New Self-Contained Appraisal Report · 2012. 5. 10. · 1-15 EAST OAK STREET RETAIL 1-15 East Oak...

1-15 EAST OAK STREET RETAIL 1-15 East Oak Street Chicago, Cook County, Illinois 60611 CBRE File No. 12-164CH-0717

Self-Contained Appraisal Report

Prepared For: Mr. Ehud Elizur 1-15 EAST OAK STREET OWNERS LLC 452 Fifth Avenue New York, New York 10018

VALUATION & ADVISORY SERVICES

© 2012 CBRE, Inc.

V A L U A T I O N & A D V I S O R Y S E R V I C E S

311 South Wacker Drive, 4th Floor Chicago, IL 60606

T (312) 233-8662 F (312) 233-8660

www.cbre.com

April 23, 2012

Mr. Ehud Elizur 1-15 EAST OAK STREET OWNERS LLC 452 Fifth Avenue New York, New York 10018 RE: Appraisal of 1-15 East Oak Street Retail 1-15 East Oak Street Chicago, Cook County, Illinois 60611 CBRE File No. 12-164CH-0717

Dear Mr. Elizur:

At your request and authorization, CBRE, Inc. has prepared an appraisal of the market value of the referenced property. Our analysis is presented in the following Self-Contained Appraisal Report.

The subject is a six-story retail building, plus basement, containing a total of 94,700 gross leasable square feet. The property is situated on a 16,698 square foot site located at the southwest corner of Oak and Rush Streets. The structure was built in 2009 as a build-to-suit for Barneys New York as their Chicago “flagship” store, representing an expansion/relocation from their former location which was on the east side of Rush Street. The subject anchors the upscale Oak Street retail corridor, which extends between North Michigan Avenue to the east and State Street to the west in downtown Chicago, Illinois. Oak Street is an upscale “high-street” retail district dominated by luxury, haute couture and high-end boutiques and jewelry tenants. The subject is currently 100% occupied; predominantly by Barneys New York (90,100 SF), with a smaller/street-level space occupied by Citibank (4,600 SF). The Barneys New York and Citibank leases extend through July 2024 and January 2019, respectively. The subject is more fully described, legally and physically, within the enclosed report.

Based on the analysis contained in the following report, the market value of the subject is concluded as follows:

MARKET VALUE CONCLUSIONAppraisal Premise Interest Appraised Date of Value Value Conclusion

As Is Leased Fee Interest March 31, 2012 $155,000,000

Compiled by CBRE

© 2012 CBRE, Inc.

Mr. Ehud Elizur April 23, 2012 Page 2

It is noted that CBRE, Inc. previously appraised the property at a concluded market value of $125M, reflecting an effective valuation date of 31 March 2011. Comparatively, the current valuation (31 March 2012) results in an estimated value of $155M, representing an increase of 24%. The primary factors attributing to the increase in value are the scheduled increases in the contract rental rates for both tenants, the resulting increase in estimated net operating income, and the application of a lower effective capitalization rate (NOI/Value or 6.18%) Vs. 7.16% reflected by the 31 March 2011 appraisal. Per our research throughout the market, the increased investor interest in net leased investments has resulted in cap rate compression for this investment class, specifically for those investments reflecting significant duration of remaining lease term and top quality – well located assets like the subject.

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.

All parties to this engagement are aware that CBRE currently manages the subject property, as well as providing leasing/management services for other properties owned by PBC. CBRE Valuation & Advisory Services certifies that our valuation has been conducted independent of our other business units and the result of our analysis represents our unbiased opinion.

The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute and IFRS standard. Furthermore, this appraisal has been prepared in compliance with disclosure regulations of Israelis Securities Law, as provided.

It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us.

Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES

J. Scott Patrick, MAI, CCIM Lesley J. Linder, MAI, CCIM Director Managing Director Phone: 630-368-5531 Phone: 312-233-8665 Fax: 630-573-7018 Fax: 312-233-8660 [email protected] [email protected] State Certified General Real Estate Appraiser State of Illinois License No. 553.000226 Expires: September 30, 2013

State Certified General Real Estate Appraiser State of Illinois License No. 553.001947 Expires: September 30, 2013

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | CERTIFICATION OF THE APPRAISAL

i

CERTIFICATION OF THE APPRAISAL

We 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 our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3. We 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. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 5. Our 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. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of Illinois.

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

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

10. As of the date of this report, J. Scott Patrick, MAI, CCIM and Lesley J. Linder, MAI, CCIM have completed the continuing education program of the Appraisal Institute.

11. J. Scott Patrick, MAI, CCIM has and Lesley J. Linder, MAI, CCIM has not made a personal inspection of the property that is the subject of this report.

12. No one provided significant real property appraisal assistance to the persons signing this report. 13. Valuation & Advisory Services operates as an independent economic entity within CBRE. Although

employees of other CBRE divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest. Further, it is noted that CBRE currently manages the subject property, as well providing leasing/management services for other properties owned by PBC. We certify that our valuation has been conducted independent of our other business units and the result of our analysis represents our unbiased opinion.

14. J. Scott Patrick, MAI, CCIM has not, but Lesley J. Linder, MAI, CCIM has provided real estate related services on this property in the three years prior to accepting this assignment.

J. Scott Patrick, MAI, CCIM Lesley J. Linder, MAI, CCIM Certified General Appraiser State of Illinois License No. 553.000226

Certified General Appraiser State of Illinois License No. 553.001947

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | SUBJECT PHOTOGRAPHS

ii

SUBJECT PHOTOGRAPHS

VIEW OF THE SUBJECT LOOKING SOUTHWEST FROOM OAK AND RUSH

VIEW OF THE SUBJECT LOOKING SOUTHEAST FROOM STATE AND OAK

© 2012 CBRE, Inc.


iii

VIEW OF THE SSUBJECT’S OAK STREET FRONTAGE

VIEW OF TTHE BARNEYS NNEW YORK SIGNAGE

© 2012 CBRE, Inc.


iv

VIEW OF AA PORTION OF THE SUBJECT’S GREEN RROOF COMPONENT, LOOKING EAST

OVER OAK STREET TO LAKE MICHIGAN

VIEW OF THE SSUBJECT’S LOADING DOCK AREA LOCATED ALONG AN ALLEYWAY

© 2012 CBRE, Inc.


v

INTERIOR VVIEW

INNTERIOR VVIEW

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | SUMMARY OF SALIENT FACTS

vi

SUMMARY OF SALIENT FACTS

Property Name

Location

Assessor’s Parcel Numbers

Highest and Best Use

As If Vacant

As Improved

Property Rights Appraised

Land Area 0.38 AC 16,698 SF

Improvements

Property Type Retail

Number of Buildings

Number of Stories

Gross Leasable Area

Year Built 2009 Renovated: 0

Condition

Major Tenants

Barneys New York

Citibank

Estimated Exposure Time

Financial Indicators

Current Occupancy 100.0%

Stabilized Occupancy 100.0%

Stabilized Credit Loss 0.0%

Overall Capitalization Rate 6.00%

Discount Rate 8.00%

Terminal Capitalization Rate 7.00%

Pro Forma Operating Data Total Per SF

Effective Gross Income $11,615,572 $122.66

Operating Expenses $2,034,430 $21.48

Expense Ratio 17.51%

Net Operating Income $9,581,142 $101.17

(Specialty Retail)

6 Months

Excellent

90,100 SF

94,700 SF

1-15 East Oak Street Retail

Leased Fee Interest

Retail

Retail

17-03-206-010-0000

17-03-206-009-0000

1-15 East Oak Street, Chicago, Cook County, Illinois 60611

4,600 SF

6

1

17-03-206-001-0000

VALUATION Total Per SF

Sales Comparison Approach $150,000,000 $1,583.95

Income Capitalization Approach $155,000,000 $1,636.75

CONCLUDED MARKET VALUE

Appraisal Premise Interest Appraised Value

As Is Leased Fee Interest $155,000,000

Compiled by CBRE

Date of Value

March 31, 2012

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | SUMMARY OF SALIENT FACTS

vii

STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT)

Strengths and weaknesses are internal to the subject; opportunities & threats are external to the subject.

Strengths

� The subject features a prominent location at the corner of Rush and Oak Streets, one of the most desirable corners in Chicago’s “high-street” retail corridor.

� Having been constructed in 2009, the property is in excellent physical condition. � The property represents excellent design and construction features, representative of the “flagship”

designation by the world renowned Barneys New York brand. � The subject is 100% occupied, with the tenancy represented by 2, long-term net lease agreements

to good quality tenants. � The lease agreements feature fixed annual increases in the base rental rates. � The lease to Barneys New York extends through July 2024, while the Citibank lease extends

through January 2019. Both leases include multiple options to renew at stipulated/graduated rental rates.

� The building design features a “green roof” component reflecting a moderate degree of environmental consciousness, perceived by the market as “forward thinking” and/or progressive.

Weaknesses

� The multi-level design may represent a “re-tenanting” challenge if alternative tenancy was required.

� The parent level of Barneys New York as retained Kirkland Ellis’s corporate restructure practice in an effort to explore the possible restructure of the corporate level debt. Per our research, market participants do not view this as a potential negative against the long-term sustainability of the Barneys New York brand.

Opportunities

� The Rush and Oak Street shopping district continues to attract nationally and internationally known retailers and is expected to remain a dominant “high-street” retail destination.

� The stipulated rent increases incorporated in the leases that encumber the subject provide an increasing trend in projected net operating income.

Threats

� The weakened overall economy has contributed to depressed levels of consumer spending, although the “luxury” retail market has continued to perform well.

� The financial condition, outstanding debt and continual budget deficits under which the State of Illinois and City of Chicago operate are of primary concern in regards to the long-term performance of the state and local economies.

EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS

Inherent in this valuation is the continued, long-term operation of Barneys New York and Citibank as viable going-concerns, with the ability to continue to honor the terms of the in-place lease

agreements.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | TABLE OF CONTENTS

viii

TABLE OF CONTENTS

CERTIFICATION OF THE APPRAISAL ............................................................................................. i

SUBJECT PHOTOGRAPHS .......................................................................................................... ii

SUMMARY OF SALIENT FACTS ................................................................................................... vi

TABLE OF CONTENTS ............................................................................................................. viii

INTRODUCTION ...................................................................................................................... 1

AREA ANALYSIS ......................................................................................................................... 6

NEIGHBORHOOD ANALYSIS .................................................................................................. 21

MARKET ANALYSIS .................................................................................................................. 26

SITE ANALYSIS ........................................................................................................................ 38

IMPROVEMENTS ANALYSIS ...................................................................................................... 41

ZONING ................................................................................................................................ 45

TAX AND ASSESSMENT DATA .................................................................................................. 46

HIGHEST AND BEST USE ......................................................................................................... 49

APPRAISAL METHODOLOGY ................................................................................................... 52

SALES COMPARISON APPROACH ............................................................................................ 53

INCOME CAPITALIZATION APPROACH .................................................................................... 59

RECONCILIATION OF VALUE .................................................................................................. 81

ASSUMPTIONS AND LIMITING CONDITIONS .......................................................................... 82

ADDENDA A Glossary of Terms B Legal Description C Improved Sale Data Sheets D Rent Comparable Data Sheets E Argus Reports F Précis METRO Report - Economy.com, Inc. G Engagement Letter H Qualifications

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | INTRODUCTION

1

INTRODUCTION

PROPERTY IDENTIFICATION

The subject is a six-story retail building, plus basement, containing a total of 94,700 gross leasable

square feet. The property is situated on a 16,698 square foot site located at the southwest corner of Oak and Rush Streets. The structure was built in 2009 as a build-to-suit for Barneys New York as

their Chicago “flagship” store, representing an expansion/relocation from their former location which

was on the east side of Rush Street. The subject anchors the upscale Oak Street retail corridor, which extends between North Michigan Avenue to the east and State Street to the west in downtown

Chicago, Illinois. Oak Street is an upscale “high-street” retail district dominated by luxury, haute

couture and high-end boutiques and jewelry tenants. The subject is currently 100% occupied;

predominantly by Barneys New York (90,100 SF), with a smaller/street-level space occupied by Citibank (4,600 SF). The Barneys New York and Citibank leases extend through July 2024 and

January 2019, respectively.

The Cook County Assessor’s Office identifies the property as parcels 17-03-206-001-0000, 17-03-206-009-0000 and 17-03-206-010-0000. A copy of the legal description is included in the

addendum.

OWNERSHIP AND PROPERTY HISTORY

Title to the property is currently vested in the name of 1-15 East Oak Street Owners LLC, who

acquired title to the property in January 2011, as improved for $117,000,000. At the time of sale the property was in receivership (the receiver having been appointed in November 2010) and there was a

pending foreclosure action. The foreclosure proceedings were dismissed under the terms of the

Purchase and Sale Agreement.

To the best of our knowledge, other than referenced above, there has been no other ownership

transfer involving the property during the previous three years. The previous owner was the developer

of the project.

PREMISE OF THE APPRAISAL

The following table illustrates the various dates associated with the valuation of the subject, the

valuation premise(s) and the rights appraised for each premise/date:

© 2012 CBRE, Inc.


2

PREMISE OF THE APPRAISALItem Date Interest Appraised

Date of Report: April 23, 2012

Date of Inspection: April 11, 2012

Date of ValueAs Is: March 31, 2012 Leased Fee Interest

Compiled by CBRE

PURPOSE OF THE APPRAISAL

The purpose of this appraisal is to estimate the market value of the subject property. The current

economic definition of market value agreed upon by agencies that regulate federal financial

institutions in the U.S. (and used herein) is as follows:

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

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

assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing 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. 1

TERMS AND DEFINITIONS

The Glossary of Terms in the Addenda provides definitions for additional terms that are, and may be

used in this appraisal.

INTENDED USE AND USER OF REPORT

The intended use is for financial reporting for the client and affiliates. The report may be used as addendum to company/affiliates public filings. Furthermore, this appraisal has been prepared in

compliance with disclosure regulations of Israelis Securities Law, as provided and is intended to be in

compliance with the IFRS standards.

1 Office of Comptroller of the Currency (OCC), 12 CFR Part 34, Subpart C – Appraisals, 34.42 (g); Office of Thrift

Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the updated Interagency Appraisal and Evaluation Guidelines promulgated in 2010.

© 2012 CBRE, Inc.


3

SCOPE OF WORK

The scope of the assignment relates to the extent and manner in which research is conducted, data is

gathered and analysis is applied, all based upon the following problem-identifying factors stated elsewhere in this report:

� Client � Intended use � Intended user � Type of opinion � Effective date of opinion � Relevant characteristics about the subject � Assignment conditions

This appraisal of the subject has been presented in the form of a Self-Contained Appraisal Report,

which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of USPAP. That is, this report incorporates, to the fullest extent possible, practical explanation of the

data, reasoning and analysis that were used to develop the opinion of value. This report also includes

thorough descriptions of the subject and the market for the property type. CBRE completed the

following steps for this assignment:

Data Resources Utilized in the Analysis

RESOURCE VERIFICATION

Site Data Source/Verification:Size Site survey

Improved Data Source/Verification:Net Size/Units LeasesArea Breakdown/Use LeasesNo. Bldgs. Physical InspectionYOC Information provided by client

Economic Data Source/Verification:Income Data: LeasesExpense Data: Tax Bills and Comparable Data

Compiled by CBRE

Extent to Which the Property is Identified

CBRE collected the relevant information about the subject from the owner (or representatives), public

records and through an inspection of the subject property. The property was legally identified through the following sources:

� postal address � assessor’s records � legal description � title report

© 2012 CBRE, Inc.


4

Economic characteristics of the subject were identified via:

� analysis of leases and/or lease briefs between the lessor and lessee � recent rent roll

Extent to Which the Property is Inspected

CBRE inspected both the interior and exterior of the subject, as well as its surrounding environs on the

effective date of appraisal.

Type and Extent of the Data Researched

CBRE reviewed the micro and/or macro market environments with respect to physical and economic

factors relevant to the valuation process. This process included interviews with regional and/or local

market participants, available published data, and other various resources. CBRE also conducted

regional and/or local research with respect to the following:

� applicable tax data � zoning requirements � flood zone status � demographics � income and expense data � comparable data

Type and Extent of Analysis Applied

CBRE analyzed the data gathered through the use of appropriate and accepted appraisal

methodology to arrive at a probable value indication via each applicable approach to value. The

steps required to complete each approach are discussed in the methodology section. CBRE then

correlated and reconciled the results into a reasonable and defensible value conclusion, as defined

herein. A reasonable exposure time associated with the value estimate presented has also been considered.

EXPOSURE/MARKETING TIME

Current appraisal guidelines require an estimate of a reasonable time period in which the subject

could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always

precedes the date of value, with the underlying premise being the time a property would have been on

the market prior to the date of value, such that it would sell at its appraised value as of the date of

value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. In consideration

of these factors, we have analyzed the following:

� exposure periods for comparable sales used in this appraisal; � exposure/marketing time information from the CBRE National Investor Survey and the

Korpacz Real Estate Investor Survey; and

© 2012 CBRE, Inc.


5

� the opinions of market participants.

The following table presents the information derived from these sources.

EXPOSURE/MARKETING TIME INFORMATION

Exposure/Mktg. (Months)Investment Type Range Average

Comparable Sales Data 3.0 - 9.0 6.0

Korpacz Net LeaseNational Data 1.0 - 12.0 4.9

Local Market Professionals 3.0 - 9.0 6.0

CBRE Exposure Time Estimate

Source: CBRE National Investor Survey & Korpacz Real Estate Investor Survey

6 Months

CBRE has concluded an exposure/marketing time of 6 months to be reasonable for the subject.

This exposure/marketing time reflects current economic conditions, current real estate investment market conditions, the terms and availability of financing for real estate acquisitions, and property and

market-specific factors. It assumes that the subject is (or has been) actively and professionally

marketed. The marketing/exposure time would apply to all valuation premises included in this report.

© 2012 CBRE, Inc.

1-15 EAST OAK STREET RETAIL | AREA ANALYSIS

6

AREA ANALYSIS

The dynamic nature of economic relationships within a market area has a direct bearing on real

estate values and the long-term quality of a real estate investment. In the market, the value of a

property is not based on the price paid for it in the past or the cost of its creation, but on what buyers

and sellers perceive it will provide in the future. Consequently, the attitude of the market toward a

property within a specific neighborhood or market area reflects the probable future trend of that area.

Since real estate is an immobile asset, economic trends affecting its location quality in relation to other competing properties within its market area will also have a direct effect on its value as an

investment. To accurately reflect such influences, it is necessary to examine the past and probable

future trends, which may affect the economic structure of the market and evaluate their impact on the market potential of the subject. This section of the report is designed to isolate and examine the

discernible economic trends in the region, which influence and create value for the subject property.

GEOGRAPHIC LOCATION

The subject property is located in the geographic area generally referred to as the Chicago metropolitan area, which is centrally located in the Midwestern United States. Other major

metropolitan areas in the region include Milwaukee, Wisconsin (90-miles north), Indianapolis, Indiana

(185-miles southeast) and Detroit, Michigan (279-miles east).

© 2012 CBRE, Inc.


7

The standards for statistical areas are defined on the federal level by the Office of Management and

Budget. Recent changes to these standards by the OMB resulted in new area configurations and new names to identify them. The Chicago metropolitan area, formerly known as the Chicago Metropolitan

Statistical Area, is now identified as the Chicago-Naperville-Joliet, IL-IN-WI Metropolitan Statistical

Area. The primary area within this new MSA is now referenced as the Chicago-Naperville-Joliet, IL

Metropolitan Division. (For ease of reference, this report retains the term “Chicago MSA,” but it will refer to the Chicago-Naperville-Joliet, IL-IN-WI Metropolitan Statistical Area. “Chicago MD” is used

to refer to the Chicago-Naperville-Joliet, IL Metropolitan Division. Additionally, combined with the

neighboring Metropolitan Statistical Areas including the Michigan City-La Porte, IN MSA to the east and Kankakee-Bradley, IL MSA to the south, the Chicago-Naperville-Joliet, IL-IN-WI MSA is a part of

the larger Chicago-Naperville-Michigan City, IL-IN-WI Combined Statistical Area (CSA).

Metropolitan Statistical Area (MSA) Metropolitan Divisions (MD) Counties

Chicago-Naperville-Joliet, IL MD

Cook, DeKalb, DuPage, Grundy, Kane, Kendall, McHenry, and Will

Gary, IN MDJasper, Lake, Newton, and Porter

Lake County-Kenosha County, IL-WI MDLake (IL) and Kenosha (WI)

Kankakee-Bradley, IL MSA - Kankakee

Michigan City-La Porte, IN MSA - LaPorte

CHICAGO-NAPERVILLE-MICHIGAN CITY, IL-IN-WI CSA DEFINITIONS

Source: Executive Office of the President of the United States, Office of Management and Budget

Chicago-Naperville-Joliet, IL-IN-WI MSA

The Chicago-Naperville-Joliet, IL Metropolitan Division consists of eight counties in northeastern

Illinois. These eight counties are Cook, DeKalb, DuPage, Grundy, Kane, Kendall, McHenry and Will. Also included within the MSA are the counties found in the Gary, IN Metropolitan Division which are

Japser, Lake (IN), Newton, and Porter as well as the counties found in the Lake County-Kenosha

County, IL-WI which are Lake (IL) and Kenosha. The Michigan City-La Porte, IN MSA and Kankakee-

Bradley, IL MSA consist solely of LaPorte and Kankakee Counties respectively.

POPULATION

Current and historical population figures for the fourteen counties comprising the Chicago MSA are

summarized in the following table.

© 2012 CBRE, Inc.


8

County 1990Census

2000Census

% Change 1990-2000

2011 Estimate

% Change 2000-2011

2016 Projection

% Change 2011-2016

Cook (IL) 5,105,067 5,376,741 5.3% 5,243,577 -2.5% 5,215,968 -0.5%DeKalb (IL) 77,932 88,969 14.2% 108,453 21.9% 116,441 7.4%DuPage (IL) 781,666 904,161 15.7% 927,524 2.6% 939,103 1.2%Grundy (IL) 32,337 37,535 16.1% 49,352 31.5% 54,288 10.0%Jasper (IN) 24,960 30,043 20.4% 33,391 11.1% 34,560 3.5%Kane (IL) 317,471 404,119 27.3% 519,589 28.6% 566,718 9.1%Kendall (IL) 39,413 54,544 38.4% 110,994 103.5% 135,004 21.6%Kenosha (WI) 128,181 149,577 16.7% 165,577 10.7% 171,418 3.5%Lake (IL) 516,418 644,356 24.8% 712,978 10.6% 740,942 3.9%Lake (IN) 475,594 484,564 1.9% 498,618 2.9% 501,203 0.5%McHenry (IL) 183,241 260,077 41.9% 324,101 24.6% 349,452 7.8%Newton (IN) 13,551 14,566 7.5% 13,642 -6.3% 13,099 -4.0%Porter (IN) 128,932 146,798 13.9% 166,921 13.7% 174,260 4.4%Will (IL) 357,313 502,266 40.6% 696,186 38.6% 771,400 10.8%TOTAL 8,104,144 9,098,316 12.3% 9,570,903 5.2% 9,783,856 2.2%

CHICAGO AREA POPULATION STATISTICS

Source: CBRE Fast Report

The population of the fourteen-county region increased significantly between 1990 and 2000,

highlighted by collar counties including Will and McHenry. Cook County, on the other hand, experienced far less growth than the surrounding counties, at 5.3%. This is indicative of the outward

migration pattern within the metropolitan area rather than an outflow of residents to other

metropolitan areas. Overall, the MSA population expanded by 12.3% between 1990 and 2000.

Population growth is expected to continue through 2016, albeit at a slower rate. Each of the fourteen

counties is expected to expand, with the exception of Cook (with an anticipated population decline of

0.5%) and Newton (with an anticipated population decline of 4.0%). The largest anticipated growth

between 2011 and 2016 is forecasted for Grundy, Kendall and Will Counties, at 10.0%, 21.6%, and 10.8%, respectively. Kane and McHenry Counties are projected to grow by more than 9.1% and 7.8%

over the coming five years.

TRANSPORTATION

Chicago is one of the primary transportation hubs in the United States. Its extensive transportation facilities give local firms ready access to national and international markets and suppliers, as well as

provide travelers with convenient traveling alternatives.

© 2012 CBRE, Inc.


9

Highways

Several major interconnected expressways and interstate highways pass through the Chicago area.

Interstates 88 and 290 are the main east-west routes, providing access to the CBD to the east and the Quad Cities to the west. Interstate 55 provides access to the southwestern suburban areas and

eventually the city of St. Louis. Communities to the north and northwest are accessed via Interstates

90 and 94. North-south travel between the western suburbs is facilitated by Interstates 294 and 355.

With ten interstate freeways consisting of some 630 miles, Chicago is one of the best connected cities in the nation and a primary hub of the trucking industry.

Airports

From an international perspective Chicago is globally accessible via air traffic. The two primary

airports serving the area are O’Hare International Airport and Chicago Midway International Airport.

© 2012 CBRE, Inc.


10

Flights Passenger Volume Cargo Tonnage Flights Passenger Volume Cargo Tonnage Flights Passenger Volume Cargo Tonnage2000 908,989 72,144,244 1,640,524 298,115 15,672,688 23,260 1,207,104 87,816,932 1,663,785 2001 911,917 67,448,064 1,413,834 278,677 15,628,886 17,162 1,190,594 83,076,950 1,430,997 2002 922,817 66,565,952 1,436,386 304,304 16,959,229 83,473 1,227,121 83,525,181 1,519,859 2003 928,691 69,508,672 1,601,736 328,025 18,644,372 25,847 1,256,716 88,153,044 1,627,583 2004 992,427 75,534,692 1,689,304 339,508 19,719,667 29,058 1,331,935 95,254,359 1,718,362 2005 972,248 76,581,146 1,701,446 289,579 17,862,838 19,460 1,261,827 94,443,984 1,720,906 2006 958,643 76,282,212 1,718,011 298,548 18,868,388 15,337 1,257,191 95,150,600 1,733,348 2007 926,973 76,182,025 1,690,742 304,657 19,378,855 14,727 1,231,630 95,560,880 1,705,468 2008 881,566 70,819,015 1,480,847 266,341 17,345,635 14,254 1,147,907 88,164,650 1,495,102 2009 827,899 64,397,782 1,198,426 244,810 17,089,365 25,010 1,072,709 81,487,147 1,223,437 2010 882,617 67,026,191 1,577,048 245,533 17,673,017 28,228 1,128,150 84,699,208 1,605,275 2011 878,798 66,790,996 1,505,218 255,227 18,883,170 26,091 1,134,025 85,674,166 1,531,309

ANNUAL OPERATIONS OF CHICAGO AIRPORTS

Source: The Chicago Airport System

MidwayO'Hare Total

O’Hare International Airport is the third busiest airport in the world serving approximately 66.8 million

domestic and international passengers via 878,798 flights annually as of 2011. In addition, O’Hare

handles nearly 1.5 million tons of cargo per year. O’Hare served as the world’s busiest airport until

2004 when flight limits were placed by Congress which expired October 31st, 2008. O’Hare provides seven runways facilitating a present capacity of 2,900 flights per day and is undergoing a

modernization plan for expansion which will also add two additional runways, one of which has been

completed. These runways are part of a $6.6 billion capital investment program and will increase O’Hare’s daily flight capacity by 40% to 3,800 flights per day while decreasing delays by an

estimated 79%. This modernization plan has been projected to create some 195,000 additional jobs

and some $18 billion dollars in annual economic activity to the region. In addition to being

accessible via Interstate 90, linkage to the CBD is provided from O’Hare via the city’s elevated light rail transit system colloquially known as “The El” and transit time is approximately 45 minutes.

Midway Airport, located in Chicago’s southwest side, serves as a secondary airport and is a popular

alternative to O’Hare. Midway contains five runways and accommodated more than 18.9 million passengers in 2011 on some 255,227 flights. Cargo is also flown out of Midway and in 2011 over

26 thousand tons were shipped from this airport, with capacity to ship over 80,000 tons as displayed

in 2002. The airport is the second busiest in the state behind O’Hare and ahead of Chicago

Rockford International Airport and nearby Gary/Chicago International Airport in Indiana. Linkage to the CBD from Midway is provided by Interstate Highway 55 as well as Chicago’s “El” system. Transit

time from Midway to the CBD via the “El” is approximately 30 minutes.

In addition to O’Hare and Midway, a number of smaller airports are located in the suburban areas. The state is currently exploring the possibility of expanding the commercial services of one of these

secondary airports, in order to facilitate a third major airport for the MSA. The most likely candidates

at present are the aforementioned Gary/Chicago International Airport located southeast of Chicago

in Gary, Indiana, within the Chicago CSA, and the Chicago Rockford International Airport in Rockford, Illinois located nine miles west of the Chicago CSA.

Additionally a third, currently undeveloped, site proposed for the expansion is located in the southwest

suburb of Peotone, Illinois. This proposed airport is currently known as Abraham Lincoln National

© 2012 CBRE, Inc.


11

Airport and is planned to be constructed as a two runway airfield with room to eventually expand to

four.

Gary/Chicago International Airport serves both Gary as well as the surrounding metropolitan division.

The airport is currently served by no passenger service airlines. Gary, encompassed by Lake County,

Indiana is strategically situated along Interstate 80, which runs east from Chicago, connecting Gary’s

manufacturing sectors with both the Indianapolis and Mishawaka metropolitan areas. Interstates 90, 94, and 65 also all run through Gary providing access to Indianapolis, Chicago, South Bend, and

Detroit. Gary/Chicago International is also serviced by the Northern Indiana Commuter

Transportation District’s South Shore Line which provides access to South Bend to the east and the Chicago CBD to the west.

Rail

Chicago’s Central Business District contains four train

stations providing rail access for suburban

commuters, freight, and nationwide travel. Rail access to and from suburban communities is provided

by the Northeast Illinois Regional Commuter Railroad

Corporation better known as Metra. Metra provides twelve rail lines which reach as far north as Kenosha,

Wisconsin and as far east as northwest Indiana and

South Bend. As the largest commuter rail system in

the United States, Metra covers nearly 500 miles of tracks servicing over 230 individual stations

throughout the Chicagoland area. Metra provided

service to some 81.4 million passengers during 2010. Metra, being mainly a commuter rail service,

frequent service is generally only provided during rush

hours, although Metra is known for its speed and

reliability. The twelve lines connect into one of four different downtown stations: Union Pacific North,

West and Northwest arrive in the Ogilvie

Transportation Center; Milwaukee District North and West, North Central Service, Southwest Service,

Burlington Northern and Heritage Corridor converge

in Union Station (along with being the nexus of Amtrak); the Rock Island Line arrives in the LaSalle

Street Station; and the Metra Electric arrives in Millennium Station.

© 2012 CBRE, Inc.


12

Within the city of Chicago itself, light rail is

provided via the Chicago Transit Authority’s elevated train system, which as mentioned

previously is better known as the “El.” These

elevated trains provide inexpensive rapid transit

service to nearly 500,000 passengers each day to all corners of the city, as well as some 40

nearby suburbs and both major airports. These

eight rail lines are supplemented by a fleet of nearly 2,000 buses which service approximately

1 million passengers at 12,000 bus stops daily,

making the CTA the second largest transit system

in the nation. As a result of these multiple extensive mass transit systems, as well as a grid

system street layout, Chicago has been

continually rated by various institutions as one of the top ten most walkable cities in the nation.

Chicago has the busiest rail hub in North America. It is the only metro area where six Class-One

railroads converge and are able to interchange traffic. Fifty percent of all U.S. rail freight goes

through Chicago’s rail yards. Chicago is the world’s third largest intermodal facilitator with 12.3 million containers annually. Only Hong Kong and Singapore handle greater volume. For reference,

the ports of Los Angeles and Long Beach combine to handle 9.6 million containers each year. Over

the next 10 years, intermodal container traffic is expected to grow 15 percent annually.

Rivers and Waterways

With the Port of Chicago handling a major share of domestic and international shipping, the city is the

key player for mid-continental shipping. The Port remains the primary link between the inland river

system, the Great Lakes, and the global marketplace, moving over 26.6 million tons of natural

resources and other goods produced throughout the Midwest and the world annually. Deep-draft commercial ships connect to the Atlantic Ocean via the St. Lawrence Seaway while barge traffic can

reach the Gulf of Mexico through the Illinois and Mississippi Rivers.

EMPLOYMENT

The Chicago metropolitan area has a large and well-diversified economic structure, which has allowed it to remain among the strongest economic centers in the nation. Due to its economic

diversification, the Chicago metropolitan area tends to experience fewer seasonal and cyclical peaks

and valleys than do many single-industry areas. The table below shows employment levels of major

© 2012 CBRE, Inc.


13

industry groups in the fourteen-county Chicago Metropolitan Statistical Area as of various dates over

the past ten years.

2001 December - 2011*Industry Group Employment % Employment % Employment %

Mining and Logging 2,500 0.1% 2,400 0.1% 1,500 0.0%

Construction 216,100 4.8% 218,800 4.8% 150,400 3.5%

Manufacturing 595,900 13.1% 489,300 10.8% 409,500 9.5%

Trade, Transportation and Utilites 951,500 20.9% 921,200 20.4% 892,600 20.7%

Information 117,000 2.6% 91,300 2.0% 74,500 1.7%

Financial Activities 325,100 7.1% 331,500 7.3% 284,100 6.6%

Professional and Business Services 706,600 15.5% 729,300 16.1% 698,600 16.2%

Educational and Health Services 516,500 11.4% 574,500 12.7% 653,200 15.2%

Leisure and Hospitality 367,700 8.1% 398,300 8.8% 391,100 9.1%

Other Services 190,800 4.2% 197,800 4.4% 190,600 4.4%

Government 558,000 12.3% 565,600 12.5% 559,100 13.0%

Total Non-Farm 4,547,700 100.0% 4,520,000 100.0% 4,305,200 100.0%

CHICAGO PMSA NON-AGRICULTURAL EMPLOYMENT BY INDUSTRY

*Preliminary Figures

Source: Bureau of Labor Statistics, Illinois Department of Employment Security

2006

As shown above, the local economy has contracted since 2001. The number of non-farm jobs in the Chicago area decreased from 4,547,700 in 2001 to 4,305,200 by December 2011, a -5.33%

reduction.

The Trade, Transportation and Utilities industry is the largest in terms of employment, followed by

Professional & Business Services, Educational and Health Services, and Government. While manufacturing was at one time the dominant employment category in the region, it has shown a slow,

steady decline over the past ten years. This is consistent with the trend throughout the nation.

As a percentage of total employment, Educational and Health Services have shown the largest growth at a 3.8% increase from their base in 2001. The Manufacturing sector had the largest decrease at a

negative -3.6%, from 13.1% of the employment base as of 2001 to its current level of 9.5% as of

December 2011.

Illinois, and primarily the Chicago area, is home to 40 Fortune 500 companies with employment at these major firms contributing to the stability of the local economy. The presence of such firms is also

indicative of the strength of the local support network and generally positive business climate in the

area. In 2001, Boeing Company relocated its headquarters from Seattle, Washington to Chicago.

Major private employers in the area include Wal-Mart Stores, Advocate Health Care System,

University of Chicago, Walgreen Co., AT&T, Inc., and UAL Corp, A more comprehensive list of major

employers is presented in the following table:

© 2012 CBRE, Inc.


14

Rank Company Employees1 U.S. Government 49,5732 Chicago Public Schools 40,8833 City of Chicago 35,2374 State of Illinois 35,7005 Cook County 23,0836 Wal-Mart Stores Inc. 21,3297 Advocate Health Care 14,8738 J.P. Morgan Chase & Co 13,6399 Walgreen Co. 13,12210 Abbott Laboratories 13,00011 United Continential Holdings 13,00012 AT&T Inc. 12,20013 Motorola Inc. 10,00014 American Airlines 9,76615 University of Illinois at Chicago 9,76616 Chicago Transit Authority 9,52017 University of Chicago 8,79118 Allstate Corp. 8,63219 Resurrection Health Care 8,20120 Archdiocese of Chciago 8,16921 Comcast Corp. 8,10022 Rush University Medical Center 8,09523 Jewel-Osco 8,00024 Northwestern University 7,82625 Bank of America N.A. 7,800

CHICAGO AREA LARGEST EMPLOYERS

Source: Crain’s Chicago Business 2011

This diversified labor pool of skilled workers helps to maintain a relatively strong level of employment in the Chicago area. As in most other major metropolitan areas, Chicago’s central county, Cook

County, has historically reported higher levels of unemployment than the outlying suburban areas.

This is no longer the case, based on the latest 2008 county unemployment rates as provided by the Illinois Department of Employment Security Labor Market Data.

In January 2011, Motorola, Inc. split into two independent companies, Motorola Mobility Holdings,

Inc. and Motorola Solutions, Inc. Motorola Solutions maintained operations at the Schaumburg

headquarters. Motorola Mobility, formerly the Mobile Devices division of Motorola, Inc. is now headquartered in Libertyville, Illinois. Together, the two companies employ some 10,000 personnel in

the Chicago area making it a major component of the workforce. The Schaumburg campus is

comprised of twelve buildings situated on 267.58 acres of land. These facilities were erected in 1976 and employ over 5,000 people. In May of 2011, the state of Illinois announced it will provide $100

million in tax credits to Motorola Mobility as part of a deal that will keep the company at its Libertyville

headquarters. This deal retains 3,000 jobs located at the headquarters and Motorola Mobility intends

to spend more than $500 million in research and development related to these jobs through 2014. In

© 2012 CBRE, Inc.


15

June of 2011 Motorola Solutions announced its intentions to add 400 jobs within the city of Chicago

by the end of 2012.

In August 2011, Google announced its plan to acquire Motorola Mobility for $12.5 billion. The

acquisition would give Google a large patent portfolio and handset-manufacturing component that

would help the company in its competition with Apple, Inc as well as enter into the cable TV box

industry. While Google has yet to lay out all of its plans, the company has indicated it will let Motorola Mobility run as an independent company. The deal is subject to regulatory approval and is

expected to close by the end 2011 or early 2012.

In addition to Motorola, GE Capital represents another significant contributor to the labor force that is adding jobs to the Chicago area. In May of 2011, GE Capital, the financial services arm of General

Electric, announced plans to expand operations in Chicago; a move that will create over 1,000 jobs

over the next three years.

In June of 2011, United Continental Holdings, Inc. announced it would bring 1,300 jobs to Chicago by the end of 2012. In October of 2010, United Airlines and Continental Airlines completed a

merger of the two airlines, resulting in the world’s largest air carrier being headquartered in Chicago.

In September of 2011, Seaton Corp., a Chicago-based staffing company announced it will add 400 jobs over the next year to its Chicago headquarters. Seaton is a privately held company that is known

for servicing large corporations such as Delta Airlines, Burger King, and Waste Management. The

400 new hires will bring its Chicago staff to 1,600.

In December of 2011, Sara Lee Corp. announced the company will return its headquarters to Chicago, five years after leaving Chicago for Downers Grove, IL. The new headquarters will occupy

most of the 270,000 square foot office building located at 400 South Jefferson Street, in the West

Loop. The building is situated near the Circle Interchange (junction between the Dan Ryan, Eisenhower and Kennedy expressways (Interstates 90/94 and 290)) as well as the commuter rail

stations. The move brings 500 jobs to Chicago.

In January of 2010, Ford announced that it would move the production of its popular Explorer model to its Chicago manufacturing facilities located at 130th Street and Torrence Avenue. Starting with

2011 model of the Ford Explorer the vehicle platform has been completely redesigned and Ford has

spent $180 million to retrofit the plant for its production; which comes in addition to the $400 million

the company spent to renovate the plant five years ago. In addition to physical improvements to the plant itself, Ford added 1,200 auto workers, effectively increasing its Chicago area workforce by

approximately 50%. Ford’s Chicago Heights parts stamping plant is also expected to benefit from the

move as it creates higher demand for production output in the area.

The following table provides a comparison of unemployment rates since 1997.

© 2012 CBRE, Inc.


16

YearCook

County (IL)DeKalb

County (IL)DuPage

County (IL)Grundy

County (IL)Kane

County (IL)Kendall

County (IL)Lake

County (IL)McHenry

County (IL)Will

County (IL)

Jasper County

(IN)

Lake County

(IN)

Newton County

(IN)

Porter County

(IN)

Kenosha County

(WI)

Chicago MSA

State of Illinois

U.S.

1997 5.3% 3.9% 3.1% 7.1% 4.5% 3.3% 3.4% 3.8% 4.7% 4.3% 4.3% 4.1% 2.8% 3.4% 4.7% 4.8% 4.7%

1998 5.0% 3.6% 2.8% 6.7% 4.1% 3.0% 3.5% 3.6% 4.3% 3.7% 3.9% 3.3% 2.6% 3.2% 4.4% 4.5% 4.4%

1999 5.0% 3.7% 2.9% 6.9% 4.1% 3.0% 3.2% 3.5% 4.3% 3.8% 4.0% 3.5% 2.9% 3.3% 4.4% 4.5% 4.4%

2000 4.8% 3.6% 3.3% 5.2% 4.3% 3.3% 3.7% 3.6% 4.1% 3.3% 3.6% 2.8% 2.7% 4.0% 4.3% 4.5% 4.3%

2001 6.1% 4.6% 4.4% 6.0% 5.3% 4.1% 4.4% 4.6% 4.9% 4.7% 4.8% 4.2% 3.8% 5.1% 5.5% 5.4% 5.5%

2002 7.4% 5.5% 5.5% 7.3% 6.5% 5.3% 5.4% 5.7% 6.1% 5.7% 6.4% 5.5% 5.0% 6.0% 6.7% 6.5% 6.7%

2003 7.4% 5.8% 5.6% 7.9% 6.7% 5.4% 5.7% 5.9% 6.3% 5.7% 6.1% 5.4% 5.1% 6.2% 6.8% 6.7% 6.8%

2004 6.8% 5.4% 5.0% 7.8% 6.0% 4.8% 5.3% 5.2% 5.9% 5.7% 6.3% 5.1% 4.8% 5.9% 6.2% 6.2% 6.2%

2005 6.5% 5.3% 4.7% 7.3% 5.7% 4.7% 4.5% 5.1% 5.5% 5.6% 6.1% 5.3% 4.7% 5.7% 5.9% 5.7% 5.9%

2006 4.7% 3.9% 3.4% 5.1% 4.3% 4.0% 4.2% 3.7% 4.3% 5.1% 5.8% 4.9% 4.4% 5.4% 4.4% 4.5% 4.6%

2007 5.1% 4.6% 3.8% 5.7% 4.8% 4.5% 5.0% 4.3% 4.7% 4.8% 5.2% 5.2% 3.9% 5.2% 4.9% 5.0% 5.0%2008 7.1% 7.4% 5.4% 9.4% 7.5% 7.5% 8.3% 6.9% 7.2% 8.7% 8.6% 8.8% 7.4% 6.7% 7.1% 7.4% 7.2%2009 10.8% 10.5% 8.6% 13.7% 11.2% 11.1% 11.6% 10.4% 11.0% 10.6% 10.2% 11.6% 8.9% 10.3% 10.6% 10.8% 10.0%2010 10.5% 9.7% 8.3% 12.4% 10.3% 9.8% 10.5% 9.6% 10.4% 10.3% 11.0% 11.0% 8.9% 10.8% 10.2% 10.3% 9.4%

Dec-11* 8.9% 8.2% 6.7% 12.0% 8.9% 8.1% 9.5% 8.3% 9.0% 9.3% 9.9% 9.7% 8.1% 9.1% 8.7% 8.8% 8.5%

*Denotes Preliminary Figure

Note: The 1997 through 2000 Chicago MSA figures include the six county SMSA as well as DeKalb, Kendall, and Grundy Counties.

Source: Illinois Department of Employment Security, Bureau of Labor Statistics

AVERAGE ANNUAL UNEMPLOYMENT RATES

Unemployment rates in the Chicago MSA began to rise as the economy began to slow in 2007. The

unemployment rate within the MSA has risen from 4.9% in 2007, to the current figure of 8.7% as of

December 2011.

In addition to being the center of commerce in the Midwest, Chicago is a world leader in the trading

of commodities, stock options and currency and interest rate futures. The city has four major

exchanges: the CME Group, the Chicago Board Options Exchange, the Mid-America Commodity

Exchange and the Chicago Stock Exchange. Also adding strength to the financial market is the Federal Reserve Bank and the region's 130 domestic and 70 foreign banks. Chicago's financial

services and products are exported nationally and internationally. Therefore, the area's financial

infrastructure is not wholly dependent upon activity in Chicago, which reinforces an already stable economy.

TRADE AND COMMERCE

Chicago is also home to four major exchanges (Chicago Mercantile Exchange, Chicago Board

Options Exchange, Mid-America Commodity Exchange and Midwest Stock Exchange) representing

over 80% of the world’s trade in commodities. The Chicago Board of Trade and Mercantile Exchange merged companies in July 2007, creating the largest derivatives market ever.

The Chicago Board of Trade is a leading futures/options exchange with more than 3,600 members

trading over 50 different products. The Chicago Mercantile Exchange is the largest futures exchange in the United States, and operates the largest futures clearing house in the world, while the CBOE is

the world’s largest options market. The Chicago Stock Exchange provides for the trading of over

3,500 NYSE, AMEX, NASDAQ and CHX-exclusive issues.

© 2012 CBRE, Inc.


17

EDUCATION

Chicago is home to fifteen major public and private universities including the highly regarded

Northwestern University and University of Chicago. Other major educational institutions include University of Illinois at Chicago, which has the largest local enrollment, as well as Loyola University

and DePaul University. These institutions offer a variety of undergraduate and graduate fields of

study. The total enrollment of these Chicago area universities is approximately 151,000 students.

Prominent MBA programs in the Chicago area include Northwestern University’s Kellogg School of Management, University of Chicago’s Graduate School of Business and DePaul University’s Kellstadt

Graduate School of Business.

While in the surrounding areas of Chicago there are a number of private liberal arts colleges and universities including North Central College, Wheaton College, Elmhurst College, North Park

University, Benedictine University and Lake Forest College. Additionally, many of the major universities

have established satellite campuses in the suburban areas. DePaul University has suburban campuses located in Naperville, Oak Forest, O’Hare and Rolling Meadows. Northern Illinois University has

suburban campuses in Hoffman Estates and Naperville.

The Chicago area also has an extensive community college system comprised of twelve two-year

colleges with a total enrollment of 145,000 students. Courses range from vocational training to classes in liberal arts, science, business and pre-professional studies. There are also seven City

Colleges of Chicago with an enrollment of over 65,000 students.

HEALTH CARE

Chicago hospitals are credited with being among the leading health care facilities in the country as well as some of the nation’s best teaching and children’s hospitals. Within the Chicago metropolitan

area, there are 121 hospitals with over 24,700 beds. The Chicago healthcare market has been

changing drastically in the past few years due to hospital system acquisitions, mergers, and

partnerships. In order to satisfy newly generated demand caused by an expanding population, Chicago’s primary hospital systems are expanding considerably; over $1 billion in new facilities have

opened since 2000 and an additional $2.5 billion in projects are currently underway.

© 2012 CBRE, Inc.


18

The two largest hospitals in the Chicago metropolitan area are Northwestern Memorial Hospital and

University of Chicago Medical Center. In addition to being the two largest in terms of net revenue, these two hospitals rank nationally as premiere health care institutions in the nation. The

Rehabilitation Institute of Chicago has been ranked number one, nationally, the rehabilitation

category by US News and World Report.

Northwestern Memorial Hospital is comprised of 745 beds and is the area’s largest hospital in terms of net patient revenue. The hospital is ranked nationally within thirteen specialties by US News &

World Reports including endocrinology, geriatric care, gynecology, heart & heart surgery, neurology &

neurosurgery, and rheumatology. Northwestern Memorial is part of the larger McGraw Medical Center which is a consortium of urban, suburban, specialized, and general hospitals and

Northwestern University. In addition to Northwestern Memorial, member hospitals include the

Northwestern University Feinberg School of Medicine, Evanston Northwestern Healthcare, Children’s

Memorial Hospital, Rehabilitation Institute of Chicago, and the Jesse Brown VA Medical Center. The Northwestern University Feinberg School of Medicine is ranked as the 20th best medical school in the

nation, while Children’s Memorial is ranked as the 18th best children’s hospital in terms of general

pediatrics.

The University of Chicago Medical Center is a 529-bed hospital facility and has ranked 17th overall in

the nation by US News & World Reports. The U of C Medical Center was also credited as being

ranked nationally within eleven adult specialties including cancer, endocrinology, gastrointestinal

disorders, heart & heart surgery, neurology & neurosurgery, and neonatal care. Additionally, the U of C Medical Center is ranked nationally in nine pediatric specialties. The University of Chicago Pritzker

School of Medicine was also ranked as the 16th best medical school in the nation. According to US

News & World Reports, this hospital was among 140 facilities—fewer than 3 percent of the 4,825 analyzed for the latest Best Hospitals rankings—to be ranked in even one of the 16 specialties.

© 2012 CBRE, Inc.


19

Located on Chicago’s Near West Side, the Illinois Medical District (IMD) is the nation’s largest urban medical district. Founded in 1941, the IMD is comprised of 560 acres, houses 2,200 hospital beds,

has 20,000 employees, and receives some 75,000 visitors daily. Annually the IMD generates

approximately $220 million in research, $3.3 billion in economic activity, 50,000 direct and indirect jobs, $80 million in state taxes, $34 million in local taxes, and $2 billion in direct and indirect

employment compensation. The district also houses the Chicago Technology Park and provides

incubation for approximately 30 emerging technology-based companies. Member institutions of the

IMD include Chicago Department of Public Health, Chicago Lighthouse for People Who Are Blind or Visually Impaired, Hektoen Institute, Illinois State Police Forensic Science Center at Chicago, Jesse

Brown VA Medical Center, John H. Stroger, Jr. Hospital of Cook County, Rush University Medical

Center, Ruth M. Rothstein CORE Center, University of Illinois Medical Center at Chicago, and the West Side Center for Disease Control.

CULTURAL AND RECREATIONAL

As one of the nation's largest cities, Chicago offers a wide variety of cultural and recreational

opportunities. Located along the shores of Lake Michigan near downtown Chicago are a variety of famous museums, parks and travel destinations. With an estimated 8,305,000 annual visitors, Navy

Pier is the largest attraction in the Chicago area. Additional tourist attractions in the Chicago MSA

include the Lincoln Park Zoo, Chicago Trolley Company, Six Flags Great America, Millennium Park,

Brookfield Zoo, Willis Tower Skydeck and Hancock Observatory. The John G. Shedd Aquarium, Art Institute of Chicago, Museum of Science and Industry, and Field Museum are the largest cultural

destinations within the MSA. Stage theaters, opera companies and symphony orchestras are also well

represented in the city.

© 2012 CBRE, Inc.


20

For sports enthusiasts, Chicago offers major professional sports teams within each league who play in

stadiums such as Wrigley Field and the recently renovated Soldier Field, as well as more recently constructed stadiums such as the United Center, Toyota Park (Bridgeview, Illinois), Sears Center

(Hoffman Estates, Illinois) and U.S. Cellular Field (formerly known as Comiskey Park).

The City of Chicago is home to over 200 theater companies, including the legendary Second City

(Members include: John Belushi, Steve Carell, Bill Murray, Stephen Colbert, Dan Akroyd, Mike Mires, Chris Farley, Gilda Radner, Joan Rivers, Martin Short, John Candy), Steppenwolf (Members include:

Gary Sinise, Joan Allen, John Malkovich), Chicago Shakespeare Theater and Broadway in Chicago

(which attracts an annual audience of nearly 2 million people). It is the only city with 4 Tony Award-winning regional theater companies. Furthermore, the city is home to the Gene Siskel Film Center, the

Chicago Symphony, Lyric Opera and the Joffrey Ballet rounding out the full arts stage experience.

Large annual festivals in the Chicago area include the Taste of Chicago and Chicago Air and Water

Show, with 3.35 and 3.10 million visitors, respectively. Additional festivals of note include the Chicago Blues Festival, Country Music Festival, Gospel Music Festival, Chicago Jazz Festival, Celtic

Music Festival, Viva Latin Music Festival and Outdoor Film Festival.

CONCLUSION

In summary, the interaction of the environmental, social, and economic forces has contributed to the diversified economic base of Chicago. Job growth is considered the primary force that drives housing

demand, retail sales and commercial construction. The recovery of the metro Chicago economy is

expected to continue in the coming quarters though it will lag behind the national pace of expansion. The area will continue to capitalize on its core strengths: its business and professional services,

transportation-distribution and tourism/convention industries. Generally, the area is expected to

maintain a relatively stable growth pattern in the foreseeable future.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | NEIGHBORHOOD ANALYSIS

21

NEIGHBORHOOD ANALYSIS

LOCATION

The subject is located in the “Off Avenue” and Gold Coast neighborhoods of Chicago’s north side,

west of North Michigan Avenue and within a mile of the Chicago Central Business District. This

exclusive Gold Coast neighborhood begins near Oak Street Beach and follows Lake Shore Drive to North Avenue, extending west State Street. It is home to some of Chicago’s most expensive

residences, finest restaurants and luxury shopping areas.

Just south of the Gold Coast, and an extension of both the Gold Coast and the North Michigan Avenue neighborhoods, is the River North neighborhood. The River North area is considered an

entertainment district, with increasing numbers of office, residential and lodging uses. River North was

historically considered the gallery district with the largest concentration of art galleries outside of

Manhattan, New York.

Just north of the Gold Coast neighborhood is Old Town, which extends to the Lincoln Park

neighborhood at North Avenue. The main streets of Old Town feature storefronts with residential

living above, while the interior streets is the starting point for Chicago’s well known three flats and row-style condo/townhome housing.

The subject’s Gold Coast neighborhood is influenced by the North Michigan Avenue retail corridor

which links the shopping district with the restaurants, entertainment and office uses concentrated in

River North.

BOUNDARIES

The neighborhood boundaries are detailed as follows:

© 2012 CBRE, Inc.


22

North: Division Street South: Chicago River East: Lake Michigan West: State Street

LAND USE

The immediate area consists primarily of commercial uses featuring street-level retail, restaurants/bars and a variety of low-, mid- and high-rise residential living. This area has established itself as an

entertainment/restaurant district as well as an upscale or “high-street” shopping district. Rush and

Division Streets have earned a reputation for having some of Chicago’s best dining and entertainment

venues, attracting large numbers of patrons for Chicago’s nightlife. Gibson’s, Tavern on Rush and Carmine’s are located along Rush Street, while a large selection of clubs, pubs and sports bars are

located along Division Street, as well as Rush Street. The subject (Barneys New York) anchors the

exclusive “high-street” retail corridor which features such national and internal brands as Prada, Hermes, Marc Jacobs, Ted Baker, Penguin, Ugg and lululemon, among others.

The North Michigan Avenue corridor, often referred to as the Magnificent Mile, is the premier

shopping district in the region, although there has been a measurable shift to the Rush and Oak

Corridor as previously referenced. The North Michigan Avenue corridor is located two blocks east of the subject property and contains some of the most favored retailer in the nation, such as Neiman

Marcus, Bloomingdale’s, Saks Fifth Avenue, Nordstrom’s and Macy’s. Vertical shopping centers on

Michigan Avenue include The Shops at North Bridge, Water Tower Place, and 900 North Michigan

Shops. Big-box developments include Tiffany, Polo Ralph Lauren and Banana Republic, among

others. Over half of the retail space along the avenue is located in the vertical shopping centers,

which comprises one of the largest collections of such centers in the nation. Concentrated along Michigan Avenue, Oak Street, and Rush Street are some of the world’s most prestigious boutiques

and international brands such as the previously mentioned Hermes, Prada, Barneys New York

(subject), Yves Saint Laurent, Louis Vuitton, Cartier, Salvador Ferragamo and Burberry. Burberry is in

the process of redeveloping their site to include a newly designed, 5-level flagship store from which to promote their iconic brand. This property is located at the northeast corner of Michigan Avenue and

Ontario.

Retail has expanded “off the avenue” due to the lack of viable space and expansion of the residential base into the Streeterville, River North, and Old Town neighborhoods. Popular retail streets include

Walton Street and the subject’s Rush and Oak Streets previously discussed. Retailers have continued

to move west along these streets. Entertainment related and neighborhood retail found in the

Streeterville area includes the River East Center and Navy Pier developments. Big box and home goods related retailers are concentrating in the River North area. Each off avenue retail location

differs considerably in character, with some targeting the smaller, more “upscale” boutiques and

others targeted towards larger venues.

© 2012 CBRE, Inc.


23

Also located within the North Michigan Avenue neighborhood are some of the city’s premier hotels,

including the Ritz-Carlton, Four Seasons, The Peninsula, Inter-Continental, and Park Hyatt. Additionally, this area includes the most expensive and desirable high-rise condominium apartments

in the city, including Water Tower Place, One Magnificent Mile, John Hancock Building, 900 North

Michigan Avenue, and Trump Tower along the Chicago River adjacent to the Wrigley Building. The

Elysian, a luxury hotel and residence featuring 188 hotel suits and 52 condos is located just south of the subject at Rush and Walton Streets.

According to Claritas, Inc., the majority of residential properties were developed before 1940, and

then in the 1960s and 1970s. The 2011 median owner-occupied housing values within the one and five-mile radii are $352,544 and $321,658; down -1.5% and -.9% from 2010 medians, respectively.

GROWTH PATTERNS

The North Michigan Avenue corridor is geographically positioned northeast of the Loop and

distinguishes itself by its retail orientation and image. It has a retail inventory of over three million square feet and is the largest of all the downtown retail submarkets.

Street level retail directly on the avenue is often unavailable and as such, many retailers have located

“off the Avenue”, effectively expanding the retail district.

Within the subject’s immediate neighborhood, the subject property is an example of that movement and growth. The subject represents the razing and subsequent redevelopment of an existing property

for the expansion and relocation of an existing retailer.

At the northwest corner of Walton and Rush Streets, the former Gino’s East Pizza restaurant was razed and a new retail property has been developed that is occupied by Lululemon. This property was under

contract as of the effective appraisal date, with the sale closing on April 16, 2012. This represents a

“high water mark” for Chicago retail, having sold for $20.7M or over $7000/SF.

The retail development has followed the expanding residential base within a significant number of new condo buildings.

ACCESS

The primary roadways within the neighborhood are North Michigan Avenue and State Street. North

Michigan Avenue provides north-south linkage between Lake Shore Drive and the Central Business District (just south of the Chicago River). North Michigan Avenue benefits from the downtown

Chicago transportation network. State Street also traverses the neighborhood north-south. Chicago

Avenue and Division Street are the major east-west arteries within the immediate area.

There are five interstate highways that lead directly to downtown Chicago as well as eight suburban trains, six transit authority train lines and numerous public bus routes. Interstates 90/94 are the most

© 2012 CBRE, Inc.


24

convenient from North Michigan Avenue via Ohio and Ontario Streets. These roadways provide east-

west access through the neighborhood. Ohio Street is a one-way, three-lane, eastbound street providing access from the Kennedy Expressway (Interstate 90/94) via the Ohio feeder ramp,

approximately five blocks west of the subject. Ontario Street is a three-lane, one-way, westbound

route also connecting with the Kennedy Expressway. Both roadways are major feeder roads within the

neighborhood.

The neighborhood is also served by the “L” (elevated commuter train) system with a Red Line stop at

Chicago and State Street (although in this portion of the city, these are underground subway lines).

The “L” provides access to Chicago’s “Loop” and to all others areas of the city. Cabs and public buses also serve the area.

DEMOGRAPHICS

Selected neighborhood demographics in a one-, three- and five-mile radius from the subject are

shown in the following table:

SELECTED NEIGHBORHOOD DEMOGRAPHICS1 East Oak StreetChicago, ILPopulation

2016 Population 93,164 344,187 806,7572011 Population 89,225 330,731 791,9922000 Population 75,067 280,406 743,3691990 Population 65,469 257,411 724,764Annual Growth 2011 - 2016 0.87% 0.80% 0.37%Annual Growth 2000 - 2011 1.58% 1.51% 0.58%Annual Growth 1990 - 2000 1.38% 0.86% 0.25%

Households2016 Households 57,163 186,465 364,345 2011 Households 54,738 179,430 356,144 2000 Households 47,268 154,331 331,823 1990 Households 39,435 132,456 301,720 Annual Growth 2011 - 2016 0.87% 0.77% 0.46%Annual Growth 2000 - 2011 1.34% 1.38% 0.65%Annual Growth 1990 - 2000 1.83% 1.54% 0.96%

Income2011 Median HH Inc $67,501 $66,306 $53,1562011 Estimated Average Household Income $106,256 $100,546 $81,6892011 Estimated Per Capita Income $65,664 $55,064 $37,144

Age 25+ College Graduates - 2010 53,208 176,617 284,423 Age 25+ Percent College Graduates - 2011 61.8% 59.2% 44.3%

Source: CBRE

1 Mile Radius

3 Mile Radius

5 Mile Radius

CONCLUSION

The subject property is located within the shopping, dining and entertainment district of the Gold

Coast neighborhood just northwest of the world-renowned “high-street” North Michigan Avenue retail corridor. The subject anchors the upscale Oak and Rush retail district and it is situated at the

© 2012 CBRE, Inc.


25

prominent corner of the intersection of Rush and Oak Streets. The property benefits from its access to

Chicago’s major commercial/retail districts, the existing high-end residential base, and the prominent entertainment district that has developed/expanded at and near Rush and Division Streets. We

believe demand for the subject property will remain strong and it will be a highly desirable, viable and

irreplaceable retail location into the foreseeable future.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | MARKET ANALYSIS

26

MARKET ANALYSIS

INTRODUCTION

The market analysis forms a basis for assessing market area boundaries, supply and demand factors,

and indications of financial feasibility. Primary data sources used for this analysis includes Real Capital Analytics, PwC Investor Survey, CBRE Market Research, and various others (as identified).

OVERALL RETAIL INVESTMENT TRENDS

According to Real Capital Analytics 2011 Year in Review Report, retail property sales totaled $42.2B

in 2011, a 91% increase from 2010. Transactions involved over 3,400 properties, a 67% increase over 2010. Sales of strip shopping centers totaled $25.0b and experienced more cap rate

compression than most other property types in 2011. Sales of regional malls and single tenant

properties were $17.5b in 2011 including a flurry of large regional mall transactions in the second

half of the year. Institutional and REIT demand for large anchored strip centers has caused a divide in prices between larger and smaller properties. Grocery-anchored centers are at the top of the list

and have recorded the sharpest decline in cap rates recently, for big and small properties alike.

Volume gains were assisted by an increasing appetite for retail portfolios. Portfolio transactions totaled $17.1b in 2011 to account for 40% of all volume. The $9.0b sale of the Centro centers as well as

interests in large regional mall portfolios were the biggest deals of the year. Although outstanding

distress for retail properties grew by 6% over the year, lenders made good progress in reducing that

balance by almost $4.0b in the second half of 2011. Blackstone was the top buyer of retail

properties in 2011, followed by non-traded REITs Cole and Inland and pension fund investors CPPIB

and TIAA-CREF. The next five largest buyers were all listed REITs.

© 2012 CBRE, Inc.


27

Retail outperformed the other property types in Q4 by posting the largest year-over-year gain in trans-

action volume. Totaling $10.9b in Q4, retail sales were up 32%. A flurry of transactions involving major regional malls helped boost volume. Anchored shopping centers have clearly become the

target of institutions and equity funds. Sales of strip centers were up 35% in Q4 and cap rates fell by

over 25 bps nationally. Cap rates on grocery-anchored centers dropped even further. Yields on other

property types, primarily single tenant properties, were unchanged in Q4. A pricing divide has opened between newer and older net leased properties.

Urban properties continue to trade at aggressive cap rates and record pricing in Manhattan has pro-

pelled the national average price per square foot to pre-peak levels. Closed cap rates on strip centers have hung tightly to an 8.0% average for over a year, but differences are evident among niches. Gro-

cery anchored strips have emerged as the clear favorite, with cap rates dropping by 50 bps this year.

Conversely, cap rates on other anchored centers and for unanchored centers have drifted up recently.

Yields within market tiers have moved little. Yields on centers in secondary and tertiary markets hover around 8.5% while those in primary markets have remained below 7.5% since the end of 2010, or

twice the historical 50 bps spread. Secondary-market caps have traditionally been more closely

aligned with those in primary markets. Yields on mall and other retail formats in secondary markets are gaining ground, as cap rates in secondary markets fell more steeply in Q3 than those in primary

markets. Yields in tertiary markets ticked up slightly. The clear winner in this subtype is urban/storefront

properties where cap rates fell another 25 bps in Q3. Cap rates on single-tenant retail yields have

flattened out overall although a decline in secondary markets was noted.

© 2012 CBRE, Inc.


28

PWC INVESTOR SURVEY

The following table provides a summary of retail capitalization rates, as reported in the

PriceWaterhouseCoopers’ PwC Investor Survey.

Low High Average

% Change in Average

Rate Low High Average

% Change in Average

Rate Low High Average

% Change in Average

Rate

1Q 2003 7.25% 10.00% 8.73% NAV 8.50% 10.00% 9.35% NAV 8.50% 13.00% 10.84% NAV2Q 2003 7.25% 10.00% 8.63% -1.1% 8.50% 10.00% 9.77% 4.5% 7.00% 11.50% 9.33% -13.9%3Q 2003 6.50% 9.50% 8.39% -2.8% 8.00% 10.00% 9.23% -5.5% 7.00% 11.00% 9.06% -2.9%4Q 2003 6.50% 9.50% 8.11% -3.3% 8.00% 10.00% 9.15% -0.9% 7.00% 11.00% 8.84% -2.4%1Q 2004 6.50% 9.50% 8.11% 0.0% 8.00% 10.00% 9.02% -1.4% 7.00% 11.00% 8.76% -0.9%2Q 2004 5.50% 9.50% 7.96% -1.8% 8.00% 9.50% 8.88% -1.6% 6.50% 11.00% 8.50% -3.0%3Q 2004 5.50% 9.50% 7.57% -4.9% 8.00% 9.50% 8.67% -2.4% 6.25% 10.50% 8.39% -1.3%4Q 2004 8.50% 9.50% 7.40% -2.2% 7.00% 9.50% 8.17% -5.8% 6.25% 9.50% 8.10% -3.5%1Q 2005 5.50% 9.50% 7.33% -0.9% 6.50% 9.50% 8.04% -1.6% 6.25% 9.50% 7.86% -3.0%2Q 2005 5.50% 9.50% 7.17% -2.2% 6.00% 9.50% 8.00% -0.5% 6.25% 9.50% 7.72% -1.8%3Q 2005 5.50% 9.50% 7.17% 0.0% 6.00% 9.50% 7.82% -2.3% 6.00% 9.00% 7.45% -3.5%4Q 2005 5.50% 9.50% 7.12% -0.7% 5.50% 9.00% 7.36% -5.9% 6.00% 9.00% 7.42% -0.4%1Q 2006 5.50% 9.50% 7.13% 0.1% 5.50% 9.00% 7.36% 0.0% 5.80% 9.00% 7.36% -0.8%2Q 2006 5.00% 9.50% 7.09% -0.6% 5.50% 9.00% 7.36% 0.0% 5.80% 9.00% 7.36% 0.0%3Q 2006 5.00% 9.50% 7.02% -1.0% 5.50% 9.00% 7.32% -0.5% 5.80% 9.00% 7.40% 0.5%4Q 2006 5.00% 9.50% 6.86% -2.3% 5.50% 9.00% 7.14% -2.5% 5.80% 9.00% 7.27% -1.8%1Q 2007 5.00% 9.50% 6.89% 0.4% 5.50% 9.00% 7.28% 2.0% 5.80% 9.00% 7.38% 1.5%2Q 2007 5.00% 9.50% 6.88% -0.1% 5.00% 9.00% 7.06% -3.0% 5.80% 9.00% 7.35% -0.4%3Q 2007 5.00% 9.50% 6.86% -0.3% 5.00% 9.00% 7.00% -0.8% 5.70% 9.00% 7.20% -2.0%4Q 2007 5.00% 9.50% 6.68% -2.6% 5.50% 9.00% 7.13% 1.9% 5.80% 9.00% 7.24% 0.6%1Q 2008 5.00% 9.50% 6.68% 0.0% 5.75% 9.00% 7.13% 0.0% 5.80% 9.00% 7.28% 0.6%2Q 2008 5.00% 9.50% 6.71% 0.5% 5.75% 9.00% 7.17% 0.6% 5.80% 9.00% 7.32% 0.5%3Q 2008 5.00% 9.50% 6.78% 1.0% 5.75% 9.00% 7.17% 0.0% 5.80% 9.00% 7.33% 0.1%4Q 2008 5.00% 9.50% 6.96% 2.7% 6.00% 10.00% 7.57% 5.6% 5.80% 9.00% 7.49% 2.2%1Q 2009 5.00% 9.50% 6.99% 0.4% 6.50% 10.00% 7.98% 5.4% 5.80% 10.00% 7.63% 1.9%2Q 2009 5.00% 11.00% 7.79% 11.4% 6.00% 10.00% 8.04% 0.8% 6.50% 10.00% 7.91% 3.7%3Q 2009 5.00% 11.00% 7.98% 2.4% 7.50% 10.00% 8.63% 7.3% 7.50% 11.00% 8.41% 6.3%4Q 2009 5.00% 11.00% 8.06% 1.0% 7.50% 10.00% 8.60% -0.3% 7.25% 11.00% 8.53% 1.4%1Q 2010 5.00% 12.00% 8.34% 3.5% 7.50% 10.00% 8.55% -0.6% 7.00% 11.40% 8.49% -0.5%2Q 2010 5.00% 10.50% 7.93% -4.9% 7.50% 10.00% 8.70% 1.8% 7.00% 11.40% 8.38% -1.3%3Q 2010 5.00% 10.50% 7.81% -1.5% 7.50% 10.00% 8.38% -3.7% 7.00% 11.40% 8.09% -3.5%4Q 2010 5.00% 10.50% 7.00% -10.4% 7.00% 10.00% 8.08% -3.6% 5.50% 9.50% 7.63% -5.7%1Q 2011 5.00% 10.50% 7.58% 8.3% 6.00% 9.50% 7.80% -3.5% 5.50% 9.50% 7.40% -3.0%2Q 2011 5.00% 11.00% 7.48% -1.3% 6.00% 9.50% 7.48% -4.1% 5.50% 9.50% 7.33% -0.9%3Q 2011 4.75% 11.00% 7.50% 0.3% 6.00% 9.50% 7.50% 0.3% 5.50% 9.50% 7.20% -1.8%4Q 2011 4.75% 10.50% 7.23% -3.6% 6.25% 9.00% 7.35% -2.0% 5.00% 9.50% 7.16% -0.6%

Source: PriceWaterhouseCoopers Korpacz

RETAIL OVERALL CAPITALIZATION RATE SUMMARYRegional Malls Power Centers Strip Centers

As illustrated in the table above, for the Fourth Quarter 2011 the average capitalization rate for Regional Malls, Power Centers and strip centers all decreased slightly. Similarly, the required discount

rates and terminal capitalization rates which increased in 2009 as a result of the credit crunch and

economic recession, coupled with declining consumer confidence are also reversing itself with the all

asset classes exhibiting lower average overall rates over the quarter. The credit markets have softened and there is more liquidity in the market for core assets and this is filtering down to lower required

rates of return. Challenged properties, however, will continue to exhibit longer marketing period

without significant discount to compensate for the risk associated with lease up and near term tenant rolls.

© 2012 CBRE, Inc.


29

CHICAGO RETAIL MARKET OVERVIEW

Market statistics for the Chicago area and the twelve submarkets are shown in the following table.

The subject property is located within the North West Suburbs submarket.

As the above table shows, the Chicago MSA has grown 45.5% since 1997. The City North

submarket, with roughly 7.75M million square feet, has expanded 52% over the same time frame. The largest growth in inventory has been experienced in the fringe communities of the region, such as

the Far Southwest Suburbs, Kane County and Far Northwest Suburbs submarkets. These areas were

experiencing dramatic housing development fueled by the migration of people to the region as well as the relocation of residents within the Chicago MSA to the outer boundaries.

Vacancy

The following table details retail vacancy rates in Chicago’s Metropolitan Area and the City North

submarket since 2005.

Submarket Total Inventory 1997 Inventory % Change Vacant Vacancy

Rate Net Base Rent

($/SF)

Far N.W. Suburbs (1) 12,984,828 5,744,648 126.0% 1,071,957 8.26% $16.99 N.W. Suburbs (2) 15,272,376 13,095,154 16.6% 1,647,017 10.78% $20.71 Far North Suburbs (3) 8,350,901 5,945,543 40.5% 711,649 8.52% $16.75 North Suburbs (4) 9,830,624 6,133,896 60.3% 637,742 6.49% $20.46 Far West Suburbs (5) 21,724,807 17,770,283 22.3% 2,407,771 11.08% $18.73 West Suburbs (6) 7,890,112 7,749,493 1.8% 392,524 4.97% $17.81 City North (7) 7,749,291 5,086,591 52.3% 452,897 5.84% $20.49 City South (8) 5,750,019 3,360,019 71.1% 428,514 7.45% $21.22 Far S.W. Suburbs (9) 11,061,232 3,495,818 216.4% 694,940 6.28% $16.65 S.W. Suburbs (10) 8,509,366 7,537,329 12.9% 696,717 8.19% $16.57 South Suburbs (11) 6,977,230 5,997,477 16.3% 1,278,365 18.32% $13.07 Kane County (14) 10,878,034 5,357,419 103.0% 1,348,475 12.40% $16.06

Chicago Metro Area 126,978,820 87,273,670 45.5% 11,768,568 9.27% $16.67

Source: CBRE’s MarketView Chicago Retail Report, 1Q2012

CHICAGO METRO RETAIL MARKET SUMMARY

© 2012 CBRE, Inc.


30

HISTORICAL RETAIL VACANCYChicago MSA City North

Period Overall Overall

2005 7.60% 4.20%2006 7.21% 4.06%2007 7.89% 4.89%2008 10.20% 6.70%2009 11.56% 6.53%2010 10.80% 8.00%2011 9.45% 6.53%

1Q2012 9.27% 5.84%


As of the First Quarter 2012, vacancy rates within the Chicago area submarkets range between 5.0% in the West Suburbs submarket and 18% in the South Suburbs submarket. The metro area’s overall

vacancy rate is 9.27%, which is down 18 basis points over the 2011 figure. The subject’s City North

submarket has a vacancy rate of 5.84%, which is well below the overall market rate and 69 basis points down from the previous quarter.

Rental Rates

The following table illustrates the change in base rent in the Chicago area and the City North

submarket.

HISTORICAL RETAIL BASE RENTS

Chicago MSA City NorthPeriod Overall Overall2005 $15.58 $22.23 2006 $17.18 $26.84 2007 $17.84 $28.14 2008 $16.63 $26.81 2009 $15.81 $25.40 2010 $15.30 $27.02 2011 $16.34 $22.31

1Q2012 $16.67 $20.49


After a spike in 2007, the average retail rental rate in the Chicago MSA has steadily decreased. However, in 2011, there have been moderate increases in the average base rental rate. Rental rates

are anticipated to increase over the near term as existing inventory is absorbed and construction

activity remains constrained.

NORTH MICHIGAN AVENUE RETAIL MARKET

The CBRE North Michigan Avenue Retail Vacancy Survey is the primary data source for the retail

statistics for this niche market. The report is published once per year and as of the date of appraisal,

the most recent report was published in June 2011. The survey is limited to the buildings with North

© 2012 CBRE, Inc.


31

Michigan Avenue frontage within the area bound by Oak Street and East Lake Shore Drive on the

north and the Chicago River on the south.

According to the study, the Magnificent Mile has emerged from the recession and is currently

experiencing the lowest vacancy rate in over 7 years. North Michigan Avenue’s success is partially

attributed to the arrival of off-price stores and discount chains that are moving into large swaths of

space, some of it empty for years. These included the arrival of off-price stores Nordstrom Rack and TJX's HomeGoods, combined with the 2009 openings of fast-fashion clothing store Zara and

electronics giant Best Buy, and retailers such as Top Shop and All Saints helped lift the Avenue to its

best performance since 2001.

According to WSL Strategic Retail, a New York-based consumer behavior research firm, the

Magnificent Mile, in order to survive, has to reflect the shopper's mindset. The vacancy rate on North

Michigan Avenue dropped to 3.7% for the year ended May 31, 2011, its lowest level since 2003,

when it was 3.1%. The vacancy rate soared to 7.2% in 2009 and 6.3% in 2008 - the two worst years since the early 1990s recession.

At the same time, the average asking rent rose 53%, to $127.42 per square foot, a leap from $83.26

in 2010 and $69.35 in 2008 and the highest rate since $113.68 in 2002, but lower than the all-time high of $128.42 reported in 2001.

"We're starting to see these big blocks of space that were among the first victims of the recession being

absorbed back into the retail inventory," said Bruce Kaplan, senior vice president of brokerage services

at CBRE in Chicago and author of the report. "It speaks to the underlying strength of the street."

Even amid the recession, Michigan Avenue did substantially better than the rest of the nation. The

national retail vacancy rate was 12.5% in the first quarter of 2010, compared with 12.1% in the first

quarter of 2009.

The Avenue's prominence keeps Chicago in the top 15 of the world's priciest shopping destinations

and among the top three in the U.S., behind New York and Los Angeles, according to a separate

CBRE report released last month - another sign that the famous shopping street is holding its own as a destination for merchants and shoppers.

In New York, the most expensive shopping location in the world, prime rent averages $1,725 per

square foot, according to CBRE. In Los Angeles, which ranks No. 12, average prime rent is $500 per

square foot. Chicago comes in 14th, with $480 per square foot.

North Michigan Avenue's luxury status began to change in the 1990s when Gap set up shop. Soon

after, the “Mag Mile” became the “Mall Mile”, populated with specialty stores common to malls such

as The Limited, Banana Republic and Victoria's Secret. The same transformation happened on other

© 2012 CBRE, Inc.


32

famous shopping streets from Fifth Avenue in New York to the Champs-Elysees in Paris, where

international names like Disney, Gap and H&M go to build their brands.

An estimated 30,000 to 40,000 people walked some portion of Chicago's mile-long stretch of stores

on a busy Saturday, according to the most recent information available from the Greater North

Michigan Avenue Association. About two-thirds of them are tourists.

Those statistics are enough to entice big chains to the Magnificent Mile with showcase stores. And the chains that are expanding these days are more often off-price outlets and discount retailers, although

the Avenue and “off Avenue” continue to attract high-end fashion retailers and flagship stores of

iconic brands.

The world's most prominent shopping streets reflect how consumers shop, according to WSL's Corlett.

And given that the economic downturn took a toll on luxury retailers, it is no surprise that discount

chains such as Forever 21 and Payless ShoeSource are as at home on North Michigan Avenue as

Tiffany, Burberry, Louis Vuitton and Chanel. Indeed, one out of three affluent consumers say that while they have money to spend, they don't want to spend as much as they used to, according to WSL

Strategic Retail's 2010 report on how Americans shops.

© 2012 CBRE, Inc.


33

SUBJECT TRENDS AND PROJECTIONS

Occupancy

Occupancy rate is the relationship between the actual income received from a property and the

income that would be received if the entire space were occupied. Consequently, the occupancy rate

is a product of both (1) the relationship between the amount of occupied space in a building or market (physical) and (2) the relationship between the contract rent for the occupied building or

market space and the total rent estimated for all space in the building or market (economic).

Subject’s Historical Trends

The subject is 100% occupied by Barneys New York and Citibank over long-term leases extending

until July 2024 and January 2019, respectively. Both tenants took occupancy at the completion of the property in 2009

Conclusion

Given the quality of the tenants and the long-term nature of the leases, we have not applied a

vacancy or collection loss. This is similar to the methodology used in deriving capitalization rates for

comparable properties in the market, and market participants do not typically apply vacancy and

© 2012 CBRE, Inc.


34

credit loss when examining net leased investments similar to the subject. Any credit risk is implied in

the selection of the overall capitalization rate.

Tenant Analysis

The subject is considered a Class A retail property. The property's recent completion date and long-term tenant commitment by Barneys New York and Citibank are both considered positive aspects of

the asset. The subject’s tenants are summarized below.

Barneys New York

Barneys New York is a luxury department store chain that sells designer apparel for men, women, and

children; shoes; accessories; and home furnishings. It operates more than 40 locations including about 10 full-size Barneys New York flagship stores in New York City, Beverly Hills, Boston, Chicago

(subject), and other major cities; some 20 smaller Barneys Co-Op shops; and about a dozen outlet

stores. Founded in 1923 by Barney Pressman with money he raised from pawning his wife's engagement ring. Barneys sold exclusively men's apparel until the 1970s when it added women's

wear. In late 2004 the Pressman family sold off it’s less than 2% remaining ownership when Barneys

was sold to Jones Apparel Group for about $400 million. In 2009 Jones Apparel sold the company to Istithmar World (an affiliate of Istithmar PJSC, an investment firm owned by the Dubai government) for

$945 million.

After a tough couple of years for luxury retailers, Barneys has a new leader and is looking to recover.

After more than two years without a CEO, in August 2010 Barneys finally hired luxury retail veteran Mark Lee. Lee succeeded Howard Socol who resigned in 2008, reportedly over a disagreement with

Barneys owners about plans for international expansion. (In the interim the retailer was run by a

committee of seven executive vice presidents.) Lee, who previously served as CEO of Gucci Group and Yves Saint Laurent, joins Barneys as sales of luxury goods are beginning show signs of life after a

prolonged period of weakness. However, he will have to wrestle with a heavy debt load incurred when

Istithmar bought Barneys.

In late 2010 Lee shook up Barneys' creative team, with the departure of two fashion executives (who together had logged nearly 40 years with the business) and the appointment of another Gucci Group

alum. The shakeup is seen as a signal that Lee is looking to broaden Barneys' appeal beyond the New

York fashion scene by catering to more mainstream tastes. Also, in February 2011, Lee announced that Barneys' board of directors has approved the largest renovation budget for existing stores that

Barneys has seen in years, as well as an overhaul of its website.

Barneys store count has grown in recent years. The luxury retailer continued to build big flagship

stores (measuring 50,000 to 80,000 square feet) in leading US cities despite the sour economic climate. New locations include the opening of its ninth flagship store in Scottsdale, Arizona in fall

2009. In addition to flagship shops, the firm has also focused on opening Barneys Co-Op stores,

© 2012 CBRE, Inc.


35

which cater to trendy, younger customers. Barneys plans to open about four Co-Op stores a year.

Also, Dubai-based Istithmar is exploring opening Barneys stores closer to its home in the Middle East.

The decline in Barneys fortunes, brought on by the foundering economy, in the aftermath of Istithmar's

2007 purchase led to rumors that the Dubai investment firm would try and sell the company.

Istithmar, which faced a huge debt deadline in December 2009, got a lifeline of sorts when the

supermarket magnate Ron Burkle became a significant investor in the business through his Yucaipa Companies. In early 2010 Burkle was reported to be looking to add to his holdings by buying a

controlling stake in Barneys.

In February 2012, it was reported that Barneys New York had hired restructuring advisers (Kirkland & Ellis) to assist the retailer with $200M in debt that matures in September 2012. “The hiring of these

advisers does not necessarily presage any sort of bankruptcy filing, since the company may be able to

reach agreements with its small group of lenders and debtholders, including Citigroup, Wells Fargo,

Perry Capital and Yucaipa Companies.

Barneys New York is actively engaged in discussions with the company’s small group of lenders to

improve its balance sheet and further position Barneys New York for sustainable, long-term growth

and success”, a company representative said in a statement, as reported by The New York Times. “We are focused on resolving this matter as expeditiously as possible, and it will remain business as

usual at Barneys New York.”

Per the same Barneys New York representative, sales rose 18% in December and the Company’s full-

year earnings rose 40% over 2010.

Citigroup (Citibank)

Citibank represents the consumer banking operations of financial services giant Citigroup. The unit

has more than 1,000 branches in about a dozen US states; California and Texas are its largest

markets, but the bank also has a significant presence in the Northeast, as well as Chicago and Miami. Through affiliates, it operates about 3,000 additional offices in some 40 countries, with a focus on

emerging markets in Asia, Latin America, and central and eastern Europe. Citibank provides standard

banking fare such as deposit accounts, credit cards, and loans to consumers and small businesses,

and utilizes its parent's breadth of financial services by also offering investment and financial planning services.

Citigroup split itself into two separate businesses in an effort to slim down and focus on its core

banking services. After suffering from $90 billion in writedowns, the financial powerhouse announced in early 2009 created Citicorp, which includes Citibank and its other banking assets. The new Citi

Holdings business is made up of riskier operations such as CitiMortgage and CitiFinancial. Also that

year former Merrill Lynch vice president Eugene McQuade was named CEO of Citibank after his

© 2012 CBRE, Inc.


36

predecessor, William Rhodes, resigned. Also in 2009 Citigroup sold its retail banking operations in

Germany to French financial institution Crédit Mutuel.

The reorganization followed a rough year for Citigroup. In 2008 the company announced it would

acquire the banking business of troubled Wachovia in an FDIC-assisted transaction, but was outbid by

Wells Fargo. The acquisition, with a price tag in excess of $2 billion, would have tripled Citibank's US

branch network and give it a substantial presence in the Southeast.

Meanwhile, the bank has retrenched and placed more emphasis on retail banking, which has proven

to be one of its more stable segments. In 2011 it completed the sale of its its 80% stake in Student

Loan Corporation and part of its private student loan portfolio in separate transactions to Discover Financial Services and Sallie Mae.

CONCLUSION

Along with much of the country, the Chicago retail market has felt the strains of the overall

recessionary economy and credit crunch. However, it appears the retail market in general has hit bottom and there are continued signs of improvement. Furthermore, the North Michigan Avenue

retail submarket has continued to outperform the overall market. Moreover, while general rates had

trended downward throughout the market, the limited availability of development sites in the subject’s

“high-street” retail district will continue to generate a premium for well located and well designed retail asset like the subject. The long-term projection for the subject’s submarket is for continued

growth.

With respect to the subject in particular, we believe the asset features an iconic retail location at the southwest corner of Rush and Oak Streets, within one of Chicago’s premier retail districts. The subject

specifically anchors the Oak/Rush “high street” retail district. Based upon our analysis, the subject is

expected to maintain strong market acceptance.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | SITE ANALYSIS

37

SITE PLAN

© 2012 CBRE, Inc.


38

SITE ANALYSIS

The following chart summarizes the salient characteristics of the subject site.

SITE SUMMARY

Physical DescriptionGross Site Area 0.38 Acres 16,698 Sq. Ft.Net Site Area 0.38 Acres 16,698 Sq. Ft.Primary Road Frontage E. Oak Street 167 FeetSecondary Road Frontage Rush Street 125 FeetAdditional Road Frontage State Street 62 FeetExcess Land Area NoneZoning DistrictFlood Map Panel No. & Date 17031C0419J 19-Aug-08Flood Zone Zone X

Source: Various sources compiled by CBRE

PD 1057; Planned Development

LOCATION

The subject is located on the south side of Oak Street, with frontage on the west side of Rush Street

and on the east side of State Street. The principle corner location is the southwest corner of Oak and

Rush Streets, to which the main entrance to the Barneys store is oriented. The street address is 1-15 East Oak Street, Chicago, Illinois.

LAND AREA

According to public records, the subject site is 16,698 square feet or 0.38 acres in size. The site is

considered adequate in terms of size and utility. There is no unusable, excess or surplus land area.

SHAPE AND FRONTAGE

The site is generally irregularly shaped and has adequate frontage along three primary thoroughfares

within the neighborhood. The resulting first floor of the building improvement is bifurcated by a public

access alley way that extends south from Oak Street. The subject’s (and neighboring buildings’)

loading area is situated off this public alley. It is noted that the subject property controls the air-rights over this portion of the alley as evidenced by the extension of floors 2-4 over the alleyway.

INGRESS/EGRESS

The subject site is 100% developed and there is no vehicular access into the property, with the

exception of the referenced alley. There is no parking component located on site. Public pay parking is available on the adjacent streets and in nearby parking garages. Pedestrian access is directly off

the surrounding sidewalks.

© 2012 CBRE, Inc.


39

TOPOGRAPHY AND DRAINAGE

The site is generally level and at street grade. The topography of the site is not seen as an impediment

to the development of the property. During our inspection of the site, we observed no drainage problems and assume that none exist.

SOILS

A soils analysis for the site has not been provided for the preparation of this appraisal. In the absence

of a soils report, it is a specific assumption that the site has adequate soils to support the highest and best use.

EASEMENTS AND ENCROACHMENTS

There are no known easements or encroachments impacting the site that are considered to affect its

marketability or highest and best use. It is recommended that the client/reader obtain a current title

policy outlining all easements and encroachments on the property, if any, prior to making a business decision.

COVENANTS, CONDITIONS AND RESTRICTIONS

There are no known covenants, conditions or restrictions impacting the site that are considered to

affect its marketability or highest and best use. It is recommended that the client/reader obtain a copy of the current covenants, conditions and restrictions, if any, prior to making a business decision.

UTILITIES AND SERVICES

The site is within the jurisdiction of Chicago and is provided all municipal services, including police,

fire and refuse garbage collection; as well as all public utilities including water, sewer, natural gas and electricity.

© 2012 CBRE, Inc.


40

FLOOD ZONE

According to flood hazard maps published by the Federal Emergency Management Agency (FEMA), the site is within Zone X, as indicated on Community Map Panel No. 17031C0419J. FEMA defines

the flood zone(s) as follows:

Zones C and X (unshaded) are flood insurance rate zones used for areas outside the

0.2-percent-annual-chance floodplain. No Base Flood Elevations (BFEs) or depths are shown in this zone, and insurance purchase is not required.

ENVIRONMENTAL ISSUES

CBRE is not qualified to detect the existence of potentially hazardous material or underground storage

tanks which may be present on or near the site. The existence of hazardous materials or underground storage tanks may affect the value of the property. For this appraisal, CBRE has specifically assumed

that the property is not affected by any hazardous materials that may be present on or near the

property.

CONCLUSION

The site is well-located within the Gold Coast and within the Oak and Rush “high-street” retail district.

It is afforded good access and visibility from roadway frontage. The size of the site is typical for the

area and existing use and there are no known detrimental uses in the immediate vicinity. Overall,

there are no known factors which are considered to prevent the site from development to its highest and best use, as if vacant, or adverse to the existing use of the site.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | IMPROVEMENTS ANALYSIS

41

IMPROVEMENTS ANALYSIS

The subject property is a six-story plus lower level, two-tenant urban retail property built in 2009 as a

redevelopment from a previously improved site. Within the center core are the elevators providing access to the upper floors. There is also a common center stairway between the first level, lower level

and second level. The majority of the sixth floor is finished as a restaurant, currently operated as

Fred’s.

The following chart shows a summary of the improvements.

IMPROVEMENTS SUMMARY

Retail

2009 Renovated: 0

Source: Various sources compiled by CBRE

0.18 : 1

90,100 SF

Site CoverageLand-to-Building Ratio

Number of Buildings

Number of Stories

Gross Leasable Area

Major Tenants

Barney's New York

Citibank

1

94,700 SF

6

94.5%4,600 SF

Property Type

Year Built

(Specialty Retail)

BUILDING AREA

Please refer to the Resource Verification table in the Scope of Work for the source of the building area

size. The following is a description of the subject improvements and basic construction features derived from CBRE’s inspection.

YEAR BUILT

The subject was built in 2009.

FOUNDATION

The foundation is assumed to be of adequate load-bearing capacity to support the improvements. The building component situated on the Rush Street frontage features an operational lower level

basement area used for storage, mechanicals, and sales floor. The building component situated on

the State Street frontage does not have a lower level and is assumed to be situated on a reinforced

concrete slab on grade.

CONSTRUCTION COMPONENTS

The construction components are assumed to be in working condition and adequate for the building.

The building features reinforced concrete foundation and structural steel framing. Floor structures are

steel decking with poured concrete floors.

© 2012 CBRE, Inc.


42

EXTERIOR WALLS

The exterior wall structure is a combination of precast concrete panels and glass. Retail storefronts

are plate glass set in anodized aluminum frames.

ROOF COVER

The building has a flat roof with a white, single-ply membrane roof covering. The roof tops have been

equipped with light-weight (secured) planting trays that facilitate the planting of perennial grasses and

vegetation creating a “green-roof” component that was “encouraged” at the time of development.

The building features a roof deck off the fifth floor which can be used for client entertainment. Also, a

second and smaller roof deck is available off the sixth floor Fred’s restaurant space.

INTERIOR FINISHES

The typical interior finish of the retail shop features high end finishes throughout the space as

summarized below:

Floor Coverings: Decorative tile, stone and hardwood flooring.

Walls: Painted sheetrock and high quality wall coverings.

Ceilings: Painted sheetrock.

Lighting: Recessed fixtures and decorative track lighting.

Summary: The interior areas are representative of high-end retail finish commensurate with the retail district in which it is located and consistent with competitors in the area.

HVAC

The HVAC system is assumed to be in good working order and adequate for the building.

ELECTRICAL

The electrical system is assumed to be in good working order and adequate for the building.

PLUMBING

The plumbing system is assumed to be in good working order and adequate for the building.

RESTROOMS

The restrooms are adequate, are assumed to comply with local code and feature high-grade finishes

that are consistent with the remainder of the property.

© 2012 CBRE, Inc.


43

FIRE PROTECTION

The property features 100% sprinkler coverage and it is assumed that the improvements have

adequate fire alarm systems, fire exits, fire extinguishers, fire escapes and/or other fire protection measures to meet local fire marshal requirements. CBRE is not qualified to determine adequate levels

of safety & fire protection, whereby it is recommended that the client/reader review available permits,

etc. prior to making a business decision.

QUALITY AND STRUCTURAL CONDITION

The overall quality of the facility is considered to be excellent for the neighborhood and age.

However, CBRE is not qualified to determine structural integrity and it is recommended that the

client/reader retain the services of a qualified, independent engineer or contractor to determine the

structural integrity of the improvements prior to making a business decision.

FUNCTIONAL UTILITY

The overall layout of the property is considered functional in utility and provides adequate accessibility

and visibility of the merchandise. The traffic pattern throughout the store is judged to be functional.

ADA COMPLIANCE

The client/reader’s attention is directed to the specific limiting conditions regarding ADA compliance.

FURNITURE, FIXTURES AND EQUIPMENT

Any personal property items contained in the property are not considered in to contribute significantly

to the overall value of the real estate.

ENVIRONMENTAL ISSUES

CBRE is not qualified to detect the existence of any potentially hazardous materials such as lead paint, asbestos, urea formaldehyde foam insulation, or other potentially hazardous construction materials on

or in the improvements. The existence of such substances may affect the value of the property. For

the purpose of this assignment, we have specifically assumed that any hazardous materials that would cause a loss in value do not affect the subject.

DEFERRED MAINTENANCE

Our inspection of the property did not indicate any significant items of deferred maintenance and

none are assumed to exist.

© 2012 CBRE, Inc.


44

ECONOMIC AGE AND LIFE

CBRE’s estimate of the subject improvements effective age and remaining economic life is depicted in

the following chart:

ECONOMIC AGE AND LIFE

Actual Age 3 YearsEffective Age 3 YearsMVS Expected Life 50 YearsRemaining Economic Life 47 YearsAccrued Physical Incurable Depreciation 6.0%

Compiled by CBRE

The overall life expectancy is based upon our on-site observations and a comparative analysis of

typical life expectancies reported for buildings of similar construction as published by Marshall and

Swift, LLC, in the Marshall Valuation Service cost guide. While CBRE did not observe anything to suggest a different economic life, a capital improvement program could extend the life expectancy.

CONCLUSION

The improvements are in excellent overall condition. Overall, there are no known factors that

adversely impact the marketability of the improvements.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | ZONING

45

ZONING

The following chart summarizes the subject’s zoning requirements.

ZONING SUMMARYCurrent Zoning PD 1057; Planned DevelopmentLegally Conforming YesUses Permitted Planned development review and approval is required in B

and C zoning districts for any building to be occupied by anyretail sales-related use with a gross floor area of 75,000square feet or more. For purposes of this paragraph, “retailsales- related uses” include general retail sales; food andbeverage retail sales; and other uses that are primarilyinvolved in the sales of goods to the general public

Zoning Change Not likely

Source: City Zoning

The subject is situated within a planned development district. The development and

requirements/restrictions have been approved.

ANALYSIS AND CONCLUSION

The improvements represent a legally-conforming use and, if damaged, may be restored without special permit application. Additional information may be obtained from the appropriate

governmental authority.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | TAX AND ASSESSMENT DATA

46

TAX AND ASSESSMENT DATA

The subject property is located in the city of Chicago and is currently assessed by Cook County. Real

estate in Cook County is assessed at different levels of the assessor’s estimated market value based on property class. Prior to the 2009 tax year (payable 2010), the major tax classes and corresponding

assessment ratios were as follows:

Major Property Class Description Assessment Ratio1 Vacant Land 22%2 Residential (single-family and six units or less) 16%3 Apartment Buildings (More than six units) 26%4 Not-for-Profit Property 30%5a Commercial Property (Office, Retail) 38%5b Industrial Property 36%

Complied by CBRE

HISTORICAL COOK COUNTY ASSESSMENT RATIO SUMMARY

In 2009, at the Cook County Chief Assessors recommendation, the Cook County Board of

Commissioners passed a new law simplifying assessments. This law, the 10/25 ordinance, reduced and clarified assessment levels. It created two assessment levels where there had formerly been six.

Under the new ordinance, the assessed value of a residential property, except apartments, represents

10% of its market value and the assessed value of a commercial or industrial property represents 25%

of market value. Apartment properties have a phased assessment ratio. This assessment ratio is

applied to the 2009 tax year and is summarized as follows:

Major Property Class Description Assessment Ratio1 Vacant Land 10%2 Residential (single-family and six units or less) 10%3 Apartment Buildings (More than six units)

2009 Tax Year 16%2010 Tax Year 13%2011 Tax Year 10%

4 Not-for-Profit Property 25%5a Commercial Property (Office, Retail) 25%5b Industrial Property 25%

Complied by CBRE

NEW COOK COUNTY ASSESSMENT RATIO SUMMARY

In Cook County, assessed values are multiplied by the State Equalization Factor (required by the

Illinois Department of Revenue to produce an average assessment ratio of 33% of the total of all

properties in Cook County) and then by the tax rate in order to derive real estate taxes, which are payable one year in arrears, meaning that property owners pay taxes each year based on the prior

year’s assessment and tax rates. The annual tax bill is due in two installments. The first installment is

equal to 55% of the prior year’s tax total and is due in March. The second installment contains all of

© 2012 CBRE, Inc.


47

the adjustments as calculated by the various taxing authorities and is typically due in September but

can be as late as November.

The following summarizes the local assessor’s estimate of the subject’s market value, assessed value,

and taxes, and does not include any furniture, fixtures or equipment.

AD VALOREM TAX INFORMATION

Assessor's Market Value 2009 Pay 2010 2010 Pay 201117-03-206-001-0000 $7,021,920 $9,201,00817-03-206-009-0000 11,877,136 15,695,616 17-03-206-010-0000 14,385,944 18,963,020

Subtotal $33,285,000 $43,859,644 $43,859,644

Assessed Value @ 25% 25% 25%$8,321,250 $10,964,911 $10,964,911

State Equalization Rate 3.3701 3.3000 3.3000 Equalized Value $28,043,445 $36,184,206 $36,184,206

General Tax Rate (per $100 A.V.) 4.627000 4.931000 5.078930

Total Taxes $1,297,570 $1,784,243 $1,837,771

Source: Assessor's Office

According to Cook County, there are no delinquent taxes encumbering the subject.

The subject’s total taxes, payable in 2011, were $1,784,243 or $18.84/SF. The current assessment

for 2012 taxes payable in 2011, at this time, is unchanged at $10,964,911but is almost a 32%

increase from 2009 payable in 2010.

As with most all commercial properties located in Cook County, the subject’s ownership has

aggressively appealed the property tax assessments. This is the most effective and proactive means of

attempting to control the escalating real estate tax expense. It is expected that the ownership will continue to appeal the assessments on an annual basis.

At $18.84/SF, the subject’s current tax liability is relatively high compared to similar properties located

throughout the submarket. Given the subject’s age, current performance and the continual tax

appeals made by ownership, we are of the opinion that the current assessment level is unlikely to significantly change in the foreseeable future, but there appears to be no extraordinary risk associated

with an atypical increase in the current tax amount.

For projection/pro forma purposes, for 2011 payable 2012, we have projected a 3% increase over the most recent tax bill. Going forward, we have assumed the subject’s property taxes increase at a

compounded annual rate of 3.0%

© 2012 CBRE, Inc.


48

TAX COMPARABLES

As a crosscheck to the subject’s applicable real estate taxes, CBRE has reviewed the real estate tax

information according to Cook County for comparable properties in the market area. The following table summarizes the comparables employed for this analysis:

AD VALOREM TAX COMPARABLES

Comparable RentalPrada /30 E.

Oak St.The Gap / 555 N.

Michigan Ave.Apple / 679 N. Michigan Ave.

Crate & Barrel/ 640 N. Michigan Ave.

Subject

Year Built 1901/1997 1998 1945/2001 1998 2009GLA (SF) 10,786 45,904 30,500 46,045 94,700Tax Year - 2010 Payable 2011 Payable 2011 Payable 2011 Payable 2011 Payable 2011

Total Assessed Value $783,617 $3,506,960 $2,118,754 $3,491,437 $10,964,911AV Per SF (GLA) $72.65 $76.40 $69.47 $75.83 $115.79

Total Taxes $127,512 $624,731 $344,770 $568,137 $1,784,243Per SF (GLA) $11.82 $13.61 $11.30 $12.34 $18.84

Source: Assessor's Office

CONCLUSION

Based on the foregoing information, the subject’s current assessment is judged to be higher than similar product, suggesting that continuation of the appeals process is necessary. We utilize the

subject’s actual real estate tax basis in our base year analysis.

The subject property is fully leased on a triple net basis in which the tenants pay all real estate taxes.

Therefore, any difference between the subject’s actual real estate taxes and those estimated herein does not have a material impact on value, although it directly impacts the tenant’ cost of occupancy.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | HIGHEST AND BEST USE

49

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.

Highest and best use analysis involves assessing the subject both as if vacant and as improved.

AS VACANT

Legal Permissibility

The legally permissible uses were discussed in detail in the Site Analysis and Zoning Sections.

Physical Possibility

The subject is adequately served by utilities, has an adequate shape and size, sufficient access, etc., to

be a separately developable site. The subject site would reasonably accept a site layout for any of the legally probable uses. There are no known physical reasons why the subject site would not support

any legally probable development. The existence of the present development on the site provides

additional evidence for the physical possibility of development.

Financial Feasibility

The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally probable land uses versus the cost to create the uses. As discussed in the

market analysis of this report, the subject retail market is stabilized. Development of new retail

properties, generally in combination with a residential or hotel development that maximized permitted

density has occurred in the past few years. And while within the subject market, there are several proposed retail and mixed-use properties with a ground floor retail component in the competitive

market, many have been placed on hold until market conditions improve. These factors indicate that it

would be financially feasible to complete a new retail property if: the site acquisition cost was low enough to provide an adequate developer’s profit; the project represents a build-to-suit; or if

significant pre-leasing activity was secured prior to development.

Maximum Profitability

The final test of highest and best use of the site as though vacant is that the use be maximally

productive, yielding the highest return to the land. In the case of the subject as if vacant, the analysis has indicated that an urban retail project would be most appropriate.

© 2012 CBRE, Inc.


50

CONCLUSION: HIGHEST AND BEST USE AS VACANT

Based on the information presented above and upon information contained in the market and

neighborhood analysis, we conclude that the highest and best use of the subject as if vacant, would be the development of a retail project. Our analysis of the subject and its respective market

characteristics indicate the most likely buyer, as if vacant, would be an investor (land speculation) or a

developer.

AS IMPROVED

Legal Permissibility

As discussed, the subject site’s zoning and legal restrictions permit a variety of land uses. The site has been improved with a retail development that is a legal, conforming use.

Physical Possibility

The physical characteristics of the subject improvements were discussed in detail in the improvements

analysis. Both the layout and positioning of the improvements are considered functional for retail use.

While it would be physically possible for a wide variety of uses, based on the legal restrictions and the design of the improvements, the continued use of the property for retail users would be the most

functional use.

Financial Feasibility

The financial feasibility of a retail property is based on the amount of rent which can be generated, less operating expenses required to generate that income; if a residual amount exists, then the land is

being put to a productive use. As will be indicated in the income capitalization approach, the subject

is producing a positive net cash flow and continued utilization of the improvements for retail purposes

is considered financially feasible.

Maximum Profitability

The maximally profitable use of the subject as improved should conform to neighborhood trends and

be consistent with existing land uses. Although several uses may generate sufficient revenue to satisfy

the required rate of return on investment and provide a return on the land, the single use that

produces the highest price or value is typically the highest and best use. As shown in the applicable valuation sections, buildings that are similar to the subject have been acquired or continue to be used

by retail owners/tenants. These comparables would indicate that the maximally productive use of the

property is consistent with the existing use as a retail property.

© 2012 CBRE, Inc.


51

CONCLUSION: HIGHEST AND BEST USE AS IMPROVED

Based on the foregoing, the highest and best use of the property, as improved, is consistent with the

existing use as a retail development.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | APPRAISAL METHODOLOGY

52

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 on the proposition that 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 that represent the highest and best use of the land, or when it is improved with relatively unique or

specialized improvements 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, only the sales comparison and income capitalization approaches are

applicable and have been used. The cost approach is not applicable in the estimation of market value, namely due to the long-term leases that are in place and the resulting income producing nature

of the asset. Furthermore, given the difficulty in assembling land in the area and the markedly

different investment criteria between a developer of speculative urban projects versus the investors

acquiring fully leased, income producing property like the subject, the Cost Approach has less relevance. Therefore, it is our opinion that only the sales comparison approach and income

capitalization approach are most applicable. The omission of the cost approach does not diminish

the credibility of the analysis.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | SALES COMPARISON APPROACH

53


A host of negative economic issues regarding the recessionary economy and credit crunch had kept

the majority of investors from pursuing opportunities in all real estate sectors. In other words, there had been a dearth of recent retail sales comparable to the subject between 2008 and 2009. Sizable

assets like the subject had been difficult to finance. However, with now available financing, coupled

with pent up demand, sales of quality assets in core markets have been occurring over the past 12-24

months.

For purposes of this analysis, we have included all of the sales that have occurred within the subject’s

Oak and Rush Street corridor, North Michigan Avenue and State Street over the past five years. We

are of the opinion that this information provides the best indication of sales trends within the subject’s submarket and for the particular type of high end retail space.

The sales presented represent the best data available for comparison with the subject and are

summarized on the following table. For the most part, they represent good quality assets in comparable retail locations.

© 2012 CBRE, Inc.


54

SUMMARY OF COMPARABLE RETAIL SALES

Year GLA Actual Sale Price NOINo. Name Type Date Built (SF) Price Per SF Occ. Per SF OAR

1 Lululemon - Chicago,Chicago, IL

Sale Apr-12 2009 2,930 $20,700,000 $7,064.80 100% $370.90 5.25%

2 Prada,Chicago, IL

Sale Oct-10 1901 10,786 $13,000,000 $1,205.30 100% $90.59 7.52%

3 Burton,Chicago, IL

Sale Aug-11 1884 8,874 $7,528,000 $848.32 100% $50.00 5.89%

4 6 North Michigan Avenue,Chicago, IL

Sale Nov-11 1880 7,071 $10,100,000 $1,428.40 100% $90.00 6.30%

5 Apple Store Ground Lease,Chicago, IL

Sale May-10 2010 18,000 $10,500,000 $583.33 100% $40.28 6.90%

6 Old Navy Store,Chicago, IL

Sale Feb-11 0 45,000 $23,000,000 $511.11 100% $30.00 5.87%

7 Heritage Shops at Millennium Park,Chicago, IL

Sale Apr-11 c1920 105,449 $31,600,000 $299.67 72% $23.71 7.91%

8 Loehmann's Department Store at MoMo,Chicago, IL

Sale Oct-07 2007 27,385 $20,000,000 $730.33 100% $43.86 6.01%

Subj.Pro

Forma

1-15 East Oak Street Retail,Chicago, Illinois

--- --- 2009 94,700 --- --- 100% $101.17 ---

Compiled by CBRE

Transaction

DISCUSSION/ANALYSIS OF IMPROVED SALES

Improved Sale One

This comparable represents a 2,930 SF retail property that is situated on a 0.07 acre parcel at 930

N. Rush Street, just south of and on the same block as the subject. The improvements were originally

constructed in 2009 and were considered in excellent condition at the time of sale. The exterior walls depict masonry construction components. The property sold in April 2012 for $20,700,000, or

$7,065/SF. Pro Forma net operating income at the time of sale was $1,086,750, or $370.90/SF for

an overall capitalization rate of 5.25%. Occupancy at the time of sale was 100%. The sale represents the purchase of the Lululemon store located at the northwest corner of Rush and Walton.

Lululemon executed a 10-year lease in 2009 at an initial rental rate of $357/SF, increasing 3%

annually.

Improved Sale Two

This comparable represents a 10,786 SF retail property that is situated on a 0.06 acre parcel at 30 E. Oak Street. The improvements were originally constructed in 1901 but extensively renovated prior to

the purchase and were considered in good condition at the time of sale. The property sold in

October 2010 for $13,000,000, or $1,205/SF. Existing net operating income at the time of sale was

$977,100, or $90.59/SF, for an overall capitalization rate of 7.52%. Occupancy at the time of sale

© 2012 CBRE, Inc.


55

was 100%. This sale represents the acquisition of a four-story, 10,786 square foot, single-tenant

retail property occupied by Prada. This property is located diagonally across Rush Street from the subject.

Improved Sale Three

This comparable represents an 8,874 SF property that is situated on a 0.06 acre parcel at 56 East

Walton Place. The improvements were originally constructed in 1884 and were considered in good

condition at the time of sale. The exterior walls depict masonry/stone construction components. The property sold in August 2011 for $7,528,000, or $848/SF. Existing net operating income at the time

of sale was $443,700, or $50.00/SF, for an overall capitalization rate of 5.89%. Occupancy at the

time of sale was 100% by Burton.

Improved Sale Four

This comparable represents a 7,071 SF retail property that is situated on a 0.17 acre parcel at 6 North Michigan Avenue. The property sold in November 2011 for $10,100,000, or $1,428/SF.

Existing net operating income at the time of sale was $636,390, or $90.00/SF, for an overall

capitalization rate of 6.3%. Occupancy at the time of sale was 100%. This comparable represents the sale of a 7,071 square foot retail condominium that is in close proximity to Millennium Park and

the Art Institute of Chicago.

Improved Sale Five

This comparable represents an 18,000 SF retail property that is situated on a 0.42 acre, ground

leased parcel located at 801 West North Avenue (North and Halstead – Lincoln Park). The improvements were originally constructed in 2010 and were considered in good condition at the time

of sale. The property sold in May 2010 for $10,500,000, or $583/SF. Existing net operating

income at the time of sale was $725,000, or $40.28/SF, for an overall capitalization rate of 6.9%.

Occupancy at the time of sale was 100% by Apple.

Improved Sale Six

This comparable represents a 45,000 SF retail property that is situated on a 0.2 acre parcel at 35

North State Street. The property sold in February 2011 for $23,000,000, or $511/SF. Existing net

operating income at the time of sale was $1,350,000, or $30.00/SF, for an overall capitalization rate

of 5.87%. Occupancy at the time of sale was 100%. The building is a free-standing, three-story retail building with approximately 20,000 square feet of lower level storage space not included in the

quoted building area.

© 2012 CBRE, Inc.


56

Improved Sale Seven

This comparable represents a 105,449 SF retail component of a mixed-use development. The

improvements were originally constructed in 2004 and were considered in good condition at the time

of sale. The property sold in April 2011 for $31,600,000, or $300/SF. Existing net operating

income at the time of sale was $2,500,000, or $23.71/SF, for an overall capitalization rate of

7.91%. This represents the sale of the retail component of the Heritage at Millennium Park

condominium. At 57 stories, the residential component features 356 luxury units ranging between 800 to 5,000 square feet. The commercial component was 72% leased at the time of sale.

Improved Sale Eight

This comparable represents the sale of the retail component of a mixed-use development located at

the northeast corner of North State Street and East Randolph Street in downtown Chicago, within the

State Street shopping district. The residential component is referred to as MoMo, which stands for “Modern Momentum”. This is a 33 story building that contains a four story podium and a residential

tower that stands on “two legs” flanking a large opening above the podium which breaks up the mass

of the building base. At the time of sale, the podium housed Loehmann's, a two-story retail department store (ground and second floor; subject of this sale transaction) and a two level theater

which is home to the Chicago-based Joffery Ballet. The department store space is comprised of

27,385 square feet and was 100% leased for a ten year term, commencing in 2007. In November

2010 Loehmann’s filed for Chapter 11 bankruptcy protection, vacating the store in January 2011. This space has since been leased to Walgreens for the opening of their 1st, 2-story “urban design”

location. The Walgreens store opened in January 2012.

Loehmann's Operating Company acquired the property from Smithfield Properties XX, LLC in October 2007 for a consideration of $20,000,000 or $730 per SF. Based on a pro forma net operating

income of $1,201,212, a cap rate of 6.00% was implied.

NET OPERATING INCOME ANALYSIS

Because net lease properties like the subject are purchased based on the income generated, the

appraisal will not attempt to adjust the sales using the traditional adjustment grid. Instead, the net operating income (NOI) being generated by the comparable sales as compared to the subject’s NOI

that was estimated in the Income Capitalization Approach has been analyzed. In general, it is a

fundamental assumption that the physical characteristics of a property (e.g., location, access, design/ appeal, condition, etc.) are reflected in the net operating income being generated, and the resultant

price per square foot paid for a property has a direct relationship to the NOI being generated.

By developing a ratio between the subject’s stabilized net operating income and comparable’s

stabilized net operating income, an adjustment factor can be calculated for each of the individual

sales. This adjustment factor can then be applied to the comparable’s price per square foot unit of

© 2012 CBRE, Inc.


57

comparison to render an indication for the subject property. This methodology represents an attempt

to isolate the economic reasoning of the buyers.

Given the preceding considerations, we have not adjusted each improved sale to the subject property

in order to account for specific physical and location characteristics. Rather, we have extracted a

significant unit of comparison from the improved sales after analyzing each comparable property and

then have applied the appropriate unit of comparison to the subject property. In this case, we have identified a relationship between the net operating income and the sales price of the property i.e. the

higher the net operating income per square foot generally corresponds to a higher sales price per

square foot.

The equation for the net income multiplier (NIM), which is the inverse of the equation for the

capitalization rate (OAR), is calculated as follows:

NIM = Sales Price/Net Operating Income

Valuation of the subject property utilizing the net income multipliers (NIM) from the comparable properties accounts for the disparity of the net operating incomes ($NOI’s) per square foot between

the comparables and the subject. Within this technique, each of the adjusted NIM’s are multiplied by

the $NOI per square foot of the subject, which produces an adjusted value indication for the subject.

The following chart depicts the calculations involved in developing adjustment factors to be applied to

the respective price per square foot indications developed from the comparables employed.

NOI Per SF Comp Sale IndicatedComparable Subject / Comp = Multiplier x Price (per SF) = Price (per SF)

1 $101.17 / $370.90 = 0.27 x $7,064.80 = $1,927.122 $101.17 / $90.59 = 1.12 x $1,205.30 = $1,346.113 $101.17 / $50.00 = 2.02 x $848.32 = $1,716.554 $101.17 / $90.00 = 1.12 x $1,428.40 = $1,605.735 $101.17 / $40.28 = 2.51 x $583.33 = $1,465.186 $101.17 / $30.00 = 3.37 x $511.11 = $1,723.697 $101.17 / $23.71 = 4.27 x $299.67 = $1,278.738 $101.17 / $43.86 = 2.31 x $730.33 = $1,684.68

Low $1,278.73High $1,927.12Average $1,593.47

Compiled by CBRE, Inc.

NET OPERATING INCOME ANALYSIS

The foregoing analysis results in an indicated price per square foot for the subject ranging from

$1,279 to $1,927/SF with an average of $1,593/SF.

© 2012 CBRE, Inc.


58

SALE PRICE PER SQUARE FOOT CONCLUSION

Overall, Comparables 1-3 are the most representative of the subject and warranted greatest

consideration as they represent the most recent sales within the subject’s immediate “high-street” retail district. Sales 4-8 traded between October 2007 and November 2011. In general, sales of single-

tenant, urban retail properties remain strong and capitalization rates continue to compress for core,

net leased assets given the pent up demand coupled with available financing. Considering the

property’s location, quality of construction and quality of tenancy, we are of the opinion that a price per square foot at or near the middle portion of the range is appropriate. It is noted that the upper

end of the range, while indicative of applicable capitalization rates, reflects a much smaller – more

readily re-tenantable - space as compared to the subject. The following chart presents the valuation conclusion:


GLA (SF) X Value Per SF = Value94,700 X $1,550 = $146,785,00094,700 X $1,650 = $156,255,000

VALUE CONCLUSION

Indicated Stabilized Value $150,000,000Deferred Maintenance $0Lease-Up Discount $0Value Indication $150,000,000Rounded $150,000,000Value Per SF $1,583.95

Compiled by CBRE

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | INCOME CAPITALIZATION APPROACH

59

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 period of time. The two common valuation

techniques associated with the Income Capitalization Approach are direct capitalization and the

discounted cash flow (DCF) analysis. Considering the long-term, escalating annual rental rates and net lease structures, we are of the opinion that investors would focus on only the direct capitalization

rate analysis. Direct capitalization examines the initial overall return on the investment based on the

in-place income and known or relatively constant changes in revenue stream.

MARKET RENT ANALYSIS

The subject is located at the center of the Rush and Oak Street “high-street” retail district in Chicago’s

Gold Coast and/or North Michigan Avenue neighborhoods. Specifically, the property is located at

the southwest corner of Rush and Oak Streets less than two blocks west of the world renowned North Michigan Avenue retail corridor. The subject’s unique retail market was analyzed in detail in the

Neighborhood and Market Analysis sections of this report. As indicated, the subject’s Rush and Oak

area, along with North Michigan Avenue are among the premier shopping districts in the nation,

garnering the highest rental rates in the Midwest and throughout much of the country.

The subject property is comprised of 94,700 square feet of gross retail space situated on six floors,

plus a lower level. It is 100% occupied by two tenants over long-term leases. Barneys New York

occupies 90,100 square feet or nearly 95% of the property with its primary entrance at the immediate corner of Rush and Oak Streets. Citibank leases 4,600 square feet at street level with exposure to the

southeast corner of Oak and State Streets. Its entrance is situated along the Oak Street frontage.

For comparison purposes, we presented actual lease deals for multi-level retail space located along

Rush and Oak Streets as well as along North Michigan Avenue. We have also presented small shop street level spaces within the subject’s immediate neighborhood similar to the bank space.

The following map and table summarize the comparable data used in the valuation of the subject. A

detailed description of each transaction is included in the addenda.

© 2012 CBRE, Inc.


60

SUMMARY OF COMPARABLE RETAIL RENTALS

Comp. No.

Property Nameand Location

Year Built Occ. GLA (SF)

Expense Basis

TenantName

LeaseArea (SF)

LeaseDate

LeaseTerm Base Rent

1 1901 100% 10,786 NNN Prada 10,786 Jun-04 15.0 Yrs. $91.05 PSF

2 1944 79% 51,340 NNN Hermes 7,734 '2010 0.0 Yrs. $158.95 PSFQuoted --- --- --- $25.00 - $325 PSF

3 1966 100% 62,000 NNN Top Shop 50,000 '2010 10.0 Yrs. $63.00 PSFColumbia 12,000 '2008 10.0 Yrs. $180.00 PSF

4 1998 91% 238,477 NNN/Gross Nordstrom Rack 38,899 '2010 11.0 Yrs. $55.27 PSFAnthropologie 18,695 Oct-10 15.0 Yrs. $55.49 PSFVictoria Secret 22,869 '2009 15.0 Yrs. $148.67 PSF

5 1989 100% 43,624 BY Taxes All Saints 11,000 '2010 10.0 Yrs. $227.27 PSFZara 32,624 '2009 10.0 Yrs. $137.94 PSF

6 1979 NA 27,375 NNN Ted Baker 2,375 '2010 10.0 Yrs. $150.00 PSF

7 2000 25% 7,990 NNN Sprinkles Cupcakes 2,028 '2010 10.0 Yrs. $128.32 PSFQuoted --- --- --- $70.00 - $128.00 PSF

8 2009 100% 5,874 NNN Lululemon 2,937 Dec-09 10.0 Yrs. $368.00 PSF

Subj. 1-15 East Oak Street Retail1-15 East Oak Street,Chicago, Illinois

2009 100% 94,700 --- ---

Compiled by CBRE

Lululemon930 N. Rush,Chicago, IL

25-39 E. Oak Street25-39 E. Oak Street,Chicago, IL830 N. Michigan Avenue830 N. Michigan Avenue,Chicago, IL

730 North Michigan Avenue730 North Michigan Avenue,Chicago, IL

700 N. Michigan Avenue700 N. Michigan Avenue,Chicago, IL

50-54 E. Walton Street50-54 E. Walton Street,Chicago, IL

ANCHOR COMPARABLES

BANK SPACE COMPARABLES

Prada30 East Oak Street,Chicago, IL

1009-1011 Rush Street1009-1011 Rush Street,Chicago, IL

© 2012 CBRE, Inc.


61

SUBJECT RENTAL INFORMATION

The following chart shows the subject’s current rental rates.

RENT ROLL ANALYSISLease Lease Term Size (GLA) Contract Rental Rate

Tenant Start Expiration (Mos.) SF % Total $/SF/Yr. $/Yr.Barney's New York Mar-09 Jul-24 185 90,100 95.1% $91.04 $8,202,454Citibank Jan-09 Jan-19 121 4,600 4.9% $308.06 $1,417,077

Occupied Subtotals 94,700 100.0% $101.58 $9,619,531Property Totals - Contract Rent 94,700 100.0% $101.58 $9,619,531Property Totals - Market Rent 94,700 100.0% $100.20 $9,489,000

Compiled by CBRE

The charts below summarize the subject leases in greater detail.

LEASE ABSTRACT - BARNEYS NEW YORK

Lessor

M Oak Rush LLC and L.I. Oak Rush LLC Oak, successor-in-interest to

Oak and Rush LLCLessee Barneys Inc.Guarantor NoneSize (SF) 90,100 Lease Date January 22, 2007Lease Commence Date March 1, 2009Expiration Date (Base Lease) July 31, 2024Lease Term (Base Lease) 185 MonthsRemaining Lease Term (Base Lease) 148 MonthsNo. & Term of Options 2 options @ 5 yearsExpiration Date (Base + All Options) 7/31/2034Remaining Lease Term (Base + All Options) 268 MonthsAssignment/Subletting With Landlord ConsentTermination Clause NoneContract Rental Rate $/SF/Yr. Total $/Yr.

Year One $71.14 $6,410,000Year Two $73.61 $6,632,300Year Three $88.64 $7,986,269Year Four Through 15 $91.26 2.95% Annual IncreasesOption One $128.13 $11,544,539Option Two 100% Market

Escalations Approximately 2.95% AnuallyLessor Expenses Roof and SturcturalLessee Expenses NNN% Rent Clause: None

Source: Lease and Lease Amendments

© 2012 CBRE, Inc.


62

LEASE ABSTRACT - CITIBANK

LessorM Oak Rush LLC and L.I. Oak Rush

LLC Oak Lessee Citibank NAGuarantor NoneSize (SF) 4,600 Lease Date September 19, 2008Lease Commence Date January 15, 2009Expiration Date (Base Lease) January 31, 2019Lease Term (Base Lease) 121 MonthsRemaining Lease Term (Base Lease) 82 MonthsNo. & Term of Options 3 options @ 5 yearsExpiration Date (Base + All Options) 1/31/2024Remaining Lease Term (Base + All Options) 142 MonthsAssignment/Subletting With ConsentTermination Clause NoneContract Rental Rate $/SF/Yr. Total $/Yr.

Year One $114.53 $526,827Year Two $117.96 $542,632Year Three (Current) $224.02 $1,030,486Year Four $306.69 $1,410,794Year Five $314.89 $1,448,493Years Six through Ten $323.33 Approximately 2.7% AnnuallyOption One $370.50 $1,704,286Options Two and Three 100% of Market

Escalations Approximately 2.7% AnnuallyLessor Expenses Roof and StructuralLessee Expenses NNNOther None% Rent Clause: None

Source: Lease

MARKET RENT ESTIMATE

Considering the various size suites and the layout of the subject project, two market rent categories

are warranted; one for the anchor space and one for the small shop bank space.

The subject’s leases were signed in 2007 and 2008. They are within the range indicated by comparables. The retail submarket has maintained a stabilized occupancy position as retailers

desiring to be in these locations have been aggressive in their leasing activity. The overall consensus

is that in today’s environment it is necessary for landlords to be a partner in lease deals and place a

greater emphasis on occupancy costs. Furthermore, it is noted that that many of the national retailers are often less concerned with implied occupancy costs relative to their “flagship” locations and rather

“need a presence in the world class retail locations”. This is increasingly germane to iconic brands

like Barneys New York, Burberry, Prada, etc.

© 2012 CBRE, Inc.


63

Analysis of Comparable Properties

The comparable properties are all situated in what can confidently be identified as “high-street” retail

locations along Oak and Rush Streets or along/just off the “Magnificent Mile”. In our analysis, we

compare the subject’s location, size and functional utility to the comparable properties. The

comparables considered most similar to the subject’s anchor space are Prada and Hermes, which are

the northeast and southeast corner locations of Oak and Rush Streets opposite the subject and Top

Shop at 830 N. Michigan Avenue. These comparables are detailed as follows:

Prada leased 10,786 square feet situated between four floors at an initial rental rate of $79.18 per

square foot. Terms of the lease include 15% escalations every five years. The current rent is $91.05

per square foot. This lease is similar to the subject with respect to location and functional utility with

multi-story space, while it is smaller than the subject.

Hermes leased 7,734 square feet consisting of lower level, ground floor and second floor space of

the former Barneys at a blended rate of $158.95 per square foot. This lease was signed in 2008.

The lease is a relocation and downsize from its former boutique on Oak Street. This lease is similar to the subject with respect to location and functional utility with multi-story space, while it is smaller than

the subject.

Top Shop leased 50,000 square feet within the lower level and floors one, two and three at the corner of N. Michigan Avenue and Delaware opposite Water Tower Place. The initial rental rate is $63.00

per square foot net. Terms of the ten-year lease included a $50.00 per square foot TI allowance.

This comparable features generally a similar location, but on Michigan Avenue which depending on

the retailer can be considered superior or inferior to the Oak and Rush location.

Secondary consideration is also given to the other Michigan Avenue leases, including Victoria’s Secret

leasing 22,869 square feet on floors one and two at a net effective rate of $145.34 per square foot

and Zara leasing 32,624 square feet between floors one, two and three at a net effective rate of $122.70 per square foot. Both of these transactions occurred in 2009.

Based on the comparable properties, considering the subject’s location, multi-level design, high

quality finishes, and its stand-alone “flagship” orientation, a rental rate of approximately $90.00 per

square foot is considered appropriate.

Occupancy Costs

In addition to an analysis of market rent comparables, we have also examined rent based on

occupancy costs. The occupancy costs provide a test of reasonableness of the amount of rent a

tenant could pay as a percent of sales. Based on our analysis of the tenants that report sales along

Michigan Avenue and within Oak and Rush Streets, a range between approximately $500 and

$2,500 per square foot was identified. Further, isolating the larger spaces along the corridor, a

© 2012 CBRE, Inc.


64

range between $650 and $1,000 per square foot was identified for the larger spaces. Due to the

confidential nature of sales levels by specific retailers, we will not identify the retailers and their specific sales volumes, but the sales volume comparables include both main-street and luxury retailers.

Barneys is not required to report sales and we do not have sales volumes for the Chicago store.

Nevertheless, it has been reported that December 2011 sales were over 18% higher than 2010, with

overall sales for the chain up 40% in 2011.

Based on our research and conversations with local market participants, occupancy costs along

Michigan Avenue and within the Oak and Rush Street retail corridors can range between 12% and

15%. However, “flagship” locations can commonly approach 20%. Considering the subject’s location, design, and iconic brand, we’ve reflected the reasonable occupancy cost range at 15% to

20%. Triple net expenses are estimated at approximately $21.45 per square foot, including taxes.

The occupancy costs analysis is illustrated as follows:

Average Gross SalesTotal Average Gross Sales $90,100,000 $90,100,000

Total Occ Costs % 15% 20% 15% 20%

Gross Rent $8,784,750 $11,713,000 $13,515,000 $18,020,000Less NNN Costs $21.45 $1,932,645 $1,932,645 $1,932,645 $1,932,645

$6,852,105 $9,780,355 $11,582,355 $16,087,355Equivalent "affordable" Net Rent $76.05 $108.55 $128.55 $178.55

90,100 SF

OCCUPANCY COST ANALYSIS

Compiled by CBRE

$650 PSF $1,000 PSF$58,565,000

As a percent of sales, an analysis of the occupancy costs indicates a reasonable rental rate between

$76 and $179 per square foot. The current Barneys lease rate is within the range of the actual lease rates. Given the subject’s large size, we are of the opinion that an average sales per square foot of

$650 (indicating an annual total of approximately $60M) to be appropriate. Assuming an occupancy

cost of say 18%, suggests a net market rent of approximately $120 per square foot – gross or $99 per

square foot – net.

Rental Rate Based on Floor

In addition to the above analysis, we have examined rental rates based on floor. Based on

conversations with market participants and our experience, multiple floor space generally represents a

blend between floors. Considering the subject’s floor plates and overall size, the market participants

indicated a blended rental rate that considers approximately $300 to $350 per square foot for street level space, $50 to $75 per square foot for second floor space, and $40 to $50 per square foot for

© 2012 CBRE, Inc.


65

the lower level, third, fourth, fifth and sixth floor space would be considered reasonable in today’s

market. The following chart illustrates a breakdown and blend of rates.

Floor Total GLAStreet 10,700 $300 $350 $3,210,000 $3,745,000

2 16,700 $50 $75 $835,000 $1,252,5003 16,700 $40 $50 $668,000 $835,0004 16,200 $40 $50 $648,000 $810,0005 10,700 $40 $50 $428,000 $535,0006 8,700 $40 $50 $348,000 $435,000LL 10,400 $40 $50 $416,000 $520,000

Total 90,100 $6,553,000 $8,132,500Concluded Rates $73 $90Compiled by CBRE

Rent Per Floor Range Total Rental RangeRENT BASED ON FLOOR

The indicated rental rate based on a blend of relative rents per floor location is $73 to $90 per

square foot. Given the subject’s excellent corner location, we believe a rate at the upper end of the

range or $90 per square foot to be achievable.

Small Shop Space

As discussed, approximately 4,600 square feet of street level space situated at the southeast corner of

Oak and State Streets, and representing the northwest corner of the subject property is leased to

Citibank. The entrance is situated along Oak Street.

Comparables Six, Seven and Eight have been analyzed as compared to the subject’s small shop space. Comparable Six is located just south of the subject along Rush Street. This project is a

redevelopment of an existing multi-story retail project. Ted Baker will lease a portion of the street level

at an initial rental rate of $150 per square foot. Comparable Seven was previously 100% occupied by Sur la Table who vacated in January 2010. The space is being demised into two suites. Sprinkles

Cupcakes leased approximately 2,029 square feet of street level space at $128 per square foot with

remaining multi-story space is available for lease with a blended asking rent of approximately $71 per square foot. Comparable Eight is located one block south of the subject and features a corner

location at Walton and Rush. Lululemon leased 2,937 square feet at the initial rental rate of $357

per square foot, which increases 3% annually and is currently $379 per square foot.

Considering the subject’s location and frontage, we believe a rate above comparables One and Two, while below Comparable Three is appropriate and concluded at $300 per square foot.

MARKET RENT CONCLUSIONS

As discussed, the subject represents a 90,100 square feet of gross retail space situated between street

level, lower level and floors two through six of a corner location. The property features excellent

© 2012 CBRE, Inc.


66

visibility and is an iconic presence for the Oak and Rush retail district. However, its space is large and

the number of floors and overall “volume” is considered a somewhat limiting attribute. Nevertheless, the location is irreplaceable and the quality of the improvements is second to none. In conclusion, we

believe that based on the comparable properties, an analysis of occupancy costs and conversations

with market professionals, we believe a market rental rate near $90.00 per square foot on a triple net

basis over a minimum ten years to be appropriate. For the Citibank space, we estimate market to be near $300 per square foot, triple net over a ten-year term to be appropriate given its location,

visibility and frontage along this “high-street” retail corridor.

The majority of lease terms include escalations either between 2.5% annually or a midterm bump typically between 10% and 15%. We conclude annual escalations of 3%, which is generally in-line

with the current terms.

Tenant improvement allowances varied significantly and were structured based on other terms of the

lease. They have ranged between “as is” to as much as $250 per square foot. Based on our concluded market rent, we estimate a tenant improvement allowance of $50 per square foot.

The following chart shows the market rent conclusions for the subject:

MARKET RENT CONCLUSIONS

CategoryGLA (SF) 90,100 4,600Percent of Total SF 95.1% 4.9%Market Rent ($/SF/Yr.) $90.00 $300.00Concessions None NoneReimbursements NNN NNNAnnual Escalation 3.0% 3.0%Tenant Improvements (New Tenants) $50.00 $50.00Tenant Improvements (Renewals) $10.00 $10.00Average Lease Term 10 Years 10 Years

Compiled by CBRE

Retail Bank

© 2012 CBRE, Inc.


67

RENT ROLL ANALYSIS

The subject’s rent roll is illustrated as follows:

RENT ROLL ANALYSISLease Lease Term Size (GLA) Contract Rental Rate

Tenant Start Expiration (Mos.) SF % Total $/SF/Yr. $/Yr.Barney's New York Mar-09 Jul-24 185 90,100 95.1% $91.04 $8,202,454Citibank Jan-09 Jan-19 121 4,600 4.9% $308.06 $1,417,077

Occupied Subtotals 94,700 100.0% $101.58 $9,619,531Property Totals - Contract Rent 94,700 100.0% $101.58 $9,619,531Property Totals - Market Rent 94,700 100.0% $100.20 $9,489,000

Compiled by CBRE

As illustrated, our estimate of market rent is moderately below the in-place rates. Given the duration of the existing leases, we will account for the above market rent in our overall rate selection.

POTENTIAL RENTAL INCOME CONCLUSION

Within this analysis, potential rental income is estimated based upon the actual income in-place over

the next twelve months. This method of calculating rental income is most prevalent in the local market and is consistent with the method used to derive overall capitalization rates from the comparable sales

data.

OPERATING HISTORY

Given the current owners’ acquisition of the property in the 1Q2011, only the April-December 2011

operating statement and the 2012 operating budget were made available. This operating information is outlined in the following chart.

OPERATING HISTORY

Year-Occupancy

2011 Annualized 2012 Budget

Total $/SF Total $/SFIncome

Rental Income $8,866,312 $93.63 $9,522,599 $100.56Expense Reimbursements 1,916,813 20.24 2,595,124 27.40 Effective Gross Income $10,783,125 $113.87 $12,117,723 $127.96

ExpensesReal Estate Taxes $1,784,243 $18.84 $2,439,711 $25.76Property Insurance 126,000 1.33 96,850 1.02 Common Area Maintenance 20,729 0.22 44,370 0.47 Management Fee 54,580 0.58 55,200 0.58 Non-Reimbursable Expense - - - - Operating Expenses $1,985,552 $20.97 $2,636,131 $27.84

Net Operating Income $8,797,573 $92.90 $9,481,592 $100.12

Annualized Amounts Represent April-December, 2011 operations.

Source: Operating statements

100.0% 100.0%

© 2012 CBRE, Inc.


68

VACANCY AND COLLECTION LOSS

As previously discussed, due to the length of the subject leases (with approximately 12 and 7+ years

remaining, excluding renewal options), and the good quality tenants, no vacancy and credit loss was applied. Any vacancy and/or tenant credit risk is accounted for in the capitalization rate.

EXPENSE REIMBURSEMENTS

The subject’s leases are based on a triple net structure whereby the tenants reimburse the owner for a

pro rata share of real estate taxes, CAM and insurance. The subject’s expense reimbursements are detailed as follows:

EXPENSE REIMBURSEMENTS

Year Total $/SF 2011 Annualized $1,916,813 $20.24 2012 Budget $2,595,124 $27.40 CBRE Estimate $1,996,041 $21.08

Compiled by CBRE

The difference between the projected amounts is the result of the projected real estate tax expense and

anticipated recovery.

EFFECTIVE GROSS INCOME

The subject’s effective gross income is detailed as follows:

EFFECTIVE GROSS INCOME

Year Total $/SF 2011 Annualized $10,783,125 $113.872012 Budget $12,117,723 $127.96CBRE Estimate $11,615,572 $122.66

Compiled by CBRE

OPERATING EXPENSE ANALYSIS

Expense Comparables

The following chart summarizes expenses obtained from comparable properties.

© 2012 CBRE, Inc.


69

EXPENSE COMPARABLES

Comparable Number 1 2 3Location Oak Street 1001 N. Rush S. State StreetGLA (SF) 10,786 10,786 54,582Expense Year 2010 Pro Forma 2009 Pro Forma 2010 Annual.

Effective Gross Income $1,161,346 $107.67 $1,112,557 $103.15 $2,610,983 $47.84

Expenses Total $/SF Total $/SF Total $/SF

Real Estate Taxes 149835 $13.89 $148,347 $13.75 $574,663 $10.53Property Insurance 7011 0.65 5,393 0.50 32,333 0.59 Common Area Maintenance 10786 1.00 - - 31,965 0.59 Management Fee 11,613 1.08 11,126 1.03 36,000 0.66

(as a % of EGI) 1.0% 1.0% 1.4%Non-Reimbursable Expense - - - - 35,776 0.66

Operating Expenses $179,245 $16.62 $164,866 $15.29 $710,737 $13.02Operating Expense Ratio 15.4% 14.8% 27.2%

Source: Actual Operating Statements and Budgets

The following subsections represent the analysis for the pro forma estimate of each category of the

subject’s stabilized expenses.

Real Estate Taxes

The real estate taxes for the subject were previously discussed. The subject’s expense is detailed as follows:

REAL ESTATE TAXES

Year Total $/SF 2011 Annualized $1,784,243 $18.84 2012 Budget $2,439,711 $25.76 Expense Comparable 1 N/A $13.89 Expense Comparable 2 N/A $13.75 Expense Comparable 3 N/A $10.53 CBRE Estimate $1,837,771 $19.41

Compiled by CBRE

Property Insurance

Property insurance expenses typically include fire and extended coverage and owner’s liability coverage. The subject’s expense is detailed as follows:

PROPERTY INSURANCE

Year Total $/SF 2011 Annualized $126,000 $1.33 2012 Budget $96,850 $1.02 Expense Comparable 1 N/A $0.65 Expense Comparable 2 N/A $0.50 Expense Comparable 3 N/A $0.59 CBRE Estimate $96,850 $1.02

Compiled by CBRE

© 2012 CBRE, Inc.


70

Common Area Maintenance

Common area maintenance expenses typically include snow removal, utilities, building maintenance,

and routine repairs and maintenance of the building and site improvements. As the tenants are

responsible for their spaces, this expense represents those costs incurred by the landlord for the limited

common areas. The subject’s expense is detailed as follows:

COMMON AREA MAINTENANCE

Year Total $/SF 2011 Annualized $20,729 $0.22 2012 Budget $44,370 $0.47 Expense Comparable 1 N/A $1.00 Expense Comparable 2 N/A $0.00 Expense Comparable 3 N/A $0.59 CBRE Estimate $44,370 $0.47

Compiled by CBRE

Management Fee

Management expenses are typically negotiated as a percentage of collected revenues (i.e., effective

gross income). The subject’s expense is detailed as follows:

MANAGEMENT FEE

Year Total % EGI 2011 Annualized $54,580 0.5% 2012 Budget $55,200 0.5% CBRE Estimate $55,440 0.5%

Compiled by CBRE

Given the net lease structure and only 2 tenant nature of the property, the management fee is

structured at an initially flat fee minimum of $4500 per month, increasing 3% annually. Given the property characteristics, we are of the opinion that this is an appropriate management fee.

Reserves for Replacement

Reserves for replacement have been estimated based on discussions with knowledgeable market

participants who indicate a range from $0.10 to $0.25 per square foot for comparable properties

and is dependent upon use. We have utilized reserves of $0.15 per square foot. Per local market custom, reserves are not incorporated as an expense item in the Direct Capitalization Technique.

© 2012 CBRE, Inc.


71

OPERATING EXPENSE CONCLUSION

The subject’s expense is detailed as follows:

OPERATING EXPENSES

Year Total $/SF 2011 Annualized $1,985,552 $20.97 2012 Budget $2,636,131 $27.84 Expense Comparable 1 N/A $16.62 Expense Comparable 2 N/A $15.29 Expense Comparable 3 N/A $13.02 CBRE Estimate $2,034,430 $21.48

Compiled by CBRE

The subject’s per square foot operating expense pro forma, net of real estate taxes, is generally in line

with the past operating history and market data presented.

NET OPERATING INCOME CONCLUSION

The subject’s net operating income is detailed as follows:

NET OPERATING INCOME

Year Total $/SF 2011 Annualized $8,797,573 $92.90 2012 Budget $9,481,592 $100.12 CBRE Estimate $9,581,142 $101.17 Compiled by CBRE

DIRECT CAPITALIZATION

Direct capitalization is a method used to convert a single year’s estimated stabilized net operating

income into a value indication. The following subsections represent different techniques for deriving

an overall capitalization rate for direct capitalization.

Comparable Sales

The overall capitalization rates (OARs) confirmed for the comparable sales analyzed in the sales comparison approach are as follows:

© 2012 CBRE, Inc.


72

COMPARABLE CAPITALIZATION RATESSale Sale Price

Sale Date $/SF Occupancy OAR1 Apr-12 $7,064.80 100% 5.25%2 Oct-10 $1,205.30 100% 7.52%3 Aug-11 $848.32 100% 5.89%4 Nov-11 $1,428.40 100% 6.30%5 May-10 $583.33 100% 6.90%6 Feb-11 $511.11 100% 5.87%7 Apr-11 $299.67 72% 7.91%8 Oct-07 $730.33 100% 6.01%

Indicated OAR: 5.25% - 7.50%

Compiled by: CBRE

The overall capitalization rates for these sales were derived based upon the actual or pro-forma

income characteristics of the property. Sale One was under contract as of the effective valuation

date, while sales 2 – 7 all occurred in 2010-2011. Sale 8 occurred in October 2007, but is included as it is represents a newer, single-tenant retail component. Sale One represents the Lululemon store

located at the south end of the subject’s block, while Sale Two represents the Prada Store, located

diagonally across the intersection from the subject. Primary emphasis has been placed on the most

recent sales.

Published Investor Surveys

The results of the most recent investor surveys are summarized in the following chart.

OVERALL CAPITALIZATION RATESInvestment Type OAR Range Average

Korpacz Net Lease

National Data 6.00% - 8.75% 7.46%

Indicated OAR: 6.0% - 7.0%

Compiled by: CBRE

The subject is considered to be a Class A property featuring a trophy location within an internationally

renowned “high-street” retail corridor, within a primary city or “core” market. Despite these factors,

the subject’s large size and multi-level design warrants a moderately higher cap rate than reflected by the recent Lululemon transaction (5.25%). Therefore, an OAR in the lower half of the suggested

range is judged to be appropriate.

Market Participants

Per our research, it is apparent that investor interest is squarely focused on quality, net leased assets in

“fortress” locations. There is a generally perceived scarcity of quality, core product in primary markets

and equity investors have re-entered the market creating competition for the high-quality assets that

are being offered, which is driving overall capitalization rates down.

© 2012 CBRE, Inc.


73

We have reviewed investor surveys and spoken with market professionals, who indicated that

applicable rates of “low 5s, but definitely sub 6” would be appropriate for a trophy asset like the subject. However, the previously referenced building characteristics create some “pause”, especially

in the event the property would have to be re-tenanted. Thus, they indicated that an adjustment of 50

to 150 basis points would be considered. As a result of this analysis, we have concluded a 6.0%

capitalization rate for the subject.

Capitalization Rate Conclusion

The following chart summarizes the OAR conclusions.

OVERALL CAPITALIZATION RATE - CONCLUSIONSource Indicated OARComparable Sales 5.25% - 7.50%National Investor Survey 6.0% - 7.0%Market Participants Low 5s; but sub 6%CBRE Estimate 6.00%

Compiled by: CBRE

Direct Capitalization Summary

A summary of the direct capitalization at stabilized occupancy is illustrated in the following chart.

© 2012 CBRE, Inc.


74

DIRECT CAPITALIZATION SUMMARY

Income SF $/Month No. of Months $/SF/Yr Total Barney's New York 90,100 $665,522 1 $665,522

$685,176 11 $7,536,931Barney's Rental Income April 2013 - March 2013 $91.04 $8,202,454

Citibank 4,600 $117,566 10 $1,175,661$120,708 2 $241,415

Citibank Rental Income April 2013 - March 2013 $308.06 $1,417,077

Gross Potential Rental Income 94,700 $101.58 $9,619,531

Vacancy and Collection Loss 0.00% - - Gross Rental Income $101.58 $9,619,531

Expense Reimbursements $21.08 1,996,041 Effective Gross Income $122.66 $11,615,572

ExpensesReal Estate Taxes $19.41 $1,837,771Property Insurance $1.02 96,850 Common Area Maintenance $0.47 44,370 Management Fee $0.59 55,440

Operating Expenses $21.48 $2,034,431Operating Expense Ratio 17.51%Net Operating Income $101.17 $9,581,141OAR / 6.00%Indicated Value $159,685,676Rounded $159,700,000Value Per SF $1,686

Matrix Analysis Cap Rate Value5.75% $166,600,0006.00% $159,700,0006.25% $153,300,000

Compiled by CBRE

© 2012 CBRE, Inc.


75

DISCOUNTED CASH FLOW ANALYSIS (DCF)

The DCF assumptions concluded for the subject are summarized as follows:

SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS

General Assumptions

Start Date Apr-12Terms of Analysis 10 YearsSoftware ARGUS

Growth Rate Assumptions

Income Growth 3.00%Expense Growth 3.00%Inflation (CPI) 3.00%Real Estate Tax Growth 3.00%

Market Leasing Assumptions

Category Retail BankMarket Rent ($/SF/Yr.) $90.00 $300.00Concessions None NoneReimbursements NNN NNNAnnual Escalation 3.0% 3.0%Tenant Improvements (New Tenants) $50.00 $50.00Tenant Improvements (Renewals) $10.00 $10.00Average Lease Term 10 Years 10 YearsRenewal Probability 70% 70%Leasing Commissions (Cashed-Out)

New Leases 5.0% 5.0%Renewal Leases 2.0% 2.0%

Down Time Before New Tenant Leases 18 Months 12 MonthsBlended Down Time Between Leases 5 Months 4 Months

Occupancy Assumptions

Total Operating Expenses ($/SF/Yr.) $21.48Current Occupancy 100.00%Stabilized Occupancy (w/Credit Loss) 100.00%

Financial Assumptions

Discount Rate 8.00%Terminal Capitalization Rate 7.00%

Other Assumptions

Cost of Sale 1.00%

Compiled by CBRE

Provided on the following pages is a discussion of the leasing assumptions used in the discounted

cash flow analysis that were not analyzed in the direct capitalization approach.

© 2012 CBRE, Inc.


76

General Assumptions

The DCF analysis utilizes a 10-year projection period. This is consistent with current investor

assumptions.

Growth Rate Assumptions

The inflation and growth rates for the DCF analysis have been estimated by analyzing the expectations typically used by buyers and sellers in the local marketplace. Published investor surveys, an analysis of

the Consumer Price Index (CPI), as well as CBRE's survey of brokers and investors active in the local

market form the foundation for the selection of the appropriate growth rates. The compilation is shown in the following chart.

SUMMARY OF GROWTH RATESInvestment Type Rent Expenses Inflation

U.S. Bureau of Labor Statistics (CPI-U)10-Year Snapshot Average as of Mar-12 2.52%

Korpacz Net LeaseNational Data 0.79% 1.88% n/a

CBRE Estimate 3.00% 3.00% 3.00%

Compiled by: CBRE

Leasing Assumptions

The contract lease terms for the existing tenants are utilized within the DCF analysis, with market

leasing assumptions applied for renewals and absorption tenants. All subsequent years vary

according to the growth rate assumptions applied to the Year 1 estimate.

Leasing Commissions

The following table presents the leasing commissions quoted for the subject, those prevalent in the

market as derived through the comparable properties, and our pro forma estimate.

LEASING COMMISSIONS

Category

Rent Comparables and/or Broker Data

New Tenants

Renewals

CBRE Estimate

New Tenants 5.0% 5.0%

Renewals 2.0% 2.0%

Compiled by CBRE

Retail Bank

4.0% - 6.0%

2.0% - 3.0%

© 2012 CBRE, Inc.


77

Renewal Probability

The renewal probability incorporated within the market leasing assumptions has been estimated at

70%. This rate is considered reasonable based on the rent comparable data, a survey of market

participants, and our analysis of actual leasing activity at the subject.

Downtime Between Leases

The downtime estimate at lease rollover incorporated within the market leasing assumptions has been

estimated at 18 months for the anchor space and 12 months for the bank space. These rates are

considered reasonable based on the rent comparable data, a survey of market participants, and our

analysis of actual leasing activity at the subject.

Occupancy Assumptions

The occupancy rate over the holding period is based on the subject’s estimated stabilized occupancy

rate and estimated lease-up period to achieve a stabilized occupancy position.

Vacancy, Credit Loss and Absorption

Please refer to the market analysis of this report for a detailed discussion of these elements.

Financial Assumptions

Discount Rate Analysis

The results of the most recent investor surveys are summarized in the following chart.

DISCOUNT RATESInvestment Type Rate Range Average

Korpacz Net LeaseNational Data 7.00% - 9.00% 8.16%

CBRE Estimate 8.00%

Compiled by: CBRE

The subject is considered to be a Class A property. Because of the subject’s investment characteristics, the scheduled rent levels near the end of the holding period, and the resulting

estimated reversionary value, a discount rate towards the middle to lower end of the range indicated

in the preceding table is considered appropriate.

Terminal Capitalization Rate

The reversionary value of the subject is based on an assumed sale at the end of the holding period based on capitalizing the Year 11 NOI at a terminal capitalization rate. Typically, for properties

similar to the subject, terminal capitalization rates are 50 to 100 basis points higher than going-in

© 2012 CBRE, Inc.


78

capitalization rates (OARs). This is a result of the uncertainty of future economic conditions and the

natural aging of the property. For the subject, we have concluded a load factor of 100 basis points to be appropriate.

TERMINAL CAPITALIZATION RATESInvestment Type Rate Range Average

Korpacz Net LeaseNational Data 6.50% - 9.00% 8.25%

CBRE Estimate 7.00%

Compiled by: CBRE

Discounted Cash Flow Conclusion

The DCF schedule and value conclusions are depicted on the following page(s).

© 2012 CBRE, Inc.

1-1

5 E

AST

OA

K S

TREE

T, C

HIC

AG

O, IL

CA

SH F

LOW

REP

OR

T B

EGIN

NIN

G A

PR

IL 1

, 2012

Y

ear

1

Yea

r 2

Y

ear

3

Yea

r 4

Y

ear

5

Yea

r 6

Y

ear

7

Yea

r 8

Y

ear

9

Yea

r 10

Reve

rsio

nFo

r th

e Yea

rs E

ndin

g

M

ar-2

013

Mar

-2014

Mar

-2015

Mar

-2016

Mar

-2017

Mar

-2018

Mar

-2019

Mar

-2020

Mar

-2021

Mar

-2022

Mar

-2023

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

Pote

ntia

l Gro

ss R

even

ue

Base

Ren

tal R

even

ue

$9,6

19,5

31

$9,8

99,7

41

$10,1

88,2

58

$10,4

85,3

16

$10,7

91,1

67

$11,1

06,0

75

$11,4

21,6

60

$11,7

53,9

71

$12,0

93,5

18

$12,4

51,6

00

$12,8

20,2

87

A

bsor

ptio

n &

Tur

nove

r V

acan

cy

-274,6

32

-282,8

71

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

Sche

dule

d Ba

se R

enta

l Rev

enue

9,6

19,5

31

9,8

99,7

41

10,1

88,2

58

10,4

85,3

16

10,7

91,1

67

11,1

06,0

75

11,1

47,0

28

11,4

71,1

00

12,0

93,5

18

12,4

51

,600

12,8

20,2

87

Ex

pens

e Re

imbu

rsem

ent

Reve

nue

Expe

nse

Reco

veri

es

1,9

96,0

41

2,0

55,9

22

2,1

17,5

99

2,1

81,1

28

2,2

46,5

62

2,3

13,9

58

2,3

63,7

18

2,4

34,6

27

2,5

28,5

24

2,6

04,3

82

2,6

82,5

12

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

To

tal R

eim

burs

emen

t Re

venu

e

1,9

96,0

41

2,0

55,9

22

2,1

17,5

99

2,1

81,1

28

2,2

46,5

62

2,3

13,9

58

2,3

63,7

18

2,4

34,6

27

2,5

28,5

24

2,6

04,3

82

2,6

82,5

12

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

Tota

l Pot

entia

l Gro

ss R

even

ue

11,6

15,5

72

11,9

55,6

63

12,3

05,8

57

12,6

66,4

44

13,0

37,7

29

13,4

20,0

33

13,5

10,7

46

13,9

05,7

27

14,6

22,0

42

15,0

55,9

82

15,5

02,7

99

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

Effe

ctiv

e G

ross

Rev

enue

11,6

15,5

72

11,9

55,6

63

12,3

05,8

57

12,6

66,4

44

13,0

37,7

29

13,4

20,0

33

13,5

10,7

46

13,9

05,7

27

14,6

22,0

42

15,0

55,9

82

15,5

02,7

99

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

Ope

ratin

g Ex

pens

es

Re

al E

stat

e Ta

xes

1,8

37,7

76

1,8

92,9

09

1,9

49,6

97

2,0

08,1

87

2,0

68,4

33

2,1

30,4

86

2,1

94,4

01

2,2

60,2

33

2,3

28,0

40

2,3

97,8

81

2,4

69,8

17

In

sura

nce

96,8

50

99,7

55

102,7

48

105,8

31

109,0

05

112,2

76

115,6

44

119,1

13

122,6

87

126,3

67

130,1

58

C

AM

44,3

70

45,7

01

47,0

72

48,4

84

49,9

39

51,4

37

52,9

80

54,5

70

56,2

07

57,8

93

59,6

30

M

anag

emen

t Fe

e

55,4

40

57,1

03

58,8

16

60,5

81

62,3

98

64,2

70

66,1

98

68,1

84

70,2

30

72,3

37

74,5

07

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

Tota

l Ope

ratin

g Ex

pens

es

2,0

34,4

36

2,0

95,4

68

2,1

58,3

33

2,2

23,0

83

2,2

89,7

75

2,3

58,4

69

2,4

29,2

23

2,5

02,1

00

2,5

77,1

64

2,6

54,4

78

2,7

34,1

12

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

Net

Ope

ratin

g In

com

e

9,5

81,1

36

9,8

60,1

95

10,1

47,5

24

10,4

43,3

61

10,7

47,9

54

11,0

61,5

64

11,0

81,5

23

11,4

03,6

27

12,0

44,8

78

12,4

01,

504

12,7

68,6

87

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

Leas

ing

& C

apita

l Cos

ts

Tena

nt Im

prov

emen

ts

124,4

63

Leas

ing

Com

mis

sion

s

564,2

47

Rese

rves

for

Rep

lace

men

t

23,6

75

24,3

85

25,1

17

25,8

70

26,6

46

27,4

46

28,2

69

29,1

17

29,9

91

30,8

91

31,8

17

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

Tota

l Lea

sing

& C

apita

l Cos

ts

23,6

75

24,3

85

25,1

17

25,8

70

26,6

46

27,4

46

28,2

69

717,8

27

29,9

91

30,8

91

31,8

17

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

___

____

____

_

____

____

__

Cas

h Fl

ow B

efor

e D

ebt

Serv

ice

9,5

57,4

61

9,8

35,8

10

10,1

22,4

07

10,4

17,4

91

10,7

21,3

08

11,0

34,1

18

11,0

53,2

54

10,6

85,8

00

12,0

14,8

87

12,3

70

,613

12,7

36,8

70

& T

axes

=

==

==

==

==

=

==

==

==

==

=

==

==

==

==

=

==

==

==

==

=

==

==

==

==

=

==

==

==

==

=

==

==

==

==

=

==

==

==

==

=

==

==

==

==

=

==

==

==

==

=

==

==

==

==

IM

PLIE

D O

VER

ALL

RA

TE6.1

9%

6.3

7%

6.5

5%

6.7

4%

6.9

4%

7.1

4%

7.1

6%

7.3

7%

7.7

8%

8.0

1%

CA

SH O

N C

ASH

RET

URN

6.1

7%

6.3

5%

6.5

4%

6.7

3%

6.9

2%

7.1

3%

7.1

4%

6.9

0%

7.7

6%

7.9

9%

Sa

le /

Yie

ldTe

rmin

al C

apita

lizat

ion

Rate

Dis

coun

t Ra

te6.

50%

7.00

%7.

50%

7.5

0%

$167,2

50,2

64

$160,5

10,3

34

$154,6

69,0

61

8.0

0%

$161,2

68,4

31

$154,8

34,1

13

$149,2

57,7

05

8.5

0%

$155,5

58,5

67

$149,4

14,6

88

$144,0

89,9

93

C

ost

of S

ale

at R

ever

sion

:1.

00%

Build

ing

Size

(SF

):94,7

00

Pe

rcen

t Re

sidu

al:

54.0

% R

eco

nci

led

Va

lue I

nd

ica

tion

(R

ou

nd

ed

):$154,8

00,0

00

Va

lue P

er

Squ

are

Foot:

$1,6

34.6

4

02

,00

0,0

00

4,0

00

,00

06

,00

0,0

00

8,0

00

,00

01

0,0

00

,00

01

2,0

00

,00

01

4,0

00

,00

0

12

34

56

78

91

0

Total $'s

Yea

r

NO

I a

nd

Ca

sh F

low

Tre

nd

Net

Ope

ratin

g In

com

e

Net

Cas

h F

low

© 2

012

CBR

E, In

c.


80

CONCLUSION OF INCOME CAPITALIZATION APPROACH

The conclusions derived via the Income Capitalization Approach are as follows:

INCOME CAPITALIZATION APPROACH VALUESDirect Capitalization Method $159,700,000 Discounted Cash Flow Analysis $154,800,000 Reconciled Value $155,000,000

Compiled by CBRE

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | RECONCILIATION OF VALUE

81

RECONCILIATION OF VALUE

The value indications from the approaches to value are summarized as follows:

SUMMARY OF VALUE CONCLUSIONSSales Comparison Approach $150,000,000 Income Capitalization Approach $155,000,000 Reconciled Value $155,000,000

Compiled by CBRE

In the sales comparison approach, the subject is compared to similar properties that have been sold

recently or for which listing prices or offers are known. The sales used in this analysis are considered somewhat comparable to the subject, yet the required adjustments were based on reasonable and

well-supported rationale. In addition, market participants are currently analyzing purchase prices on

investment properties as they relate to available substitutes in the market. Therefore, the sales

comparison approach is considered to provide a reliable value indication, but has been given secondary emphasis in the final value reconciliation.

The income capitalization approach is applicable to the subject since it is an income producing

property leased in the open market. Market participants are primarily analyzing properties based on their income generating capability. Therefore, the income capitalization approach is considered a

reasonable and substantiated value indicator and has been given relative emphasis in the final value

estimate.

Based on the foregoing, the market value of the subject has been concluded as follows:

MARKET VALUE CONCLUSIONAppraisal Premise Interest Appraised Date of Value Value Conclusion

As Is Leased Fee Interest March 31, 2012 $155,000,000

Compiled by CBRE

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | ASSUMPTIONS AND LIMITING CONDITIONS

82

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 title that would adversely affect marketability or value. CBRE is not aware of any title defects nor has it been advised of any unless such is specifically noted in the report. CBRE, 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’s title should be sought from a qualified title company that issues or insures title to real property.

2. 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. CBRE professionals are not engineers and are not competent to judge matters of an engineering nature. CBRE 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 CBRE by ownership or management; CBRE inspected less than 100% of the entire interior and exterior portions of the improvements; and CBRE 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, CBRE reserves the right to amend the appraisal conclusions reported herein.

3. 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. CBRE has no knowledge of the existence of such materials on or in the property. CBRE, 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.

We 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.

4. 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 CBRE This report may be subject to amendment upon re-inspection of the subject subsequent to repairs, modifications, alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the information, conditions and projected levels of operation.

5. 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, CBRE 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, CBRE 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 CBRE of any questions or errors.

© 2012 CBRE, Inc.


83

6. 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, we will have no obligation to revise this report to reflect events or conditions which occur subsequent to the date of the appraisal. However, CBRE will be available to discuss the necessity for revision resulting from changes in economic or market factors affecting the subject.

7. CBRE assumes no private deed restrictions, limiting the use of the subject in any way.

8. 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.

9. CBRE is not aware of any contemplated public initiatives, governmental development controls, or rent controls that would significantly affect the value of the subject.

10. 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.

11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics are predicated on the information and assumptions contained within the report. Any projections of income, expenses and economic conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market expectations of future income and expenses. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary from the projections considered herein. CBRE does not warrant these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of CBRE

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 CBRE 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. 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.

14. This study may not be duplicated in whole or in part without the specific written consent of CBRE nor may this report or copies hereof be transmitted to third parties without said consent, which consent CBRE reserves the right to deny. Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission to attorneys, accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the report to any court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this appraisal was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any public document without the express written consent of CBRE which consent CBRE reserves the right to deny. Finally, this report shall not be advertised to the public or otherwise used to induce a third party to purchase the property or to make a “sale” or “offer for sale” of any “security”, as such terms are defined and used in the Securities Act of 1933, as amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised that they should rely on their own independently secured advice for any decision in connection with this property. CBRE shall have no accountability or responsibility to any such third party.

15. 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.

16. 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.

17. 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.

18. 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

© 2012 CBRE, Inc.


84

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 CBRE 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. CBRE 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.

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 CBRE 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. CBRE assumes that the subject analyzed herein will be under prudent and competent management and ownership; neither inefficient or super-efficient.

21. 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.

22. 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.

23. 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, CBRE 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 CBRE has no specific information relating to this issue, nor is CBRE 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.

24. 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 approximately result in damage to Appraiser. Notwithstanding the foregoing, Appraiser shall have no obligation under this Section with respect to any loss that is caused solely by the active negligence or willful misconduct of a Client and is not contributed to by any act or omission (including any failure to perform any duty imposed by law) by Appraiser. 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.

25. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter.

© 2012 CBRE, Inc.

11-15 EAST OAK STREET RETAIL | ADDENDA

ADDENDA

© 2012 CBRE, Inc.


ADDENDUM A

GLOSSARY OF TERMS

© 2012 CBRE, Inc.


assessed value Assessed value applies in ad valorem taxation and refers to the value of a property according to the tax rolls. Assessed value may not conform to market value, but it is usually calculated in relation to a market value base. †

cash equivalency The procedure in which the sale prices of comparable properties sold with atypical financing are adjusted to reflect typical market terms.

contract rent The actual rental income specified in a lease. ‡

disposition value The most probable price which a specified interest in real property is likely to bring under all of the following conditions: 1) Consummation of a sale will occur within a limited future marketing period specified by the client; 2) The actual market conditions currently prevailing are those to which the appraised property interest is subject; 3) The buyer and seller is each acting prudently and knowledgeably; 4) The seller is under compulsion to sell; 5) The buyer is typically motivated; 6) Both parties are acting in what they consider their best interests; 7) An adequate marketing effort will be made in the limited time allowed for the completion of a sale; 8) Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 9) 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 rent The rental rate net of financial concessions such as periods of no rent during the lease term; may be calculated on a discounted basis, reflecting the time value of money, or on a simple, straight-line basis. ‡

excess land In regard to an improved site, the land not needed to serve or support the existing improvement. In regard to a vacant site or a site considered as though vacant, the land not needed to accommodate the site’s primary highest and best use. Such land may be separated from the larger site and have its own highest and best use, or it may allow for future expansion of the existing or anticipated improvement. See also surplus land. ‡

extraordinary assumption An assumption directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. See also hypothetical condition. ‡

fee simple estate Absolute ownership unencumbered by any other interest or estate, subject only to the limitations

imposed by the governmental powers of taxation, eminent domain, police power, and escheat. ‡

floor area ratio (FAR) The relationship between the above-ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area; also called building-to-land ratio. ‡

full service lease A lease in which rent covers all operating expenses. Typically, full service leases are combined with an expense stop, the expense level covered by the contract lease payment. Increases in expenses above the expense stop level are passed through to the tenant and are known as expense pass-throughs.

going concern value Going concern value is the value of a proven property operation. It includes the incremental value associated with the business concern, which is distinct from the value of the real estate only. Going concern value includes an intangible enhancement of the value of an operating business enterprise which is produced by the assemblage of the land, building, labor, equipment, and marketing operation. This process creates an economically viable business that is expected to continue. Going concern value refers to the total value of a property, including both real property and intangible personal property attributed to the business value. †

gross building area (GBA) The total floor area of a building, including below-grade space but excluding unenclosed areas, measured from the exterior of the walls. Gross building area for office buildings is computed by measuring to the outside finished surface of permanent outer building walls without any deductions. All enclosed floors of the building including basements, mechanical equipment floors, penthouses, and the like are included in the measurement. Parking spaces and parking garages are excluded. ‡

hypothetical condition That which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. See also extraordinary assumption. ‡

investment value Investment value is the value of an investment to a particular investor based on his or her investment requirements. In contrast to market value, investment value is value to an individual, not value in the marketplace. Investment value reflects the subjective relationship between a particular investor and a given investment. When measured in dollars, investment value is the price an investor would pay for an investment in light of its perceived capacity to satisfy his or her desires,

© 2012 CBRE, Inc.


needs, or investment goals. To estimate investment value, specific investment criteria must be known. Criteria to evaluate a real estate investment are not necessarily set down by the individual investor; they may be established by an expert on real estate and its value, that is, an appraiser. †

leased fee See leased fee estate

leased fee estate An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease.‡

leasehold See leasehold estate

leasehold estate The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions.‡

liquidation value The most probable price which a specified interest in real property is likely to bring under all of the following conditions: 1) Consummation of a sale will occur within a severely limited future marketing period specified by the client; 2) The actual market conditions currently prevailing are those to which the appraised property interest is subject; 3) The buyer is acting prudently and knowledgeably; 4) The seller is under extreme compulsion to sell; 5) The buyer is typically motivated; 6) The buyer is acting in what he or she considers his or her best interests; 7) A limited marketing effort and time will be allowed for the completion of a sale; 8) Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 9) 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. ‡

market rent The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations; the lessee and lessor each acting prudently and knowledgeably, and assuming consummation of a lease contract as of a specified date and the passing of the leasehold from lessor to lessee under conditions whereby: 1) lessee and lessor are typically motivated; 2) both parties are well informed or well advised, and acting in what they consider their best interests; 3) a reasonable time is allowed for exposure in the open market; 4) the rent payment is made in terms of cash in U.S. dollars and is expressed as an amount per time period consistent with the payment schedule of the lease contract; and 5) the rental amount represents the normal consideration for the

property leased unaffected by special fees or concessions granted by anyone associated with the transaction. ‡

market value Market value is one of the central concepts of the appraisal practice. Market value is differentiated from other types of value in that it is created by the collective patterns of the market. 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) A reasonable time is allowed for exposure in the open market; 2) Both parties are well informed or well advised, and acting in what they consider their own best interests; 3) Buyer and seller are typically motivated; 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.§

marketing period The time it takes an interest in real property to sell on the market subsequent to the date of an appraisal. ‡

net lease Lease in which all or some of the operating expenses are paid directly by the tenant. The landlord never takes possession of the expense payment. In a Triple Net Lease all operating expenses are the responsibility of the tenant, including property taxes, insurance, interior maintenance, and other miscellaneous expenses. However, management fees and exterior maintenance are often the responsibility of the lessor in a triple net lease. A modified net lease is one in which some expenses are paid separately by the tenant and some are included in the rent.

net rentable area (NRA) 1) The area on which rent is computed. 2) The Rentable Area of a floor shall be computed by measuring to the inside finished surface of the dominant portion of the permanent outer building walls, excluding any major vertical penetrations of the floor. No deductions shall be made for columns and projections necessary to the building. Include space such as mechanical room, janitorial room, restrooms, and lobby of the floor. *

occupancy rate The relationship or ratio between the income received from the rented units in a property and the income that would be received if all the units were occupied.‡

prospective value opinion A forecast of the value expected at a specified future date. A prospective value opinion is most frequently sought in connection with real estate projects that are proposed, under construction, or under conversion to a new us, or those that have not

© 2012 CBRE, Inc.


achieved sellout or a stabilized level of long-term occupancy at the time the appraisal report is written. ‡

reasonable exposure time The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based upon an analysis of past events assuming a competitive and open market. ††

rent See full service lease net lease market rent contract, coupon, face, or nominal rent effective rent

shell rent The typical rent paid for retail, office, or industrial tenant space based on minimal “shell” interior finishes (called plain vanilla finish in some areas). Usually the landlord delivers the main building shell space or some minimum level of interior build-out, and the tenant completes the interior finish, which can include wall, ceiling, and floor finishes; mechanical systems, interior electric, and plumbing. Typically these are long-term leases with tenants paying all or most property expenses. ‡

surplus land Land not necessary to support the highest and best use of the existing improvement but, because of physical limitations, building placement, or neighborhood norms, cannot be sold off separately. Such land may or may not contribute positively to value and may or may not accommodate future expansion of an existing or anticipated improvement. See also excess land. ‡

usable area 1) The area actually used by individual tenants. 2) The Usable Area of an office building is computed by measuring to the finished surface of the office side of corridor and other permanent walls, to the center of partitions that separate the office from adjoining usable areas, and to the inside finished surface of the dominant portion of the permanent outer building walls. Excludes areas such as mechanical rooms, janitorial room, restrooms, lobby, and any major vertical penetrations of a multi-tenant floor. *

use value Use value is a concept based on the productivity of an economic good. Use value is the value a specific property has for a specific use. Use value focuses on the value the real estate contributes to the enterprise of which it is a part, without regard to the property’s highest and best use or the monetary amount that might be realized upon its sale. †

value indication An opinion of value derived through application of the appraisal process. ‡

† The Appraisal of Real Estate, Thirteenth Edition, Appraisal Institute, 2008.

‡ The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute, 2002.

§ Office of Comptroller of the Currency (OCC), 12 CFR Part 34, Subpart C – Appraisals, 34.42 (g); Office of Thrift Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP).

* 2000 BOMA Experience Exchange Report, Income/Expense Analysis for Office Buildings (Building Owners and Managers Association, 2000)

†† Statement on Appraisal Standard No. 6, Appraisal Standards Board of The Appraisal Foundation, September 16, 1993, revised June 15, 2004.

© 2012 CBRE, Inc.


ADDENDUM B

LEGAL DESCRIPTION

© 2012 CBRE, Inc.

RETAIL SALE No. 1

930 N. Rush StreetChicago,IL 60611Cook

Financial Data Advisor100Pro Forma

N/AN/AN/AN/A

$1,086,750

TotalN/A

Per SF

Analysis

Overall Cap. Rate (OAR):Direct Cap5.25 %N/A %N/AN/A %$7064.80

Comments Sale represents the purchase of the Lululemon store located at the northwest corner of Rush and Walton. Single-tenant, net leasetransaction. Lululemon executed a 10-year lease in 2009 at an initial rental rate of $357/SF, increasing 3% annually.

Lululemon - Chicago

N/AN/AN/A

$370.90

Buyers Underwriting Criteria.:

Source:Occupancy at Sale:Existing or ProForma Inc:

Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:Net Operating Income:

Location:

County:

Location Data

Physical Data

Sale Data Sale

Entity controlled by Fred LatskoAcadia Realty TrustN/A

Cash to Seller$20,700,000

$20,700,000$0$20,700,000Selling broker, TIAA acquisition representatives, published data

Misc. Freestanding RetailType:

N/A4/2012

Transaction Type:

Sale Price:

Date:Marketing Time:Grantor:Grantee:Document No.:

Req.Capital Cost:

Financing:Cash Eq.Price:

Adj. Sale Price:Verification:

17-03-206-014-0000N/AAtlas Ref:

Assessor's Parcel No:

Eff. Gross Multiplier (EGIM):Oper. Expense Ratio (OER):Price Per Square Foot:

Land Area: 0.07 Acres

Projected IRR:

Excess Land:

Year Built:

Condition:Exterior Walls:

Parking:

Gross Leasable Area:

Anchor Tenant GLA:

Anchors:

GLA Purchased:

Lululemon

Total GLA:Local Tenant GLA:

None

2009

excellentMasonry

None

2,930 SF

2,930 SF

2,930 SF2,930 SF

Single-tenant

N/A

© 2012 CBRE, Inc.

RETAIL SALE No. 2

30 East Oak StreetChicago,IL 60611Cook

Financial Data Appraiser100%Existing

$982,100N/A

$982,100$5,000

$977,100

Total$91.05

Per SF

Analysis

Overall Cap. Rate (OAR):Direct Cap7.52 %N/A %13.240.51 %$1205.30

Comments This sale represents the acquisition of a four-story, 10,786 square foot, single-tenant retail property located at the northeast cornerof Rush and Oak Streets in Chicago's upscale Gold Coast neighborhood approximately three blocks from North Michigan Avenue.In October 2010 the property was acquired as part of a three-property portfolio of Prada retail stores. The other two locations werein New York and Los Angeles. The total purchase price was reported to be approximately $90,000,000. The allocated purchaseprice for the Chicago asset was $13,000,000, or $1,205.30 per square foot. At the time of sale the property was 100% leased andoccupied by Prada over a long-term lease extending until June 2019 at which time the first of five six-year renewal options could beexercised. The in-place rental rate was $91.05 per square foot, which increases 15% every five years and in each renewal option.Based on existing income and a $5,000 nominal non-recoverable expense amount, the implied overall capitalization rate is 7.52%.This was an off market transaction and the buyer approached the seller.

Prada

N/A$91.05$0.46

$90.59




Location:

County:

Location Data

Physical Data

Sale Data Sale

Red Sail Real Estate Chicago, Inc.VZW CHI Aquisitions Group LLC1036210057

Market Terms$13,000,000

$13,000,000$0$13,000,000Public Records, Broker


N/A10/2010

Transaction Type:

Sale Price:


Req.Capital Cost:



17-30-204-009N/AAtlas Ref:




Projected IRR:

Excess Land:

Year Built:


Parking:


Anchor Tenant GLA:

Anchors:

GLA Purchased:

Prada


None

1901

GoodConcrete and Glass

None

10,786 SF

10,786 SF

10,786 SF10,786 SF

Renovated

N/A

© 2012 CBRE, Inc.

RETAIL SALE No. 3

56 East Walton PlaceChicago,IL 60611Cook

Financial Data Buyer100%Existing

N/AN/AN/AN/A

$443,700

TotalN/A

Per SF

Analysis


Comments This comparable represents the sale of a 8,874 square foot retail building located at 56 East Walton Place in Chicago, CookCounty, Illinois. The location is in an established high-end shopping destination just west of Michigan Avenue. The space wasleased to Burton at a net rental rate or $50.00 per square foot. Built in 1884 and renovated in 1999, the three-story building servesat the Burton flagship location. In August 2011, the property sold for a consideration of $7,528,000, or $848.32 per square foot.Based on the net rental rate with no offset for vacancy or other expenses, an overall capitalization rate of 5.89% is indicated by thetransaction.

Burton

N/AN/AN/A

$50.00




Location:

County:

Location Data

Physical Data

Sale Data Sale

Latsko PropertiesAcadia Realty Trust1123042074


$7,528,000$0$7,528,000Public Records


N/A8/2011

Transaction Type:

Sale Price:


Req.Capital Cost:



17-03-207-037N/AAtlas Ref:




Projected IRR:

Excess Land:

Year Built:


Parking:


Anchor Tenant GLA:

Anchors:

GLA Purchased:

Burton


None

1884

GoodMasonry

Street

8,874 SF

8,874 SF

8,874 SF8,874 SFN/A

© 2012 CBRE, Inc.

RETAIL SALE No. 4

6 North Michigan AvenueChicago,IL 60602Cook

Financial Data Buyer100%Existing

N/AN/AN/AN/A

$636,390

TotalN/A

Per SF

Analysis


Comments This comparable represents the sale of a 7,071 square foot retail condominium located at 6 North Michigan Avenue in Chicago,Cook County, Illinois. The location is in close proximity to Millennium Park and the Art Institute of Chicago in the Chicago CentralBusiness District. The two-tenant spaces are leased to Panera Bread and Starbucks for 15 year terms. The initial rental ratesaverage $90.00 per square foot and escalate in years six and eleven. In November 2011, the property sold for a consideration of$10,100,000, or $1,428.37 per square foot. Based on the net rental rate with no offset for vacancy or other expenses, an overallcapitalization rate of 6.30% is indicated by the transaction.

6 North Michigan Avenue

N/AN/AN/A

$90.00




Location:

County:

Location Data

Physical Data

Sale Data Sale

6 NM Retail, Inc.Fedo's LLCN/A


$10,100,000$0$10,100,000Buyer

Retail CondominiumType:

N/A11/2011

Transaction Type:

Sale Price:


Req.Capital Cost:



17-10-312-016N/AAtlas Ref:




Projected IRR:

Excess Land:

Year Built:


Parking:


Anchor Tenant GLA:

Anchors:

GLA Purchased:

StarbucksPanera Bread


None

1880

GoodMasonry

Street

7,071 SF

1,995 SF5,076 SF

7,071 SF7,071 SFN/A

© 2012 CBRE, Inc.

RETAIL SALE No. 5

801 West North AvenueChicago,IL 60622Cook

Financial Data Appraiser100%Existing

N/AN/AN/AN/A

$725,000

TotalN/A

Per SF

Analysis


Comments This sale represents the acquisition of a 0.42-acre ground lease property located at the corner of North Avenue and Halsted Streetin Chicago's Lincoln Park neighborhood. The space is occupied by Apple who occupies an 18,000 square foot retail store. Theproperty was built in 2010 on a build-to-suit basis. In May 2010, the property was purchased for $10,500,000, or $583.33 persquare foot. Terms of the Apple ground lease include an annual rent amount of $725,000 flat over the initial ten-year term. Termsof the lease include an early termination option after five years with notification by the 48th month. The implied overallcapitalization rate is 6.90%.

Apple Store Ground Lease

N/AN/AN/A

$40.28




Location:

County:

Location Data

Physical Data

Sale Data Sale

Trust 19939 (M. Development)500 North LLC1013144082


$10,500,000$0$10,500,000Public Records


3 months5/2010

Transaction Type:

Sale Price:


Req.Capital Cost:



17-05-210-008N/AAtlas Ref:




Projected IRR:

Excess Land:

Year Built:


Parking:


Anchor Tenant GLA:

Anchors:

GLA Purchased:

Apple


None

2010

GoodGlass

None

18,000 SF

18,000 SF

18,000 SF18,000 SFN/A

© 2012 CBRE, Inc.

RETAIL SALE No. 6

35 North State StreetChicago,IL 60602Cook

Financial Data Broker100%Existing

N/AN/AN/AN/A

$1,350,000

TotalN/A

Per SF

Analysis


Comments This sale represents the acquisition of 35 North State Street in Chicago, Cook County, Illinois. The building is a free-standing,three-story retail building with approximately 20,000 square feet of lower level storage space not included in the quoted total of45,000 square feet. The property sold in February 2011 for $23,000,000, or $511.11 per square foot. The transaction represents adirect deal and the property was not marketed prior to the sale. At the time of sale the property was 100% leased and occupied byOld Navy. There were approximately six years remaining on the lease at the time of sale. Based on the reported sale price andin-place income, an overall capitalization rate of 5.87% is indicated by the sale. According to market participants familiar with thetransaction, the capitalization rate reflects the potential for future redevelopment as the site as improved is consideredunder-improved as the zoning density has not been maximized.

Old Navy Store

N/AN/AN/A

$30.00




Location:

County:

Location Data

Physical Data

Sale Data Sale

South East Corner AssociatesGeorgetown Company1105618057


$23,000,000$0$23,000,000Public Records


2 months2/2011

Transaction Type:

Sale Price:


Req.Capital Cost:



17-10-311-001-0000N/AAtlas Ref:




Projected IRR:

Excess Land:

Year Built:


Parking:


Anchor Tenant GLA:

Anchors:

GLA Purchased:

Old Navy


None

N/A

GoodGlass and Concrete

Street and Garage

45,000 SF

45,000 SF

45,000 SF45,000 SFN/A

© 2012 CBRE, Inc.

RETAIL SALE No. 7

55 East Randolph StreetChicago,IL 60601Cook

Financial Data Broker72%Existing

N/AN/AN/AN/A

$2,500,000

TotalN/A

Per SF

Analysis


Comments This represents the sale of the retail component of the Heritage at Millennium Park condominium. At 57-stories, the residentialcomponent features 356 luxury units ranging between 800 to 5,000 square feet. The commercial component was 72% leased at thetime of sale and includes 25,263 square feet of lower-level pedway retail space, 26,271 square feet of street level retail space,33,371 square feet of second floor retail space and 20,544 square feet of third-story office space. The bulk of the vacancy wasconcentrated among the office area and the pedway retail area. In April 2011, the property sold for a consideration of $31,600,000,or $299.67 per square foot. Based on existing income at the time of sale, an overall capitalization rate of 7.91% is indicated by thesale comparable.

Heritage Shops at Millennium Park

N/AN/AN/A

$23.71




Location:

County:

Location Data

Physical Data

Sale Data Sale

Mesa DevelopmentAcadia Realty Trust1109722080


$31,600,000$0$31,600,000Listing broker, Public records

Retail CondominiumType:

3 months4/2011

Transaction Type:

Sale Price:


Req.Capital Cost:



17-10-30-014N/AAtlas Ref:




Projected IRR:

Excess Land:

Year Built:


Parking:


Anchor Tenant GLA:

Anchors:

GLA Purchased:

LA FitnessMcDonaldsPedway - RetailThird Floor Office


None

2004

GoodConcrete

Street and garage

103,951 SF

49,878 SF8,266 SF25,263 SF

105,449 SF

20,544 SF

105,449 SF1,498 SF

© 2012 CBRE, Inc.

RETAIL SALE No. 8

151 North State StreetChicago,IL 60601Cook

Financial Data Appraiser100%Pro Forma

N/AN/AN/AN/A

$1,201,212

TotalN/A

Per SF

Analysis

Overall Cap. Rate (OAR):Other6.01 %N/A %N/AN/A %$730.33

Comments This comparable represents the sale of the retail component of the MoMo mixed-use development located at the northeast corner ofNorth State Street and East Randolph Street in downtown Chicago, Illinois. MoMo, which stands for “Modern Momentum”, is a 33story building that contains a four story podium and a residential tower that will stand on two legs flanking a large opening abovethe podium which breaks up the mass of the building base. The podium houses the Loehmann's, a two-story retail departmentstore (ground and second floor) and a two level theater which is home to the Chicago-based Joffery Ballet. The Loehmann'sdepartment store is comprised of 27,385 square feet and is 100% leased for a ten year term, commencing in 2007. Loehmann's Operating Company acquired the property from Smithfield Properties XX, LLC in October 2007 for a consideration of$20,000,000 or $730.33 per square foot. Based on a pro forma net operating income of $1,201,212, a cap rate of 6.00% is implied.[In November 2010 Loehmann’s filed for Chapter 11 bankruptcy and in January 2011 they vacated this location. Furthermore, thisspace has now (January 2012) been leased to Walgreens as their first, 2-level "urban" design concept.]

Loehmann's Department Store at MoMo

N/AN/AN/A

$43.86




Location:

County:

Location Data

Physical Data

Sale Data Sale

Smithfield Properties XX, LLCLoehmann's Operating CompanyN/A


$20,000,000$0$20,000,000


N/A10/2007

Transaction Type:

Sale Price:


Req.Capital Cost:



17-10-305-007-8001N/AAtlas Ref:




Projected IRR:

Excess Land:

Year Built:


Parking:


Anchor Tenant GLA:

Anchors:

GLA Purchased:

Loehmann's


None

2007

ExcellentMasonry and Steel

None

27,385 SF

27,385 SF

27,385 SF27,385 SFN/A

© 2012 CBRE, Inc.

RETAIL COMPARABLE No. 1

Comments This comparable represents the lease of the Prada store at 30 East Oak Street in Chicago, Illinois. The four-story building was builtin 1901 and completely renovated in 1997. As a sale-leaseback, Prada leased the 10,786 square feet building over a 15-year term atan initial rental rate of $79.18 per square foot, which increases 15% every five years. The current rental rate is $91.05 per squarefoot. The deal is absolute net with Prada paying all expenses including structural repairs and maintenance. Terms of the leaseinclude five, six-year options. Prada has occupied the building since 1997.

Prada

Physical Data

Lease Data


Recent Leases

30 East Oak StreetChicago,ILCook

Location:

County:

Location Data

N/AN/AAtlas Ref:


Occupancy:100%

N/AN/AN/ANoneNNN

15%/5 Years

15 Years10,786 SF

$79.18 PSF

NNN

02/2005

Typical Size:Term:Base Rent PSF:Rent Escalations:Basis:Expense Pass-Thru:Free Rent (months):Tenant Improvement:Leasing Agent:Phone No.:Survey Date:

Escalations Free Rent(Months)

TI(PSF)

Rent(PSF)Tenant

Size(SF)Date

Term(Yrs)

15% / 5 Years $0.00$79.18Prada06/2004 15.0010,786

10,786 SF1901

GoodMasonry and Glass

Gross Leaseable Area:Year Built:


Renovated in 1997

Parking: None

100%Local:Overall:

Anchor Tenant GLA:

Anchors:Prada


10,786 SF

10,786 SF

10,786 SFN/A

© 2012 CBRE, Inc.


Comments This comparable represents a multi-story retail property located at the corner of Rush and Oak Streets in Chicago's Gold Coastneighborhood. The property features excellent visibility within an upscale retail node. The property was formerly 100% occupied byBarney's who relocated to a larger space across the street. In the fourth quarter of 2008 Hermes leased 7,734 square feet consistingof street level, second floor and lower level space. This tenant took occupancy in 2010, and it is a relocation from its former locationat 110 E. Oak Street. The blended rental rate is $158.95 per square foot, net. Specifically, the rent is $25.00 per square foot for1,000 square feet of the lower level, $325 per square foot for 2,797 square feet of street level space and $75.00 per square foot for3,937 square feet of second floor space.

25-39 E. Oak Street

Physical Data

Lease Data

Type:

Recent Leases

25-39 E. Oak StreetChicago,ILCook

Location:

County:

Location Data

N/AN/AAtlas Ref:


Occupancy:79.2%

N/ASierra Realty AdvisorsNANegotiableNA

Negotiable

5 - 10 YearsN/A

$25.00 - $325 PSF

NNN

05/2010



TI(PSF)

Rent(PSF)Tenant

Size(SF)Date

Term(Yrs)

NANA $0.00$158.95Hermes'2010 7,734

51,340 SF1944

GoodConcrete



Renovated in 2010

Parking: None

79.2%Local:Overall:

Anchor Tenant GLA:

Anchors:Hermes


7,734 SF

7,734 SF

51,340 SF43,606 SF

© 2012 CBRE, Inc.


Comments 830 North Michigan Avenue is a multi-level retail center located along the west side of North Michigan Avenue between Pearson andChestnut Streets. The center was originally developed in 1966 and renovated over the years, and contains 150,000 square feet. 830North Michigan Avenue is not a vertical mall but rather an urban big box center. Existing tenants include Filene’s Basement, andColumbia Sportswear. The center is fully leased. In mid 2010 Top Shop leased the former Borders space. The initial rental rate forthe Top Shop space is $63.00 per square foot net for the 50,000 square feet corner space consisting of lower level and floors one(9,831 square feet) through three. Terms of this lease are reported to include a tenant improvement allowance of $50.00 per squarefoot. The space is currently being built out for Top Shops occupancy in mid 2011. In 2008 Columbia Sportswear leased the formerVictoria’s Secret store consisting of 12,000 square feet over a ten-year term at an initial rental rate of $180.00 per square foot on anet basis. Terms of the lease included a tenant improvement allowance of $25.00 per square foot.

830 N. Michigan Avenue

Physical Data

Lease Data

Big BoxType:

Recent Leases

830 N. Michigan AvenueChicago,ILCook

Location:

County:

Location Data

N/AN/AAtlas Ref:


Occupancy:100%

N/AN/A$25.00 - $60.00 PSFN/AN/A

N/A

10 YearsN/A

$65.00 - $180.00 PSF

NNN

10/2010



TI(PSF)

Rent(PSF)Tenant

Size(SF)Date

Term(Yrs)

$50.00$63.00Top Shop'2010 10.00

$25.00$180.00Columbia'2008 10.00

50,000

12,000

62,000 SF1966

GoodConcrete



Parking: None

100%Local:Overall:

Anchor Tenant GLA:

Anchors:ColumbiaTop Shop


62,000 SF

12,000 SF50,000 SF

62,000 SFN/A

© 2012 CBRE, Inc.


Comments 30 North Michigan Avenue represents the retail component of a mixed-use development situated upon the city block bounded byNorth Michigan Avenue, Rush Street, Chicago Avenue and Superior Street. The retail component is a multi-level center with 238,477square feet of gross leasable area. 730 North Michigan Avenue is not a vertical mall but rather an urban big box center. Existingtenants include Banana Republic, Ralph Lauren, Tiffany & Co. and Victoria Secret. The center has stores that fronts both NorthMichigan Avenue and Chicago Avenue and it is currently 91% occupied. Between 2006 and 2008, several sizable stores vacated thecenter including CompUSA, American Girl and Pottery Barn. The Pottery Barn space, with frontage on North Michigan Avenue, wasre-leased to Victoria Secret. The CompUSA space was re-leased to Nordstrom Rack. Lastly, the former American Girl store hasbeen demised with a portion leased to Anthropology and the remaining space being marketed for lease. Victoria Secret leased22,869 square feet within two levels for 15 years and an initial base rental rate of $148.67 per square foot, net. Terms of the leaseincluded a $50.00 per square foot tenant improvement allowance. Nordstrom Rack leased 38,899 square feet at the corner ofChicago Avenue and Rush Street at a base rent of $55.27 per square foot, gross. Terms of the lease included a tenant improvementallowance of $40.00 per square foot. Anthropologie leased 18,695 square feet of lower level space at a base rent of $55.49 per

730 North Michigan Avenue

Physical Data

Lease Data

Big BoxType:

Recent Leases

730 North Michigan AvenueChicago,ILCook

Location:

County:

Location Data

N/AN/AAtlas Ref:


Occupancy:91%

N/AN/A$40 - $50 PSFN/AN/A

N/A

10 - 15 YearsN/A

$55.27 - $148.67 PSF

NNN/Gross

10/2010



TI(PSF)

Rent(PSF)Tenant

Size(SF)Date

Term(Yrs)

None $40.00$55.27Nordstrom Rack'2010 11.00

NANA $0.00$55.49Anthropologie10/2010 15.00

NANA $50.00$148.67Victoria's Secret'2009 15.00

38,899

18,695

22,869

238,477 SF1998

Good



Parking: None

91%Local:Overall:

Anchor Tenant GLA:

Anchors:Victoria's SecretRalph LaurenBanana RepublicTiffany & Co.


N/A

238,477 SF238,477 SF

© 2012 CBRE, Inc.


Comments This comparable represents a street level and big box, multi-story space along North Michigan Avenue within the Chicago Place Mall.The owners of the mall are currently redeveloping / re-positioning the center with two big box stores that will occupy the first threefloors. Zara leases one of the big box spaces consisting of three floors with a total of 32,624 square feet. Zara leased the space in2009 at a base rental rate of $137.94 per square foot for ten years. The expense reimbursement is base year real estate taxes.Terms of the lease included a $122.61 per square foot tenant improvement allowance. In 2010 British clothing company All Saintshas leased 11,000 square feet of street level space in 2010 for $227.27 per square foot on a gross basis.

700 N. Michigan Avenue

Physical Data

Lease Data

Big BoxType:

Recent Leases

700 N. Michigan AvenueChicago,ILCook

Location:

County:

Location Data

N/AN/AAtlas Ref:


Occupancy:100%

N/AN/ANANAN/A

N/A

10 YearsN/A

$137.94 - $227.27 PSF

BY Taxes

10/2010



TI(PSF)

Rent(PSF)Tenant

Size(SF)Date

Term(Yrs)

NANA $0.00$227.27All Saints'2010 10.00

NANA $122.61$137.94Zara'2009 10.00

11,000

32,624

43,624 SF1989

GoodBrick



Parking: Attached Garage

100%Local:Overall:

Anchor Tenant GLA:

Anchors:ZaraAll Saints


43,624 SF

32,624 SF11,000 SF

43,624 SFN/A

© 2012 CBRE, Inc.


Comments This comparable represents a mixed-use retail and office facility located within the upscale Rush Street retail node off North MichiganAvenue in Chicago's Gold Coast neighborhood. The four-story property was built in 1979 and recently renovated. In 2010 Ted Bakerleased 2,375 square feet of street level space at $150.00 per square foot net over a ten-year term. SCOOP NYC has leased theother street level space, while the terms were not available. The upper floors are leased to a mix of office and commercial-serviceusers.

1009-1011 Rush Street

Physical Data

Lease Data

Type:

Recent Leases

1009-1011 Rush StreetChicago,ILCook

Location:

County:

Location Data

N/AN/AAtlas Ref:


Occupancy:NA

N/AN/AVariesNegotiableNA

NA

5 - 10 YearsN/A

$150.00 PSF

NNN

03/2011



TI(PSF)

Rent(PSF)Tenant

Size(SF)Date

Term(Yrs)

NANA $0.00$150.00Ted Baker'2010 10.002,375

27,375 SF1979

GoodMasonry



Renovated in 2010

Parking: None

NALocal:Overall:

Anchor Tenant GLA:

Anchors:Ted Baker


2,375 SF

2,375 SF

27,375 SF25,000 SF

© 2012 CBRE, Inc.


Comments This rental represents a 7,990 square foot retail property built in 2000 and located in Chicago's "off Michigan Avenue" district at50-54 E. Walton. The property features 2,590 square feet of street level retail space at 5,400 square feet of second floor space.Sprinkles Cupcakes has leased approximately 2,028 square feet of street level retail space for $128.32 per square foot net. Theasking rent for the remaining space is $580,000 annually or $71.18 per square foot.

50-54 E. Walton Street

Physical Data

Lease Data


Recent Leases

50-54 E. Walton StreetChicago,ILCook

Location:

County:

Location Data

N/AN/AAtlas Ref:


Occupancy:25%

N/AN/ANANoneNA

3% Annual

10 Years7,990 SF

$70.00 - $128.00 PSF

NNN

05/2010



TI(PSF)

Rent(PSF)Tenant

Size(SF)Date

Term(Yrs)

NANA $0.00$128.32Sprinkles Cupcakes'2010 10.002,028

7,990 SF2000

GoodBrick Veneer



Parking: None

25%Local:Overall:

Anchor Tenant GLA:


N/A

7,990 SF7,990 SF

© 2012 CBRE, Inc.


Comments This comparable represents a 2,937-square foot, free-standing retail property located at the northwest corner of Rush Street andWalton Place in Chicago's Gold Coast neighborhood and within an upscale retail node off North Michigan Avenue. The property wasbuilt in 2009 as a redevelopment for Lululemon. Lululemon leases the building at a currently rental rate of $368 per square foot,which increases 3% annually over the ten-year lease term. The initial rental rate was $357 per square foot. Sales are reported to be"through the roof".

Lululemon

Physical Data

Lease Data


Recent Leases

930 N. RushChicago,ILCook

Location:

County:

Location Data

17-03-206-014-0000N/AAtlas Ref:


Occupancy:100%

N/AN/ABuilt-to-SuitNoneNA

3% Annually

10 Years2,937 SF

$368.00 PSF

NNN

03/2011



TI(PSF)

Rent(PSF)Tenant

Size(SF)Date

Term(Yrs)

3% AnnualNone $0.00$357.00Lululemon12/2009 10.002,937

5,874 SF2009

GoodMasonry



Parking: None

100%Local:Overall:

Anchor Tenant GLA:

Anchors:Lululemon


2,937 SF

2,937 SF

5,874 SF2,937 SF

© 2012 CBRE, Inc.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:55

am

R

ef#

: AD

B

P

age

: 1

Sch

edul

e O

f Pro

spec

tive

Cas

h Fl

owIn

Infla

ted

Dol

lars

for t

he F

isca

l Yea

r Beg

inni

ng 4

/1/2

012

Y

ear

1

Yea

r 2

Y

ear

3

Yea

r 4

Y

ear

5

Yea

r 6

Y

ear

7

Yea

r 8

Y

ear

9

Yea

r 10

Y

ear 1

1Fo

r the

Yea

rs E

ndin

g

Mar

-201

3

Mar

-201

4

Mar

-201

5

Mar

-201

6

Mar

-201

7

Mar

-201

8

Mar

-201

9

Mar

-202

0

Mar

-202

1

Mar

-202

2

Mar

-202

3

Pot

entia

l Gro

ss R

even

ue B

ase

Ren

tal R

even

ue $

9,61

9,53

1 $

9,89

9,74

1 $

10,1

88,2

58

$10

,485

,316

$

10,7

91,1

67

$11

,106

,075

$

11,4

21,6

60

$11

,753

,971

$

12,0

93,5

18

$12

,451

,600

$

12,8

20,2

87

Abs

orpt

ion

& T

urno

ver V

acan

cy

(274

,632

)

(282

,871

)

Sch

edul

ed B

ase

Ren

tal R

even

ue

9,61

9,53

1

9,89

9,74

1 1

0,18

8,25

8 1

0,48

5,31

6 1

0,79

1,16

7 1

1,10

6,07

5 1

1,14

7,02

8 1

1,47

1,10

0 1

2,09

3,51

8 1

2,45

1,60

0 1

2,82

0,28

7

Exp

ense

Rei

mbu

rsem

ent R

even

ue

Exp

ense

Rec

over

ies

1,

996,

041

2,

055,

922

2,

117,

599

2,

181,

128

2,

246,

562

2,

313,

958

2,

363,

718

2,

434,

627

2,

528,

524

2,

604,

382

2,

682,

512

Tot

al R

eim

burs

emen

t Rev

enue

1,

996,

041

2,

055,

922

2,

117,

599

2,

181,

128

2,

246,

562

2,

313,

958

2,

363,

718

2,

434,

627

2,

528,

524

2,

604,

382

2,

682,

512

Tota

l Pot

entia

l Gro

ss R

even

ue 1

1,61

5,57

2 1

1,95

5,66

3 1

2,30

5,85

7 1

2,66

6,44

4 1

3,03

7,72

9 1

3,42

0,03

3 1

3,51

0,74

6 1

3,90

5,72

7 1

4,62

2,04

2 1

5,05

5,98

2 1

5,50

2,79

9

Effe

ctiv

e G

ross

Rev

enue

11,

615,

572

11,

955,

663

12,

305,

857

12,

666,

444

13,

037,

729

13,

420,

033

13,

510,

746

13,

905,

727

14,

622,

042

15,

055,

982

15,

502,

799

Ope

ratin

g E

xpen

ses

Rea

l Est

ate

Taxe

s

1,83

7,77

6

1,89

2,90

9

1,94

9,69

7

2,00

8,18

7

2,06

8,43

3

2,13

0,48

6

2,19

4,40

1

2,26

0,23

3

2,32

8,04

0

2,39

7,88

1

2,46

9,81

7 I

nsur

ance

96,8

50

99,7

55

1

02,7

48

1

05,8

31

1

09,0

05

1

12,2

76

1

15,6

44

1

19,1

13

1

22,6

87

1

26,3

67

1

30,1

58

CA

M

44

,370

45

,701

47

,072

48

,484

49

,939

51

,437

52

,980

54

,570

56

,207

57

,893

59

,630

M

anag

emen

t Fee

55,4

40

57,1

03

58,8

16

60,5

81

62,3

98

64,2

70

66,1

98

68,1

84

70,2

30

72,3

37

74,5

07

Tota

l Ope

ratin

g E

xpen

ses

2,

034,

436

2,

095,

468

2,

158,

333

2,

223,

083

2,

289,

775

2,

358,

469

2,

429,

223

2,

502,

100

2,

577,

164

2,

654,

478

2,

734,

112

Net

Ope

ratin

g In

com

e

9,58

1,13

6

9,86

0,19

5 1

0,14

7,52

4 1

0,44

3,36

1 1

0,74

7,95

4 1

1,06

1,56

4 1

1,08

1,52

3 1

1,40

3,62

7 1

2,04

4,87

8 1

2,40

1,50

4 1

2,76

8,68

7

Leas

ing

& C

apita

l Cos

ts T

enan

t Im

prov

emen

ts

124

,463

L

easi

ng C

omm

issi

ons

5

64,2

47

Res

erve

s fo

r Rep

lace

men

t

23

,675

24

,385

25

,117

25

,870

26

,646

27

,446

28

,269

29

,117

29

,991

30

,891

31

,817

Tota

l Lea

sing

& C

apita

l Cos

ts

23

,675

24

,385

25

,117

25

,870

26

,646

27

,446

28

,269

717

,827

29

,991

30

,891

31

,817

Cas

h Fl

ow B

efor

e D

ebt S

ervi

ce $

9,55

7,46

1 $

9,83

5,81

0 $

10,1

22,4

07

$10

,417

,491

$

10,7

21,3

08

$11

,034

,118

$

11,0

53,2

54

$10

,685

,800

$

12,0

14,8

87

$12

,370

,613

$

12,7

36,8

70

& T

axes

===

====

====

==

====

====

= =

====

====

==

====

====

===

===

====

====

==

====

====

= =

====

====

==

====

====

===

===

====

====

==

====

====

= =

====

====

==

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:55

am

R

ef#

: AD

B

P

age

: 2

Dire

ct C

apita

lizat

ion

Val

ue S

umm

ary

In In

flate

d D

olla

rs fo

r the

Fis

cal Y

ear B

egin

ning

4/1

/201

2

1-1

2Fo

r the

Mon

ths

Tot

al

Pot

entia

l Gro

ss R

even

ue B

ase

Ren

tal R

even

ue $

9,61

9,53

1 A

bsor

ptio

n &

Tur

nove

r Vac

ancy

Sch

edul

ed B

ase

Ren

tal R

even

ue

9,61

9,53

1

Exp

ense

Rei

mbu

rsem

ent R

even

ue

Exp

ense

Rec

over

ies

1,

996,

041

Tot

al R

eim

burs

emen

t Rev

enue

1,

996,

041

Tota

l Pot

entia

l Gro

ss R

even

ue 1

1,61

5,57

2

Effe

ctiv

e G

ross

Rev

enue

11,

615,

572

Ope

ratin

g E

xpen

ses

Rea

l Est

ate

Taxe

s

1,83

7,77

6 I

nsur

ance

96,8

50

CA

M

44

,370

M

anag

emen

t Fee

55,4

40

Tota

l Ope

ratin

g E

xpen

ses

2,

034,

436

Net

Ope

ratin

g In

com

e

9,58

1,13

6

Cap

italiz

atio

n R

ate

6.0

0%

Cap

italiz

ed V

alue

$159

,685

,600

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:55

am

R

ef#

: AD

B

P

age

: 3

Pro

spec

tive

Pre

sent

Val

ueC

ash

Flow

Bef

ore

Deb

t Ser

vice

plu

s P

rope

rty R

esal

eD

isco

unte

d A

nnua

lly (E

ndpo

int o

n C

ash

Flow

& R

esal

e) o

ver a

10-

Yea

r Per

iod

For t

he

P.V

. of

P

.V. o

f

P.V

. of

P

.V. o

f

P.V

. of

Ana

lysi

s Y

ear

A

nnua

l

Cas

h Fl

ow

C

ash

Flow

Cas

h Fl

ow

C

ash

Flow

Cas

h Fl

ow P

erio

d E

ndin

g

Cas

h Fl

ow

@

7.0

0%

@

7.2

5%

@

7.5

0%

@

7.7

5%

@

8.0

0%

Yea

r 1

Mar

-201

3 $

9,55

7,46

1 $

8,93

2,20

7 $

8,91

1,38

6 $

8,89

0,66

1 $

8,87

0,03

3 $

8,84

9,50

1 Y

ear

2M

ar-2

014

9,

835,

810

8,

590,

977

8,

550,

972

8,

511,

248

8,

471,

798

8,

432,

622

Yea

r 3

Mar

-201

5 1

0,12

2,40

7

8,26

2,89

9

8,20

5,25

2

8,14

8,13

8

8,09

1,55

4

8,03

5,49

3 Y

ear

4M

ar-2

016

10,

417,

491

7,

947,

454

7,

873,

610

7,

800,

623

7,

728,

479

7,

657,

167

Yea

r 5

Mar

-201

7 1

0,72

1,30

8

7,64

4,14

5

7,55

5,46

7

7,46

8,01

9

7,38

1,78

5

7,29

6,74

2 Y

ear

6M

ar-2

018

11,

034,

118

7,

352,

498

7,

250,

264

7,

149,

684

7,

050,

728

6,

953,

366

Yea

r 7

Mar

-201

9 1

1,05

3,25

4

6,88

3,41

2

6,77

1,87

6

6,66

2,40

3

6,55

4,94

7

6,44

9,46

7 Y

ear

8M

ar-2

020

10,

685,

800

6,

219,

232

6,

104,

199

5,

991,

552

5,

881,

239

5,

773,

205

Yea

r 9

Mar

-202

1 1

2,01

4,88

7

6,53

5,30

3

6,39

9,46

9

6,26

6,76

7

6,13

7,11

4

6,01

0,43

5 Y

ear 1

0M

ar-2

022

12,

370,

613

6,

288,

592

6,

143,

534

6,

002,

146

5,

864,

330

5,

729,

988

Tot

al C

ash

Flow

107

,813

,149

7

4,65

6,71

9 7

3,76

6,02

9 7

2,89

1,24

1 7

2,03

2,00

7 7

1,18

7,98

6 P

rope

rty R

esal

e @

6.2

5% C

ap 2

02,2

56,0

02

102

,816

,695

1

00,4

45,0

20

98,

133,

384

95,

880,

133

93,

683,

663

Tot

al P

rope

rty P

rese

nt V

alue

$177

,473

,414

$174

,211

,049

$171

,024

,625

$167

,912

,140

$164

,871

,649

===

====

====

==

====

====

= =

====

====

==

====

====

===

===

====

====

Rou

nded

to T

hous

ands

$177

,473

,000

$174

,211

,000

$171

,025

,000

$167

,912

,000

$164

,872

,000

===

====

====

==

====

====

= =

====

====

==

====

====

===

===

====

====

Per

SqF

t

1,8

74.0

6

1,8

39.6

1

1,8

05.9

6

1,7

73.1

0

1,7

40.9

9

Per

cent

age

Val

ue D

istri

butio

n

Ass

ured

Inco

me

40.9

0%

41.1

8%

41.4

6%

41.7

5%

42.0

3%

Pro

spec

tive

Inco

me

1.1

7%

1.1

6%

1.1

6%

1.1

5%

1.1

5%

Pro

spec

tive

Pro

perty

Res

ale

57.9

3%

57.6

6%

57.3

8%

57.1

0%

56.8

2%

===

====

====

==

====

====

= =

====

====

==

====

====

===

===

====

====

1

00.0

0%

1

00.0

0%

1

00.0

0%

1

00.0

0%

1

00.0

0%

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:55

am

R

ef#

: AD

B

P

age

: 4

Res

ale

- Cap

Rat

e M

atrix

Cas

h Fl

ow B

efor

e D

ebt S

ervi

ce p

lus

Pro

perty

Res

ale

in Y

ear 1

0, M

ar-2

022

Dis

coun

ted

Ann

ually

(End

poin

t on

Cas

h Fl

ow &

Res

ale)

Net

P

.V. o

f

P.V

. of

P

.V. o

f

P.V

. of

P

.V. o

f F

or th

e P

roce

eds

P

rope

rty

P

rope

rty

P

rope

rty

P

rope

rty

P

rope

rty

Cap

Rat

es F

rom

Sal

e

@ 7

.00%

@ 7

.25%

@ 7

.50%

@ 7

.75%

@ 8

.00%

6

.00%

$210

,683

,335

$181

,757

,443

$178

,396

,258

$175

,113

,516

$171

,907

,146

$168

,775

,135

6

.25%

202

,256

,002

1

77,4

73,4

14

174

,211

,049

1

71,0

24,6

25

167

,912

,140

1

64,8

71,6

49

6

.50%

194

,476

,925

1

73,5

18,9

26

170

,347

,779

1

67,2

50,2

64

164

,224

,443

1

61,2

68,4

31

6

.75%

187

,274

,076

1

69,8

57,3

63

166

,770

,677

1

63,7

55,4

86

160

,809

,908

1

57,9

32,1

18

7

.00%

180

,585

,716

1

66,4

57,3

40

163

,449

,083

1

60,5

10,3

34

157

,639

,269

1

54,8

34,1

14

7

.25%

174

,358

,622

1

63,2

91,8

01

160

,356

,564

1

57,4

88,9

86

154

,687

,294

1

51,9

49,7

64

7

.50%

168

,546

,668

1

60,3

37,2

99

157

,470

,212

1

54,6

69,0

61

151

,932

,118

1

49,2

57,7

05

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 1

Inpu

t Ass

umpt

ions

Pro

perty

Des

crip

tion

Nam

e:B

arne

ys N

ew Y

ork

Add

ress

:1-

15 E

. Oak

Stre

et A

ddre

ss2:

City

:C

hica

go S

tate

:IL

Zip

:60

611

Cou

ntry

:U

S P

ortfo

lio:

Pro

perty

Typ

e:R

etai

l P

rope

rty R

efer

ence

:12

-164

CH

-071

7 P

rope

rty V

ersi

on:

Adv

ance

d D

escr

iptio

n O

wne

r:1-

15 E

ast O

ak S

treet

Ow

ners

LL

Len

der:

DB

Dev

elop

men

t:N

WC

Rus

h an

d O

ak -

YO

C 2

009

Bui

ldin

g:B

arne

ys N

ew Y

ork

Reg

ion:

Mid

wes

t S

ub-M

arke

t:R

ush

- Oak

/ M

ichi

gan

Ave

nue

Sub

-Typ

e: P

rope

rty M

anag

er:

CB

RE

Ass

et M

anag

er:

CM

SA

:C

hica

go-N

aper

ville

-Jol

iet,

IL

MS

A/N

EC

MA

: C

ount

y:C

ook

Fip

s: U

ser D

efin

ed 5

: U

ser D

efin

ed 6

: U

ser D

efin

ed 7

: U

ser D

efin

ed 8

: U

ser D

efin

ed 9

: U

ser D

efin

ed 1

0: U

ser D

efin

ed 1

1: U

ser D

efin

ed 1

2: U

ser D

efin

ed 1

3: U

ser D

efin

ed 1

4: U

ser D

efin

ed 1

5: U

ser D

efin

ed 1

6: U

ser D

efin

ed 1

7: U

ser D

efin

ed 1

8: U

ser D

efin

ed 1

9: U

ser D

efin

ed 2

0:

Pro

perty

Tim

ing

Ana

lysi

s S

tart

Dat

e:4/

12R

epor

ting

Sta

rt D

ate:

4/12

Yea

rs to

Rep

ort o

r End

Dat

e:10

Are

a M

easu

res

Labe

l

A

rea

Pro

perty

Siz

e

94,

700

SqF

tA

lt. P

rop.

Siz

e

1 S

qFt

Pro

perty

Siz

e fo

r Pro

Rat

a

94,

731

SqF

t

(con

tinue

d on

nex

t pag

e)

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 2

Inpu

t Ass

umpt

ions

(con

tinue

d fro

m p

revi

ous

page

)

Gen

eral

Infla

tion

Inf

latio

n M

onth

:A

naly

sis

Sta

rt R

eim

burs

emen

t Met

hod:

Fisc

al re

imbu

rsem

ent u

sing

fisc

al in

flatio

n I

nfla

tion

Rat

e:3

Rei

mbu

rsab

le E

xpen

ses

Nam

e

Acc

t Cod

e

Act

uals

Bud

gete

dU

nits

Are

a/C

onst

ant

Freq

uenc

y %

Fix

ed In

flatio

nR

ef A

cct

Not

es

Rea

l Est

ate

Taxe

s

Det

ail

$Am

ount

1

00In

sura

nce

D

etai

l$A

mou

nt

100

CA

M

Det

ail

$Am

ount

1

00M

anag

emen

t Fee

D

etai

l$A

mou

nt

100

Gro

ss U

p fo

r Rei

mbu

rsem

ent:

No

Det

ail O

f Rea

l Est

ate

Taxe

s

M

ar-2

013

M

ar-2

014

M

ar-2

015

M

ar-2

016

M

ar-2

017

M

ar-2

018

M

ar-2

019

M

ar-2

020

M

ar-2

021

M

ar-2

022

M

ar-2

023

M

ar-2

024

M

ar-2

025

A

pril

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

May

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

June

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

July

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

Aug

ust

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

Sep

tem

ber

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

Oct

ober

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

Nov

embe

r 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

D

ecem

ber

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

Janu

ary

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

Febr

uary

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00

Mar

ch 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

153

148.

00 1

5314

8.00

Ann

ual T

otal

1

8377

76

183

7776

1

8377

76

183

7776

1

8377

76

183

7776

1

8377

76

183

7776

1

8377

76

183

7776

1

8377

76

183

7776

1

8377

76In

flatio

nIn

flate

d To

tal

1

8377

76

189

2909

1

9496

97

200

8187

2

0684

33

213

0486

2

1944

01

226

0233

2

3280

40

239

7881

2

4698

17

254

3912

2

6202

29

(con

tinue

d on

nex

t pag

e)

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 3

Inpu

t Ass

umpt

ions

(con

tinue

d fro

m p

revi

ous

page

)

Det

ail O

f Ins

uran

ce

Mar

-201

3

Mar

-201

4

Mar

-201

5

Mar

-201

6

Mar

-201

7

Mar

-201

8

Mar

-201

9

Mar

-202

0

Mar

-202

1

Mar

-202

2

Mar

-202

3

Mar

-202

4

Mar

-202

5

A

pril

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

May

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

June

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

July

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

Aug

ust

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

Sep

tem

ber

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

Oct

ober

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

Nov

embe

r

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

D

ecem

ber

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

Janu

ary

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

Febr

uary

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

Mar

ch

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

8

070.

83

807

0.83

Ann

ual T

otal

96

849.

96

9684

9.96

96

849.

96

9684

9.96

96

849.

96

9684

9.96

96

849.

96

9684

9.96

96

849.

96

9684

9.96

96

849.

96

9684

9.96

96

849.

96In

flatio

nIn

flate

d To

tal

9685

0

99

755

1

0274

8

105

831

1

0900

5

112

276

1

1564

4

119

113

1

2268

7

126

367

1

3015

8

134

063

1

3808

5

Det

ail O

f CA

M

Mar

-201

3

Mar

-201

4

Mar

-201

5

Mar

-201

6

Mar

-201

7

Mar

-201

8

Mar

-201

9

Mar

-202

0

Mar

-202

1

Mar

-202

2

Mar

-202

3

Mar

-202

4

Mar

-202

5

A

pril

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

May

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

June

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

July

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

Aug

ust

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

Sep

tem

ber

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

Oct

ober

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

Nov

embe

r

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

D

ecem

ber

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

Janu

ary

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

Febr

uary

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

Mar

ch

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

3

697.

50

369

7.50

Ann

ual T

otal

44

370.

00

4437

0.00

44

370.

00

4437

0.00

44

370.

00

4437

0.00

44

370.

00

4437

0.00

44

370.

00

4437

0.00

44

370.

00

4437

0.00

44

370.

00In

flatio

nIn

flate

d To

tal

4437

0

45

701

4707

2

48

484

4993

9

51

437

5298

0

54

570

5620

7

57

893

5963

0

61

418

6326

1

(con

tinue

d on

nex

t pag

e)

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 4

Inpu

t Ass

umpt

ions

(con

tinue

d fro

m p

revi

ous

page

)

Det

ail O

f Man

agem

ent F

ee

Mar

-201

3

Mar

-201

4

Mar

-201

5

Mar

-201

6

Mar

-201

7

Mar

-201

8

Mar

-201

9

Mar

-202

0

Mar

-202

1

Mar

-202

2

Mar

-202

3

Mar

-202

4

Mar

-202

5

A

pril

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

May

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

June

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

July

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

Aug

ust

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

Sep

tem

ber

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

Oct

ober

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

Nov

embe

r

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

D

ecem

ber

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

Janu

ary

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

Febr

uary

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

Mar

ch

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

4

620.

00

462

0.00

Ann

ual T

otal

55

440.

00

5544

0.00

55

440.

00

5544

0.00

55

440.

00

5544

0.00

55

440.

00

5544

0.00

55

440.

00

5544

0.00

55

440.

00

5544

0.00

55

440.

00In

flatio

nIn

flate

d To

tal

5544

0

57

103

5881

6

60

581

6239

8

64

270

6619

8

68

184

7023

0

72

337

7450

7

76

742

7904

4

Rei

mbu

rsem

ent R

even

ue R

epor

ting

Gro

upR

epor

ting

Gro

up: E

xpen

se R

ecov

erie

sR

eal E

stat

e Ta

xes

Insu

ranc

eC

AM

Man

agem

ent F

ee

Cap

ital E

xpen

ditu

res

Nam

e

Acc

t Cod

e

Act

uals

Bud

gete

dU

nits

Are

a/C

onst

ant

Freq

uenc

y %

Fix

ed In

flatio

nR

ef A

cct

Not

es

Res

erve

s fo

r Rep

lace

men

t

0.

25$/

Are

aP

rope

rty S

ize

/Yea

r

100

Ren

t Rol

l

Tena

nt N

ame/

Leas

eS

tart

Term

/ B

ase/

Min

U

nit o

fR

ent

Rtl

Rei

mbu

r-

U

nit o

fN

o.D

escr

iptio

nS

uite

Type

Leas

e S

tatu

sTo

tal A

rea

Dat

eE

xpir

R

ent

M

easu

reC

hng

Sls

sem

ents

Mea

sure

Ren

t Aba

tem

ent

1B

arne

y's

New

Yor

kR

etai

lC

ontra

ct

90,

100

3/0

9 7

/24

D

etai

l

B

arne

ysB

arne

y's

New

Yor

kO

ptio

nS

pecu

lativ

e

90,

100

5

D

etai

l

B

arne

ys 2

Citi

bank

Ret

ail

Con

tract

4

,600

1/0

9 1

/19

D

etai

l

C

itiba

nk

Tena

nt N

ame/

Sec

urity

Rnw

lM

ore/

No.

Des

crip

tion

Leas

ing

Cos

t

D

epos

itM

arke

t Lea

sing

Upo

n E

xpira

tion

Pro

bN

otes

1B

arne

y's

New

Yor

kA

ncho

rO

ptio

nB

arne

y's

New

Yor

kA

ncho

rM

arke

t 2

Citi

bank

Ban

kM

arke

t

(con

tinue

d on

nex

t pag

e)

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 5

Inpu

t Ass

umpt

ions

(con

tinue

d fro

m p

revi

ous

page

)

Det

ail B

ase

Ren

t

B

arne

y's

New

Yor

k

D

ate

Am

ount

U

nits

5

/10

6,6

32,3

00 $

Am

nt/Y

r

5/1

1

7,9

86,2

68.9

2 $

Am

nt/Y

r

5/1

2

8,2

22,1

06.9

9 $

Am

nt/Y

r

5/1

3

2

.954

391

% In

c, A

nnua

l

Det

ail B

ase

Ren

t

B

arne

y's

New

Yor

k

D

ate

Am

ount

U

nits

8

/24

11

,544

,538

.56

$ A

mnt

/Yr

8

/25

11

,890

,874

.71

$ A

mnt

/Yr

8

/26

12

,247

,600

.96

$ A

mnt

/Yr

8

/27

12

,615

,028

.98

$ A

mnt

/Yr

8

/28

12

,993

,479

.85

$ A

mnt

/Yr

Det

ail B

ase

Ren

t

C

itiba

nk

D

ate

Am

ount

U

nits

2

/11

1

,030

,486

.49

$ A

mnt

/Yr

2

/12

1

,410

,793

.65

$ A

mnt

/Yr

2

/13

1

,448

,492

.73

$ A

mnt

/Yr

2

/14

1

,487

,322

.78

$ A

mnt

/Yr

2

/15

1

,527

,317

.74

$ A

mnt

/Yr

2

/16

1

,568

,512

.54

$ A

mnt

/Yr

2

/17

1

,610

,943

.19

$ A

mnt

/Yr

2

/18

1

,654

,646

.76

$ A

mnt

/Yr

Det

aile

d R

eim

burs

emen

t Met

hods

Rei

mbu

rsem

ent C

ateg

ory:

Bar

neys

Bas

e C

ateg

ory

on A

noth

er M

etho

d: N

o

Rei

mbu

rsab

le E

xpen

ses

Rei

mbu

rsem

ent M

etho

dA

mou

ntP

roA

rea

Mea

sure

Are

aR

eim

burs

e A

fter

Cha

rg-

-rat

aM

inim

umab

le %

Rea

l Est

ate

Taxe

sN

et (P

ays

Pro

Rat

a S

hare

)N

atur

alP

rope

rty S

ize

for P

ro R

ata

10

0C

AM

Net

(Pay

s P

ro R

ata

Sha

re)

Nat

ural

Pro

perty

Siz

e fo

r Pro

Rat

a

100

Insu

ranc

eN

et (P

ays

Pro

Rat

a S

hare

)N

atur

alP

rope

rty S

ize

for P

ro R

ata

10

0M

anag

emen

t Fee

Net

(Pay

s P

ro R

ata

Sha

re)

Nat

ural

Pro

perty

Siz

e fo

r Pro

Rat

a

100

Rei

mbu

rsab

le E

xpen

ses

Rei

mb.

Uni

t of

Min

.R

eim

b.U

nit o

fM

ax%

Ren

tM

inim

umM

easu

reG

row

thM

axM

easu

reG

row

thO

ffset

Rea

l Est

ate

Taxe

sC

AM

Insu

ranc

eM

anag

emen

t Fee

15,

000

$ A

mnt

/Yr

Num

ber o

f ter

ms

to a

pply

met

hod:

1G

ross

up

Exp

ense

s: G

loba

l

Rei

mbu

rsem

ent C

ateg

ory:

Citi

bank

Bas

e C

ateg

ory

on A

noth

er M

etho

d: N

o

Rei

mbu

rsab

le E

xpen

ses

Rei

mbu

rsem

ent M

etho

dA

mou

ntP

roA

rea

Mea

sure

Are

aR

eim

burs

e A

fter

Cha

rg-

-rat

aM

inim

umab

le %

(con

tinue

d on

nex

t pag

e)

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 6

Inpu

t Ass

umpt

ions

(con

tinue

d fro

m p

revi

ous

page

)R

eim

burs

able

Exp

ense

sR

eim

burs

emen

t Met

hod

Am

ount

Pro

Are

a M

easu

reA

rea

Rei

mbu

rse

Afte

rC

harg

--r

ata

Min

imum

able

%

Rea

l Est

ate

Taxe

sN

et (P

ays

Pro

Rat

a S

hare

)N

atur

alP

rope

rty S

ize

for P

ro R

ata

10

0C

AM

Net

(Pay

s P

ro R

ata

Sha

re)

Nat

ural

Pro

perty

Siz

e fo

r Pro

Rat

a

100

Insu

ranc

eN

et (P

ays

Pro

Rat

a S

hare

)N

atur

alP

rope

rty S

ize

for P

ro R

ata

10

0M

anag

emen

t Fee

Net

(Pay

s P

ro R

ata

Sha

re)

Nat

ural

Pro

perty

Siz

e fo

r Pro

Rat

a

100

Rei

mbu

rsab

le E

xpen

ses

Rei

mb.

Uni

t of

Min

.R

eim

b.U

nit o

fM

ax%

Ren

tM

inim

umM

easu

reG

row

thM

axM

easu

reG

row

thO

ffset

Rea

l Est

ate

Taxe

sC

AM

Insu

ranc

eM

anag

emen

t Fee

$ A

mnt

/Yr

Num

ber o

f ter

ms

to a

pply

met

hod:

1G

ross

up

Exp

ense

s: G

loba

l

(con

tinue

d on

nex

t pag

e)

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 7

Inpu

t Ass

umpt

ions

(con

tinue

d fro

m p

revi

ous

page

)

Mar

ket L

easi

ng A

ssum

ptio

ns

Leas

ing

Ass

umpt

ions

Cat

egor

y: A

ncho

r

Leas

e S

tatu

s: S

pecu

lativ

e

N

ew M

arke

t

Ren

ewal

Mkt

U

nit o

f Mea

sure

R

enew

al P

roba

bilit

y

70

Per

cent

M

arke

t Ren

t

A

ncho

r

Mon

ths

Vac

ant

18

0

Mon

ths

T

enan

t Im

prov

emen

ts

TI

L

easi

ng C

omm

issi

ons

LC

Ren

t Aba

tem

ents

0

M

onth

s

Sec

urity

Dep

osit

N

one

N

one

Non

-Wei

ghte

d Ite

ms

R

ent C

hang

es

Yes

R

etai

l Sal

es

N

o

Rei

mbu

rsem

ents

Bar

neys

T

erm

Len

gths

10

Yea

rs

Ren

t Cha

nges

: Anc

hor,c

urre

nt te

rmC

hang

ing

Bas

e:3%

Ann

ual B

umps

Ste

p:P

orte

rs' W

age:

Mis

cella

neou

s:C

PI R

ent

Cat

egor

y:P

arki

ng S

pace

s:

C

ontin

ue P

rior

Am

ount

:

Leas

ing

Ass

umpt

ions

Cat

egor

y: B

ank

Leas

e S

tatu

s: S

pecu

lativ

e

N

ew M

arke

t

Ren

ewal

Mkt

U

nit o

f Mea

sure

R

enew

al P

roba

bilit

y

70

Per

cent

M

arke

t Ren

t

Ban

k

Mon

ths

Vac

ant

12

0

Mon

ths

T

enan

t Im

prov

emen

ts

TI

L

easi

ng C

omm

issi

ons

LC

Ren

t Aba

tem

ents

0

M

onth

s

Sec

urity

Dep

osit

N

one

N

one

Non

-Wei

ghte

d Ite

ms

R

ent C

hang

es

Yes

R

etai

l Sal

es

N

o

Rei

mbu

rsem

ents

Citi

bank

T

erm

Len

gths

10

Yea

rs

(con

tinue

d on

nex

t pag

e)

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 8

Inpu

t Ass

umpt

ions

(con

tinue

d fro

m p

revi

ous

page

)

Ren

t Cha

nges

: Ban

k,cu

rren

t ter

mC

hang

ing

Bas

e:3%

Ann

ual B

umps

Ste

p:P

orte

rs' W

age:

Mis

cella

neou

s:C

PI R

ent

Cat

egor

y:P

arki

ng S

pace

s:

C

ontin

ue P

rior

Am

ount

:

Mar

ket R

ent

Mar

ket R

ent C

ateg

ory:

Anc

hor

Uni

t of M

easu

re: $

/SqF

t/Yr

Mar

-201

3 M

ar-2

014

Mar

-201

5 M

ar-2

016

Mar

-201

7 M

ar-2

018

Mar

-201

9 M

ar-2

020

Mar

-202

1 M

ar-2

022

Mar

-202

3 M

ar-2

024

New

90

90

90

90

90

90

90

90

90

90

90

90

Ren

ewal

Infla

tion

Mar

ket R

ent C

ateg

ory:

Ban

k

Uni

t of M

easu

re: $

/SqF

t/Yr

Mar

-201

3 M

ar-2

014

Mar

-201

5 M

ar-2

016

Mar

-201

7 M

ar-2

018

Mar

-201

9 M

ar-2

020

Mar

-202

1 M

ar-2

022

Mar

-202

3 M

ar-2

024

New

300

300

300

300

300

300

300

300

300

300

300

300

Ren

ewal

Infla

tion

Cha

ngin

g B

ase

Ren

t

C

hang

ing

Bas

e:

3

% A

nnua

l Bum

ps

D

ate

Am

ount

U

nits

1

1

00 %

Mar

ket

13

3 %

Inc,

Ann

ual

(con

tinue

d on

nex

t pag

e)

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 9

Inpu

t Ass

umpt

ions

(con

tinue

d fro

m p

revi

ous

page

)

Tena

nt Im

prov

emen

ts

Tena

nt Im

prov

emen

ts C

ateg

ory:

TI

Pay

men

t Mad

e: F

irst M

onth

Uni

t of M

easu

re: $

/SqF

t

Mar

-201

3 M

ar-2

014

Mar

-201

5 M

ar-2

016

Mar

-201

7 M

ar-2

018

Mar

-201

9 M

ar-2

020

Mar

-202

1 M

ar-2

022

Mar

-202

3 M

ar-2

024

New

50

50

50

50

50

50

50

50

50

50

50

50

Ren

ewal

10

10

10

10

10

10

10

10

10

10

10

10

Infla

tion

Leas

ing

Com

mis

sion

s

Leas

ing

Com

mis

sion

s C

ateg

ory:

LC

Pay

men

t Mad

e: F

irst M

onth

Uni

t of M

easu

re: P

erce

nt

Mar

-201

3 M

ar-2

014

Mar

-201

5 M

ar-2

016

Mar

-201

7 M

ar-2

018

Mar

-201

9 M

ar-2

020

Mar

-202

1 M

ar-2

022

Mar

-202

3 M

ar-2

024

New

5

5

5

5

5

5

5

5

5

5

5

5

Ren

ewal

2

2

2

2

2

2

2

2

2

2

2

2

Infla

tion

Cal

cula

tion

incl

udes

:B

ase

Ren

t:Y

esFr

ee R

ent:

Yes

Ste

p R

ent:

Yes

Rei

mbu

rsem

ents

:N

oR

etai

l Sal

es:

No

CP

I Ren

t:N

o

Pro

perty

Res

ale

Opt

ion:

Cap

italiz

e N

et O

pera

ting

Inco

me

Cap

Rat

e:6.

25R

esal

e A

djus

tmen

t(s):

1A

pply

Rat

e to

follo

win

g ye

ar in

com

e: Y

esC

alcu

late

Res

ale

for A

ll Y

ears

: Yes

Cap

Rat

e R

ange

Low

Rat

e:6

Hig

h R

ate:

7.5

Incr

emen

t:0.

25

Dire

ct C

apita

lizat

ion

Cap

italiz

atio

n P

erio

d:Y

ear O

neC

ash

Flow

to C

apita

lize:

Net

Ope

ratin

g In

com

eC

ap R

ate:

6C

omm

issi

ons:

0C

alcu

late

a B

lend

ed V

alue

:50

%

(con

tinue

d on

nex

t pag

e)

© 2

012

CBR

E, In

c.

Bar

neys

New

Yor

k

Sof

twar

e : A

RG

US

Ver

. 15.

0.1.

26

1-1

5 E

. Oak

Stre

et F

ile :

12-1

64C

H-0

717,

1-1

5 O

ak S

t - C

hica

go, I

L

C

hica

go, I

L 60

611

Pro

perty

Typ

e : R

etai

l

P

ortfo

lio :

D

ate

: 4/2

6/12

Tim

e : 1

0:57

am

R

ef#

: AD

B

P

age

: 10

Inpu

t Ass

umpt

ions

(con

tinue

d fro

m p

revi

ous

page

)

Pre

sent

Val

ue D

isco

untin

gP

rimar

y D

isco

unt R

ate:

7.

5D

isco

unt R

ate

Ran

ge N

umbe

r of R

ates

:5

Inc

rem

ent:

0.25

Dis

coun

t Met

hod:

Ann

ually

(End

poin

t on

Cas

h Fl

ow &

Res

ale)

Adv

ance

dU

nlev

erag

ed D

isco

unt R

ange

Cas

h Fl

ow R

ate:

7.5

Res

ale

Rat

e:7.

5Le

vera

ged

Dis

coun

t Ran

geC

ash

Flow

Rat

e:7.

5R

esal

e R

ate:

7.5

© 2

012

CBR

E, In

c.

ANALYSIS

SHORTTERM

LONGTERM

STRENGTHS & WEAKNESSES

CURRENT EMPLOYMENT TRENDS

FORECAST RISKSRISK-ADJUSTEDRETURN, ’10-15

RELATIVE EMPLOYMENT PERFORMANCE (1996=100)

EMPLOYMENT GROWTH RANK

VITALITY

LIFE CYCLE PHASE

U.S.=100% Best=1 Worst=384

Best=1, Worst=392 U.S.=100%

2010-2012

RELATIVE COSTSLIVING BUSINESS

2010-2015

RELATIVE RANK

Total Construction Manufacturing Trade Trans/Utilities Information Financial Activities Prof & Business Svcs. Edu & Health Svcs. Leisure & Hospitality Other Services Government

30 MOODY’S ANALYTICS / Précis U.S. Metro / Midwest / February 2012

DECEMBER 2011% change yr ago, 3-mo MA

U.S. CHI

95

100

105

110115

120

125

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11F 12F 13F 14F 15F

-1.2-1.5

-0.50.5

2.9-0.9

-6.31.31.4

0.71.2

0.5

2004 2005 2006 2007 2008 2009 2010 INDICATORS 2011 2012 2013 2014 2015374.7 380.3 389.8 394.3 389.4 377.1 383.9 Gross metro product (C$B) 389.0 398.2 406.9 423.9 442.3

2.1 1.5 2.5 1.2 -1.3 -3.1 1.8 % change 1.3 2.4 2.2 4.2 4.33,754.1 3,790.8 3,843.7 3,873.2 3,845.4 3,645.7 3,611.9 Total employment (000) 3,637.9 3,677.0 3,702.2 3,778.6 3,885.2

-0.1 1.0 1.4 0.8 -0.7 -5.2 -0.9 % change 0.7 1.1 0.7 2.1 2.86.3 6.0 4.5 4.9 6.2 10.0 10.1 Unemployment rate 9.6 10.6 9.9 7.9 6.74.9 4.8 7.3 5.7 3.6 -5.8 3.1 Personal income growth 5.1 3.1 4.4 6.3 6.3

7,738.0 7,740.0 7,749.5 7,779.4 7,817.0 7,856.1 7,894.0 Population (000) 7,928.2 7,966.3 8,005.6 8,043.3 8,077.227,382 29,299 22,698 13,382 5,585 2,752 2,747 Single-family permits 2,885 3,267 5,035 5,009 4,3659,880 14,677 17,121 14,696 7,953 1,565 2,407 Multifamily permits 3,025 5,722 4,835 4,695 4,673246.2 270.7 283.9 286.0 253.0 203.4 195.8 Existing-home price ($ths) 178.0 182.9 191.1 208.3 227.4

99,516 106,244 99,306 89,314 52,976 72,551 54,773 Mortgage originations ($mil) 44,838 40,904 38,081 39,362 46,124-50.5 -58.4 -51.8 -31.2 -25.2 -22.5 -18.8 Net migration (000) -17.9 -14.8 -14.2 -16.2 -20.4

45,789 60,910 16,741 23,632 34,252 47,229 55,692 Personal bankruptcies 45,954 45,680 45,838 47,164 43,696

Recent Performance. Chicago’s recovery is on the ropes. Hard-hit sectors such as construction, finance and government continue to contract, while manufacturing-related industries are expand-ing more slowly. On the upside, factory output is regaining momentum, housing is off its lows, and convention and tourism business is picking up. While cargo tonnage at O’Hare and Midway airports is down more than 10% from a year ago, passenger traffic is up about 1% thanks to surge in international visitors.

Jobs. The job market will get a temporary boost from a mild winter, but the effect will fade by the spring and growth will be below average this year. Leading employment indicators have been almost universally positive nationwide, but they have been only lukewarm for CHI. Temporary employment is increasing only slowly, and with the average workweek still a half hour below its previous cy-clical high, there is room for employers to tap the current workforce before they need to hire.

A spate of layoffs will also slow improvement. American Airlines wants to eliminate 15% of its workforce as it remakes itself under bankruptcy protection, and five other companies are cutting their global workforces, including hundreds in CHI, as they brace for a recession in Europe.

The layoffs and short workweek validate the weak income prospects, and with the wealth shock from declining housing equity particularly severe, households have been straining harder to sup-port spending. Retail and leisure/hospitality have underperformed, except for the luxury segment, which has been helped by higher stock prices and a spike in the number of high-paying management jobs. CHI has benefited from an expanding roster of high-tech companies such as Groupon, Face-book and LinkedIn, which on average pay more than twice those in other private industries.

Small business. Small businesses may be what break CHI out of its recent funk for good. The house-hold employment survey more accurately reflects what small businesses are doing, and recently it has shown more improvement than the payroll survey. A rising stock market is emboldening venture capi-tal and private equity firms to take more chances on startups, while credit is more accessible for established small firms. Small businesses’ role has expanded over the last two decades, even more than nationally with an above-average share of income in CHI coming from sole proprietors. Illinois is fairly competitive for newly established firms. Its tax burden ranks among the highest in the nation for mature companies but closer to the middle for firms established in the last three years, according to the Tax Foundation.

Finance. Finance employment is still expected to underperform this year, but a slight increase is now expected instead of no change. R.J. O’Brien and others have hired former MF Global employees and have absorbed many of the company’s customer ac-counts. More importantly, recent policy successes in Europe are supporting an easing in financial condi-tions, giving banks the green light to poach busi-ness from their European competitors, which are deleveraging. Citibank is moving its central region headquarters from Dallas to CHI and is planning on beefing up its retail presence by adding 20 branches.

A mild winter will temporarily heat up Chi-cago’s recovery, but indicators that matter most for the outlook do not point convincingly to a lasting pickup, and growth will settle at a below-average pace by midyear. Longer term, a large talent pool, central location, vast transportation network, and superior access to capital will work in CHI’s favor, but middling population trends will constrain expansion.

Aaron D. SmithFebruary 2012

DataBuffet® MSA code: DMCHI

CHICAGO

189 3rd quintile

228 3rd quintile 102% 107%

97% 192

Mature

STRENGTHS � High per capita income, which boosts service economy.

� Huge talent pool; strong roster of leading educational institutions.

� Major business, distribution, transportation and financial center.

WEAKNESSES � Below-average population growth. � Infrastructure in need of repair. � Onerous tax burden. � Poor state and local fiscal health.

UPSIDE � Exports rise more quickly, giving extra lift to manufacturing.

� Higher-quality jobs boost income growth more than expected.

� More companies seek headquarters downtown. � Tourism benefits from new casino.

DOWNSIDE � City of Chicago’s budget troubles worsen. � Fewer companies relocate to CHI because of the state business tax.

X W 0.42%

© 2012 CBRE, Inc.

EMPLOYMENT & INDUSTRY MIGRATION FLOWS

LEADING INDUSTRIESHOUSE PRICES

COMPARATIVE EMPLOYMENT AND INCOME

PER CAPITA INCOME

Due to U.S. fl uctuations Relative to U.S.

TOP EMPLOYERS

PUBLIC

INDUSTRIAL DIVERSITY

EMPLOYMENT VOLATILITY

Sources: IRS (top), 2010; Census Bureau, 2010

Sources: BLS, Moody’s Analytics, 2010

2010

Sources: Percent of total employment — Moody’s Analytics & BLS, 2010; Average annual earnings — BEA, 2009

NAICS INDUSTRY EMPLOYEES (000)

Sector % of Total Employment Average Annual Earnings

Not due to U.S. Due to U.S.

Most Diverse (U.S.)

Least Diverse

Source: Bureau of Economic Analysis, 2009

Source: FHFA, 1996Q1=100, NSA

MiningConstructionManufacturing Durable NondurableTransportation/UtilitiesWholesale TradeRetail TradeInformationFinancial ActivitiesProf. and Bus. ServicesEduc. and Health ServicesLeisure and Hosp. ServicesOther ServicesGovernment

MOODY’S RATING

MOODY’S ANALYTICS / Précis U.S. Metro / Midwest / February 2012 31

CHI U.S.

100106

0%

20%

40%

60%

80%

100%

98%

COUNTYAS OF JUN 16, 2011Aa3

INTO CHICAGO, IL NUMBER OF MIGRANTSLake County, IL 11,136Gary, IN 5,306New York, NY 2,924Rockford, IL 2,651Los Angeles, CA 2,126Phoenix, AZ 2,109Milwaukee, WI 2,078Minneapolis, MN 1,941Warren, MI 1,829Atlanta, GA 1,753Total In-migration 115,095

FROM CHICAGO, ILLake County, IL 12,763Gary, IN 8,277Phoenix, AZ 3,279New York, NY 3,246Rockford, IL 2,758Houston, TX 2,614Los Angeles, CA 2,563Atlanta, GA 2,542Dallas, TX 2,424Milwaukee, WI 2,105Total Out-migration 146,184

Net Migration -31,089

GVSL State & Local Government 421.86221 General Medical and Surgical Hospitals 142.25613 Employment Services 129.97221 Full-Service Restaurants 116.97222 Limited-Service Eating Places 92.85511 Management of Companies and Enterprises 69.96113 Colleges, Universities & Professional Schools 66.84451 Grocery Stores 62.85221 Depository Credit Intermediation 60.65617 Services to Buildings and Dwellings 53.06211 �� 52.64521 Department Stores 52.45416 �� 50.45415 Computer Systems Design and Related Srvcs. 49.0GVF Federal Government 48.1

High-tech employment 162.4As % of total employment 4.4

2007 2008 2009 2010Domestic -59,168 -57,321 -54,152 -48,896Foreign 27,909 32,136 31,676 30,080Total -31,259 -25,186 -22,476 -18,815

Federal 48,110State 50,639Local 371,175

CHI IL U.S. 0.0% 0.2% 0.5% 3.3% 3.5% 4.2% 8.7% 10.0% 8.9% 56.7% 58.5% 61.3% 43.3% 41.5% 38.7% 4.7% 4.5% 3.7% 5.4% 5.1% 4.2% 9.9% 10.5% 11.1% 2.0% 1.8% 2.1% 7.2% 6.4% 5.9% 16.8% 14.2% 12.9% 15.1% 14.8% 15.0% 9.1% 9.2% 10.0% 4.7% 4.5% 4.1% 13.2% 15.3% 17.3%

CHI IL U.S. $355,256 $37,476 $67,309 $62,943 $59,111 $51,846 $73,841 $73,850 $70,205 nd $72,712 $71,802 nd $75,468 $67,654 nd $59,643 $58,428 $84,123 $79,420 $72,720 $31,190 $29,102 $30,042 $97,199 $76,107 $87,045 $61,893 $53,999 $45,142 $78,007 $67,247 $58,340 $50,200 $48,253 $48,812 $25,349 $22,561 $22,600 $40,614 $36,167 $32,053 $69,349 $65,125 $65,089

Wal-Mart Stores Inc. 21,329Advocate Health Care System 14,873JP Morgan Chase Bank 13,639Walgreen Co. 13,122Abbott Laboratories 13,000United Continental Holdings Inc. 13,000AT&T 12,200Motorola Inc. 10,000American Airlines 9,766University of Illinois 9,766Chicago Transit Authority 9,520University of Chicago 8,791Allstate Insurance Co. 8,632Resurrection Healthcare 8,201Archdiocese of Chicago 8,169Comcast Corp. 8,100Rush University Medical Center 8,095Jewel-Osco Stores 8,000Northwestern University 7,826Bank of America N.A. 7,800

Source: Crain’s Book of Lists, December 2010

CHI U.S.

80

100

120

140

160

180

200

220

96 99 02 05 08 11

0.00

0.20

0.40

0.60

0.80

1.00

0.81

-35,000-30,000

-25,000-20,000-15,000-10,000

-5,0000

07 08 09 10

Net Migration, CHI

CHI IL U.S.

44,727 41,058 38,846

© 2012 CBRE, Inc.


CHICAGO

Stronger Manufacturing Growth Ahead

Sources: ISM, Moody’s Analytics

SA

-24

-12

0

12

24

36

08 09 10 11 12

ISM-Chicago, new orders less inventory index, 1-mo lead

Chicago industrial production over 3 mo, % change annualized

0 5 10 15 20 25 30

DecaturPeoria

ChampaignKankakee

BloomingtonSpringfield

Quad CitiesDanville

U.S.Midwest

IllinoisLake County

Chicago

Housing Burdened by High Foreclosures

Sources: RealtyTrac, Moody’s Analytics

Foreclosure inventory per 1,000 households, Jan 2012

41.9

21.9

18.0

6.9

11.3

North AmericaAsiaEUSouth AmericaOther

A Weaker Europe Will Not Derail Exports

Sources: International Trade Administration, Moody’s Analytics

Exports from Chicago metro area, % of total, 2008

102030405060708090

100110

00 01 02 03 04 05 06 07 08 09 10 11

Illinois Chicago U.S.

Healing Process Will Take Longer

Sources: Equifax, Moody’s Analytics

Housing equity per household, $ ths

Prospects for manufacturing are looking more upbeat, as the impact of the crisis in Europe on overseas demand has been smaller than anticipated. The auto industry remains a source of strength. Demand for heavy equipment also maintains strength, led by ro-bust activity in energy. These trends are borne out in the CHI area manufacturing survey, which continues to outperform the national survey. The survey’s components show the gap between new orders and inventories at a two-year high, a positive sign for production. The factory workweek has also been lengthening.

A large foreclosure backlog will cause CHI’s beleaguered hous-ing market to fare worse than most over the next year. The metro division accounts for four-fifths of the state’s foreclosures but less than two-thirds of its housing stock. Household formation has also been slow to recover because of weak migration patterns, weighing on housing demand. The better job market should help reverse this trend, but with so much excess inventory, builders will be slow to construct homes. The recent pop in housing starts likely reflects unusually mild weather and will prove temporary.

10

20

30

40

50

60

70

80

08 09 10 11

U.S. Chicago Illinois

Narrow Base of Hiring Gains Is Disappointing

Sources: BLS, Moody’s Analytics

3-mo employment diffusion index, 3-digit NAICS

92949698

100102104106108110

T T+3 T+6 T+9 T+12 T+15 T+18 T+21 T+24 T+27 T+30

1975 1980 19821991 2001 Current

Jobless Recovery for Windy CityChicago employment, index to first mo of U.S. recovery

Sources: BLS, Moody’s Analytics

T=first mo of U.S. recovery

© 2012 CBRE, Inc.


© 2012, Moody’s Analytics, Inc. and/or its licensors and affi liates (together, “Moody’s”). All rights reserved. ALL INFORMATION CONTAINED HEREIN

IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER

TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY PURPOSE, IN WHOLE

OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

All information contained herein is obtained by Moody’s from sources believed by it to be accurate and reliable. Because of the possibility of human

and mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. Under no

circumstances shall Moody’s have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or

relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of Moody’s or any of its directors,

offi cers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or

delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without

limitation, lost profi ts), even if Moody’s is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such

information. The fi nancial reporting, analysis, projections, observations, and other information contained herein are, and must be construed solely as,

statements of opinion and not statements of fact or recommendations to purchase, sell, or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED,

AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH OPINION OR

INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER. Each opinion must be weighed solely as one factor

in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own

study and evaluation prior to investing.

About Moody’s AnalyticsEconomic & Consumer Credit Analytics

Moody’s Analytics helps capital markets and credit risk management professionals

worldwide respond to an evolving marketplace with confi dence. Through its team of

economists, Moody’s Analytics is a leading independent provider of data, analysis,

modeling and forecasts on national and regional economies, fi nancial markets, and

credit risk.

Moody’s Analytics tracks and analyzes trends in consumer credit and spending, output and income, mortgage activity, popu-

lation, central bank behavior, and prices. Our customized models, concise and timely reports, and one of the largest assembled

fi nancial, economic and demographic databases support fi rms and policymakers in strategic planning, product and sales fore-

casting, credit risk and sensitivity management, and investment research. Our customers include multinational corporations,

governments at all levels, central banks and fi nancial regulators, retailers, mutual funds, fi nancial institutions, utilities, residen-

tial and commercial real estate fi rms, insurance companies, and professional investors.

Our web and print periodicals and special publications cover every U.S. state and metropolitan area; countries throughout Eu-

rope, Asia and the Americas; and the world’s major cities, plus the U.S. housing market and other industries. From our offi ces in the

U.S., the United Kingdom, and Australia, we provide up-to-the-minute reporting and analysis on the world’s major economies.

Moody’s Analytics added Economy.com to its portfolio in 2005. Its economics and consumer credit analytics arm is based in

West Chester PA, a suburb of Philadelphia, with offi ces in London and Sydney. More information is available at www.economy.com.

© 2012 CBRE, Inc.

QUALIFICATIONS OF

J. SCOTT PATRICK, MAI, CCIMDirector

CBRE, Inc. - Valuation and Advisory Services

700 Commerce Drive, Suite 550 Oak Brook, IL 60523

(630) 368-5531

EDUCATION

Bachelor of Science, Business – Real Estate Administration, Indiana University – Bloomington, IN

CERTIFICATION State Certified General Real Estate Appraiser: State of Illinois (No. 553-000226) Licensed Real Estate Broker: State of Illinois (No. 475090543)

PROFESSIONAL

Designated Member, Appraisal Institute (MAI), Certificate No. 10314 Certified Commercial Investment Member (CCIM), Certificate No. 10820

EMPLOYMENT EXPERIENCE 2011 – Present CBRE, Inc. Chicago, IL Director 2007 - 2010 Rubicon Advisory, LLC Chicago, IL Director 2003 - 2007 Allstate Investments, LLC Northbrook, IL Senior Manager – Appraisals 1999 - 2003 Integra Realty Resources Chicago, IL Managing Director 1994 – 1999 Nunnink & Associates, Inc. Chicago, IL Regional Manager 1991 – 1994 Citicorp Real Estate, Inc. Chicago, IL 1983 – 1991 Joseph J. Blake & Associates Houston, TX – Chicago, IL J. Scott Patrick has 25+ years of commercial real estate valuation experience. Based predominantly in Chicago, Mr. Patrick has completed assignments across the United States with primary focus on institutional-grade, retail and office properties. In addition to most types of retail and office properties, Mr. Patrick has a wide range of experience analyzing and appraising real estate assets such as:

� GSA leased office and industrial properties, including specialty assets occupied by the Federal Bureau of Investigation, US Secret Service, Joint Forces Task Force Command, Homeland Security, Internal Revenue Service, and the Drug Enforcement Agency.

� Industrial properties including distribution, light and heavy manufacturing, office/warehouse (low to high finish), and truck terminals.

© 2012 CBRE, Inc.

QUALIFICATIONS OF

LES LINDER, MAI, CCIM Managing Director

CB Richard Ellis Inc., Valuation and Advisory Services 311 South Wacker, Suite 400

Chicago, IL 60606 (312) 233-8665

[email protected]

EDUCATIONAL

Bachelors of Science Degree, Business – Real Estate Administration Indiana University, Bloomington, Indiana

CERTIFICATION

State Certified General Real Estate Appraiser: State of Michigan (No. 1201003343) State Certified General Real Estate Appraiser: State of Illinois (No. 553.001947) State Certified General Real Estate Appraiser: State of Indiana (No. CG-40801085)

PROFESSIONAL

Designated Member, Appraisal Institute (MAI), Member No. 37831 Member of the Commercial Investment Real Estate Institute (CCIM), Certificate No. 11264

EMPLOYMENT EXPERIENCE

1987-1994 Oetzel-Hanton-Williams, Inc. Appraiser Troy, MI 1994-1994 National Realty Advisors

Senior Appraiser Troy, MI 1994-1996 Laurencelle Appraisal Company Senior Appraiser Birmingham, MI 1996-2004 Bank One Inc. Vice President Detroit, MI 2004-2008 CB Richard Ellis, Inc Managing Director Southfield, MI 2008-Present CB Richard Ellis, Inc Managing Director Chicago, IL

Valuation assignments included all types of existing as well as proposed commercial, industrial, multiple-family residential and special purpose properties throughout the mid-west, including apartments, office buildings, industrial manufacturing and warehouse facilities, shopping centers, restaurants, hotels, motels, manufactured home communities and a wide variety of investment and special purpose properties and unimproved land. In addition I have testified as an Expert Witness for US Bankruptcy court.

© 2012 CBRE, Inc.

New Self-Contained Appraisal Report · 2012. 5. 10. · 1-15 EAST OAK STREET RETAIL 1-15 East Oak...

Documents

Transcript of New Self-Contained Appraisal Report · 2012. 5. 10. · 1-15 EAST OAK STREET RETAIL 1-15 East Oak...