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APPRAISAL REPORT

Subject Property 3032 English Rows

Naperville, Illinois 60564

As of August 22, 2017

Prepared for Ms. Beth Jensen

Countryside Bank 6734 Joliet Road

Countryside, IL 60525

Prepared by MIDWEST APPRAISAL COMPANY, INC.

3055 West 111th Street Chicago, Illinois 60655

File No. C017075

September 12, 2017 Ms. Beth Jensen Countryside Bank 6734 Joliet Road Countryside, Illinois 60525

and US Small Business Administration Reference The Appraisal of: 3032 English Rows Naperville, Illinois 60564 Permanent Index Number: 07-01-16-207-012-0000 Dear Ms. Jensen: At your request, I have prepared an appraisal report of the property located at the above-referenced address. This report is in accordance with Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and the Uniform Standards of Professional Appraisal Practice. This is an appraisal report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2 of the Uniform Standards of Professional Appraisal Practice. It presents 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 its intended use. The appraiser is not responsible for unauthorized use of this report. Upon completion of plans and specifications, the property will consists of a renovated 10 year-old, one-story, masonry and frame-constructed, full service restaurant building, containing 7,920± square feet. There is approximately 1,193 square feet of outside patio dining area. The improvements are situated on an approximate 52,925 square foot site.

Market Value is defined as "The most probable price which a property should bring in a competitive and open market under all condition's requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 2. both parties are well informed or well advised and acting in what they consider

their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in US. dollars or in terms of financial

arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by

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

(Federal Register, Vol. 165, August 24, 1990 "Rules and Regulations, " 34.42) The purpose of this appraisal is to estimate the market value of the fee simple interest of the subject property. The intended use of this appraisal is to provide an analysis of data and an estimate of market value to aid the client, Countryside Bank, in proper underwriting, loan classification and/or disposition of the asset. Fee Simple Estate is defined in The Dictionary of Real Estate Appraisal, (Sixth Edition) as:

Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by governmental powers of taxation, eminent domain, police power and escheat.

Prospective opinion of value is defined in The Dictionary of Real Estate Appraisal (Sixth Edition) as: “A value opinion effective as of a specified future date. The term does not define a type of value. Instead, it identified 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.”

An interior and exterior observation of the subject property has been made and a thorough investigation and analysis of the work to be performed in order to arrive at a sound opinion of the subject property’s market value. The following prospective value opinion has an effective date of value of October 15, 2017. The analysis and conclusion are based upon prevailing market conditions as of August 22, 2017. The appraiser cannot be held responsible for unforeseeable events, which might occur subsequent to the date of this report. Based on our observation, investigation and analyses, it is our opinion that the prospective market value of the fee simple interest in the subject property, subject to the limiting conditions set forth in this report, as of the proposed completion date of October 15, 2017, is:

$2,580,000 The preceding value opinion upon completion is based upon the following Extraordinary Assumption:

That the renovations have been completed as of the effective date of value, according to the plans upon which this appraisal is based and in a quality and workman like manner as of the date of value. It will also conform to all of the City of Naperville codes and regulations. Use of these extraordinary assumptions may affect assignment results.

Further, it is my opinion that the “As Is” market value of subject property as of August 22, 2017, is:

$2,260,000

Respectfully submitted, MIDWEST APPRAISAL COMPANY, INC. Reviewed and Approved by:

Robert Litz James M. McDermott State Certified Residential Real Estate Appraiser State Certified General Real Estate Appraiser License #556.001130 License #553.001906 Expires: 09/30/2017 Expires: 09/30/2017

TABLE OF CONTENTS

PAGE NUMBER Photography of the Subject Property ...................................................................................1 Google Earth ........................................................................................................................7 Summary of Data & Conclusions ........................................................................................8 Identification of the Subject Property ................................................................................10 Purpose of the Appraisal ....................................................................................................10 Intended Use of the Appraisal ............................................................................................10 Property Rights Appraised .................................................................................................10 Definition of Market Value ................................................................................................11 Scope of Work ...................................................................................................................12 Exposure & Marketing Time .............................................................................................14 FACTUAL SECTION:

Regional Map ...............................................................................................................15 Chicago Regional Analysis ..........................................................................................16 Neighborhood Map ......................................................................................................21 Neighborhood Analysis ................................................................................................22 History ..........................................................................................................................25 Assessment Data ..........................................................................................................26 Zoning Map ..................................................................................................................27 Zoning ..........................................................................................................................28 Sidwell Map .................................................................................................................29 Site Data .......................................................................................................................30 Flood Zone ...................................................................................................................32 Interior Pictures ............................................................................................................33 Description of the Improvements .................................................................................40 Highest and Best Use ...................................................................................................44

VALUATION SECTION:

Approaches to Value ....................................................................................................47 Estimate of Value by the Income Capitalization Approach .........................................48 Estimate of Value by the Sales Comparison Approach ...............................................56 Reconciliation and Value Conclusion ..........................................................................68 "As Is Value" ................................................................................................................70 Assumptions & Limiting Conditions ...........................................................................72 Certification .................................................................................................................76

ADDENDUM: Engagement Letter

Qualifications of the Appraiser

Midwest Appraisal Company, Inc.

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Subject Property Photographs


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VIEW LOOKING SOUTHWEST AT SUBJECT ALONG ROUTE 59

VIEW LOOKING NORTHWEST AT SUBJECT ALONG ROUTE 59


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VIEW LOOKING SOUTHWEST AT SUBJECT FROM PARKING LOT

VIEW LOOKING NORTHWEST AT SUBJECT FROM PARKING LOT


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REAR OF SUBJECT LOOKING NORTH

REAR OF SUBJECT LOOKING SOUTH


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VIEW LOOKING WEST ALONG ENGLISH ROWS (a private street)

VIEW LOOKING EAST AT ENGLISH ROWS (a private street)


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VIEW LOOKING NORTH ALONG ROUTE 59

VIEW LOOKING SOUTH ALONG ROUTE 59


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GOOGLE EARTH


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SUMMARY OF DATA AND CONCLUSIONS Property Location: The subject property is located at 3032 English

Rows, in Naperville, Will County, Illinois 60564.

Purpose of the Appraisal: The purpose of this appraisal is to provide an

opinion of the prospective market value of the fee simple interest in the subject property with an estimated completion date of October 15, 2017 and the “as is” market value of the fee simple interest in the subject property, as of August 22, 2017.

Property Rights Appraised: The property rights being appraised are those

inherent in the fee simple interest of the subject property. The term "fee simple estate" is defined in The Dictionary of Real Estate Appraisal, (Sixth Edition) as:“Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by governmental powers of taxation, eminent domain, police power and escheat.”

Intended Use of the Appraisal: The intended use of this appraisal is to provide

an analysis of data and an opinion of market value to aid the client, Countryside Bank, in proper underwriting, loan classification and/or disposition of the asset.

Property Description: Upon completion of plans and specifications,

the property will consists of a renovated 10 year-old, one-story, masonry and frame-constructed, full service restaurant building, containing 7,920± square feet. There is approximately 1,193 square feet of outside patio dining area. The improvements are situated on an approximate 52,925 square foot site.


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Market Value Indication: “Upon Completion”

Appraisal Indicators Income Capitalization Approach: $2,360,000 Sales Comparison Approach: $2,650,000 Reconciled Opinion Of Value: $2,580,000 The preceding value opinion upon completion is based upon the following Extraordinary Assumption:


Market Value Indication: “As Is”

Appraisal Indicators Sales Comparison Approach: $2,260,000 Date of Observation: August 22, 2017 Effective Date of Value: The prospective value opinion has an effective

date of value of October 15, 2017. Our analysis and conclusion are based upon prevailing market conditions as of August 22, 2017. The appraiser cannot be held responsible for unforeseeable events which might occur prior to the effective date of value. The effective date of value for the “as is” value is August 22, 2017.


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IDENTIFICATION OF THE PROPERTY The subject site is an approximate 52,925 square foot tract of land, improved with a full service restaurant type building. It is commonly known as 3032 English Rows, Naperville, Illinois. The property is also described as Permanent Index Number 07-01-16-207-012-0000 in Will County, Illinois. LEGAL DESCRIPTION The appraiser requested a legal description but it was not provided. PURPOSE OF THE APPRAISAL The purpose of this appraisal is to provide an opinion of the “as is” market value of the fee simple interest in the subject property, as of August 22, 2017 and the prospective market value of the fee simple interest in the subject property, “upon completion” of the proposed construction is estimated to be October 15, 2017. INTENDED USE AND INTENDED USER OF THE APPRAISAL The intended use of this appraisal is to provide an analysis of data and an opinion of market value to aid the client and intended user, Countryside Bank, in proper underwriting, loan classification and/or disposition of the asset. Only the client listed above may use this report. No other use or users are intended. Our client did not specifically advise us of any other intended users at the time of engagement. Parties who receive a copy of this appraisal report as a consequence of disclosure requirements applicable to our client of record do not become intended users of this report unless specifically stated herein. Other users may not use or rely on any portion of this report without the expressed written consent of Midwest Appraisal Company, Inc. The use of the appraisal by any other party or for any other purpose renders the appraisal invalid and no liability is assumed, expressed or implied by Midwest Appraisal Company, Inc. for unauthorized use of this appraisal. PROPERTY RIGHTS APPRAISED The legal interests appraised herein include the fee simple estate. Fee Simple Estate is defined in The Dictionary of Real Estate Appraisal, (Sixth Edition) as:

“Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by governmental powers of taxation, eminent domain, police power and escheat.”


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DATE OF APPRAISAL The effective date of this appraisal is August 22, 2017 and is subject to market influences and economic conditions that existed on that date. According to The Appraisal of Real Estate (14th Edition) “The effective date of the appraisal refers to the point in time as of which the analyses and conclusions are relevant, for the intended use of the appraisal…’’ DEFINITION OF MARKET VALUE Market Value is defined as "The most probable price which a property should bring in a competitive and open market under all condition's requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 2. both parties are well informed or well advised and acting in what they consider

their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in US. dollars or in terms of financial

arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by

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

*Federal Register, Vol. 165, August 24, 1990 "Rules and Regulations, " 34.42 The essential difference between market value and market price is that the market price is an accomplished or historic fact. It does not assume that there was prudent conduct by the parties, that they were typically motivated and acting in their best interest or any of the other conditions basic to the concept of market value. It is the amount actually paid, or to be paid, for a property in a particular transaction. PROSPECTIVE OPINION OF VALUE DEFINITION Prospective opinion of value is defined in The Dictionary of Real Estate Appraisal (Sixth Edition) as: “A value opinion effective as of a specified future date. The term does not define a type of value. Instead, it identified 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.” LIMITING CONDITIONS AND ASSUMPTIONS This appraisal is subject to the general limiting conditions as well as the general assumptions stated herein. Your attention is directed to the list of general limiting conditions and assumptions contained in this report, as they are an integral part of the value conclusions.


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SCOPE OF WORK

The scope of the appraisal included the physical observation of the subject property on August 22, 2017, followed by collection and analysis of pertinent subject and market data, analyses of the highest and best use of the subject property, and the application of the appropriate valuation methods to determine the market value of the subject property “upon completion of plans and specifications” and the “as is” market value. The scope of the appraisal included, but was not limited to the following: x Observed the subject site and the exterior as well as the interior of the

improvements to the subject site. Improvement dimensions were taken from field measurements and the construction plans for the subject from Roake & Associates, Inc.; 1887 High Grove Lane, Naperville, IL 60564, dated September 12, 2006 Job #647.004. Site dimensions were also taken from the plans.

x Conducted a market area analysis and a highest and best use analysis. x Gathered information on comparable improved sales from CoStar Inc., LoopNet,

CoreLogic, Cook, Will, Kane, and Dupage County Assessor’s records, the multiple listing service, brokers' files and in-house files. This information was verified with public records and a party to the transaction when possible.

x Gathered information on market rent, operating expenses, occupancy rates, yield and capitalization rates. The appraiser asked for 3 years of income and operating statements, however the subject is owner occupied.

x Confirmed and analyzed the data and applied the income capitalization and sales comparison approaches. In the income capitalization approach, the appraiser used direct capitalization with an overall rate.

x Reconciled the two approaches to arrive at an opinion of the market value of the subject property “as is” and “upon completion” as of the effective date.

x Prepared an appraisal report based on the information gathered in the appraisal process.

x The cost approach was not developed due to the age of the improvements and the lack of data for estimating accrued depreciation and obsolescence. The primary approach to value is the sales comparison approach, and the income capitalization approach provides additional support.

We have relied on FEMA flood maps and US Fish and Wildlife Service Wetlands Inventory Maps to determine the subject’s floodplain and wetlands status. While these maps are generally accurate, they are not precise. Prior to conveyance or development, an exact determination and delineation regarding the subject’s floodplain and wetlands status should be made by a professional engineer, licensed surveyor or other qualified individual or entity. This appraisal is based on the assumption that the online FEMA and wetland maps from the above cited sources are accurate and we reserve the right to amend this appraisal if a site specific determination regarding floodplain and / or wetland status indicates different results.


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SCOPE OF WORK CONTINUED This appraisal report is a brief recapitulation of the appraiser’s data, analyses, and conclusions. Supporting documentation is retained in the appraiser’s file.

ASSIGNMENT CONDITIONS The value opinion upon completion is based upon the following Extraordinary Assumption:



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EXPOSURE TIME & MARKETING TIME

Exposure is defined in The Dictionary of Real Estate Appraisal (6th Edition, Page 83) as:

1. The time a property remains on the market.

2. 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. Exposure time is a retrospective opinion based on an analysis of past events assuming a competitive and open market.

Marketing Time is defined in The Dictionary of Real Estate Appraisal (6th Ed., P. 140) as:

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.

Based upon market conditions in the market area leading up to the date of value, exposure time is estimated at between 9 to 15 months. The marketing time has also been estimated at between 9 and 15 months. Our estimate is based on a review of recent sales and current listing on the MLS. We have also reviewed recent sales and current listings from CoStar and Loop Net, and discussed exposure times with area brokers. COMPETENCY OF THE APPRAISERS Robert Litz is a State Certified Residential Real Estate Appraiser and James M. McDermott is a State Certified General Real Estate Appraiser. Robert Litz and James M. McDermott have over 50 years of combined appraisal experience and have performed numerous appraisals of restaurant buildings. Robert Litz and James M. McDermott are competent in the analysis and valuation of the subject property.


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REGIONAL MAP


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CHICAGO REGIONAL ANALYSIS The Chicago metropolitan area, consisting of a six-county region, is the nation’s third largest metropolitan area, encompassing over 4,600 square miles of land area and is located at the southwest end of Lake Michigan. This six-county region, made up of Cook, DuPage, Kane, Lake, McHenry and Will Counties, form the subject’s regional economic environment.

The economic vitality of the surrounding area, and the immediate neighborhood encompassing the subject property, is an important consideration in estimating future real estate demand and income potential. The subject property is located in the Village of Naperville, in Will County, Illinois. A detail of our evaluation of historical, current and projected trends, a demographic analysis and comparisons of the Chicago MSA to the State of Illinois can be found in the work file. The following is a summary of our analysis: ¾ As of the 2010 Census, the metropolitan area had a population of 9,729,825. ¾ Principal municipalities include Chicago with a population of 2,695,598 and

Aurora with 200,661. Three municipalities with populations over 100,000 include Elgin, Joliet and Naperville.

¾ The population statistics and projections indicate that the region’s population is projected to increase through 2020, following increases over the past three decades. Overall, the population in the area increased by roughly 5% between 2000 and 2009, with increases in five of six counties, and a population decline in Cook County.

¾ Chicago's location within the Midwest is the primary environmental force affecting commercial and industrial property values. The region's central location and the numerous transportation modes converging in the area have made the Chicago metropolitan area a primary distribution hub. Public transportation is extremely efficient in the region, linking most of the primary employment centers with the outlying, as well as inner city, residential communities.

¾ Major area airports include Chicago O’Hare International, Chicago Midway International and Chicago/Rockford International. There are several additional reliever and general aviation airports throughout the metropolitan area.

¾ The varied composition of the region’s employment base and an examination of its major employers indicate a diversified economy that is not dependent upon any particular sector.

¾ The Chicago metropolitan area is home to the corporate headquarters of 57 Fortune 1000 companies which include Boeing, Walgreens, Motorola Solutions, McDonald’s, Sears and Kraft Foods.

¾ The unemployment rate (July) stands at 4.8% for the Chicago-Naperville-Joliet MSA, down from 5.1% in June. The national unemployment rate was 4.3% in July down from 4.4% in June, after peaking at 10.1% in October of 2009. The nation lost 8,500,000 jobs during the recession / downturn.


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¾ The recession officially ended in June of 2009, but employment growth continues to be sluggish. The trend in the past year has been for lower unemployment.

¾ Weak demand for manufactured goods has greatly impacted the area’s trade, transportation and utilities and manufacturing sectors.

¾ All real estate segments suffered greatly between 2008 and 2011 with elevated vacancy rates, declining rents and low demand. As a result, property values dropped sharply, capitalization rates increased for all property types and new construction slowed to a near halt. More recently, amid rebounding prices for some property classes and greater availability of capital, capitalization rates fell for each of the four main property types, dropping by as much as 150 basis points for office properties.

¾ The credit crisis resulted in an astounding drop in transaction volume as CMBSs, REITs and community banks all but left the market in late 2008 & 2009. More recently as CMBSs, REITs, deep-pocketed institutional investors and other private equity sources have re-entered the market, sales volume has increased significantly from the lows of 2009.

¾ According to the CBRE Marketview Survey (2nd Q, 2017), Chicago industrial availability rate 240 bps below 10-year average and is the 28th consecutive quarter of positive net absorption. Chicago retail vacancy rates and rents climb slightly upwards. Dollar General, Mariano’s & TJ Maxx expand locations and Ulta opens its 999th store on Michigan Avenue. Chicago CBD office Class A average asking gross rents increased 5.2% year over year, ending Q2 2017 at $45.56 per square foot. There is a positive outlook for capital markets for the second half of 2017, with ten properties being marketed totaling $2.2 billion. Chicago Suburban Office market vacancy rate in the East-West Tollway dropped 30 basis points quarter to quarter, reaching 16.4%. The Western East-West Tollway direct vacancy rate has declined 120 basis points year over year, reaching 16%. The overall gross asking rate in the O’Hare submarket has increased $0.87 per square foot year over year, reaching $25.15 per square foot during Q2, 2017.

Residential Market In 2013 the majority of markets in Chicago and the surrounding suburbs began to show considerable signs of recovery. While marketing times remained elevated in some areas, the volume of sales had increased. New residential permit activity began to increase but at a much slower pace than in the new housing boom in 2005-2006. Foreclosures and short sales continued to plague the market in some areas but the number of distressed sales decreased from prior years. The housing market continued to recover, with reports in 2016 indicating values in hot areas of Chicago's North Side fully recovered, but homeowners in other city neighborhoods and Cook County's suburbs continued to hold homes with values far below their pre-housing crash peaks.


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The housing forecast for 2017 as indicated in the Illinois Realtors Report indicates a positive annual growth but not at the rates previously predicted. Median prices in 2016 showed moderate growth in both Illinois and the Chicago PMSA. In Chicago, annual growth rates for each month varied between 3.9% and 10.1%. According to the forecast “this has been the fourth consecutive year with positive annual growth for each month since 2013”. The report also indicated that the first half of the year saw more positive trends and growth then the second half did. Predictions for 2017 indicate continual growth in the median sale price but within a narrower and slightly smaller range compared with 2016. By December 2017, the median price of homes in Illinois is forecast to see an approximate 4.6% increase over 2016 and the median for Chicago is expected to see a 4.8% increase overall. The Illinois Realtors Report Monthly Local Market Update for May 2017 indicated Chicago area home prices continued to rise moderately with the median price in May of 2017, up 5.5% over the previous year. The City of Chicago saw a slight decrease in volume when comparing May 2016 to May 2017 but a positive net increase, when comparing year to year, of approximately 4.2%. On the contrary, as noted by Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory of the University of Illinois “over the last 12 months, Illinois’ economy has grown at a much slower rate than the “US”. “The state budget impasse combined with weaker (compared to 2015) employment growth has dampened the housing market. However, prices and sales continue to increase and the prospects for 2017 look similar although the growth rates will be in a narrower band. Metropolitan Retail Market According to the CB Richard Ellis, Chicago Retail Market View, 2nd Quarter 2017, began with additional big box closures and bankruptcy announcements; including Sears, HH Greg, and Ultra Foods. Along with these closings, the media has caused quite a frenzy by reporting the bottom may be falling out within the retail world. However, this theory is contradicted by the announcement from several retailers that have stated plans to expand. Dollar General, Ulta, Aldi and TJ Maxx have intentions to open more stores over the next few years across the county. Dollar General has plans to expand by 1,000 locations this year. It will also reopen 15 Chicago area dollar stores as Dollar General locations. All 15 stores were among the stores they agreed to buy from Dollar Express in April. A few of the neighborhood in which the stores locations area currently under renovations are Jefferson Park, Back of the Yards, Edgewater, and Portage Park. During Q2 2017, the retail vacancy rate increased 50 basis points to 10% and net asking rents made a slight climb to $18.69 per square foot. A primary contributing factor to the uptick in vacancy was the shuttering of various Golfsmith, Ultra Foods, and HH Gregg locations which area spread throughout the Chicago submarket.


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Grocery continues to be a thriving entity within the Chicago retail market. Mariano’s continues its momentum in the suburbs. The former Kmart located at 345 W. Roosevelt Road in Lombard has been demolished and a 74,000 square foot Mariano’s store has been built in its place. This location opened in late August of 2017. In the far north suburbs, a new Mariano’s location is expected to open in mid-September. The 74,570 square foot store will be located adjacent to the Bannockburn Green Shopping Center at the northeast corner of Waukegan Road and Half Day Road. The build-to-suit property was annexed by the Village of Bannockburn from unincorporated Lake County as part of the transaction that would allow Mariano’s to operate its store in Bannockburn. The urban side of the market also had a grocery activity. Two stores that were demolished to make way for mew mixed-use developments reopened in their original locations at the end of June. The 58,000 square foot Jewel-Osco store opened at 1210 N. Clark Street. The other store is Aldi, which is located at 1753 N. Milwaukee Avenue in Bucktown. Chicago Retail Market The subject is located in the Far Southwest suburbs submarket, as defined by CB Richard Ellis. The following bullet points provide a brief summary of the retail market as of the 2nd quarter of 2017. ¾ Inventory in the Far Southwest suburbs submarket exceeds 11.3 million square

feet. ¾ The metropolitan retail market recorded an overall vacancy rate of 9.5%, down

from 10.1 in the fourth quarter. ¾ The Far Southwest suburbs submarket ended the second quarter with a vacancy

rate of 5.4% up from 5% in the first quarter 2017. ¾ The Far West suburbs submarket was among those struggling to attract new

tenants and ended the quarter with a market-high vacancy rate of 14.3%. The Northwest suburbs and South suburbs were the second highest at 12.1% each with the Northwest Suburbs at third with a vacancy rate of 12.1%. The City North set the low end of the range at 3.8% followed by the Far Southwest Suburbs at 5.4%.

¾ The Far Southwest suburbs submarket had an asking lease rate of $19.27 to $21.09 per square foot. The range for the first quarter was $19.19 to $20.78 per square foot.

This survey pertains to investment grade commercial centers of 50,000 square feet or more. Neighborhood centers and storefronts were not included in the analysis.


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Outlook and Conclusion In the past three years, sales volume in the overall residential market has improved and expectations are for it to continue to improve, with prices projected to see slight increases in many markets. The overall commercial market has also seen improvement. Vacancy rates are trending downward in many markets, however, the far west suburbs, northwest suburbs and south suburbs still suffer from a nagging oversupply. Many markets on Chicago’s north side have shown more promising improvement, however, buyers and renters still have a number of choices, and effective rental rates have shown minimum improvement due to the impact of concessions. Many analysts predict improvement will continue in most markets in the near term.


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NEIGHBORHOOD MAP


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MARKET AREA ANALYSIS

The subject property is located in the City of Naperville, Will County, Illinois. Naperville is a suburb of Chicago located approximately 30 miles southwest of the Central Business District. The community is approximately 39.4 square miles. Neighboring communities include Bolingbrook to the east, Aurora to the west, Plainfield on the south and Lisle and Warrenville to the north. Naperville is roughly bordered by:

North Interstate 88 (Ronald Regan Memorial Tollway)

South 111th Street and parts of 119th Street

East Wehrli/Naper Blvd.

West Route 59

Immediate Environs The property is located along the west side of Route 59, approximately one block south of 103rd Street. The average daily traffic count in the immediate area along Route 59 is 33,400. Tamarack Golf course is located directly south of the subject. The majority of improvements along Route 59 within the immediate area consists of one story commercial storefronts, gas stations, full service restaurants mixed use buildings, auto repairs shop and the back yard of residential homes. Within the immediate area the vacancy rate ranges from 5 to 10 percent. The subject’s area of Naperville lies in Will County, however, portions of Naperville are also located in DuPage County.

Access The subject is located in the far southwest section of the City of Naperville on Route 59. Route 59 is a heavily traveled thoroughfare that traverses the city in a north/south direction and provides access to many additional arterial street including 95th Street, 103rd Street and 111th Street. Access to the subject area is average with Interstate 55 accessible approximately 8 miles north and Intestate 55 is located approximately 6 miles southeast at 135th Street and Essington Road. In addition, public transportation service consisting of train (Metra West Line) and bus service (Pace) provides good access between the community, surrounding communities and the Loop. The Metra Naperville Station is located approximately 6 miles north of the subject on Meridian Lake Dive just west of Route 59. Overall, access to the neighborhood is average.

Public Services Schools, fire and police protection are all provided by the city of Naperville. Water, sanitary sewer service, electric and gas utilities are available to the subject development. According to the City of Naperville’s Parcel Report, the subject is located in school district 204 which includes Nequa Valley High School, Crone Middle School and Patterson Elementary School.


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Land Use The subject’s area is residential in nature. Neighborhood land uses within the immediate area are attached single family buildings with a few single family homes. The new English Rows townhome development is located directly behind the subject. These townhomes range in asking prices from $314,900 to $459,900. The remaining single family homes in the area range in age from 10 to 25 years.

Trends and development activity

New residential development in Naperville has been active with several newer developments breaking ground in recent years. Several townhome and single family residential developments were noted throughout the community. Additionally, several retail and commercial developments are also underway and range from smaller local restaurants to larger national chains. The following data pertains to attached single-family home sales within a one mile radius of the subject according to the MLS of Northern Illinois.

ATTATCHED SINGLE FAMILY HOMES

Year Number Sold Average Sale Price

Average Marketing Time

2007 11 $322,461 110 2008 8 $309,599 336 2009 15 $249,073 228 2010 12 $245,108 160 2011 14 $253,811 252 2012 6 $230,567 360 2013 13 $235,238 120 2014 10 $256,600 40 2015 19 $294,586 81 2016 20 $306,898 121

Thru 8/27 2017

25 $314,430 122

The annual number of attached single family homes sold within a mile radius of the subject hit its low in 2012. Currently at 25, it has already exceeded the previous year and will be the highest in the past ten years. The average sale prices declined by over 28% from peak (2007) to (2012), however the current average sale price has increased over 36% from the low. The current $314,430 average sale price is slightly over 2% below the 2007 high. There are currently 3 active listings within a one mile radius for attached single family residences on the MLS ranging from $259,900 to $335,000, with an average list price of $298,300 and a marketing time of 34 days.


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Outlook and Conclusions

The subject is located in the City of Naperville in the western suburbs of Chicago. The subject site has good accessibility to nearby thoroughfares and interstates and has adequate access to public transportation. It is located in an area which has a good household income and per capita income and a moderate population density aside from the open space areas. New commercial development has been active in the past couple of years however it has been major chains or medical facilities. The market for commercial properties in Naperville is positive and values and rental rates are on the rise while vacancies have been declining from the depths of the recession. Overall it is our opinion that property values in the subject area are expected to be stable to increasing slightly in the near future and will be tied to the overall strength of the local and national economy.


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HISTORY According to the Uniform Standards of Professional Appraisal Practice, Standard 1, Standard Rule 1-5 (a) and (b):

"In developing a real property appraisal, when the value opinion to be developed is market value, an appraiser must, if such information is available to the appraiser in the normal course of business: (a) analyze all agreements of sale, options, or listings of the subject property

current as of the effective date of the appraisal; and (b) analyze all sales of the subject property that occurred with the three (3) years

prior to the effective date of the appraisal.” The appraiser has reviewed the Recorder of Deeds records, as extracted and supplied by the recorder of deeds website and discussions with the property owner indicates that the subject property has not sold within the previous three years and is owner occupied. There have been no agreements of sale, options or listing of the subject property within the last three years as of the effective date of this appraisal. The subject is reported to be owner occupied.


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ASSESSMENT AND REAL ESTATE TAX DATA

The subject property is located in Wheatland Township in Will County. Assessment data on the subject property was obtained from the Will County Assessor’s Office website. The following is the 2016 and 2017 assessment data for the subject property.

2016 & 2017

ASSESSMENT DATA Parcel

Number Land

Assessment Improvement Assessment

Total Assessment

07-01-16-207-012 $122,309 $508,703 $631,012

The subject property has a level of assessment of 33.33% of the assessor’s opinion of market value and the indicated opinion of market value for 2017 is $1,893,225.32 or $239.04 per square foot of building area. The subject property is property appears to be under assessed.

Real estate taxes in Will County are paid one year in arrears. According to the Will County Treasurer’s website, the subject property’s 2016 real estate tax rate was 7.7394% and the real estate tax obligation for 2016, payable in 2017, was $48,836.54, or $6.17 per square foot of building area. Note: The 2017 property’s real estate taxes are based upon the Will County Assessor’s office market value of approximately $1,893,225.32, the same as 2016. Real estate taxes will most likely be similar, depending on changes in the tax rate and equalization factor.


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ZONING MAP


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ZONING According to the zoning map of the City of Naperville, the subject site is zoned B2 PUD. The B2 community shopping center district is intended to accommodate the needs of a much larger consumer population than is served by the neighborhood convenience shopping center district. A wider range of uses and structure sizes is permitted for both daily and occasional shopping. These facilities shall be in the form of a shopping center. This zoning allows for a variety of uses including but not limited to any permitted use in B1 district, antique shops, bicycle sales, rental, and repairs, catering establishments, department stores and discount stores, employment agencies, general retail, househould appliance stores, jewelry stores, locksmith shops, millinery shops, optician, sales & retail, pet shops, shoe stores, tailor shops, tobacco shops, etc. A few conditional uses include but are not limited to automobile service stations, daycare centers and nursery schools, hotels & motels, motor vehicles sales, radio and television stations and studios, vocational and trade schools operated entirely outdoors, etc. There are no lot width requirements in the B2 district. Side or rear lot line where the B2 district abuts a lot located in an R1A, E1, E2 or AG district, the yard provided shall be not less than 15 feet in depth. Where the B2 district abuts a lot located in an R1B, R2, R3, R4 or R5 district, the yard provided shall be not less than twelve 12 feet in depth. The maximum floor area ratio for all buildings and structures in the B2 district shall be 0.325. The subject is in a PUD and must comply with the allowable uses in the PUD. According to a representative with the zoning department of Naperville the subject restaurant is a permitted use in the PUD. ¾ Zoning information was obtained from the City of Naperville on line zoning

map. This information is assumed to be accurate. No responsibility is assumed for any changes to the subject's zoning that may have recently occurred and not yet been reported on the web site.

¾ Changes in zoning can have a substantial impact on property value. This

property is being appraised assuming the above reported zoning. We accept no responsibility for recent changes in zoning that have not yet been made readily


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SIDWELL MAP


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SITE DATA Location: The subject site is located at 3032 English Rows,

Naperville, Illinois. The subject is an interior site, located on the west side of Route 59. The subject is located in Census Tract 8803.12.

Size, Shape and Frontage: The subject site is rectangular in shape and contains approximately 52,925 square feet. The site has approximately 310.64 feet of frontage along the west side of Route 59, while the back of the site has 309.42 feet. The north and south sides of the site have 170.54 feet. The above information was obtained from the site plans for the subject. A survey of the property was not provided.

Land to Building Ratio: 6.68 to 1 Average Daily Traffic Count: 33,400 vehicles along Route 59 Visibility and Access: The site has one curb cut along Route 59 which is

known as English Rows. The site has good visibility and access from Route 59.

Topography and Drainage: The subject site is basically level and at grade with

surrounding streets and drainage appears adequate. As we are not experts in the field of drainage or engineering, we make no warranties as to the adequacy of the subject site’s drainage. It is assumed for this appraisal that the site has proper drainage to accommodate the subject site.

Soil and Subsoil: No soil tests were provided in conjunction with this

appraisal. Judging from the condition of the subject and surrounding improvements, it would appear that soil conditions are adequate to support the existing improvements over their remaining economic lives. However, no responsibility is assumed for any adverse subsoil conditions that might exist.

Utilities: Utilities including sewer, water, gas, electricity,

cable television and telecommunications are available to the site.


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SITE DATA CONTINUED

Environmental: During our observation we did not notice any obvious environmental problems. However, we are not experts in this field and do not assume any responsibility for environmental problems which might exist.

Easements/Restrictions: A title report was not provided and we are not

qualified to do title searches. This appraisal is based on the assumption that there are no easements, encumbrances or restrictions other than typical utility easements or other restrictions imposed by the zoning ordinance and right-of-way easements, which would affect the marketability of the subject. We reserve the right to amend the appraisal if any other easements or restrictions exist which impact the market value of the subject.


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FEMA DATA According to the Federal Emergency Management Agency's Flood Insurance Rate Map Number 17197C0030E revised September 6, 1995, the subject site is located in a zone X. The following explanation of the flood zone designations is taken from the Flood Insurance Rate Map cited above. Zone Explanation A: Areas of 100 year flood: based flood elevations and flood hazard factors not

determined. AE: An areas inundated by 100 year flooding, for which BFE’s have been determined. AO: Areas of 100 year shallow flooding where depths are between one (1) and three

(3) feet; average depths of inundation are shown, but no flood hazard factors are determined.

AH: Areas of 100 year shallow flooding where depths are between one (1) and three (3) feet: base flood elevations are shown, but no flood hazard factors are determined.

A1-30: Areas of 100 year flood; base flood elevations and flood hazard factors determined.

A99: Areas of 100 year flood to be protected by flood protection system under construction: base flood elevations and flood hazard factors not determined.

D: Areas of undetermined, but possible, flood hazards. V: Areas of 100 year coastal flood with velocity (wave action); base flood elevations

and flood hazard factors not determined. V1-30: Areas of 100 year coastal flood with velocity (wave action); base flood elevations

and flood hazard factors determined. X.: Areas of 500-year flood; areas of 100-year flood with average depths of less than

1 foot or with drainage areas less than 1 square mile; and areas protected by levees from 100-year flood.

X Shaded: Area of moderate flood hazard, usually the area between the limits of the 100-year and 500-year floods

WETLANDS A review of the U.S. Fish and Wildlife Service wetlands maps indicates that the subject site is not affected by wetlands, however a specified wetlands delineation study has not been conducted to my knowledge. The findings of such a study would supersede the online map.


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PATIO AREA

PATIO AREA


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INTERIOR PICTURES

INTERIOR PICTURES


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INTERIOR PICTURES

INTERIOR PICTURES


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INTERIOR PICTURES

INTERIOR PICTURES


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INTERIOR PICTURES

INTERIOR PICTURES


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INTERIOR PICTURES

INTERIOR PICTURES


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INTERIOR PICTURES

INTERIOR PICTURES


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DESCRIPTION OF THE IMPROVEMENTS

The 52,925 square foot subject site will be improved with a renovated 10-year-old, one-story, masonry and frame constructed, full service restaurant type building, containing 7,920± square feet of building area. The following physical description of the subject building improvements is based upon my personal observation of the property on August 22, 2017 and reviewed construction plans. Building Type: Full service restaurant Age: 10 years Size: 7,920 square feet Stories: One Basement: None Foundation: Concrete Exterior Walls: Masonry and frame Roof Structure: Wood deck Roof Cover: Ash shingle Plumbing: The women’s restroom contains four toilets with one being

handicapped and a three bowl sink. The men’s has one toilet, one handicapped toilet and four urinals. Mop sink in the storage area and there are various sinks located throughout the kitchen, bar and service areas.

Sprinklered: 100% Lighting: Canned, fluorescent recessed and light fixtures Ceiling Heights: 8’ to 10’ and vaulted ceiling approximately 25’ Electricity: Assume to be adequate for current use Heat & Air Conditioning: Forced warm air and central air conditioning. Misc. Improvements: 1,193± square foot outdoor patio with seating for 88,

concrete sidewall, landscaping and parking for approximately 67 cars and an additional 3 handicapped spaces.


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DESCRIPTION OF THE IMPROVEMENTS CONTINUED Interior Description: The building consists of vestibule, south side dining area

with four booths and stone fireplace, north side dining area, library dining area with stone fireplace, lounge/bar area with stone fireplace, bar area for serving outside patio, liquor storage room, mechanical room, office, janitor room, storage room, preparation area, cooking area, service area, dry food storage area, meter room, dishwashing area, various coolers and freezers. Indoor seating is available for approximately 190 patrons. The finish in the lounge/bar and dining areas consists of carpet, hardwood & quarry tile floors and wood paneling & drywall walls. The ceiling is painted metal and tongue and groove hardwood. The kitchen and food storage areas are finished with quarry tile floors, marlite paneled walls and an acoustical tile ceiling. The two washrooms have ceramic tile floors, ceramic tile walls and painted drywall ceilings.

General Condition and Utility: Upon completion the building will be considered good for

its age of 10 years. A few of the improvements to be made include exterior painting, new wing wall in one of the dining rooms, demo of existing north side bar for more dining space, patching floors, some new electrical, new built in wine display, new wing wall in lounge area, ceiling patching, refinish floors, touch up millwork, etc. See flowing page for list of improvements to be made and cost.

Upon completion of the proposed construction, it is

assumed that the building will be in good condition with good quality interior finishes that have been constructed in a workman like manner. Parking is adequate for a building of this size and the utility is considered to be typical of a good quality full service restaurant.

Overall, “as is” the subject property appears to be structurally sound and in average condition for its age.


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DESCRIPTION OF THE IMPROVEMENTS


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DESCRIPTION OF THE IMPROVEMENTS CONTINUED

Comments: Hazardous materials may or may not be present in the property, but none were observed. I have no educated knowledge of the existence of such materials on the property. The presence of these substances, including asbestos, radon, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the appraised property. The value estimate is predicated on the assumption that no such material is on, in, or near the property. Such materials could cause a loss in value. However, it is noted that I am not qualified to detect such substances. No responsibility is assumed for any such conditions, or for the expertise or knowledge required to discover them. If there is concern regarding the presence of hazardous material, I recommend retaining an expert in the field.


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HIGHEST AND BEST USE

Implicit in the definition of market value as defined herein is that the subject property is being valued in accordance with the concept of highest and best use. Highest and best use is defined in The Dictionary of Real Estate Appraisal (6th Edition), as:

The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility and maximum productivity.

It further defines that highest and best use of a site as though vacant as:

The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset’s existing use or for some alternate use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid.

And, lastly, it defines the highest and best use of the property as improved, as:

The highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions)

It is to be recognized that in cases where a site has existing improvements on it, the highest and best use may be determined to be different from the existing use. The existing use will continue, however, unless and until land value in its highest and best use exceeds the total value of the property in its existing use. A potential use must be tested against the four criteria stated above to determine the highest and best use of a site. Legal permissibility and physical possibility must be tested first before considering financial feasibility and maximum productivity. If a potential use does not pass the test of each of these criteria it must be withdrawn from consideration. The highest and best use is that use which produces the highest value based upon a specified market rate of investment.


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HIGHEST AND BEST USE - CONTINUED As Vacant

Legally Permissible According to the zoning ordinance of the City of Naperville, Illinois, the subject property is zoned B-2 PUD. Some of the allowed used in the B-2 zoning including but not limited to any permitted use in B1 district, antique shops, bicycle sales, rental, and repairs, catering establishments, department stores and discount stores, employment agencies, general retail, household appliance stores, jewelry stores, locksmith shops, millinery shops, optician, sales & retail, pet shops, shoe stores, tailor shops, tobacco shops, etc. A few conditional uses include but are not limited to automobile service stations, daycare centers and nursery schools, hotels & motels, motor vechicle sales, radio and television stations and studios, vocational and trade schools operated entirely outdoors, etc. The current PUD allows a one story, full service restaurant type building. Any alternative use would have to be approved by the village. In determining the highest and best use of the land, as if vacant, consideration was given to all possible uses. Uses that are not permissible under the existing zoning code are considered if it is likely that a zoning change, allowing for that use, could likely be granted for the site. It is our opinion that based on surrounding development that a zoning change is unlikely at this time. Consequently, a restaurant is considered legally permissible for the subject site. Physically Possibly The subject site consists of a rectangular shaped interior parcel containing approximately 52,925 square feet. The site is not located in a designated flood hazard area. The size, shape and terrain of the subject site make it acceptable for whatever is allowed in the PUD. Financially Feasible The subject’s immediate surrounding area along Route 59h includes mixed-use buildings, neighborhood strip centers, single tenant retail buildings, gas station, auto repair shop, office building and a banking facility. The majority of the improvements in the immediate area are from 10 to 25+ year range. Based upon an analysis of surrounding improvements, recent development in the general market area and access, commercial or any other allowable use is considered to be a financially feasible use of the subject site. Maximally Productive Based upon the above analysis, it is likely that, if vacant, the subject parcel would be improved with a commercial development. After analyzing the legally permissible, physically possible and financially feasible uses of the subject site, it is our opinion that the maximally productive use of the subject site as vacant, and therefore its highest and best use, is for commercial or any other allowable use.


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HIGHEST AND BEST USE – CONTINUED As Improved Our analysis of the Highest and Best Use of the subject property as improved included an analysis to determine whether or not the present improvement on the subject site contributes to the land value, as if vacant, and whether or not an alternative use of the existing improvements would indicate a higher total property value than the existing use. Based on our analysis, it is our opinion that the value of the subject property, as improved is greater than the value of the subject site as vacant. The subject is improved with a one story, full service restaurant type building. The building is a legal conforming use and the present improvements are in usable condition and represent the highest and best use of the site as improved. Therefore, the highest and best use of the subject property, as improved, is for continued use as presently developed as a commercial development. The subject’s most likely user would be an owner user.


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APPROACHES TO VALUE

The valuation of any parcel of real estate is derived principally through three basic approaches to value: the cost approach, the income capitalization approach, and the sales comparison approach. From the indications of these analyses and the weight accorded to each, an opinion of value is reached based upon expert judgment within the outline of the appraisal process. My methodology involving the appraisal of the subject property will include the following: Cost Approach The cost approach is devoted to an analysis of the physical value of the property; that is, the current market value of the land, assuming it to be vacant, to which is added the depreciated value of the improvements present on the site. The latter is derived based upon my estimate of the cost of reproducing the improvements, from which must be deducted accrued depreciation, including physical deterioration, functional obsolescence, and external obsolescence. Physical deterioration measures the physical wearing out of the property as observed during my field inspection. Functional obsolescence reflects a lack of desirability by reason of layout, style or design; and external obsolescence denotes a loss in value from causes outside the property itself. This approach is most applicable with recently constructed or special purpose type properties. There is inherent difficulty in estimating accrued depreciation with older properties. The primary approaches to value for the subject property are the sales comparison approach and the income capitalization approach. Due to the subject’s age and difficulty in estimating obsolescence the cost approach has not been developed in this appraisal. The data collected in our analysis provides a reliable and credible opinion of value. Income Capitalization Approach The income capitalization approach involves an analysis of the property in terms of its ability to provide a net annual income in dollars. The estimated net annual income is then capitalized at a rate commensurate with the relative certainty of its continuance and the risk involved in ownership of the property. Sales Comparison Approach The sales comparison approach is based upon the principle of substitution; that is, when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, assuming no costly delay in making the substitution. Since no properties are ever identical, the necessary adjustment for differences in quality, location, size, services, and market appeal are a function of appraisal experience and judgment.


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ESTIMATE OF VALUE BY THE INCOME CAPITALIZATION APPROACH

The income capitalization approach is an approach to value in which the anticipated future benefits of a property are capitalized into a present value. It is measured by capitalizing the net income that a fully informed person is warranted in assuming the property will produce during its remaining life. The reliability of this technique is dependent upon four conditions: 1) the reasonableness of the estimate of anticipated net annual

income; 2) the duration of the annual income, usually for the remaining

economic life of the building; 3) the selected capitalization rate; and 4) the method of conversion into value. This section is divided into three parts: 1) Income estimate 2) Capitalization method and rate selection 3) Capitalization process

INCOME ESTIMATE

When deriving an income estimate there are two distinctly different concepts of rent that are considered; contract rent and market rent (economic rent). Contract rent is defined by The Dictionary of Real Estate Appraisal, page 50, Sixth Edition, published by the Appraisal Institute, as “the actual rental income specified in a lease”. Contract rent varies from market rent, which is defined by The Dictionary of Real Estate Appraisal, page 140, Sixth Edition, published by the Appraisal Institute, as “the most probable rent that a property should bring in a competitive and open market reflecting the condition and restrictions of a specified lease agreement, including the rental adjustment and revaluation, permitted uses, use restrictions, expense obligations, term, concessions, renewal, and purchase options, and tenant improvements (TIs)”.

The selection of which type of rent should be used in an appraisal may have a substantial effect on the final value estimate of the subject property. The rental type used in an appraisal is dependent upon the property rights being appraised. Contract rent is normally used when the property is being valued as encumbered by the existing leases. This is known as the value of the leased fee estate.


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The leased fee interest is defined in The Dictionary of Real Estate Appraisal (Sixth Edition) as:

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.

When valuing a property utilizing this concept, contract rent is used even if it is less than or greater than the market rent of the property at the date of value. Market rent is used when the property rights being appraised consist of the fee simple estate. The fee simple estate is defined in The Dictionary of Real Estate Appraisal, Sixth Edition, page 90, published by the Appraisal Institute, as:

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.

According to the CEO (Edward Carrella) the subject is owner occupied. Therefore, the property rights being appraised consist of the fee simple estate, unencumbered by any leases. Fee simple requires valuing the property at its highest and best use, using full market or economic rent as of the effective date of valuation. Rental comparables were analyzed to determine the subject’s market rental rate. Those comparables afforded the most weight are summarized below.

COMPARABLE RENTAL CHART

Location

Size

Build-out

Age Condition

Lease start date

Rental Rate

Subject 3032 English Rows Naperville, Illinois

Bld. or unit

7,920 sf

Full Service Restaurant

outside patio

10 Years Good*

Owner

Occupied

Per Sq. Ft.

N.A.

1. 4531-91 Route 71 Unit 4571 OSwego, Illinois

4,500 sf

Full Service Restaurant

12 years Average

5/15

3-years

$16.50

Net 2. 2656 Show Place Drive Naperville, Illinois

7,500 sf

Full Service Restaurant small patio

10 years Average

6/16

12-years

$18.88

Net 3. 827 N. Washington Street Unit 101 & 102 Naperville, Illinois

6,382 sf

Retail

30± years Average

11/16

3-years

$25.00

Net 4. 15663 W. 127th Street Lemont, Illinois

2,640 sf

Kentucky Fried/ Taco Bell

16 years Good

9/15

5-years

$28.06

Net * Upon Completion.


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The rental properties selected for comparison range in age from 10 to 30± years and in unit size from 2,640 to 7,500 square feet of building or unit area. These rentals have varying degrees of comparability to the subject and indicate a range of rental rates from $16.50 to $28.06 per square foot on a net basis. Rental no. 1 was selected for similarities in quality of construction and utility. The rental has an advantage in size, however is inferior in having no outside patio dining area, location, age/condition and market conditions as of the date of rental. Rental no. 2 was selected for similarities in location, size, quality of construction, utility and market conditions as of the date of rental. The rental is slightly inferior in outside patio dining area and inferior in age/condition. Rental no. 3 was selected for similarities in quality of construction and market conditions as of the date of rental. The rental has an advantage in size, however is inferior in having no outside patio dining area, location and in age/condition. Rental no. 4 was selected for similarities in age/condition and quality of construction. The rental has disadvantages in having no outside patio area, location and market conditions as of the date of rental. The rental has advantages in size and utility (fast food with seating) and having national tenants with drive thru lane. Real estate markets are imperfect and all rentals do not point to one indication of value. All rentals were considered in the final analysis. After an analysis of comparable rental data in the subject's market area and in comparable areas, it is my opinion that the subject rental rate is estimated at $27.00 per square foot on a net basis. Therefore:

7,920 square feet @ $27.00 per square foot = $213,840 Vacancy & Collection Loss Vacancy and collection loss accounts for the difference between the potential gross income and the effective gross income. Therefore, the potential gross income must be adjusted for these factors. Vacancy and collection loss, also called vacancy and credit loss or vacancy and contingency loss is defined by The Dictionary of Real Estate Appraisal, Sixth Edition, Page 243, as: “a deduction from potential gross income (PGI) made to reflect income reductions due to vacancies, tenant turnover, and nonpayment of rent”.


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It is common that a property owner will experience vacancy and collection loss with commercial type buildings because of the short-term lease agreements and the tenant turnover. Credit loss considers nonpayment of rent and can consider units rented at below market rates. Over the course of a year, a property may experience some loss in rent collection due to tenant turnover or collection loss. At the time of observation, the subject was owner occupied. According to the CB Richard Ellis “Market View Brief” for the 2nd Quarter 2017, The vacancy rate for the Far Southwest suburbs retail submarket was 5.4%, which is up slightly from the 1st quarter 2017 rate of 5%. These figures apply to investment grade retail properties and are less reflective of neighborhood restaurant buildings. It has been reported by commercial brokers in the area that most commercial buildings in the area are general are experiencing commercial vacancy rates of between 5% to 10%, with the higher rates at distressed properties. After consideration of the industry data, a tour of the area and comments by local commercial brokers, the vacancy and collection loss is estimated at 8%. Therefore: Estimated Net Potential Income $213,840 Less: Vacancy & Collection Loss Estimated at 8% $ 17,107 Effective Net Income $196,733

Operating Expenses Operating expenses for neighborhood commercial net lease properties include a management and reserve for replacement. Many owner/operators avoid management fees by managing their own properties. They also typically do not accrue a reserve for the replacement of short lived items such as roofs and mechanical systems. All remaining expenses are typically covered by the tenant. Management Fee Industry data indicates a range of 3% to 6% of the effective income for commercial properties. The subject is a single tenant building and we will estimate a 3% management fee for the subject. Therefore, 3% of $196,733 = $5,902. Reserve Structural Maintenance/Replacement Allowance Is the replacement of the foundation, exterior walls, roof, and HVAC repairs/replacement. An annual reserve should be set up to account for the periodic expenses associated with these items. Replacement Reserve, or replacement allowance, is defined in The Dictionary of Real Estate Appraisal (6th Ed.) as, “An allowance that provides for the periodic replacement of building components that wear out more rapidly than the building itself and must be replaced during the building’s economic life.”


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The subject building will be in good condition “upon completion”. After a review of investor surveys for commercial type properties the structural maintenance reserve (replacement allowance) expense will be estimated @ $0.25 per square foot of gross building area. Therefore 7,920 x $0.25 per square foot or $1,980. Income Estimate

Effective Net Income = $213,840 Less: Owner’s expense on vacancy @ 8% = 17,107 = $196,733 = Less: Management 3% = 5,902 Less: Reserve Structural Maintenance/Replacement Allowance = 1,980 TOTAL = $7,882 Estimated Net Operating Income: = $188,851


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CAPITALIZATION OF INCOME

In this appraisal, direct capitalization of the estimated net operating income with an overall capitalization rate will be utilized to estimate the market value of the subject property. Direct Capitalization is defined in The Dictionary of Real Estate Appraisal (Sixth Edition, P. 65) as: “A method used to convert an estimate of a single year’s income expectancy into an indication of value in one direct step, either by dividing the income estimate by an appropriate capitalization rate or by multiplying the income estimate by an appropriate factor. Direct capitalization employs capitalization rates and multipliers extracted or developed from market data. Only a single year’s income is used. Yield and value changes are implied, but not explicitly identified.” In order to estimate a capitalization rate, I will conduct a band of investment technique, market extraction technique and further, I will consult with industry data pertaining to capitalization rates for commercial properties. Band of Investment We have utilized the band of investment technique to determine an overall rate for the subject property. The band of investment technique is defined by The Dictionary of Real Estate Appraisal, Sixth Edition, page 19. as:

A technique in which the capitalization rates attributable to components of an investment are weighed and combined to derive a weighted-average rate attributable to the total investment (i.e., debt and equity, land and improvements).

This technique is based upon the mortgage interest rates reported by local mortgage bankers as of September of 2017. After consulting with lenders, a 25-year mortgage (with a five-year call provision) for 70.0% of the property value at a 5.0% interest rate is typical. Based upon a review of current money rates and the high credit rating of the investor, an informed investor would require a 10% dividend on the equity portion for this type of investment. A 10% equity dividend rate is applied to the 30.0% equity position. The following is a summary of some of the current rates.


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Current Money Rates

September 5, 2017 (Close of Day)

Indicator Value

Prime Rate 4.25

30 Year T-Bond 2.69

10 Year T-Note 2.07

91 Day T-Bill 1.03

Fed Funds 1.16

3 Month EuroDollar 1.32

Mortgage Rate 30 Year 3.83

PwC Dividend Indicator 6.24*

* January 2017.

The overall rate indicated by the Band of Investment Technique is 7.91%, as shown below: Debt .70 x .0702 (constant) = .0491 Equity .30 x .1000 (equity dividend rate) = .0300 .0791 Industry Data According to the Price Waterhouse Coopers Real Estate Investor Survey (1st Q, 2017), capitalization rates for the National Strip Shopping Centers were reported to be in the 4.0% to 9.50% range, with the average being 6.32%. These rates apply to institutional grade properties, which the subject is not. PWC further reports that the spread between institutional and non-institutional grade assets ranges between 25 and 500 basis points with an average of 134 basis points. The range is wide and depends on the quality of the asset. They also state that on a ten year lease the months of free rent range from none to six months with the average being two month. Again these apply to institutional grade properties, which the subject is not. According to the 2nd quarter 2017 Real Estate Report, by Situs RERC, the average going in capitalization rate for first-tier Chicago Retail Neighborhood Commercial properties is 7.4%. They also report that the average going in capitalization rate for first tier neighborhood retail commercial properties in the Midwest Region range from 6.5% to 8.5% with an average of 7.5%, while for second-tier properties ranged from 6.8% to 9.5% with an average of 8.1% and for third-tier properties ranged from 7% to 11% with an average of 8.7%. The subject is a 10 year old neighborhood full service restaurant and is considered to be a second tier property.


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FINAL RATE SELECTION

The subject property is comprised of single tenant full service restaurant type building that will be in good condition upon completion. Based upon a review of industry data and the band of investment technique, the overall capitalization rate is estimated at 8%. Therefore, the market value of the fee simple interest in the subject property, as indicated by the income capitalization approach, is $2,360,000 as calculated below.

Therefore: Net Operating Income $188,851 Divided By

Capitalization Rate

.0800 Value Indicated by the Income Capitalization Approach:

$2,360,638

Market Value of the Fee Simple Interest “Upon Completion”

$2,360,000


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ESTIMATE OF VALUE BY THE SALES COMPARISON APPROACH The sales comparison approach is a method of estimating the market value of a property by comparison of actual sales of similar type properties to the subject property. This approach reflects the market value of a property based upon the actions of typical buyers and sellers in the market and exemplifies the principle of substitution. The principle of “Substitution" is defined in The Dictionary of Real Estate Appraisal, (6th Edition), as follows:

The appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price will attract the greatest demand and widest distribution.

I have conducted a market survey to obtain sales of improved properties that were similar to the subject property in physical and economic characteristic. A thorough search was made to identify comparable sales located in the subject’s market area. The best possible sales were used and have been included in this analysis. It is difficult to compare a commercial property as a whole with another property as a whole. Each property must be broken down into its significant characteristics and a basic unit of comparison established. In this instance, the relevant unit of comparison is sale price per square foot of building area including land. The following improved sales compiled during the survey were considered to be the most comparable to the subject property and have been used in this analysis.


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COMPARABLE PROPERTY SALE NO. 1 3875 East Main Street Saint Charles, Illinois Kane County Lot Size: 73,456 square feet Building Size: 6,654 square feet Land to Building Ratio: 11.04 to 1.0 Age: 13 years Sale Price: $1,400,000 Date Sold: December, 2015 Unit Price: $210.40 per square foot of building, including land. Buyer: Spiro Angelos Seller: Craig Cserkies Document #: 15K068775 P.I.N.: 09-25-426-019 Description of Improvements: The sale property consists of a one story, masonry constructed full service restaurant. At the time of sale, the building vacant. The former tenant, TGI Friday vacated the property and rather than find a new tenant and repair some deferred maintenance, the owner decided to sell. The buyer added approximately 1,500 square feet, a drive thru lane and converted the building into a three unit strip center. Tenants include ATI Physical Therapy, Potbelly’s and Noodles & Company. The average daily traffic count along Main Street is 31,400 vehicles. The buyer then sold the fully leased property for $4,910,000 in December of 2016. Below is the photo of the property at the time of sale. The following page is the current photo subsequent to renovations.


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COMPARABLE PROPERTY SALE NO. 1 3875 East Main Street Saint Charles, Illinois Kane County

CURRENT PHOTO


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COMPARABLE PROPERTY SALE NO. 2 18 South Roselle Road Schaumburg, Illinois Cook County Lot Size: 44,568 square feet Building Size: 5,116 square feet Land to Building Ratio: 8.71 to 1.0 Age: 13 years Sale Price: $1,325,000 Date Sold: July, 2015 Unit Price: $258.99 per square foot of building, including land. Buyer: Ray Walker Seller: Curtis Smith Document #: 1521842041 P.I.N.: 07-22-301-051 Description of Improvements: The sale property consists of a one story, masonry constructed full service restaurant formerly occupied by Applebee’s and vacant at the time of sale and was reported to be in average condition for its age. The sale price included furniture, fixtures and equipment. The average daily traffic count along Roselle Road is 28,100 vehicles. The property was listed for $1,400,000 or $273.65 per square foot and marketed for over 600 days. The buyer opened a Walker Bros. Pancake House restaurant subsequent to the sale.


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COMPARABLE PROPERTY SALE NO. 3 12618 South Route 59 Plainfield, Illinois Will County Lot Size: 51,836 square feet Building Size: 5,200 square feet Land to Building Ratio: 9.97 to 1.0 Age: 11 years Sale Price: $1,425,000 Date Sold: January, 2016 Unit Price: $274.04 per square foot of building, including land. Buyer: Cashflow Properties, LLC Seller: Mars-Kensington North, LLC Document #: R16013903 P.I.N.: 07-22-301-051 Description of Improvements: The sale property consists of a one story, masonry constructed full service restaurant formerly occupied by Bob Evans and vacant at the time of sale. The property was in average condition for its age. The average daily traffic count along Route 59 is 27,400 vehicles. The property was listed for $1,475,000 or $283.65 per square foot and marketed for over 141 days. The buyer opened a Broken Yolk Café subsequent to the sale.


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COMPARABLE PROPERTY SALE NO. 4 111 East Algonquin Road Arlington Heights, Illinois Cook County Lot Size: 59,659 square feet Building Size: 4,748 square feet Land to Building Ratio: 12.57 to 1.0 Age: 10 years Sale Price: $1,360,000 Date Sold: November, 2016 Unit Price: $286.44 per square foot of building, including land. Buyer: Laurence Elbaum Seller: George Shepard Document #: 1632015017 P.I.N. Nos.: 08-16-401-030, 036, 039 & 043 Description of Improvements: The sale property consists of a one story, masonry constructed full service restaurant formerly occupied by Applebee’s and vacant at the time of sale. The sale price included furniture, fixtures and equipment. The average daily traffic count along Algonquin Road is 28,900 vehicles. The property was listed for $1,475,000 or $312.63 per square foot.


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COMPARABLE PROPERTY SALE NO. 5 19 North Washington Street Naperville, Illinois DuPage County Lot Size: 18,876 square feet Building Size: 2,700 square feet Land to Building Ratio: 6.99 to 1.0 Age: 47 years Sale Price: $1,150,000 Date Sold: December, 2015 Unit Price: $425.93 per square foot of building area, including land.

Buyer: Dominic Imburgia Seller: Andrew Trasatt Document #: R16-001384 P.I.N.: 08-13-411-006 Description of Improvements: The property consists of a one story, masonry constructed restaurant located in the Central Business District of Naperville. The building was an auto repair facility and completely renovated in 2012 and is now Fiamme, a traditional Naples inspired Italian restaurant specializing in oak-fired oven pizza. There is an approximate 780 square foot outdoor patio and parking for approximately 18 cars. There is no basement. The average daily traffic count along Washington Street is 22,300 vehicles. According to the broker, the property was leased at the time of sale but lease terms were not disclosed.


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COMPARABLE PROPERTY OFERING 6 4097 Healthway Drive Aurora, Illinois DuPage County Lot Size: 48,216 square feet Building Size: 7,267 square feet Land to Building Ratio: 6.63 to 1.0 Age: 11 years Current List Price: $2,500,000 Marketing Time: Listed July 21, 2017 Current Asking Price: $344.02 per square foot of building, including land. MLS #: 09697091 P.I.N.: 07-28-202-046 Description of Improvements: The sale property consists of a one story, masonry constructed full service restaurant with 7,200 square feet of basement area. The building is occupied DOMO 77 and the asking price included furniture, fixtures and equipment. It also includes the business value. There are approximately 65 parking spaces. The property is an out-lot in the Fox Valley Mall Shopping center. The property faces Ogden Avneue and the average daily traffic count along Ogden Avenue is 23,500 vehicles. The property was originally listed at $2,900,000 or $399.06 and reduced to the above asking price.


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COMPARABLE PROPERTY SALES DATA CHART “Upon Completion”

Sale #

Blding Area/ Sq. Ft.

Traffic Count

Land to Building

Ratio

Age/

Cond.

Basement

Utility

FF & E

Included ***

Business

Value

Sale Date

Unit Sale Price Per

Sq. Ft. Incl. Land

3032 English Rows Naperville, IL Will County

7,920±

33,400 6.68 to 1

10 years Good*

None Full Service

restaurant with outside patio

None

None

DNA

DNA

1. 3875 E. Main Street Saint Charles, IL Kane County

E

6,654

S

31,400 E

11.04 to 1

S

12 years Below

Average I

None E

Full service restaurant

I

None

E

None

E

12/15

I/E

$210.40 I

2. 18 S. Roselle Road Schaumburg, IL Cook County

I

5,116

S

28,100 I

8.71 to 1

S

13 years Good

E

None E

Full Service restaurant with patio

E

Included

E/S

None

E

07/15 I

$258.99 I

3. 12618 S. Route 59 Plainfield, IL Will County

E

5,200

S

27,400 I

9.97 to 1

S

11 years Average

I

None E


I

None

E

None

E

01/16

I/E

$274.04 I

4. 111 East Algonquin Rd. Arlington Heights, IL Cook County

I

4,748

S

28,900 E

12.57 to 1

S

10 years Average

I

None E

Full Service restaurant

I

Included

E/S

None

E

11/16

E

$286.44 I

5. 19 North Washington St. Naperville, IL DuPage County

S

2,700

S

22,300 I

6.99 to 1

E

47 years

Good **

E

None E


E

Included

E/S

None

E

12/15 I

$425.93

S OFFERING

6. 4097 Healthway Drive Aurora, IL DuPage County

E

7,267

E

23,500 I

6.63 to 1

E

11 years Average

I

Full S


I

Included

E/S

Included

S

Offering

S

Asking

$344.02

* Upon Completion. ** Building was completely renovated in 2012. *** Furniture, fixtures & equipment The variables stated above are compared to the subject, then rated as being “S” - Superior, “E” - Similar, or “I” - Inferior. The last column indicates my overall opinion of the comparisons between the sale and subject.


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SALES COMPARISON MAP


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ANALYSIS AND CONCLUSION OF SALES COMPARISON APPROACH

The sales and listings selected for comparison range in age from 10 to a completely renovated 47 year old building and in building size from 2,700 to 7,267 square feet. These sales and listing have varying degrees of comparability to the subject and indicate a range in value from $210.40 to $425.93 per square foot of building area including land. No adjustments are required for property rights, conditions of sale, financing, or expenditures made after purchase. When making location adjustments, consideration is given to the higher real estate taxes in Cook County compared to Kane, Will and DuPage Counties. SALE #1 was selected for its similarities in location, traffic count and quality of construction. The sale has advantages in size and land to building ratio. The sale has disadvantages in age/condition and utility (having no outside dining patio area). The sale also has a slight disadvantage in date of sale. Overall, the sale is inferior to the subject on a per square foot unit basis. SALE #2 was selected for its similarities in age/condition, utility and quality of construction. The sale has advantages in size and land to building ratio and a slight advantage in that FF&E was included in the sale price. The sale has disadvantages in location due to the higher property taxes in Cook County, traffic count and date of sale. Overall, the sale is inferior to the subject on a per square foot unit basis. SALE #3 was selected for its similarities in location and quality of construction. The sale has advantages in size and land to building ratio. The sale has a disadvantage in traffic count, age/condition, utility (having no outside dining patio area) and a slight disadvantage in date of sale. Overall, the sale is inferior to the subject on a per square foot unit basis. SALE #4 was selected for its similarities in traffic count, quality of construction and date of sale. The sale has advantages in size and land to building ratio and a slight advantage in that FF&E was included in the sale price. The sale has disadvantages in location due to the higher property taxes in Cook County, age/condition and utility (having no outside dining patio area). Overall, the sale is inferior to the subject on a per square foot unit basis. SALE #5 was selected for its similarities in land to building ratio, age/condition, utility and quality of construction. The sale has disadvantages in traffic count and date of sale. The sale has substantial advantages in size and location (the central business district of Naperville). The sale has a slight advantage in that FF&E was included in the sale price. Overall, the sale is superior to the subject on a per square foot unit basis.


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OFFERING #6 was selected for its similarities in location, size, land to building ratio and quality of construction. The offering has disadvantages in traffic count, age/condition and utility (having no outside dining patio area). The offering has advantages in that it includes business value and has basement area and a slight advantage in that FF&E is included in the offering price. The offering also has an advantage in that it is an offering. Typically, offerings prices are typically not achieved in the market. Conclusion After giving due consideration to all of the comparable sales, the value of the subject property “upon completion” is considered to be most reasonably represented by the unit value of $335.00 per square foot of building area including land. The subject property contains 7,920 square feet @ $335.00 per square foot = $2,653,200.

Value of the Sales Comparison Approach “Upon Completion”:

$2,650,000


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RECONCILIATION AND VALUE CONCLUSION

Upon completion of plans and specifications, the property will consists of a renovated 10 year-old, one-story, masonry and frame-constructed, full service restaurant building, containing 7,920± square feet. There is approximately 1,193 square feet of outside patio dining area. The improvements are situated on a 52,925 square-foot parcel of land, located in Naperville, Illinois. Analysis of the subject property by the income capitalization approach, and the sales comparison approach has resulted in the following range in “upon completion” value indications as of August 22, 2017: Income Capitalization Approach $2,360,000 Sales Comparison Approach $2,650,000 The income capitalization approach reflects the value of the subject property, based upon its income-producing capability. The theory of the income capitalization approach is that the current value of a property is reflected by the present worth of the benefits it will produce over its remaining economic life. An analysis of the available market data indicates that properties of this type are either owner/user properties or investment properties. The value indicated by this approach is based upon an investment analysis and reflects what a purchaser/investor would pay predicated upon the property's net income-producing capabilities. Real estate investors base their decisions upon economic factors that are market oriented, and are concerned with the net income and its durability. Depreciation in the form of tax shelter is usually considered independently of the real estate by each investor as it applies to his/her financial status. When properties of this type are purchased for investment purposes, the value indicated by the income capitalization approach is given primary consideration by the investor. However for properties like the subject that are owner occupied the value indicated by the income capitalization approach was afforded secondary consideration in the final analysis. The sales comparison approach reflects the value of the subject property based upon an analysis of recent sales of similar improved properties within the subject area. The sales comparison approach is considered to be an important approach to value because it reflects the action of buyers and sellers of comparable properties, including both owner/user and investor. It also exemplifies the basic principle of substitution which states that no purchaser will pay more for a property than the cost of acquiring a comparable property. This approach reflects current market conditions as viewed by owner/users together with a cross section of investors in various brackets having varying tax shelter and equity return requirements. Since the sales comparison approach reflects the action of both user/purchasers and investors in the market, it was afforded primary consideration in the final analysis.


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Therefore, based upon the analysis of the aforementioned approaches to value and data contained in this report, it is my opinion that the market value, of the fee simple interest of the subject property, “upon completion”, as of October 15, 2017 was:

$2,580,000


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COMPARABLE PROPERTY SALES DATA CHART “As Is”

Sale #

Blding Area/ Sq. Ft.

Traffic Count

Land to Building

Ratio

Age/

Cond.

Basement

Utility

FF & E

Included ***

Business

Value

Sale Date

Unit Sale Price Per

Sq. Ft. Incl. Land

3032 English Rows Naperville, IL Will County

7,920±

33,400 6.68 to 1

10 years Average

None Full Service

restaurant with outside patio

None

None

DNA

DNA

1. 3875 E. Main Street Saint Charles, IL Kane County

E

6,654

S

31,400 E

11.04 to 1

S

12 years Below

Average I

None E


I

None

E

None

E

12/15

I/E

$210.40 I

2. 18 S. Roselle Road Schaumburg, IL Cook County

I

5,116

S

28,100 I

8.71 to 1

S

13 years Good

S

None E


E

Included

E/S

None

E

07/15 I

$258.99 I

3. 12618 S. Route 59 Plainfield, IL Will County

E

5,200

S

27,400 I

9.97 to 1

S

11 years Average

E

None E


I

None

E

None

E

01/16

I/E

$274.04 I

4. 111 East Algonquin Rd. Arlington Heights, IL Cook County

I

4,748

S

28,900 E

12.57 to 1

S

10 years Average

E

None E


I

Included

E/S

None

E

11/16

E

$286.44

E/S 5. 19 North Washington St. Naperville, IL DuPage County

S

2,700

S

22,300 I

6.99 to 1

E

47 years

Good **

S

None E


E

Included

E/S

None

E

12/15 I

$425.93

S OFFERING

6. 4097 Healthway Drive Aurora, IL DuPage County

E

7,267

E

23,500 I

6.63 to 1

E

11 years Average

E

Full S


I

Included

E/S

Included

S

Offering

S

Asking

$344.02

** Building was completely renovated in 2012. *** Furniture, fixtures & equipment The variables stated above are compared to the subject, then rated as being “S” - Superior, “E” - Similar, or “I” - Inferior. The last column indicates my overall opinion of the comparisons between the sale and subject.


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Conclusion After giving due consideration to all of the comparable sales, the value of the subject property “as is” is considered to be most reasonably represented by the unit value of $285.00 per square foot of building area including land. The subject property contains 7,920 square feet @ $285.00 per square foot = $2,257,200.

Value of the Sales Comparison Approach “As Is”:

$2,260,000


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ASSUMPTIONS AND LIMITING CONDITIONS

The certification of the appraiser appearing in the appraisal report is subject to the following conditions and to such other specific and limiting conditions as are set forth by the appraiser in the report. 1. This is an appraisal report. As such, it might not include full discussions

of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning the data, reasoning and analyses is retained in the appraiser’s file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

2. No responsibility is assumed for legal or title considerations. Title to the

property is assumed to be good and marketable unless otherwise stated in this report.

3. The property is appraised free and clear of any or all liens and

encumbrances unless otherwise stated in this report. 4. Responsible ownership and competent property management are assumed

unless otherwise stated in this report. 5. It is assumed that there are no hidden or unapparent 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.

6. It is assumed that there is full compliance with all applicable federal, state,

and local environmental regulations and laws unless otherwise stated in this report.

7. It is assumed that all applicable zoning and use regulations and restrictions

have been complied with, unless a nonconformity has been stated, defined and considered in this appraisal report.

8. It is assumed that all required licenses, certificates of occupancy, or other

legislative or administrative authority from any local, state, or national governmental, or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.


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9. Any sketch in the report may show approximate dimensions and is

included to assist the reader in visualizing the property. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee as to accuracy is expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report.

10. It is assumed that the utilization of the land and improvements is within

the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report.

11. The appraiser is not qualified to detect hazardous waste and/or toxic

materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process.

12. Unless otherwise stated in this report, the subject property is appraised

without a specific compliance survey having been conducted to determine if the property is or is not in conformance with the requirements of the Americans With Disabilities Act. The presence of architectural and communications barriers that are structural in nature that would restrict access by disabled individuals may adversely affect the property’s value, marketability, or utility.

13. Any proposed improvements are assumed to be completed in a good

workmanlike manner in accordance with the submitted plans and specifications.

14. 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.


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15. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper written qualification and only in its entirety.

16. 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) shall be disseminated to the public through advertising, public relations, news, sales, or other media without prior written consent and approval of the appraiser.

17. No responsibility is assumed for accuracy of information furnished to the

appraiser or the appraisal firm by other experts or by public records. The market data relied upon in this report has been confirmed with one or more of the following: parties familiar with the transaction, from affidavit, or from other sources thought to be reasonable and reliable. All are considered appropriate for inclusion to the best of our factual judgment and knowledge. An impractical and uneconomic expenditure of time would be required to furnish unimpeachable verification in all instances, particularly as to engineering and market related information. It is suggested that the client consider independent verification as a prerequisite to any transaction involving the sale, lease or other significant commitment of funds and/or transfer of the property.

18. The contract for appraisal, consultation or analytical service is fulfilled and

the total fee is due and payable upon completion of the report, unless other arrangements have been made. The appraiser will not be asked or required to give testimony in court of hearing because of having made this appraisal, in full or in part, nor shall he engage in post appraisal consultation with the client or any third parties unless prior separate and special arrangements have been made, and at an additional fee. If testimony or deposition is required because of any subpoena, the client shall be responsible for any additional time, fees, and/or changes regardless of the issuing party or parties.

19. The appraiser reserves the right to alter statements, analyses, conclusions,

of any value estimates in the appraisal if there becomes known to the appraiser facts pertinent to the appraisal process which were unknown when the report was prepared.


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20. ACCEPTANCE AND/OR USE OF THIS APPRAISAL REPORT BY

THE CLIENT OR ANY THIRD PARTY CONSTITUTES ACCEPTANCE OF THE ABOVE LIMITING CONDITIONS. APPRAISER LIABILITY EXTENDS ONLY TO THE STATED CLIENT, NOT TO SUBSEQUENT PARTIES OR USERS.


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CERTIFICATION

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, conclusions and recommendations.

We have no present or prospective interest in the property that is the subject of

this report, and I have no personal interest with respect to the parties involved. We have no bias with respect to the property that is the subject of this report or to

the parties involved with this assignment. Our engagement in this assignment was not contingent upon developing or

reporting predetermined results. Our compensation for completing this assignment is not contingent upon the

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

Our analyses, opinions and conclusions were developed, and this report has been

prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

Robert P. Litz has made an interior and exterior observation of the subject property, James M. McDermott has not. No one provided significant real property appraisal or appraisal consulting assistance to the persons signing this certification.


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Robert Litz has performed services, as an appraiser regarding the property that is the subject of this report within the three-year period immediately preceding the acceptance of this assignment. James M. McDermott has not performed 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 the acceptance of this assignment.

As of the date of this report, Robert P. Litz and James McDermott, have

completed the requirements of the continuing education program of the State of Illinois.

Respectfully submitted, MIDWEST APPRAISAL COMPANY, INC. Reviewed and Approved by:

Robert Litz James M. McDermott State Certified Residential Real Estate Appraiser State Certified General Real Estate Appraiser License #556.001130 License #553.001906 Expires: 09/30/2017 Expires: 09/30/2017

ADDENDUM

¾ Engagement Letter ¾ Qualifications of the Appraisers

Engagement Letter

QUALIFICATIONS

QUALIFICATIONS OF ROBERT P. LITZ EDUCATION Moraine Valley Community College, Palos Heights, Illinois, 1976 Western Illinois University, Macomb, Illinois Graduated 1979 TECHNICAL COURSES Introduction to Real Estate Appraisal Principles of Real Estate Appraisal 1.1 Market Data Analysis 1.2 Foundation of Real Estate Appraisal Appraising the Single Family Residence Uniform Standards of Professional Appraisal Practices Real Estate Appraisal Methods 1.4B Report Writing – None Residential Real Estate Appraising Fair Housing/Fair Lending 2.0 Financial Analysis of Income Properties 2.1 Introduction to Income Properties DESIGNATIONS State Certified Residential Real Estate Appraiser #556.001130 WORK EXPERIENCE 1987-Present Midwest Appraisal Company, Inc. Chicago, Illinois EXPERIENCE Since 1988 I have appraised various types of real estate including: single family

homes valued up to $2,000,000; condominiums; multi-family residences; factories; warehouses, office buildings; mixed-use building; strip stores; restaurants; banquet halls; truck terminals; car dealerships; bowling alleys, funeral homes; gas stations; schools; churches; tunnel car washes; office buildings, and a commercial airplane hangar. Have been called upon and given testimony, as an expert witness. Qualified Appraisal reports were full narrative reports for mortgage, estates and assessment purposes.

Within the last several years I have specialized in appraising various gas station type properties, which include gas service stations; gas mini mart stations; booth gas stations; car wash and mini mart gas stations. I have appraised gas stations for Amoco Oil, Kean Oil, Super America, Sweeney Oil, Martin Oil, Graham Oil, Southerland Corporation 7-Eleven Gas Food Marts; Thornton's and various independents.

QUALIFICATIONS OF THE APPRAISER

JAMES M. MCDERMOTT

DESIGNATIONS

State Certified General Real Estate Appraiser, Illinois EDUCATION Lewis University, Romeoville, Illinois Bachelor of Science, May 1993 Major: Aviation Administration REAL ESTATE COURSES Standards of Professional Appraisal Practice (IL I) Foundations of Real Estate Appraisals (IL II) Residential/ Single Family Appraisal (IL III) 1.4A Residential Report Writing 1.4B Report Writing- Non Residential Real Estate Appraising 1.5 Residential Analysis of Small Income Properties 2.2 Techniques of Income Property Appraising 2.0 Financial Analysis of Income Properties 2.1 Introduction to Income Properties EMPLOYMENT 5/93-Present Midwest Appraisal Company, Inc. 3055 West 111th Street Chicago, Illinois 60655 Staff Appraiser EXPERIENCE Since 1993 I have appraised single family residences, residential subdivisions,

apartment buildings, condominiums, townhome developments, retail buildings, strip centers, restaurants, office buildings, supermarkets, banks, car dealerships, funeral homes, banquet halls, bowling alleys, gas stations, car washes, factories, warehouses and vacant land. Appraisal reports were full narrative reports for mortgage, estate and assessment purposes.

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