REAL ESTATE APPRAISAL › info › appraisal_2017.pdf · 2017-10-12 · Real Estate Appraisal ....

Real Estate Appraisal Appraisal Report North Building of Downtown Main Public Library 900 Vine Street Cincinnati, Hamilton County, Ohio 45202 Special-Use, Five-Story Building Totaling 132,500 Square Feet As Is Market Value as of September 13, 2017

Prepared For: Ms. Molly DeFosse Chief Finance and Facilities Officer The Public Library of Cincinnati and Hamilton County 800 Vine Street Cincinnati, OH 45202 File #: 506506517 Prepared By: Eric J. Gardner, MAI, CCIM

September 28, 2017 Ms. Molly DeFosse Chief Finance and Facilities Officer The Public Library of Cincinnati and Hamilton County 800 Vine Street Cincinnati, OH 45202 Re: Real estate appraisal of North Building of Downtown Main Public Library – 900 Vine

Street, Cincinnati, Hamilton County, Ohio 45202. Dear Ms. DeFosse: As you requested, I have made an investigation and appraisal of the real estate located at 900 Vine Street, Cincinnati, Hamilton County, Ohio 45202. The property being appraised is the North Building of the Downtown Main Public Library. It is improved with a special-use five-story structure with a basement and mechanical penthouse that was constructed in 1996. The improvements total 132,500 square feet. It is the appraiser’s understanding that the floor plates each total 29,000 square feet with a 2,500 square foot cutout for an open atrium/light well. The improvements are user-specific and serve a variety of uses including administrative offices, library space open to the public, and two (2) floors of internal storage for library materials that has built-in shelving and tracking. The purpose of the appraisal was to offer an opinion of the as is market value of the fee simple interest of the subject property. A personal tour of the property was performed, and the analyses used to form an opinion of value are contained in the following appraisal report. The intended use of the appraisal is to be used by Ms. Molly DeFosse, The Public Library of Cincinnati and Hamilton County for internal valuation purposes. 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 Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). This assignment has been prepared by a Certified General Appraiser in an impartial, objective, and independent manner.

Ms. Molly DeFosse Page Two September 28, 2017 In approaching this assignment and arriving at our conclusions, it is important to reiterate that the subject property is a special-use type of commercial real estate and was developed and constructed with the intent of being user-specific for the Public Library of Cincinnati and Hamilton County. Special-use assets often require special consideration and analysis when opining value. Thus, the use of hypothetical conditions are a critical and necessary ingredient in reaching reasonable and practical value conclusions. As is the case with complex properties the valuation involves a combination of the sales comparison approach, income capitalization approach, and a modified market data approach which have all been recognized as being commercially reasonable under the circumstances. Due to changes in technology, the manner and volume in which library materials are used has changed significantly in the past 20 years since the subject improvements were constructed. This has contributed to what is considered early obsolescence or external obsolescence for the subject improvements in its current use. According to the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), external obsolescence is defined as follows: “A type of depreciation; a diminution in value caused by negative external influences and generally incurable on the part of the owner, landlord, or tenant. The external influence may be either temporary or permanent.” Therefore, from a market perspective, it is the opinion of the appraiser that highest and best use of the subject improvements is a mixed-use redevelopment. This takes into account the subject property’s location, zoning, market supply and demand, and the surrounding property uses. Market comparable sales and rentals of the subject’s present use do not exist. Therefore, to arrive at an as is value for the subject property we have applied the hypothetical condition that the subject will be redeveloped into a mixed-use property with office, retail and warehouse/storage components. This is how most developers and investors in the market would approach a property such as the subject. The focus of this report and analysis is on the as is market value of the existing land and improvements. This report does not include any type of potential for future air rights agreements. Providing a detailed architectural and structural building analysis to determine the potential feasibility of creating an air rights agreement is beyond the scope of this assignment. However, we would urge the client to explore this option as current market trends indicate a strong demand for residential housing downtown.

Ms. Molly DeFosse Page Three September 28, 2017 Two (2) scenarios were considered in our analysis to arrive at an as is opinion of value. In the first scenario we first opined a prospective market value upon stabilization and deducted a series of cost-to-cure items to arrive at an as is value opinion. In the second scenario we considered the property as is and considered comparable sales that were vacant and/or not stabilized at the time of sale. Our conclusions are as follows:

A typical exposure time for the subject property is estimated to be 12 months or less based on analysis of relevant market data. A typical marketing time for the subject is also estimated to be 12 months or less. This assumes professional brokers are used, and the opinion of market value derived herein is the selling price. The reported value conclusion is subject to the assumptions and limiting conditions set forth in the body of the report. Our final value conclusion is subject to the following extraordinary assumptions and hypothetical conditions: 1 – The as is market value conclusion is subject to the hypothetical condition that

the subject could be redeveloped into a mixed-use property with office, retail and warehouse/storage components.

2 – Within our analysis we have made the extraordinary assumption that the

Library will remove and relocate the specialized shelving and tracking on Floors C & D and incur any associated costs.

Status Effective Date Whole $ $/Unit UnitsScenario I:Sales Comparison Approach As Stabilized October 1, 2019 $7,860,000 $59 /SFIncome Capitalization Approach As Stabilized October 1, 2019 $7,600,000 $57 /SF

Final Opinion of Stabilized Market Value As Stabilized October 1, 2019 $7,700,000 $58 /SFLess Cost to Cure Items/Rent Loss:Rent Loss ($1,262,901) ($10) /SFTenant Improvements to be Completed ($1,669,500) ($13) /SFLeasing Commissions to be Paid ($582,142) ($4) /SFCapital Improvements (Roof) ($275,000) ($2) /SFTotal Cost to Cure ($3,789,543) ($29) /SFTotal Cost to Cure - Rounded ($3,800,000) ($29) /SFOpinion of Market Value - Scenario I (Deducting Cost to Cure) As Is September 13, 2017 $3,900,000 $29 /SF

Scenario II:Sales Comparison Approach As Is September 13, 2017 $3,600,000 $27 /SFOpinion of Market Value - Scenario II (No Cost to Cure Deduction) As Is September 13, 2017 $3,600,000 $27 /SF

Final Opinion of As Is Market Value As Is September 13, 2017 $3,900,000 $29 /SF

Opinion of Market Value

Ms. Molly DeFosse Page Four September 28, 2017 This letter is not the appraisal, but is followed by an appraisal report setting forth the identification of the property, pertinent facts about the area and the subject property, comparable market data, and the results of the investigations and analyses leading to the value conclusions. Respectfully submitted,

Eric J. Gardner, MAI, CCIM Senior Vice-President State of Ohio Certified General Appraiser Certificate #419444

Table of Contents Page Appraisal Report

Title Page Letter of Transmittal Table of Contents Summary of Important Facts and Conclusions ......................................................................... 7 Intended Use of the Appraisal ................................................................................................... 11 Definition of Market Value and Interest Appraised ................................................................. 12 Appraisal Scope and Reporting Process ................................................................................. 14 Identification of Property ............................................................................................................ 16 Ownership and Taxes ................................................................................................................. 16 History of Property Being Appraised & Five Year Sales History .......................................... 17 Neighborhood Description ......................................................................................................... 18 Site Data ....................................................................................................................................... 28 Improvement Description ........................................................................................................... 31 Highest and Best Use ................................................................................................................. 34 Sales Comparison Approach ..................................................................................................... 36 Income Approach ........................................................................................................................ 65 Reconciliation and Final Value Opinion ................................................................................... 81 Photographs of Subject Property .............................................................................................. 85 Certification ................................................................................................................................ 115 Assumptions and Limiting Conditions .................................................................................... 117

Addenda

Photographs of Subject Property Ohio License Certification Assumptions and Limited Conditions Appraiser Qualifications Appraiser Disclosure Statement

APPRAISAL REPORT Summary of Important Facts and Conclusions Summary of Important Facts and Conclusions

Identification of Property

Location The subject property is located on the north side of E. 9th Street east of Vine Street and west of Walnut.

Street Address 900 Vine Street, Cincinnati, Hamilton County, Ohio 45202

Ownership Public Library of Cincinnati & Hamilton County

Auditor’s Reference No. 076-0002-0247-00

Objective of the Appraisal

Purpose The purpose of the appraisal was to offer an opinion of the as is market value of the fee simple interest of the subject property.

Intended Use The intended use of this report is for internal valuation purposes. This report is not intended for any other use. The appraiser is not responsible for unauthorized use of this report.

Intended User The intended user of this report is Ms. Molly DeFosse, The Public Library of Cincinnati and Hamilton County.

Site

Size and Shape The subject site is rectangular in shape and totals 1.283 acres or 55,887 square feet.

Zoning Data The real estate being appraised is located within the zoning jurisdiction of the City of Cincinnati. The site is zoned DD-C, Downtown Support.

Flood Data According to Federal Flood Rate Map Community Panel No. 39061C0332F with an effective date of February 16, 2012, the subject is located in a Flood Zone X. Zone X areas are defined as areas outside the 500 year flood plain. A copy of the subject’s flood zone map is provided in the Site Data section of this report.

Improvements The property being appraised is the North Building of the Downtown Main Public Library. It is improved with a five-story structure with a basement and mechanical

506506517 7

APPRAISAL REPORT Summary of Important Facts and Conclusions

penthouse that was constructed in 1996. The improvements total 132,500 square feet. It is the appraiser’s understanding that the floor plates each total 29,000 square feet with a 2,500 square foot cutout for an open atrium/light well. The improvements are user-specific and serve a variety of uses including administrative offices, library space open to the public, and two (2) floors of internal storage for library materials that has built-in shelving and tracking.

Highest and Best Use

As If Vacant Multi-story, mixed-use development

As Improved Mixed-use redevelopment

Effective Date of Value September 13, 2017

Site Visit Date September 13, 2017

Marketing Time A typical marketing time for the subject property is estimated to be 12 months or less based on analysis of relevant market data.

Exposure Time A typical exposure time for the subject property is estimated to be 12 months or less based on analysis of relevant market data.

Extraordinary Assumptions Our final value conclusion is not subject to any extraordinary assumptions.

1 – Within our analysis we have made the extraordinary assumption that the Library will remove and relocate the shelving and tracking on Floors C & D for future use elsewhere and incur any associated costs. We have not applied a cost-to-cure figure for this item within our analysis.

Hypothetical Conditions Our final value conclusion is subject to the following hypothetical conditions:

1 – The value conclusion is subject to the hypothetical condition that the subject will be redeveloped into a mixed-use property with office, retail and warehouse/storage components.

506506517 8

APPRAISAL REPORT Summary of Important Facts and Conclusions Market Value and Conclusions

Significant Market and Property Specific Factors Influencing the Subject Property The top positive (+) factors influencing the subject property are: • Well-located within the Cincinnati CBD • Increased demand for office, retail, and residential space within the Cincinnati CBD and

peripheral areas in recent years spurred by new developments, growing and/or expanding downtown amenities, and growing downtown population and labor force.

• Subject improvements constructed in 1996 and have been well-maintained in good condition. Improved structures within the Cincinnati CBD that are +/- 20 years old or less are very rare.

• Institutional grade construction • Site is located within close proximity to the newly-developed streetcar line • The existing structure may have the ability to create air rights that could support adding

additional floors (this option is beyond the scope of this report). The most negative (-) or risk factors affecting the subject property are: • Subject property is a special-use type of commercial real estate and was developed and

constructed with the intent of being user-specific for the Public Library of Cincinnati and Hamilton County. Special-use assets often require special consideration and analysis when opining value.

• Due to changes in technology, the manner and volume in which library materials are used has changed significantly in the past 20 years since the subject improvements were constructed. This has contributed to what is considered early obsolescence or external obsolescence for the subject improvements in its current use.






506506517 9

APPRAISAL REPORT Summary of Important Facts and Conclusions • There are numerous forms of functional obsolescence throughout the building which may

require a cure to in order to be considered functional in a potential redevelopment. • The subject improvements have a stand-alone boiler for heat; however, the HVAC system

is shared with the Main Library Building. In the event that the subject property is redeveloped the HVAC system will need to be separated.

• There is an existing four (4) story skywalk connecting the North Building and the Main Library Building over E. 9th Street. In the event that the subject property is redeveloped, this connector will need to be removed or an easement/mutual operating agreement will need to be developed.

• Floors C & D are considered non-typical office/commercial space. These floors have uncommonly low ceiling heights (7-8’ feet), no exterior windows, and have built-in user-specific shelving and tracking for storage and indexing of library materials. It is the opinion on the appraiser that these floors are not marketable for anything other than some form of storage.

• The floorplates have a 2,500 square foot cutout that serves as an open atrium/light well. Open areas such as these can create challenges in space planning and higher operating expenses.

• There is limited on-site parking. The only on-site parking associated with the property is a small surface lot on the east end of the property at the northeast corner of E. 9th Street & Walnut with a total of 18 surface spaces.

• It is our understanding that the roof is at the end of its useful life. Jeff Gerrein, Facilities Operations Manager, communicated to the appraiser during the tour of the property that cost estimate to replace the roof is between $250,000 - $300,000. We were not provided with any contractor quotes or inspection/condition reports regarding the roof.

• Currently the subject is exempt from real estate taxes. A sale to a private party developer would most likely result in the loss of the tax exemption status.

506506517 10

APPRAISAL REPORT Intended Use of the Appraisal Intended Use of the Appraisal Reporting Format This appraisal report presents only summary discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser’s file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated below. The appraiser is not responsible for unauthorized use of this report.

Purpose The purpose of the appraisal was to offer an opinion of the as is market value of the fee simple interest of the subject property.

Intended Use The intended use of this report is for internal valuation purposes. This report is not intended for any other use. The appraiser is not responsible for unauthorized use of this report.

Intended User The intended user of this report is Ms. Molly DeFosse, The Public Library of Cincinnati and Hamilton County.

Interest Appraised Fee Simple

Effective Date of Value September 13, 2017

Site Visit Date September 13, 2017

Date of Report September 28, 2017

506506517 11

APPRAISAL REPORT Definition of Market Value and Interest Appraised Definition of Market Value and Interest Appraised Market Value According to the Office of the Comptroller of the Currency under 12 CFR, Part 34, Subpart C-Appraisals, 34, 42 Definitions ([.f].), the definition of Market Value is as follows: Market Value. The most probable price which a property should bring in a

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

a. Buyer and seller are typically motivated; b. Both parties are well informed or well advised, and

acting in what they consider their best interests; c. A reasonable time is allowed for exposure in the

open market; d. Payment is made in terms of cash in U. S. dollars

or in terms of financial arrangements comparable thereto; and

e. The price represents normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Interest Appraised According to the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), the following pertinent terms referenced in the report may be defined as follows:

Fee Simple Interest. 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.

Leased Fee Interest. The ownership interest held by the lessor, which includes

the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.

As Is Market Value. The opinion of the market value of real property in its current

physical condition, use, and zoning as of the appraisal date. Retrospective Opinion of Value. A value opinion effective as of a specified

historical date. The term does not define a type of value. Instead it identifies a

506506517 12

APPRAISAL REPORT Definition of Market Value and Interest Appraised

value opinion as being effective at some specific prior date. An opinion of value as of a retrospective date is frequently sought in connection with property tax appeals, damage models, lease renegotiation, deficiency judgments, estate tax, and condemnation.

Prospective Opinion of Value. A value opinion effective as of a specified future

date. The term does not define a type of value. Instead it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy.

Pertinent Terms According to the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015) and for the purpose of the Uniform Standards of Professional Appraisal Practice, 2016-2017 USPAP, the following pertinent terms referenced in the report may be defined as follows:

Exposure Time. The estimated length of time that 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. Marketing Time. An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal.

Extraordinary Assumption. An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions. Hypothetical Condition. A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Deferred Maintenance. Items of wear and tear on a property that should be fixed now to protect the value or income-producing ability of the property, such as a broken window, a dead tree, a leak in the roof, or a faulty roof that must be completely replaced. These items are almost always curable. Functional Obsolescence. The impairment of functional capacity of improvements according to market tastes and standards. External Obsolescence. A type of depreciation; a diminution in value caused by negative external influences and generally incurable on the part of the owner, landlord, or tenant. The external influence may be either temporary or permanent.

506506517 13

APPRAISAL REPORT Appraisal Scope and Reporting Process Appraisal Scope and Reporting Process In preparing this appraisal, the appraiser • used regional and neighborhood data contained within office files in order to determine the

influence on the subject property;

• spoke with various real estate professionals regarding trends in the subject’s particular property type;

• toured the subject site and the exterior of the improvements as well as the interior of the improvements;

• gathered and confirmed information on comparable improved sales;

• applied the sales comparison approach to arrive at an indication of value;

• gathered and confirmed information on comparable rentals;

• applied the income approach to arrive at an indication of value.

We requested the following information in the table below from the client and/or owner. The table summarizes the information we received and collected from alternate sources.

To develop the opinion of value, the appraiser performed a complete appraisal process, as defined by the Uniform Standards of Professional Appraisal Practice. This means that the appraiser(s) met the scope required to provide a competent and credible appraisal report. This

Property Data Requested Yes No N/A Alternate Source of Data/CommentsLegal description XCopies of current tax bills X Tax exemptDetails on any subject property transfers in the past three (3) years

X

Current listing information XEnvironmental reports pertaining to subject XSite plan XPlat map X County AuditorDeed XEasement agreements XCopy of ground lease XBuilding plans and specifications XCopies of all executed leases or detailed rent roll

X

Three-year history of income & expenses XDetails of planned capital expeditures X Verbally communicated cost estimate

to repair roof - not provided any documentation

Real Estate Appraisal Information RequestData Provided

506506517 14

APPRAISAL REPORT Appraisal Scope and Reporting Process assignment has been prepared by a Certified General Appraiser in an impartial, objective, and independent manner. In approaching this assignment and arriving at our conclusions, it is important to reiterate that the subject property is a special-use type of commercial real estate and was developed and constructed with the intent of being user-specific for the Public Library of Cincinnati and Hamilton County. Special-use assets often require special consideration and analysis when opining value. Thus, the use of hypothetical conditions are a critical and necessary ingredient in reaching reasonable and practical value conclusions. As is the case with complex properties the valuation involves a combination of the sales comparison approach, income capitalization approach, and a modified market data approach which have all been recognized as being commercially reasonable under the circumstances. Market comparable sales and rentals of the subject’s present use do not exist. Therefore, to arrive at an as is value for the subject property we have applied the hypothetical condition that the subject will be redeveloped into a mixed-use property with office, retail and warehouse/storage components. This is how most developers and investors in the market would approach a property such as the subject. Two (2) scenarios were considered in our analysis to arrive at an as is opinion of value. In the first scenario we first opined a prospective market value upon stabilization and deducted a series of cost-to-cure items to arrive at an as is value opinion. In the second scenario we considered the property as is and considered comparable sales that were vacant and/or not stabilized at the time of sale. The scope of this assignment does not include the following:

• Site valuation as if vacant and available for development. In order to develop a credible site valuation analysis, a detailed demolition cost estimate would need to be provided.

• This report does not include any type of potential for future air rights agreements. Providing a detailed architectural and structural building analysis to determine the potential feasibility of creating an air rights agreement is beyond the scope of this assignment.

This Appraisal Report is a brief explanation of the appraiser’s data, analyses, and conclusions. Supporting documentation is retained in the appraiser’s file.

506506517 15

APPRAISAL REPORT Identification of Property Identification of Property Ownership and Taxes Location The subject property is located on the north side of E. 9th Street

east of Vine Street and west of Walnut.

Street Address 900 Vine Street, Cincinnati, Hamilton County, Ohio 45202

Ownership Public Library of Cincinnati & Hamilton County

Auditor’s Reference No. 076-0002-0247-00

The subject property is currently exempt from taxes based on its present use. The Hamilton County Auditor's current assessed value of the subject property is set forth below.

In our analysis we have projected property taxes based on the “as stabilized” conclusion of value within the sales comparison approach and applying the appropriate current effective tax rate in the table below. This projected annual tax liability will be applied later within the income capitalization approach considering the hypothetical condition in our analysis assumes redevelopment. The property would lose its tax exempt status in that scenario and thus, it is necessary to project annual taxes.

35% 100%Market Value Market Value

Land $1,496,376 $4,275,360Improvements $4,025,861 $11,502,460TOTAL $5,522,237 $15,777,820Total/SF $119

Effective Tax Rate - / $1,000 of Assessed Value

Annual Tax Liability $0Annual Tax Liability/SF $0.00Source: County Auditor

Real Estate Tax AnalysisCurrent Real Estate Taxes

As of Effective Date of Value

506506517 16

APPRAISAL REPORT Identification of Property

History of Property Being Appraised & Five Year Sales History The property being appraised is the North Building of the Downtown Main Public Library. The improvements are user-specific and serve a variety of uses including administrative offices, library space open to the public, and two (2) floors of internal storage for library materials that has built-in shelving and tracking. It is our understanding that approximately $39 million was spent on the land, site improvements, and the existing building in the late 1990s. To our knowledge there have been no transfers of the subject property within the past five (5) years.

35% 100%Market Value Market Value

Land $1,496,376 $4,275,360Improvements $1,254,624 $3,584,640TOTAL $2,751,000 $7,860,000Total/SF $59

Effective Tax Rate 95.401744 / $1,000 of Assessed Value

Annual Tax Liability $262,450Annual Tax Liability/SF $1.98Source: County Auditor, Pillar VG

Real Estate Tax Analysis

Based on SCA ConclusionCurrent Real Estate Taxes

506506517 17

APPRAISAL REPORT Neighborhood Description Neighborhood Description The following map identifies the location of the subject property within the region.

Regional Summary Over the past 7 years, area population has grown 2.7%, indicating a slowly expanding workforce for the area. Household formation within the MSA is advancing at a slightly faster pace – 3.1% over the past seven years – for a gain of 17,037 new households. Median household income within the region is higher than the US average, and has grown at a faster rate than the US over the past several years. Also, job creation is gaining steam with the region reporting over 22,000 more jobs in 2016 than two years prior. 2016 has seen accelerated gains with 16,454 more people employed in December 2016 than twelve months prior. Additionally, Cincinnati’s cost of living is considered favorable, especially when considering home ownership. Transportation projects are poised to positively affect the region, including a new highway interchange in uptown along I-71 and the repositioning of CVG airport. Passenger traffic troughed in 2013 and low-cost carriers are beginning to positively impact the local market. E-commerce expansions are driving air freight deliveries and development near the airport. Cincinnati is currently the sixth-largest cargo airport in the nation, based on weight processed. Cincinnati’s downtown area continues to add facilities including GE’s Global Operations Center, 84.51°’s (formerly DunnhumbyUSA) 280,000 square foot office, and new hotels. Office development in the suburbs has also picked up steam, including medical office users and multi-tenant buildings.

506506517 18

APPRAISAL REPORT Neighborhood Description The office market is adding inventory, comprised primarily of owner/user product, including corporate and medical office users. CoStar reported improving fundamentals in 2016, with nearly one million square feet of absorption and a 240 basis point drop in overall vacancy. Cincinnati’s multi-tenant office sector is also gaining ground with strong absorption and a 50 basis point drop in vacancy in 2016. The apartment market is expanding with new construction, positive absorption and rising rents. This sector is benefitted by current demand for mixed use and urban development, allowing apartments to piggy-back along with office and retail development. Vacancy is low and new development is being quickly absorbed in the face of steady demand. Although new deliveries are forecast continue at an above average pace over the next few years, vacancy is anticipated to rise only slightly, and to remain below 5.0% for the near term. Cincinnati’s retail market is recovering, with over 3.9 million square feet of absorption over the past 3 years. Absorption has outpaced new construction, allowing vacancy to drop 150 basis points over the same timeframe. Overall vacancy for the Cincinnati market remains 60 basis points above that of the U.S. but is lower than it has been for the past nine years. Kroger has announced plans to build a two-story grocery store in a mixed-use residential development at the corner of Court and Walnut streets that will have a major impact on the downtown area. The region’s industrial market is expanding with 7.2 million square feet absorbed over the past eight quarters, and over 3.5 million square feet scheduled for delivery in 2017. Regional industrial vacancy ended 2016 at 5.6% versus 5.4% for the US. According to Moody’s Economy.com, total employment in Cincinnati is forecast to increase by about 16,300 jobs (1.5%) in 2017. Although Amazon has not announced a start date for its hub, the company said it expects to create more than 2,000 jobs when the site opens.1 These numbers indicate growth, and the outlook for 2017 is positive.2 The map below identifies the location of the subject property within the neighborhood.

1Reuters, “Amazon is building a massive air cargo hub in Kentucky,” nypost.com, February 1, 2017.

2 Reis Observer, Metro: Cincinnati, Reis, Inc. January 12, 2017.

506506517 19

APPRAISAL REPORT Neighborhood Description Neighborhood Map

506506517

20

APPRAISAL REPORT Neighborhood Description Immediate Neighborhood The subject property is located at 900 Vine Street, Cincinnati OH 45202. The immediate neighborhood is a mix of office, street-level retail, government buildings, schools and multifamily housing. The neighborhood is illustrated below using google.com/maps.

Subject Property

506506517 21

APPRAISAL REPORT Neighborhood Description Market Area The boundaries of the area of influence for the subject property are considered the property’s market area. The market area provides a framework in which the opinion of a property’s value is developed. Based on the physical inspection and subsequent analysis of value influences, the subject’s market area is considered to be a 1 mile radius around the subject property.

Within the defined market area influences on the property’s value can be further analyzed. Relevant influences on a property’s value are categorized as social, economic, governmental and environmental. Social and economic influences on property value tend to overlap with demographic statistics. Therefore, relevant demographic characteristics are outlined below.

506506517 22

APPRAISAL REPORT Neighborhood Description

Market Area Region Population, 2017 estimate

5,819 Hamilton County: 809,968 Cincinnati MSA: 2,171,583

Population Growth, 2010-2017 estimate

13.93% Hamilton County: 0.95% Cincinnati MSA: 2.70% Ohio: 0.91% U.S.: 5.31%

2017 Estimated Average Age 40.6 U.S.: 39.1

Unemployment, May 2017 (not seasonally adjusted)

4.0% Hamilton County Cincinnati MSA: 3.9% Ohio: 4.6% U.S.: 4.1%

Average Household Income Levels, 2017 estimates

$74,876 Cincinnati MSA: $80,305 Ohio: $71,025 U.S.: $80,853

Extent of owner occupancy 10.52% Cincinnati MSA: 67.33% Ohio: 67.49% U.S.: 64.94%

Sources: Bureau of Labor Statistics, Environicsanalytics/Spotlight

506506517 23

APPRAISAL REPORT Neighborhood Description Social characteristics for the market indicate stability when considering population growth. Area population is estimated to increase 13.93% from 2010 to 2017. The population growth is higher than the Cincinnati MSA average and also higher than US population growth estimates. Hamilton County unemployment, at 4.0%, is lower than the Ohio and U.S. unemployment rates and higher than that for the Cincinnati MSA. The market area is part of the region’s CBD submarket. Cincinnati market statistics are as follows:

Cincinnati City Office Submarket Cluster Class A, B & C

Quoted Rates $15.77 $16.30 $16.65 $16.19 $17.00 $17.21 $17.00 Source: CoStar, Inc. Q2 2017 Cincinnati Office Market Report. Cincinnati City Submarket Cluster The Cincinnati City office submarket cluster experienced positive absorption in the second quarter of 2017 with vacancy decreasing from 8.2% in the first quarter of 2017 to 8.1% in the second quarter. Within the Cincinnati City submarket cluster, the subject is located in the Cincinnati CBD office submarket with Second Quarter 2017 statistics shown below:

Bldgs Total RBA Vacancy YTD Net

Absorption Quoted Rates

Cincinnati City Submarket Cluster 1,285 40,094,415 8.1% (68,207) $17.00 Cincinnati CBD Submarket 217 21,986,599 9.0% (137,909) $17.31

(63,542)

373,218 381,171

562,897

942,260

(107,355)

39,148

13.3%

11.1%

9.9% 9.5%

7.9% 8.2% 8.1%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

(200,000)

-

200,000

400,000

600,000

800,000

1,000,000

2012 2013 2014 2015 2016 Q1 2017 Q2 2017

Net Absorption Vacancy%

506506517 24


Total Retail Market Statistics

Source: Costar Cincinnati Retail – Q2 2017; Cincinnati Total Retail Market and Cincinnati City Submarket Cluster

The Cincinnati City submarket cluster experienced positive absorption in the second quarter of 2017 with vacancy decreasing from 2.6% in the first quarter of 2017 to 2.4% in the second quarter. Within the Cincinnati City submarket cluster, the subject property lies in the Cincinnati CBD total retail submarket with Second Quarter 2017 statistics shown below:

Bldgs Total GLA Vacancy YTD Net


Cincinnati City Cluster 2,669 19,825,823 2.4% 158,716 $14.68 Cincinnati CBD Submarket 152 1,971,937 5.0% (51,030) $11.60

316,307 326,254

-33,104

200,964 181,786 115,816 42,900

6.60%

4.70% 4.00%

3.50% 2.70% 2.60% 2.40%

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

2012 2013 2014 2015 2016 Q1 2017 Q2 2017

Net Absorption, Cincinnati Metro

Net Absorption Cincinnati City Submarket Cluster

Vacancy Rate, Cincinnati Metro

Vacancy Rate Cincinnati City Submarket Cluster

506506517 25


Property Tax Burden

The subject property is part of Tax District 001 in the Cincinnati Public School District. Effective commercial tax rates for this district are currently 3.34% of the property’s market value (for the tax year 2016 paid in 2017). The average tax burden for Hamilton County is 3.09% which makes the subject’s tax burden slightly higher than the Hamilton County average.

Traffic Counts Traffic counts per day for neighborhood arterials are provided below:

Source: STDBOnline.com

506506517 26

APPRAISAL REPORT Neighborhood Description Changes in property use and land use patterns

Land use within the area is projected to remain DD-C, Downtown Support District.

Access to public transportation and areas

Market Trends Growth in the urban core and renewed interest in urban living have spurred new development as well as redevelopment of existing building stock in office, hospitality and multifamily housing – many of which include a street-level retail component. There is currently limited inventory of Class A downtown office space with large floor plates.

Subject Property

506506517 27

APPRAISAL REPORT Site Data Site Data Location The subject property is located on the north side of E. 9th Street east

of Vine Street and west of Walnut.

Size and Shape The subject site is rectangular in shape and totals 1.283 acres or 55,887 square feet. The Hamilton County parcel map for the subject site is provided below.

Zoning Data The real estate being appraised is located within the zoning jurisdiction of the City of Cincinnati. The site is zoned DD-C, Downtown Support.

Topography Flat

506506517 28

APPRAISAL REPORT Site Data Flood Data According to Federal Flood Rate Map Community Panel No.

39061C0332F with an effective date of February 16, 2012, the subject is located in a Flood Zone X. Zone X areas are defined as areas outside the 500 year flood plain. A copy of the subject’s flood zone map is provided below.

506506517 29

APPRAISAL REPORT Site Data Utilities To our knowledge all public utilities are available to the site which

includes water, sewer, gas, and electric.

Deed Restrictions and Easements

We are not aware of any adverse deed restrictions or easements that affect the property.

506506517 30

APPRAISAL REPORT Improvement Description Improvement Description The improvement description information detailed below has been collected from a personal tour of the site and improvements, a review of public records (tax cards), and from information provided by the client and/or owner.

General Description The property being appraised is the North Building of the Downtown Main Public Library. It is improved with a five-story structure with a basement and mechanical penthouse.

Size of Improvements The breakdown of the improved area is summarized in the table below.

It is the appraiser’s understanding that the floor plates each total 29,000 square feet with a 2,500 square foot cutout for an open atrium/light well.

As improved as of the date of value, Floor 1 consists of public library area; Floor 2 is combination of public library area and administrative offices; Floors C & D are user-specific storage with built-in shelving and tracking for library materials and periodicals; Floor 3 consists of administrative office. As previously mentioned there is a basement and mechanical penthouse. There areas were not considered in the square footage total above.

Age and Condition The improvements were constructed in 1996 and are considered to be in above-average physical condition.

Basic Construction

Foundation Poured

Framing Steel

Exterior Walls Brick

Floor Construction Poured concrete

Roof Flat EPMD roof – it is our understanding that the roof is at the end of its useful life.

Area Improved Area (SF)Floor 1 26,500 Floor 2 26,500 Floor C 26,500 Floor D 26,500 Floor 3 26,500 Total 132,500

Improved Area Breakdown

506506517 31

APPRAISAL REPORT Improvement Description Mechanical Features

HVAC Stand-alone boiler for heat; shared HVAC system with Main Library Building

Electric 480/277 volt, 4000/2000 amp, 3 phase, 4 wire

Sprinkler Yes, fully

Elevator Total of three (3) – 2 passenger, 1 freight (5,000 lb., 33 passenger freight capacity)

Restrooms One (1) set of men’s and women’s on Floors 1 & 2; two (2) sets of men’s and women’s on Floor 3.

Parking There is limited on-site parking. The only on-site parking associated with the property is a small surface lot on the east end of the property at the northeast corner of E. 9th Street & Walnut with a total of 18 surface spaces.

Deferred Maintenance It is our understanding that the roof is at the end of its useful life. Jeff Gerrein, Facilities Operations Manager, communicated to the appraiser during the tour of the property that cost estimate to replace the roof is between $250,000 - $300,000. We were not provided with any contractor quotes or inspection/condition reports regarding the roof. Aside from the roof no other deferred maintenance was present at the time of our tour.

Land to Building Ratio

Functional Obsolescence

The subject is a special-use type of commercial real estate and was developed and constructed with the intent of being user-specific for the Public Library of Cincinnati and Hamilton County. There are numerous forms of functional obsolescence throughout the structure which may require a cure to in order to be considered functional in the scenario of a redevelopment. These items include the following:

• The subject improvements have a stand-alone boiler for heat; however, the HVAC system is shared with the Main Library Building. In the event that the subject property is redeveloped the HVAC system will need to be separated.

• There is an existing four (4) story skywalk connecting the North Building and the Main Library Building over E. 9th Street. In the event that the subject property is redeveloped, this connector will need to be removed or an

Site Size (SF) Improved (SF) LTB Ratio55,887 132,500 0.42

Land-to-Building Ratio

506506517 32

APPRAISAL REPORT Improvement Description

easement/mutual operating agreement will need to be developed.



506506517 33

APPRAISAL REPORT Highest and Best Use Highest and Best Use According to the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), the definition of Highest and Best Use is as follows:

Highest And Best Use. The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value.

The highest and best use relies on the market analysis to identify the most profitable, competitive use to which the subject property can be put. The highest and best use is shaped by the competitive forces within the market where the property is located and provides the foundation for a thorough investigation of the competitive position of the property. To estimate highest and best use, the following four questions must be considered:

1. What uses of the subject site are permissible legal uses (i.e., permitted by zoning, deed restrictions, etc.)?

2. What uses of the subject site are physically possible? 3. Which physically possible and legally permissible uses will produce a net return to

the owner of the site? 4. Among the feasible uses, which use will produce the highest net return to the site?

The highest and best use of the site is analyzed in two ways: 1) as though vacant and available for development, and 2) as presently improved. The highest and best use of the site as if vacant and available for development may be different from the highest and best use as improved. This is true when the existing improvements are not an appropriate use; however, their contribution to the property's total value is in excess of the value of the site as if vacant. Following is a discussion of the highest and best use of the subject property. Highest and Best Use As If Vacant and Available for Development The subject site is rectangular in shape and totals 1.283 acres or 55,887 square feet. The subject site has level topography and has no known encumbrances or physical characteristics that would impede or restrict development. The real estate being appraised is located within the zoning jurisdiction of the City of Cincinnati. The site is zoned DD-C, Downtown Support. According to the City of Cincinnati zoning code “Subdistrict C, Downtown Support, is intended to maintain and enhance the Downtown Development District by providing sites for office, residential, commercial and public and semi-public uses essential for the livelihood of businesses and neighborhoods located in Cincinnati and residents living in the downtown area. Subdistrict C permits a mix of professional and governmental offices, residential, commercial, public, and limited industrial uses.” The subject site is located within the Cincinnati CBD. The Downtown/CBD area and peripheral areas have experienced increased demand for office, retail, and residential space spurred by new developments, growing and/or expanding downtown amenities, and growing downtown

506506517 34

APPRAISAL REPORT Highest and Best Use population and labor force. The subject site is also located within close proximity to the newly-developed streetcar line. It is the opinion of the appraiser that the highest and best use of the subject property as if vacant and available for development is multi-story, mixed-use commercial development. This takes into account the subject property’s location, zoning, market supply and demand, and the surrounding property uses. Highest and Best Use As Improved The subject property is improved with a special-use five-story structure with a basement and mechanical penthouse that was constructed in 1996. The improvements are user-specific and serve a variety of uses including administrative offices, library space open to the public, and two (2) floors of internal storage for library materials that has built-in shelving and tracking. The improvements are considered to be special use and user-specific. Due to changes in technology, the manner and volume in which library materials are used has changed significantly in the past 20 years since the subject improvements were constructed. This has contributed to what is considered early obsolescence or external obsolescence for the subject improvements in its current use. According to the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), external obsolescence is defined as follows: “A type of depreciation; a diminution in value caused by negative external influences and generally incurable on the part of the owner, landlord, or tenant. The external influence may be either temporary or permanent.” Therefore, from a market perspective, it is the opinion of the appraiser that highest and best use of the subject improvements is a mixed-use redevelopment. This takes into account the subject property’s location, zoning, market supply and demand, and the surrounding property uses.

506506517 35

APPRAISAL REPORT Sales Comparison Approach Sales Comparison Approach In the sales comparison approach, the subject property is compared with similar and competitive properties that have sold recently. The sales comparison approach works on the premise the market value of the property is directly related to the prices paid for comparable/competitive properties. The differences between each of these comparable sales and the subject property are considered and adjusted. The most common elements of comparison are property rights conveyed, financing terms, sale conditions, market conditions, location, and physical characteristics. All sales represent arm’s length transactions and sold on the basis of cash or equivalent unless otherwise noted on the individual comparable sale. An appropriate unit of comparison is determined and applied to each of the comparable sales. There are two units of comparison, physical and economic. Physical units of comparison include price per square foot of gross building area, price per apartment unit, price per room, etc. Physical units of comparison are most reliable when used for properties not encumbered by leases, because the encumbering leases may be above or below market level. Examples of when to rely on these physical units of comparison include all types of owner occupied buildings, such as office, industrial, and retail; and apartments. There are two types of adjustments that may be considered, which include quantitative and qualitative adjustments. Quantitative adjustments require market support, while qualitative adjustments are judgments to the degree of which an adjustment is made. While oftentimes percentage adjustments are used, they may be considered as quantitative or qualitative. This recognizes that match pairs may support the quantitative adjustment or the percentage may be qualitative identifying the magnitude of a particular unit of comparison. Within our analysis, we have considered two (2) sets of comparable sales. Market comparable sales of the subject’s present use do not exist. Therefore, to arrive at an as is value for the subject property we have applied the hypothetical condition that the subject will be redeveloped into a mixed-use property with office, retail and warehouse/storage components. This is how most developers and investors in the market would approach a property such as the subject. Therefore, we first have considered sales of downtown properties which were stabilized at the time of sale to opine a prospective market value upon stabilization. We will later deduct a series of cost-to-cure items to arrive at an as is value. Contained on the following pages are several of the most relevant sales being considered for comparison with the subject on an as stabilized basis. Details of each are provided first, with a reconciling discussion to follow.

506506517 36

APPRAISAL REPORT Sales Comparison Approach

Improved Sale No. 1

Property Identification

Record ID 4505 Property Type Office, Multi-Tenant Office Address 302 W. Third Street, Cincinnati, Hamilton County, Ohio 45202 Location Cincinnati Tax ID 145-0001-0090, 0100, 0101-00 MSA Cincinnati Market Type Urban

Sale Data Grantor TIC West Third St, LLC (22 owners) Grantee 302 West Third Owner, LLC Sale Date October 2015 Property Rights Leased Fee Conditions of Sale Arm's length Financing Cash to Seller Verification Alexander Gardiner, CFO of buyer, through appraisal; 212-906-

3457 Sale Price $15,998,289

506506517 37

APPRAISAL REPORT Sales Comparison Approach Land Data

Land Size 0.832 Acres or 36,238 SF Front Footage 211 ft W Third Street; 182 ft Plum Street; 185 ft McFarland

Street; Zoning Downtown Development District, DD Topography Sloping Utilities All public utilities available Shape Irregular Flood Information Zone X

General Physical Data Building Type Multi Tenant Net Rentable SF 176,971 Construction Type Steel and concrete Class A and B construction Roof Type EPDM flat rubber membrane Foundation Poured concrete Electrical Adequate HVAC RTMU with gas heat Sprinklers 100% wet sprinklered Stories 5 Floor Height 15' Year Built 1916 Renovated 2000 Condition Average to good Parking Surface 15

Elevators Two

Income Analysis Potential Gross Income $2,823,831 Vacancy $308,646 Effective Gross Income $2,515,185 Expenses $1,389,467 Net Operating Income $1,125,718

Indicators Sale Price/Net Rentable SF

$90.40

Floor Area Ratio 4.88 Land to Building Ratio .2:1 Occupancy at Sale 87% Gross Income Multiplier 5.67

506506517 38


Improved Sale No. 1 (Cont.)

EGI Multiplier 6.36 Expenses/Square Foot $7.85 Overall or Capitalization Rate

7.04%

NOI/Square Foot $6.36

506506517 39


Improved Sale No. 2


Record ID 3447 Property Type Office, Multi-Tenant Property Name Mill Valley Address 2055 & 2060 Reading Road, Cincinnati, Hamilton County, Ohio

45202 Location Mt. Auburn Tax ID 071-0003-0029; 30; 33; 090-0002-0030; 31; 090-0003-0022;

0109 MSA Cincinnati Market Type Suburban

Sale Data Grantor New Mill Valley, LLC Grantee Matrix Holdings, LLC Sale Date December 2014 Property Rights Leased fee Marketing Time 4 months Conditions of Sale Arm's length Financing Cash to Seller Verification Steve Timmel, Broker, Colliers International thru appraisal;

506506517 40


513-562-2221 Sale Price $6,400,000

Land Data Land Size 5.040 Acres or 219,542 SF Zoning OG - Office General; MG Manufacturing General Topography Level to sloping (cut into hillsides) Utilities All public available Shape Irregular Flood Information Zone X

General Physical Data Building Name 2055 Reading Rd. Building Type Multi Tenant Net SF 30,908 Construction Type Masonry frame Class C construction Roof Type 4-ply build-up Foundation Poured concrete Electrical Assumed adequate HVAC Air handlers Sprinklers 100% wet sprinklered Stories 4 Year Built 1906 Converted office 1984-90 Condition Average Parking Parking

Garage/Asphalt 280

Building Class Class B Elevators One 5-stop hydraulic

General Physical Data Building Name 2060 Reading Rd. Building Type Multi Tenant Net SF 44,294

Construction Type Masonry frame Roof Type Rubber ballasted membrane Foundation Poured concrete Electrical Assumed adequate HVAC Air handlers Sprinklers 100% wet sprinklered

506506517 41


Stories 4 Year Built 1906 Converted office 1984-90 Condition Good Building Class Class B Elevators One 4-stop gear traction

Summary for Multiple Buildings Construction Year Gross Net No. Avg. Building Name Type Built Sq. Ft. Sq. Ft. Stories Fl. Ht. 2055 Reading Rd. Masonry

frame Class C construct

1906 30,908 4

2060 Reading Rd. Masonry frame

1906 44,294 4

Gross SF 77,110 Net SF 75,202 Income Analysis

Effective Gross Income $1,101,376 2013 Actuals Expenses $510,505 2013 Actuals Net Operating Income $590,871 2013 Actuals

Indicators Sale Price/Gross SF $83.00 Sale Price/Net SF $85.10 Floor Area Ratio 0.35 Land to Building Ratio 2.85:1 Occupancy at Sale 95% EGI Multiplier 5.81 Expenses/Square Foot $6.62 Overall or Capitalization Rate

9.23%

NOI/Square Foot $7.66 Remarks The property was listed on the open market by Steve Timmel of Colliers International for approximately four months with an original ask price of $7,250,000, or $96.41 per square foot. It was reported there were four offers ranging from $6,000,000 to $6,700,000. The improvements were built as manufacturing uses in 1906 and 1925 and renovated and converted to an office use in 1984 and 1990. Financials are based on year end 2013. There were seven tax parcels included in the sale. The property was purchased on March 29, 2012 by the current owner, New Mill Valley, LLC, from Mill Valley, LLC, for $4,050,000, or $53.86 per square foot. The sale was the result of a

506506517 42

APPRAISAL REPORT Sales Comparison Approach negotiated buy-out with the previous lender as the subject property lost two of its largest tenants, thus resulting in financial hardship. The property consists of two 4-story office buildings and a 2-story parking garage. The rent roll and financial information represents the 2013 actual rent roll and financial data.

506506517 43


Improved Sale No. 3


Record ID 2768 Property Type Office, CBD Property Name Atrium One - Omnicare Center Address 201 E. Fourth Street, Cincinnati, Hamilton County, Ohio 45202 Location Cincinnati CBD Tax ID 083-0003-0010-00 MSA Cincinnati

Sale Data Grantor Asset Ohio Fourth Street LLC Grantee CVG Partners II LLC Sale Date July 2013 Property Rights Leased Fee Conditions of Sale Arm's Length Financing Cash to Seller Mortgagee Principal Financial Group Verification Tom Smith, CVG Partners (Buyer); Jim O'Connell, Cassidy

Turley Sale Price $43,400,000

506506517 44


Land Data

Land Size 1.070 Acres or 46,609 SF Zoning DD, City of Cincinnati, Downtown Development

General Physical Data Building Name Atrium I - Omnicare Ctr Building Type Multi Tenant Net Rentable SF 571,500 Area Breakdown Office 566,500 Retail 5,000 Construction Type Steel and masonry Class A construction Roof Type Flat rubber membrane Foundation Poured concrete Electrical Adequate HVAC Cooling tower and boilers Sprinklers 100% wet sprinklered Stories 18 Year Built 1981 Condition Average Parking Covered Parking 285

Income Analysis

Net Operating Income $4,250,000


$75.94

Occupancy at Sale 86.48% Overall or Capitalization Rate

9.79%

NOI/Square Foot $7.44 Remarks Property was sold by Convergys, who purchased the building in 2003 for $63,775,000 ($111.59/SF). Convergys is remaining in the building as a tenant on a long-term lease (lease terms were not provided) along with Omnicare and several other office and retail tenants. Omnicare is the largest tenant in the building and has the naming rights. At the time of the sale 77,250 SF was vacant (13.52%). The property was listed on the open market by JLL for over 6 months and received multiple offers. Jim O'Connell and Tom Powers of Cassidy Turley represented the buyer. The listing broker's projected first year fiscal NOI is $4,250,000 with

506506517 45

APPRAISAL REPORT Sales Comparison Approach results in a 9.79% cap rate. Included in the sale is a 285-space parking garage in the lower levels of the building. The buyer acquired the building with equity from its own proprietary private investment partnership and about $38 million in non-recourse financing provided through Iowa-based Principal Financial Group. The buyer plans to spend between $2.5 and $3.0 million within the first year on roof and balcony repairs. It is our understanding that these capital expenditures affected the sale price (originally around $46 million prior to negotiation for deferred maintenance).

506506517 46

APPRAISAL REPORT Sales Comparison Approach Recap: Market Data

Improved Sales Comparable 1 Comparable 2 Comparable 3Property 302 W. Third Mill Valley Atrium One (Omnicare Center)Address 302 W. Third Street 2055 & 2060 Reading Road 201 E. Fourth StreetCity Cincinnati Cincinnati CincinnatiCounty Hamilton Hamilton HamiltonState OH OH OHParcel ID 145-0001-0090, 0100, 0101 071-0003-0029, 0030, 0033 083-0003-0010-00

090-0002-0030, 0031090-0003-0022, 0109

Total Improved Area (SF) 176,971 75,202 571,500Year Built 1916, Renovated 2000 1906, Converted 1984-90 1981Location CBD Midtown/I-71 CBD

Property Rights Leased Fee Leased Fee Leased FeeSale Condition Arm's Length Arm's Length Arm's LengthFinancing Cash to Seller Cash to Seller ConventionalSale Date October-15 December-14 July-13Grantor TIC West Third Street, LLC New Mill Valley, LLC Asset Ohio Fourth Street LLCGrantee 302 West Third Owner, LLC Matrix Holdings, LLC CVG Partners II LLCOccupancy at Sale 87.0% 95.0% 86.0%Sale Price $15,998,289 $6,400,000 $43,400,000Sale Price ($/SF) $90 $85 $76

506506517 47

APPRAISAL REPORT Sales Comparison Approach The following map identifies the location of the subject property and the comparable sales utilized for this report.

506506517

48

APPRAISAL REPORT Sales Comparison Approach Adjustment Comments Qualitative and quantitative type adjustment analysis will be employed for this analysis. Adjustments will be considered from the observation of sales of properties that exhibited some similar characteristics that occurred within a reasonable time before date of value within the subject general market area (region). Specific elements of comparison we considered in the analyses are property rights conveyed, financing terms, sale conditions, market conditions, location, physical characteristics, and size. Location takes into consideration the specific submarket as well as general location characteristics such as frontage, visibility, access, and proximity to the interstate. Comparable Sale 1 was adjusted downward in our analysis. It is considered to be a superior location along Third Street closer the center of the city and near the CBD’s Financial District. It is larger than the subject in improved area which requires an upward adjustment and it is somewhat inferior in age/condition, given that the structure is much older than the subject (although it was renovated in 2000). The cumulative adjustment is downward based on the superior location. Comparable Sale 2 is considered an inferior location (located in a peripheral submarket to the CBD). It is also inferior to the subject in age/condition. Downward adjustments were applied for occupancy (95% at the time of sale, which is superior to our stabilized vacancy conclusion) and improved area, which is smaller than the subject’s improved area. The cumulative adjustments are considered to be offsetting. Comparable Sale 3 was adjusted upward in our analysis. It is a much larger improved area than the subject; therefore, an upward adjustment was applied for size. It is considered to be a superior location along Fourth Street in the heart of the CBD’s Financial District. It is also superior in age/condition given that it is Class A, institutional grade office high-rise. The cumulative adjustment is slightly upward given the economies of scale with the size of the improved area (571,500 SF vs. 132,500 SF).

506506517 49

APPRAISAL REPORT Sales Comparison Approach The table below shows the adjustments considered in our analysis:

Conclusion After considering the various differences between the comparable sales properties and the subject it is our opinion that the subject property would have an as stabilized market value within the range below. We have assumed a 24 month period to reach stabilization, which results in a prospective date of value of October 1, 2019. Given the functional obsolescence associated with the storage space on Floors C & D, we felt it necessary to separate that area from the three (3) floors of functional office or retail/commercial space within our opinion of value. It is the opinion of the appraiser that these floors are not marketable for anything other than some form of storage and do not contribute the same value is upper level space in such buildings. It is the appraiser’s opinion that these floors contribute 20% - 35% of the value of the grade-level space. We have applied 30% within our analysis. We have adopted a value based on our calculations below.

Adjustments Comparable 1 Comparable 2 Comparable 3Sale Price ($/SF) $90 $85 $76Property Rights Leased Fee Leased Fee Leased FeeAdjustment 0.0% 0.0% 0.0%Adjusted Sale Price ($/SF) $90 $85 $76Sale Condition Arm's Length Arm's Length Arm's LengthAdjustment 0.0% 0.0% 0.0%Adjusted Sale Price ($/SF) $90 $85 $76Financing Cash to Seller Cash to Seller ConventionalAdjustment 0.0% 0.0% 0.0%Adjusted Sale Price ($/SF) $90 $85 $76Market Conditions Similar Similar SimilarAdjustment 0.0% 0.0% 0.0%Adjusted Sale Price ($/SF) $90 $85 $76

Location Adjustment Superior Inferior SuperiorPhysical Adjustment Inferior Inferior SuperiorOccupancy Similar Superior SimilarSize Adjustment Larger Smaller LargerOverall Adjustments Downward Offsetting Upward

506506517 50


Effective Date:October 1, 2019

Floors 1, 2 & 3 SF $/SF Total RoundedValue Range - Low 79,500 x $80 = $6,360,000 $6,360,000Value Range - High 79,500 x $85 = $6,757,500 $6,760,000Opinion of Value - Grade Level $6,560,000

Floors C & D (30%) SF $/SF Total RoundedValue Range - Low 53,000 x $24 = $1,272,000 $1,270,000Value Range - High 53,000 x $26 = $1,351,500 $1,350,000Opinion of Value - Lower Level $1,300,000

Whole $Opinion of Market Value - Total $7,860,000

Sales Comparison Approach - As Stabilized

506506517 51

APPRAISAL REPORT Sales Comparison Approach In the second scenario we considered the property as is and, therefore, considered sales of commercial properties within the CBD and peripheral areas that were vacant and/or not stabilized at the time of sale. Contained on the following pages are several of the most relevant sales being considered for comparison with the subject on an as is basis. Details of each are provided first, with a reconciling discussion to follow.

506506517 52


Improved Sale No. 1


Record ID 5234 Property Type Office, Downtown Office Property Name URS Office Tower Address 36 E. Seventh Street, Cincinnati, Hamilton County, Ohio 45202 Location Downtown/CBD Tax ID 077-0003-0145, -0146, -0147-00 MSA Cincinnati

Sale Data Grantor JPMCC 2004-CIBC10 7th Street Office LLC Grantee 36 E. Seventh, LLC Sale Date August 2016 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Cash to Seller Verification Jared Wendling, Neyer Properties; 513-699-8824 Sale Price $8,000,000 Cash Equivalent $8,000,000

506506517 53

APPRAISAL REPORT Sales Comparison Approach Land Data

Land Size 0.735 Acres or 32,017 SF Zoning DD, City of Cincinnati, Downtown Development

General Physical Data Building Name URS Office Tower Building Type Multi Tenant Net Rentable SF 197,302 Stories 12 Floors Year Built 1989


$40.55

Floor Area Ratio 6.16 Land to Building Ratio .16:1 Occupancy at Sale 55.7%

Remarks Neyer Properties is the true buyer. This sale only represents the 12 floors of office associated with the property (floors 15-26). The 14-story parking garage beneath is separately owned and not included in this transaction. It is our understanding that subsequent to the sale the buyer spent roughly $4 million ($20.27/SF) upgrading the interior and exterior of the improvements. Specific items included renovation to the 15th floor lobby, new building conference room, renovation of the restroom areas, common corridor renovations, and exterior facade renovation. The property was only 55.7% occupied at the time of sale. According to the buyer, there was no cap relevant cap rate given the amount of vacancy.

506506517 54


Improved Sale No. 2


Record ID 4286 Property Type Office, Mixed Use Property Name Fourth and Walnut Office Building Address 105 East Fourth Street , Cincinnati, Hamilton County, Ohio

45202 Location Cincinnati CBD Tax ID 083-0001-0197-00

Sale Data Grantor 105 East Fourth Street Holdings LLC Grantee Supreme Bright Cincinnati LLC Sale Date January 2016 Property Rights Fee Simple Conditions of Sale Arm's Length Verification PVG through appraisal Sale Price $9,300,000

506506517 55



Cash Equivalent $9,300,000

Land Data Land Size 1.033 Acres or 44,997 SF Zoning Downtown Development District, DD Topography Generally Level Utilities All Public Available Shape Rectangular Flood Information Zone X

General Physical Data Building Name Fourth & Walnut Building Type Multi Tenant Net Rentable SF 375,034 Construction Type Steel Roof Type Membrane Foundation 5" thick concrete floors Stories 19 Year Built 1904 Renovations 1995-2001


$24.80

Floor Area Ratio 8.33 Land to Building Ratio .12:1

Remarks This represents the sale of the Fourth & Walnut office building within the Cincinnati CBD. The buyer is a Texas-based investor who plans to convert the building to mixed-use. Plans for the three-building property include up to three hotels, redesigned office space, retail and restaurants. On the ground floor, potential plans include a "celebrity chef restaurant" and high-end retail. A grocery store and fitness center are also being considered. The property has traditionally been Class B office space. It is our understanding that some office components will remain, but may be transformed to high-end, tech-heavy office space. The total investment will be more than $100 million.

506506517 56


Improved Sale No. 3


Record ID 4351 Property Type Office, Downtown Office Address 151 W. Fourth Street, Cincinnati, Hamilton County, Ohio 45202 Location CBD Tax ID 145-0001-0259-00; 0261-00 MSA Cincinnati Market Type Urban

Sale Data Grantor Elm-4 Associates, Ltd. Grantee Ashley Commercial Group, LLC (ACG Elm, LLC) Sale Date February 2015 Property Rights Leased fee Conditions of Sale Arm's length Verification PVG through appraisal Sale Price $3,000,000

506506517 57



Land Data

Land Size 0.336 Acres or 14,636 SF Zoning DD - Downtown Development Topography Generally level Utilities All public available Shape Rectangular Flood Information Zone X

General Physical Data Building Type Multi Tenant Gross SF 102,728 Net SF 90,380 Construction Type Masonry frame, Class B construction Roof Type Flat rubber membrane Foundation Stone Electrical Assumed adequate HVAC Rooftop chiller Sprinklers 100% wet sprinklered Stories 8 Year Built 1880 , renovated 1990 Condition Average Building Class Class B Elevators Two 9-stop, one freight

Indicators Sale Price/Gross SF $29.20 Sale Price/Net SF $33.19 Floor Area Ratio 7.02 Land to Building Ratio .14:1 Occupancy at Sale 41%

Remarks The property contains a total size of 102,728 gross square feet, which includes a total of eight floors, including Floors 1 through 7, as well as the L1 (lower level) space that includes rear street level access. This excludes the L2 lower level, which is currently basement storage. The property currently consists of a single office tenant occupying various floors, with a total current occupancy of 41% of the total net rentable area of 90,380 square feet. This tenant currently leases floors 5, 6 and 7, with an option for the lease of floor 4 as well. The remaining floors, including the retail storefronts and L1 (first lower level), are currently vacant.

506506517 58

APPRAISAL REPORT Sales Comparison Approach Upon purchase, the buyers plan to lease the remaining vacant office spaces at an ask rent of $16.00 per square foot gross. This includes a TI (tenant improvement) allowance of $15 per square foot. Storefront retail space will also be quoted at a rental rate of $16.00 per square foot gross. The buyer believes that occupancy can be stabilized with prudent management. There are no items of deferred maintenance for the building, with a TI allowance typical in the market to attract new tenants. Another option that the buyer is considering is converting the lower levels into self-storage space. Under this scenario, Floors L2, L1, part of Floor 1 and all of Floor 2 would be converted to storage use, similar to typical climate-controlled space. Units would range in size from 5’x5’ up to 10’x20’.

506506517 59

APPRAISAL REPORT Sales Comparison Approach Recap: Market Data

Improved Sales Comparable 1 Comparable 2 Comparable 3Property URS Tower Fourth & Walnut Fourth & ElmAddress 36 E. Seventh Street 105 E. Fourth Street 151 W. Fourth StreetCity Cincinnati Cincinnati CincinnatiCounty Hamilton Hamilton HamiltonState OH OH OHParcel ID 077-0003-0145, 0146, 0147 083-0001-0197-00 145-0001-0259, 0261

Total Improved Area (SF) 197,302 375,034 90,380Year Built 1989 1904, Renovations 1995-2001 1880, Renovated 1990Location CBD CBD CBD

Property Rights Fee Simple Fee Simple Leased FeeSale Condition Arm's Length Arm's Length Arm's Length

Financing Cash to Seller Cash to Seller ConventionalSale Date August-16 January-16 February-15Grantor JPMCC 2004-CIBC10 7th

Street Office LLC105 East Fourth Street Holdings LLC

Elm-4 Associates, Ltd.

Grantee 36 E. Seventh LLC Supreme Bright Cincinnati LLC Ashley Commercial Group LLCOccupancy at Sale 55.7% N/A 41.0%Sale Price $8,000,000 $9,300,000 $3,000,000Sale Price ($/SF) $41 $25 $33

506506517 60

APPRAISAL REPORT Sales Comparison Approach The following map identifies the location of the subject property and the comparable sales utilized for this report.

506506517 61

APPRAISAL REPORT Sales Comparison Approach Adjustment Comments Qualitative and quantitative type adjustment analysis will be employed for this analysis. Adjustments will be considered from the observation of sales of properties that exhibited some similar characteristics that occurred within a reasonable time before date of value within the subject general market area (region). Specific elements of comparison we considered in the analyses are property rights conveyed, financing terms, sale conditions, market conditions, location, physical characteristics, and size. Location takes into consideration the specific submarket as well as general location characteristics such as frontage, visibility, access, and proximity to the interstate. Comparable Sale 1 was adjusted downward in our analysis. It is located within close proximity to the subject, but is considered a superior location in that it located closer to the Fountain Square and Sixth Street entertainment district. While the property was not stabilized at the time of sale, it was 55% occupied; therefore, a downward adjustment was applied for occupancy considering the “as is” nature of this analysis. It is larger in improved area, which requires and upward adjustment; however, the cumulative adjustment is downward based on the location and occupancy factors. Comparable Sale 2 was adjusted upward in our analysis. It is considered to be a superior location along Fourth Street in the heart of the CBD’s Financial District. However, it is much larger in improved area and inferior in age/condition. The property was purchased with the intent to redevelop. The cumulative adjustment is upward in our analysis based on these factors. Comparable Sale 3 was adjusted upward in our analysis. No adjustment was applied for location even though it is located on Fourth Street, because it located west of the CBD’s Financial District. While the property was not stabilized at the time of sale, it was 41% occupied; therefore, a downward adjustment was applied for occupancy considering the “as is” nature of this analysis. It is also slightly smaller in improved area. An upward adjustment was applied for age/condition. The cumulative adjustment is upward in our analysis.

506506517 62

APPRAISAL REPORT Sales Comparison Approach The table below shows the adjustments considered in our analysis:

Conclusion After considering the various differences between the comparable sales properties and the subject it is our opinion that the subject property would have an as is market value within the range below. Given the functional obsolescence associated with the storage space on Floors C & D, we felt it necessary to separate that area from the three (3) floors of functional office or retail/commercial space within our opinion of value. It is the opinion of the appraiser that these floors are not marketable for anything other than some form of storage and do not contribute the same value is upper level space in such buildings. It is the appraiser’s opinion that these floors contribute 20% - 35% of the value of the grade-level space. We have applied 30% within our analysis. We have adopted a value based on our calculations below.

Adjustments Comparable 1 Comparable 2 Comparable 3Sale Price ($/SF) $41 $25 $33Property Rights Fee Simple Fee Simple Leased FeeAdjustment 0.0% 0.0% 0.0%Adjusted Sale Price ($/SF) $41 $25 $33Sale Condition Arm's Length Arm's Length Arm's LengthAdjustment 0.0% 0.0% 0.0%Adjusted Sale Price ($/SF) $41 $25 $33Financing Cash to Seller Cash to Seller ConventionalAdjustment 0.0% 0.0% 0.0%Adjusted Sale Price ($/SF) $41 $25 $33Market Conditions Similar Similar SimilarAdjustment 0.0% 0.0% 0.0%Adjusted Sale Price ($/SF) $41 $25 $33

Location Adjustment Superior Superior SimilarPhysical Adjustment Similar Inferior InferiorOccupancy Superior Superior SuperiorSize Adjustment Larger Larger SmallerOverall Adjustments Downward Upward Upward

506506517 63


Effective Date:September 13, 2017

Floors 1, 2 & 3 SF $/SF Total RoundedValue Range - Low 79,500 x $35 = $2,782,500 $2,780,000Value Range - High 79,500 x $40 = $3,180,000 $3,180,000Opinion of Value - Grade Level $3,000,000

Floors C & D (30%) SF $/SF Total RoundedValue Range - Low 53,000 x $11 = $556,500 $560,000Value Range - High 53,000 x $12 = $636,000 $640,000Opinion of Value - Lower Level $600,000

Whole $Opinion of Market Value - Total $3,600,000

Sales Comparison Approach - As Is

506506517 64

APPRAISAL REPORT Income Approach Income Approach Overall Capitalization Rate Method For estimating the subject's market value in the income approach, the direct capitalization method is being used. This method is also known as the overall capitalization rate method and uses the following formula to derive a value:

Market Value = Net Operating Income Overall Capitalization Rate

The gross income, vacancy factor, and operating expenses are stabilized to represent a "typical" year's net operating income (NOI) based on market data versus a NOI reflecting the peak or valley. The overall capitalization rate is derived directly from market data reflecting recent sales of investment type real estate. Projected Gross Income The subject property is a special-use type of commercial real estate and was developed and constructed with the intent of being user-specific for the Public Library of Cincinnati and Hamilton County. The breakdown of the improved area as of the effective date of value is summarized in the table below.

It is the appraiser’s understanding that the floor plates each total 29,000 square feet with a 2,500 square foot cutout for an open atrium/light well. As improved as of the date of value, Floor 1 consists of public library area; Floor 2 is combination of public library area and administrative offices; Floors C & D are user-specific storage with built-in shelving and tracking for library materials and periodicals; Floor 3 consists of administrative office. As previously mentioned there is a basement and mechanical penthouse. There areas were not considered in the square footage total above. Due to changes in technology, the manner and volume in which library materials are used has changed significantly in the past 20 years since the subject improvements were constructed. This has contributed to what is considered early obsolescence or external obsolescence for the subject improvements in its current use. Therefore, from a market perspective, it is the opinion of the appraiser that highest and best use of the subject improvements is a mixed-use redevelopment. This takes into account the subject property’s location, zoning, market supply and demand, and the surrounding property uses.

Area Improved Area (SF)Floor 1 26,500 Floor 2 26,500 Floor C 26,500 Floor D 26,500 Floor 3 26,500 Total 132,500

Improved Area Breakdown

506506517 65

APPRAISAL REPORT Income Approach Therefore, we have applied the hypothetical condition that the subject will be redeveloped into a mixed-use property with office, retail and warehouse/storage components. This is how most developers and investors in the market would approach a property such as the subject. In order to arrive at an as is value within this scenario we will first opine a prospective market value upon stabilization and later deducted a series of cost-to-cure items. Assuming redevelopment we have classified the improved area as follows. These areas will be applied within our proforma analysis later in the income approach.

Our initial step involves the estimate of the PGI for the subject property. PGI is the total income attributable to a real property at 100% occupancy, before operating expenses are deducted. We have researched and considered comparable market rentals within our analysis for both office and retail space. The comparable office rentals are first summarized in the table on the following pages:

Area Improved Area (SF)Office (Floors 2 & 3) 53,000Retail (Floor 1) 26,500Storage (Floors C & D) 53,000Total 132,500

Space Breakdown - Assuming Redevelopment

506506517 66

APPRAISAL REPORT Income Approach Recap: Market Data

Rental 1 Rental 2 Rental 3 Rental 4 Rental 5

Name N/A 312 Plum The Edge Sawyer Point Place Centennial Plaza III

Location 302 W. Third Street, Cincinnati, Hamilton County, Ohio

312 Plum Street, Cincinnati, Hamilton County, Ohio

310 Culvert Street, Cincinnati, Hamilton County, Ohio

720 E. Pete Rose Way, Cincinnati, Hamilton County, Ohio

895 Central Avenue, Cincinnati, Hamilton County, Ohio

Building Size/SF 176,971 SF 230,489 100,000 SF 187,283 149,789

Year Built 1916; renovated 2000 1990 1936; renovated 1916; renovated 1985

Condition Good Average to good Average to good Average to good Average to good

Rental Rate $12.73/SF - $19.35/SF $20.25/SF $19.00/SF $22.50/SF $14.90/SF - $18.50/SF

Lease Terms 3 – 15 years gross and base year stop

5 years – 10 years gross




TI Allowance $20.00/SF – 5 years

$30.00/SF – 10 years

$20.00/SF – 5 years

$30.00/SF – 10 years

$20.00/SF – 5 years

$30.00/SF – 10 years

$20.00/SF – 5 years

$30.00/SF – 10 years

$3.00/SF per lease year

Occupancy 87% 83% 72% 64% 53%

Overall Comparability Similar Superior (Location) Similar Superior (Location) Inferior (Location, Age/Condition)

506506517 67

APPRAISAL REPORT Income Approach The following map identifies the location of the subject property and the comparable rentals utilized for this report.

506506517

68

APPRAISAL REPORT Income Approach

Rental 1 Rental 2

Rental 3 Rental 4

Rental 5

506506517 69

APPRAISAL REPORT Income Approach The comparable retail rentals are first summarized in the table on the following pages:

Rental 1 Rental 2 Rental 3 Rental 4

Name 125 E. Court Street 617 Vine 580 Building 580 Building

Location 125 E. Court Street, Cincinnati, Hamilton County, Ohio

617 Vine Street, Cincinnati, Hamilton County, Ohio

580 Walnut, Cincinnati, Hamilton County, Ohio

580 Walnut Street, Cincinnati, Hamilton County, Ohio

Space Type Street Retail, Office Building

Street Retail, Hotel Mezzanine Level Retail Street Level Retail

Size (SF) 1,631 SF 1,340 SF 1,617 SF 2,923 SF

Rental Rate $22.50/SF, Full Service $24/SF Modified Gross $17/SF Net + $7/SF CAM; $24/SF Gross

$28/SF Net + $5.25/SF CAM; $33.25/SF Gross

Overall Comparability Inferior (Location) Offsetting (Superior location, Inferior age/condition)

Offsetting (Superior location, Inferior space type)

Superior (Location)

506506517 70

APPRAISAL REPORT Income Approach The following map identifies the location of the subject property and the comparable rentals utilized for this report.

506506517 71

APPRAISAL REPORT

Rental 1 Rental 2

Rental 3 & Rental 4

506506517 72

APPRAISAL REPORT Market Rent Conclusion When considering the location, physical condition, economic size, functional utility of each property (as well as the subject), as well as market conditions at the time of value we have concluded the following for the market rent and terms for the office area of the subject property:

As was done in the sales comparison approach, we felt it necessary to separate the storage area on Floors C & D from the three (3) floors of functional office or retail/commercial space within our opinion of value. It is the opinion of the appraiser that these floors are not marketable for anything other than some form of storage and do not contribute the same value is upper level space in such buildings. It is the appraiser’s opinion that these floors contribute 20% - 35% of the value of the grade-level space. We have applied 30% within our analysis. We have adopted a value based on our calculations below.

When considering the location, physical condition, economic size, functional utility of each property (as well as the subject), as well as market conditions at the time of value we have concluded the following for the market rent and terms for the first floor retail area of the subject property:

Low $12.73Median $19.00Average $18.18High $22.50Pillar VG Conclusion $18.00Lease Type GrossTerm Five (5) Years

Rent Conclusion - Office Area

Office Rent Conclusion $18.00Contributory % 30%PVG Conclusion $5.40Lease Type GrossTerm Five (5) Years

Rent Conclusion - Storage Area

Low $22.50Median $24.00Average $25.94High $33.25Pillar VG Conclusion $24.00Lease Type GrossTerm Five (5) Years

Rent Conclusion - Retail Area

506506517 73

APPRAISAL REPORT Vacancy and Rent Loss Vacancy and credit losses are a stated allowance to be set against the PGI to compensate for probable vacancy, turnover expenditure or non-payment of rent. In determining the consistency of the occupancy levels, and to project vacancy factors during stabilized occupancy periods, the occupancy status of the subject and the regional and local market was examined. As previously mentioned in this report, the subject property is located within the region’s Downtown/CBD submarket. Within the Cincinnati City submarket cluster, the subject is located in the Cincinnati CBD office submarket with Second Quarter 2017 statistics shown below:

Bldgs Total RBA Vacancy YTD Net


Cincinnati City Submarket Cluster 1,285 40,094,415 8.1% (68,207) $17.00 Cincinnati CBD Submarket 217 21,986,599 9.0% (137,909) $17.31

Within the Cincinnati City submarket cluster, the subject property lies in the Cincinnati CBD total retail submarket with Second Quarter 2017 statistics shown below:

Bldgs Total GLA Vacancy YTD Net


Cincinnati City Cluster 2,669 19,825,823 2.4% 158,716 $14.68 Cincinnati CBD Submarket 152 1,971,937 5.0% (51,030) $11.60

Source: CoStar, Inc. Q2 2017 Cincinnati Office Market Report. Cincinnati City Submarket Cluster The reported vacancies above according to Costar for the Cincinnati CBD submarket are 9.0% for office and 5% for retail. We have applied a blended/overall vacancy rate of 10% within our analysis. This takes into consideration the subject’s location on the fringe of the core CBD area of activity as well as the mixed-use nature of the project. Discussion of Operating Expenses We were not provided historical operating expenses for the subject property. The operating expense level for the subject property will be supported by information contained in national publications, such as the 2017 BOMA Experience Exchange Report (Cincinnati Downtown Office Buildings containing up to 300,000 square feet) as well as from operating expenses on comparable office properties. Following is a breakdown of the individual expense categories. Insurance According to BOMA, the average insurance expense for similar

properties is $0.17 per square foot. Similar properties in the area have insurance expense amounts ranging from $0.11 per square foot to $0.29 per square foot with an average of $0.18 per square foot. An insurance expense of $0.18 per square foot adopted and applied within our analysis.

Real Estate Taxes The subject property is currently exempt from taxes based on its present use. In our analysis we have projected property taxes based on the “as stabilized” conclusion of value within the sales

506506517 74

APPRAISAL REPORT

comparison approach and applying the appropriate current effective tax rate (see Tax Analysis on page 12). This results in an annual tax liability of $262,450 or $1.98 per square foot. This is in line with the range of comparables considered in our analysis of $0.90 per square foot and $2.49 per square foot.

Utilities According to BOMA, utilities expense has an average of $2.07 per square foot. The comparables considered in our analysis range from $1.19 per square foot up to $3.13 per square foot with an average of $1.78 per square foot. Considering some of the features of the subject building that could contribute to higher operating expenses (elevators, open atrium/light well), we have concluded at the higher end of the range and have applied a utilities expense of $2.00 per square foot.

Janitorial Service According to BOMA, the average janitorial expense is $0.88 per square foot, with the expense comparables ranging from $0.08 per square foot to $1.53 per square foot with an average of $0.79 per square foot. We have adopted and applied $0.80 per square foot for janitorial within our analysis.

Management Typically, in the Greater Cincinnati office market management fee expense is expressed as a function of effective gross income. The expense comparables considered in our analysis ranged from 2.7% of EGI to $5% of EGI with an average of 4%. Therefore, for purposes of this analysis, a management fee expense of 4% of effective gross income is being adopted.

Common Area Maintenance

According to BOMA, the average common area maintenance expense is $0.53 per square foot. The comparables considered didn’t always report a CAM expense or may have had these items in other expense categories (such as “other”, which was not applied in our analysis). We have applied $0.50 per square foot for this expense item within our analysis.

Repairs and Maintenance According to BOMA, the average repairs and maintenance expense is $1.02 per square foot, with expense comparables ranging from $0.84 per square foot to $3.33 per square foot. The average maintenance expense for the comparables was $1.65; however, this was affected by an outlier at the high end of the range. The median in the data set considered was $1.17. Taking all the comparable data into consideration we have applied $1.15 per square foot within our analysis.

Reserve for Replacement To stabilize the net income stream, it is necessary to add a reserve for replacement as a component to the expenses. This line item accounts for items with shorter physical lives than the entire structure. Items reserved for office buildings include roof, mechanical equipment, plumbing, etc. Other short-lived items are either paid as an ongoing operating expense or capitalized as

506506517 75

APPRAISAL REPORT

long-term improvements. Having this line item helps to smooth the regular income stream as it becomes necessary to replace such items during the year. For purposes of this analysis, reserves for replacement generally range from $0.10 per square foot to $0.20 per square foot. Therefore, a reserve for replacement of $0.15 per square foot is being adopted.

Conclusion of Operating Expenses The following chart summarizes operating expenses of comparable office properties considered in our analysis.

Comparable No.: 1 2 3 4 5 6 Avg. BOMA PVG ConclusionName: 4th & Elm 302 W. Third Street Mill Valley 700 Walnut Provident Building Gwynne Building N/ALocation: Cincinnati, Ohio Cincinnati, Ohio Cincinnati, Ohio Cincinnati, Ohio Cincinnati, Ohio Cincinnati, Ohio N/ANRA/SF: Total 176,971 75,202 75,557 138,638 116,138 N/AExpense Yr.: 2016 2016 Budget 2014 2012 2011 2012 N/AExpenses/ SF: Insurance $0.18 $0.11 $0.14 $0.29 $0.13 $0.22 $0.18 $0.17 $0.18 Real Estate Taxes $0.89 $2.49 $1.04 $1.57 $1.18 $0.90 $1.35 $2.16 $1.98 Utilities $1.56 $1.19 $1.33 $1.69 $1.76 $3.13 $1.78 $2.07 $2.00 Janitorial $0.08 $1.08 $0.89 $0.78 $0.35 $1.53 $0.79 $0.88 $0.80 Management $0.26 $0.59 $0.98 $0.77 $0.35 $0.28 $0.54 $0.76 -- As a % of EGI 4.8% 4.0% 5.0% 5.0% 3.9% 2.7% 4% N/A 4% CAM $0.00 $0.09 $1.00 $0.00 $0.36 $0.00 $0.24 $0.53 $0.50 Maintenance $3.33 $1.17 $1.11 $1.78 $0.84 Incl. in Janitorial $1.65 $1.02 $1.15 Other $0.38 $1.18 $1.31 $0.27 $0.71 $1.38Total Expenses/SF: $6.68 $7.90 $7.80 $7.15 $5.68 $7.44

Expense Comparables

506506517 76

APPRAISAL REPORT Following is the stabilized income and expense statement used to project a stabilized net operating income for the subject property with the market assumptions discussed above.

% of EGI $/SF Annual $Potential Gross Income Base Rent - Office Area 53,000 56.5% $18.00 $954,000 Base Rent - Retail Area 26,500 37.7% $24.00 $636,000 Base Rent - Storage/Warehouse Area 53,000 16.9% $5.40 $286,200 Expense Reimbursement Revenue 132,500 0.0% $0.00 $0 Total Potential Gross Income 111.1% $14.16 $1,876,200Vacancy and Credit Loss 10.00% (11.1%) ($1.42) ($187,620)Effective Gross Income 100.0% $12.74 $1,688,580Operating Expenses Based On: Reimbursable Insurance $/SF No 1.4% $0.18 $23,850 Real Estate Taxes Projected No 15.5% $1.98 $262,450 Utilities $/SF No 15.7% $2.00 $265,000 Janitorial $/SF No 6.3% $0.80 $106,000 Mgmt/Administrative % of EGI No 4.0% $0.51 $67,543 CAM $/SF No 3.9% $0.50 $66,250 Repairs & Maintenance $/SF No 9.0% $1.15 $152,375Total Operating Expenses (55.9%) ($7.12) ($943,468) Replacement Allowance $/SF No (1.2%) ($0.15) ($19,875)Total Expenses (57.1%) ($7.27) ($963,343)Net Operating Income 42.9% $5.47 $725,237

Projected Operating Statement

506506517 77

APPRAISAL REPORT Discussion of Overall Rate According to the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), Overall Capitalization Rate (Ro) is defined as follows:

Overall Capitalization Rate (Ro). An income rate for a total real property interest that reflects the relationship between a single year’s net operating income expectancy and the total property price or value.

An appropriate overall capitalization rate is typically adopted from relevant market data and if that is unavailable or non-existent, then a debt coverage formula or mortgage equity analyses would be appropriate. We have used two (2) methods to support our final capitalization rate conclusion. Method 1 – Direct Comparable Sales The following are comparable properties that have sold within the region with corresponding cap rates.

Comparable Comparable Comparable Comparable1 2 3 4

Property 312 Elm/312 Plum Atrium One Mill Valley Three Crowne PointLocation 312 Elm/312 Plum 201 E. Fourth Street 2055-2060 Reading Road 3 Crowne Point Court

Cincinnati Cincinnati Cincinnati SharonvilleSale Date February-11 July-13 December-14 January-17Sale Price $70,500,000 $43,400,000 $6,400,000 $9,495,000 Building Area (SF) 609,275 571,500 75,202 75,486Sale Price $/SF $116 $76 $85 $126 Year Built 1989/1992 1981 1906, Converted 1984-90 1998NOI @ Stabilization $7,338,000 $4,250,000 $590,871 $859,298 NOI /SF $12.04 $7.44 $7.86 $11.38 Capitalization Rate 10.41% 9.79% 9.23% 9.05%

Overall Capitalization Rate Comparables

506506517 78

APPRAISAL REPORT Method 2 – Investor Surveys The following chart summarizes investment criteria for the National CBD Office market according to the Third Quarter 2017 PwC Real Estate Investor Survey.

506506517 79

APPRAISAL REPORT Conclusion Many factors go into the final selection of the overall capitalization rate such as the location of the property, age/condition of the improvements, quality of the tenant, length of a typical lease, and the prevailing interest rates. Based on the above analysis, our opinion of the prospective market value upon stabilization of the fee simple interest of the subject improvements is as follows:

Low HighNOI $725,237 $725,237OAR 9.75% 9.25%Indicated Value Range $7,438,324 $7,840,396 $/SF $56 $59

Final Opinion Whole $ $/SFMarket Value (Rounded) $7,600,000 $57Indicated OAR 9.54%

Income Capitalization Approach

506506517 80

APPRAISAL REPORT Reconciliation and Final Value Opinion Reconciliation and Final Value Opinion Cost to Cure To arrive at an as is value, we first opined a prospective value upon stabilization and deducted a series of cost to cure items. The following factors have been considered as necessary expenditures in order for the property to achieve a stabilized value. The below analysis estimates three (3) factors necessary to bring the building to stabilized occupancy – NOI loss during absorption period, tenant improvements, and leasing commissions. We have provided a cost-to-cure analysis for both the office floors and the first floor retail area taking each of these factors into account. The vacancy and rent assumptions in this analysis are based on the same assumptions applied in the income capitalization approach. Our other assumptions are summarized in the table below.

These assumptions have been applied as follows:

Item Best Case Worse Cast Most LikelyAbsorption Period to Reach Stabilization (Months) 12 48 24Office Tenant Improvement Allowance $10 $20 $15Retail Tenant Improvement Allowance $25 $60 $40

Cost-to-Cure Input Assumtions

Value Reduction to Reach Stabilization - Office Area1 Total Vacant Space 100.0% 53,000 2 Total Occupied Space 0.0% -

Total Office Area (Net Rentable Area) 53,000

3 Less: Stabilized Vacancy Factor 10.0%4 Total Occupied SF @ Stabilization 47,700 5 Equals: Total Space to be Leased to Reach Stabilization (Line 4 - 2) 47,700 6 Market Rent for Vacant Space (Including Expense Reimbursements - Based on Proforma) $18.007 Estimated Potential Gross Income on Vacant Space (Line 5 x 6) $858,6008 Less: Estimated % Annual Expenses (See Proforma - % of EGI) 55.9% $479,7309 Equals: One Year of NOI on Vacant Space to Reach Stabilization (Line 7 - 8) $378,870

10 Monthly NOI Loss if Property Does Not Reach Stabilization $31,573

11 Projected Number of Months to Reach Stabilization 2412 Total NOI Lost for Time to Reach Projected Stabilization $757,741

13 Less: Tenant Improvements - Vacant Space to be Leased to Reach Stabilization $15.00 $715,500Less: Leasing Commissions

14 Net Market Rent Assumption (Based on Proforma Analysis) $25.1215 Total Annual Net Rent on Space to be Leased to Reach Stabilization (Line 14 X 5) $1,198,24916 Lease Term Assumption (Years) 517 Total Lease Consideration on Space to be Leased to Reach Stabilization (Line 15 X 16) $5,991,24318 Lease Comission (%) 6%19 Total Leasing Commission on Space to be Leased to Reach Stabilization (Line 17 X 18) $359,475

20 Total Cost to Cure (Line 12+13+19) $1,832,715$/SF $35

506506517 81

APPRAISAL REPORT Reconciliation and Final Value Opinion

In addition, it is our understanding that the roof is at the end of its useful life. Jeff Gerrein, Facilities Operations Manager, communicated to the appraiser during the tour of the property that cost estimate to replace the roof is between $250,000 - $300,000. We were not provided with any contractor quotes or inspection/condition reports regarding the roof. Based on the information provided, we have applied $275,000 as an estimate to replace the roof. Our cost-to-cure conclusion are summarized in the following table:

Value Reduction to Reach Stabilization - Retail Area1 Total Vacant Space 100.0% 26,500 2 Total Occupied Space 0.0% -

Total Office Area (Net Rentable Area) 26,500

3 Less: Stabilized Vacancy Factor 10.0%4 Total Occupied SF @ Stabilization 23,850 5 Equals: Total Space to be Leased to Reach Stabilization (Line 4 - 2) 23,850 6 Market Rent for Vacant Space (Including Expense Reimbursements - Based on Proforma) $24.007 Estimated Potential Gross Income on Vacant Space (Line 5 x 6) $572,4008 Less: Estimated % Annual Expenses (See Proforma - % of EGI) 55.9% $319,8209 Equals: One Year of NOI on Vacant Space to Reach Stabilization (Line 7 - 8) $252,580

10 Monthly NOI Loss if Property Does Not Reach Stabilization $21,048

11 Projected Number of Months to Reach Stabilization 2412 Total NOI Lost for Time to Reach Projected Stabilization $505,160

13 Less: Tenant Improvements - Vacant Space to be Leased to Reach Stabilization $40.00 $954,000Less: Leasing Commissions

14 Net Market Rent Assumption (Based on Proforma Analysis) $31.1215 Total Annual Net Rent on Space to be Leased to Reach Stabilization (Line 14 X 5) $742,22416 Lease Term Assumption (Years) 517 Total Lease Consideration on Space to be Leased to Reach Stabilization (Line 15 X 16) $3,711,12218 Lease Comission (%) 6%19 Total Leasing Commission on Space to be Leased to Reach Stabilization (Line 17 X 18) $222,667

20 Total Cost to Cure (Line 12+13+19) $1,681,828$/SF $63

Item Office Area Retail Area Total BuildingRent Loss $757,741 $505,160 $1,262,901Tenant Improvements $715,500 $954,000 $1,669,500Leasing Commissions $359,475 $222,667 $582,142Subtotal $1,832,715 $1,681,828 $3,514,543Roof Replacement $275,000Total Cost-to-Cure $3,789,543Rounded $3,800,000

Cost-to-Cure Summary

506506517 82

APPRAISAL REPORT Reconciliation and Final Value Opinion Deducting the cost-to-cure items results in our conclusions below.

A typical exposure time for the subject property is estimated to be 12 months or less based on analysis of relevant market data. A typical marketing time for the subject is also estimated to be 12 months or less. This assumes professional brokers are used, and the opinion of market value derived herein is the selling price. The above market value is predicated upon the attached underlying assumptions and limiting conditions as well as the certification. Our final value conclusion is subject to the following extraordinary assumptions and hypothetical conditions: 1 – The as is market value conclusion is subject to the hypothetical condition that

the subject could be redeveloped into a mixed-use property with office, retail and warehouse/storage components.

2 – Within our analysis we have made the extraordinary assumption that the

Library will remove and relocate the specialized shelving and tracking on Floors C & D and incur any associated costs.

Significant Market and Property Specific Factors Influencing the Subject Property The top positive (+) factors influencing the subject property are: • Well-located within the Cincinnati CBD • Increased demand for office, retail, and residential space within the Cincinnati CBD and

peripheral areas in recent years spurred by new developments, growing and/or expanding downtown amenities, and growing downtown population and labor force.

• Subject improvements constructed in 1996 and have been well-maintained in good condition. Improved structures within the Cincinnati CBD that are +/- 20 years old or less are very rare.

• Institutional grade construction






506506517 83

APPRAISAL REPORT Reconciliation and Final Value Opinion • Site is located within close proximity to the newly-developed streetcar line • The existing structure may have the ability to create air rights that could support adding

additional floors (this option is beyond the scope of this report). The most negative (-) or risk factors affecting the subject property are: • Subject property is a special-use type of commercial real estate and was developed and

constructed with the intent of being user-specific for the Public Library of Cincinnati and Hamilton County. Special-use assets often require special consideration and analysis when opining value.

• Due to changes in technology, the manner and volume in which library materials are used has changed significantly in the past 20 years since the subject improvements were constructed. This has contributed to what is considered early obsolescence or external obsolescence for the subject improvements in its current use.

• There are numerous forms of functional obsolescence throughout the building which may require a cure to in order to be considered functional in a potential redevelopment.

• The subject improvements have a stand-alone boiler for heat; however, the HVAC system is shared with the Main Library Building. In the event that the subject property is redeveloped the HVAC system will need to be separated.

• There is an existing four (4) story skywalk connecting the North Building and the Main Library Building over E. 9th Street. In the event that the subject property is redeveloped, this connector will need to be removed or an easement/mutual operating agreement will need to be developed.



• There is limited on-site parking. The only on-site parking associated with the property is a small surface lot on the east end of the property at the northeast corner of E. 9th Street & Walnut with a total of 18 surface spaces.

• It is our understanding that the roof is at the end of its useful life. Jeff Gerrein, Facilities Operations Manager, communicated to the appraiser during the tour of the property that cost estimate to replace the roof is between $250,000 - $300,000. We were not provided with any contractor quotes or inspection/condition reports regarding the roof.

• Currently the subject is exempt from real estate taxes. A sale to a private party developer would most likely result in the loss of the tax exemption status.

506506517 84

ADDENDA Photographs of Subject Property Photographs of Subject Property

View of subject property


506506517 85

ADDENDA Photographs of Subject Property



506506517 86




506506517 87



View of parking lot

506506517 88


View of roof from mechanical penthouse

View of roof from mechanical penthouse

506506517 89


Sample view of Floor 1 area


506506517 90




506506517 91




506506517 92




506506517 93




506506517 94




506506517 95




506506517 96




506506517 97




506506517 98




506506517 99




506506517 100




506506517 101




506506517 102




506506517 103




506506517 104




506506517 105


View of open atrium/light well

View of open atrium/light well

506506517 106


View of Floor C (Stacks)

View of Floor C (Stacks)

506506517 107


View of Floor D (Stacks)

View of Floor D (Stacks)

506506517 108


Sample view of mechanical penthouse


506506517 109



Sample view of basement area

506506517 110




506506517 111




506506517 112




506506517 113

ADDENDA

506506517 114

ADDENDA Certification Certification I certify that, to the best of my knowledge and belief....

• the statements of fact contained in this report are true and correct. • the reported analyses, opinions, and conclusions are limited only by the reported

assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.

• I have no present or prospective interest in the property that is the subject of this report, and

no personal interest with respect to the parties involved.

• I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

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

involved with this assignment. • my engagement in this assignment was not contingent upon developing or reporting

predetermined results. • my compensation for completing this assignment is not contingent upon the development or

reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

• my analyses, opinions, and conclusions were developed, and this report has been prepared,

in conformity with the Uniform Standards of Professional Appraisal Practice, the Code of Professional Ethics, and the Standards of Professional Practice of the Appraisal Institute.

• Eric J. Gardner, MAI, CCIM has personally viewed the property that is the subject of this

report. • no one provided significant real property appraisal assistance to the person(s) signing this

certification. • the use of this report is subject to the requirements of the Appraisal Institute relating to

review by its duly authorized representative.

• as of the date of this report, Eric J. Gardner, MAI, CCIM has completed the requirements of the continuing education program of the Appraisal Institute.

506506517 115

ADDENDA Certification

• as of the date of this report, Eric J. Gardner, MAI, CCIM has completed the Standards and Ethics education requirement of the Appraisal Institute for Designated Members.

Eric J. Gardner, MAI, CCIM Senior Vice-President State of Ohio Certified General Appraiser Certificate #419444

506506517 116

ADDENDA Assumptions and Limiting Conditions Assumptions and Limiting Conditions This appraisal has been made with the following general assumptions: 1. The report is considered valid only for whom it was prepared and for the stated purpose

and function. 2. That the term market value, as herein used, is defined proceeding in this appraisal

report. 3. That the date of value to which the opinions expressed in this report apply is set forth in

the letter of transmittal. The appraiser assumes no responsibility for economic or physical factors occurring at some later date that may affect the opinions herein stated.

4. That no opinion is intended to be expressed for legal matters or that would require

specialized investigator knowledge beyond that ordinarily employed by real estate appraisers, although such matters may be discussed in the report.

5. That no opinion as to title is rendered. Data on ownership and the legal description were

obtained from sources generally considered reliable. Title is assumed to be marketable and free and clear of all liens and encumbrances, easements, and restrictions except those specifically discussed in the report. The property is appraised assuming it to be under responsible ownership and competent management and available for its highest and best use.

6. That no engineering survey has been made by the appraiser. Except as specifically

stated, data relative to size and area were taken from sources considered reliable, and no encroachment of real property improvements is assumed to exist.

7. That maps, plats, and exhibits included herein are for illustration only, as an aid in

visualizing matters discussed within the report. They should not be considered as surveys or relied upon for any other purpose.

8. That no opinion is expressed as to the value of subsurface oil, gas, or mineral rights, and

that the property is not subject to surface entry for the exploration or removal of such materials except as is expressly stated.

9. That the projections included in this report are utilized to assist in the valuation process

and are based on current market conditions, anticipated short term supply and demand factors, and a continued stable economy. Therefore, the projections are subject to changes in future conditions that cannot be accurately predicted by the appraiser and could affect the future income or value projections.

10. That testimony or attendance in court or at any other hearing is not required by reason of

rendering this appraisal unless such arrangements are made a reasonable time in advance.

11. Information contained in this report is assumed to be correct but is not guaranteed.

506506517 117

ADDENDA Assumptions and Limiting Conditions 12. Possession of this report or any copy thereof does not carry with it the right of

publication. Disclosure of the contents of this report is governed by the Bylaws and Regulation of the Appraisal Institute. Neither all nor any part of the contents of this Report (especially any conclusions as to value, the identity of the Appraiser or the firm with which the appraiser is connected, or any reference to the Appraisal Institute or to the MAI designation) shall be disseminated to the public through advertising media, public relations media, news media, sales media or any other public means of communication, without the prior written consent and approval of the author.

13. That, because no title report was made available to the appraiser, he assumed no

responsibility for such items of record not disclosed by his normal investigation. 14. That no detailed soil studies covering the subject property were available to the

appraiser. Therefore, premises as to soil qualities employed in this report are not conclusive but have been considered consistent with information available to the appraiser.

15. That the appraiser has personally inspected the subject property and finds no obvious

evidence of structural deficiencies except as stated in this report; however, no responsibility for hidden defects or conformity to specific governmental requirements, such as fire, building and safety, earthquake, or occupancy codes, can be assumed without provision of specific professional or governmental inspections.

16. That no consideration has been given in this appraisal to personal property located on

the premises, or to the cost of moving or relocating such personal property; only the real property has been considered.

17. That the appraiser is not qualified to detect the existence of potentially hazardous

material which may or may not be present on or near the property, such as the presence of formaldehyde foam insulation, existence of toxic waste, or the existence of asbestos insulation. The existence of such substances may have an effect on the value of the property. No consideration has been given in our analysis to any potential diminution in value should such hazardous materials be found. We urge the client to retain an expert in the field before making a business decision regarding the property.

18. It is assumed any requirements under the Americans With Disabilities Act (ADA) for the

subject property have been met. In the event any requirements are currently pending that would require modification to the existing structure, the appraiser reserves the right to amend this report and make any value adjustment considered necessary.

19. It is assumed that all applicable zoning and use regulations and restrictions have been

complied with, unless nonconformity has been stated, defined, and considered in the appraisal report. Zoning laws are assumed to be stable. No responsibility is assumed for building code violations.

20. No responsibility is assumed for any architectural, structural, mechanical or engineering

matters. All engineering is assumed to be correct. It is assumed that there are no hidden conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

506506517 118

ADDENDA Assumptions and Limiting Conditions 21. The appraisal report may contain a valuation relating to the geographical portion of a

larger parcel and the value reported for such portion plus the value of all other geographic portions may or may not equal the value of the entire parcel or tract when considered in its entirety.

22. Any value opinions provided in this report apply to the subject property as a whole, and

any proration or division of the total into fractional interests will invalidate the value opinion, unless such proration or division of interests has been set forth in the report.

23. The distribution, if any, of the total valuation in this report between land and

improvements applies only under the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used.

24. It is assumed that the site could be developed and/or utilized without severe limitations

or restrictions due to any “wetlands” regulations, unless so noted. EXTRAORDINARY ASSUMPTIONS: An assumption, directly related to a specific assignment,

as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions. Comment: 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. This appraisal has been premised on the following extraordinary assumption:

1 – Within our analysis we have made the extraordinary assumption that the Library will remove and relocate the specialized shelving and tracking on Floors C & D and incur any associated costs.

HYPOTHETICAL CONDTIONS: A condition, directly related to a specific assignment, which is

contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Comment: Hypothetical conditions are 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 analysis. This appraisal has been premised on the following hypothetical condition:

1 – The as is market value conclusion is subject to the hypothetical condition that the subject could be redeveloped into a mixed-use property with office, retail and warehouse/storage components.

506506517 119

PROFESSIONAL QUALIFICATIONS

Eric J. Gardner, MAI, CCIM POSITIONS Senior Vice President Real Estate Salesperson Commercial Appraiser Edge Real Estate Group Pillar Valuation Group 8154 Montgomery Road, Suite 200 7800 Laurel Avenue, Suite 400B Cincinnati, Ohio 45236 Cincinnati, Ohio 45243 Ohio File Number: SAL 2002001921 Office Phone: (513) 271-1740 Broker: Michael Halonen Cell Phone: (513) 543-9992 Fax: (513) 271-2276 E-Mail: [email protected] EXPERIENCE December 2010 to present, Senior Vice President with Pillar Valuation Group, Inc. 2006 – 2010, Senior Vice President, Principal with Cassidy Turley 1998 - 2006, The Gem Real Estate Group, Inc. 1992 - 1998, Property Advisors Corporation

Property Types • Retail • Multi Family • Office • Land • Industrial • Special Use Properties

Real Estate Analysis Performed Include

• Market Value • Financial Feasibility of Proposed Projects

• Lease Up Projections • Absorption Studies • Rental Projections • Market Analysis • Discounted Cash Flow Analysis • Income and Expense Projections • Before and After Market Values • Cost/Value Analysis

Expert Witness Testimony I have been qualified as an expert witness in numerous county Board of Revision hearings throughout the State of Ohio and at the Ohio Board of Tax Appeals. I have also been qualified as an expert witness in the Court of Common Pleas in Hamilton, Butler, Warren, Montgomery and Clermont Counties in Ohio.

506506517 120

mailto:[email protected]

PROFESSIONAL QUALIFICATIONS

Eric J. Gardner, MAI, CCIM Page 2

TYPES OF CLIENTS Fortune 500 Companies, Lenders (banks, life insurance companies, pension funds,

conduits), Private Corporations, REIT’s, Developers, Investors, Legal and Financial Counsel, Governments, Economic Development Agencies, and Investors.

COMMUNITY NAIOP – Cincinnati/N. KY Chapter, President, 2002 and Board Member LEADERSHIP Appraisal Institute – Cardinal Ohio Chapter, 2009 President and Board Member ’04-‘10

University of Cincinnati, Real Estate Roundtable Cincinnati Area Board of Realtors, Member National Eagle Scout Association, Boy Scouts of America, Class of 1987 Assistant Scout Master, Troop 194, Mason, Ohio Coach – Baseball, Basketball – Mason Youth Organization (MYO) St. Xavier High School – Rugby Advisory Board Member & Treasurer

SPEAKING / TEACHING ENGAGEMENTS

Lectured for numerous professional, business and community organizations on Commercial Real Estate, financing, eminent domain, tax appeals and related matters. University of Cincinnati, College of Business – Adjunct Professor, Department of Finance/Real Estate – Real Estate Principals; Real Estate Appraisal; Real Estate Development Courses

EDUCATION M.B.A., Major in Finance, University of Dayton – 1999 B.B.A., Major in Marketing and Management, University of Cincinnati - 1993 DESIGNATIONS / MAI-Member, Appraisal Institute #11560 – January 2000 CERTIFICATIONS CCIM – Certified Commercial Investment Member #10785 – May 2003 State of Ohio – Certified General Appraiser, #419444 State of Kentucky – Certified General Appraiser, #001670 State of Indiana – Certified General Appraiser, #CG40300441 State of Ohio – Real Estate Salesperson, #2002001921 State of Michigan – Certified General Appraiser, #1201007609 CONTINUING EDUCATION

Ohio, Kentucky, Indiana and Michigan require at least 14 hours per year of continuing education. The Appraisal Institute requires at least 20 hours per year of continuing education, with which I am current.

USPAP I completed the 2016-2017 7.0 hour update course 12/08/15.

506506517 121

APPRAISER DISCLOSURE STATEMENT

In compliance with Ohio Revised Code Section 4763.12 (C)

1. Name of Appraiser: Eric J. Gardner, MAI, CCIM

2. Class of Certification/Licensure: X Certified General

___ Licensed Residential

___ Temporary ____ General ____ Licensed

Certification/Licensure Number 419444

3. Scope: This report X is within the scope of my Certification of License

__ is not within the scope of my Certification or License

4. Service Provided By: X Disinterested & Unbiased Third Party

__ Interested & Biased Third Party

__ Interested Third Party on Contingent Fee Basis

5. Signature of person preparing and reporting the appraisal

This form must be included in conjunction with all appraisal assignments or specialized services performed by a state-certified or state-licensed real estate appraiser.

State of Ohio

Department of Commerce Division of Real Estate

Appraiser Section Cleveland (216) 787-3100

122

506506517

REAL ESTATE APPRAISAL › info › appraisal_2017.pdf · 2017-10-12 · Real Estate Appraisal ....

Documents

Transcript of REAL ESTATE APPRAISAL › info › appraisal_2017.pdf · 2017-10-12 · Real Estate Appraisal ....