Integra Realty Resources San Diego. Appraisal of Real Property

Transcription

1 Integra Realty Resources San Diego Appraisal of Real Property Proposed Mixed Use Property 951 Seacoast Dr. Imperial Beach, San Diego County, California Prepared For: Pacific AMG, Inc. Effective Date of the Appraisal: November 5, 2015 Report Format: Appraisal Report Standard Format IRR San Diego File Number:

2 951 Seacoast Dr. Imperial Beach, California

3 Integra Realty Resources 5330 Carroll Canyon Road T San Diego Suite 100 F San Diego, CA sandiego@irr.com November 25, 2015 Mr. Jeffrey Lubin Pacific AMG, Inc Oberlin Drive, Suite 308 San Diego, CA SUBJECT: Market Value Appraisal Lighthouse Point 951 Seacoast Dr. Imperial Beach, San Diego County, California IRR San Diego File No Dear Mr. Lubin: Integra Realty Resources San Diego is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value as is of the fee simple interest in the property. As requested, we also estimate the prospective individual residential and commercial condominium unit values. The client for the assignment is Pacific AMG, Inc., and the intended use is for loan underwriting purposes. The appraisal is intended to conform with the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, applicable state appraisal regulations, and the appraisal guidelines of Pacific AMG, Inc. To report the assignment results, we use the Appraisal Report option of Standards Rule 2 2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. The subject is a proposed mixed use property containing 3 residential condominium units located on the second and third floors and two ground level commercial condominium units. The improvements are anticipated to be complete in The site area is 0.11 acres

4 Mr. Jeffrey Lubin Pacific AMG, Inc. November 25, 2015 Page 2 or 4,763 square feet. The site has approved entitlements (Vested Tentative Map #140027) for the proposed development. Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value is as follows: Value Conclusions Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value As Is Fee Simple November 5, 2015 $1,430,000 Prospective Sum Proceeds at Market Value at Total Project Completion Fee Simple January 1, 2017 $6,620,000 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. We have been requested to estimate the prospective individual retail values of the proposed 3 residential condomium and 2 ground level commercial condominium unit, as of the estimated date of completion, which is 1/1/2017. These value estimates are made under the extraordinary assumption that the project is completed according to the plans, specifications, timing and costs provided by the developer. The values also assume continued market appreciation up to the prospective date of project completion; and no major change in economic conditions, supply and demand, interest rates, costs, etc., during the construction period. 2. According to the developer, the City will not allow a condominium map to be recorded until after the proposed project is complete. Therefore, we assume that a condominium map will be recorded for each respective units once the project is complete. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. None. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and subject to considerable risk and uncertainty. Events may occur that could cause the performance of the property to differ materially from our estimates, such as changes in the economy, interest rates, capitalization rates, financial strength of tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based partly on data obtained from interviews and third party sources, which are not always completely reliable. Although we are of the opinion that our findings are reasonable based on available evidence, we are not responsible for the effects of future occurrences that cannot reasonably be foreseen at this time.

5 Mr. Jeffrey Lubin Pacific AMG, Inc. November 25, 2015 Page 3 If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service. Respectfully submitted, Integra Realty Resources San Diego Jeff A. Greenwald, MAI, SRA, AI GRS, ASA, FRICS David Burningham, MAI Senior Managing Director / Principal Certified General Real Estate Appraiser Certified General Real Estate Appraiser CA Certificate #AG036349, Exp: 02/08/17 CA Certificate #AG025255, Exp: 10/12/17 E mail: dburningham@irr.com E mail: jgreenwald@irr.com John A. Morgan, MAI Managing Director/Review Appraiser Certified General Real Estate Appraiser CA Certificate #AG007753; Exp jmorgan@irr.com Job Number:

6 Table of Contents Summary of Salient Facts and Conclusions 1 General Information 2 Identification of Subject 2 Sale History 2 Pending Transactions 3 Purpose of the Appraisal 3 Definition of Market Value 3 Definition of Property Rights Appraised 4 Intended Use and User 4 Applicable Requirements 4 Report Format 4 Prior Services 4 Scope of Work 4 Economic Analysis 7 San Diego County Area Analysis 7 Surrounding Area Analysis 16 Demographics 18 Retail Market Analysis 22 Retail Market/Broker Interviews 30 Attached Residential Condominium Market Analysis 33 Property Analysis 36 Land Description and Analysis 36 Improvements Description and Analysis 41 Real Estate Taxes 54 Highest and Best Use 55 Valuation 57 Valuation Methodology 57 Land Valuation 58 Analysis and Adjustment of Sales 62 Land Value Conclusion 65 Cost Approach 66 Replacement Cost 66 Depreciation 68 Value Indication 70 Sales Comparison Approach 71 Discussion of Sales 76 Sales Comparison Approach Commercial Condominium Units 79 Discussion of Improved Sales 83 Reconciliation and Conclusion of Value 89 Exposure Time 90 Marketing Period 90 Certification 91 Assumptions and Limiting Conditions 93 Addenda A. Appraiser Qualifications B. Financials and Property Information C. Comparable Data Land Sale Comparables Commercial Sale Comparables Commercial Lease Comparables D. Engagement Letter

7 Summary of Salient Facts and Conclusions 1 Summary of Salient Facts and Conclusions Property Name Address Property Type Owner of Record Tax ID Land Area Gross Building Area Rentable Area Year Built; Year Renovated Zoning Designation Highest and Best Use As if Vacant Highest and Best Use As Improved Exposure Time; Marketing Period Lighthouse Point 951 Seacoast Dr. Imperial Beach, San Diego County, California Mixed Use 951 Seacoast Trust acres; 4,763 SF 10,694 SF 8,804 SF 2017; N/a C/MU 2, Seacoast Commercial Mixed Use A mixed use development The proposed mixed use development 2 6 months; 2 6 months Date of the Report November 25, 2015 Value Conclusions Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value As Is Fee Simple November 5, 2015 $1,430,000 Prospective Sum Proceeds at Market Value at Total Project Fee Simple January 1, 2017 $6,620,000 Completion The values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than Pacific AMG, Inc. may use or rely on the information, opinions, and conclusions contained in the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions contained therein. Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. We have been requested to estimate the prospective individual retail values of the proposed 3 residential condomium and 2 ground level commercial condominium unit, as of the estimated date of completion, which is 1/1/2017. These value estimates are made under the extraordinary assumption that the project is completed according to the plans, specifications, timing and costs provided by the developer. The values also assume continued market appreciation up to the prospective date of project completion; and no major change in economic conditions, supply and demand, interest rates, costs, etc., during the construction period. 2. According to the developer, the City will not allow a condominium map to be recorded until after the proposed project is complete. Therefore, we assume that a condominium map will be recorded for each respective units once the project is complete. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. None.

8 General Information 2 General Information Identification of Subject The subject is a proposed mixed use property containing 3 residential condominium units located on the second and third floors and two ground level commercial condominium units. The improvements are anticipated to be complete in The site area is 0.11 acres or 4,763 square feet. The site has approved entitlements (Vested Tentative Map #140027) for the proposed development. A legal description of the property is as follows: Lot 1 in block 20 of Imperial Beach, in the City of Imperial Beach, County of San Diego, State of California, Map No. 1139, filed in the Office of the County Recorder of San Diego County, June 16, Property Identification Property Name Lighthouse Point Address 951 Seacoast Dr. Imperial Beach, California Tax ID Owner of Record 951 Seacoast Trust Census Tract Number Sale History The most recent closed sale of the subject is summarized as follows: Sale Date November 7, 2013 Seller Carol Lynn Ericson Buyer 951 Seacoast Trust Sale Price $669,000 Recording Instrument Number The current owner purchased the subject property with the intent to redevelop the site. Since the time the subject was purchase and according to a representative of ownership, approximately $400,000 has been spent to date on entitling the subject s site for a mixed use development. This representative of ownership also stated another $30,000 in fees will be spent prior to construction commencement. The sale price is consistent with our as is market value conclusion considering market conditions have improved plus the cost of entitling the site with some profit. To the best of our knowledge, no other sale or transfer of ownership has taken place within a three year period prior to the effective appraisal date.

9 General Information 3 Pending Transactions To the best of our knowledge, the property as is not subject to an agreement of sale or an option to buy, as of the effective appraisal date. The three proposed residential condominium units are currently listed for $1,750,000 each (2,098 SF, 2,328 SF and 2,343 SF). According to the listing agent, Soraya Pizzey with Spirit Realty ( ), there has been a great level of interest in the residential units; however, there have been no written letters of interest or offers. To the best of our knowledge, the proposed commercial units are not actively being marketed. Purpose of the Appraisal The purpose of the appraisal is to develop an opinion of the market value as is of the fee simple interest in the property as of the effective date of the appraisal, November 5, As requested, we also estimate the prospective individual residential and commercial condominium unit values. The date of the report is November 25, The appraisal is valid only as of the stated effective date or dates. Definition of Market Value Market value is defined as: 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: Buyer and seller are typically motivated; Both parties are well informed or well advised, and acting in what they consider their own best interests; A reasonable time is allowed for exposure in the open market; Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 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. (Source: Code of Federal Regulations, Title 12, Chapter I, Part 34.42[g]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472)

10 General Information 4 Definition of Property Rights Appraised Fee simple estate is defined as, 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. (Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois, 2010) Intended Use and User The intended use of the appraisal is for loan underwriting purposes. The client and intended user is Pacific AMG, Inc. The appraisal is not intended for any other use or user. No party or parties other than Pacific AMG, Inc. may use or rely on the information, opinions, and conclusions contained in this report. Applicable Requirements This appraisal is intended to conform to the requirements of the following: Uniform Standards of Professional Appraisal Practice (USPAP); Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute; Applicable state appraisal regulations; Appraisal guidelines of Pacific AMG, Inc. Report Format This report is prepared under the Appraisal Report option of Standards Rule 2 2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. Prior Services USPAP requires appraisers to disclose to the client any other services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. We have not performed any 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. Scope of Work To determine the appropriate scope of work for the assignment, we considered the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors. Our concluded scope of work is described below.

11 General Information 5 Valuation Methodology Appraisers usually consider the use of three approaches to value when developing a market value opinion for real property. These are the cost approach, sales comparison approach, and income capitalization approach. Use of the approaches in this assignment is summarized as follows: Approaches to Value Approach Applicability to Subject Use in Assignment Cost Approach Applicable Utilized Sales Comparison Approach Applicable Utilized Income Capitalization Approach Applicable Utilized The cost approach is the most reliable valuation method for the subject due to the following: There is sufficient data to develop reliable estimates of land value and replacement cost of the improvements. The subject represents proposed construction, which reduces the subjectivity of estimating accrued depreciation. This approach is typically most relevant for properties for which sales and rental data is limited. The sales comparison approach is an applicable valuation method because: A sufficient amount of relevant sales data is available for analysis. This approach directly considers the prices of alternative properties having similar utility. This approach is typically most relevant for owner user properties. The income capitalization approach is not applicable to the assignment considering the following: There is not adequate market data for similar properties that would permit us to develop a reliable estimate of the property s income generating potential. Research and Analysis The type and extent of our research and analysis is detailed in individual sections of the report. This includes the steps we took to verify comparable sales, which are disclosed in the comparable sale profile sheets in the addenda to the report. Although we make an effort to confirm the arms length nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary verification from sources deemed reliable. Inspection Mr. Jeff A. Greenwald, MAI, SRA, AI GRS, ASA, FRICS and John Morgan, MAI have not inspected the subject property but have participated in the analysis, opinions, and conclusions concerning the real

12 General Information 6 estate contained within this report and fully concur with the final value estimate expressed herein. Mr. David P. Burningham, MAI conducted an interior and exterior inspection on November 5, 2016.

13 San Diego County Area Analysis 7 Economic Analysis San Diego County Area Analysis San Diego County is located in southwestern California. It is 4,207 square miles in size and has a population density of 759 persons per square mile. San Diego County is part of the San Diego Carlsbad San Marcos, CA Metropolitan Statistical Area, hereinafter called the San Diego MSA, as defined by the U.S. Office of Management and Budget. Population San Diego County has an estimated 2015 population of 3,250,417, which represents an average annual 1.0% increase over the 2010 census of 3,095,313. San Diego County added an average of 31,021 residents per year over the period, and its annual growth rate exceeded the State of California rate of 0.8%. Looking forward, San Diego County's population is projected to increase at a 1.0% annual rate from , equivalent to the addition of an average of 31,735 residents per year. San Diego County's growth rate is expected to exceed that of California, which is projected to be 0.9%. Employment Total employment in San Diego County is currently estimated at 1,359,701 jobs. Between year end 2004 and the present, employment rose by 61,030 jobs, equivalent to a 4.7% increase over the entire period. There were gains in employment in eight out of the past ten years despite the national economic downturn and slow recovery. Although San Diego County's employment rose over the last decade, it underperformed California, which experienced an increase in employment of 6.1% or 919,842 jobs over this period. A comparison of unemployment rates is another way of gauging an area s economic health. Over the past decade, the San Diego County unemployment rate has been consistently lower than that of California, with an average unemployment rate of 7.0% in comparison to a 8.3% rate for California. A lower unemployment rate is a positive indicator. Recent data shows that the San Diego County unemployment rate is 5.0% in comparison to a 6.2% rate for California, a positive sign for San Diego County economy but one that must be tempered by the fact that San Diego County has underperformed California in the rate of job growth over the past two years.

14 San Diego County Area Analysis 8 Employment Sectors The composition of the San Diego County job market is depicted in the following chart, along with that of California. Total employment for both areas is broken down by major employment sector, and the sectors are ranked from largest to smallest based on the percentage of San Diego County jobs in each category.

15 San Diego County Area Analysis 9 Employment Sectors % 5% 10% 15% 20% Professional and Business Services Trade; Transportation; and Utilities Government Education and Health Services Leisure and Hospitality Manufacturing Financial Activities Construction Other Services Information Natural Resources & Mining 5.2% 4.9% 4.7% 4.2% 3.6% 3.1% 1.8% 2.9% 0.7% 2.3% 7.2% 7.8% 10.9% 17.0% 15.5% 16.5% 18.5% 16.2% 14.5% 13.7% 14.7% 12.9% San Diego County California Source: Bureau of Labor Statistics and Economy.com San Diego County has greater concentrations than California in the following employment sectors: 1. Professional and Business Services, representing 17.0% of San Diego County payroll employment compared to 15.5% for California as a whole. This sector includes legal, accounting, and engineering firms, as well as management of holding companies. 2. Government, representing 16.2% of San Diego County payroll employment compared to 14.5% for California as a whole. This sector includes employment in local, state, and federal government agencies. 3. Leisure and Hospitality, representing 12.9% of San Diego County payroll employment compared to 10.9% for California as a whole. This sector includes employment in hotels, restaurants, recreation facilities, and arts and cultural institutions. 4. Financial Activities, representing 5.2% of San Diego County payroll employment compared to 4.9% for California as a whole. Banking, insurance, and investment firms are included in this sector, as are real estate owners, managers, and brokers. San Diego County is underrepresented in the following sectors: 1. Trade; Transportation; and Utilities, representing 16.5% of San Diego County payroll

16 San Diego County Area Analysis 10 employment compared to 18.5% for California as a whole. This sector includes jobs in retail trade, wholesale trade, trucking, warehousing, and electric, gas, and water utilities. 2. Education and Health Services, representing 13.7% of San Diego County payroll employment compared to 14.7% for California as a whole. This sector includes employment in public and private schools, colleges, hospitals, and social service agencies. 3. Manufacturing, representing 7.2% of San Diego County payroll employment compared to 7.8% for California as a whole. This sector includes all establishments engaged in the manufacturing of durable and nondurable goods. 4. Information, representing 1.8% of San Diego County payroll employment compared to 2.9% for California as a whole. Publishing, broadcasting, data processing, telecommunications, and software publishing are included in this sector. Major Employers Major employers in San Diego County are shown in the following table.

17 San Diego County Area Analysis 11 Gross Domestic Product Gross Domestic Product (GDP) is a measure of economic activity based on the total value of goods and services produced in a defined geographic area. Although GDP figures are not available at the county level, data reported for the San Diego MSA is considered meaningful when compared to the nation overall, as San Diego County is part of the MSA and subject to its influence. Economic growth, as measured by annual changes in GDP, has been somewhat lower in the San Diego MSA than the United States overall during the past eight years. The San Diego MSA has grown at a 0.6% average annual rate while the United States has grown at a 0.9% rate. As the national economy improves, the San Diego MSA continues to underperform the United States. GDP for the San Diego MSA rose by 1.7% in 2013 while the United States GDP rose by 1.8%.

18 San Diego County Area Analysis 12 The San Diego MSA has a per capita GDP of $57,955, which is 18% greater than the United States GDP of $49,115. This means that San Diego MSA industries and employers are adding relatively more value to the economy than their counterparts in the United States overall. Household Income San Diego County has a higher level of household income than California. Median household income for San Diego County is $61,766, which is 2.5% greater than the corresponding figure for California. The following chart shows the distribution of households across twelve income levels. San Diego County has a greater concentration of households in the higher income levels than California. Specifically, 41% of San Diego County households are at the $75,000 or greater levels in household income as compared to 40% of California households. A lesser concentration of households is apparent in the lower income levels, as 29% of San Diego County households are below the $35,000 level in household income versus 31% of California households.

19 San Diego County Area Analysis 13 Household Income Distribution 2015 $500,000 and more $250, ,999 $200,000 $249,999 $150,000 $199,999 $125,000 $149,999 $100,000 $124,999 $75,000 $99,999 $50,000 $74,999 $35,000 $49,999 $25,000 $34,999 $15,000 $24,999 Less than $15, % 1.5% 3.0% 3.3% 2.2% 2.3% 6.9% 6.4% 5.9% 5.7% 9.0% 8.8% 12.8% 12.0% 12.5% 12.5% 9.2% 9.2% 9.0% 10.0% 11.1% 11.4% 17.3% 16.9% 0.0% 5.0% 10.0% 15.0% 20.0% Source: Claritas San Diego County, CA California Education and Age Residents of San Diego County have a higher level of educational attainment than those of California. An estimated 34% of San Diego County residents are college graduates with four year degrees, versus 31% of California residents. People in San Diego County are similar in age to their California counterparts. The median age of both San Diego County and California is 36 years. Education & Age 2015 Percent College Graduate Median Age 80% 70% 60% 50% 40% 30% 20% 10% 34% San Diego County, CA 31% California San Diego County, CA California Source: Claritas

20 San Diego County Area Analysis 14 Conclusion The San Diego County economy will benefit from a growing population base and higher income and education levels. San Diego County experienced growth in the number of jobs and has maintained a consistently lower unemployment rate than California over the past decade. Moreover, San Diego County benefits from being part of the San Diego MSA, which generates a higher level of GDP per capita than the nation overall. We anticipate that the San Diego County economy will improve and employment will grow, strengthening the demand for real estate.

21 San Diego County Area Analysis 15 Area Map

22 Surrounding Area Analysis 16 Surrounding Area Analysis Imperial Beach, CA Overview Imperial Beach is the most southwesterly located city in the continental United Sates. Located 10 miles south of San Diego, north of the border city of Tijuana, the community was originally developed as a beach retreat for residents of the Imperial Valley in 1887, and subsequently named Imperial Beach. The city was incorporated in 1956 becoming the 10th city in San Diego County. Imperial Beach has three and a half miles of Pacific Ocean beachfront, including a 1,200 foot fishing pier. The original pier was built in 1909 to house machinery that generated electricity from wave action. The "Edwards Wave Motor" was not successful and was dismantled shortly after it was installed. The pier had been damaged several times by heavy tidal activity and was completely renovated in The city has a land area of 4.4 square miles. It lies just south of the southern end of San Diego Bay and is bordered on the north and south with U.S. Navy facilities and on the southwest by the Tijuana Slough Wildlife Preserve. Location The city is bordered by Mexico to the south, San Diego to the east, Coronado and San Diego Bay to the north, and the Pacific Ocean to the west. Accessibility Imperial Beach Boulevard and Highway 75 (Palm Avenue) are the two major east/west roadways. Palm Avenue is the main commercial corridor and Imperial Beach Boulevard is developed with a mix of commercial and residential properties. Palm Avenue and Imperial Beach Boulevard provide access to Interstate 5 and Interstate 805 to the east. Both I 5 and I 805 run north/south and connect with international border at Tijuana, Mexico to the south, and downtown San Diego to the north. Imperial Beach is linked to San Diego by bus service which connects to both the San Diego trolley and Coronado Island, making it one of the few cities in San Diego County with a strong public transit system. The city's bus line has the most passengers of any in the county. San Diego International Airport is 20 miles to the north Economic Base Imperial Beach sits between the Silver Strand (south of Coronado) and the Mexican Border and boasts a small but neighborly business center. It is considered a bedroom community as many of its residents work and shop in the city of San Diego.

23 Surrounding Area Analysis 17 The business district is characterized by its informal, small town style. It is a traditional beach community filled with small owner operated businesses that cater to the residents and the tourists who come to the area during the warmer seasons. With the help of the San Diego Port District, the city spent $10 million on seaside parks, restrooms and a lifeguard tower/sheriff's substation during the 1990s. A new sewage outfall and treatment plant has improved the beach pollution problem. Public art graces the parks and the new pier. The U.S. Open Sandcastle Competition attracts several hundred thousand visitors each July to enjoy the imaginative sandcastles and three day street fair. Imperial Beach is becoming an eco tourism destination. The wetlands located in this area are wellknown for bird watching. The Tijuana River estuary is the largest salt water marsh in Southern California. It is also the only coastal lagoon not bisected by a railroad or a highway. The Tijuana River National Estuarine straddles the border and makes Imperial Beach unique in San Diego County. The city recently received a grant to help it promote its unique tourist attractions to a wider audience. Topography The terrain in Imperial Beach is relatively flat, rising slightly from the Pacific Ocean. The average elevation is 10 feet above sea level. The ocean is to the west and the San Diego Bay is to the north. Predominant Development Imperial Beach is virtually fully developed and therefore has limited new construction activity. The predominant development in the subject area is commercial redevelopment along Highway 75 (which becomes Palm Avenue). There are no large commercial shopping centers in Imperial Beach. However, a new small box grocery store anchored retail center is found on Palm Ave. Smaller strip centers are more typical. Residential development consists primarily of replacing older structures with new detached homes and condominiums, as well as renovation of existing apartment projects and conversion of apartments to condominiums.

24 Surrounding Area Analysis 18 Demographics A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table. As shown above, the current population within a 10 minute drive time of the subject is 59,592, and the average household size is 3.2. Population in the area has grown since the 2010 census, and this trend is projected to continue over the next five years. Compared to San Diego County overall, the population within a 3 mile radius is projected to grow at a slower rate. Median household income is $45,312, which is lower than the household income for San Diego County. Residents within a 10 minute drive time have a considerably lower level of educational attainment than those of San Diego County, while median owner occupied home values are considerably lower. Services Imperial Beach has public electricity, gas, water and sewer services. EDCO provides trash pick up and recycling service. Imperial Beach has a City Manager form of government with the legislative body consisting of a mayor and four council members elected to four year terms. In addition to six elementary schools, Imperial Beach has a middle school, a high school (Mar Vista High School) and an adult education center under the jurisdiction of the Sweetwater Union School District.

25 Surrounding Area Analysis 19 The Imperial Beach Fire department provides fire suppression, emergency medical services, prevention, education, inspection, community service and weed abatement duties. The San Diego County Sheriff's Department has been providing contract law enforcement services to the City of Imperial Beach since In the role of the city's "Police Department", the Imperial Beach Station provides all aspects of law enforcement services including patrol, traffic, COPPS, crime prevention and investigations. Additionally, the Imperial Beach Sheriff's Station provides law enforcement services, to over 22,000 residents who reside in the unincorporated communities of Bonita, Sunnyside, Chula Vista, Lincoln Acres, Proctor Valley, San Miguel Mountain, Otay Valley, and Otay Mesa. Lifeguard division structure: The City of Imperial Beach Department of Public Safety is structured to provide safe and well managed beaches for the many people who swim, surf, fish or boat along the city's shoreline each year. The City Manager is responsible to the City Council and the San Diego Unified Port District for the effective operations of the department. Beaches are the property of the people of the State of California, however, the state "entrusts" the beaches to local government for the purpose of providing services. In this case the San Diego Unified Port District holds the "trust" for the tide lands, and funds services through a contract with the City of Imperial Beach. The Lifeguard Captain is in charge of the Beach/Ocean Safety Division. The Captain is responsible to the Public Safety Director for the effective operation of the Lifeguard Service. Redevelopment For housing projects, the focus remains on rehabilitation of existing multi family housing and exploring the possibility of providing affordable, limited equity co op housing to allow for ownership interest by low and moderate income residents. The city explores other funding sources for the rehabilitation of single family homes to promote home ownership for low and moderate income residents. Proposed Hotel Development Imperial Beach Resort LLC purchased an Imperial Beach parcel for $5.5 million in 2014, with plans to develop a 79 room boutique hotel. The city of Imperial Beach has since approved plans for a 79 room hotel at the site, with 115 underground parking spaces and 10,000 square feet of meeting and restaurant space. An apartment complex currently occupies the property and will be replaced by the hotel. Conclusion Imperial Beach is a small, nearly fully developed coastal community. The availability of sandy beaches, which normally would be a major positive influence, has been offset by pollution problems originating in Mexico. The Imperial Beach waterfront is frequently fouled by sewage runoff from Mexico. A bi

26 Surrounding Area Analysis 20 national treatment facility at the base of the Tijuana River is to address this issue. Further negative influences have been in the form of nonresident aliens illegally crossing the US/Mexico border. These illegal crossings typically led to increased property and street crimes in border areas. The US Border Patrol recently implemented Operation Gatekeeper which has significantly cut down these illegal crossings. The Imperial Beach area has benefited tremendously from this program as illegal crossings have been reduced between Interstate 5 and the Pacific Ocean, previously a hotbed for these activities. In summary, the Imperial Beach area is a reasonably affordable beach oriented community which should continue to draw residents and shoppers due to the affordable nature of the area. Previous negative influences are currently being addressed on a local and national level by the area s politicians. Imperial Beach should continue to be desirable due to the limited amount of affordable beachfront property available in San Diego County.

27 Surrounding Area Analysis 21 Surrounding Area Map

28 Retail Market Analysis 22 Retail Market Analysis Metro Area Overview We have included excerpts from CoStar s most recent San Diego Retail Report below:

29 Retail Market Analysis 23

30 Retail Market Analysis 24

31 Retail Market Analysis 25 The subject property is located in the South Bay retail sector.

32 Retail Market Analysis 26

33 Retail Market Analysis 27 General retail vacancy was reported at approximately 2% in the subject s submarket in Q with an average asking rate of $23.61/SF/Yr triple net.

34 Retail Market Analysis 28

35 Retail Market Analysis 29

36 Retail Market/Broker Interviews 30 Retail Market/Broker Interviews According to Costar s market report, the current market for general retail space in the subject s submarket has a vacancy rate of around 2% for the 3 rd Qtr Over the past 2 3 years market conditions have mostly been stable with some more recent signs of improvement which is expected to continue in 2015/2016. In addition, we performed a Costar analysis of all retail space within the subject s submarket/zip code. The data output from this search is presented the following chart.

37 Retail Market/Broker Interviews 31 Rental rates have shown recent improvement. The Costar analytics chart below indicates that the most recent available retail space in the subject market was absorbed within 10 plus months. We anticipate the lease up period for the retail space in the subject area at approximately 10 months on a weighted average basis.

38 Retail Market/Broker Interviews 32 The current market for retail space appears to be slightly improving in the subject s immediate area. The appraisers interviewed knowledgeable brokers in the subject s market, such as Tommy Gibbs with Cushman and Wakefield/DTZ ( ), who indicated that there have been some more recent signs of an improving market. Overall, the data we collected, and the feedback from our interview/surveys indicates recent improvement/stability with some anticipation of mild increases. Therefore, we still consider the long term demand prospects to be good for the San Diego region and the subject s sub market. Conclusions The appraisers have also analyzed the vacancy rates of retail developments in San Diego County as well as the overall demand for competing space in the competitive area and based on the information collected by the appraisers, market demand for a retail space appears to be adequate for the subject to be leased over the long term.

39 Attached Residential Condominium Market Analysis 33 Attached Residential Condominium Market Analysis Imperial Beach Overview We include excerpts from some of MLS s data reports for Imperial Beach below: The subject s zip code has 13 active attached residential properties in MLS. The current average time on the market is 153 days. The average year built is The average square footage is 1,432 SF and the average asking price is $871,377. This includes the subject s units listed at $1,750,000 each.

40 Attached Residential Condominium Market Analysis 34 The subject s zip code has 10 pending attached residential properties in MLS. The current average time on the market is 43 days. The average year built is The average square footage is 1,051 SF and the average price is $348,720.

41 Attached Residential Condominium Market Analysis 35 Market Summary Status Class Type Price Range No. of Listings Average Price Median Price Average DOM SOLD RESIDENTIAL All Other Attached $110,000 - $114,999 1 $110,000 $110,000 0 $135,000 - $139,999 2 $136,750 $136, $145,000 - $149,999 1 $145,000 $145, $150,000 - $154,999 1 $150,000 $150, $165,000 - $169,999 1 $167,800 $167, $190,000 - $194,999 2 $192,000 $192, $205,000 - $209,999 1 $205,000 $205, $210,000 - $214,999 2 $210,500 $210, $225,000 - $229,999 1 $227,000 $227, $235,000 - $239,999 1 $235,000 $235, $240,000 - $244,999 3 $240,000 $240, $245,000 - $249,999 3 $246,000 $245, $250,000 - $254,999 3 $251,000 $250, $255,000 - $259,999 1 $255,000 $255,000 9 $275,000 - $279,999 1 $275,000 $275, $290,000 - $294,999 1 $293,000 $293, $305,000 - $309,999 1 $309,900 $309,900 9 $325,000 - $329,999 3 $325,333 $325, $350,000 - $354,999 3 $350,000 $350, $385,000 - $389,999 2 $387,200 $387, $395,000 - $399,999 2 $395,500 $395, $400,000 - $404,999 4 $400,000 $400, $415,000 - $419,999 3 $417,667 $419, $450,000 - $454,999 2 $450,000 $450, $480,000 - $484,999 2 $480,000 $480, $545,000 - $549,999 1 $549,000 $549, $585,000 - $589,999 1 $585,000 $585, $595,000 - $599,999 1 $595,000 $595, $610,000 - $614,999 1 $610,000 $610, $795,000 - $799,999 2 $797,398 $797, $830,000 - $834,999 1 $830,000 $830, $1,025,000 - $1,029,999 1 $1,025,000 $1,025, Sub Total 55 $359,189 $325, Grand Totals 55 $359,189 $325, The subject s zip code has had 55 sales of attached residential properties in MLS. The average time on the market was 59 days. The average year built is The average square footage is 1,108 SF and the average price is $359,189. Conclusions The MLS charts above indicate that the most recent available attached residential condominium units in the subject market were absorbed within 3 plus months. We anticipate the absorption period for the attached residential condominium space in the subject area at approximately 3 months on a weighted average basis.

42 Land Description and Analysis 36 Property Analysis Land Description and Analysis Land Description Land Area 0.11 acres; 4,763 SF Source of Land Area Architect Primary Street Frontage Seacoast Dr. 95 feet Secondary Street Frontage Elder Ave. 50 feet Shape Rectangular Corner Yes Topography Generally level and at street grade Drainage No problems reported or observed Environmental Hazards None reported or observed Ground Stability No problems reported or observed Flood Area Panel Number 06073C 2134 G Date May 16, 2012 Zone X Description Outside of 500 year floodplain Insurance Required? No Zoning; Other Regulations Zoning Jurisdiction The City of Imperial Beach Zoning Designation C/MU 2 Description Seacoast Commercial Mixed Use Legally Conforming? Appears to be legally conforming Zoning Change Likely? No Permitted Uses Retail, office, commercial and mixed use Minimum Lot Area 3,000 sf Minimum Street Frontage (Feet) 35 Maximum Building Height 35 feet Parking Requirement 1 / 1,000 sf of gross SF of commercial space; 1.5 spaces per dwelling unit Other Land Use Regulations None noted Utilities Service Provider Water California American Water Co. Sewer California American Water Co. Electricity SDG&E Natural Gas SDG&E Local Phone AT&T We are not aware of any pending or prospective zoning changes. It appears that the proposed use of the site is a legally conforming use. However, it should be noted that we did not perform a complete

43 Land Description and Analysis 37 zoning compliance study and are not experts on zoning and building codes. Our valuation assumes that the proposed subject conforms to all development standards under the zoning codes and all building standards under the building codes. We reserve the right to change our value if this assumption is found to be inaccurate. We are not experts in the interpretation of zoning ordinances. An appropriately qualified land use attorney should be engaged if a determination of compliance with zoning is required. Existing Improvements The site currently includes older improvements, consisting of a detached single family residence. These improvements will be razed for the new development, and are considered to have no economic life and no contributory value to the site. Shape and Dimensions The site is rectangular. Site utility based on shape and dimensions is average. Topography The site is generally level and at street grade. The topography does not result in any particular development limitations. Drainage No particular drainage problems were observed or disclosed at the time of field inspection. This appraisal assumes that there are not any unusual drainage issues that would affect the development of the subject. Ocean Views The subject s site is located immediately across the public open space park. This affords the proposed subject unobstructed ocean and pier views especially on the upper levels.

44 Land Description and Analysis 38 Flood Map

45 Land Description and Analysis 39 Environmental Hazards An environmental assessment report was not provided for review, and during our inspection, we did not observe any obvious signs of contamination on or near the subject. However, environmental issues are beyond our scope of expertise. It is assumed, based on the proposed architectural plans, that the property is not adversely affected by environmental hazards and the site can be readily developed. Ground Stability A geotechnical report for the subject property was not provided for review. It is assumed, based on the proposed architectural plans, that geotechnical studies have been compiled and the subject site is suitable for the proposed construction. Streets, Access and Frontage Details pertaining to street access and frontage are provided in the following table. Streets, Access and Frontage Street Seacoast Dr. Elder Ave. Frontage Feet Paving Asphalt Asphalt Curbs Concrete Concrete Sidewalks Concrete Concrete Lanes Two Two Direction of Traffic Two way Two way Condition Average Average Traffic Levels Average Average Signals/Traffic Control No No Visibility Good Good Easements, Encroachments and Restrictions We were not provided a current title report to review. We are not aware of any easements, encroachments, or restrictions that would adversely affect value. Our valuation assumes no adverse impacts from easements, encroachments, or restrictions, and further assumes that the subject has clear and marketable title. Conclusion of Land Analysis Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses including those permitted by zoning. We are not aware of any other particular restrictions on development.

46 Land Description and Analysis 40 Plat Map

47 Improvements Description and Analysis 41 Improvements Description and Analysis The subject is a proposed mixed use property containing 3 residential condominium units located on the second and third floors and two ground level commercial condominium units. The improvements are anticipated to be complete in The site area is 0.11 acres or 4,763 square feet. The site has approved entitlements (Vested Tentative Map #140027) for the proposed development. Improvements Description Proposed Name of Property Lighthouse Point General Property Type Mixed Use Occupancy Type Multi Tenant Number of Buildings One Stories Three Construction Class D Construction Type Wood frame Construction Quality Good Condition Good Number of Residential Units 3 Units per Acre (Density) 27.4 Gross Building Area (SF) 10,694 Rentable Area (SF) 8,804 Land Area (SF) 4,763 Floor Area Ratio (RA/Land SF) 1.85 Floor Area Ratio (GBA/Land SF) 2.25 Building Area Source Architectural plans Year Built 2017 Year Renovated N/a Estimated Effective Age (Yrs.) 0 Estimated Economic Life (Yrs.) 50 Remaining Economic Life (Yrs.) 50 Number of Parking Spaces 6 Source of Parking Count Plans Parking Type Garage Parking Spaces/Unit 2.0 Net sellable area is 8,804 SF (6,769 SF of residential area and 2,035 SF of commercial area). Gross building area, including the grade level garage, storage areas, exterior staircases, etc. is 10,694 SF.

48 Improvements Description and Analysis 42 Construction Details Foundation Structural Frame Exterior Walls Roof Heating Air Conditioning Elevators Rest Rooms Concrete Wood frame Painted stucco/wood paneling/tile veneer Flat built up composite material Central Central One plus two staircases Anticipated 1 per commercial unit and 2 per residential unit Unit Mix and Occupancy Floor Plan Units % of Total Avg. Unit Size Total SF 2 Bd/2 Ba Units Mulit Level Unit % 2,343 2,343 Single Level Unit % 2,328 2,328 Total/Average % 2,336 4,671 3 Bd/2 Ba Units Single Level Unit % 2,098 2,098 Total/Average % 2,098 2,098 Total Units % 2,256 6,769 The project is anticipated to have landscaped and paved common areas as well as a common grade level parking garage. The tenants will have use of 6 ground level garage parking spaces. The project will be serviced by one elevator car. The developer currently does not have an estimate for HOA fees. The residential units will include standard and upgraded options for flooring, cabinetry and countertops. All units will include hardwood cabinetry, stone countertops, stainless steel appliances, stacked or side by side washer/dryers and extensive multi level rooftop decking and private unit deck access. The entire project is anticipated to have sprinkler fire suppression. The commercial suites will most likely be completed by the developer in warm shell condition, with HVAC and interior walls installed, but no flooring and no drop ceiling. As noted, the commercial area can be demised into two individual condominium units. These units will have storefront exposure to Seacoast Dr.

49 Improvements Description and Analysis 43 Unit Features and Project Amenities Unit Features At Subject Project Amenities At Subject Patios/Balcony X Gated Entrance Fireplace X Swimming Pool Vaulted Ceilings X Spa/Hot Tub Dishwasher X Sauna Disposal X Covered Parking Trash Compactor Garage/Under Building X Washer/Dryer Hookup Tennis Court Washer/Dryer In Unit X Playground Storage in Unit Clubhouse/Rec. Bldg. Air Conditioning X Fitness Room Carpets/Drapes/Blinds Racquet Ball Walk in Closets X Volleyball Basketball Laundry Facility Storage Security Improvements Analysis Proposed Quality and Condition The improvements are anticipated to be of good quality construction with modern elevator served 3 level design with grade level garage parking. The quality of the proposed project is considered to be generally superior to that of most competing properties, because most of the older properties in the area exhibit inferior materials. Overall, the market appeal of the proposed subject is anticipated to be superior to that of most competing properties. Functional Utility The proposed improvements are anticipated to be adequately suited to their proposed use. ADA Compliance Based on our inspection and information provided, we are not aware of any ADA issues. However, we are not expert in ADA matters, and further study by an appropriately qualified professional would be recommended to assess ADA compliance. Hazardous Substances An environmental assessment report was not provided for review and environmental issues are beyond our scope of expertise. No hazardous substances were observed during our inspection of the improvements; however, we are not qualified to detect such substances. Unless otherwise stated, we assume no hazardous conditions exist on or near the subject.

50 Improvements Description and Analysis 44 Personal Property No personal property items were observed that would have any material contribution to market value. Conclusion of Improvements Analysis Overall, the quality, condition, and functional utility of the proposed improvements are above average for their age and location.

51 Improvements Description and Analysis 45 Existing Improvements To Be Demolished (Photo Taken on November 5, 2016) South Elevation (Photo Taken on November 5, 2016) North Elevation (Photo Taken on November 5, 2016) East Elevation (Photo Taken on November 5, 2016) Seacoast Dr. Looking South (Photo Taken on November 5, 2016) Seacoast Dr. Looking North (Photo Taken on November 5, 2016)

52 Improvements Description and Analysis 46 View of the Parking and Pier Across the Street (Photo Taken on November 5, 2016) Existing Interior View (Photo Taken on November 5, 2016) Existing Interior View (Photo Taken on November 5, 2016) Existing Interior View (Photo Taken on November 5, 2016) Existing Interior View (Photo Taken on November 5, 2016) Existing Interior View (Photo Taken on November 5, 2016)

53 Improvements Description and Analysis 47 Ground Level Floor Plan Proposed

54 Improvements Description and Analysis 48 2 nd Level Floor Plan Proposed Residential Unit 2 Residential Unit 1 Lower Level

55 Improvements Description and Analysis 49 3 rd Level Floor Plan Proposed Residential Unit 3 Residential Unit 1 Upper Level

56 Improvements Description and Analysis 50 Roof Level Deck Area Proposed

57 Improvements Description and Analysis 51 Elevations Proposed

58 Improvements Description and Analysis 52 Elevations Proposed

59 Improvements Description and Analysis 53 Rendering Proposed

60 Real Estate Taxes 54 Real Estate Taxes Real estate taxes and assessments for the current tax year are shown in the following table. Taxes and Assessments 2015/2016 Assessed Value Taxes and Assessments Ad Valorem Tax ID Land Improvements Total Tax Rate Taxes Direct Assessments Total $499,790 $182,576 $682, % $7,936 $369 $8,305 The subject s effective property tax rate including fixed charges and special assessments is commensurate with competing properties in the subject s CMA and with the comparable utilized within this report. No adjustments to the comparables were necessary for differences in effective property tax rates. The appraisers are not aware of any past due taxes to be paid. Real estate taxes for the subject property are assessed and collected by the County of San Diego. The property is subject to the property tax rules of the state of California, which control the activities and policies of local assessment jurisdictions. These laws were significantly modified on June 7, 1978, when the state s voters passed Proposition 13, amending Article XIII of the State Constitution. Proposition 13 abolished the practice of periodic reassessment of properties, based on market value appraisals. Instead, real property is subject to reassessment (i.e., revaluation at full or partial current market value) only with changes in ownership or new construction or major remodeling etc. takes place. Otherwise, increases in assessed value are limited to no more than 2% per year. In addition, tax rates are limited to a general rate of 1%, plus the rates needed to service any bonded indebtedness. Voter approved direct assessments can also be added, and are often related to the installation of infrastructure. Re assessments occur on a change of ownership, new construction, major remodeling, etc. Based upon our as is and proposed concluded values, the real estate taxes appear to be low. The assessed values, along with property taxes, are anticipated to increase upon sale of the subject property at our concluded value and/or upon completion of the proposed improvements.

61 Highest and Best Use 55 Highest and Best Use Process Before a property can be valued, an opinion of highest and best use must be developed for the subject site, both as if vacant, and as improved or proposed. By definition, the highest and best use must be: Physically possible. Legally permissible under the zoning regulations and other restrictions that apply to the site. Financially feasible. Maximally productive, i.e., capable of producing the highest value from among the permissible, possible, and financially feasible uses. As If Vacant Physically Possible The physical characteristics of the site do not appear to impose any unusual restrictions on development. Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses. Legally Permissible The site is zoned C/MU 2, Seacoast Commercial Mixed Use. Permitted uses include retail, office, commercial and mixed use. The property also has been entitled for a mixed use residential over commercial condominium development. To our knowledge, there are no legal restrictions such as easements or deed restrictions that would effectively limit the use of the property. Given prevailing land use patterns in the area, only a mixed use development is given further consideration in determining highest and best use of the site, as though vacant. Financially Feasible Based on our analysis of the market, there is currently adequate demand for a mixed use development in the subject s area. It appears that a newly developed mixed use development on the site would have a value commensurate with its cost. Therefore, a mixed use development is considered to be financially feasible. Maximally Productive There does not appear to be any reasonably probable use of the site that would generate a higher residual land value than a mixed use development. Accordingly, it is our opinion that a mixed use development, developed to the normal market density level permitted by zoning, is the maximally productive use of the property. Conclusion Development of the site for a mixed use development is the only use that meets the four tests of highest and best use. Therefore, it is concluded to be the highest and best use of the property as if vacant.

62 Highest and Best Use 56 As Improved The older improvements situated on the subject do not represent the highest and best use of the property. Based on our analysis, the proposed mixed use residential/commercial condominium development project is physically possible, legally permissible, financially feasible and most probable. For these reasons, the proposed mixed use development is concluded to be maximally productive and the highest and best use of the property as improved. Most Probable Buyer Taking into account the functional utility of the site and area development trends, the probable buyer is a developer. For the individual proposed condominiums, the most likely buyer are owner users.

63 Valuation Methodology 57 Valuation Valuation Methodology Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach and the income capitalization approach. The cost approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties. The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data. The sales comparison approach is less reliable in an inactive market or when estimating the value of properties for which no directly comparable sales data is available. The sales comparison approach is often relied upon for owner user properties. The income capitalization approach reflects the market s perception of a relationship between a property s potential income and its market value. This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied, as appropriate. This approach is widely used in appraising income producing properties. Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type. The methodology employed in this assignment is summarized as follows: Approaches to Value Approach Applicability to Subject Use in Assignment Cost Approach Applicable Utilized Sales Comparison Approach Applicable Utilized Income Capitalization Approach Applicable Utilized

64 Land Valuation 58 Land Valuation To develop an opinion of the subject s land value, as if vacant and available to be developed to its highest and best use, we utilize the sales comparison approach. Our search for comparable sales focused on transactions within the following parameters: Location: Imperial Beach with a Focus Near the Waterfront Size: All Use: Mixed Use Transaction Date: Generally 2014 to Present For this analysis, we use price per square foot as the appropriate unit of comparison because market participants typically compare sale prices and property values on this basis. We considered using a per unit comparison; however, zoning does not specify a density per acre and the sales data lack information on a density yield. Therefore, in this case we elected to compare the land sales on a per square foot basis. The most relevant sales are summarized in the following table.

65 Land Valuation 59 Summary of Comparable Land Sales No. Name/Address Sale Date; Status Effective Sale Price SF; Acres Zoning $/SF Land Evergreen Ave. Aug 15 $2,400,000 19,627 Seacoast $ Evergreen Ave. Closed 0.45 Imperial Beach San Diego County CA Comments: The buyer declined to confirm the transaction and directed us to the information in public records; The data was collected from Costar and public records. Finished lot condition Seacoast Dr. Nov 14 $5,500,000 35,715 Seacoast $ Seacoast Dr. Closed 0.82 Commercial Imperial Beach San Diego County CA Mixed Use/Residential Comments: Beachfront property; Selling broker indicates no entitlements were a part of this sale; Finished lot condition Ocean Ln. Aug 15 $1,600,000 4,000 Seacoast $ Ocean Ln. Closed 0.09 Imperial Beach San Diego County CA Commercial Mixed Use Commercial Mixed Use/Residential Comments: No entitlements at the time of sale; Rough graded condition. Subject 4,763 Seacoast Lighthouse Point 0.11 Commercial Imperial Beach, CA Mixed Use

66 Land Valuation 60 Comparable Land Sales Map

67 Land Valuation 61 Sale Evergreen Ave. Sale Seacoast Dr. Sale Ocean Ln.

68 Land Valuation 62 Analysis and Adjustment of Sales The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factors Effective Sale Price Real Property Rights Financing Terms Conditions of Sale Market Conditions Location Access/Exposure Size Shape and Topography Zoning Entitlements Accounts for atypical economics of a transaction, such as demolition cost, expenditures by the buyer at time of purchase, or other similar factors. Usually applied directly to sale price on a lump sum basis. Fee simple, leased fee, leasehold, partial interest, etc. Seller financing, or assumption of existing financing, at non market terms. Extraordinary motivation of buyer or seller, assemblage, forced sale, related parties transaction. Changes in the economic environment over time that affect the appreciation and depreciation of real estate. Market or submarket area influences on sale price; surrounding land use influences. Convenience to transportation facilities; ease of site access; visibility from main thoroughfares; traffic counts. Inverse relationship that often exists between parcel size and unit value. Primary physical factors that affect the utility of a site for its highest and best use. Government regulations that affect the types and intensities of uses allowable on a site. The specific level of governmental approvals attained pertaining to development of a site. Market data is very limited from which to empirically extract precise adjustments from paired sales. It should also be noted that commercial real estate similar to the subject does not exchange on a high transaction volume organized market with very precise price points such as a homogeneous commodity. Given that each commercial property is unique, nuanced, and immovable, and given the limitations in the current availability of transaction data, highly precise adjustments in the current analysis are not realistic. Rather, we rely on an adjustment method known as bracketing wherein we identify characteristics among the aggregate of the comparable data set that are superior, similar, and/or inferior to the subject. We apply adjustments to the comparables for superior or inferior characteristics based on approximated inferred market premiums or discounts (as implied and inferred among the aggregate of the comparable data set) for the superior/inferior characteristics.

69 Land Valuation 63 Prior to the adjustment process the comparable data set broadly surrounds the likely market unit value of the subject. After applying adjustments for differences in characteristics (based on inferences of premiums/discounts within the comparable data set) the adjusted comparable data set more narrowly surrounds the likely market unit value of the subject. In the reconciliation process, we identify and emphasize the adjusted comparable data that is most similar to the subject and most strongly supports the most likely market unit value of the subject. Our analysis of the comparable sales is described in the following paragraphs. We are aware that market conditions have improved since the time the land sales have transacted. As a result, we apply a 3% annual adjustment due to improving market conditions. Sale 3 received a downward adjustment due to superior location (beachfront lot). Comparing Sale 3 with Sale 2 suggest a premium is paid for a small beachfront lot. Therefore, based on this data we made a nominal downward adjustment of 25% due to superior location to Sale 3. We considered a similar adjustment for Sale 2; however, a greater portion of this lot is situated away from the beachfront. Therefore, we elected not to make a location adjustment to this sale. Sale 1 received an upward adjustment due to inferior size. Generally speaking, larger lots will yield a lower price per square foot as compared to smaller lots. A portion of our data set appears to reflect a similar pattern. Therefore, an upward adjustment was deemed appropriate due to inferior size. A corresponding adjustment was made to Sale 2. Based on site costs we have extracted from the market, we have segregated out the costs for upgrading a raw site to a rough graded site (approximately $1.50/SF) and upgrading a rough graded site with basic paving only at approximately $1.50/SF. Therefore, we made a downward adjustment of $1.50/SF due to superior site condition to Sales 1 and 2 respectively.

70 Land Valuation 64 The following table summarizes the adjustments we make to each sale. Land Sales Adjustment Grid Subject Comparable 1 Comparable 2 Comparable 3 Name Lighthouse Point Evergreen 1046 Seacoast Dr. 812 Ocean Ln. Ave. Address 951 Seacoast Dr Evergreen 1046 Seacoast Dr. 812 Ocean Ln. Ave. City Imperial Beach Imperial Beach Imperial Beach Imperial Beach County San Diego San Diego San Diego San Diego State California CA CA CA Sale Date Aug 15 Nov 14 Aug 15 Sale Status Closed Closed Closed Sale Price $2,400,000 $5,500,000 $1,600,000 Price Adjustment Description of Adjustment Effective Sale Price $2,400,000 $5,500,000 $1,600,000 Square Feet 4,763 19,627 35,715 4,000 Acres Zoning Description Seacoast Commercial Mixed Use Seacoast Commercial Mixed Use Seacoast Commercial Mixed Use/Residential Seacoast Commercial Mixed Use/Residential Lot Condition Rough Graded Finished Lot Finished Lot Rough Graded Price per Square Foot $ $ $ Property Rights Fee Simple Fee Simple Fee Simple % Adjustment Financing Terms % Adjustment Conditions of Sale % Adjustment Market Conditions 11/5/2015 Aug 15 Nov 14 Aug 15 Annual % Adjustment 3% 1% 3% 1% Cumulative Adjusted Price $ $ $ Location 25% Access/Exposure Size 10% 15% Shape and Topography Zoning Entitlements Lot Condition $ Adjustment $1.50 $1.50 $0.00 Net $ Adjustment $10.85 $22.29 $ Net % Adjustment 9% 14% 25% Final Adjusted Price $ $ $ Overall Adjustment 10% 17% 24% Range of Adjusted Prices Average Indicated Value $ $ $ $200.00

71 Land Valuation 65 Land Value Conclusion Prior to adjustment, the sales reflect a range of $ $ per square foot. After adjustment, the range is narrowed to $ $ per square foot, with an average of $ per square foot. In this case, no one sale appears to be more reliable than another. Therefore, we place approximately equal weight on all the sales. We arrive at a land value conclusion as follows: Land Value Conclusion Indicated Value per Square Foot $ Subject Square Feet 4,763 Indicated Value $952,600 Adjustments Entitlement Cost $430,000 Less Entitlement Costs not Incurred to $30,000 Date 20% Profit on $400,000 Entitlement $80,000 Costs to Date Total Adjustments $480,000 Indicated Value $1,432,600 Rounded $1,430,000

72 Cost Approach 66 Cost Approach The steps taken to apply the cost approach are: Develop an opinion of the value of the land as though vacant and available to be developed to its highest and best use, as of the effective date of the appraisal; Estimate the replacement cost new of the existing improvements using Marshall Valuation Service; Estimate depreciation from all causes and deduct this estimate from replacement cost new to arrive at depreciated replacement cost of the improvements; and Add land value to the depreciated replacement cost of the improvements to arrive at a market value indication for the property overall. Replacement Cost Replacement cost is the current cost to construct improvements with equivalent utility to the subject, using modern materials and current standards, design, and layout. Estimates of replacement cost for the purpose of developing a market value opinion include three components: direct costs, indirect costs (also known as soft costs) and entrepreneurial profit. Direct Costs Direct costs are expenditures for labor, materials, equipment and contractor s overhead and profit. We use Marshall Valuation Service (MVS) as the basis of our direct cost estimate. In addition to direct costs, MVS includes certain indirect costs such as architectural and engineering fees, and interest on building loan funds during construction. MVS high value residences cost estimates are approximately $267.12/SF after multipliers. This cost estimate gives close support to the $ /SF cost estimate provided to us by the owner/developer. We analyzed the developer s cost estimate versus data found in Marshall and Swift. This comparison revealed that the developer s costs were reasonable. Therefore, we relied the owner/developer contractor s cost estimate because the budget was based on the plans and specs of the proposed building. Site development costs from primary data we have collected from the market include engineering, offsite utilities, landscaping, installation of concrete sidewalks and curbs, parking lot paving, sign and fencing. Reviewed site costs for the following locations are as follows: Temecula (existing/blt 2007) $12.31/SF Lancaster (proposed medical office) $10.45/SF Huntington Beach (proposed mixed use) $ 8.78/SF A Proposed bus repair/storage yard in Vista $10.33/SF A newly built car wash in Lakeside (2007) $17.07/SF A Proposed day care in the Torrey Hills area $ 9.58/SF A Proposed boat repair facility on Shelter Island Dr. (2008) $ 7.58/SF A Proposed medical office building in Chula Vista (October 2009) $ 11/SF A Sportfishing Landing at 2838 Garrison St. (December 2009) $ 6.80/SF A new strip retail center in Tehachapi, CA (February 2010) $ 5.36/SF

73 Cost Approach 67 A Proposed Restaurant in Oceanside, CA (March 2010) A renovated boat repair facility on Shelter Island Dr. (March 2010) A Proposed Restaurant in Point Loma, CA (February 2011) A strip retail center (Blt 2010) in Oceanside, CA (February 2011) A Proposed Veterinary Hospital in Wildomar, CA (April 2012) A Proposed Daycare Expansion in Vista, CA (October 2012) A New Medical Office Building in Ramona, CA (March 2013) A Proposed Parking Structure in Los Alamitos, CA (April 2013) A Proposed 7 Eleven Store in City Heights/San Diego, CA (Oct 2015) A Proposed Self Storage Property in San Ysidro, CA (Oct 2015) $12.13/SF $ 8.04/SF $ 9.23/SF $13.64/SF $ 7.50/SF $11.00/SF $14.66/SF $12.00/SF $12.74/SF $ 6.83/SF We note that the owner of the proposed restaurant in Oceanside appraised by us in March 2010 was required by the City to expand the adjacent street. The new medical building constructed in Ramona, CA (2013) was required by the County to expand the adjacent street. Additionally, the daycare facility in Vista was heavily weighted with retaining wall costs. Based on the data we have collected from the market, the owner/developer contractor s site cost estimate of $15.15/SF is within the range of our data set. We note the subject s site improvements most likely include some hard scape walls. Therefore, we have relied on the cost estimate provided to us. We note there are additional costs for a required fire hydrant installation and all subsurface utilities (gas, electric, sewer/water). These costs equate to $65,000 for the fire hydrant and $15.41/SF for all the new subsurface utilities. Indirect Costs MVS does not include all of the indirect costs that are appropriate in a replacement cost estimate. Therefore, we add an allowance for the following indirect costs that are not contained within MVS: taxes and carrying costs on land during construction; legal and accounting fees; and marketing and finance costs prior to stabilization. We estimate that a 30% allowance for additional indirect costs is appropriate. Entrepreneurial Profit The final component of the replacement cost estimate is entrepreneurial profit, the financial reward that a developer would expect to receive in addition to recovering all direct and indirect costs. This is the expected compensation that would be necessary to motivate a developer to undertake the project. It is our estimate that an allowance of 20% of total direct and indirect costs is appropriate. Replacement Cost New The following tables show our replacement cost estimates for the subject building improvements and site improvements.

74 Cost Approach 68 Replacement Cost Estimate Building Improvements Bldg Name MVS Building Type MVS Class Quality Quantity Unit Unit Cost Cost New Lighthouse Point Mixed Use D Good 10,694 SF $ $2,657,031 Subtotal Replacement Cost New $2,657,031 Plus: Indirect Cost 30% $797,109 Subtotal $3,454,141 Plus: Entrepreneurial Profit 20% $690,828 Total Replacement Cost New $4,144,969 Site Improvements Item Quality Quantity Unit Unit Cost Cost New Site Improvements Average 4,763 SF $15.15 $72,159 Required Fire Hydrant Average 1 Unit $65, $65,000 Electrical/Water/Sewer/Gas Service Average 4,763 SF $15.41 $73,398 Subtotal Replacement Cost New $210,557 Plus: Indirect Cost 30% $63,167 Subtotal $273,724 Plus: Entrepreneurial Profit 20% $54,745 Total Replacement Cost New $328,469 Overall Property Building Improvements $2,657,031 Site Improvements $210,557 Subtotal Replacement Cost New $2,867,589 Plus: Indirect Cost 30% $860,277 Subtotal $3,727,865 Plus: Entrepreneurial Profit 20% $745,573 Total Replacement Cost New $4,473,438 Source: Marshall Valuation Service except for Indirect Costs and Entrepreneurial Profit, which are appraiser's estimates. Depreciation Depreciation is the difference between the replacement cost new of the improvements and their contribution to overall property value on the effective date of the appraisal. Deferred Maintenance No items of deferred maintenance are identified; thus, no deductions for this form of depreciation are necessary. Age Life Depreciation After deducting deferred maintenance, if any, we use the age life method to estimate depreciation applicable to the remaining replacement costs. This method indicates the loss in value due to physical deterioration and some functional obsolescence based on the age and condition of the improvements. The age life method is applied on a straight line basis, by dividing the subject s effective age by its economic life. Age life depreciation for the site improvements is estimated separately from the building improvements, based on their shorter economic lives. Functional Obsolescence Functional obsolescence is a loss in value due to changes in market tastes and standards. In the case of the subject, it is not necessary to make a deduction for additional functional obsolescence over and above that accounted for in the age life method.

75 Cost Approach 69 External Obsolescence External obsolescence is a loss in value due to external causes, such as imbalances in supply and demand or negative location influences. A deduction for external obsolescence is not considered necessary for the subject. Final Estimate of Depreciation Our estimate of depreciation and calculation of depreciated replacement cost are shown in the following table. Estimate of Depreciation Building Improvements Replacement Cost New $4,144,969 Less: Deferred Maintenance $0 Remaining Cost $4,144,969 Age Life Depreciation 0.0% $0 Additional Functional Obsolescence 0% $0 External Obsolescence 0% $0 Total Depreciation $0 Depreciated Replacement Cost $4,144,969 Site Improvements Replacement Cost New $328,469 Less: Deferred Maintenance $0 Remaining Cost $328,469 Age Life Depreciation 0.0% $0 Additional Functional Obsolescence 0% $0 External Obsolescence 0% $0 Total Depreciation $0 Depreciated Replacement Cost $328,469 Overall Property Replacement Cost New $4,473,438 Deferred Maintenance $0 Remaining Cost $4,473,438 Age Life Depreciation $0 Additional Functional Obsolescence $0 External Obsolescence $0 Total Depreciation $0 Depreciated Replacement Cost $4,473,438 Rounded: $4,470,000

76 Cost Approach 70 Value Indication By combining our land value conclusion with the depreciated replacement cost of the improvements, we arrive at a value indication by the cost approach as shown in the following table. This value indication reflects the fee simple interest in the property. To estimate market value at completion, we make adjustments to the stabilized value as shown below. Value Indication by Cost Approach Depreciated Replacement Cost $4,470,000 Land Value $1,430,000 Indicated Property Value $5,900,000 Adjustments Cost to Complete Entitlements $30,000 Total Adjustments $30,000 Indicated Value $5,930,000 Rounded $5,930,000

77 Sales Comparison Approach 71 Sales Comparison Approach The sales comparison approach develops an indication of value by comparing the subject to sales of similar properties. The steps taken to apply this approach are: Identify relevant property sales; Research, assemble, and verify pertinent data for the most relevant sales; Analyze the sales for material differences in comparison to the subject; Reconcile the analysis of the sales into a value indication for the subject. We use the sales comparison approach to estimate the individual and aggregate value of the proposed residential condominium units, as of the prospective date of completion, which is anticipated to be January 1, This approach develops an indication of value by researching, verifying, and analyzing sales of similar properties. Our sales research focused on recent transactions of individual condominium units in the Imperial Beach marketplace. However, we found a limited number of sales of comparable oceanfront properties. Therefore, we expanded our search to the similar sub markets of Ocean Beach, Pacific Beach and Oceanside, CA. We also note there are few new projects selling inventory comparable to the subject in size, quality and location/view. In this case, we found the most similar sales in Oceanside, CA. We use re sales of condominium units from shown below: Individual Residential Condominium Sales Sale # Address Date of Sale Price Size (SF) $/SF Parking Br/Ba Year Built Mo. HOA Doc # DOM Seacoast Dr., Unit C, Imperial Beach 9/24/2015 $798,000 1,169 $683 1 Gar 3/ $ Seacoast Dr., Unit 211, Imperial Beach Ocean Lane, Imperial Beach S. The Strand, Unit 204, Oceanside S. The Strand, Unit 102, Oceanside N. Pacific Street, Oceanside 7/7/2015 $830,000 1,371 $605 1 Gar 2/ $ /16/2014 $945,000 1,685 $561 2 Gar 2/ $ /29/2015 $1,800,000 1,813 $993 2 Gar 3/ $ /17/2015 $1,962,500 2,304 $852 2 Gar 3/ $ /28/2015 $1,600,000 2,430 $658 2 Gar 3/ $ We are also aware of the following sale: 634 Ocean Lane, Imperial Beach, CA 1,400 SF; Built ,300 SF Lot Sold June 25, 2015 Price: $1,399,000 or $999.29/SF The agent involved with this transaction stated the buyer was not able completely demolish the existing improvements due to zoning restrictions; however, the buyer intended to completely gut the building for a full renovation. This property is also situated immediately on the beachfront and is located on a low traffic residential street. Due to the extraneous circumstances with this sale, we elected to exclude it from our data set.

78 Sales Comparison Approach 72 Comparable Condominium Sales Map

79 Sales Comparison Approach 73 Comparable Condominium Sales Map

80 Sales Comparison Approach 74 Comparable Condominium Sales Map

81 Sales Comparison Approach 75 Sale Seacoast Dr., Unit C Sale Seacoast Dr., Unit 211 Sale Ocean Lane Sale 4 and S. The Strand, Units 102 and 204, Oceanside Sale N. Pacific St., Oceanside

82 Sales Comparison Approach 76 Discussion of Sales Due to the subjective nature of coastal condominium properties created by dissimilar market response to differences in views, quality and proximity to public bay/beach amenities, we find it difficult to provide a quantitative analysis for the data. We therefore provide a qualitative discussion/analysis of the data. Sale 1 is located at 1660 Seacoast Dr., Unit C, Imperial Beach, CA. This 1,169 SF, 2 story attached condominium sold in September 2015 for $798,000 or $683/SF. This property is inferior to the subject in age/condition, but slightly superior in locational demand since it is located immediately on the beach. The interior also has inferior finishes as compared to the proposed subject s units. Sale 2 is located at 714 Seacoast Dr., Unit 211, Imperial Beach, CA. This 1,371 SF, 2 nd level attached condominium sold in July 2015 for $830,000 or $605/SF. This property is inferior to the subject in age/condition, but slightly superior in locational demand since it is located immediately on the beach. This property also has superior common area amenities (pool). However, the interior has inferior finishes as compared to the proposed subject s units. Sale 3 is located at 696 Ocean Lane, Imperial Beach, CA. This 1,685 SF, attached condominium sold in September 2015 for $945,000 or $561/SF. This property is slightly inferior to the subject in age/condition, but slightly superior in locational demand since it is located immediately on the beach. The interior also has inferior finishes as compared to the proposed subject s units. Comparing Sale 1 to 3 indicates an increase in market conditions for similar properties between September 2014 and September 2015 improved over this 12 month period ($798,000 versus $945,000). Comparing Sale 1 to 3 reflects an 18.42% increase in a 12 month period. Comparing Sale 1 to 2 reflects a 4.01% increase in a 2 month period. Sale 4 is located at 318 S. The Strand, Unit 204, Oceanside, CA. This 1,813 SF, 2 nd level attached condominium sold in May 2015 for $1,800,000 or $993/SF. This property is inferior to the subject in age/condition, but superior in locational demand. The interior also has inferior finishes as compared to the proposed subject s units. Sale 4 is located at 318 S. The Strand, Unit 102, Oceanside, CA. This 2,304 SF, 1 st level attached condominium sold in June 2015 for $1,962,500 or $852/SF. This property is inferior to the subject in age/condition, but superior in locational demand. The interior also has inferior finishes as compared to the proposed subject s units. Sale 6 is located at 807 N. Pacific St., Oceanside, CA. This 2,430 SF, attached condominium sold in May 2015 for $1,600,000 or $658/SF. This is property most likely has superior interior finishes as compared to the subject; however, some of the ocean views are blocked by a building directly across the street from this property.

83 Sales Comparison Approach 77 The appraisers plotted the sales on a $/SF basis and found a weaker correlation between the size of the unit and the price per SF as compared to the age/condition versus the price per SF. This is shown in the following charts. $1,100 Size Vs. $/SF $1,000 $900 $800 $700 Series2 $600 $500 1,169 1,371 1,685 1,813 2,304 2,430 $1,100 Year Built Vs. $/SF $1,000 $900 $800 $700 $/SF $600 $ As expected, older properties typically sell at lower $/SF indicator than newer properties. Although Sales 4, 5 and 6 are located in Oceanside they have the most similar building quality, size and also have ocean/pier views. Sales 1, 2 and 3 are located in close proximity to the subject; however, these data are inferior to the subject in effective age/condition and quality.

84 Sales Comparison Approach 78 The subject units should fall in the upper half of the $/SF range presented by the closed data, given their (new) age/condition, ocean views, grade level parking, elevator accessed to the upper floors, etc. However, the Oceanside, CA sales most likely have an approximate 10% to 15% superior location as compared to the subject. Based on the data available, and considering the various factors impacting value (location, age, condition, quality, density, parking design and view), the current subject estimated individual unit values (if they were constructed as of the date of this appraisal) are estimated $725/SF for units 1 and 3 and $750/SF for the top floor unit or unit 2. Values are estimated in the table: Residential Values Unit No. Plan Br/Ba Size (SF) $/SF Current Value Rounded 1 2/2 2,343 $725 $1,698,675 $1,700, /2 2,328 $750 $1,746,000 $1,750, /2 2,098 $725 $1,521,050 $1,520,000 Current Aggregate Pricing Estimate $4,970,000 Also, the above unit pricing estimate is based on the current marketplace. Following the recession, the Imperial Beach residential marketplace has continued to improve with annual appreciation rates ranging from 3% to 20% annually. Barring any major changes in the economy or market, we anticipate that annual appreciation will continue over the next months. The client has requested that we project a trended aggregate retail value for the subject units, as of the anticipated date of completion, which is circa January 1, Based on historical average appreciation over the past three years, and considering the lack of new supply, we trend the aggregate value (including upgrade/option premiums) up 6% per year to account for anticipated appreciation. The prospective trended total aggregate retail value, as of the anticipated date of completion (January 1, 2017), is estimated below: Price Appreciation Current Aggregate Pricing Estimate $4,970,000 Trended Upward by 6.0% $5,268,200 Rounded $5,270,000 Average Trended Unit Value $1,756,667 Rounded $1,760,000 Average Trended $/SF Value $780.03

85 Sales Comparison Approach Commercial Condominium Units 79 Sales Comparison Approach Commercial Condominium Units The proposed subject development will include 2,035 SF of ground floor commercial condominium space, which can be demised into two units. These units can either be sold to individual buyers, or held by the developer and leased out to typical retail or commercial tenants. In this section, we use the sales comparison approach to estimate the individual retail value of the proposed two commercial condominium units. We note there are a very limited number of recent retail sales in Imperial Beach, CA. Therefore, we expanded our search geographically to similar coastal communities that have similar obtainable rents. We also found a very limited number of comparable commercial condominium sales in these similar submarkets. Therefore, we include some stand alone retail sales that have a high FAR ratio. In this case, the sales data is very weak and comparing these sales with the subject would require large and subjective adjustments which would render inconclusive results. The data is purely given for the reader s reference. The sales are summarized in the table below:

86 Sales Comparison Approach Commercial Condominium Units 80 Summary of Comparable Improved Sales Sale Date; Status Yr. Built; # Stories; % Occ. Prop Rights SF Effective Sale Price $/SF Cap Rate No. Name/Address Niagara Ave. Sep $500, % 4796 Niagara Ave. Closed 1 1,124 $ San Diego 100% Leased Fee San Diego County CA Comments: Investment purchase of an office/retail building that includes a nail salon and insurance office suite. The property also has a billboard that generates income at $350/Mo. Applying a 'ground lease' type cap rate to the billboard income yields approximately $90,000. Therefore, the effective purchase price excluding the billboard is approximately $500,000. The cap rate is estimated based on the effective price and gross income provided by the listing agent and an estimated vacancy rate of 5% and expense ratio of 25% Voltaire St. Oct $560, Voltaire St. Closed 1 1,024 $ San Diego 100% Fee Simple San Diego County CA Comments: Owner user purchase; No business goodwill and/or FF&E was a part of the sale; The property appears to be under renovation since the close of escrow (unknown cost) Girard Ave. May $550, % 7514 Girard Avenue, Suite 7 Closed $ La Jolla 100% Leased Fee San Diego County CA Comments: Sale of a ground floor retail condominium in La Jolla (corner of Pearl Street & Girard Avenue) in a larger, 27,054 SF mixeduse property. The unit includes 3 subterranean garage spaces. The unit is an interior unit with no street exposure. The unit was leased at the time of sale. The broker reported a 4.5% cap rate Seacoast Dr., Unit 8 Oct $1,025, Seacoast Dr. Closed 2 3,056 $ Imperial Beach 100% Fee Simple San Diego County CA Comments: No brokers were involved with this sale; The data was collected from Costar; This property has approximately 1,000 SF of ground level commercial space and the remaining upper level space is residential (Live/Work condominium unit) Seacoast Dr., Unit 6 Oct $812, Seacoast Dr. Closed 2 2,934 $ Imperial Beach 100% Fee Simple San Diego County CA Comments: This property has approximately 1,000 SF of ground level commercial space with the remaining space being upper level residential (Live/Work condominium unit). Subject 2017 Lighthouse Point Three 1,018 Imperial Beach, CA Fee Simple Average Size

87 Sales Comparison Approach Commercial Condominium Units 81 Comparable Improved Sales Map

88 Sales Comparison Approach Commercial Condominium Units 82 Sale Niagara Ave. Sale Voltaire St. Sale Girard Ave. Sale Seacoast Dr., Unit 8 Sale Seacoast Dr., Unit 6

89 Sales Comparison Approach Commercial Condominium Units 83 Discussion of Improved Sales Sales 4 and 5 are located in close proximity to the subject; however, these sales are live/work condominiums. They are purely given for the reader s reference; however, they suggest the subject s commercial condominiums should sell for a higher dollar amount /SF. Sales 1 and 2 are inferior in age/condition and proximity to the beach; however, they are located in areas that have superior pedestrian traffic. Overall, theses sales suggest the subject s commercial condominiums should sell for a higher dollar amount /SF. Sale 3 has a superior location and is located on a high traffic corner; however, it is located several blocks away from the oceanfront. These factors may offset each other. As a check of reasonableness, we discussed the potential to lease the subject commercial units rather than offer them for sale with local leasing brokers such as Tommy Gibbs with Cushman and Wakefield/DTZ ( ). Mr. Gibbs opinion is the retail lease for the subject could range from $30.00/SF/Yr absolute net to $33.00/SF/Yr absolute net depending on age, TIA, parking, exposure and proximity to the beach. We note the subject s submarket has a very limited number of recent retail lease comparables. In this case, we are not aware of any recent leases near the waterfront/beach. We are aware of a new grocery store anchored retail center on Palm Ave. that is represented by Matt Moser with Retail Insights ( ). We left and voice mail messages with Mr. Moser if he could share some leasing data from the center. Mr. Moser declined to reply to our messages. Thus, we include the following lease comparables located in the most similar submarkets in San Diego County.

90 Sales Comparison Approach Commercial Condominium Units 84 Summary of Comparable Rentals Commercial No. Property Information Tenant SF Lease Start Term (Mos.) Rent/SF Lease Type 1 Coronado Village MCS Cellular 1,000 Oct $26.40 Absolute Net 2909 Coronado Ave San Diego San Diego County CA Comments: 3% annual increases Newport Ave. Tattoo Shop 2,500 Jan $24.60 Absolute Net Newport Ave. San Diego San Diego County CA Comments: 3% annual increases; Existing jewelry store to vacate in the near future; New incoming tenant is taking the space as is with no tenant improvement allowance and/or free rent Voltaire St. Coffee Bean & Tea Leaf 2,128 Sep $36.00 Absolute Net 4195 Voltaire St. San Diego San Diego County CA Comments: 10% mid term increase; $25/SF tenant improvement allowance Rosecrans Street Citrali Pho Bar & Grill 2,881 Apr $33.60 Absolute Net 1005 Rosecrans Street San Diego San Diego County CA Comments: 10 year absolute net lease of restaurant space with exposure to Rosecrans Street, annual CPI escalation. No TI allowance as the space was previously built out as a restaurant.

91 Sales Comparison Approach Commercial Condominium Units 85 Comparable Rentals Map

92 Sales Comparison Approach Commercial Condominium Units 86 Lease Coronado Ave. Lease Newport Ave. Lease Voltaire St. Lease Rosecrans St.

93 Sales Comparison Approach Commercial Condominium Units 87 Lease 3 has the most similar age/condition as compared to the subject. However, this property is located in a superior community. This is most likely offset by the inferior distance to the waterfront/beach. We also consider this lease had a $25/SF TIA. Lease 1 is located in an anchored shopping center; however, it is located in an inferior community and it located away from the beachfront. Thus, we would expect the subject s commercial space market rent to be greater than this data point. Lease 2 has inferior age/condition. Lease 3 also has inferior age/condition; however, it is located in a superior community as compared to the subject. Based on the data presented, we use a market rent of $33.00/SF/Yr absolute net. We note coastal California properties routinely yield capitalization rates in the current market that are sub 6%. We also note that exclusive coastal communities are currently yielding capitalization rates in the 4% range. For example, the property for Lease 3 is currently listed at a 4% cap rate. However, the subject s community is not considered an exclusive coastal community. Based on this data we will use a 5.0% cap rate for the subject s commercial space. Using a market rent of $33.00/SF/year, absolute net, and typical vacancy and expenses, we provide a rough estimate of value for the subject s retail component on an income basis in the following table: Direct Capitalization Analysis Annual $/SF INCOME Rental Income $67,155 $33.00 Expense Reimbursements $21,618 $10.62 Potential Gross Income $88,773 $43.62 Vacancy & Collection Loss 2.00% $1,775 $0.87 Effective Gross Income $86,998 $42.75 EXPENSES Real Estate Taxes $14,208 $6.98 Association Dues $4,800 $2.36 Management 3.00% $2,610 $1.28 Total Expenses $21,618 $10.62 NET OPERATING INCOME $65,380 $32.13 Capitalization Rate 5.00% Stabilized Value Indication $1,307,591 $ At Completion Stabilized Value Indication $1,307,591 $ Lease Up Costs $40,000 $19.66 Indicated Value At Completion $1,267,591 $ Rounded $1,270,000 $624.08

94 Sales Comparison Approach Commercial Condominium Units 88 This appears to be reasonably supported by the sales data. We deducted $10/SF TIA from the stabilized value to account for warm shell condition. Additionally, we deduct leasing commissions (5% based on 5 year leases) to estimate the value upon completion in bulk of the retail component. Since the construction period is approximately 12 months, the subject will have adequate time to for the space to be marketed. We anticipate the retail component will be fully pre leased at time of completion. Thus, no rent loss is included. The value of the proposed subject commercial units on an income basis is a stabilized value. Lease Up Costs Assumptions Tenant SF/Units Months Vacant Annual Rent/SF/Unit Expense Recovery/ SF/Unit Lease Term (Mos.) TI's/SF LC % TI's LC Total Vacant 908 $33.00 $ $ % $9,080 $7,491 $16,571 Vacant 1,127 $33.00 $ $ % $11,270 $9,298 $20,568 Totals $20,350 $16,789 $37,139 Profit for Lease up Risk 10% $3,714 Grand Total $40,853 Rounded $40,000 The estimated commercial space value, if trended by 6% per year, is approximately $1,270,000 X 1.06 = $1,346,200 or $1,350,000 rounded. The combined trended unit values for both the residential and commercial components of the subject are shown below: Prospective Sum Retail Sale Proceeds, 3 Residential Condominium Units Prospective Sum Retail Sale Proceeds, 2 Ground Level Retail Condominiums Prospective Sum Proceeds, Total Project (January 1, 2017) $ $ $ 5,270,000 1,350,000 6,620,000

95 Reconciliation and Conclusion of Value 89 Reconciliation and Conclusion of Value The values indicated by our analyses are as follows: Summary of Value Indications Prospective Sum Proceeds at Market Value at Total Project Market Value As Is Completion Cost Approach Not Used $5,930,000 Sales Comparison Approach $1,430,000 $6,620,000 Reconciled $1,430,000 $6,620,000 As discussed previously, we use the sales comparison approach in estimating an opinion of value of the subject as is land value and the value of the proposed residential and commercial units. The income capitalization approach is not useful as the proposed residential and commercial units (and current land) are not anticipated to generate rental income; and renting the residential proposed units would not represent the highest and best use of the property. The prospective aggregate residential condominiums and commercial units value estimates, as of the anticipated date of completion (January 1, 2017) are summarized below: Prospective Sum Retail Sale Proceeds, 3 Residential Condominium Units Prospective Sum Retail Sale Proceeds, 2 Ground Level Retail Condominiums Prospective Sum Proceeds, Total Project (January 1, 2017) $ $ $ 5,270,000 1,350,000 6,620,000 Based on the preceding valuation analysis and subject to the definitions, assumptions, and limiting conditions expressed in the report, our value opinion follows: Value Conclusions Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value As Is Fee Simple November 5, 2015 $1,430,000 Prospective Sum Proceeds at Market Value at Total Project Completion Fee Simple January 1, 2017 $6,620,000

96 Reconciliation and Conclusion of Value 90 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. We have been requested to estimate the prospective individual retail values of the proposed 3 residential condomium and 2 ground level commercial condominium unit, as of the estimated date of completion, which is 1/1/2017. These value estimates are made under the extraordinary assumption that the project is completed according to the plans, specifications, timing and costs provided by the developer. The values also assume continued market appreciation up to the prospective date of project completion; and no major change in economic conditions, supply and demand, interest rates, costs, etc., during the construction period. 2. According to the developer, the City will not allow a condominium map to be recorded until after the proposed project is complete. Therefore, we assume that a condominium map will be recorded for each respective units once the project is complete. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. None. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and subject to considerable risk and uncertainty. Events may occur that could cause the performance of the property to differ materially from our estimates, such as changes in the economy, interest rates, capitalization rates, financial strength of tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based partly on data obtained from interviews and third party sources, which are not always completely reliable. Although we are of the opinion that our findings are reasonable based on available evidence, we are not responsible for the effects of future occurrences that cannot be reasonably foreseen at this time. Exposure Time Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Based on the concluded market values stated previously, it is our opinion that the probable exposure time is 2 6 months. Marketing Period Marketing time is an estimate of the amount of time it might take to sell a property at the concluded market value immediately following the effective date of value. We estimate the subject s marketing period at 2 6 months. The exposure and marketing time estimates are reflective of the as is site only. Projected absorption of the proposed residential and commercial units is detailed previously in the appraisal.

97 Certification 91 Certification We certify that, to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. 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. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three year period immediately preceding acceptance of this assignment. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. 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. 8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 10. David Burningham, MAI made a personal inspection of the property that is the subject of this report. 11. Jeff Greenwald, MAI, SRA, AI GRS, ASA, FRICS and John Morgan, MAI have not personally inspected the subject. 12. No one provided significant real property appraisal assistance to the person(s) signing this certification. 13. We have the appropriate knowledge and experience in to complete this assignment competently in accordance with the competency provision as required by the Competency Rule of USPAP. Appraiser qualifications are located in the addenda of this report. 14. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

98 Certification Jeff Greenwald has successfully met the requirements for the title "Certified General Appraiser" delegated by the Office of Real Estate Appraisers, valid until October 12, 2017, OREA identification number AG David Burningham has successfully met the requirements for the title "Certified General Appraiser" delegated by the Office of Real Estate Appraisers, valid until February 8, 2017, OREA identification number AG John A. Morgan has successfully met the requirements for title "Certified General Appraiser" delegated by the Office of Real Estate Appraisers, valid until June 9, 2016, OREA identification number AG As of the date of this report, Jeff Greenwald, John Morgan and David Burningham have completed the requirements of the continuing education program for Designated Members of the Appraisal Institute. Jeff A. Greenwald, MAI, SRA, AI GRS, ASA, FRICS David Burningham, MAI Senior Managing Director / Principal Certified General Real Estate Appraiser Certified General Real Estate Appraiser CA Certificate #AG036349, Exp: 02/08/17 CA Certificate #AG025255, Exp: 10/12/17 E mail: dburningham@irr.com E mail: jgreenwald@irr.com John A. Morgan, MAI Managing Director/Review Appraiser Certified General Real Estate Appraiser CA Certificate #AG007753; Exp jmorgan@irr.com

99 Assumptions and Limiting Conditions 93 Assumptions and Limiting Conditions This appraisal and any other work product related to this engagement are limited by the following standard assumptions, except as otherwise noted in the report: 1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use. 2. There are no existing judgments or pending or threatened litigation that could affect the value of the property. 3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property. 4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction. 5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes. 6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. This appraisal and any other work product related to this engagement are subject to the following limiting conditions, except as otherwise noted in the report: 1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised. 2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events. 3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated. 4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies. 5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment. 6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal

100 Assumptions and Limiting Conditions 94 covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct. 7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal. 8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability; and civil, mechanical, electrical, structural and other engineering and environmental matters. Such considerations may also include determinations of compliance with zoning and other federal, state, and local laws, regulations and codes. 9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal report shall be utilized separately or out of context. 10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the persons signing the report. 11. Information, estimates and opinions contained in the report and obtained from third party sources are assumed to be reliable and have not been independently verified. 12. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results. 13. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate. 14. Unless otherwise stated in the report, no consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered. 15. The current purchasing power of the dollar is the basis for the values stated in the appraisal; we have assumed that no extreme fluctuations in economic cycles will occur. 16. The values found herein are subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions. 17. The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic

101 Assumptions and Limiting Conditions 95 conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material. 18. The Americans with Disabilities Act (ADA) became effective January 26, We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject with ADA regulations. Inasmuch as compliance matches each owner s financial ability with the cost to cure the nonconforming physical characteristics of a property, a specific study of both the owner s financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance. 19. The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk. 20. No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property. Integra Realty Resources San Diego, Integra Realty Resources, Inc., Integra Strategic Ventures, Inc. and/or any of their respective officers, owners, managers, directors, agents, subcontractors or employees (the Integra Parties ), shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property. 21. The persons signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. We are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are nonexistent or minimal. 22. Integra Realty Resources San Diego is not a building or environmental inspector. Integra San Diego does not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended. 23. The appraisal report and value conclusions for an appraisal assume the satisfactory completion of construction, repairs or alterations in a workmanlike manner. 24. It is expressly acknowledged that in any action which may be brought against any of the Integra Parties, arising out of, relating to, or in any way pertaining to this engagement, the

102 Assumptions and Limiting Conditions 96 appraisal reports, and/or any other related work product, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with intentional misconduct. It is further acknowledged that the collective liability of the Integra Parties in any such action shall not exceed the fees paid for the preparation of the appraisal report unless the appraisal was fraudulent or prepared with intentional misconduct. Finally, it is acknowledged that the fees charged herein are in reliance upon the foregoing limitations of liability. 25. Integra Realty Resources San Diego, an independently owned and operated company, has prepared the appraisal for the specific intended use stated elsewhere in the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided. Accordingly, the appraisal report is addressed to and shall be solely for the Client s use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report or any other work product related to the engagement (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable). 26. The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. The Integra Parties are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property. 27. All prospective value opinions presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future.

103 Addenda Addendum A Appraiser Qualifications

104 Jeff A. Greenwald, MAI, SRA, AI GRS, ASA, FRICS Experience Jeff Greenwald, MAI, SRA, AI GRS, ASA, FRICS is the founding stockholder, Senior Managing Director and principal in the San Diego office of Integra Realty Resources. Jeff began his real estate career in He has been an independent fee appraiser since 1991 providing appraisal, consultation and litigation services to as a Senior Associate Appraiser of the Limbach Company and President of his own company, JAG Enterprises. He previously owned and operated a real estate development company, providing extensive experience in development, financing, construction, and leasing. Integra Realty Resources San Diego 5330 Carroll Canyon Road Suite 100 San Diego, CA T F irr.com Jeff s real estate development career spanned six years and his company, Winer Greenwald Development, Inc. completed the development of 17 office, retail, apartment and automotive projects with a combined value of over $100 million. His leasing and sales career included six years at John Burnham & Company and two years at Business Real Estate Brokerage where, combined, he completed over 1,700 lease transactions. Jeff is a Certified General Appraiser in five western states and also holds a California Real Estate Broker s license. Professional Activities & Affiliations Appraisal Institute, Member (MAI) Appraisal Institute, August 2005 Appraisal Institute, Senior Residential Appraiser (SRA) Appraisal Institute, November 2009 Other: Appraisal Institute, General Review Specialist (AI GRS), May 2015 American Society of Appraisers (ASA) Accredited Senior Appraiser, October 2014 Royal Institute of Chartered Surveyors, Fellow (FRICS), December 2007 Member: San Diego Association of Realtors, January 2006 Member: California Association of Realtors, January 2006 Member: National Association of Realtors, January 2006 Licenses California, Certified General Real Estate Appraiser, AG025255, Expires October 2017 Washington, Certified General Real Estate Appraiser, , Expires October 2016 Oregon, Certified General Real Estate Appraiser, C000883, Expires October 2016 Arizona, Certified General Real Estate, 31748, Expires September 2017 Texas, Certified General Real Estate Appraiser, , Expires October 2016 California, Real Estate Broker, Education Real Estate / Appraisal Courses Completed Real Estate Principles Real Estate Practice Fundamentals of Appraisal Property Management Real Estate Finance Legal Aspects of Real Estate Income Capitalization 310 Appraisal Institute Appraisal Principles 110 Appraisal Institute Appraisal Procedures 120 Appraisal Institute Appraisal General Applications 320 Appraisal Institute jgreenwald@irr.com x302

105 Jeff A. Greenwald, MAI, SRA, AI GRS, ASA, FRICS Education (Cont'd) Standards of Professional Practice 410 Appraisal Institute Standards of Professional Practice 420 Appraisal Institute Standards of Professional Practice 430 Appraisal Institute Advanced Income Capitalization 510 Appraisal Institute Highest and Best Use 520 Appraisal Institute Advanced Sales Comparison/Cost Approach 530 Appraisal Institute Advanced Applications 540 Appraisal Institute Advanced Report Writing 550 Appraisal Institute Litigation Appraising: Specialized Topics and Applications 705 GRE Condemnation Appraising: Principles and Applications 715 GRE The Appraiser as an Expert Witness 700 GRE Appraisal Curriculum Overview General 430 BDM Fundamentals of Separating Real and Personal Property from Intangible Business Assets AI 833 Review Theory General Integra Realty Resources San Diego 5330 Carroll Canyon Road Suite 100 San Diego, CA T F irr.com Recent Seminars / Continuing Education 2007 Economic Forecast (02/07) Internet Search Strategies (03/07) Small Hotel Valuation (04/07) Analyzing Distressed Real Estate (08/07) Appraising Convenience Stores (08/07) Appraisal Review General (11/07) San Diego Economic Forecast (02/08) Uniform Appraisal Standards for Federal Land Acquisitions (05/08) Litigation Appraising: Specialized Topics and Applications (10/08) Hypothetical Conditions and Extraordinary Assumptions (11/08) 7 Hour USPAP Update (01/ Economic Forecast (02/09) Business Practices and Ethics (04/09) Valuation of Green Buildings (04/09) 7 Hour USPAP Update (07/09) Condemnation Appraising: Principles and Applications (09/09) Litigation Appraising and Expert Witness Strategies (10/09) Self Storage Seminar (01/10) 2010 USPAP Update (01/10) Hotel Valuations: New Techniques, Appraisal Institute (02/10) Business Practices and Ethics (10/10) 7 Hour USPAP Update (11/10) 2011 San Diego Economic Update (02/11) Supporting Capitalization Rates (05/11) 7 Hour USPAP Update (06/11) Southern California Investment Sales Updated (06/11) San Diego Industrial Market Updated (07/11) San Diego Office Leasing Updated and Outlook (08/11) San Diego County Housing Market Update (09/11) Self Storage: Emerging Core Asset (10/11) 2012 San Diego Economic Update (02/12) jgreenwald@irr.com x302

106 Jeff A. Greenwald, MAI, SRA, AI GRS, ASA, FRICS Education (Cont'd) 4 Hour Federal and California Statutory and Regulatory Laws (11/12) 7 Hour USPAP Update (3/13) Liability Issues for Appraisers Performing Litigation and Other Non Lending Work (05/13) Loss Prevention Seminar for Real Estate Appraisers (05/13) Business Practices and Ethics (08/13) Online Cool Tools: New Technology for Real Estate Appraisers (10/14) Allocating Components in Going Concern Appraisals RP401 ASA (10/14) 7 Hour USPAP Update (3/15) Laws & Regulations for California Appraisers (3/15) Integra Realty Resources San Diego 5330 Carroll Canyon Road Suite 100 San Diego, CA T F irr.com BACHELOR OF ARTS: INDIANA UNIVERSITY, 1976 Qualified Before Courts & Administrative Bodies Qualified Expert Witness, U.S. Bankruptcy Court, San Diego Grievance Committee, Appraisal Institute 2010 San Diego Association of Realtors California Association of Realtors National Association of Realtors jgreenwald@irr.com x302

107 Mr. David P. Burningham, MAI Experience Senior Analyst Actively engaged in real estate valuation and consulting since mid Background includes nine years in corporate accounting and finance with Ford Investor Services, Coca Cola Enterprises and BAE Systems. Mr. Burningham was a controller with Coca Cola Enterprises over San Diego, Orange and Imperial Counties. Annual sales were approximately $300M. With BAE Systems, Mr. Burningham was involved with managing approximately $145M in indirect overhead expenses for a North American sector. Recent experience is concentrated in major urban and suburban developments. Valuations have been performed on various properties including, but not limited to, strip and neighborhood shopping centers, single and multi tenanted industrial buildings, low to mid rise office buildings, mixed use facilities, and vacant land for different uses. David specializes in the real estate appraisal of a number of special purpose properties, including but not limited to Port Authority properties, boat repair facilities, downtown city blocks (land), high density land and Skilled Nursing Facilities, car washes, airplane hangars, mobile home parks and self storage facilities together with a wide array of medical office properties. Integra Realty Resources San Diego 5330 Carroll Canyon Road Suite 100 San Diego, CA T F irr.com Clients served include accountants, investment firms, law firms, and lenders, private and public agencies. Valuations have been performed for condemnations purposes, estates, financing, and equity participation and due diligence support. Valuations and market studies have been performed on proposed, partially completed, renovated and existing structures. Professional Activities & Affiliations Member: Appraisal Institute, January 2012 Licenses California, Certified General, AG036349, Expires February 2017 Education Master of Business Administration CALIFORNIA STATE UNIVERSITY SAN MARCOS, San Marcos, CA December 1997 Bachelor of Science BRIGHAM YOUNG UNIVERSITY, Provo, UT August 1994 Major: Business Management, Emphasis: Finance Minor: Statistics Miscellaneous Eagle Scout dburningham@irr.com x309

108 John Morgan, MAI Experience John Morgan joined Integra Realty Resources San Diego as a Director/Senior Analyst in February John has been an independent fee appraiser in the San Diego area since 1983 and has been a State Certified General Appraiser in California since the inception of State certification in John was recently promoted to Managing Director. Prior to joining Integra Realty Resources San Diego, John was the President of Morgan Appraisal & Consulting from 1992 to 2005, where he completed over 750 commercial appraisals. From.1983 through 1991, John served as staff appraiser for the Lawrence Group, The Limbach Company and Dore & Curry Appraisal Firms. Integra Realty Resources San Diego 5330 Carroll Canyon Road Suite 100 San Diego, CA T F irr.com John has extensive experience in appraising office, retail and Industrial properties, but specializes in residential subdivisions and condominium developments, residential and commercial condominium conversion projects, master planned communities, high rise office/retail and residential developments, together with residential and rural land projects. Professional Activities & Affiliations Appraisal Institute, Associate Member Appraisal Institute, January 1983 Licenses California, Certified General, AG , Expires June 2016 Education BACHELOR OF ARTS POINT LOMA COLLEGE, 1982 Additional Courses/Seminars Course 101 SREA, San Diego State University, Course 102 SREA San Diego State University, Course 201 SREA University of San Diego, Course 202 SREA. University of San Diego, Residential Income Property Analysis: 1984 Subdivision Appraisal Analysis: 1984 SREA Demonstration Report Seminar SREA R41b Seminar: 1986 SREA R41c Seminar: 1987 AI Apartment Seminar: 1993 AI Subdivision Seminar: 1993 CA OREA Federal/State Laws Workshop: : USPAP, Part A: : USPAP, Part B: K HUD Appraisals: 1996 Appraisal Properties with Cracked Slabs: 1996 Environmental Considerations for the Appraiser: 1998 Regression Analysis: 1998 Introduction to Review Appraisal: USPAP Update: 1998 Federal & State Laws & Regulations: 1998 Limited Appraisal Reports: 1998 jmorgan@irr.com x315

109 John Morgan, MAI Education (Cont'd) Appraisal Review: 1998 Income Capitalization: National USPAP Update: National USPAP Update: 2003 Real Estate Damages: Assessment & Testimony, 2003 Legal Issues for Appraisers: 2003 Federal & State Laws & Regulations: 2003 Appraiser Liability: National USPAP Update: 2004 Appraising the Oddball Property: 2004 Construction Issues for Appraisers: National USPAP Update: 2006 National USPAP Update: 2008 Cost Approach: 2008 Technology for Appraisers: 2008 Fair Housing: 2008 Environmental Pollution & Mold: 2008 CA OREA Update: 2008 Appraisal Trends: 2008 Income Capitalization: 2008 Condemnation Appraising, Principles & Applications: Hour USPAP Update, Hour USPAP Update, 2012 Industrial Flex Building for Mortgage Underwriting, 2012 Appraising Apartments, 2012 Land & Site Valuation, 2012 Mortgage Fraud & Protection, Hour USPAP Class (12/13) IRR Certified Reviewer (12/13) AI Business Practices & Ethics, 2014 AI Appraisal Institute Advanced Income & Capitalization, 2014 AI appraisal Institute Advanced Concepts & Case Studies, 2014 AI General Demonstration Report & Writing, 2014 AI General Report Writing & Case Studies, 2014 Integra Realty Resources San Diego 5330 Carroll Canyon Road Suite 100 San Diego, CA T F irr.com jmorgan@irr.com x315

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113 Integra Realty Resources, Inc. Corporate Profile Integra Realty Resources, Inc. offers the most comprehensive property valuation and counseling coverage in the United States with 61 independently owned and operated offices in 34 states and the Caribbean. Integra was created for the purpose of combining the intimate knowledge of well established local firms with the powerful resources and capabilities of a national company. Integra offers integrated technology, national data and information systems, as well as standardized valuation models and report formats for ease of client review and analysis. Integra s local offices have an average of 25 years of service in the local market, and virtually all are headed by a Senior Managing Director who is an MAI member of the Appraisal Institute. A listing of IRR s local offices and their Senior Managing Directors follows: ATLANTA, GA Sherry L. Watkins., MAI, FRICS AUSTIN, TX Randy A. Williams, MAI, SR/WA, FRICS BALTIMORE, MD G. Edward Kerr, MAI, MRICS BIRMINGHAM, AL Rusty Rich, MAI, MRICS BOISE, ID Bradford T. Knipe, MAI, ARA, CCIM, CRE, FRICS BOSTON, MA David L. Cary, Jr., MAI, MRICS CHARLESTON, SC Cleveland Bud Wright, Jr., MAI CHARLOTTE, NC Fitzhugh L. Stout, MAI, CRE, FRICS CHICAGO, IL Eric L. Enloe, MAI, FRICS CINCINNATI, OH Gary S. Wright, MAI, FRICS, SRA CLEVELAND, OH Douglas P. Sloan, MAI COLUMBIA, SC Michael B. Dodds, MAI, CCIM COLUMBUS, OH Bruce A. Daubner, MAI, FRICS DALLAS, TX Mark R. Lamb, MAI, CPA, FRICS DAYTON, OH Gary S. Wright, MAI, FRICS, SRA DENVER, CO Brad A. Weiman, MAI, FRICS DETROIT, MI Anthony Sanna, MAI, CRE, FRICS FORT WORTH, TX Gregory B. Cook, SR/WA GREENSBORO, NC Nancy Tritt, MAI, SRA, FRICS GREENVILLE, SC Michael B. Dodds, MAI, CCIM HARTFORD, CT Mark F. Bates, MAI, CRE, FRICS HOUSTON, TX David R. Dominy, MAI, CRE, FRICS INDIANAPOLIS, IN Michael C. Lady, MAI, SRA, CCIM, FRICS JACKSON, MS J. Walter Allen, MAI, FRICS JACKSONVILLE, FL Robert Crenshaw, MAI, FRICS KANSAS CITY, MO/KS Kenneth Jaggers, MAI, FRICS LAS VEGAS, NV Charles E. Jack IV, MAI LOS ANGELES, CA John G. Ellis, MAI, CRE, FRICS LOS ANGELES, CA Matthew J. Swanson, MAI LOUISVILLE, KY Stacey Nicholas, MAI, MRICS MEMPHIS, TN J. Walter Allen, MAI, FRICS MIAMI/PALM BEACH, FL Anthony M. Graziano, MAI, CRE, FRICS MINNEAPOLIS, MN Michael F. Amundson, MAI, CCIM, FRICS NAPLES, FL Carlton J. Lloyd, MAI, FRICS NASHVILLE, TN R. Paul Perutelli, MAI, SRA, FRICS NEW JERSEY COASTAL Halvor J. Egeland, MAI NEW JERSEY NORTHERN Matthew S. Krauser, CRE, FRICS NEW YORK, NY Raymond T. Cirz, MAI, CRE, FRICS ORANGE COUNTY, CA Larry D. Webb, MAI, FRICS ORLANDO, FL Christopher Starkey, MAI, MRICS PHILADELPHIA, PA Joseph D. Pasquarella, MAI, CRE, FRICS PHOENIX, AZ Walter Tres Winius III, MAI, FRICS PITTSBURGH, PA Paul D. Griffith, MAI, CRE, FRICS PORTLAND, OR Brian A. Glanville, MAI, CRE, FRICS PROVIDENCE, RI Gerard H. McDonough, MAI, FRICS RALEIGH, NC Chris R. Morris, MAI, FRICS RICHMOND, VA Kenneth L. Brown, MAI, CCIM, FRICS SACRAMENTO, CA Scott Beebe, MAI, FRICS ST. LOUIS, MO P. Ryan McDonald, MAI, FRICS SALT LAKE CITY, UT Darrin W. Liddell, MAI, CCIM, FRICS SAN DIEGO, CA Jeff A. Greenwald, MAI, SRA, FRICS SAN FRANCISCO, CA Jan Kleczewski, MAI, FRICS SARASOTA, FL Carlton J. Lloyd, MAI, FRICS SAVANNAH, GA J. Carl Schultz, Jr., MAI, FRICS, CRE, SRA SEATTLE, WA Allen N. Safer, MAI, MRICS SYRACUSE, NY William J. Kimball, MAI, FRICS TAMPA, FL Bradford L. Johnson, MAI, MRICS TULSA, OK Owen S. Ard, MAI WASHINGTON, DC Patrick C. Kerr, MAI, SRA, FRICS WILMINGTON, DE Douglas L. Nickel, MAI, FRICS CARIBBEAN/CAYMAN ISLANDS James Andrews, MAI, FRICS Corporate Office Eleven Times Square, 640 Eighth Avenue, 15th Floor, Suite A, New York, New York Telephone: (212) ; Fax: (646) ; E mail info@irr.com Website:

114 Addenda Addendum B Financials and Property Information

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121 Addenda Addendum C Comparable Data

122 Addenda Land Sale Comparables

123 Land Sale Profile Sale No. 1 Location & Property Identification Property Name: Sub Property Type: Address: City/State/Zip: County: Submarket: Market Orientation: Evergreen Ave. Commercial, Other Evergreen Ave. Imperial Beach, CA San Diego South San Diego Suburban IRR Event ID: Sale Information Sale Price: $2,400,000 Eff. R.E. Sale Price: $2,400,000 Sale Date: 08/12/2015 Sale Status: Closed $/Acre(Gross): $5,326,232 $/Land SF(Gross): $ $/Acre(Usable): $5,326,232 $/Land SF(Usable): $ Grantor/Seller: Howard Land Development, LLC Grantee/Buyer: Citymark Seacoast, LLC Property Rights: Fee Simple Occupancy at Time of Sale: Terms of Sale: Cash Document Type: Deed Recording No.: Verified By: Mr. David P. Burningham, MAI Verification Source: Verification Type: Costar/Public records Secondary Verification Land SF(Usable/Gross): 19,627/19,627 Usable/Gross Ratio: 1.00 Shape: Rectangular Topography: Level Corner Lot: Yes Frontage Feet: 150 Zoning Code: C/MU 2 Zoning Desc.: Seacoast Commercial Mixed Use Easements: No Environmental Issues: No Flood Plain: No Date: 01/01/1900 Utilities: Electricity, Water Public, Telephone Source of Land Info.: Public Records Comments The buyer declined to confirm the transaction and directed us to the information in public records; The data was collected from Costar and public records. Finished lot condition. Improvement and Site Data MSA: Legal/Tax/Parcel ID: Acres(Usable/Gross): San Diego Carlsbad San Marcos, CA Metropolitan Statistical Area & / Evergreen Ave.

124 Land Sale Profile Sale No. 2 Location & Property Identification Property Name: Sub Property Type: Address: City/State/Zip: County: 1046 Seacoast Dr. Commercial, Office 1046 Seacoast Dr. Imperial Beach, CA San Diego Market Orientation: Suburban IRR Event ID: Sale Information Sale Price: $5,500,000 Eff. R.E. Sale Price: $5,500,000 Sale Date: 11/10/2014 Sale Status: Closed $/Acre(Gross): $6,708,135 $/Land SF(Gross): $ $/Acre(Usable): $6,708,135 $/Land SF(Usable): $ Grantor/Seller: William Mundt Trust Grantee/Buyer: Imperial Beach Resort, LLC Property Rights: Fee Simple Occupancy at Time of Sale: Terms of Sale: Conventional Document Type: Deed Recording No.: Verified By: Mr. David P. Burningham, MAI Zoning Desc.: Seacoast Commercial Mixed Use/Residential Source of Land Info.: Other Comments Beachfront property; Selling broker indicates no entitlements were a part of this sale; Finished lot condition. Verification Date: 11/6/15 Verification Source: Rich Murdock, Lee & Associates Verification Type: Confirmed Seller Broker Improvement and Site Data Acres(Usable/Gross): 0.82/0.82 Land SF(Usable/Gross): 35,715/35,715 Usable/Gross Ratio: 1.00 Zoning Code: C/MU 2;SMU RO 1046 Seacoast Dr.

125 Land Sale Profile Sale No. 3 Location & Property Identification Property Name: Sub Property Type: Address: City/State/Zip: County: 812 Ocean Ln. Other 812 Ocean Ln. Imperial Beach, CA San Diego Market Orientation: Suburban IRR Event ID: Sale Information Sale Price: $1,600,000 Eff. R.E. Sale Price: $1,600,000 Sale Date: 08/10/2015 Sale Status: Closed $/Acre(Gross): $17,429,194 $/Land SF(Gross): $ $/Acre(Usable): $17,429,194 $/Land SF(Usable): $ Grantee/Buyer: Westport Holding Texas Property Rights: Fee Simple Occupancy at Time of Sale: Terms of Sale: Conventional Document Type: Deed Recording No.: Verified By: Mr. David P. Burningham, MAI Zoning Desc.: Seacoast Commercial Mixed Use/Residential Source of Land Info.: Owner Comments No entitlements at the time of sale; Rough graded condition. Verification Date: 11/12/15 Verification Source: Charlotte Weber, Coldwell Verification Type: Confirmed Seller Broker Improvement and Site Data Acres(Usable/Gross): 0.09/0.09 Land SF(Usable/Gross): 4,000/4,000 Usable/Gross Ratio: 1.00 Zoning Code: SMU/RO 812 Ocean Ln.

126 Addenda Commercial Sale Comparables

127 Retail Sale Profile Sale No. 1 Location & Property Identification Property Name: Sub Property Type: Address: City/State/Zip: County: Submarket: Market Orientation: 4796 Niagara Ave. Freestanding 4796 Niagara Ave. San Diego, CA San Diego Pt Loma/Sports Arena Coastal Waterfront IRR Event ID: Sale Information Sale Price: $590,000 Eff. R.E. Sale Price: $500,000 Sale Date: 09/15/2014 Sale Status: Closed $/SF GBA: $ $/SF NRA: $ Grantor/Seller: Kauffman Jeraldine K Trust Grantee/Buyer: Kevin & C Miller 2013 Trust Property Rights: Leased Fee Exposure Time: 6 (months) Occupancy at Time of Sale: Financing: All cash Terms of Sale: Conventional Document Type: Deed Recording No.: Verified By: Mr. David P. Burningham, MAI Verification Date: 8/3/15 Verification Source: Markus Feldmann, Pacific RE Verification Type: Confirmed Seller Broker Improvement and Site Data Legal/Tax/Parcel ID: GBA SF: 1,124 GLA SF: 1,124 Acres(Gross): 0.03 Land SF(Gross): 1,472 Year Built: 1937 No. of Buildings/Stories: 1/1 Multi Tenant/Condo.: Yes/No Bldg. to Land Ratio FAR: 0.76 Source of Land Info.: Public Records Comments Investment purchase of an office/retail building that includes a nail salon and insurance office suite. The property also has a billboard that generates income at $350/Mo. Applying a 'ground lease' type cap rate to the billboard income yields approximately $90,000. Therefore, the effective purchase price excluding the billboard is approximately $500,000. The cap rate is estimated based on the effective price and gross income provided by the listing agent and an estimated vacancy rate of 5% and expense ratio of 25%. Operating Data and Key Indicators Net Operating Income: $23,897 OAR(Cap. rate)actual: 4.78% 4796 Niagara Ave.

128 Retail Sale Profile Sale No. 2 Location & Property Identification Property Name: Sub Property Type: Address: City/State/Zip: County: 4118 Voltaire St. Restaurant/Bar, Sit Down Restaurant 4118 Voltaire St. San Diego, CA San Diego Market Orientation: Suburban IRR Event ID: Sale Information Sale Price: $560,000 Eff. R.E. Sale Price: $560,000 Sale Date: 10/03/2014 Sale Status: Closed $/SF GBA: $ $/SF NRA: $ Grantor/Seller: Lawrence Lograsso Grantee/Buyer: Dak Ang Yeng Property Rights: Fee Simple Occupancy at Time of Sale: Terms of Sale: Cash Document Type: Deed Recording No.: Verified By: Mr. David P. Burningham, MAI Year Built: 1923 Property Class: C Total Parking Spaces: 1 Park. Ratio 1000 SF GLA: 0.98 Park. Ratio 1000 SF GBA: 0.98 Bldg. to Land Ratio FAR: 0.26 Source of Land Info.: Other Comments Owner user purchase; No business goodwill and/or FF&E was a part of the sale; The property appears to be under renovation since the close of escrow (unknown cost). Verification Date: 7/2/15 Verification Source: Kipp Gstettenbauer, Cushman Verification Type: Confirmed Seller Broker Improvement and Site Data GBA SF: 1,024 GLA SF: 1,024 Acres(Usable/Gross): 0.09/0.09 Land SF(Usable/Gross): Usable/Gross Ratio: 3,999/3, Voltaire St.

129 Retail Sale Profile Sale No. 3 Location & Property Identification Property Name: Sub Property Type: Address: City/State/Zip: County: Submarket: Market Orientation: 7514 Girard Ave. Mixed Use 7514 Girard Avenue, Suite 7 La Jolla, CA San Diego Central Coast Suburban IRR Event ID: Sale Information Sale Price: $550,000 Eff. R.E. Sale Price: $550,000 Sale Date: 05/08/2014 Sale Status: Closed $/SF GBA: $ $/SF NRA: $ Grantor/Seller: Tony Tan Nguy Trust Grantee/Buyer: Mona Fang Property Rights: Leased Fee % of Interest Conveyed: Document Type: Deed Recording No.: Verified By: John Morgan Verification Date: 8/12/14 Verification Source: Phil Reed, listing broker, 858/ Verification Type: Confirmed Seller Broker Year Built: 1986 Most Recent Renovation: 1992 Property Class: C Multi Tenant/Condo.: No/Yes Total Parking Spaces: 3 Park. Ratio 1000 SF GLA: 3.06 Park. Structure Space: 3 Park. Ratio 1000 SF GBA: 3.06 Source of Land Info.: Broker Comments Sale of a ground floor retail condominium in La Jolla (corner of Pearl Street & Girard Avenue) in a larger, 27,054 SF mixed use property. The unit includes 3 subterranean garage spaces. The unit is an interior unit with no street exposure. The unit was leased at the time of sale. The broker reported a 4.5% cap rate. Improvement and Site Data MSA: San Diego Carlsbad San Marcos, CA Metropolitan Statistical Area Legal/Tax/Parcel ID: GBA SF: 980 GLA SF: 980 Acres(Gross): 0.00 Land SF(Gross): Girard Ave.

130 Other Sale Profile Sale No. 4 Location & Property Identification Property Name: Seacoast Dr., Unit 8 Address: City/State/Zip: County: Seacoast Dr. Imperial Beach, CA San Diego Market Orientation: Suburban IRR Event ID: Sale Information Sale Price: $1,025,000 Eff. R.E. Sale Price: $1,025,000 Sale Date: 10/08/2015 Sale Status: Closed $/SF GBA: $ $/SF NRA: $ Grantor/Seller: Da Silva Family Trust Grantee/Buyer: Barrelet Family Trust Property Rights: Fee Simple Occupancy at Time of Sale: Terms of Sale: Conventional Document Type: Deed Recording No.: Verified By: Mr. David P. Burningham, MAI Source of Land Info.: Comments Other No brokers were involved with this sale; The data was collected from Costar; This property has approximately 1,000 SF of ground level commercial space and the remaining upper level space is residential (Live/Work condominium unit). Verification Source: Verification Type: Costar/Public records Secondary Verification Improvement and Site Data GBA SF: 3,056 NRA SF: 3,056 Acres(Usable/Gross): 0.51/0.51 Land SF(Usable/Gross): 22,215/22,215 Usable/Gross Ratio: 1.00 Year Built: 1998 Property Class: C Bldg. to Land Ratio FAR: Seacoast Dr., Unit 8

131 Other Sale Profile Sale No. 5 Location & Property Identification Property Name: Seacoast Dr., Unit 6 Address: City/State/Zip: County: Seacoast Dr. Imperial Beach, CA San Diego Market Orientation: Suburban IRR Event ID: Sale Information Sale Price: $812,500 Eff. R.E. Sale Price: $812,500 Sale Date: 10/02/2015 Sale Status: Closed $/SF GBA: $ $/SF NRA: $ Grantor/Seller: Joyce Shepard Grantee/Buyer: Bill & Laura Whitacre Property Rights: Fee Simple Occupancy at Time of Sale: Terms of Sale: Conventional Document Type: Deed Recording No.: Verified By: Mr. David P. Burningham, MAI Bldg. to Land Ratio FAR: 0.13 Source of Land Info.: Other Comments This property has approximately 1,000 SF of ground level commercial space with the remaining space being upper level residential (Live/Work condominium unit). Verification Date: 11/16/15 Verification Source: Bill Whitacre, Verification Type: Confirmed Buyer Improvement and Site Data GBA SF: 2,934 NRA SF: 2,934 Acres(Usable/Gross): 0.51/0.51 Land SF(Usable/Gross): 22,215/22,215 Usable/Gross Ratio: 1.00 Year Built: 1998 Property Class: C Seacoast Dr., Unit 6

132 Addenda Commercial Lease Comparables

133 Other Lease Profile Lease No. 1 Location & Property Identification Property Name: Coronado Village Address: City/State/Zip: County: Submarket: 2909 Coronado Ave San Diego, CA San Diego Imperial Bch/South SD Ret IRR Event ID: Lease Information Lessee: MCS Cellular Init Year Contract Rate: $26.40 /$/SF/YR Effective Lease Rate: $26.40 /$/SF/YR Lease Commencement: 10/01/2014 Term of Lease: 60 months Space Type: Other Verified with: Scott Duhs, Duhs Commercial Transaction Reliability: Confirmed Leased Area: 1,000 Park. Ratio 1000 SF GBA: 5.60 Bldg. to Land Ratio FAR: Zoning Desc.: CC 2 3 Comments 3% annual increases. Lease Expense Information Lease Reimburse. Type: Improvement and Site Data MSA: Absolute Net San Diego Carlsbad San Marcos, CA Metropolitan Statistical Area Legal/Tax/Parcel ID: Par 1 map 2712 div lot 1 map 6224 plus easements GBA SF: 29,603 NRA SF: 29,603 Acres(Gross): 6.00 Land SF(Gross): 261,360 Year Built: 1975 Total Parking Spaces: 166 Park. Ratio 1000 SF GLA: 5.61 Coronado Village

134 Retail Lease Profile Lease No. 2 Location & Property Identification Property Name: Sub Property Type: Address: City/State/Zip: County: Newport Ave. Freestanding Newport Ave. San Diego, CA San Diego Market Orientation: Rural IRR Event ID: Lease Information Lessee: Tattoo Shop Init Year Contract Rate: $24.60 /$/SF/YR Effective Lease Rate: $24.60 /$/SF/YR Lease Commencement: 01/01/2016 Term of Lease: 60 months Space Type: Retail Verified with: Tommy Gibbs, Cushman & Wakefield Transaction Reliability: Confirmed Leased Area: 2,500 3% annual increases; Existing jewelry store to vacate in the near future; New incoming tenant is taking the space as is with no tenant improvement allowance and/or free rent. Lease Expense Information Lease Reimburse. Type: Improvement and Site Data Absolute Net GBA SF: 5,034 GLA SF: 5,034 Acres(Usable/Gross): 0.08/0.08 Land SF(Usable/Gross): 3,484/3,484 Usable/Gross Ratio: 1.00 Year Built: 1954 Property Class: C Bldg. to Land Ratio FAR: 1.44 Source of Land Info.: Other Comments Newport Ave.

135 Retail Lease Profile Lease No. 3 Location & Property Identification Property Name: Sub Property Type: Address: City/State/Zip: County: 4195 Voltaire St. Mixed Use 4195 Voltaire St. San Diego, CA San Diego Market Orientation: Rural IRR Event ID: Lease Information Lessee: Coffee Bean & Tea Leaf Init Year Contract Rate: $36.00 /$/SF/YR Effective Lease Rate: $36.00 /$/SF/YR Lease Commencement: 09/01/2015 Term of Lease: 120 months Space Type: Retail Verified with: Tommy Gibbs, Cushman & Wakefield Transaction Reliability: Confirmed Leased Area: 2,128 10% mid term increase; $25/SF tenant improvement allowance. Lease Expense Information Lease Reimburse. Type: Improvement and Site Data Absolute Net GBA SF: 2,128 GLA SF: 2,128 Acres(Usable/Gross): 0.26/0.26 Land SF(Usable/Gross): 11,325/11,325 Usable/Gross Ratio: 1.00 Year Built: 2015 Property Class: C Bldg. to Land Ratio FAR: 0.19 Source of Land Info.: Other Comments 4195 Voltaire St.

136 Land Lease Profile Lease No. 4 Location & Property Identification Property Name: Sub Property Type: Address: City/State/Zip: 1005 Rosecrans Street Commercial, Retail 1005 Rosecrans Street San Diego, CA Market Orientation: Suburban IRR Event ID: Lease Information Lessee: Citrali Pho Bar & Grill Init Year Contract Rate: $33.60 /$/SF/YR Effective Lease Rate: $33.60 /$/SF/YR Lease Commencement: 04/01/2015 Lease Expiration: 03/31/2025 Term of Lease: 120 months Space Type: Restaurant Verified with: Matt Peckham, listing broker Flocke & Avoyer, 858/ x671 Transaction Reliability: IRR Confirmed Leased Area: 2,881 Source of Land Info.: Comments Public Records 10 year NNN lease of restaurant space with exposure to Rosecrans Street, annual CPI escalation. No TI allowance as the space was previously built out as a restaurant. Lease Expense Information Lease Reimburse. Type: Improvement and Site Data MSA: Absolute Net San Diego Carlsbad San Marcos, CA Metropolitan Statistical Area Legal/Tax/Parcel ID: Acres(Usable/Gross): 0.23/0.23 Land SF(Usable/Gross): 10,000/10,000 Usable/Gross Ratio: 1.00 Zoning Code: CC 4 2 Zoning Desc.: Mixed Use Utilities Desc.: All to site 1005 Rosecrans Street

137 Addenda Addendum D Engagement Letter

138 Addenda

139 Addenda