prepared for - loopnet...attn: jennifer seo, credit administration re: appraisal of an existing...

APPRAISAL REPORT

EXISTING COMMERCIAL-OFFICE PROPERTY 8031 & 8051 Main Street Stanton, California 90680

Thomas Map Page No.: 797-J2, Orange County Our Job No.: AG19-039

Borrower: Two United Oil LLC

PREPARED FOR

U.S. METRO BANK 9866 Garden Grove Boulevard

Garden Grove, California 92844

Attn: Jennifer Seo, Credit Administration

DATE OF VALUE

April 16, 2019

DATE OF REPORT

April 24, 2019

April 24, 2019 US METRO BANK 9866 Garden Grove Boulevard Garden Grove, California 92844 Attn: Jennifer Seo, Credit Administration

Re: Appraisal of an existing commercial-office property located at 8031 & 8051 Main Street,

Stanton, California 90680 (Our Job No. AG19-039; Borrower: Two United Oil LLC) Dear Ms. Seo, In accordance with your request, we have prepared an appraisal of the above-referenced real property for the purpose of formulating and expressing my opinion of its market value. Based on our inspection of the subject property and surrounding neighborhood, our analysis of relevant data, and the preparation of the most applicable approaches to value, it is our opinion that that the “as is” market value of the fee simple interest in the subject property, as of April 16, 2019, is:

THREE MILLION EIGHT HUNDRED THOUSAND DOLLARS $3,800,000

The subject is 90% owner-occupied with the remaining 10% occupied by a tenant on a month-to-month basis. Thus, the interest appraised is the fee simple interest. Our Client in this appraisal assignment is US Metro Bank. This appraisal report has been prepared in conformance to Title XI of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989 and the “Uniform Standards of Professional Appraisal Practice” (USPAP 2018-2019) promulgated by the Appraisal Foundation, as well as applicable requirements set forth by US Metro Bank. Furthermore, this report is in compliance with the Interagency Appraisal and Evaluation Guidelines set forth December 2, 2010 (2010 Guidelines). The intended user(s) of this appraisal is US Metro Bank. Our analysis and conclusion are subject to this report’s Contingencies and Limiting Conditions. This appraisal of the subject property has been presented in the form of an Appraisal Report in conformance with reporting requirements of USPAP Standards Rule 2-2(a) and per our Client’s request, utilizes only the most applicable approaches to value – those being the Income and Sales Comparison Approaches – to provide a credible estimate of the subject’s market value. The appraisal is made without any extraordinary assumptions or hypothetical conditions. Respectfully submitted,

JOHN C. AGAMATA Certificate No. AG022752 CA/Expires 21-Feb-21

310 S. Twin Oaks Valley Road, #107-366, San Marcos, California 92078 Office: (760) 201-0846 Fax: (760) 290-7034 www.AgamataGroup.com

AGAMATA APPRAISAL GROUP

EXHIBIT

SUBJECT AERIAL VIEW

TABLE OF CONTENTS

REPORT SUMMARY ................................................................................................. 1 INTRODUCTION ....................................................................................................... 3 LOCATION ANALYSIS ............................................................................................. 9 LAND DESCRIPTION ................................................................................................ 18 IMPROVEMENT DESCRIPTION .............................................................................. 21 MARKET STUDY ....................................................................................................... 24 EXPOSURE AND MARKETING PERIOD ................................................................ 34 HIGHEST AND BEST USE ........................................................................................ 35 VALUATION ANALYSIS .......................................................................................... 39 Income Approach ................................................................................................. 41 Sales Comparison Approach ............................................................................... 49 RECONCILIATION ..................................................................................................... 57 FINAL VALUATION .................................................................................................. 58 INSURABLE VALUE ESTIMATE ............................................................................. 59 CERTIFICATION ASSUMPTIONS AND LIMITING CONDITIONS APPRAISER’S QUALIFICATIONS ADDENDA

Subject Photographs Preliminary Title Report Appraisal Engagement Letter


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REPORT SUMMARY

\ Property/Location: EXISTING COMMERCIAL-OFFICE PROPERTY

8031 & 8051 Main Street Stanton, California 90680

Assessor’s Parcel No.: 126-433-07, 08 Census Tract No.: 878.03 Thomas Map: 797-J2 (Orange County) Owner of Record: Two United Oil LLC Property’s Last Transfer:

Date of Transfer:

January 13, 2004

Sale Price: $500,000 (Doc. #0025520) Present Contract: N/A Site and Improvements:

Building Data Site Data Property Type: Commercial-office Size: 18,376 SF; 0.42 Acre Building SF: 11,503 SF (GBA/NRA) Excess Land: No Year Built: 2008/1947 (Renov. 2015) Lot Shape: Rectangular Rem. Econ. Life: 40 Years Topography: Level at street grade Current Occupancy: 100% Zoning Class: IG (Industrial General) Current Occupants: 90% Owner; 10% Tenant Subject Use: Legal and non-conforming


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Appraisal Valuation Summary Date of Report: April 24, 2019 Date of Value: April 16, 2019 Rights Appraised: Fee Simple Interest Appraisal Premise: “As Is” Highest & Best Use: “As if Vacant” Commercial-office Use “As Improved” Existing Commercial-office Use Most Likely Buyer: Owner-User Exposure Period: 4 to 8 Months Marketing Period: 4 to 8 Months

Valuation – “As Is” Value

Income Approach: Indicated Value: $3,530,000 Projected Gross Income $262,268 Vacancy & Collection Allowance: 5.0% Expense Ratio (% of EGI): 25.7% Expense Ratio ($/SF NRA): $5.56 Net Operating Income: $185,168 Going-In Capitalization Rate 5.25% Sales Comparison Approach: Indicated Value: $3,850,0001

No. of Comparables Used: Nine Unadjusted $/Bldg. SF Range: $250.07 - $548.98 Adjusted $/Bldg. SF Range: $330.99 - $339.99 Average Adjusted $/Bldg. SF: $334.15 Final $/Bldg. SF Value Selected: $335.00

Value Conclusions – Fee Simple Interest

“As Is” Value Other Valuation Income Approach $3,530,000 N/A Sales Comparison Approach $3,850,000 N/A Final Market Value Conclusions: $3,800,000 N/A Insurable Value Estimate: 2 $2,090,000 N/A

1Ibid. 2Reflects replacement cost (new) of building improvements for insurance purposes.


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INTRODUCTION

“As Is” Date of Value/Property Inspection

The “As Is” date of value is April 16, 2019, the most recent date of inspection.

Date of Report

The date of this report is April 24, 2019.

Purpose of Appraisal

The purpose of the appraisal is to estimate the “as is” market value of the fee simple interest in the

subject property.

Function of Appraisal

The function of this report is to provide U.S. Metro Bank with an appraisal report. The appraisal is

prepared using proper principles and techniques in order to derive a final value conclusion for the

subject property.

Intended Use/Users of Appraisal

The intended use of this appraisal is for loan underwriting or classification. The intended user(s) of

this appraisal is US Metro Bank. This report may not be used for any purpose, by any party, other

than the stated intended users without the written consent of the appraiser and the appraiser

specifically disclaims any liability to such unauthorized third parties.


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Property Rights Appraised

The interests appraised are the fee simple interest.

Definition of Market Value3

Market Value means the most probable price which a property should bring in a competitive and

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

knowledgeably and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of sale as of 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 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 commissions granted by anyone associated with the sale.

Definition of “As Is Market Value”

“As Is Market Value” means an as is value of the property on the appraisal date. This is an estimate

of the value of the property in the condition observed upon inspection and as it physically and legally

exists without hypothetical conditions, assumptions or qualifications as of the date the appraisal is

prepared.

3Definitions found in this appraisal report’s Introduction section are compatible with definitions from The Dictionary of Real Estate Appraisal, Fifth Edition (Appraisal Institute, 2010), OCC, OTS, RTC, FDIC, NCUA, and the Board of Governors of the Federal Reserve System.


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Definition of Fee Estate

Absolute ownership unencumbered by any other interest or estate, subject only to the limitations

imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

Definition of Leased Fee Estate

A leased fee estate is an ownership interest held by a landlord with the right of use and occupancy

conveyed by lease to others; the rights of the lessor (the leased fee owner) and the leased fee are

specified by contract terms contained within the lease.

Definition of Cash Equivalency

Cash Equivalency is a price expressed in terms of cash, as distinguished from a price expressed

totally or partly in terms of the face amounts of notes or other securities that cannot be sold at their

face amounts.

Scope of Work

This appraisal report is intended to be an “appraisal assignment” as defined in the Uniform Standards

of Professional Practice as published by the Appraisal Standards Board (ASB) of The Appraisal

Foundation. It is the intent that the appraisal assignment be performed in such a manner that the

results of the analysis, opinions, and conclusions be credible.

It is the intent that all appropriate data deemed pertinent to the solution of the appraisal problem be

collected, confirmed, and reported in conformity with the Uniform Standards of Professional Practice

(USPAP), adopted be the Appraisal Standards Board of the Appraisal Foundation and the Code of

Professional Ethics and Standards of Professional Practice of the Appraisal Institute.


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This appraisal of the subject has been presented in the form of an Appraisal Report, which is intended

to comply with the minimum reporting requirements set forth under Standards Rule 2-2(a) of the

USPAP. Furthermore, this appraisal is intended to be appropriate in relation to the significance of the

appraisal problem. All applicable approaches – in this report’s case the Cost and Sales Comparison

Approaches – are utilized in the valuation of the subject property and provide a credible estimate of

the subject’s market value(s). Support for the approach(s) used is discussed in the Valuation Section.

The appraisers have the appropriate knowledge, education and experience to complete this

assignment competently. Appraiser qualifications are attached to this report. Other activities

undertaken by John C. Agamata during the course of this appraisal are as follows:

A physical inspection of the subject property and surrounding neighborhood on April 16,

2019. An inspection of the exterior of the comparable properties.

An inspection of exterior of the comparable properties.

Research and investigation of current market conditions relative to the property type being

appraised, as well as the market sector with which the subject is identified.

Interviews with brokers, appraisers, property owners and/or managers, as well as relevant public agencies or governing bodies.

Collection, verification and analysis of market data and any other pertinent information

necessary to the valuation process.

Compilation of the descriptions, reasoning and explanations, leading to final value conclusions, within this report.

Robert Agamata provided professional assistance and participated in the inspection of the subject property under the direct technical supervision of John C. Agamata. The final conclusion to value is made by and the appraisal is signed by John C. Agamata.

Those signing the appraisal report have not performed services, as an appraiser or in any

other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

FF&E Estimate

The furniture, fixtures and equipment (FF&E) items will not be valued in this report.


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Current Ownership

Title to the subject property is vested in Two United Oil LLC, a California limited liability company

Property History

The current ownership purchased the subject property for $500,000 in January 13, 2004 (Doc.

#0025520). An inter-related transfer (vesting change) was recorded in August 20, 2014.

The subject property is a comprised of an 18,376 SF site that encompasses two contiguous parcels

totaling and a contiguous 1,838 SF alley that was abandoned by the city of Stanton in December 2018

(Per City Resolution No. 2018-57, dated December 18, 2018) and ownership transferred to the

subject’s property owner. In 2008, the ownership constructed two new buildings (8031 Main Street,

#A and #B) and renovated the 8051 Main Street building in 2015. The three buildings total 11,503

SF (GBA). Two buildings (8031 #A and 8051 Main; 10,326 SF or 90% GBA) are occupied by the

owner. The 8031 Main #B building (1,177 SF) is occupied by a tenant on a month-to-month basis,

which commenced on January 1, 2019. The tenant’s space is entirely office and the lease contract

rent is $2,000/Month (Modified Gross). The subject’s occupancy is further discussed in this appraisal

report’s Income Approach.

To the best of our knowledge, there have been other no recorded full value (armslength) transfers of

the subject title during the past three years. Ownership reports the property is not currently listed on

the market for sale nor is it in escrow to be sold.

Assessed Valuation and Taxes

The subject parcel is located in Tax Rate Area 17-007 with a 2018-2019 base tax rate of 1.102820%

plus direct/special assessment charges (if any). Assessed values and taxes are summarized as follows.


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APN Land Improvements Total Base Direct/Special Total126-433-07 $369,693 $512,287 $881,980 $9,726.65 $519.23 $10,245.88 126-433-08 $437,482 $322,224 $759,706 $8,378.18 $475.78 $8,853.96

Totals: $807,175 $834,511 $1,641,686 $18,104.83 $995.01 $19,099.84

Assessed Values Property Taxes (2018-2019)

The Assessor’s assessment of market value is limited to a maximum increase of 2% per year, unless

the property is transferred or there is substantial new construction. Proposition 13 typically requires

reassessment of real property upon a change of ownership. In either event, the property is re-

appraised to current market value, usually as evidenced by the sale price or the construction costs.

Assessed value is generally not considered an accurate reflection of market value, as it is not

particularly sensitive to economic fluctuations affecting the property. If the County Tax Assessor’s

estimate of market value is higher than the sale price, then Proposition 8 provides for the

reassessment of real property due to a decline in market value. A property owner must petition for a

reassessment in order to lower property taxes or receive a tax refund. If the owner disputes the

reassessed value, an appeals procedure is in place for a more detailed reassessment of market value in

accordance with Proposition 8.

According to Orange County Treasurer-Tax Collector records, property taxes for the subject parcel

are current.


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LOCATION ANALYSIS

Southern California

The subject property is located in Los Angeles County and within the broad Southern California area,

defined by most analysts, to include Los Angeles, Orange, Riverside, San Bernardino and Ventura

counties. This Southern California five-county area had a July 2015 population of 18,669,300, up

4.0% from 17,920,600 in 2010. Historic and projected population figures for the Southern California

five-county area are shown on the following table.

The unemployment rate for the entire State of California was 4.1 percent in September 2018, which

reflects the steady downward trend for the same month (September) over the past 4 years from 4.5%

(2017), 5.4% (2016), 5.9% (2015) and 7.2% (2014).

The California unemployment rate was 4.2 percent in December 2018, while state’s employers added

24,500 nonfarm payroll jobs according to data released by the California Employment Development

Department (EDD) from two surveys. California has now gained a total of 3,097,600 jobs since the

economic expansion in February 2010.


EXHIBIT

REGIONAL LOCATION MAP


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Orange County

Orange County is one of six counties that comprise the Southern California Metropolitan Region,

which has historically been one of the fastest growing and most dynamic areas in the country.

Snapshots of key Orange County economic indicators are shown on the following charts.


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The following Orange County economic overviews are excerpts from the 2018-2019 Economic

Forecast and Industry Outlook report published by the Los Angeles County Economic Development

Corporation (LAEDC) in April 2018.

The Orange County economy is one of the strongest performing in California in terms of job creation and unemployment. The county continues to follow the long-term trajectory of a diminished manufacturing sector vis-à-vis steady annual growth in professional and business services. Facilitating the transformation of Orange County’s economy has been its success in attracting a highly skilled workforce and thereby producing a per capita income exceeding the state. Over 84 percent of the adult population in Orange County has a high school diploma and roughly 39 percent has a bachelor’s degree or higher, both above the statewide average. In 2017, Orange County’s economy grew at an estimated rate of 2.5 percent compared with 2.5 percent for the State and accounted for 10.5 percent of California’s Gross State Product while being home to just 8.1 percent of the state’s population. Orange County’s real gross county product is expected to decelerate modestly to 2.1 percent this year and maintain that rate in 2018. Labor Market In 2017, Orange County’s unemployment rate averaged 3.5 percent, the lowest since it was 3.4 percent in 2006. In 2018, the unemployment rate is expected to drop again 3.3 and then to 3.2 percent in 2019. Orange County added 36,300 wage and salary jobs last year, increasing the number of nonfarm jobs from 1.58 million 2016 to 1.59 million in 2017. This corresponded to an annual growth rate 0.7 percent, compared with 1.9 percent for the rest of California. The labor market in Orange County will experience additional improvements over the next two years with an anticipated annual increase in nonfarm jobs of 1.4 percent this year before slowing slightly to 1.2 percent in 2019. Most industries in the county added jobs last year, notably excluding manufacturing (-2.2 percent). The largest percentage gains were construction (4.6 percent), administrative and support services (4.6 percent), and educational services (4.0 percent). In absolute terms, the construction industry added the largest number of jobs (4,500), joined by leisure and hospitality (4,500 jobs), and administrative and support services (4,100 jobs). The sectors that posted employment declines were manufacturing (3,400 jobs); professional, scientific and technical services (1,300 jobs); and government (1,100 jobs). Most industries are expected to add to their payrolls this year (2018), the top-hiring being health care and social assistance (6,700 jobs), leisure and hospitality (5,300 jobs), construction (3,800 jobs), and administrative and support services (3,800). Two industries are projected to lose jobs: manufacturing (2,900 jobs) and transportation, warehousing and utilities (200 jobs).


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Personal Income & Expenditures In addition to rising levels of employment, Orange County’s residents have also experienced gains in personal income. Due to increases in both employment and wages, total personal income in the county edged up by 3.0 percent in 2017 to $203 billion (nominal). Personal income has been rising in Orange County on a year-over-year basis since 2010 (except for a 1.9 percent decline in 2013) and is expected to reach $209 billion this year, rising yet again in 2019 to $214.6 billion. Higher income is generally associated with increased levels of consumer spending, but the rate at which spending increases will be influenced by the rate of inflation, changes in tax policy and household decisions regarding how much to save and invest. Real per capita personal income was $56,556 last year, up from $56,026 in 2016. Persistent job growth, record low unemployment and low inflation likely contributed to this. Over the next two-year, modest gains in real per capita income are expected to continue: 1.8 percent in 2018 and almost 1.0% in 2019. Compared with the other counties in Southern California, Orange County had the highest real per capita income compared to any other county. Housing Market The nation’s housing markets have taken far longer to recover from the 2007 housing crash than most industry experts anticipated, and Orange County is no exception. After the second home price nadir in 2011, the upward trend in home prices continued to do so in 2017 and is project to do so through 2019. The median price for all homes (attached and detached, new and existing) in Orange County was $659,400 in December 2017, up by 3.3 percent from a year earlier. The median home price in Orange County has risen on a year-over-year basis since the second quarter of 2012 and in 2017 exceeded the pre-recession price peak. In this instance, Orange County defies most of the region. The LAEDC 2019-2020 Economic Forecast and Industry Outlook report projects the following:

Orange County will continue to see strong output and wage growth on the back of a strong labor market. Higher-than-average education will continue to drive real wage growth higher than the regional average and in middle and high skill industries such as business services and healthcare. However, home prices are also expected to grow above that of any other county in Southern California. The following comments are excerpts from a Costar Orange County Economic Summary (April 2019). Employment growth had outpaced that of the nation since 2012. Hiring slowed in 2018, dipping below the national average in the second half of 2018. The unemployment rate, however, continues to hover around 3%, and continues to trend below both the California and national averages.


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January 2019 overall nonfarm employment declined by around 24,600 jobs, a falloff of around 1.5%. The largest loss was within trade, transportation and utilities with a loss of 6,500 jobs, 90% of which were in retail trade due to the loss of season workers. Despite the negative month-over-month growth, losses were less this year than at the same time last year where job growth dipped by almost 1.7%.

Overall, Orange County is the third-most diverse high-tech sector in the nation, behind only San Jose and San Diego. Almost 200 Fortune 500 companies have an office in one of the Irvine submarkets, and innovation firms, including Blizzard Entertainment, Broadcom, Edwards Lifesciences, and Google have significant footprints in the metro. After venture capital fell precipitously in 2017, investment rebounded in 2018, and the second quarter was the strongest on record on the back of a $250 million investment in UST Global in Aliso Viejo from a sovereign wealth fund from Singapore.


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City of Stanton

The subject property is located in northwestern Orange County in the City of Stanton, 23 miles

southeast of Downtown Los Angeles and 8 miles northwest of Santa Ana. Stanton was incorporated

in 1956 and contains 3.15 square miles. The City is bordered by Anaheim to the north and northeast;

Garden Grove to the south and southeast; Cypress to the west; and Buena Park to the northwest.

Commercial developments, including retail stores and services, restaurants, and offices, are located

along primary arterials including Beach Boulevard (#39), Western Avenue, Knott Avenue, Dale

Avenue, Cerritos Boulevard, Katella Avenue, Orangewood Avenue, and Chapman Avenue, with

residential components, including single and multi-family residences, located along local streets.

The city is approximately 95% built-up with structures constructed between the 1910s and 2000s

(primarily 1950s to 1980s). The City of Stanton had a 2017 population of 38,528, a nominal increase

from the January 2012 population of 38,489. Stanton had a March 2019 unemployment rate of 3.5%.

This compares to the past 5-year unemployment rates (year-end) of 3.1% (2018), 3.8% (2017), 5.3%

(2016), 5.9% (2015), and 7.2% (2014). The largest industries in Stanton are Manufacturing (3,126

people), Retail Trade (2,315 people), and Accommodation & Food Services (1,767 people), and the

highest paying industries are Finance & Insurance ($50,681), Public Administration ($47,118), and

Professional, Scientific, & Technical Services ($46,121). Median household income in Stanton is

$50,601.


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Subject Neighborhood

The subject property is located in the northern section of the city in a section bisected by Beach

Boulevard designated in 2008 as the Town Center Mix-Used District (Specific Plan). The subject

neighborhood comprises of mostly commercial retail buildings that were built in the 1950s and

1960s, with residential tracts (1950s/1960s) located to the northeast, and industrial buildings (built

1950s to 1970s) to east and southeast. The subject neighborhood has good freeway access with the

Artesia (#91) Freeway, 3.25 miles to the north; Santa Ana (I-5) Freeway, 4.75 miles to the east;

Garden Grove (#22) Freeway, 2.75 miles to the south; and the San Gabriel River (I-605) Freeway, 5

miles to the west. Key demographics for the subject’s location are shown below.

Population 1 Mile 2 Mile 3 Mile2019 Total Population: 39,126 135,954 273,729

2024 Population: 39,959 138,424 278,366Pop Growth 2019-2024: 2.13% 1.82% 1.69%

Average Age: 36.1 37.1 37.7Households

2019 Total Households: 10,927 38,880 79,980HH Growth 2019-2024: 2.10% 1.88% 1.70%Median Household Inc: $56,802 $60,936 $66,425

Avg Household Size: 3.5 3.4 3.32019 Avg HH Vehicles: 2 2 2

HousingMedian Home Value: $432,087 $496,323 $536,249

Median Year Built: 1972 1969 1967


EXHIBIT

NORTHERLY VIEW

SOUTHERLY VIEW

VICINTY AERIAL VIEWS


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Specifically, the subject is located at the northwest corner of Main Street and Chestnut Avenue, and

less than 100 feet (one lot) east of Beach Boulevard, one of the most travelled commercial arterials in

Orange County and the location of a heavy concentration of commercial uses (retail centers,

restaurants, office uses, etc.) along with mix-use residential-retail projects. Main Street and Chestnut

Avenue a secondary (local) streets with combined daily traffic counts of less than 5,000 vehicles.

However, the subject has partial visibility from the signalized intersection of Main Street and Beach

Boulevard, which as an average daily traffic count of over 65,000 vehicles at this intersection. This

traffic count (Source: MPSI/Costar, 2017) along with surrounding businesses are shown below.

Properties immediately surrounding the subject are described as follows:

North: Adjacent on the north is a 6,530 SF lot improved with a 1950s-constructed, one-

story, 3,056 SF commercial building owned by the subject property ownership and leased to a service-related business (Stanton Utilities, Inc.). This property is followed by a 6,125 SF lot improved with a 1949-constructed, one-story, 3,247 SF commercial-service building.

East: Across Chestnut Avenue (at northeast corner of Main Street), is a renovated, one-

story, 1,200 SF commercial office building situated on a 6,752 SF lot. This property is followed by a 4-unit apartment project constructed in the 1940s.


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South: Directly across Main Street from the subject is a 10,650 SF lot improved with a 1951-constructed, one-story 5,507 SF auto service property. East of the property, at the southeast corner of Main Street and Chestnut Avenue is a 0.40-acre lot improved with a 6,942 SF, one-story, industrial building constructed in 1965.

West: Adjacent to the west, at the northeast corner of Main Street and Beach Boulevard, is

a 6,970 SF lot owned by the subject ownership who is completing construction of a two-story commercial-office building with ground floor (under-building) parking.

Overall, maintenance levels of surrounding properties generally range from average to good. In

summary, the subject has an established and desirable business location – particularly due to its

immediate proximity to Beach Boulevard.


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LAND DESCRIPTION

Location: 8031 & 8051 Main Street Stanton, CA 90680 Site Area4: 18,376 SF5 (0.42 Acre) Shape: Rectangular (Parcel Maps are found on the following page) Zoning: IG, “Industrial General”, City of Stanton

According to the Stanton Zoning Code, the “IG zone is applied to areas appropriate for light industry and manufacturing, heavy commercial service-type facilities, and warehousing facilities that are not proposed to be located in a “campus” type environment. Proximity to major arterial highways is essential or desirable due to the large volumes of vehicle and truck traffic that these uses may generate. Activities are located within enclosed buildings and typically have little or no potential of creating noise, smoke, dust, vibration, or other environmental impacts or pollution.” The IG zone allows a variety of light to medium industrial uses, including storage and warehouses uses. We should note that the city is in the midst of converting the zoning to be in conformance of the General Plan, which was adopted in 2008. Under the General Plan, the subject is within the “Town Center Mixed Use District” (aka Town Center Specific Plan) as shown on the following page.

4 Source: Orange County Assessor parcel map 5The subject’s site area of 18,376 SF includes a city-abandoned alley (1,838 SF or 15’ x 122.5’) that was transferred to the current ownership, per City of Stanton Resolution Number 2018-37, dated December 18, 2018


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The subject improvements were expanded (two new buildings constructed) in 2008 and the third building (original structure) was completely renovated in 2015. The 2008 construction and 2015 renovation were approved by the City. The subject use is permitted. Although the improvements conform to the General Plan, they do not meet development standards of the zoning standards adopted in 2013 as it relates to setbacks and parking. Until such, the zoning is changed to conform to the General Plan, the subject commercial-office use is considered a “grandfathered” legal and non-conforming use. In the event the improvements are destroyed by natural causes including fire and earthquake, the subject improvements can be rebuilt to their state at the time of destruction.

Topography: Generally level at street grade Street Improvements: The subject site is located at the northwest “non-signalized” corner of

Main Street and Chestnut Avenue. Main Street is a local 2-lane street with dedicated street width of 80 feet. Chestnut Avenue is a local 2-lane street with a dedicated street width of 60 feet. Both streets are improved with asphalt paving; concrete curbs, gutters and sidewalks; and metal lights mounted on wood utility poles.

Access/Exposure: The subject has 135 feet of frontage along Main Street and 137.5 feet of

frontage along Chestnut Avenue (including city-abandoned 15-wide alley that has been deeded to the subject ownership). The subject’s onsite parking is accessible from of the aforementioned city-abandoned alley via Chestnut Avenue and a public alley via Main Street (this alley borders subject site’s western property line).

Utilities: All connected to the site including electricity


EXHIBIT

APN: 126-433-07 & 08, and City-Abandoned Alley

PARCEL MAPS


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Drainage: Appears adequate Flood Zone: Flood Zone X (“0.2 Pct. Annual Chance Flood Hazard) according to

FEMA Map No. 06059C0136J, dated December 3, 2009. Flood insurance is not required.

Earthquake Zone: There are neither previously mapped faults that traverse the site, nor is

the site within the boundaries of an Earthquake Fault Zone as specified by the Alquist-Priolo Earthquake Fault Zoning Act.

Soils Conditions: A geotechnical investigation report was not submitted for our review.

This appraisal report assumes that all recommendations (for grading; compaction; and foundation design, construction, and maintenance of) provided by the soils engineer were implemented, and that construction designs provided for adequate load-bearing capacity and structural engineering to support the existing structure.

Hazardous Waste/ Toxic Conditions: A hazardous or toxic waste investigation report was not submitted for

our review. This appraisal will not determine whether or not the appraised property has any hazardous contamination. Our value estimate is predicated upon the assumption that the subject property is free of any toxic material, or any other adverse geotechnical or soils conditions that would cause a loss in value. No responsibility is assumed for any toxic conditions or for any expertise or engineering knowledge required to discover and/or correct such conditions if they exist.

Easements and Encroachments: A Preliminary Title Report prepared by Chicago Title and dated March

25, 2019 (Reference No. 8051 Main and 8031 A and B Main) was provided for our review. Public utility easements are noted and considered typical. No adverse title conditions, easements or encroachments were stated on the preliminary title report nor were any observed during our site inspection. Identification of these items is of a legal nature and an attorney specializing in this field should be consulted for their opinion concerning these items. This report is not intended to render any opinion whatsoever regarding any adverse title conditions, easements or encroachments that may affect the subject property. Our value estimate is, however, predicated upon there being no adverse title conditions, easements or encroachments that would cause a loss in value or prohibit development and no responsibility is assumed for any such conditions or for any expertise or knowledge required to discover them.


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Gross BldgOffice Warehouse Area (GBA

Bldg. 1 (8031 Main #A) 3,809 0 3,809Bldg. 2 (8031 Main #B) 1,177 0 1,177Bldg. 3 (8051 Main) 6,121 396 6,517

Totals: 11,107 396 11,503% of GBA: 97% 3% 100%

Building/Address

IMPROVEMENT DESCRIPTION

Property Type: Commercial-office

Year Built: Buildings 1 and 2 (8031 Main Street) – 2008

Building 3 (8051 Main Street) – 1947/Renovated 2015 No. Buildings: Three No. Stories: One & Two Quality: Class C (Above Average) Building Areas (SF)6: Design/Layout: The subject property comprises of two contiguous parcels (APN’s 126-

433-07 and 008, plus a city-abandoned alley that borders the two aforementioned parcels from the north – totaling 18,376 SF (0.42 acre). The subject site is improved with three buildings designated as Buildings 1 (3,809 SF), 2 (1,177 SF) and 3 (6,517 SF), totaling a gross building area (GBA) of 11,503 SF. The current ownership fully occupies Buildings 1 and 3 (10,326 SF or 90% of GBA). Building 2 is fully occupied by one tenant (1,177 SF or 10% of GBA).

Building 1 (8031 Main #A) – Owner Occupied 2-story 3,809 SF concrete block building that was built by the current

ownership in 2008. The first floor totals 2,200 SF and features reception area, lounge/open foyer area, 3 private offices, one restroom, kitchen/break room, and conference room. The second floor is 1,609 SF and features open office area and three private offices. The second floor is accessible from one interior stairs. Building 1 is utilized as an office.

6Source: Appraiser’s measurements


EXHIBIT

BLDG 1 (8031 Main) BLDG 2 (8031 Main; Same Address as Bldg 1)

1st Floor 25.17 x 46.75 = 1,177

40.00 x 55.00 = 2,200

2nd Floor BLDG 3 (8051 Main)

18.25 x 24.50 = 447

40.00 x 20.34 = 814 51.50 x 133.42 = 6,871

10.67 x 14.58 = 156 (6.00) x 59.00 = (354)

7.29 x 5.08 = 37 Total Area - Bldg 3 6,517

7.88 x 7.08 = 56

10.17 x 9.67 = 98 Office Area - Bldg 3 11,107

5.09 x 19.67 = 100 Warehouse Area - Bldg 3 396

Less: Arc (98.72) = (99)

1,609

Total Area Bldg 1 3,809 GROSS BUILDING AREA: 11,503

Area Summary (SF) Site Area

Office Area 11,107 97% of GBA APN 126-433-07 10,125

Warehouse Area 396 3% of GBA APN 126-433-08 6,413

City Abandoned Alley 1,838

Parking Spaces: 21 Total Site Area: 18,376

Parking Ratio (Sp/1000 SF GBA) 1.8 Acre: 0.42

AREA CALCULATIONS (SF)

BUILDING SKETCH


22

Building 2 (Also 8031 Main #B) – Tenant Occupied 1-story 1,177 SF concrete block building that was built by the current

ownership in 2008. The first floor is open office area with one restroom. This building also features a partially improved, 681 SF open mezzanine (not part of GBA) and one 10’x10’ overhead metal roll-up door. Building 2 is utilized as an office.

Building 3 (8051 Main) – Owner Occupied 1-story, 6,517 SF wood frame/concrete block building that was built in

1947 and completely renovated by the current ownership in 2015. The building features a total office area of 6,121 SF demised with two open office areas, several private offices, storage room, computer rooms, 2 conference rooms, 2 restrooms and kitchen/break room; 396 SF warehouse with 16’ clear height; and a 1,229 SF unfinished, open mezzanine (not part of GBA) utilized as a storage.

The subject is considered to be a storefront commercial-office property.

Given its underlying industrial zoning and small (3% of GBA) warehouse with overhead loading doors, the subject can also be described as a quasi flex-office building with high percentage of office build-out. However, given the subject is one lot from Beach Boulevard (a major commercial arterial) with an average daily traffic of over 65,000 vehicles, a commercial-office user is the more likely buyer of the property.

Floor Area Ratio: 0.42 (Based on GBA) Parking: Current zoning requires a parking ratio of 3.3 spaces per 1,000 SF of

building floor area (3.3:1 ratio) or a minimum of 38 spaces for the subject. The subject site can accommodate 21 parking spaces (1.8:1 ratio), which does not comply with zoning requirements. As stated earlier, the subject is a legal and non-conforming use.

Construction Details Construction Type: Concrete Block/Wood Frame Foundation: Concrete Exterior Walls: Buildings 1 and 2 has concrete block walls with painted stucco finish

and brick veneer base; Building 3 has stucco finish over wood frame with brick veneer base

Roof: Built-up roofing


23

Doors and Windows: Entrance glass doors and exterior metal doors. Interior doors are hollow wood doors; some interior doors are glass. Windows are tinted glass in fixed aluminum frames.

Loading Doors: Two 10’ x 10’ overhead metal roll-up doors; one 12’ x 14’overhead

metal roll-up doors Interior Finishes: Walls: The office areas feature interior partitions that are mostly

painted drywall (some are glass and wall-paneled partitions)

Floor Covering: Combination of ceramic tile, polished concrete, sealed concrete (warehouse area), vinyl tile, and carpet flooring throughout

Ceilings: Combination of painted drywall, suspended T-bar and exposed wood beam/truss ceilings

Ceiling Height: 16’ (open office areas in Building 2 and warehouse area in Building 3) Lighting: Fluorescent light fixtures throughout HVAC: Roof mounted HVAC units for all three buildings Energy Efficiency: The owner-installed a roof-top mounted solar energy system in 2012 at

a reported cost of $76,000. The owner states that system results in a savings of $700 to $800/Month. We were not provided any specifications or cost documentation pertaining to the system. However, we have considered the amenity as part of the subject’s overall quality in our valuation.

Restrooms: 4 restrooms (one each in Buildings 1 and 2; two in Building 3) Fire Sprinklers: None Site Improvements: Concrete hardscape and paved parking area; concrete alley (city-

abandoned alley now owned by ownership) with concrete driveway via Chestnut Avenue; chain-link and wrought-iron fencing with automatic rolling gate; and concrete block façade with stucco finish

Economic Life: The improvements are in good condition and have an estimated overall

effective age of 10 years with a remaining economic life of 40 years.


24

MARKET STUDY

Information regarding retail market conditions is derived from our independent research and as well

as information provided by CoStar.

The subject is in the City of Stanton, which is part of the West County Office Market. The subject’s

submarket is depicted in the map below, which is followed by key statistics (Source: CoStar).

West County Office Market Area

The West County Office Market area – as surveyed by Costar – contains 15.5 million SF of office

space (including medical office), of which nearly 3 million SF (19%) is comprised of office

properties ranging between 5,000 and 15,000 SF, including the 11,503 SF subject building.

Key statistics (Source: Costar) as well as vacancy and rent rate trends are shown on the following

page.


25

West County Office Market (April 2019) All Office Properties Office Properties 5,000 to 15,000 SF

The vacancy level for all office space in the West County Office Market is currently 5.6% with an

average over the past 5 years of 7.2%. However, the vacancy level drops considerably for properties

between 5,000 and 15,000 SF, which averaged 3.7% over the past 5 years and below 3% during the

past 12 months (the lowest in over 20 years). After bottoming out in 2011, average asking rental rates

per SF have soared upward to record highs – albeit the upward climb has tapered off in the past 6 to 9

months.


26

West County Office Market – Sale Trends (April 2019) Office Properties up to 100,000 SF Office Properties 5,000 to 15,000 SF

The previous recession resulted in declining closed sale prices that bottomed-out between 2009 and

2011. Sale prices have steadily trended upward for the past 7 to 8 years – albeit the trend has

tapered off during the past 12 to 18 months.


27

The fluctuations in average sale and listing prices per SF during the past 3 to 4 years are due

primarily to the dramatic changes in the average size of buildings sold. Furthermore, the volume in

2019 thus far is not sufficient to be considered a reliable benchmark.

Period No SalesTotal SF

SoldAverage Bldg. SF

Average Price/SF No Sales

Total SF Sold

Average Bldg. SF

Average Price/SF

2018-19 49 931,414 19,008 $241.86 21 111,112 5,291 $325.33

2019 7 66,798 9,543 $233.20 1 3,194 3,194 $285.00

2018 42 864,616 20,586 $242.52 20 107,918 5,396 $326.52

2017 16 275,357 17,210 $206.40 7 45,430 6,490 $234.32

2016 25 497,641 19,906 $232.24 12 62,618 5,218 $299.59

West County Market - Sale Statistics (2016-2019)

All Office Properties (up to 100,000 SF) Office Properties 2,000 to 15,000 SF

PeriodNo

ListingsTotal SF Listed

Average Bldg. SF

Average Price/SF

No Listings

Total SF Listed

Average Bldg. SF

Average Price/SF

2018-19 43 332,908 7,742 $307.60 31 113,270 3,654 $345.12

2019 20 194,850 9,743 $297.91 14 61,375 4,384 $360.08

2018 23 138,058 6,003 $321.28 17 51,895 3,053 $327.43

2017 25 219,512 8,780 $300.58 19 51,982 2,736 $356.62

2016 34 198,757 5,846 $305.65 28 81,407 2,907 $314.04

West County Market - Listing Statistics (2016-2019)

All Office Properties (up to 100,000 SF) Office Properties 2,000 to 15,000 SF

Typically, smaller buildings sell for more per SF (conversely larger buildings sell for less per SF) due

primarily to economies of scale. The most notable is the average list price of buildings up to 100,000

SF in 2019 ($297.91/SF) falling from 2018 ($321.28/SF). However, the average building size in 2019

(9,743 SF) is 62% larger than in 2018 (6,003 SF).

With regards to properties between 5,000 and 15,000 SF, average annual closed sale prices per SF

have seesawed during the past 3 years due to size deviations along with sales volume and product

quality. The average asking price in 2019 ($360.08/SF) is an increase from the previous 3 years

despite the larger average size of buildings listed for sale in 2019 (4,384 SF vs. 3,053 SF in 2018,

2,736 SF in 2017 and 2,907 SF in 2016). After accounting for annual size deviations and the quality

of the properties sold, an upward trend in prices is readily evident during the past 3 to 4 years

although it appears prices have begun stabilize over the past 12 to 18 months.


28

West County Market – Flex-Office Properties

As stated-earlier, the subject can also be described as a quasi flex-office building given its underlying

industrial zoning and small (3% of GBA) warehouse with overhead loading doors. Key statistics for

flex-office properties located in the West County Market are shown below.

Orange County – Flex Properties 5,000 to 15,000 SF (April 2019)


29

The entire Orange County region – as surveyed by Costar – contains 1,298 flex properties between

5,000 and 15,000 SF (total of 12.9 million SF) that have a current vacancy level of only 2.1% while

averaging 3.1% during the past 5 years. Since bottoming out in 2012, average rental rates per SF for

these properties have skyrocketed upward to current record-highs. Average closed sale and asking

prices per SF have also trended upward for the past 7 to 8 years to record-high levels in 2018 and

2019.

Capitalization Rates

Institutional investors continue to target Orange County, regularly trading trophy properties and

office campuses. Assets with 3 Star ratings are the most commonly sold inventory, often among

private investors. Average cap rates have settled in the mid-5% range, almost 100 basis points higher

than in the apartment sector. With the strongest third quarter for recorded sales volume in more than a

decade, 2017 sales volume exceeded 2016's level by about 15%. Cap Rate trends in for all office

space in the West County Office Market area and for those office properties up to 10,000 SF in the

entire Orange County region are shown on the following table.


30

West County Market (Office up to 100,000 SF) Orange County (Flex Properties 5,000-15,000 SF)

The average Cap Rate for office properties (up to 100,000 SF) in the West County Market has

average in the mid-5% during the past 18 months. With regards to flex properties throughout the

entire Orange County region, the average Cap Rate fell to well below 4% in 2018 (the lowest in well

over 20 years). Although rising to just over 5% in 2019, the volume of flex properties sale

transactions is still small as it represent transfers through the first 4 months of this year.

Tightening vacancies, development activity well below pre-recession levels, and steady rent growth

contribute to investor confidence in Orange County. However, the mildly increasing Cap Rate

forecasted over the next 3 to 4 years is due in large part to anticipated increases in interest rates.

City of Stanton

The City of Stanton is contains a total of 460,315 SF of office and flex space, of which 252,138 SF

(55%) is office space only. As shown on the following page, the overall vacancy rate for office and

flex space in Stanton, has averaged 3.6% during the past 5 years while falling to its current level of

only 2.3%. The historically low vacancy levels are due in large part to the small amount of space in

the City and the minimal new deliveries. Only 11,520 SF of new space (office or flex) has been

delivered/completed in Stanton during the past 10 years.

The limited availability and strengthening market conditions have resulted in a steady increase in

market rent rates (per SF) since they bottomed out in 2011. The upward trend is expected to continue

but likely not as pronounced as the period between 2012 and 2018.


31

City of Stanton - Office and Flex Properties (April 2019)


32

Mortgage Interest Rates

Market participants such as mortgage bankers, bank business development officers and bank analysts

interviewed during the past 6 to 8 weeks. The consensus opinion was that long-term interest rates are

likely to trend upward in 2019. Eventually, an anticipated inflationary hike will also increase long-

term rates but not for an extended period. The expected deficit increase that will accompany the

recently enacted tax package will also slightly boost long-term rates. Furthermore, most believe the

Fed will keep raising short rates because of falling unemployment and other indicators that show a

tightening labor market. The Fed, however, very much prefers to stay ahead of any inflation that may

be generated by rising wages. Although the increase is expected, interest rates are likely to remain

low by historical standards.

Private investors remain particularly sensitive to tax and policy changes. However, many buyers seek

to capitalize on the reduced competition for assets – albeit some investors have refrained from the

market to assess the impacts of potential policy changes. The outlook for continued economic

momentum, including steady job creation and accelerating wage growth, remains a strong driver of

asset performance. At the same time, restrained development in all with perhaps the exception of

apartment properties will help the sector sustain positive fundamentals.

The U.S. economy continues to expand and national GDP expected to hover near or above 3%.

Business investment also continues to be solid with non-residential investment surpassing most

projections.

Broker Interviews/Summary

Commercial brokers were interviewed from brokerage firms active in the subject’s primary market

area such as CBRE, Colliers International, Keller Williams., NAI Capital, RE/MAX Commercial &

Investment, WESTMAC Commercial Broker, and Lee & Associates.

The results of our broker interviews and conclusions specific to the subject for the subject property

derived from our research are summarized as follows:


33

SUBJECT PRIMARY MARKET SUMMARY Subject Occupancy History:

Current: The property has been fully occupied since 2008 by the current owner until January 2019, when 10% of the building area was leased to a tenant on a month-to-month basis. The owner occupies the remaining 90% of the building area.

Immediate Market Area Vacancy: Below 4% for properties in Stanton

General Trends per Broker Consensus

Rental Rates: Record-high rental rates are expected to stabilize during the next 12 to 24 months.

Vacancy: Expected to remain below 5% for office properties

Sale Prices: Notable increasing price trend during the past 6 to 7 years is expected to stabilize over the next 12 to 24 months

Subject Profile if Vacant & Available

Tenant Profile: Local business

Most Likely Buyer: Owner-User

Strengths: Aside from the strong real estate market conditions previously discussed, the subject has an established business district and less than 100 feet from an intersection that encounters over a 65,000 ADT along Beach Boulevard. Furthermore, two of the subject’s three buildings were constructed in 2008 and the third building was completely renovated in 2015. The buildings are built-out finished office space with the exemption of a small (396 SF) warehouse/storage area.

Weaknesses: The subject’s has non-conforming parking (1.8:1) that is typical of older office properties in the market area but well below the 3 to 4:1 parking ratio found in more recently constructed office properties.

Concluded Subject Vacancy Based on our analysis and the preceding comments, it is our opinion that a vacancy and collection allowance of 5.0% over a long-term (5 to 7 or more years) holding period is appropriate for the subject.


34

EXPOSURE AND MARKETING PERIOD

Exposure period is the amount of time the real property interest being appraised would have been

offered on the market prior to the hypothetical consummation of a sale at market value on the

effective date of the appraisal. Marketing period is an opinion of the amount of time it might take to

sell the real property interest after the effective date of the appraisal.

The median marketing period trends (annual) relevant to the subject property are shown below.

Marketing Period Trends West County Market – Office up to 100,000 SF Orange County (Flex Properties 5,000-15,000 SF)

The charts above indicate median time to sale periods generally ranging from 3 to 10 months during

the past 2 to 3 years. Furthermore, the four of the five closed sale comparables utilized in this

appraisal report’s Sales Comparison Approach reported marketing periods ranging from 4 to 10

months. Brokers and market participants active in the buying and selling of this property type

indicated that an adequate marketing period for the subject unit would likely take between 4 and 8

months. Based on our findings, a concluded marketing/exposure period for the subject property

would be 4 to 8 months – the caveat being the property is properly priced and actively marketed.


35

HIGHEST AND BEST USE Highest and best use is defined as:

“The reasonably probable 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 must meet are legal permissibility, physical possibility, financial feasibility and maximum profitability.”1

The above definition of the “Highest and Best Use” is in reference to land that is unimproved. In

cases of improved land, a determination of the contributory value of the improvements to the land

must be made. The improvements found on a site may be of inappropriate use, but will usually

continue until the land value in its highest and best use exceeds the total value of the property in its

existing use.

The highest and best use of both land as though vacant and property as improved must meet four

basic tests. These tests consist of the following:

1. Is the use legally permissible or reasonably possible?

2. Is the use physically possible on the site? 3. Is the use economically and financially feasible under proposed and projected market

conditions? 4. Is the use estimated to be the most profitable among the alternatives that are legally

permissible, physically possible, and economically feasible? Highest and Best Use - As Vacant

Highest and Best Use of the site as vacant assumes that a parcel of land is vacant or could be vacant

by demolishing the improvements. Given this assumption, this analysis determines the size, quality

and function that would provide the highest return to the land. The four criteria of Highest and Best

Use (as mentioned above) provide a basis for analysis.

To form an opinion as to the Highest and Best Use as vacant, we considered the physical attributes of

the subject property, its zoning, location and known governmental influences, and the uses of the

surrounding properties.

1Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, 2010.


36

Legally Permissible

Legal restrictions as they apply to the subject property are of two types: private restrictions (deed

restrictions and easements) and public restrictions (zoning). Current information regarding private

restrictions was not provided in this assignment. There appears to be no deed or easement restrictions

on the property that could affect development. The land is not encumbered by a restriction of a long-

term ground lease. Therefore, legal restrictions as they apply to the subject property are primarily the

public restriction of zoning.

The appraised property is zoned “I-G” (General Industrial)” with a General Plan overlay designating

the site to be in the Town Center Mixed-Use District, which is reportedly in the process of being

adopted as the zoning standard for the subject. The I-G zoning allows for light industry and

manufacturing, heavy commercial service-type facilities, and warehousing facilities as well as limited

commercial uses such as office use. The subject is one lot from Beach Boulevard, one of the most

travelled commercial arterials in Orange County and the location of heavy concentration of

commercial uses (retail centers, restaurants, office uses, etc.) along with mix-use residential-retail

projects. The aforementioned uses would conform to existing surrounding land uses.

Physically Possible

The size, shape, terrain, soil conditions, accessibility, and availability of utilities for a parcel of land

affect its utility and adaptability. The physical characteristics of the subject site appear to be adequate

in terms of shape, size, topography, available utilities and accessibility. Although the exact soil

composition is unknown, it appears that the soil is also adequate to support building improvements.

Therefore, it appears that the physical characteristics would allow for the legally permissible uses.

Financially Feasible and Maximally Productive

According to the Real Estate Terminology Handbook, a real estate project is feasible when the

analysis indicates that there is a likelihood of satisfying the explicit objectives and when a selected

course of action is tested in the context of specific constraints and limited resources. The feasibility

of a real estate project is normally related to its economic potential.


37

An in-depth feasibility analysis on the possible alternative uses of the site is beyond the scope of this

appraisal assignment. However, in analyzing the subject property, we have investigated the subject’s

regional, city, and neighborhood characteristics, as well as overall market conditions. Details

regarding each category are presented in respective sections of this appraisal report.

Conclusion “As Vacant”

It is our opinion that the highest and best use of the subject site, if vacant and available for

development, would likely be achieved with the construction of a commercial-office property

(constructed to maximum allowable density), which would be feasible at this time. We note that the

subject property owner is completing construction of a two-story commercial-office building with

ground floor (under-building parking) on the 6,970 SF lot adjacent to the subject that fronts Beach

Boulevard.

Highest and Best Use – “As Improved”

The highest and best use of an improved property at a given time means that use of the land, which

produces the most benefits and, therefore, the highest improved property value. The “use” in the case

of improved property refers to the type of use, as well as how this use is to be exercised in the future.

In determining the highest and best use of land as improved, three use potentials exist: 1) the present

improvements are demolished and the land is used for another purpose; 2) the present improvements

are retained without substantial physical or operational changes; 3) the present improvements are

retained but with significant changes in the physical property (i.e., remodel/addition) or its

management.

In the case of the subject, the property consists of an 18,376 SF site improved with a 2008/2015-

renovated commercial-office buildings totaling 11,503 SF. The improvements are functional and

have an estimated remaining economic life 40 years. As previously mentioned in the Market Study

section of this appraisal report, market trends in the subject has an established where office (and flex

space) vacancies have been historically low and currently hover in the mid-2%. Furthermore, an

adequately strong demand exists for properties like the subject (particularly from owner users) and

availability is limited.


38

Conclusion “As Improved”

It appears that the subject’s existing development meets all the required tests of the Highest and Best

Use concept; those being legally permissible, physical adaptability and maximum productivity.

Based on this analysis, it is our opinion that the existing commercial-office improvements present the

highest and best use of the land “as improved”, particularly considering the improvements provide

value in excess of estimated land value.


39

VALUATION ANALYSIS

Typically, the process of appraising real property consists of compiling and analyzing data from three

different perspectives; these approaches to value are:

In the Cost Approach, the value of a property is derived by adding the estimated value of the land to the current cost of constructing a reproduction or replacement for the improvements and then subtracting the amount of depreciation (i.e., deterioration and obsolescence) in the structures from all causes. Profit for coordination by the entrepreneur is included in the value indication. This approach is particularly useful in valuing new or nearly new improvements and properties that are not frequently exchanged in the market. The current costs to construct the improvements can be obtained from cost estimators, cost estimating publications, builders and contractors. Depreciation is measured through market research and the application of specific valuation procedures. Land value is estimated separately in the cost approach. This approach is based on the theory of substitution that implies that a knowledgeable buyer will pay no more for the real property than the cost of producing a comparable property of similar utility.

The Income Approach is based upon the principle that the value of an income producing property is the present worth of anticipated future benefits, which are comprised of The Annual Income Stream (Cash Flow or Net Income) and the Reversion Benefits (Resale Value). The specific data that an appraiser investigates for this approach might include the property’s gross income expectancy, the expected reduction in gross income caused by vacancy and collection loss, the anticipated annual operating expenses, the pattern and duration of the property’s income stream, and the anticipated resale value or the value of other real property interest reversions. After income and expenses are estimated, the income stream or streams are capitalized by applying an appropriate rate or factor, or converted into present value through discounting. In the discounted cash flow analysis, the quantity, variability, timing, and duration of a set of periodic incomes and the quantity and timing of the reversion are specified and discounted to a present value at a specified yield rate. The rates used for capitalization or discounting are derived from acceptable rates of return for similar properties.

The Sales Comparison Approach is a method of comparing recent sales of similar

properties to the subject property. This approach is based on the principle of substitution in that a prudent investor would pay no more for the real property than the cost of acquiring a satisfactory alternative property that possesses physical, economic and financial comparability. The value of a particular property tends to coincide to the value indicated by the actions of informed buyers and sellers in the marketplace for similar properties.


40

The Cost Approach to value is excluded. Based on our analysis of the subject’s area, market

participants are generally not buying or selling with reliance placed on the methodology of the Cost

Approach to establish value on older buildings like the subject (originally constructed in 1945 and

2008). Moreover, a Cost Analysis would be weakened due to speculative estimates of depreciation,

particularly economic depreciation. It is difficult to derive the specific amount of economic

depreciation, if any, that should be attributed to economic decline.

In the case of the subject appraisal, we have utilized the Income and Sales Comparison approaches in

valuing the subject property. In this report’s Reconciliation section, the two approaches to value are

reconciled into a final value conclusion.

Our valuation analysis follows.


41

INCOME APPROACH

The Income Approach is a method of converting the anticipated economic benefits of owning

property into a value estimate through capitalization. The principle of “anticipation” underlies this

approach in that investors recognize the relationship between an asset’s income and its value. In

order to value the anticipated economic benefits of a particular property, potential income and

expense must be estimated, and the most appropriate capitalization method must be selected. The

two most common methods of converting net income into value are direct capitalization and

discounted cash flow analysis. In direct capitalization, net operating income is divided by an overall

rate extracted from the market sales to indicate a value. In the discounted cash flow method,

anticipated future net income streams and a reversionary value are discounted to an estimate of net

present value at a chosen yield rate. In our opinion, the direct capitalization method is most

appropriate for the subject property. This analysis contains the following sections:

Net Operating Income Estimate

Capitalization Rate Estimate

Indicated Value from the Income Approach

Net Operating Income Estimate

The subject’s three buildings total 11,503 SF (GBA). Two storefront buildings (8031 #A and 8051

Main; 10,326 SF or 90% GBA) are occupied by the owner. The 8031 Main #B building (1,177 SF) at

the rear of the property is occupied by a tenant (Atef Alkabian) on a month-to-month basis, which

commenced on January 1, 2019. The tenant’s space is entirely office and the lease contract rent is

$2,000/Month (Modified Gross). In our valuation, we have elected to base our analysis on an overall

market rental rate for the entire 11,503 SF subject property.

Market Rental Estimate

Market rent for the subject was based on a survey of recent leases and active listings of space similar

to the subject in size, parking, age/quality and location. Our surveyed focused on general office

space; however, flex space with high office build-out were also considered. Of the limited data

available, the following summarized five properties were indicative of the subject’s market rent.

Summary Comparable Rental Properties

Item Subject

Address 8031 & 8051 Main St.

City/Community Stanton

Proximity to Subject -

Property Type Storefront Comcl-Office

Year Built 2008/1947 (Ren. 2015)

Total Building SF (NRA) 11,503

Land SF 18,376

LEASE DATA

Verification Source Inspection

Lease Date/Term N/A 12/11/2018 3 Yrs 10/30/2017 4 Yrs 7/1/2017 1 Yr 3/19/2019 3 Yrs

Lease Type Mod. Gross (Projected)

Size of Space Leased (SF) 11,503 (Entire Prop.)

Monthly Rent $/SF: -

Expenses paid by Tenant Utilities+Reg.Maint

Adjustment for Expenses [a] -

Rent/SF (MG Equiv.) -

Concessions/Listing Adjust. -

Time Adjustment -

Economic Adjusted Rent/SF: -

RENT/SF ADJUSTMENTS

Size of Space Leased (SF) 11,503 (Entire Prop.) 5,200 -5% 8,395 -2% 4,600 -5% 5,000 -5% 10,500 14,608 2%

Type/Quality (Shell & Bld-out) Class C (Good) Class C (Avg) 6% Class C (Good) -3% Class C (Avg) 6% Class C (Avg) 6% Class C (Avg) 6% Class B (Avg) -3%

Design/Appeal Above-Avg SI 3% SS -3% I 6% I 6% SI 3% SS -3%

Condition Very Good I 8% I 8% I 8% I 8% SI 3% I 8%

Freestanding or POLB [b] Freestanding Freestanding POLB 10% POLB 10% Freestanding POLB 10% POLB 10%

% Office Build-out 97% 100% 100% 100% 100% 100% 100%

FAR/Parking Ratio 1.8:1 4:1 -8% 4:1 -8% 4:1 -8% 3.5:1 -6% 4:1 -8% 4:1 -8%

Site Utility/Accessibility Good (Corner lot) E (Corner) E (Corner) SI (Mid-Block) 4% E (Corner) SI (Mid-Block) 4% E

Street Type/Exposure [c] Local/<5K ADT [d] Major/37K ADT -8% Major/17K ADT -4% Major/33K ADT -8% Coll./15K ADT -4% Major/37K ADT -8% Major/48K ADT -10%

Business District Desirability Good (1 Lot from Beach

Bl)

SS -4% E E E E E

Mix Retail/Comcl/Ind Mix Retail/Comcl/Ind E E E SI 4% E E

TOTAL ADJUSTMENT: --

INDICATED SUBJ. RENT/SF: --

[a] Adjustments are made to NNN and Full Service Gross leases to equate to Modified Gross (the subject's projected lease basis)

[d] The subject is also partially visible from the intersection (100 feet west) of Main Street and Beach Boulevard, which has an ADT of over 65,000 vehicles


Summary of Comparable Rental Properties

1 2 3 4 5 4

6491 Edinger Avenue 5772 Bolsa Ave 1112 N. Magnolia Ave 721 N. Eckhoff St 631 S Brookhurst St 511 N. Brookhurst

Huntington Beach Huntington Beach Anaheim Orange Anaheim Anaheim

5.5 MI SW 5 MI SW 2.9 MI N/NW 6.9 MI E 2 MI NW 2.8 MI NW

1970/Renov. 1990s 1984 1973/Renov. 1990s 1976/Ren Late-1990s 1979/Ren.1990/2002 1975/Renov. 1990s

Commercial-Office General Office General Office Flex-Office General Office General Office

18,295 126,324 65,340 Part of Larger Property 57,272 89,734

5,200 54,352 9,396 5,000 32,494 43,058

Broker/Costar Broker/Costar Broker/Costar Broker/Costar Broker/Costar Broker/Costar

Listing

NNN Mod. Gross Mod. Gross NNN Full Service Gross Mod. Gross

Listing

5,200 8,395 4,600 5,000 10,500 14,608

$0.50 $0.00 $0.00 $0.40 ($0.25) $0.00

All NNN Expenses Utilities+Reg.Maint

$1.60 $1.80 $1.75 $1.25 $2.00 $2.00

Utilities+Reg.Maint All NNN Expenses None Utilities+Reg.Maint

$2.10 $1.80 $1.75 $1.65 $1.75 $2.00

0.0% 0.0% -4.0% 0.0% -4.0% 0.0%

$2.10 $1.87 $1.68 $1.73 $1.68 $2.00

$1.89 $1.85 $1.92

0.0% 4.0% 0.0% 5.0% 0.0% 0.0%

-8% -2% 13% 9% 10%

[a] POLB = Part of larger building (less desirable than a freestanding space/building)

[c] ADT = Average Daily Traffic (in thousands)

$1.93 $1.83 $1.90

-4%

42


43

Comparable Rentals Map

We were unable to locate any recent lease comparables in the City of Stanton, which has a small

amount of office space (a quarter-million SF), of which only 4% is currently vacant. Furthermore,

Stanton contains a 208,000 SF of flex-space (as categorized by Costar) with no vacant space at this

time. Thus, our survey was expanded in the neighboring or nearby cities. The six comparables have

Modified Gross (MG) or equivalent monthly rental rates ranging from $1.65 to $2.10/SF. Minor time

adjustments were applied to Nos. 2 and 4, which leased 16 to 21 months ago. Also, downward

“listing” adjustments were to Nos. 3 and 5 to reflect the likelihood of negotiated leases below their

asking rates.

No. 1 ($2.10/SF, MG Equiv.) is a freestanding

40-year-old commercial-office building located

5.5 miles southwest in the city of Huntington

Beach. Upward adjustments for No. 1’s

inferior improvements (in terms of quality,

appeal and condition) are outweighed by

downward adjustments warranted for its

smaller size (5,200 SF vs. subject’s 11,503

SF), higher parking ratio (4:1 vs. subject’s 1.8:1), greater traffic exposure and more desirable

business district. After adjustments, No. 1 indicates a market rent of $1.93/SF for the subject.


44

No. 2 ($1.87/SF, MG; Time Adjusted) is part

of a 35-year-old general office building also

located in Huntington Beach, 5 miles

southwest of the subject. It is within an

established district but one that is

predominantly industrial. Upward adjustments

for No. 2’s non-freestanding layout and

inferior condition are narrowly exceeded by

downward adjustments required for its smaller leased space size (8,395 SF), higher parking ratio

(4:1), greater traffic exposure and slightly superior quality and appeal. After adjustments, No. 2

indicates a subject rent of $1.83/SF.

No. 3 ($1.68/SF, MG; Listing Adjusted) is an

available space within a 46-year-old two-

building general office property located 2.9

miles north/northwest in the neighboring city

of Anaheim. Downward adjustments for No.

3’s smaller size (4,600 SF), higher parking

ratio (4:1), and greater traffic exposure are

surpassed by upward adjustments made for it

being part of a larger project, slightly inferior

accessibility (mid-block vs. subject’s corner lot), and inferior quality, appeal and condition. After

adjustments, No. 3 indicates a market rent of $1.90/SF for the subject.

No. 4 ($1.73/SF, MG Equiv.; Time

Adjusted) is freestanding 43-year-old flex-

office building located 6.9 miles east in the

City of Orange. Downward adjustments for

No. 4’s smaller size (5,000 SF), higher parking

ratio (3.5:1) and greater traffic exposure are

outweighed by downward adjustments

warranted for its inferior improvements

(quality, appeal and condition) and slightly inferior (predominantly industrial) location. After

adjustments, No. 4 indicates a subject rent of $1.89/SF.


45

No. 5 ($1.68/SF, MG; Listing Adjusted) is an

available similar-size space (10,500 SF) within

a 40-year general office building located 2

miles northwest in Anaheim. Downward

adjustments for No. 5’s higher parking ratio

(4:1) and greater traffic exposure are exceeded

by upward adjustments made for its non-

freestanding layout, mid-block lot, and overall

inferior improvements. After adjustments, No. 3 indicates a market rent of $1.85/SF for the subject.

No. 4 ($2.00/SF, MG) is a 14,608 SF space

within a 44-year-old Class B general office

building also located in Anaheim, 2.8 miles

northwest of the subject. Upward adjustments

for this comparable’s larger lease space,

inferior condition and non-freestanding layout

are narrowly exceeded by downward

adjustments warranted for its slightly superior

quality and appeal, higher parking ratio (4:1), and greater traffic exposure. After adjustments, No. 4

indicates a subject rent of $1.92/SF.

After adjustments, the comparables indicate subject market rents ranging from $1.83 to $1.93/SF,

with an average of $1.890/SF. All six comparables were given similar consideration. Based on our

findings, a concluded subject market rent of $1.90/SF/Month (Modified Gross) is appropriate.

Vacancy and Collection Loss

Based on our finding, which are discussed in detail in this appraisal report Market Study section, a

concluded subject vacancy and collection allowance of 5.0% over a stabilized operation (7 to 10-

year holding period) is considered appropriate.


46

Operating Expense Estimate

Historical operating expenses for the subject were not provided for our review. Market evidence and

our broker survey indicate that most similar properties are leased on a Modified Gross basis whereby

the tenant pays for their utilities and regular unit maintenance while the lessor is responsible for

operating expenses including property taxes, insurance, major repairs, management, and replacement

reserves. Our expense projections are based on an analysis of comparable data, management

company surveys and expense reports, and our previous appraisals of thousands industrial properties

in Orange County and throughout Southern California. The subject’s expenses are further discussed

as follows.

Property Taxes: Assumes a sale and is based on the subject’s base tax rate multiplied by the value indicated in the Income Approach.

Direct Assessments: Based on fixed annual special or direct tax assessments.

Property Insurance: Our research revealed insurance rates for buildings like the subject typically range from $0.30 to $0.45/SF. A projected Insurance expense of $0.35/SF is reasonable given the subject’s recent construction/renovation and overall quality.

Repairs/Maintenance: This expense includes the repair of major items and excludes capital expenditures that are covered in our Reserves expense estimate as well as general on-going maintenance (i.e., janitorial) that is the tenant’s responsibility. Our research revealed repair expenses for buildings like the subject typically range from $0.75 to $1.75/SF. Given the subject’s quality and recent construction/renovation, a Repairs/Maintenance expense of $1.10/SF is appropriate.

Management Fees: This category includes off-site property management and bookkeeping costs. This expense is typically expressed as percentage of effective gross income. Typical fees for managing a comparable facility range between 2% and 3% for a property like the subject. A concluded Management expense of 2.0% of EGI is reasonable given the minimal turnover of similar properties in the market area.

Replacement Reserves: It is customary and prudent to deduct an annual sum from gross revenues to establish a reserve for replacement of long-term items throughout the property. Typical proforma and expense provisions allocate this expense from $0.20 to $0.35/SF for a building like the subject. Considering the subject’s recent construction/renovation, we have projected a Reserves expense of $0.25/SF. We note that the resulting amount equates to approximately 1.2% of EGI, which is also within market parameters (1% to 2% of EGI).

The subject’s projected income and expenses are summarized as follows.


47

Income and Expense Summary Gross Rental Income: 11,503 SF x $1.90/SF (Market) x 12 Months $262,268Less: Vacancy & Collection – 5.0% -13,113Effective Gross Income (EGI) $249,155Less: Operating Expenses Property Taxes (Tax Rate x Indicated Value) $38,930 Special Assessments 519 Insurance - $0.35/SF 4,026 Maintenance/Repairs - $1.10/SF 12,653 Management – 2.0% of EGI 4,983 Replacement Reserves - $0.25/SF 2,876 Total Operating Expenses ($5.56/SF; 25.7% of EGI) -63,987Net Operating Income: $185,168

Capitalization Rate Estimate The subject’s concluded capitalization rate is based on the following:

Investor purchases of office buildings in the subject’s size range (±5,000 to 15,000 SF) have

been limited County-wide during the past 2 years. Following is a summary of relevant investment office property transactions that range from 4,538 to 14,622 SF. The Cap Rates indicated by these properties range from 3.50% to 6.18%, with an average of 5.32%. An analysis of these sale properties suggests that a Cap Rate between in the low-5% range would be reasonable for the subject.

Sale Size Year Sale CapDate Street Address City (SF) Built Price Rate

08/29/18 5075 Warner Avenue Huntington Beach 9,423 1965/Renov. 1990s $3,650,000 5.60%05/16/18 135-139 W 1st Street Tustin 14,622 2005 $7,480,000 5.30%Listing 13700-13752 Goldenwest St. Westminster 10,000 1978/Renov. 2003 $4,650,000 3.50%

02/07/19 5500 Trabuco Rd Irvine 6,933 2001 $2,975,000 4.38%02/06/19 27372 Aliso Creek Rd Aliso Viejo 14,037 2001 $4,500,000 6.18%11/01/18 1525 E 17th St Santa Ana 10,310 1962 $1,650,000 5.42%08/16/18 5631 Lincoln Ave Cypress 4,538 1941 $1,530,000 5.50%07/25/18 27831 La Paz Rd Laguna Niguel 6,878 1980 $2,440,000 6.03%06/22/18 5020 Campus Dr Newport Beach 11,458 1995 $4,202,500 5.50%06/15/18 1611 E 4th St Santa Ana 14,344 1986 $3,050,000 6.10%09/01/17 1815 E Heim Ave Orange 10,742 1982 $2,150,000 5.30%07/25/17 9900 Irvine Center Dr Irvine 4,960 2007 $2,108,000 5.16%Listing 777 W 19th St Costa Mesa 11,316 1986 $3,995,000 5.34%Listing 7800 Commonwealth Ave Buena Park 11,300 1985 $3,790,000 5.04%Listing 8181 E Kaiser Blvd Anaheim 11,706 1999 $3,750,000 5.50%Listing 1043 Civic Center Dr W Santa Ana 8,432 1955 $2,340,000 5.19%

Average: 5.32%

Numerous brokers were interviewed from brokerage and development firms active in the subject’s market area. The consensus opinion of brokers interviewed was that a capitalization rate in the near 5% would be appropriate for the subject given its established and desirable location, very limited availability of similar properties, and strong upward pressure on sale prices paid by owner users who continue to have the greatest influence in prices paid for small office properties like the subject.


48

Cap Rate trends relevant to the subject property are shown below.

West County Market (Office up to 100,000 SF) Orange County (Flex Properties 5,000-15,000 SF)

As stated earlier, mortgage rates have begun to increase. Financial market volatility together

with questions arising from the contentious election reined in sales slightly. It appears that investors have scaled back activity as they await clarity on government policies and as the market recalibrates to higher interest rates. Private investors remain particularly sensitive to tax and policy changes. However, many buyers seek to capitalize on the reduced competition for assets – albeit some investors have refrained from the market to assess the impacts of potential policy changes. Although interest rates have risen since the election, by historical standards they are still low.

Based on our research and analysis, a concluded capitalization rate of 5.25% for the subject is

considered appropriate and consistent with market levels.

Indicated Value from the Income Approach

$185,168 NOI Capitalized @ 5.25% OAR, rounded…………… $3,530,000


49

SALES COMPARISON APPROACH

An investigation was undertaken to locate sales of similar improvements in the subject’s market area

that could be used to provide direct market indications of the subject’s value. Our survey focused

primarily on similar-size and quality office properties. However, our research revealed a limited

number of adequately comparable recent (past 24 months) closed sale transactions and active listings

of comparable office properties between 5,000 and 15,000 SF (subject is 11,503 SF GBA). As such,

our survey was expanded to cover the West County, Central County, and North County markets

areas.

The subject is considered to be a storefront commercial-office property. Given its underlying

industrial zoning and small (3% of GBA) warehouse with overhead loading doors, the subject can

also be described as a quasi flex-office building with high percentage of office build-out. However,

given the subject is one lot from Beach Boulevard (a major commercial arterial) with an average daily

traffic of over 65,000 vehicles, a commercial-office user is the more likely buyer of the property.

Nevertheless, in support of conclusion, flex properties were also considered with particular emphasis

on those with high office build-out.

Of the data surveyed, nine properties were considered the most reliable indicators of the subject’s

market value. Six of the nine properties are office space with three being storefront commercial-office

properties like subject. The last three comparables are flex properties.

Each comparable property was visited and we attempted to verify the sales information with one or

more of the parties to the transaction. In the case of the subject, the most appropriate unit of

comparison is the price per square foot of gross building area. The nine comparables are summarized

and compared to the subject on the following pages.

The following table summarizes the six comparables and provides a comparison analysis of each

comparable to the subject.

COMPARABLE SALE PROPERTIES

Other Office Properties

Item Subject

Location/Address: 8031 & 8051 Main St.

Stanton

Assessor’s Parcel No. 126-433-07


Building SF (GBA) 11,503

Land (SF) 18,376

Year Built 2008/1947 (Ren. 2015)

Construction Type Storefront Comcl-Office

Construction Type Class C (Good)

Occupancy 90% Owner/10% Ten MTM

SALE DATA

Sale Date: -

Document No. -

Source -

Interest Transferred/Appraised Fee Simple

List Price: -

Time on the Market -

List vs Sale Price % Variance -

Sale Price: -

Sale Price/SF GBA -

Financing:

Cash Down -

1st Trust Deed -

1st T.D. Terms -

Economic Adjustments

Property Rights (Buyer Type) [a] Fee Simple

(Owner-Usser)

Listing/Conditions of Sale -

Financing -

Time/Market Conditions -

Total Economic % Adjustments: -

Economic Adjusted Price/SF: -

Property Adjustments

Building Size (SF) 11,503 5,340 -5% 8,671 -3% 8,150 -3% 5,829 -6% 10,677 10,000

Construction Type/Quality Class C (Good) E SI 5% E S+ (Medical) -12% E E

Design/Appeal Above-Avg E SI 5% E E E E

Condition Very Good I (Def. Maint) 10% I 10% SI 5% E SI 5% SI 5%

% Office Build-out [b] 97% 100% 100% 100% 100% 50% 8% 100%

Floor Area Ratio 0.63 0.49 (Triangular) -3% 0.79 3% 0.60 0.31 -10% 0.54 -3% 0.40 -6%

Visibility/Accessibility Corner/Good E (Corner) E (Corner) SI (Mid-Block) 4% E (Corner) SI (Mid-Block) 4% E (Corner)

Street Type/Exposure [c] Local/<5K ADT [d] Major/57K ADT -15% Major/34K ADT -10% Collctr/15K ADT -6% Major/54K ADT -15% Local /<5K ADT Major/40K ADT -12%

Business District Desirability Good (1 Lot from Beach Bl) E E E E I 8% S -8%

Immediate Surroundings Mix Retail/Comcl/Ind E E E E I 8% S -8%

Total Property % Adjustments: -

FINAL INDICATED SUBJECT PSF: -

Storefront Comcl-Office Storefront Comcl-Office Storefront Comcl-Office Storefront Medical Office-over-Retail

8891 Watson Street

Cypress

262-412-05

3.25 MI NW

10,677

19,602

2000

Office-Comcl/Whse

10,890 10,986 13,504 18,731 24,829

1962/Renov. 2001 1958 1963/Renov. 2006 1971/Major Renov. 2016

$333.31 $339.99 $334.16 $331.69 $336.75

[a] To reflect higher prices paid by owner-users (subject's most likely buyer), upward adjustments were applied to leased fee properties purchased by or being marketed to investors

[d] The subject is also partially visible from the intersection (100 feet west) of Main Street and Beach Boulevard, which has an ADT of over 65,000 vehicles

$331.59

[b] Office build-out adjustment is based on a depreciated build-out cost of $40/SF [c] ADT = Average Daily Traffic (in thousands)

-13.0% 10.0% 0.0% -43.0% -29.0%30.0%

6.0% 0.0% 2.0% 6.0% 2.0%

$383.11 $309.08 $334.16 $581.92 $474.30

2.0%

$255.07

0.0% 0.0% 0.0% 0.0% 0.0%

6.0% 0.0% 0.0% 6.0% 0.0%

0.0%

0.0%

0.0% 0.0% 8.0% 0.0% 8.0%

0.0% 0.0% -6.0% 0.0% -6.0%

8.0%

-6.0%

(Owner-User) (Owner-User) (Investor) (Owner-User) (Investor) (Investor)

SALE ADJUSTMENT GRID (PSF GBA ANALYSIS)

$1,540,000 $1,876,000 - $2,560,000 -

Conv. Loan Conv. Loan - Conv. Loan -

-

-

$390,000 $804,000 - $640,000 --

$361.42 $309.08 $327.61 $548.98 $465.00

-3% -10% - -3% -

$1,930,000 $2,680,000 - $3,200,000 -

-

-

$250.07

$1,999,500 $2,988,800 $2,670,000 $3,300,000 $4,650,000

6 Months 10 Months 7 Months 4 Months 7 Months

$2,670,000

2 Weeks

CoStar/LoopNet/Broker CoStar/LoopNet/Broker CoStar/LoopNet/Broker CoStar/LoopNet/Broker CoStar/LoopNet/Broker

Fee Simple @ Sale Leased Fee Leased Fee Fee Simple @ Sale Leased Fee

CoStar/LoopNet/Broker

Leased Fee

8-Dec-17 22-Oct-18 Listing 1-Nov-17 Listing

529717 382087 - 465212 -

Listing

-

Class C (Average) Class C (Average) Class C (Good) Class B (Good) Class C (Good)

70% Buyer/30% Tenant 50% Buyer/50% Tenants 100% Tenants 50% Buyer/50% Tenants 100% Tenants

Class C (Average)

100% Tenant

1978/Renov.2001

2.5 MI S 6 MI NE 5 MI NE 3.75 MI N 3.25 MI S

5,340 8,671 8,150 5,829 10,000

Garden Grove Fullerton Ave., Fullerton Buena Park Westminster

097-364-08 029-031-35 031-131-29 276-312-41 096-071-28


Summary of Comparable Building Sales

1 2 3 4 6

9012 Garden Grove Blvd 618-624 N Harbor Blvd 1532 W Commonwealth 6714-6736 Beach Blvd 13700 Goldenwest St

Storefront Commercial-Office Properties

5

50

COMPARABLE SALE PROPERTIES

Item Subject

Location/Address: 8031 & 8051 Main St.

Stanton

Assessor’s Parcel No. 126-433-07


Building SF (GBA) 11,503

Land (SF) 18,376

Year Built 2008/1947 (Ren. 2015)

Construction Type Storefront Comcl-Office

Construction Type Class C (Good)

Occupancy 90% Owner/10% Ten MTM

SALE DATA

Sale Date: -

Document No. -

Source -

Interest Transferred/Appraised Fee Simple

List Price: -

Time on the Market -

List vs Sale Price % Variance -

Sale Price: -

Sale Price/SF GBA -

Financing:

Cash Down -

1st Trust Deed -

1st T.D. Terms -


Property Rights (Buyer Type) [a] Fee Simple

(Owner-Usser)

Listing/Conditions of Sale -

Financing -

Time/Market Conditions -

Total Economic % Adjustments: -

Economic Adjusted Price/SF: -


Building Size (SF) 11,503 12,590 6,763 -5% 8,069 -3%

Construction Type/Quality Class C (Good) SI 5% E SI 5%

Design/Appeal Above-Avg SI 5% E E

Condition Very Good SI 5% SI 5% SI 5%

% Office Build-out [b] 97% 62% (100% AC) 2% 63% (100% AC) 2% 79% 3%

Floor Area Ratio 0.63 0.51 -4% 0.37 -10% 0.60

Visibility/Accessibility Corner/Good E (Corner) I (Mid-Block/PID) 6% E (Corner)

Street Type/Exposure [c] Local/<5K ADT [d] Local/Fwy Frontage -10% Local /<5K ADT Local /<5K ADT

Business District Desirability Good (1 Lot from Beach Bl) E E SI 4%

Immediate Surroundings Mix Retail/Comcl/Ind SI (Industrial) 4% SI (Industrial) 4% SI (Industrial) 4%

Total Property % Adjustments: -

FINAL INDICATED SUBJECT PSF: -

(Continued)

[c] ADT = Average Daily Traffic (in thousands)[d] The subject is also partially visible from the intersection (100 feet west) of Main Street and Beach Boulevard, which has an ADT of over 65,000 vehicles

[a] To reflect higher prices paid by owner-users (subject's most likely buyer), upward adjustments were applied to leased fee properties purchased by or being marketed to investors

$335.70 $335.72 $330.99

7.0% 2.0% 18.0%

$313.74 $329.14 $280.50

0.0% 6.0% 2.0%

0.0% 6.0% 0.0%

0.0% 0.0% 0.0%

0.0% 0.0% -6.0%

(Owner-User) (Owner-User) (Investor)

0.0% 0.0% 8.0%

SALE ADJUSTMENT GRID (PSF GBA ANALYSIS)

All Cash Sale All Cash Sale -

- - -

- - -

$313.74 $310.51 $275.00

$3,950,000 $2,100,000 -

- -5% -

(Purchased by City) 5 Months 2 Months

- $2,200,000 $2,219,000

Fee Simple Fee Simple Leased Fee

CoStar/LoopNet/Buyer CoStar/LoopNet/Broker CoStar/LoopNet/Broker

0003342 0500456 -

4-Jan-19 29-Sep-17 Listing

100% Buyer 100% Buyer 100% Tenant

Class C (Average) Class C (Good) Class C (Average)

Flex-Office/Showroom Flex-Office Flex-Office

1980 1989 1983

24,829 18,504 13,504

12,590 6,763 8,069

8.25 MI E/NE 5.5 MI E 11.25 MI E/NE

344-421-19 082-140-50 346-201-06

Anaheim Anaheim Anaheim

[b] Office build-out adjustment is based on a depreciated build-out cost of $40/SF


Summary of Comparable Building Sales

Flex-Office Properties

7 8 9

3035 E La Mesa St 1255 S Lewis Street 5100 E Hunter Ave

51


52

Comparable Sales Map

The comparables have unadjusted prices ranging from $250.07 to $548.98/SF.


Smaller buildings when not encumbered by a lease (or leases), predominantly cater to owner users

(subject’s most likely buyer) who typically higher prices than investors. For this reason, upward

Property Rights/Buyer Type adjustments were applied to Nos. 3, 6 and 9, which are leased properties

purchased by or being marketed investors.

Based on price trends discussed in this appraisal report’s Market Study, we have elected to apply a

minor upward time adjustment to Nos. 1, 4 and 8 – all of which sold over 16 months in late-2017/

Lastly, downward “listing” adjustments were applied to Nos. 3, 5 and 9 to reflect the likelihood of

negotiated sales below their asking prices.

After applying the aforementioned economic adjustments, the indicated prices range from $255.07 to

$581.92/SF.


53


Property adjustments were made for building size, occupancy at sale, construction quality, appeal,

interior build-out, overall condition, floor area ratio (FAR), business district/neighborhood identity,

immediate surroundings, and traffic exposure. Adjustments were based “paired” data sets analysis as

well as broker interviews and our considerable experience from having appraised thousands of office

properties in Orange County and throughout Southern California.

The comparables are further discussed as follows.

No. 1 ($383.11/SF; Time Adjusted) is a

partially owner-occupied, similar-quality, 57-

year-old, storefront commercial-office property

located 2.5 miles south in the neighboring city

of Garden Grove. An upward adjustment for

No. 1’s inferior condition is well exceeded by

downward adjustments required for its smaller

size (5,340 SF vs. subject’s 11,503 SF), lower

FAR (albeit the adjustment is somewhat tempered by its triangular lot), and considerably greater

traffic exposure. After adjustments, No. 1 indicates a value of $333.31/SF for the subject.

No. 2 ($309.08/SF) is a partially owner-

occupied, 61-year-old, commercial-office

property located 6 miles northeast in the City

of Fullerton. Downward adjustments for No.

2’s smaller size (8,671 SF) and greater traffic

exposure are surpassed by upward adjustments

made for its higher FAR (0.79 vs. subject’s

0.63 FAR), inferior condition, and slightly

inferior overall quality and design/appeal. After adjustments, No. 2 indicates a value of $339.99/SF

for the subject.


54

No. 3 ($334.16/SF; Buyer Type & Listing

Adjusted) is an investor-purchased, 2006-

renovated, similar-quality, commercial-office

building also located in Fullerton, 5 miles

northeast of the subject. Downward

adjustments for No. 3’s smaller size (8,150 SF)

and greater traffic exposure are offset by

upward adjustments required for its slightly

inferior condition and accessibility (mid-block vs. subject’s corner lot). After adjustments, No. 3

indicates a value of $334.16/SF for the subject.

No. 4 ($581.92/SF; Time Adjusted) is an

owner-user purchased similar-appeal storefront

medical office building located 3.75 miles

north in the neighboring city of Buena Park. An

overall superior property, No. 4 required

downward adjustments for its smaller size,

medical office build-out, lower FAR and

considerably greater traffic exposure. After

these adjustments, No. 4 indicates a subject value of $331.69/SF.

No. 5 ($255.07/SF; Property Rights/Buyer

Type & Listing Adjusted) is located 3.25

miles northwest in the neighboring city of

Cypress and comprised of a similar-size

(10,677 SF), multi-tenant, office-commercial/

warehouse building with 50% office build-out

and 50% warehouse space. A downward

adjustment for its lower FAR (0.54) is heavily

outweighed by upward adjustments warranted for its slightly inferior condition, partial (50%) build-

out, mid-block lot, and inferior overall location within a less desirable business district and

surrounded by mostly industrial properties and contractor yards. After adjustments, No. 5 indicates a

subject value of $331.59/SF.


55


Type & Listing Adjusted) is an available

similar-size (10,000 SF), 2006-renovated,

multi-tenant, office-over-retail building located

3.25 miles south in the neighboring city of

Westminster. An upward adjustment for this

comparable’s slightly inferior condition is

well-exceeded by downward adjustments

required for its lower FAR (0.40), much greater traffic exposure, and superior overall location (in

terms of business district desirability and surroundings). After adjustments, No. 5 indicates a subject

value of $336.75/SF.

No. 7 ($313.74/SF) is located 8.25 miles

east/northeast in the northeast industrial district

of Anaheim and comprised of an owner-user

purchased, similar size (12,590 SF), well-

maintained, 1980-constructed, flex-office/

showroom building (100% HVAC with 62%

office build-out). Downward adjustments for

No. 7’s lower FAR (0.51) and freeway

exposure are outweighed by upward adjustments applied for its slightly inferior interior build-out,

predominantly industrial surroundings, and slightly inferior overall quality, appeal and condition.

After adjustments, No. 7 indicates a subject value of $335.70/SF.

No. 8 ($329.14/SF; Listing Adjusted) is also

located in northeast Anaheim (11.25 miles east/

northeast) and comprised of an leased single-

tenant flex-office building with 79% office

build-out. Downward adjustments for No. 8’s

smaller size (6,763 SF) and lower FAR (0.37)

are narrowly exceeded by upward adjustments

warranted for its slightly inferior condition and

build-out, inferior accessibility/visibility (rear building of PID project), and industrial surroundings.

After adjustments, No. 8 indicates a subject value of $335.72/SF.


56


Type & Listing Adjusted) is also located in

northeast Anaheim (an available similar size

and quality building located 2 miles west and

along a major street. A downward adjustment

for No. 9’s smaller size (8,069 SF) is heavily

outweighed by upward adjustments required

for its slightly quality condition, interior build-

out, business district (eastern periphery of its neighborhood) and surroundings (industrial). After

adjustments, No. 9 indicates a subject value of $330.99/SF.

After adjustments, the comparables indicate subject values ranging from $330.99 to $339.99/SF, with

an average of $334.15/SF. Most weight is given Sale Nos. 1 thru 6, which are comprised of

commercial-office properties and indicated adjusted values ranging from $331.59 to $339.99/SF.

Based on our findings and the narrow range of adjusted values indicated by the nine comparables

analyzed, a concluded subject value of $335.00/SF is considered appropriate.

Indicated Value from the Sales Comparison Approach

$335.00/SF x 11,503 SF GBA, rounded……………………………. $3,850,000


57

RECONCILIATION

Indicated values from the Income and Sales Comparison approaches are summarized as follows: Income Approach: $3,530,000

Sales Comparison Approach: $3,850,000

The Income Approach is based on a thorough rental survey of the most comparable properties in the

market area, and well-supported expense and capitalization rate estimates derived from market area

research and industry standards. Most investors rely on the Income Approach to determine the value

of a single or multi-tenant investment property. However, the occupancy and income characteristics

of the subject reflect owner occupancy. The reliability of the Income Approach to value has been

further by the scarcity of recent investor-purchased like properties. More importantly, market

participants (buyer, sellers and brokers) place considerably less emphasis on the Income Approach in

determining a price for 90% owner-occupied fee simple property like the subject. For these reasons,

the Income Approach was given very minimal weight in our final valuation.

The Sales Comparison Approach was given greatest consideration in the Reconciliation. This

approach is an attempt to measure the value of the subject property by comparing prices of similar

properties that have recently sold. This approach is most reliable when the sale dates of the

comparables are close in time to the date of valuation of the appraised property, and there is

reasonable similarity between the subject and the sales comparables analyzed. Since it is determined

that the most likely buyer would be an owner-user, the Sales Comparison is considered the most

reliable approach to the valuation of the subject. In the final valuation, primary emphasis and greatest

weight are placed on the Sales Comparison Approach.


58

FINAL VALUATION

Based on our inspection of the subject property and surrounding neighborhood, our analysis of

relevant data, and the preparation of the most applicable approaches to value, it is our opinion that

“As Is” market value of the fee simple interest in the subject property, as of April 16, 2019, is:

THREE MILLION EIGHT HUNDRED THOUSAND DOLLARS

$3,800,000


59

INSURABLE VALUE ESTIMATE

Insurable value is defined by The Dictionary of Real Estate Appraisal, Fifth Edition as published

by the Appraisal Institute as follows:

1. The value of an asset or an asset group that is covered by an insurance policy; can be estimated by deducting costs of non-insurable items (e.g., land value) from market value.

2. Value used by insurance companies as the basis for insurance. Often considered replacement or reproduction cost plus allowances for debris removal or demolition less deterioration and non-insurable items. Sometimes cash value or market value, but often entirely a cost concept. (Marshall & Swift LP).

We have been asked by the client to provide an estimate of insurable value. Our estimate is based

on historical cost data/estimates provided by Agamata Associates (a professional cost engineering

firm) as well as national cost services such as Marshall & Swift. This estimate should be used only as

a guide and not relied upon as a definitive construction cost estimate should reconstruction of the

structure(s) be needed. This insurable value estimate is based on a construction cost analysis. The

subject’s insurable value “as is” is estimated as follows.

Replacement Cost New GBA (SF) $/GBA Sub-TotalBuilding Improvements

Direct Building Shell Costs (Excl Yard Improvements) 11,503 $125.00 $1,437,875Direct Building Interior Office Build-out 11,107 $60.00 666,420Other Related Building Costs 270,000

Total Building Replacement Cost New 11,503 $206.41 $2,374,295

Less: Insurance ExclusionsFoundations Below Grade 3.00%Piping Below Building Grade 2.00%Architect Fees 7.00%Total Insurance Exclusion Adjustment 12.00% ($284,915)

Insurable Value $2,089,381Rounded to……………………………………. 3 $2,090,000

INSURABLE VALUE


CERTIFICATION

We, the undersigned, do hereby certify that during the completion of this assignment that, except as

specifically noted:

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 represents 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 with respect to the parties involved.

4. I have not performed services, as an appraiser or in any other capacity, regarding the property that is the

subject of this report within the three-year period immediately preceding acceptance of this assignment.

5. We have no bias with respect to the property that is the subject of this report or to the parties involved with

this assignment.

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

7. 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.

8. My analyses, opinions, and conclusions were developed, and this report has been prepared in conformity

with the uniform standards of professional appraisal practice.

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

10. Robert Agamata provided professional assistance in the inspection of the subject property and

research/confirmation of comparable data under the direct technical supervision of John C. Agamata. The

final conclusion to value is made by and the appraisal is signed by John C. Agamata.

11. This appraisal report has been made in conformity with, and is subject to, the basic standards and intent of

Title XI F.I.R.R.E.A. reform amendments of 1989, the Uniform Standards of Professional Appraisal

Practice (2018-2019 USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation, the

Office of the Comptroller of Currency (OCC), Federal Appraisal Regulations and the Office Thrift

Supervision (OTS).

12. We (the undersigned) have adequate education, and have previously appraised many properties similar to

this type of property, and we are familiar with the area. We are competent to appraise the subject property.

Refer to attached qualifications for additional information.

April 24, 2019

DATE SIGNED

JOHN C. AGAMATA

State Certified General Appraiser

Certificate No. AG 022752

CA/Expires 21-Feb-21


ASSUMPTIONS AND LIMITING CONDITIONS

Along with those previously stated in this appraisal report, this appraisal is made expressly subject to

the conditions and stipulations following:

Specific

1. A preliminary title report was provided for our review. Public utility and roadway easements

are noted on the title report and considered typical. Also refer to this appraisal report’s Land

Description section. We have reviewed neither legal opinions nor engineering reports

concerning the aforementioned. We assume the subject property to be free of any easements,

covenants or restrictions, which would have a negative impact on the value of the property.

Any existing easements, covenants or restrictions are assumed necessary for the highest and

best use of the site. These assumptions are formally incorporated into various estimates of

this report.

2. We have not received a soils report in connection with this appraisal assignment. In the

absence of a soils report, we assume soil conditions to be adequate to support the existing

improvements into the future. This assumption is incorporated into this report.

3. A geologic report covering the subject property was not provided. In the absence of a

geologic report, we assume geologic conditions to be stable enough to support the existing

improvements into the future. In addition, we assume that no geologic conditions exist which

would adversely affect the value of the site or prevent the development of the site to its

highest and best use. These assumptions are formally incorporated into various estimates of

this report.

4. The subject property is appraised without a specific compliance survey having been

conducted to determine if the property is or is not in conformance with the requirements of

the Americans with Disabilities Act. The presence of architectural and communications

barriers that are structural in nature that would restrict access by disabled individuals may

adversely affect the property’s value, marketability, or utility. The analysis contained herein

assumes the subject is not impacted by any aspects of the Americans with Disabilities Act and


that there are no known non-compliance items. Subject to confirmation by an appropriately

licensed entity, this assumption is incorporated into various estimates of this report.

General

1. No responsibility is assumed by us for matters which are legal in nature.

2. The appraisal covers the property described only.

3. Sources of information are believed to be correct and, where feasible, have been verified.

4. That the date of value, which the conclusions and opinions expressed in this report apply, is

set forth in the letter of transmittal. Further, that the dollar amount of any value opinion

herein rendered is based upon the purchasing power of the American dollar on that date.

5. That the appraiser(s) assumes no responsibility for economic or physical factors, which may

affect the opinions stated herein, occurring at some date after the date of value.

6. That the appraiser(s) reserves the right to make such adjustments to the valuation therein

reported, as may be required by consideration of additional data or more reliable data that

may become available.

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

matters discussed within the report. They should not be considered as survey, or relied upon

for any other purpose, nor should they be removed from, reproduced, or used apart from this

report.

8. By reason of this appraisal, we are not required to give testimony or to be in attendance in

court or at any governmental or other hearing with reference to the property without prior

arrangements having been made relative to such additional employment.

9. Neither all nor any part of the contents of this report (especially any conclusions as to value,

the identity of the appraiser or the firm with which they are connected, or any reference to the


Certified General certification) shall be disseminated to the public through advertising media,

public relations media, sales media or any other public means of communication without the

prior written consent and approval of the authors.

10. Possession of this report, or a copy of it, will not carry with it the right of publication. The

report may not be used for any purpose by any person other that the party to whom it is

addressed without the written consent of the appraiser and the appraiser specifically disclaims

any liability to such unauthorized third parties. In any event, the report may be used only with

proper written qualifications and only in its entirety for its stated purpose.


QUALIFICATIONS

of

JOHN C. AGAMATA

PROFESSIONAL BACKGROUND

Actively engaged in real estate appraisal profession since 1980. In January 1988, implemented the “Real Estate Appraisal Division” of Agamata Associates, Laguna Niguel, California. Between 1990 and May 2014, conducted appraisal services

under Agamata Appraisal Company and AppraisalPacific. Presently, the Appraisal Manager for Agamata Appraisal

Group, Inc. located in San Diego County (310 S. Twin Oaks Valley Road, #107-366, San Marcos, CA 92078; TEL: 760-

201-0846). .

Senior associate appraiser with Diversified Realty Appraisal, Newport Beach, California from 1980 to 1988. Also

provided appraisal services for Urban Pacific Services Corporation (Irvine, California). Also engaged in cost engineering

and estimating assignments with Agamata Associates (Laguna Niguel, California) since 1979. Between February 1982

and October 1983, employed part-time with Coldwell banker Residential (Mission Viejo, California) as a licensed real

estate agent.

EDUCATIONAL ACTIVITIES

Federal and State Law1s and Regulations, Allied Real Estate Schools – 2002, 2004, 2006, 2009, 2011, 2015, 2017, 2019

Uniform Standards of Professional Appraisal Practice, Allied Real Estate Schools – 02’, 04’, 06’, 11’, 13’,15’, 17’,19’

Allied Real Estate Schools – 2019 (Analyzing Markets; Statistics and Modeling; Complex Residential Appraisal; and

Real Estate Appraisal Report Writing)

Allied Real Estate Schools – 2015 (Case Studies in Complex Appraisal; Real Estate Specialties v.2; Economics for

Appraisers; and Creating Credible Appraisals)

California Real Estate Principals, Allied Real Estate Schools – 2002, 2004

Real Estate Appraisal Principals, Course 110, Appraisal Institute – 1993

Real Estate Appraisal Procedures, Course 120, Appraisal Institute – 1993

Uniform Standards of Professional Appraisal Practice, Course 410 and 420, Appraisal Institute – 1993

Basic Income Capitalization, Course 310, Appraisal Institute – 1993

Appraisal Principals and Techniques, Real Estate Trainers – 1993

University of California, Irvine, 1979-1981

LICENSING

Certified General Real Estate Appraiser - Office of Real Estate Appraisers, State of California (#AG022752; Valid thru

February 21, 2021)

EXPERIENCE

Principal appraiser on over 7,500 commercial assignments since January 1998. Valuations (including properties valued

over $25 million), consultations, market analyses, and feasibility studies completed on a wide range of commercial,

industrial, residential, and special-purpose properties located throughout California. Experience also includes expert

witness testimony in litigation assignments.

Provided appraisal services for financial institutions (past and present) that include Wells Fargo Bank, JPMorgan Chase

Bank, Bank of the West, City National Bank, HSBC Bank, Neighborhood National Bank, Capital Bank, Celtic Bank,

Bank of Southern California, Pacific Premier Bank, Commerce Bank of Temecula Valley, US Metro Bank, Sunwest

Bank, BBCN Bank, CommerceWest Bank, Nano Bank, Community Valley Bank, Regents Bank, Grandpoint Bank,

Comerica Bank, Union Bank, Pacific Western Bank, Pacific Capital Bank, Home Bank of California, Bridge Bank,

Citibank, First National Bank of North County, Pacific Coast National Bank, Security Pacific Bank, Community South

Bank, Rabobank, Washington Mutual Bank, First Commerce Bank, American Continental Bank, Friendly Hills Bank,

Preferred Bank, Community West Bank, First Business Bank, Southwest Community Bank, Spectrum Commercial

Lending, Orange County Business Bank, Umpqua Bank, Hana Small Business Lending, Inc., Guaranty Bank of

California, Commerce National Bank, Community Bank, First Federal Bank, CIT Small Business Lending Corp., Gulf

Coast Bank & Trust Company, First National Bank of Southern California, Pacific Trust Bank, ING Bank, GE Capital

Corporation, Premier Commercial Bank, etc.


A D D E N D A

SUBJECT PHOTOGRAPHS

AGAMATA APPRAISAL CO.

1

SUBJECT PHOTOGRAPHS

Northeast view of the

subject from Main Street;

Building 1 (8031 Main) is

to the left and Building 3

(8051 Main) is to the right

NOTE: Building 2 (also

has 8031 Main address) is

at the rear

Northerly view of the





NOTE: Buildings 1 and 3

are 100% owner occupied


2

SUBJECT PHOTOGRAPHS (Continued)

Northwest view of the





Easterly view of Main

Street; subject buildings to

the left


3


Northwest view of the

subject from Main Street

and Chestnut Avenue

Westerly view of Main

Street; subject to the right


4


Westerly view of Bldg. 3

from Chestnut Avenue

Southerly view of

Chestnut Avenue; subject

to the right (Building 3;

Building 2 (tenant) is in

the background

NOTE: red arrow indicates

city abandoned alley –

now owned by the current

ownership. The property to

the right (parking lot) is

also owned by the current

ownership (not part of

appraisal)


5


View of alley from Main

Street

Northerly view of

Chestnut Avenue; the

subject is to the left


6


Close-up of Bldg. 1

(owner occupied)

Close-up view of Bldg. 2

(tenant occupied)

NOTE: Buildings 1 and 2

have same 8031 Main

Street address


7


Close-up view of Bldg. 3

(owner occupied)

View of parking area

between Buildings 1 and 3


8


Another view of parking

area between Buildings 1

and 3; red arrow indicates

stucco block facade

Close-up view of parking

area from alley (city

abandoned alley; owned

by the current ownership)


9


Close-up view of subject

buildings from alley (red

arrow indicates the city-

abandoned alley now

owned by the ownership)

Building 1 (owner

occupied) – lobby and

foyer area


10


Building 1: lounge area on

the ground floor

Building 1 – conference

room


11


Building 1 – private office

Building 1 – another

private office


12


Building 1 - private office

Bldg. 1 - 2nd floor office

area


13


Bldg. 1 - restroom

Bldg. 2 (tenant occupied) –

lower floor office with

open mezzanine above


14


Bldg. 2 (tenant occupied) –

lower floor office with

open mezzanine above

Bldg. 2 (2nd floor open

mezzanine); partially

improved


15


Bldg. 3 (owner occupied)

– typical office area

Bldg. 3 (owner occupied)

– office area (engineer’s

room)


16


Bldg. 3 – office hallway

Bldg. 3 – office area


17


Bldg. 3 – open office area

Bldg. 3 – conference room


18


Bldg. 3 – small warehouse

area; also showing open

mezzanine above

PRELIMINARY TITLE REPORT

Chicago Title - LA500 N. Brand Blvd, Suite 200, Glendale, CA 91203

Prelim Title Report

Title Officer: Jim PrestonEmail: [email protected] No.: (818)548-0222Fax No.: (818)550-3254Title No.: 111904407

Phone No.: (714)823-4222Fax No.: (714)620-8889

Property Address: 8051 Main Street, Stanton, CA

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CLTA Preliminary Report Form - Modified (11/17/2006) Printed: 04.06.19 @ 12:14 PM1 CA-CT-FLAX-02180.055690-SPS-1-19-111904407

PRELIMINARY REPORTOrder No.: 111904407-JPProperty: 8051 Main Street

Stanton, CA 906808031 A and B Main StreetStanton, CA 90680

In response to the application for a policy of title insurance referenced herein, Chicago Title Company herebyreports that it is prepared to issue, or cause to be issued, as of the date hereof, a policy or policies of titleinsurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss whichmay be sustained by reason of any defect, lien or encumbrance not shown or referred to as an exception herein ornot excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations or Conditions of saidpolicy forms.

The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy orpolicies are set forth in Attachment One. The policy to be issued may contain an arbitration clause. When theAmount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated atthe option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on CoveredRisks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a DeductibleAmount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Attachment One. Copiesof the policy forms should be read. They are available from the office which issued this report.

This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating theissuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumedprior to the issuance of a policy of title insurance, a Binder or Commitment should be requested.

The policy(ies) of title insurance to be issued hereunder will be policy(ies) of Chicago Title Insurance Company, aFlorida corporation.

Please read the exceptions shown or referred to herein and the exceptions and exclusions set forth inAttachment One of this report carefully. The exceptions and exclusions are meant to provide you withnotice of matters which are not covered under the terms of the title insurance policy and should becarefully considered.

It is important to note that this preliminary report is not a written representation as to the condition of titleand may not list all liens, defects and encumbrances affecting title to the land.

Chicago Title Insurance Company

Countersigned By:

Authorized Officer or Agent

By:

PresidentAttest:

Secretary


Visit Us on our Website: www.ctic.com

ISSUING OFFICE: 500 N. Brand Blvd, Suite 200, Glendale, CA 91203

FOR SETTLEMENT INQUIRIES, CONTACT:US Metro Bank

9866 Garden Grove Blvd. Garden Grove, CA 92844(714)823-4222 FAX (714)620-8889

PRELIMINARY REPORT

Title Officer: Jim PrestonEmail: [email protected] No.: (818)548-0222Fax No.: (818)550-3254Title No.: 111904407-JP

Customer: Daniel ParkEmail: [email protected]

Phone No.: (714)823-4222Fax No.: (714)620-8889

Ref. No.: 8051 Main and 8031 A and B Main

PROPERTY ADDRESS(ES): 8051 Main Street, Stanton, CA8031 A and B Main Street, Stanton, CA

EFFECTIVE DATE: March 25, 2019 at 07:30 AM

The form of policy or policies of title insurance contemplated by this report is:

ALTA Loan Policy 2006

1. The estate or interest in the Land hereinafter described or referred to covered by this Report is:

A Fee

2. Title to said estate or interest at the date hereof is vested in:

Two United Oil LLC, a California Limited Liability Company

3. The Land referred to in this Report is described as follows:

SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF

http://www.ctic.com

EXHIBIT "A"Legal Description


For APN/Parcel ID(s): 126-433-07 and 126-433-08

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF STANTON, COUNTY OFLOS ANGELES, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

PARCEL ONE:

LOTS 35, 36 AND 37 IN BLOCK 10 OF STANTON TOWNSITE TRACT, IN THE CITY OF STANTON,COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 8, PAGE 11 OFMISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

PARCEL TWO:

LOTS 33 AND 34 IN BLOCK 10 OF THE STANTON TOWNSITE TRACT, IN THE CITY OF STANTON,COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 8, PAGE 11MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

mailto:[email protected]?subject=111904407&body=The%20following%20documents%20have%20been%20identified%20as%20not%20available.%20By%20sending%20this%20request%20to%20Chicago%20Title%20we%20will%20retrieve%20all%20listed%20documents%20below%20and%20an%20amended%20hyperlink%20version%20will%20be%20sent%20once%20completed.%0D%0A%0D%0Amap/plat%0D%0A2008-00215728, of Official Records%0D%0A2016-00052190, of Official Records%0D%0AAPN/Parcel ID(s): 126-433-07 and 126-433-08%0D%0ABOOK 8, PAGE 11 OF MISCELLANEOUS MAPS%0D%0ABOOK 8, PAGE 11 OF MISCELLANEOUS MAPS%0D%0ARecording No.: 2008-00215728%0D%0ARecording No.: 2016-00052190






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Title No.: 111904407-JP


AT THE DATE HEREOF, EXCEPTIONS TO COVERAGE IN ADDITION TO THE PRINTED EXCEPTIONS ANDEXCLUSIONS IN SAID POLICY FORM WOULD BE AS FOLLOWS:

1. Property taxes, which are a lien not yet due and payable, including any assessments collected with taxes to belevied for the fiscal year 2019-2020.

2. Property taxes, including any personal property taxes and any assessments collected with taxes, are as follows:

Tax Identification No.: 126-433-07Fiscal Year: 2018-20191st Installment: $5,122.94 paid.2nd Installment: $5,122.94, OpenPenalty and Cost: $535.29 (Due after April 10)Homeowners Exemption: $NoneCode Area: 17-007

Affects: Parcel One

3. Property taxes, including any personal property taxes and any assessments collected with taxes, are as follows:

Tax Identification No.: 126-433-08Fiscal Year: 2018-20191st Installment: $4,426.98 paid.2nd Installment: $4,426.98, OpenPenalty and Cost: $465.69 (Due after April 10)Homeowners Exemption: $NoneCode Area: 17-007

Affects: Parcel Two

4. The lien of supplemental or escaped assessments of property taxes, if any, made pursuant to the provisions ofChapter 3.5 (commencing with Section 75) or Part 2, Chapter 3, Articles 3 and 4, respectively, of the Revenue andTaxation Code of the State of California as a result of the transfer of title to the vestee named in Schedule A or asa result of changes in ownership or new construction occurring prior to Date of Policy.

5. Water rights, claims or title to water, whether or not disclosed by the public records.

6. An unrecorded lease with certain terms, covenants, conditions and provisions set forth therein as disclosed by thedocument

Entitled: Assignment of Interest in LeaseLessor: USS Cal Builders, Inc., a California corporationLessee: Allen Othman Const.Recording Date: May 6, 2008Recording No.: 2008-00215728, of Official Records

The present ownership of the leasehold created by said lease and other matters affecting the interest of the lesseeare not shown herein.

Affects: Parcel 2

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Title No.: 111904407-JP

EXCEPTIONS(continued)


7. Easement(s) for the purpose(s) shown below and rights incidental thereto as set forth in a document:

In favor of: Southern California Edison Company, a corporationPurpose: Public utilities and incidental purposesRecording Date: February 24, 2010Recording No.: 2010-00088258, of Official RecordsAffects: The Westerly 5.00 feet of said land

Affects: Parcel 2

8. Easement(s) for the purpose(s) shown below and rights incidental thereto as set forth in a document:

In favor of: Southern California Edison Company, a corporation, its successor and assignsPurpose: Public utilities and incidental purposesRecording Date: June 17, 2010Recording No.: 2010-000285639, of Official RecordsAffects: As described therein

Affects: Parcel 2

9. A deed of trust to secure an indebtedness in the amount shown below,

Amount: $982,000.00Dated: July 22, 2014Trustor/Grantor Two United Oil LLC, a California Limited Liability CompanyTrustee: Community BankBeneficiary: Community BankLoan No.: Not shownRecording Date: August 20, 2014Recording No.: 2014-000335834, of Official Records

10. An assignment of all moneys due, or to become due as rental or otherwise from said Land, to secure payment ofan indebtedness, shown below and upon the terms and conditions therein

Amount: $982,000.00Assigned to: Community BankAssigned By: Two United Oil LLC, a California Limited Liability CompanyRecording Date: August 20, 2014Recording No.: 2014-000335834, of Official Records


Entitled: Subordination Agreement - LeaseLessor: Two United Oil LLCLessee: USS CAL. Builders, Inc.Recording Date: August 20, 2014Recording No.: 2014-000335836, of Official Records


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https://smartviewonline.net/Root/webstorage/orderguid/18E95DE7-664C-4C4C-A406-23E991951F6B/Property_2010-285639+DEG+06-17-2010.pdf

https://smartviewonline.net/Root/webstorage/orderguid/B44B54DF-CCA0-4367-8A57-F5968387D3CA/Property_2014-335834+TDR+08-20-2014.pdf


https://smartviewonline.net/Root/webstorage/orderguid/B97470E8-757C-4288-B888-7CAF9CCDBFE9/Property_2014-335836+LSESBD+08-20-2014.pdf











Title No.: 111904407-JP



An agreement recorded August 20, 2014 at Recording No. 2014-000335836, of Official Records which states thatsaid lease has been made subordinate to the document

Entitled: Deed of TrustRecording Date: August 20, 2014Recording No.: 2014-000335834, of Official Records


Entitled: Subordination Agreement - LeaseLessor: Two United Oil LLCLessee: USS CAL. Builders, Inc.Recording Date: August 20, 2014Recording No.: 2014-000335837, of Official Records


An agreement recorded August 20, 2014 at Recording No. 2014-000335837, of Official Records which states thatsaid lease has been made subordinate to the document

Entitled: Deed of TrustRecording Date: August 20, 2014Recording No.: 2014-000335834, of Official Records


Amount: $400,000.00Dated: September 22, 2014Trustor/Grantor Two United Oil LLC, a California Limited Liability CompanyTrustee: Community BankBeneficiary: Community BankLoan No.: Not shownRecording Date: October 2, 2014Recording No.: 2014-000402307, of Official Records

The Deed of Trust set forth above is purported to be a “Credit Line” Deed of Trust. Under California Civil Code§2943.1 it is a requirement that the Trustor/Grantor of said Deed of Trust either immediately provide thebeneficiary with the “Borrower’s instruction to Suspend and Close Equity Line of Credit” or provide a satisfactorysubordination of this Deed of Trust to the proposed Deed of Trust to be recorded at closing.

If the above credit line is being paid off, this Company will require that Escrow obtain written confirmation from thecurrent Beneficiary that the account has been frozen prior to recording. Failure to do so will result in this Companyholding funds at the close of Escrow until such confirmation is obtained from the Beneficiary.

An agreement to modify the terms and provisions of said deed of trust as therein provided

Executed by: Two United Oil LLC and Community BankRecording Date: July 18, 2017Recording No.: 2017-000295518, of Official Records



https://smartviewonline.net/Root/webstorage/orderguid/72B10ED5-E9A3-4F73-AE64-08D06B002E2A/Property_2014-335837+LSESBD+08-20-2014.pdf



https://smartviewonline.net/Root/webstorage/orderguid/F21378E7-D4D0-4A7A-B6CE-46F3EF75DCD1/Property_2014-402307+TDR+10-02-2014.pdf

https://smartviewonline.net/Root/webstorage/orderguid/C2855EF7-80F7-4C40-B8EC-6B1002318C4E/Property_2017-295518+TDDMOD+07-18-2017.pdf















Title No.: 111904407-JP



14. An assignment of all moneys due, or to become due as rental or otherwise from said Land, to secure payment ofan indebtedness, shown below and upon the terms and conditions therein

Amount: $400,000.00Assigned to: Community BankAssigned By: Two United Oil LLC, a California Limited Liability CompanyRecording Date: October 2, 2014Recording No.: 2014-000402308, of Official Records


Entitled: Subordination Agreement - LeaseLessor: Two United Oil LLCLessee: USS CAL. Builders, Inc.Recording Date: October 2, 2014Recording No.: 2014-000402309, of Official Records


An agreement recorded October 2, 2014 at Recording No. 2014-000402309, of Official Records which states thatsaid lease has been made subordinate to the document

Entitled: Deed of TrustRecording Date: October 2, 2014Recording No.: 2014-000402307, of Official Records


Entitled: Subordination Agreement - LeaseLessor: Two United Oil LLCLessee: USS CAL. Builders, Inc.Recording Date: October 2, 2014Recording No.: 2014-000402310, of Official Records


An agreement recorded October 2, 2014 at Recording No. 2014-000402310, of Official Records which states thatsaid lease has been made subordinate to the document

Entitled: Deed of TrustRecording Date: October 2, 2014Recording No.: 2014-000402307, of Official Records

https://smartviewonline.net/Root/webstorage/orderguid/61EFEAD4-6E51-40AD-805D-F5B2B0348D41/Property_2014-402308+AOR+10-02-2014.pdf

https://smartviewonline.net/Root/webstorage/orderguid/FD24793E-EFFF-43D6-B7CE-B6D246BBF1E9/Property_2014-402309+LSESBD+10-02-2014.pdf



https://smartviewonline.net/Root/webstorage/orderguid/E50F58DE-B014-41A5-9CCF-D60DE5AC7751/Property_2014-402310+LSESBD+10-02-2014.pdf

















Title No.: 111904407-JP




Amount: $6,500,000.00Dated: October 3, 2016Trustor/Grantor Two United Oil LLC, a California Limited Liability CompanyTrustee: Fidelity National TitleBeneficiary: La Jolla Funding Inc.Loan No.: Not shownRecording Date: October 26, 2016Recording No.: 2016-00052190, of Official Records

Affects: The herein described Land and other land.

The effect of a release, satisfaction or reconveyance recorded January 9, 2019 at 2019-00007271, of OfficialRecords, which purports to release, satisfy or reconvey the above-mentioned mortgage or deed of trust.

The requirement that the release, satisfaction or reconveyance of the above mortgage or deed of trust be verifiedwith the lender or loan servicer. If the mortgage or deed of trust was a MERS loan, the identity of the lender or loanservicer may be obtained from the MERS website (www.mersinc.org), or by calling the MERS Helpdesk1-888-680-6377. After obtaining the identity of the lender or loan servicer, the lender or loan servicer must becontacted and the release, satisfaction or reconveyance verified. The verification must be in writing to theCompany.

The Company reserves the right to make additional requirements or add additional items or exceptions.

18. Matters contained in that certain document

Entitled: Resolution No. 2018-37Recording Date: December 18, 2018Recording No.: 2018-000471374, of Official Records

Reference is hereby made to said document for full particulars.

19. In order to complete this report, the Company requires a Statement of Information to be completed by thefollowing party(ies),

Party(ies): All Parties

The Company reserves the right to add additional items or make further requirements after review of therequested Statement of Information.

NOTE: The Statement of Information is necessary to complete the search and examination of title under thisorder. Any title search includes matters that are indexed by name only, and having a completed Statement ofInformation assists the Company in the elimination of certain matters which appear to involve the parties but infact affect another party with the same or similar name. Be assured that the Statement of Information is essentialand will be kept strictly confidential to this file.


https://smartviewonline.net/Root/webstorage/orderguid/56053786-AE2D-4ABE-B409-A71E90A78E83/Property_2019-7271+TDDSFR+01-09-2019.pdf

https://smartviewonline.net/Root/webstorage/orderguid/56053786-AE2D-4ABE-B409-A71E90A78E83/Property_2019-7271+TDDSFR+01-09-2019.pdf

https://smartviewonline.net/Root/webstorage/orderguid/6ADB24FC-8D55-41AE-A577-F86F59565012/Property_2018-471374+RES+12-18-2018.pdf

https://smartviewonline.net/Root/webstorage/orderguid/EEF9F0ED-B36F-41DE-B69D-5FF0CCEE0A7C/Statement+of+Information+(Letter).pdf





Title No.: 111904407-JP



20. Any rights of the parties in possession of a portion of, or all of, said Land, which rights are not disclosed by thepublic records.

The Company will require, for review, a full and complete copy of any unrecorded agreement, contract, licenseand/or lease, together with all supplements, assignments and amendments thereto, before issuing any policy oftitle insurance without excepting this item from coverage.

The Company reserves the right to except additional items and/or make additional requirements after reviewingsaid documents.

21. Matters which may be disclosed by an inspection and/or by a correct ALTA/ACSM Land Title Survey of said Landthat is satisfactory to the Company, and/or by inquiry of the parties in possession thereof.

An inspection of said Land has been ordered; upon its completion the Company reserves the right to exceptadditional items and/or make additional requirements.

END OF EXCEPTIONS

Title No.: 111904407-JP


=

NOTES

Note 1. Notice: Please be aware that due to the conflict between federal and state laws concerning the cultivation,distribution, manufacture or sale of marijuana, the Company is not able to close or insure any transactioninvolving Land that is associated with these activities.

Note 2. Note: There are NO conveyances affecting said Land recorded within 24 months of the date of this report.

Note 3. Note: The charge for a policy of title insurance, when issued through this application for title insurance, will bebased on the Short Term Rate.

Note 4. Note: If a county recorder, title insurance company, escrow company, real estate broker, real estate agent orassociation provides a copy of a declaration, governing document or deed to any person, California lawrequires that the document provided shall include a statement regarding any unlawful restrictions. Saidstatement is to be in at least 14-point bold face type and may be stamped on the first page of any documentprovided or included as a cover page attached to the requested document. Should a party to this transactionrequest a copy of any document reported herein that fits this category, the statement is to be included in themanner described.

Note 5. Note: When this title order closes and if the Company if handling the loan proceeds through a sub-escrow, alltitle charges and expenses normally billed will be deducted from those loan proceeds. Title charges andexpenses would include Title Premiums, any Tax or Bond advances, Documentary Transfer Tax, RecordingFees, etc.

Note 6. Note: None of the items shown in this report will cause the Company to decline to attach CLTA EndorsementForm 100 to an Extended Coverage Loan Policy, when issued.

Note 7. Note: The Company is not aware of any matters which would cause it to decline to attach CLTA EndorsementForm 116 indicating that there is located on said Land described below, to an Extended Coverage Loan Policy,known as:

Parcel One: Commercial Property - 8051 Main Street, in the City of Stanton, County of Orange, State ofCalifornia

Parcel Two: Commercial Property - 8031 Main Street, in the City of Stanton, County of Orange, State ofCalifornia

Note 8. Note: The policy of title insurance will include an arbitration provision. The Company or the insured maydemand arbitration. Arbitrable matters may include, but are not limited to, any controversy or claim betweenthe Company and the insured arising out of or relating to this policy, any service of the Company in connectionwith its issuance or the breach of a policy provision or other obligation. Please ask your escrow or title officerfor a sample copy of the policy to be issued if you wish to review the arbitration provisions and any otherprovisions pertaining to your Title Insurance coverage.

Note 9. Note: Any documents being executed in conjunction with this transaction must be signed in the presence ofan authorized Company employee, an authorized employee of an agent, an authorized employee of theinsured lender, or by using Bancserv or other approved third-party service. If the above requirement cannotbe met, please call the Company at the number provided in this report.

Note 10. Note: Pursuant to Government Code Section 27388.1, as amended and effective as of 1-1-2018, aDocumentary Transfer Tax (DTT) Affidavit may be required to be completed and submitted with eachdocument when DTT is being paid or when an exemption is being claimed from paying the tax. If agovernmental agency is a party to the document, the form will not be required. DTT Affidavits may be availableat a Tax Assessor-County Clerk-Recorder.

Title No.: 111904407-JP

NOTES(continued)


=

Note 11. Due to the special requirements of SB 50 (California Public Resources Code Section 8560 et seq.), anytransaction that includes the conveyance of title by an agency of the United States must be approved inadvance by the Company’s State Counsel, Regional Counsel, or one of their designees.

END OF NOTES

Wire Fraud AlertOriginal Effective Date: 5/11/2017Current Version Date: 5/11/2017 111904407S - WIRE0016 (DSI Rev. 12/07/17)

TM and © Fidelity National Financial, Inc. and/or an affiliate. All rights reserved

WIRE FRAUD ALERTThis Notice is not intended to provide legal or professional advice.

If you have any questions, please consult with a lawyer.

All parties to a real estate transaction are targets for wire fraud and many have lost hundreds of thousands ofdollars because they simply relied on the wire instructions received via email, without further verification. If fundsare to be wired in conjunction with this real estate transaction, we strongly recommend verbal verificationof wire instructions through a known, trusted phone number prior to sending funds.

In addition, the following non-exclusive self-protection strategies are recommended to minimize exposure topossible wire fraud.

NEVER RELY on emails purporting to change wire instructions. Parties to a transaction rarely change wireinstructions in the course of a transaction.

ALWAYS VERIFY wire instructions, specifically the ABA routing number and account number, by calling theparty who sent the instructions to you. DO NOT use the phone number provided in the email containing theinstructions, use phone numbers you have called before or can otherwise verify. Obtain the number ofrelevant parties to the transaction as soon as an escrow account is opened. DO NOT send an email toverify as the email address may be incorrect or the email may be intercepted by the fraudster.

USE COMPLEX EMAIL PASSWORDS that employ a combination of mixed case, numbers, and symbols.Make your passwords greater than eight (8) characters. Also, change your password often and do NOT reusethe same password for other online accounts.

USE MULTI-FACTOR AUTHENTICATION for email accounts. Your email provider or IT staff may havespecific instructions on how to implement this feature.

For more information on wire-fraud scams or to report an incident, please refer to the following links:

Federal Bureau of Investigation: Internet Crime Complaint Center:http://www.fbi.gov http://www.ic3.gov

http://www.fbi.gov

http://www.ic3.gov

Privacy Statement Printed: 04.06.19 @ 12:14 PM bySCA0002565_CTLA.doc / Updated: 07.13.18 ----111904407

FIDELITY NATIONAL FINANCIALPRIVACY NOTICE

Revised May 1, 2018

Fidelity National Financial, Inc. and its majority-owned subsidiary companies (collectively, "FNF", "our," or "we")respect and are committed to protecting your privacy. This Privacy Notice explains how we collect, use, andprotect personal information, when and to whom we disclose such information, and the choices you have aboutthe use and disclosure of that information.

Types of Information CollectedWe may collect two types of information from you: Personal Information and Browsing Information.

Personal Information. FNF may collect the following categories of Personal Information:• contact information (e.g., name, address, phone number, email address);• demographic information (e.g., date of birth, gender, marital status);• identity information (e.g. Social Security Number, driver's license, passport, or other government ID number);• financial account information (e.g. loan or bank account information); and• other personal information necessary to provide products or services to you.

Browsing Information. FNF may automatically collect the following types of Browsing Information when youaccess an FNF website, online service, or application (each an "FNF Website") from your Internet browser,computer, and/or mobile device:• Internet Protocol (IP) address and operating system;• browser version, language, and type;• domain name system requests; and• browsing history on the FNF Website, such as date and time of your visit to the FNF Website and visits to the

pages within the FNF Website.

How Personal Information is CollectedWe may collect Personal Information about you from:• information we receive from you on applications or other forms;• information about your transactions with FNF, our affiliates, or others; and• information we receive from consumer reporting agencies and/or governmental entities, either directly from

these entities or through others.

How Browsing Information is CollectedIf you visit or use an FNF Website, Browsing Information may be collected during your visit. Like most websites,our servers automatically log each visitor to the FNF Website and may collect the Browsing Information describedabove. We use Browsing Information for system administration, troubleshooting, fraud investigation, and toimprove our websites. Browsing Information generally does not reveal anything personal about you, though if youhave created a user account for an FNF Website and are logged into that account, the FNF Website may be ableto link certain browsing activity to your user account.

Other Online SpecificsCookies. When you visit an FNF Website, a "cookie" may be sent to your computer. A cookie is a small piece ofdata that is sent to your Internet browser from a web server and stored on your computer's hard drive. Informationgathered using cookies helps us improve your user experience. For example, a cookie can help the website loadproperly or can customize the display page based on your browser type and user preferences. You can choosewhether or not to accept cookies by changing your Internet browser settings. Be aware that doing so may impairor limit some functionality of the FNF Website.

Web Beacons. We use web beacons to determine when and how many times a page has been viewed. Thisinformation is used to improve our websites.

Do Not Track. Currently our FNF Websites do not respond to "Do Not Track" features enabled through yourbrowser.

Links to Other Sites. FNF Websites may contain links to other websites. FNF is not responsible for the privacypractices or the content of any of those other websites. We advise you to read the privacy policy of every websiteyou visit.


Use of Personal InformationFNF uses Personal Information for three main purposes:• To provide products and services to you or in connection with a transaction involving you.• To improve our products and services.• To communicate with you about our, our affiliates', and third parties' products and services, jointly or

independently.

When Information Is DisclosedWe may make disclosures of your Personal Information and Browsing Information in the following circumstances:• to enable us to detect or prevent criminal activity, fraud, material misrepresentation, or nondisclosure;• to nonaffiliated service providers who provide or perform services or functions on our behalf and who agree to

use the information only to provide such services or functions;• to nonaffiliated third party service providers with whom we perform joint marketing, pursuant to an agreement

with them to jointly market financial products or services to you;• to law enforcement or authorities in connection with an investigation, or in response to a subpoena or court

order; or• in the good-faith belief that such disclosure is necessary to comply with legal process or applicable laws, or to

protect the rights, property, or safety of FNF, its customers, or the public.The law does not require your prior authorization and does not allow you to restrict the disclosures describedabove. Additionally, we may disclose your information to third parties for whom you have given us authorization orconsent to make such disclosure. We do not otherwise share your Personal Information or Browsing Informationwith nonaffiliated third parties, except as required or permitted by law.

We reserve the right to transfer your Personal Information, Browsing Information, and any other information, inconnection with the sale or other disposition of all or part of the FNF business and/or assets, or in the event ofbankruptcy, reorganization, insolvency, receivership, or an assignment for the benefit of creditors. By submittingPersonal Information and/or Browsing Information to FNF, you expressly agree and consent to the use and/ortransfer of the foregoing information in connection with any of the above described proceedings.

Please see "Choices With Your Information" to learn the disclosures you can restrict.

Security of Your InformationWe maintain physical, electronic, and procedural safeguards to guard your Personal Information. We limit accessto nonpublic personal information about you to employees who need to know that information to do their job.When we provide Personal Information to others as discussed in this Privacy Notice, we expect that they processsuch information in compliance with our Privacy Notice and in compliance with applicable privacy laws.

Choices With Your InformationIf you do not want FNF to share your information with our affiliates to directly market to you, you may send an "optout" request by email, phone, or physical mail as directed at the end of this Privacy Notice. We do not share yourPersonal Information with nonaffiliates for their use to direct market to you.

Whether you submit Personal Information or Browsing Information to FNF is entirely up to you. If you decide notto submit Personal Information or Browsing Information, FNF may not be able to provide certain services orproducts to you.

For California Residents: We will not share your Personal Information or Browsing Information with nonaffiliatedthird parties, except as permitted by California law.

For Nevada Residents: You may be placed on our internal Do Not Call List by calling (888) 934-3354 or bycontacting us via the information set forth at the end of this Privacy Notice. Nevada law requires that we alsoprovide you with the following contact information: Bureau of Consumer Protection, Office of the Nevada AttorneyGeneral, 555 E. Washington St., Suite 3900, Las Vegas, NV 89101; Phone number: (702) 486-3132; email:[email protected].

For Oregon Residents: We will not share your Personal Information or Browsing Information with nonaffiliatedthird parties for marketing purposes, except after you have been informed by us of such sharing and had anopportunity to indicate that you do not want a disclosure made for marketing purposes.


For Vermont Residents: We will not disclose information about you creditworthiness to our affiliates and will notdisclose your personal information, financial information, credit report, or health information to nonaffiliated thirdparties to market to you, other than as permitted by Vermont law, unless you authorize us to make thosedisclosures.

Information From ChildrenThe FNF Websites are meant for adults and are not intended or designed to attract persons under the age ofeighteen (18). We do not collect Personal Information from any person that we know to be under the age ofthirteen (13) without permission from a parent or guardian.

International UsersFNF's headquarters is located within the United States. If you reside outside the United States and choose toprovide Personal Information or Browsing Information to us, please note that we may transfer that informationoutside of your country of residence for any of the purposes described in this Privacy Notice. By providing FNFwith your Personal Information and/or Browsing Information, you consent to our collection, transfer, and use ofsuch information in accordance with this Privacy Notice.

FNF Website Services for Mortgage LoansCertain FNF companies provide services to mortgage loan servicers, including hosting websites that collectcustomer information on behalf of mortgage loan servicers (the "Service Websites"). The Service Websites maycontain links to both this Privacy Notice and the mortgage loan servicer or lender's privacy notice. The sections ofthis Privacy Notice titled When Information is Disclosed, Choices with Your Information, and Accessing andCorrecting Information do not apply to the Service Websites. The mortgage loan servicer or lender's privacynotice governs use, disclosure, and access to your Personal Information. FNF does not share PersonalInformation collected through the Service Websites, except (1) as required or authorized by contract with themortgage loan servicer or lender, or (2) as required by law or in the good-faith belief that such disclosure isnecessary to comply with a legal process or applicable law, to enforce this Privacy Notice, or to protect the rights,property, or safety of FNF or the public.

Your Consent To This Privacy Notice; Notice ChangesBy submitting Personal Information and/or Browsing Information to FNF, you consent to the collection and use ofthe information in accordance with this Privacy Notice. We may change this Privacy Notice at any time. Therevised Privacy Notice, showing the new revision date, will be posted on the FNF Website. Each time you provideinformation to us following any amendment of this Privacy Notice, your provision of information to us will signifyyour assent to and acceptance of the terms of the revised Privacy Notice for all previously collected informationand information collected from you in the future. We may use comments, information or feedback that you submitto us in any manner that we may choose without notice or compensation to you.

Accessing and Correcting Information; Contact UsIf you have questions, would like to access or correct your Personal Information, or want to opt-out of informationsharing for affiliate marketing, send your requests via email to [email protected], by phone to (888) 934-3354, or bymail to:

Fidelity National Financial, Inc.601 Riverside Avenue,

Jacksonville, Florida 32204Attn: Chief Privacy Officer

mailto:[email protected]

ATTACHMENT ONE

Attachment One (05/06/16)

CALIFORNIA LAND TITLE ASSOCIATIONSTANDARD COVERAGE POLICY - 1990

EXCLUSIONS FROM COVERAGEThe following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees orexpenses which arise by reason of:1. (a) Any law, ordinance or governmental regulation (including but not limited to building or zoning laws, ordinances, or regulations) restricting,

regulating, prohibiting or relating (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of anyimprovement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or anyparcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances orgovernmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien, or encumbrance resultingfrom a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy.

(b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or notice of a defect, lienor encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy.

2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding fromcoverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge.

3. Defects, liens, encumbrances, adverse claims or other matters:(a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant;(b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing

to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy;(c) resulting in no loss or damage to the insured claimant;(d) attaching or created subsequent to Date of Policy; or(e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the

estate or interest insured by this policy.4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of

any subsequent owner of the indebtedness, to comply with the applicable doing business laws of the state in which the land is situated.5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured

mortgage and is based upon usury or any consumer credit protection or truth in lending law.6. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy or the transaction creating the

interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws.

EXCEPTIONS FROM COVERAGE - SCHEDULE B, PART IThis policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real

property or by the public records.Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records ofsuch agency or by the public records.

2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of the land orwhich may be asserted by persons in possession thereof.

3. Easements, liens or encumbrances, or claims thereof, not shown by the public records.4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which

are not shown by the public records.5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title

to water, whether or not the matters excepted under (a), (b) or (c) are shown by the public records.6. Any lien or right to a lien for services, labor or material not shown by the public records.

ATTACHMENT ONE(CONTINUED)


CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE (12-02-13)ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE

EXCLUSIONSIn addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from:1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning:

a. building;b. zoning;c. land use;d. improvements on the Land;e. land division; andf. environmental protection.This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27.

2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion doesnot limit the coverage described in Covered Risk 14 or 15.

3. The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17.4. Risks:

a. that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records;b. that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date;c. that result in no loss to You; ord. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28.

5. Failure to pay value for Your Title.6. Lack of a right:

a. to any land outside the area specifically described and referred to in paragraph 3 of Schedule A; andb. in streets, alleys, or waterways that touch the Land.This Exclusion does not limit the coverage described in Covered Risk 11 or 21.

7. The transfer of the Title to You is invalid as a preferential transfer or as a fraudulent transfer or conveyance under federal bankruptcy, stateinsolvency, or similar creditors’ rights laws.

8. Contamination, explosion, fire, flooding, vibration, fracturing, earthquake or subsidence.9. Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances.

LIMITATIONS ON COVERED RISKSYour insurance for the following Covered Risks is limited on the Owner’s Coverage Statement as follows:• For Covered Risk 16, 18, 19 and 21, Your Deductible Amount and Our Maximum Dollar Limit of Liability

shown in Schedule A.The deductible amounts and maximum dollar limits shown on Schedule A are as follows:

Your Deductible Amount Our Maximum Dollar Limit of Liability

Covered Risk 16: 1.00% of Policy Amount Shown in Schedule A or$2,500.00(whichever is less)

$ 10,000.00


$ 25,000.00


$ 25,000.00


$ 5,000.00



2006 ALTA LOAN POLICY (06-17-06)

EXCLUSIONS FROM COVERAGEThe following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, orexpenses that arise by reason of:1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or

relating to(i) the occupancy, use, or enjoyment of the Land;(ii) the character, dimensions, or location of any improvement erected on the Land;(iii) the subdivision of land; or(iv) environmental protection;or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit thecoverage provided under Covered Risk 5.

(b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6.2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.3. Defects, liens, encumbrances, adverse claims, or other matters

(a) created, suffered, assumed, or agreed to by the Insured Claimant;(b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in

writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;(c) resulting in no loss or damage to the Insured Claimant;(d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13,

or 14); or(e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.

4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing-business lawsof the state where the Land is situated.

5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the InsuredMortgage and is based upon usury or any consumer credit protection or truth-in-lending law.

6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws, that the transaction creating the lienof the Insured Mortgage, is(a) a fraudulent conveyance or fraudulent transfer, or(b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy.

7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy andthe date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under CoveredRisk 11(b).

The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage,the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:

EXCEPTIONS FROM COVERAGE[Except as provided in Schedule B - Part II,[ t[or T]his policy does not insure against loss or damage, and the Company will not pay costs, attorneys’fees, or expenses that arise by reason of:

[PART I[The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage,the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real

property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings,whether or not shown by the records of such agency or by the Public Records.

2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or thatmay be asserted by persons in possession of the Land.

3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records.4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and

complete land survey of the Land and not shown by the Public Records.5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title

to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records.6. Any lien or right to a lien for services, labor or material not shown by the Public Records.]

PART IIIn addition to the matters set forth in Part I of this Schedule, the Title is subject to the following matters, and the Company insures against loss ordamage sustained in the event that they are not subordinate to the lien of the Insured Mortgage:]



2006 ALTA OWNER’S POLICY (06-17-06)

EXCLUSIONS FROM COVERAGEThe following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, orexpenses that arise by reason of:1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or

relating to(i) the occupancy, use, or enjoyment of the Land;(ii) the character, dimensions, or location of any improvement erected on the Land;(iii) the subdivision of land; or(iv) environmental protection;or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit thecoverage provided under Covered Risk 5.

(b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6.2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.3. Defects, liens, encumbrances, adverse claims, or other matters


writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;(c) resulting in no loss or damage to the Insured Claimant;(d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9

and 10); or(e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title.

4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws, that the transaction vesting the Titleas shown in Schedule A, is(a) a fraudulent conveyance or fraudulent transfer; or(b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy.

5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy andthe date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A.

The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage,the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:

EXCEPTIONS FROM COVERAGEThis policy does not insure against loss or damage, and the Company will not pay costs, attorneys’ fees, or expenses that arise by reason of:[The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage,the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real

property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings,whether or not shown by the records of such agency or by the Public Records.

2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or thatmay be asserted by persons in possession of the Land.

3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records.4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and

complete land survey of the Land and not shown by the Public Records.5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title

to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records.6. Any lien or right to a lien for services, labor or material not shown by the Public Records.]7. [Variable exceptions such as taxes, easements, CC&R’s, etc., shown here.]



ALTA EXPANDED COVERAGE RESIDENTIAL LOAN POLICY - ASSESSMENTS PRIORITY (04-02-15)

EXCLUSIONS FROM COVERAGEThe following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys’ fees orexpenses which arise by reason of:1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or

relating to(i) the occupancy, use, or enjoyment of the Land;(ii) the character, dimensions, or location of any improvement erected on the Land;(iii) the subdivision of land; or(iv) environmental protection;or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit thecoverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16.

(b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14or 16.

2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.3. Defects, liens, encumbrances, adverse claims, or other matters


writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;(c) resulting in no loss or damage to the Insured Claimant;(d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16,

17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or(e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.

4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing-business lawsof the state where the Land is situated.

5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the InsuredMortgage and is based upon usury, or any consumer credit protection or truth-in-lending law. This Exclusion does not modify or limit the coverageprovided in Covered Risk 26.

6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after theInsured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusiondoes not modify or limit the coverage provided in Covered Risk 11.

7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date ofPolicy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25.

8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicablebuilding codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6.

9. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws, that the transaction creating the lienof the Insured Mortgage, is(a) a fraudulent conveyance or fraudulent transfer, or(b) a preferential transfer for any reason not stated in Covered Risk 27(b) of this policy.

10. Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence.11. Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances.

Notice of Available Discounts

Notice of Available Discounts Printed: 04.06.19 @ 12:14 PM bySCA0002565_CTLA.doc / Updated: 07.13.18 ----111904407

Pursuant to Section 2355.3 in Title 10 of the California Code of Regulations Fidelity National Financial, Inc. and itssubsidiaries ("FNF") must deliver a notice of each discount available under our current rate filing along with thedelivery of escrow instructions, a preliminary report or commitment. Please be aware that the provision of thisnotice does not constitute a waiver of the consumer's right to be charged the filed rate. As such, your transactionmay not qualify for the below discounts.

You are encouraged to discuss the applicability of one or more of the below discounts with a Companyrepresentative. These discounts are generally described below; consult the rate manual for a full description ofthe terms, conditions and requirements for such discount. These discounts only apply to transactions involvingservices rendered by the FNF Family of Companies. This notice only applies to transactions involving propertyimproved with a one-to-four family residential dwelling.

Not all discounts are offered by every FNF Company. The discount will only be applicable to the FNF Company asindicated by the named discount.

FNF Underwritten Title Companies Underwritten by FNF UnderwritersCTC - Chicago Title Company CTIC - Chicago Title Insurance Company

Available Discounts

CREDIT FOR PRELIMINARY TITLE REPORTS AND/OR COMMITMENTS ON SUBSEQUENTPOLICIES (CTIC)Where no major change in the title has occurred since the issuance of the original report or commitment, the ordermay be reopened within 12 to 36 months and all or a portion of the charge previously paid for the report orcommitment may be credited on a subsequent policy charge.

DISASTER LOANS (CTIC)The charge for a Lender's Policy (Standard or Extended coverage) covering the financing or refinancing by anowner of record, within 24 months of the date of a declaration of a disaster area by the government of the UnitedStates or the State of California on any land located in said area, which was partially or totally destroyed in thedisaster, will be 50% of the appropriate title insurance rate.

CHURCHES OR CHARITABLE NON-PROFIT ORGANIZATIONS (CTIC)On properties used as a church or for charitable purposes within the scope of the normal activities of such entities,provided said charge is normally the church's obligation the charge for an owner's policy shall be 50% to 70% ofthe appropriate title insurance rate, depending on the type of coverage selected. The charge for a lender's policyshall be 32% to 50% of the appropriate title insurance rate, depending on the type of coverage selected.

This map/plat is being furnished as an aid in locating the herein described Land in relation to adjoining streets, natural boundaries and other land, and is not a survey of the land

depicted. Except to the extent a policy of title insurance is expressly modified by endorsement, if any, the Company does not insure dimensions, distances, location of easements,

acreage or other matters shown thereon.

Order: 111904407 Page 1 of 1 Requested By: CTGLDNA21, Printed: 4/5/2019 3:21 PM

Doc: OR:A 126-43


EXHIBIT A

Order No.: 111904407

For APN/Parcel ID(s): 126-433-07 and 126-433-08

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF STANTON, COUNTYOF LOS ANGELES, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

PARCEL ONE:

LOTS 35, 36 AND 37 IN BLOCK 10 OF STANTON TOWNSITE TRACT, IN THE CITY OF STANTON,COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 8, PAGE 11OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

PARCEL TWO:

LOTS 33 AND 34 IN BLOCK 10 OF THE STANTON TOWNSITE TRACT, IN THE CITY OF STANTON,COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 8, PAGE 11MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.











APPRAISAL ENGAGEMENT LETTER

Garden Grove Branch9866 Garden Grove Blvd., Garden Grove, CA 92844

Tel: 714-620-8888

Fax: 714-620-8889

John C. Agamata310 S. Twin Oaks Valley Road, #107‐366

San Marcos, California 92078

Office: (760) 201‐0846

To Whom It May Concern

This letter is to authorize you to perform an appraisal assignment on the properties listed below.

Property Address: Appraisal Type Requested a. Appraisal Report X

b Restricted Appraisal Report c 1-4 SFR Form Appraisal Report

1.

2.

3.

Three (3) valuation approaches: Cost, Sales Comparison, and Income (if any approach is excluded,state the reason for exclusion)The property's insurable value as of the appraisal date.

Your appraisal must conform to the Uniform Standards of Professional Appraisal Practice (USPAP) and theminimum standards for appraisals as set forth in the FDIC regulation 12 C.F.R. Part 323 et seq. as empowered underTitle XI of “FIRREA”. Furthermore, your appraisal must comply with the “Supplemental Standards” of USPAP andthe Bank’s appraisal policy.

Your appraisal report will be reviewed upon receipt. The assignment is NOT considered complete until the reviewreveals the report to be in compliance with standards and supplemental standards of USPAP, the regulation, and theBank's policy. Moreover, you are required to attach a completed “Minimum Standard Checklist” with the appraisal.Any post report submission requests for additional support, clarification, or consideration based on our review willbe expeditiously complied with.

The undersigned will serve as your main source of contact regarding this assignment.

The prospective borrower is not your client, and any interim information or value conclusion is to be provided to theundersigned exclusively.

We understand that the total fee you will charge for this assignment is 3500, and the completed appraisal report willbe ready by 4/25/19. If you encounter any problem in gathering your data that would delay completion, pleasenotify the office of the undersigned immediately.

The property's Market Value as is on appraisal date

APPRAISAL ENGAGEMENT LETTER

April 11, 2019

8031 A&B & 8051 Main Street, Stanton, CA

Each property as a separate report.We request that your appraisal provides the following (but not limited to) :

AGAMATA APPRAISAL G O

Sincerely yours,

Jennifer SeoCredit Adm.714-823-4202Email: [email protected]

____________________________________________________________Appraiser Date

Information indicated below are provided for the appraisal order:

Documents Description Attached To Follow Not Applicable

Rent RollLeaseSummaryLeaseAgreementEscrowInstructionPurchaseContractPreliminaryTitle ReportIncome & ExpenseStatementOther

Please submit one (1) hard copy of appraisal report to the attention of Credit Administration and one (1) e-file to email address at [email protected] and (1) e-file to email address at [email protected] .

APPRAISER’S ACCEPTANCE: I accept the appraisal engagement as outlined in this letter. The submitted report will be in compliance with required standards, regulations, and the Bank’s appraisal policy.