SUMMARY APPRAISAL REPORT

Transcription

1 File No. SUMMARY APPRAISAL REPORT OF THE REAL PROPERTY LOCATED AT 6332 Middlebelt Road Garden City, MI for Mr. Edgar J. Dietrich Charlevoix Grosse Pointe Park, MI as of February 13, 2008 by Jake D. Dow, CREA/CCRA 2922 Shenandoah Drive Royal Oak, MI Appraisal 1, Ltd.

2 Appraisal 1, Ltd Shenandoah Drive Royal Oak, MI February 20, 2008 Mr. Edgar J. Dietrich Charlevoix Grosse Pointe Park, MI Property - Borrower - File No. - Case No Middlebelt Road Garden City, MI Maplewood Custom Millwork Dear : In accordance with your request, I have made a Complete Appraisal and prepared a Summary Appraisal Report of the real property located at 6332 Middlebelt Road, Garden City, MI. The purpose of the Summary Appraisal is to provide an opinion of the market value of the property described in the body of this report. Enclosed, please find the Summary Appraisal which describes certain data gathered during our investigation of the property. The methods of approach and reasoning in the valuation of the various physical and economic factors of the subject property are contained in this report. An inspection of the property and a study of pertinent factors, including valuation trends and an analysis of neighborhood data, led the appraiser to the conclusion that the market value, as of February 13, 2008 is : One Million Three Hundred Thousand Dollars ($1,300,000) The opinion of value expressed in this report is contingent upon the Limiting Conditions attached to this report. It has been a pleasure to assist you. If I may be of further service to you in the future, please let me know. Respectfully submitted, Appraisal 1, Ltd. Jake D. Dow, CREA/CCRA Certification #

3 Complete Appraisal Analysis - Summary Appraisal Report PURPOSE OF THE APPRAISAL File #: It is to estimate the current market value of the Subject Property. DEFINITION OF MARKET VALUE The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, 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 each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash 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. *Adjustments to the comparables must be made for special or creative financing or sales concessions. No adjustments are necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing adjustments can be made to the comparable property by comparisons to financing terms offered by a third party institutional lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession but the dollar amount of any adjustments should approximate the market's reaction to the financing or concessions based on the appraiser's judgment. CERTIFICATION I certify that, to the best of my knowledge and belief: 1. The statements of fact contained in this report are true and correct. The appraiser has not knowingly withheld any pertinent information. 2. The reported analysis, opinions, and conclusions are limited only by the reported Assumptions and Limiting Conditions, and are my personal, unbiased professional analysis, opinions, and conclusions. 3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. 4. My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result or the occurrence of a subsequent event. 5. My analysis, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 6. I have (or have not) made a personal inspection of the property that is the subject of this report. (If more than one person signs the report, this certification must clearly specify which individuals did, and which individuals did not make a personal inspection of the appraised property.) 7. No one provided significant professional assistance to the person signing this report. (If there are exceptions, the name of each individual providing significant professional assistance must be stated.) 8. The "Estimate of Market Value" in the appraisal report is not based in whole or in part upon the race, color, or national origin of the prospective owners or occupants of the property appraised or of the properties in the vicinity of the property appraised. 9. All contingent and limiting conditions are contained herein (imposed by the terms of the assignment or by the undersigned affecting the analysis, opinions, and conclusions contained in this report). 10. All conclusions and opinions concerning the real estate that are set forth in the appraisal report were prepared by the appraiser whose signature appears on the appraisal report. No change of any item in the appraisal report shall by made by anyone other than the appraiser, and the appraiser shall have no responsibility for any such unauthorized change. 11. This form has not been altered, except for the possible expansion of the analysis/comments areas. 12. The appraiser has read and understands the instruction manual that accompanies this form. 13. The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. STATEMENT OF CONTINGENT AND LIMITING CONDITIONS This appraisal report is subject to the following Assumptions 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 therfor. 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 this 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. Disclosure of the contents of the appraisal report is governed by the Bylaws and Regulations of the professional appraisal organizations with which the Appraiser is affiliated. 8. Neither all, nor any part of the contents 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 assigns, mortgage insurers, consultants, professional appraisal organizations, any state or federally approved financial institution, any department, agency, or instrumentality of the United States or any 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. 9. 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. See Attached Date: February 20, 2008 Appraiser(s): Jake D. Dow, CREA/CCRA Appraisal 1, Ltd. UCIAR-SP7/90 OTS APPROVED FORM-MAY NOT BE ALTERED PAGE 7

4 TABLE OF CONTENTS Table of Contents i Summary of Salient Facts & Conclusions ii Purpose of the Appraisal 1 Function of the Appraisal 1 The Appraisal Process 1 Approaches to Value 2 Area Analysis 3 Site Improvements 4 Tax and Assessment Analysis 5 Highest and Best Use 6 Cost Approach 7 Direct Sales Comparison Approach 9 Rental Comparables 12 Income Approach 13 Final Conclusion of Value 15 APPENDIX Assumptions and Limiting Conditions I ADDENDUM A. Location Map B. Subject Sketches C. Photographs 1. Front and Rear Views 2. Street Scenes 3. Comparable Sales 4. Interior Views i

5 SUMMARY OF SALIENT FACTS AND CONCLUSIONS Subject: Maplewood Custom Millwork 6332 Middlebelt Road Garden City, Michigan Land: A irregular shaped property consists of three parcels of land (identified as Parcels A, B and C for purposes of this report) with a total frontage of feet on the east side of Middlebelt Road and 480 feet of frontage on the south side of Maplewood Boulevard. Improvements: Parcel A is improved with a 5,710 sq. ft. one-story, brick veneer retail building and office, a 3,420 sq. ft. shop, and a 12,300 sq. ft. warehouse, for a total building area of 21,430 sq. ft. The adjacent paved parking lot has an area of 22,718 sq. ft. Parcels B and C are unimproved vacant parcels of land. Best Use: Commercial Retail and/ or Wholesale facilities Valuation Date: February 13, 2008 Market Value: $ 1,300,000 Tax ID: (A) , (B) and (C) Legal Description: W 210 ft. of E 590 ft., Lot 25; also, W 210 ft. of E 590 ft., Lot 26; also, W 480 ft. of E 590 ft., Lot 27, and Lot 28, exc. E 110 ft.; Assessors Folkers Little Farms Sub., T2S, R9E, Liber 64, Page 46, WCR. ii

6 PURPOSE OF THE APPRAISAL The purpose of this appraisal is to estimate the current Market Value of the fee simple interest of the improved real property, located at 6332 Middlebelt Road, Garden City, MI. 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 any 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 sale concessions granted by anyone associated with the sale. Fee simple interest is defined as absolute ownership unencumbered by any other interest or estate, subject only to limitations or eminent domain, escheat, police power and taxation. FUNCTION OF THE APPRAISAL The function of this appraisal is to provide a determination of Market Value of specific real property in order to assist in financial planning decisions. THE APPRAISAL PROCESS A real estate appraisal is an estimate of the present worth or value of rights in real estate under specified market conditions, which has been derived from the orderly and logical analysis of supportable facts by a trained practitioner. Commonly accepted appraisal practice involves the following steps: (1) Define the problem; (2) Plan the work involved to complete the appraisal; (3) Collect the data pertinent to the appraisal; (4) Organize and analyze the data obtained; (5) Apply the data and analysis to arrive at indications of value for the cost approach, direct sales comparison approach, and the income approach; and (6) Correlate and reconcile the value indications into a final estimate of value. The reliability of the data, the experience of the appraiser and the judgment exercised in interpreting and applying the data will affect the opinion rendered. Care must be taken to verify any data utilized and to justify any conclusions reached therefrom. 1

7 APPROACHES TO VALUE The cost approach, based primarily on the principle of substitution, assumes that a prudent and knowledgeable purchaser would pay no more than the cost of manufacturing a facility with equal desirability and utility as the subject. In utilizing the cost approach the appraiser first values land as if vacant, generally by using direct sales comparison. The reproduction or replacement cost new of the building and improvements is then estimated. Accrued depreciation is then estimated and deducted from the estimated cost new to arrive at an estimate of the present worth of the improvements. The depreciated building and improvements value is then added to the estimated land value to obtain an estimate of value for the entire property. This technique is most applicable in the valuation of unique, special purpose buildings, also when the improvements are relatively new and represent the highest and best use to the land. The income has, at its foundation, two major principles: substitution and anticipation. An investor in real estate expects a return comparable to that of investments with similar risk. The income approach assumes a direct and measurable relationship between the amount of income a property produces and that property's value. Application of this approach involves converting the future benefits of ownership into an indication of present worth, generally through a process of capitalization of net operating income. This technique is particularly useful when there is little reliable sale data or when the building is so old that the cost approach is deemed unreliable. The direct sales comparison approach, also premised on the principle of substitution, assumes that an informed purchaser will pay no more for the subject property than the cost of acquiring a similar property with equal utility. A comparison is made between the subject and similar properties that have sold recently. After analysis of the sale transactions and physical attributes of the comparable properties, adjustments are made to the comparable sales to reflect the value of any dissimilarities between the comparables and the subject. The estimated values of these dissimilarities are then added to or subtracted from the sale prices to arrive at a value for the subject. The direct sales comparison is especially applicable when there is an abundance of reliable sales data to utilize. After completing the analysis of the three valuation techniques, the appraiser will correlate the indicated values into a final value estimate. Each of the three approaches is reviewed for the quality and reliability of the data used, as well as the applicability of the technique to the solution of the defined appraisal problem. Completion of this analysis (referred to as final reconciliation) should lead the appraiser to render as opinion of value that is rational, supportable, justifiable and defensible. 2

8 AREA ANALYSIS Garden City is centrally located in Wayne County (eight miles due west of Detroit in the western part of the Detroit Metropolitan Area), and is located five miles east of Interstate I-275 and three miles south of Interstate I-96. It extends from Warren Road on the north to Cherry Hill Road on the south, and from Inkster Road on the east to Venoy and Radcliff on the west, for a total area of 5.87 square miles. Downtown Garden City is located at the intersection of Ford Road (M-153) and Middlebelt Road, which is the busiest intersection in Wayne County. Extensive renovations are planned in the Garden City downtown area in order to capitalize on the traffic volume. The current economic recession has had an impact at state and local levels with increased numbers of small business bankruptcies and extensive reductions in forces of large companies. These changes were more evident in the inter city, but also affected the adjacent areas. During recent years, new construction in many areas has resulted in greater competition and restoration of the older buildings throughout the area. This has provided a stabilizing factor for the commercial real estate market in the southeastern Michigan area. Garden City has a population of just over 30,000 (2000 census) with a labor force of over 18,000, an unemployment rate of 1.8%, and a median household income of $ 51,841. 3

9 SITE AND SITE IMPROVEMENTS The subject property at 6332 Middlebelt Road, Garden City, Michigan, is located on the southeast corner of Middlebelt Road and Maplewood Boulevard, midway between Ford Road (M-153) and Warren Road, in the northeastern part of Garden City. It is easily accessible from Interstate I-96 (three and one-half miles north) and I-275 (five miles west). The property consists of three adjacent parcels of land with a total of feet of frontage on Middlebelt and 480 feet of frontage on Maplewood. The corner parcel A is improved with a 5,130 sq. ft. one-story retail building on a concrete slab, an adjacent 580 sq. ft. office and 3,420 sq. ft. shop, connected to a 12,300 sq. ft. unheated steel rigid-frame warehouse building at the rear. Parcels B and C, adjacent on the south, are unimproved vacant lots. The retail building, built in 1956, is at the front and extreme south of the improved lot. It is a steel framed structure with long span steel bar joists that support a gypsum roof deck. The exterior walls are concrete block with a brick veneer and plate glass store front. The flooring is primarily ceramic tile, interior partitions of drywall, and a suspended acoustic panel ceiling with recessed fluorescent lighting. The most of the area is currently used for display of kitchen and bathroom cabinets and related items. A small area at the rear is devoted to a sales office and general storage. Heating for the building is supplied by unit gas heaters. The shop building, built in 1964 adjacent on the north, is of ordinary wood construction with wood joists and roof deck. The front twenty feet has an office with a raised floor to match the level of the retail building and is accessible only from the display area. The remaining work shop floor is at the same level as the adjacent parking lot but lower that the floor of the retail building. Raw materials are brought into the shop, measured, cut to required dimensions, assembled, and finished for display or shipment to customers. It also contains a public lavatory and separate furnace room with a gas fired, forced warm air furnace for this building. A steel rigid-frame unheated warehouse building (built in 1967) adjacent to the back of the retail and work shop and extending further to the north and east serves as a storage area for lumber for building the current occupants main products. The exterior walls and roof are of corrugated metal with plastic skylight panels, and a concrete floor and foundation. 4

10 TAX AND ASSESSMENT ANALYSIS The Garden City Assessor's Office identifies the property as three separate parcels. The improved corner Parcel A located at 6332 Middlebelt Road is identified as property number with a State Equalized Value (SEV) of $ 330,800 and a Taxable Value of $ 280,264. The two smaller unimproved lots (Parcel B and C ) to the south are identified by number and , respectively, with SEV s of $ 14,700 each. The Taxable Values are $ 8,627 and $ 14,700, respectively. The 2007 property taxes are as follows: Parcel A - $ 14,036.72; Parcel B - $ , and Parcel C - $ ; for a grand total of $ 15,

11 HIGHEST AND BEST USE The term highest and best use is generally defined as that reasonable and probable use that supports the highest present value, as defined, as of the effective date of the appraisal. Alternatively, that use from among reasonably probable and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which will generate the highest net return to the property over a period of time. The definition above applies specifically to the highest and best use of land. It is to be recognized that in cases where a site has existing improvements on it, the highest and best use will continue, however, unless and until land value in its highest and best use exceeds the total value of the property in its existing use. In analyzing highest and best use, the appraiser first considers the highest and best use of the site as if vacant, then follows with the analysis of the highest and best use as improved. In both cases the appraiser considers the following criteria: 1. Possible Use - The appraiser considers whether the proposed use is physically possible on the site. 2. Permitted Legal Use - The appraiser must ascertain whether the proposed use is permitted pursuant to zoning regulations, building codes and private restrictions. 3. Feasible (appropriate) Use - Given legally permitted and physically possible uses, the appraiser analyzes the proposed use of the property in relation to the local market characteristics to determine if the proposed use is compatible of producing a positive net present value. 4. Highest Present Value - The appraiser reviews the alternative uses that meet the first three criteria to select that use which will produce the highest present value. The highest and best use will remain at the current use unless and until the site can no longer viably, economically support the current use. It is the opinion of the appraiser that the use of the subject property as wholesale and/or retail facilities, is in accordance with the current commercial zoning, is the highest and best use of the property as legally permitted. 6

12 COST APPROACH The Cost Approach is generally defined as that approach in appraisal analysis which is based on the proposition that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. It is particularly applicable when the property being appraised involves relatively new improvements which represent the highest and best use of the land or when relatively unique or specialized improvements are located on the site and for which there exist no comparable properties on the market. The cost approach is based primarily on the principle of substitution, which simply asserts that a property's market value tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming no costly delay is encountered in making the substitution. In arriving at a value estimate by the cost approach, the appraiser takes the following steps: 1. The site is valued as if vacant and able to be put to its highest and best use. 2. The replacement cost new of buildings is estimated using current cost. 3. Accrued depreciation (value of diminished utility) of the buildings is estimated. 4. Accrued depreciation is deducted from the replacement cost new to arrive an estimate of the present worth of the buildings. 5. The depreciated replacement cost new of the site improvements is estimated. 6. The estimated depreciated costs of buildings and site improvements are summed to obtain the estimated depreciated replacement cost new of all improvements. 7. The estimated depreciated replacement cost new of all improvements is added to the estimated site value to obtain the opinion of market value of the subject property via the cost approach. The cost approach generally becomes less reliable with older properties. In the subject case, relatively recent renovation and updating, and good maintenance practices, have significantly reduced the physical depreciation, which combined with a minimal amount of functional and/or economic obsolescence, provides good support. 7

13 COST APPROACH The following is the cost approach for the subject property as of February 13, Cost data is provided by the Marshall and Swift Valuation Service, adjusted for local conditions. Land value is estimated on the basis of recent closed market transactions and/or extrapolation of assessor s values for this type of property. Building and Improvements: One-Story, Steel frame on Slab (5,130 $ 90/sf) = $ 461,700 One-Story, Wood frame on Slab (4,000 $ 70/sf) = 280,000 One-story, Rigid Steel Whse. (12,300 $ 20/sf) = 246,000 Sub Total 987,700 An effective depreciation factor of 43.75% = - 432,100 Sub Total 555,600 Plus Land and Land Improvements: Paved Parking area (22,718 $ 5/sf) = 113,600 Land Value (95,985 $ 7.50/sf) = 719,200 Total $ 1,388,400 TOTAL INDICATED VALUE (ROUNDED) $ 1,390,000 8

14 DIRECT SALES COMPARISON APPROACH The Direct or Market Sales Comparison Approach is commonly defined as that approach in appraisal analysis which is based on the proposition that an informed purchaser would pay no more for a property than the cost of acquiring an existing property with the same utility. This approach is applicable when an active market provides sufficient quantities of reliable data which can be verified from authoritative sources. The direct sales comparison approach is relatively unreliable in an inactive market or in estimating the value of properties for which no real comparable sales data are available. It is also questionable when sales data cannot be verified with principals to the transaction. The Direct Sales Comparison Approach which is based on the principle of substitution assumes that a knowledgeable and prudent buyer, informed of pertinent local market prices and conditions, will pay no more for a property than the cost of acquiring an equally desirable substitute property. In the comparison process it is important to select comparables that are as similar to the subject as possible. The subject and comparables must share a similar or identical highest and best use, as well as having similar or reasonably identical physical characteristics. Any dissimilarities between the comparables and the subject must be analyzed and value adjustments made to the comparable's as necessary. The adjustments made are based on the principle of contribution, not cost. The principle of contribution states that the value of a component part of a property is measured by how much it contributes to the value of the entire property. The amount of the value adjustment is gauged by the market and applied to the comparable property. Since the subject property is improved with a building designed as wholesale and/or retail facility with a shop area and warehouse, market sales that were similar in size and use were selected from the same market area. 9

15 COMPARABLE SALES AOI-4381 SUBJECT COMPARABLE COMPARABLE COMPARABLE NO. 1 NO. 2 NO. 3 LOCATION 6332 Middlebelt Inkster Wayne Schoolcraft Garden City Redford Twp Livonia Livonia SOURCE Inspection/City Rec MLS # MLS # MLS # PROXIMITY 3.3 Miles NNE'ly 4.3 Miles NW'ly 3.7 Miles NNW'ly TO SUBJECT SALE AMOUNT $550,000 $500,000 $626,500 DATE OF SALE 12/12/ /12/2006 6/20/2006 SITE SIZE 255 x x x x 399 LAND AREA 95,867 40,000 26,845 39,501 BLDG. AREA 21,430 11,440 8,500 10,381 LAND:BLDG RATIO YR BLT/EFC AGE / / /25 INDICATED $48.08 $60.35 $58.82 COST/SF ADJUSTMENTS: TIME 0.00% 0.00% 0.00% AMOUNT LAND 2.00% 2.20% 1.10% AMOUNT SIZE % % % AMOUNT (7.21) (12.07) (8.82) AGE/CONDITION % -5.00% % AMOUNT (4.81) (3.02) (5.88) LOCATION 10.00% 15.00% 10.00% AMOUNT UTILITY/AMENITIES 35.00% 15.00% 20.00% AMOUNT INDICATED $61.92 $58.65 $64.70 $62.41 VALUE/ SF An analysis of comparable sales data with equal weight placed on all Comparables provides an indicated value of about $ 62 per square foot of building area. This results in an indicated value of $ 1,328,660 for the 21,430 sf subject property, rounded to $1,300,

16 SALES COMPARISON The table of sales comparison on the prior page includes various factors for adjustment for comparability to the subject property. No time adjustment factor was utilized since commercial properties have remained relatively stable during the past two years. The positive land adjustment factor required for all Comparables is a direct result of their relatively smaller amount of site (after comparing the land to building ratio of the subject). A building size adjustment is required to reflect the fact that smaller facilities have a greater unit cost, and larger ones have a lesser unit cost. The adjustments reflect the negative adjustment unit price of the smaller Comparables, in proportion to the size difference, to reflect comparability with the subject property. The Age factor reflects the physical, functional, and economical depreciation required to reflect that of the subject. In the subject situation, the negative adjustments reflect the lower effective ages of all Comparables. The positive location factors are a result of the more distant and/or lesser amount of external economic activity (shopping and community centers, new or existing residential facilities, etc.) in the immediate area, in addition to established public services, major streets and public transportation. The adjustments are in direct proportion to the inferiority of their respective sites on less traveled highways, including less visibility and/or poor accessibility from those routes. Other utility/amenities adjustments are required due to differences in the utility of the facilities as a result of ease of ingress and egress, the layout of the facility, additional building components (i.e.; presence of lighting, plumbing fixtures, and heating and/or cooling), and their ability to be adaptable to serve different or additional functions. Positive adjustment factors were required for all comparables in proportion to the amount and condition of interior components. 11

17 RENTAL COMPARABLES R SUBJECT RENT RENT RENT NO. 1 NO. 2 NO. 3 LOCATION 6332 Middlebelt Plymouth Autry Industrial Garden City Livonia Livonia Livonia SOURCE Inspection/City Rec Signature Assoc. Signature Assoc. Signature Assoc. PROXIMITY 2.8 Miles NNW'ly 4.2 Miles NW'ly 5.2 Miles NW'ly TO SUBJECT LEASE TYPE Net/Net/Net Net/Net/Net Net/Net/Net BUILDING SIZE 21,700 23,625 14,334 RENTAL AREA 21,430 20,855 22,800 14,212 YR BLT/EFC AGE / / / /25 INDICATED $4.95 $4.95 $4.95 ANNUAL RENT/SF ADJUSTMENTS: TIME 0.00% 0.00% 0.00% AMOUNT SIZE 0.00% 0.00% -5.00% AMOUNT (0.25) AGE/CONDITION 0.00% -5.00% % AMOUNT 0.00 (0.25) (0.50) LOCATION 5.00% 10.00% 10.00% AMOUNT UTILITY/AMENITIES 10.00% 10.00% 20.00% AMOUNT INDICATED $5.69 $5.69 $5.69 $5.69 VALUE/ SF An analysis of comparable rental data with equal weight placed on all Comparables provides an indicated overall net rental value of about $ 5.69 per square foot for the 21,430 sq. ft.subject property, for a total of $121, per year, rounded to 122,000, net of all expenses. 12

18 INCOME APPROACH The income approach to value is commonly defined as the procedure in an appraisal analysis which converts anticipated benefits (dollar income or amenities) to be derived from the ownership of property into a value estimate. An investor will consider the present value of anticipated future benefits when deciding what price to pay for a property today. In making the investment decision, the investor must forecast the changes that he or she thinks might occur in the property, in the area or region, and in the national economy. Additionally, the investor will be unwilling to pay more for a property than the price of a similar investment with equal risk. The principles of anticipation, change and substitution are interrelated and comprise the foundation of the income approach to value. Reconstruction of the operating income statement is based on comparison of rental rates for similar property in the area and in similar communities. All rates are based on triple net leases. The current lease for the subject property appears to be substantially below typical market rates. The following results are the appraiser's opinion only. OPERATING INCOME STATEMENT Potential Gross Receipts: Rental Income, per yr. = $ 122,000 Vacancy Allowance (5%) = ( 6,100) 115,900 Less Operating Expenses: Replcmt Resv.($ 30,000/15 yr) = 2,000 ( 2,000) $ 113,900 13

19 An estimated mortgage of 70% and a rate of 8.5% with a rate of 10.5% for the 30% equity produces the following:.70 x = x = Weighted Rate The mortgage coefficient from Elwood s Tables (based on a fifteen year mortgage, a five year projection period and a 10.5% equity yield) is Equity Yield - C(Ratio of Mortgage to Value) = Basic Capitalization Rate ( ) (.70) = Basic Capitalization Rate = Indicated Value = Annual Net Operating Income Basic Capitalization Rate = $ 113,900 / INDICATED VALUE = $ 1,188, ROUNDED TO $ 1,190,000 14

20 FINAL CONCLUSION OF VALUE The Direct Sales Comparison Approach is generally the most appropriate method for determining the value of property currently being purchased since it reflects the behavior of the majority of buyers in this market area. As mentioned earlier in this report, the Direct Sales or Market Comparison Approach is based on the proposition that an informed purchaser would pay no more for a property than the cost of acquiring an existing similar property with the same utility. This approach is applicable when an active market provides sufficient quantities of reliable data which can be verified from authoritative sources. Good support is provided by both the Cost and Income Approach. COST APPROACH $ 1,390,000 MARKET APPROACH $ 1,300,000 INCOME APPROACH $ 1,190,000 The appraiser concludes that after careful consideration of all the facts presented, the Market Value, indicated by the Market Approach, for the subject real property as of February 13, 2008 would be: ONE MILLION AND THREE HUNDRED THOUSAND DOLLARS The marketing time for the subject property is estimated at from six to nine months of exposure on the open market based on the sales of comparable vacant properties in the area during the past two years. 15

21 APPENDIX

22 ADDENDUM

23 Borrower or Owner Property Address File No. City County State Zip Code Lender or Client LOCATION MAP Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich Appraisal 1, Ltd.

24 Borrower or Owner Property Address File No. City County State Zip Code Lender or Client PHOTOGRAPH ADDENDUM Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich FRONT VIEW OF SUBJECT PROPERTY REAR VIEW OF SUBJECT PROPERTY STREET SCENE OF SUBJECT PROPERTY Appraisal 1, Ltd.

25 Borrower or Owner Property Address File No. City County State Zip Code Lender or Client PHOTOGRAPH ADDENDUM Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich PAVED PARKING AREA FRONT OF WAREHOUSE AND SHOP ENTRANCE PARKING LOT FROM MAPLEWOOD STREET VIEW OF MAPLEWOOD Appraisal 1, Ltd.

26 Borrower or Owner Property Address File No. City County State Zip Code Lender or Client PHOTOGRAPH ADDENDUM Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich COMPARABLE # Inkster COMPARABLE # Wayne COMPARABLE # Schoolcraft Appraisal 1, Ltd.

27 Borrower or Owner Property Address File No. City County State Zip Code Lender or Client PHOTOGRAPH ADDENDUM Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich RENTAL # Plymounth Rd Autry St. RENTAL #2 RENTAL # Industrial Rd. Appraisal 1, Ltd.

28 Borrower or Owner Property Address File No. City County State Zip Code Lender or Client PHOTOGRAPH ADDENDUM Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich SHOWROOM FOYER SHOWROOM KITCHEN DISPLAY SHOWROOM BATH DISPLAY Appraisal 1, Ltd.

29 Borrower or Owner Property Address File No. City County State Zip Code Lender or Client PHOTOGRAPH ADDENDUM Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich SALES OFFICE CUSTOMER CONFERENCE AREA PRIVATE OFFICE Appraisal 1, Ltd.

30 Borrower or Owner Property Address File No. City County State Zip Code Lender or Client PHOTOGRAPH ADDENDUM Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich PUBLIC LAVATORY CARPENTER SHOP SHOP ASSEMBLY AREA Appraisal 1, Ltd.

31 Borrower or Owner Property Address File No. City County State Zip Code Lender or Client PHOTOGRAPH ADDENDUM Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich WAREHOUSE WAREHOUSE WAREHOUSE MEZZANINE Appraisal 1, Ltd.

32 COMMERCIAL BUILDING COMPARABLE NUMBER 1 Category Area Map. Ref. N-5 SubArea Tax # Lot(s) Address / Location Inkster Rd., Redford, MI Property Rights Purchased Fee Simple Date of Sale Terms Conventional Verified by MLS # Grantor Grantee Recorded: DB Pg Date Stamps $ Sale Price $ 550,000 Equity $ Price / SF $ Overall Rate Equity Dividend EGIM Land Size Dimensions 100 x 400 Yr Blt 1977 Zoning CM 301-Industrial Use at Time of Sale Food Distribution & Manufacturing Assessed Tax Value $ 238,200 Tax Rate Taxes $ 6,634 SF Gross Building Area SF Net Rentable Area Construction Type Concrete Block No. of Stories One Rent per SF $ Expense per SF $ Expense Ratio % Remarks Actual Income & Expenses Unknown. BUILDING DESCRIPTION INCOME / EXPENSE PROJECTIONS Quality Average Condition Average Basement No Utilities Parking Type On-Site No. Spaces Major Tenants Owner Occupied Remarks Sprinkler HVAC Elevator No Gross Potential Income Less Vacancy & Credit Loss Plus Other Income Effective Gross Income Real Estate Taxes Insurance Management Repairs and Maintenance Janitorial Utilities Total Operating Expense Net Operating Income Debt Service Loan # 1 Debt Service Loan # 2 Income $ Debt Service Loan # 3 Expenses Expenses $ Before Tax Cash Flow Analysis / Comments: UCIAR-SP/EP 7/90 OTS APPROVED FORM - MAY NOT BE ALTERED

33 COMMERCIAL BUILDING COMPARABLE NUMBER 2 Category Area Map. Ref. G-6 SubArea Tax # Lot(s) 6A Address / Location Wayne Rd, Livonia, Mi Property Rights Purchased Fee Simple Date of Sale Terms Conventional Verified by Grantor MLS # Exclusive Enterprises, Inc Wayne County Public Records Grantee Patlar, LLC Recorded: DB Pg 1202 Date 10/12/2006 Stamps $ Sale Price $ 500,000 Equity $ Price / SF $ Overall Rate Equity Dividend EGIM Land Size Dimensions Yr Blt 1971 Zoning CM 301-Industrial Use at Time of Sale General Office & Warehouse Assessed Tax Value $ 248,420 Tax Rate Taxes $ 6,754 SF Gross Building Area 8500 SF Net Rentable Area Construction Type Concrete Block No. of Stories One Rent per SF $ Expense per SF $ Expense Ratio % Remarks Actual Income & Expenses Unknown. BUILDING DESCRIPTION INCOME / EXPENSE PROJECTIONS Quality Average Condition Average Basement No Utilities Parking Type On-Site No. Spaces Major Tenants Owner Occupied Remarks Sprinkler HVAC Elevator No Gross Potential Income Less Vacancy & Credit Loss Plus Other Income Effective Gross Income Real Estate Taxes Insurance Management Repairs and Maintenance Janitorial Utilities Total Operating Expense Net Operating Income Debt Service Loan # 1 Debt Service Loan # 2 Income $ Debt Service Loan # 3 Expenses Expenses $ Before Tax Cash Flow Analysis / Comments: UCIAR-SP/EP 7/90 OTS APPROVED FORM - MAY NOT BE ALTERED

34 COMMERCIAL BUILDING COMPARABLE NUMBER 3 Category Area Map. Ref. L-5 SubArea Tax # Lot(s) Address / Location Schoolcraft Rd., Livonia, MI Property Rights Purchased Fee Simple Date of Sale Terms Conventional Verified by Grantor MLS # Uni Matrix Financial Services Wayne County Public Records Grantee Jiffy Signs Properties, LLC Recorded: DB Pg 0092 Date 05/03/2006 Stamps $ Sale Price $ 626,500 Equity $ Price / SF $ Overall Rate Equity Dividend EGIM Land Size Dimensions Yr Blt 1978 Zoning CM 301-Industrial Use at Time of Sale Construction Office & Warehouse Assessed Tax Value $ 284,980 Tax Rate Taxes $ 7,748 SF Gross Building Area SF Net Rentable Area Construction Type Concrete Block No. of Stories One Rent per SF $ Expense per SF $ Expense Ratio % Remarks BUILDING DESCRIPTION INCOME / EXPENSE PROJECTIONS Quality Average Condition Average Basement No Utilities Parking Type On-Site No. Spaces Major Tenants Owner Occupied Remarks Sprinkler HVAC Elevator No Gross Potential Income Less Vacancy & Credit Loss Plus Other Income Effective Gross Income Real Estate Taxes Insurance Management Repairs and Maintenance Janitorial Utilities Total Operating Expense Net Operating Income Debt Service Loan # 1 Debt Service Loan # 2 Income $ Debt Service Loan # 3 Expenses Expenses $ Before Tax Cash Flow Analysis / Comments: UCIAR-SP/EP 7/90 OTS APPROVED FORM - MAY NOT BE ALTERED

35 Borrower or Owner Property Address City County State Zip Code Lender or Client File No USPAP COMPLIANCE ADDENDUM Maplewood Custom Millwork 6332 Middlebelt Road Garden City Wayne MI Mr. Edgar J. Dietrich APPRAISER'S CERTIFICATION: The following Certification statements are in addition to and may supercede the signed Appraiser's Certification attached to this appraisal report. This Appraiser's Certification is compliant with the current edition of the Uniform Standards of Professional Appraisal Practice. 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. 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. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. I have (or have not) made a personal inspection of the property that is the subject of this report. (If more than one person signs this certification, the certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property.) No one provided significant real property appraisal assistance to the person signing this certification. (If there are exceptions, the name of each individual providing significant real property appraisal assistance must be stated.) TYPE OF VALUE (PURPOSE OF THE APPRAISAL) AND DEFINITION OF VALUE: The purpose of this appraisal is to provide an opinion of the market value of the subject property, as defined in this report, as of the effective date of this report. INTENDED USE, AND INTENDED USER OF THE APPRAISAL: The intended use of the appraisal is to assist the client and any other intended users in the underwriting, approval, and funding of the mortgage loan. The intended users of this report are the stated client and any other institutions involved in the underwriting, approval, and funding of the mortgage loan. No one else, including the purchaser and seller, should rely on the opinion of value or any other conclusions contained in this appraisal report. ANALYSIS AND REPORT FORM: The appraisal is based on the information gathered by the appraiser from public records, other identified sources, inspection of the subject property and neighborhood, and selection of comparable sales, listings, and/or rentals within the subject market area. The original source of the comparable data described in the Data Source section of the market grid along with the source of confirmation is provided, where available. The original source is presented first. The sources and data are considered reliable. When conflicting information was provided, the source deemed most reliable has been used. Data believed to be unreliable was not included in the report or used as a basis for the value conclusion. The extent of the analysis to this assignment is stated in the Appraiser's Certification included above and attached to this report. Appraisal 1, Ltd.

36 File No USPAP COMPLIANCE ADDENDUM Borrower or Owner Property Address Maplewood Custom Millwork 6332 Middlebelt Road City Garden City County Wayne State MI Zip Code Lender or Client Mr. Edgar J. Dietrich DEFINITION OF INSPECTION: The term "Inspection", as used in this report, is not the same level of inspection that is required for a "Professional Home Inspection". The appraiser does not fully inspect the electrical system, plumbing system, mechanical systems, foundation system, floor structure, or subfloor. The appraiser is not an expert in construction materials and the purpose of the appraisal is to make an economic evaluation of the subject property. If the client needs a more detailed inspection of the property, a home inspection, by a Professional Home Inspector, is suggested. DIGITAL SIGNATURES: The signature(s) affixed to this report, and certification, were applied by the original appraiser(s) or supervisory appraiser and represent their acknowledgements of the facts, opinions and conclusions found in the report. Each appraiser(s) applied his or her signature electronically using a password encrypted method. Hence these signatures have more safeguards and carry the same validity as the individual's hand applied signature. If the report has a hand-applied signature, this comment does not apply. OPINION OF MARKET VALUE VS ESTIMATE OF MARKET VALUE: The current Uniform Standards of Professional Practice defines the market value conclusion as an opinion of market value and not an estimate of market value. THREE YEAR SALES HISTORY FOR THE SUBJECT PROPERTY: The appraiser has complied with Standards Rule 1-5b and 2-2b(ix) requiring the appraiser to analyze and report all sales of the subject property that occurred within the three (3) years prior to the effective date of the appraisal. If this information was available to the appraiser(s), it is reported in the Subject column of Sales Comparison Analysis section of the appraisal report. EXPOSURE PERIOD By studying the sales of similar comparable residential properties with value ranges as identified in this report and discussions with individuals knowledgable of current neighborhood trends in the subject area, the appraiser feels that the exposure time for the subject property is equal to the indicated Marketing Time identified in the Neighborhood section of this appraisal report. APPRAISER: SUPERVISORY APPRAISER (ONLY IF REQUIRED): Signature: Signature: Name: Date Signed: Jake D. Dow, CREA/CCRA February 20, Name: Date Signed: State Certification #: State Certification #: or State License #: or State License #: State: State: Expiration Date of Certification or License: 07/31/2008 Appraisal 1, Ltd. Expiration Date of Certification or License: Did X Did Not Inspect Property