GEORGE H. WALKER & Co.

Transcription

1 George H. Walker GEORGE H. WALKER & Co. Real Estate Appraisers Lori A. Walker January 24, 2018 Appraiser File #7791 Amanda J. McCellon Pittsburg Economic Development Corporation 200 Rusk St. Pittsburg, TX RE: 412 Quitman St. Pittsburg, TX Dear: Mrs. McCellon As per your request, an appraisal has been performed regarding the above referenced property. Research has revealed a market value of One Hundred Forty Thousand Dollars ($140,000) The attached narrative appraisal report summarizes the appraisal. questions, please do not hesitate to call. If you have any Respectfully submitted, George H. Walker GHW P.O. Box 376, Sulphur Springs, Texas P-(903) F-(903)

2 TABLE OF CONTENTS GENERAL INFORMATION CLIENT, INTENDED USERS INTENDED USE METHOD OF REPORT IDENTIFICATION OF THE SUBJECT PROPERTY REAL PROPERTY INTEREST PURPOSE OF THE APPRAISAL Definition of Market Value EFFECTIVE DATE OF APPRAISAL SCOPE OF WORK APPRAISER PREVIOUS INVOLVEMENT AREA AND NEIGHBORHOOD ANALYSIS AREA DESCRIPTION NEIGHBORHOOD DESCRIPTION PROPERTY DESCRIPTION HISTORY OF THE SUBJECT PROPERTY SALES CONTRACT COMMENTS SITE DESCRIPTION Aerial w/cad Plat Map Flood Map Traffic Count Map Zoning Map Zoning Regulations COMMENTS ON ENVIRONMENTAL CONDITIONS IMPROVEMENTS DESCRIPTION Personal Property Photoimages Use of the Existing Real Estate or Highest and Best Use PROPERTY TAX COMMENTS VALUATION ANALYSIS COST APPROACH SALES COMPARISON APPROACH

3 TABLE OF CONTENTS Location Map Comparison Grid INCOME APPROACH FINAL RECONCILIATION Certification and limiting conditions Contingent and Limiting Conditions ADDITIONAL COMMENTS AND CONDITIONS OF APPRAISAL

4 GENERAL INFORMATION CLIENT, INTENDED USERS The appraisal was ordered by Amanda McCellon on behalf of Pittsburg Economic Development Corporation. Pittsburg Economic Development Corporation is considered to be the client. The principals and officers of Pittsburg Economic Development Corporation are considered to be the intended users of the appraisal. INTENDED USE It is understood that the appraisal is to be used in making a property disposition decision. METHOD OF REPORT This appraisal is presented as an Appraisal Report. According to the Uniform Standards of Professional Appraisal Practice issued by the Appraisal Standards Board of the Appraisal Foundation, an appraisal report is a written report prepared under Standards Rule 2-2(a), 8-2(a) or 10-2(a)

5 IDENTIFICATION OF THE SUBJECT PROPERTY The property that is the subject of this appraisal is located at the south side of Quitman St. between King Avenue and S Texas St. It is understood to have the address of 412 Quitman St. Pittsburg, TX The local tax appraisal office has the tract identified as R# The property is further described in the Property Description section of this report

6 REAL PROPERTY INTEREST According to The Dictionary of Real Estate Appraisal, Fourth Edition, published by the Appraisal Institute, the following definitions are: Fee Simple Estate - Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat. Leased Fee Interest An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the lessee are specified by contract terms contained within the lease. Leasehold Interest The interest held by then lessee (the tenant or renter) through a lease transferring the rights of use and occupancy for a stated term under certain conditions. The real property interest under consideration in this appraisal is the fee simple estate. For purposes of this appraisal, mineral reservations, if any, are not considered to have a salient effect on the market value or marketability of the subject property unless otherwise stated in this report

7 PURPOSE OF THE APPRAISAL The purpose of the appraisal is to estimate the market value, as defined as follows, of the fee simple estate of the subject property. Definition of Market Value For the purpose of this appraisal and according to FIRREA regulations as found at market value is defined as follows: Market value means 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: (1) Buyer and seller are typically motivated; (2) Both parties are well informed or well advised, and acting in what they consider their own best interests; (3) A reasonable time is allowed for exposure in the open market; (4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale

8 EFFECTIVE DATE OF APPRAISAL The subject property was inspected on, January 9, 2018, which is also the effective date of the appraisal. SCOPE OF WORK A cursory physical appraisal inspection was made of the subject property. The data collection process also included interviews with several area real estate professionals and entrepreneurs. In addition, the data collection process included research and inspection of numerous public records as well as in-house files and data base and professional publications. Other statements contained in various other parts of this report further illustrate the work that was performed in the performance of this appraisal. APPRAISER PREVIOUS INVOLVEMENT The appraiser has not been involved with this property within the past three years as an appraiser or in any other capacity

9 AREA AND NEIGHBORHOOD ANALYSIS AREA DESCRIPTION The following narrative is based on information from the City of Pittsburg website. Pittsburg is in Northeast Texas, approximately 110 miles east of Dallas, and approximately 60 miles west of Texarkana. It is accessed via several major roadways. Several state maintained farm to market roads also run throughout the city and county. The city has a total of 3.3 square miles. The City of Pittsburg is located on US Hwy 271, one of the busiest highways in East Texas. Pittsburg is approximately ten miles away from Interstate 30 and forty miles from Interstate 20. A new loop connecting I- 30 to Hwy 271 about six miles north of Pittsburg is now open, making access to the interstate much easier. This infrastructure development will continue to increase the already high traffic count for Pittsburg as it will bring interstate traffic into the heart of the commercial district. Pittsburg sits in the geographical center of North East Texas. Within a fifty mile radius, there are fourteen counties which would constitute the market base of 465,700 people. Within a thirty mile radius, there are eleven counties and 328,500 people. The population of the western portion of East Texas is expected to grow by 15 to 20 percent over the next ten years as people from the Dallas/Fort Worth area seek to leave the city in search of cheap and plentiful assets. Pittsburg has access to these abundant resources such as water, energy, and land

10 Historical population Census Pop. %± , % , % , % , % , % , % , % , % , % , % , % , % , % Est ,707 [8] 4.7% - 7 -

11 NEIGHBORHOOD DESCRIPTION For the purposes of this appraisal, a few terms should be defined. The following definitions are taken from The Appraisal of Real Estate; Twelfth Edition. Neighborhood is a group of complimentary land uses; a related grouping of inhabitants, buildings, or business enterprises. Market area is the defined geographic area in which the subject property competes for the attentions of participants; the term broadly defines an area containing diverse land uses

12 Neighborhood The neighborhood of Pittsburg lies on both sides of the intersection of Highway 11(north & south) and Highway 271(east & west). The subject lies within the boundaries of Hickory St. to the north, S Texas St. to the east, Fred St. to the south, and King Ave. to the west. The Pittsburg area is located in a central location for different routes of transportation throughout surrounding counties. The property is located in a Multi-Family Residential District Area.. Improvements include several retail outlets, restaurants, grocery store, and convenience stores. In contrast to the commercial uses in the subject neighborhood, there are residential areas, both single family and multifamily. There does not appear to be a clash between the residential area and the subject neighborhood as defined

13 Market Area Although the neighborhood as defined has relatively homogenous characteristics, the effective market includes all of Pittsburg and the surrounding area, in which there are other neighborhoods of similar composition and zoning. There were no conditions noted that should have an adverse impact on market values in the neighborhood, and no adverse trends were noted

14 PROPERTY DESCRIPTION HISTORY OF THE SUBJECT PROPERTY Below is an excerpt from the local tax appraisal office regarding the transaction history of the subject. It is understood that the subject tract was transferred from Camp County and City of Pittsburg to Pittsburg Economic Development Corporation on August 25, Consideration was not determined. The transfer is not considered to be an arm s length market transaction. No other market transaction involving the subject property was found to have occurred within the past 3 years. SALES CONTRACT COMMENTS contract. The subject property was not found to be encumbered by a sales

15 SITE DESCRIPTION According to the Dictionary of Real Estate, Fifth Edition published by the Appraisal Institute, SITE is defined as: Land that is improved so that it is ready to be used for a specific purpose. Therefore, by definition, improvements to the site are included in the improvement analysis. It should be noted at this point that the appraisal was made without the aid of a professional survey. According to the local tax appraisal district, the subject site has a total area of approximately 4.50 acres or 196,020 square feet. According to the following Texas Highway Department Traffic Count Map, the traffic count near the subject is indicated to be approximately 5,000. The tract appears to be typically level. Drainage appears to be adequate. According to the following flood map, the subject is not in a designated flood hazard area. The site is serviced by public utilities such as electricity, natural gas, water and sewer. Public records indicate that the subject is under a R-3 (Multi-Family Residential District) zoning

16 Aerial w/cad Plat Map

17 Flood Map

18 Traffic Count Map

19 Zoning Map

20 Zoning Regulations R-3 Multiple Family Residential District: This district permits multifamily developments of densities not to exceed 25 units per acre. Regulations are designed to protect the residential character and prevent overcrowding of land by providing minimum standard[s] for building spacing, yards, height and off-street parking. gset

21 SECTION VIII - R-3 MULTIPLE-FAMILY RESIDENTIAL DISTRICT 1. The regulations set forth in this Section or set forth elsewhere in this Ordinance when referred to in this Section are the regulations in the R-3 Residential District. 2. USE REGULATIONS: A building or premises shall be used only for the following purposes: a. Any use permitted in the R-2 Two-Family Residential District or the R-TH Townhouse District. b. Multiple dwelling. c. Medical clinic. d. Rooming house and boarding house. e. Religious, educational, or nonprofit organization organized to promote the welfare of the general public, but not a penal or mental institution. f. Hospital devoted primarily to the diagnosis, treatment or care of the sick and injured exclusive of institutions specializing in the care of [or] treatment of mental illness, narcotic addicts, alcoholics and exclusive of institutions operated for the care and treatment of animals. g. Nursing, rest or convalescent home, orphanage or foster home. h. Accessory building or use customarily incidental to any of the above uses, including a storage garage on a lot occupied by a multiple dwelling, house, hospital, or institution. 3. HEIGHT AND AREA REGULATIONS: The following height and area regulations shall be observed. See also Section XXII - HEIGHT AND AREA EXCEPTIONS AND MODIFICATIONS. Maximum Height of Building Stories Feet Minimum Depth of Front Yard in Feet Minimum Width of Side Yard in Feet Minimum Depth of Rear Yard in Feet Minimum Lot Area Per Family in Sq. Ft. 2-1/ * 25 1-F 6,000 2-F 3,500 M-F 1,000** Minimum Lot Size in Sq. Ft. 1-F 6,000 2-F 7,000 M-F 7,000 *When two or more buildings are designed and used in combination as a multiple dwelling unit, that has one ownership, one management, common parking area and central control of service, all such buildings shall have a minimum side yard of 25 feet. **Plus minimum lot area of 4,000 square feet. 4. PARKING REGULATIONS: There shall be provided at the time any building or structure is erected or structurally altered a minimum of two (2) off-street parking spaces per dwelling unit

22 COMMENTS ON ENVIRONMENTAL CONDITIONS The subject used to be the location of the Pittsburg Hospital. The hospital has been torn down and removed from the site. It was noted that, due to age, the hospital could have materials that contain asbestos. It has been reported that a remediation has been performed; and, a certificate exists that all materials of asbestos have been removed from the property and do not cause a concern to the environment or others. For purposes of this valuation, it is assumed that the abatement has been performed and the certificate exists. There were no adverse environmental conditions observed; however, it should be noted that the appraiser is not an environmental expert nor was an environmental impact study conducted. Further research in this regard may reveal adverse environmental conditions which would alter the market value of the subject property. This appraisal is based on the assumption that no environmental conditions exist within the legal boundaries of the subject property or within the effective area of the subject vicinity which would have an effect on the marketability or the market value of the subject property

23 IMPROVEMENTS DESCRIPTION The subject is a vacant tract of land within the city limits of Pittsburg, TX. The subject tract has a few trees scattered throughout the property. Although this property was improved with a medical facility at one time, those improvements have been removed. As of the effective date of the appraisal, the subject is considered to be effectively unimproved. There were no functional inadequacies noted during the appraisal visit. There were no conditions noted in the area that is expected to cause a salient adverse effect on the marketability or market value of the subject. Personal Property Personal property was not included in the valuation. The following photoimages illustrate the subject

24 Photoimages

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27 as follows. Use of the Existing Real Estate or Highest and Best Use According to The Appraisal of Real Estate, Twelfth Edition, Is defined The reasonable probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value. The The Appraisal of Real Estate, Twelfth Edition also states Fundamentally, the concept of highest and best use applies to land alone because the value of the improvements is considered to be the value they contribute to the land. Land is said to have value, while improvements contribute to the value of the property as a whole. The probable uses of a property, both as vacant and as improved must comply with four criteria to be considered as the highest and best use. The four criteria are as follows. 1. physically possible 2. Legally permissible 3. Financially feasible 4. Maximally productive Comments concerning the highest and best use of the subject property are as follows

28 ...as Unimproved The subject is a 4.50 acre tract located within the city limits of Pittsburg. The area is populated with residential home sites, retail districts, manufacturing facilities and undeveloped land. Short distances from the subject are other manufacturing facilities and retail outlets. The subject is zoned R-3 for Multi-Family Residential. Due to the size of the tract and the applicable zoning, as vacant, the highest and best uses are considered to be an apartment complex (multifamily use), or care facility....as Improved The subject is a 4.50 acre tract located within the city limits of Pittsburg. The area is populated with residential home sites, retail districts, manufacturing facilities and undeveloped land. Short distances from the subject are other manufacturing facilities and retail outlets. The subject is zoned R-3 for Multi-Family Residential. Due to the size of the tract and the applicable zoning, as vacant, the highest and best use is considered to be an apartment complex (multi-family use) or care facility

29 PROPERTY TAX COMMENTS The following are applicable property taxes for the subject properties. R20747 Based on the indicated assessed value of $20,000 and the indicated rate of , the subject s indicated tax burden is approximately $ Research did not reveal past due taxes

30 VALUATION ANALYSIS COST APPROACH The cost approach is based on the assumption that a typically informed purchaser would pay no more for a property than it would cost to acquire a site with comparable attributes to that of the subject property and construct improvements with attributes equal to that of the subject property, including total accumulated depreciation from all causes. The cost approach is most reliable when appraising property with new improvements in an area where construction costs and information on sales of similar sites are readily available; the subject structures are new and have no depreciation, physical, functional or external. The reliability of the cost approach diminishes as the effective age of the subject improvements increase and the availability of reliable construction costs and site information decreases. In performing the cost approach, a site value determination is made first. After the site value determination is made, calculations based on local construction costs and Marshall and Swift Valuation Services are made to estimate the cost new of the subject improvements. Then depreciation factors are subtracted from the cost new of the improvements. The site value and the depreciated value of the improvements are added to the estimated contribution of any site improvements to determine the value based on the cost approach. The cost approach is not effective in effectively unimproved land; therefore, it is deemed inapplicable and not included in the report

31 SALES COMPARISON APPROACH The market analysis is an approach that gains reliability with the quantity of recent sales of properties with construction and utility similar to that of the subject property. The market analysis approach is generally considered to be the best indicator of value, when there have been confirmed sales of similar properties in the area within a reasonable time frame. The time frame depends on several variables, including area inflation based on supply and demand of facilities with similar construction and utility to that of the subject, as well as financing terms and availability. The following represents sales of improved properties with utility comparable to that of the subject

32 Comparable 1 Location: 1756 Hwy 271 N. Pittsburg, Texas Grantor: David Clemens Grantee: Henson Richard Gregory Trustee Date of Sale: 02/11/2016 Consideration: $120,000 Recorded 389 / 559 Source Private Professional Source / CCAD Financing: Cash to Seller Land Size: 1.17 acres Improvements: The Comparable had a building that had caught fire. It is in fair condition and given no consideration to contributory value. Price/SF: $2.35 per sq. ft

33 Comparable 2 Location: 604 S Greer Pittsburg, Texas Grantor: McNamara/ Mills Grantee: Heridaldo Date of Sale: 02/11/2014 Consideration: $62,500 Recorded 354 / 376 Source GTAR / CCAD Financing: Conventional Land Size: 1.48 acres Improvements: None Price/SF: $0.97 per sq. ft

34 Comparable 3 Location: 204 Fulton Pittsburg, Texas Grantor: EDC AG Products Company, LLC Grantee: Johnny Overstreet Date of Sale: 11/10/2017 Consideration: $75,000 Recorded 423 / 642 Source HUD Statement/ Private Source / CCAD Financing: Conventional Land Size: 4.96 acres Improvements: The Comparable had a building that is in fair condition and given no consideration to contributory value. The building has been torn down and is no longer on the property. Price/SF: $0.35 per sq. ft

35 Comparable 4 Location: 00 Hwy 271 N Pittsburg, Texas Grantor: Busch Family Limited Partnership & James Larry Shrum Grantee: Cole Prewitt & Rudisill Pittsburg LLC Date of Sale: 07/07/2017 Consideration: $245,000 Recorded 417 / 389 Source GTAR # / CCAD Financing: Conventional Land Size: acres Improvements: None Price/SF: $0.55 per sq. ft

36 Location Map

37 Comparison Grid Subject Location 412 Quitman St Grantor Camp County & City of Pittsburg Land Comp Hwy 271 N Clemens Land Comp 2 Land Comp 3 Land Comp S. Greer 204 Fulton 00 Hwy 271 N McNamara/ Mills EDC AG Products Company, LLC Busch Family Limited Partnership & James Larry Shrum Grantee PEDC Hinson Heridaldo Overstreet Cole Prewitt & Rudisill Pittsburg LLC Recorded 419/ / / / /389 Date of Sale N/A Feb-16 Feb-14 Nov-17 Jul-17 Sales Price $120,000 $62,500 $75,000 $245,000 Tract Size acre / SF ,020 50,965 64, , ,926 $/SF $2.35 $0.97 $ 0.35 $0.55 Location 2 Lane 2Way 4 Lane 4 Way -10% 4 Lane 4 Way -10% 2 Lane 2 Way 0% 4 Lane 4 Way -10% Traffic Count / Exposure Tract ssize Adjustment 5,000 12,832-25% 6,700 0% Slow 50% 12,832-25% Total % -35% -10% 50% -35% $ Adjustment Adjusted Price Properties were selected to best represent the subject's tract size, location, traffic count, and appeal. Dates noted in the sales comparison grid are closing dates. Property values are relatively stable over this time period and no time adjustments are indicated. All comparables are located in commercial areas of Pittsburg, TX. Comparables 1, 2, and 4 are located on four lane roads that provide good exposure and traffic count to the comparables

38 Adjustments were made to allow for differences in location and traffic count. All comparables are good indicators of market value and are most consideration in the final opinion of value. In order to indicate a value for the subject and allow for diminishing return, trendline calculations were made. The following figures illustrate the results of the trendline calculations Tract Size Linear (Tract Size) Expon. (Tract Size) Log. (Tract Size) Mode Result Linear 0.82 Logarithmic 0.65 Exponential 0.70 Mean 0.72 Based on the data researched and the analysis performed, the subject is indicated to have a value of approximately $0.72 per square foot or (196,020 sf x $0.72/sf) $141,134 rounded to $140,

39 INCOME APPROACH The Income Approach is based on the simple premise that the value of a property is related to the income it can produce. The more income the property produces, the more the property tends to be worth. An investor will pay more for a property that produces a certain level of income than for a property that produces less income. This approach is sometimes called the Income Capitalization Approach. The Income Approach or Income Capitalization Approach is most useful, of course, for properties that are purchased for their income producing potential. These typically include commercial properties such as office buildings and retail stores. A buyer determines the price to offer for a potential acquisition by studying the income generated by the property and by determining the present value of the right to receive a presumed income stream, taking into account the rate of income or capitalization rate that should be expected by a buyer. The general formula for the income capitalization approach is: Net Operating Income / Capitalization Rate = Value The credibility of the income approach is based on the availability and accuracy of income and expense data as well as its relationship to the price investors are willing to pay for a given rate of return on investment. When ample and reliable income and expense data as well as ample and reliable capitalization rates data exist to determine how much area investors are investing income producing properties, the income approach is a good indicator of a properties market value. As the availability and reliability of that data diminish, so does the reliability of the income approach to value

40 In formulating the income approach, the income producing potential of the property is determined. In many instances, properties are owner occupied and must be compared with income data produced by other properties in the market. The first determination is that of potential gross income, or PGI. Potential gross income is, basically the total annual income that the property could produce without taking into account any discounting factors such as vacancy and collection loss or any fixed and variable expenses incurred in the normal maintenance of the property such as property management, taxes and remedy of deferred maintenance. When the PGI is determined, then vacancy and collection losses are subtracted leaving effective gross income, or EGI. When fixed and variable expenses are subtracted, the result is net operating income, or NOI. In most real estate appraisals, the definition of market value dictates cash transactions of cash equivalent. Although most real estate transactions involve some type of leverage, financing of a buyer arrangements are not factored into market value determination of the subject of a real estate appraisal. This offers a constant which can generally be used as a basis of comparison. The net operating income is then factored with a capitalization rate, or cap rate. The best way to determine a cap rate is to use the sales of income producing properties and divide the sale price by the confirmed net operating income of the year prior to sale of the property. This is called direct capitalization. This procedure tells us that the buyer of this property required the resultant rate of return. If several such properties can be found and the cap rate determined, then a usable, reliable capitalization rate is available to be applied to the subject. This procedure is very useful and available in high population areas where there are several sales to consider. In smaller markets it is rare that sales can be found with known income and expense figures in numbers large enough to establish a sound capitalization rate. In the face of no data or very little reliable income and expense data

41 of confirmed income producing real estate sales, cap rates can be developed by using several other accepted methods. Mortgage-Equity method of capitalization considers the fact that most properties are purchased with debt and equity capital. This rate addresses both sides. The capitalization rate for the debt side is the mortgage constant, which is the ratio of the annual debt service to the principal amount of the mortgage loan. The mortgage constant is a function of the interest rate, the frequency of amortization and the amortization term of the loan. It is also the sum of the interest rate and the sinking fund factor. The capitalization rate for the equity side addresses the requirement for a systematic cash return on the equity. The rate used to capitalize income is called the equity capitalization rate. It is the ratio of annual pretax cash flow to the amount of equity investment. The equity capitalization rate may be more or less than the eventual equity yield rate. For appraisal purposes, a property s equity capitalization rate is the anticipated cash flow to the equity investor, usually for the first year of the holding period. The overall capitalization rate must satisfy both the mortgage constant requirement of the lender and the pretax cash flow requirements of the equity investor. It is a weighted rate between the mortgage constant and the equity dividend rate. Another popular method of determining a cap rate called the Banker s In House Method uses typical lending ratios and income factors to establish an acceptable rate of capitalization. The formula is: mortgage position x mortgage constant x debt coverage ratio. There are several other methods of using income to arrive at value; however, it must be established that the income approach is most reliable when the subject is producing income and ample income and expense data from the operation of the subject is available and used in conjunction with the sales comparison approach where ample reliable income and expense

42 data are available on several sales of comparable income producing properties. Although some land tracts are leased, this is not the norm in this area. Therefore, the income approach was deemed unreliable due to inadequate reliable data and not included in the report

43 FINAL RECONCILIATION Cost Approach N/A Sales Comparison Approach $140,000 Income Approach N/A The cost approach is not reliable in the appraisal of effectively unimproved land and therefore not included in the report. Although some land tracts are leased, this is not the norm in this area. Therefore, the income approach was deemed unreliable due to inadequate reliable data and not included in the report. In this instance, the sales comparison analysis is the only applicable approach to the subject s value. Based on the data researched and the analysis performed, I conclude that the market value of the subject property in its as is condition subject to the limiting conditions and assumptions put forth in this report, as of the effective date of this appraisal, is: One Hundred Forty Thousand Dollars ($140,000)

44 Certification and limiting conditions I certify that, to the best of my knowledge and belief: the statements of fact contained in this report are true and correct. the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. Unless specifically stated in this report, I have performed no services as an appraiser or any other capacity regarding the property that is the subject of this report within the three year period immediately preceding the acceptance of this assignment. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. my engagement in this assignment was not contingent upon developing or reporting predetermined results. my compensation 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. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice

45 The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. I have made a personal inspection of the property that is the subject of this report. Unless otherwise indicated, I have performed no services regarding the subject property within the prior three years, as an appraiser or in any other capacity. Brittan Diamond, a licensed trainee, provided assistance in: o 1) subject property inspection, o 2) data collection regarding the subject property, o 3) market data collection, o 4) data analysis, o 5) reconciliation of approaches and value determination, and o 6) report preparation. no one other than Brittan Diamond provided significant real property appraisal assistance to the person signing this certification other than as specified in the body of the report. George H. Walker January 24, 2018 TX G

46 Contingent and Limiting Conditions 1. The appraiser assumes no responsibility for matters of a legal nature affecting the property appraised or the title thereto, nor does the appraiser render any opinion as to the title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership. 2. Any sketch in the report may show approximate dimensions and is included to assist the reader in visualizing the property. The appraiser has made no survey of the property. 3. The appraiser is not required to give testimony or appear in court because of having made the appraisal with reference to the property in question, unless arrangements have been previously made therefor. 4. Any distribution of the valuation in the report between land and improvements applies only under the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. 5. The appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The appraiser assumes no responsibility for such conditions, or for engineering which might be required to discover such factors. 6. Information, estimates, and opinions furnished to the appraiser, and contained in the report, were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy of such items furnished the appraiser can be assumed by the appraiser. 7. Neither all, nor any part of the content of the report, or copy thereof (including conclusions as to the property value, the identity of the appraiser, professional designations, reference to any professional appraisal organizations, or the firm with which the appraiser is connected), shall be used for any purposes by anyone but the client specified in the report, the borrower if appraisal fee paid by same, the mortgagee or its successors and assign, mortgage insurers, consultants, professional appraisal organizations, any state or federally approved financial institution, any department, agency, or instrumentality of the United States or any

47 state or the District of Columbia, without the previous written consent of the appraiser; nor shall it be conveyed by anyone to the public through advertising, public relations, news sales, or other media, without the written consent and approval of the appraiser. 8. On all appraisals, subject to satisfactory completion, repairs, or alterations, the appraisal report and value conclusion are contingent upon completion of the improvements in a workmanlike manner

48 ADDITIONAL COMMENTS AND CONDITIONS OF APPRAISAL The exposure time considered in the appraisal is 6-12 months. Anticipated marketing period is 6-12 months. This appraisal was performed in accordance with the Uniform Standards of Professional Appraisal Practice and the rules and regulations of the Appraisal Institute. George H. Walker January 24, 2018 TX G Supporting documentation

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50 George H. Walker (903) P.O. Box 376 Fax: (903) Sulphur Springs, TX State Certified Real Estate Appraiser TX G Experience Private Practice since September 1993 General real estate and business appraisal practice including of all types of real estate; commercial, residential, and farm and ranch. Active appraisal area includes Delta, Franklin, Hopkins, Hunt, Lamar, Titus, and Wood Counties. Market research and paired sales analysis conducted in-house. Other cost information obtained by using Marshall & Swift cost service. Flood Zone information from Federal Emergency Management Agency flood insurance rate maps. Computer data base of files and comparables maintained in-house. September 1992 to September 1993 Castle Appraisal Service Completed apprenticeship as required by Texas Appraiser Licensing and Certification Board. Education The Appraisal Institute & Tyler Real Estate College Completed real estate and appraisal courses required by TALCB as well as course study toward MAI designation, including Real Estate Principles, Real Estate Law, Principles of Real Estate Appraisal, Commercial Appraisal, and Uniform Standards of Professional Appraisal Practice. Texas Tech University Bachelor of Business Administration degree in Business Marketing

51 Seminars and Continuing Education November 2017 Marshall & Swift Commercial Cost Approach Certification Marshall & Swift August 2017 FHA Appraisal Training - HUD November 2016 Supervisor-Trainee Course for Texas McKissock November 2016 Condemnation Appraising: Principles & Applications Appraisal Institute September 2014 Using Spreadsheet Programs in Real Estate Appraisals Appraisal Institute September 2014 The FHA Appraisal US Department of HUD November 2013 Resid. Sales Comparison; The Adjustment Process Columbia Institute November 2013 Interagency Rules of Banks & Credit Unions Columbia Institute November 2012 Write It Right The Colombia Institute March Fundamentals of Separating Real Property, Personal Property and Intangible Business Assets Appraisal Institute July 2011 Report Writing the UAD Colombia Institute December 2010 FHA Single Family Appraisal Colombia Institute November 2009 Professional Ethics and Standards of the Appraisal Institute Appraisal Institute March 2009 FHA Today Colombia Institute March 2009 Fannie Mae Today Colombia Institute September 2008 Analyzing Distressed Real Estate Appraisal Institute September 2008 Understanding and Testing DCF Valuation Models Appraisal Institute April 2007 Advanced Sales Comparison and Cost Approaches Appraisal Institute November 2006 Advanced Income Analysis Appraisal Institute June The Professional s Guide to the Uniform Residential Appraisal Report Appraisal Institute April Understanding and Testing DCF Valuation Models Appraisal Institute April 2005 Analyzing Distressed Real Estate Appraisal Institute April 2003 Partial Interest Valuation Undivided Seminar Appraisal Institute October 2002 Apartment Appraisal Appraisal Institute February 2002 Universal Standards of Professional Appraisal Practice Appraisal Institute March 2001 Residential Report Writing Tyler Real Estate College October 2000 Income Property Appraisal Texas A&M Commerce September 2000 HUD Appraisal Inspection and Guidelines Seminar - HUD October 1999 The FHA and the Appraisal Process HUD October 1998 Financial Analysis & Capitalization of Income Properties Lincoln Graduate Center September Update Session on HUD Appraisal Requirements - HUD October 1996 Professional Ethics and Standards of the Appraisal Institute Appraisal Institute Bi-Annually Updates to USPAP Professional Associations The Appraisal Institute Wood County Board of Realtors Greater Dallas Board of Realtors