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APPRAISAL REPORT REAL ESTATE LOCATED AT: REAL ESTATE LOCATED AT 17 EAST MAGNOLIA EUSTIS, LAKE COUNTY, FLORIDA 3 STORY DOWNTOWN BUILDING

PREPARED FOR MS. TRACY M. JEANS, DIR. OF PURCHASING CITY OF EUSTIS ECONOMIC DEVELOPMENT 10 N. GROVE STREET EUSTIS, FL. 32726 FILE NO. 150801A

AICF

APPRAISALS INC. OF CENTRAL FLORIDA

690 West Montrose Street Clermont, FL 34711

JOHN L. ROCKER III, MAI SRA

State-Certified General Real Estate Appraiser RZ1678

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APPRAISALS OF CENTRAL FLORIDA John L. Rocker, III, MAI, SRA

State-Certified General Real Estate Appraiser RZ1678

COMMERCIAL REAL ESTATE APPRAISERS - CONSULTANTS 690 Montrose Street • Clermont • Florida 34711

(352) 394-3490 • FAX (352) 394-8588 E-Mail Address: aiocfl@gmail.com

August 25, 2015 Ms. Tracy M. Jeans, Dir. Of Purchasing City of Eustis Economic Development 10 N. Grove Street Eustis, FL. 32726 RE: Appraisal of real estate located at 17 East Magnolia Avenue, Eustis, Lake County, Florida At your request and authorization, I have prepared an Appraisal of the above referenced real property and presented my analysis in the following appraisal report. The purpose of this appraisal was to estimate the market value of the fee simple interest. The appraisal premise was “As Is”. The function of this appraisal was to serve as the basis for establishing value for asset evaluation purposes.

The subject consists of an existing 2,297 square foot 3 story building located in downtown Eustis, Lake County, Florida. The subject is more fully described, legally and physically within the enclosed report.

Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of and inseparable from this letter. Based on the analysis, market value of the subject was concluded as follows:

This report was prepared in conformance with, Uniform Standards of Professional Appraisal Practice (USPAP) as set forth by the Appraisal Foundation; and in accordance with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

Extraordinary Assumption Statement: Since the improvements are in need of repair to be commensurate with the downtown Eustis market we have assumed that repairs will be needed in the amount of ($25 per square foot) $57,425 and was applied in this analysis. If anything differs than what is assumed, Appraisals Inc. of Central Florida has the right to adjust the appraisal accordingly.

MARKET VALUE CONCLUSION

Appraisal Premise Interest Appraised Date of Value Value Conclusion

“As Is” Fee Simple August 20, 2015 $140,000

SS Source: Appraisals Inc. of Central Florida

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CERTIFICATION OF THE APPRAISAL

I certify to the best of our knowledge and belief:

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

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial and unbiased professional analyses, opinions, and conclusions.

3. I have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment.

4. My engagement in this assignment was not contingent upon developing or reporting predetermined results.

5. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

6. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.

7. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation, the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute.

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

9. John Rocker, MAI, SRA has completed the requirements of the continuing education program of the Appraisal Institute and/or the State of Florida.

10. John Rocker, MAI, SRA has made a personal inspection of the property that is the subject of this report.

11. No one provided professional real property appraisal assistance to the person signing this report.

12. John Rocker, MAI, SRA has extensive experience in the appraisal/review of similar property types.

13. John Rocker, MAI, SRA is currently certified in the state where the subject is located.

14. John Rocker, MAI, SRA has not performed any prior services, including appraisal services, for the subject property in the previous 3 years.

It has been a pleasure to assist you in this assignment and if you have any questions concerning the analysis, please contact us.

APPRAISALS INC. OF CENTRAL FLORIDA

John L. Rocker, III, MAI, SRA State-Certified General Real Estate Appraiser RZ1678

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SUBJECT PHOTOGRAPHS

FRONT/SIDE BUILDING SCENE

WESTERLY STREET SCENE ALONG MAGNOLIA AVENUE

SUBJECT PROPERTY ON RIGHT

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SUBJECT PHOTOGRAPHS

SIDE REAR SCENE

FRONT SCENE

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SUBJECT PHOTOGRAPHS

DOWNSTAIRS UNIT SCENE

UPSTAIRS UNIT SCENE

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SUBJECT PHOTOGRAPHS

TYPICAL UPSTAIRS RESTROOM SCENE

TYPICAL UPSTAIRS ROOM SCENE

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SUBJECT PHOTOGRAPHS

TYPICAL UPSTAIRS ROOM SCENE

TYPICAL UPSTAIRS RESTROOM SCENE

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SUBJECT PHOTOGRAPHS

TYPICAL UPSTAIRS ROOM SCENE

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AERIAL OF SUBJECT PROPERTY

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SUMMARY OF SALIENT FACTS

Address: 17 E. Magnolia Avenue, Eustis, Lake

County, Florida Assessor’s Alternate Key Number: 11-19-26-010003401100 Owner of Record: Rock & Pickle Inc. Zoning: CBD, Central Business District, City of

Eustis Zoning Authorities Highest and Best Use:

As Though Vacant: Future Commercial Development As Improved: Continued Use of the Existing

Improvements Property Rights Appraised: Fee Simple Date of Value: August 20, 2015 Land Area: 738 square feet (subject to formal survey

confirmation) Improvements: Number Buildings/Stories: 1/Three Total Area: 2,297 SF Construction Type: Class “C” Year Built: 1929 Estimated Exposure Time: 12-15 months

Extraordinary Assumption Statement: Since the improvements are in need of repair to be commensurate with the downtown Eustis market we have assumed that repairs will be needed in the amount of ($25 per square foot) $57,425 and was applied in this analysis. If anything differs than what is assumed, Appraisals Inc. of Central Florida has the right to adjust the appraisal accordingly.

MARKET VALUE CONCLUSION

Appraisal Premise Interest Appraised Date of Value Value Conclusion

“As Is” Fee Simple August 20, 2015 $140,000

SS Source: Appraisals Inc. of Central Florida

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TABLE OF CONTENTS

CERTIFICATION OF THE APPRAISAL ...................................................................................... 3

SUBJECT PHOTOGRAPHS ....................................................................................................... 4

SUMMARY OF SALIENT FACTS ............................................................................................. 11

TABLE OF CONTENTS ............................................................................................................ 12

INTRODUCTION ...................................................................................................................... 13

AREA ANALYSIS ...................................................................................................................... 16

NEIGHBORHOOD ANALYSIS .................................................................................................. 41

PROPERTY DESCRIPTION ..................................................................................................... 44

HIGHEST AND BEST USE ....................................................................................................... 46

APPRAISAL METHODOLOGY ................................................................................................. 48

DIRECT SALES COMPARISON APPROACH .......................................................................... 49

INCOME CAPITALIZATION APPROACH ................................................................................. 54

RECONCILIATION OF VALUE ................................................................................................. 62

ASSUMPTIONS AND LIMITING CONDITIONS ........................................................................ 63

ADDENDA A Lake County Property Record Cards B Appraisal Definitions C Qualifications D Purchase Order

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INTRODUCTION

PROPERTY IDENTIFICATION

The subject consists of an existing 2,297 square foot 3 story building located in downtown Eustis, Lake County, Florida.

OWNERSHIP AND PROPERTY HISTORY

Title to the property is currently vested in the name(s) of Rock & Pickle Inc.. According to the Lake County Property Appraiser there have been no transactions involving the subject during the past three years.

DATE OF INSPECTION/VALUE

The subject was inspected on August 20, 2015. The date of value was August 20, 2015.

DATE OF REPORT

The date of report is the date indicated on the letter of transmittal.

PURPOSE OF THE APPRAISAL

The purpose of this appraisal is to estimate the value of the subject property. Market value is defined as follows:

PREMISE OF THE APPRAISAL

The premise of this appraisal valuation is “As Is”.

INTENDED USE/USER(S) OF REPORT

This appraisal is to aid Ms. Tracy M. Jeanes the Director of Purchasing for the City of Eustis Economic Development Department in asset evaluation of the subject property.

PROPERTY RIGHTS APPRAISED

The interest appraised represents the fee simple estate.

APPRAISAL DEVELOPMENT, REPORTING PROCESS AND SCOPE OF WORK

The following steps were completed for this assignment:

1. identified the subject property; understood the intended use of the report; inspected the interior, exterior but not the roof or behind the walls;

2. applied appropriate appraisal methodology;

3. analyzed the comparable data to arrive at a probable range of value via each approach to value used in this report;

4. reconciled the results of each approach into a reasonable and defensible final estimate of value for the subject, as defined herein; and

5. estimated a reasonable exposure time associated with the value estimate.

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To develop the opinion of value, I performed an Appraisal as defined by the Uniform Standards of Professional Appraisal Practice (USPAP). In this Appraisal, I used the Direct Sales Comparison and Income Approaches to value. Furthermore, the value conclusion reflects all known information about the subject, market conditions, and available data. This appraisal of the subject has been presented with reporting requirements set forth under Standards Rule 2-2(b) of USPAP. This report incorporates a description of all information significant to the solution of the appraisal problem. It also includes descriptions of the subject property and the market for the subject property type.

EXPOSURE TIME

Exposure time is not intended to be a prediction of a date of sale or a one-line statement. Instead, it is an integral part of the appraisal analysis and is based on one or more of the following:

statistical information about days on the market

information gathered through sales verification

interviews of market participants. The reasonable exposure period is a function of price, time, and use. It is not an isolated estimate of time alone. Exposure time is different for various types of real estate and under various market conditions. Exposure time is the estimated length of time the property would have been offered prior to a hypothetical market value sale on the effective date of appraisal. It is a retrospective estimate based on an analysis of recent past events, assuming a competitive and open market. It assumes not only adequate, sufficient, and reasonable time but also adequate, sufficient, and reasonable marketing effort. Exposure time is therefore interrelated with appraisal conclusion of value.

In consideration of these factors, I have analyzed the following:

exposure periods of comparable sales revealed during the course of this appraisal;

knowledgeable real estate professionals.

Based on the foregoing analysis, an exposure time of 12-15 months is reasonable, defensible, and appropriate. I assume the subject would have been competitively priced and aggressively promoted regionally.

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Exposure time is the estimated length of time the property would have been offered prior to a hypothetical market value sale on the effective date of appraisal. It is a retrospective estimate based on an analysis of recent past events, assuming a competitive and open market. It assumes not only adequate, sufficient, and reasonable time but also adequate, sufficient, and reasonable marketing effort. Exposure time is therefore interrelated with appraisal conclusion of value.

In consideration of these factors, I have analyzed the following:

exposure periods of comparable sales revealed during the course of this appraisal;

knowledgeable real estate professionals.

Based on the foregoing analysis, an exposure time of 12-15 months is reasonable, defensible, and appropriate. I assume the subject would have been competitively priced and aggressively promoted regionally. MARKETING TIME The estimated marketing time is estimated to be 12±-15± months.

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AREA ANALYSIS FOR ORLANDO METROPOLITAN STATISTICAL AREA (MSA)

LOCATION

The Orlando Metropolitan Statistical Area

(MSA) is located in the geographical center of

Florida and covers Orange, Seminole, Lake

and Osceola Counties. Orlando, Winter Park

and south Seminole County comprise the

primary population base, which covers

approximately 300 square miles and is the

growing hub of activity in Central Florida. The

Orlando MSA is located 148 miles southwest

of Jacksonville, 57 miles west of Cocoa

Beach, 220 miles north of Miami and 80 miles

east of Tampa.

HISTORICAL ECONOMIC OVERVIEW

Economic growth in Orlando is affected by

several significant events in the previous

decades:

Walt Disney World’s Magic Kingdom opened in 1971 and the Orlando area subsequently

entered a dynamic growth period.

The Greater Orlando Aviation Authority was founded in 1975 to build and then manage

the new Orlando International Airport on the former McCoy Air Force Base. Airside 3,

which filled out the North Terminal, was completed in 2000, with the last additional gates

added in 2006.

Florida Technical University was expanded in 1978 to all academic fields and renamed

the University of Central Florida (UCF). With more than 53,000 students, including more

than 1,250 students of international origin, UCF is the country’s third largest university in

the nation. Maybe even more important is the school’s growing reputation as a top

metropolitan research university, and its focus on meeting the needs of the local

business community.

Walt Disney World expanded in 1982 with EPCOT; MGM Studios Tour in 1989; Animal

Kingdom in 1998. Each of these major new attractions was accompanied with

significant new hotel rooms on Disney property and in southwest Orlando.

In 1983, the first phase of the Orange County Convention/Civic Center (325,000 sq. ft.)

was completed, broadening the appeal of the area as a convention destination.

Universal Studios Orlando opened in 1990 and Islands of Adventure at Universal

Studios opened in 1999.

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The development of the Orange County Courthouse in 1997 began another boom in

downtown high-rise development.

The Orange County Convention Center was expanded in 2003 to have a total of 2.05

million square feet of exhibition space and 479,200 square feet of meeting rooms; now

one of the three largest convention facilities in the country.

The newly constructed Amway Center opened in 2010 home of the Orlando Magic and

other popular venues.

POPULATION

The Orlando MSA is the third largest MSA in Florida behind Miami and Tampa. The population

base is centered in and around the city of Orlando with 55% of the MSA population in Orange

County. The City of Orlando is the sixth largest city in Florida and Florida’s largest inland city.

The following projections are based upon the 2000 census with projections based on an urban

growth simulation model. Historical population statistics and projected trends for the Orlando

MSA are summarized as follows:

POPULATION STATISTICS

1990 2000

Annual %

Change 2008

Annual %

Change 2013

Annual %

Change

Orange County 677,491 896,344 2.8% 1,091,830 2.5% 1,215,878 2.4%

Seminole County 287,529 365,196 2.4% 421,812 1.8% 457,562 1.7%

Osceola County 107,728 172,493 4.8% 266,182 5.6% 326,064 5.0%

Lake County 152,104 210,528 3.3% 298,742 4.5% 355,045 4.1%

Orlando MSA 1,224,852 1,644,561 3.0% 2,078,566 3.0% 2,354,549 2.8%

Source: Claritas

The area population base is centered in and around the city of Orlando with 55% of the MSA

population in Orange County.

POPULATION AND HOUSEHOLD PROJECTIONS

O rlando State of United

Population MSA Florida States

2013 Projected Population 2,354,549 20,253,440 319,161,431

2008 Estimated Population 2,078,566 18,599,579 304,141,549

2000 Census Population 1,644,561 15,982,378 281,421,906

1990 Census Population 1,224,852 12,937,926 248,709,873

Growth 2008-2013 13.28% 8.89% 4.94%

Growth 2000-2008 26.39% 16.38% 8.07%

Households

2013 Projected Households 894,481 8,070,862 120,741,378

2008 Estimated Households 790,271 7,398,258 114,694,201

2000 Census Households 625,248 6,337,929 105,480,101

1990 Census Households 465,275 5,134,869 91,947,410

Growth 2008-2013 13.19% 9.09% 5.27%

Growth 2000-2008 26.39% 16.73% 8.74%

Source: Claritas

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Population and household growth has historically outpaced both the State of Florida and the

United States. The upward trend in the MSA's population growth, spurred by a substantial

amount of economic development activity both underway and planned, is anticipated to

moderate in the near to mid-term. The following is a summary of household income levels:

HOUSEHOLD INCOME LEVELS

O rlando State of United

Income MSA Florida States

2013 Prj. Median Household Income $55,325 $52,229 $55,374

2008 Est. Median Household Income $50,019 $46,943 $50,142

2000 Cen. Median Household Income $42,111 $38,911 $42,339

1990 Cen. Median Household Income $30,121 $27,680 $29,970

Growth 2008-2013 10.6% 11.3% 10.4%

Growth 2000-2008 18.8% 20.6% 18.4%

Growth 1990-2000 39.8% 40.6% 41.3%

Source: Claritas

The Orlando MSA Household Income Levels are generally higher than the State of Florida,

reflecting a large working class and lower retiree population.

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EMPLOYMENT

The following is a summary of the largest employers in the region:

Company City County Employment Walt Disney Co. Lake Buena Vista Orange 58,000

Publix Super Markets MSA MSA 17,521

Adventist Health System Orlando Orange 16,700

Orlando Health Orlando Orange 14,000

Universal Orlando Orlando Orange 13,000

Lockheed Martin Orlando Orange 13,000

Sea World Parks Orlando Orange 7,000

Marriott International Inc. Orlando Orange 6,312

Starwood Hotels & Resorts Orlando Orange 5,369

Walgreen Co. MSA MSA 5,004

Darden Restaurants Inc Orlando Orange 4,800

Central Florida Investments Orlando Orange 3,861

Siemens Orlando Orange 3,500

AT&T Corp Lake Mary Seminole 3,210

FedEx Corp Orlando Orange 3,000

Space Gateway Support Orlando Orange 2,886

Lowes Cos. Inc MSA MSA 2,872

Wyndham Worldwide Corp. Orlando Orange 2,790

Mears Transportation Group Orlando Orange 2,776

Wachovia Corp Orlando Orange 2,765

Rosen Hotels & Resorts Orlando Orange 2,667

SunTrust Banks Inc Orlando Orange 2,644

CVS Corp. Orlando MSA 2,500

Orange Lake Resort & Country Club Kissimmee Osceola 2,500

Central Florida Health Alliance Leesburg Lake 2,480 Source: OBJ Book of Lists 2011, Orlando Sentinel Top Employers

The following is a summary of local employment by industry and comparisons:

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The Orlando Area Economy is heavily concentrated in the service industry, given the strong

tourism influence. However, the economy has evolved over the past decades to include a

growing presence in education, medical, defense and high-tech industries.

UNEMPLOYMENT STATISTICS

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TOURISM

Central Florida’s tourism industry hopes to build on the record crowds of the past several years.

Orlando, the first U.S. travel market to draw more than 55± million visitors annually, expects 60

million to drop in this year, according to Visit Orlando, its tourism-marketing agency. The

number of international travelers – who tend to stay longer and spend more than domestic

visitors – is forecast to increase. Canada and South America are among the promising

international feeder markets, said Gary Sain, Visit Orlando’s president and chief executive

officer. While leisure travel rebounded quickly from the recession, corporate travel has been

slower to return to business as usual. Sain said he expects more companies and industries

booking conventions, trade shows and meetings. Central Florida’s hospitality industry is

headed for a growth spurt this year, with thousands of new rooms set to hit the market. Several

hotel projects are slated to open this year, resulting in the addition of significantly more rooms,

according to Visit Orlando.

MAJOR NEW DEVELOPMENTS

Orlando has seen a substantial amount of development activity in recent years, leaving many

portions of the area significantly oversupplied. As a result, much of the private sector proposed

construction activity has either been cancelled or placed on indefinite hold.

Although, many private development projects have been cancelled, several large

public/governmental projects such as the New Orlando Magic Arena and Orlando Veterans

Administration Center.

The Orlando Veterans Administration Center will be a 134-bed hospital, 120-unit nursing home,

60–bed assisted living facility, outpatient clinic and benefit center. The entire project is

estimated to be over one-million square feet. This will be one of the largest veteran centers in

the county employing over 2,000. It will be located in the Lake Nona Science and Technology

Park.

TRANSPORTATION

Roadway Transportation

The metropolitan area is continually expanding its network of highways and thoroughfares.

Interstate 4 traverses the metropolitan Orlando area in a generally northeasterly/southwesterly

direction and services as a main link in the tri-county area. Additionally, Interstate 4 connects

Orlando with other population centers in central Florida including Tampa to the southwest and

Daytona Beach to the northeast. Interstate 4 is a six- and eight-lane highway, however several

construction projects are currently underway to widen Interstate 4 as well as create a more

efficient interchange system, which should help to ease traffic congestion along the Interstate 4

corridor.

The Central Florida Expressway System (SR 408, SR 417, SR 528, SR 429 and Florida

Turnpike) is a limited access toll road system that is constantly being expanded and will

eventually circumnavigate the metro area. The expressway has quickly improved access to

outlying areas, making them more suitable for development and contributing to urban sprawl.

Construction was completed in December 2006 on the southwestern portion extending the

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Western Expressway south from the Florida Turnpike to Interstate 4 near Walt Disney World.

The completion date for the final, northwestern or “Wekiva Parkway” portion connecting Apoka

to Interstate 4 is yet to be determined.

Air Transportation

The Orlando market is serviced by two International Airports: Orlando International (MCO) and

Sanford International. Orlando International is the primary airport serving the region. The

Sanford Airport largely caters to second tier regional carriers and some International flights from

the UK.

The Orlando International Airport has four terminals with more than 5.0 million square feet of

terminal space. The following chart shows passenger activity trends at Orlando International

Airport:

SUMMARY STATISTICS – ORLANDO INTERNATIONAL (MCO)

Annual Daily

Passengers 36,401,000 99,728 Operations (Arrivals & Departures) 296,000 810 Commercial Operations 279,000 765 (Air Carrier,Commuter,Cargo) Other Operations 16,000 45 (Military,General Aviation, etc.) Airlines 41 Passenger 37 Cargo Only 4

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SUMMARY STATISTICS – ORLANDO SANFORD INTERNATIONAL

Passenger Counts

UTILITIES

Availability of utilities, particularly regarding treating and disposing of wastewater, has been a

key issue for new development in the Orlando MSA. Overall, it appears that sufficient capacity

is currently available in most of the metro area. Local governments are increasing the share of

the cost burden with system users, particularly new users in the form of “impact fees”.

The Local Government Comprehensive Planning and Land Development Regulation Act

requires each local government to have in place "concurrent" with the impact of any

development the necessary public facilities and services to serve the development. This

provision is known as the "concurrency requirement" and is one of the most innovative growth

management techniques in the United States. The intent was to encourage infill development,

but the result was more urban sprawl.

If concurrency restricts a project, the developer may choose to provide the facilities and services

necessary to support the project and maintain the required level of service. This could mean

substantial expense for impact fees and off-site improvements not directly related to the project.

In some cases this will render a project economically unfeasible.

2014

Domestic International

Enplanements 932,643 Enplanements 147,609

Deplanements 952,550 Deplanements 149,819

Transit* 2,080

Total Domestic 1,885,193 Total International 299,508

Total Passengers 2,184,701

2013

Domestic International

Enplanements 799,496 Enplanements 206,722

Deplanements 814,385 Deplanements 211,137

Transit* 940

Total Domestic 1,613,881 Total International 418,799

Total Passengers 2,032,680

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METRO ORLANDO HOME DATA

Orlando home prices have almost doubled from the bottom of the market four years ago but

remain far from the peak prices of 2007, a new report shows.

The median price for a house in the core Orlando market, which includes mostly Orange and

Seminole counties, was $181,900 in May — that was up 10 percent from a year earlier and 4

percent from a month earlier, according to a report released Monday by Orlando Regional

Realtors Association.

Orlando's sales prices of early summer are a stark contrast from July 2011, when the midpoint

price for a home was $94,900.

Two relatively new communities helped drive up prices. With 31 sales, Baldwin Park had an

average sales price of $506,813. Lake Nona, with 25 sales, averaged $487,315. Winter Park

had 50 sales, with an average sales price of $503,159; Windermere had 77 sales that averaged

$465,252.

As sales prices pushed up last month, sales volume dropped from 3,107 sales in April to 2,951

sales in May. And inventory of home listings increased from a 3.77-month supply in April to a

four-month supply in May.

"The number of homes now on the market is up 8 percent over this time last year," said Sharon

Voss, Orlando Realtor president and an agent with Watson Realty Corp. "In addition, there are

considerably more non-distressed homes available. These easier-to-close homes now make up

80 percent of our total inventory."

Even with prices almost doubling over four years, Orlando sales prices remain far below the

median of $264,436 set at the top of the market in July 2007.

Not only were prices higher, so were interest rates. They ran 3.9 percent for a 30-year, fixed-

rate mortgage in May, which was up from 3.7 percent in April.

Buyers also lost some negotiating power: Sales prices in May were 96.84 percent of asking

price, down from 95 percent a month earlier.

Multi-family occupancy and rental rates have increased as well as new construction of

subdivision homes.

AREA TRENDS

To further analyze the Orlando MSA, it can be divided into four quadrants: northwest,

southwest, southeast, and northeast.

The northwest quadrant is comprised of Orange County, Lake County, and western Seminole

County. The Western Expressway (Toll Road 429) has significantly improved access to this

quadrant resulting in increased residential growth as well as commercial growth along US

Highway 441, State Road 50 and other main thoroughfares. Significant suburban growth is also

occurring in Clermont in southern Lake County; northern Lake County remains popular as a

retirement destination.

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The southwest quadrant is comprised of Orange and Osceola counties and is home to the

majority of the tourism related activities in the Orlando MSA. The Disney World and Universal

Studios theme parks are located within this quadrant as wells as a significant number of other

tourist attractions and major resorts. Also located within this quadrant is International Drive, the

Orange County Convention Center and other major employers.

The southeast quadrant is comprised of Orange and Osceola counties. The Orlando

International Airport is located within this quadrant and is the primary economic driver, creating

demand for the numerous hotels and restaurants nearby. The southeast quadrant also has the

largest inventory of industrial space in the MSA. As well, this sector includes sprawling major

new planned residential developments including Waterford Lakes, Vista Lakes and Lake Nona.

The Lake Nona area will benefit from the proposed Burnham Institute, the UF Medical Research

Facility, the UCF Medical School and new VA hospital.

The northeast quadrant encompasses northeast Orange County and Seminole County and

includes the cities of Maitland, Altamonte Springs, and Lake Mary. These cities are more

established with limited development land. Large scale retail development is occurring in

northern Seminole County surrounding the Seminole Towne Center Mall in Sanford. On the

east side, the University of Central Florida and Research Park continue to drive growth as

enrollment approaches 50,000± students.

CONCLUSION

Job growth in the Orlando MSA has improved over the past year and troubles in the housing

market have dramatically improved. The slowing of employment growth during the recession

has negatively impacted demand for all property types, except education, healthcare and

defense, however most sectors have appeared to have bottomed out and have greatly

improved. It is expected that strong demographic trends, a steady supply of educated workers,

and moderate costs of living bode well for Orlando in the longer term.

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NEIGHBORHOOD ANALYSIS

LOCATION MAP OF SUBJECT PROPERTY

A neighborhood is a separately identifiable, cohesive area within a community with some interest shared by its occupants. Most neighborhoods have recognizable natural or manmade boundaries and while physical boundaries are often stipulated than other boundaries of influence. A neighborhood may be further defined as a grouping of complementary uses affected in a similar manner by social, economic, governmental, and environmental factors, or by perceptible changes in land use and the architectural style and condition of improvements thereto. In addition, every neighborhood is subject to influence by the greater abutting or surrounding community or metropolitan area. The City of Eustis is located within central Lake County, Florida and is considered a northwest suburb of the Orlando MSA. The city has benefited from its location within the tri-city area of Eustis, Tavares and Mount Dora known as the “Golden Triangle” area. This area is centered midway between both coasts of Florida and is within short driving distances to area attractions. The neighborhood is bounded by the City of Umatilla to the north, County Road 439 to the east, the City of Mount Dora to the south and Lake Eustis to the west.

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Development History The subject neighborhood had grown rapidly in the early to mid 2000’s with strong absorption in the residential market but has since slowed due to the decline in national and local economic conditions. Commercial development had also experienced somewhat of a strong growth in the past several years along the U.S. Highway 441 and State Road 19 corridor with recent development of office and retail facilities. The neighborhood is suburban in nature. A more graphic illustration of the neighborhood land uses is as follows: Commercial 15% Industrial 5% Agricultural 10% Residential 65% Special Purpose 5% Total 100% Eustis has seen a significant economic decline in its downtown commercial and retail market since the relocation of Florida Hospital Waterman, which anchored the downtown district, to the U.S. Highway 441 corridor. Due to the downward economic trend, the City of Eustis has since structured and approved a master plan to significantly renovate and redevelop its downtown district with hopes to bring new life to the area. The plan is intended to beautify and functionalize the existing improvements while expanding and intensifying future commercial as well as residential development. A map of the proposed area of focus for this master plan is illustrated below.

Economic Base The neighborhood is primarily characterized as a service sector of the Orlando MSA. The area has good access and most employment centers are a 10 to 50 minute drive. The residential districts consist of both older and newer somewhat stabilized areas, targeting middle income households and retirees. Major Commercial Districts are located downtown and along U.S. Highway 441. The downtown district consists of multiple restaurants, retail shops, office/residential and multi-purpose uses while the U.S. Highway 441 sector includes most commercial uses and some anchored by big box retail stores and Florida Hospital Waterman, one of the area’s major employers. The city has a wide range of businesses and industries that include Florida Food Products, Mercer Products, Inc., Service Trucking, U.S. Nutraceuticals, AgriStarts, and Accent Marketing, to name a few. The population mix is pretty even among white collar, blue collar and retirees.

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Access/Transportation Regional access for the subject neighborhood is provided by three major arterial roadways, including U.S. Highway 441, State Road 19 and State Road 44. US Highway 441 is a major east-west right of way, that provides access to most area cities, including Orlando, which is located south of the neighborhood. State Road 19 a.k.a. Bay Street, is a north-south right of way that terminates south at Old Highway 441 and extends northerly into the Ocala National Forest. State Road 44 is an east-west right of way that provides access from the downtown district as far east as the east coast of Florida. There is limited public transportation, which is not considered a detriment. Local transportation consists primarily of LakeXpress, a busing system that provides public transportation along the U.S. Highway 441 corridor, including the municipalities of Eustis, Fruitland Park, Lady Lake, Leesburg, Mount Dora and Tavares. The closest major airport hub is in Orlando (Orlando International Airport), an hour drive to the southeast, or the Sanford International Airport is a 30± minute drive to the east, which is a significantly smaller facility with a lower number of daily flights. Rail access is also located in Orlando or in the City of Sanford, a 30 minute drive to the east. Deepwater ports are located in Port Canaveral, Jacksonville and the Tampa area. Overall, neighborhood access and transportation for the subject neighborhood is considered good. Neighborhood Conclusion In summary, the subject neighborhood is mixed in character, supporting a variety of uses. The primary use and characteristics of the neighborhood classify it as a commercial/residential sector with adequate road network. Overall, it is our opinion that the subject neighborhood will continue to remain a desirable area, consideration given to the population base, and will continue to experience moderate development over the next decade, with potential for experiencing more favorable market conditions than presently exist and that have existed in the previous boom era .

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PROPERTY DESCRIPTION

Site Description. The subject consists of 738± square feet of land area and is rectangular in shape with a generally level topography, (subject to formal survey confirmation). Soil conditions are assumed to be favorable for development, typical of the area. There were no restrictions, adverse easements or encroachments noted upon review of the Lake County Property Appraiser’s Official data. The site is accessed via the north side of two lane paved East Magnolia Avenue and the east side of 2 lane, one-way, south bound, paved North Bay Street a/k/a State Road 19. All municipal utilities are available to the site. The subject property is currently zoned Central Business District by the City of Eustis Zoning Authorities. A common and usually central area of the community where citizens carry on commercial trade and purchasing. The central business district is distinguished from satellite business centers, shopping districts, and highway commercial districts. This land use designation has a mix of commercial, public/institutional and residential uses that is desired in the downtown areas.

According to the Federal Emergency Management Agency (FEMA) map number 12069C0356E, dated December 18, 2012, the subject property appears to be located within Zone X, an area of minimal flooding. Actual flood plain amounts cannot be determined without formal survey confirmation.

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Improvements. The subject property is improved with a 3 story, Class “C” building used as a barber shop downstairs and upstairs 2 floors are vacant. The total size is 2,297 square feet with about the same square footage on each floor. Floors 2 and 3 are accessed via a stairwell. The building has a brick exterior reportedly recently replaced, roll seamed roofing, wood frame fixed plate windows and doors (1st floor), double hung wood frame windows on 2nd and 3rd floors. The building is of average quality and fair to average condition in need of repairs and updating (see Extraordinary Assumption Statement). Each floor has a 2-fixture restroom except 2nd floor which has a toilet, sink and shower. Additional sinks are located on the 1st floor to accommodate the barber shop. Interior trim and finish consists of plaster ceiling and walls and wood floors. Each unit has HVAC/wall system but may be in need of repairs as well as the electrical and plumbing. Site improvements include walks, drives, limited landscaping, water and sewer hook-up. The subject is bounded by an alley way along the east building side, diagonal offsite parking out front (no on-site parking) and a vacant lot/park for municipal etc. purposes along the west side. Overall improvements are in fair to average condition with repairs necessary to be commensurate with the Downtown City of Eustis properties and to yield the highest return to the property as well. There was no personal property, trade fixtures, furniture, fixtures or equipment included in this appraisal. According to Lake County Public Records, the subject property is legally described as follows: EUSTIS S 8 FT OF E 18 FT OF LOT 11, E 18 FT OF LOT 12 BLK 34 PB 1 PG 79 ORB 1603 PG 764

TAX AND ASSESSMENT DATA

The subject’s assessed values are summarized below.

TAXES AND ASSESSMENT DATA

Tax ID Number Assessed Value Assessed Taxes

11-19-26-010003401100 $73,122 $1,638.48

Source: Lake County Property Appraiser’s Office

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HIGHEST AND BEST USE

In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are:

* legal permissibility; * physical possibility; * financial feasibility; and * maximum profitability.

AS VACANT

Legal Permissibility

The legally permissible uses were summarized in Zoning section of this report. Essentially, the subject site is developable with a wide array of land uses.

Physical Possibility

Overall, a wide range of legally permissible uses would be physically possible.

Financial Feasibility

The financial feasibility of a specific property is market driven, and is influenced by surrounding land uses. Based on the subject’s specific location and physical characteristics, development of the site with a future commercial-oriented use that is complimentary to the surrounding land uses would represent the most likely financially feasible option.

Maximum Profitability

The use which results in the maximum profitability of the site is beyond the scope of this assignment. The recipient of the property’s productivity (e.g., the lender, equity investor, the public, etc.) greatly determines what the use should be. Regardless, the use for the subject should conform to the neighborhood trends and be consistent with existing land uses. In this case, future commercial development appears to provide the highest yield to the land and the maximum profitability.

CONCLUSION: HIGHEST AND BEST USE AS VACANT

Consequently, after considering the physically possible, legally permissible, financially feasible and maximum productivity of the subject property, the highest and best use of the site as though vacant would be for future commercial development when demand dictates such.

AS IMPROVED

Legal Permissibility

Obviously the improvements are legal permissible or the building would be prohibited from its current use.

Physical Possibility

Obviously the improvements are physically possible or they would not exist.

Financial Feasibility

Adjacent businesses are in business and it appears to be equitable for the subject property to be as well. Thus, the subject appears to be financially feasible as an office/retail/residential complex.

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Maximum Profitability

The rents appear to be within reason in the neighborhood and occupants appear to be profiting accordingly. As such, the existing improvements as renovated would appear to be the maximum profitable use.

CONCLUSION: HIGHEST AND BEST USE AS IMPROVED

Consequently, after considering the physically possible, legally permissible, financially feasible and maximum productivity of the subject property, the current improvements as renovated would be the Highest and Best Use of the subject property.

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APPRAISAL METHODOLOGY

In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available.

COST APPROACH

The Cost Approach is based upon the proposition the informed purchaser would pay no more for the subject than the cost to produce a substitute property with equivalent utility. This approach is particularly applicable when the property being appraised involves relatively new improvements which represent the highest and best use of the land or when relatively unique or specialized improvements are located on the site and for which there exist few sales or leases of comparable properties.

SALES COMPARISON APPROACH

The Sales Comparison Approach utilizes sales of comparable properties, adjusted for differences, to indicate a value for the subject. Valuation is typically accomplished using physical units of comparison such as price per square foot, price per unit, price per floor, etc., or economic units of comparison such as gross rent multiplier. Adjustments are applied to the physical units of comparison derived from the comparable sale. The unit of comparison chosen for the subject is then used to yield a total value. Economic units of comparison are not adjusted, but rather analyzed as to relevant differences, with the final estimate derived based on the general comparisons.

INCOME CAPITALIZATION APPROACH

The Income Capitalization Approach reflects the subject’s income-producing capabilities. This approach is based on the assumption that value is created by the expectation of benefits to be derived in the future. Specifically estimated is the amount an investor would be willing to pay to receive an income stream plus reversion value from a property over a period of time. The two common valuation techniques associated with the Income Capitalization Approach are direct capitalization and the discounted cash flow (DCF) analysis.

METHODOLOGY APPLICABLE TO THE SUBJECT

In valuing the subject, the Sales Comparison and Income Capitalization approaches were used and considered most meaningful. The Cost Approach was not used due to the older age of improvements.

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DIRECT SALES COMPARISON APPROACH

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DIRECT SALES COMPARISON APPROACH

I have applied a Sales Comparison Approach to estimate market value of the subject property. Sales prices of similar improvements are compared on a unit basis such as per square foot of building area. The most widely used indicator for like-kind sales is price per square foot of building area. A grid is used to summarize the direction and magnitude of adjustments judged appropriate to the comparable sales. In some cases adjustments may be derived directly from quantifiable data (e.g., the estimated off-site costs). However, in many instances the adjustments involve the judgment of the appraiser. After a diligent effort has been made to identify and adjust for all salient differences, one of several patterns is likely to emerge:

1. There may be a clear clustering of adjusted values within a narrow range; 2. there may be no discernible pattern; or 3. there may be a general clustering, but with one or several adjusted sales outside the

general range indicated by the other data. In the first instance, an estimate of value within the resulting adjusted range is typically concluded. In the second instance, it is generally possible only to conclude a reasonable value range. In the third instance, the "outliers" typically receive little weight in the analysis unless they are the most comparable sales, represent a fundamental change in market dynamics, or are otherwise particularly relevant to the subject analysis. The sales selected were most comparable to the subject. A summary of the comparables utilized is included below as well as a location map.

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ANALYSIS OF COMPARABLE SALES

ANALYSIS OF IMPROVED SALES

DESCRIPTION SUBJECT SALE 1 ADJ SALE 2 ADJ SALE 3 ADJ SALE 4 ADJ

Sale Price/SF ---- $99,000/

$70

$147,500/ $55

$170,000/

$41

$175,000/ $55

Property Rights Conveyed

Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple

Financing ---- Cash or

Equivalent

Cash or Equivalent

Cash or

Equivalent

Cash or Equivalent

Sale Date ---- 11/2014 10/2014 12/2014 03/2015

Location 17 E. Magnolia

St., Eustis 345 N Grove St.,

Eustis +20%

26 Magnolia Ave., Eustis

24 Magnolia Ave., Eustis

300 Woodward Ave. & S. Bay

St., Eustis

+10%

Property Type/Use

Office/Residential Office Office Bar +10% Office/Shop +10%

Year Built/ Condition

1929/ Average-Fair

1955/ Average

-10% 1912/

Average-Fair ---

1955/ Fair

1924/

Average -10%

Quality Average Average Average Average-Fair +10% Average-Fair +5%

Building Size (SF)

2,297± 1,400± -10% 2,671± 4,132± +10% 3,200±

Access Average Good -5% Average Average Good -5%

Visibility/ Exposure

Average Good -5% Average Average Good -5%

LTBR 1.00:1 5.75:1 -10% 2.96:1 -5% 1.00:1 9.77:1 -15%

Zoning CBD CBD CBD CBD GI/RT +25%

Availability of Utilities

All All All All All

Recorded ---- 4570/2219 4551/1987 4564/1726 4599/1452

Net Adjustments ---- -20% -5% +30% +15%

Indicated Unit Value

---- $56 $52 $53 $63

SOURCE: APPRAISALS INC OF CENTRAL FLORIDA

Improved Sale No. 1 was located at 345 N. Grove Street, Eustis, Lake County, Florida. The property sold in November 2014 for $99,000 or $70 per square foot of building area. The sale consisted of a 1 story office building containing 1,400± square feet of average quality space. The structure was reportedly built in 1955 and was in average condition at the time of sale. The property was considered to have good access, good visibility and exposure and reflected a land to building ratio of 5.75:1.

In comparison to the subject, the sale would be adjusted upward for location i.e. farther away from the core downtown district. The sale would be adjusted downward for age/condition, size since smaller buildings typically sell for higher unit sale prices, access, visibility/exposure and land to building ratio. Overall adjustments were downward reflecting a lower unit value for the subject.

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Improved Sale No. 2 is located at 26 Magnolia Avenue, Eustis, Lake County, Florida. The property was purchased in October 2014 for $147,500 or $55 per square foot of building area. This sale consisted of a 1.5 story office building containing 2,671± square feet of average quality space originally constructed in 1912 and sold in average condition. The property was considered to have

average access, average visibility/exposure and reflected a land to building ratio of 2.96:1. In comparison to the subject, the sale would be adjusted downward for land to building ratio. Overall adjustments were downward reflecting a lower unit value for the subject.

Improved Sale No. 3 is located at 24 Magnolia Street, Eustis, Lake County, Florida. The property was purchased in December 2014 for $170,000 or $41 per square foot of building area. This sale consisted of a total of 4,132± square foot of bar space originally constructed in 1955. Improvements were of average to fair quality and of fair condition. The analysis indicates a land to building ratio of 1.00.

In comparison to the subject, the sale would be adjusted upward for its inferior usage, quality and size since larger buildings typically sell for lower unit sale prices. Overall adjustments were upward reflecting a higher unit value for the subject.

Improved Sale No. 4 was located at 300 Woodward Avenue, Eustis, Lake County, Florida. The property sold in March 2015 for $175,000 or $55 per square foot of building area. The sale consisted of a 1 story office/shop building containing 3,200± square feet of average to fair quality space. The structure was reportedly built in 1924 and was in average condition (having a newer effective age due to renovations) at the time of sale. The property was considered to have good access, good

visibility/exposure and reflected a land to building ratio of 9.77:1. In comparison to the subject, the sale would be adjusted upward for location i.e. farther away from the core downtown district, property type/use, quality and zoning. The sale would be adjusted downward for its newer effective age/condition, access, visibility/exposure and land to building ratio. Overall adjustments were upward reflecting a higher unit value for the subject.

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CONCLUSION OF VALUE The price per square foot of building area was considered the best unit of comparison to appraise the subject property. The cost to cure for the subject property was approximately $25 per square foot or $57,425± and was considered in the adjustments applied for age, quality and condition in this market approach analyses and therefore no other necessary deduction was applied. Consequently, after applying appropriate quantitative adjustments to the sales, we have concluded an estimated opinion of market value for the subject property to be $56 per square foot of building area x 2,297 square feet, or $128,632 rounded to $130,000.

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INCOME APPROACH

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INCOME CAPITALIZATION APPROACH

Income Approach. The Income Approach involves the process of converting anticipated future income benefits into a present worth or value. Future benefits are generally indicated by the amount of net income the property will produce during its remaining useful life. After comparison of interest yields and characteristics of risk for investments of similar type and class of properties, this net income is then capitalized into an estimate of value. The value indicated by the Income Approach is generally the most analytic value indication for properties which are held for income production or investment type properties in general. Income and expenses subsequent to the date of valuation are projected on the basis of an assumed efficient operation of the subject. This projection yields an income estimate that is then translated into value using either a process known as a Direct Capitalization or a Discounted Cash Flow Analysis. In our analysis, we have estimated a value for the subject, via the Income Approach, using Direct Capitalization to estimate a market value for the subject. The first floor of the subject is leased to a month to month tenant and used as a barber shop and floors 2 and 3 not leased and would require about $25 per square foot or a total of $57,425 in renovations to be rented as renovated downstairs commercial usage and upstairs residential usage. Income and expenses were based on market rental rates and estimated operating expenses, and an assumed efficient operation of the subject. The following map and summary of comparables used, illustrates our arrival to an estimate of market rent:

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COMPARABLE RENTAL NO. 1

Location: 113 N Bay Street, Eustis

PHYSICAL CHARACTERISTICS

PROPERTY TYPE: Professional Office/Residential

NET LEASABLE AREA:

1,200/1,700 upstairs

AGE/CONDITION: 1900/Average

QUALITY: Average

LEASE INFORMATION

LEASE AMOUNT: $12.50/SF Downstairs $12/SF Upstairs

EXPENSE BASIS: Modified Gross

OCCUPANCY: 60-90%

COMPARABILITY TO SUBJECT:

Similar

COMMENTS: The rental consists of a 3 story retail office downstairs building units and upper 2 stories are residential units with lakeview.

Data Source: Loopnet Compiled By: Appraisals Inc. of Central Florida

COMPARABLE RENTAL NO. 2 Location: 8-16 N Eustis Street, Eustis

PHYSICAL CHARACTERISTICS

PROPERTY TYPE: Profession Office

NET LEASABLE AREA:

Two 1,500 SF units & one 4,500 SF unit

AGE/CONDITION: 1904/Average

QUALITY: Average

LEASE INFORMATION

LEASE AMOUNT: $8.00/SF

EXPENSE BASIS: Modified Gross

OCCUPANCY: 30%

COMPARABILITY TO SUBJECT:

Inferior

COMMENTS: The rental consists of a 14,896 SF neighborhood office center with a 12 month minimum term.

Data Source: Loopnet Compiled By: Appraisals Inc. of Central Florida

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COMPARABLE RENTAL NO. 3 Location: 100 N. Bay Street, Eustis

PHYSICAL CHARACTERISTICS

PROPERTY TYPE: Professional Office

NET LEASABLE AREA:

10,000

AGE/CONDITION: 1956/Average to Good

QUALITY: Average to Good

LEASE INFORMATION

LEASE AMOUNT: $9.50 plus $4.50/SF CAM

EXPENSE BASIS: Triple Net

OCCUPANCY: Vacant

COMPARABILITY TO SUBJECT:

Superior

COMMENTS: There is 1,290 Sf on 1st floor

available and 8x840 SF on 2nd

floor available (can be divided). The building has an elevator.

Data Source: Loopnet Compiled By: Appraisals Inc. of Central Florida

Thus, the actual rent for downstairs subject of $925 per month equates to $15.02 per square foot annually which includes all the barbershop, furniture, fixture and equipment. As vacant the space would likely be at about $8.50 per square foot since it would not be furnished with the barbershop fixtures and other equipment. Several buildings downtown have upstairs apartments, most all without an elevator, most rent for about $.80 to $1.20 per square foot. For purposes of this analysis we have concluded $.80 per square foot per month or $9.60 per square foot for the upstairs would be appropriate. RECAP OF POTENTIAL GROSS INCOME 1st floor 739 x $8.50/SF $ 6,282 2nd & 3rd floors $9.60/SF x 1,558 SF $14,957 Total Potential Income $21,239

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Vacancy and Collection (Credit) Loss Allowance The principles of supply and demand and the related concept of competition are particularly useful in forecasting future benefits and estimating rates of return in the income capitalization approach. Both income and rates of return are determined in the market. The rents charged by the owners of various income producing properties usually do not vary greatly from those charged by owners of competing properties. Therefore, a good indicator on the supply and demand for the local market is the occupancy or vacancy rate. In this case, the subject property is best suited for a single tenant downstairs and one or two tenants upstairs. Thus, we have considered a vacancy and collection credit loss of 16-17%± to be appropriate and commensurate with the downtown market conditions. Effective Gross Income (EGI) The vacancy and collection loss factor is deducted from the potential gross income, reflecting the effective gross income. In this case, we have estimated the Effective Gross Income to be $17,761 for the subject property. Operating Expenses From the effective gross income, we included the estimated operating expenses, which are necessary and typical, based on similar properties in the market. The following is a brief summary of various expense terms:

Type of Lease Arrangement Expense Responsibility

Gross Tenant pays rent, and landlord pays all expenses

Modified Gross Tenant and Landlord share expenses

Single Net Tenant pays utilities and taxes or insurance, and landlord pays structural repairs, property maintenance, and property taxes or insurance.

Double Net Tenant pays utilities and taxes and insurance, and landlord pays structural repairs and property maintenance.

Triple Net Tenant pays utilities, taxes, insurance and maintenance, and landlord pays for structural repairs only

Source: The Appraisal of Real Estate 13th Edition

In this case, expenses were based on a modified gross lease basis, since it is considered a common lease arrangement for similar property types. The reflected operating expense ratio of 23%± was considered to be in line with collected market data for competing projects and therefore deemed reliable. Net Operating Income Conclusion The subject’s net operating income is summarized as follows:

Net Operating Income

Effective Gross Income (EGI) $17,761

Estimated Expenses ($4,071)

Net Operating Income (NOI) $13,690 Compiled By: Appraisals Inc. of Central Florida

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Direct Capitalization Direct capitalization is a method used to convert a single year’s estimated stabilized net operating income into a value indication. The quality of data collected was not sufficient to derive an accurate capitalization rate from the comparable sales. Therefore we have relied upon the band of investment method and information provided by an investor’s survey published by PwC and local professionals to estimate a reasonable cap rate. Band of Investment The band of the investment technique has been utilized. The analysis is shown in the following table:

Band of Investment

Mortgage Interest Rate 5.0%

Mortgage Term (Amortization Period) 20

Mortgage Ratio (Loan-to-Value) 70%

Mortgage Constant 0.0792

Equity Dividend Rate 7%

Mortgage Requirement 70% x 0.0792 = 0.0554

Equity Requirement 30% X 0.700 = 0.0240

100%

0.794

Indicated OAR 8%

National Investors Survey 1st Quarter 2015 PwC Real Estate Investors Survey, reflected cap rates for office space to range from a low of 4.00% to a high of 9.00%. We have concluded a cap rate at the middle of the range at 6.5% to be appropriate. Residential apartments ranged from 3.5% to 8%. We have concluded the middle of the range to be appropriate at 5.75%. Considering most of the income would be from the residential use, we have concluded a concluded capitalization rate from this method to 6%.

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Local Real Estate Professionals Survey

Interviews with local real estate professionals indicate that cap rates for office/retail/apartment buildings in the subject market area typically are about 8% for office/retail and about 6% for the residential apartments. In this case, we have concluded at the mid-range of 7% due to the physical and economical characteristics of the subject.

Capitalization Rate Conclusion

The following table summarizes the OAR conclusions: Thus, the concluded reasonable capitalization rate for the subject property was estimated to be 6.75%.

Capitalization Rate Conclusion

Technique Indicated OAR

Comparable Sales N/A

Band of Investment 8%

National Investor’s Survey 6%

Local Real Estate Professionals 7%

Concluded OAR 6.75% Compiled By: Appraisals Inc. of Central Florida

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Rentable Units: 2,297 SF

Income Breakdown

Unit Unit Sq Ft Annual Rent

1301 S. Bay Street 2,297 $21,239

Total Leasable SF 2,297

Potential Gross Income (PGI) $21,239

Vacancy and Credit Loss 16-17% $3,478 (16.4%±)

Effective Gross Income (EGI) $17,761

Expense Breakdown

Taxes $1,638

Insurance $550

Utilities Tenant

Management/Leasing (@ 3%) $533

Maintenance/Repairs Tenant

Professional Fees $350

Maintenance/Repairs $650

Prorated Major Replacements/Reserves $350

Total Expenses $4,071

Expense Ratio (Expenses/EGI) 23%±

Net Operating Income (NOI) $13,690

Capitalization Rate 6.75%

Subtotal Value $202,817

Less Cost to Cure $57,425

Total Value with Garage (rounded) $145,392

CONCLUSION OF VALUE After considering market rents for similar property types, analyzing potential gross income, estimating vacancy and collection loss and deducting appropriate expenses we have arrived at an estimated Net Operating Income of $13,690. Utilizing a reasonable capitalization rate of 6.75% results in an estimated opinion of value via the Income Approach of $202,817 less cost to cure of $57,425 ($25/SF) $145,392 rounded to $145,000. INCOME APPROACH INDICATED “AS IS” VALUE……………$145,000

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RECONCILIATION AND CONCLUSION OF VALUE The Direct Sales Comparison and Income Approaches to value were utilized to appraise the subject property. The results of each approach to value utilized are illustrated as follows:

Cost Approach N/A Direct Sales Comparison Approach $130,000 Income Approach $145,000

The Cost Approach incorporates the “Sales Comparison Approach” to support an estimate for land value. This approach is most applicable for newer owner-occupant type buildings and where high land-to-building-ratios exist. This approach was also not used due to the older age of improvements and therefore it is believed that it would not have meaningful credible results. The Sales Comparison Approach can provide an excellent insight to market value when truly comparable sales are available. The sales used were considered to be comparable and were the best available sales. Considering the available data, we have applied weight and merit to this approach. The Income Approach is typically considered for income producing properties. The Income Approach was utilized and given weight and merit to this approach as well. Weight and merit was given equally to the Sales Comparison and Income Approaches to value. Thus, we have concluded an estimated overall opinion of market value of the fee simple interest for the subject property to be $140,000.

CONCLUSION OF VALUE Appraisal Premise Interest Appraised Date of Value Value Conclusion

As Is Fee Simple August 20, 2015 $140,000 Source: Appraisals Inc. of Central Florida

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ASSUMPTIONS AND LIMITING CONDITIONS

1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties appraised is clear and marketable and that there are no recorded or unrecorded matters or exceptions to total that would adversely affect marketability or value. Appraisals Inc. of Central Florida is not aware of any title defects nor has it been advised of any unless such is specifically noted in the report. Appraisals Inc. of Central Florida, however, has not examined title and makes no representations relative to the condition thereof. Documents dealing with liens, encumbrances, easements, deed restrictions, clouds and other conditions that may affect the quality of title have not been reviewed. Insurance against financial loss resulting in claims that may arise out of defects in the subject property’s title should be sought from a qualified title company that issues or insures title to real property. Appraisals Inc. of Central Florida assumes no private deed restrictions, limiting the use of the subject property in any way.

2. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be correct. It is further assumed that no encroachments to the realty exist.

3. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined and considered in the appraisal report.

4. Also, unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or regulations governing use, density, or shape are being considered. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report is based, unless otherwise stated.

5. Appraisals Inc. of Central Florida is not aware of any contemplated public initiatives, governmental development controls, or rent controls that would significantly affect the value of the subject.

6. 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 appraisers. Appraisals Inc. of Central Florida has no knowledge of the existence of such materials on or in the property. Appraisals Inc. of Central Florida, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater 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.

I have inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in the appraisal.

7. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposit or subsurface rights of value involved in this appraisal, whether they be gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred.

8. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on the property or properties being appraised are structurally sound, seismically safe and code conforming; that all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the elements; that the property or properties have been engineered in such a manner that the improvements, as currently constituted, conform to all applicable local, state, and federal building codes and ordinances. Appraisals Inc. of Central Florida professionals are not engineers and are not competent to judge matters of an engineering nature. Appraisals Inc. of Central Florida has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. Unless otherwise specifically noted in the body of the report: no problems were brought to the attention of Appraisals Inc. of Central Florida by ownership or management; Appraisals Inc. of Central Florida inspected less than 100% of the entire interior and exterior portions of the improvements; and Appraisals Inc. of Central Florida was not furnished any engineering studies by the owners or by the party requesting this appraisal. If questions in these areas are critical to the decision process of the reader, the advice of competent engineering consultants should be obtained and relied upon. It is specifically assumed that any knowledgeable and prudent purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. Structural problems and/or building system problems may not be visually detectable. If engineering consultants retained should report negative factors of a material nature, or if such are later discovered, relative to the condition of improvements, such information could have a substantial negative impact on the conclusions reported in this appraisal. Accordingly, if negative findings are reported by engineering consultants, Appraisals Inc. of Central Florida reserves the right to amend the appraisal conclusions reported herein.

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9. It is assumed that all factual data furnished by the client, property owner, owner’s representative, or persons designated by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal report. Unless otherwise specifically noted in the appraisal report, Appraisals Inc. of Central Florida has no reason to believe that any of the data furnished contain any material error. Information and data referred to in this paragraph include, without being limited to, numerical street addresses, lot and block numbers, Assessor’s Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any material error in any of the above data could have a substantial impact on the conclusions reported. Thus, Appraisals Inc. of Central Florida reserves the right to amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should carefully review all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report and should immediately notify Appraisals Inc. of Central Florida of any questions or errors.

10. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this appraisal. Under the terms of the engagement, I will have no obligation to revise this report to reflect events or conditions which occur subsequent to the date of the appraisal. However, Appraisals Inc. of Central Florida will be available to discuss the necessity for revision resulting from changes in economic or market factors affecting the subject.

11. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the property, both physically and economically, on the open market.

12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct or indirect recommendation of Appraisals Inc. of Central Florida to buy, sell, or hold the properties at the value stated. Such decisions involve substantial investment strategy questions and must be specifically addressed in consultation form.

13. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in the report.

14. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with any other property or appraisal and are invalid if so used.

15. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and reliable. None of the exhibits are to be removed, reproduced, or used apart from this report.

16. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been made known to Appraisals Inc. of Central Florida unless otherwise stated within the body of this report. If the Consultant has not been supplied with a termite inspection, survey or occupancy permit, no responsibility or representation is assumed or made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No representation or warranty is made concerning obtaining these items. Appraisals Inc. of Central Florida 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.

17. Appraisals Inc. of Central Florida assumes that the subject property analyzed herein will be under prudent and competent management and ownership; neither inefficient or super-efficient.

18. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real property, have been disregarded with only real property being considered in the report unless otherwise stated. Any existing or proposed improvements, on or off-site, as well as any alterations or repairs considered, are assumed to be completed in a workmanlike manner according to standard practices based upon the information submitted to Appraisals Inc. of Central Florida This report may be subject to amendment upon re-inspection of the subject property subsequent to repairs, modifications, alterations and completed new

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construction. Any estimate of Market Value is as of the date indicated; based upon the information, conditions and projected levels of operation.

19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special assumptions set forth in this report. It is the responsibility of the Client, or client’s designees, to read in full, comprehend and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor Appraisals Inc. of Central Florida assumes responsibility for any situation arising out of the Client’s failure to become familiar with and understand the same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting profession if so desired.

20. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of possible readily achievable barrier removal construction items in this report, Appraisals Inc. of Central Florida has not made a specific compliance survey and analysis of this property to determine whether it is in conformance with the various detailed requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect on the value estimated herein. Since Appraisals Inc. of Central Florida has no specific information relating to this issue, nor is Appraisals Inc. of Central Florida qualified to make such an assessment, the effect of any possible non-compliance with the requirements of the ADA was not considered in estimating the value of the subject property.

21. Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client proximately result in damage to Appraiser. The Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising as a result of the Client’s failure or the failure of any of the Client’s agents to provide a complete copy of the appraisal report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be entitled to recover from the other reasonable attorney fees and costs.

ADDENDA

ADDENDUM A

LAKE COUNTY PROPERTY RECORD CARDS

ADDENDUM B

APPRAISAL DEFINITIONS

APPRAISAL DEFINITIONS Definition of Market Value Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

(1) Buyer and seller are typically motivated; (2) Both parties are well informed or well advised, and acting in what they consider their

own best interests; (3) A reasonable time is allowed for exposure in the open market; (4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements

comparable thereto; and (5) The price represents the normal consideration for the property sold unaffected by

special or creative financing or sales concessions granted by anyone associated with the sale.

(Source: Federal Register, vol.55, no. 163, August 22, 1990, pages 34228 and 34229; also quoted in the Glossary of the Uniform Standards of Professional Appraisal Practice, 2000 edition.) Definition of Fee Simple Interest According to the 13th Edition of the Appraisal of Real Estate the definition of fee simple estate is: absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Definition of Highest and Best Use According to the 13th Edition of the Appraisal of Real Estate the definition of highest and best use is defined as: the reasonably probable and legal use of vacant land or an improved property that is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value.

ADDENDUM C

QUALIFICATIONS

ADDENDUM D

PURCHASE ORDER