professional appraisal services, inc · 2017-03-22 · bank of america in the award/engagement...

SUBJECT PROPERTY:Retail Strip Center

520 E. Houghton Ave.West Branch, Ogemaw County, Michigan

PROJECT NUMBER:15-004113-APR01-001

CLIENT:Ms. Talitha Stone

Bank of America, N.A.1070 Gaines School Rd.

GA8-043-01-01Athens, Georgia 30605

REPORT DATE:July 2, 2015

EFFECTIVE DATE:June 11, 2015 - "As Is"

PAS FILE NUMBER:MI15-2-0098

2525 E. Paris Ave., Ste. 150 • Grand Rapids, MI 49546Ph: 616.942.4100 • Fax: 616.942.4104

PROFESSIONAL APPRAISAL SERVICES, INC.Real Estate Appraisers & Consultants

Daniel F. Essa, MAI, J.D., LL.M.Jeffery T. Cutler, MAIDavid F. Greig, MAI

Joseph D. Stotenbur, MAI

July 2, 2015

Ms. Talitha StoneCommercial ConsultantBank of America, NA1070 Gaines School RoadGA8-043-01-01Athens, Georgia 30605

RE: Appraisal of a Retail Shopping Center, located at 520 E. Houghton Avenue,West Branch, Ogemaw County, MI. Service Type ID: 15-004113-APR01-001

Dear Ms. Stone:

In response to your authorization, we have made a personal inspection of the above captioned property, conducted the required investigations, gathered the necessary data and analyzed the information with respect to the subject property, in order to form an opinion of the Market Value of the Leased Fee Interest.

The subject is comprised of a 27,672 net square foot retail center situated on 2.82 acres of land. The center was constructed in 1972 and was 92% leased at the time of inspection.

Based upon our investigation and analysis, as developed in the Appraisal Report which follows, the Market Value of the subject property is as follows:

MARKET VALUE CONCLUSIONAppraisal Premise Property Rights Date of Value Value Conclusion“As Is” Market Value Leased Fee June 11, 2015 $1,200,000

The intended use of this report is to provide information for use in making business and credit decisions concerning an actual or prospective loan or line of credit, or making internal business decisions concerning a Bank of America owned or leased property. This report is for the use and benefit of, and may be relied upon by, Bank of America, N.A. as Lender, or Bank of America, N.A. as Administrative Agent for certain Lenders, and each actual and prospective Lender and Participant in such loan or line of credit, and their respective successors, assign and affiliates.

Daniel F. Essa, MAI, J.D., LL.M.EMail: [email protected]

Mid-Michigan/Corporate Office2152 Commons Pkwy.Okemos, MI 48864Tel: (517) 333-9900Fax: (517) 333-9953Daniel F. Essa, MAI, J.D., LL.M.Jeffery T. Cutler, MAI

Metro Detroit Office41700 Gardenbrook Rd., Ste. 145

Novi, MI 48375Tel: (248) 349-5555

Fax: (248) 349-5522David F. Greig, MAI

Grand Rapids Office2525 E. Paris Ave., SE, Ste. 150

Grand Rapids, MI 49546Tel: (616) 942-4100Fax: (616) 942-4104

Joseph D. Stotenbur, MAI

Professional aPPraisal services, inc.Real Estate Appraisers & Consultants

Ms. Talitha StoneJuly 2, 2015Page 2

Bank of America makes no warranties or representations regarding this document or the conclusions contained herein.

Your attention is directed to the following Appraisal Report which, in part, forms the basis of our opinion. This appraisal has been prepared in a manner which complies with the Uniform Standards of Professional Appraisal Practice (USPAP); all professional standards and code of ethics of the Appraisal Institute; the appraisal requirements of Title XI of the Federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), revised June 7, 1994, and amendments thereto; the Bank of America Professional Services Agreement; requirements as detailed by Bank of America in the award/engagement contract and in Bank of America's Valuation Services Information System RFP/award information; and all state and federal laws governing the real estate appraisal industry. The subject was physically inspected by Jeffery T. Cutler. Daniel F. Essa did not physically inspect the subject.

We appreciate this opportunity to be of service to you in the preparation of the following report.

Respectfully submitted,

PROFESSIONAL APPRAISAL SERVICES, INC.

Daniel F. Essa, MAI, LL.M., J.D. Jeffery T. Cutler, MAICertified General Real Estate Appraiser Certified General Real Estate AppraiserState of Michigan (ID#1201001525) State of Michigan ID#1201068454Email: [email protected] Email: [email protected] Ph: 517-333-1628 Ph: 517-333-1619

mailto:[email protected]



TABLE OF CONTENTS

INTRODUCTIONCertificate of Value.......................................................................................................1Summary of Salient Facts and Conclusions................................................................3General Assumptions and Limiting Conditions............................................................5Property Identification...................................................................................................8Statement of Ownership & Property History................................................................8Scope of the Appraisal.................................................................................................8Property Rights Appraised.........................................................................................10Intended Use/User of the Appraisal...........................................................................10Date of Valuation........................................................................................................10Definition of Market Value..........................................................................................11

DESCRIPTIONS, ANALYSIS AND CONCLUSIONSArea And Neighborhood Analysis..............................................................................14Site Description..........................................................................................................20Improvement Description...........................................................................................22Deferred Maintenance................................................................................................24Subject Photographs..................................................................................................25Ad Valorem Tax Information.......................................................................................28Highest and Best Use.................................................................................................29Method of Valuation...................................................................................................31Income Approach.......................................................................................................32Sales Comparison Approach......................................................................................47Reconciliation and Final Value Estimate....................................................................57

ADDENDALetter of Commitment................................................................................................. ASubject Tax Information.............................................................................................. BQualifications.............................................................................................................. C

INTRODUCTION

CERTIFICATE OF VALUE

We have no present or contemplated future interest in the real estate that is the subject of this appraisal report.

We have no personal interest or bias with respect to the subject matter of this appraisal report or the parties involved.

To the best of our knowledge and belief, the statements of fact contained in this appraisal, upon which the analyses, opinions, and conclusions expressed herein are based, are true and correct.

This appraisal report sets forth all of the assumptions and limiting conditions (imposed by the terms of our assignment or by the undersigned) affecting the analyses, opinions, and conclusions contained in this report.

This report is subject to the Assumptions and Limiting Conditions that are an integral part of the stated value. This appraisal has been prepared in a manner which complies with the Uniform Standards of Professional Appraisal Practice (USPAP); all professional standards and code of ethics of the Appraisal Institute; the appraisal requirements of Title XI of the Federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), revised June 7, 1994, and amendments thereto; the Bank of America Professional Services Agreement; requirements as detailed by Bank of America in the award/engagement contract and in Bank of America's Valuation Services Information System RFP/award information; and all state and federal laws governing the real estate appraisal industry.

The values expressed in this report are not based in whole, or part, of upon race, color or national origin of the current/prospective owners or occupants.

Our compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report. The appraisal assignment was not based on a requested minimum value, a specific valuation or the approval of a loan.

This appraisal has been made in conformity with, and is subject to, the requirements of the Code of Professional Ethics and Standards of Professional Conduct of the Appraisal Foundation and of the Appraisal Institute.

The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representative.

We have complied with the Competency Provision of the Uniform Standards of Professional Appraisal Practice and of the Appraisal Standards Board of the Appraisal Foundation.

The Appraisal Institute conducts a program of continuing professional education for its designated members. MAI and SRA members who meet the minimum standards of this

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program are awarded periodic education certificates. As of the date of this report, Mr. Daniel F. Essa and Mr. Jeffry T. Cutler have completed the continuing education program of the Appraisal Institute.

In Michigan, appraisers are required to be licensed/certified and are regulated by the Michigan Department of Licensing and Regulatory Affairs, Bureau of Commercial Services, P. O. Box 30018, Lansing, MI 48909.

No one other than the undersigned provided significant professional assistance with the preparation of this report. Jeffery T. Cutler performed a physical inspection of the subject property.

Professional Appraisal Services, Inc. has not performed services on the subject property within the previous three years.

Based upon our investigation and analysis, as developed in the Appraisal Report which follows, the Market Value of the subject property is as follows:


Daniel F. Essa, MAI, LL.M., J.D. Jeffery T. Cutler, MAICertified General Real Estate Appraiser Certified General Real Estate AppraiserState of Michigan (ID#1201001525) State of Michigan (ID#1201068454)Email: [email protected] Email: [email protected] Ph: 517-333-1628 Ph: 517-333-1619

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SUMMARY OF SALIENT FACTS AND CONCLUSIONS

Effective Date of Appraisal: June 11, 2015 - “As Is”

Type of Report: Appraisal Report

Date of Report: July 2, 2015

Subject Property: Retail Center

Location: 520 E. Houghton Avenue, West Branch, Ogemaw County, Michigan.

Owner of Record: West Branch Development Properties , LLC

Parcel Number: 65-052-629-005-00

Property Rights Appraised: Leased Fee Interest

Purpose of the Appraisal: Estimate the "As Is" Market Value of the subject property as of the effective date of this report.

Land Area: 2.82 acres or 123,025 square feet

Gross/Net Building Area: 27,672 square feet

Year Built: 1972

Zoning: “GB,” General Business District

Land to Building Ratio: 4.45 to 1

Highest and Best Use:“As Vacant:” Hold for Future Development“As Improved:” Retail Center

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SUMMARY OF SALIENT FACTS AND CONCLUSIONS - Continued

Value Conclusions: “As Is”Cost Approach Not DevelopedIncome Approach $1,170,000Sales Comparison Approach $1,220,000Reconciled Market Value $1,200,000

Value Per Net Rentable Square Foot: $43.37 - “As Is”

NOI: $108,239 - “As Is”

Overall Rate: 9.25%

Occupancy: 92% leased

Exposure Time: 12 Months

Effective Age: 15 years

Remaining Economic Life: 25 years

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GENERAL ASSUMPTIONS AND LIMITING CONDITIONS

That the date of value, to which the opinions expressed in this report apply, is set forth in the Letter of Transmittal. The appraiser assumes no responsibility for economic or physical factors occurring at some later date which may affect the opinions herein stated. This appraisal is made subject to general assumptions and limiting conditions which state:

1) No opinions are intended to be expressed for legal matters; or that would require specialized investigation or knowledge beyond that ordinarily employed by the real estate appraiser, although such matters may be discussed in this report.

2) No opinion as to title is rendered. Name of ownership and the legal description were obtained from sources generally considered reliable. Title is assumed to be marketable and free and clear of all liens, encumbrances, easements, and restrictions, except those specifically discussed in this report. The property is appraised assuming it to be under responsible ownership and competent management and available for its highest and best use.

3) No engineering survey has been made by the appraiser. Except as specifically stated, data relative to size and area were taken from sources considered reliable and no encroachment or real property improvement is assumed to exist.

4) Maps, plats, and exhibits included herein are for illustration only, as an aid in visualizing matters discussed within this report. They should not be considered as surveys or relied upon for any other purpose.

5) No detailed soil studies covering the subject property were available to the appraiser. Therefore, the premises, as to soil qualities employed in this report, are not conclusive but have been considered consistent with information available to the appraiser.

6) Any information furnished to me by others is believed to be reliable, but I assume no responsibility for its accuracy. Possession of this report, or a copy thereof, does not carry with it the right to publication, nor may it be used for any purpose, by any but the applicant without the previous written consent of the appraiser or the applicant and, in any event, only in its entirety.

7) Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on, or in, the property. The appraiser,

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however, is not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on, or in, the property that would cause a loss in value. No responsibility is assumed for any such conditions or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.

8) The property is appraised as though free and clear, and under responsible ownership and competent management. All existing liens and encumbrances have been disregarded.

9) Unless otherwise stated herein, all of the improvements previously described were considered to be operational and in good structural condition.

10) This appraisal does not require me to give testimony, in court or attend on its behalf, unless arrangements have previously been made therefore.

11) The distribution of the total valuation in this report between land and improvements applied only under the existing programs of utilization. The separate valuations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used.

12) The value is reported in dollars on the basis of the currency prevailing at the date of this appraisal.

13) That the appraiser assumes no responsibility for determining if the property lies within a flood hazard area and its consequences to the property. It is advised that a Topographic Survey be obtained and local officials be contacted.

14) This appraisal has been made in accordance with the Code of Ethics of the Appraisal Foundation.

15) American Disabilities Act. Recent interpretations of the American Disabilities Act (ADA) may result in judicial statutes which require that commercial properties comply with design specifications for disabled persons. The American Disabilities Act could have a negative affect on the value of a property. Due to the various political and legal issues involved with the American Disabilities Act, the appraiser is not qualified to render an opinion regarding any impact on the subject property value attributed to ADA compliance and it is recommended that an attorney or professionals with expertise in such matters be contacted.

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16) Structural Condition. We are not structural engineers and are not qualified to determine the structural soundness of the subject. The value conclusion contained herein is subject to the subject building and foundations being structurally sound.

17) Deferred Maintenance. The cost to cure the noted deferred maintenance, if any, was estimated by the appraiser based on cost obtained from the Marshall and Swift publication. Should actual contractor's cost vary significantly, the appraiser reserves the right to amend the value conclusion accordingly.

EXTRAORDINARY ASSUMPTIONS AND LIMITING CONDITIONS

Access/Easement. The subject site is landlocked. Mr. Kenneth Galazin, a representative of the subject owner, indicated that there was an easement providing access to the subject site across the adjacent retail facility, which has access to E. Houghton Avenue. The appraisal is completed under the premis that the easement is in place and the subject owner has adequate ingress/egress to the subject site. Should this premis prove to be false, we reserve the right to amend our value conclusion accordingly.

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PROPERTY IDENTIFICATION

The subject property can be identified as a shopping center located at 520 E. Houghton Avenue, West Branch, Ogemaw County, Michigan. The subject improvements consist of one building that was constructed in 1972, featuring 27,672 net rentable square feet (92% occupied). The subject's site contains 2.82 acres or 123,025 square feet of land area. The subject site and existing improvements will be further detailed in the Site and Improvement Description sections of this appraisal report.

STATEMENT OF OWNERSHIP & PROPERTY HISTORY

The subject property is currently owned by West Branch Development Properties, LLC. There are no known transactions involving the subject property within the last 36 months. Additionally, the subject property is not currently listed for sale and is not considered to be in a speculative market. The subject's vacant space is currently being marketed by the subject owner at a negotiable rate.

SCOPE OF THE APPRAISAL

This appraisal is intended to comply with all applicable standards of the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Board of the Appraisal Foundation and adopted by the Appraisal Institute, F.I.R.R.E.A., the O.C.C., and the appraisal instructions of Bank of America.

In our analysis and as an integral part of the appraisal process we have made a number of independent investigations and analyses. We have reviewed and analyzed data in our office and retained in our files of various developments that we have appraised, as well as various local, state and national sources of published data. Listed below are some of the investigations and analyses undertaken and the sources considered.

Extent to Which Property is Identified

Physical Characteristics: In this appraisal assignment, in order to gather information concerning the physical characteristics of the subject property, the appraiser physically inspected and measured the subject property. Additionally, information regarding the scope and character of the subject improvements was based on discussions with the property contact, municipal records, and inspection of the site and improvements.

Legal Characteristics: Reliance was placed on the subject’s legal descriptions and other recordings as provided by the municipal documents supplied by both West Branch and Ogemaw County, in order to determine the presence and whereabouts of any easements, restrictions, covenants or other encroachments that may encumber the

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subject property. The appraiser did not research the presence of such items independently.

Economic Charact eristics : The subject is 92% leased to 3 tenants. The appraiser reviewed the lease data, as well as the subject's historical operating statements. Furthermore, discussions with brokers, property managers, developers, and bankers were relied upon to provide other necessary economic data in order to complete the appraisal. The value reported is predicated on the general and extraordinary assumptions stated earlier in this report.

Extent to Which Property is Inspected

The appraiser performed a physical inspection of the subject property. Information regarding the size, condition, construction and other aspects of the subject real estate was obtained from inspection of the subject property, sketches and conversations with the property contact.

Additionally, public records from both West Branch and Ogemaw County were utilized, as well as local multiple listing service, local brokers and market participants, in order to identify characteristics of the subject property that are relevant to the valuation process.

Type and Extent of the Data Researched

Sales of similar properties that have occurred during the past four years were researched within the city of West Branch and Ogemaw County and the surrounding regions. Comparable improved sales were confirmed through review of local assessor and county equalization records, as well as via discussion with various parties to the respective transactions including the buyer, seller, or their representatives, including brokers.

Similarly, an investigation of rental rates throughout the region was conducted, and various parties were consulted including landlords, tenants and managers. Information retained in the appraiser's files was also consulted and leases were utilized to establish a market rental range for the subject property.

Type and Extent of Analysis Applied

The value opinions presented in this report are based on review and analysis of the market conditions affecting real property value.

In order to determine the highest and best use of the real estate, a survey of the market was completed, noting supply and demand factors, and a feasibility analysis was considered. Given the nature of the subject real property, conclusions of highest and best use were based on logic and observed evidence.

There are three traditional approaches used to arrive at an opinion of value of real estate: the Sales Comparison Approach, Income Approach, and Cost Approach. In this

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instance, the Income and Sales Comparison Approaches were considered relevant to the appraisal problem. Due to the age of the subject, and lack of comparable land sales, the Cost Approach was not utilized.

PROPERTY RIGHTS APPRAISED

The property rights of the subject property being appraised in this report consist of a Leased Fee Interest. Leased Fee is defined by The Dictionary of Real Estate Appraisal, Fifth Edition, copyright 2010 by the Appraisal Institute, page 111, as being:

“A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord-tenant relationship (i.e., a lease).”

INTENDED USE/USER OF THE APPRAISAL

The intended use of this report is to provide information for use in making business and credit decisions concerning an actual or prospective loan or line of credit, or making internal business decisions concerning a Bank of America owned or leased property. This report is for the use and benefit of, and may be relied upon by, Bank of America, N.A. as Lender, or Bank of America, N.A. as Administrative Agent for certain Lenders, and each actual and prospective Lender and Participant in such loan or line of credit, and their respective successors, assign and affiliates.

DATE OF VALUATION

The estimates of “As Is” Market Value is effective as of June 11, 2015.

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DEFINITION OF MARKET VALUE

As referred herein, “Market Value” is defined by federal regulation 12 CFR 564.2 (f) as follows:

"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 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.

Source: Office of the Comptroller of Currency, 12 CFR, Part 34

VALUE “AS IS”

Value "As Is" is defined as the value of a property in its present condition subject to the market conditions prevalent as of the effective date of the appraisal, without hypothetical conditions, assumptions, or qualifications as to the physical or legal aspects of the property. If the property has not achieved stabilized occupancy or sellout as of the date of the appraisal, all applicable deductions and discounts need to be applied in order to estimate the "As Is" value.

The most frequent deductions include, but are not necessarily limited to, unearned entrepreneurial profit; the costs necessary to market the space of units (sales commissions, leasing commissions, and advertising expenses); the costs necessary to maintain the property until it achieves sellout or lease-up, as appropriate; the real estate taxes on unsold units or unleased space; the associated administrative expenses; and other marketing, holding, and administrative costs/expenses that may be applicable and appropriate.

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EXPOSURE TIME AND MARKETING TIME

The Appraisal Standards Board (ASB) of the Appraisal Foundation has issued a proposed "statement" to "interpret or explain" a portion of the Uniform Standards of Professional Appraisal Practice (USPAP). Excerpts from the statements are as follows:

1. Reasonable exposure time is always presumed to occur prior to the effective date of the appraisal.

2. The estimate of exposure time should be based on gathered market data.

3. Exposure time is different for various types of real estate and under various conditions.

4. The Reasonable exposure period is a function of price, time and use; not an isolate estimate of time alone.1

Based on this advisory opinion, exposure time is the estimated length of time the property interest being appraised would have been offered on the market. This retrospective estimate is based on past events assuming a competitive and open market. For the purposes of this appraisal, exposure time will be calculated as the estimated time it will take to sell the property at the appraised value.

Due to a lack of empirical statistical studies, it was necessary to determine exposure time and marketing time based on conversations with market participants, and a study of demographic data. Therefore, in consideration of the condition, location, and demand for retail projects in the subject market area, the exposure time for the subject is estimated to be twelve months.

Marketing time is a prospective estimate of the timing required based on present conditions. In view of the market conditions as detailed, it would be reasonable to conclude that the marketing time associated with the subject property would generally accord with the exposure time as noted above.

1 See SMT-6 USPAP 2014-2015 Edition.

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DESCRIPTIONS, ANALYSIS AND CONCLUSIONS

AREA AND NEIGHBORHOOD ANALYSISDelineation: The property being appraised is situated within the city of West Branch, Ogemaw County, which is situated in the central portion of the lower peninsula of Michigan. Ogemaw County offers many activities such as golfing, festivals, fairs, parades, car shows, arts & crafts shows, live entertainment, and a farmers market.

Access to the region includes interstate and state truckline highways. The major highways that service Ogemaw County are I-75, M-33, and M-55. In addition, there are several other roadways and three truck lines. Aviation in the immediate area is provided by the West Branch Community Airport. Airlines offering service include Northwest, United, USAir, Com Air, Skyway, and Continental Express.

Demographic Information: The following information was provided by EASI Demographics, and includes statistics for Ogemaw County.

POPULATION AND HOUSEHOLD GROWTHOgemaw County

Population % Growth Households % Growth

1990 18,662 - - 7,178 - -

2000 21,621 15.86% 8,832 23.04%

2015 21,124 -2.30% 9,096 2.99%

2020 est. 20,935 -0.89% 9,158 0.68%

HOUSEHOLD INCOME STATISTICSOGEMAW County MICHIGAN NATIONAL

Median $40,881 $53,674 $57,639

Average $51,639 $69,447 $77,190

Per Capita $22,489 $27,160 $29,126

HISTORICAL UNEMPLOYMENT RATESYear Ending 2006 2007 2008 2009 2010 2011 2012 2013 2014 5/15

Ogemaw Co. 8.0% 8.2% 9.2% 13.5% 13.0% 10.8% 10.2% 11.8% 9.7% 7.8%

Michigan 6.9% 7.1% 8.3% 13.4% 12.7% 10.3% 9.1% 8.8% 7.3% 5.9%

USA 4.3% 4.6% 5.8% 9.3% 9.6% 8.9% 8.1% 7.4% 6.2% 5.3%Source: Michigan Dept. of Labor and Economic Growth

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The following table depicts the area's largest employers.

AREA'S LARGER EMPLOYERS

Company Employees

West Branch Regional Medical 424

Sandvik Hard Materials 164

Taylor Building Products Inc. 150

Home Depot USA Inc. 150

County of Ogemaw 135

Kmart Corp 125

Forward Corp 125

Gold Star Coatings Inc. 100

Rose City Geriatric Village 100

Ausauble Valley Community 100

Immediate Neighborhood: The subject's immediate neighborhood can be identified as being bound by Valley Street to the west, W. State Road to the north, Dam Road to the east, and W. Flowage Lake Road to the south.

Land use in the subject neighborhood consists of a mixture of uses including commercial retail development noted along E. Houghton Avenue and Business I-75 and residential use and some undeveloped land noted along secondary roadways. It should be noted that a golf course encompasses the majority of the northeast portion of the subject neighborhood, and Flowage Lake encompasses the very southeast portion of the subject neighborhood.

Accessibility: The subject neighborhood is considered to exhibit an average location when compared to other competing neighborhoods in the area. Business I-75, which turns into E. Houghton Avenue, connects with I-75 just south of the subject neighborhood.

Transportation/Major Traffic Carriers: The major north/south traffic carriers in the area include I-75, Court Street (M-30), Cook Road/Business I-75, and County Road F9 (M-76). Major east/west traffic carriers in the area include State Street and Houghton Avenue (M-55). In addition, numerous secondary and interior traffic carriers bind and intersect the subject neighborhood, enhancing its accessibility.

Political Jurisdiction: The subject neighborhood is located within the city of West Branch, Ogemaw County, Michigan and is served by the West Branch-Rose City Area School District. Municipal water and sanitary sewer systems are provided by the city of West Branch. Furthermore, police protection is provided by the City of West Branch Police Department, and fire protection is provided by the City of West Branch Fire Department.

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Topography/Flood Plain: The subject neighborhood is generally level in nature. According to Federal Emergency Management, the subject neighborhood is located in an unmapped community. No immediate flood risk was apparent upon inspection; however, if further flood risk information is desired, a qualified expert should be retained.

Stage of Development: The subject neighborhood is centered on the east side of the city of West Branch near the junction of Business I-75 and E. Houghton Avenue (M-55). This junction is signaled and features fairly dense commercial development. The subject site including an older retail facility are located south this signal. To the north of this signal is a more recently constructed retail strip center, Walgreens, Rite-Aid and Auto Zone. To the east is a Tractor Supply Company. Additionally, K-Mart and an additional strip center were noted to the southeast.

Outside of the junction of these two main thoroughfares, the subject neighborhood consists primarily of residential use with some undeveloped land noted. The downtown area of West Branch is centered to the west of the subject neighborhood on Houghton Avenue. This is largely building out with older, turn of the century style commercial development. Newer commercial development was also noted south of the subject neighborhood along Business I-75 near I-75 on/off ramps. National retailers located in this area include Walmart and Home Depot, as well as a small Tanger Outlet Mall.

Research was also conducted utilizing CoStar Analytics. Retail space within Ogemaw County and the subject's 3-mile radius was referenced.

OGEMAW COUNTY RETAIL

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3-MILE RADIUS RETAIL

Conclusions: Overall, the subject neighborhood is forecast to remain relatively stable at current levels into the foreseeable future as long as the statewide economy does not continue to decline as it has in the recent past.

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The accompanying map is for illustration purposes only and is not a legal representation of the property illustrated.

(c) Copyright 2015, Professional Appraisal Services, Inc.

Area Map

The accompanying map is for illustration purposes only and is not a legal representation of the property illustrated.

(c) Copyright 2015, Professional Appraisal Services, Inc.

Neighborhood Map

SITE DESCRIPTION

The subject property has a common address of 520 E. Houghton Avenue, West Branch, Ogemaw County, Michigan. The site is comprised of one parcel featuring 2.82 acres or 123,025 square feet of land.

Parcel Number: 65-052-629-005-00

Legal Description: Referenced in Addenda.

Location: The subject site is located along the south line of E. Houghton Avenue (M-55) at the junction of E. Houghton Avenue (M-55) and Business I-75, which connects to I-75 approximately two miles south of the subject site. The subject is considered to have an average to above average location when compared to other competing facilities in the general area.

Physical Characteristics: The subject site is comprised of of 2.82 acres or 123,025 square feet of land. The land-to-building ratio equates to 4.45 to 1. The topography of the subject site is level at road grade, appeared to be well drained, and did not appear to suffer from any soil or subsoil conditions which would adversely impact development, as evidenced by existing improvements.

Site Improvements: In addition to the vertical improvements, the subject site is improved with exterior lighting, adequate landscaping, asphalt paved drives and

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parking, adequate signage and concrete curbs/sidewalks and gutters. The subject was considered to be in average condition and adequately maintained.

Easements: Typical utility and right-of-way easements were noted to be present and serve the subject property at the time of inspection. However, there were no adverse easements or encroachments noted. It should be noted that the subject features an access easement across the parking lot of the adjacent retail development to the north.

Zoning: According to the city of West Branch, the subject property is currently zoned “GB,” General Business District, which allows for a wide variety of commercial uses including any retail business whose principal activity is the sale of merchandise within an enclosed building as well as professional and business office use. Based upon review of the City of West Branch Zoning Ordinance, the subject’s use as a retail shopping center is considered a legal and conforming use.

Flood Plain: The subject neighborhood is generally level in nature. According to Federal Emergency Management, the subject neighborhood is located in an unmapped community. No immediate flood risk was apparent upon inspection; however, if further flood risk information is desired, a qualified expert should be retained.

Adjacent Land Uses: To the immediate west and south of the subject site is a cemetery. To the immediate north of the subject site is a an older retail strip center, which has parking that adjoins to the subject parking lot. To the north of the subject site across E. Houghton Avenue (M-55) is a newer retail strip center. To the immediate east of the subject site a retail facility (Tractor Supply Company).

Utilities and Services: Utility services available to the site include the following:

Water - City of West BranchSewer - City of West BranchElectricity - Consumers EnergyNatural Gas - DTE EnergySchool District - West Branch - Rose City Area Public SchoolsPolice Department - City of West Branch Police DepartmentFire Protection - City of West Branch Fire Department

Conclusion: The subject site contains 2.82 acres of land that was improved with a shopping center, which appeared to be homogeneous with existing land uses in the immediate area. No adverse encroachments or inharmonious land usage are known that would prevent the utilization of the site in a manner consistent with its highest and best use.

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IMPROVEMENT DESCRIPTION

The subject site is improved with one single story building. Additional site improvements include concrete curbs, gutters, sidewalks, asphalt paved parking, steel pole mounted lighting and signage, and minimal landscaping.

The subject shopping center features one building that contains 27,672 net square feet. The subject facility was constructed in 1972, was remodeled since, and was considered to be in average condition at the time of inspection. At the time of inspection, one suite was vacant (2,267 square feet, or 8%), and the current tenants have occupied their respective suites for over ten years.

A summary of construction details for the subject property as well as similar quality retail facilities can be referenced as follows:

BUILDING DESCRIPTION

Gross/Net Building Area: 27,672 square feet

Foundation: Poured concrete foundation and footing with a concrete slab on grade floor.

Year Built: 1972, with renovations in 1982 and 1997

Structural System: Cement block and steel frame

Exterior Walls: Combination of painted block and brick veneer

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Roof: Flat with metal decking covered with rubberized membranes.

Interior: Generally consisting of drywall walls with open or acoustical tile ceilings, and combinations of tile, carpet, or finished concrete flooring.

Ceilings: Determined by tenant, acoustical tiles or open frame.

Lighting: Determined by tenant, tube fluorescent or can lighting fixtures

Flooring: Determined by tenant, commercial grade carpet, VCT and unfinished concrete.

Electrical: Assumed to be adequate to the subject improvements and meet local building code

Plumbing: Assumed to be adequate to the subject improvements and meet local building code. Average grade fixtures in bathrooms.

Parking: Asphalt paved parking area, adequate.

Design/Appeal: Average

Quality: Average

Condition: Average

Effective Age: 15 years

Economic Life: 40 years

Remaining Economic Life: 25 years

Overall, the subject property was considered to be in average condition with average quality construction and design appeal. Additionally, the subject is considered to be functional in design and use.

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DEFERRED MAINTENANCE

Deferred Maintenance is defined in The Dictionary of Real Estate Appraisal, Fifth Edition, copyright 2010, by the Appraisal Institute, page 54, as being:

"Needed repairs or replacement of items that should have taken place during the course of normal maintenance."

As previously detailed, the subject was in average condition at the time of inspection. No items of deferred maintenance were noted at the time of inspection. Your attention is directed to the subject photographs on the following pages of this report.

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SUBJECT PHOTOGRAPHS

Subject Photographs

Exterior View of Subject Exterior View of Subject

Exterior View of Subject Exterior View of Subject

Interior View of Retail Space Interior View of Retail Space

Subject Photographs

Interior View of Retail Space Interior View of Retail Space

Interior View of Vacant Retail Space Interior View of Vacant Retail Space

View of Houghton Avenue Facing West View of Houghton Avenue Facing East

AD VALOREM TAX INFORMATION

In Michigan, property is assessed at 50% of the true cash value. Furthermore, while State Equalized Value (SEV) increases with market values, Taxable Value is “capped” with a maximum CPI increase not to exceed 5% annually. Property can become “uncapped” when it is transferred or improvements are made. A summary of salient assessment data for the subject is detailed in the following table.

Subject's Assessment DataCounty West BranchTaxing Jurisdiction West BranchPublic School District West Branch – Rose City2015 SEV $667,0002015 TV $633,780Implied True Cash Value (TCV) $1,334,000Non-Homestead Millage Rate 52.1508

Based on review of the data presented, the subject's tax liability is calculated as follows:

SEV / 1,000 x Mills = Taxes$667,000 / 1,000 x 52.1508 = $34,784.58

Administrative Fee of 1% + $347.85Total Tax and Administrative Fees $35,132.43Estimated Annual Real Estate Tax (Rounded) = $35,130

The subject's estimated real property tax is $35,130 annually, or $1.27 per square foot. Furthermore, the property taxes for the subject were current at the time of inspection.

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HIGHEST AND BEST USE

According to The Dictionary of Real Estate Appraisal, Fifth Edition, copyright 2010, page 93, by the Appraisal Institute, highest and best use is defined as:

"The most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued."

The highest and best use of both land, as vacant, and property, as improved, must meet four criteria. The criteria are that the highest and best use must be (1) physically possible, (2) legally permissible, (3) financially feasible, and (4) maximally productive.

HIGHEST AND BEST USE, AS VACANT

Physically Possible: The subject site is comprised of one parcel that contains 2.82 aggregate acres. The site is irregular in shape, functional, and large enough to adapt and accommodate a variety of smaller uses.

Legally Permissible: Many highest and best uses are often prevented by zoning regulations, deed restrictions, building codes, historical district controls and/or environmental regulations. According to the city of West Branch, the subject property is currently zoned “GB,” General Business District, which allows for a wide variety of commercial uses including any retail business whose principal activity is the sale of merchandise within an enclosed building as well as professional and business office use. Based upon review of the City of West Branch Zoning Ordinance, the subject’s use as a retail shopping center is considered a legal and conforming use.

Financially Feasible: In determining the financially feasible uses, consideration must be given to supply and demand influences for those uses deemed physically possible and legally permissible. These factors were considered in the Market Analysis and it was concluded that the property has average locational characteristics for industrial use. However, considering current economic conditions, new construction is not typically feasible at this time.

Maximally Productive: Analysis of this criterion results in the use that provides the highest net return to the land. Factors to consider include construction cost outlays versus resultant cash flows with the use providing the highest net return to total investment (cost) being described as the maximally productive use. Based on the subject's physical and economic characteristics, future commercial use would represent the highest and best use of the site, as vacant.

HIGHEST AND BEST USE, AS VACANT

After analyzing the legal, physically possible, feasible and maximumly productive uses, it is opined that the highest and best use of the subject property, "As Vacant,” would be to hold for future development.

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HIGHEST AND BEST USE, AS IMPROVED

Highest and best use, as improved, considers use of a property with respect to existing improvements and the ideal improvement in accordance with the highest and best use, as vacant conclusion. In determining the highest and best use, as improved, three alternatives are generally considered:

➢Demolish the existing improvements and redevelop the site;➢Modify the existing use (remodeling/renovation/conversion);➢Continue the existing use (make no changes).

The subject improvements are functional “As Is.” As the value of the site, as improved, exceeds the value of the site, as vacant, and as there are no more feasible alternative uses, the highest and best use of the site, as improved, is that of the existing use as a retail center. The subject is a multi-tenant, income producing property held for investment purposes. As such, the most probable buyer is an investor.

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METHOD OF VALUATION

The subject property is comprised of a retail center. In estimating the market value of this property, we have analyzed the various approaches to valuation. Our analysis is a study of market conditions that lead to an estimate of value.

There are three general methods by which the value of real estate can be measured. These methods are known as the Cost, Income and Sales Comparison Approaches. All three methods have their advantages and weaknesses, depending on the type of property being appraised. The test to determine which method or methods should be used lies in an understanding of the real estate market itself. It is best to use the method that a typical buyer or seller uses for the particular property under analysis.

The Cost Approach is a process of estimating the replacement cost new of the building improvements, deducting from there an estimate of accrued depreciation, if any, and adding the market value of the land as if vacant. The subject improvements were originally constructed in 1972. Due to the difficulty in calculating depreciation for the subject property and considering the fact that investors give this approach little credence, the Cost Approach was not deemed to be an appropriate indicator of market value for the subject property.

As the subject property is an income producing property held for investment purposes, proper methodology entails analyzing the market and applying the Income Approach in the same way as typical buyers and sellers in the open market. A survey of similar properties and industry reports were analyzed. This data will be analyzed and an appropriate market value estimate will be derived.

The Sales Comparison Approach has also been utilized. There are sales of generally comparable projects which have recently sold in the subject market area, and other similar competing markets to render this approach applicable.

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INCOME APPROACH

The Income Capitalization Approach is based on the premise that there is a relationship between the amount of income that a property is capable of producing and its value. This approach considers the ability of a property to produce income and recognizes that value is the present worth of future benefits resulting from ownership of the property.

Two capitalization methods are available in the Income Capitalization Approach. Direct Capitalization and Yield Capitalization are defined by The Dictionary of Real Estate Appraisal, 5th ed., s.v. "direct capitalization," "yield capitalization" (Chicago: Appraisal Institute, 2010), as follows:

Direct Capitalization - “A method used to convert an estimate of a single year’s income expectancy into an indication of value in one direct step, either by dividing the net income estimate by an appropriate capitalization rate or by multiplying the income estimate by an appropriate factor. Direct capitalization employs capitalization rates and multipliers extracted or developed from market data. Only a single year’s income is used. Yield and value changes are implied but not identified.”

Yield Capitalization - “A method used to convert future benefits into present value by 1) discounting each future benefit at an appropriate yield rate, or 2) developing an overall rate that explicitly reflects the investment’s income pattern, holding period, value change, and yield rate.”

The subject property represents a retail center. After considering the size and income characteristics of the subject property, the appraiser has elected to utilize the Direct Capitalization Method of the Income Approach.

The basic steps of the Direct Capitalization Method of the Income Capitalization Approach involve the estimation of market rent to arrive at a gross income estimate. From the gross income estimate, a vacancy and collection loss and gross annual expenses are deducted to arrive at an estimate of a net operating income. An appropriate income capitalization rate is then applied to the net operating income estimate to arrive at a value indication for the subject property.

The following data and analysis demonstrates these procedures as they are applied to the subject property.

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RENT INFORMATIONLESSOR: Bridgeport Village SquareLESSEE: Inline TenantsRENTAL RATE: $6.22 per sfRENTAL DATE: October, 2014EXPENSE STRUCTURE: Triple NetOCCUPANCY: 59%PARCEL NUMBER: 09-11-5-15-3003-005CONFIRMATION: Rent Roll

RENT NUMBER 1

Retail Center6300 Dixie Highway, Bridgeport, Bridgeport Township,Saginaw County, MI

Comp #34,308

PHYSICAL INFORMATIONGROSS BUILDING AREA: 73,916 sfNET RENTABLE AREA: 73,620 sfLAND AREA: 8.73 acres or 380,279 sfLAND TO BUILDING: 5.14 to 1SITE COVERAGE RATIO: 19.40%YEAR BUILT: 1977CONDITION: AveragePARKING: Asphalt / AdequateUTILITIES: Public / AdequateZONING: “C-2” Community Center

COMMENTSThis center is located just west of I-75 on/off ramps. Currently, the center features 13 suites, but could be reconfigured to combine orseparate any number of suites. Vacant suites are in generally below average condition.

Tenants include Kroger (not included in this comparable), Family Dollar, Advance America, H&R Block and Rent A Center. Rent ACenter has already vacated but continues to pay rent as their lease doesn't expire until July 2015. Subway recently vacated afterbuilding a free standing store across the street. The landlord pays taxes, insurance and exterior CAM. Tenants pay utilities andinterior CAM/janitorial. The modified-gross rate is $7.92 psf, with $1.70 psf paid by the landlord. As such, the effective NNN rate is$6.22 psf.

(c) Copyright 2015, Professional Appraisal Services, Inc. - Information Deemed Reliable but Not Guaranteed

RENT INFORMATIONLESSOR: Gladwin Plaza East, LLCLESSEE: VariousRENTAL RATE: $5.75 per sfRENTAL DATE: March, 2014LEASE TERM: Long-TermEXPENSE STRUCTURE: Triple NetOCCUPANCY: 85.51%PARCEL NUMBER: 26-170-506-104-003-02CONFIRMATION: Kenneth Galazin - Subject Owner

(810-571-0536) / Copy of RentRoll

RENT NUMBER 2

Retail Shopping CenterGladwin Plaza East160 James Robertson Drive, Gladwin, Gladwin County,MI

Comp #32,827

PHYSICAL INFORMATIONGROSS BUILDING AREA: 29,520 sfNET RENTABLE AREA: 29,070 sfLAND AREA: 2.90 acres or 126,324 sfLAND TO BUILDING: 4.28 to 1SITE COVERAGE RATIO: 23.40%CEILING HEIGHT: 14 FeetYEAR BUILT: 1999CONDITION: AveragePARKING: Asphalt / AdequateUTILITIES: Public / AdequateZONING: "C2," Service Commercial Zoning

District

COMMENTSThis shopping center features an average location on the east side of the city of Gladwin. It is located adjacent to a Pamida andfeatures seven suites ranging in size from 970 sf to 15,120 sf for an aggregate of 29,070 total net rentable square feet.One 1,600 sf suite is used only for storage only. Save-A-Lot leases 15,120 sf for $5.25 psf, CarQuest leases 4,500 sf for $2.37 psf,H&R Block leases 1,623 sf for $12.30 psf, Grondins leases 980 sf for $12.00 psf, and Instant Cash lease 970 sf for 12.00 psf. 4,277sf is available for lease. All of the retail leases are triple-net with leases expirations ranging from month-to-month to 2018. The totalweighted average rental rate for the occupied retail suites is $5.75 psf.


RENT INFORMATIONLESSOR: City Branch Plaza, LLCLESSEE: VariousRENTAL RATE: $4.73 per sfRENTAL DATE: July, 2015EXPENSE STRUCTURE: Triple NetOCCUPANCY: 95%PARCEL NUMBER: 21-4453-00000 & 21-2612-00200CONFIRMATION: Copy of rent roll/Owner

RENT NUMBER 3

Retail Strip CenterCity Branch Plaza, LLC3405 E. Genesee Avenue, Saginaw, Saginaw County, MI

Comp #34,310

PHYSICAL INFORMATIONGROSS BUILDING AREA: 34,042 sfNET RENTABLE AREA: 33,057 sfLAND AREA: 4.25 acres or 185,086 sfLAND TO BUILDING: 5.44 to 1SITE COVERAGE RATIO: 18.40%YEAR BUILT: 1954 & 1956CONDITION: AveragePARKING: Asphalt / AdequateUTILITIES: Public / AdequateZONING: "B-1” Local Business

COMMENTSThis center is located at the corner of E. Genesee and Hess Avenues. The surrounding area is primarily older residentialdevelopment, with commercial users along E. Genesee Avenue to the south.

Tenants include Metro PCS, H&R Block, Check n' Go, Dollar General, Rent A Center and several local tenants. Suite sizes rangefrom 1,400 to 8,930 square feet. Leases expire from late 2015 to early 2020. The primary tenants (Dollar General and Rent ACenter) feature leases expiring in 2017 and 2020. Five of the nine tenant leases are NNN, with the landlord paying taxes, insuranceand exterior CAM for the other four. The actual average rate is $5.08 psf. However, when deducting landlord paid expenses, theeffective NNN rate equates to $4.73 psf.


RENT INFORMATIONLESSOR: Margie SimonLESSEE: Family DollarRENTAL RATE: $6.00 per sfRENTAL DATE: August, 2015LEASE TERM: 5 yearsEXPENSE STRUCTURE: Triple NetOCCUPANCY: 100%PARCEL NUMBER: 010-017-300-475-00CONFIRMATION: Copy of lease

RENT NUMBER 4

Retail Building950 N. Euclid Avenue, Bay City, Bangor Township, BayCounty, MI

Comp #34,134

PHYSICAL INFORMATIONGROSS BUILDING AREA: 8,400 sfLAND AREA: 0.75 acres or 32,670 sfLAND TO BUILDING: 3.89 to 1SITE COVERAGE RATIO: 25.70%YEAR BUILT: 1957CONDITION: AveragePARKING: Asphalt / AdequateUTILITIES: Public / AdequateZONING: “C-2” General Commercial

COMMENTSThis single tenant building was constructed in 1957 and remodeled in 2000. The surrounding area consists of older retaildevelopment to the north and south along Euclid Avenue, with a Kroger grocery store directly west.

Family Dollar leases the building at a level rental rate of $6.00 per square foot ($50,400 annually) on a NNN expense structure. Thetenant pays all expenses except management and reserves. The lease commenced in 2013 and expires in September 2018. Thetenants has six 5-year options, each with a 10% increase.



Rent Map

RENT COMPARABLE SUMMARY

6300 Dixie Hwy.BridgeportBridgeport Twp.,

MI

73,916 / 73,620

--

October, 2014

$6.22

Triple Net

1977

Average

Asphalt / Adequate

160 James Robertson Dr.Gladwin, MI

29,520 / 29,070

--

March, 2014

Long-Term

$5.75

Triple Net

1999

Average

Asphalt / Adequate

3405 E. Genesee Ave.Saginaw, MI

34,042 / 33,057

--

July, 2015

$4.73

Triple Net

1954 & 1956

Average

Asphalt / Adequate

950 N. Euclid Ave.Bay CityBangor Twp., MI

8,400 / 8,400

--

August, 2015

5 years

$6.00

Triple Net

1957

Average

Asphalt / Adequate

520 E. Houghton Ave.W. Branch, MI

27,672 / 27,672

--

--

--

--

--

1972

Average

Asphalt / Adequate

SUBJECT COMPARABLE 1 COMPARABLE 2 COMPARABLE 3 COMPARABLE 4

Location

GBA / NRA (SF)

Tenant Area (SF)

Lease Date

Lease Term

Lease Rent/SF

Expenses

Year Built

Condition

Parking


In order to derive market rate ranges for the subject property, adjustments must be applied to the comparable rentals for factors such as the location, age & condition, size, and quality & appeal. All of these factors may have an impact on the amount of rent a property is able to obtain.

Location- Rentals No. 2 and 3 were deemed inferior and adjusted upward. Rental No. 4 offers a superior location and was adjusted downward.

Size- The subject features 27,672 net rentable square feet of retail within multiple suites. Larger buildings/suites typically lease for less per square foot than smaller buildings/suites. Rental No. 4 reflects only a single larger suite and a downward adjustment was applied.

Quality/Appeal- The subject was deemed to offer average quality and appeal. Rentals No. 2 and 4 were deemed superior and adjusted downward.

Age/Condition- The subject was deemed to offer average age and condition. Rentals No. 1, 2 and 4 were deemed superior and adjusted downward.

Your attention is directed to the adjustment graph and grid on the following page which outline the application of the adjustments applied to the comparable rentals in order to derive market rental estimates for the subject units.

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40

Rent 1 Rent 2 Rent 3 Rent 4Rent per SF $6.22 $5.75 $4.73 $6.00

Market Conditions 0% 0% 0% 0%

Adjusted Rent per SF $6.22 $5.75 $4.73 $6.00

Location 0% 12% 12% -3%Size 0% 0% 0% 5%

Quality & Appeal 0% -10% 0% -3%Age & Condition -3% -10% 0% -3%

Other 0% 0% 0% 0%

Net Percentage Adjustments -3% -8% 12% -4%

Adjusted Rent/SF $6.03 $5.29 $5.30 $5.76

$6.22 High High $6.03$4.73 Low Low $5.29$5.68 Mean Mean $5.60

Adjusted Rental Rate per SF

RENT ADJUSTMENT GRAPH AND GRID

0

1

2

3

4

5

6

7

Unadjusted Adjusted

Leased Fee Analysis. The first step in valuing the Leased Fee Interest is to analyze the subject’s contract rent to determine if it is consistent with market rent. The subject’s contract rent is set forth below.

Thorn Americas, Inc. (Rent-A-Center) leases 3,363 square feet at a rental rate of $7.35 per square foot, or $24,718 annually, on a triple net expense structure. The lease originally commenced on April 1, 1998. The current term runs for 5 years and expires on March 31, 2017. The tenant has an additional 5-year renewal option with the rental rate increasing to $7.72 per square foot, or $25,954 annually for the renewal term.

Family Dollar Stores of Michigan, Inc. leases 11,542 square feet at a rental rate of $5.54 per square foot, or $63,950 annually, on a modified gross expense structure. The tenant is responsible for all expenses except for base year taxes ($0.65 psf) and insurance ($0.03 psf) and interior maintenance and repair in excess of $1,000. The lease originally commenced in approximately May of 1997. The current term runs for five years and expires on December 31, 2017. It should be noted that landlord is also entitled to 3% of the gross sales in excess beyond set threshold ($2,131,600), although the tenant has not reached the threshold to date. The tenant has two 5-year renewal options with the rental rate increasing during each renewal as follows:

Begin End PSF Per Month Per Annum01/01/18 12/31/22 $6.06 $5,829.15 $69,950

01/01/23 12/31/27 $6.67 $6,412.07 $76,945

Specialized Pharmacy Services, Inc. (Omnicare) leases 10,500 square feet at a rental rate of $6.46 per square foot, or $67,830 annually, on a triple net expense structure. The lease originally commenced in approximately April of 2001, ran for 10 years, and was set to expire on March 31, 2011. The initial term of the lease was extended on November 1, 2010 for seven years, expiring on October 31, 2017. The rental rate will increase as detailed in the table below:

Begin End PSF Per Month Per Annum11/01/15 10/31/16 $6.65 $5,818.75 $69,825

11/01/16 10/31/17 $6.85 $5,993.75 $71,925

The subject current rent roll is outlined below.

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CURRENT RENT ROLL - SUBJECTTENANT SQ. FT. ANNUAL RENT RENT/SQ. FT. EXPIRE DATE EXP. STRUC.

Rent A Center 3,363 $24,718 $7.35 3/31/2017 NNNFamily Dollar 11,542 $63,950 $5.54 12/31/2017 Mod-Gross

10,500 $67,830 $6.46 10/31/2017 NNNTOTALS 25,405 $156,498 $6.16 ------ ------Omni-Care

Final Market Rent Conclusion. The comparable market rental rates summarized in the preceding graph and grid indicate adjusted rental rates from $5.30 to 6.03 per square foot, with a mean of $5.60 per square foot. One of the subject tenants (Family Dollar) features a modified-gross expense structures. When deducting the estimated landlord paid expenses (base taxes and insurance), the subject's effective NNN average rate would fall to $5.85 psf, which is within the comparable rental range. The subject's 2,267 square feet of vacant space is being marketed as negotiable. In this instance, a market rate (considering the smaller size) of $7.50 per square foot “as is” was deemed reasonable. The subject's potential gross income is outlined below

Vacancy and Collection Loss. This figure represents that portion of the subject which would not be rented during the year and is simply calculated as a percentage of Gross Annual Income. This amount of gross income loss is due to a number of factors, to include unleased space or the failure to collect rent for any reason.

As previously noted, the overall retail vacancy rate for the subject 3-mile area is 9.5% (CoStar Report). The subject was 92% occupied at the time of inspection and the vacant suite has been difficult to lease in recent years (vacant approximately 3 years). The subject owner indicated that Metro PCS has expressed interest in the suite. Given the subject's current and historical occupancy, a stabilized vacancy and collection loss of 7% was deemed reasonable.

Effective Gross Income. This figure is simply the amount that the subject will actually generate after reflecting vacancy and collection loss. In this instance, the subject’s effective annual income is estimated to be $161,356 on a stabilized basis. This excludes reimbursement revenue. The subject's 2014 rental revenues was $161,118.

Reimbursement Revenue. The subject collects reimbursements from the majority of tenants for their pro-rata share of real estate taxes, insurance and common area maintenance (CAM). The 2012, 2013 and 2014 reimbursements totaled $24,637 $23,392 and $21,977, respectively. In this instance, $22,000 in reimbursement revenue was deemed reasonable.

Operating Expenses. These are items necessary to maintain the subject property. Normally, they include such items as property taxes, property insurance, management, common area maintenance (CAM), and reserves for replacement. In order to estimate the net income generated by the subject, the expenses incurred in producing this income must be deducted. Historical expense data was provided for calender years

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POTENTIAL GROSS INCOMETENANT SQ. FT. ANNUAL RENT RENT/SQ. FT. EXPIRE DATE EXP. STRUC.

Rent A Center 3,363 $24,718 $7.35 3/31/2017 NNNFamily Dollar 11,542 $63,950 $5.54 12/31/2017 Mod-Gross

10,500 $67,830 $6.46 10/31/2017 NNNVacant 2,267 $17,003 $7.50 NA NNNTOTALS 27,672 $173,501 $6.27 ------ ------

Omni-Care

2012, 2013, and 2014, and is summarized in the following table. The detailed data is retained in our files and is available for review upon request.

HISTORICAL EXPENSE DATA (PSF OF NRA)Year 2012 2013 2014Taxes $1.24 $1.26 $1.21Insurance $0.19 $0.18 $0.18Management/Admin. $0.10 $0.11 $0.10CAM $0.53 $0.51 $0.63Utilities2 $0.20 $0.20 $0.22TOTALS $2.26 $2.92 $2.34

The following expense comparables were also referenced to determine an appropriate expense load for the subject.

COMPARABLE EXPENSE DATATYPE Shopping Center Shopping Center Shopping Center

YEAR 2014 2014 2014

SIZE (SF) 33,057 93,224 89,538

LOCATION Saginaw, Saginaw County

Ann Arbor, Washtenaw County

DeWitt Clinton County

FIXED EXPENSESTAXES $0.31 $4.44 $0.84

INSURANCE $0.14 $0.14 $0.12

VARIABLE EXPENSESMANAGEMENT $0.15 $0.97 $0.42

CAM $0.87 $3.06 $1.06

OTHER / MISC $0.19 $0.00 $0.06

TOTALS $1.66 $8.61 $2.50

The following discussion outlines the basis for our expense projections.

Taxes for the subject property were calculated at $35,130 or $1.27 per square foot based on the contemporary assessment.

Insurance expenses were projected at $0.18 per square foot based on the historical expenses reported. This is also supported by the expense comparables which suggest a range from $0.12 to $0.14 per square foot.

2 The utilities reflect the expense to the landlord.

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Management/Administration of a shopping center such as the subject is somewhat intensive due to the number of tenants and amount of bookkeeping and accounting required. The management expense was estimated at 4% of effective gross income, including administrative costs.

Common Area Maintenance (CAM) expenses include common area utilities including water/sewer, maintenance/repairs not paid directly by tenants, and other contracted services. The comparables suggest a range from $0.87 to $3.06 per square foot. The subject's CAM expenses have consistently been below this range. All considered, CAM expenses were concluded at $0.60 per square foot.

Other/Miscellaneous expenses would include non-reimbursed CAM charges and other items including utilities on vacant units, and other non-reimbursed expenses. Based on the subject's historical expenses, $0.20 psf will be applied for utilities.

Reserves for Replacement Considering the physical characteristics of the subject, and to reflect occasional exterior maintenance paid for by the landlord for roof and outer walls, the reserves for replacement expense was estimated at $0.20 per square foot.

Total expenses were projected at $2.71 per square foot, or $75,117 based on historical data and the expense comparables.

Your attention is directed to the following stabilized operating statement for the subject.

Historical net operating income was $101,870 in 2013 and $118,343 in 2014.

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STABILIZED OPERATING STATEMENTIncomeGross Potential Income (Retail)

27,672 SF $173,501Less Vacancy & Collection Loss 7.00% ($12,145)Effective Gross Income $161,356Plus Reimbursement Revenue: $22,000Total Income: $183,356Expenses Per SF AmountFixed

$1.27 $35,130 Insurance $0.18 $4,981Variable Management/Admin. (4%) $0.27 $7,334 CAM $0.60 $16,603 Utilities $0.20 $5,534Reserves $0.20 $5,534Total Expenses $2.71 $75,117 ($75,117)Net Operating Income $108,239

Ad Valorem Taxes

Selection of Capitalization Rate. In order to determine an appropriate overall rate for the subject property, we have reviewed actual extracted overall rates from sales in the market, consulted national investor surveys, and conducted the band-of-investments. The subject most comparably reflects retail space.

Band of Investment: In this technique, the overall rate consists of two components (mortgage contribution and equity contribution). The mortgage contribution is developed by multiplying the mortgage ratio by the mortgage rate. The equity contribution is developed by multiplying the equity dividend rate by the equity ratio. According to RealtyRates.com Investor Survey - Q2 2015, typical loan terms available for retail buildings along with equity dividend rate expectations are as follows:

RETAIL BUILDING LOAN TERMS

TERM MINIMUM MAXIMUM AVERAGE

Loan-to-Value Ratio 50.0% 90.0% 70%

Amortization Period 15 years 40 years 25 years

Interest Rate 3.08% 9.75% 5.14%

Equity Dividend Rate 8.08% 18.16% 13.60%

Based on review of the data, assumptions for use in the band of investment technique are as follows:

BAND OF INVESTMENT ASSUMPTIONS

TERM ASSUMPTION

Loan to Value Ratio 75.00%

Amortization Period 25 years

Interest Rate 5.25%

Equity Dividend Rate 12.75%

The overall rate for the subject property is calculated by band-of-investment as follows:

Loan Ratio x Mortgage Constant = Mortgage Contribution

Equity Ratio x Equity Dividend Rate = Equity Contribution Overall Rate

0.75 x 0.0809 = .06070.25 x 0.1275 = .0319

Overall Rate = .0926

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National Investor Expectations: According to RealtyRates.com Investor Survey – 2Q 2015, surveyed cap rates for “Retail - All Types” ranged from 4.28% to 14.66% with a mean of 10.02%.

According to PWC Waterhouse Real Estate Investor Survey – 1Q 2015, surveyed cap rates for Non-Institutional Grade “Strip Shopping Centers” ranged from 6.25% to 14.00% with a mean of 8.34%.

Following is a summary of the overall capitalization rates indicated by the market data:

Published investor surveys (mean) 8.34%-10.02%Band-of-investment 9.26%

The subject is a stabilized shopping center with an occupancy level of 92% and current tenants of 10+ years. After analyzing the economic characteristics of the subject property and the Band of Investment Technique, as well national investor expectations, an overall rate of 9.25% was considered to be reasonable and appropriate for the subject. Therefore, the “As Is” Market Value of the subject property, via the Direct Capitalization Technique, is as follows:

$108,239 = $1,170,1510.0925

Say = $1,170,000

Final Estimate of Value via the Income Approach. The Direct Capitalization Method was considered to be an accurate indicator of value for the subject property. Based on this analysis, the final estimate of "As Is" Market Value, as of June 11, 2015, is as follows:

Market Value “As Is” $1,170,000

46

SALES COMPARISON APPROACH

The Sales Comparison Approach depends upon the principle of substitution. The principle of substitution holds that the value of a property that is replaceable in the market tends to be set by the cost of acquiring an equally desirable substitute property.

The Sales Comparison Approach requires that a sufficient number of comparable sales be present in the market to reflect an accurate indication of value. In that event, market value can be derived directly from the sales since all factors involved are weighted according to their significance to actual buyers and sellers. A direct comparison between each sale and the subject is made on a point by point basis including factors such as conditions of sale, time, location, size, and physical characteristics. The sales price of each comparable is adjusted in order to arrive at value indications had the sale been essentially the same as the subject. The multiple value indications that result from the comparison are then reconciled into a single value indication for the subject.

Listed in the following pages are sales of similar properties. In order to obtain appropriate adjustments, the sales were compared with each other. A summary and location map of these sales can be found following the sales.

47

SALE INFORMATIONSALE DATE: June 26, 2014SALE PRICE: $925,000DAYS ON MARKET: 1,688OCCUPANCY: 88%GRANTOR: MI Retail PartnersGRANTEE: Sayaco PartnershipFINANCING: Cash to SellerRECORDING DATA: Liber 1143, Page 948PARCEL NUMBER: 72-003-017-010-0035CONFIRMATION: CoStar and Denton Township

FINANCIAL INFORMATIONPRICE PER SF: $34.13

SALE NUMBER 1

Retail Strip Shopping CenterVillage Square Plaza3535 W. Houghton Lake Drive, Houghton Lake, DentonTownship, Roscommon County, MI

Comp #29,094

PHYSICAL INFORMATIONGROSS BUILDING AREA: 27,100 sfNET RENTABLE AREA: 27,100 sfLAND AREA: 3.01 acres or 131,116 sfLAND TO BUILDING: 4.84 to 1SITE COVERAGE RATIO: 20.70%YEAR BUILT: 1990. Remodeled in 2006CONDITION: AveragePARKING: Asphalt / AdequateUTILITIES: Public / Adequate

COMMENTSThis retail strip center is located along W. Houghton Lake Drive (M-55), which is the primary retail corridor in the area. The centerfeatures 10 units and is 88% occupied. The property was bank owned had been listed for sale at $1,250,000.


SALE INFORMATIONSALE DATE: May 30, 2014SALE PRICE: $3,300,000DAYS ON MARKET: 663OCCUPANCY: 62%GRANTOR: Bloomfield 2005, LLCGRANTEE: Riverwood Crossing, LLCFINANCING: Cash to SellerRECORDING DATA: Liber 1199, Page 0448PARCEL NUMBER: 007-17-300-007-04 & 007-17-300

-007-05CONFIRMATION: David Block of Block & Company,

via CoStar. Caledonia Twp.

FINANCIAL INFORMATIONPRICE PER SF (GBA): $53.27

SALE NUMBER 2

Shopping Center1560-1629 E. Main Street, Owosso, Caledonia Township,Shiawassee County, MI

Comp #32,904

PHYSICAL INFORMATIONGROSS BUILDING AREA: 61,953 sfLAND AREA: 9.16 acres or 399,010 sfLAND TO BUILDING: 6.44 to 1SITE COVERAGE RATIO: 15.50%YEAR BUILT: 1993CONDITION: AveragePARKING: Asphalt / AdequateUTILITIES: Public / AdequateZONING: B-2

COMMENTSThis center consists of two building housing multiple tenants that include Subway, Rent A Center, Maurice's, Game Stop, H & RBlock, Verizon and others.

The property was listed for sale in March 2012 for $4,500,000, and lowered to $3,800,000 in November 2013. CoStar reported anoccupancy of approximately 62% at the time of sale (which corresponds with the amount of space being marketed at the time oflisting).


SALE INFORMATIONSALE DATE: December 27, 2013SALE PRICE: $775,000GRANTOR: Eastern Michigan Properties, LLCGRANTEE: Jay FolskeFINANCING: Cash to SellerRECORDING DATA: Liber 4472, Page 0010PARCEL NUMBER: 20-028-2024-000CONFIRMATION: Fort Gratiot Township Assessor's

Office / CoStar


SALE NUMBER 3

Retail Strip CenterNorthgate Plaza3900 Pine Grove Avenue, Fort Gratiot Township, St. ClairCounty, MI

Comp #33,122

PHYSICAL INFORMATIONGROSS BUILDING AREA: 23,652 sfLAND AREA: 2.28 acres or 99,317 sfLAND TO BUILDING: 4.2 to 1SITE COVERAGE RATIO: 23.80%YEAR BUILT: 1992CONDITION: AveragePARKING: Asphalt / AdequateUTILITIES: Public / AdequateZONING: C-2CONSTRUCTION: Concrete block with a flat roof.

COMMENTSThis property is situated between Pine Grove Avenue and 24th Avenue, south of Krafft Road in Fort Gratiot Township.


SALE INFORMATIONSALE DATE: April 30, 2014SALE PRICE: $875,000GRANTOR: Harrison DG Properties, LLCGRANTEE: RFEC Investments, LLCFINANCING: Cash to SellerPARCEL NUMBER: 070-042-005-10CONFIRMATION: Clare County and CoStar


SALE NUMBER 4

Retail Center126 N Broad Street, Harrison, Clare County, MI

Comp #34,313

PHYSICAL INFORMATIONGROSS BUILDING AREA: 17,665 sfLAND AREA: 1.06 acres or 46,174 sfLAND TO BUILDING: 2.61 to 1SITE COVERAGE RATIO: 38.30%YEAR BUILT: 1965CONDITION: AveragePARKING: Asphalt / AdequateUTILITIES: Public / Adequate

COMMENTSThis two tenant center was fully leased by Family Video and Dollar General at the time of sale.

The information was confirmed by CoStar via John Groothuis of Capstone Real Estate (selling broker). The list price was $995,000.



Sale Map

SALE COMPARABLE SUMMARY

3535 W. Houghton Lake Dr.Houghton LakeDenton Twp.,

MI

27,100 / 27,100

June 26, 2014

$925,000

$34.13

1990. Remodeled in 2006

Average

Asphalt / Adequate

3.01

4.84 to 1

1560-1629 E. Main St.OwossoCaledonia Twp., MI

61,953 / 61,953

May 30, 2014

$3,300,000

$53.27

1993

Average

Asphalt / Adequate

9.16

6.44 to 1

3900 Pine Grove Ave.Fort Gratiot Twp., MI

23,652 / 23,652

December 27, 2013

$775,000

$32.77

1992

Average

Asphalt / Adequate

2.28

4.2 to 1

126 N Broad St.Harrison, MI

17,665 / 17,665

April 30, 2014

$875,000

$49.53

1965

Average

Asphalt / Adequate

1.06

2.61 to 1

520 E. Houghton Ave.W. Branch, MI

27,672 / 27,672

--

--

--

1972

Average

Asphalt / Adequate

2.82

4.45 to 1

SUBJECT COMPARABLE 1 COMPARABLE 2 COMPARABLE 3 COMPARABLE 4

Location

GBA / NRA (SF)

Date of Sale

Sale Price

Price/SF

Year Built

Condition

Parking

Land Area (Acres)

Land/Bldg Ratio


IMPROVED SALES ANALYSIS

The preceding pages presented sales information on properties which were considered to be most similar to the subject property.

Improved Sales Analysis. The sales listed on the previous pages are considered to be the most comparable to the subject property of all occurring in the recent past. In order to compare these sales with the subject, adjustments were made to the sales for factors such as condition of sale, time, location, size, quality and appeal, age and condition, land/building ratios and other adjustments.

Occupancy- The subject was 92% leased at the time of inspection. Sale No. 2 featured an inferior occupancy level and was adjusted upward (above the line).

Location- Sales No. 1-3 offer inferior locations and were adjusted upward.

Size- The subject features 27,672 gross and net rentable square feet. Larger buildings typically sell for less per square foot than smaller buildings due to the larger cash outlay. Sale No. 2 is larger (inferior) than the subject and was adjusted upward, with Sale No. 4 being smaller and adjusted downward.

Quality/Appeal- The subject was deemed to offer average quality and appeal. Sales No. 1-3 were deemed superior and adjusted downward.

Age/Condition- The subject was deemed to offer average age and condition. Sales No. 1-3 were deemed superior and adjusted downward.

Land/Building Ratio- The subject features a land to building ratio of 4.45 to 1. Adjustments were not warranted.

Your attention is directed to the grid and graph on the following page which outlines the application of adjustments applied to the comparable sales in order to commensurate them to the subject property.

54

55

Sale 1 Sale 2 Sale 3 Sale 4Cash Equivalent Price/SF $34.13 $53.27 $32.77 $49.53

Date of Sale 6/26/14 5/30/14 12/27/13 4/30/14Occupancy 0% 15% 0% 0%

Market Conditions 0% 0% 0% 0%

Adjusted Cash Equivalent $34.13 $61.26 $32.77 $49.53

Location 17% 2% 12% 0%Size 0% 7% 0% -5%

Quality & Appeal -5% -5% -3% 0%Age & Condition -5% -5% -3% 0%Land to Building 0% 0% 0% 0%

Other 0% 0% 0% 0%

Net Percentage Adjustments 7% -1% 6% -5%

Adjusted Sale Price/SF $36.52 $60.65 $34.74 $47.05

$53.27 High High $60.65$32.77 Low Low $34.74$42.43 Mean Mean $44.74

Adjusted Sale Price per SF

SALE ADJUSTMENT GRAPH AND GRID

0

10

20

30

40

50

60

70

Unadjusted Adjusted

Sale Price Per Square Foot. After adjustments, the prices per square foot ranged from $34.74 to $60.65 per square foot, with a mean of $44.74 per square foot. In this instance, a price per square foot of $44.00 was deemed to be reasonable and appropriate. As such, the Market Value of the subject property, via the Sale Price Per Square Foot Method, is calculated as follows:

27,672 Sq. Ft. @ $44.00 Per Sq. Ft. = $1,217,568

Say = $1,220,000

It should be noted that a 15,760 square foot retail center (4 suites) located at 417 W. Houghton Avenue in West Branch sold on December 31, 2013, for $500,000 ($31.73 psf). This was a distressed REO sale and was not utilized as a comparable.

Final Estimate of Value via the Sales Comparison Approach : The Sales Comparison Approach utilized the Sale Price Per Square Foot Method. Based on this analysis, the "As Is" Market Value, as of June 11, 2015, via the Sales Comparison Approach, is as follows:


56

RECONCILIATION AND FINAL VALUE ESTIMATE

The appraisal process utilized the Income and Sales Comparison Approaches in estimating the Leased Fee value of the subject property. A brief summary of each approach follows, and is postulated on all cash or cash equivalent basis.

Income Approach. The Income Approach reflects the present worth of the anticipated benefits of ownership for which an investor would be willing to pay. Market standards were well supported and the Direct Capitalization Method was used to value the subject property. The Income Approach indicated the “As Is” Market Value as follows:


Sales Comparison Approach. The Sales Comparison Approach was based on data abstracted from sales of comparable properties. The strength of the Market Approach is that it reflects activity of a willing buyer and a willing seller in the market place. The weakness of this approach is that no two properties are exactly alike and in over built markets the data may include sellers under duress. Additionally, exact purchase consideration is often unknown. The Sale Price Per Square Foot method was utilized. The Sales Comparison Approach indicated the “As Is” Market Value as follows:


Final Value Estimate. The Final Value Estimate is based on the most appropriate market data considering the current market conditions. In this instance, equal emphasis was placed on both approaches. As such, the "As Is" Market Value is as follows:


Per your request, I have estimated the marketing period for the subject property. Based on information we received from area brokers and after analyzing current market data, it is opined that the marketing period for the subject property at the estimated Market Value, as of June 11, 2015, is as follows:

One Year (12 Months)

57

ADDENDA

EXHIBIT A

Award Confirmation LetterSupplier is hereby authorized to perform the Statement of Work detailed below. Supplier acknowledges that this confirmation letter is a summaryof select contract terms and conditions which is provided for convenience. To view the complete agreement electronically accepted by Supplier,Supplier is referred to Bank of America's Commercial Valuation Services Information Management System.

Supplier: Statement of WorkService Type ID: 15-004113-APR01-001 Supplier: Professional Appraisal Services IncService: Appraisal (Order) Supplier Representative: Daniel Essa MAIBorrower: WEST BRANCH DEVELOPMENT

PROPERTIES LLCAgreement Number: VSIMS16447.14.1

Award Terms and ConditionsSourcing Manager: Talitha Stone, Commercial Consultant Other Terms or Conditions:Date Awarded: 05/22/2015 Fees: USD 2,650Bank Contact: Talitha StoneContact Phone: 706-705-1232Appraisal Type: SummaryCertification: Contracted Appraiser Must SignService Delivery RequirementsDue Date Description06/10/2015 SALES AND INCOME APPROACHES. Time is of the essence. Review of all attachments and initial communication with

identified project or property contacts must occur within five days of engagement. Liquidated damages may be assessed if theStatement of Work (SOW), including the delivery of all reports and requested data, is incomplete by the listed due date. Damageswill be assessed at a rate of 5% of the negotiated fee for each day (cumulative) the SOW remains incomplete. Damages will not beimposed for delays resulting from circumstances beyond the appraiser's control if timely notice is provided; such circumstances tobe judged for their validity solely by the Sourcing Manager. Individual standalone reports to be provided for each listed propertyunless instructed otherwise in this agreement.

Service DefinitionCurrency Premise Qualifier Interest Appraised Allocations DescriptionUSD Market Value As-Is Leased Fee Real Estate Policies and ProceduresAppraisal reports must include most probable buyer, remaining economic life, exposure time and marketing time. Reappraisals must explaindifferences in value for assignments completed for Bank of America within the last two years. Please carefully review all AppraisalRequirements prior to beginning the assignment and VSIMS Appraisal Submission Checklist prior to submitting assignment results.Bank of America is in the process of transitioning to Argus 16. Until such time that version 16 is operational, all Argus-based DCF analyses andassociated files must be created and submitted using Argus version 15 or earlier. Notwithstanding this requirement, the vendor is responsible toensure compliance with Argus software license agreements.The scope of work must include the sales and income approaches to value. New construction and properties under renovation require a costapproach. Contact Commercial Appraisal Services immediately if property or market characteristics preclude the development of credibleassignment results via the specified approaches.The certification requirement may not be delegated by the contracted appraiser without prior review and prequalification of the designee by Bankof America. If certification will be delegated by the contracted appraiser, identification of the primary appraiser for each report is required, andthose appraisers must be on Bank of America's approved fee panel. Contingent names may be listed if a decision will not be finalized at the timeof bid. Use the Bid Comments section for up to three designees. Otherwise, upload a separate document detailing each primary appraiser byproperty.Supplier is required to review, update and/or enter key summary information about the property appraised and associated value conclusions aspart of this service.All appraisal reports must include both exposure time (as required by USPAP) and marketing time in your appraisal as a condition of this award.1. Include the following statement in the Letter of Transmittal and the Intended Use Section of the report: 'The intended use of the report is toprovide information for use in making business and credit decisions concerning an actual or prospective loan or line of credit, or making internalbusiness decisions concerning a Bank of America owned or leased property. This report is for the use and benefit of, and may be relied upon by,Bank of America, N.A. as Lender, or , Bank of America, N.A. as Administrative Agent for certain Lenders, and each actual and prospectiveLender and Participant in such loan or line of credit, and their respective successors, assigns and affiliates. 2. Include the statement: "Bank ofAmerica makes no warranties or representations regarding this document or the conclusions contained herein." in your transmittal letter.Include identification and support of the most probable buyer. (owner user or investor)Reappraisal assignments must document and explain assumption changes and resulting value differences for all Bank of America assignmentscompleted within the prior two years.Estimate remaining economic life for the subject property.All appraisal reports (including all addendum and related attachments) and invoices must be uploaded to VSIMS in Adobe Acrobat-compatibleformat (PDF). Document security must be set to allow Commenting, Copying and Extracting of Content for use in the Bank's review function.Documents may be otherwise restricted from changes subject to the supplier's personal security preference. Additional Microsoft and Argusdocuments may be uploaded in their native format, where appropriate. Vendors are prohibited from accepting payment for services renderedfrom anyone other than Bank of America, N.A., its successors and/or assigns unless otherwise specified within this agreement.PLEASE NOTE NEW INTENDED USE LANGUAGE NEW REQUIREMENTS: PLEASE REVIEW THE ATTACHED APPRAISALREQUIREMENTS, AND SUBMISSION CHECKLIST. THEY HAVE BEEN UPDATED. Â• The property inspection must be performed by acertified appraiser (**licensed trainees are NOT acceptable**). Â• All individuals that inspect the property must include a copy of theirqualifications in the appraisal report. Â• Identification AND SUPPORT of the most probable buyer (owner user or investor) is required.Addressee and Distribution InstructionsReport Distribution Name Address CD/DVD Bound CommentsAddressee, Recipient andIntended User

Talitha Stone, CommercialConsultant

Bank of America, NA | 1070Gaines School Rd | GA8-043-01-01 | Athens, GA 30605

0 0

Documents (content available online only)Reference Documents APPRAISAL_REQUIREMENTS_20150501_04232015_195026.pdf

VSIMS_APPRAISAL_SUBMISSION_CHECKLIST_20150113_01142015_161152.pdfProject Contacts

Award Confirmation LetterName Company / Role Telephone CommentsProperty Contact (additional contacts may be listed for each property. Refer to the online property profile for details)Name Company / Role Telephone CommentsKen Galazin owner 810-571-0536 Properties (detailed descriptions may be viewed online or downloaded)

# Property Type Property Address1 Shopping Center - Convenience/Strip Center 520 E Houghton Avenue , West Branch, MI

EXHIBIT B

EXHIBIT C

DANIEL F. ESSA, MAI, LL.M., JD 2152 Commons Parkway · Suite A

Okemos, MI 48864 517.333.9900 Tel · 517.333.9953 Fax

[email protected]

PROFESSIONS DESIGNATIONS MAI – Member Appraisal Institute

EDUCATION BACKGROUND

2001 LL.M. Wayne State University, Master of law with primary

emphasis in taxation. Degree conferred December 13, 2001.

1994 J.D. Thomas M. Cooley School of Law. Juris Doctor degree

conferred May 15, 1994.

1989 B.S. University of Houston - America Jurisprudence

Primary emphasis on America Law, Legal Research, Real Estate Law, and

related legal processes; Degree conferred December 17, 1989

1982 B.B.A. Southwest Texas State University - Business Administration

Primary emphasis on Management, Finance, and Real Estate related

Courses; Degree conferred December 19, 1982

APPRAISAL INSTITUTE COURSES

1) Course I-A1: Real Estate Appraisal Principles

2) Course I-A2: Real Estate Appraisal Procedures

3) Course 8-2: Residential Valuation Procedures

4) Course 2-3: Standards of Professional Practice

5) Course 1B-A: Capitalization Theory and Techniques Part A

6) Course 1B-A: Capitalization Theory and Techniques Part B

7) Course 2-2: Report Writing and Valuation Analysis (06/90)

8) Course 530: Advanced Sales and Costs Approaches

9) Course 550: Advanced Application

10) Course 520: Highest & Best Use Market Approaches

11) Course 510: Advanced Income Capitalizations

12) American Institute of Real Estate Appraisers Seminars / Appraisal Institute:

• Cash Equivalency

• Reviewing Appraisal Reports

• Attacking and Defending as Appraisal in Litigation

13) Resolution Trust Corporation Seminars:

• Review Appraisal (09/90)

• Environmental (12/90)

• Affordable Housing (02/91)

14) 7-Hour USPAP

15) 14-Hour USPAP

PROFESSIONAL AFFILIATIONS & LICENSES

Member of The Appraisal Institute � (MAI) Certificate # 11622

State Bar of Michigan � Bar # P52702

Certified General Real Estate Appraiser � State of Michigan # 1201001525

Certified General Real Estate Appraiser � State of Ohio # 2010001908

Certified General Real Estate Appraiser � State of Indiana #CG49800247

Certified General Real Estate Appraiser � State of Tennessee # 00004346

Certified General Real Estate Appraiser � State of Texas # TX-1338454-G

Greater Lansing Association of Realtors � Broker # 6501288155

Federal Housing Administration � Fee Panel Appraiser / Fee Panel Review Appraiser

APPRAISAL BACKGROUND

01/94 – Present Professional Appraisal Services, Inc.

• Real Estate Appraisers & Consultants

05/91 – 09/94 Michigan National Bank

• Staff Appraiser

11/89 – 05/91 Resolution Trust Corporation

• Review Appraiser

Asset management; production, assigning and reviewing appraisals;

Coordinating the Houston Consolidated Office.

10/87 – 10/89 Gary Brown & Associates

• Staff Appraiser

05/87 – 10/87 Nowlin Mortgage Company

• Chief Appraiser

Production, assigning and reviewing appraisals; profit and loss;

coordinating the Houston Appraisal Branch.

04/86 – 04/87 Mercantile Mortgage Company

• Senior Staff Appraiser

Production, assigning and reviewing appraisals; coordinating the

Southeast Branch Appraisal Office.

05/84 – 03/86 James L. Julian & Associates

• Staff Appraiser

12/82 – 04/84 Larry A. Jones & Associates

• Staff Appraiser

SCOPE OF WORK

Numerous Residential Appraisals for Federal Housing Administration

Numerous Residential Appraisals for Mortgage Companies, Transfer Companies and Individuals.

Apartment Projects – FNMA / FHLMC / L.I.T.H.C. / Bond Financing / Feasibility Studies

Department Housing and Urban Development – Section 236, Rehabilitation 241(D), Section 8

FNMA Form 1026 on a number of P.U.D. / Condo / 2-4 Family Developments.

Condominium Projects / Development Loans

Truck Stops / Gas Stations / Convenience Stores / Feasibility Studies

Office Building and numerous lease-by-lease analyses

Mixed-Use and Residential Subdivision Developments

Manufactured Home Parks / Feasibility Studies

Numerous Vacant Land Appraisals / Land Development Projects / Bulk Sale Analysis / Discount Cash Flow Analysis

Hotels, Motels, full and limited service / Lodges

Assisted Living Facility / Convalescent Care

Numerous Feasibility Studies

Numerous Condemnation Appraisals – Before / After Damages

Numerous Golf Courses – Going Concern

Numerous Marinas / Boat Slips

Numerous Land Lease Analyses

Numerous Parking Garages / Parking Lots

Numerous Funeral Homes / Mortuary Facilities

Numerous Religious Facilities / Churches

Numerous Self Storage Facilities

Numerous Restaurant Appraisals (Real estate Only/Going Concern)

Numerous Car Wash Facilities –Self Service facilities/ Tunnel facilities (Real Estate Only, Going Concern)

Numerous Retail Centers (Regional / Community /Lifestyle Centers, Big Box, Lease-By-Lease Analysis)

Numerous Industrial Facilities (Light Industrial, Heavy Manufacturing, Industrial Tax Credits)

Special / Unique Properties Appraised

1. Proposed Time Share Development – Bermuda

2. The Pepsi Centre – Regional Shopping Center, Montreal, Canada

3. Gravel / Sand Pits – Going Concern valuations with Geological Surveys

4. Casino

5. Numerous Schools

6. Airports

7. Race Track

8. Micro-Breweries

9. Numerous appraisals for properties with entitlements – TIF (Tax Incremental Financing), Brownfield,

Bond Financing, Michigan Business Tax, Empowerment Zones, Historic Tax Credits, LITHC tax credits

10. Juvenile Detention Centers

PARTIAL LIST OF CLIENTS

Aetna

Agree Realty Corporation

Allstate Appraisal (on behalf of the

FDIC)

America Express

Ann Arbor State Bank

Bank of America

Bank of Ann Arbor

Bank of Lakeview

Bank United

Bernard Financial Group

Byron Central State Bank

Canada Life

Capitol National Bank

Century Bank and Trust

Charter One Bank

Chemical Bank

Ciena Capital

Cigna

Citizens Bank

Comerica Bank

Compass Bank

Consumers Credit Union

Cushman & Wakefield

Delaware Investments

DTN Management

Eaton Federal Savings Bank

Farm Bureau Insurance

Fifth Third Bank

First Federal Savings Bank

First Horizon National Corporation

First Tennessee Bank

FirstBank

Flagstar Bank

Founders Bank & Trust

Franklin Bank

GMAC

Great Western Life

Greenmann Capital

Grewal & Associates, P.C.

Greystone Servicing Corporation

Haginas & Chapman

Harris N.A. / CREASU

Heartland Business Bank

Homestead Savings Bank

Huntingtion National Bank

Imperial Capital Bank

Independent Bank

ING Investment Management

Jackson National Life

John Hancock Life Insurance Co.

JPMorgan Chase Bank, NA

Kalamazoo County State Bank

KeyBank National Association

Lake Osceola State Bank

Lapeer County Bank & Trust Co.

Level One Bank

Livingston Community Bank

Macatawa Bank

Mainstreet Lender

mBank

Merrill Lynch

Michigan Business Connection

Michigan Commerce Bank

Michigan State University

MSU Federal Credit Union

National Life Group

Nationwide

Nstar Community Bank

Numera Financial

PGP Valuation, Inc. (on behalf of the

FDIC)

PNC Bank

Protective Life

Q10/Triad Capital Advisors, Inc.

Regions Bank

Southern Farm Bureau Life

Insurance Co.

Southern Michigan Bank & Trust

St. James Capital, LLC

Summit Community Bank

Sun America

TCF Bank

The Granger Group

The National Bank of Indianapolis

The Private Bank

Thrivent Financial for Lutherans

United Bank

United Bank & Trust - Washtenaw

United Structured Finance

University Bank

Vineyard Bank

Wells Fargo RETECHS

West Shore Bank

LAW FIRMS

Aloia & Associates, LLC

Ferguson & Widmayer, P.C.

Foster, Swift, Collins and Smith, P.C.

Fraser, Trebilcock, Davis & Dunlap, P.C.

Fred Gordon, Attorney at Law

Gaffney & Associates

Grewal & Associates, P.C.

Henry & O'Donnell, P.C.

Hillis, Clark, Martin & Peterson, P.S.

Holland & Hart, LLP

Honigman, Miller, Schwartz and Cohn, P.C.

Hubbard Fox, Thomas, White & Bengston, P.C.

Hungerford, Aldrin, Nichols & Carter, PC

John Hunt, CPA, LL.M. - Attorney at Law

Kronzek & Cronkright, P.C.

Loomis, Ewert, Parsley, Davis & Gotting

Mallory, Cunningham, Lapka, Scott & Selin, P.C.

McEwen Gisvold, LLP

Miller, Canfield, Paddock and Stone, PLC

Miller, Johnson, LLP

Plunkett & Cooney, PC

Rezents & Crowley, LLP

Thrun, Maatsch & Nordberg, P.C.

Varnum, Riddering, Schmidt & Hawlett, LLC

Wesse Halloran, PLC

FEDERAL GOVERNMENT AGENCIES

Department Housing Urban Development

F.D.I.C. – Federal Depositor Insurance Corporation

Federal Housing Administration

Resolution Trust Corporation

LAW FIRMS Continued

JEFFERY T. CUTLER, MAIReal Estate Appraiser & Consultant

2152 Commons ParkwayOkemos, Michigan 48864

Office 517.333.1619, Fax 517.333.9953Email: [email protected]

Educational Background

2002 - Present Appraisal Institute, Chicago Illinois2001 Holloway Real Estate Institute, Lansing, Michigan1998 Western Michigan University Bachelor of Science – Education

Appraisal Institute Courses

1) Course 120 - Real Estate Appraisal Procedures2) Course 310 - Basic Income Capitalization3) Course 420 - Business Practices & Ethics (Online Course)4) Course 510 - Advanced Income Capitalization5) Course 520 - Highest & Best Use Market Analysis6) Course 530 - Advance Sales and Costs Approaches7) Course 540 - Report Writing & Valuation Analysis8) Course 550 - Advanced Applications9) USPAP - 15-Hour National USPAP10) Course 833 - Fundamentals of Separating Real Property, Personal Property and

Intangible Business Assets.

Continuing Education

1. 7-Hour USPAP (completed 2013)2. Michigan Law3. The Art of the Addenda4. Environmental Issues for Appraisers5. Business Practices & Ethics6. Essential Elements of Disclosures and Disclaimers7. Appraising FHA

Professional Affiliations

MAI - Member of The Appraisal Institute - Certificate Number 437550

Certified General Real Estate Appraiser - State of Michigan # 1201068454

Scope of Work

Condominium Projects / Development LoansTruck Stops / Gas Stations / Convenience StoresOffice Buildings and Numerous Lease-by-Lease AnalysesMixed-Use and Residential Subdivision DevelopmentsManufactured Home ParksNumerous Vacant Land Appraisals / Land Development ProjectsLight Industrial Buildings / Heavy Manufacturing / Freight TerminalsShopping Centers – Community, Regional, MallsOffice – Warehouse Projects / Light Industrial / Heavy IndustrialNumerous Lease-by-Lease Analysis / Office ParksHotels, Motels, Full and Limited Service / Hotel CondominiumsAssisted Living Facility / Convalescent Care / Retirement CenterStudent and Conventional Housing ProjectsRestaurants - Traditional and Fast FoodAutomobile DealershipsCar Wash Facilities - Self and Full ServeMini-Storage Facilities - Traditional and Climate ControlledFuneral HomesLeased LandCondemnation AppraisalsIndoor Recreational FacilitiesReligious BuildingsGrocery StoresOil Change FacilitiesHotel Condominium Developments / Resort Fractional OwnershipsMovie TheatersGravel / Sand PitsLodge / Banquet HallsBowling Alleys / Roller RinksFitness CentersFair Grounds

-Assignments completed in Michigan, Indiana, Illinois, Wisconsin, New Mexico, Virginia, Colorado, Ohio, Alabama, Tennessee, South Dakota, Missouri, Georgia, Arizona, California, Quebec (City of Montreal) & Bermuda (UK)

Partial List of Clients

Mortgage Banker & Brokers Law Firms

Bank of America Bernick, Omer, Radner & Ouellette, P.C.Chemical Bank Patrick & Kwiatkowski, PLLCCitizen’s Bank Rhoades McKee, PCCapitol National Bank Loomis Law FirmCharter One BankFifth Third BankCitibankFlagstar BankComerica Bank Conduit LendersWells FargoFirst Federal Savings Bank American Express FinancialIndependent Bank Birmingham FinancialFranklin Bank Key Bank CorporationGreystone Servicing Corp.Huntington National BankJ.P. Morgan Chase BankKey BankLehman BrothersMacatawa BankMercantile BankNational City BankRepublic BankSterling Bank & TrustWashington MutualWachovia CorporationMBC LoansHantz Bank