complete appraisal in summary reporting format · appraisal in summary reporting format subject...

APPRAISAL IN SUMMARY REPORTING FORMAT

Subject Property: Dan Lord Plumbing

Ownership of Record: James D Lord, et ux

Street Address: 2609 S Farmerville Street

City and State: Ruston, LA

Parish: Lincoln

Property Type: Commercial

Date of Value Estimate: July 28, 2010

Prepared for: Prepared by:

City of Ruston

Economic Development Department

401 N Trenton Street

Ruston, LA 71270

Michael A. Graham, MAI

1300 Hudson Lane, Suite No. 1

Monroe, Louisiana 71201

Real Estate Appraisal Services

MICHAEL A. GRAHAM, MAI

REAL ESTATE APPRAISAL SERVICES

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MICHAEL A. GRAHAM, MAI Real Estate Appraisals and Consultation

1300 Hudson Lane Suite # 1

Monroe, La. 71201

Phone: 318-387-9092

Fax: 318-325-5776

e-mail: [email protected]

July 28, 2010

City of Ruston

ATTN: Lewis Love

Public Works Director

701 East Tennessee

Ruston, LA 71270

Dear Mr. Love,

Pursuant to your request, the undersigned appraiser has made a personal and careful

inspection of the property identified above and has thoroughly investigated and analyzed

matters pertinent to the estimation of “Market Value” of said property.

To report the findings of my investigation, I offer this appraisal in a summary reporting format.

This appraisal follows the minimum guidelines set forth in standards rule 2-2 (b) of the Uniform

Standards of Appraisal Practice, 2010 - 2011 Edition, published by The Appraisal Foundation.

The appraisal report may not be limited to the information found herein. The reader may

consult with Appraiser's project files to find more comprehensive definit ions; broad area

analysis; comparable factual data; and additional assumptions and limited conditions. This

appraisal considers such additional information a part of this analysis and is available upon

request.

Assumptions and Limiting Conditions are listed in this report. These are typical for appraisal

reporting; there are special contingencies, over and above the typical, that would influence the

estimated value. Also, my certification statement, to include the value estimate, is listed and

follows the Limiting Conditions.

mailto:[email protected]



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Upon inspection of the property, I do not find obvious evidence of an Environmental Hazard.

However, I am not an expert in this field and do not certify concerning this matter. A Phase I

environmental study was not provided to the appraiser.

Market Value Conclusion

Appraisal Premise Interest Appraised Effective Date Conclusion

“As-Is” Full ownership, less

minerals July 28, 2010

$150,000

Thank you for the opportunity to work with you on this appraisal assignment. If I can offer

additional assistance relative to this appraisal or help you with another matter, please contact

me.

Respectfully submitted,

_______________________________ _____________________________

MICHAEL A. GRAHAM, MAI KARA A. PLATT

LA STATE GENERAL CERTIFIED APPRAISER: #GO938 LA STATE GENERAL CERTIFIED APPRAISER: #G2088



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TABLE OF CONTENTS

SUMMARY OF SALIENT FACTS AND CONCLUSIONS .......................................................................... 5

SUMMARY OF APPRAISAL PROBLEM .................................................................................................. 6

TYPE OF PROPERTY:.................................................................................................................................... 6 CLIENT: ....................................................................................................................................................... 6 INTENDED USER .......................................................................................................................................... 6 PURPOSE OF THE APPRAISAL ....................................................................................................................... 6 FUNCTION OF APPRAISAL: ............................................................................................................................ 7 PROPERTY RIGHTS APPRAISED .................................................................................................................... 7 EFFECTIVE DATE OF APPRAISAL ................................................................................................................... 7 APPRAISAL REPORT TYPE ............................................................................................................................ 7 EXPOSURE TIME .......................................................................................................................................... 7 USE OF PROPERTY AT DATE OF APPRAISAL .................................................................................................. 7 USE OF PROPERTY REFLECTED IN APPRAISAL: ............................................................................................. 7

SCOPE OF WORK .................................................................................................................................. 8

CERTIFICATION STATEMENT ............................................................................................................. 10

ASSUMPTIONS AND LIMITING CONDITIONS ..................................................................................... 11

OWNERSHIP INFORMATION AND SALE HISTORY ............................................................................ 13

AREA DATA .......................................................................................................................................... 14

LOCATION OF SUBJECT PROPERTY ................................................................................................. 16

SITE DATA ............................................................................................................................................ 17

SITE PLAN ............................................................................................................................................ 19

AERIAL PHOTOGRAPHS ..................................................................................................................... 21

IMPROVEMENT ANALYSIS .................................................................................................................. 23

FLOOR PLAN ........................................................................................................................................ 26

HIGHEST AND BEST USE .................................................................................................................... 27

HIGHEST AND BEST USE OF LAND AS THOUGH VACANT ............................................................................... 28 HIGHEST AND BEST USE OF PROPERTY AS IMPROVED ................................................................................. 29

LAND VALUATION ................................................................................................................................ 30

COMPARABLE LAND SALES SUMMARY ............................................................................................ 31

LAND ADJUSTMENT GRID .................................................................................................................. 45

COST APPROACH ............................................................................................................................... 46

COST APPROACH SUMMARY ............................................................................................................. 49

SALES COMPARISON APPROACH ..................................................................................................... 50

IMPROVED SALES SUMMARY TABLE ................................................................................................ 51

UNIT OF COMPARISON / DISCUSSION OF ADJUSTMENTS .............................................................. 75

INCOME APPROACH TO VALUE ......................................................................................................... 79

RECONCILIATION OF VALUE .............................................................................................................. 94

ADDENDA............................................................................................................................................. 95



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SUMMARY OF SALIENT FACTS AND CONCLUSIONS

The subject property is located on the east side of S Farmerville just north of Tennessee in

Ruston, LA.

Subject Property: Dan Lord Plumbing

Property Type: Commercial

Report Type: Summary

Interest Appraised: Full ownership, less minerals

Appraisal Date: July 28, 2010

Value Date: July 28, 2010

Inspection Date: July 28, 2010

Highest & Best Use As Vacant: Light Industrial or General commercial

Legal Description: See the legal description in the addenda

Owner ID: 2102 (Ruston Parish Assessor)

Opinion of Market Value: $150,000

Range of Value: $145,000 to $160,000



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SUMMARY OF APPRAISAL PROBLEM

TYPE OF PROPERTY:

Commercial

CLIENT:

City of Ruston

INTENDED USER

City of Ruston

PURPOSE OF THE APPRAISAL

The purpose of this appraisal is to estimate the “Market Value” of the subject in it’s “as-is”

condition. "Market Value" is defined by the United States Treasury Department, Comptroller

of the Currency 12 CFR part 34, 34.42 ( f ) as, "The most probable price which a property

should bring in a competitive and open market under all conditions requisite to a fair sale, the

buyer and seller each acting prudently and knowledgeably, and assuming the price is not

affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a

specified date and the passing of title from seller to buyer under conditions whereby:

(1) Buyer and seller are typically motivated;

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

own best interests;

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

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

comparable thereto; and

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

special or creative financing or sales concessions granted by anyone associated with

the sale."



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FUNCTION OF APPRAISAL:

Internal decision making

PROPERTY RIGHTS APPRAISED

Full ownership, less mineral rights

EFFECTIVE DATE OF APPRAISAL

July 28, 2010

APPRAISAL REPORT TYPE

Summary

EXPOSURE TIME

Definition (Dictionary of Real Estate Appraisal): The estimated length of time the property

interest being appraised would have been offered on the market prior to the hypothetical

market value on the effective date of the appraisal; a retrospective estimate based upon an

analysis of past events assuming a competitive and open market. Exposure time is always

presumed to occur prior to the effective date of the appraisal. The overall concept of

reasonable exposure encompasses not only adequate, sufficient and reasonable time but also

adequate, sufficient, and reasonable effort. The exposure time for the subject property is

estimated to be six months.

USE OF PROPERTY AT DATE OF APPRAISAL

Commercial

USE OF PROPERTY REFLECTED IN APPRAISAL:

Commercial



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SCOPE OF WORK

The Appraiser

a. Has inspected the subject property to note the characteristics of the property that are

relevant to its valuation.

b. Has investigated available market data for use in the sales comparison, cost and

income approaches to value.

The appraiser’s investigations will include research of public records through the use of

commercial sources of data such as printed comparable data services and

computerized databases. Search parameters such as dates of sales, leases,

locations, sizes, types of properties and distances from the subject will start with

relatively narrow constraints and, if necessary, be expanded until the appraiser has

either retrieved data sufficient (in the appraiser’s opinion) to estimate market value, or

until the appraiser believes that he or she has reasonably exhausted the available pool

of data. Researched sales data will be viewed and, if found to be appropriate, efforts

will be made to verify the data with persons directly involved in the transactions such

as buyers, seller, brokers or agents. At the appraiser’s discretion, some data will be

used without personal verification if, in the appraiser’s opinion, the data appear to be

correct. In addition, the appraiser will consider any appropriate listings or properties

found through observation during appraiser’s data collection process. The appraiser

will report only the data deemed to be pertinent to the valuation problem;

c. Has investigated and analyzed any pertinent easements or restrictions, on the fee

simple ownership of the subject property. It is the client’s responsibility to supply the

appraiser with a title report. If a title report is not available, the appraiser will rely on a

visual inspection and identify any readily apparent easements or restrictions;

d. Will analyze the data found and reach conclusions regarding the market value, as

defined in the report, of the subject property as of the date of value using appropriate

valuation approaches (es) identified above;

e. Has prepared the appraisal in compliance with the Uniform Standards of Professional

Appraisal Practice as promulgated by The Appraisal Foundation and the Code of

Professional Ethics and Certification Standard of the Appraisal Institute;



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f. Is not responsible for ascertaining the existence of any toxic waste or other

contamination present on or off the site. The appraiser will, however, report any

indications of toxic waste or contaminants that may affect value if they are readily

apparent during appraiser’s investigations. Appraiser cautions the user of the report

that appraiser is not expert in such matters and that appraiser may overlook

contamination that might be readily apparent to parties who are experts in such

matters.

g. Did prepare a Summary Appraisal Report, as defined in USPAP, which will include

photographs of the subject property, descriptions of the subject neighborhood, the site,

any improvements on the site, a description of the zoning, a highest and best use

analysis, a description of the most important sales used in the appraiser’s valuation, a

reconciliation and conclusion, a map illustrating the sales in relationship to the subject

property, and other data deemed by the appraiser to be relevant to the assignment.



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CERTIFICATION STATEMENT

I certify that, to the best of my knowledge and belief:

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

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

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

personal interest or bias with respect to the parties involved.

4. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

5. my engagement in this assignment was not contingent upon developing or reporting predetermined

results.

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

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

8. I have performed within the context of the competency provision of the Uniform Standards of

Professional Appraisal Practice

9. Kara Platt, General Certified Appraiser, provided significant real property appraisal assistance to the person(s) signing this certification.

10. The reported analyses, opinions, and conclusions were developed, and this report has been

prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.

11. The use of this report is subject to the requirements of the Appraisal Institute relating to review

by its duly authorized representatives.

12. As of the date of this report, Michael A. Graham has completed the continuing education program of the Appraisal Institute.

13. That my opinion of the Market Value as of July 28, 2010, is:

$150,000 (One Hundred Fifty Thousand Dollars)

_______________________________ _____________________________

MICHAEL A. GRAHAM, MAI KARA A. PLATT

LA STATE GENERAL CERTIFIED APPRAISER: #GO938 LA STATE GENERAL CERTIFIED APPRAISER: #G2088



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ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal is made under the following assumptions and limiting conditions:

1. No responsibility is assumed for the legal description provided or for matters pertaining to

legal or title considerations. Title to the property is assumed to be good and marketable

unless otherwise stated.

2. The property is appraised free and clear of any or all liens or encumbrances unless

otherwise stated.

3. Responsible ownership and competent property managements are assumed.

4. The information furnished by others is believed to be reliable, but no warranty is given for its

accuracy.

5. All engineering studies are assumed to be correct. The plot plans and illustrative material in

the report are included only to help the reader visualize the property.

6. 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 obtaining the engineering studies that may be required to discover them.

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

local environmental regulations and laws unless the lack of compliance is stated, described,

and considered in the appraisal report.

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

legislative or administrative authority from any local, state, or national government or private

entity or organization have been or can be obtained or renewed for any use on which the

opinion of value contained in this report is based.

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

or property lines of the property described and that there is no encroachment or trespass

unless noted in the report.

10. Unless otherwise stated in this report, the existence of hazardous material, which may or

may not be present on the property, was not observed by the appraiser. The appraiser has

no knowledge of the existence of such materials on or in the property. The appraiser,

however, is not qualified to detect such substances. The presence of substances such as

asbestos, urea formaldehyde foam insulation or other potentially hazardous materials may

affect the value of the property. The value estimate is predicated upon the assumption that

there is no such material on or in the property that would cause a loss in value. No

responsibility is assumed for any such conditions, or for any expertise or engineering

knowledge required to discover them. The client is urged to retain an expert in this field, if

desired.

11. Any allocation of the total value estimated in this report between the land and the

improvements applied only under the stated program of utilization. The separate values



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allocated to the land and buildings must not be used in conjunction with any other appraisal

and are invalid if so used.

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

13. The appraiser, by reason of this appraisal, is not required to give further consultation or

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

arrangements have been previously made.

14. Neither all nor any part of the contents of this report shall be disseminated to the public

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

consent and approval of the appraiser.

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

or division of the total into fractional interests will invalidate the opinion of value, unless such

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

16. If subject property is a proposed construction, only preliminary plans and specifications

were available for use in the preparation of this appraisal; the analysis, therefore, is subject

to a review of the final plans and specifications when available.

17. Any proposed improvements are assumed to have been completed unless otherwise

stipulated, so any construction is assumed to conform with the building plans referenced in

the report.

18. The appraiser assumes that the reader or user of this report has been provided with copies

of available building plans and all leases and amendments, if any, that encumber the

property.

19. In the event no legal description was provided by the client, the appraiser used the parish

tax plat to ascertain the physical dimensions and acreage of the property. Should a survey

prove this information to be inaccurate, it may be necessary for this appraisal to be

adjusted.

20. The forecasts, projections, or operating estimates contained herein are based on current

market conditions, anticipated short term supply and demand factors, and a continued

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

conditions.

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

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

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

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

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

more of the requirements of the act. If so, this fact could have a negative impact upon the

value of the property. Since the appraiser has no direct evidence relating to this issue,

possible noncompliance with the requirements of ADA was not considered in estimating he

value of the property.



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OWNERSHIP INFORMATION AND SALE HISTORY

OWNERSHIP OF RECORD: James D Lord, et ux (per the Lincoln Parish Assessor)

4428 Hwy 818

Ruston, LA 71270

SUBJECT PROPERTY

ADDRESS:

2609 S Farmerville St.

Ruston, LA 71270

LEGAL DESCRIPTION: See the legal description in the addenda

TAX ASSESSMENTS: Land: $4,195

Improvements: $11,372

Total: $15,567

Millage Rate: 8908

Current Tax Burden: $1,386.70

Future Taxes: If the subject property transfers for or

around the reported opinion of value,

annual taxes are expected to increase.

LAST TRANSFER: Date: 07/10/2009

Vendor: Adair Asset Management LLC / US

Bank

Vendee: James D. Lord et ux

Consideration: $1,847

Book/Page: 1274 / 236

Remarks: Property transferred to Adair Asset

Management for the 2008 Taxes that

were $1,369 on June 1, 2009 in

conveyance book 1272 page 387.

PREVIOUS TRANSFER: Date: 01/17/2007

Vendor: Ronnie L. Walker et ux

Vendee: James D. Lord et ux

Consideration: $120,000

Book/Page: 1212 / 479

ACTIVE LISTINGS: The subject property had been listed for sale with Today’s Realty

from 2/26/2009 until it expired on 2/2/2010 for a list price of

$175,000. To the appraiser’s knowledge, there have been no

offers on the property and no purchase agreements are in place

at the date of the appraisal.



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AREA DATA



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LOCATION OF SUBJECT PROPERTY

The subject property is located on the east side of South Farmerville in Ruston, Louisiana

71270. The area is composed of vacant land, multi – family residential and industrial.



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SITE DATA

Square Feet Acres

Primary Site: 48,352 1.110

Surplus Land: 0 0.000

Excess Land: 0 0.000

Total Area: 48,352 1.110

Note: There is a discrepancy in the legal description of the subject property. The legal

describes going to the centerline of S Farmerville and also states the tract being 1.11 acres;

however, the size of the subject going to the centerline would be approximately 55,000 SF or

1.26 acres. For the purpose of this appraisal, the subject size stated on the legal of 1.11 acres

will be used as the subject size since it would be considered the useable area. The appraiser

recommends hiring a professional surveyor to survey the subject property. The survey on the

following page is of the neighboring property dated July 2004.

DIMENSIONS: 200’ x 242’ (approximately)

SHAPE: Rectangular

TOPOGRAPHY: Property slopes from west to east but adequate for intended use

DRAINAGE: Adequate in times of normal rainfall

UTILITIES:

Water: City of Ruston

Sewer: City of Ruston

Electricity: Entergy

Gas: Arkla Gas

FLOOD ZONE:

Based on FIRM Flood Insurance Rate Map No. 22061C0245D (April 2, 2009)

for Lincoln Parish, Louisiana, this property lies in Flood Zone “X” See addenda

for a copy of the flood plain map.

ACCESS: Direct access to S Farmerville Street

STREET TYPE: S Farmerville is a two lane asphalt roadway

ZONING / RESTRICTIONS The subject property is zoned D-1 Light industrial district



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SETBACKS, HEIGHT,

BUILDING COVERAGE:

There are no building restrictions under zoning D-1 Light industrial district but

all improvements have to be approved by The City Planning & Zoning

Department.

CONFORMITY TO

RESTRICTIONS: The subject conforms to the D-1 zoning restrictions

SITE CONDITION: The site is improved with a metal warehouse building and related site

improvements.

SURROUNDING LAND

USES: Public / Institutional, light industrial / business, light business, single and multi –

family residential

SERVITUDES/

ENCROACHMENTS: None noted that would adversely influence the property value

NUISANCES / HAZARDS: None noted

UNIT OF COMPARISON: The land valuation section of this report will focus on the value per square foot

as the unit of comparison.



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SITE PLAN



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21

AERIAL PHOTOGRAPHS



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IMPROVEMENT ANALYSIS

The subject property is located on the East side of S Farmerville Street in Ruston, LA It is

improved with a class “S,” metal building, concrete parking and sidewalks, crushed rock and

asphalt for use as drives and soil stabilizer and 6 ft chain link fencing with 3 strand barb wire.

The building was built in 1982 and the crushed asphalt, fencing and signage were added 2

years ago.

Improvements:

Heated Office: 723 SF

Warehouse: 3,290 SF

Total area under roof: 4,013 LF

Site Improvements / Other:

Concrete parking: 1,950 SF

Concrete sidewalk: 445 SF

Gravel & crushed asphalt: 15,005 SF

Chain link fencing: 236 LF

3 ft chain link gate: 1 Unit

25 ft chain link gate: 1 Unit

Signage: 1 Unit



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Exterior Description

Foundation: Concrete slab

Framing: Class “S” steel frame

Insulation: Typical

Exterior Walls: Metal sheeting

Exterior Doors: insulated metal and overhead 8 ft roll up doors

Windows: Metal frame

Roof and Drain System: Metal sheeting; gutter system

Chimneys & Vents: No chimney, typical venting

Interior Description

Walls: Office – painted drywall

Warehouse - exposed vinyl lined insulation

Doors: Office - hollow core doors

Storage Areas: Typical closet storage

Flooring System: Concrete slab

Ceilings: Textured drywall

Floor Coverings: Office – carpet and vinyl flooring

Warehouse - concrete

Other: N/A



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Equipment and Mechanical Systems

Plumbing: City sewer with 1 bathroom to include a toilet, sink and shower

Hot Water System: Hot water heater for the bathroom

Heating & Cooling: HVAC system for the finished office area; no heating or cooling

in warehouse

Electrical Systems: Typical

Fire Protection: N/A

Elevators, ramps, stairs: N/A

Alarms, and call systems: Security system in office and warehouse

Attached Equipment: N/A



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FLOOR PLAN



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HIGHEST AND BEST USE

Market forces create market value, so the analysis of market forces that have a bearing on the

determination of highest and best use is crucial to the valuation process. When the purpose of

an appraisal is to develop an opinion of market value, highest and best use analysis identifies

the most profitable, competitive use to which the property can be put.

The highest and best use of a specific parcel of land is not determined through subjective

analysis by the property owner, the developer, or the appraiser; rather, highest and best use is

shaped by the competitive forces within the market where the property is located. Therefore,

the analysis and interpretation of highest and best use is an economic study and a financial

analysis focused on the subject property.

In all valuation assignments, opinions of value are based on use. The highest and best use of

a property to be appraised provides the foundation for a thorough investigation of the

competitive position of the property in the minds of market participants. Consequently, highest

and best use can be described as the foundation of which market value rests.

Highest and best use may be defined as follows “The reasonably probable and legal use of

vacant land or an improved property that is physically possible, appropriately supported, and

financially feasible and that result in the highest value.”

In addition to being reasonably probable, the highest and best use of both the land as though

vacant and the property as improved must meet four implicit criteria. That is, the highest and

best use must be

1. Physically possible

2. Legally permissible

3. Financially feasible

4. Maximally productive



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HIGHEST AND BEST USE OF LAND AS THOUGH VACANT

Note: For an improved property, the valuation of the land as though vacant is a necessary

procedure within the appraisal process, but is one that is performed under a hypothetical

condition, i.e., that the subject site is vacant.

Legally Permissible: The site is zoned D-1 Light Industrial District which allows for any

use permitted in B-3 General Business District except for

dwelling use can only be used for night watchmen or custodians.

The uses include but not limited to: automotive service and

repair, child day care services, communications facility, offices

and restaurant.

Physically Possible: The topography of the site allows for construction of legally

permissible uses.

Financially Feasible: Light industrial or general commercial

Maximally Productive: Light industrial or general commercial



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HIGHEST AND BEST USE OF PROPERTY AS IMPROVED

The highest and best use of a property as improved may be continuation of the exiting use,

renovation or rehabilitation, expansion, adaptation or conversion to another use, partial or total

demolition, or some combination of these alternatives.

Legally Permissible: The zone D-1 Light Industrial District does not have building

requirements therefore the current improvements are legally

permissible.

Physically Possible: The existing improvements are obviously physically possible, and no

significant physical modifications need to be considered because of

the condition, functional utility, and / or maintenance associated with

the improvement. The continuation of the existing use meets the

physical possibility test.

Financially Feasible: The property “as-improved” produces a positive return on investment

and is financially feasible.

Maximally Productive: The appraiser has found no evidence to suggest that changes to the

property will result in a higher value. The most productive use of the

property is for continued use as a metal building for light industrial or

general commercial use.



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LAND VALUATION

The valuation of a parcel of land begins by identifying the real estate and property rights to be

valued, any encumbrances on those property rights, the land’s physical characteristics, and

the available utilities and site improvements. Comparable data on similar parcels is collected

and the highest and best use of the subject site is analyzed. Once these tasks are complete,

the appraiser chooses an appropriate method to employ in the valuation process. Accepted

methods of land valuation are as follow:

Sales Comparison Approach

Extraction

Allocation

Direct Capitalization (land residual and ground rent capitalization)

Yield Capitalization (discounted cash flow / subdivision development analysis)

The Sales Comparison Approach is usually the preferred methodology for developing a land

value conclusion. However, when sales of similar parcels of land are not plentiful enough for

the application of sales comparison, alternative techniques may be used.

In this particular appraisal report, my research has revealed an adequate number of sales for

comparison to the subject property. That said, the sales comparison approach is employed to

value the subject land. The following tasks have been performed to develop an opinion of

land value:

Gather data on actual sales as well as listings, offers, and options.

Identify the similarities and differences in the data

Identify the highest and best use of each potential comparable sale

Identify units of comparison that explain market behavior

Adjust the sale prices of the comparables to account for the dissimilar characteristics of

the land being appraised.

Form a conclusion as to the market value of the subject land

The following pages will offer a summary chart and location map. The addenda will contain a

detailed data sheet on each comparable land sale.



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COMPARABLE LAND SALES SUMMARY

No. Location Sale Date Price Size in Acres

Size in SF Price/ SF

1. Link Drive 02/04/2004 $30,000 1.074 46,801 $.64

2. McDonald and Franke Drive 01/31/2005 $13,487 2.997 130,549 $.10

3. 1619 Link Drive 10/20/2005 $30,000 0.537 23,400 $1.28

4. 1401 McDonald Avenue 01/22/2007 $40,000 2.820 122,839 $.33

5. South Farmerville Street 05/20/2004 $41,300 4.130 179,903 $.23



8. Between 167 and S Farmerville 01/01/2008 $350,000 13.936 607,070 $.58

9. Industrial Drive 07/15/2009 $60,000 0.537 23,392 $2.56

10. Industrial Drive 10/23/2009 $60,000 0.537 23,392 $2.56



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Land Sale No. 1

Property Identification Record ID 1742 Property Type Industrial, Industrial Address Link Drive, Ruston, Lincoln Parish, Louisiana 71270 Location Lot 9, Interstate Commercial Park Sale Data Grantor Centerpoint Energy Resources Corp. Grantee Citadel Resources, Inc Sale Date February 04, 2004 Deed Book/Page 1156 / 548 Property Rights Fee Financing Cash Verification Bill Elmore; 318-548-5760, June 10, 2009 by KPlatt Sale Price $30,000 Land Data Zoning D-1, Light Industrial Shape Rectangle Land Size Information Gross Land Size 1.074 Acres or 46,801 SF Front Footage 130 ft Total Frontage: 130 ft Link Drive Indicators Sale Price/Gross Acre $27,923 Actual or $27,923 Adjusted Sale Price/Gross SF $0.64 Actual or $0.64 Adjusted Sale Price/Front Foot $231 Actual or $231 Adjusted Remarks Per vendee, the lots were selling for $30,000 a lot but they made offer for 2 at $30,000 and it was taken. No plans for improvements to property and tract is partially wooded



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Land Sale No. 2

Property Identification Record ID 874 Property Type Industrial, Industrial Address McDonald and Franke Drive, Ruston, Lincoln Parish, Louisiana Location Southeastern Industrial Area Sale Data Grantor Louisiana Soil Products of Ruston, LLC Grantee Franke Consumer Products, Inc Sale Date January 31, 2005 Deed Book/Page 1169/698 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Cash Sale Verification John Thompkins; 318-251-8955, December 05, 2005; Confirmed

by Justin Preaus Sale Price $13,487 Land Data Topography Level Utilities Available Shape Semi-rectangular Land Size Information Gross Land Size 2.997 Acres or 130,549 SF Front Footage 782 ft McDonald;157 ft Franke Indicators Sale Price/Gross Acre $4,500 Actual or $4,500 Adjusted Sale Price/Gross SF $0.10 Actual or $0.10 Adjusted Remarks Vacant industrial property fronting McDonald Avenue. Purchased by Franke Consumer Products for assemblage with a factory located south of the roadway. Negligible timber value. Buyer also purchased an adjoining 22.72 acre parcel on the same date for a similar unit price.



35

Land Sale No. 3

Property Identification Record ID 1743 Property Type Industrial, Industrial Address 1619 Link Drive, Ruston, Lincoln Parish, Louisiana 71270 Location Lot 11, Interstate Commercial Park Sale Data Grantor Ruston Land Development Corp. Grantee Lee B Waltman, et ux Sale Date October 20, 2005 Deed Book/Page 1184 / 453 Property Rights Fee Financing Cash Verification Mr. Waltman assistant; 251-3955, June 10, 2009; Confirmed by

Kara Platt Sale Price $30,000 Land Data Zoning D-1, Light Industrial Dimensions 130' x 180' Shape Rectangle Depth 180 Land Size Information Gross Land Size 0.537 Acres or 23,400 SF Front Footage 130 ft Total Frontage: 130 ft Link Drive Indicators Sale Price/Gross Acre $55,846 Actual or $55,846 Adjusted Sale Price/Gross SF $1.28 Actual or $1.28 Adjusted Sale Price/Front Foot $231 Actual or $231 Adjusted Remarks Property located in the Interstate Commercial Park. Site improvement ready at purchase. Property purchased for Drainage Structures and currently improved with gravel and chain link fencing.



36

Land Sale No. 4

Property Identification Record ID 1744 Property Type Industrial, Industrial Address 1401 McDonald Avenue, Ruston, Lincoln County, Louisiana

71270 Location Sec 19-18-2 Sale Data Grantor Don J Beasley Grantee Claud James Irby Jr Sale Date January 22, 2007 Deed Book/Page 1212 / 669 Property Rights Fee Conditions of Sale Arm's Length Financing Cash Verification Gilbert Realty; 251-9107, June 10, 2009; Confirmed by Kara

Platt Sale Price $40,000 Land Data Zoning D-2, Industrial Shape Rectangular Land Size Information Gross Land Size 2.820 Acres or 122,839 SF Indicators Sale Price/Gross Acre $14,184 Actual or $14,184 Adjusted Sale Price/Gross SF $0.33 Actual or $0.33 Adjusted Remarks Property is wooded and backs up to railroad tracks. Per Gilbert Realty, the property was purchased to build a body shop. No improvements have been made to the property.



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Land Sale No. 5

Property Identification Record ID 798 Property Type Unknown Address South Farmerville Street, Ruston, Lincoln County, Louisiana Location Near old Ruston airport Sale Data Grantor Milt Douglas Andrews, et ux Grantee Golden Ages Senior Village Limited Partnership Sale Date May 20, 2004 Deed Book/Page 1159/783 Conditions of Sale Arm's Length Financing Cash Sale Verification Milt Douglas Andrews; 318-255-4686, January 24, 2005;

Confirmed by Justin Preaus Sale Price $41,300 Land Data Zoning R-3, Multi-Family Topography Variable, rolling hills Utilities All available Shape Rectangular Flood Info No hazard Land Size Information Gross Land Size 4.130 Acres or 179,903 SF Front Footage 200 ft S. Farmerville St. Indicators Sale Price/Gross Acre $10,000 Actual or $10,000 Adjusted Sale Price/Gross SF $0.23 Actual or $0.23 Adjusted Remarks 4.13 acre tract located on the western side of South Farmerville Street, across from the Frostee Factory. The property was purchased for the development of a senior citizens apartment village. Topography slopes slightly from west to east. At the time of sale, the tract was uncleared and growing a small amount of hardwood timber.



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Land Sale No. 6

Property Identification Record ID 800 Property Type Unknown Address South Farmerville Street, Ruston, Lincoln County, Louisiana Location Near old Ruston airport Sale Data Grantor Michael Lee Freeman et al Grantee City of Ruston, Louisiana Sale Date July 28, 2004 Deed Book/Page 1162/446 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Cash Sale Verification Mr. Burnside; 318-251-8689, January 24, 2005; Confirmed by

Justin Preaus Sale Price $132,000 Land Data Zoning C-3, Central Business Topography Sloping, with creek drainage Utilities All Available Shape Semi-rectangular Flood Info Hazard along creek bed Land Size Information Gross Land Size 15.038 Acres or 655,055 SF Front Footage 325 ft S. Farmerville Indicators Sale Price/Gross Acre $8,778 Actual or $8,778 Adjusted Sale Price/Gross SF $0.20 Actual or $0.20 Adjusted Remarks 15.038 acre tract located just north of the junction of East Tennessee Avenue and South Farmerville Street. This property joins two tracts owned by the City of Ruston utilized for the Public Works Department. Topography slopes from north to south and east to west. A creek system runs through the property. All utilities are available. The tract was growing timber at the time of sale. Timber value is thought to be roughly equal to cost of clearing.



39

Land Sale No. 7

Property Identification Record ID 1139 Property Type Unknown Address South Farmerville Street, Ruston, Lincoln County, Louisiana Location In Section 36, T18N, R3W Sale Data Grantor City of Ruston Grantee On Time Feeders, Inc Sale Date July 06, 2005 Deed Book/Page 1178/198 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Cash Sale Sale Price $25,156 Land Data Topography Low lying Utilities Available Shape Semi-rectangular Land Size Information Gross Land Size 6.289 Acres or 273,949 SF Front Footage 400 ft S. Farmerville Indicators Sale Price/Gross Acre $4,000 Actual or $4,000 Adjusted Sale Price/Gross SF $0.09 Actual or $0.09 Adjusted Remarks Parcel purchased for the construction of a light industrial facility for On Time Feeders. Low lying topography will require filling and grading as well as additional care to improvement design and layout.



40

Land Sale No. 8

Property Identification Record ID 1456 Property Type Special Purpose Property Name Future Campus Community Assembly of God Address Between 167 and S Farmerville, Ruston, Lincoln County,

Louisiana Location Sec 36, T18N, R3W Project Name: LTRP Sale Data Grantor Milt T Andrews et ux Grantee Campus Community Assembly of God, Inc Sale Date January 01, 2008 Deed Book/Page 1240/93 Property Rights Fee Sale Price $350,000 Land Data Zoning R-15, Single Family Residential Dimensions 330' x 1829' x 330' x 1850' Shape Rectangular Land Size Information Gross Land Size 13.936 Acres or 607,070 SF Front Footage 330 ft Hwy 167;330 ft S Farmerville Indicators Sale Price/Gross Acre $25,114 Sale Price/Gross SF $0.58 Remarks Wood tract located between 167 and S Farmerville just north of Timbers Ave.



41

Land Sale No. 9

Property Identification Record ID 1798 Property Type Industrial Property Name Interstate commercial park Address Industrial Drive, Ruston, Lincoln County, Louisiana 71270 Location Lot 50 unit 3 Sale Data Grantor Ruston Land Development Corporation Grantee Mary Elizabeth Foster, et ux Sale Date July 15, 2009 Deed Book/Page 1274 / 451 Property Rights Fee Conditions of Sale Arm's Length Financing Cash Sale Price $60,000 Land Data Zoning D-1, Light Industrial Dimensions 125'x x199' Shape Rectangle Depth 199 Land Size Information Gross Land Size 0.537 Acres or 23,392 SF Front Footage 125 ft Total Frontage: 125 ft Industrial Drive Indicators Sale Price/Gross Acre $111,730 Actual or $111,730 Adjusted Sale Price/Gross SF $2.56 Actual or $2.56 Adjusted



42

Land Sale No. 10

Property Identification Record ID 1858 Property Type Industrial Property Name Interstate commercial park Address Industrial Drive, Ruston, Lincoln County, Louisiana 71270 Location Lot 52 unit 3 Sale Data Grantor Ruston Land Development Corporation Grantee K & J Properties of Ruston, LLC Sale Date October 23, 2009 Deed Book/Page 1278/102 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Credit Sale Sale Price $60,000 Land Data Zoning D-1, Light Industrial Dimensions 125'x x199' Shape Rectangle T/R/Section 18/02/18 Depth 199 Land Size Information Gross Land Size 0.537 Acres or 23,392 SF Front Footage 125 ft Industrial Drive Indicators Sale Price/Gross Acre $111,730 Actual or $111,730 Adjusted Sale Price/Gross SF $2.56 Actual or $2.56 Adjusted



43

Selecting Unit of Comparison

After sales data has been gathered and verified, systematic analysis begins. Because like

units must be compared, each sale price should be stated in terms of appropriate units of

comparison. The units of comparison selected depend on the appraisal problem and nature of

the property. Units of comparison are used to facilitate comparison of the subject and

comparable properties. Examples of units of comparison include: total property price, price

per square foot, price per acre, price per front foot, etc. After an analysis of the comparable

sales, the most reliable unit of comparison, in my opinion, is as follows:

Concluded Unit of Comparison: Price per square foot of site area ($ / SF)

Analysis and Adjustment of Comparable Sales

Ideally, if all comparable properties are identical to the subject property, no adjustments would

be required. However, this is rarely the case. Once the data is collected and verified, it can

be organized in a market data grid for comparison. The grid will illustrate and recognize any

important differences between the comparable properties and the subject. These differences

are often referred to as elements of comparison. The adjustment grid contains 10 basic

elements of comparison that should be considered in sales comparison analysis.

Elements of Comparison

1.) Real Property Rights Conveyed: When real property rights are sold, they may be the

sole subject of the contract or the contract may include other rights, less than all of the real

property rights, or even another property or properties. Before the price of a comparable sale

property can be used in sales comparison analysis, the appraiser must first ensure that the

sale price of the property applies to property rights that are similar to those being appraised.

To do so may require one or more adjustments to the price before specific differences in the

physical real estate can be compared.

2.) Financing Terms: The transaction price of one property may differ from that of an

identical property due to different financing arrangements. The typical definition of market

value recognizes cash equivalent terms provided the calculation of these terms reflects the

market. In the event a property sells via atypical financing terms, the sale must be analyzed

and a conclusion made as to how the below or above market financing influences the sales

price.

3.) Conditions of Sale: Adjustments for conditions of sale usually reflect the motivations of

the buyer and the seller. In many situations the conditions of sale significantly affect

transactions prices; these are not considered arm’s length transactions. Examples warranting

an adjustment for this element of comparison include: assemblage, plottage, liquidation sale,



44

inter family transfer, and depressed sale. In most cases, a sale that is not considered arm’s

length is omitted from the sales comparison analysis unless market information is available to

support the atypical condition.

4.) Expenditures made immediately after purchase: A knowledgeable buyer considers

expenditures that will have to be made upon purchase of a property because these costs

affect the price the buyer agrees to pay. Such expenditures include: costs to cure deferred

maintenance, costs to demolish and remove any portion of the improvements, costs to

petitions for a zoning change, costs to remediate environmental contamination. These costs

are often quantified in price negotiations and can be discovered through verification of

transaction data. The relevant figure is not the actual cost that was incurred but the cost that

was anticipated by the buyer and seller.

5.) Market conditions (time): Comparable sales that occurred under market conditions

different from those applicable to the subject on the effective date of value require adjustment

for any differences that affect their values. An adjustment for market conditions is made if

general property values have appreciated or depreciated since the transaction dates due to

inflation or deflation or a change in investor’s perceptions of the market over time.

6.) Location: An adjustment for location within a market area may be required when the

locational characteristics of a comparable property are different from those of the subject

property. Excessive locational differences may disqualify a property from use as a

comparable. Locational differences are usually handled with quantitative adjustments.

7.) Physical characteristics: If the physical characteristics of a comparable property and

the subject property differ in many ways, each of these differences may require comparison

and adjustment.

8.) Use / Zoning: Any difference in the current use or the highest and best use of a

potential comparable sale and the subject property must be addressed. The appraiser must

recognize the difference and determine if the sale is an appropriate comparable and, if so,

whether an adjustment is required. In most cases the buyer or buyer’s agent must confirm the

ultimate use for which the comparable was purchased.

9.) Non – realty components of value: Non-realty components of value include personal

property, business concerns, and other items that do not constitute real property but are

included in either the sale price of the comparable or the ownership interest in the subject

property. These items should be analyzed and reported separately from the realty.



45

LAND ADJUSTMENT GRID

Subject Land Sale 1 Land Sale 3 Land Sale 10

Date of Sale: Feb-04 Oct-05 Oct-09

Deed Price: $30,000 $30,000 $60,000

Rights Conveyed: $0 $0 $0

Financing Adjustment: $0 $0 $0

Conditions of Sale: $0 $0 $0

Cash Equivalent Price: $30,000 $30,000 $60,000

Expenditures after sale: $0 $0 $0

Misc. Adjustment: $0 $0 $0

Adjusted Sales Price: $30,000 $30,000 $60,000

Market Conditions (% adj.) 5.00% 5.00% 0.00%

Adjusted Sales Price: $31,500 $31,500 $60,000

Unit of Comparison SF

Units (SF; FF; Acres) 48,352 46,801 23,400 23,392

Price per Unit: $0.67 $1.35 $2.56

Other Adjustments:

Location: -30.00% -30.00% -30.00%

Size: 0.00% -10.00% -10.00%

Shape / Utility: 0.00% 0.00% 0.00%

Topography: 0.00% 0.00% 0.00%

Utilities: 0.00% 0.00% 0.00%

Site Condition: 0.00% 0.00% 0.00%

Corner Lot: 0.00% 0.00% 0.00%

Frontage to Depth: 0.00% 0.00% 0.00%

Use / Zoning: 0.00% 0.00% 0.00%

Other: 0.00% 0.00% 0.00%

Net Adjustment: -30.00% -40.00% -40.00%

Adj. Unit of Comparison: $0.47 $0.81 $1.54

SUMMARY OF VALUE

Range of Unit Value: $0.47 to $1.54

Average of Unit Value: $0.94

Median Unit Value: $0.81

Concluded Unit Value: $1.00

Subject Size: 48,352 SF

Indicated Site Value: $48,352



46

COST APPROACH

The cost approach may be defined as a set of procedures through which a value indication s

derived for the fee simple interest in a property by estimating the current cost to construct a

reproduction of, or replacement for, the existing structure plus any profit or incentive;

deducting depreciation from the total cost; and adding the estimated land value. Other

adjustments may then be made to the indicated fee simple value of the subject property to

reflect the value of the property interest being appraised. In the cost approach, a property is

valued based on a comparison with the cost to building a new or substitute property. The cost

estimate is adjusted for the depreciation evident in the existing property.



47

Cost New

Cost Basis: Replacement cost new: The estimated cost to construct, at

current prices as of the effective appraisal date, a building with

utility equivalent to the building being appraised, using modern

materials and current standards, design, and layout.

Method: Comparative unit: A method used to drive a cost estimate in

terms of dollars per unit of area or volume based on known costs

of similar structures that are adjusted for time and physical

differences; usually applied to total building area.

Source: Marshall Valuation / Cost comparables and local building

contractors.

The cost new estimate includes the following:

Direct Costs: Expenditures for the labor and materials used in the construction

of improvements.

Indirect Costs: Expenditures or allowances for items other than labor and

materials that are necessary for construction but are not typically

part of the construction contract. Indirect costs may include

administrative costs; professional fees; financing costs and the

interest paid on construction loans; taxes and the builder’s or

developer’s all risk insurance during construction; and marketing,

sales, and lease up costs incurred to achieve occupancy or sale.

These costs can vary by property type.

Entrepreneurial Incentive: A market derived figure that represents the amount an

entrepreneur expects to receive for his or her contribution to a

project and risk. The estimation of entrepreneurial incentive is a

necessary component of total cost.



48

DEPRECIATION

Depreciation is the difference between the contributory value of an improvement and its cost

at the time of appraisal:

Replacement Cost of Improvement

Minus: Contributory Value of Improvement

Equals: Depreciation

By estimating the depreciation incurred by an improvement and deducting this estimate from

the improvement’s replacement cost, an appraiser can conclude the depreciated cost of the

improvement. This depreciated cost approximates the improvement’s contribution to the

property’s market value. Depreciation in an improvement can result from three ma jor causes

operating separately or in combination.

1. Physical deterioration – wear and tear from regular use and the impact of the elements.

2. Functional obsolescence – a flaw in the structure, materials, or design that diminishes

the function, utility, and value of the improvement.

3. External obsolescence – a temporary or permanent impairment of the utility or salability

of an improvement or property due to negative influences outside the property

Depreciation for the major building improvements is supported by market extracted data. Site

improvements are depreciated at a similar rate if the age, condition and economic life are

concluded to be similar to the primary building structure. Any site improvement that has a

different age, condition or economic life may be depreciated at a different rate.

Conclusion:

Actual Age of Subject (+/-): 27 Years

Concluded Economic Life: 50 Years

Ind. Overall Depreciation %: 45.00%

Ind. Annual Depr. Rate: 1.67%



49

COST APPROACH SUMMARY

Direct Costs SF $ / SF Total

Office and Warehouse: 4,013 @ $33.95 = $136,256

Site improvements / Other: $35,506

N/A: 0 @ $0.00 $0

Total = $171,762

Indirect Costs $5,153

Entreprenuerial Incentive 5.00% $8,588

Total Cost New $185,503

Depreciation

Overall Depreciation 45.00% $83,476

Total Depreciation: -$83,476

Cost Approach Summary

Est. Improvement Value $102,027

Est. Land Value $48,352

Indication of Value: $150,379

Add / Subtract: N/A $0

Conclusion - Cost Approach: $150,379



50

SALES COMPARISON APPROACH

In the sales comparison approach, the appraiser develops an opinion of value by analyzing

similar properties and comparing these properties with the subject property. The comparative

techniques of analysis applied in the sales comparison approach are fundamental to the

valuation process. Estimates of market rent, expenses, land value, cost depreciation, and

other value parameters may be derived in the other approaches to value using similar

comparative techniques. Similarly, conclusions derived in the other approaches are often

analyzed in the sales comparison approach to estimate the adjustments to be made to the

sale prices of comparable properties.

In the sales comparison approach, an opinion of market value is developed by comparing

properties similar to the subject property that have recently sold, are listed for sale, or are

under contract. A major premise of the sales comparison approach is that the market value of

a property is related to the prices of comparable, competitive properties.

The procedure applied in the sale comparison approach includes the following steps:

1) Research transactional data

2) Verify the data as accurate and representative of arm’s length transactions

3) Selecting relevant units of comparison

4) Determine how the comparables differ from the subject and adjust the price for

differences in various elements of comparison.

5) Reconcile multiple value indications into a single value or range of value.



51

IMPROVED SALES SUMMARY TABLE

No. Location Sale Date Price Building Size (SF)

Price/ SF

1. 1703 Link Drive 05/04/2006 $160,000 5,000 $32.00

2. 1800 Trade Drive 12/12/2007 $115,000 4,000 $28.75

3. 2829 Hwy 33 04/13/2007 $160,000 2,800 $57.14

4. 1601 Link Drive 03/24/2008 $200,000 4,500 $44.44

5. 2609 S Farmerville 01/17/2007 $120,000 4,013 $29.90

6. 2609 S Farmerville 07/07/2006 $110,000 4,013 $27.41

7. 2314 Hwy 33 06/28/2007 $300,000 8,489 $35.34

8. 120 Railroad Avenue 05/24/2007 $120,000 4,284 $28.01

9. 508 South Monroe Street 08/12/2005 $90,000 3,062 $29.39

10. 7087 Hwy 80 West 07/25/2005 $62,000 3,200 $19.38

11. 2419 Hwy 33 08/20/2004 $100,000 4,900 $20.41



52



53

Improved Sale No. 1

Property Identification Record ID 915 Property Type Industrial, Industrial (<20,000 SF) Property Name Elliott Electric Supply Address 1703 Link Drive, Ruston, Lincoln Parish, Louisiana Location Lot 12 of Interstate Commercial Park Sale Data Grantor Thermon Holstead, etux Grantee Elliott Partners, LTD Sale Date May 04, 2006 Deed Book/Page 1196/103 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Cash Sale Verification Danny Mora; 936-569-1184, November 26, 2007; Other

sources: Deed, Confirmed by Kara Platt Sale Price $160,000 Land Data Land Size 0.540 Acres or 23,522 SF Zoning D-1 Shape Rectangle General Physical Data Building Type Single Tenant Gross Area SF 5,000 Construction Type Class "S" Roof Type Metal Foundation concrete slab Electrical Typical Stories 1 Floor Height 14



54

Indicators Sale Price/ SF $32.00 Actual or $32.00 Adjusted Floor Area Ratio 0.21 Land to Building Ratio 4.70:1 Remarks Per vendee representative, property at date of purchase was a shell. It had 2 restrooms and suspended heaters.



55

Improved Sale No. 2

Property Identification Record ID 1307 Property Type Industrial, Industrial (<20,000 SF) Property Name PCI Electric Address 1800 Trade Drive, Ruston, Lincoln Parish, Louisiana 71270 Location Lot #3 Interstate Business Park Sale Data Grantor Randolf A. Greene Grantee Allen Blake Holdings, LLC Sale Date December 12, 2007 Deed Book/Page 1237 / 315 Property Rights Fee Conditions of Sale Arm's length Financing Cash Verification Rex Rinehart; 318-251-1061, June 11, 2009; Confirmed by Kara

Platt Sale Price $115,000 Land Data Land Size 0.599 Acres or 26,081 SF Front Footage 120 ft Total Frontage: 120 ft Trade Drive Zoning D-1, Light Industrial Utilities all public available Shape Rectangle General Physical Data Building Type Single Tenant Gross Area SF 4,000



56

Area Breakdown Office 1,600 Warehouse 2,400 Construction Type Steel Beam Roof Type Metal panel Foundation concrete slab Floor Height 12' wall Year Built 1980 estimated Indicators Sale Price/Gross Area SF $28.75 Actual or $28.75 Adjusted Floor Area Ratio 0.15 Land to Building Ratio 6.52:1 Remarks No improvements after purchase of property. Owners were tenants before purchase. (2) 10' x 10' overhead doors, chain link fencing and concrete parking. Site value estimate @ $30,000.



57

Improved Sale No. 3

Property Identification Record ID 1308 Property Type Commercial, Industrial (<20,000 SF) Address 2829 Hwy 33, Ruston, Lincoln Parish, Louisiana 71270 Location Sec 5-18-2 Sale Data Grantor Gary M. Smith, et ux Grantee Northside Management Company Sale Date April 13, 2007 Deed Book/Page 1219 / 753 Property Rights Fee Financing Cash Verification John Stephenson, selling agent; 318-514-9970, June 10, 2009;

Confirmed by Kara Platt Sale Price $160,000 Land Data Land Size 1.654 Acres or 72,040 SF Front Footage 139 ft Total Frontage: 139 ft Hwy 33 Zoning No zoning Dimensions 139' x 546' x 125' x 607' Shape Rectangular Depth 576 General Physical Data Building Name Ruston Alternator Building Type Single Tenant Gross Area SF 2,800 Per MLS Area Breakdown Office 300 Warehouse 2,500 Construction Type Steel Frame Roof Type Metal Foundation concrete slab



58

Sprinklers None Year Built 1994 Indicators Sale Price/Gross Area SF $57.14 Actual or $57.14 Adjusted Floor Area Ratio 0.04 Land to Building Ratio 25.73:1 Remarks (2) 12' overhead doors and (1) 14' overhead door; Storage above shop and office, Whirl Wind model building constructed by Russell Buildings. Entire building is heated and cooled per leasing agent. Out of City Limits and fronts Hwy 33. Vendee built self storage warehouses behind existing building since purchase.



59

Improved Sale No. 4

Property Identification Record ID 1309 Property Type Industrial, Industrial (<20,000 SF) Address 1601 Link Drive, Ruston, Lincoln Parish, Louisiana 71270 Location Lot 8, Interstate Commercial Park Sale Data Grantor Donald R Lindsey, et ux Grantee James M Foster, et ux Sale Date March 24, 2008 Deed Book/Page 1244 / 380 Property Rights Fee Financing Cash Verification Donald Lindsey; 318-777-9030, June 10, 2009; Confirmed by

Kara Platt Sale Price $200,000 Land Data Land Size 0.670 Acres or 29,200 SF Zoning D-1, Light Industrial Shape Irregular General Physical Data Building Type Single Tenant Gross Area SF 4,500 Construction Type Steel Roof Type Metal Foundation slab HVAC Central Year Built 2004 estimated



60

Improved Sale No. 4 (Cont.) Indicators Sale Price/Gross Area SF $44.44 Actual or $44.44 Adjusted Floor Area Ratio 0.15 Land to Building Ratio 6.49:1 Remarks Grantor stated at date of sale, building did not have finished office, had 1 bathroom, HVAC, 3 exterior metal doors and 2 roll up doors.



61

Improved Sale No. 5

Property Identification Record ID 1315 Property Type Industrial, Industrial (<20,000 SF) Property Name Dan Lord Plumbing Address 2609 S Farmerville, Ruston, Lincoln Parish, Louisiana 71270 Sale Data Grantor Ronnie Lynn Walker, et ux Grantee James Daniel Lord, et ux Sale Date January 17, 2007 Deed Book/Page 1212 / 479 Property Rights Fee Conditions of Sale Arm's Length Financing Cash Verification Other sources: Inspection and deed, Confirmed by Kara Platt Sale Price $120,000 Land Data Land Size 1.263 Acres or 55,000 SF Front Footage 200 ft Total Frontage: 200 ft S Farmerville Zoning D-1, Light Industrial Dimensions 200' x 275' Shape Rectangle Depth 275 General Physical Data Building Type Single Tenant Gross Area SF 4,013 Area Breakdown Office 723 Warehouse 3,290



62

Construction Type Steel Roof Type Metal Foundation slab HVAC office Sprinklers none Year Built 1982 Indicators Sale Price/Gross Area SF $29.90 Actual or $29.90 Adjusted Floor Area Ratio 0.07 Land to Building Ratio 13.71:1 Remarks Grantee changed property from septic to city sewer, rewired the alarm, added fence and gravel / crushed asphalt to rear of property to stabilize the soil after purchase of property. Previous agreement with Bob Webb (original owner) is that he will rent 1 office space and 1 bay for a flat rate of $400.00 / month



63

Improved Sale No. 6

Property Identification Record ID 1316 Property Type Industrial, Industrial (<20,000 SF) Address 2609 S Farmerville, Ruston, Lincoln Parish, Louisiana 71270 Sale Data Grantor Michael Freeman, et al Grantee Ronnie Walker, et ux Sale Date July 07, 2006 Deed Book/Page 1200 / 647 Property Rights Fee Financing cash Verification Ronnie Walker; 318-255-8482, June 10, 2009; Other sources:

Deed, Confirmed by Kara Platt Sale Price $110,000 Land Data Land Size 1.263 Acres or 55,000 SF Front Footage 200 ft Total Frontage: 200 ft S Farmerville Zoning D-1, Light Industrial Dimensions 200' x 275' Shape Rectangle Depth 275 General Physical Data Building Type Single Tenant Gross Area SF 4,013 Area Breakdown Office 723 Warehouse 3,290 Construction Type Steel Roof Type Metal Foundation slab HVAC Office Year Built 1982



64

Indicators Sale Price/Gross Area SF $27.41 Actual or $27.41 Adjusted Floor Area Ratio 0.07 Land to Building Ratio 13.71:1 Remarks No improvements made after purchase. Grantee agreed to lease 1 office and 1 bay to original owner Bob Webb for his electrical company for a flat rate of $400.00 / month until he retires.



65

Improved Sale No. 7

Property Identification Record ID 918 Property Type Commercial, Industrial (<20,000 SF) Address 2314 Hwy 33, Ruston, Lincoln Parish, Louisiana Sale Data Grantor Ernest James Holder, etux Grantee Jesse Earl Otwell Sale Date June 28, 2007 Deed Book/Page 1226/597 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Cash Sale Verification Sam Riser; November 27, 2007; Marc Taylor, Appraiser, 318-

254-0302, November 27, 2007; Other sources: Deed, Confirmed by Kara Platt

Sale Price $300,000 Land Data Land Size 1.034 Acres or 45,046 SF Front Footage 154 ft Hwy 33;278 ft Hodges Rd Zoning No zoning Topography adequate Utilities available, sewer private Dimensions 154' x 278' x 156' x 341' Shape Rectangular General Physical Data Building Type Single Tenant Net Rentable SF 8,489 Area Breakdown Large Bldg 4,445 Machine Shop 2,420 Welding Shop 1,624



66

Improved Sale No. 7 (Cont.) Construction Type Class "S" Roof Type Metal Foundation Concrete slab Electrical typical Stories 1 Floor Height 14 Indicators Sale Price/Net Rentable SF $35.34 Actual or $35.34 Adjusted Floor Area Ratio 0.19 Land to Building Ratio 5.31:1 Remarks Verified sale with vendor’s father and appraiser Marc Taylor. The main building is 4,445 SF with approximately 1,000 SF of office space. The office has central air and heat, suspended ceiling, vinyl tile flooring and drywall. Shop has 3 overhead doors and basic shop area. The machine shop is 2,420 SF with minimal office finish and overhead door. The welding shop is 1,624 SF with 2 overhead doors and electricity. The welding shop is a shell of a building with no a/c.



67

Improved Sale No. 8

Property Identification Record ID 910 Property Type Commercial, Unknown Address 120 Railroad Avenue, Ruston, Lincoln County, Louisiana Sale Data Grantor Hedgepeth Rentals, LLC Grantee Rapid Signs, LLC Sale Date May 24, 2007 Deed Book/Page 1223/516 Property Rights Fee Simple Financing Cash Sale Verification Steven Hedgepeth; 318-222-8367, Other sources: Multi-list,

deed, Confirmed by Justin Preaus Sale Price $120,000 Land Data Land Size 0.175 Acres or 7,623 SF Front Footage 98 ft Railroad Ave Utilities Available Shape Rectangular General Physical Data Building Type Single Tenant SF 4,284 Area Breakdown Office area 1,751 Warehouse 2,533



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Improved Sale No. 8 (Cont.) Construction Type Masonry block Roof Type Metal Foundation Slab HVAC Central Income Analysis Potential Gross Income $14,400 Vacancy $600 Effective Gross Income $13,800 Expenses $3,100 Net Operating Income $10,700 Indicators Sale Price/ SF $28.01 Actual or $28.01 Adjusted Floor Area Ratio 0.56 Land to Building Ratio 1.78:1 Gross Income Multiplier 8.33 Eff. Gross Income Multiplier 8.7 Expenses/Sq. Ft. $0.72 Overall or Cap Rate 8.92% Net Operating Income/Sq. Ft. $2.50 Remarks New home of Rapid Signs. Property located in downtown Ruston area, was listed for 31 days prior to sale. Includes loading/unloading area in front with roll-up door. Previously occupied by The Cleaners of Ruston, and rented for $1,200 per month with the owner being responsible for taxes and half of the insurance costs.



69

Improved Sale No. 9

Property Identification Record ID 908 Property Type Commercial, Retail Address 508 South Monroe Street, Ruston, Lincoln Parish, Louisiana User 3 LTRP Sale Data Grantor Matthew A. James Grantee Karim A Dhanani, etux Sale Date August 12, 2005 Deed Book/Page 1187/606 Property Rights Fee Simple Financing Cash Sale User 4 2182 Verification Jill James; 318-255-7970, Other sources: Multi-List, Deed,

Confirmed by Justin Preaus Sale Price $90,000 Land Data Land Size 0.189 Acres or 8,233 SF Front Footage 75 ft South Monroe Utilities Available Shape Rectangular General Physical Data Building Type Single Tenant SF 3,062



70

Improved Sale No. 9 (Cont.) Area Breakdown Retail 1,100 Office 700 Warehouse & Other 1,200 Construction Type Metal Bldg Roof Type Metal Foundation Slab HVAC Central system Floor Height 12' est Year Built 1980 Condition Fair Income Analysis Potential Gross Income $13,800 Vacancy $690 Effective Gross Income $13,110 Expenses $4,200 Net Operating Income $8,910 Indicators Sale Price/ SF $29.39 Actual or $29.39 Adjusted Floor Area Ratio 0.36 Land to Building Ratio 2.74:1 Gross Income Multiplier 6.52 Eff. Gross Income Multiplier 6.86 Expenses/Sq. Ft. $1.37 Overall or Cap Rate 9.9% Net Operating Income/Sq. Ft. $2.91 Remarks Metal building on South Monroe Street, just south of West California Avenue. Property was on the market for 87 days. Brick veneer front / asphalt parking / showroom area / office area / warehouse area / storage room / roll-up doors. Purchased for use as a rental property and is currently housing a day-care facility.



71

Improved Sale No. 10

Property Identification Record ID 909 Property Type Commercial, Retail Address 7087 Hwy 80 West, Ruston, Lincoln County, Louisiana Sale Data Grantor Edward A. Pardon, etux Grantee Corey Shane Martin, etux Sale Date July 25, 2005 Deed Book/Page 1179/146 Property Rights Fee Simple Financing Cash Sale Verification Other sources: Multi-List, deed Sale Price $62,000 Land Data Land Size 2.000 Acres or 87,120 SF Front Footage 209 ft Hwy 80 Utilities Available Shape Rectangular General Physical Data Building Type Single Tenant SF 3,200 Area Breakdown Office 1,700 Warehouse 1,500



72

Improved Sale No. 10 (Cont.) Construction Type Metal Roof Type Metal Foundation Concrete HVAC Central Condition Fair Indicators Sale Price/ SF $19.38 Actual or $19.38 Adjusted Floor Area Ratio 0.04 Land to Building Ratio 27.23:1 Remarks Metal building just outside the city limits of Ruston. Utilized by a flooring company. Metal construction, with office, showroom, warehouse, kitchen, and storage areas. Elevated concrete loading dock in rear.



73

Improved Sale No. 11

Property Identification Record ID 917 Property Type Commercial, Miscellaneous Address 2419 Hwy 33, Ruston, Lincoln Parish, Louisiana Sale Data Grantor Philip N. Taylor, etux Grantee T.A.P. of Ruston, LLC Sale Date August 20, 2004 Deed Book/Page 1164/136 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Cash Sale Verification Truman Potts; 318-255-6346, November 28, 2007; Other

sources: Deed, Confirmed by Kara Platt Sale Price $100,000 Land Data Land Size 1.220 Acres or 53,143 SF Front Footage 153 ft Hwy 33;40 ft Camp Road Zoning No zoning Topography Adequate Utilities available, sewer is private Shape Irregular General Physical Data Building Type Single Tenant Gross Area SF 4,900



74

Improved Sale No. 11 (Cont.) Area Breakdown Bldg A 2,400 Bldg B 1,000 Bldg C 1,500 Construction Type Class "S" and "D" Roof Type Metal Foundation concrete slab Electrical typical HVAC A/C in main building Stories 1 Indicators Sale Price/Gross Area SF $20.41 Actual or $20.41 Adjusted Floor Area Ratio 0.09 Land to Building Ratio 10.85:1 Remarks Parcel fronts Camp Road and Hwy 33. Spoke with vendee; he purchased property for private use. The main building is steel frame and heated and cooled. It has 280 SF of finished office with suspended ceiling, laminate wood flooring and drywall. He replaced original door fronts with roll up doors to store his antique cars. Building B is wood frame with metal roof and side panels. It is a shell of a building with electricity only. Building C is a steel frame building shell with electricity. Chain link fence around perimeter of property.



75

UNIT OF COMPARISON / DISCUSSION OF ADJUSTMENTS

Selecting Unit of Comparison

After sales data has been gathered and verified, systematic analysis begins. Because like

units must be compared, each sale price should be stated in terms of appropriate units of

comparison. The units of comparison selected depend on the appraisal problem and nature of

the property. Units of comparison are used to facilitate comparison of the subject and

comparable properties. Examples of units of comparison include: total property price, price

per square foot of gross building area, price per apartment unit, price per cubic foot of building

area, price per guest room, price per acre, price per square foot, price per front foot, etc. After

an analysis of the comparable sales, the most reliable unit of comparison is concluded to be:

Concluded Unit of Comparison: Price per square foot

Analysis and Adjustment of Comparable Sales

Ideally, if all comparable properties are identical to the subject property, no adjustments would

be required. However, this is rarely the case, especially for non residential properties. Once

the data is collected and verified, it can be organized in a market data grid for comparison.

The grid will illustrate and recognize any important differences between the comparable

properties and the subject. These differences are often referred to as elements of

comparison. The adjustment grid contains 10 basic elements of comparison that should be

considered in sales comparison analysis.

Elements of Comparison

1.) Real Property Rights Conveyed: When real property rights are sold, they may be the sole

subject of the contract or the contract may include other rights, less than all of the real

property rights, or even another property or properties. Before the price of a comparable sale

property can be used in sales comparison analysis, the appraiser must first ensure that the

sale price of the property applies to property rights that are similar to those being appraised.

To do so may require one or more adjustments to the price before specific differences in the

physical real estate can be compared.

2.) Financing Terms: The transaction price of one property may differ from that of an identical

property due to different financing arrangements. The typical definition of market value

recognizes cash equivalent terms provided the calculation of these terms reflects the market.

In the event a property sells via atypical financing terms, the sale must be analyzed and a

conclusion made as to how the below or above market financing influences the sales price.



76

3.) Conditions of Sale: Adjustments for conditions of sale usually reflect the motivations of the

buyer and the seller. In many situations the conditions of sale significantly affect transactions

prices; these are not considered arm’s length transactions. Examples warranting an

adjustment for this element of comparison include: assemblage, plottage, liquidation sale,

inter family transfer, and depressed sale. In most cases, a sale that is not considered arm’s

length is omitted from the sales comparison analysis unless market information is available to

support the atypical condition.

4.) Expenditures made immediately after purchase: A knowledgeable buyer considers

expenditures that will have to be made upon purchase of a property because these costs

affect the price the buyer agrees to pay. Such expenditures include: costs to cure deferred

maintenance, costs to demolish and remove any portion of the improvements, costs to

petitions for a zoning change, costs to remediate environmental contamination. These costs

are often quantified in price negotiations and can be discovered through verification of

transaction data. The relevant figure is not the actual cost that was incurred but the cost that

was anticipated by the buyer and seller.

5.) Market conditions (time): Comparable sales that occurred under market conditions

different from those applicable to the subject on the effective date of value require adjustment

for any differences that affect their values. An adjustment for market conditions is made if

general property values have appreciated or depreciated since the transaction dates due to

inflation or deflation or a change in investor’s perceptions of the market over time.

6.) Location: An adjustment for location within a market area may be required when the

locational characteristics of a comparable property are different from those of the subject

property. Excessive locational differences may disqualify a property from use as a

comparable. Locational differences are usually handled with quantitative adjustments.

7.) Physical characteristics: If the physical characteristics of a comparable property and the

subject property differ in many ways, each of these differences may require comparison and

adjustment. Physical differences include differences in building size, quality of construction,

architectural style, building materials, age, condition, functional utility, site size, attractiveness,

and amenities. The adjustment for physical differences may certainly be equal to the cost to

install or remove; however, this is not always the case depending on market perception.

8.) Economic characteristics: Economic characteristics include all the attributes of a property

that directly affect its income. This element of comparison is usually applied to income

producing properties. Characteristics that affect a property’s income include operating

expenses, quality of management, tenant mix, rent concessions, lease terms, lease expiration

dates, renewal options, etc.

9.) Use / Zoning: Any difference in the current use or the highest and best use of a potential

comparable sale and the subject property must be addressed. The appraiser must recognize



77

the difference and determine if the sale is an appropriate comparable and, if so, whether an

adjustment is required. In most cases the buyer or buyer’s agent must confirm the ultimate

use for which the comparable was purchased.

10.) Non – realty components of value: Non-realty components of value include personal

property, business concerns, and other items that do not constitute real property but are

included in either the sale price of the comparable or the ownership interest in the subject

property. These items should be analyzed and reported separately from the realty.

See the following page for the market data adjustment grid.



78

Subject Imp. Sale 1 Imp.Sale 2 Imp.Sale 3 Imp.Sale 4

Date of Sale: 5/4/2006 12/12/2007 4/13/2007 3/24/2008

Price: $160,000 $115,000 $160,000 $200,000

Rights Conveyed: $0 $0 $0 $0

Financing Adjustment: $0 $0 $0 $0

Conditions of Sale: $0 $0 $0 $0

Cash Equivalent Price: $160,000 $115,000 $160,000 $200,000

Deferred Maintenance: $0 $0 $0

Other expenditures after sale: $0 $0 $0 $0

Total Adjusted Price: $160,000 $115,000 $160,000 $200,000

Less: Land Value: -$30,000 -$30,000 -$60,000 -$30,000

Ind. Improvement Value: $130,000 $85,000 $100,000 $170,000

Market Conditions (% adj.) 5.00% 0.00% 0.00% 0.00%

Adjusted Sales Price: $136,500 $85,000 $100,000 $170,000

Unit of Comparison ($ / SF)

SF (Net Rentable) 4,013 5,000 4,000 2,800 4,500

Price per Unit: $27.30 $21.25 $35.71 $37.78

Other Adjustments: Imp. Sale 1 Imp.Sale 2 Imp.Sale 3 Imp.Sale 4

Location: 0.00% 0.00% 0.00% 0.00%

Building Size: 0.00% 0.00% 0.00% 0.00%

Construction Quality: 0.00% 0.00% -15.00% -15.00%

Architectural Style: 0.00% 0.00% 0.00% 0.00%

Finished Area: 10.00% 0.00% 5.00% 10.00%

Amenities: -2.00% 0.00% 0.00% 0.00%

Age / Condition: 0.00% 0.00% -15.00% -20.00%

Economic: 0.00% 0.00% 0.00% 0.00%

Net Adjustment: 8.00% 0.00% -25.00% -25.00%

Adj. Unit of Comparison: $29.48 $21.25 $26.78 $28.34

SUMMARY OF VALUE

Range of Unit Value: $21.25 to $29.48

Average of Unit Value: $26.46

Median Unit Value: $27.56

Concluded Unit Value: $26.00

Subject - Units / Size: 4,013

Ind. Improvement Value: $104,338

Add: Est. Land Value $48,352

Total: $152,690



79

INCOME APPROACH TO VALUE

Income producing real estate is typically purchased as an investment, and from an investor’s

point of view earning power is the critical element affecting property value. One basic

investment premise holds that the higher the earnings, the higher the value, provided the

amount of risk remains constant. An investor who purchases income producing real estate is

essentially trading present dollars for the expectation of receiving future dollars. The income

capitalization approach to value consists of methods, techniques, and mathematical

procedures that I will use to analyze the property’s capacity to generate benefits and convert

these benefits into an indication of present value.

The income approach offers two acceptable methods to value future income for the subject

property. The first method is Direct Capitalization. Direct Capitalization is used in the income

capitalization approach to convert a single year’s income expectancy into a value indication.

This conversion is accomplished in one step, either by dividing the income estimate by an

appropriate income rate or by multiplying it by an appropriate income factor.

Yield capitalization is the second fundamental method used in the income capitalization

approach to value. Yield capitalization is used to convert future benefits into an indication of

present value by applying an appropriate yield rate. Yield capitalization includes:

1) Select an appropriate holding or study period

2) Forecast all future cash flows or cash flow patterns

3) Chooses an appropriate yield rate

4) Convert future benefits into present value by discounting each annual future benefit or

by developing an overall rate that reflects the income pattern, value change, and yield

rate using one of the various yield formulas.



80

Contract Rent

The property owner, James D. Lord, has a verbal lease agreement with Bob Webb for the use

of 1 office of 130 SF and 1 bay in warehouse of 1,080 SF for a monthly rent of $400.00. The

lease is month to month and the tenant does not pay any taxes, insurance or util ities.

Market / Economic Rent

Market rent is the rental income a property would probably command in the open market. It is

indicated by current rents that are either paid or asked for comparable space with the same

division of expenses as of the date of the appraisal. Market rent is sometimes referred to as

economic rent.

Conclusion of Market Rent

Economic rent for the subject property is supported by competitive rentals in the market area.

The concluded rents per square foot accounts for the office and warehouse/manufacturing

areas, construction quality and other pertinent physical characteristics. Comparable rentals

are summarized on the following page. The concluded rent for the subject property is $4.50

SF in a modified gross lease situation. Hypothetically, the owner would pay for taxes,

insurance, maintenance and reserve for replacement.

RENTALS SUMMARY TABLE

No. Location Lease Type Building Size Rent/SF

1. 1711 Industrial Drive Modified 5,000 $4.56

2. 508 South Monroe Street Modified 3,062 $4.90

3. 1721 Industrial Modified 5,000 $5.28

4. 1821 Industrial Modified 5,000 $4.20

5. 1729 and 1731 Industrial Drive Modified 5,000 $4.20

6. 1720 Industrial drive Modified 5,000 $5.28

7. 1726 Trade Drive Modified 4,500 $4.00

8. 1711 Trade Drive Modified 4,500 $3.33

9. 2484 Hwy 33 Modified 4,500 $5.87

10. 2505 Hwy 33 Modified 2,430 $4.44



81

Improved Lease No. 1

Property Identification Record ID 148 Property Type Industrial Address 1711 Industrial Drive, Ruston, Lincoln County, Louisiana 71270 Location Interstate Commercial Park Physical Data Net Rentable SF 5,000 Construction Type Steel Frame Roof Type Metal Foundation slab Electrical typical General Lease Data Lease Type Modified Gross Lease Tenant Size 5,000 to 5,000 General Tenant Summary Owner Thermon Holstead Verification Thermon Holstead; 318-255-4650, Confirmed by KPlatt Rent Analysis Actual Rent $4.32 - $4.80/SF; $4.56/SF Average Remarks There are 4 units in the building. Each unit has an overhead door, metal entry door and restroom. Each unit is divided by concrete block wall. Owner maintains entire building and pays taxes. Tenants are responsible for the utilities.



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Property Identification Record ID 165 Property Type Commercial, Day Care Facility Address 508 South Monroe Street, Ruston, Louisiana Physical Data Net Rentable SF 3,062 Construction Type Prefab metal panel Roof Type Metal Foundation Slab Year Built 1980 Tenant Rent Roll Tenant Name Size Rent/SF Lease Type Beg. Date Term Denene Stringfellow 3,062 $4.90 Modified MTM General Tenant Summary Verification Karim Dhanani; Other sources: Lease Rent Analysis Actual Rent $4.90 - $4.90/SF; $4.90/SF Average Remarks Month-to-month lease on a metal building utilized as a day-care facility. Written lease agreement expired in February of 2008. Modified gross structure. Tenant is responsible for utilities, janitorial expenses, and the maintenance of windows, doors, sidewalks, the building front, and interior walls. Tenant is also responsible for repair items of less than $500.



83


Property Identification

Record ID 209

Property Type Industrial

Property Name Fastenal

Address 1721 Industrial, Ruston, Lincoln County, Louisiana 71270

Location Interstate Industrial Park

Physical Data

Net Rentable SF 5,000

Area Breakdown Warehouse 2,500

Showroom 2,500

Construction Type Class "S"

Roof Type Metal

Foundation slab

General Tenant Summary

Owner Holstead Rentals

Verification Thermon Holstead; 318-255-4650, October 01, 2009; by K Platt

Rent Analysis

Actual Rent $5.28 - $5.28/SF; $5.28/SF Average

Remarks

Lease is expiring at the end of the year and tenant moving to another location. Entire building is

heated and cooled and 50% is finished retail space. Warehouse has 1 loading dock. Lease

structure is modified



84



Record ID 210


Property Name Tommy's Feed Store

Address 1821 Industrial, Ruston, Lincoln County, Louisiana 71270

Location Interstate Commercial Park

Physical Data


Area Breakdown Retail 2,500

Warehouse 2,500


Roof Type metal

Foundation slab



Verification Thermon Holstead; 255-4650, October 01, 2009; Confirmed by

KPlatt

Rent Analysis


Remarks

50% of building is finished retail space and the other is inventory storage for feed store. Tenant

made improvements to property. Lease structure is modified gross.



85



Record ID 211


Address 1729 and 1731 Industrial Drive, Ruston, Lincoln County,

Louisiana 71270


Physical Data


Roof Type metal

Foundation slab


Tenant Rent Roll

Suite

No.

Tenant Name Size Rent/SF Lease Type Term

1731 AMA North 2,500 $4.80 Modified month to month

1729 Pipe Liner's Warehouse 2,500 $3.60 Modified


Owner Thermon Holstead


Kara Platt

Rent Analysis


Remarks

Pipeliners Warehouse leases a shell with a restroom and AMA North has finished office and bay.

16' eave height



86

Improved Lease No. 6 (Listing)


Record ID 212


Address 1720 Industrial drive, Ruston, Lincoln County, Louisiana 71270


Physical Data


Area Breakdown Office 1,250

Warehouse 3,750


Roof Type metal

Foundation slab

General Lease Data

Typical Lease Term 1-5 years

Lease Type Modified Gross

Tenant Size 5,000 sf




KPlatt

Rent Analysis


Remarks

Space currently for lease, 1,250 SF office, 4 OH doors and canopy on rear of building. 16' eave

height. Lease structure is modified



87



Record ID 207

Property Type Industrial, Industrial (<20,000 SF)

Property Name National Healthcare Services

Address 1726 Trade Drive, Ruston, Lincoln County, Louisiana 71270


Physical Data


Construction Type Metal

Roof Type Metal

Foundation slab

Tenant Rent Roll

Suite

No.


National Healthcare

Services

2,250 $4.53 Modified 5 years

Cabinet Maker 2,250 $3.47 Modified 1 year


Verification David Brannon; 318-255-9740, October 01, 2009; by KPlatt

Rent Analysis


Remarks

Mr. Brannon gave approximate rents and stated the building is split in half with the cabinet maker

utilizing just a warehouse with restroom. National Healthcare's space is 75% finished office.



88



Record ID 208

Property Type Industrial, Industrial (<20,000 SF)

Property Name Connie's Consignment

Address 1711 Trade Drive, Ruston, Lincoln County, Louisiana 71270

Location Interstate Industrial Park

Physical Data

Gross Area SF 4,500


Roof Type Metal

Foundation slab

Tenant Rent Roll

Tenant Name Size Rent/SF Lease Type Beg.

Date

Term

Connie's Consignment 4,500 $3.33 Modified 2003 month to

month



Verification Connie; September 30, 2009; Confirmed by Kara Platt

Rent Analysis


Remarks

Industrial building with 3 restrooms, 2 OH doors and small office. Tenant converted interior to

consignment shop. Verbal agreement month to month but has been tenant for 6 years.



89



Record ID 152

Property Type Commercial, Retail

Property Name Ruston Air Conditioning and Heating, Inc

Address 2484 Hwy 33, Ruston, Lincoln County, Louisiana 71270

Physical Data


Area Breakdown Office 625

Warehouse 3,875


Roof Type Metal

Foundation concrete slab

HVAC Central air and heat

Year Built 1978

Tenant Rent Roll


American Granite and Stone 4,500 $5.87 Modified 2-3 years


Owner Ruston Air Conditioning and He

Verification Keith Moore; 318-254-8531, November 26, 2007; by Kara Platt

Rent Analysis


Remarks

Tenant finished out 25' x 25' of office space to display their granite and stone. Updated rent

10/1/2009 with Judy



90



Record ID 150

Property Type Commercial, Retail

Property Name Miller Swimming Pool Supply

Address 2505 Hwy 33, Ruston, Lincoln County, Louisiana 71270

Physical Data


Area Breakdown Showroom/Office 1,215

Supply Area 1,215


Roof Type Metal

Foundation concrete slab

Electrical typical

HVAC Central air and heat

Year Built 2001

Condition Good


Owner Max Barrett Enterprises, LLC

Verification Ms. Miller; 255-7665, October 01, 2009; Inspection, by KPlatt

Rent Analysis


Remarks

Entire building is leased by Miller Swimming Pool Supply Company. The building is 60 x 40 and

could equally be divided into 2 suites. The supply area is not finished but has plumbing available.

Property has changed ownership but tenant is still on month to month lease.



91

Direct Capitalization

Direct capitalization is a method used in the income approach to convert a single year’s

income expectancy into a value indication. This conversion is accomplished in one step,

either by dividing the income estimate by an appropriate income rate or by multiplying it by an

appropriate income factor.

Direct capitalization is widely used when properties are already operating on a stabilized basis

and there is an ample supply of comparable sales with similar risk levels, incomes, expenses,

physical and locational characteristics, and future expectations. This methodology may be

less useful for properties going through an initial lease-up or when income and / or expenses

are expected to change in an irregular pattern over time. The advantage of direct

capitalization are that it is simple to use, easy to explain, often expresses market thinking, and

provides strong market evidence of value when adequate sales are available.

Potential Gross Income: Potential gross income is usually analyzed on an annual basis.

Potential gross income comprises:

Rent for all space in the property

Rent from escalation clauses

Reimbursement income

All other forms of income to the real estate

Vacancy and collection loss: An allowance for reductions in potential gross income

attributable to vacancies, tenant turnover, and nonpayment of rent.

Effective Gross Income: Effective gross income is calculated as the potential gross income

minus the vacancy and collection loss allowance.

Operating Expenses: The periodic expenditures necessary to maintain the real property and

continue production of the effective gross income, assuming prudent and competent

management.

Fixed Expenses: Operating expenses that generally do not vary with

occupancy and that prudent management will pay for whether the property is

occupied or vacant.

Variable Expenses: Operating expense that generally vary with the level of

occupancy or the extent of services provided.



92

Replacement Allowance: An allowance that provides for the periodic

replacement of building components that wear out more rapidly than the

building itself does and must be replaced during the building’s economic life.

Net Operating Income: The actual or anticipated net income that remains after all operating

expenses are deducted from effective gross income, but before mortgage debt service and

book depreciation are deducted.

Overall Capitalization Rate: An income rate for a total real property interest that reflects the

relationship between a single year’s net operating income and the total property price or value;

used to convert net operating income into an indication of overall property value (Ro – Io / Vo).

Derivation of Overall Capitalization Rates: Overall rates can be estimated with various

techniques; the techniques used depend on the quantity and quality of data available. When

supported by appropriate market data, accepted techniques include:

Derivation from comparable sales

Derivation from effective gross income multipliers and net income ratios.

Band of investment

The debt coverage formula

Yield capitalization techniques



93

Direct Capitalization

Income

Net Rental Area: 4,013

Concluded Market Rent ($/SF): $4.50

Scheduled Base Rent Revenue: $18,059

Other Revenue: $0

Total Potential Gross Income: 18,059

Vacancy and Collection Loss: 5.00% $903

Effective Gross Income: 17,156

Fixed Expenses

Real Estate Taxes: $1,500

Insurance: $800

Variable Expenses

Management $515

Maintenance / Repairs $500

Reserve for replacement $500

Total Expenses $3,315

Net Operating Income $13,841

Concluded Overall Capitalization Rate 9.50%

Indicated Value from Income Approach $145,695



94

RECONCILIATION OF VALUE

All three approaches to value were developed in this appraisal. The range and point value for

the subject property is offered below. All three approaches are thought to offer credible

indications of value to support the final conclusion.

Value Indications

Cost Approach = $150,379

Sales Comparison Approach = $152,690

Income Approach = $145,695

Range of Value = $145,695 to $152,690

Average Value = $149,588

Median Value = $150,379

Final Opinion of Value = $150,000 rounded

Reasonable Range of Value: $145,000 to $160,000



95

ADDENDA

SUBJECT PHOTOGRAPHS (7/28/2010) ............................................................................................................ 96

LEGAL DESCRIPTION......................................................................................................................................... 100

TAX ASSESSMENTS ............................................................................................................................................. 101

FLOOD HAZARD MAP ......................................................................................................................................... 107

ZONING MAP & REGULATIONS ...................................................................................................................... 108

QUALIFICATIONS OF MICHAEL A. GRAHAM, MAI .................................................................................. 110

QUALIFICATIONS OF: KARA A. PLATT ..................................................................................................... 111

DEFINITIONS OF TERMS ................................................................................................................................... 112



96

SUBJECT PHOTOGRAPHS (7/28/2010)

Front of subject property looking NE Front of subject property looking East

Front of subject property looking SE North side of property

Looking North on S Farmerville Looking South on S Farmerville



97

Northeast corner of building Northeast corner of building

Rear area or east side of property Rear of subject property slightly drops off

Looking West toward the subject building from

East property line Overview of rear of property



98

South property line Rolling gate and fencing on property

Dan Lord Office Bob Webb Office

Bathroom Overview of warehouse



99

Overview of warehouse Overview of warehouse

Overview of warehouse Overview of warehouse

Overview of warehouse bay dividers Overview of warehouse



100

LEGAL DESCRIPTION

For reference only. This legal should not be used without proper legal authority. Survey is recommended.



101

TAX ASSESSMENTS



102



103



104



105



106



107

FLOOD HAZARD MAP



108

ZONING MAP & REGULATIONS



109



110

QUALIFICATIONS OF MICHAEL A. GRAHAM, MAI

Michael A. Graham, MAI Real Estate Appraisals and Consultation

1300 Hudson Lane – Suite 1

Monroe, Louisiana 71201

(318) 387-9092

[email protected]

EDUCATION: Degree: Bachelor of Science May 1993 Institution: Louisiana State University College: College of Business Administration Major: Real Estate Finance LICENSES / DESIGNATIONS / AFFILIATIONS: Member of Appraisal Institute # 11985 (MAI) State of Louisiana Certified General Real Estate Appraiser # GO938 Louisiana Real Estate Salesperson # 64033 Louisiana Real Estate Appraisers Board Treasurer of the Louisiana Chapter of the Appraisal Institute BACKGROUND: 1984 - 1988 Ouachita Christian High School; raised in Monroe, LA 1988 - 1993 Louisiana State University; School of Business 1993 - Present Independent fee appraiser based in Monroe, LA 1994 – Present Louisiana Real Estate Salesperson 1995 – 1998 Residential construction and speculation home development 1996 – Present Manager of multi-tenant office complex, self storage facility, and multi-tenant

industrial development. 2001 – Present Adjunct instructor at LA Tech University (Finance 443 – The Appraisal of Real Estate) PROPERTY TYPES APPRAISED: Vacant commercial property / Residential subdivision developments / Farm Land / Timber land / Multifamily residential / High and low rise office developments / Big box retail / Strip center retail / Various build to suit developments / Restaurants / Limited service hotels / Convenience stores / Residential homes / lndustrial land and improved properties- light and heavy / Special purpose properties / Self storage facilities / Car dealerships / Eminent domain assignments PARTIAL LIST OF CLIENTS: Several Banks & Savings and Loans in Ouachita Parish as well as others across North Louisiana / Attorneys / CPA's / Engineering Firms / State & Local Governmental Agencies / Federal Government / Private Individuals & Investors / Utility Companies / EXPERT WITNESS TESTIMONY: Qualified as expert witness in real estate appraisal for the following Parishes: Lincoln, Union, Catahoula, Concordia, Sabine, Caldwell, Jackson, LaSalle. References available upon request.



111

QUALIFICATIONS OF: KARA A. PLATT

EDUCATION: Texas A&M University B.B.A., Marketing 1998

International Certificate in Business 1998 Blinn Junior College A.S., Science 1998 LICENSES/ DESIGNATIONS/ CERTIFICATIONS: Louisiana General Real Estate Appraiser License #G2088

Completed/ passed the Louisiana Certified General Appraiser Exam, 15 hour USPAP course, Yield Capitalization of Income Property, Direct Capitalization of Income Property, Income Property Appraisal, Basic Appraisal Procedures, Basic Appraisal Principles, Real Estate Appraisal

Texas All Line Insurance License #491298 Louisiana All Line Insurance License #486435 Oklahoma All Line Insurance License #40082414 Florida All Line Insurance License #E142043 North Carolina All Line Insurance License#0002443124 Flood Certified Adjuster FCN: 50000041 BACKGROUND: 1989-1992 Buffalo High School, Buffalo, Texas 1992-1998 Blinn Junior College 1995-1998 Texas A&M University, College of Business 1998-2006 State Farm Insurance Catastrophe Claims Adjuster Present Independent Fee Associate Appraiser Present Independent Catastrophe Claims Adjuster PROPERTY TYPES APPRAISED: Vacant Commercial Property/ Farm land/ Multi Family Residential/ Residential homes/ Industrial land and improved properties/ Special purpose properties/ Convenience stores/ Restaurants/ Multi-tenant commercial/ Mobile home parks/ Warehouses CONDEMNATIONATION AND INSTITUTIONAL APPRAISALS:

#318-04-0010- LA 145 to LA 821

#023-03-0022- US HWY 425 Bastrop to Log Cabin

University of Louisiana at Monroe

Grambling State University

Louisiana Tech University

City of Monroe

City of Ruston



112

DEFINITIONS OF TERMS

MARKET VALUE: "Market Value" is defined by the Department of Transportation and Development,

Appraisal Handbook, Chapter 5, 501 as:

"The most probable price, in terms of money, which a property should bring in a competiti ve and open

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

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

the consummation of a sale effective on 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 each act in what they consider their own best

interest;

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

(4) Payment is made in cash or its equivalent;

(5) Financing, if any, is on terms generally available in the community as of a specified date. This

financing should be typical for the property type in its locale;

(6) The price represents the normal consideration for the property sold unaffected by special financing

amounts, and/or terms, services, fees, costs, and credits incurred in the transaction."

HIGHEST AND BEST USE:

Highest and best use reflects a basic assumption about real estate market behavior - that the price a

buyer will pay for a property is based on his or her conclusions about the most profitable use of the site

or property. Therefore, sites and improved properties tend to be put to their highest and best use set

forth in a appraisal may or may not conform with the existing use. The determination of highest and

best use must be based on careful consideration of prevailing market conditions, trends affecting

market participation and change, and the existing use of the subject property.

HIGHEST AND BEST USE HAS BEEN DEFINED AS:

The reasonably probable and legal use of vacant land or an improved property, which is physically

possible, appropriately supported financially feasible, and that results in the highest value. The four

criteria the highest and best use estimate must meet are:

1. Legally permissible.

2. Physically possible.

3. Financially feasible.

4. Maximum profitability.**

*REAL ESTATE APPRAISAL TERMINOLOGY, The American Institute of Real Estate Appraisers, The

Society of Real Estate Appraisers, First Printing, 1981.

**THE DICTIONARY OF REAL ESTATE APPRAISAL, The American Institute of Real Estate

Appraisers, Second Edition, 1984, 1989.

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