg. Area 648, , , , , ,930 Construction Type Masonry C Tilt Wall Block/Metal C Tilt Wall C Tilt Wall C Tilt Wall Construction Quality Average Average Average Average Average Average Year Built Condition Average Average Average Average Average Average Land to Bldg. Ratio 3.91 to to to to to to 1 Percent HVAC Nearly 100% 52% 100% 7.30% 11.40% 22% Sprinklered Wet System Wet System Wet System Wet System Wet System Wet System Eave Height 30' 24' 24' 20' 24' 29' Adjustments Location Mid Co. /Major Intersection 0% 5% 15% 10% 10% Land to Bldg. Ratio 10% 0% 20% 0% 0% Overall Gross Area Signifcantly Larger 35% 35% 35% 35% 35% Load Factor 11.40% 10% 10% 10% 10% 10% Age years 10% 15% 0% 15% 15% HVAC/Buildout Heavy R &D 10% 0% 20% 10% 20% Clear Height 30' 10% 10% 14% 10% 0% Net Adjustment 25% 55% 46% 50% 50% Adjusted Price PSF $31.55 $20.93 $16.06 $27.06 $17.04 Other Factors Assemblage with Netural Proposed for 100% Leased to Neutral Nearby Property significant renovation Credit Tenant VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 168

170 Summary of Adjustments The summary of adjustments on the preceding chart indicates an adjusted price per gross square foot ranging from $16.06-$31.55 per square foot. The highest sale (Sale 1 at $31.55 PSF) is one of the smaller properties and was purchased by a company that has several other properties within the immediate area. To some degree, proximity to their existing facilities may have influenced a higher sale price per unit. The next highest sale (Sale 2 at $27.06 PSF) was 100% leased long term to a credit tenant. The lower end of the range (Sale 3 at $16.06 PSF) was the sale of a former box production facility that will be totally renovated ($2,000,000 cost) for the proposed use. The average adjusted sale price is $22.53 per square foot. In addition to the foregoing analysis, we have also alternatively considered the data included in Land Sale #1 for the Main Star Center property of this appraisal. To recap, this transaction reflects the sale of the former Paradyne (now Zhone Technologies) headquarters in the Tampa Bay Area. The property sold for $4,001,000 in December The property is located within the mid-county area at th Avenue North, Largo, approximately one mile northwest of the subject property. The total site reportedly contains approximately acres. The property is improved with one single story office building and one two story office/manufacturing/warehouse facility containing a total of 318,781 square feet constructed in At the time of sale, only 40% of the property was occupied, with a lease running until June Reportedly, the property was in below average condition at the time of sale with considerable functional obsolescence. This was a distressed property that was marketed over an extended period of time and ultimately sold via Auction by Wells Fargo. The buyer was adjoining property owner Harrod Properties. The buyer reportedly has no concrete plans for the property yet, but will probably hold until the existing lease expires for redevelopment. Based on our verification of the sale, the buyer generally considers this property as a redevelopment site with interim contribution to the occupied portion of the property. Based on the sale price and the total size of the existing buildings, the indicated unit value on a price per square foot basis of building area as is would be $12.55 per square foot. Based on the fact that this was an auction sale of a property in below average condition, 40% occupied, we consider this analysis to set an absolute lower limit of value on a unit price basis. Additional detail is located within the sale write-up in the addenda section of the appraisal. In our opinion, the sales provide a reasonable bracket of unit price for the subject property. Additionally, the alternative sale provides a good lower limit of value. Accordingly, we have estimated the market value via the Sales Comparison Approach for the leased fee interest in the Main Star Center property as follows: 648,899 gross square $20.00 per square foot = $12,977,980 Rounded $13,000,000 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 169

171 RECONCILATION AND CONCLUSION MAIN STAR CENTER PARCEL Based on the age/condition and specialty nature of the Main Star Center Property, the Cost Approach to Value was not considered applicable. The Income Approach was applied using a Discounted Cash Flow Analysis that reflects minor adjustments for market based expenses. The Sales Comparison Approach was utilized via five recent sales of large industrial facilities. As noted, the subject property is unique in its history, construction, design and income/expense structure. Both the Income and Sales Comparison Approaches attempt to reflect the strengths and weaknesses of the subject property under current market conditions. The value estimates from these approaches is summarized as follows: Cost Approach to Value Not Applicable Income Approach to Value $12,300,000 Sales Comparison Approach to Value $13,000,000 In our opinion, the most weight should be placed on the Income Approach to Value as a multi-tenant facility with strong income/expense history. The Sales Comparison Approach, while valid, is given slightly less emphasis due to the significant size differential between the subject and recent comparable sales. In the final analysis, we have estimated the market value of the leased fee interest in the Main Star Center as of February 18, 2015 as follows: Twelve Million Five Hundred Thousand ($12,500,000) Dollars This is equivalent to $19.26 per square foot of gross building area. Based on data included within the land valuation section, the allocation between land and improvements is estimated as follows: Land Value 2,542,162 $2.50 per square foot = $6,355,404 Rounded $6,356,000 Improvements $6,144,000 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 170

172 Allocation of Value to SCIP Building Part of the appraisal assignment was to allocate (breakout) value to the SCIP building (Building 400) which is subleased to the United States Military. According to Star Center Management, the building contains a total of 15,405 square feet, although a building layout available at inspection showed a slightly smaller area of 15,314 square feet. The Raytheon lease (U.S. Military sublease) is for 14,085 square feet of the building which excludes the attached 4 story security tower and some storage. The building was reportedly constructed between 1968 and Construction is poured concrete foundation walls and column footings with concrete slab, concrete block exterior walls, flat metal deck with built up roofing, central zoned HVAC system, fully sprinklered. Approximately ceiling height reported at 14 feet. The building contains approximately 2,419 square feet of lobby/office area, 2,347 square feet of classroom space, 3,304 square feet of maintenance area serviced by two overhead doors, and 7,244 square feet of storage/shipping area to include the tower. Ceramic tile and carpet in foyer, lay-in drop ceiling panels with florescent lighting. Production/maintenance area has painted concrete flooring, painted block walks, and exposed ceiling joists. The building also contains a former vault area and clean room. The building was substantially renovated in and is in good condition with good functional utility for office/production/maintenance use. It should be noted that the income paid to the Star Center by Raytheon for this area reflects contract rent of $13.25 per square foot, which includes utilities and contribution for ad valorem taxes. Net of utilities and taxes, the indicated rental rate includes the standard $5.10 per square foot plant maintenance and a reinvestment reserve of $3.56 per square foot. This reinvestment reserve is considerably above the rate paid for the overall Raytheon space and the rate paid by the majority of the tenants within the facility. On a market basis, this appears to be excessive and not supported by market sales. Accordingly, an income approach has not been utilized in allocating value to this portion of the property. Furthermore, as with the balance of the property, a Cost Approach is also not considered applicable. For allocation purposes, we have relied upon the Direct Sales Comparison Approach to Value. Included below a map of three comparable sales and one listing of freestanding industrial buildings in the mid- Pinellas County area that have reasonably similar characteristics to Building 400. Detail is as follows: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 171

173 COMPARALE SALE LOCATION MAP-ALOCATION TO SCIP VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 172

174 INDUSTRIAL COMPARABLE th Street North Property Identification Property/Sale ID 18417/31892 Property Type Industrial Address th Street North City, State Zip Clearwater, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Pinellas Industrial/South Pinellas Industrial Latitude/Longitude / Tax ID Transaction Data Sale Date November 5, 2014 Sale Status Closed Grantor Danielson, Inc. Grantee RG Bldg. LLC Financing Conventional Deed Book/Page 18581/613 Sale Price $1,850,000 Adjusted Price $1,850,000 Property Description Gross Building SF 30,000 Building Condition Good Construction Class C-Tilt Wall Year Built 1998 Clear Height (ft) 22 Rail Access No Gross Acres Usable Acres Flr. Area Ratio (FAR) 0.40 Land to Bldg. Ratio 2.50 Flood Zone X Zoning Jurisdiction Pinellas Park Zoning Code M-1 Land Use IL-Industrial Light VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 173

175 Physical Indicators $/SF GBA $61.67 Verification Confirmed With Deron Thomas, broker Confirmed By Leslie A. McKeon Confirmation Date Remarks X Freestanding office/warehouse facility located along the fringe of the Gateway Area reportedly in good condition. Purchased for use as a single tenant building with 3,500 square feet (12%) finished office space, 2 dock high loading doors and 2 grade level loading doors. Parking appears adequate. At time of sale, the northern 15,000 square feet had been leased for an indoor volleyball facility for a private school. Two years into the lease, the lessee decided to buy the facility. To the broker's knowledge, this was an arm s length sale. Details of existing lease were not disclosed. No recent sale history VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 174

176 INDUSTRIAL COMPARABLE th Street North Property Identification Property/Sale ID 18418/31893 Property Type Industrial Address th Street North City, State Zip Largo, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Pinellas Industrial/South Pinellas Industrial Latitude/Longitude / Tax ID Transaction Data Sale Date August 15, 2014 Sale Status Closed Grantor Joseph E. Gross and Terri S. Gross and Trustee UTD Grantee Salvo Technologies Financing 67% PMM at market Deed Book/Page 18497/765 Days on Market Extended Sale Price $525,000 Adjusted Price $525,000 Property Description Gross Building SF 9,000 Building Condition Good Construction Class S-Steel Frame Year Built 1983 Clear Height (ft) 16 Rail Access No Gross Acres Usable Acres Flr. Area Ratio (FAR).29 Land to Bldg. Ratio 3.4 Flood Zone X Zoning Jurisdiction Pinellas Park Zoning Code M-1 Land Use IL-Industrial Limited VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 175

177 Physical Indicators $/SF GBA $58.33 Verification Confirmed With Robert Barber, broker Confirmed By Leslie A. McKeon Confirmation Date Remarks X Freestanding single tenant building. Prior to sale, the property had been used as a television production studio with finished areas remodeled for digital and sound studio. Office/production area contains 7,620 square feet (85%) of the area, 1,380 square feet (15%) is warehouse space. 3 phase power 600 amp service. Open ceiling 16', finished ceiling 10 feet. Two front loading grade level doors at front of facility. Owner financing was reported by listing broker at market rate and did not impact sale price. No recent sale History. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 176

178 INDUSTRIAL COMPARABLE th Street North Property Identification Property/Sale ID 17673/31379 Property Type Industrial Current Use Manufacturing Address th Street North City, State Zip Clearwater, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Tax ID Transaction Data Sale Date March 14, 2013 Sale Status Closed Grantor Florida Real Estate, LLC Grantee Seaboard Tool Real Estate Holdings, LLC Property Rights Fee Simple Financing Cash to Seller Conditions of Sale Arm's Length Deed Book/Page 17928/1544 Days on Market Extended Sale Price $445,675 Adjusted Price $445,675 Property Description Gross Building SF 10,215 Building Condition Average Construction Class C-Masonry Year Built 1983 Clear Height (ft) 16 Rail Access No Gross Acres Usable Acres Flr. Area Ratio (FAR).38 Land to Bldg. Ratio 2.62 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 177

179 Flood Zone AE Zoning Jurisdiction Pinellas Park Zoning Code M-1 Land Use IL-Industrial Limited Physical Indicators $/SF GBA $43.63 Verification Confirmed With Deron Thomas Confirmed By Leslie A. McKeon Confirmation Date Remarks X No recent sales. Last date of sale was May 2007 for $760,000 (OR Book Pg. 2644) Part of two unit industrial condominium building located within an established industrial park within the Gateway area. Broker reported that he had been the second broker to market the property. Due to the condominium status, the unit had some circulation issues. The building is 100% air conditioned and was used for light assembly. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 178

180 INDUSTRIAL COMPARABLE Starkey Road Property Identification Property/Sale ID 18419/31894 Property Type Industrial Address 1200 Starkey Road (Rear Building) City, State Zip Largo, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Pinellas Industrial/South Pinellas Industrial Latitude/Longitude / Tax ID Transaction Data Sale Date Sale Status Property Rights N/A Listing Leased Fee (1 space leased) 14+ months Days on Market List Price $1,634,160 Adjusted Price $1,634,160 Property Description Gross Building SF 29,712 Building Condition Good Construction Class C-Tilt Wall Year Built 2001 Clear Height (ft) average Rail Access No Gross Acres Usable Acres Flr. Area Ratio (FAR).31 Land to Bldg. Ratio 3.22 Flood Zone X Zoning Jurisdiction Largo Zoning Code N/A Land Use LI-Light Industrial VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 179

181 Physical Indicators $/SF GBA $55.00 Verification Confirmed With Deron Thomas Confirmed By Leslie A. McKeon Confirmation Date Remarks No recent sale history Current listing of freestanding flex space industrial building, built 2001, good condition, 32% leased. Potential for single user or up to four tenants foot clear heights, 3 phase power, part of warehouse area is HVAC, grade level loading. Located behind another industrial building with adequate signage provided along Starkey Road. Grade level loading. Property is also available for lease at rates ranging from $4.50 to $5.85 per square foot triple net, depending on finish area. X VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 180

182 Transaction Adjustments These items are applied prior to the application of property adjustments. Transaction adjustments include 1. Real Property Rights Conveyed 2. Financing Terms 3. Conditions of Sale 4. Expenditures Made Immediately After Purchase 5. Market Conditions The factors are discussed as follows: The allocation to the SCIP parcel assumes fee simple estate. Sales 1-3 sold on the basis of fee simple estate while the current listing is partially leased and assumed to reflect market rent. No adjustment has been made to these transactions for property rights conveyed. All the properties considered were estimated to be financed with either cash or terms equivalent to cash and no adjustments were considered necessary. To our knowledge all of the closed transactions were on an arm s length basis. No adjustment is considered necessary for conditions of sale. Transaction 4 has been adjusted downward 10% due to the status as a listing only. To our knowledge no significant expenditures were required for deferred maintenance or other deficiencies that were necessary to continue the existing use of the sale properties. Accordingly, no adjustments have been made to the sale price for expenditures after sale. All sales have taken place within the last 24 months are considered to reflect current market conditions. No adjustments for market conditions are considered necessary; however more emphasis has been placed on the most recent transactions. Property Adjustments Property adjustments are usually expressed quantitatively as percentages that reflect the increase or decrease in value attributable to the various characteristics of the property. In some instances, however, qualitative adjustments are utilized. Property adjustments are applied after the application of transaction adjustments, and may include: 6. Excess Land 7. Locational Characteristics 8. Physical Characteristics 9. Economic Characteristics 10. Use 11. Non-Realty Components of Value, as applicable. The adjustments are discussed as follows: VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 181

183 Surplus Land The total subject property has a land to building ratio of 7.07 to 1, several times greater than the comparable sales. Surplus land is considered (in market terms) as being more land area than what would be typically necessary to support the improvement size. In the case of the subject property, approximately 2.5 acres is attributed to the SCIP site size. This SCIP land area supports the existing building as well as outdoor fenced vehicle parking/training area. Based on the layout of the property, this additional land could not be independently developed, but could support expansion of the existing building. We were unable to find recent sales of similar improvements that reflected larger than typical land to building ratios. In order to allow for this differential, we have made adjustments based on approximately 50% of market land value, as applied in scale to the comparable. These adjustments ranged from 15-20% as applied to the comparables. Location The subject property is an interior parcel located within the Star Center, located within the Mid-Pinellas County market at the intersection of two major roadways. While the overall center is well located, the specific SCIP parcel has no frontage influence from a major roadway. Sales 1-3 are all interior sales from established industrial parks with no major road influence. Overall, no adjustments have been made to these transactions for location. Sale 4 (listing) is a rear building located behind a building fronting Starkey Road. An upward adjustment of 5% has been made to Sale 4 for location. Size (Gross Area) All other factors being equal, based on economy of scale, a smaller property will typically sell for a higher unit value than a larger one. In general, sales 2 and 3 were considered to be in the same size range as the subject and no adjustment was made to these transactions. Sales 1 and 4 were twice as large as the subject and an upward adjustment of 10% has been made to these two transactions for size. Construction Type/Quality With the exception of Sale 2, all sales have masonry construction of average quality. Sale 2 has Steel Construction with masonry detail. No adjustments for the construction differential were apparent in the market and therefore no adjustment was made. Age/Condition The subject property was reportedly constructed between 1968 and 1986, but was substantially renovated in 2012 and is considered in good condition. Sale 1 is considerably newer than the subject and was considered in good condition. A downward adjustment of 10% as been made to the subject as compared to the comparable. Sale 2 was constructed within the actual age range of the subject and is also reported in good condition. No adjustment for age/condition is considered necessary. Sale 3 is also within the age range of the subject property, but is in average condition and appears dated. An upward adjustment of 20% has been made based on the subject s recent renovation. Sale 4 is a relatively new facility in good condition. A downward adjustment of 15% has been made in relation to the subject for age/condition. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 182

184 HVAC/Buildout The subject property is nearly 100% HVAC with the majority of the space reflecting office/training or service/warehouse space. Sale 1 was reportedly near 100% HVAC with some office area. No adjustment is considered necessary. Sale 2 was reportedly approximately 85% HVAC space with significant office/studio, production and warehouse space. A 5% upward adjustment has been made. Sale 3 reportedly has 100% HVAC production/assembly and office area, however the buildout is dated. A 10% upward adjustment has been made. Sale 4 is a relatively new facility with an estimated 75% HVAC space. The majority of the space was utilized as a volleyball practice facility and is assumed to have minimal buildout. A 10% upward adjustment has been made. Clear Height Clear height in industrial property dictates use with higher clear height allowing the flexibility of use, including stacking systems and other equipment sometimes necessary in assembly/production. Typically, higher eave height reflects a premium in the market. The subject property service/warehouse area has a clear height of approximately 14. The clear height of the comparables varies from All sales have been adjusted downward 2% per height of clear in excess of 14. The summary chart of these adjustments as discussed above follows. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 183

185 IMPROVED SALE SUMMARY SHEET- SCIP IMPROVED SALE ALLOCATION Subject Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale ID Location Bldg. 400 Star Center th St. N th Street N th St. N Starkey Rd. Largo, Fl Clearwater, Fl Largo, Fl Clearwater, Fl Largo, Fl Sales Data Date of Sale Current Nov 14 Aug 14 Mar 13 Current Listing Grantor Danielson, Inc. Joseph E. Gross, et al Florida Real Estate, LLC Saja Realty Grantee RG Bldg. LLC Salvo Technologies Seaboard Tool Real N/A Estate Holdings, LLC Property Rights Property Rights Assume Fee Simple Fee Simple Fee Simple Fee Simple Leased Fee Financing Conventional PMM at market Cash to Seller N/A Conditions of Sale Arm's Length Arms's Length Arm's Length 10% Sale Price $1,850,000 $525,000 $445,675 $1,634,160 Adjustments $0 $0 $0 $163,416 Adjusted Sale Price $1,850,000 $525,000 $445,675 $1,470,744 Price PSF (Gross) $61.67 $58.33 $43.63 $49.50 Physical Charactoristics Property Type Industrial Industrial Industrial Industrial Industrial Use Office/Train./Service/Whse Office/Warehouse Studio/Production/Whse Light Assembly Flex Gross Bldg. Area 14,085 (excl. tower) 30,000 9,000 10,215 29,712 Construction Type Masonry Tilt Wall Steel with Masonry Masonry Tilt Wall Construction Quality Average Average Average Average Average Year Built 1968 and Condition Good Good Good Average Good Land to Bldg. Ratio 7.07 to to to to Percent HVAC Nearly 100% Est. 100% 85% % Est. 75% Eave Height 14' 22' 16' 16' Adjustments Surplus Land 20% 15% 20% 15% Location Interior to Star Center 0% 0% 0% 5% Gross Bldg. Area 10% 0% 0% 10% Age/Condition Renovated 2012/Good 10% 0% 20% 15% HVAC/Buildout Approximately 100% 0% 5% 10% 10% Clear Height 14' 16% 4% 4% 10% Net Adjustment 4% 16% 46% 15% Adjusted Price PSF $64.13 $67.67 $63.70 $56.93 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 184

186 Summary of Adjustments The summary of adjustments on the preceding chart indicates an adjusted price per gross square foot ranging from $ per square foot. The highest sale (Sale 2 at $67.67 PSF) is one of the most recent closed transactions and is located in proximity to the subject. The next highest sale (Sale 1 at $64.13 PSF) is the most recent sale. The lower end of the range is the current listing at $56.93 which was adjusted downward 10% for listing status. The average adjusted sale price is $63.11 per square foot. In our opinion, the sales provide a reasonable bracket of unit price for the subject property. We have placed the most weight on the two most recent sales with support from the other two transactions. Accordingly, we have estimated the market value for the fee simple interest for the SCIP allocation as follows: 14,085* gross square $65.00 per square foot = $915,525 Rounded $916,000 *Valuation does not include common area tower. Allocated: Land $463,000 Improvements $453,000 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 185

187 24/ (S) / C ) /02 12/021 12/ S) / / (S) / / / (S) (S) 38(S) (S) 6 10(S) 19 2(S) (S) The Young-Rainey Star Center Property Environmental Factors As noted earlier, the U.S. Department of Energy Legacy Management maintains an online Fact Sheet and Program Update for the Star Center Property (see addenda) that summarizes the history and current status of the Star Center. A graphic and summary is noted below: (S) 3 9(S) (S) A C A C(C) A C (C) NE Site A A C(C) 9 0(S) 38 (S) (S) WWTA Building 100 Site 3 79(S) 828 (S) 12 29(S) 197(S) (S) 117(S) BRYAN DAIRY RD The NE site has underdone intense bioremediation. Reportedly, the NE site has received a conditional closure of remediation activities. Any development of the site would be monitored by the Florida Department of Environmental Protection. Development of the property would be subject to the proposed Declaration of Restrictive Covenant. The Wastewater Neutralization area was found to contain arsenic, trichloroethene, and vinyl chloride. Groundwater cleanup took place in this area between FDEP issued an approval to proceed with closure of the WWNA. Reportedly, the area was excavated and backfilled with clean soil, but still indicates trace readings. DOE is reportedly working with DEP to establish institutional controls to ensure safe levels. Site closure will reportedly proceed once controls are adequately established. The site would be subject to the proposed Declaration of Restrictive Covenant. The Building 100 area contains two distinct contaminant plumes containing organic solvents and metals. These plumes originate beneath Building 100 and extend beyond the property to the south and east. Monitoring conducted in 2013 and 2014 indicated that these plumes were unstable. At present, Building 100 and the Wastewater Neutralization Area are currently undergoing enhanced bioremediation. Overall, this is a long term remediation project that is funded by the Department of Energy and monitored by an on-site DOE contractor (SM Stoller Corporation). According to the Stoller representative, the contamination is contained below the level of the existing ponds and poses no threat to public safety as long as the Building 100 remains in place and there is no unmonitored development of the property. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 186

188 This appraisal assumes that the current bioremediation program on the Building 100 area will continue (with monitoring) and that the existing use of the property will continue for the foreseeable future with potential for future redevelopment in accordance with proposed restrictive covenants. It is our understanding that any sale of the subject property would be subject to a Declaration of Restrictive Covenant between the Pinellas County Industrial Development Authority (Pinellas County Economic Development Authority) and the Florida Department of Environmental Protection that would run with the property in perpetuity. The Restrictive Covenant includes a requirement that the site(s) must achieve rehabilitation via a Site Rehabilitation Completion Order with Conditions. We interpret this to mean that site remediation must be successfully completed before there could be any redevelopment of the property. It should be noted that a draft of the Declaration of Restrictive Covenant (attachment to letter from DOE to Paul Sacco dated June 2013) references that groundwater contamination on the property is not migrating. This statement appears to be in conflict with the October-December 2014 program update for the Main Star Center parcel (Bldg. 100 and WWNA). This appraisal assumes that there is nothing within the proposed Declaration of Restrictive Covenant that would be in conflict with current site conditions. In addition to the requirement that the property achieve site rehabilitation, the proposed declaration sets forth specific restrictions and engineering controls. A summary is as follows: Groundwater restrictions basically disallow the use of the groundwater under the Restricted Property without FDEP s (Florida Department of Environmental Protection) approval. Furthermore, no drilling for water is permitted other than monitoring wells, remediation wells, or other remedial systems approved by DEP and other agencies. Dewatering must also be conducted under an approved FDEP plan. Additionally, existing stormwater features on the restricted property such as stormwater swales, stormwater detention or retention facilities and ditches cannot be altered, modified or expanded. There can be no construction of new stormwater facilities without FDEP s approval. For the Building 100 area, the restrictions provide that the area of contamination shall be permanently covered and maintained with an impermeable material that prevents human exposure and prevents water infiltration. In evaluating possible impacts to the value of the subject property, the appraisers requested Pinellas County Site Plan Review to review the master drainage plan for the property. This appraisal assumes that two outparcels could be identified and potentially developed, leased or sold. According to Pinellas County, the existing drainage system has adequate capacity to support the development of these two outparcels without requiring additional drainage or alternation of the existing pond system located within the Restricted Area. However, it appears that a portion of one of the contaminant plumes runs through the area of the existing South Pond. We have assumed that this plume runs below the area of the pond and does not affect the current pond system. With this assumption, it does not appear that the groundwater use restrictions would have any significant effect on the utility of the property. Soil Restrictions-This section of the proposed restrictive covenant basically states that any soil excavated from the restricted area must be removed and disposed of with prior approval of the FDEP and in compliance with applicable local, state and federal requirements. This section also states that this would not apply to any areas outside of the restricted area. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 187

189 Land-Use restrictions (Wastewater Neutralization Area Solid Waste Management Unit) on the property prohibit specific uses including agricultural, hotels/lodging, recreational uses, residential uses, educational uses or day care services. As noted in the prior sections of the report, Pinellas County has indicated a strong motivation to protect and maintain existing industrial uses and that a zoning or land use change to the property to permit any alternative use would be unlikely. Therefore, these land use restrictions are not considered to have any significant effect on the utility of the property. In searching for evidence of market based data relative to these groundwater, soil and land use restrictions, the appraisers found several sales of property that included restrictive covenants or other use restrictions on property based on varying levels of environmental contamination. Our research indicates that every situation is unique in respect to the motivation of the buyer, the specific type of contamination, the location of the contamination on site, the effect the contamination has on the use or development of the property, the length of time necessary for remediation, and the party who is responsible. The appraisers have also interviewed numerous industrial brokers as to the potential impact of contamination issues on value and marketability. Basically the opinion was that there are specialty funds and users who are knowledgeable about this issue as it relates to the industrial market and would not limit consideration of a property strictly on the existence of contamination. Obviously, the specific level and type of contamination would play a factor in each individual investment decision. In the case of the subject property, existing environmental contamination is a significant factor. While the Department of Energy currently has a bioremediation program underway, this is a long term process that will require monitoring and restrictive covenants for any redevelopment of the property. Any investor in the property must consider the viability of the Raytheon lease in the context of the short and long term redevelopment potential of the Main Star Center property based on the remediation status. Given the significant improvements that Raytheon has made to the subject property, the suitability of the facility for defense contractor use, and the availability of a skilled workforce, it appears likely that Raytheon will remain in place. If Raytheon stays in place to support the existing building, the bioremediation program can continue with the building in place. Assuming the remediation is successful within a reasonable time frame (say 5-10 years +/-), redevelopment of the property (either with or without Raytheon as a tenant) would be available as an option. Ultimately, the Department of Energy is responsible for the remediation of the property which significantly reduces any long term risk level associated with the contamination. We understand that the DOE is also responsible for the cost of any increased institutional controls (operational costs) during the remediation process. While the environmental contamination is a major consideration, it is our opinion that knowledgeable industrial developers would be willing to work with the DOE/FDEP in the long term remediation and redevelopment of the property. Market data indicates no clear discount for the environmental contamination assuming that DOE has the ultimate responsibility for clean up and there is alternative cash flow to the property. For the purpose of market value, we have made no specific discount for the environmental factors. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 188

190 Certification The undersigned do hereby certify that, except as otherwise stated in this restricted appraisal: 1. This appraisal sets forth all of the limiting conditions (imposed by the terms of the assignment or by the undersigned) affecting the analyses, opinions and conclusions contained in this appraisal. 2. The subject property (interior and exterior) of Building 100 was made on February 9, A subsequent inspection of the satellite buildings was made on February 18, The inspections were made by Leslie A. McKeon, MAI and John S. Menard, MAI in the company of chief engineer Dana Riiska. 3. We certify that to the best of our knowledge and belief, the statements of fact contained in this appraisal are true and correct. We further certify that the reported appraisal analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, unbiased, professional analyses, opinions, and conclusions. We further certify that we have no present or prospective interest in the appraised property, and have no personal interest or bias with respect to the parties involved. 4. We have performed no appraisal 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. Our engagement in this assignment was cont 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. 6. The appraisal analyses, opinions and conclusions were developed and this appraisal has been prepared in conformance with (and the use of this appraisal is subject to) the Uniform Standards of Professional Practice as well as the standards of the Appraisal Institute which includes the provisions providing for review by its duly authorized representatives. 7. This appraisal has been prepared in summary format in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation. Supporting documentation has been retained in our files. 8. The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan, per the FDIC Final Rule on Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), effective September 19, 1990, as defined in 12 CFR Part a.10. To our knowledge, the subject property has no significant natural, cultural, recreational, or scientific value. 9. John S. Menard, MAI and Leslie A. McKeon, MAI are certified under the Florida Real Estate License Law Chapter 475 voluntary certification program for real estate appraisers. As of the date of this appraisal, we have completed the requirements of the continuing education program of the Appraisal Institute and the State of Florida. We do not authorize the out-of-text quoting from or partial reprinting of this appraisal. Further, neither, all, nor shall any part of this appraisal be disseminated to the general public VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 189

191 by the use of media for public communication without the prior written consent of the appraisers signing this appraisal. 10. Statements supplemental to this Certificate of Value, as required by membership or candidacy in a professional appraisal organization, are further detailed in the Qualifying and Limiting Conditions section of this appraisal and, by reference, are made a part hereof. In our opinion, the values of the various components of the subject property, as of February 18, 2015 were as follows: Summary of Value Market Leasehold Leased Fee Pinellas County Identification Acreage Value Interest Interest Interest Land Leases Star 1A 4.07 $709,000 $9,000 $700,000 $700,000 Star 1B 2.7 $519,000 $54,000 $465,000 $465,000 Star II 2.76 $452,000 $37,000 $415,000 $415,000 Star III 1.23 $241,000 $51,000 $190,000 $190,000 Star IV 8.51 $1,391,000 $115,000 $1,276,000 $1,276,000 Monin 4.16 $683,000 $96,000 $587,000 $587,000 Hit 4.18 $680,000 $93,000 $587,000 $587,000 Total $4,675,000 $455,000 $4,220,000 $4,220,000 Fee Simple Vacant Out Parcels Acreage Square Feet Price/PSF Value Rounded SCVLP ,072 $5.00 $1,350,360 $1,351,000 SCCCP ,259 $5.50 $1,013,425 $1,014,000 Total Out Parcels ,331 $5.21 $2,363,785 $2,365,000 Main Star Center Parcel* Acreage Square Feet Price/PSF Value Rounded ,542,162 $2.50 $6,355,404 $6,356,000 Improvements 648,899 $11.73 $6,144,000 $6,144,000 Total $12,500,000 Total Estimated Value $19,085,000 Includes*: SCIP Land $462,825 $463,000 Improvements $453,000 $453,000 Total $915,825 $916,000 Leslie A. McKeon, MAI, SRA Senior Appraiser State-Certified General Appraiser RZ272 John S. Menard, MAI Director State-Certified General Appraiser RZ133 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 190

192 Addenda VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 191

193 Last Deed of Conveyance VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 192

194 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 193

195 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 194

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197 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 196

198 Pinellas County Fact Sheet VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 197

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200 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 199

201 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 200

202 Program Update VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 201

203 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 202

204 Land Sales LAND COMPARABLE 17666/31373 St. Petersburg Housing Authority Property Identification Property/Sale ID 17666/31373 Property Type Industrial Property Name St. Petersburg Housing Authority Property Address NEC of I-275 and Gandy Boulevard City, State Zip Saint Petersburg, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Pinellas Industrial/South Pinellas Industrial Latitude/Longitude / Tax ID Transaction Data Sale Status Listing Grantor St. Petersburg Housing Authority Days on Market Extended List Price $750,000 Property Description Gross Acres Gross SF 162,914 Usable Acres Usable SF 162,914 Street Access Property is accessed via a frontage road along the Shape Utilities Flood Hazard Zone Use Designation north side of Gandy Blvd. Irregular All available AE IL (Industrial Limited) VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 203

205 Zoning Jurisdiction Zoning Code Zoning Description City of St. Petersburg EC Employment Centers Indicators $/Gross Acre $200,535 $/Gross SF $4.60 Verification Confirmed With Confirmed By St. Petersburg Housing Authority Harry C. Bright, III, Leslie McKeon Remarks X The property is located within the Gateway Business Center with frontage and visibility (but no access) along both Gandy Boulevard and I-275. The location is within the core Gateway area of St. Petersburg. Access to the property is via internal roads with the business center. $1,000,000 in July 2010 (OR Bk/Pg: 16973/0982). The City of St. Petersburg Housing Authority purchased the property to construct an office and a small housing project. After the purchase, the Housing Authority found that housing was prohibited on the property. The Housing Authority constructed their office building on the east portion of the property and has had the balance of the property listed for sale for an extended period of time. The property was reportedly under contract for a time at list price for the development of a Charter School. The deal ultimately fell apart because the use as a school required a land use change which would have been inconsistent and not supported by the city. The site has financial incentives for qualified target industries, Ad Valorem Tax Exemption and Quick Action Closing Fund. According to the listing, the property has been approved for a mid-rise office building. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 204

206 LAND COMPARABLE 17651/31358 Belcher Road Property Identification Property/Sale ID 17651/31358 Property Type Industrial Property Name The Belcher Property Address Belcher Road South City, State Zip Largo, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Latitude/Longitude / Tax ID Transaction Data Sale Date November 7, 2013 Sale Status Closed Grantor Eagle FL III SPE, LLC Grantee Belcher Rd, LLC Property Rights Fee Simple Deed Book/Page 18221/2053 Days on Market Approximately 2 years Condition of Sale Bank Sale Sale Price $585,000 Adjusted Price $585,000 Property Description Gross Acres Gross SF 203,406 Usable Acres Usable SF 203,406 Street Access West side of Belcher Road Visibility Corner/Interior Shape Visibility Corner/Interior Average Interior Rectangular Average Interior VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 205

207 Shape Utilities Use Designation Zoning Jurisdiction Zoning Code Zoning Description Rectangular All available IL (Industrial Limited) City of Pinellas Park CH Heavy Commercial Indicators $/Gross Acre $125,279 $/Gross SF $2.88 Verification Confirmed With Confirmed By Mark Klein & Heuchen, Inc. Harry C. Bright, III, Leslie A. McKeon Remarks X The purchaser of the property is a developer and owner of industrial parks (Regent Properties). This is an interior parcel with a right-in, right-out ingress/egress onto Belcher Road. The 2013 AADT count from the FDOT website on Belcher Road in this area was 14,700. The location of the counter is reportedly north of 54th Avenue north and may underestimate the true traffic count of this property. $1,650,000 in December 2005 (OR Bk/Pg: 14868/0252) Mr. Klein reported that the property had been listed approximately two years and had periodically been reduced from a much higher price. It was finally reduced to $550,000 and two parties that had previously been interested got into a 'bidding war' and the property sold at an above asking price of $585,000. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 206

208 LAND COMPARABLE 18351/31837 Brinkmann Property Identification Property/Sale ID 18351/31837 Property Type Industrial Address Camden Field Parkway, East of Falkenburg Road City, State Zip Tampa, Florida County Hillsborough MSA Tampa-St. Petersburg-Clearwater Submarket East Hillsborough Industrial/East Side Industrial Latitude/Longitude / Tax ID and Transaction Data Sale Date June 26, 2014 Sale Status Closed Grantor FR/CAL Interchange, LLC Grantee Brinkmann Instruments, Inc. Property Rights Fee Simple Financing Cash to Seller Conditions of Sale Arm's Length Deed Book/Page 22654/220 Sale Price $1,800,000 Adjusted Price $1,800,000 Property Description Gross Acres Gross SF 328,007 Street Access Camden Field Parkway Shape Generally Rectangular Flood Hazard Zone X Use Designation CMU-12, Community Zoning Jurisdiction Zoning Code Zoning Description Mixed Use Hillsborough County PD Planned Development VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 207

209 Indicators $/Gross Acre $239,044 $/Gross SF $5.49 Remarks No recent sale history X This site is located within an industrial area located between I-75 and South Falkenburg Road, between Causeway Boulevard and Madison in Hillsborough County. The purchase agreement was signed in late This transaction represents the sale of two vacant, platted industrial lots that included the development rights for up to 120,000 square feet of office and 85,000 square feet of light industrial building area. The purchaser is holding the property for future development. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 208

210 LAND COMPARABLE 18352/31838 SLV Property Identification Property/Sale ID 18352/31838 Property Type Industrial Address 6101 Johns Road City, State Zip Tampa, Florida County Hillsborough MSA Tampa-St. Petersburg-Clearwater Submarket North Hillsborough/Northwest Tampa Latitude/Longitude / Tax ID Transaction Data Sale Date September 25, 2014 Sale Status Closed Grantor Islander Development Corporation, LLC Grantee SLV Lighting North America, Inc. Property Rights Fee Simple Financing Cash to Seller Conditions of Sale Arm's Length Deed Book/Page 22830/1235 Sale Price $1,542,500 Adjusted Price $1,542,500 Property Description Gross Acres Gross SF 635,950 Usable Acres Usable SF 422,746 Street Access Johns Road Corner/Interior Shape Utilities Flood Hazard Zone Use Designation Interior Rectangular All available 'X' and 'A' SMU-6 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 209

211 Zoning Jurisdiction Zoning Code Zoning Description Hiilsborough County M Manufacturing Indicators $/Gross Acre $105,655 $/Gross SF $2.43 $/Useable Acre $158,939 $/Useable SF $3.65 Remarks No recent sale history X Sale of large industrial site located just west of the Veteran's Expressway and North of Sligh Avenue, just north of Tampa International Airport in Tampa, Fl. The site included three distinct wetland areas which are not buildable. The site will require on-site retention. The property was purchased for near term development of a corporate headquarters, office and warehouse for SLV Lighting. Phase I will consist of 7,527 square feet of office space and 33,638 square feet of warehouse space. Phase II is proposed to contain 73,275 square feet of warehouse. Total project will contain 114,440 square feet. Overall FAR will be.18. FAR for upland only will be.27. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 210

212 LAND COMPARABLE 18344/31833 Florida RV Property Identification Property/Sale ID 18344/31833 Property Type Industrial Address th Avenue North City, State Zip Saint Petersburg, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Pinellas Industrial/South Pinellas Industrial Tax ID and and Transaction Data Sale Date July 9, 2014 Sale Status Closed Grantor JMI-Daniels Pharmaceuticals, Inc. Grantee Florida RV & Boat Storage, Inc. Property Rights Fee Simple Financing Cash to Seller Conditions of Sale Arm's Length Deed Book/Page 18507/1612 Days on Market 173 Sale Price $285,000 Adjusted Price $285,000 Property Description Gross Acres Gross SF 63,233 Street Access 25th Avenue Rail Access No Visibility Average Shape Rail Access Visibility Utilities Flood Hazard Zone See sketch/remarks No Average All available X VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 211

213 Use Designation Zoning Jurisdiction Zoning Code Zoning Description LI City of St. Petersburg IT Industrial Traditional Indicators $/Gross Acre $196,331 $/Gross SF $4.51 Verification Confirmed With CoStar Remarks No recent sales of the property. X Sale of two non-contiguous parcels for the purposes of RV /Boat storage facility within an established industrial area. Good proximity in relation to I-275 interchange. Sold subject to environmental conditions. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 212

214 LAND COMPARABLE 7503/27274 Bryan Dairy Road Property Identification Property/Sale ID 7503/27274 Property Type Industrial Property Name Bryan Dairy Site Address 6899 Bryan Dairy Road City, State Zip Pinellas Park, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Cross Bayou Latitude/Longitude / Tax ID ; 0340; 0350 Transaction Data Sale Date December 23, 2011 Sale Status Closed Grantor 6900 Bryan Dairy, LLC Grantee Bryan Dairy Acquisitions, LLC Property Rights Fee Simple Conditions of Sale Typical Deed Book/Page 17456/2267 Days on Market 7-8 mos. Sale Price $330,000 Adjusted Price $330,000 Property Description Gross Acres Gross SF 82,114 Shape Rectangular Zoning Jurisdiction Pinellas Park Use Designation CG - Commercial General Zoning Code B-1 Zoning Description General Commercial VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 213

215 Indicators $/Gross Acre $175,059 $/Gross SF $4.02 Verification Confirmed With Confirmed By Kerry Fuller (listing agent at Stonebridge Real Estate Co.) Leslie A. McKeon Remarks X 05 Apr 2005 OR Book /Pg / 0861 $560,000 Generally rectangular, vacant site with good frontage and visibility along Bryan Dairy Road. The property was zoned B-1 prior to sale and generally adjoins office and business park uses. A recent road improvement project along Bryan Dairy Road limited the access from Bryan Dairy Road to right in, right out only. The broker indicated that this changed the highest and best use of the site from commercial (restaurant, bank) to office/industrial use. Based on this perceived change in highest and best use, the property owner changed brokers and significantly reduced the listing price of the property. Subsequent to the sale, the land use of the property was changed from Commercial General to Industrial Limited and rezoned from B-1 to M-1, Light Industrial District VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 214

216 LAND COMPARABLE 18343/31832 Shoot Straight Property Identification Property/Sale ID 18343/31832 Property Type Industrial Address 4594 Ulmerton Road City, State Zip Clearwater, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Pinellas/Gateway Latitude/Longitude / Tax ID and 0030 Transaction Data Sale Date August 23, 2013 Sale Status Closed Grantor TSPFL Holding, LLC Grantee Shoot Straight Clearwater Holding Company Property Rights Fee Simple Financing Cash to Seller Conditions of Sale Bank Sale Deed Book/Page 18143/1071 Sale Price $700,000 Adjusted Price $700,000 Property Description Gross Acres Gross SF 83,200 Usable Acres Usable SF 83,200 Street Access Rail Access Visibility Ulmerton Road & Automobile Blvd. No Good VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 215

217 Corner/Interior Shape Street Access Rail Access Visibility Corner/Interior Shape Utilities Flood Hazard Zone Use Designation Zoning Jurisdiction Zoning Code Zoning Description Corner Generally Rectangular Ulmerton Road & Automobile Blvd. No Good Corner Generally Rectangular All available X M Pinellas Park IPD Industrial Planned Development Indicators $/Gross Acre $366,492 $/Gross SF $8.41 Verification Confirmed With Eshenbaugh Land Co., listing broker Remarks No recent sale history. X Bank sale (subsidiary of Whitney Bank) of a vacant tract of land located within a mixed commercial/industrial section of the Gateway Area. The property was purchased for the development of a gun store and indoor shooting range. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 216

218 LAND COMPARABLE 7687/30551 ASI Property Identification Property/Sale ID 7687/30551 Property Type Commercial Property Name ASI Insurance Corporate Headquarters Address 9500 MLK Street North City, State Zip St. Petersburg, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket North St. Petersburg Tax ID Transaction Data Sale Date February 1, 2012 Sale Status Closed Grantor Lawrence Kadish Grantee ASI RE LLC Property Rights Fee Simple Deed Book/Page 17476/684 Sale Price $4,150,000 Sale Conditions Adj. $150,000 Adjusted Price $4,300,000 Property Description Gross Acres Gross SF 566,280 Use Designation Planned Redevlopment District Zoning Jurisdiction St. Petersburg Zoning Code CCS-1 Zoning Description Corridor Commercial Suburban VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 217

219 Indicators $/Gross Acre $330,769 $/Gross SF $7.59 Verification Confirmed With Confirmed By Dennis Ruppel, Esquire Jeff J. Boyle Remarks No relevant sale history. X Property was the former K-Mart that was subsequently demolished. Reportedly, demolition costs and impact fee credits were offsetting. The property has subsequently been improved with two, 3-story office buildings and five level structured parking for ASI Insurance corporate offices. Approximately $150,000 was required in the demolition and fill requirement for the building pad. Per Pinellas County Property Appraiser, the office facilities contain approximately 241,000 square feet.. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 218

220 LAND COMPARABLE 18342/31831 Tampa Bay Luxury Imports Property Identification Property/Sale ID 18342/31831 Property Type Industrial Property Name Tampa Bay Luxury Imports LLC Address 3201 Gandy Boulevard City, State Zip Pinellas Park, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Latitude/Longitude / Tax ID Part of Transaction Data Sale Date January 9, 2015 Sale Status Closed Grantor Huntley Properties LLC Grantee Tampa Bay Luxury Imports LLC Property Rights Fee Simple Conditions of Sale Arm's Length Deed Book/Page 18643/658 Sale Price $1,600,000 Adjusted Price $1,600,000 Property Description Gross Acres Gross SF 284,185 Street Access Frontage Road, Grand Avenue. Corner/Interior Corner Shape Irregular Corner/Interior Corner Shape Irregular Utilities All available Flood Hazard Zone AE and X Use Designation CG Zoning Jurisdiction Pinellas Park Zoning Code B-1 Zoning Description Business VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 219

221 Indicators $/Gross Acre $245,248 $/Gross SF $5.63 Verification Confirmed With Confirmed By CoStar, press release and public records Leslie McKeon Remarks X No recent arms length sale history. The property is part of a larger parcel. Property was purchased for development of new luxury automobile dealership. The site is actually within the Gateway Centre Business Park, but this particular site has a zoning/land use which permits commercial uses. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 220

222 LAND COMPARABLE 18311/31809 Zhone Technologies Site Property Identification Property/Sale ID 18311/31809 Property Type Industrial Address th Avenue North City, State Zip Largo, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Pinellas Industrial/South Pinellas Industrial Latitude/Longitude / Tax ID Transaction Data Sale Date December 2, 2014 Sale Status Closed Grantor th Avenue N Holdings, LLC Grantee Starkey Lakes III, LLLP Property Rights Fee Simple Conditions of Sale Auction Deed Book/Page 18609/1279 Recording Number Extended Sale Price $4,001,000 Sale Adjustment -$1,912,599 Adjusted Price $2,088,401 Property Description Gross Acres Gross SF 818,057 Street Access 126th Avenue Corner/Interior Shape Street Access Interior Slightly Irregular 126th Avenue VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 221

223 Corner/Interior Interior Shape Slightly Irregular Utilities All available Flood Hazard Zone X Use Designation IL Zoning Jurisdiction Pinellas County Zoning Code M-1 Zoning Description Manufacturing Indicators $/Gross Acre $111,203 $/Gross SF $2.55 Verification Confirmed With Confirmed By Dale Peterson, CBRE Leslie McKeon Remarks X No recent arms length sale history. Property was sold by Wells Fargo. The property is improved with one single story office building and one two story office/manufacturing/warehouse facility containing a total of 318,871 square feet constructed in This was originally the Paradyne headquarters and is now 40% occupied by Zhone Technologies. The Zhone lease runs through June Reportedly the improvements are generally in below average condition with considerable functional obsolescence. This was a distressed property that was marketed over an extended period of time and ultimately sold via Auction by Wells Fargo. The buyer was adjoining property owner Harrod Properties. The buyer reportedly has no concrete plans for the property yet, but will probably hold until the Zhone lease expires for redevelopment. We have estimated that there is some contribution to the leased portion of the property occupied by Zhone Technologies (approximately 127,500 square feet). Allocating $15.00 per square foot for interim use of this area would indicate an improvement contribution of approximately $1,912,500, leaving land contribution at $2,088,500. Based on reported land area at acres, the effective land contribution is $2.55 per square foot. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 222

224 LAND COMPARABLE 7519/30480 ls4622 Property Identification Property/Sale ID 7519/30480 Property Type Industrial Property Name Great Bay Distributors Site Address Valpak Avenue City, State Zip St. Petersburg, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Submarket Gateway Latitude/Longitude / Tax ID , , Transaction Data Sale Date February 29, 2012 Sale Status Closed Grantor Eagle FL V SPE, LLC Grantee GB3 Partners, LLLP Property Rights Fee Simple Conditions of Sale Arm's Length Deed Book/Page 17505/1230 Sale Price $9,750,000 Post Sale Expenses $1,500,000 Adjusted Price $11,250,000 Property Description Gross Acres Gross SF 4,193,957 Shape Use Designation Irregular Industrial Limited/Activity VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 223

225 Zoning Code Zoning Description Center EC Employment Centers Indicators $/Gross Acre $116,847 $/Gross SF $2.68 Verification Confirmed With Confirmed By Don Mastry, Esq. Jeff J. Boyle Remarks X This sale represents the balance of land holdings of the former Sod Farm development conceived by Grady Pridgen. The property was known as La Entrada and is situated within the Entrada Community Development District (DRI)(OR15560/2257) which was originally responsible for all existing land improvements at time of sale to include roadway infrastructure, in-ground utilities and 3 major lake developments responsible for on-site retention. In addition the fee simple property rights are subject to numerous terms, covenants, conditions, restrictions, easements, assessments and possible liens set forth in the Declaration recorded as May 13, 2005 (OR14313/1890). Major easements of record as noted on public record were granted to Halkey-Roberts Corporation (OR14313/1973) and to ValPak Direct Marketing Systems, Inc. (OR14541/1383) which gain access via ValPak Avenue on the north side of the property. We note that subsequent to the closing and dated March 2, 2012, further recorded as of March 5, 2012, a Memorandum of Lease was recorded (OR17507/1355) between GB3 Partners, LLLP (Landlord) and Great Bay Distributors, Inc. (Tenant). This was a 30 year land lease with four (4) five year options. It was note by Mr. Donald Mastry, Esq. this lease was not arm's length, but related parties. The property is under construction with a 270,000 SF distribution facility (Anheuser Busch) which will include a private solar energy system when completed in A representative of ARCO MURRAY (project contractor for Great Bay Distributors) reported that there was an additional 150,000 cubic yards of fill that had to be utilized on site that would represent an extraordinary development cost. The estimated cost for the fill was $1,500,000. Therefore, total adjusted acquisition cost is $11,250,000 ($9,750,000 + $1,500,000) VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 224

226 LAND COMPARABLE 7684/27291 Baycare Health Property Identification Property/Sale ID 7684/27291 Property Type Office Land Property Name Baycare Health System Land Address 2985 Drew Street City, State Zip Clearwater, Florida County Pinellas MSA Tampa-St. Petersburg-Clearwater Latitude/Longitude / Tax ID Transaction Data Sale Date February 6, 2012 Sale Status Closed Grantor Clearwater Housing Authority Grantee BayCare Health System, Inc. Property Rights Fee Simple Deed Book/Page 17487/1376 Recording Number Public Records Sale Price $4,380,000 Sale Conditions Adj. $2,500,000 Adjusted Price $6,880,000 Property Description Gross Acres Gross SF 1,731,074 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 225

227 Shape Zoning Jurisdiction Use Designation Zoning Code Zoning Description Rectangular Clearwater R/OL - Residential/Office Limited O Office Limited District Indicators $/Gross Acre $173,125 $/Gross SF $3.97 Verification Confirmed With Confirmed By Ed Armstrong III Esq. Jeff J. Boyle Remarks No relevant sale history. X Property was formerly owned and utilized by the Clearwater Housing Authority for low cost housing. Prior to the acquisition by the housing authority the property was utilized as a borrow pit for the expansion of McMullen-Booth Road. As a consequence, it was reported by Mr. Armstrong that the site had settled over the years and $2,500,000 of fill was required to bring the property to buildable grade. The sale was subject to a Development Agreement between the City of Clearwater and the Baycare Health Systems, Inc. Baycare has subsequently developed the property with a 156,000 square foot corporate office facility. The site has approvals for up to 300,000 square feet. Part of the agreement required a rezoning from Medium Density Residential (MDR) and Commercial (C) to Office (O) and a land use plan amendment from Residential Medium (RM) and Residential/Office/Retail (ROR) to Residential/Office Limited (R/OL). VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 226

228 LAND COMPARABLE 17068/30943 Property Identification Property/Sale ID 17068/30943 Property Type Commercial Property Name Amazon Site Address th Street NE City, State Zip Ruskin, Florida County Hillsborough MSA Tampa-St. Petersburg-Clearwater Latitude/Longitude / Tax ID U US , U HZ , U HZ Transaction Data Sale Date October 9, 2013 Sale Status Closed Grantor South Shore Corporate Park, LLC Grantee RELP Tampa, LLC Property Rights Fee Simple Financing Cash to Seller Conditions of Sale Arm's Length Deed Book/Page 22197/891 Sale Price $14,629,400 Adjusted Price $14,629,400 Property Description Gross Acres Gross SF 3,464,278 Usable Acres Usable SF 3,464,278 Shape Irregular Rail Access Shape Use Designation Zoning Jurisdiction Zoning Code No Irregular SMU-6 Hillsborough County PD VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 227

229 Zoning Planned Development Indicators $/Gross Acre $183,951 $/Gross SF $4.22 Verification Confirmed With Confirmed By Eric Clausen - Inland Real Estate Group John Menard Remarks No relevant sale history. X According to a number of local news articles, the site was sold to USAA Real Estate Co. (the real estate arm of insurance giant USAA). USAA is under construction with a distribution/warehouse which will be leased to Amazon. USAA Real Estate Co. works with Amazon in developing its distribution centers. Amazon was negotiating to open a fulfillment center for nine months +/- prior to sale. In return for constructing the facility in Ruskin and providing permanent employment, economic incentives of $6.4 million in property tax breaks over seven years and $1.1 million in payments for providing 375 aboveaverage paying jobs will be provided by Hillsborough County. The warehouse is to contain one million +/- square feet of space. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 228

230 Financial Information Provided by Pinellas County VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 229

231 2014 Ad Valorem Worksheet VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 230

232 Actuals Fiscal Year 2014 & Budget 15 through 20 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 231

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235 Assumptions Fiscal Year 2014 VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 234

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238 CIP Budget Details Fiscal Year & Projected VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 237

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241 Area of Restrictive Covenants NE Site WWTA Building 100 Site BRYAN DAIRY RD VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 240

242 Qualifications VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 241

243 Qualifications of Leslie A. McKeon, MAI, SRA Senior Appraiser Valbridge Property Advisors Entreken Associates, Inc. Independent Valuations for a Variable World State Certification Florida State-Certified General Real Estate Appraiser RZ272 Education BS, Real Estate Florida State University Contact Details x 205 (p) (f) lmckeon@valbridge.com Valbridge Property Advisors Entreken Associates, Inc th Street North St. Petersburg, FL Membership/Affiliations: Appraisal Institute MAI, SRA Member Florida Gulfcoast Chapter of the Appraisal Institute Member Appraisal Institute & Related Courses: Completed all required coursework necessary for MAI and SRA designations. Experience: Senior Appraiser Valbridge Property Advisors Entreken Associates, Inc. (2013-Present) Vice President McKeon & Menard, Tampa, Fl. ( ) President/Principal McKeon & Stroud ( ) Senior Appraiser Glenn E. McCormick Co., Inc. ( ) Leslie McKeon has completed a wide variety of real estate appraisal assignments for financial institutions, law firms, and corporations. Appraisal experience includes: Eminent Domain Commercial Litigation Estate and Tax Planning Corporate Real Estate Portfolio Commercial and Multi-Family Loan Underwriting Toxic/REO Assets Real Estate Tax Appeal Environmental Sensitive Lands Less Than Fee Interests Corridor Real Estate Appraisal Review VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 242

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245 Qualifications of John S. Menard, MAI Director Valbridge Property Advisors Entreken Associates, Inc. Independent Valuations for a Variable World State Certification Florida State-Certified General Real Estate Appraiser RZ133 Education B.S., Business Management & Economics University of Tampa Contact Details x 202 (p) (f) jmenard@valbridge.com Valbridge Property Advisors Entreken Associates, Inc th Street North St. Petersburg, FL Membership/Affiliations: Greater Tampa Association of Realtors National Association of Realtors The Appraisal Institute - MAI, SRPA Designation West Coast Florida Chapter - Appraisal Institute Past President Past Chapter Representative to the State Region Past Admissions Chairman Past Candidate Guidance Chairman Region X Appraisal Institute Past Regional Panel Member Appraisal Institute & Related Courses: American Institute of Real Estate Appraisers: Real Estate Appraisal Principles Basic Valuation Principles Capitalization Theory and Techniques Case Studies in Real Estate Valuation Valuation Analysis Industrial Property Valuation Litigation Valuation Standards of Professional Practice Standards of Professional Practice Update Society of Real Estate Appraisers: Applied Income Property Valuation Appraisal Institute: Standards of Professional Practice Part A & B Various Seminars on Real Estate Issues VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 244

246 Experience: Valbridge Property Advisors Entreken Associates, Inc. Director, January Present Preparation of narrative appraisal reports for the valuation of commercial real estate in the Tampa Bay area and State-wide. McKeon & Menard, Tampa, Florida Managing Director, Present Preparation of narrative appraisal reports for the valuation of commercial real estate in the Tampa Bay area and State-wide. Knight Appraisal Services, Inc. Tampa, Florida Senior Appraiser, John S. Menard Appraisals Independent Appraiser, Glenn E. McCormick Co., Inc. St. Petersburg, Florida Staff Appraiser, *Qualified as expert witness in local courts. VALBRIDGE PROPERTY ADVISORS Entreken Associates, Inc. Page 245

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