COMMERCIAL APPRAISAL REVIEW

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1 COMMERCIAL APPRAISAL REVIEW SAMPLE Borrower/Property Name: Property Address: Property Type: Company, Inc./ County Highway AB, Blooming Grove, WI Mini-Warehouse Storage Facility Appraiser/Firm: Kevin F. Meicher, Brian J. Richardson/Meicher Real Estate LLC Date of Report: 5/12/2011 Interest Valued: Fee Simple Type of Value: Market Value Loan Officer/ Bank Type of Report: Complete Summary Value Estimate Reviewer: J. Travers Price, CGA#221 Real Estate Underwriting Services As Is Value $1,425,000 As Is 5/6/2011 Review Date: Review Type: Desk Field OK NA Inadeq. Omitted Comments 1. GENERAL REQUIREMENTS Address or Other I.D. City & State Legal Description p. 14 Interest Being Appraised Fee Simple FF & E/Personal Property None included Purpose of Appraisal p. 15 Function of Appraisal p. 15 Definition of Value p. 15 Scope of Appraisal p. 18 Effective Date of Value 5/6/2011 Limiting Conditions Est. Exposure Time 6-12 months Address or Assigned to Bank Compl w/uspap & FIRREA Appraiser Competency Extraordinary Assumptions Relat. Of Fractional Interests Cert. Reg. Prohib. Influences Subj. Sale History p REGIONAL/CITY DATA Current Populations p. 24 Growth Trends Economic Health 3. NEIGHBORHOOD Stage (%) of Development p. 46 Surrounding Improvements Adaptability of Subject Trend Prox. To Frwys, Shop g etc. 1

2 OK NA Inadeq Omitted Comments 4. SITE DATA Dimensions 242,150 SF Area Irregular Topography Level Bearing Quality Water/Sewer/Utilities All available Zoning & Conformance C-1 and C-2 Deed/Other Use Restrictions None Noted Street Surface Curb & Gutter Desig. Flood Hazard Area Zone Envir. Hazards Commentary Special Assessments Check Proposed Publ. Impr. s Check Easements/Affect on Value None Noted 5. IMPROVEMENTS Age Physical Condition Number of Stories One Number of Buildings 7 Mini Warehouse, 3 Warehouse/Shop Gross Area By Type: Total Dimensions Net Rentable Area (NRA) Method of Measuring NRA Functional Efficiency Envir. Hazards Commentary ADA Commentary Construction Details: Walls, Roof, Floors Interior Finishes Mechanicals Sprinklers Special Equipment Outside Improvements Parking 49,140 SF 6. Highest & Best Use/Marketability Highest & Best Use Analysis Commercial Development Mkt. Supply/Demand, New Const., Occupancy, etc. Subj, s Direct Competition Proximity, Size, Age, Cond n, Amenities, Occ., Rents, Lease Terms, etc. Condo or Subdiv. Compet n: Location/Identification Number of Lots Date of Market Entry Absorption History Price Incr. History Price/Sq. Ft. Financing Availability 2

3 OK NA Inadeq Omitted Comments 7. ASSESSED VALUE Land $360,500 Improvements $864,400 Total $1,224,900 Equalized Val. Ratio 97.64% Indic. Val. Per Assessment 8. LAND VALUE Number of Comp. Sales 6 Land Sales, 1 Listing Comp. s Described as to: Location Size Utilities Zoning Spec. Assessments Time of Sale Conditions of Sale Cash Equiv. Adjustment Land Residual Method Subj. Land Acquis. Detail Value Concluded $485, COST APPROACH Data Source Identified Marshall Valuation Service Bldg. Areas Agree W/Descr. Accrued Depreciation 8.57%-28.57% Mathematics O.K. Est. Completion Date Explain Approach Omission Value Concluded $1,450, INCOME APPROACH Rental Val. Market Support 4 Mini-Storage Warehouse Comps Other Income Support Details of Exist g Leases Concessions Absorption Vac. & Coll. Allowance 20% Operating History Expense Est. Support Cap./Disc t Rate Support 9% DCF Input Detail & Support Mathematics O.K. Explain Approach Omission Value Concluded $1,420, SALES COMPARISON APPROACH Number of Comp s 5 Sales Comparables Description of Comp. s Location Size (No. Units, etc.) Age Condition & Amenities Lease Cond. & Vac. Sale/Option Date Selling Price Cond ns of Sale Cash Equivalency Analysis Adj. Of Comp. s to Subj. Explain Approach Omission Value Concluded $1,380,000 - $1,475,000 3

4 12. FAIR LENDING Ref to race, age, sex, religion, etc.? Negative Commentary Supported OK NA Inadeq Omitted Comments 13. Correlation/Final Value Certification Explanation of Decision p. 117 General Certification Section I Personal Inspection Certif. Signature(s) 14. Addenda City Map or Excerpts Subject Photos Neighborhood Photos Floor Plan Plot Plan Appraiser Qualifications Engagement Letter Attached 15: Review Comments: Note: In accordance with federal guidelines on real estate appraisals, it is the policy of Bank to obtain reviews on third party appraisals. The purpose of this review is to (1) check the report for compliance with Title I of the Federal Institutions Reform and Recovery Enforcement Act (FIRREA) and with the Uniform Standards of Professional Appraisal Practice (USPAP); (2) form an opinion as to the adequacy and relevance of the comparable data presented and the adjustments to such data; (3) form an opinion as to the opinions and conclusion in the report as appropriate and reasonable. Client & Intended User of the Review Bank. Intended uses of the Review Provide a value from which loan underwriting decisions will be made. Qualifying Factors and Scope of Work for this Appraisal Review: This is a desk review; an external physical inspection of the subject property and comparables was not made. The reviewer has read and analyzed the information furnished in the report. The purpose of this activity is to provide an opinion of the appraisal s reasonableness and its conformance in accordance standards and guidelines and to determine the appraisal s acceptability with regard to adequately supporting the value conclusion. In addition, the purpose of this review is for quality control and compliance with appraisal review standards as promulgated by the Uniform Standards of Professional Appraisal Practice (USPAP). This review document includes a summation of the description of subject property, of the data used, methods employed and the assumptions and conclusions made by the appraiser in order to familiarize the reader with the property under review. This summation also is used as the basis for critiquing the reasonableness of the content of the report and for discussing the appraiser s methodology for determining the value. It is from this data that the reviewer will further discuss any concerns about the rational for the opinions and conclusions in this review document. Any assumptions and conclusions in the review are based only on the information contained in the appraisal report and upon the reviewer s knowledge and experience. If the data or data analyses, method used, assumptions made or errors found in the report make the conclusion questionable, they will be reported in this review with appropriate comments and recommendations. 4

5 This review report is intended to provide an opinion of the appraisal s conformance in accordance with regulations, standards and guidelines and to determine the appraisal s acceptability with regard to adequately supporting the value conclusion. This review is made in context of market conditions as of the effective date of the report. Any information that may be obtained that was not available to the appraiser was not used by the reviewer in the development of this review pertaining to the quality of the work under review. IN REVIEWING THIS APPRAISAL, DID THE REVIEWER: 1....develop an opinion as to the completeness of the material under review within the scope of work applicable in the assignment (i.e. completeness of the report within the context of reporting requirements for the type of report submitted)? USPAP Regulation S.R. 3-1 (d.) 2....develop an opinion as to the apparent adequacy and relevance of the data and the propriety of any adjustments to the data? S.R. 3-1 (e.) YES 3....develop an opinion as to the appropriateness of the appraisal methods and techniques used and develop the reasons for any disagreement? S.R. 3-1 (f.) YES 4....develop an opinion as to whether the analyses, opinions, and conclusions in the work under review are appropriate and reasonable and develop the reasons for any disagreement? S.R. 3-1 (g.) 5. Was the original report amended? NO 6. Did the reviewer replace any items deemed not to be in compliance, with information or analysis developed in conformance with USPAP Standard 1? (If Yes, See Reviewer Comments) 7. Was a reviewer s determination developed in accordance with USPAP Standard 1? (If Yes, See Reviewer Comments) 8. Does the report (as corrected/amended) meet the minimum requirements of USPAP? 12 CFR (a.) YES 9. Was this a written report, which contained sufficient information and analysis to support a transaction decision? 12 CFR (b.) YES 10. Were appropriate deductions/discounts made for proposed construction, renovation, partially leased buildings, non-market lease terms, and tract developments with unsold units? 11. Was the definition of market value used as set forth in 12 CFR (g)? NO NO YES NO N/A YES YES 12 CFR (c.) YES 12 CFR (d.) YES 12. Was the appraiser(s) currently state licensed or certified in the state where the property is located? 12 CFR (e.) YES 13. In considering neighborhood trends, an appraiser must avoid stereotyped or biased assumptions relating to race, age, color, religion, gender or national origin or any assumption that racial, ethnic or religious homogeneity is necessary to maximize value in a neighborhood. Further, an appraiser must avoid making an unsupported assumption or premise about neighborhood decline, effective age, and remaining economic life. This appraisal has been reviewed for any such biases or unsupported assumptions and to the best of my knowledge complies with the requirements of current legislation. Fair Housing Legislation YES 14. A copy of computer diskettes (Spreadsheet, Pro-Ject, Argus, or other) generated in connection with this assignment was provided to the Bank. ARD Appraisal Guidelines N/A 5

6 SCOPE OF REVIEW PROCESS In accordance with Standard Rule 3-1c of USPAP, the following disclosure is made concerning the nature, extent, and detail of the review process conducted in connection with this review assignment: In preparing the review, the reviewer has assumed and relied upon the accuracy of all facts reported in the appraisal except those that reviewer has verified independently as indicated below. Reviewed appraisal requisition/engagement letter Read the entire appraisal Read portions of the appraisal Inspected the subject property (cursory drive-by) Inspected the neighborhood (cursory drive-by) Inspected some/all of the comparable sale data Inspected some/all of the rent comparable data Identified any Extraordinary Assumptions used in the completion of the review assignment. Confirmed some/all comparable sales data Confirmed some/all comparable rental data Conducted an independent market search for other data Plans were reviewed and area calculations checked Reviewed leases for the subject property Math checked for the Cost Approach Math checked for the Sales Comparison Approach Math checked for the Income Approach Completed Alternative Valuation Analysis in accordance with SR-1 and SR-2 of USPAP. Other (Please specify): Overview of Approaches to Value: All three approaches to value were considered and utilized in the valuation of the subject property. Property Description: The Buckeye Self Storage Mini-Warehouse Facility consists of seven Mini-Warehouse Buildings and three Multi-Tenant Warehouse/Shop Buildings. The total gross building area for all buildings is 49,140 SF. The improvements are located on five adjacent lots that contain approximately 242,150 SF in Blooming Grove, Wisconsin. Subject History: The current owner of record is Branum Genco Development Company. There have been no reported sales of the subject property throughout a five year sales history search. Zoning: Zoning of the property is C-1 and C-2, Commercial Development District, as approved by Dane County, whom oversees the Town of Blooming Grove zoning. It is assumed that the property is constructed in compliance with all applicable zoning and building codes. The improvements are anticipated to be legal and conforming with the zoning for this area. It is assumed that the property is constructed in compliance with all applicable zoning and building codes. Regional, Neighborhood, Market Analysis: A regional and market area analysis was provided in Section IV of the report. The City of Madison and the Dane County area have historically been regarded as having a high quality of life and stable economic base. The area s strong economy, employment base, governmental influence, and stable housing market are all indicators of a strong and healthy local economy. Madison s generally strong economy has had a positive effect on its real estate market. Overall, the long-term prospects for this area and its real estate market conditions are positive. 6

7 The subject property is located in the Town of Blooming Grove, Dane County, Wisconsin. The primary market area boundaries include County Highway BB to the North, Interstate 90/39 to the West, Highway 12/18 to the South, and County Highway N to the East. Overall, the neighborhood is considered to be rural in nature with easy access to newer commercial and residential developments, especially on the east side of Madison. The subject property is easily accessible and visible from Highway AB, which is accessible from Buckeye Road further north of the subject property in Madison and Highway 12/18/Beltline Highway further south of the subject property. The subject has easy access and conveniently serves residents on the east side of Madison as well as Cottage Grove. It is anticipated that the market area will continue to slowly develop or remain stable in the near future. Cost Approach: Six comparable land sales and one listing were reviewed in determining the land value of the subject property. The comparables ranged from 65,544 SF to 354,901 SF and indicated a range of prices from $3.35/SF to $5.50/SF before adjustments. Adjustments were made for sale characteristics, conditions of sale, economic conditions, date of sale, location/access & visibility, size and other physical characteristics. Due to market conditions the most recent sales were given more weight. The subject land is concluded at $2.00/SF for a final land value of $485,000, rounded. The total replacement cost new for the subject, estimated using the Marshall Valuation Service, is $1,522,693, including an entrepreneurial profit of $148,718. An overall range of incurable physical depreciation is between 8.57% and 28.57% for the various components of the property, functional obsolescence is estimated at 10%, and economic obsolescence at 15%, resulting in a depreciated value of 963,187. Adding the land value of $485,000 results in a total indicated As Is value of 1,450,000, rounded. Sales Comparison Approach: Five sales comparables were reviewed in determining the market value for the subject. The sales occurred between November 2007 and September 2008 and ranged in price from $26.98/SF to $44.49/SF, and $4,968/unit to $7,353/unit before adjustments. After adjustments, the prices ranged from $31.56/SF to $40.04/SF and $5,400/unit to $6,618/unit. The subject is concluded at $30/SF with 49,140 SF for $1,475,000, and $6,500/unit with 212 units for $1,380,000. The property is felt to fall within this range. Income Approach: After an analysis of the subject lease summary and four comparable rentals, the subject current rent level is concluded to be at or near market levels. The total annual gross potential income is projected at $263,160. The vacancy/collection loss is estimated at 20%. The property appears to reflect a current vacancy of 33% and base on market norms and the subject history this was felt to be appropriate. This resulted in an effective gross potential income of $210,528. Expenses for the subject total $82,355 for a projected net operating income of $128,173. The capitalization rate is concluded at 9% as supported by the Band of Investment, survey data and sales extraction. This resulted in an As Is value of $1,420,000, rounded. Reconciliation: All three approaches to value were considered and utilized in the valuation of the subject property. The Income Approach was given the greatest weight, with the Sales Comparison Approach used as a check against it. The Cost Approach was given the least consideration in the valuation. 7

8 Review comments: Overall the appraisal is acceptable. Given the occupancy history the concluded OAR appears appropriate. Placing the most weight on the Income approach is acceptable given the investor calculus of a typical purchaser. T CONCLUSION: Subject to the comments noted above, the subject appraisal is felt to be in compliance with FIRREA, USPAP and Bank s appraisal standards and the fee simple As Is value conclusion of $1,425,000 as of 5/6/2011 is felt to be supported and acceptable for underwriting purposes. 8

REVIEW APPRAISER-ASSUMPTIONS, LIMITING CONDITIONS AND CERTIFICATION Review Appraiser: J. Travers Price, CGA #221 Property Name: Property Address:, Blooming Grove, WI Appraiser/Firm: Kevin F.

9 REVIEW APPRAISER-ASSUMPTIONS, LIMITING CONDITIONS AND CERTIFICATION Review Appraiser: J. Travers Price, CGA #221 Property Name: Property Address:, Blooming Grove, WI Appraiser/Firm: Kevin F. Meicher, Brian J. Richardson/Meicher Real Estate LLC Interest Valued: Fee Simple Date of Review: Value Conclusion: $1,425,000 As Is 5/6/2011 ASSUMPTIONS & LIMITING CONDITIONS 1) The reviewer assumes no responsibility for matters legal in nature nor renders any opinion as to the title, which is assumed to be marketable. 2) No expert witness testimony or other appearance in court will be required of the reviewer on matters pertaining to this subject report unless previous arrangements have been made. 3) This review is to be used only in its entirety and only for the purposes for which it was prepared. 4) The reviewer assumes that there are no hidden or un-apparent conditions of the property, subsoil, or structures, which would render the property more or less valuable. The reviewer assumes no responsibility for any such conditions or for any engineering surveys, which might be required to discover such conditions. 5) Any information furnished by others and included in this review is from sources deemed to be reliable and believed to be true and accurate, but is in no way guaranteed by the reviewer. 6) Disclosure of the contents of this review is governed by the By-laws and Regulations of the Appraisal Institute. Neither all nor any part of the contents of this review shall be disseminated to the public through advertising media, news media, sales media, or any public means of communication, without the prior written consent and approval of the author(s). 7) The opinion or confirmation of value expressed here is valid only for the stated purpose as of market condition prevailing as of the date of the reviewed appraisal. 8) It is assumed that the property is in full compliance with all applicable Federal, State, and Local Environmental Regulations and Laws, unless noncompliance is specifically stated, defined and considered in the appraisal report or review. 9) It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any Local, State or Federal Government, or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this reviewed report depends. 10) Unless otherwise stated in this review or the subject report, the existence of hazardous substances which may or may not be present on the subject property, of other environmental conditions, are not known or were not observed. The reviewer, however, is not qualified to identify such substances or conditions. If the presence of such substances or conditions may affect the value of the property, the value estimate and review of same is predicated on the assumption that there are no such conditions on or in the property. REVIEWER S ETRAORDINARY ASSUMPITON Unless otherwise stated, all data provided in the appraisal reviewed is assumed to be factual, accurate and complete and that there has been no omission of data that would affect the reviewer s conclusions. Such data includes information about physical, legal, or economic characteristics of the subject property or about conditions external to the property, such as market conditions or trends, or the integrity of data used in the analysis. CERTIFICATION I certify that to the best of my knowledge and belief: - The facts and data reported by the review appraiser and used in the review process are true and correct. - the analyses, opinions, and conclusions in this review report are limited only by the assumptions and limiting conditions stated in this review report, and are my personal, impartial, and unbiased professional analyses, opinions and conclusions. - I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. - I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. - my engagement in this assignment was not contingent upon developing or reporting predetermined results. - my compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in this review or from its use. - my analyses, opinions, and conclusions were developed and this review report was prepared in conformity with the Uniform Standards of Professional Appraisal Practice. - I did not personally inspect the subject property of the work under review. - no one provided significant real or personal property appraisal or appraisal review assistance to the person(s) signing this certification J. Travers Price, CGA #221 Date 9

RESTRICTED APPRAISAL REPORT

Restricted Use Appraisal Report Thomas J. Schulte & Associates Page #1 RESTRICTED APPRAISAL REPORT SUBJECT ASSIGNMENT Property City: Zip Code: County: Legal Description: Assessor's Parcel #: Tax Year: