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SRP APPRAISAL SERVICES

SERVING THE NORTH TEXAS AREA

807 West Mulberry Street, Suite 4

Denton, Texas 76201

(940) 566-5700

May 2, 2018 REF: 3285-1

Ms. Wynell Perkins

325 Willow Wood St.

Murphy, TX 75094-3523

Subject: Appraisal Report of the real property located at 6935 Dewitt Road, Sachse,

Collin County, Texas.

Dear Ms. Perkins,

In accordance with your request, SRP Appraisal Services has conducted investigations

and analysis and prepared a 69-page appraisal report on the above referenced property.

The intended use is to assist the client, Ms. Wynell Perkins and her assigns, in a real

estate decision.

The purpose of this report is to develop an opinion of the “Market Value” of the fee

simple estate in the subject property “as is” as of April 20, 2018 (the effective date of the

appraisal).

To report the assignment results, we have used an Appraisal Report which is intended

to comply with the reporting requirements set forth under Standard Rule 2-2(a) of the

Uniform Standards of Professional Appraisal Practice for an Appraisal Report. The

information contained in this report is specific to the needs of the client and for the

intended use stated in this report. The appraiser is not responsible for unauthorized

use of this report.

This report has been prepared in compliance with the Uniform Standards of

Professional Appraisal Practice (USPAP) as approved by the Appraisal Standards Board

and promulgated by the Appraisal Foundation, as well to Title XI of FIRREA, with

Federal Regulations on appraisals, 12 CFR, Part 34.44, and with guidelines established

by the client.

The subject property addressed in this report is not considered to have any significant

natural, cultural, recreational, or scientific value. No mineral rights or personal

property are considered in this analysis.

Based on the investigation and analysis contained in the following report, a market

exposure period of 12 months or less is considered representative of the subject

property if property marketed.

FINAL OPINION OF MARKET VALUE FOR THE SUBJECT PROPERTY

AS OF APRIL 20, 2018

THREE HUNDRED FIFTY THOUSAND DOLLARS

$350,000

The extraordinary assumptions and hypothetical conditions utilized in this valuation

analysis are as follows:

The appraiser is not a surveyor, draftsman, or architect. The appraiser makes the

extraordinary assumption that information provided by the client, as well as data

obtained from the Collin Central Appraisal District and Collin County deed

records are correct. Any discrepancy may affect the value or marketability of the

subject property and warrant modification of the appraisal.

It is an extraordinary assumption of this report that the subject does not have

unreported encroachments or easements that have any significant effect on the

subject site.

No environmental assessment of the subject property was provided. The subject

property has been utilized for light industrial uses in the past and poses a slight

risk of environmental contamination. The appraiser makes the extraordinary

assumption that the subject is not affected by environmental conditions. Any

environmental conditions may affect the marketability of the subject property

and warrant modification of the appraisal.

We appreciate the opportunity to provide this appraisal for you. Should you have any

questions regarding our appraisal, please contact our office at (940) 566-5700.

Respectfully submitted,

SRP Appraisal Services

Esther Rodriguez-Phelps Date Signed

TX #1338157-G

AN APPRAISAL REPORT OF

THE LIGHT INDUSTRIAL PROPETY LOCATED AT

6935 DEWITT ROAD

CITY OF SACHSE, COLLIN COUNTY, TEXAS 75048

PREPARED FOR:

MS. WYNELL PERKINS

325 WILLOW WOOD ST.

MURPHY, TX 75094-3523

EFFECTIVE DATE OF VALUE: APRIL 20, 2018

PREPARED BY:

SRP APPRAISAL SERVICES

807 WEST MULBERRY STREET, #4

DENTON, TEXAS 76201

(940) 566-5700

SRP Appraisal Services Serving the North Texas Area

Page 2

TABLE OF CONTENTS

EXECUTIVE SUMMARY ............................................................................................................ 3

GENERAL ASSUMPTIONS AND LIMITING CONDITIONS .............................................. 5

INTRODUCTION AND IDENTIFICATION OF SUBJECT ................................................. 10

SUBJECT PROPERTY PHOTOS ............................................................................................... 12

PREMISES OF THE APPRAISAL ............................................................................................ 17

REGIONAL ANALYSIS ............................................................................................................ 20

NEIGHBORHOOD/MARKET AREA ANALYSIS ................................................................ 22

SITE DESCRIPTION .................................................................................................................. 27

IMPROVEMENT ANALYSIS ................................................................................................... 31

OWNERSHIP HISTORY ........................................................................................................... 35

REAL ESTATE TAX ANALYSIS .............................................................................................. 35

HIGHEST AND BEST USE ....................................................................................................... 36

APPROACHES TO VALUE ...................................................................................................... 37

INCOME APPROACH .............................................................................................................. 38

SALES COMPARISON APPROACH ...................................................................................... 51

OPINION OF EXPOSURE AND MARKETING TIME ......................................................... 61

RECONCILIATION AND FINAL OPINION OF VALUE ................................................... 61

EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS ............... 63

CERTIFICATION OF THE APPRAISER................................................................................. 64

ADDENDA .................................................................................................................................. 66

QUALIFICATIONS OF THE APPRAISER .......................................................................... 67


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EXECUTIVE SUMMARY

Property Address: 6935 Dewitt Rd., Sachse

Collin County, Texas 75048.

Tax ID: 2652580.

Owner of Record: The Estate of James E. Perkins.

Effective Date of Value: April 20, 2018.

Property Rights Appraised: Fee Simple Estate.

General Location: The west side of Dewitt Rd., about 1,250 feet

south of Ranch Rd.

Site Size: 38,376 SF or about 0.881 acres.

Flood Hazard: None.

Zoning: R-3 - Single Family Residential.

Improvements:

# of Buildings: 2.

# of Units: 3.

Office/Warehouse: 1 unit.

Warehouse: 2 units

Construction: Metal.

Net Rentable Area: 9,350 SF.

Occupancy: Owner occupied.

Quality: Average.

Office %: 5.1%

Truss Height: est. 14 ft.

Condition: Average.


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Year Built:

Office/Warehouse: 1979.

Warehouse: 1986.

Highest and Best Use:

As Vacant: Development with a residential use.

As Developed: Continue in its current legal, non-conforming

use.

Indications of Market Value

Income Approach: $350,000

Net Operating Income: $29,897

Capitalization Rate: 8.5%

Sales Comparison Approach: $375,000

Unit Price Range (Unadjusted) $30.03/SF to $147.71/SF

Unit Price Range (Adjusted) $39.04/SF to $49.84/SF

Cost Approach: Not Developed

Final Opinion: $350,000

Estimated Market Exposure Time: 12 Months or less.

Appraiser: Esther Rodriguez-Phelps, SCGA.

Appraiser File: ` #3285


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GENERAL ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal report has been made with the following general assumptions and limiting

conditions as well as other specific assumptions and limiting conditions as stated within the

appraisal report.

1. Per the request of the client, this is an Appraisal Report which is intended to comply

with the reporting requirements set forth under Standard Rule 2-2(a) of the Uniform

Standards of Professional Appraisal Practice for an Appraisal Report. As such, it

might not include full discussions of the data, reasoning, and analyses that were used

in the appraisal process to develop the appraiser’s opinion of value. Supporting

documentation concerning the data, reasoning, and analyses is retained in the

appraiser’s file. The information contained in this report is specific to the needs of the

client and for the intended use stated in this report. The appraiser is not responsible

for unauthorized use of this report.

2. No responsibility is assumed for matters legal in character or nature, for the legal

description provided and utilized in this report, or for matters pertaining to legal or

title considerations. No opinion is rendered as to the title to the property and title is

assumed to be good and marketable unless otherwise stated.

3. No responsibility is assumed for matters of survey or any matters architectural,

structural, mechanical, or engineering in nature.

4. The property is appraised as though free and clear of any or all liens or encumbrances

unless otherwise stated.

5. The property is assumed to be under responsible ownership and competent

management.


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6. The information furnished by others is believed to be reliable, but no warranty is

given for its accuracy. The appraiser has not independently verified all of the

information furnished or assumptions made with respect to the appraisal unless

otherwise indicated and therefore is not responsible for their content or their effect on

the market value of the property.

7. All engineering studies are assumed to be correct. The maps, plot plans and other

illustrative material in this report are included only to help the reader visualize the

property. These illustrations are not necessarily measured surveys or measured maps

and the appraiser is not responsible for any cartographic or surveying errors.

Dimensions and areas of the subject property and of the comparable sales were

obtained by various means and are not guaranteed to be exact.

8. It is assumed that there are no hidden or unapparent conditions of the property,

subsoil, or structures or any toxic materials that render it more or less valuable. No

responsibility is assumed for such conditions or for obtaining the engineering studies

that may be required to discover them. This includes environmental hazards

associated with building improvements.

9. It is assumed that the property is full compliance with all applicable federal, state and

local legal and environmental regulations and laws unless the lack of compliance is

stated, described, and considered in the appraisal report.

10. It is assumed that the property conforms to all applicable zoning and use regulations

and restrictions of all types have been complied with unless a non-conformity has

been identified, described and considered in the appraisal report.

11. It is assumed that all required licenses, certificates of occupancy, consents, permits,

and other legislative or administrative authority from any local, state, or national

government or private entity or organization have been or can be obtained or

renewed for any use on which the opinion of value contained in this report is based.


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12. It is assumed that the use of the land and improvements is confined within the

boundaries or property lines of the property described and that there is no

encroachment or trespass unless noted in the report.

13. Unless otherwise stated in this report, the existence of hazardous materials, 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, however, is not qualified to detect such substances. The presence of

substances such as asbestos, urea-formaldehyde foam insulation and other potentially

hazardous materials may affect the value of the property. The value estimated 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 such conditions or for

any expertise or engineering knowledge required to discover them. The intended

user is urged to retain an expert in this field, if desired.

14. Any opinions of value provided in this report apply to the entire property, and any

proration or division of the total into fractional interests will invalidate the opinion of

value unless such proration or division of interests has been set forth in the report.

15. The distribution of the total valuation in this report between land and improvements

applies only under the existing program of utilization. The separate valuations for

land and building must not be used in conjunction with any other appraisal and are

invalid if so used.

16. Due to the nature of real estate valuation and the complexities of external and internal

factors which dictate the value of any real estate the opinion of the appraiser set forth

in the appraisal concerning the value of the property is reliable as of the Effective Date

and should not be considered as reliable at any time thereafter. The forecasts,

projections or operating estimates contained herein are based on current market

conditions, anticipated short-term supply and demand factors, and a continued stable

economy. These forecasts are, therefore, subject to changes with future conditions.


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17. The Americans with Disabilities Act (ADA) became effective January 26, 1992. The

appraiser has not made a specific compliance survey or analysis of the property to

determine whether or not it is in conformity with the various detailed requirements of

ADA. It is possible that a compliance survey of the property and a detailed analysis

of the requirements of ADA would reveal that the property is not in compliance with

one or more of the requirements of the act. If so, this fact could have a negative

impact upon the value of the property. Since the appraiser has no direct evidence

relating to this issue, possible noncompliance with the requirements of ADA was not

considered in estimating the subject property value.

18. Possession of this report, or a copy thereof, does not carry with it the right of

publication, nor may it be used for other than its intended use. Neither all nor any

part of the contents of this report, including conclusions as to value, the identity of the

appraiser, or the firm with which the appraiser is connected, shall be disseminated to

the public through advertising, public relations, news, sales, or other media without

prior written consent and approval of the appraiser. The validity of the Appraisal is

expressly conditioned upon consideration of its entirety.

19. The appraiser, by reason of this appraisal, is not required to provide any other

services including, but not limited to, further consultation or testimony in court or

before any other body charged with interpretation or enforcement of the appraisal, or

to be in attendance in court with reference to the property in question unless

arrangements have been previously made.

20. The appraiser makes no guarantee or warranty, whether implied or expressed,

concerning the market value set forth in the appraisal. The appraisal merely sets forth

the appraiser's opinion of such value based upon information obtained by the

appraiser and assumptions made by the appraiser with respect to the property.


Page 9

21. The appraiser assumes no responsibility for any costs or consequences arising due to

the need, or the lack of need for flood hazard insurance. An agent for the Federal

Flood Insurance Program should be contacted to determine the actual need for flood

hazard insurance.

22. Subsurface rights (minerals and oil) were not considered in this appraisal unless

otherwise specifically stated.

23. The State of Texas does not have full disclosure laws regarding real estate

transactions. Therefore, the appraiser necessarily confirmed all sales with brokers,

property managers, mortgage brokers, grantors, grantees and other parties familiar

with the transaction. The appraiser's data is limited by the accuracy of the

information supplied by the aforementioned individuals. Whenever possible, the

information was verified by county records.

24. The Market Value within this report is not based in whole or in part on the race, color

or national origin of the subject property owner, occupants, or prospective purchaser:

or the race, color or national origin of the owners or occupants of the properties in the

vicinity of the subject property.

25. Due to the summary nature of the appraisal, this report is intended exclusively for the

internal use of the client and/or its affiliates, so long as those persons understand that

the level of detail of presentation limits the reliance on the report to the client and

considers anyone else using this report an unintended user.


Page 10

INTRODUCTION AND IDENTIFICATION OF SUBJECT

The subject of this report is an average quality light industrial property located on the west

side of Dewitt Rd., approximately 1,250 ft. south of Ranch Rd., in the western portion of

Sachse. Per the Collin Central Appraisal District, the subject site contains a total of 38,376 SF

(0.881 acres). The improvements are two metal warehouse buildings totaling of 9,350 SF and

related improvements. The subject has the mailing address of 6935 Dewitt Rd., Sachse, TX

75048.

Per the Collin CAD, the subject is legally described as:

Land in the Daniel Herring Survey, Abst. No. 402, City of Sachse, Texas.


extraordinary assumption that legal description, site size, and other information relied on is

correct.

This appraisal covers real property only, i.e. land, site improvements and the infrastructure.

No personal property, supplies, materials on hand, inventory, furniture, fixtures, equipment,

or business goodwill and other non-realty items are included in the valuation.

The subject property is owner occupied as of the effective date of this appraisal. No leases,

listings, or contracts for sale of the subject are known to the appraiser.

Per the City of Sachse, the site is zoned for a residential use and the subject improvements

are considered a legal, non-conforming use. Municipal water and sewer services are

available to the property which is currently served by an operating water well and septic

system.

A location map is located on the following page.


Page 11

LOCATION MAP

SUBJECT


Page 12

SUBJECT PROPERTY PHOTOS

Subject Property SEC Looking SW Subject Property NEC Looking SW

Subject Property NWC Looking S Subject Property SWC Looking NE


Page 13

Bldg. 1 - Office/Warehouse. SEC Bldg. 1 S/S Looking E

Bldg. 1 Rear Looking N Bldg. 1 N/S Looking E

Entry/Reception Office Exec. Office


Page 14

Office Restroom Warehouse Interior

Warehouse Interior Roll-up Door Warehouse Restroom

Break Room Warehouse Addition Interior


Page 15

Bdlg 2 NEC Bldg. 2 NWC

Bldg. 2 SWC Bldg. 2 SEC

Interior View, W/H Unit 1 Add. Interior View W/H Unit 1 of


Page 16

W/H Unit 1 Restroom Addition R/R view

W/H Unit 2 Interior Well House

Dewitt Rd. Looking N Dewitt Rd. Looking S


Page 17

PREMISES OF THE APPRAISAL

CLIENT AND INTENDED USER OF THE APPRAISAL

The client for this report is Ms. Wynell Perkins, owner. The intended user is for Ms. Perkins

and her assigns.

INTENDED USE OF THE APPRAISAL

The intended use of the appraisal is to assist the client, and any other users, in a real estate

portfolio decision.

PURPOSE OF THE APPRAISAL/TYPE OF VALUE OPINION

Per the request of the client, an opinion of the "Market Value" of the subject property "as is" is

developed as of April 20, 2018 (the effective date of the appraisal). This value is subject to

the assumptions and limiting conditions contained in this report. All of the opinions of value

expressed in this report reflect the conditions prevailing as of the date of valuation.

REAL PROPERTY INTEREST APPRAISED

The subject of this report is currently vacant. Therefore, the property rights appraised are fee

simple estate. Fee simple estate is defined by The Appraisal of Real Estate published by The

Appraisal Institute (12th Edition, pg. 69) as “Absolute ownership unencumbered by any

other interest or estate, subject to the limitations imposed by the governmental powers of

taxation, eminent domain, police power, and escheat.”

DEFINITION OF MARKET VALUE

According to the Code of Federal Regulations (12 CFR 225.62 (g)), the definition of market value

used by agencies that regulate federally insured financial institutions in the United States is:

"The most probable price which a property should bring in a competitive and open market

under all conditions requisite to a fair sale, the buyer and seller each acting prudently and

knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this

definition is the consummation of a sale as of a specified date and the passing of title from

seller to buyer under conditions whereby:

(1) Buyer and seller are typically motivated;


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(2) Both parties are well informed or well advised, and acting in what they

consider to be their own best interests;

(3) A reasonable time is allowed for exposure in the open market;

(4) Payment is made in terms of cash in U.S. dollars or in terms of financial

arrangements comparable thereto; and

(5) The price represents the normal consideration for the property sold unaffected

by special or creative financing or sales concessions granted by anyone

associated with the sale."

EFFECTIVE DATE OF THE APPRAISAL

The subject property was inspected on April 20, 2018 by Esther Rodriguez-Phelps of SRP

Appraisal Services. April 20, 2018 is the effective date of the appraisal.

DATE OF THE REPORT

The date of this report is considered to be the date of signature which is contained on all

signature pages.

REPORT TYPE/ASSIGNMENT CONDITIONS

To report the assignment results, we have intended to comply with the reporting

requirements set forth under Standard Rule 2-2(a) of the Uniform Standards of Professional

Appraisal Practice. The depth of discussion contained in this report is specific to the needs of

the client and for the intended use stated in this report and this appraisal is intended to

conform to the requirements of the client. The scope of the appraisal is suitable to produce a

credible estimate of value.

SCOPE OF WORK PERFORMED

The appraisal is conducted in conformity with the Uniform Standards of Professional

Appraisal Practice (USPAP) as set forth by The Appraisal Foundation and the federal

regulations set forth in Title XI of FIRREA. The value determined in this appraisal is market

value. In the appraisal of this property, the appraisers completed the following steps and

analysis:


Page 19

1. Esther Rodriguez-Phelps conducted a visual survey of the subject property, the

neighborhood, surrounding land uses, and the comparable sales, comparable leases,

and area listings employed in this analysis on April 20, 2018 as well as previous and

subsequent times.

2. Gathered and analyzed regional, city, and neighborhood trends using secondary data

sources.

3. Gathered information from various government authorities relative to the site.

Zoning and deed restrictions, if available, on the subject property were analyzed. The

taxes for the subject were calculated and analyzed.

4. Analyzed the ownership history of the subject property utilizing data from the local

appraisal district and deeds. All listings, contracts, and leases concerning the subject

property were analyzed, if available.

5. Analyzed the highest and best use of the site as vacant and as improved. Analyzed

market data gathered concerning the subject area. In this analysis supply and

demand trends within the subject market were analyzed.

6. Researched sales, listings, and leases of comparable vacant and improved properties

in the subject neighborhood and surrounding areas. The extent of collecting,

confirming, and reporting the market data included a search of sales reporting

services including the MLS, CoStar, and LoopNet, and data obtained from local

appraisal districts, county records, and discussions with professionals in the area

7. In the valuation of the subject property, the income approach and the sales

comparison approach were developed. Due to the age and condition of the

improvements making depreciations estimates unreliable, the cost approach is not

developed in this instance.

8. Approximated a reasonable marketing time and exposure period associated with the

Market Value opinion developed in this report.

9. Reconciled the results of the analysis into an opinion of Market Value for the subject.


Page 20

COMPETENCY OF THE APPRAISER

Esther Rodriguez-Phelps is a State Certified General Appraiser. Ms. Rodriguez-Phelps has

experience in appraising properties similar to the subject, has a general knowledge and

experience in the Collin County real estate market and surrounding markets, and certifies

she complies with the Competency Provisions of USPAP and FIRREA.

REGIONAL ANALYSIS

The subject property is located in the City of Sachse situated in the northeast portion of the

Dallas/Fort Worth Metroplex.

REGIONAL LOCATION MAP

The Dallas/Fort Worth MSA is the largest metropolitan area in the State of Texas with an

estimated population of 7,399,662 in 2017 according to the US Census. The area has shown

SUBJECT


Page 21

sustained growth for many years and saw a 2% population increase from July 2016 to July

2017. The NCTCOG has forecasted the population of the 12-county region to continue

increasing into the foreseeable future with 10,543,336 area residents by the Year 2040.

The Dallas/Fort Worth CMSA has a reported unemployment rate of 3.7% in March 2018, a

slight decrease from 3.9% in March 2017, and continues to stay below the State of Texas

unemployment rate (4.1% in March 2018). Per the Texas Workforce Commission, overall

employment increased by 3.22% (March 2017 to March 2018) while the labor force increased

by 3.44% during the same time period. The information sector showed a slight decrease over

the last 12 months while the sectors for Construction, Manufacturing, and Other Services

showed a strong growth rate.

The Dallas Federal Reserve (DFW Economic Indicators, March 28, 2018) reports the

Dallas/Fort Worth economy expanded in March with payroll employment rising at an

annualized 2.2%. In the first quarter, DFW employment gains outpaced the state and

national growth rates. The Dallas and Fort Worth business-cycle indexes also posted strong

growth in March and unemployment edged down in both metro areas. Single family

housing permit strength continues and is supported by strong job and population growth in

the Metroplex. According to the FRB, the regional economy forecast is for overall modest

growth through 2018.

Due to the increases in population and continued in-migration, a tight housing market has

occurred in the area. Housing inventories continue to remain low with current levels at less

than 3 months. Commercial vacancy rates continue to decline in all areas. New

development for multifamily, office, and flex space have increased in recent months.

The Dallas/Fort Worth metropolitan area has excellent transportation facilities, including an

extensive interstate highway system. The D/FW International Airport encompasses

approximately 18,000 acres and is the third busiest airport in the world relative to scheduled

air carrier operations.

The regional economy forecast is for overall modest growth through 2018. However,

economic uncertainty still exists due to energy prices, trade concerns, and the current

political climate. It should be noted that the Federal Reserve has made a quarter point rate

hike with plans for two additional rate hikes.


Page 22

The regional economy appears to be relatively stable at this time and growing at a moderate

pace. Most economists agree that the region will continue to grow in employment over the

next few years. The long-term outlook for Dallas/Fort Worth Metroplex is considered

favorable due to its central location, quality environmental forces, a diversified employment

base, a quality transportation system, and continued in-migration.

NEIGHBORHOOD/MARKET AREA ANALYSIS

The subject neighborhood is located in primarily in Sachse, a town in southern Collin county

and northeast Dallas county. Boundaries for the market area are considered to be the area

containing, but not limited to, a line following 14th St./FM 544 to the north, Lake Ray

Hubbard to the east, Lakeview Pkwy./SH 66 to the south, and Shiloh Rd. to the west.

MARKET AREA MAP

SUBJECT


Page 23

Access to the neighborhood is considered average given its proximity to regional area

highways, regional thoroughfares, and neighborhood roads. These provide access to major

employment centers throughout the Metroplex. The neighborhood is considered to have

average linkage attributes.

According to Census data, Sachse had a 2016 population estimate of 25,039 people. The

median household income in the area is estimated at $93,270 and the median home is valued

at $184,200. Approximately 84.8% of the housing units are owner occupied. This

information is considered to be a reasonable indicator of current conditions.

Specific employment information for Sachse is not available but considered to be similar to

Collin County. Per the Texas Workforce Commission, the current unemployment rate was

estimated at 3.5% in March 2018, a decrease of 0.1% over the previous 12 months. In

addition, the labor force has increased 3.6% over the same time period. The market area is

steadily growing with respect to employment and anticipated to continue growing at a stable

rate into the foreseeable future.

The subject market area is approximately 85% built out. Development consists primarily of

single family residential. There is some commercial and light industrial development in the

area. There are some tracts available for development. A portion of the market is affected by

flood plain associated with Lake Ray Hubbard.

Demographic information obtained for the subject market area is displayed below.


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Description 0.5 Miles 0.5 to 1 Miles 1 to 2 Miles

POPULATION BY YEAR

Population (4/1/1990) 594 3,708 4,238

Population (4/1/2000) 1,559 4,352 11,039

Population (4/1/2010) 3,527 6,273 18,962

Population (1/1/2017) 4,210 7,137 22,263

Population (1/1/2022) 4,422 7,496 23,376

Percent Growth (2017/2010) 19.36 13.77 17.41

Percent Forecast (2022/2017) 5.04 5.03 5

HOUSEHOLDS BY YEAR

Households (4/1/1990) 191 1,229 1,427

Households (4/1/2000) 511 1,496 3,513

Households (4/1/2010) 1,101 2,143 5,901

Households (1/1/2017) 1,306 2,424 6,884

Households (1/1/2022) 1,363 2,537 7,193

Percent Growth (2017/2010) 18.62 13.11 16.66

Percent Forecast (2022/2017) 4.36 4.66 4.49

GENERAL POPULATION CHARACTERISTICS

Median Age 37.6 37.1 36.8

Male 2,054 3,511 11,014

Female 2,156 3,626 11,249

Density 3,831.10 1,735.40 3,700.50

Urban 4,210 7,137 22,263

Rural 0 0 0

GENERAL HOUSEHOLD CHARACTERISTICS


Page 25

Households (1/1/2017) 1,306 2,424 6,884

Families 1,159 2,013 6,027

Non-Family Households 147 411 857

Average Size of Household 3.22 2.94 3.23

Median Age of Householder 48.9 48.9 48.1

Median Value Owner Occupied ($) 233,039 193,945 218,721

Median Rent ($) 1,750 761 917

Median Vehicles Per Household 2.6 2.7 2.6

GENERAL HOUSING CHARACTERISTICS

Housing, Units 1,333 2,532 7,078

Housing, Owner Occupied 1,250 2,073 6,184

Housing, Renter Occupied 56 351 700

Housing, Vacant 27 108 194

POPULATION BY RACE

White Alone 2,814 5,332 12,530

Black Alone 472 623 2,577

Asian Alone 695 651 5,740

American Indian and Alaska Native Alone 27 40 127

Other Race Alone 90 272 493

Two or More Races 112 219 796

POPULATION BY ETHNICITY

Hispanic 366 1,061 2,154

White Non-Hispanic 2,570 4,649 11,113

GENERAL INCOME CHARACTERISTICS

Total Personal Income ($) 181,034,881 282,237,961 988,841,978

Total Household Income ($) 181,034,881 282,237,961 988,841,978

Median Household Income ($) 129,276 95,182 130,802

Average Household Income ($) 138,618 116,435 143,644

Per Capita Income ($) 43,001 39,546 44,416

RETAIL SALES

Total Retail Sales (including Food Services) ($) 56,117 25,053 1,912,540

CONSUMER EXPENDITURES

Total Annual Expenditures ($000) 109,570.30 176,433.30 573,680.20

EMPLOYMENT BY PLACE OF BUSINESS

Employees, Total (by Place of Work) 425 1,018 4,495

Establishments, Total (by Place of Work) 65 105 305


Page 26

EASI QUALITY OF LIFE

EASI Quality of Life Index (US Avg=100) 150 146 145

EASI Total Crime Index (US Avg=100; A=High) 7 30 22

EASI Weather Index (US Avg=100) 184 184 184

BLOCK GROUP COUNT 1 3 6

Footnotes:

Easy Analytic Software Inc. (EASI) is the source of all updated estimates. All other data are

derived from the US Census and other official government sources. Consumer Expenditure data

are derived from the Bureau of Labor Statistics. All estimates are as of 1/1/2017 unless otherwise

stated.

The above data indicates there is significant residential development in the immediate area

of the subject and the median household income levels and home values in surrounding

areas are generally similar to the neighborhood overall.

The property tax burden within the subject neighborhood is competitive with alternative

sectors in the region. It appears that governmental forces in the area are favorable

concerning the development and marketing of area properties.

Terrain features in the area are basically level to gently rolling. No hazards or nuisances

such as vibration, dust, odors, smoke, or smog were noted or reported to be present in the

neighborhood. Overall drainage is considered adequate due to the network of creeks and

drainage channels.

The general market area has shown sustained growth for many years with residential and

commercial development. Current construction is an indicator the area will have continued

growth into the foreseeable future.


Page 27

SITE DESCRIPTION

The subject site is consists of one tract of land located on the west side of Dewitt Rd.

approximately 1,250 ft. south of Ranch Rd.

Please refer to the following exhibits for additional information concerning the subject site.

AERIAL MAP

SUBJECT

SUBJECT


Page 28

CCAD GIS MAP

Site Size: 38,376 SF (0.8810 acres).

Shape: Rectangular

Road Frontage: est. 150 ft. on the west side of Dewitt Rd.

Access/Visibility/Linkage: Average access and linkage for the area. Average

visibility for the area. The subject has two driveways

on Dewitt. At the subject site, Dewitt is a 4 lane

divided concrete roadway with gutters and sidewalks.

Topography/Drainage/Soil: Surface drainage on the site appears adequate. Upon

visually surveying those improvements on and

immediately surrounding the subject site, soil, and

subsoil conditions appear adequate to support most

types of construction, dependent on proper planning

and implementation. The appraiser assumes that

there are no hidden or unapparent conditions on the

property’s subsoil or structures which would render it

SUBJECT


Page 29

less valuable. Most limitations can be overcome by

good design and careful installation.

Flood Plain: None per FEMA Flood Plain Map 48085C0530J dated

06/02/2009.

Utility Access: A fully functional water well and septic system is

located on the property. Municipal water and sewer

service is available by the City of Sacshe provides

municipal water and sewer service and may require

service for municipal services. Electric and phone

service available from various providers. No natural

gas service is available.

Easements & Encroachments: Subject property is assumed to have typical public

utility easements. The appraiser makes the

extraordinary assumption that the subject is not

affected by undisclosed easements or encroachments.

Hazards & Nuisances: No hazards or nuisances are noted. The property has

been utilized for light industrial uses and may pose a

slight risk of environmental contamination. The

appraiser makes the extraordinary assumption that

the subject is not affected by environmental

conditions.

Surrounding Land Use: North – light industrial, east and west – residential

subdivision, and south – a single family home.

Zoning: The subject is zoned R-3 – Single Family Residential

per the City of Sachse. This designation does not

allow for commercial uses. However, the subject

property been used for a commercial use and the

improvements appear to be a legal, non-conforming

use.


Page 30

CITY OF SACHSE ZONING MAP

SUBJECT


Page 31

IMPROVEMENT ANALYSIS

The subject improvements include an office/warehouse (Bldg. 1) and a warehouse (Bldg. 2).

Building 1 contains 6,600 SF office/warehouse. The 480 SF office which includes an

entry/reception area, an office, and a restroom. The 6,120 SF warehouse has an addition with

a 225 SF break room and a temperature controlled bay. The warehouse has pull-through

access. Building 2 has a heated bay and an outside access restroom. The appraiser is not a

surveyor, draftsman, or architect. The appraiser assumes no liability should any of the

improvement data prove to be inaccurate.

IMPROVEMENT SKETCH


Page 32

Quality: Average Quality.

Gross Building Area:

Office %

9,350 SF

5.1%

Building 1 – Office/Warehouse

Year of Construction:

Size:

Office:

Truss Height:

# of Bays:

1979/1994.

6,600 SF.

480 SF.

14 ft.

2 bays, one temperature controlled.

Exterior Characteristics

Foundation:

Exterior Walls:

Roof:

Exterior Doors:

Windows:

Reinforced concrete slab.

Metal

Metal with gutters and downspouts

Fixed glass sliding door, two metal pedestrian doors,

and 2 metal roll-up doors.

Single pane aluminum frame. No screens.

Interior Finish Out

Office:

Ceilings and Walls:

Flooring:

Interior Doors:

Temperature Control

The ceilings are textured and painted sheetrock with

florescent lights and a ceiling fan. Walls are a mix of

paneling, textured and painted sheetrock, and wall

paper.

Flooring is carpet in office area and vinyl in restroom

Interior doors are hollow core wood and a metal

pedestrian to the warehouse.

HVAC.


Page 33

Warehouse:

Ceilings and Walls:

Flooring:

Interior Doors:

Temperature Control:

The older section has metal ceilings and walls with an

exposed insulation treatment, and exposed metal

trusses. Lighting is a mix of hanging florescent lights

and vinyl skylights.

Concrete flooring.

Interior doors are hollow core wood in the restroom

and a metal roll-up door to the addition.

Window Unit, hanging heat, and exhaust fans.

Bldg. 2 - Warehouse

Year of Construction:

Size:

Office:

Truss Height:

# of Bays:

1986.

2,750 SF.

0 SF.

14 ft.

3 bays.

Exterior Characteristics

Foundation:

Exterior Walls:

Roof:

Exterior Doors:

Windows:

Reinforced concrete slab.

Metal.

Metal with gutters and downspouts.

2 metal pedestrian, 3 roll up doors.

Single pane aluminum frame.

Interior Finish Out

Ceilings and Walls:

Flooring:

Insulated metal ceiling and walls and exposed trusses.

The restroom has textured and painted sheetrock

ceilings and walls. Lighting is a mix of florescent

lights and skylights.

Exposed concrete floor.


Page 34

Interior Doors:

Temperature Control

Wood hollow core.

Hanging heat in two bays.

Restrooms:

Bldg 1:

Bldg 2:

3 – 1 station

2. 1 – Office; 1 – Warehouse.

1.

Electrical/Plumbing: Assumed adequate and per local and national codes.

Fire Protection/Security: None.

Additional Features:

Metal canopy, exterior lights, and partial metal screen

fencing. A well house is located at the rear of the

property.

Parking: Concrete. The subject has approximately 4,500 SF of

concrete parking and drives. The number of parking

spaces appears to be adequate for the improvements.

Land to Building Ratio: 4.10:1.

Condition: Average.

Deferred Maintenance: Deferred maintenance was noted during the visual

inspection. The exterior of both buildings had some

siding damage, the trim had chipped and peeling

paint, and several areas of rust were noted. Bldg. 1

office interior has peeling wallpaper, damaged

sheetrock, and minor light fixture damage and the

warehouse has minor trim damage over doorways.

Exposed insulation material was noted in original

warehouse and may be in need of remedy. Minor

insulation damage was noted in the newer warehouse


Page 35

interior. The concrete drives are in average condition.

All mechanical systems are assumed to be in working

order.

OWNERSHIP HISTORY

According to Collin County records, the owner of record for the subject property is James E.

Perkins, and survived by his wife, Wynell Perkins. The property has been owned in excess

of the three year reporting requirement.

The subject is owner occupied with a warehouse use. No contracts for sale or lease for the

subject property are known to the appraiser. The property is in consideration for a

lease/purchase agreement but no further details are known to the appraiser.

REAL ESTATE TAX ANALYSIS

The Collin Central Appraisal District is responsible for assessing all real property in Collin

County. The subject is currently taxed under account #2652580. Taxing information for the

subject is displayed in the following table for 2017. Tax rates for 2018 have not yet been set.

No taxes are known to be due.

TAX ASSESSMENT INFORMATION

Improvement Value $38,208

Land Value $57,565

Total Taxable Value (2017) $95,773

Tax Rate (2017) 2.659335/$100

Estimated Annual Tax Liability $2,546.92

The subject is taxed below the value opinion developed in this report. Future tax liabilities

may be increased if market value is utilized.


Page 36

HIGHEST AND BEST USE

AS VACANT

The subject, as vacant, is functional for virtually any small to medium scale use. The

property is currently zoned for a single family use and a zoning change is unlikely.

Development with a residential use appears to be the maximally productive use for the

subject site. There is a demand for homes in the area and current market conditions indicate

rental rates would support speculative development at this time.

Giving consideration to the information above and in the regional and neighborhood

analysis, it is the appraiser’s opinion that the highest and best use for the subject property, as

vacant, is for development with a single family use.

AS IMPROVED

As of the date of the appraiser’s inspection, the subject improvements are functional as a

light industrial facility. Current zoning does not allow for commercial uses. However, the

subject property is owner occupied with a light industrial use. The current improvements

appear to be a legal, non-conforming use. Demolition of the improvements would not result

in a vacant land value above the current value of the improvements and land at this time. In

addition, there are few similar properties in the market, but there does appear to be demand

for similar units. Taking this into consideration, the highest and best use of the subject

property, as improved, is to continue in its current, legal, non- conforming use.


Page 37

APPROACHES TO VALUE

An assignment to develop an opinion of a real property’s market value involves a systematic

set of procedures an appraiser follows to provide answers to a client’s questions about a real

property value (The Appraisal of Real Estate, 12th Edition, pg. 49). The process includes

defining the problem and identifying the scope of work required to solve the problem, and

the gathering and analyzing of relevant data to identify trends affecting the subject property.

To apply valuation theory, the appraiser applied three basic approaches to value to be used

when deemed applicable by the appraiser: the cost approach, the sales comparison approach,

and the income approach. When one or more the approaches are not utilized in the

appraisal process, full justification must be presented.

The income approach is a process in which the appraiser analyzes a property’s capacity to

generate future benefits and capitalize the income into an indication of present value. This

approach to value is based upon the principle of anticipation of future benefits from the

ownership of the real estate. The appraiser is primarily concerned with the future benefits

resulting from net income. Net income is the remainder after deduction of expenses of

operation from effective gross income. The steps in this approach include estimating

potential gross income by comparison with competing properties and estimating expenses

(derived from historical and/or market experience) to determine a projected net income

stream. The estimated income is then capitalized or discounted into an indication of value

by using rates extracted from competitive properties in the market.

The sales comparison approach involves the comparison of the subject property to similar

properties that have recently sold, are currently listed for sale, or are under contract. These

properties are compared to the subject and each other with regard to differences or

similarities in time, age, location, physical characteristics, and the conditions influencing the

sale. The notable differences in the comparable properties are then adjusted from the subject

property to indicate a value range for the property being appraised. When sufficient sales

data is available, these adjustments are best determined by the actions of typical buyers and

sellers in the subject’s market. This value range, as indicated by the adjusted comparable

properties, is then developed into a final indicated value for the subject property by this

approach.


Page 38

In the cost approach, the appraiser must first develop an opinion of the value of the subject

site by comparing it to similar sites that have recently sold, are currently listed for sale, or are

under contract. The replacement cost new of the improvements, as determined by

comparison to similarly constructed properties, is then estimated. Depreciation from all

sources is determined and subtracted from the replacement cost new of the improvements to

arrive at a current value of the improvements. The current value of all improvements is then

added to the opinion of site value with the result being the indicated value by the cost

approach.

In the valuation of the subject property the income approach and the sales comparison

approaches are utilized to develop an opinion of the subject property value. The cost

approach is not developed due to the age and condition of the improvements making

depreciation estimates unreliable.

INCOME APPROACH

In the Income Approach to Value, estimates are made of the potential gross income that

might be expected from rental of the real estate and of rent losses and expenses that might be

incurred by the owner/lessor. Resulting net operating income is then capitalized at an

appropriate rate or the future cash flow is discounted to indicate the value of a property.

The appraiser has utilized the capitalization method.

POTENTIAL GROSS INCOME (PGI)

The first step in the process of estimating the future net income a property is capable of

generating during ownership is to approximate the potential gross rental income. In order to

approximate an economic rent for the appraised property and to project a future income

stream, lease data concerning other similar properties was investigated.

Most similar properties are leased on an industrial gross basis with the tenant responsible

only for items such as interior maintenance and utilities. Tenants are typically responsible

for increases in taxes and insurance. As a result, the subject is analyzed as leased on an

industrial gross basis. A summary of the properties sampled is displayed on the following

page.


Page 39

COMPARABLE RENTAL SUMMARY

Rental Subject Lease 1 Lease 2 Lease 3 Lease 4 Lease 5

Location 6935 Dewitt Rd.,

Sacshe

2802 Exchange

St., Wylie

211 Regency

Dr., Wylie

1050 N. Hwy

78, Wylie

226 Commercial

St., Garland

5150 Boyd

Blvd., Rowlett

Lease Space 9,350 SF 4,000 SF 6,357 SF 6,000 SF 9,400 SF 8,000 SF

Improvements/

Condition

Avg. Quality

Metal

Avg-Fair Cond.

YOC: 1979/1986

L/B Ratio: 4.10:1

Gd. Quality

Masonry/Metal

Gd. Condition

YOC: 2017

LB Ratio: 2.82:1

Gd. Quality

Masonry/Metal

Avg. Condition

YOC: 2012

L/B Ratio: 4.51:1

Avg. Quality

Masonry/Metal

Avg. Condition

YOC: 2001

LB Ratio: 7.26:1

Avg. Quality

Metal

Avg. Condition

YOC: 1960

LB Ratio: 2.00:1

Avg. Quality

Metal

Avg. Condition

YOC: 1985

LB Ratio: N/A

Amenities

480 SF Office

5.1% HVAC

14’ Truss

5 bays

No Sprinklers

Concrete Park.

700 SF Office

17.5% HVAC

16’ Truss

2 bays

Sprinklers

Concrete Park.

200 SF Office

3.2% HVAC

15’ Truss

3 bays

Sprinklers

Concrete Park.

3600 SF Off.

100% HVAC

16’ Truss

3 bays

No Sprinklers

Concrete Park.

600 SF Office

31.9% HVAC

18’ Truss

1 bay

No Sprinklers

Concrete Park.

800 SF Office

10.0% HVAC

16’ Truss

3 bays

No Sprinklers

Concrete Park.

Lease Rate

Rent/SF

N/A

N/A

$4,000/Mo.

$12.00/SF

$7,199/Mo.

$13.59/SF

$8,000/Mo.

$16.00/SF

$6,000/Mo.

$7.66/SF

$3,500/Mo.

$5.25/SF

Lease Type N/A NNN NNN Mod. Gross Ind. Gross Ind. Gross

Occupancy N/A 100% 100% Vacant 75% 100%

Confirmation N/A Costar Costar Loopnet Loopnet Costar

Comments: Leases 3 and 4 are asking rates.


Page 40

COMPARABLE LEASE MAP

A discussion of the adjustments applied to each of the comparables is contained on the

following pages.


Page 41

LEASE 1

2802 Exchange St, Wylie

Lease 1 is on a triple net lease, superior to an industrial gross lease assumed for the subject.

As a result a downward adjustment is applied for the market difference.

This property is located north of the subject on a secondary roadway, inferior to the subject

location. This is an inferior location compared to the subject and an upward adjustment is

applied. This lease is smaller compared to the subject. In general, smaller properties tend to

lease for more per unit of comparison than similar larger properties. As a result, a

downward size adjustment is applied for the market effect difference. These improvements

are of superior quality construction and amenities, such as a superior office percentage and a

secured yard. Considering the factors, a downward adjustment is required. Lease 1 is of

more recent construction and in far superior condition compared to the subject and a

downward age/condition adjustment is warranted.


Page 42

LEASE 2

211 Regency Dr., Wylie

Lease 2 is also on a triple net lease and a downward adjustment is applied.

This unit is located near lease 1 on a corner lot of 2 secondary roads. This has superior

access, but inferior linkage attributes compared to the subject location. Overall, this is

generally similar location and a no adjustment is needed. This is a smaller unit and is

adjusted downward for size. This property is of superior quality construction and superior

amenities. A downward adjustment is indicated for superior overall quality. This building

is newer construction and in superior condition compared to the subject requiring a

downward age/condition adjustment.


Page 43

LEASE 3

1050 N. Hwy 78, Wylie

This building is currently available for lease on a modified gross basis, superior to a gross

lease. Downward adjustments for an asking lease rate and for superior lease type are

applied.

This property is located on a superior roadway compared to the subject. This property has

visibility and linkage attributes compared to the subject. Overall, this is a slightly superior

location and a downward adjustment is indicated. This is a smaller unit compared to the

subject and a downward adjustment is applied. Quality of construction is superior and has

far superior office and HVAC percentages to the subject. Again, this is of more recent

construction and in superior condition. Downward adjustments for quality and

age/condition are warranted.


Page 44

LEASE 4

226 Commercial St., Garland

This building is currently available for lease on an industrial gross basis. A downward

adjustments for an asking lease rate is applied.

Comparable 4 is located southwest of the subject in a superior market area. This unit is

within a multi-tenant property on a secondary road. This property has inferior access and

visibility compared to the subject. Even so, this is a superior location and a downward

adjustment is warranted. Size is similar to the subject. This property is of superior quality

construction and has superior office and HVAC percentages. A downward quality

adjustment is applied. No age/condition adjustment is needed.


Page 45

LEASE 5

5150 Boyd Blvd., Rowlett

Comparable 5 is located southeast of the subject on a secondary roadway and has inferior

visibility and has similar linkage attributes. Overall, this is an inferior location compared to

the subject. These improvements are slightly smaller compared to the subject. Quality is

superior due to office and HVAC percentages and a downward adjustment is applied. This

building is in slightly superior condition to the subject and a downward adjustment is

applied.

A summary of the adjustment made to the comparable lease properties is contained in the

following table.


Page 46

LEASE COMPARABLE ADJUSTMENT GRID

Lease 1 Lease 2 Lease 3 Lease 4 Lease 5

SF Rental Rate $12.00 $13.59 $16.00 $7.66 $5.25

Time Current Current Asking Asking Current

Adjustment 0% 0% -3% -3% 0%

Type of Lease NNN NNN Mod. Gross Ind. Gross Ind. Gross

Adjustment -$2.00 -$2.00 -$1.00 $0 $0

Adjusted Rental Rate $10.00 $11.59 $14.52 $7.43 $5.25

Location +5% 0% -5% -10% +10%

Size -15% -10% -10% 0% -5%

Quality -20% -25% -35% -10% 0%

Age/Condition -20% -15% -10% 0% 0%

Net Adjustment -50% -50% -60% -20% +5%

Adjusted Rate/SF $5.00 $5.80 $5.81 $5.94 $5.51

POTENTIAL GROSS INCOME

The adjusted market leases indicate a range from $5.00/SF to $5.94/SF on an industrial gross

basis. It is the opinion of the appraiser the subject's market lease rate lies towards the lower

end the indicated range at $5.00/SF. Considering the above information, the total potential

gross income is estimated at $46,750 ($5.00/SF x 9,350 SF) for the year. This equates to

$3,896/month.

PASS THROUGH REIMBURESEMENTS

The subject is assumed leased on an industrial gross basis. No costs are to be passed through

to the tenant.

PGI CONCLUSION

The total potential gross income is estimated at $46,750 for the year.

VACANCY/CREDIT LOSS

We noted vacant properties within the area during a visual observance of properties in the

immediate subject market area. The majority of the buildings in the subject market area are


Page 47

occupied, but there are properties available. Taking this information into consideration, a

vacancy/credit loss estimate of 5% (95% occupancy) is considered reasonable, assuming

prudent management, and is utilized in this income analysis. Therefore, the estimated

vacancy/credit loss is $2,337/yr.

EFFECTIVE GROSS INCOME

Effective gross income is estimated by subtracting vacancy/credit loss from potential gross

income and pass through reimbursements. Therefore, the subject property EGI is

approximated at $44,413.

OPERATING EXPENSES

Operating expenses are estimated from information obtained from the market and similar

properties. Square foot indicators are based on 9,350 SF. Estimated expenses are discussed

below.

Property taxes are based on potential taxable value calculated in Tax Analysis section

at $2,547or about $0.27/SF.

Insurance expense is based similar properties known to the appraiser and discussions

with professionals in the market. An expense of $0.35/SF or $3,273 is utilized.

Management expense in the subject market generally ranges from 3% to 10%. For the

purposes of this report, management expense is estimated at 8.0% of actual rental

income or $3,553.

Utilities expense is the responsibility of the tenant.

Administrative expense includes items such as bank service charges, office expenses,

bookkeeping, and telephone expense. We have projected this expense to be $0.10/SF

or $935 annually. This expense does not include depreciation, loan interest, and travel

and entertainment.

Expenses for annualized maintenance, expenses for repairs, and reserves for future

repairs must be considered. The improvements are older and may require some

maintenance. For reserves, the appraiser considered the rate of savings needed to


Page 48

prepare for the cost of tenant rollover, repairs to the property, and reserves for future

repairs invested at a safe rate. Data from the market and similar properties was

utilized. A rate of $0.40/SF for repairs and reserves or about $3,740 is considered

reasonable.

Miscellaneous expenses are approximated at $0.05/SF. A pro forma is developed on

the next page utilizing the above information.

A pro-forma operating statement is displayed below.


Page 49

STABILIZED OPERATING STATEMENT - PRO FORMA

Gross Rental Income $5.00/SF 9,350 SF $46,750

Pass Through Reimbursements $0.00/SF $0

Less: Vacancy/

Collection Loss (5%)

($0.25/SF) ($2,337)

EGI $4.75/SF $44,413

Less: Operating Expenses

PSF Total

Property Taxes $0.27 $2,547

Insurance $0.35 $3,273

Management (8.0%) $0.38 $3,553

Utilities $0 $0

Administrative $0.10 $935

Repairs/Reserves/Maintenance $0.40 $3,740

Miscellaneous $0.05 $468

Sub-Total of Expenses $1.55 $14,516

Net Operating Income $3.20 $29,897


Page 50

DIRECT CAPITALIZATION/CONCLUSION

There are several techniques from which an appropriate overall capitalization rate (OAR) can

be estimated. When sales in a similar market area are abundant, the direct capitalization

method may be used. None of the comparable sales had an indicated a capitalization rate.

Therefore, due to limited market data from comparable sales, the appraiser has further relied

on the mortgage/equity technique.

Area lenders indicated that a typical loan would involve an interest rate of approximately

5.5% with a 20-year amortization period with a loan to value ratio of 75%. An equity yield

rate of 10% is deemed appropriate for the subject property giving consideration to various

real estate investor surveys.

MORTGAGE/EQUITY TECHNIQUE

Loan ratio (0.75) x Mortgage Constant (0.0825) 0.0619

Equity Ratio (0.25) x Equity Yield Rate (0.1000) 0.0250

Indicated Capitalization Rate 0.0869

The above technique indicates an overall rate of 8.69%. Utilizing a debt service coverage

ratio of 1.25 and the information above, the debt coverage ratio technique indicates a

capitalization rate of 7.73%. Discussions with professionals in the area and considering the

age, quality, condition, and location of the subject, the appraiser has utilized a capitalization

rate for the subject property of 8.5%.

The resulting value estimate of the subject property by the income approach, is $351,729

($29,897 ÷ 0.085), rounded to $350,000.

INDICATED VALUE OF THE SUBJECT PROPERTY

DETERMINED IN THE INCOME APPROACH

$350,000


Page 51

SALES COMPARISON APPROACH

The sales comparison approach is premised upon the principle that states that a prudent

purchaser would pay no more for real property than the cost of acquiring an equally

desirable substitute on the open market. There are various units of comparison available in

the evaluation of sales data in this approach. In this analysis, percentage adjustments are

added and subtracted from the comparable property’s sale price/square foot (SP/SF) to

account for dissimilarities between market sales and the subject property.

The extent of collecting, confirming, and reporting the market data included a search of sales

reporting services including the MLS, CoStar, and LoopNet, area appraisal district data,

county records, and discussions with professionals in the area. The research process

included sales that have occurred during the past 3 years in the subject market areas and

similar submarkets within the Dallas/Ft. Worth metropolitan area. The sales utilized were

the best available.

IMPROVED SALES ANALYSIS

The most common basis for analysis for this type of property is the SP/SF method. A

summary of comparable sales information is located in the following table followed by a

comparable sales map.


Page 52

COMPARABLE IMPROVED SALES SUMMARY

Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale 5

Location 6935 Dewitt Rd.,

Sacshe

6404

Industrial

Dr., Sachse

8317 Schrade

Rd., Rowlett

5425

Lakeview

Pkwy.,

Rowlett

117 Garvon

St., Garland

218-1/2 State

St., Garland

Site Size 38,376 SF 20,000 SF 52,228 SF 19,995 SF 10,454- SF 7,840 SF

Improvements

9,350 SF

Avg. Quality

Metal

Fair- Avg. Cond.

YOC: 1979/1986

L/B Ratio:

4.10:1

7,510 SF

Avg. Quality

Masonry

Avg. Cond.

YOC: 1983

L/B Ratio:

2.66:1

5,928 SF

Avg. Quality

Metal

Fair Cond.

YOC: 1980

LB Ratio:

8.81:1

3,500 SF

Gd. Quality

Masonry

Avg. Cond.

YOC: 1984

L/B Ratio:

5.71:1

7,250 SF

Avg. Quality

Metal

Avg. Cond.

YOC: 1959

L/B Ratio:

1.44:1

3,050 SF

Avg. Quality

Metal

Avg. Cond.

YOC: 1990

L/B Ratio:

2.57:1

Amenities

5.1% HVAC

14’ Truss

5 bays

Open Yard

Conc. Prking

~10% HVAC

14’ Truss

2 bays

None

Conc.

Prking.

~10% HVAC

15’ Truss

0 bays

Open Yard

Grass

Prking.

50% HVAC

20’ Truss

3 bays

Secure Yard

Conc.

Prking.

~10% HVAC

18’ Truss.

2 bays

Secure Yard

Conc.

Prking.

No HVAC

14’ Truss

5 bays

Secure Yard

Conc.

Prking.

Utilities All Available

Wtr. Well All Available All Available All Available All Available All Available

Grantor N/A W.D. & J.L.

Campbell

Templo

Familiar

Oasis

Lynn

Kincaid Fred Pyse Pyse Estate

Grantee N/A

N.N. Kahn,

M.A. Kahn,

& A.A. Kahn

James M.

Jeffrey

Tucker

Roofing Sys.,

LLC

Garvon St.

Properties

LLC

Dale Vith

Sale Date

DOM N/A

02/03/2016

3,600 Days

02/05/2018

447 Days

11/30/2016

94 Days

02/22/2016

99 Days

02/03/2017

140 Days

Sale Price N/A $340,000 $178,000 $510,000 $325,000 $239,000

Concessions N/A N/A N/A $6,000 N/A N/A

SP/SF N/A $45.27 $30.03 $147.71 $44.83 $78.36

Record Data N/A 2016-

00034090

2018-

00027133

2016-

00336365

2017-

00103227

2017-

00060102

Cap. Rate N/A N/A N/A N/A N/A N/A

Verification: N/A Costar

#3525357

NTREIS

#13752775

NTRIES

#13405923

Costar

#3889950

NTREIS

#13453412


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COMPARABLE IMPROVED SALES MAP

IMPROVED SALES ANALYSIS

Each of the sales was reported to have occurred on either a cash basis or with the grantee

obtaining financing at prevailing market rates. All of the utilized sales have arms length

transactions whereby no undue stimulus existed which would affect the sale price. All of the

sales in this analysis occurred under typical conditions of sale with generally equal

buyer/seller motivation and no adjustments are considered necessary. The sales occurred

from February 2016 through February 2018. Little data concerning changes in industrial land

prices is available. However, there has been upward pressure on land prices in recent

quarters. NTREIS reports that overall real estate prices rose from the Feb. 2016 to Feb. 2018.


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Time adjustments are applied at 6% per annum (0.50%/month) upward adjustment for sales

prior to February 2018.

The appraiser is not aware of any prior sales of the comparable properties within the

required reporting period.

ADJUSTMENT ANALYSIS

An adequate number of sales were available to develop an opinion of value. The most recent

and proximate sales that could be located and verified and the most proximate sales with

similar utility were utilized in the development of this appraisal report. No sales available

had a similar land to building ratio. All of the sales required adjustment. Although a paired

sales analysis for each of the adjustments was attempted, a lack of truly comparable sales

with all the necessary factors required the appraiser’s judgment be utilized.

The comparable improved sales are analyzed on the following pages.


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SALE 1

6404 Industrial Dr., Sachse

Comparable 1 is the most proximate and recent sale near the subject. Even so, this is one of

the older sales utilized and significant time adjustment is applied for the market effect.

Sale 1 is located near the subject in an area of industrial development. This property has

frontage on a secondary roadway but has visibility from a superior roadway. Overall, this is

considered a generally similar location and no adjustment is necessary. This property is

similar in size compared to the subject. This comparable is superior masonry construction

and in overall superior condition compared to the subject. A downward adjustment is

applied for both quality and age/condition. This property has an inferior land to building

ratio compared to the subject and an upward adjustment is applied


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SALE 2

8317 Schrade Rd., Rowlett

Sale 2 is located south of the subject at the corner of two secondary roads. This property has

far inferior visibility, access, and linkage attributes compared to the subject. A significant

upward location adjustment is warranted. This is a smaller property compared to the

subject. In general, smaller properties tend to sell for more per unit of comparison than

similar larger properties resulting in a downward adjustment. This comparable is inferior

quality for an industrial use property and is in inferior condition compared to the subject.

An upward adjustment is applied for each characteristic. This property has a superior land

to building ratio and is adjusted downward for the difference in value.


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SALE 3

5425 Lakeview Pkwy., Rowlett

Sale 3 is adjusted for both market concessions and for time. This property is located

southeast of the subject on a far superior roadway and has superior visibility. A downward

location adjustment is needed. Size is smaller compared to the subject. This building is of

superior quality construction with a superior HVAC percentage. Overall, quality is far

superior to the subject and a significant downward adjustment is warranted. This building is

similar in age, but has been well maintained and superior condition to the subject.

Downward adjustments are applied for each of these categories.


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SALE 4

117 Garvon St., Garland

Sale 4 is also adjusted for time. This comparable is located southwest of the subject in a

generally similar submarket. This property is on a secondary roadway, inferior to the

subject. Size is similar to the subject. These improvements are of similar quality construction

but has a secure yard, a superior characteristic compared to the subject. Considering the

factors, a downward adjustment is warranted. Condition is generally similar. This has an

inferior land to building ratio.


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SALE 5

218-1/2 State St., Garland

This comparable is adjusted for time. Sale 5 is, in a superior submarket and adjacent to comp

4. This sale is located on a corner lot of two secondary roadways and has inferior visibility

compared to the subject. Overall, this is considered a superior location and a downward

adjustment is warranted. This is a smaller property compared to the subject and is adjusted

downwards for the difference in value. These improvements are of similar quality

construction but has a secure yard, superior to the subject. An upward adjustment for an

inferior land to building ratio is applied.

The following table summarized the adjustments that were applied to each sale.


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COMPARABLE IMPROVED SALES ADJUSTMENT SUMMARY

Sale 1 Sale 2 Sale 3 Sale 4 Sale 5

Date 02/16 02/18 11/16 02/16 02/17

Sale Price/SF $45.27 $30.03 $147.71 $44.83 $78.36

Mkt. Negotiations $0 $0 -$1.71 $0 $0

Time 12% 0% 7.5% 12% 6%

Adjusted SP $50.70 $30.03 $156.95 $50.21 $83.06

Location 0% +25% -20% -20% -25%

Size 0% -5% -10% 0% -10%

Quality -5% +10% -25% -5% -10%

Age/Condition -10% +10% -15% 0% 0%

L/B Ratio +5% -10% 0% +10% +5%

Net Adjustment -10% +30% -70% -15% -40%

Adjusted Price/SF $45.63 $39.04 $47.09 $42.68 $49.84

CONCLUSION

Few sales of similar properties were available for analysis. The comparable properties are

considered similar to the property after adjustments. The adjusted prices range from

$39.04/SF to $49.84/SF. Considering the subject's location, age, quality, and condition, the

appraiser feels the subject value lies towards the lower end of this indicated range and a

value of $40.00/SF is appropriate. The opinion of the value of the subject, as indicated by the

sales comparison approach, is $374,000 (9,350 SF X $40.00/SF), rounded to $375,000.

INDICATION OF VALUE DETERMINED IN

THE SALES COMPARISON APPROACH

$375,000


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OPINION OF EXPOSURE AND MARKETING TIME

Similar properties in the Dallas/Fort Worth metropolitan area are marketable to a wide

group of potential purchasers in the local and regional market. There have been few sales of

this type property in the general subject market area during the last two years. The subject

property should sell within a twelve (12) month time frame if properly marketed. An

exposure period of twelve (12) months or less is considered representative of the subject

property and is well supported by the comparable sales.

RECONCILIATION AND FINAL OPINION OF VALUE

The subject of this report is an average quality light industrial property located on the west

side of Dewitt Rd., approximately 1,250 ft. south of Ranch Rd., in the western portion of

Sachse. The subject site contains a total of 38,376 SF (0.881 acres). The improvements are two

metal warehouse buildings totaling of 9,350 SF and related improvements. The subject has

the mailing address of 6935 Dewitt Rd., Sachse, TX 75048.

The purpose of this report is to provide an opinion of the "Market Value" of the fee estate in

the subject property as of April 20, 2018 (the effective date of the appraisal).

In the valuation of the subject, the income and the sales comparison approaches were

utilized to develop a value opinion of the subject. The cost approach was not developed due

to the age and condition of the improvements making depreciation estimates unreliable. The

following value conclusions were determined in each approach.

VALUE INDICATIONS FOR THE SUBJECT

Income Capitalization Approach $350,000

Sales Comparison Approach $375,000

Cost Approach Not Developed

The income approach and the sales comparison approach are both generally good indicators

of the subject. Few comparable sales were available for analysis and less weight is placed on

this value indication. Therefore as of April 20, 2018, and subject to the basic assumptions


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and limiting conditions, the indication of the value for the subject is $350,000.

FINAL OPINION OF MARKET VALUE OF THE SUBJECT

AS OF APRIL 20, 2018

THREE HUNDRED FIFTY DOLLARS

$350,000


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EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL

CONDITIONS

The appraiser makes the following extraordinary assumptions concerning the subject

property.


extraordinary assumption that information provided by the client, as well as data

obtained from the Collin Central Appraisal District and Collin County deed records

are correct. Any discrepancy may affect the value or marketability of the subject

property and warrant modification of the appraisal.

It is an extraordinary assumption of this report that the subject does not have

unreported encroachments or easements that have any significant effect on the subject

site.

No environmental assessment of the subject property was provided. The subject

property has been utilized for light industrial uses in the past and poses a slight risk of

environmental contamination. The appraiser makes the extraordinary assumption

that the subject is not affected by environmental conditions. Any environmental

conditions may affect the marketability of the subject property and warrant

modification of the appraisal.


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CERTIFICATION OF THE APPRAISER

This Appraiser’s Certification is compliant with the current edition of the Uniform Standards

of Professional Appraisal Practice.

I., Esther Rodriguez-Phelps, certify that to the best of my knowledge and belief:

- The statements of fact contained in this report are true and correct.

- The reported analyses, opinions, and conclusions are limited only by the reported

assumptions and limiting conditions and are my personal, impartial, and unbiased

professional analyses, opinions, and conclusions.

- I have no present or prospective interest in the property that is the subject of this

report and no personal interest or bias with respect to the parties involved.

- I have no bias with respect to the property that is the subject of this report or to the

parties involved with this assignment.

- My engagement in this assignment was not contingent upon developing or reporting

predetermined results.

- My compensation is not contingent upon the development reporting of a

predetermined value or direction in value that favors the cause of the client, the

amount of the value opinion, the attainment of a stipulated result, or the occurrence of

a subsequent event directly related to the intended use of this appraisal.

- My analyses, opinions, and conclusions were developed, and this report has been

prepared, in conformity with the Uniform Standards of Professional Appraisal

Practice.

- I have made a personal inspection of the property that is the subject of this report.

- As of the date of this report, I, Esther Rodriguez-Phelps, am currently a State Certified


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General Real Estate Appraiser.

- No one provided significant real property appraisal assistance to the person signing

this certification

- The appraisal assignment was not based on a requested minimum valuation, a

specific valuation, or the approval of a loan.

- I have performed no other services, as an appraiser or in any other capacity, regarding

the property that is the subject of the work within the three year period immediately

preceding acceptance of this assignment.

Esther Rodriguez-Phelps Date Signed

TX #1338157-G


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ADDENDA


Page 67

QUALIFICATIONS OF THE APPRAISER


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Esther Rodriguez-Phelps 807 W. Mulberry, Unit 4, Denton, Texas

940-566-5700 – email: [email protected]

Texas Certified General Appraiser TX 1338157 – G Expiration Date: October 31, 2018

Appraisal Experience SRP Appraisals, Inc. August 2008 to Present

807 W. Mulberry Street, #4, Denton, Texas

Steve Nichols Appraisal Services September 2005 to August 2008 215 N. Carroll Blvd., Denton, Texas

Property Types: Land: Raw Land, Undeveloped Lots, Subdivisions, Mobile Home Parks

Residential: Single-Family, Duplex, 4-plex, Apartments, Townhomes, and Homes on acreage

Office: Single tenant, Multi-story Class A and Class B, and Mixed Use Office/Retail, Medical/Dental, Proposed construction

Retail: Restaurants, Free-Standing, Convenience Stores, Strip Centers, and Shopping Centers

Industrial: Single and Multi-tenant, Office/Warehouse, Self-storage Facilities, and Industrial Parks

Other: Worship Facilities Appraisal Education USPAP Basic Appraisal Principles and Procedures General Market Analysis & Highest & Best Use General Appraiser Income Approach I &

II General Appraiser Sales Comparison Approach Apartment Appraisal Real Estate Finance Statistics & Valuation Modeling General Appraiser Report Writing & Case

Studies General Appraiser Site Valuation & Cost Approach Business Practices and Ethics Additional Education

August 1992 University of North Texas Master of Business Administration

Additional Work Experience 1995 – 2005 University of North Texas Assistant to the Vice President Administrative Services Officer 1990-1992 INROADS, Inc. Corporate Recruiter/Student Counselor


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