Appraisal of. Six Contiguous Parcels within Buzzard Point Southeast, Washington D.C

Transcription

1 Appraisal of Six Contiguous Parcels within Buzzard Point Southeast, Washington D.C Parcel Address Ownership Size/SF Square 607 Lot 013 1st Street, SW SW Land Holder 89,251 Square 605 Lot nd Street, SW Rollingwood Real Estate 25,612 Square 605 Lot st Street, SW Super Salvage 41,824 Square 661 Lot 805 1st Street, SW PEPCO 56,297 Square 661 Lot 804 1st Street, SW PEPCO 69,366 Square 665 Lot st Street, SW (portion) PEPCO 108,001 Prepared For: Ms. Deborah Freis Office of the Chief Financial Officer Office of Economic Development Finance Government of the District of Columbia th Street, SW W772 Washington D.C Prepared By: Joseph J. Blake & Associates, Inc st Street, N.W., Suite 530 Washington, D.C Joseph J. Blake and Associates, Inc

2 Real Estate Valuation and Consulting Canal Square, st Street N.W, Suite 530, Washington, D.C., Phone: (202) Fax: (202) February 21, 2014 Ms. Deborah Freis Office of the Chief Financial Officer Office of Economic Development Finance Government of the District of Columbia th Street, SW W772 Washington D.C Regarding: Six Contiguous Parcels in Buzzard Point, Southeast, Washington D.C. Dear Ms. Freis: Joseph J. Blake and Associates has prepared a complete appraisal for the above-referenced property, considering all relevant valuation techniques. The data, analysis and conclusions that result in our value estimate are presented in the attached appraisal report, which is presented in a self-contained format. The subject property is comprised of six contiguous tax parcels containing a total of 390,351 square feet of land (8.96 acres) in the Southwest quadrant of the District of Columbia, in an area known as Buzzard Point. Buzzard Point is bordered by Half Street on the east, Second Street on the west, T Street on the south, and R Street and Potomac Avenue on the north. The area is approximately three-blocks west of the Washington Nationals Baseball Stadium and threeblocks east of the Fort McNair Army Post. The six subject parcels are identified in the District of Columbia tax records as Square 607 Lot 13, Square 605 Lot 7, Square 605 Lot 802, Square 661 Lot 805, Square 661 Lot 804, and a portion of Square 665 Lot 24. The current uses on site include a metal salvage company, a former Pepco substation, and single story warehouses. The site is zoned CG/CR by the District of Columbia. The Capitol Gateway (CG) Overlay District was established to provide use, height, density, combined lot development, and design requirements to ensure an appropriate mixture of residential and commercial uses and suitable height, bulk, and design of buildings in the Buzzard Point and Capitol Gateway areas. Specific development objectives of the overlay are: to encourage support and visitor-related uses and continued existing industrial uses; to reduce the height and bulk of buildings along the Anacostia riverfront; to require suitable ground-floor retail and service uses along M Street, near the Navy Yard metro; to provide for a ballpark for major league sport and entertainment and associated uses at Squares and Reservation 247; to establish South Capital Street as a monumental boulevard; and to provide for the development of Half Street, S.E. and First Street, S.E. as active pedestrian-oriented streets. Corporate Headquarters: 425 Broad Hollow Road, Suite 429, Melville New York Phone: (516) Regional Offices: Boston, Chicago, Dallas, Los Angeles, Miami, New York City, and San Francisco, Washington, D.C. Blake & Sanyu Alliance: Tokyo, Osaka, Nagoya, Yokohama Blake & PIX ATIS REAL Alliance: Argentina, Brazil, Chile, Colombia, Venezuela

3 Page Two Ms. Deborah Freis Office of the Chief Financial Officer Office of Economic Development Finance Government of the District of Columbia Regarding: Six Contiguous Parcels in Buzzard Point, Southeast, Washington D.C. The CR zoning district permits matter-of-right residential, commercial, recreational and light industrial development to a maximum lot occupancy of 75% for residential use, 20% for public recreation and community center use, and 100% for all other structures. A maximum FAR of 6.0 for all buildings and structures, of which not more than three (3.0) may be used for other than residential purposes, a maximum height of ninety (90) feet for all buildings and structures and forty-five (45) feet for public recreation and community centers. An area equivalent to 10% of the total lot area shall be required at ground level for all new development and rear yards shall be provided for each residential building or structure. The CG Overlay is mapped on top of the existing underlying zone district (CR) and where there are conflicts, the CG Overlay governs. The subject property also lies within the Capitol Gateway Overlay District which increase the FAR of the subject parcels to 7.0 provided that the additional 1.0 FAR shall be devoted to residential uses (Section ). This does not account for any additional density provide by inclusionary zoning. It is reasonable to assume that the developer would seek and be granted the additional density of 1.2 FAR with inclusionary zoning applied to the proposed/projected subject development. Inclusionary zoning grants additional density to developers with the intent that the additional FAR or a portion of the additional FAR will be developed with affordable housing units. Currently, the six subject parcels are under consideration for a mixed-use development which would include a 25,000 seat Major League Soccer Stadium for the Washington D.C. United Soccer Team. The purpose of this appraisal is to estimate the hypothetical market value of the fee simple estate in each of the subject sites as if the property were vacant, in cleared condition and free of any environmental hazards/issues. In valuing this property, the appraiser has considered the actions of the market and has concluded with an estimate of market value in consideration of current economic indicators extracted from comparable properties. Our study consisted of a personal inspection of the subject property and a comprehensive investigation into the competitive marketplace for similar properties. All pertinent factors, as they relate to value, were examined in consideration of the economic environment of the subject property under current conditions. This report is presented in a self-contained format as established in Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice. The report has been prepared in conformity with, and subject to, the appraisal guidelines of the Code of Professional Ethics and Standards of Conduct of the Appraisal Institute, and the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation.

4 Page Two Ms. Deborah Freis Office of the Chief Financial Officer Office of Economic Development Finance Government of the District of Columbia Regarding: Six Contiguous Parcels in Buzzard Point, Southeast, Washington D.C. Based on the analysis presented within this report, it is our opinion that the hypothetical market value of the fee simple estate in the subject parcels as-if vacant and in cleared condition, free of any environmental hazards/issues as of January 22, 2014, is as follows: Parcel Address Ownership Size/SF Value Square 607 Lot 013 1st Street, SW SW Land Holder 89,251 $27,800,000 Square 605 Lot nd Street, SW Rollingwood Real Estate 25,612 $9,500,000 Square 605 Lot st Street, SW Super Salvage 41,824 $14,400,000 Square 661 Lot 805 1st Street, SW PEPCO 56,297 $17,500,000 Square 661 Lot 804 1st Street, SW PEPCO 69,366 $21,600,000 Square 665 Lot st Street, SW (portion) PEPCO 108,001 $31,900,000 The attached appraisal report describes the data and analysis that serves as the basis for our value conclusion. Presentation of the signature pages without the balance of the entire report is considered an inappropriate use of the document. Respectfully submitted, JOSEPH J. BLAKE AND ASSOCIATES, INC. Thomas J. Shields, MAI Managing Partner District of Columbia Certified General Appraiser #GA10248

5 TABLE OF CONTENTS SECTION I - INTRODUCTION Executive Summary Certificate of Value Basic Assumptions and Limiting Conditions SECTION II - GENERAL INFORMATION Identification of the Property History of Ownership Purpose/Intended Use of Appraisal Valuation Dates Scope of the Appraisal Property Rights Appraised and Relevant Definitions Area Analysis Neighborhood Analysis Market Analysis Description of the Site Zoning Real Estate Taxes Highest and Best Analysis SECTION III - VALUATION OF THE PROPERTY Appraisal Process Sales Comparison Approach Reconciliation of Value SECTION IV - ADDENDA Engagement Letter Qualifications of the Appraisers

6 S E C T I O N I - I N T R O D U C T I O N Joseph J. Blake and Associates, Inc (2013/567) Real Estate Appraisers and Consultants

7 EXECUTIVE SUMMARY 2 Effective Date of Value: January 22, 2014 Date of Inspection: January 22, 2014 Date of Report: February 14, 2014 Property Address: The following chart identifies the subject properties. Parcel Address Ownership Size/SF Square 607 Lot 013 1st Street, SW SW Land Holder 89,251 Square 605 Lot nd Street, SW Rollingwood Real Estate 25,612 Square 605 Lot st Street, SW Super Salvage 41,824 Square 661 Lot 805 1st Street, SW PEPCO 56,297 Square 661 Lot 804 1st Street, SW PEPCO 69,366 Square 665 Lot st Street, SW (portion) PEPCO 108,001 The following map illustrates the subject parcels.

8 EXECUTIVE SUMMARY 3 Property Location: Property Description: The subject property is comprised of six contiguous tax parcels containing a total of 390,351 square feet of land (8.96 acres) in the Southwest quadrant of the District of Columbia, in an area known as Buzzard Point. Buzzard Point is bordered by Half Street on the east, Second Street on the west, T Street on the south, and R Street and Potomac Avenue on the north. The area is approximately three-blocks west of the Washington Nationals Baseball Stadium and three-blocks east of the Fort McNair Army Post. The current uses on subject parcels include a metal salvage company, a former Pepco substation, and single-story warehouses.

9 EXECUTIVE SUMMARY 4 Zoning: The site is zoned CG/CR by the District of Columbia. The Capital Gateway (CG) Overlay District was established to provide use, height, density, combined lot development, and design requirements to ensure an appropriate mixture of residential and commercial uses and suitable height, bulk, and design of buildings in the Buzzard Point and Capital Gateway areas. The CR zoning district permits matter-of-right residential, commercial, recreational and light industrial development to a maximum lot occupancy of 75% for residential use, 20% for public recreation and community center use, and 100% for all other structures. A maximum FAR of 6.0 for all buildings and structures, of which not more than three (3.0) may be used for other than residential purposes, a maximum height of ninety (90) feet for all buildings and structures and forty-five (45) feet for public recreation and community centers. An area equivalent to 10% of the total lot area shall be required at ground level for all new development and rear yards shall be provided for each residential building or structure. The CG Overlay is mapped on top of the existing underlying zone district (CR) and where there are conflicts, the CG Overlay governs. As noted, the subject property also lies within the Capitol Gateway Overlay District which increase the FAR of the subject parcels to 7.0 provided that the additional 1.0 FAR shall be devoted to residential uses (Section ). This does not account for any additional density provide by inclusionary zoning. It is reasonable to assume that the developer would seek and be granted the additional density of 1.2 FAR with inclusionary zoning applied to the proposed/projected subject development. Inclusionary zoning grants additional density to developers with the intent that the additional FAR or a portion of the additional FAR will be developed with affordable housing units. Flood Plan Map: Upon review of the Flood Insurance Rate Map Panel No C dated September 27, 2010, the subject site is located within Zone X, an area determined to be outside the 0.2% annual chance floodplain.

10 EXECUTIVE SUMMARY 5 Site Improvements: Square 607 Lot 13 surface parking with a small onestory warehouse on the northwest corner. Square 605 Lot 7 surface parking with a small one-story warehouse on the southwest corner. Square 605 Lot 802 salvage yard with a small one-story warehouse on the southwest corner. Square 661 Lot 805 surface parking. Square 661 Lot 804 improved with two cylindrical storage structures. Square 665 Lot 24 (portion) contains industrial equipment from PEPCO substation. Highest and Best Use: Mixed-Use development to the highest density allowed with possible retail element on ground floor and primarily residential uses on the upper floors. Indicated Value by Approaches: Sales Comparison Approach: Parcel Address Ownership Size/SF Value Square 607 Lot 013 1st Street, SW SW Land Holder 89,251 $27,800,000 Square 605 Lot nd Street, SW Rollingwood Real Estate 25,612 $9,500,000 Square 605 Lot st Street, SW Super Salvage 41,824 $14,400,000 Square 661 Lot 805 1st Street, SW PEPCO 56,297 $17,500,000 Square 661 Lot 804 1st Street, SW PEPCO 69,366 $21,600,000 Square 665 Lot st Street, SW (portion) PEPCO 108,001 $31,900,000 The purpose of this appraisal is to estimate the hypothetical market value of the fee simple estate in each of the subject sites as if the property were vacant, in cleared condition and free of any environmental hazards/issues.

11 CERTIFICATE OF VALUE 6 I, Thomas J. Shields, MAI, certify that I have personally inspected the subject property. I have reviewed the analyses, conclusions, and opinions concerning real estate contained in this appraisal report and fully concur with the final value estimate expressed herein. I, Thomas J. Shields, MAI, certify to the best of our knowledge and belief: - The statements of fact contained in this report are true and correct. - The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. - We have no present or prospective interest in the property that is the subject of this report, and no personal interest or bias with respect to the parties involved. - Our engagement in this assignment was not contingent upon developing or reporting predetermined results. - We have performed no 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. - We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. - Our engagement in this assignment was not contingent upon developing or reporting predetermined results. - Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. - Our analysis, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. - Thomas E. Rowley, IV provided significant professional assistance to those signing this certification. - The reported analysis, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute. - The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. - The reported analysis, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. That the appraisal report conforms to the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989 ( FIRREA ). - That this Certification is only valid when accompanied by the attached Basic Assumptions and Limiting Conditions. - As of the date of this report, Mr. Shields has completed the continuing education program for Designated Members of the Appraisal Institute.

12 CERTIFICATE OF VALUE 7 The Appraisal Institute conducts a voluntary program of continuing education for its designated members. MAI s and SRA's (members) who meet the minimum standards of this program are awarded periodic educational certification. Thomas J. Shields, MAI is currently certified under the AI mandatory continuing education program. Mr. Shields is duly certified in the District of Columbia to appraise the subject property in accordance with a federally related transaction. The report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP). The analysis, opinions and conclusions were also developed and prepared in accordance with regulations issued by the Office of Thrift Supervision including Title XI of the Financial Reform, Recovery and Enforcement Act of 1989 (FIRREA). In valuing this property, we have considered the actions of the market, and have concluded to an estimate of market value in consideration of current economic indicators extracted from the marketplace. Our study consisted of a personal inspection of the property, as well as a comprehensive investigation into the competitive marketplace, in terms of sales and rentals, among similar property types in the subject s market area. All relevant factors, as they relate to value, were examined in consideration of the current economic environment. Based on the analysis presented within this report, it is our opinion that the hypothetical market value of the fee simple estate in the subject parcels as-if vacant and in cleared condition, free of any environmental hazards/issues as of January 22, 2014, is as follows: Parcel Address Ownership Size/SF Value Square 607 Lot 013 1st Street, SW SW Land Holder 89,251 $27,800,000 Square 605 Lot nd Street, SW Rollingwood Real Estate 25,612 $9,500,000 Square 605 Lot st Street, SW Super Salvage 41,824 $14,400,000 Square 661 Lot 805 1st Street, SW PEPCO 56,297 $17,500,000 Square 661 Lot 804 1st Street, SW PEPCO 69,366 $21,600,000 Square 665 Lot st Street, SW (portion) PEPCO 108,001 $31,900,000 The attached appraisal report describes the data and analysis that serves as the basis for our value conclusion. Presentation of the signature pages without the balance of the entire report is considered an in appropriate use of the document. Respectfully submitted, JOSEPH J. BLAKE AND ASSOCIATES, INC. Thomas J. Shields, MAI Managing Partner District of Columbia Certified General Appraiser #GA10248

13 BASIC ASSUMPTIONS AND LIMITING CONDITIONS 8 This appraisal report is subject to underlying assumptions and limiting conditions qualifying the information contained in the report as follows: The valuation estimate and market or feasibility conclusions apply only to the property specifically identified and described in the ensuing report. It should be noted that this valuation does not include any personal property, fixtures, or intangible items associated with the subject property. Information and data contained in the report, although obtained from public record and other reliable sources and, where possible, carefully checked by the appraiser, are accepted as satisfactory evidence upon which rests the final expression of property value. The appraisers have made no legal survey nor have they commissioned one to be prepared; therefore, reference to a sketch, plat, diagram, or previous survey appearing in the report is only for the purpose of the reader to visualize the property. It is assumed that all information known to the client and relative to the valuation has been accurately furnished and that there are no undisclosed leases, agreements, liens, or other encumbrances affecting the use of the property. Ownership and management are assumed to be competent and in responsible hands. No responsibility beyond reason is assumed for matters of a legal nature, whether existing or pending. Information identified as being furnished or prepared by others is believed to be reliable, but no responsibility for its accuracy is assumed. The appraisers, by reason of this appraisal, shall not be required to give testimony as an expert witness in any legal hearing or before any court of law unless justly and fairly compensated for such services. By reason of the purpose of the appraisal and function of the report herein set forth, the value reported is only applicable to the property rights appraised and the appraisal report should not be used for any other purpose. Disclosure of the contents of this appraisal report is governed by the by-laws and regulations of the Appraisal Institute. The Americans with Disabilities Act ("ADA") became effective January 26, We 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. It is possible that a compliance survey of the property, together with a detailed analysis of the 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 we have no direct evidence relating to this issue, we did not consider possible non-compliance with the requirements of ADA in estimating the value of the property.

14 BASIC ASSUMPTIONS AND LIMITING CONDITIONS 9 The appraisers are not engineers, and any references to physical property characteristics in terms of quality, condition, cost, suitability, soil conditions, flood risk, obsolescence, etc., are strictly related to their economic impact on the property. No liability is assumed for any engineering-related issues. Neither all nor 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 the MAI designation) shall be reproduced for dissemination 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 written approval of the appraisers. In this appraisal assignment, the existence of potentially hazardous materials used in construction or maintenance of the building, such as the presence of urea formaldehyde foam insulation, asbestos, and/or existence of toxic waste, which may or may not be present on the property, has not been considered. This valuation is subject to modification if any such potentially hazardous materials were detected by a qualified expert in these areas. The appraisers reserve the right to modify this valuation if so warranted. This appraisal is based on the condition of local and national economies, purchasing power of money, and financing rates prevailing at the effective date of value. Possession of this report or a copy thereof does not imply right of publication, nor use for any other purpose by any other than the person to whom it addresses, without the written consent of the authors. We have predicated our estimate of market value on sale involving cash, or financial arrangements equivalent to cash (i.e. market rate financing). Based on recent sale data, we have anticipated that the subject property would require a marketing and/or exposure time of less than six months to sell at the indicated market value/price level. Any separation of the signature pages from the balance of our report invalidates the conclusion. We have estimated the hypothetical market value of the fee simple estate in the subject property as if the property were vacant, in cleared condition and free of any environmental hazards/issues.

15 S E C T I O N II - G E N E R A L I N F O R M A T I O N

16 GENERAL INFORMATION 11 Identification of the Property The subject property may be identified in the District of Columbia by tax records as Square 607 Lot 13, Square 605 Lot 7, Square 605 Lot 802, Square 661 Lot 805, Square 661 Lot 804, and a portion of Square 665 Lot 24. The following chart illustrates the parcel, address and parcel square footage. Parcel Address Size/SF Square 607 Lot 013 1st Street, SW 89,251 Square 605 Lot nd Street, SW 25,612 Square 605 Lot st Street, SW 41,824 Square 661 Lot 805 1st Street, SW 56,297 Square 661 Lot 804 1st Street, SW 69,366 Square 665 Lot st Street, SW (portion) 108,001 History of Ownership The subject parcels are currently owned per the following table: Property Owner Address Square 607 Lot 013 Square 605 Lot 007 Square 605 Lot 802 Square 661 Lot 805 Square 661 Lot 804 Square 665 Lot 24 (portion) Last Sale Date Last Sale Price S W Land Holder LLC 1 st Street SW 8/25/2005 $75,113,527* Rollingwood Real Estate LLC Super Salvage INC Potomac Electric Power Company Potomac Electric Power Company Potomac Electric Power Company nd Street SW st Street SW 02/07/2011 $2,175,000 12/31/2000 N/A 1 st Street SW 12/31/2000 N/A 1 st Street SW 12/31/2000 N/A st Street SW 12/31/2000 N/A * We note that this parcel was included in a larger overall sale totaling 8.82 acres purchased by Akridge from Pepco. The subject parcels are currently under consideration for development of a mixed-use development, including a MLS stadium for DC United. Purpose/Intended Use of the Appraisal The purpose of the appraisal is to estimate the hypothetical market value of the fee simple estate in each of the subject parcels as-if vacant and in cleared condition, free of any environmental hazards/issues as of January 22, 2014 (the date of inspection). The intended use is to help our client, Ms. Deborah Freis, Office of the Chief Financial Officer, Office of Economic Development Finance of the Government of the District of Columbia, evaluate the asset for internal purposes.

17 GENERAL INFORMATION 12 Valuation Dates The effective date of value is the date of inspection, which occurred on January 22, The date of this report is February 14, Scope of the Appraisal The scope of this assignment involves a complete appraisal, wherein all relevant valuation techniques are employed and considered. The data, analysis and conclusions that comprise the appraisal are contained in this appraisal report, which is presented in a summary format. The appraisal process was initiated with a personal inspection of the asset. Public records were consulted to confirm information pertaining to zoning, lot size and other characteristics of the subject property. In completing the Market Analysis, we compiled information pertaining to multifamily land sales and conditions impacting improved residential property in the subject s market area. This data, combined with information pertaining to neighborhood trends and the subject s physical characteristics, were considered to determine the highest and best use for the asset. Zoning and development patterns in the immediate neighborhood further suggest that the highest and best use of the site is for development with a residential condominium or multi-family rental facility. Based on the condition of the improvements, the land-to-building ratio and development trends in the immediate neighborhood, it was determined that the value for this property is primarily correlated with the land value. In this instance, the existing improvements are considered an interim use and contribute minimally to the overall value of the property. In the valuation of the asset, it was determined that the Sales Comparison Approach is a relevant technique for the as-is value. This analysis was employed, using the most recent comparable sales of similar multifamily sites. The Cost Approach and Income Capitalization Approach are not applicable in the appraisal of the subject property (land).

18 GENERAL INFORMATION 13 Property Rights Appraised and Relevant Definitions The subject property represents six parcels of land. It would effectively convey the fee simple estate. Fee Simple Estate: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. 1 Hypothetical Condition: That which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. 2 Extraordinary Assumption: An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. 3 Market Value: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (A) buyer and seller are typically motivated; (B) both parties are well informed or well advised, and acting in what they consider their best interests; (C) a reasonable time is allowed for exposure in the open market; (D) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto (E) 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. 4 1 Appraisal Institute. Dictionary of Real Estate Appraisal, 4th Ed. Chicago: Appraisal Institute, Page Appraisal Institute. Dictionary of Real Estate Appraisal, 5th Ed. Chicago: Appraisal Institute, Page Appraisal Institute. Dictionary of Real Estate Appraisal, 5th Ed. Chicago: Appraisal Institute, Page Dictionary of Real Estate Appraisal, 4th Ed. Chicago: Appraisal Institute, Page 177.

19 AREA ANALYSIS 14 Introduction The subject property is located in the Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area (MSA), as defined by the U.S. Department of Commerce as of December, This MSA includes the District of Columbia; the Maryland Counties of Calvert, Charles, Frederick, Montgomery and Prince George s; the Virginia Counties of Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania, Stafford and Warren Counties; Jefferson County, WV; and the Virginia independent Cities of Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, and Manassas Park. The following map illustrates the location of the subject property in the region. Regional Economy Historically, the regional economy relies upon extensive government offices, military installations (and related government contracting), commercial business activity, associations/nonprofit organizations, and tourism. In the past decades, there has also been substantial expansion of technology related companies. In the past, it was common to characterize the Washington area economy as being recession proof. This has been shown to be incorrect; however, the region has been cushioned from the full force of the national recessions by an economic structure that is less cyclical, buoyed by the underlying support of the Federal Government.

20 AREA ANALYSIS 15 The Washington metropolitan area gross regional product growth rate has consistently been higher than National GDP growth in the past several years. Some economists predicted that without a major new driver, such as technology in the nineties, the Washington area economy may be constrained on the upside of the business cycle just as it has been protected on the down side. The following chart compares regional and national economic growth. The data for 2013 is not yet available. National vs. Regional Growth: National GDP Growth -3.50% 3.1.% 1.80% 2.2% National Job Growth -0.04% -0.73% 1.22% 1.70% Washington Area GDP Growth -0.4% 3.4% 1.1% N/A Washington Area Job Growth -1.68% 0.38% 1.41% 1.06% Source: BLS,BEA, (N/A:Not available yet) The Washington area s gross domestic product (GDP) was over $380 billion in 2011, an increase of 1.1% from 2010, the 2012 number was not available. Federal spending makes up roughly 21.6% of the regional GDP and grew by 3.4% between 2009 and The following chart summarizes the other major core industries in the region. Core Sectors of the Economy - Washington Metro Area 2010* GRP in Billions $ %GRP $ %GRP $ %GRP Total Federal $s $ % $ % $ % Portion Procurement $ % $ % $ % Technology $ % $ % $ % Building Industry $ % $ % $ % Int l Business $ % $ % $ % Hospitality $ % $ % $ % Other $ % $ % $ % Total GRP $ % $ % $ % Source: Dr. Stephen Fuller, Delta Associates; March *Estimate. The following chart shows the 12-month percent change in the annual CPI index for the Baltimore Washington CMSA. Between 2000 and 2011, the annual inflation in the Washington- Baltimore CMSA has averaged 2.83%. Change in the Annual CPI index for the Baltimore Washington CMSA Avg. Washington-Baltimore 2.6% 2.4% 2.8% 2.8% 4.0% 3.6% 3.6% 4.5% 0.2% 1.7% 3.3% 2.2% 2.83% *Source: BLS. Data reflects most recent annual data available. Between 2001 and 2004 inflation, as measured by changes in the U.S. Department of Labor s Consumer Price Index (All Urban Consumers, current series), remained fairly low. Between 2005 and 2008, the region experienced significantly higher annual inflation, averaging 3.93% over the four-year period.

21 AREA ANALYSIS 16 Through the recession that took hold in 2009 and continued through 2010, annual CPI change was at historically low levels. In 2011, annual change in CPI increased in the first half of the year to 4.1% as of July. In the latter half of the year, the trend was for more moderate increases, and the annual change was 3.3%. In 2012 CPI increased by 2.2% for the Baltimore Washington CMSA resulting in an average annual CPI of 2.83% since For 2013, the annual change in CPI from the previous year was 1.5% at mid-year and 1.7% as of November, Employment According to the Bureau of Labor Statistics, the average annual change in total employment in the Washington area jobs between 2001 and 2012 was 32,467 jobs, with solid gains in employment posted between 2002 and 2006 (average 51,948 jobs), 2008 (39,655 jobs) and for 2010 and 2011 (average 50,656 jobs). Wash. MSA Year Wash. MSA Wash. MSA Wash. MSA Change In USA Labor Force Employment Unemployment Employment Unemployment ,709,854 2,615, % 4.0% ,701,909 2,611, % -4, % ,749,469 2,639, % 27, % ,780,248 2,672, % 33, % ,833,955 2,729, % 57, % ,903,238 2,803, % 73, % ,962,332 2,870, % 67, % ,973,242 2,885, % 14, % ,037,839 2,925, % 39, % ,077,157 2,887, % -38, % ,133,388 2,934, % 47, % ,172,532 2,988, % 53, % ,182,006 3,005, % 16, % 13-Jan 3,191,098 3,008, % 2, % 13-Feb 3,180,245 3,006, % -1, % 13-Mar 3,198,956 3,033, % 26, % 13-Apr 3,192,669 3,033, % % 13-May 3,209,132 3,031, % -2, % 13-Jun 3,234,135 3,039, % 8, % 13-Jul 3,250,700 3,064, % 25, % 13-Aug 3,181,182 3,008, % -56, % 13-Sep 3,188,621 3,020, % 11, % 13-Oct 3,181,657 2,997, % -22, % 13-Nov 3,175,902 3,021, % 24, % Source: Bureau of Labor Statistics, not seasonally adjusted. Between 2001 and 2012, the labor force increased by 480,097 or an annual average of 40,008 persons. As shown in the above chart, the Washington MSA has historically seen unemployment well below the national levels. Monthly data for the national unemployment rate is seasonally adjusted while the local data is not, but the adjusted national rate is 7.0% as of November, 2013, well above the regional rate of 4.9%.

22 AREA ANALYSIS 17 In 2009, the unemployment rate in the Washington MSA rose above 5.0% for the first time since 1992, to 6.2%. The national and local recession that began in early 2008 did not cause unemployment in the region to approach national levels; however, the region saw a decrease in employment of 38,028 jobs in In 2010, the unemployment rate remained steady at 6.3%, before decreasing to 5.8% in 2011 and 5.6% in As of November, 2013, the unemployment rate in the Washington MSA is 4.9%, according to the Bureau of Labor Statistics, with significant fluctuation on a monthly basis. Historically, the government sector has been one of if not the largest employment sector in the Washington MSA. As of November, 2013, government (Federal, state and local) was the second largest employment sector in the area, with 22.4% of total non-farm employment. Washington MSA Employment by Sector Employment in Thousands Nov 13 % of Total Total Non-Farm 2, , , , , , , , ,101.5 Mining, Lodging, Construction % Manufacturing % Trade, Transportation, Utilities % Information % Financial Activities % Professional/Business Services % Education and Health Services % Leisure and Hospitality % Other Services % Government % Source: Bureau of Labor Statistics For 2012 Total Non-Farm employment in the Washington area increased by 1.5%, following an increase of 1.1% in Total non-farm employment slowed, but still posted growth for 2007 and 2008, before falling 1.7% in Growth in 2010 was modest, at 0.3%, before increasing in the subsequent two years. The data as of November, 2013 suggests an increase of 2.0%. Professional Business services is the largest employment sector in the MSA as of November, 2013 with 22.8% of total non-farm employment. This sector also posted the fourth largest percentage increase over the past eight full years, at 8.65%. As noted, government is the second largest employment sector in the region, with the presence of the Federal Government having a major impact on the Washington area employment picture. Total government employment has increased 8.95% over the past eight full years, although the rate of growth in 2011 was only 0.5% and growth in this sector was actually negative in 2012 with an uptick thus far in Trade, transportation, and utilities (TTU) is the third largest employment sector in the area (13.0% of total employment), followed closely by Education and Health services (12.6%). TTU employment decreased 4.7% between 2005 and 2012, but increased 2.3% in 2012 and 4.1% so far in Education and Health services, on the other hand, increased 22.3% in the past eight years, with an increase of 2.5% in 2012 and an increase of 3.5% so far in 2013.

23 AREA ANALYSIS 18 Job growth related to the scheduled Base Realignment and Closure act (BRAC) is expected to generate substantial job increases in both suburban Maryland and Northern Virginia. Specifically, Fort Meade in the Laurel area is expected to attain an additional 9,834 jobs added, including 5,042 direct employees and 4,792 in indirect employment. Likewise, Fort Belvoir in southern Fairfax County will add 22,000+ military jobs and the Quantico Marine Base on the Stafford County/Prince William County border will add 3,000-5,000 military jobs. While the shifts in Northern Virginia will primarily result in increased on-base employment (long term), there very likely will be major increases in job growth and related demand for space from contractors that need to be near these bases. Household and Population Trends Between 2000 and 2010, the regional population increased from 4,398,586 to 5,250,904, an increase of 852,318 persons. This represents a total increase in population of 19.38%. Trends in Population Jurisdiction %Change % Change District of Columbia 572, , % 621, , % Arlington County 189, , % 215, , % City of Alexandria 128, , % 144, , % Montgomery County 873, , % 993,116 1,047, % Prince Georges County 801, , % 871, , % Fairfax County 969,749 1,081, % 1,104,820 1,166, % City of Fairfax 21,498 22, % 23,700 25, % City of Falls Church 10,377 12, % 13,145 15, % Inner Suburbs 2,994,216 3,299, % 3,366,165 3,546, % Loudoun County 169, , % 339, , % Prince William County 280, , % 422, , % Manassas City 35,135 37, % 40,010 45, % Calvert County 74,563 88, % 90,989 94, % Charles County 120, , % 152, , % Frederick County 59, , % 238, , % Stafford County 92, , % 132, , % Outer Suburbs 832,311 1,349, % 1,416,745 1,564, % Regional Total 4,398,586 5,250, % 5,404,596 5,783, % Source: CCIM The inner-lying suburbs and the District of Columbia are heavily developed. As a result of this and outward shifts in the suburban employment centers, the outlying suburbs experienced much higher percentage population growth over the past decade. Over the next five years, CCIM projects the population in the outer suburbs to increase 4.86%, while the region as a whole is expected to see an increase of 4.54%.

24 AREA ANALYSIS 19 Distribution of Households Jurisdiction Avg % Change Household Size 2013 District of Columbia 266, , % Arlington County 98, , % City of Alexandria 68,082 70, % Montgomery County 357, , % Prince Georges County 304, , % Fairfax County 391, , % City of Fairfax 8,347 8, % City of Falls Church 5,101 5, % Inner Suburbs 1,232,335 1,256, % Loudoun County 104, , % Prince William County 130, , % Manassas City 12,527 13, % Calvert County 30,873 31, % Charles County 51,214 53, % Frederick County 84,800 86, % Stafford County 41,769 43, % Outer Suburbs 456, , % Regional Total 1,659,854 1,735, % Source: CCIM The number of households is also increasing, along with the population. The regional average for household size is higher in the outer suburbs than that displayed by many closer-in suburbs and that of the District of Columbia. In the inner suburbs, the number of households increased at a lower rate than the population, while in the outer suburbs, the number of households increased at a higher rate than the population. In 2005, the median household income in the Metropolitan area was $70,236, according to CCIM. As of year-end 2010, the median household income in the region is $85,231, an increase of 21.4%. Northern Virginia has the highest median household income at $91,801, up 10.9% since In Suburban Maryland, the median household income increased 13.5% over the past five years, to $80,404. In the District of Columbia, the median household income increased 18.2%, with an average of $51,218 as of year-end 2010.

25 AREA ANALYSIS 20 Transportation The Washington Metropolitan Transit Authority operates an interconnected rail and bus service known as Metro. Currently, the Metrorail system is 106 miles with 86 stations. Metro plans to expand its rail stations with an additional station on the Red Line in Northeast Washington at New York Avenue. Metro has recently added two new stations extending the Blue Line into central Prince George s County. These stations were completed at the end of 2004 and early The Silver Line is currently under construction and will include 11 new stations developed in two phases. Phase 1 will run from East Falls Church to Wiehle Avenue on the eastern edge of Reston. It will include four stations in Tysons Corner - McLean, Tysons Corner, Greensboro Park, and Springhill. Construction of this first phase is expected to be completed between 2013 and Phase Two will run from Wiehle Avenue to Ashburn in eastern Loudoun County with completion estimated for The second phase will serve Reston Town Center, Herndon, the Dulles Airport, Route 606 and Ashburn. In terms of a highway network, the Capital Beltway (I-495) is one of the most important factors driving development in the Washington area. It has tied the Maryland and Virginia suburbs together and significantly influenced real estate investment and development patterns. In addition to the Beltway, Washington is connected to I-95, the major north-south interstate highway that extends most of the length of the Atlantic Coast, and I-66, an east-west highway that begins in Washington, D.C. and connects westward to interstate highways in Virginia and West Virginia. The region does have notorious problems with traffic congestion in certain areas. However, there have been several major investments in the infrastructure over the past few years, including massive improvements to the mixing bowl in Springfield, where I-95 and I-495 connect, the addition of "Hot Lanes" in Virginia along I-495 which extend 2 additional lanes in each direction between the Springfield interchange to just north of the Dulles Toll Road. In Maryland, the inter-county connector opened in 2011, connecting I-95, near the Prince George s County line, with I-270 in Montgomery County.

26 AREA ANALYSIS 21 The following table provides a summary of air passenger activity at the three airports in the region. Annual Airport Passengers (In Millions) % Change Dulles % Reagan % BWI % Total % Two of the three airports have experienced an increase in passengers over the prior year. Dulles saw a decrease of 2.18%. In total, over 64 million passengers flew into and out of the Washington region s three airports in 2012, a 9.48% increase from Reagan National has experienced the highest growth since 2004, followed by BWI. Housing Trends The following chart summarizes average home standard sale prices reported by Metropolitan Regional Information Systems (MRIS) for detached homes from 2009 through Average Detached Home Sale Prices Washington Region Average Prices Percent Change District of Columbia $720,653 $752,276 $755,504 $834,683 $872, % 0.43% 10.48% 4.57% Maryland Anne Arundel County $395,065 $393,909 $393,608 $401,768 $419, % -0.08% 2.07% 4.43% Calvert County $328,924 $309,730 $312,893 $315,884 $327, % 1.02% 0.96% 3.62% Charles County $299,738 $282,600 $259,708 $264,758 $278, % -8.10% 1.94% 5.29% Frederick County $314,486 $312,536 $299,439 $314,067 $344, % -4.19% 4.89% 9.80% Howard County $489,568 $495,060 $495,143 $494,041 $519, % 0.02% -0.22% 5.06% Montgomery County $558,566 $578,043 $598,377 $594,676 $647, % 3.52% -0.62% 8.85% Prince George's County $245,546 $217,025 $203,903 $215,340 $241, % -6.05% 5.61% 12.26% St. Mary s County $314,798 $309,615 $293,587 $308,210 $298, % -5.18% 4.98% -3.15% Virginia Alexandria City $639,230 $703,354 $710,398 $696,414 $774, % 1.00% -1.97% 11.14% Arlington County $713,557 $744,485 $747,164 $777,608 $843, % 0.36% 4.07% 8.53% Fairfax County $555,760 $615,201 $624,355 $641,066 $691, % 1.49% 2.68% 7.83% Fairfax City $435,879 $488,824 $494,021 $519,857 $550, % 1.06% 5.23% 5.89% Falls Church City $657,738 $661,395 $755,874 $794,829 $845, % 14.28% 5.15% 6.34% Fauquier County $349,566 $352,604 $352,521 $377,013 $384, % -0.02% 6.95% 2.08% Loudoun County $477,914 $515,525 $523,666 $533,641 $570, % 1.58% 1.90% 6.87% Manassas City $234,929 $271,620 $287,681 $302,173 $336, % 5.91% 5.04% 11.26% Manassas Park City $171,884 $223,903 $215,686 $251,700 $280, % -3.67% 16.70% 11.32% Prince William County $291,527 $333,971 $342,958 $361,305 $395, % 2.69% 5.35% 9.41% Prior to 2008, there was strong demand for condominium units and single-family homes throughout the metropolitan area, especially in the revitalizing downtown areas and closer-in suburbs. As a result of the strong demand and low interest rates, prices increased sharply in , and the pace of new construction reached historic levels. In late Fall 2005, the housing market began to decline, a trend that continued through 2009.

27 AREA ANALYSIS 22 In 2010, 13 of the 19 jurisdictions tracked saw price increases for detached homes ranging between 0.56% and 30.26%. All jurisdictions in Virginia along with the District of Columbia and two jurisdictions in Maryland saw increases. Average sale prices increased in 11 of the 19 jurisdictions for In all but two sectors of Northern Virginia, prices increased between 0.36% and 14.28%, with Falls Church City and Manassas City seeing the highest increases. Fairfax County, with the largest number of sales by far, saw price increases of 1.06% in The District of Columbia posted a modest increase for the year. In suburban Maryland, three of the eight sectors posted increases, led by Montgomery County with an increase of 3.52%. Prince George s County saw the largest volume of sales, but continued its steep decline in pricing. In 2012, pricing began to stabilize with only three of the jurisdictions posting declines and several of the jurisdictions, particularly those in Northern Virginia posting some significant increases. Fairfax County again saw the largest volume of sales, and posted an increase in pricing of 2.7%. In suburban Maryland, only Howard and Montgomery Counties posted decreases in pricing, although each decline was less than 1.0%. Prince George s County continued to see the highest sales volume, but posted an increase in pricing of 5.6% in 2012, after several years of steep declines. In the District of Columbia, the average sale price for a detached home increased 10.5%, the second highest percentage increase in the region. For 2013, the regional housing market continued to improve. St. Mary s County in Maryland was the only sector in the entire region to see a decline in average sale price for detached homes, and Prince George s (+12.3%), Frederick (+9.8%), and Montgomery (+8.85%) counties in Maryland posted sharp increases. All jurisdictions in Northern Virginia posted increases in pricing, with all but one sector (Fauquier County) seeing increases between 5.9% and 11.3%. In the District of Columbia, the average sale price of a detached home increased for the fourth straight year. Conclusion The Washington area economy has historically been relatively resilient and more insulated from recessionary influences in relation to the nation as a whole. Although the regional economy did slip into recession with the nation in 2009, with employment declining for the first time in many years, the area maintains one of the lowest unemployment rates of any major metropolitan area in the nation and appears to have recovered the job losses seen during the recession. Historically, the presence of the Federal Government has provided some manner of protection from economic downturns. This is one of the reasons institutional investors prefer this location, as continued job growth and related population growth can help shorten periodic downturns. Additionally, these factors help smooth-out periods of overbuilding among both office and residential sectors. Looking forward, job growth related to the scheduled Base Realignment and Closure act (BRAC) is expected to continue to generate substantial job increases in both suburban Maryland and Northern Virginia. However, a major issue is the sequester, which has already lead to furloughs for over 800,000 government workers. Government spending reductions for 2013 are approximately $84 billion. Similar cuts will continue all the way through This sequestration will affect government jobs for years to come.

28 AREA ANALYSIS 23 On a long-term basis, the Washington Metropolitan area is a favored location for many institutional investors. There is still heavy technology employment in the region and the underlying stabilizing presence of the Federal Government creates a generally positive atmosphere for investor expectations. Future job growth and good overall employment prospects continue to attract new employees, which in turn spurs increased demand for office, retail and residential real estate. The long-term outlook for the overall economic health of the region remains positive.

29 NEIGHBORHOOD ANALYSIS 24 The neighborhood analysis is intended to provide a bridge between the area analysis and the study of the subject property. The Dictionary of Real Estate Appraisal (4 th Edition) defines a neighborhood as a group of complimentary land uses; a congruous grouping of inhabitants, buildings or business enterprise. The goal of the neighborhood analysis is to define and examine the social, economic, governmental and environmental factors that influence the value of the subject property. The subject property is located in the Southwest quadrant of Washington, District of Columbia in an area known as Buzzard Point. Buzzard Point is bordered by Half Street to the east, Second Street to the west, T Street to the south, and R Street and Potomac Avenue to the north. The site is approximately three-blocks west of the Washington Nationals Baseball Stadium and three-blocks east of the Fort McNair Army Post. The site is seven-blocks from the Navy Yard Metro Station and Waterfront Metro Station (green line) at M Street, and one-block west of South Capitol Street. The Southwest Freeway (Interstate 395) is approximately one-half mile north. The subject s immediate neighborhood is defined as the parts of the city that lie south of Capitol Hill and I-395/I-695, bounded to the south and east by the Anacostia River and to the west by the Washington Channel.

30 NEIGHBORHOOD ANALYSIS 25 Government Influences The primary government influence on real property in the subject s neighborhood area is exerted by the District of Columbia. The District controls real estate assessment and taxation, planning and zoning, police service, fire and rescue services, education and judicial process. Environmental Influences Relative to the subject property, the relevant environmental influences that impact the valuation are related to access and development trends in the immediate area. Aside from developments in the immediate neighborhood, the proximity to Capitol Hill and the Navy Yard should be a driving force behind the decision of many residents to live or operate businesses in this neighborhood. Residents also benefit from good vehicular access throughout the city. Capitol Hill is bisected by several major thoroughfares including: Pennsylvania Avenue, Independence Avenue and Constitution Avenue. A myriad of secondary streets can be used for north-south access in the immediate area and residents have superior highway access in relation to other residential neighborhoods in the Northwest or Northeast Quadrants. Interstate 395 bounds the northern side of the neighborhood, providing immediate highway access throughout the area. The Navy Yard was first authorized in 1799 for use as the Navy's largest shipbuilding facility. The facility currently serves as the Headquarters for the Naval District Washington and includes the Office of the Naval Inspector General, Office of the Judge Advocate General, Military Sealift Command, Naval Computer and Telecommunications Station, Naval Facilities Engineering Command (NAVFAC), NAVFAC HQ, NAVFAC Specialty Centers, Naval Sea Systems Command (NAVSEA) Space and Naval Warfare Systems Command (SPAWAR) and the Naval Historical Center. The Navy Yard has approximately 2.2 million SF of office space and 13,000 US Navy members and employees as well as the US Navy Museum. In terms of new development, the area surrounding the subject neighborhood has been growing with new developments since The past four years the area has seen a significant delivery of office and residential space spurred by the development of the Nationals Stadium.

31 NEIGHBORHOOD ANALYSIS 26 Perhaps the most notable of developments over the past ten years is the Washington Nationals Baseball Stadium, a 41,000-seat stadium that sits on 26 acres, directly east of the subject property. Half Street, which runs alongside the subject site represents the promenade to the main entrance of the stadium from the Washington Navy Yard Metro Station. The boundaries for the stadium development are as follows: N Street to the north, First Street to the east, South Capitol Street to the west and the Anacostia Riverfront/Potomac Avenue to the south. The Nationals Stadium is part of a larger redevelopment of the Capitol Riverfront. The subject site is situated in the southwest portion of the development area. The following picture displays the development area for the Capitol Riverfront. The Capitol Riverfront is a 500-acre district situated between I-395 and the Anacostia River. Located five blocks to the south of the U.S. Capital building, directly to the south of the Capitol Hill neighborhood and Barracks Row, the Capitol Riverfront is connected to some of the District s largest employment and residential cores, as well as its most popular visitor destinations. Reagan National Airport and Union Station are both less than a ten-minute cab ride from the Capitol Riverfront. According to the Capitol Riverfront BID 4Q 2013, the riverfront area currently has 35,000 daytime employees in 7.2 million SF of office including the Washington Navy Yard and U.S. Department of Transportation, 3,306 residential units including apartments, condos, co-ops and townhouses with an estimated residential population of 4,000 people, a 204-room Courtyard by Marriott, Nationals Park baseball stadium, and a continuous one mile riverwalk trail from Diamond Teague Park to the 11th Street bridges. Approximately two to three million people visit the Capitol Riverfront annually to attend events at Nationals Park or the Navy Museum.

32 NEIGHBORHOOD ANALYSIS 27 Development Summary Capitol Riverfront Employers U.S. Navy Yard General Dynamics Lockheed Martin NCIS BAE Systems Booz Allen Hamilton U.S. Department of Transportation Computer Science Corporation (CSC) Northrup Grumman U.S. Coast Guard Washington Nationals Parsons Engineering Williams C. Smith & Company Living Classrooms U.S. Bureau of Land Management Alion Earth Conservation Corps Sayres & Associates D.C. Department of Transportation Source: Capitol Riverfront BID 4Q 2013 Columbia Group Systems Planning Analysis Additionally, retail, entertainment and hospitality tenants currently operating include: Courtyard by Marriott, Starbucks, CVS, Gordon Biersch, Five Guys Burgers & Fries, Kruba Thai & Sushi, Park Tavern at Canal Park, Cornercopia Market and Deli, Justin's Cafe, Lot 38 Espresso Bar, Harry's Reserve, Subway, Chicken Tortilla, The Port Cafe, Barracks Row Restaurants (including Matchbox, Belga Cafe, Cava, Ted's Bulletin and more), Congressional Dry Cleaners, Sizzling Express, Capital One Bank, SunTrust Bank, Wells Fargo Bank, Bank of America, Dogma Dog Daycare, Wagtime Too, Casa degli Angeli Bed and Breakfast, Bluejacket Brewery, Nationals Park, and the U.S. Navy Museum. Additional tenants coming soon include Buzz Bakery, Nando s Peri-Peri, Desi Living Loft Furniture, Osteria Morini, and Agua 301.

33 NEIGHBORHOOD ANALYSIS 28 The Southwest Waterfront is another area of the District experiencing a revitalization and redevelopment effort similar to the Capitol Riverfront. The Southwest Waterfront is generally defined by Interstate 395 to the north, the Washington Channel to the west, the Anacostia River to the south, and South Capitol Street to the east, though Buzzard Point is typically included in the Capitol Riverfront development as Fort McNair separates Buzzard Point from the Southwest Waterfront area. The Southwest Waterfront redevelopment is commonly referred to as The Wharf. The Wharf is a large-scale waterfront development that is part of the District of Columbia s Anacostia Waterfront Initiative. The District of Columbia Zoning Commission approved Stage 1 of the two stage Planned Unit Development (PUD) in January 2013 with anticipated opening in The Wharf is a $2.0 billion redevelopment of the Southwest Waterfront along the historic Washington Channel covering 27 acres of land and more than 50 acres of water from the Municipal Fish Market to Fort McNair. The Wharf is a public/private partnership between Hoffman Madison Waterfront and the District of Columbia. Construction began in 2013 with an anticipated project completion date in 2020.

34 NEIGHBORHOOD ANALYSIS 29 The Wharf Development includes the following features: A total of 3.2 million square feet of residential, hotel, office, restaurant, retail and cultural space on 27 acres of land and 24 acres of riparian rights in the Washington Channel 1,350 residential units 683 keys in three hotels including Carr Hospitality Groups Intercontinental Hotel 325,000 square feet of restaurant and retail space 900,000 square feet of Class A office space 10 acres of parks, open spaces and civic areas 450 boat slips Four public piers (commercial and recreational) More than 5,000 person capacity Wharf Hall for live music and cultural events 50% of all building rooftops will be green 2,500 below-grade vehicle parking garage 1,750 bicycle parking spaces 15,000 square foot co-generation plant for heating, cooling, and electric with 25% less emissions 100% retainment and recycling of the The Wharf s storm water Source: swdcwaterfront.com

35 NEIGHBORHOOD ANALYSIS 30 A key feature of The Wharf development project is open space and sustainability. The Wharf has been designed in accordance with LEED-ND (neighborhood) Gold objectives, in order to meet certification requirements and to comply with all LEED-ND criteria. According to the Hoffman-Madison Waterfront Development Team, Innovative stormwater management designs have been carefully integrated into The Wharf. Significant Low Impact Development (LID) zone plantings and a monumental storm water reuse cistern that stretches beneath the entire length of The Wharf will drastically reduce or eliminate stormwater runoff that enters the Washington Channel and help improve the health of the Potomac River watershed. The Wharf s reuse of stormwater runoff for CHP cooling and the creative use of LID strategies will help the development meet the stormwater management goals of the Anacostia Waterfront Initiative. Buzzard Point The immediate area of the subject site is known as Buzzard Point. Buzzard Point is an area located in the Southwest quadrant of the District and is on the western threshold of the Capitol Riverfront development district. The boundaries of Buzzard Point are typically defined as the area south of M Street SW bounded by Fort McNair to the west, South Capitol Street SE to the east, and the Anacostia River to the south. Buzzard Point is one of the last remaining undeveloped/underdeveloped corners of the District. The area has long been thought of as an industrial backwater of the city and contains a variety of uses including salvage yards, rockcrushing hard industry, the former headquarters of the U.S. Coast Guard, an Army fort dating back to the late 1700s, prime riverfront boat slips, and an array surface parking lots. The area is yet to benefit from the redevelopment of the old Navy Yard and emerging Southwest Washington Waterfront and was chosen as the relocation destination of several businesses during the development of the Washington National s Baseball Stadium. Perhaps, though, the most prominent feature of Buzzard Point is the approximately three-quarters mile of waterfront that extends from Fort McNair along the west bank of the Anacostia River to South Capitol Street SE at the Frederick Douglass Memorial Bridge.

36 NEIGHBORHOOD ANALYSIS 31 Buzzard Point features three distinct designated areas: A residential area, a mixed-use area, and Fort McNair. The designated residential area is between M Street SW and P Street SW and consists predominately of subsidized multifamily and public housing units. The mixed-use area lies south of P Street SW between 2 nd Street SW and South Capitol Street SE to the Anacostia River.

37 NEIGHBORHOOD ANALYSIS 32 Source: Buzzard Point Planning Assistance Team Fort Lesley J. McNair is a United States Army post positioned on the west side of Buzzard Point and occupies about 28 acres from the Potomac River on the west to 2 nd Street SW on the east and P Street SW on the north to the end of the peninsula at the confluence of the Anacostia River and Potomac River. Fort McNair was established in 1791 and is third in length of service following the United States Military Academy at West Point and the Carlisle Barracks. Fort McNair is the headquarters of the Army s Military District of Washington and is home to the National Defense University, the official residence of the U.S. Army s vice chief of staff and is part of the Fort Myer Military Community. The mixed-use area consists of a cement manufacturing plant, a metal salvage yard, vacant land, the PEPCO substation, two marinas and two mid-rise office buildings built in the 1970 s. The two mid-rise office buildings are known as the Transportation Building, located at nd Street SW and the Jamal Building located at 1900 Half Street SW. The Transportation Building is the former headquarters for the U.S. Coast Guard, which vacated the 600,000 square foot facility in September 2013 and relocated to St. Elizabeths. The Jamal Building is currently 82% occupied according to CoStar; however, the U.S. Coast Guard is the major tenant and will also relocate operations to St. Elizabeths. Both office buildings are located along the Anacostia riverfront.

38 NEIGHBORHOOD ANALYSIS 33 Jamal Building from Water Street SW, Source: CoStar Transportation Building from V Street SW, Source: CoStar

39 NEIGHBORHOOD ANALYSIS 34 At the corner of First Street SW and Potomac Avenue SW, is the Super Salvage Inc. metal processing plant, where engines, hub caps, radiators, lawn furniture and other discarded items are scrapped and salvaged for future uses. Super Salvage Inc. has been located in Buzzard Point for over 60 years. To the east of Super Salvage, separated by a lot with vacant warehouses, resides the Florida Rock gravel plant, commonly known as the Steuart Site, after the property owner. The plant relocated to the area as part of the Washington Nationals Stadium development plans. Perhaps though, the most iconic of sites situated in the mixed-use portion of Buzzard Point along the Anacostia riverfront is the PEPCO substation. The facility covers four city blocks or more than 15 acres between 1 st Street SW and Half Street SW. In 2007, PEPCO Holdings announced that it intends to retire power plant units at the Buzzard Point facility. According to PEPCO, these units are more than 35 years old and they are nearing the end of their useful lives. The Buzzard Point units are dispatched only a limited number of hours annually, though the site houses a major substation. PEPCO has indicated it will continue to operate the substation and in 2012 announced plans to upgrade transmission circuits between the Buzzard Point Station and the Ritchie Substation in Seat Pleasant, Maryland. According to PEPCO, The proposed transmission upgrades are necessary to maintain reliable electric service, comply with updated standards from the North American Electric Reliability Corporation, and to address the projections of the regional electric grid operator for power and reliability protocols on PEPCO s transmission system. Source: Buzzard Point Planning Assistance Team

40 NEIGHBORHOOD ANALYSIS 35 The majority of the vacant land of Buzzard Point belongs to a Washington, D.C. developer, Akridge. Akridge landholdings consist of approximately nine-acres between 1 st Street SW and 2 nd Street SW to the east and west, and S Street and V Street SW to the north and south. Akridge currently describes the property as 2.7 million square foot build-to-suit opportunity. According to Akridge President Matt Klein in a recent Washington Business Journal article, Akridge will re-evaluate its plans to develop a mixed-use property at the site to fit better with the proposed DC United Soccer Stadium. The following chart displays the recently discussed sites within Buzzard Point Source: Buzzard Point Planning Assistance Team

41 NEIGHBORHOOD ANALYSIS 36 Although the Buzzard Point waterfront contains obstacles for development, most notably Fort McNair on the western side of the peninsula and the Monday/Jamal Buildings on the eastern side, the area contains two marinas run by the National Park Service. James Creek Marina is the larger of the two marinas and was first constructed in 1913 as the Corinthian Yacht Club. It was transferred to the National Park Service in In 1990 the marina was completely renovated. All the existing pilings, docks and structures were removed or demolished. The marina was dredged, a sea wall was built along the existing shoreline, and new Meeco floating docks were installed. In 2008, Guest Services, Inc., a National Park Service Concessionaire, assumed management responsibilities for the marina. Source: Buzzard Point Planning Assistance Team

42 NEIGHBORHOOD ANALYSIS 37 Buzzard Point Initiatives To address future planning and development of the city, in 2006, the District of Columbia adopted a new Comprehensive Plan as a road map to create successful neighborhoods, increase access to education and employment, and connect the city through investments in transportation, technology, and public space according to the Comprehensive Plan Progress Report Buzzard Point is featured most prominently in the Lower Anacostia Waterfront Near Southwest Area Element of the report as outlined in the chart. As described by the report Land uses along the Anacostia waterfront are diverse. The shoreline currently includes wetlands and large open spaces, marinas, power plants, housing, commercial centers, and industry. The Anacostia Waterfront Planning Area includes the residential neighborhoods of Southwest and Near Southeast/Carrollsburg. Its parks and open spaces include Anacostia Park, Popular Point, and Hains Point, as well as historic squares and playgrounds in the residential areas. The area also includes federal military installations such as Fort McNair and the Washington Navy Yard, and local public facilities such as schools and recreation centers. It also includes Southeastern University, a business-oriented university catering to the educational needs of many District residents. A key aspect for the development of Buzzard Point will be the focus on improved transportation access to the area. The northern portion of Buzzard Point is well linked to the rest of the district by way of M Street SW as an east-west thoroughfare linking the area to the Southwest Waterfront and the Capitol Riverfront, as well as two metro stations. South Capitol Street SE serves as the major north-south thoroughfare providing access to Capitol Hill and Anacostia. However, access to the southern portion of the peninsula is constrained by the lack of entry points to South Capitol Street SE and public transportation options. As part of the Comprehensive Plan, development actions are in progress to reconstruct the Fredrick Douglas Memorial Bridge, add an oval traffic rotary to connect with Potomac Avenue, and promote streetcar or bus rapid transit to improve pedestrian connections to the Metrorail Stations at the Navy Yard and Waterside Mall/SEU.

43 NEIGHBORHOOD ANALYSIS 38 The South Capitol Street Corridor Project calls for replacing the Fredrick Douglas Memorial Bridge and transforming the bridge and related urban freeway sections into a scenic boulevard with pedestrian access a new gateway into the District. The total project investment is expected to cost $908 million and is divided into two phases. Key elements of the project include: Building a new six-lane Frederick Douglas Memorial Bridge Creating a new traffic oval west of the river that connects South Capitol Street, Potomac Avenue, and Q Street SW Reconstruct South Capitol Street as a six-lane boulevard with an improved streetscape from the traffic oval to D Street SE/SW and an at-grade intersection at M Street SE Creating a new at-grade traffic oval east of the river that connects South Capitol Street, Suitland Parkway, and Howard Road SE Reconstructing the Suitland Parkway/Interstate-295 interchange Constructing a new diamond interchange on Suitland Parkway at Martin Luther King Jr. Avenue Improving related portions of New Jersey Avenue, Howard Road, Firth Sterling Avenue, and Sheridan Road SE Increasing bicycle and pedestrian facilities Improving drainage and storm water management throughout the corridor In June of 2013, the District Department of Transportation (DDOT) issued a Request for Qualifications (RFQ) from contractors for design-build construction of Segments 1 and 2, which include the Frederick Douglas Memorial Bridge and Approaches and the I-295/Suitland Parkway Interchange Reconstruction. Potentially further enhancing accessibility to Buzzard Point is the proposed nine-mile northsouth streetcar line between Buzzard Point in Southwest D.C. and Takoma in Northwest D.C. In the fall of 2013, DDOT launched a one-year study of the line. The north-south line would cross multiple neighborhoods: the Southwest waterfront, downtown, Shaw, Columbia Heights, Petworth, and Takoma. The north-south line is a key segment of the planned 22-mile system. In December of 2013, the first streetcar was delivered to begin testing a new 2-mile line running east on H Street from behind Union Station, then along Benning Road to Oklahoma Avenue. DDOT estimates testing will be completed and ready for passengers by the first quarter of The streetcar will be the first to operate in the District since the dismantling of the previous streetcar system in 1962 and represents over a decade of planning. The following charts outline the South Capitol Street Corridor Project and DDOT proposed streetcar alignment.

44 NEIGHBORHOOD ANALYSIS 39 South Capitol Street Corridor Project Source: Anacostia Waterfront.org

45 NEIGHBORHOOD ANALYSIS 40 District of Columbia Proposed Street Car Lines Source: District Department of Transportation

46 NEIGHBORHOOD ANALYSIS 41 Most discussions regarding the development of Buzzard Point are centered on the proposed $300 million, 20,000 seat, D.C. United Soccer Stadium. A tentative agreement between the District of Columbia and D.C. United executives provide for a new venue that would allow the Major League Soccer (MLS) team to leave RFK Stadium for a new stadium in Buzzard Point, a few blocks from the Washington Nationals Baseball Stadium. D.C. United is the winningest franchise in MLS since the 1996 inaugural season. The tentative agreement includes a series of land swaps necessary to provide the land for construction of the new stadium. According to the Washington Post The city is negotiating land swaps with three private property owners on Buzzard Point. They are developer Akridge, PEPCO, and businessman and venture capitalist Mark D. Ein, who owns land at the site s northern end and has also been leading negotiations for owners of the Super Salvage scrap yard next door. In the tentative agreement, The District of Columbia and D.C. United would split the costs for the project, with the city providing about $150 million to assemble land and prepare the site and the team spending a similar amount building the stadium. D.C. United is expected to be granted a 25 to 35 year lease of the land, including the opportunity to develop restaurants and retail along the unused portion of the site. D.C. United is the winningest franchise in MLS since the 1996 inaugural season. Currently, the District of Columbia is in discussions with one of the Buzzard Point property owners, Akridge, regarding a potential land swap. Within the terms of the agreement, Akridge would swap an 89,251 square foot parcel in Buzzard Point for the Reeves Center, an approximately 500,000 square foot office building located on the corner of 14 th and U Street. Akridge is interested in redeveloping the Reeves Center site into a multifamily and first-floor retail/commercial space use as shown in the rendering below.

47 NEIGHBORHOOD ANALYSIS 42 The D.C. United Soccer Stadium is widely viewed as a necessary catalyst for the development of Buzzard Point and combined with the plans to replace the Frederick Douglas Memorial Bridge with new access points along South Capitol Street SE, would essentially link Buzzard Point to the Capitol Riverfront and surrounding areas. Social and Economic Influences To gain a better understanding of the social and economic characteristics among residents in the subject s neighborhood, we considered statistical information pertaining to residents in one, three and five mile radius from the subject property. This data was obtained through the CCIM Site to Do Business (CCIM-STDB).

48 NEIGHBORHOOD ANALYSIS 43 As shown in the previous chart, the population within the subject neighborhood is very small and declining within a quarter mile and half mile radius. Moving slightly beyond the immediate area to a three-quarters radius and the demographic data improve dramatically, further demonstrating the growth in the immediate areas surrounding the property. The neighborhood has a low-income demographic profile consistent with public subsidized housing. Within a quarter-mile, household income is approximately $25,000, however extending the radius to a three-quarters radius, the medium income more than doubles to over $56,000 further demonstrating the dichotomy of the surrounding areas. Conclusion: The subject site is located just south of Capitol Hill and just west of the Capitol Riverfront, in a part of the city that has long been neglected as a development corridor. The area features a prominent historical landmark first envisioned over two hundred years ago alongside undeveloped/underdeveloped land, comingled with heavy industrial uses on a notable peninsula. Significant development initiates surround the area and continue to encroach upon the immediate surroundings. The area will benefit from the currently planned investments such as the new Frederick Douglas Memorial Bridge and South Capitol Street SE traffic oval and access point. The District of Columbia is one of the most robust economic environments in the country with the continued expectation of population and income growth. While the subject site poses many challenges in the type of use and redevelopment going forward, it also presents a unique opportunity to enhance a distinguishable waterfront and entry point to the Nations capitol.

49 MARKET ANALYSIS 44 As we will discuss in the highest and best use section, we have concluded that the highest and best use of the subject is for multi-family development with associated retail and commercial uses. In this section of the analysis, we will discuss the multifamily market on a regional level, and more specifically, on a submarket level. Our regional multi-family market analysis relies on information from REIS. This report represents the most recent data available. Washington, DC Multi-Family Overview According to the 4 th Quarter of 2013 REIS Metro Trend Futures, the Washington, DC market contains 93,247 units with a vacancy rate of 4.8% and an average asking rental rate of $1,541 per unit per month as of the end of the year. There have been approximately 8,800 deliveries since 2008 and full year 2013 has seen positive net absorption of 1,993 units. REIS is projecting the addition of approximately 10,000 new units by year-end Although REIS is projecting a slight increase in vacancy levels in response to these additions, the report is also projecting increasing asking rental rates over the same period. This displays confidence in the Washington, DC market over the next several years. The majority of our analysis will focus on the subject s Capitol Hill/Southwest submarket, which is detailed in the following sections.

50 MARKET ANALYSIS 45 Capitol Hill/Southwest Submarket The subject property is located in the Capitol Hill/Southwest submarket, which is displayed in green on the following map. The following charts detail specific historical and current submarket statistics according to REIS, beginning with a chart that details the inventory breakdown of rental properties according to age in the submarket.

51 MARKET ANALYSIS 46 As shown previously, the area has seen significant development over the last years with 48% of the inventory completed during that period. The balance of the inventory was constructed prior to 1979 with effectively no new construction between 1980 and The current average asking rent reported by REIS in the Capitol Hill/Southwest submarket is $1,205 per month for a studio unit with an average size of 483 square feet, $1,487 per month for a one-bedroom unit with an average size of 766 square feet, and $2,176 per month for twobedroom units with an average size of 1,095 square feet. The following chart displays the rental rate breakdown in the submarket according to the number of bedrooms. The chart also displays the average sizes of these unit types and other unit types in the submarket. As shown above, REIS is reporting rental rate growth for studio and two-bedroom units over the past one, three, and five annualized years. One-bedroom unit rents are down (2.9%) over the past year but have grown over the past three and five year periods. The following chart highlights historical vacancy trends and projections within this submarket as well as regional and national data. As shown above, the submarket vacancy rate has historically been above that of the District of Columbia area overall, and is currently also above the national average vacancy rate. The vacancy rate of the submarket is expected to decrease over the next five years declining to levels that are projected to be below both the overall District of Columbia market as well as the nation, attesting to the strength of the subject s submarket and the increasing demand forecasted.

52 MARKET ANALYSIS 47 The following chart provides a summary of the Capitol Hill/Southwest submarket over the past several years, and also summarizes the projections going forward according to REIS. At the end of 2013, the Capitol Hill/Southwest submarket contained 8,036 units with a vacancy rate of 5.5% and an average asking rental rate of $1,607 per unit per month. There have been approximately 1,700 deliveries since In 2012 there was a positive net absorption of 191 units with even stronger performance in 2013 with total positive net absorption of 291 units. REIS is projecting the addition of 495 new units by year-end Despite these new additions, REIS is projecting that vacancy rates will decline to below 3% by 2018 while rents are expected to continue to increase at roughly 2.5% per annum. This displays confidence in the subject s Capitol Hill/Southwest submarket over the next several years. New/Recent Development As of year-end 2013 there were 1,264 residential units under construction in the Capital Riverfront area of Southeast Washington D.C. The following paragraphs discuss several of the recently developed and proposed/planned developments in the area. Camden South Capital Apartments is the most recent multi-family complex to open and was completed in the 2 nd Quarter of The complex contains 276 units, covered parking, and a rooftop entertainment lounge with swimming pool and grills. Located adjacent to the Nationals Baseball Stadium and within walking distance to The Yards entertainment district and the Navy Yard Metro Station, the complex achieved the neighborhood s fastest lease-up to date according to the Capitol Riverfront BID Annual Report 2013.

53 MARKET ANALYSIS 48 Next in line to open will be developer Forest City s Twelve12, with an April 2014 completion date. The complex broke ground at the end of 2011 and will feature 218 units with 88,000 square feet of retail, including a full line Harris Teeter grocery center, Vida Fitness with Bang Salon, Aura Spa, and Penthouse Pool Club and Lounge. The complex is located on the corner of M Street SE and 4 th Street SE. Source: capitolriverfront.org Additional complexes under development include: River Parc by Toll Brothers River Parc is 287 unit apartment complex located at the corner of First Street SE and K Street SE. The project will include a 179-space below-grade parking garage. This is Toll Brothers first project in Washington, D.C. The project is slated for completion in the 1 st Quarter of Park Chelsea by WC Smith This 432 unit luxury apartment complex will be located at 880 New Jersey Avenue SE. The complex will feature a 75-foot indoor lap pool, second roof top pool, pilates/yoga studio, dog exercise area, and a Jacuzzi. Additionally, there will 1,500 square feet of ground floor retail. The project broke ground in the fall of 2012 and has an expected completion date of The Yards, Phase I Parcel N by Forest City Parcel N will be a 325-unit apartment complex located at 351 Tingey Street SE with approximately 20,000 square feet of ground floor retail. The project broke ground in late 2013 with completion targeted for late 2015.

54 MARKET ANALYSIS New Jersey Avenue by WC Smith (announced) This 336 unit luxury loft style apartment building will also contain 35,000 square feet of ground floor retail for a Whole Foods Market. Anticipated completion date of Source: capitolriverfront.org The Capitol Riverfront BID estimates a current population of over 4,100 residents living in 3,034 units and expects to achieve over 5,000 residents in A total of four new apartment buildings are expected to break ground in 2014 and the total number of residential units in the Capitol Riverfront is projected to grow to over 5,000 units by Conclusion The site is bordered by Half Street on the east, Second Street on the west, T Street on the south, and R Street and Potomac Avenue on the north. The multi-family rental markets are experiencing low vacancies, increasing rental rates, and the addition of new supply to the market. The demand characteristics for the subject submarket and overall District of Columbia market are strong. Expectations are for continued strong demand over the next five years, thus presenting the opportunity for good investment returns in the multi-family sector.

55 MARKET ANALYSIS 50 Washington, DC Office Overview To properly evaluate the asset, it is important to establish supply and demand factors pertaining to office space in the region. The following analysis details relevant statistical data pertaining to occupancy, new construction and the rental market from the Reis Survey. The analysis will also discuss recent sales activity involving improved office properties throughout the region. Regional Office Market Profile The Washington, D.C. metropolitan area office market is the second largest in the country, with a total inventory of approximately 307 million square feet of net rentable area. The following table displays the regional breakdown of supply and occupancy cited in the Reis Survey, as of the 4th Quarter 2013: All Building Classes - 4Q-2013 DC No. VA Sub. MD Metro D.C. Total Inventory (SF) 103,366, ,642,000 68,142, ,150,000 Space Available (SF) 10,616,000 23,928,000 10,309,000 44,853,000 Vacancy Rate 10.27% 17.38% 15.13% 14.51% 2013 YTD Net Absorption (SF) -225, , ,000-67,000 Completions (SF) YTD 967,000 1,638, ,000 3,371,000 Source: Reis The Washington metropolitan region had demonstrated solid economics through 2007 and into 2008, with a strong performance marked by rising rents and falling vacancy rates. The global credit crisis which began in part in August of 2007 and was fully realized in August of 2008 has had a severe effect on all facets of the region s office market including leasing and investment sales. However, the region began to experience positive momentum in terms of leasing and investment sales beginning in the second quarter of As of the 4th quarter 2013, Reis reports the regional vacancy rate at 14.51%. As shown in the above chart, the District of Columbia is significantly out-performing the suburban markets, which are between 15% and 17% vacant. In the 4th quarter, each of the submarkets experienced a slight increase in vacancy levels over the prior year. As shown in the following chart, the current vacancy level for the total metro area represents an eight year high. The following table summarizes the vacancy history of the various segments of the metro region. Metropolitan Area Direct Vacancy Rate District of Columbia 6.90% 7.40% 8.30% 10.70% 9.90% 9.40% 9.30% 10.27% Northern Virginia 10.30% 10.20% 13.40% 14.30% 14.70% 14.70% 15.70% 17.38% Suburban Maryland 8.60% 9.50% 12.60% 15.10% 15.50% 15.30% 14.80% 15.13% Metro Area 8.82% 9.13% 11.58% 13.30% 13.24% 13.07% 13.39% 14.51% Source: Reis

56 MARKET ANALYSIS 51 The following table tracks regional net absorption in square feet of office space in the Washington Metropolitan area over the past several years. Metropolitan Area Net Absorption (SF) DC 2,554,000 1,921, , ,000 3,288, , , ,000 Northern VA 1,751,000 1,437, ,000-1,125, , , , ,000 Suburban MD 930, , ,000-1,065,000-98, , , ,000 Overall Metro Area 5,235,000 4,109, ,000-1,722,000 2,978,000 1,697, ,000-67,000 Source: Reis The 2006 figure indicates a solid year for absorption with over 5 million SF absorbed. In 2007 absorption fell by roughly 21.5% falling to 4.1 million SF. In 2008 subsequent to the initial credit crunch beginning in August of 2007, absorption fell to a net loss of roughly 260,000 SF. The 2009 net absorption for the metro area was negative 1,722,000 SF subsequent to the September 2008 credit crisis. Only the District experienced positive absorption in 2009 and For 2011 the District lead the area with positive absorption of approximately 792,000 SF, but the total in the District was significantly off the prior year. For 2012, regional absorption was positive 352,000 SF, with both the District and Northern Virginia being off of the pace set in By contrast, Suburban Maryland saw a significant increase in net absorption in For the 4th quarter of 2013, net absorption has been negative in DC and Northern Virginia but positive in Suburban, MD. Construction Regional trends on new office construction between 1993 and 2012 are summarized as follows: Year Metro DC Total (Square Feet) Year Metro DC Total (Square Feet) ,720, ,006, , ,398, ,921, ,135, ,721, ,385, ,989, ,916, ,058, ,323, ,562, ,024, ,355, ,315, ,506, ,538, ,336, ,457,629 Source: CoStar For the region, deliveries since 2000 outpaced the levels of the 1990 s. Within the District, the CBD is primarily built-out, most of the development has occurred in the East End and Capitol Hill. Deliveries in 2006 through 2009 greatly exceeded the average over the past decade. The metro area had not experienced this volume of construction since Completions in 2010 through 2012, however, declined significantly. Although the data indicates a slight uptick in 2012, the completions remain well below the levels evidenced between 2006 and As of the 3rd quarter of 2013, CoStar reports that there were roughly 6.4 million SF under construction of which 53% is pre-leased.

57 MARKET ANALYSIS 52 As indicated above, of the total area under construction, 1.83 million square feet are in the Downtown area of the District of Columbia; however, this space is 79.6% pre-leased, highlighting the overall strength of this market area. New Development According to the Capitol Riverfront BID Annual Report 2013, the area has 14.7 million square feet of office space planned for the neighborhood, of which 50% has been built. There are ten office buildings in the Capitol Riverfront with a total of 7.4 million square feet of leasable office space, eight of which are privately owned, as stated in the annual report. Recent office development in the subject area includes the following office properties: 100 M Street A 12-story, 243,000 square foot Class A office building with 12,500 square feet of ground floor retail space. The property is located on the corner of 1 st Street SE and M Street SE, adjacent to the Navy Yard Metro Station. Parsons Engineering is the largest tenant, occupying more than 80,000 square feet. Retail tenants include Gordon Biersch Brewery and Sun Trust Bank Half Street This 399,000 square foot office building contains 20,000 square feet of first floor retail space. The building features underground parking and is LEED certified. 200 I Street, SE Formerly known as 225 Virginia Avenue, the District Government purchased the office building in 2009 and entered into a development agreement with Stonebridge Carras to renovate the property. Renovations of the 350,000 square feet LEED Silver certified building were completed in The office building now houses 1,200 1,400 employees from four District agencies. Congressional Square (pre-leasing) Bordered by I Street on the north, K Street on the south, Half Street on the west and 1 st Street on the east, Congressional Square is a multi-phase office building complex with an expected 795,000 square feet of office space and 30,000 square feet of retail space. Pre-leasing has begun on Phase I, which contains 290,000 square feet of office space and 14,000 square feet of street level retail space. The building will be designed to LEED Gold standards and is within walking distance to two Metrorail Stations. Phase I has an estimated completion date of

58 MARKET ANALYSIS 53 Source: capitolriverfront.org Deliveries of office space slowed dramatically after 2007 in the Capitol Riverfront neighborhood due to the Great Recession. Further impacting the market in 2013, the U.S. Coast Guard moved from Buzzard Point to St. Elizabeths, thus vacating two office buildings and relocating an estimated 4,000 employees. The area office submarket should rebound with the overall office market as the economy continues to improve and as the neighborhood continues to be developed. Additionally, Class A rents in the neighborhood offer a 10%-25% discount to typical Class A rents in the CBD, creating an incentive for prospective tenants to locate in the area. Submarket Analysis Capital Riverfront/SE/SW The subject property is situated in the Capital Riverfront office submarket, as this area is relatively small, the analysis also includes the Southeast and Southwest markets within the District of Columbia. The relevant area extends south from East Capital Street and Jefferson Drive SW to the Washington Channel and the District boundary with Maryland. This is a generally smaller office node but is an area of the highest inventory growth over the past five years. In the course of completing this assignment, we performed a survey using the CoStar system pertaining to office properties in the Capital Riverfront, Southeast and Southwest quadrants of the city.

59 MARKET ANALYSIS 54 Supply and Vacancy The CoStar survey indicates that there are 176 office buildings in the Capitol Riverfront/SE/SW submarket with a total of 17,838,348 square feet. This survey suggests total vacancy rate of 12.3% as of year-end The following chart summarizes inventory and vacancy rates of office buildings within the subject submarket. The data summarized in the following charts and analysis is from The CoStar Office Report. The vacancy rate at the end of 4Q 2013 was approximately 12.3%. The vacancy rate has been trending upward in 2013 after achieving a multi-year low of 8.8% in the 3 rd and 4 th Quarters of Overall, the vacancy rate has been trending downward since the recessionary peak rate of 19.9% in the 4 th Quarter of 2009.

60 MARKET ANALYSIS 55 Vacancy Rate Chart Absorption The subject s submarket experienced negative net absorption of (635,198) square feet in The historical trends in the submarkets are presented below:

61 MARKET ANALYSIS 56 Absorption in the Capitol Riverfront/SE/SW submarket was negative in 2013 for the first time in over a decade. Prior to 2013, the submarket absorbed over two-million square feet of office from 2010 to 2012, exhibiting strong demand in the submarket. Net Absorption Chart Rental Rates During Q office rental rates in the Capitol Riverfront/SE/SW submarket averaged $47.39/SF.

62 MARKET ANALYSIS 57 The Capitol Riverfront/SE/SW submarket has experienced a decline in rental rates over the past three years after peaking at $50.19 in 1Q The current rental rate is at levels not seen since 2009, highlighting the sluggish demand for the market. Gross Asking Rent Per SF Chart Conclusion The subject property is situated in an underdeveloped area of the submarket and poses challenges for development. The Capitol Riverfront area had experienced a significant building boom after the development of the Nationals Stadium leading into the economic crisis of 2008, the existing office vacancy is a result of that overbuilding coupled with decline in leasing activity. Leasing remains sluggish for office in the submarket particularly in the Capital Riverfront/Southeast/Southwest submarkets. In general, the near and mid-term prospects for the subject and the wider market appear to remain sluggish with regard to leasing activity, and concerns over pending federal budget decisions. Additionally, sales of institutional quality office buildings slowed modestly in recent months. The long term prospects for the subject and the submarket are good due to the revitalization of the area and proximity to the federal government, however the near to mid-term prospects are expected to remain sluggish.

63 MARKET ANALYSIS 58 District of Columbia Retail Market According to CoStar, the District of Columbia retail market contains slightly less than 21.9 million square feet of rentable area contained within 4,209 properties. The DC retail market has a current vacancy rate of 4.6% and an average asking rental rate of $38.64 per square foot on a triple net basis. There were a total of 291,673 square feet of retail space delivered in 2012 and 349,642 delivered in In spite of the increased inventory, the vacancy rate demonstrates a multi-year downward trend. Further demonstrating the rebound of the retail market, rental rates are approaching the peak rate of $41.03 achieved in the 2 nd Quarter of The following chart summarized the District of Columbia retail market since the start of 2007.

64 MARKET ANALYSIS 59 Submarket Analysis Capitol Riverfront/SE/SW The subject property is situated in the Capital Riverfront retail submarket, as this area is relatively small, the analysis also includes the Southeast and Southwest markets within the District of Columbia. The relevant area extends south from East Capital Street and Jefferson Drive SW to the Washington Channel and the District boundary with Maryland. The subject property is located within the Capitol Riverfront/SE/SW retail submarket, which contains approximately 1.95 million square feet of net rentable area contained within 336 properties. The submarket has a current vacancy rate of just 3.7% and an average asking rental rate of $25.59 per square foot on a triple net basis. The submarket has been one of the slower areas develop but is benefiting from the redevelopment of the Old Navy Yard and opening of the Washington, D.C. Nationals Baseball Stadium. The submarket has delivered over 77,000 square feet of new retail space during the past two years. The submarket is demonstrating moderate demand with positive net absorption of 15,244 square feet in 2012 followed by 37,754 square feet in 2013.

65 MARKET ANALYSIS 60 Construction Deliveries As seen in the chart below, retail development in the submarket has been relatively limited since a robust 2007, before the recession. Previous to the Nationals Baseball Stadium completion in 2008, the submarket was not considered a prime location for new development. The chart demonstrates the run-up in new deliveries prior to the completion of the stadium followed by almost a standstill in new development of the area that may be partly, or mostly, attributable to the Great Recession. Given the recent improvement in the economic environment of the District of Columbia and United States as a whole, the submarket should begin to be a major focus of development opportunities, especially given the forecast for continued multifamily development in the submarket as previously discussed. New Development The retail sector turned in a strong performance in 2013 for the Capitol Riverfront neighborhood. According to the Capitol Riverfront BID Annual Report 2013, the year concluded with the opening of eight new restaurants, two service retailers, construction of 88,000 square feet of new retail space, and the announcements of ICON Theater and Whole Foods opening in 2016 and 2017 respectively. Retail development in the neighborhood is being driven, in part, by the continued strength of the multi-family sector. The vast majority of new multi-family complexes, recently completed and under construction, include ground floor retail, thus enabling a local access to retail amenities.

66 MARKET ANALYSIS 61 Recently completed and planned retail developments in the subject area includes the following: Boilermaker Shops A renovated naval industrial building completed in the 4 th Quarter of 2012 contains 33,540 square feet of retail space and 16,000 square feet of mezzanine office space. Located at 300 Tingey Street SE between 3 rd and 4 th Streets SE, the Boilermaker Shops tenants include Bluejacket Brewery, Buzz Bakery, Nando s Peri-Peri, and Wells Dry Cleaners. In 2014, 100 Montaditos and Willie s Brew and Que are expected to open. Source: capitolriverfront.org The Lumber Shed An adaptive reuse of a historical Navy Yard industrial building that has 17,350 square feet of ground level retail and 17,350 square feet of office space. Osteria Morini by award winning New York City chef Michael White and Agua 301 opened in Source: capitolriverfront.org

67 MARKET ANALYSIS 62 Harris Teeter As part of the Forest City developed Twelve12 multi-family complex, Harris Teeter has signed a 50,000 square foot lease. The complex is currently under construction and is expected to open in Additionally, as part of the complex, VIDA fitness, Bang Salon, and Aura Spa are expected to open. Whole Foods Market Located on the ground floor of the soon to be constructed 800 New Jersey, SE multi-family complex, Whole Foods Markets signed a 35,000 square foot lease. The complex will include two levels of Whole Foods customer parking above the ground floor retail. Additional Restaurant Openings Gordon Biersch at 100 M Street SE, Potbelly Sandwich Shop and Kruba Thai & Sushi at the Yards Foundry Lofts Building (301 Tingey Street SE), Sweetgreen and TaKorean at Twelve12 ( th Street SE) in The Capitol Riverfront neighborhood demonstrated the strength of the area with new retail announcements and new leases totaling 50,000 square feet of retail space among eight tenants in 2013, according the Capitol Riverfront BID. Additionally, The Buccini/Pollin Group announced a new 168-room Hampton Inn at N & 1 st Streets, SE that is expected to break ground in Conclusion The subject property is located on the edge of the path of development. To the east of the subject property, retail development was spurred by the completion of Nationals Baseball Stadium and subsequent surge in multi-family deliveries. With relatively low submarket rental rates and vacancy rates, a slight change in perception of the immediate area could generate a renewed development effort.

68 DESCRIPTION OF THE SITE 63 Location: Tax Identification: The subject property is bordered by Half Street on the east, Second Street on the west, T Street on the south, and R Street and Potomac Avenue on the north. The site is approximately threeblocks west from Washington Nationals Baseball Stadium and threeblocks east from the Fort McNair Army Post in the Southwest Quadrant of Washington, D.C The subject property is identified in the District of Columbia tax records as Square 607 Lot 13, Square 605 Lot 7, Square 605 Lot 802, Square 661 Lot 805, Square 661 Lot 804, and Square 665 Lot 24. Site Area: Square 607 Lot 13 89,251 square feet Square 605 Lot 7 25,612 square feet Square 605 Lot ,824 square feet Square 661 Lot ,297 square feet Square 661 Lot ,366 square feet Square 665 Lot ,001 square feet of 425,891 total Total 390,351 SF Shape: Square 607 Lot 13 rectangular in shape Square 605 Lot 7 irregular Square 605 Lot 802 irregular Square 661 Lot 805 rectangular in shape Square 661 Lot 804 rectangular in shape Square 665 Lot 24 rectangular in shape Topography: Drainage: Soils: The subject property is level and at street grade Appears to be adequate. Square 605 Lot 802 and Square 665 Lot 24 present potential environmental concerns given the heavy industrial nature of the lot uses. As noted within the Extraordinary Assumptions Our report assumes that the site is free of any environmental hazards. Frontage/Access: Square 607 Lot 13 frontage along S Street SW, 2 nd Street SW, T Street SW, and 1 st Street SW; access via 2 nd Street SW and 1 st Street SW Square 605 Lot 7 frontage along 2 nd Street SW, S Street SW; access via 2 nd Street SW and 1 st Street SW Square 605 Lot 802 frontage along S Street SW, 1 st Street SW, and R Street SW; access via 1 st Street SW and R Street SW Square 661 Lot 805 frontage along 1 st Street SW, Half Street SW, and R Street SW; access via R Street SW and Half Street SW Square 661 Lot 804 frontage along S Street SW, Half Street SW, and 1 st Street SW; access via South Street SW Square 665 Lot 24 frontage along S Street SW, 1 st Street SW, and Half Street SW, and T Street SW; access via T Street SW.

69 DESCRIPTION OF THE SITE 64 Utilities: Easements/ Encroachments: Environmental: Flood Plan Map: Site Improvements: The subject parcels are served by all public utilities, including gas, electricity, water-sewer service and telephone. The subject parcels are encumbered by typical utility easements. These easements are assumed to be typical of the market and not hinder development in any way. We were not provided with an environmental assessment of the subject site. For the purposes of this valuation, the property is assumed to be free and clear of all environmental hazards; however, due to the current uses a Phase II Environmental Study is recommended for each parcel by a qualified professional. Upon review of the Flood Insurance Rate Map Panel No C dated September 27, 2010, the subject site is located within Zone X, an area determined to be outside the 0.2% annual chance floodplain. Square 607 Lot 13 surface parking with a small one-story warehouse on the northwest corner Square 605 Lot 7 surface parking with a small one-story warehouse on the southwest corner Square 605 Lot 802 salvage yard with a small one-story warehouse on the southwest corner Square 661 Lot 805 surface parking Square 661 Lot 804 improved with two cylindrical storage structures Square 665 Lot 24 contains industrial equipment from PEPCO substation Conclusion: The site appears to be adequate to support a variety of development options including multifamily, office and entertainment venues.

70 DESCRIPTION OF THE SITE 65

71 ZONING 66 The subject property falls under the zoning jurisdiction of the District of Columbia. The subject property is zoned CG/CR by the District of Columbia. The site is zoned CG/CR by the District of Columbia. The Capitol Gateway (CG) Overlay District was established to provide use, height, density, combined lot development, and design requirements to ensure an appropriate mixture of residential and commercial uses and suitable height, bulk, and design of buildings in the Buzzard Point and Capitol Gateway areas. Specific development objectives of the overlay are: to encourage support and visitor-related uses and continued existing industrial uses; to reduce the height and bulk of buildings along the Anacostia riverfront; to require suitable ground-floor retail and service uses along M Street, near the Navy Yard metro; to provide for a ballpark for major league sport and entertainment and associated uses at Squares and Reservation 247; to establish South Capital Street as a monumental boulevard; and to provide for the development of Half Street, S.E. and First Street, S.E. as active pedestrian-oriented streets. The CR zoning district permits matter-of-right residential, commercial, recreational and light industrial development to a maximum lot occupancy of 75% for residential use, 20% for public recreation and community center use, and 100% for all other structures. A maximum FAR of 6.0 for all buildings and structures, of which not more than three (3.0) may be used for other than residential purposes, a maximum height of ninety (90) feet for all buildings and structures and forty-five (45) feet for public recreation and community centers. An area equivalent to 10% of the total lot area shall be required at ground level for all new development and rear yards shall be provided for each residential building or structure. Zoning requirements are as follows: Floor Area Ratio (FAR): 6.0 times However, as the subject properties fall within the Capital Gateway Overlay District the FAR is increased to 7.0 provided that the additional 1.0 FAR shall be devoted to residential uses (Section ). This does not account for any additional density provided by inclusionary zoning. It is reasonable to assume that the developer would seek and be granted the additional density of 1.2 FAR with inclusionary zoning applied to the proposed/projected subject development. Inclusionary zoning grants additional density to developers with the intent that the additional FAR or a portion of the additional FAR will be developed with affordable housing units. Maximum Height: 90 feet for all buildings and structures increased to 100 feet within the Capitol Gateway Overlay 45 feet for public recreation and community centers Maximum Lot Occupancy: 75% residential increased to 80% within the Capitol Gateway Overlay District 20% public recreation and community center use 100% for all other structures

72 ZONING 67 Minimum Rear Yard: Minimum Side Yard: Parking Requirement: Conclusion: Three inches per foot of building height, but not less than 12 feet Not required. Generally: 1 space/1,800sf of Gross Area over 2,000 SF. We are valuing the property as vacant land with the potential to develop the site to an FAR of 8.2. This estimates includes the FAR of 6.0 granted within the CR district, the bonus density of 1.0 FAR granted within the CG District and the bonus density of 1.2 FAR granted with inclusionary zoning. As such, the following chart illustrates the development potential of each parcel. We note that we are not experts in complex zoning matters and recommend our client seek the position of an attorney well-versed in the Washington D.C. zoning ordinance. Parcel Address Ownership Size/SF FAR Square 607 Lot 013 1st Street, SW SW Land Holder 89, ,858 Square 605 Lot nd Street, SW Rollingwood Real Estate 25, ,018 Square 605 Lot st Street, SW Super Salvage 41, ,957 Square 661 Lot 805 1st Street, SW PEPCO 56, ,635 Square 661 Lot 804 1st Street, SW PEPCO 69, ,801 Square 665 Lot st Street, SW (portion) PEPCO 108, ,608

73 REAL ESTATE TAXES 68 In the District of Columbia, the tax year extends from October 1 through September 30 of the following year. For instance, the 2013 tax year for the District of Columbia extends from October 1, 2013 through September 30, Property in the District of Columbia is reassessed every year. Properties are supposed to be assessed at 100% of their perceived market value. The 2013 tax rate for commercial properties has been set at $1.65/$100 for the first $3,000,000 of assessed value and $1.85/$100 for any amount over $3,000,000. The 2013 tax rate for residential properties is currently $0.85/$100. The 2013 assessment for the subject property is as follows: 2013 Tax Assessment & Tax Liability Tax ID Land Size Land Value Improvement Value Total Value Tax Liability Per Square Foot ,612 $1,175,000 $1,000,000 $2,175,000 $35,888 $ ,824 $7,528,320 $8,330 $7,536,650 $133,428 $ ,251 $8,032,590 $10,000 $8,042,590 $142,788 $ ,366 $20,809,800 $1,000 $20,810,800 $379,000 $ ,297 $16,860,100 $1,000 $16,861,100 $305,930 $ (Partial)* 108,001 $22,573,243 $254 $22,573,497 $411,610 $3.81 Total 390,351 $76,979,053 $1,020,584 $77,999,637 $1,436,993 $3.68 * Estimated as a percentage (25.36%) of total square feet 2014 Preliminary Tax Assessment & Tax Liability Tax ID Land Size Land Value Improvement Value Total Value Tax Liability Per Square Foot ,612 $5,378,520 $861,500 $6,240,020 $109,440 $ ,824 $8,792,240 $10,840 $8,803,080 $156,857 $ ,251 $18,743,710 $1,000 $18,744,710 $340,777 $ ,366 $20,809,800 $45,000 $20,854,800 $379,814 $ ,297 $16,860,100 $1,000 $16,861,100 $305,930 $ (Partial)* 108,001 $21,444,583 $1,026,717 $22,471,300 $409,719 $3.79 Total 390,351 $92,028,953 $1,946,057 $93,975,010 $1,732,538 $4.44 * Estimated as a percentage (25.36%) of total square feet Conclusion It should be noted that the value derived later in this report is significantly higher than the assessed value due to a number of factors including increasing land values in this neighborhood in conjunction with plottage or the value increase resulting from the assemblage of several smaller parcels into one unified parcel for development.

74 HIGHEST AND BEST USE 69 Highest and best use may be defined as: "That 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." 5 A second corresponding definition is as follows: "That 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 must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability." 6 The highest and best use of a property generally sets the parameters within which that property is valued or evaluated. In arriving at the Highest and Best Use of the subject property, it was necessary to carefully examine the area in which the property is located and the actions of the market, past, present, and future. The subject site contains a total of 390,351 SF. The surrounding area consists of primarily affordable housing, industrial uses, and office buildings. In order for the subject site to fulfill it s highest and best use, that use must meet four criteria. It must be: (1) physically possible, (2) legally permissible, (3) financially feasible, and (4) maximally productive. Physically Possible: The size, shape, location, utility, availability, and terrain impose physical restraints upon the type of uses possible for the subject property. Any use incompatible with the utility, capacity or constraints imposed by the size, shape, or terrain would not be considered physically possible. As an assembled/unified parcel, the subject site is irregularly shaped but not to the detriment of its marketability as much of the site is generally rectangular in shape. The site is bordered by Half Street on the east, Second Street on the west, T Street on the south, and R Street and Potomac Avenue on the north. The site offers good visibility and access to the neighborhood. If the site were vacant, it could physically support a wide array of development options. Legally Permissible: The primary legal constraints on the subject property are related to the zoning requirements. The property is zoned CG/CR, which allows for a variety of commercial, residential, and entertainment uses. This zoning district encourages residential or commercial development with an emphasis on visitor related uses. 5 6 Appraisal Institute, The Appraisal Of Real Estate, 11th Edition, Page 45. The Appraisal Institute, The Dictionary of Real Estate Appraisal, page 149. Chicago, IL 1993.

75 HIGHEST AND BEST USE 70 Financially Feasible: Any use of the subject site which provides a financial return to the land in excess of the cost of the land and the amortized cost of capital is considered financially feasible. In order to determine the highest and best use of the property, one must determine the most financially feasible use. If the subject site were to be sold on the open market today, it could be sold to an investor or a developer. The subject site is situated in an area that traditionally consists of industrial uses and is considered a transitional neighborhood. The PEPCO substation and cement plant posing challenging development obstacles for multi-family or office uses. As discussed within the market analysis the development of the Nationals stadium has brought substantial revitalization to the area just north of the subject parcels. The majority of the development has been focused on multi-family with ancillary and first-floor retail uses. At the end of 2013, the Capitol Hill/Southwest multi-family submarket contained 8,036 units with a vacancy rate of 5.5% and an average asking rental rate of $1,607 per unit per month. There have been approximately 1,700 deliveries since In 2012 there was a positive net absorption of 191 units with even stronger performance in 2013 with total positive net absorption of 291 units. REIS is projecting the addition of 495 new units by year-end Despite these new additions, REIS is projecting that vacancy rates will decline to below 3% by 2018 while rents are expected to continue to increase at roughly 2.5% per annum. Developers continue to seek additional land for multi-family development in the area. As of year-end 2013 there were 1,264 residential units under construction in the Capital Riverfront area of Southeast Washington D.C. The multi-family rental markets are experiencing low vacancies, increasing rental rates, and the addition of new supply to the market. The demand characteristics for the subject submarket and overall District of Columbia market are strong. Expectations are for continued strong demand over the next five years, thus presenting the opportunity for good investment returns in the multi-family sector. In addition, the growth of the multi-family development has brought retail development to the previously underserved area. The vast majority of new multi-family complexes, recently completed and under construction, include ground floor retail, thus enabling local access to retail amenities. The retail sector turned in a strong performance in 2013 for the Capitol Riverfront neighborhood. According to the Capitol Riverfront BID Annual Report 2013, the year concluded with the opening of eight new restaurants, two service retailers, construction of 88,000 square feet of new retail space, and the announcements of ICON Theater and Whole Foods opening in 2016 and 2017 respectively. The subject parcels are located within the Capitol Riverfront/SE/SW retail submarket, which contains approximately 1.95 million square feet of net rentable area contained within 336 properties. The submarket has a current vacancy rate of just 3.7% and an average asking rental rate of $25.59 per square foot on a triple net basis. While the current vacancy rate illustrates the strength of the market, the planned development, including a Whole Foods and Harris Teeter grocery store illustrates the faith in the market by retailers. The completion of these grocers should add to the desirability of the area.

76 HIGHEST AND BEST USE 71 The office market within the immediate subject area has struggled in comparison to the retail and multi-family sectors. According to the Capitol Riverfront BID Annual Report 2013, the area has 14.7 million square feet of office space planned for the neighborhood, of which 50% has been built. There are ten office buildings in the Capitol Riverfront with a total of 7.4 million square feet of leasable office space, eight of which are privately owned, as stated in the annual report. The vacancy rate at the end of 4Q 2013 was approximately 12.3%. The vacancy rate has been trending upward in 2013 after achieving a multi-year low of 8.8% in the 3 rd and 4 th Quarters of The Capitol Riverfront/SE/SW submarket has experienced a decline in rental rates over the past three years after peaking at $50.19 in 1Q The current rental rate ($47.39 psf) is at levels not seen since 2009, highlighting the sluggish demand for the market. In addition, we are aware of a large recent lease that leased well below the indicated market rate with extensive concessions. A review of the market conditions for the major commercial sectors indicates that multi-family development with first floor retail/restaurant uses appears to be the most financially feasible. Brokers and developers we surveyed agreed that the most logical choice for future development in the area is multi-family with retail/restaurant space. We note that without the potential development of the soccer stadium, the area is most likely several years away from developer interest.

77 S E C T I O N IV - V A L U A T I O N O F T H E P R O P E R T Y Joseph J. Blake and Associates, Inc

78 APPRAISAL PROCESS 74 The purpose of this appraisal is to determine the market value of the subject property in accordance with commonly accepted value estimating procedure. The valuation process is a systematic procedure employed to provide the answer to a client's question about real property value. It is a model of appraisal activity, reflecting an understanding of value and the methods used in value estimation. There are three traditional approaches involved in the valuation of real property: The Income Capitalization Approach, the Sales Comparison Approach, and the Cost Approach. The three approaches are interrelated; each involves the gathering and analysis of sales, cost, and income data that pertain to the property being appraised. 1 The Income Capitalization Approach is an approach which, "...consists of methods, techniques and mathematical procedures that an appraiser uses to analyze a property s capacity to generate benefits (i.e. the monetary benefits of income and reversion) and convert these benefits into an indication present value. 2 In the Sales Comparison Approach, market value is estimated by comparing the subject property to similar properties that have recently sold, are listed for sale or under contract. A major premise of the Sales Comparison Approach is that the market value of the property is directly related to the prices of comparable, competitive properties. 3 When performing the Cost Approach, the appraiser estimates the cost to construct a reproduction or replacement of the existing structure and site improvements (including direct costs, indirect costs and entrepreneurial profit) and then deducts all accrued depreciation in the property being appraised from the reproduction or replacement cost of the structure. 4 The results provide an estimate of the depreciated building value, which is then added to the land value in order to obtain a value estimate through the Cost Approach. In all three approaches, the most important source of data is the marketplace for comparable and competing properties. This applies not only to comparable sales, but also in the determination of rent levels, vacancy rates, expenses, yield rates and capitalization rates; as well as in the estimating of construction costs, accrued depreciation and remaining economic life. At the conclusion of the approaches, the value indicators are correlated into a final value estimate with the type of property appraised and the adequacy of the data processed as it relates to the market. The subject property includes six contagious parcels in the Buzzard Point area of Southwest Washington D.C. The following chart illustrates the parcels. 1 Appraisal Institute, The Appraisal of Real Estate, page 73. Chicago, Ibid, page Ibid, page Ibid, page 313. Joseph J. Blake and Associates, Inc

79 APPRAISAL PROCESS 75 Parcel Address Ownership Size/SF Square 607 Lot 013 1st Street, SW SW Land Holder 89,251 Square 605 Lot nd Street, SW Rollingwood Real Estate 25,612 Square 605 Lot st Street, SW Super Salvage 41,824 Square 661 Lot 805 1st Street, SW PEPCO 56,297 Square 661 Lot 804 1st Street, SW PEPCO 69,366 Square 665 Lot 24 (portion) st Street, SW PEPCO 108,001 In the valuation of the subject property as-if vacant, cleared and without environmental issues or concerns, the most appropriate method involves the Sales Comparison Approach, using sites within the subject area with a similar zoning and/or proposed use. Joseph J. Blake and Associates, Inc

80 S A L E S C O M P A R I S O N A P P R O A C H Joseph J. Blake and Associates, Inc

81 SALES COMPARISON APPROACH 77 The Sales Comparison Approach is based upon the assumption that a prudent buyer would not pay more for a property than it would cost to acquire a comparable substitute property. This approach involves a direct comparison of the property being appraised to other similar type properties that have sold or are currently being offered for sale. This technique is based on the principle of substitution and assumes that the price a typical purchaser pays is usually the result of an extensive market investigation in which available alternatives are compared. Hence, verified and analyzed data will generally provide good evidence of value as it represents typical actions and reactions of buyers and sellers active in the market. For the purpose of this analysis, we focused on sales involving properties that had similar plans for multi-family development or mixed-use development. There have been sufficient comparable land sales in the immediate area over the past few years by which to reasonably estimate the value of the subject property. We note that based on our understanding of the subject zoning, which features an FAR up to 8.2 (with inclusionary zoning), the subject (390,351 square feet) could be developed with 3,200,878 square feet. Based on the Market Analysis and the Highest and Best Use Analysis contained within this report, the majority of the site would be maximally productive with multifamily development with ancillary retail/restaurant use. The following pages describe the comparable land sales used for direct comparison to the subject property. Joseph J. Blake and Associates, Inc

82 SALES COMPARISON APPROACH 78 COMPARABLE LAND SALE ONE Location: Grantor: Grantee: Date of Sale: Deed Reference: Land Area: Zoning: Maximum Density: FAR: 1319 South Capitol Street, SW Washington, DC Paul D Warring N/A Under Contract N/A 29,550 SF, acres CG/C-2-C 7.0X (Bonus density available due to the Capital Gateway Overlay) 206,850 SF Consideration: $12,600,000 Financing: Cash to the seller Unit Price: Price per FAR: $60.91 Price per SF of Land Area: $ Comments: This sale represents a 29,550 square foot lot located north of the subject parcels on the west side of South Capitol Street, south of N Street and north of O Street, across from Nationals Park. In addition, the property is two-blocks from the Navy Yard Metro Station (Green Line). According to the broker, the sale was part of assemblage with an alley closing. The property can be developed up to 206,850 square feet of residential space based on the slight increase of density from the Capital Gateway overlay. The broker indicated that there was limited interest in the site, although they felt the pricing was reasonable. Verification: Public Record, Broker Joseph J. Blake and Associates, Inc

83 SALES COMPARISON APPROACH 79 Joseph J. Blake and Associates, Inc

84 SALES COMPARISON APPROACH 80 COMPARABLE LAND SALE TWO Location: 1244 South Capitol Street, SE Washington, DC Grantor: Lehman Brothers Holdings Inc. (DC Ballpark 2, LLC) Grantee: The JBG Companies (1224 South Capitol Residential, LLC) Date of Sale: December 2013 Parcels: Square 700, Lots 37, 38, 37, 45, 46 & 803 Deed Reference: Land Area: Zoning: Maximum Density: FAR: 29,626 SF, 0.25 acres CG/CR 9.5x (Transferrable Density Rights) 281,447 (it was reported that the developer is planning a 238,000 sf development) Consideration: $17,000,000 Financing: Cash to the seller Unit Price: Price per FAR: $60.42 (based on total FAR) Price per SF of Land Area: $ Comments: This sale represents a total of 29,625 square feet on six lots at the northeast quadrant of the intersection formed by N Street and South Capitol Street. The site is two blocks from the Navy Metro Yard Station (Green Line). The property had been improved with a BP gas station (closed) and several vacant lots at the time of sale. The property had originally been planned for development by Lehman Brothers and Monument Realty. Monument initially planned to develop 260 units on the property. Verification: Public Record, Broker Joseph J. Blake and Associates, Inc

85 SALES COMPARISON APPROACH 81 Joseph J. Blake and Associates, Inc

86 SALES COMPARISON APPROACH 82 COMPARABLE LAND SALE THREE Location: 50 M Street, SE Washington, DC Grantor: Lehman Brothers Holdings, Inc. (MR Ballpark 6, LLC) Grantee: Englewood, LLC (KCG 50 M, LLC) Date of Sale: May 2013 Parcel: Deed Reference: Land Area: Zoning: Maximum Density: FAR: 15,567 SF, acres C-3-C 9.0X (Transferrable Density Rights) 140,121, SF Consideration: $13,000,000 Financing: Cash to the seller Unit Price: Price per FAR: $92.77 Price per SF of Land Area: $ Comments: This property is located at the intersection of M Street and Half Street. The site is located directly across the street from the Navy Yard/Ballpark Metro Station. The property contains transferrable density rights which allows the site to be developed up to 9.0X FAR. 50 M. Street was originally planned for the development of a 135,000 square foot office building by Monument Realty and Lehman Brothers. Monument purchased the site in 2007 for $14.3 million. The current developers are considering developing a 200-room select-service hotel according to an interview with the Washington Business Journal. Verification: Public Record, Broker Joseph J. Blake and Associates, Inc

87 SALES COMPARISON APPROACH 83 Joseph J. Blake and Associates, Inc

88 SALES COMPARISON APPROACH 84 COMPARABLE LAND SALE FOUR Location: 1 st Street and M Street, SE (Square 701) Washington, DC Grantor: Meisel & Cohen Property Management Grantee: Ballpark Square, LLC (Grosvenor Americas, Inc.) Skanska USA Commercial Development, Inc. Date of Sale: October 2012 Parcel: Grosvenor Americas, Inc. purchased parcels , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Skanska USA Commercial Development purchased parcels , , , , , , , , , , , , , , , , , , , , , , Deed Reference: Land Area: Zoning: FAR: Grosvenor Americas, Inc Skanska USA Commercial Development 53,653 square feet Grosvenor Americas, Inc. 23,470 square feet Skanska USA Commercial Development CR 650,000 SF based on approvals Consideration: $45,020,364 ($25,810,742 represents the Grosvenor Americas purchase and $19,209,622 represents the Skanska USA Commercial Development purchase). Financing: Cash to the seller Unit Price: Price per FAR: $69.26 based on a total FAR of 650,000 square feet Price per SF of Land Area: $ Joseph J. Blake and Associates, Inc

89 SALES COMPARISON APPROACH 85 Comparable Land Sale Four Continued Comments: This site comprises the eastern half of Square 701, bounded by N Street, SE to the south, M Street on the north, 1 st Street on the east and Cushing Place on the West. The site had been utilized as parking lot F for the Nationals Stadium. The developer has submitted plans for the following to be developed on the site; A 235,000 square foot Class A office building on the northern end of the site fronting M Street. The building will include 11,000 square feet of retail space and a below-grade parking garage for over 140-cars (since named 99 M) A 170-key hotel directly south of the office building fronting 1 st Street Two residential buildings with 285 units, 23 of which are designated affordable dwelling units. The building will feature 180 below grade parking spaces. A two-level retail structure on the corner of 1 st and N Streets. Square 701 Renderings Joseph J. Blake and Associates, Inc

90 SALES COMPARISON APPROACH 86 COMPARABLE LAND SALE FIVE Location: st Street, SE Washington, DC Grantor: The Cohen Companies, Inc. (Square 699N Phase II Developer, LLC) Grantee: Toll Brothers, Inc. (Toll DC LP) Date of Sale: April 2012 Parcel: 0699-N , 0699-N Deed Reference: Land Area: 27,181 square feet Zoning: C-3-C Maximum Density: 6.5X FAR: 176,676 SF Consideration: Financing: $24,000,000; however, the site included an underground parking garage and all underground infrastructure. The site was a concrete pad ready for development. As such, the purchaser allocated $8,000,000 to the parking garage and related infrastructure, reducing the purchase price on an FAR basis to $16,000,000. Cash to the seller Unit Price: Price per FAR: Price per SF of Land Area: $ Comments: $90.56 based on a adjusted purchase price of $16,000,000 The property is located on parcel Square 699, which was bought (in its entirety) by Bethesda developer Ron Cohen in October 2005 for $55 million. Cohen planned to develop the property in three phases. The first phase was developed with a 14-story, 200-unit development known as Velocity, which opened in The second phase was sold to Toll Brothers in April 2012 (above noted sale) and the third phase (along Half Street) was sold to Toll Brothers in October The buildings will be served by a center courtyard. Toll Brothers is developing the site with the 277-unit River Parc apartments. River Parc apartments will feature 287-units and is 13-stories with no ground floor retail. As the developer had planned for additional phases to be built, the comparable parcels had under-ground parking in-place and utilities/underground infrastructure nearly completed. According to discussions with people familiar with the transaction, $8,000,000 was allocated to the underground parking garage and related infrastructure completions. Joseph J. Blake and Associates, Inc

91 SALES COMPARISON APPROACH 87 The following map illustrates the location of the comparable sales in relation to the subject property. In order to obtain a market value indication for the subject site, the comparable land sales are denominated into the appropriate unit of comparison, then compared to the subject property for variances that would be perceived in the marketplace. In this analysis, data is analyzed on the basis of dollars/sf of FAR. The adjustment analysis is described as follows: Initial Adjustment Criteria The initial adjustment criteria include factors such as financing, conditions of sale, property rights conveyed and changes in market conditions over time. No adjustments are required for financing, sales conditions, or property rights conveyed to the sales. In terms of market conditions, all of the comparables are located within the Capitol Hill/Southwest submarket which has experienced significant growth over the past several years. Reis reports that there have been approximately 1,700 multi-family units have been delivered to the market since Multi-family absorption within the market remains strong with recent additions such as the Camden property experiencing rapid lease-up. Further, despite the significant supply additions, multi-family vacancy has held steady or even declined. Multi-family rental rates have also steadily climbed with an increase of 2.4% in With these continued improvements in the subject multi-family submarket, developer interest for land which can be developed with multi-family use has remained strong. Joseph J. Blake and Associates, Inc

92 SALES COMPARISON APPROACH 88 Retail development has also picked up steam in an area that previously had featured limited retail uses. The continued growth of the multi-family market has increased retail developer interest in the area. The additions of Whole Foods (under construction in 2014 at 800 New Jersey Avenue) and Harris Teeter (under construction at the Twelve12 development) to the area confirm the developer faith in the area. Discussions with area retail brokers found that small shop retailers (coffee shops/in-line restaurants/service retailers) are eagerly awaiting the delivery of space. Office use continues to struggle in the area as several buildings contain large blocks of space. Costar reports that the submarket features a vacancy rate of 12.3%, the highest rate in several years. We are aware of a recent large lease signing in the area which included considerable concessions and a contract rent well below pro-forma estimates. Comparable One is currently under contract and therefore represents current market conditions. No adjustment is warranted for Comparable One. Comparable Two was sold in December 2013 and also represents current market conditions. No adjustment has been applied to Comparable Two. Comparable Three was sold in May As discussed the subject submarket continues to improve and become more viable with each announcement of new construction. Investors are actively seeking deals in the market, pushing pricing upwards. A minor upward adjustment has been applied to Comparable Three for the continued improvement in the market. Comparables Four and Five were sold in late 2012 and early 2012 respectively. An upward adjustment for market conditions has been applied to each of the sales. Primary Adjustment Criteria The primary adjustment criteria consist of overall location, access/visibility, development costs, zoning, size, physical characteristics and economic characteristics. The following paragraphs explain the adjustment process. Location: The subject property is within Buzzard Point and combines six parcels, with several of the parcels located at the northern end of Buzzard Point, just southeast of the Washington Nationals Baseball Stadium. At the request of our client we are valuing the subject parcels as if we are unaware of the potential soccer stadium development. The Buzzard Point area has historically and continues to be a primarily industrial area, dominated by the Buzzard Point power plant and other heavy industrial uses such as Super Salvage and a concrete plant. The area has not experienced new development in decades. The comparables are all located north of the subject property, surrounding the northern side of the Washington Nationals baseball stadium. As discussed within the neighborhood analysis the area has experienced considerable interest from developers and is the midst of a building boom with over 1,200 multi-family units under development, several new office buildings either under construction or in planning and several retail developments including two new grocery stores. Discussions with area developers and brokers involved in the subject submarket noted that there is little to no desire to develop a single lot in Buzzard Point. The broker of Comparable One noted that there was less desire for that site, which is across from the stadium but on the west side of South Capitol street than for sites which are on the east side of South Joseph J. Blake and Associates, Inc

93 SALES COMPARISON APPROACH 89 Capitol and north of the stadium. As such, a downward adjustment for the subject location is warranted in comparison to each of the comparables. As there is no identifiable metric for determining an appropriate adjustment (variance in rental rates or sales of lots for similar use) our adjustment is based on discussions with participants in the market who indicated a downward adjustment between 25% and 50% is warranted, which takes into account a potential holding period. We note that the participants indicated that there would be no interest in a single lot for development with multi-family/retail or office in the area. However, an assemblage similar to the subject would attract considerable interest due to the lack of large developable blocks in the District. We note that there have been similar areas of the District which have experienced significant revitalization over the past several years. Beginning with Chinatown, the U-Street corridor, NoMA, Shaw and the area surrounding the Nationals Stadium. Each of these areas were neglected by developers for decades and are now considered vibrant or emerging areas with strong developer interest in each of the areas. As such, based in the success of other neglected submarkets within the District, we have tempered our downward adjustment for the Comparables towards the lower end of the range of our survey. Comparable One is located north of the subject parcels on the west side of South Capitol Street, south of N Street and north of O Street, across from Nationals Park. As discussed, developer interest was inferior to the sites north of the Stadium and on the east side of South Capitol. As such, we have applied a 25% downward adjustment to Comparable One. Comparable Two is located on the on six lots at the northeast quadrant of the intersection formed by N Street and South Capitol Street. The site is two blocks from the Navy Metro Yard Station (Green Line). The location is considered superior to the subject parcels as it within walking distance to the Metro and just across from the stadium. A 30% downward adjustment has been applied to Comparable Two. Comparable Three is located at the intersection of M Street and Half Street. The site is located directly across the street from the Navy Yard/Ballpark Metro Station. The location will also benefit from the proximity to the Harris Teeter and Whole Foods which are under planning/development. A 40% downward adjustment has been applied to Comparable Three. Comparable Four is located directly across from Comparable Three and benefits from the same locational attributes as Comparable Three. As such, we have applied a 40% downward adjustment for the location do Comparable Four. Comparable Five is the northernmost of the Comparable sales. The location benefits from the proximity to the planned development along New Jersey Avenue and the development already in-place. Overall, the area is considered far superior to the subject area and warrants our greatest downward adjustment. A 45% downward adjustment has been applied for Comparable Five. Joseph J. Blake and Associates, Inc

94 SALES COMPARISON APPROACH 90 Physical Characteristics: The subject and each of the sales are representative of developable land parcels that have no detrimental features such as streams or marshland that would hinder development, warranting no adjustments. We note that we have assumed for the purposes of this report that the subject property is free and clear of any environmental issues/conditions. To the best of our knowledge the comparable parcels were also free of any major environmental issues. As such, no adjustment for physical characteristics are warranted. Size: The subject property is being analyzed on the basis of $/SF of permitted FAR, based on the permitted density of the current zoning. In this instance, we must make adjustments to the amount of developable square footage. The following chart illustrates the potential FAR of the individual parcels, the FAR of the comparable properties and our adjustment applied to each comparable. FAR Adjustment Table Parcel 607/ / / / / /24 Comparable One 206, , , , , , ,608 Adjustment -10% 0% 0% -5% -5% -15% Comparable Two 281, , , , , , ,608 Adjustment -10% 0% 0% -5% -5% -15% Comparable Three 140, , , , , , ,608 Adjustment -15% 0% -5% -10% -10% -20% Comparable Four 650, , , , , , ,608 Adjustment 0% 15% 10% 10% 5% 0% Comparable Five 176, , , , , , ,608 Adjustment -15% 0% -5% -10% -10% -20% In the market, price/value generally varies inversely with size. The larger size of the site, the lower the $/SF FAR. Development Costs: This adjustment is intended to account for criteria such as demolition, finishing costs or atypical physical characteristics that would impact development costs. Several of the sales, will require demolition of some small structures. However, the cost associated with said demolition represents a small percentage of the acquisition costs. As a result, no modifications for this factor are warranted. We note that we have made an adjustment to the overall sales price of Comparable Five to account for the in-place parking garage and site completion. Joseph J. Blake and Associates, Inc

95 SALES COMPARISON APPROACH 91 Approval Status: Each of the comparable properties are approved for multi-family, retail and commercial development, similar to the subject property. No adjustments are warranted. Inclusionary Zoning: As we are estimating the FAR with inclusionary zoning, a downward adjustment is warranted for each of the comparables which did not include inclusionary zoning, which would require the developer to lease a small portion of the units at either 50% or 80% of the Washington D.C. AMI. As such, we have included a minor downward adjustment to each of the comparables. The following chart summarizes the adjustment process for Parcel Square 607 Lot 013. Sales Comparables Adjustment Grid Sale Comparable One Two Three Four Five Sales Price/SF-FAR $60.91 $60.42 $92.77 $69.26 $90.56 Financing 0% 0% 0% 0% 0% Property Rights Conveyed 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% Market Conditions 0% 0% 2.5% 5% 5% Adjusted Sale Price/SF-FAR $60.91 $60.42 $95.09 $72.72 $95.09 Location -25% -30% -40% -40% -45% Physical Characterisitcs 0% 0% 0% 0% 0% Size -10% -10% -15% 0% -15% Economic Characterisitcs 0% 0% 0% 0% 0% Development Costs 0% 0% 0% 0% 0% Approval Status 0% 0% 0% 0% 0% Inclusionary Zoning -5% -5% -5% -5% -5% Total Adjustment -40% -45% -60% -45% -65% Adjusted Sale Price/SF-FAR $36.55 $33.23 $38.04 $40.00 $33.28 After adjustment, the comparable data demonstrates a range in unit prices, between $33.23 and $40.00 per square foot, with an average of $36.22 per square foot of maximum allowable FAR. Giving majority weight to Comparable Sales One (close proximity to the subject) and Comparable Four (most similar in size), we have reconciled to a market value indication of $38.00 per square foot of FAR for the subject site. Conclusion for Parcel Square 607 Lot 013 Based on the data and analysis, a unit value of $38.00 per square foot of FAR is derived through the Sales Comparison Approach. Therefore, the market value of the subject site is estimated at $27,800,000 on an aggregate basis (731,858 SF of FAR X $38.00 = $27,810,604 or $27,800,000 as rounded). Joseph J. Blake and Associates, Inc

96 SALES COMPARISON APPROACH 92 The following chart summarizes the adjustment process for Parcel Square 605 Lot 007. Sales Comparables Adjustment Grid Sale Comparable One Two Three Four Five Sales Price/SF-FAR $60.91 $60.42 $92.77 $69.26 $90.56 Financing 0% 0% 0% 0% 0% Property Rights Conveyed 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% Market Conditions 0% 0% 2.5% 5% 5% Adjusted Sale Price/SF-FAR $60.91 $60.42 $95.09 $72.72 $95.09 Location -25% -30% -40% -40% -45% Physical Characterisitcs 0% 0% 0% 0% 0% Size 0% 0% 0% 15% 0% Economic Characterisitcs 0% 0% 0% 0% 0% Development Costs 0% 0% 0% 0% 0% Approval Status 0% 0% 0% 0% 0% Inclusionary Zoning -5% -5% -5% -5% -5% Total Adjustment -30.0% -35.0% -45.0% -30.0% -50.0% Adjusted Sale Price/SF-FAR $42.64 $39.27 $52.30 $50.91 $47.54 After adjustment, the comparable data demonstrates a range in unit prices, between $39.27 and $52.30 per square foot, with an average of $46.53 per square foot of maximum allowable FAR. Giving majority weight to Comparable Sales One (close proximity to the subject) and Comparable Five (most similar in size), we have reconciled to a market value indication of $45.00 per square foot of FAR for the subject site. Conclusion for Parcel Square 605 Lot 007 Based on the data and analysis, a unit value of $45.00 per square foot of FAR is derived through the Sales Comparison Approach. Therefore, the market value of the subject site is estimated at $9,500,000 on an aggregate basis (210,018 SF of FAR X $45.00 = $9,450,810 or $9,500,000 as rounded). Joseph J. Blake and Associates, Inc

97 SALES COMPARISON APPROACH 93 The following chart summarizes the adjustment process for Parcel Square 605 Lot 802. Sales Comparables Adjustment Grid Sale Comparable One Two Three Four Five Sales Price/SF-FAR $60.91 $60.42 $92.77 $69.26 $90.56 Financing 0% 0% 0% 0% 0% Property Rights Conveyed 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% Market Conditions 0% 0% 2.5% 5% 5% Adjusted Sale Price/SF-FAR $60.91 $60.42 $95.09 $72.72 $95.09 Location -25% -30% -40% -40% -45% Physical Characterisitcs 0% 0% 0% 0% 0% Size 0% 0% -5% 10% -5% Economic Characterisitcs 0% 0% 0% 0% 0% Development Costs 0% 0% 0% 0% 0% Approval Status 0% 0% 0% 0% 0% Inclusionary Zoning -5% -5% -5% -5% -5% Total Adjustment -30.0% -35.0% -50.0% -35.0% -55.0% Adjusted Sale Price/SF-FAR $42.64 $39.27 $47.54 $47.27 $42.79 After adjustment, the comparable data demonstrates a range in unit prices, between $39.27 and $47.54 per square foot, with an average of $43.90 per square foot of maximum allowable FAR. Giving majority weight to Comparable Sales One (close proximity to the subject) and Comparables Two and Five (most similar in size), we have reconciled to a market value indication of $42.00 per square foot of FAR for the subject site. Conclusion for Parcel Square 605 Lot 802 Based on the data and analysis, a unit value of $42.00 per square foot of FAR is derived through the Sales Comparison Approach. Therefore, the market value of the subject site is estimated at $14,400,000 on an aggregate basis (342,957 SF of FAR X $42.00 = $14,404,194 or $14,400,000 as rounded). Joseph J. Blake and Associates, Inc

98 SALES COMPARISON APPROACH 94 The following chart summarizes the adjustment process for Parcel Square 661 Lot 805. Sales Comparables Adjustment Grid Sale Comparable One Two Three Four Five Sales Price/SF-FAR $60.91 $60.42 $92.77 $69.26 $90.56 Financing 0% 0% 0% 0% 0% Property Rights Conveyed 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% Market Conditions 0% 0% 2.5% 5% 5% Adjusted Sale Price/SF-FAR $60.91 $60.42 $95.09 $72.72 $95.09 Location -25% -30% -40% -40% -45% Physical Characterisitcs 0% 0% 0% 0% 0% Size -5% -5% -10% 10% -10% Economic Characterisitcs 0% 0% 0% 0% 0% Development Costs 0% 0% 0% 0% 0% Approval Status 0% 0% 0% 0% 0% Inclusionary Zoning -5% -5% -5% -5% -5% Total Adjustment -35.0% -40.0% -55.0% -35.0% -60.0% Adjusted Sale Price/SF-FAR $39.59 $36.25 $42.79 $47.27 $38.04 After adjustment, the comparable data demonstrates a range in unit prices, between $36.25 and $47.27 per square foot, with an average of $40.79 per square foot of maximum allowable FAR. Giving majority weight to Comparable Sales One (close proximity to the subject) and Comparable Two (most similar in size), we have reconciled to a market value indication of $38.00 per square foot of FAR for the subject site. Conclusion for Parcel Square 661 Lot 805 Based on the data and analysis, a unit value of $38.00 per square foot of FAR is derived through the Sales Comparison Approach. Therefore, the market value of the subject site is estimated at $17,500,000 on an aggregate basis (461,635 SF of FAR X $38.00 = $17,542,130 or $17,500,000 as rounded). Joseph J. Blake and Associates, Inc

99 SALES COMPARISON APPROACH 95 The following chart summarizes the adjustment process for Parcel Square 661 Lot 804. Sales Comparables Adjustment Grid Sale Comparable One Two Three Four Five Sales Price/SF-FAR $60.91 $60.42 $92.77 $69.26 $90.56 Financing 0% 0% 0% 0% 0% Property Rights Conveyed 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% Market Conditions 0% 0% 2.5% 5% 5% Adjusted Sale Price/SF-FAR $60.91 $60.42 $95.09 $72.72 $95.09 Location -25% -30% -40% -40% -45% Physical Characterisitcs 0% 0% 0% 0% 0% Size -5% -5% -10% 5% -10% Economic Characterisitcs 0% 0% 0% 0% 0% Development Costs 0% 0% 0% 0% 0% Approval Status 0% 0% 0% 0% 0% Inclusionary Zoning -5% -5% -5% -5% -5% Total Adjustment -35.0% -40.0% -55.0% -40.0% -60.0% Adjusted Sale Price/SF-FAR $39.59 $36.25 $42.79 $43.63 $38.04 After adjustment, the comparable data demonstrates a range in unit prices, between $36.25 and $43.63 per square foot, with an average of $40.06 per square foot of maximum allowable FAR. Giving majority weight to Comparable Sale One (close proximity to the subject) and Comparable Two (most similar in size), we have reconciled to a market value indication of $38.00 per square foot of FAR for the subject site. Conclusion for Parcel Square 661 Lot 804 Based on the data and analysis, a unit value of $38.00 per square foot of FAR is derived through the Sales Comparison Approach. Therefore, the market value of the subject site is estimated at $21,600,000 on an aggregate basis (568,801 SF of FAR X $38 = $21,614,438 or $21,600,000 as rounded). Joseph J. Blake and Associates, Inc

100 SALES COMPARISON APPROACH 96 The following chart summarizes the adjustment process for Parcel Square 665 Lot 024. Sales Comparables Adjustment Grid Sale Comparable One Two Three Four Five Sales Price/SF-FAR $60.91 $60.42 $92.77 $69.26 $90.56 Financing 0% 0% 0% 0% 0% Property Rights Conveyed 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% Market Conditions 0% 0% 2.5% 5% 5% Adjusted Sale Price/SF-FAR $60.91 $60.42 $95.09 $72.72 $95.09 Location -25% -30% -40% -40% -45% Physical Characterisitcs 0% 0% 0% 0% 0% Size -15% -15% -20% 0% -20% Economic Characterisitcs 0% 0% 0% 0% 0% Development Costs 0% 0% 0% 0% 0% Approval Status 0% 0% 0% 0% 0% Inclusionary Zoning -5% -5% -5% -5% -5% Total Adjustment -45.0% -50.0% -65.0% -45.0% -70.0% Adjusted Sale Price/SF-FAR $33.50 $30.21 $33.28 $40.00 $28.53 After adjustment, the comparable data demonstrates a range in unit prices, between $28.53 and $40.00 per square foot, with an average of $35.10 per square foot of maximum allowable FAR. Giving majority weight to Comparable Sale One (close proximity to the subject) and Comparable Four (most similar in size), we have reconciled to a market value indication of $36.00 per square foot of FAR for the subject site. Conclusion for Parcel Square 665 Lot 024 Based on the data and analysis, a unit value of $36.00 per square foot of FAR is derived through the Sales Comparison Approach. Therefore, the market value of the subject site is estimated at $31,900,000 on an aggregate basis (885,608 SF of FAR X $36.00 = $31,881,888 or $31,900,000 as rounded). Joseph J. Blake and Associates, Inc

101 F I N A L R E C O N C I L I A T I O N Joseph J. Blake and Associates, Inc

102 FINAL RECONCILIATION 98 The subject property is zoned for a variety of uses; however, the highest and best use was determined to be hold the subject for development of a multi-family residential project with ancillary retail/commercial space. The only applicable valuation technique is the Sales Comparison Approach, utilizing an analysis of similarly zoned sites with similar locational characteristics in the in the District of Columbia. The Income Capitalization Approach and the Cost Approach were not applicable in this instance. Based on the analysis presented within this report, it is our opinion that the hypothetical market value of the fee simple estate in the subject parcels as-if vacant and in cleared condition, free of any environmental hazards/issues as of January 22, 2014, is as follows: Parcel Address Ownership Size/SF Value Square 607 Lot 013 1st Street, SW SW Land Holder 89,251 $27,800,000 Square 605 Lot nd Street, SW Rollingwood Real Estate 25,612 $9,500,000 Square 605 Lot st Street, SW Super Salvage 41,824 $14,400,000 Square 661 Lot 805 1st Street, SW PEPCO 56,297 $17,500,000 Square 661 Lot 804 1st Street, SW PEPCO 69,366 $21,600,000 Square 665 Lot st Street, SW (portion) PEPCO 108,001 $31,900,000 Joseph J. Blake and Associates, Inc

103 S E C T I O N IV - A D D E N D A Joseph J. Blake and Associates, Inc

104 E N G A G E M E N T L E T T E R Joseph J. Blake and Associates, Inc

105 Order No.: P Aprraisal Report EDF 2014 Reeves and Proposed Soccer Properties Page 1 of I d>o1'-f/03 2 t?'tp(,f 3 *.. L...Ji& * * _.&..IL. Order No: P Aprraisal Report EDF 2014 Reeves and Proposed Soccer Properties CriA> Issued on Tue, 11 Feb, 2014 Supplier: Joseph J. Blake and Associates 425 Broad Hollow Road Suile429 Melville, NY Phone: Fax: Contact: Thomas Sheilds Ship To: Office of the Chief Financial Officer Office of Economic Development Finance 11014th St. SWW772 Washington, DC United States Deliver To: Freis, Deborah Biii To: Office of the Chief Financial Officer OMA Financial Operations th St. SW E600 Washington, DC United States I <- Item Description Part Number Unit Qty Need By Unit Price Extended Amount Appraisal Report EDF 2014 Reeves Center and... each 24,000 Fri, 14 Feb, 2014 Appraisal Report EDF 2014 Reeves Center and Proposed Soccer Stadium Properties $1.00 USO $24, USO If used In conjunction with a contract award, purchase order is placed in accordance with all provisions of Contract Number: small purchase Requester: Freis, Deborah Delivery Date: Fri, 14 Feb, 2014 PR No.: RQ Total $24, USO Comments COMMENT by arlbasystem on ALL INVOICES SHALL BE SUBMITTED TO THE 'BILL TO' ADDRESS INDICATED ON THIS PURCHASE ORDER. INVOICES SHALL INCLUDE THE PURCHASE ORDER NUMBER, CONTRACT NUMBER (IF APPLICABLE), CONTRACTOR'S NAME AND ADDRESS, INVOICE DATE, QUANTITY AND DESCRIPTION OF GOOD(S) OR SERVICE(S) FOR WHICH PAYMENT IS BEING REQUESTED, REMITTANCE ADDRESS, AND CONTACT PERSON NAME AND PHONE NUMBER IF THERE IS A PROBLEM WITH THE INVOICE. INVOICES FOR QUANTITIES OR AMOUNTS GREATER THAN WHAT IS STATED ON THE PURCHASE ORDER WILL BE REJECTED. FAILURE TO FOLLOW THESE INSTRUCTIONS MAY RESULT IN DELAYS IN PAYMENT. (aribasystem, Tue, 11Feb,2014) COMMENT by aribasystem on FOB is Destination unless specified otherwise (aribasystem, Tue, 11 Feb, 2014) COMMENT by aribasystem on GOVERNMENT OF THE DISTRICT OF COLUMBIA STANDARD CONTRACT PROVISIONS FOR USE WITH THE DISTRICT OF COLUMBIA GOVERNMENT SUPPLY AND SERVICES CONTRACTS (July 2010) ARE HEREBY INCORPORATED BY REFERENCE. (aribasystem, Tue, 11Feb,2014) r-"' r o- --J ~-- ~--

106 Q U A L I F I C A T I O N S O F T H E A P P R A I S E R S Joseph J. Blake and Associates, Inc

107 THOMAS J. SHIELDS, MAI PROFESSIONAL QUALIFICATIONS AND RELEVANT EXPERIENCE PROFESSIONAL AFFILIATIONS: Appraisal Institute, MAI - Designated Member #9784 Royal Institution of Chartered Surveyors # DIPLOMA/DEGREE DETAILS: OTHER EDUCATION: EMPLOYER: POSITIONS: Graduate in 1985 from Gettysburg College with a Bachelor of Arts with a minor in History. Numerous Appraisal Institute courses JOSEPH J. BLAKE AND ASSOCIATES, INC ST Street, NW, Suite 530 Washington, D.C Managing Partner (2011 to Present) Principal (1993 to 2011) Regional Manager Mid-Atlantic Region (1992 to Present) Assistant Manager - Boston Office (1988 to 1992) Associate Appraiser (1985 to 1988) CURRENT RESPONSIBILITIES: Thomas J. Shields tshields@josephjblake.com has been employed since 1985 by the firm of Joseph J. Blake and Associates, Inc., Professional Real Estate Appraisers and Consultants. Mr. Shields is currently the Managing Partner of the Mid-Atlantic Regional Office, located in Washington, D.C. Include the preparation and direction of a variety of full narrative real estate appraisals and consulting studies prepared on a national basis. Mr. Shields supervises a staff of 11 Appraisers and consultants and directs all major assignments throughout the Mid-Atlantic United States. STATE CERTIFICATION: Commonwealth of Virginia, Certified General Appraiser (# ) District of Columbia, Certified General Appraiser (#GA ) State of Maryland, Certified General Appraiser (#4892) State of North Carolina, Certified General Appraiser (#A4207) State of Tennessee, Certified General Appraiser (# ) State of Illinois, Certified General Appraiser (# ) RELEVANT EXPERIENCE: Mr. Shields has prepared and or directed numerous appraisal and consulting assignments for individuals, corporations, financial institutions, pension funds, and syndicates which include: mixed-use properties, singlefamily residences, apartment buildings and complexes, proposed condominiums, condominium conversions, office buildings, motels, hotels, industrial properties, regional malls, shopping centers, mobile home parks, market studies, feasibility studies, and investment analyses on a variety of institutional and non-institutional grade real property in over 20 states. Over the past 28 years Mr. Shields has prepared or supervised over 8,000 appraisals that represent an aggregate value well into the billions of dollars.

108 THOMAS J. SHIELDS, MAI PROFESSIONAL QUALIFICATIONS AND RELEVANT EXPERIENCE Mr. Shields current duties include the appraisal of all types of investment grade and non-investment grade real estate, including office buildings, regional malls, power centers, community centers, neighborhood centers, industrial properties and apartments, condominium complexes, residential subdivisions, hotels, marinas, restaurants, vacant land and special use properties, as well as providing related consulting. His other duties include management and administrative activities for s Mid-Atlantic Regional Office. Mr. Shields also specializes in the appraisals of LIHTC properties and large Municipal Bond assignments. Mr. Shields also prepares numerous reports for Fannie Mae and Freddie Mac. He has appraised and has supervised appraisals, as well as prepared consulting studies of properties for a variety of public pension funds, large institutional investors, pension fund advisors, insurance companies and banks such as the Teachers Retirement Systems of Illinois, the Teachers Retirement Systems of New York, Prudential, L&B Real Estate, Jones Lang LaSalle, Bank of America, JP Morgan Chase, Principal Mutual Life Insurance Company, Wells Fargo, Bank of America, Citibank, HSBC, Capital One, PNC, TD Bank, RBS Citizens, New Tower Trust, Centerline Capital, Grandbridge, Prudential Mortgage, TIAA CREF Mr. Shields has qualified as an expert witness for Federal Bankruptcy Court in the District of Columbia, States of Virginia, West Virginia and Maryland and has given oral and written testimony in each. He has also been qualified in County Courts in Virginia, Maryland and the District of Columbia. POSITIONS HELD AT THE APPRAISAL INSTITUTE INCLUDE: Former Treasurer of Washington D.C. Chapter Current Vice President of Washington D.C. Chapter Current Board Member of Washington D.C. Chapter ADDITIONAL REAL ESTATE ACTIVITIES: Former chairman of the Washington D.C. Mortgage Bankers Association s CREF (Commercial Real Estate Finance) Council Active in NCREIF, PREA, Mortgage Bankers Association, NAIOP and DCBIA.

109 THOMAS J. SHIELDS, MAI PROFESSIONAL QUALIFICATIONS AND RELEVANT EXPERIENCE PARTIAL LIST OF CLIENTS: -Carr Properties - Washington, D.C. -Banc One Capital Reston, VA -Chase Manhattan Bank - New York, NY -Forest City - Cleveland, OH -Calpers - San Francisco, CA -Wachovia - Winston Salem, NC -Turner Construction - New York, NY -CIBC New York, NY -Citicorp Real Estate - New York, NY -AT&T Investment Mgmt. New York, NY -DIHC Management - Atlanta, GA -Suburban Capital - Rockville, MD -Bank of America - San Francisco, CA -CS First Boston New York, NY -Equitable Real Estate - Washington, D.C. -Metric Realty - San Francisco, CA -European American Bank - Uniondale, NY -Nomura - New York, NY -JE Robert Co. - McLean, VA -Lehman Brothers New York, NY -GE Capital - Washington, D.C. -New York Teachers' Pension Fund - Albany, NY -General Services Administration - Philadelphia, PA -TransAtlantic Capital, New York, NY -John Hancock Realty - Boston, MA -Lincoln Property Co. - Rosslyn, VA -La Salle Properties - Chicago, IL -Illinois State Teachers' Retirement - Springfield, IL -The L&B Group - Dallas, TX -Columbia Bank - -Mass Mutual - Washington, D.C. and Springfield, MA -National Cooperative Bank - Washington, DC -Mellon Bank - Pittsburgh, PA -Citizens Bank - Laurel, MD -Metropolitan Life - Atlanta, GA -Midland Loan Services - Kansas City, MO -Prudential Realty - Newark, NJ -The Gunwyn Company - Boston, MA -Raymond James Properties - Atlanta, GA -Prentiss Properties - Dallas, TX -The Staubach Company - McLean, VA -Westmark Realty Advisors - Los Angeles, CA -TA Associates - Boston, MA -Wells Fargo Realty Advisors-Washington, DC -Urdang Advisors - Philadelphia, PA -PNC Bank Pittsburgh, PA -Trammell Crow Company - Washington, D.C. -American Bank Bethesda, MD -SSR Realty Advisors White Plains, NY -Providence Funding South Bend, IN -Capmark Vienna, VA -Columbia Bank Columbia, MD -Holiday Fenoglio, LP Houston, TX -National Valuation Consultants Princeton, NJ -Heller Financial Chicago, IL -Eagle Bank Bethesda, MD -Continental Wingate Boston, MA -Commerce Bank Harrisburg, PA -National Realty Funding Kansas City, MO -CB Richard Ellis Orlando, FL -Main America Capital Atlanta, GA -MMA Financial St. Paul, MN -Central Park Capital Atlanta, GA -Fulton Bank Herndon, VA -Fidelity & Trust Washington, D.C. -Johnson Capital Vienna, VA -Sovereign Bank Brooklyn, NY -Washington Mutual Irvine, CA

110 DEPARTMENT OF PROFESSIONAL AND OCCUPATIONAL REGULATION COMMONWEAL TH OF VIRGINIA EXPIRES ON Mayland Dr., Suite 400, Richmond, VA Telephone: (804) REAL ESTATE APPRAISER BOARD CERTIFIED GENERAL REAL ESTATE APPRAISER NUMBER THOMAS J SHIELDS 3307 MILL CROSS COURT OAKTON VA ALTERATION OF THIS DOCUMENT, USE AFTER EXPIRATION, OR USE BY PERSONS OR FIRMS OTHER THAN THOSE NAMEO MAY RESULT IN CRIMINAL PROSECUTION UNDER THE CODE OF VIRGINIA. -. Gordon N. Dixon, Direct&r (POCKET CARD) (SEE REVERSE SIDE FOR NAME AND/OR ADDRESS CHANGE) COMMONWEALTH OF VI RGINIA REAL ESTATE APPRAISER BOARD CERTIFIED GENERAL REAL ESTATE APPRAISER NUMBER: THOMAS J SHIELDS 3307 MILL CROSS COUR'. O ~ '..J :o U.. - (DETACH HERE) DEPARTMENT OF PROFESSIONAL AND OCCUPATIONAL REGULATION 9960 Mayland Dr., Suite 400, Richmond, VA Alff~ nv,80~~'1t?jje ~~PIRA TION, OR USE BY PERSONS OR FIRMS OTHER THAN THOSE NAMED MAY RESULT IN CRIMINAL PROSECUTION UNDER THE CODE OF VIRGINIA.

111 z 0 ~ fr ~ ~ l: ~ ~ 0 ~ ~ w ~ ~ a. oe:emhm6t-.f.qf:tonsumer ANO FJ~GU~A'fOFW AFf"AIM 'o0.'fipatii;!jl{.l"md Pr fe$sional L:tc.!lsing,A.qmi111stratl6~ ' - ' ' ' - Appraiser Board ' ' certifi~ that 1HOMAS J SHIELDS 3307MILLCROSSCOURT OAKTON VA has met all the requirements prescrfbed by law and regulations and is hereby licensed as a(n): Certified General Appraiser License Number: GA10248 Issue Date: Expiration Date: ~c;~ (/ Director, Department of Consumtt and Regulatmy Affairs -*' '*'. '* '""l I I i i..i r- 1 r i I t i

112 MDLiR 11LMK1Mo>IT u 1 Lwiui.. L 1!'~><,11<G A"'IJ R!vLL A11lll' LICENSE* REGISTRATION * CERTIFICATION * PERMIT STATE OF MARYLAND DEPARTMENT OF LABOR, LICENSING AND REGULATION COMMISSION OF RE APPRAISERS & HOME INSPECTORS CERTIFIES THAT: THOMAS JAMES SHI ELDS Manin O'Mallty Covemor Anthon~ C. Brown l.1 Qc.\<ctmor Leonard J. Howie, ill Socrotury IS AN AUTHORIZED : 04-CERTIFIED GENERAL LIC/REG/CERT 4892 EXPIRATION Signature of Bearer EFFECTIVE CONTROL NO ~~.~~ WHERE REQUIRED BY LAW THIS MUST BE CONSPICUOUSLY DISPLAYED IN OFFICE TO WHICH IT APPLIES

113 THOMAS J SHIELDS 3307 MILL CROSS CT OAKTON, VA NORTH CAROLINA APPRAISAL BOARD

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115 LICENSE NO Department of Financial and Professional Regulation Division of Professional Regulation The person, firm or corporation whose nomo appears on this conwicate hos complied with the provisions d the Illinois Stelulos ond/or rules ond rogulolions Md Is hereby authorized to engage In the acilvity IS lndlcoted bejow. CERTIFIED GENERAL REAL ESTATE APPRAISER EXPIRES: 09/30/2015 THOMAS J SHIELDS 3307 MILL CROSS COURT OAKTON, VA A// I}/')~ MANUEL FLORES ~ / v f c--l/ 1 ACTING SECRETARY ~<.. JAY STEWART re..>" """"- DIRECTOR The official status of this license can be verified at " Cut on Dotted Line ~ For further reference, the Department is now providing a personal customer identification " Contact Number" which you may use in lieu of your social security number or FEIN number when contacting the Department. Your number is: l ~-... (l)ii1 r--- :~~-~se-::~ ----~~-~~~:::;::~~:~~:!~~~::~: :~~~;:~~~ ;~ uo Dlvlalon of Profenlonal Ragulatlon I I CERTIFIED GENERAL REAL ESTATE APPRAISER - I THOMAS J SHIELDS EXPIRES: 09/30/2016.tfJ/ /)'1 ~MANUEL FLORES ~ JAY STEWART /~/~ 1 ACTINGSECRETARY ~...,..._._, - 01RECiOR I The official status or this license can be verified at l