SunTrust Bank, Central Florida

Transcription

1 June 27, 2000 Ms. Stephanie Andrews; Assistant Vice President SunTrust Bank, Central Florida Post Office Box 4925 Orlando, Florida Re: Appraisal of a Multi-Tenant Office Building Located at 1088 East Altamonte Drive in Altamonte Springs, Florida. Appraisal Based on Fee Simple and Leased Fee Value. Dear Ms. Andrews: As requested, we have completed our inspection and appraisal of the above referenced property. The attached, complete appraisal in a self-contained report format provides data and reasoning employed in formulating our value estimate. Our appraisal has been prepared in conformance with USPAP and Appraisal Institute standards, and in compliance with SunTrust Bank, Central Florida. No departure rules were invoked that would limit the reliability of this appraisal. We also certify that we have no past, present or prospective interest and no personal interest or bias with respect to the parties involved; that our compensation is not contingent on an action or event resulting from the analysis, opinions or conclusions therein. Further, to the best of our knowledge, the information and opinions presented herein are correct. We refer you to the General Assumptions and Limiting Conditions that are made part of this report. We also refer you to the Certification. As of the date of this report, Richard A. Best, MAI has completed the voluntary continuing education program with the Appraisal Institute. The use of this report is limited to our client and also to duly authorized members of the Appraisal Institute and the Real Estate Appraisal Board of the State of Florida. This is a certified appraisal as defined in the provisions of Part II, Chapter , Florida Statutes. We do not authorize the out of context quoting from partial reprinting of this appraisal report. Further, neither all nor any part of this appraisal report shall be disseminated to the general public by the use of the media for public communication without the prior written consent to the undersigned appraiser. This appraisal also conforms to the Federal Deposit Insurance Corporation s final ruling for appraisals that are published in the Federal Register, effective September 19, 1990, under 12 CFR Part 323. This rule specifically denies any departure from Uniform Standards of Professional Appraisal Practice.

2 Ms. Stephanie Andrews June 27, 2000 Page 2 The purpose of the appraisal was to estimate the as is market value of the fee simple and leased fee interest in the property, as of the valuation date, June 22, The function of the appraisal is for loan underwriting. It should be noted that contract rents are at market rent levels; therefore, the fee simple value is considered to be equal to the leased fee value. The value reported is qualified by certain definitions, limiting conditions and certification statements which are set forth within the attached report. Based on our analysis, the Market Value as is of the property, based on fee simple and leased fee estate, as of June 22, 2000 is: SIX HUNDRED TWENTY THOUSAND DOLLARS $620,000 Thank you for this opportunity to be of service. DeRango, Best & Associates Richard A. Best, MAI; Vice President Managing Partner St. Cert. Gen. RE Appr

3 TABLE OF CONTENTS EXECUTIVE SUMMARY...1 INTRODUCTION...15 NEIGHBORHOOD OVERVIEW...18 SUBJECT PROPERTY...22 SITE DESCRIPTION...22 ZONING...24 SUMMARY...24 DESCRIPTION OF IMPROVEMENTS...25 INTERIOR LAYOUT AND DESIGN...26 CONDITION & FUNCTIONAL UTILITY AND OTHER FEATURES...26 UTILITIES & SERVICES...27 REAL ESTATE TAXES...27 KNOWN EASEMENTS...27 HIGHEST & BEST USE...28 APPRAISAL PROCESS...31 COST APPROACH...32 OVERVIEW...32 LAND SALES ANALYSIS & ADJUSTMENT DISCUSSION...32 CONCLUSION...39 IMPROVEMENTS COST ESTIMATE...39 SALES COMPARISON APPROACH...41 INCOME CAPITALIZATION APPROACH...48 REVENUE FORECAST - MARKET...49 RENT CONCLUSIONS...52 VACANCY & COLLECTION LOSS...53 OPERATING EXPENSES...53 CAPITALIZATION...54 MARKET EXTRACTED CAPITALIZATION RATES...54 NATIONAL INVESTOR S SURVEY...54 BAND OF INVESTMENT...54 RECONCILIATION...56 ADDENDA...57 GENERAL ASSUMPTIONS & LIMITING CONDITIONS...58 DEFINITIONS...60 SEMINOLE COUNTY / ORLANDO AREA ANALYSIS...61 Letter of Engagement Letter of Intent Contract for Purchase and Sale Leases (Five Total) Copy of Existing Zoning Regulations Representative Client List Qualifications

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5 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 1 EXECUTIVE SUMMARY REPORT DATE: June 27, 2000 REPORT TYPE: Complete Appraisal; Self-Contained Report Format EFFECTIVE DATE OF APPRAISAL: As Is : June 22, 2000 PROPERTY IDENTIFICATION: PURPOSE AND FUNCTION OF APPRAISAL: ESTATE APPRAISED: PROPERTY LOCATION: HIGHEST AND BEST USE: EASEMENTS: The property is a multi-tenant professional office building containing 5,990 SF net rentable square feet (according to the leases provided), situated on 0.76 acre (33,127 SF). The property is located along the south side of East Altamonte Drive (SR 436), east of Longwood Avenue (CR 427) in Altamonte Springs, Seminole County, Florida. The street address is 1088 East Altamonte Drive, Altamonte Springs. Estimate the as is market value of the fee simple and leased fee estate of the subject property, as of June 22, The function is for loan underwriting on part of SunTrust Bank, Central Florida. Fee Simple and Leased Fee Estate The property address is 1088 East Altamonte Drive, Altamonte Springs, Seminole County, Florida. Continued use as a multi-tenant professional office. Typical utility easements exist. Subject to formal site survey. CURRENT OCCUPANCY: 100% VALUE INDICATIONS: Cost Approach $650,000 Market Approach $620,000 Income Approach $615,000 VALUE ESTIMATE: As Is $620,000

6 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 2 VIEW OF SUBJECT, FACING SOUTHWEST

7 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 3 VIEW OF SUBJECT, FACING SOUTHEAST

8 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 4 REAR VIEW OF SUBJECT FACING NORTHWEST

9 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 5 STREET SCENE FACING EAST ALONG STATE ROAD 436

10 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 6 STREET SCENE FACING WEST ALONG STATE ROAD 436

11 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 7 TYPICAL NEIGHBORHOOD VIEW

12 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 8 TYPICAL NEIGHBORHOOD VIEW

13 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 9 TYPICAL INTERIOR OFFICE VIEW

14 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 10 TYPICAL OFFICE VIEW

15 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 11 TYPICAL OFFICE VIEW

16 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 12 TYPICAL OFFICE VIEW

17 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 13 TYPICAL OFFICE VIEW

18 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 14 TYPICAL EXTERIOR LANDSCAPING VIEW

19 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 15 TYPICAL COURTYARD VIEW INTRODUCTION SCOPE OF THE ASSIGNMENT DeRango, Best & Associates has been requested by SunTrust Bank, Central Florida to prepare an appraisal of a multi-tenant office building located at 1088 East Altamonte Drive, Altamonte Springs, Florida. The building contains 5,990 SF of rentable building area according to the leases provided, and the improvements are situated on a 0.76 acre site. Additional site improvements include surface parking, on-site water retention, signage, concrete curbing, asphalt, landscaping, and all utilities. The purpose of this appraisal is to estimate the Market Value of the fee simple and leased fee estate of the property in its as is condition. In arriving at these value estimates, we have prepared the Cost, Sales Comparison and Income Capitalization approaches to value. The scope of the appraisal included an inspection of the property and the neighborhood. Public record information considered in our analysis of the subject was obtained from the Seminole County Property Appraisers Office. Information regarding sales of comparable properties was obtained by using Experien Data, Inc., Comps, and additional research of the public records, and other third-party sources. For comparable rental information, we consulted with real estate brokers and leasing agents, owners/operators of similar general multi-tenant office buildings in the general neighborhood. LEGAL DESCRIPTION The subject legal description is as follows: Leg Lot 1, Block A, Town & Country Estates Replat, as per Plat Book 12, Page 29 of Seminole County, Florida. OWNERSHIP & SALES HISTORY The subject is under the ownership of Banli Corporation (c/o Leonardo Betancurth, General Manager), who has owned the property in excess of five years. The property is under contract for purchase and sale in the amount of $616,500 according to a contract that has

20 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 16 been included in the addenda of this report. It is our understanding that this appraisal will be used in loan purposes to secure financing based on the current contract. No other transactions are known to have occurred in the past five years.

21 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 17 MARKETING TIME Our concluded Market Value estimate considers the type of real estate, the market conditions, the above average size of the building and the specific posture of subject. Occupancy levels within the subject market generally are approximately %. The local market in terms of marketability and profitability is extremely location specific. The subject is located at the southwest corner of Robin Road and State Road 436 (East Altamonte Drive) in Altamonte Springs, Seminole County, Florida. Traffic counts within this area were recently published, showing approximately 60,000 cares per day that traverse along State Road 436 near the subject. Access and proximity is considered favorable if not positive, and on site parking appears adequate (38 spaces). The improvements were in average to good condition as of the date of this appraisal (minor deferred maintenance items addressed later in this report). The improvements are at 100% occupancy, and tenants have overall been longstanding. The office market in terms of marketability is extremely location specific. There were no signs of external obsolescence that would affect value for the property, and overall conditions within the neighborhood submarket suggest that the neighborhood is within the stabilized stage of its life cycle. Based on a lack of available inventory within the submarket, and stable market conditions which lend well to the economic environment of the submarket, we are of the opinion that the property, is priced at market levels, could sell within a nine to 12 month time period. Therefore, based on the above, and the value concluded, we estimate the marketing period for the property to be somewhere between nine and 12 months. This time frame recognizes that the conclusion of the market value will remain at the same level throughout the marketing period. Furthermore, this estimate is premised on active promotion of the property during this period. We have also estimated that the exposure time of the property to be somewhere in the nine to 12 month time period.

22 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 18 NEIGHBORHOOD OVERVIEW Subject GENERAL DISCUSSION The property is located on the south side of State Road 436 (East Altamonte Drive), at its southwest corner with Robin Road in the central areas of the city of Altamonte Springs, Seminole County, Florida. The property is in the northern suburban areas of the metro Orlando area in an area of established commercial and residential development. The neighborhood is stable and in generally good condition with good access and exposure. NEIGHBORHOOD BOUNDARIES The neighborhood is defined as the commercial development corridor along State Road 436 from the Altamonte Mall area, about ¾ miles to the east and west, to the intersection with US Highway 17/92, which is one mile to the east. The strip of development along the highway to approximately ¼ mile north and south of the highway makes up the neighborhood for our discussion purposes. We have also included a brief discussion of the State Road 434 market.

23 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 19 NEIGHBORHOOD CHARACTER The neighborhood is the central business district of Altamonte Springs. The SR 436 corridor is one of the more heavily developed commercial thoroughfares in the metro Orlando area. The immediate neighborhood is almost 100% developed with most buildings being 10 to 25 years in age. The development is a mix of retail, general commercial and medical office uses. The city government complex is located just east of the property and includes the City Hall, administrative office and the Police and Fire departments for the City of Altamonte Springs. The office development in the area is generally professional and medical in nature with a mixture of single and multiple user character. Directly across the highway from the property is a multistory office occupied by the Sprint Corporation and to the west, the Kirchman Corporation has a multi-building complex used for their corporate headquarters. About ½ mile to the west is the Florida Hospital complex and surrounding professional office developments. The medical office space associated with this complex is almost 100% occupied. Other development along the highway is a mix of retail, restaurants, commercial services and quasi retail uses. There is virtually no land available for development and few unoccupied office or retail spaces found along the highway. The traffic counts along SR 436 in the immediate neighborhood are around 60,000 vehicles per day, which makes the area sought after by developers of retail and similar products. As noted, most of the land in the area is developed. The only notable new development in the area is a shopping center under construction at the intersection of SR 436 and US highway 17/92 where a Kash and Karry anchored retail center was recently completed. The office rental and sales market in the metro Orlando area and the northern suburbs have been strong with vacancy levels being maintained between 5% and 7%. In the immediate market area there are only a few small bays available for lease with the balance of the space being occupied by mostly small to medium sized local office users (with the exception of the Sprint and Kirchman users discussed earlier). The Maitland Avenue corridor to the west of the property also has a mix of professional office space and occupancy levels in this area are also generally good. Rent levels are average to slightly above average for the Altamonte Springs market at a whole in the neighborhood. The newer office developments catering to larger corporate users have generally located in the northern suburbs along the Interstate 4 corridor in the Maitland and Lake Mary areas.

24 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 20 The neighborhood is also greatly influenced by the Florida Hospital Altamonte, located near the subject. It is located at 601 East Altamonte Drive. This is a 278-bed hospital with approximately 1,700 doctors, and 1,380 employees. There were 12,560 admitted patients as of April 1998, 37,800 emergency room visits, and 80,650 outpatient room visits. The average occupancy of this facility is 60%. State Road 434 is located at the northern boundary of the defined neighborhood. It is an east-west roadway that eventually turns a north-south direction on its western terminus. This major roadway provides direct access to such large developments as Wekiva Springs/Sabal Club (via Wekiva Springs Road). There are several small and mid-size Class B and C office developments that are over 10 years old. This roadway recently underwent an intersection expansion at its terminus with Interstate 4. Heading west, this roadway provides direct access to eastern Seminole and Orange County. U.S, Highway is located approximately four to five miles east of the subject. It is a major north-south roadway providing a link between Seminole and Orange County. It is best described as yet another major commercial corridor. Interstate 4 is located approximately ¼ mile west of the subject property. This highway positively enhances the marketability of the subject with ease of access. Interstate 4 ends to the north at Daytona Beach and to the west in Tampa, Florida. Future plans (over 20 years) call for a road widening of Interstate 4 through Seminole County and downtown Orlando. At State Road 436 and Interstate 4, there is an average daily traffic count of 60,000 cars, one of the highest traffic counts in Central Florida. Westmonte Drive Office Market West of Subject Development along Westmonte Drive, just west of I-4 consists mainly of office space. There is also a light mixture of retail uses, particularly at its intersection with State Road 436. The Ethan Allen Plaza is located at the northeast corner of Westmonte Drive and State Road 436 (Semoran Boulevard). Restaurants located outside of this plaza include TGIF and Cookers. Tenants include Green Tree Mortgage, Ethan Allen, and Re-Max. Several office owner-users and/or single-tenants are in place along Westmonte Drive. They include the Insurance Office of America, the 220 Center, Manpower, Southeastern Conference, the Westmonte Medical Center, and Lucerne Development. Office (not medical) rental rates appear to be in the $14/SF full-service range. Occupancies appear to fall in the % range. Overall, this smaller office corridor is classified as a Class B to C development, catering to smaller users.

25 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 21 Other office development within the area includes the Maitland Center, one exit south of the subject (on Interstate 4). This major office corridor is home to such tenants as Federal Express, EDS and Charles Schwabb. Other recent development includes the RDV Sports Complex, an interactive 200,000+ SF health and sports center that opened in February New development under way includes the Maitland Concourse, a multi-tenant office complex that is currently 40% pre-leased. Like the office development west of Interstate 4, along both the north and south side of Maitland Boulevard, Class A rents are in the $24/SF range (similar to downtown and Orlando CBD rents). The subject market is considered to be more in the Class B-C office market. As land becomes scarcer for new development, and as rental rates rise in the Class A market, it is anticipated that this will have a positive force on properties similar to the subject. Conclusion The subject is considered to be in the stabilized stage of its life cycle, with no foreseeable signs of decline. There is very little land suitable for new development. It is anticipated that the subject professional and medical office market will remain strong, due mainly to the lack of perceived competition and the ease and access of the immediate area. Overall, the property is well located in an established commercial corridor with excellent highway exposure. The Altamonte Springs market is stable and mature and we would expect continued stability in values and occupancy levels along the State Road 436 corridor where the property is located.

26 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 22 SUBJECT PROPERTY SITE DESCRIPTION Location The property is located along the south side of East Altamonte Drive (SR 436), just east of Longwood Avenue (CR 427), and at its southwest corner with Robin Drive in Altamonte Springs, Seminole County, Florida. The street address is 1088 East Altamonte Drive.

27 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 23 Size/Configuration The site is nearly rectangular but slightly irregular in shape and contains a total area of 33,127 SF (0.76 acre). The property has an estimate of 160 feet of road frontage along the south side of East Altamonte Drive, and approximately 200 feet of road frontage along the west side of Robin Road. A site survey was not provided, and the land size and dimensions were taken from Seminole County records. Topography The subject property appears to be generally level and near above road grade with Altamonte Drive. Drainage appears adequate. There is on-site drainage.

28 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 24 Access & Exposure The property is conveniently accessed via East Altamonte Drive (SR 436) and Robin Road. Flood Hazard Subject Based on Community Panel No C 0140 E, effective April 17, 1995, of the Flood Insurance Rate Maps of the National Flood Insurance Program, that the property is located in Zone C which is an area of minimal flooding. ZONING The property is zoned MOC-2, or Mixed Office Commercial (Medium Intensity), by the city of Altamonte Springs. This zoning classification allows for multi-use or mixed-use high intensity office, retail-commercial, service and institutional uses with high density residential uses permitted on a selected basis. After further determination, the subject appears to be in legal compliance to current zoning regulations. A brief overlay of the MOC-2 zoning regulations can be found within the addenda of this report. SUMMARY The site is adequate in size, topography and shape to support its existing development. There appeared to be no adverse site conditions that would affect value. The subject site is well suited for continued use as professional office use.

29 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 25 DESCRIPTION OF IMPROVEMENTS The building improvement description for the subject is based upon the appraisers inspection and information provided by the property owner. The total gross building area of the property is 6,632+ SF according to Seminole County Tax Records and our personal measurement of the improvements. The net rentable area according to the leases provided indicate 5,990 SF. A recent offering package prepared for the property showed a total net rentable area slightly higher, at 6,050 SF. However, for purposes of this appraisal and for consistency, we have used the total rentable area reported on the five leases provided (totaling 5,990 SF). The salient construction specifics are summarized as follows: Building Type: General multi-tenant office building. The total occupancy is 100%, with five leases. Year Built: Construction Type: Foundation: Eve Height: Roof: Interior Finishes: Lighting: HVAC: Parking: Access: 1965/1966 with renovations and expansion over the years. This includes an expansion in Stucco over concrete block. Concrete finish. Reinforced concrete. Approximately feet Built-up tar and gravel roof system. The improvements are divided into five office suites, all of which have standard commercial grade carpeting and tile, and drywall partitioning. Fluorescent lighting. Individual HVAC systems for each suite (compressors are groundmounted. Reportedly, all but one of the HVAC units have been replaced with the exception of one unit which is reportedly in need of replacement. We have deducted the cost of this as a deferred maintenance item. Approximately 38 striped parking spaces, or over six spaces per 1,000 SF of rentable area. This parking ratio exceeds the minimum parking requirements with Altamonte Springs. East Altamonte Drive and Robin Drive. Plumbing: Individual restrooms in each rental office unit.

30 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 26 INTERIOR LAYOUT AND DESIGN The individual offices have the following room layouts. Suite 101 (The Pain Medicine Group) has an open exam room, private exam room, kitchen / lab, two bathrooms, doctor s office, administrative office, and reception area. Suite 102 (AllState Insurance) has a reception area, administrative area, three executive offices and two bathrooms. Suite 103 (RGIS Inventory Specialists) has a reception area, conference room, three individual offices, a storage area, two-fixtured restroom, and a storage closet Suite 105 (Quality Assurance Home Delivery/Paralegal) has a reception area, executive offices, bathroom, and kitchen area. Suite 104 and 106 (DNB Mortgage) has an executive office, reception area, storage room, four offices, two restrooms, conference room, and kitchen area. CONDITION & FUNCTIONAL UTILITY AND OTHER FEATURES Improvements are adequate in design and functionality for its multi-tenant office use. The building is overall well maintained with an above average maintenance program. The improvements were in overall average condition with only minor signs of deferred maintenance including the following: 1. One HVAC compressor is in need of replacement that will require approximately $1,500 in costs for replacement. 2. A ceiling in Unit 106 is slightly sagging and will require a minimal cost to repair, say $ Suite 103 will require approximately $400 in window replacement for a fractured window. The total cost estimate of these deferred maintenance items is approximately $2,000. We have deducted these costs in our final value estimate The effective age of the property, based on renovations and expansions over the years, is approximately 15 years. The total estimated economic life is approximately 40 years. Therefore, the estimated remaining economic life is approximately 25 years. Therefore, we have estimated in the Cost Approach section of this report that the depreciation ratio for physical, long-lived incurable depreciation is 37.5%, or 15 years divided by 40 years.

31 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 27 UTILITIES & SERVICES Altamonte Springs provides water and sewer service. Telephone service is provided by Sprint. Electricity is provided by Florida Power Corporation. REAL ESTATE TAXES The property is assessed and taxed by Seminole County, under Tax Parcel Identification No A As of inspection, the site had been assessed at $231,889 for 1999, and $213,968 for building and extra features, indicating a total assessed value of $445,857. The total 1999 taxes have amounted to $8, According to Seminole County, 1999 taxes were paid. KNOWN EASEMENTS Typical utility easements exist. A survey was not provided, and we reserve the right to modify this report if a formal site survey is provided that shows additional easements or encroachments not noted.

32 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 28 HIGHEST & BEST USE In estimating the highest and best use of the property, we have considered those uses that are legally permissible, physically possible, economically feasible, and which would result in the highest return to the land. Consideration has been given to the features of the land such as zoning, size, shape, location, access, availability of utilities, surrounding land uses, and the demand for property in the current real estate market. The highest and best use concept recognizes the contribution of the contemplated use to the community development and environmental goals, as well as the individual property owner's wealth maximization. This analysis considers the legal, physical and economic factors which affect the property. In the appraisal practice, the Highest and Best Use Analysis is the foundation upon which the valuation of a property is based. Two highest and best use estimates are considered in the valuation of the property. The first analysis represents the highest and best use of a property as if vacant and available for development. The second estimate of highest and best use pertains to the use of the property as improved. In the discussion of the highest and best use as improved, the contribution of the improvements to the overall property value are analyzed. HIGHEST & BEST USE AS IF VACANT Legal Considerations The legal considerations pertain mainly to the zoning and Land Use Plan which dictates the type and intensity of allowable development for the site. The property is zoned MOC-2; or Mixed Office / Commercial; by the City of Altamonte Springs. The purpose of the district is to provide areas within the city that would accommodate general commercial uses and that would be homogenous and compatible with surrounding land uses. Physical Considerations The physical considerations affecting a site generally address the type and size of development that a particular site will support. The subject is rectangular in shape, with adequate access and exposure. The total land area is 33,127 SF, or 0.76 acre. The site s physical characteristics, such as size and topography, do not limit the development potential. Therefore, from a physical standpoint, the highest and best use of the property, as if vacant, would be for its development with general commercial uses. This is in tandem with surrounding land uses and the development potential of the site.

33 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 29 Economic Considerations The economic factors affecting a site usually relate to the supply/demand factors found in the surrounding neighborhood or submarket. The subject is located in the commercial retail and office neighborhood of Altamonte Springs, Florida. This sub-market has approximately % occupancy, with many of the facilities being owner-occupied and multi-tenant structures. The area has experienced relative stability and most recently, revitalization over the last several years, which has caused level demand and in turn created a sound submarket. Our analysis of the submarket indicates a stable environment with good prospects for continued stability. Growth is limited due to the lack of available commercial land. Conclusion The subject property enjoys a good location within the Altamonte Springs market. Based on the occupancy rate for existing commercial office and retail buildings within the neighborhood, and continued demand for existing space, it is our opinion that the highest and best use of the site as vacant is for development as a general commercial building that would maximize the site s potential. HIGHEST & BEST USE AS IMPROVED At the date of valuation, the property was improved with a general commercial building containing a total of 6,632 SF of gross building area, and a total rentable area according to the leases provided of 5,990 SF. The improvements were in average to good condition at the date of inspection, and are functional in design. Based on the characteristics of the neighborhood, it is our opinion that the highest and best use of the property, as improved, is for continued use of the subject improvements as a multi-tenant office building. This is based on the following: Legally, the improvements are in compliance with existing zoning regulations as promulgated by the City of Altamonte Springs. Physically, the improvements are well situated on the site and are within typical floor area ratios of competing properties. Economically, as proven within the Income Approach, the improvements appear to provide an adequate return to land and building. There is no alternate use of the subject improvements other than a multi-tenant office use that would be considered economically feasible.

34 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 30 Therefore, we have concluded that the highest and best use as improved is for continued multi-tenant office use. This also takes into consideration a discount for deferred maintenance as we have estimated at $2,000. In keeping consistent with our highest and best use estimate, our following valuation of the subject is based on the following: In the Cost Approach, general commercial land sales were used and analyzed to estimate land value. We then used the Marshall Valuation Service to adequately estimate a contributory value of the improvements. In the Sales Comparison Approach, we have utilized multi-tenant office building sales for comparison to the subject, to accurately estimate the market value of the subject. In the Income Approach, we have estimated a potential gross revenue based on a market survey of competing office rents in the Altamonte Springs and overall Seminole County submarket.

35 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 31 APPRAISAL PROCESS In this appraisal we have applied the Cost Approach, Sales Comparison (Market) Approach and the Income Capitalization Approach. We have reconciled a value estimate from the three approaches. After careful examination, emphasis is placed on the approach(es) that appears most reliable and a final value estimate is concluded. The Cost Approach is defined as, "That approach in appraisal analysis which is based on the proposition that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property." This approach provides a good indication of value when the property being appraised involves relatively new improvements that represent the highest and best use of the land or to value special use properties. The Sales Comparison Approach is defined as, "an appraisal procedure in which the market value estimate is predicted upon prices paid in actual market transactions and current listings. The process involves analyzing sales of recently sold properties in order to derive an indication of the most probable sales prices of the property being appraised. In this analysis, comparable sale transactions were identified and utilized. The Income Approach is defined as, "the procedure in appraisal analysis which converts anticipated benefits (income) to be derived from the ownership of property into a value estimate. The Income Approach is not widely applied, though, in appraising general auto service properties. The value indications produced by the application of the foregoing approaches to value are then reconciled into a final value conclusion for the property. We have used all three approaches to value.

36 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 32 COST APPROACH OVERVIEW The first step in this approach is to estimate the Market Value of the land as if vacant, via the Sales Comparison Approach in which comparable land sale transactions are analyzed and for their comparability to the subject property. The next step is to estimate the replacement costs new of the subject improvements. Construction estimates were derived from the development costs provided by our independent cost analysis via Marshall Valuation Service and indirect impact fee estimates derived from the respective jurisdictional authorities. We then deducted appropriate physical depreciation to arrive at a contributory value of the improvements; and when added to the estimated land value, a resulting value indication was made via the Cost Approach. LAND SALES ANALYSIS & ADJUSTMENT DISCUSSION In this analysis we have reviewed and analyzed five sales of similar-zoned retail/commercial sales in the Seminole County market. An extended sales search throughout Seminole County was required due to the lack of sales in the immediate area (100% built-up nature of the neighborhood). The comparable sales were similar in size and utility, and were analyzed based on the price paid per square foot of land area, which is the most common unit of comparison for office land. The unadjusted price of the comparables ranged from $4.31 to $10.00/SF. On the facing page is a summary of the sale properties considered. Comparable Land Sale No. 1 sold in January 2000 for $325,000, or $4.31/SF. This is the sale of a acre site that is located at Chapman Road and Douglas Avenue in Altamonte Springs, Seminole County, Florida. This site was purchased for subsequent development of a 13,000 SF office building. The property lies within the county limits. This site is considered inferior in location to the subject, and we made an upward adjustment of 20%. This recognizes that the subject is located directly along State Road 436 (East Altamonte Drive). We also adjusted this sale upward 5% for its larger land size. The adjusted sale price is $5.39/SF. Comparable Land Sale No. 2 sold in March 2000 for $390,000, or $10/SF. This is the sale of an outparcel site that is located at Alafaya Woods Road and Alafaya Trail in Oviedo, Seminole County, Florida. It is an outparcel of the Alafaya Square Shopping Center, and as such is considered superior (a downward 20% adjustment for location was made).

37 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 33 The site contains acre, or 39,004 SF, and was purchased for subsequent development of a 3,500 SF branch bank facility. No other adjustments were required. The adjusted sale price is $8.00/SF. Comparable Land Sale No. 3 sold in February 1998 for $4.74/SF. This 1.36-acre site was developed with an 11,000 SF office building (build-to-suit) for Alternative Mortgage Funding, Inc. The improvements were constructed in September At the time of sale, all utilities were available. The buyer did report that approximately 100 feet of electric lines extension was required. Verification was made with the buyer. This site required no adjustments. We made an upward 20% adjustment for the site s inferior location when compared to the subject. We also made an upward 5% adjustment for this site s larger size when compared to the subject. The adjusted sale price/sf is $5.93/SF. Comparable Land Sale No. 4 sold in August 1998 for $6.35/SF. It is located at the northwest corner of Wymore Road and Sandspur Road in Orange County, Florida. This site was purchased by S.L.R.K., Inc. (Mr. Robert E. Isola) for development of a total of 23,000 SF in office buildings (currently one of two buildings is constructed). Vertical development has not begun on the second building. This site contains a total of 2.17 acres. We adjusted this sale upward 10% for its inferior location when compared to the subject. We then adjusted this sale upward 5% for its larger land size, and upward 5% for its inferior access and exposure. The resulting adjusted price/sf is $7.62/SF. Comparable Land Sale No. 5 sold in June 1998 for $5.09/SF. It is a 3.2-acre site located at the northeast corner of Hope Road and Wymore Road in Orange County (approximately two miles south of the subject). This site was purchased for future development (under way) of a 35,000 SF office building. This site was adjusted upward 10% for its inferior location. We then adjusted this sale upward 10% for its larger land size. No other adjustments were required. The adjusted sale price is $6.11/SF.

38 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 34 LAND SALE 1 COUNTY: Seminole RECORDING: OR BOOK: 3789 PAGE: 0952 LOCATION: Northern Corner of Chapman Road and Douglas Avenue in Altamonte Springs, Seminole County, Florida. FINANCING: $250,000 Mortgage with SouthTrust Bank SALE DATE: January 20, 2000 IND. SALE PRICE: $325,000 $4.31/SF GRANTOR: GRANTEE: USE AT SALE DATE: SITE SIZE: ZONING: Ridgewood Hotels, Inc. Steven K. Hope To construct a 12,000 SF office building Acres (75,489 SF) C-2, Seminole County

39 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 35 LAND SALE 2 COUNTY: Seminole RECORDING: OR BOOK: 3812 PAGE: 0440 LOCATION: Alafaya Woods Road and Alafaya Trail; Oviedo, Seminole County, Florida FINANCING: Cash to Seller SALE DATE: March 7, 2000 IND. SALE PRICE: $390,000 $10.00/SF PRICE: $390,000 $10.00/SF GRANTOR: GRANTEE: USE AT SALE DATE: SITE SIZE: ZONING: Alafaya Square Center, LP Crown Bank FSB To construct a 3,500 SF branch bank facility Acre (39,004 SF) C-2, Seminole County, Florida

40 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 36 LAND SALE 3 COUNTY: Seminole RECORDING: OR BOOK: 3371 PAGE: 0291 LOCATION: N. Westmonte Drive, Altamonte Springs, Florida FINANCING: 1 st Regions Bank- $140,000 Mortgage (50%) SALE DATE: February 16, 1998 IND. SALE PRICE: $280,000 $4.74/SF PRICE: $280,000 $4.74/SF GRANTOR: GRANTEE: USE AT SALE DATE: SITE SIZE: ZONING: 436 Associates Alternative Mortgage Funding Corp. Future Commercial Development Acres (59,241 SF) GO, Altamonte Springs

41 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 37 LAND SALE 4 COUNTY: Orange RECORDING: OR BOOK: 5541 PAGE: 1821 LOCATION: Wymore Road and Sandspur Road, Maitland, Florida FINANCING: Cash to Seller SALE DATE: August 5, 1998 IND. SALE PRICE: $600,000 $6.35/SF PRICE: $600,000 $6.35/SF GRANTOR: GRANTEE: USE AT SALE DATE: SITE SIZE: ZONING: Welbro Constructors, Inc. S L R K, Inc. To construct approximately 23,000 SF of office space Acres (94,525 SF) P01, Maitland

42 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 38 LAND SALE 5 COUNTY: Orange RECORDING: OR BOOK: 5502 PAGE: 2535 LOCATION: FINANCING: Wymore Road and Hope Road, Maitland Florida. Cash to Seller SALE DATE: June 12, 1998 IND. SALE PRICE: $710,000 $5.09/SF PRICE: $710,000 $5.09/SF GRANTOR: GRANTEE: USE AT SALE DATE: SITE SIZE: ZONING: Strong Properties (LTD) MPOV2 (LP) Future Office Building Development (35,000 SF) Acres PD, Maitland

43 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 39 CONCLUSION In our valuation of the subject we have considered the land sales which indicate a value range of $4.31 to $10.00/SF. They are all located in superior sub markets, and were the most comparable available. In addition, we have researched and surveyed the local market and our observations were discussed earlier. In our valuation of the subject site, we have taken into consideration the following: There is a wide range of unit values, particularly due to the lack of available land and sales activity along State Road 436. We were required to extend our search to other developing areas of Seminole County with similar property types for proposal, after land acquisition. The location of the subject is for the most part superior as it relates to most of the sales. It is our opinion that the subject has a unit value is estimated at $7.50/SF, or 0.76± AC (33,127± SF) x $7.50/SF = $250,000 (R) IMPROVEMENTS COST ESTIMATE Development cost data is typically analyzed on a price per square foot of building area. We performed our own cost estimate using the MVS, a nationally recognized cost service that permits refinements where necessary. Using MVS, a recognized national cost estimating service, the base structure cost for subject was estimated. Local and current multipliers were then applied to provide an estimated development cost as of the valuation date. Cost estimates provided by MVS include typical site preparation, utility connections, and soft costs such as architectural/engineering fees, professional fees, and contractor's overhead. However, these costs do not include items such as entrepreneurial profit, land acquisition costs, special assessments, impact fees, on and off-site costs associated with the development and site improvement costs. We have estimated the additional indirect costs (excluding entrepreneurial profit and land acquisition) at 12% of direct costs based on our familiarity with cost comparables. Based on MVS definitions and general descriptions, the property consists of Class C, Average Cost Office Building (Section 15, Page 17). The base cost is $61.46/SF, and the refined cost for this classification is $62.60/SF, adjusted for local, perimeter, story-height and current cost modifiers. Addition of other site improvements, as well as Indirect Costs based upon 12% of Direct Costs, plus a 13% entrepreneurial profit of improvements and land, results in an indicated cost new of the improvements of $642,000.

44 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 40 Depreciation There were no signs of functional or external obsolescence. Based on our findings, we applied an age/life method in determining depreciation. Before we estimated physical long-lived incurable depreciation, we first subtracted the estimated $2,000 in deferred maintenance items to arrive at our basis for long-lived depreciation. Long-lived depreciation is based on our previous estimate of 15 years (effective and actual age), divided by an estimated economic life of 40 years, or 37.5%. The resulting physical depreciation was therefore $240,000. Conclusion We added the depreciated contributory value of the improvements of $400,280 to the previously estimated land value of $250,000 to arrive at a value via the Cost Approach of $650,000.

45 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 41 MARKET APPROACH SALES COMPARISON APPROACH The Sales Comparison Approach is based upon a comparison of prices paid for similar properties in similar markets, representing bona fide, arm s length transactions. This approach works best in an active market where prices serve as strong indicators of the most probable selling price of the subject. We have reviewed a variety of sales in the tricounty area over the last few years. In analyzing the comparable improved sales, to arrive at an indication of value for the property, we have relied on the sale price per square foot of total building area as the most meaningful unit of comparison. As it is one of the most recognized units of comparison typically utilized by market participants for properties of this type. The facing chart summarizes the pertinent data obtained from the analysis of the comparable improved sale properties utilized in this report. The following four improved multi-tenant office building sales have been provided. The following is a discussion and description of each property.

46 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 42 Comparable Improved Sale No. 1 sold in January 2000 for $1,128,000. This is the sale of an 11,942 SF multi-tenant office building that is situated on a acre site. This property is located at Rainer Drive in Altamonte Springs, Seminole County, Florida. The property is at the southwest corner of Rainer Drive and Magnolia Road, immediately west of State Road 434. There are two buildings (one containing 4,680 SF and one containing 7,262 SF). The first building is divided into four tenant spaces, and the second building is designed for a single-tenant with 15 individual offices. The overall occupancy at the time of sale was 85%. The indicated capitalization rate at the time of sale was approximately 10%. Expenses were based on actual and historical figures of $28,889, or $2.42/SF. No adjustments were required for this sale. Sales Information: Buyer Central Florida Education Foundation Seller - Magnolia-Rainer Partnership, Inc. Sale Date - January 2000 Sale Price - $1,128,000 Sale Price/SF - $94.46 OR Book/Page Conditions of Sale - Arm s Length Confirmed By - Richard A. Best, MAI

47 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 43 Financing - $960,000 Mtg AmSouth Bank

48 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 44 Comparable Improved Sale No. 2 sold in July 1999 for $460,000, or $75.29/SF. This is the sale of a 6,110 SF multi-tenant professional office building that is located at 452 Osceola Street in Altamonte Springs, Seminole County, Florida. The underlying site contains approximately acre. Financial information relating to this sale was not made available. We adjusted this sale upward 25% for its inferior condition at the time of sale when compared to the subject. No other adjustments were required. The adjusted sale price is $94.11/SF. Sales Information Buyer Scott Appleton Seller - William R. Decker, Inc. Sale Date - July 1999 Sale Price - $460,000 Sale Price/SF $75.29/SF OR Book/Page /1482 Conditions of Sale - Arm s Length Confirmed By - Richard A. Best, MAI Financing - Information not available

49 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 45 Comparable Improved Sale No. 3 - sold in January 2000 for $77.32/SF. This is the sale of a 5,820 SF multi-tenant professional office building that is located at 665 West Fulton Street in Sanford, Seminole County, Florida. This two-story professional office building is currently 89% leased. When considering this sale for comparability, we made an upward 5% adjustment for the inferior location as it relates to the subject. We also made an upward 10% adjustment for inferior physical features, and an upward 5% adjustment for the inferior land to building ratio. Finally, we made a downward 5% adjustment for the age of the building as it compares to the effective age of the subject. The adjusted sale price is $88.92/SF. Sales Information Buyer Byron and Victoria Rambo Seller - James L. Dunn Sale Date - January 5, 2000 Sale Price - $450,000 Sale Price/SF - $77.32 OR Book/Page /0789 Conditions of Sale - Arm s Length Confirmed By - Richard A. Best, MAI Financing - $225,000 Mortgage

50 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 46 Comparable Improved Sale No. 4 - sold in July 1998 for $975,000, or $109.55/SF. This is the sale of an 8,900 SF multi-tenant office building that is located at 111 East Fairbanks Avenue Winter Park, Orange County, Florida. After the sale, approximately 7,400 SF was occupied by the owner. The buyer was a tenant for 10 years prior to the sale. The remaining 1,500 SF was leased at a rate of approximately $11.25/SF full service. The total expenses at the time of sale as reported by the broker were approximately $1,500 per month, or $2.43/SF per year. We adjusted this sale downward 20% for its superior location when compared to the subject. We also adjusted this sale upward 10% for its inferior land to building ratio. No other adjustments were required. The adjusted sale price is $98.60/SF. Sales Information Buyer ADK Property, Inc. Seller - Limaran II, Inc. Sale Date - July 1998 Sale Price - $975,000 Sale Price/SF - $ OR Book/Page /849 Conditions of Sale - Arm s Length Confirmed By - Richard A. Best, MAI Financing - $877,500 Mortgage SouthTrust Bank

51 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 47 CONCLUSIONS In our valuation of the subject we have considered four improved sales that indicate an unadjusted value range of $75.29 to $109.55/SF, with an adjusted price range of between $88.92 and $98.60/SF. They are all located in overall similar sub markets, and as mentioned were the most recent and comparable sales available. It is our opinion that the subject has an as-is value towards the middle end of the range and based on: Average to good condition of the improvements Layout and design considered functional for most office users. The unit value is estimated at $94/SF, or $623,500. Our value indication via the Sales Comparison Approach of $623,500, before taking into consideration the following: 6,632 $94/SF: $623,500 Less: Deferred $2,000 ($ 2,000) As-Is Value indication: $620,000 Total Value Indication Sales Comparison Approach: $620,000 (R)

52 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 48 INCOME CAPITALIZATION APPROACH In appraisal terminology with regard to income properties, a value is normally defined as the present worth of future rights to income. A value by this approach can be derived by capitalizing a single year s stabilized net operating income or by discounting the projected cash flows and reversionary value of the property over an anticipated holding period into a present value estimate. The first method is referred to as Direct Capitalization and the second method is Discounted Cash Flow Analysis. Due to the size and physical characteristics of the subject, we have used the Direct Capitalization Model. The steps used in preparing this analysis are summarized as follows: Project the potential gross income for the subject. Determine an allowance for stabilized vacancy, credit, and collection losses. This estimate is based upon the anticipated down time due to tenant turnover, credit losses, and periodic fluctuations in rental revenue due to changes in the marketplace that are unforeseen. Estimate potential operating expenses and other charges based on reported operating expenses at other comparable properties and industry averages. Deduct vacancy and collection losses, as well as operating expenses from the gross potential income for the property in order to arrive at an appropriate estimate of the net operating income attributable to the property. Capitalize the net operating income at a market derived overall capitalization rate to obtain an indication of the value of the subject by the Income Capitalization Approach. Current Leases in Place - Subject The facing page illustrates the existing leases in place. The property is 100% leased and occupied. As can be seen, rental rates with the subject are currently in the $12.88-$14/SF range full service (gross), with the tenant responsible for interior elecric and janitorial. The exception is that the landlord is responsible for up to $2,400 for interior electric for Unit Unit 103 (RGIS) as per lease stipulation. In an effort to determine the reasonableness of the contract rents in place, we have surveyed three professional multi-tenant office buildings in the Altamonte Springs/Seminole County market to determine if contract rents are at market rent levels.

53 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 49 REVENUE FORECAST - MARKET The following is a summary of the three comparable offices analyzed. Comparable Rental No. 1 is located along the north side of State Road 436, west of State Road 434 in Altamonte Springs, Florida. This is the Colonial Bank Building. It contains approximately 25,000 SF and was constructed in Current leases are in the $17.50/SF range on a full service basis. The property is considered superior in location and quality to the subject. The occupancy at the time of survey was approximately 88%. Leases are written on typical 3-5 year terms. Comparable Rental No. 2 is located along the west side of State Road 434, south of Sand Lake Road in Altamonte Springs, Seminole County, Florida. This is a 10,000 SF professional office building that currently leases office space at a rate of between $12.50/SF and $13/SF modified gross. The tenant in this case is responsible for interior maintenance, which partly explains a somewhat lower rental rate than the subject. This property is superior in exposure yet inferior in quality to the subject. Comparable Rental No. 3 is located at the northeast quadrant of State Road 434 and 436 in Altamonte Springs, Florida. This is an 84,000 SF multi-tenant commercial center that has a combination of retail and office space. There are four buildings on the property. Lease rates are in the $10.80/SF to $11.20/SF range, based on a modified gross lease arrangement. In this case, the tenants are responsible for a pro-rata share of real estate taxes and insurance, which explains the lower base rental rate as compared to the subject. This property is considered superior in location, but substantially inferior in quality, effective age and condition.

54 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 50 COMPARABLE RENTAL PHOTOGRAPHS VIEW OF COMPARABLE RENTAL NO. 1

55 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 51 VIEW OF COMPARABLE RENTAL NO. 2

56 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 52 VIEW OF COMPARABLE RENTAL NO. 3 We have placed most weight on Rental 1 and 2, and less weight on Rental 3. We concluded that the most likely rental rate of the subject would be at the middle to higher end of the range, due to: Building size Stabilized location of the immediate area Overall market appeal. RENT CONCLUSIONS We have concluded that contract rental rates are in line with market rental rates, and therefore our leased fee value estimate is considered in line with our fee simple value estimate. In the forthcoming Income Approach Summary, we have concluded to a total annual potential gross income of $85,276, or on average $14.24/SF. This total rental rate conclusion was based on an annualized income that is achievable today, from contract rents provided.

57 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 53 VACANCY & COLLECTION LOSS Since the subject is designed for multi-tenancy, we have concluded that the most appropriate vacancy and collection loss would be 3%, recognizing the low risk associated with the property, and also the historic operating position of the property in the % occupancy levels over the years. OPERATING EXPENSES Under a gross lease arrangement, it is contemplated that an owner would pay for real estate taxes, insurance, management, reserves for replacement of short-lived items, maintenance, and exterior utilities. The tenant is responsible for mainly janitorial and interior electric. We have also considered that, for Unit 103, the landlord is responsible for interior electric up to $2,400 as per lease agreement. We have taken this into consideration in our expense analysis. The following is a discussion of each expense: Management has been estimated at 4% of effective gross revenue, or $3,309. This fee is typical for management and the collection of rents with a property such as the subject. Typical management fees range between 4-6%. Real Estate Taxes are based on historic levels, and we have relied on 1999 gross tax levels of $8,730. While we recognize that 2000 taxes might be slightly higher, this factor is weighted by a potential 4% discount for early payment. Insurance for the property has fallen within the $1,500 annual range based on a review of the financial information provided by our client. While it is contemplated in lease terms that the tenant is responsible for certain liability insurance, the landlord is responsible for property casualty insurance. Maintenance for the property was reported in the $2,778 and $4,000 range for 1999 and 1998, respectively. We have used a figure of $4,000 per year, or $333 per month, which should assist in costs such as exterior landscaping and maintenance, pest control, etc. Exterior Utilities, along with interior electric and utilities, are estimated at $2,760 per year. This expense covers water, sewer, garbage and exterior electric. Reserves for Replacement have been estimated at $899 per year, or $0.15/SF.

58 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 54 The total expenses in our analysis have amounted to $21,197, or $3.54/SF. This is considered reasonable and in line with other smaller multi-tenant office facilities in the greater Central Florida market. The resulting net operating income of the subject is therefore estimated at $61,250. CAPITALIZATION In estimating a capitalization rate for the subject, we have relied on capitalization rates from certain sales used in our Sales Comparison Analysis. We have also relied on the Korpacz National Investor Survey, and the Band of Investment. The following begins our analysis. Market Extracted Capitalization Rates Sale 1 provided an overall capitalization rate of 10.0%. We were unable to extract capitalization rates from Sales 2, 3, and 4. National Investor s Survey Korpacz Real Estate Investor s Survey, 2 nd Quarter 2000, reports investor grade office building capitalization rates in the 7.5% to 11.0% range. Given the subject s limited investor appeal (not considered a national investment asset), and the credit status of existing and potential tenant draw, we feel that the subject capitalization rate based on investor s expectations would be in the 10% range. BAND OF INVESTMENT It is important to note that the equity capitalization rate is based on an annual equity cash flow divided by a total equity investment. It is not considered an equity yield rate, which is typically higher. Correspondingly, the mortgage constant is a mortgage capitalization rate, or the total annual debt service divided by the principal loan amount. The mortgage perimeters are based on those set forth under the subject financing scenario. The equity capitalization rate was derived from various investor sources including an interview with local brokers, as based on investor s expectations. The perimeters are as follows: Loan Interest Rate is 8.25% Amortization Period is 20 years Equity capitalization rate is 9%

59 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 55 The following is a conclusion based on the Direct Capitalization Method: MORTGAGE BAND OF INVESTMENT RATE Mortgage Ratio X Annual Constant 75% X = 7.67% Equity Ratio X Ro 25% X 9.0% = 2.25% Overall Rate 9.92% In rounding, we have concluded to an overall capitalization rate of 10.0% for the subject, recognizing, Quality and appeal of the property. Local user nature of the improvements. Demand within the immediate area. A summary of the calculations leading to a value conclusion for the subject property by the Income Capitalization Approach is shown on the facing page.

60 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 56 RECONCILIATION As-Is Value The Cost, Sales Comparison, and Income Capitalization approaches to value have provided the following indications of value for the subject property: Cost Approach $650,000 Sales Comparison Approach $620,000 Income Capitalization Approach $615,000 The Cost Approach is best suited for proposed or recently developed properties. Since the subject has an effective age of 15 years, we placed least weight on this approach to value. The Sales Comparison Approach provides an indication of value for the subject by comparison with prices paid for similar properties. Appropriate units of comparison are extracted from the four comparable improved sales and applied to the subject to arrive at a value conclusion by the Sales Comparison Approach. The four sales analyzed in this report provide a good indication of a likely selling price of the subject. They are similar office buildings (multi-tenant) like the subject. Considerable weight is placed on this approach. In valuing the subject, most reliance has been placed on the Income Approach, since similar multi-tenant office buildings in this neighborhood are purchased mostly as an income-producing investment. The market rents, vacancy and collection loss estimate, and expense estimates, as well as the overall capitalization rate, were extracted from the market and are considered to be accurately estimated. In conclusion, most weight was placed on the Income Approach, while secondary weight was placed on Sales Comparison Approach. Least weight was placed on the Cost Approach. Based on the foregoing, it is our opinion that the as-is of the leased fee and fee simple interest in the subject, on June 22, 2000, was: SIX HUNDRED TWENTY THOUSAND DOLLARS ($620,000)

61 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 57 ADDENDA General Assumptions & Limiting Conditions Definitions Orlando Area Overview Letter of Engagement Letter of Intent Contract for Purchase and Sale Leases (Five Total) Copy of Existing Zoning Regulations Representative Client List Qualifications

62 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 58 GENERAL ASSUMPTIONS & LIMITING CONDITIONS STANDARD The legal description furnished is assumed to be correct. We assume no responsibility for matters in legal character, nor do we render any opinions as to title, which is assumed to be good. This report contains a section entitled "Ownership and Sales History", which describes the recent title history of the subject property. This should not be construed to be a title search or a report of title. We render no opinion as to title, which is assumed to be good and marketable. All existing liens and encumbrances have been disregarded, and the property is appraised as though free and clear, under responsible ownership and competent management. Site plans, sketches, drawings and other exhibits in this report are included only to assist the reader in visualizing the property. We assume no liability for their accuracy. We have made no survey of the property and assume no responsibility in connection with such matters. The appraisers assume no liability for structural conditions not visible through ordinary inspection. Information obtained from Public Records, files, Realtors, buyers and sellers, etc. was utilized in the preparation of this appraisal report. The information obtained from these sources was assumed to be accurate and correct. A reasonable effort has been made to verify all such information; however, no responsibility for its accuracy is assumed by this office. The distribution of the total valuation in this report between land and improvement applies only under the existing program of utilization. The separate valuation for land and building must not be used in conjunction with any other appraisal and are invalid if so used. ENVIRONMENTAL Our appraisal assumes that there are no hazardous materials on the property. We are not aware of the existence of potentially hazardous material(s) on the property. We are not qualified to detect such substances. We urge the client to retain an expert in this field if desired.

63 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 59 We are not aware of any soil or subsoil conditions which would affect the property. The discovery of soil conditions is beyond my area of expertise. AMERICAN DISABILITY ACT The Americans with Disabilities Act ("ADA") became effective January 26, The appraisers have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since there was no direct evidence relating to this issue, the appraisers did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. OTHER Disclosure of the contents of this appraisal report is governed by the Standards of the Appraisal Institute. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers or the firm with which they are connected, or any reference to the Appraisal Institute or to the MAI or SRA designation) shall be disseminated to the public through advertising media, public relations media, news media, sales media or any other public means of communication without the prior consent and approval of the undersigned.

64 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 60 MARKET VALUE The definition of Market Value is as follows: DEFINITIONS "Market Value" is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and the seller, each acting prudently, knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby: 1) Buyer and seller are typically motivated; 2) Both parties are well informed or well advised, and each acting in what he considers his own best interest; 3) A reasonable time is allowed for exposure in the open market; 4) Payment is made in terms of cash and US dollars or in terms of financial arrangements comparable thereto; 5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. PROPERTY RIGHTS APPRAISED The property rights appraised herein are the Fee Simple and Leased Fee Estate. FEE SIMPLE ESTATE 1 Fee simple estate is "absolute ownership unencumbered by any other interest or estate; subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat." LEASED FEE ESTATE 2 1 The Appraisal Institute, The Dictionary of Real Estate Appraisal, Third Edition, p The Appraisal Institute, The Dictionary of Real Es tate Appraisal, Third Edition, p.140.

65 ALTAMONTE SPRINGS, SEMINOLE COUNTY, FLORIDA PAGE 61 Leased Fee Estate is an ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others; the rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease. SEMINOLE COUNTY / ORLANDO AREA ANALYSIS Subject INTRODUCTION The economic vitality of the surrounding area, and the immediate neighborhood encompassing the subject property, is an important consideration in estimating future retail demand and income potential. Historic social, economic, governmental, and environmental forces which reflect the quantity and quality of retail demand provide a basis from which future estimates of demand can originate. The subject property is located just north of Orlando in Orange County, Florida. The subject is located in Altamonte Springs in Seminole County, Florida. Our evaluation of historical, current and projected trends for this area will focus on a comparison to Florida. A detailed demographic analysis of Orlando and Florida was conducted using information provided by the National Planning Association, a recognized industry source. Information supplied includes employment, population and income data.