self contained appraisal report prepared for · at your request and authorization, cb richard ellis...

© 2006 CB Richard Ellis, Inc.

FRISCO PLAZA 719-815 Ten Mile Drive Frisco, Summit County, Colorado CBRE File No. 06-0907

Self Contained Appraisal Report

Prepared for: Mr. Nick Losada GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P. 600 East Las Colinas Boulevard, Suite 450 Irving, Texas 75039

VALUATION & ADVISORY SERVICES


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

1225 17th Street, Suite 1570 Denver, Colorado, 80202

T 303-628-7476 F 303-628-1757

www.cbre.com

November 30, 2006 Mr. Nick Losada GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P. 600 East Las Colinas Boulevard, Suite 450 Irving, Texas 75039 RE: Appraisal of Frisco Plaza 719-815 Ten Mile Drive Frisco, Summit County, Colorado CBRE File No 06-0907

Dear Mr. Losada:

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

The subject is a 56,743-square-foot four building, one and two-story commercial mixed-use development. The tenants consist of a combination of office, light industrial and retail uses. The property was developed from 1976 through 1983 and is situated on a 2.868-acre site. The property was most recently renovated from 2003 through 2004 at a cost of $354,738. Currently, the center is 99.2% occupied and is considered to be in average condition. The property is owned by Frisco Ten Mile Drive, LLC, and is under contract for sale to Douglas and Jason Swinger for $9,500,000, or $167.42 per square foot. The subject is more fully described, legally and physically, within the enclosed report.

The site size and square footage estimates contained herein are based upon our review of Summit County Assessor records, tenant rent roll/summary lease abstracts and an on-site inspection of the subject improvements. Should any additional information be provided that is substantially different than that reported herein, CBRE, reserves the right to amend the conclusions reported.

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


Mr. Nick Losada November 30, 2006 Page 2

MARKET VALUE CONCLUSIONAppraisal Premise Interest Appraised Date of Value Value Conclusion

As Is Leased Fee Interest November 18, 2006 $9,700,000

Compiled by CBRE

Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter.

The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and Title XI Regulations.

The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter.


Mr. Nick Losada November 30, 2006 Page 3

CBRE hereby expressly granted to Client the right to copy this report and distribute it to other parties in the transaction for which this report has been prepared, including employees of Client, other lenders in the transaction, and the borrower, if any. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us.

Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES

Zachary D. Alm Thomas D. Baroch, MAI Real Estate Analyst Managing Director Registered Appraiser: State of Colorado No. AR40033969

Certified General Appraiser State of Colorado No. CG01315467

Phone: 303-628-1754 Phone: 303-628-7474 Fax: 303-628-1757 Fax: 303-628-1757 Email: [email protected] Email: [email protected]


FRISCO PLAZA CERTIFICATION OF THE APPRAISAL

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CERTIFICATION OF THE APPRAISAL

We certify to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions

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

3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment.

4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

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

6. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation , or the approval of a loan.

7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation, the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute and FIRREA, as well as the requirements of the State of Colorado relating to review by its duly authorized representatives.

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

9. Thomas D. Baroch, MAI has completed the requirements of the continuing education program of the Appraisal Institute.

10. Zachary D. Alm and Thomas D. Baroch, MAI have made a personal inspection of the property that is the subject of this report.

11. No one provided significant real property appraisal assistance to the persons signing this report. 12. Zachary D. Alm and Thomas D. Baroch, MAI have extensive experience in the appraisal/review of

similar property types. 13. Zachary D. Alm is currently registered in the state where the subject is located and Thomas D.

Baroch, MAI is currently certified in the state where the subject is located. 14. Valuation & Appraisal Services operates as an independent economic entity within CB Richard

Ellis, Inc. Although other employees of CB Richard Ellis, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy are maintained at all times with regard to this assignment without conflict of interest.

Zachary D. Alm Thomas D. Baroch, MAI Real Estate Analyst Managing Director Colorado Registered Real Estate Appraiser No. AR40033969

Colorado Certified General Real Estate Appraiser No. CG01315467


FRISCO PLAZA SUBJECT PHOTOGRAPHS

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SUBJECT PHOTOGRAPHS

TYPICAL VIEW OF THE SUBJECT

TYPICAL VIEW OF THE SUBJECT



iii

TYPICAL INTERIOR VIEW OF THE SUBJECT




iv





v

VIEW LOOKING WEST ALONG LAGOON DRIVE

VIEW LOOKING NORTH ALONG TEN MILE DRIVE


FRISCO PLAZA SUMMARY OF SALIENT FACTS

vi

SUMMARY OF SALIENT FACTS

Property Name

Location

Assessor’s Parcel Number

Highest and Best Use

As Vacant

As Improved

Property Rights Appraised

Land Area 2.87 AC 124,948 SF

Improvements

Property Type Commercial Mixed-Use

Number of Buildings

Number of Stories

Gross Leasable Area

Year Built

Renovated

Condition

Major Tenants

Colorado Motor Parts

Specialized Truck & SUV

Estimated Exposure Time

Financial Indicators

Current Occupancy 99.2%

Stabilized Occupancy 95.0%

Overall Capitalization Rate 6.50%

Discount Rate 8.75%

Terminal Capitalization Rate 7.00%

Pro Forma Operating Data Total Per SF

Effective Gross Income $864,394 $15.23

Operating Expenses $224,861 $3.96

Expense Ratio 26.01%

Net Operating Income $639,532 $11.27

1976, 1978 and 1983

719-815 Ten Mile Drive, Frisco, Summit, Colorado 80443

1 and 2

4

4,785 SF

Frisco Plaza

Leased Fee Interest

Commercial Mixed-Use


2097-2630-06-004

2097-2630-37-007

2097-2630-06-002

2097-2630-06-001

2003-2004

56,743 SF

9 Months

Average

5,898 SF

VALUATION Total Per SF

Sales Comparison Approach $9,800,000 $172.71

Income Capitalization Approach $9,700,000 $170.95

Insurable Value $4,400,000 $77.54

CONCLUDED MARKET VALUE

Appraisal Premise Interest Appraised Value

As Is Leased Fee Interest $9,700,000

Compiled by CBRE

Date of Value

November 18, 2006

EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS

None noted.


FRISCO PLAZA TABLE OF CONTENTS

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TABLE OF CONTENTS

CERTIFICATION OF THE APPRAISAL.............................................................................................i SUBJECT PHOTOGRAPHS ..........................................................................................................ii SUMMARY OF SALIENT FACTS................................................................................................... vi TABLE OF CONTENTS.............................................................................................................. vii INTRODUCTION ...................................................................................................................... 1 AREA ANALYSIS......................................................................................................................... 6 NEIGHBORHOOD ANALYSIS .................................................................................................. 18 MARKET ANALYSIS .................................................................................................................. 20 SITE ANALYSIS ........................................................................................................................ 30 IMPROVEMENTS ANALYSIS...................................................................................................... 34 ZONING ................................................................................................................................ 38 TAX AND ASSESSMENT DATA .................................................................................................. 39 HIGHEST AND BEST USE ......................................................................................................... 40 APPRAISAL METHODOLOGY................................................................................................... 42 INSURABLE VALUE................................................................................................................... 43 SALES COMPARISON APPROACH............................................................................................ 45 INCOME CAPITALIZATION APPROACH.................................................................................... 49 RECONCILIATION OF VALUE .................................................................................................. 72 ASSUMPTIONS AND LIMITING CONDITIONS .......................................................................... 73 ADDENDA A Glossary of Terms B Improved Sale Data Sheets C Rent Comparable Data Sheets D Operating Data E ARGUS Supporting Schedules F Legal Description / Flood Plain Map G Précis METRO Report - Economy.com, Inc. H Qualifications


FRISCO PLAZA INTRODUCTION

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INTRODUCTION

PROPERTY IDENTIFICATION

The subject’s street address is 719-815 Ten Mile Drive, in the town of Frisco, Summit County,

Colorado. A lot and block legal description is provided in the Addenda of the report.

OWNERSHIP AND PROPERTY HISTORY

The subject property is comprised of four separate parcels, 2097-2630-06-001, 002, 004 and 007.

Parcel number 2097-2630-37-007 (719 Ten Mile Drive) is currently subdivided into condominium

Units A-F. In a condominium form of ownership, the prospective purchaser of the individual suites would own the individual unit and an undivided interest in the underlying land (in common ownership

with the remaining unit owners). However, the owner has retained 100% interest in all units

comprising the subject property. The property is currently under contract to Douglas and Jason

Swinger for $9,500,000, or $167.42 per square foot. To our knowledge, there have been no other offers to purchase, listings to sell or other transactions involving the subject property over the last three

years.

Title to the entire property is currently vested in the name of Frisco Ten Mile Drive, LLC, which acquired title to the property in multiple transactions dating back to 1991. The following paragraphs

will summarize the subject’s acquisition dates.

Parcel No. 2097-2630-06-001

In July 1995, Mr. Meyers, purchased 741 Ten Mile Drive from Frisco Plaza Center Limited for

$775,000 by means of a warranty deed (Reception No. 493987). In August 2003, there was a related party transaction converting ownership into Frisco Ten Mile Drive, LLC (Reception No.

726242) no document fee was recorded.

Parcel No. 2097-2630-06-002

In August 2002, Frisco Ten Mile Drive, LLC purchased 757 Ten Mile Drive from Frisco Plaza Center

Limited for $2,252,000 by means of a warranty deed (Reception No. 694694).

Parcel No. 2097-2630-06-004

In August 2003, Frisco Ten Mile Drive, LLC purchased 801 Ten Mile Drive from Frisco Plaza Center

Limited for $1,240,000 by means of a warranty deed (Reception No. 726234).



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Parcel No. 2097-2630-06-007

The current owner (Tyler Meyers) originally gained title to the condominium Units A-C (719 Ten Mile

Drive) in September 1991 for $216,300 by means of a warranty deed (Reception No. 410041). In

January 1998 he acquired Units D-E for $325,000 by means of a warranty deed (Reception No. 413812) and Unit F in December 1993 for $127,500 also by a warranty deed (Reception No.

459332). ). In August 2003, there was a related party transaction converting ownership into Frisco

Ten Mile Drive, LLC (Reception No. 726237). No document fee was recorded.

PREMISE OF THE APPRAISAL/RELEVANT DATES

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

valuation premise(s):

PREMISE OF THE APPRAISAL/RELEVANT DATESDate of Report: November 30, 2006

Date of Inspection: November 18, 2006

Date of ValueAs Is: November 18, 2006

Compiled by CBRE

TERMS AND DEFINITIONS

The current economic definition agreed upon by agencies that regulate federal financial institutions in the U.S. (and used herein) is as follows:

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

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

assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated; 2. both parties are well informed or well advised, and acting in what they consider their own best

interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements

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

creative financing or sales concessions granted by anyone associated with the sale. 1

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

Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP).



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

used in this appraisal.

INTENDED USE AND USER OF REPORT

This appraisal is to be used by the client for Goldman Sachs Commercial Mortgage Capital, L.P.

SCOPE OF WORK

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

gathered and analysis is applied, all based upon the following problem-identifying factors stated

elsewhere in this report:

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

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

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

USPAP. That is, this report incorporates, to the fullest extent possible, practical explanation of the data, reasoning and analysis that were used to develop the opinion of value. This report also includes

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

following steps for this assignment:

Extent to Which the Property is Identified

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

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

its postal address, assessor’s records, legal description and title report. Economic characteristics of

the subject were identified via an analysis of the rent roll, lease briefs between the lessor and lessee, recent rent roll, and historical operating statements.

Extent to Which the Property is Inspected

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

effective date of appraisal.

Type and Extent of the Data Researched

CBRE reviewed the micro and/or macro market environments with respect to physical and economic factors relevant to the valuation process. This process included interviews with regional and/or local

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



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regional and/or local research with respect to applicable tax data, zoning requirements, flood zone

status, demographics, income and expense data, and comparable listing, sale and rental information.

Type and Extent of Analysis Applied

CBRE analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value.

Approaches to value used include the Sales Comparison and Income Capitalization Approaches. The

steps required to complete each approach are discussed in the methodology section. CBRE then correlated and reconciled the results into a reasonable and defensible value conclusion, as defined

herein. A reasonable exposure time and marketing time associated with the value estimate presented

has also been concluded.

SPECIAL APPRAISAL INSTRUCTIONS

There have been no special appraisal instructions for this assignment.

EXPOSURE/MARKETING TIME

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

could be brought to market and sold. This reasonable time frame can either be examined historically

or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on

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

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

of these factors, we have analyzed the following:

• exposure periods for comparable sales used in this appraisal; • marketing time information from the CBRE National Investor Survey; and • the opinions of market participants.

The following table presents the information derived from these sources.

EXPOSURE TIME INFORMATIONExposure Time (Months)

Investment Type Range Average

CBRE General InvestmentClass A 1.0 - 5.0 3.2Class B 3.0 - 12.0 5.5Class C 5.0 - 12.0 7.0

CBRE Estimate

Source: CBRE National Investor Survey

9 Months



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In general, the improved sales indicate exposure times in the lower to middle portion of the range

indicated by the investor survey. In addition to the sales and survey data, we have also reviewed the assumptions and conclusions reached, particularly the income estimates and rates of return and there

potential impact on exposure/marketing time. Based on these analyses, we have concluded an

exposure/marketing time of 9 months or less would be considered reasonable for the subject.

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

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

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


FRISCO PLAZA AREA ANALYSIS

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AREA ANALYSIS

In the appraisal process, relevant economic and demographic factors influencing real estate must be analyzed. The majority of the data for this analysis were obtained through the Summit County

Planning Department, various local planning offices, Colorado Ski Country USA, the Colorado

Department of Local Affairs, and the Colorado Department of Revenue. Factors affecting real estate values generally may be categorized as environmental, social, governmental and economic. The

following discussion will explore these factors as they pertain to Summit County.

The latest employment data released by the U.S. Department of Labor indicates strong, positive

employment growth. As government agencies and private companies begin to revise their findings, additional time will pass before trends can be documented. Our daily contact with clients, markets,

and the latest statistics provide us with a general understanding of many evolving trends. As a result,

we find this to be a time of transition and uncertainty, meriting caution in both current and planned business activity.

LOCATION CHARACTERISTICS

Summit County is located in the north-central mountains of Colorado, on the west side of the

Continental Divide. Approximately 82% of the county's acreage is located within national forests with



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elevations ranging from 7,947 feet to 14,270 feet above sea level. Summit County is home to four

major ski resorts: Keystone, Arapahoe Basin, Breckenridge and Copper Mountain. Those four ski areas within Summit County account for more skier visits than any other county in the United States.

A major advantage to Summit County's ski resorts is their location, just 90 minutes driving time on I-

70 west of the 2.4 million residents of the Denver metropolitan area. The major ski areas of

Breckenridge, Keystone and Copper Mountain also enjoy close proximity, all within 20 minutes of each other. Vail, the largest single ski mountain in the United States, is located in neighboring Eagle

County to the west, a drive of about 40 minutes over Vail Pass. Out of town visitors to the area often

take advantage of the diversity of ski resorts and terrain in Summit County and ski at least two areas during their visit. Skiers from the Front Range areas surrounding Denver tend to be day visitors.

Distances to Summit County ski areas and other nearby resort communities from the Silverthorne area,

which is the primary town in Summit County and the major interchange exit from I-70, are as follows:

APPROXIMATE DISTANCES FROM SILVERTHORNE

Destination Distance

Arapahoe Basin Ski Area 11 Miles

Loveland Basin Ski Area 9 Miles

Keystone 5 Miles

Breckenridge 11 Miles

Copper Mountain 10 Miles

Frisco 4 MilesVail 26 Miles

Source: CBRE

Summit County’s proximity to Denver has contributed to rapid development of the region as both a

winter and summer recreational center. In 1970, the first bore of the Dwight Eisenhower tunnel was constructed, which dramatically improved access to the county area. This tunnel completed the east

and west links of Interstate 70, and allowed for commuting from both sides of the Divide without

navigating the circuitous Loveland Pass. In 1973 the second bore, which is named after former Colorado Governor Edwin C. “Big Ed” Johnson, was opened.

In the two years following the opening of the Eisenhower Tunnel, Keystone and Copper Mountain

were opened, joining the existing ski areas of Breckenridge and Arapahoe Basin. Since that time, growth has continued at a strong pace. The area now attracts a wide array of second homebuyers

from the Front Range, and national and international locations.

Climate is critical to the development and success of Summit County as a resort destination. Higher

elevations in the county receive as much as 300 inches of snowfall per year, contributing to some of the best skiing conditions in the country. Despite the abundant snowfall, Summit County has over 300



8

days of sunshine annually. Runoff during the spring, summer and fall contributes to numerous

outdoor activities, and the summer's mild temperatures attract many more visitors to the region.

LINKAGE ATTRIBUTES

I-70 is the primary highway serving Summit County. It is a four-lane interstate that travels from east to

west through Summit County, linking the communities of Grand Junction, Glenwood Springs and Vail

on the Western Slope of the Rocky Mountains to Denver on the Eastern Slope. The interstate is the

principle means of access to Summit County and also a dominant east/west passage for over-land freight and pleasure travel to and through the Central Rocky Mountain states.

The completion of the Eisenhower/Johnson Tunnels through the Continental Divide greatly improved

access to Summit County from Denver. Summer traffic through the tunnels is typically higher than during the winter season. Tunnel traffic is increasing about 3.5 percent a year according to CDOT

figures. In 2004, approximately 10.7 million vehicles traveled through the tunnel. The 1,148,403

vehicles that traveled through the tunnels last month exceeded the previous July high of 1,103,597, set in 2004. July’s daily tunnel traffic averaged 37,045 vehicles.

State Highways 6 and 9 serve as linkage routes to the various communities of the county, and also

provide access to Interstate 70. Highway 9 is a north-south route that travels north from I-70 through

Silverthorne to U.S. Highway 40, just north of Kremmling. South of I-70, Highway 9 extends through Frisco and Breckenridge to Fairplay, where it connects with US Highway 285. Highway 6 runs

southeast of the interstate at Silverthorne/Dillon through Keystone and over Loveland Pass, eventually

intersecting I-70 on the east side of the Eisenhower Tunnel. Highway 6 follows I-70 within Summit County, west of Silverthorne/Dillon. The only other major linkage in the county is Highway 91, which

runs south from the interchange of I-70 at Copper Mountain over Fremont Pass to Leadville. Swan

Mountain Road, which runs along the southern shore of Lake Dillon, provides a short cut between

Keystone and Breckenridge; however, it is a relatively steep, winding road that can be dangerous in winter conditions.

The primary means of transportation within the county is by automobile, although all of the larger ski

areas offer free transit services. Summit County also operates a shuttle service, called the Summit Stage, between most major towns and resorts. The Summit Stage is a free bus service that operates

year-round and is financed by sales taxes. Buses operate on a 30-minute cycle and meet at the

Transfer Center in Frisco. The Vail Resorts Express is a bus system which connects all Vail Ski Resorts

(Keystone, Breckenridge, Vail and Beaver Creek) during the ski season. This bus service operates from approximately 8:00 A.M. to 7:15 P.M. The Vail Resorts Express charges $10.00 per person for

a round trip fare between Vail/Beaver Creek (Eagle County) and Keystone/Breckenridge (Summit

County). The Ski-Ka Express offers free shuttle service between Breckenridge and Keystone during the ski season.



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Due to the rugged terrain and lack of open tracts in Summit County, there are few sites suitable for a

municipal airport, and none has been constructed to date. Almost all out-of-state visitors fly to Denver International Airport in Denver (roughly 90 miles east), and utilize ground transportation to

Summit County. Colorado Springs also has commercial aviation services and Highway 24 provides a

link to Summit County via Highway 9. A number of rental car agencies have operations in Summit

County. The nearest general aviation airport is the Eagle-Vail Airport, which is located approximately 45 miles to the west.

POPULATION

Summit County was the fastest growing county in the United States from 1970-1980 with a 232%

growth rate. Since the 1970s, population growth has slowed, but is still quite strong with the county showing a 8.2% annual increase between 1990 and 2000. The following table illustrates population

data for Summit County and various sub-regions, as provided by the U.S. Bureau of the Census and

Summit County Planning Department. Data used is reflective of the most recent US Census 2000.

APPROXIMATE DISTANCES FROM SILVERTHORNE

Destination Distance

Arapahoe Basin Ski Area 11 Miles

Loveland Basin Ski Area 9 Miles

Keystone 5 Miles

Breckenridge 11 Miles

Copper Mountain 10 Miles

Frisco 4 MilesVail 26 Miles

Source: CBRE

Summit County’s 2003 estimated population was 25,143, which represented a 6.8% change from the 2000 US Census. By 2008 the Summit County population is estimated to grow to 28,799, which

reflects 4.46% annual growth from 2003 to 2008. Population statistics divide the mountain area

populace into four designations for better understanding of demographic distribution. “Resident

population” refers to full-time residents that are the portion of the population counted in the decennial census. “Second-home population” data refers to part-time residents. The sum of the residential

population and the second-home population is termed “household population”. Finally, “peak

population” is defined as all permanent residents, second-home residents, seasonal visitors and daily visitors. These designations are required when considering all aspects of the economic picture of

mountain resort areas as each has a strong impact on local trade, revenue and economic

development.

The year-round resident population is distributed mainly in Dillon/Silverthorne (21.3%), Breckenridge/ Upper Blue River basin (28.7%), Frisco (13.1%), and Keystone/Snake River Basin (17.8%).



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Taking into account the population of second home residents and visitors in short-term lodging

facilities, the average number of persons in the county during the peak summer and winter tourist seasons is approximately 5.6 times the number of permanent residents. The permanent resident

population is slowly increasing as a total percentage of the peak population, from 14.5% in 1990 to

17.4% according to the Census 2000 figures. The compound annual growth rate from 1990 to

2000 was 6.7% for residents and 2.8% for second-home nonresidents, which demonstrates a trend towards more permanent residents in Summit County.

The majority of Summit County's 2000 peak population, which includes both permanent residents and

visitors, is concentrated in the Upper Blue/Breckenridge (35.0%), Dillon/Silverthorne (23.1%) and Keystone/Snake River basin (21.2%). These areas are where the bulk of the lodging facilities in

Summit County are located.

SUMMER SEASON TOURISM

In recent years, Summit County has developed more second season (summer) tourism. Activities such as hiking, mountain biking, rafting, boating, fishing, golf, tennis and even shopping attract

vacationers to the area during this season. The towns and resorts of Summit County also boast a

wide range of festivals, concerts and related cultural events and activities that cater to local, Front

Range and out-of-state visitors alike.

While downhill skiing remains Summit County's main attraction, more people are visiting the region in

summer to enjoy the sunshine and mild weather offered in Colorado's mountains. As the population

of the country ages, golf and other less strenuous activities have become increasingly popular.

The development of the Silverthorne Factory Stores in the late 1980s and early 1990s has also

become a Summit County destination. Three separate phases have now been developed in this

center, with a total of more than 100 manufacturers' outlet stores. When comparing winter activity

versus summer activity, sales at the outlet center in recent years have been stronger in the milder summer season than the winter season, despite the typically strong retail sales month of December.

Colorado ski resorts reported a 5.0% increase in skier visits for 2005 to 11.8 million. Breckenridge,

which had a record number skiers, reported a 10.0% increase in sales from last year for the first three months of the year. Sales were down in April of this year due to the busy Easter holiday in March.

Even with the flat April, Breckenridge was back to 2000-2001 levels, before the September 11th

terrorist attacks.

WINTER SEASON TOURISM

The demand generators for the overall growth in the area are related to tourism and recreation. Skier visits are indicators of the overall economic condition of the Valley. According to Ski Magazine,

Colorado is home to two of the top ten resorts in North America. In total Colorado resorts had more



11

than forty top ten spots in nearly every category including terrain, service, snow conditions, lodging

accommodations and family programs. The following is a list of the top twenty-five resorts comprised of an overall rank in North America compiled by Ski Magazine.

TOP 25 SKI RESORTS IN NORTH AMERICA - OVERALL RANKRank Resort Name Location

1 Whistler Blackcomb British Columbia

2 Alta/Snowbird Utah

3 Jackson Hole Wyoming

4 Squaw Valley California

5 Mammoth Mountain California

6 Vail Colorado

7 Aspen/Aspen Highlands Colorado

8 Big Sky Montana

9 Aleyeska Alaska

10 Fernie British Columbia

11 Steamboat Colorado

12 Heavenly California

13 Telluride Colorado

14 Kirkwood California

15 Snowbasin Utah

16 Big Mountain Montana

17 Park City Utah

18 The Canyons Utah

19 Beaver Creek Colorado

20 Sunshine Village Alberta

21 Lake Louise Alberta

22 Taos Ski Valley New Mexico

23 Crested Butte Colorado

24 Kicking Horse British Columbia

25 Crystal Washington

Source: Ski Magazine - 2005



12

Colorado Skier Visits

RESORT AND TYPE

Destination Resorts 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Aspen Highlands 149,963 142,090 127,389 140,640 136,136 157,317 160,836 167,390

Aspen Mountain 345,351 334,536 331,121 319,343 310,381 315,130 298,830 304,498

Buttermilk Mountain 180,006 178,089 158,194 148,826 145,683 141,077 139,213 148,018

Crested Butte 549,660 462,478 414,642 367,263 336,483 342,416 333,011 375,936

Cuchara Mountain 39,760 21,678 32,154 NAV NAV NAV NAV NAV

Durango Mountain 328,705 304,735 235,000 321,600 250,500 263,712 268,486 278,767

Howelsen Hill 14,946 14,475 14,000 14,000 15,208 14,000 14,009 16,526

Silverton NAV NAV NAV NAV NAV 2,382 3,600 3,683

Snowmass 884,066 777,140 707,600 740,241 676,505 669,701 724,752 747,304

Steamboat 1,053,145 1,013,254 1,024,832 1,003,317 1,001,003 1,001,020 1,002,821 971,770

Telluride 375,027 382,467 309,737 334,506 341,370 367,252 367,775 411,396

Wolf Creek 158,235 202,053 114,802 187,116 170,847 183,907 210,857 215,821

Subtotal 4,078,864 3,832,995 3,469,471 3,576,852 3,384,116 3,457,914 3,524,190 3,641,109

Front Range Destination

Arrowhead NAV NAV NAV NAV NAV NAV NAV NAV

Beaver Creek 668,520 614,549 586,004 676,528 657,956 718,353 768,542 815,350

Breckenridge 1,300,883 1,385,927 1,444,365 1,422,783 1,468,518 1,424,770 1,402,055 1,470,961

Copper Mountain 921,065 867,394 803,312 992,888 1,005,913 1,058,016 931,143 1,046,242

Keystone 1,149,270 1,253,192 1,192,198 1,230,100 1,069,111 1,038,942 944,433 1,021,069

Vail 1,597,932 1,334,939 1,371,702 1,645,902 1,536,024 1,610,961 1,555,513 1,568,192

Winter Park 1,042,290 980,408 902,827 978,539 975,256 998,772 955,615 990,837

Subtotal 6,679,960 6,436,409 6,300,408 6,946,740 6,712,778 6,849,814 6,557,301 6,912,651

Gems/Front Range

Arapahoe Basin 215,296 267,406 220,945 240,406 151,678 317,401 275,428 328,251

Berthoud Pass 10,735 20,101 16,870 20,160 NAV NAV NAV NAV

Eldora Mountain 202,136 175,939 229,785 233,741 250,000 286,528 278,454 281,238

Loveland 264,532 230,333 225,896 209,757 199,781 244,621 203,916 240,961

Monarch 148,160 140,000 127,215 147,266 138,850 147,094 144,984 142,190

Powerhorn 88,196 55,613 71,941 70,118 76,456 79,624 82,948 81,893

Ski Cooper 82,052 62,145 60,171 66,225 68,893 64,499 58,408 57,389

SolVista 107,399 90,330 92,514 71,303 62,837 65,900 58,482 57,886

Sunlight 102,389 78,290 77,047 84,104 82,742 92,382 66,650 72,004

Subtotal 1,220,895 1,120,157 1,122,384 1,143,080 1,031,237 1,298,049 1,169,270 1,261,812

Totals 11,979,719 11,389,561 10,892,263 11,666,672 11,128,131 11,605,777 11,250,761 11,815,572

Increase/Decrease (590,158) (497,298) 774,409 (538,541) 477,646 (355,016) 564,811

Increase/Decrease -4.93% -4.37% 7.11% -4.62% 4.29% -3.06% 5.02%

Source: Colorado Ski County, USA

COLORADO SKIER VISITS

The 2004-05’ ski season saw an increase of 5.02% over the previous year, indicating that the

economy in general, as well as concerns about air travel, had rebounded. In Colorado, there were

11.8 million skier visits, up from 11.2 the year before. Skier visits increased from the 1997/1998

through 2004/2005 season by approximately 11.62%. Total skier visits statewide in 2004-2005 were 11.8 million, a 4.78% increase from the previous year.

NATIONAL ECONOMY

Reports from the twelve Federal Reserve Districts indicate that economic activity continued to expand

since the last report. Four Districts reported that economic growth firmed while a couple of Districts noted that growth cooled. Other reports generally characterized growth as moderate or mixed.



13

Consumer spending increased more quickly in a number of Districts, although several reports

continued to note that automobile and home-related sales were sluggish. Tourism was generally strong and added some momentum in the New York and Kansas City Districts. Activity in the service

sector expanded in most Districts, but Boston described activity as flat and Cleveland and Dallas

identified pockets of softness in some industries. Manufacturing conditions generally held up well, with

several Districts indicating that growth increased, though Philadelphia reported that activity edged down. Commercial construction gained strength in most of the country. Reports on residential real

estate, however, indicated widespread cooling with the majority of Districts citing lower asking prices,

rising inventories of homes on the market and softening sales. A number of reports, however, indicated that residential activity increased in some markets. Financial institutions continued to report

that residential mortgage lending had tapered off, but commercial lending activity picked up in

several Districts. Agricultural conditions generally improved as rainfall brought relief to drought-

stricken areas.

A number of Districts reported that labor markets were tight with some noting shortages of skilled

workers. Wage pressures were associated with tightening conditions in a few Districts, though other

reports noted that wage pressures were in check. While the majority of Districts characterized price pressures as contained, input prices increased in several Districts and a few reports mentioned

increased pass through by businesses.

CONSUMER SPENDING AND TOURISM

Most Districts reported stronger growth in consumer spending, although automobile and housing-related sales generally weakened. Solid back-to-school sales helped boost retail revenues in the

Philadelphia, Atlanta and Minneapolis Districts. Chicago said back-to-school sales were within

expectations, though "nothing stellar." Sales of upscale merchandise picked up in the New York

District, while apparel sales grew more quickly in the Boston, Cleveland and San Francisco Districts. Chain department store sales were stronger in the Richmond District and same-store sales increased

in the New York District. Softer residential real estate conditions damped home improvement and

furniture sales in the New York, Richmond, Kansas City and San Francisco Districts.

Vehicle sales weakened in several Districts--particularly sales of domestic automobiles, SUVs and light

trucks. However, a few Districts reported increased sales of foreign cars and fuel-efficient automobiles.

Philadelphia noted that a growing number of smaller automobile dealerships had closed and dealers

in the Atlanta District added incentives to move inventory. In the Dallas District, sales of luxury vehicles increased.

Tourist activity strengthened since our last report. New York said that tourism remained robust in New

York City. Kansas City reported solid gains in hotel occupancy rates, while tourist activity in the San



14

Francisco District remained at a high level despite some moderation. Tourism in the Richmond District

was temporarily dented by Hurricane Ernesto in early September, but rebounded later in the month.

SERVICES

Activity in the service sector generally strengthened across Districts since the last report. The

Philadelphia, Richmond, St. Louis and San Francisco Districts reported increased demand for

professional and technical services. Boston reported increased demand for consulting and financial

services, and along with San Francisco, for healthcare services. Richmond indicated that demand for computer and web-based services firmed and San Francisco noted that demand for media services

was stronger. Assessments of transportation services were mixed. Trucking firms reported declining

volume in the Philadelphia, Cleveland, Atlanta and Dallas Districts, and in Cleveland, shipping services continued to soften. Chicago said trucking volume was up slightly and cargo shipping

increased in the Dallas District. St. Louis reported that freight transportation companies planned

expansions. Atlanta indicated that rail companies experienced steady growth in inter-modal shipment volume, and Dallas said that rail demand was strong.

MANUFACTURING

Manufacturing activity remained generally strong in most Districts. Eight of the twelve Districts

indicated that factory output increased, while Chicago and Kansas City noted that the pace of

expansion slowed. Minneapolis described factory activity as mixed and Philadelphia reported that factory production edged down. The output of energy-related equipment increased in the Boston,

Atlanta and Dallas Districts, while Chicago and San Francisco indicated that orders for machine tools

increased. San Francisco reported that semiconductor sales were solid. The demand for steel was especially strong according to Atlanta and Chicago, while Cleveland and Chicago noted that heavy

equipment sales continued to be robust. Chicago also reported strength in heavy-duty truck

production. In contrast, St. Louis said that producers of motor vehicle parts announced plans to lay off

workers and Cleveland reported weakness in the auto industry. Reports of softer demand for housing-related products continued to be widespread, but Dallas noted that strong demand from the

commercial construction industry helped offset softer residential demand. Cleveland, Minneapolis,

Dallas and San Francisco said that sales of food products had accelerated since our last report.

CONSTRUCTION AND REAL ESTATE

Nearly all Districts reported that housing market conditions continued to soften, though several noted

that activity increased in some markets. Most Districts reported higher home inventories, and several

said that homebuilders and sellers continued to offer incentives to attract buyers. Softer home demand in San Francisco led to layoffs for mortgage brokers and real estate agents. Residential construction

remained weak in the St. Louis and Minneapolis Districts except in western North Dakota where

residential construction was described as "robust." New home inventories inched up in the Dallas



15

District despite strong demand in some of its markets and inventories of single family homes and

condominiums rose sharply in the Boston District.

New York and St. Louis reported mixed housing activity. On the upside, Manhattan condominium

sales showed signs of resilience, and housing sales rose in Memphis, but both Districts noted

weakness in most markets. Richmond reported generally weaker housing activity, but also noted

increases in some markets. Atlanta said that housing activity rose in its Mississippi Gulf market, and Minneapolis' Sioux Falls market remained on pace with last year's record-breaking level. Dallas

reported particularly robust home sales in its Houston, Austin and El Paso markets.

Commercial real estate markets were strong in most Districts, and activity increased at a faster pace in a number. Leasing activity increased in New York, Minneapolis, Kansas City, Dallas and San

Francisco, and held steady in Richmond. Chicago and St. Louis, however, said leasing activity was

mixed. Rent increases were reported by New York, Minneapolis and San Francisco, with Dallas

indicating that pricing power was shifting to landlords.

Nonresidential construction was generally strong. Construction activity was steady in the Cleveland,

Richmond, Atlanta, Minneapolis and Kansas City Districts and increased in the Chicago and Dallas

Districts. Material costs and budget concerns scaled back some projects in the Atlanta and Chicago Districts. The Chicago and Minneapolis reports noted concerns among some contacts that

commercial construction may slow in the coming months.

BANKING AND FINANCE

Lending activity was mixed as increases in commercial lending were offset by further weakness in residential mortgage lending. The New York, Richmond and Chicago Districts reported declines in

overall loan demand, while Philadelphia, St. Louis and Kansas City reported modest increases.

Demand for residential mortgages slowed in the New York, Philadelphia, Cleveland, Richmond,

Atlanta, Chicago, Dallas and San Francisco Districts. Demand for commercial and industrial loans rose in the Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis and San Francisco

Districts; held steady in the Richmond and Dallas Districts; and declined in the New York District. The

commercial lending market was characterized as very competitive by Richmond, Chicago and Dallas. Overall credit quality remained generally good, although increases in mortgage delinquency rates

were noted by Philadelphia, Cleveland and Atlanta. Tighter standards for commercial loans were

reported by New York and Chicago.

AGRICULTURE AND NATURAL RESOURCES

Agriculture conditions generally improved as late summer rainfall brought relief to drought-stricken Districts, although some rains hindered field work in some areas and damaged crops in others.

Richmond indicated that tropical storm Ernesto severely damaged crops along some coastal areas.



16

Chicago and St. Louis reported that recent precipitation and unseasonably cool weather delayed corn

and soybean harvests. Crop yields in the Minneapolis District improved with the rainfall, though Chicago reported that yield prospects were mixed. In the Kansas City District, cooler weather and

scattered rainfall restored soil moisture and pastures conditions, though cattle producers continued to

draw down herds. Dallas, however, said that while September rains assisted wheat producers and

eased pressure on livestock producers to liquidate herds, many parts of the District still needed rain. San Francisco reported strong sales for livestock and most crops but indicated that spinach producers

put planting on hold.

Activity in the energy industry remained strong according to reports from the Minneapolis, Kansas City and San Francisco Districts. Minneapolis indicated that alternative energy industries continued to

expand at a rapid pace and that mining production was at near-capacity across the District. Kansas

City noted that oil and gas drilling rig counts remained above year-ago levels, while San Francisco

said that oil and natural gas extraction continued at a rapid pace. In contrast, Dallas reported that activity in the oil and energy producing sector was virtually unchanged although demand for oil-field

equipment and energy services remained strong.

EMPLOYMENT, WAGES, AND PRICES

Labor market conditions remained taut since our last report. The Boston, Philadelphia, Richmond, Minneapolis and Dallas reports characterized labor markets as generally tight, particularly for skilled

workers, while the remaining Districts noted that job growth was steady to stronger. Six Districts

mentioned labor shortages, particularly for professional, scientific, and other technical workers. In addition, Kansas City said retailers faced shortages of experienced sales workers and Atlanta

indicated that residential construction firms were having difficulty obtaining qualified construction

workers, despite the slowdown in building activity. In contrast, Cleveland reported that roughly half of

the homebuilders they contacted had reduced their labor force.

Wage growth around the nation was generally modest, although faster wage growth for skilled

services workers was cited by a number of Districts. The San Francisco District noted that a short

supply of healthcare, finance and construction workers pushed wages higher. In addition, Richmond noted a sharp uptick in retail wages and Atlanta reported that some manufacturers had raised entry-

level wages in an effort to attract workers.

Most Districts reported few signs of increased price pressures in recent weeks. A number of Districts

said that energy prices moderated, but increases in raw materials prices were noted by Philadelphia, Richmond and Atlanta, and a rise in building materials prices was reported by Minneapolis. Instances

of businesses passing on higher costs were scattered across Districts; Cleveland and Atlanta said some

manufacturers attempted to raise output prices while Boston reported increases in retail prices. Boston also reported that costs for some businesses had increased--especially for airfare and hotel



17

accommodations. Likewise, the New York District noted that accommodation and theatre ticket prices

had risen sharply compared to a year ago.

CONCLUSION

Summit County has a central mountain location that is conveniently accessible from most parts of the

state, particularly Colorado's Front Range, where the bulk of the state's population is concentrated.

The most notable attributes of Summit County are four major ski resorts, which logged 3.6 million

skier visits last year, nearly one-third of Colorado’s total skier visits. While the rest of Colorado experienced declines in skier visits each of the past two years due to warm weather conditions and

lower than normal snowfall, Summit County’s ski resorts have fared relatively well. Resort business

and related fields such as real estate make up the most significant share of the area's economy. Summer tourism has a much lesser economic impact than winter tourism in the county.

While Summit County attracts visitors from throughout the nation and the world, the regional

economy, specifically Denver and the Front Range, is the primary engine driving the local economy. Coloradans account for more than 30% of all skier visits and account for a large segment of the

lodging and retail business in the area. Most economists believe that the state's economy will show

slower growth over the next several years.

Nationally, the ski industry appears to be somewhat flat with little or no growth projected for the near term due to the aging of the general population. Colorado and particularly Summit County have

remained strong in the last few years, showing growth in an otherwise stagnant market. The

competitive position of the ski resorts in Summit County should cause this trend to continue, with these resorts benefiting from proximity to Denver and other Front Range communities, skiable terrain, uphill

capacity, entertainment, discount pricing and strong marketing. The four Summit County ski areas

continue to invest significant amounts of capital to improving and expanding terrain and facilities.

Tourism and the second home markets are the primary economic engines of Summit County. The majority of Summit County's real estate is purchased for vacation/recreation, and not as primary

residences. Owners of this type of property typically reside beyond the boundaries of the county as

well as the state. In addition, second homes are dependent traditionally on buyers’ discretionary income and the decline in stock prices has cut into the wealth of many potential second home buyers.

Some agents reported that the decline in the stock market has had a definite adverse impact on new

home sales in Summit County. On the other hand, some have reported that wealthy buyers,

particularly “baby boomers” interested in future retirement homes, have viewed mountain real estate investments as a relatively safe haven for investment dollars given the uncertainty of the stock market.


FRISCO PLAZA NEIGHBORHOOD ANALYSIS

18

NEIGHBORHOOD ANALYSIS

LOCATION

The subject neighborhood generally encompasses the Town of Frisco, Colorado. The Town of Frisco

is situated along the east side of Interstate 70 and is bound by Dillon Reservoir to the north and

Arapahoe National Forest to the south. Frisco is located approximately one hour west of Denver via

Interstate 70 and primarily serves as a tourist and snow ski destination.

LAND USE AND GROWTH PATTERNS

The majority of land use in Summit County consists of retail orientated, lodging/hotels and residential

developments. New development has consisted of primarily retail and residential building over the

past 10-years. The primary retail attraction in Summit County is the Shops at Silverthorne, a large retail outlet mall. A growing portion of new residential construction has been in the form of second/

recreational homes primarily related to the snow ski industry. As previously noted, Frisco is in close

proximity to four major ski resort (Copper Mountain, Breckenridge, Keystone and Arapahoe Basin). Retail and general use commercial properties in Frisco are concentrated along Main Street and

consist mostly of small storefront shops and office uses. In the future, growth is expected to continue

east of downtown Frisco, along State Highway 9 towards Breckenridge. Select properties in the

downtown area will likely be candidates for redevelopment.


FRISCO PLAZA NEIGHBORHOOD ANALYSIS

19

ACCESS

Interstate 70, the primary east-westbound transportation highway for Colorado, provides access to

Frisco. Access locations to Frisco from Interstate 70 are located at Exit Numbers 201 and 203. State Highway 9 serves as the primary route connecting Interstate 70 to the west and Breckenridge to the

south.

DEMOGRAPHICS

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

SELECTED NEIGHBORHOOD DEMOGRAPHICS715-815 Ten Mile Drive Radius 1.0 Radius 3.0 Radius 5.0Frisco, Colorado Mile Mile MilePopulation

2011 Population 2,954 5,726 16,8522006 Population 2,765 5,084 15,1052000 Population 2,649 4,501 13,5191990 Population 1,705 2,537 7,413Annual Growth 2006 - 2011 1.33% 2.41% 2.21%Annual Growth 2000 - 2006 0.72% 2.05% 1.87%Annual Growth 1990 - 2000 4.50% 5.90% 6.19%

Households2011 Households 1,284 2,437 6,325 2006 Households 1,178 2,153 5,692 2000 Households 1,107 1,898 5,138 1990 Households 693 1,067 3,033 Annual Growth 2006 - 2011 1.74% 2.51% 2.13%Annual Growth 2000 - 2006 1.04% 2.12% 1.72%Annual Growth 1990 - 2000 4.80% 5.93% 5.41%

Income2006 Median HH Inc $76,043 $72,443 $67,6352006 Estimated Average Household Income $91,047 $86,991 $84,5152006 Estimated Per Capita Income $38,681 $37,073 $32,451

Age 25+ College Graduates - 2000 1,175 1,835 4,261 Age 25+ Percent College Graduates - 2006 54.2% 46.5% 38.9%

Source: CBRE

CONCLUSION

The location of the subject property continues to be a strong commercial corridor of Summit County.

Primary access to and from the neighborhood is considered average. Visibility from surrounding

streets is considered average. As shown above, the population within the subject neighborhood has exhibited strong growth over the past five years and contains approximately 5,084 residents within a

three-mile radius of the subject. The subject neighborhood can generally be described as stable, with

no noted detrimental influences. The neighborhood currently has an above average income

demographic profile with a 2006 median household income of $72,443 within a three-mile radius. Generally, the neighborhood is expected to remain stable in the future.


FRISCO PLAZA MARKET ANALYSIS

20

MARKET ANALYSIS

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

and indications of financial feasibility. The market analysis will take into account supply and demand, vacancy, absorption and planned projects. The analysis is based on recent studies conducted by

CBRE and Torto Wheaton Research (TWR), and includes information pertinent to the commercial

markets.

DEMOGRAPHIC ANALYSIS

Demand for additional retail property is a direct function of population change and household

income. Retail properties are products of a clearly definable demand relating directly to population

shifts and income patterns.

Housing, Population and Household Formation

The following table illustrates the population and household changes for the subject neighborhood.

POPULATION AND HOUSEHOLD PROJECTIONSRadius 1.0 Radius 3.0 Radius 5.0

Population Mile Mile Mile

2011 Population 2,954 5,726 16,8522006 Population 2,765 5,084 15,1052000 Population 2,649 4,501 13,5191990 Population 1,705 2,537 7,413Annual Growth 2006 - 2011 1.33% 2.41% 2.21%Annual Growth 2000 - 2006 0.72% 2.05% 1.87%Annual Growth 1990 - 2000 4.50% 5.90% 6.19%

Households2011 Households 1,284 2,437 6,3252006 Households 1,178 2,153 5,6922000 Households 1,107 1,898 5,1381990 Households 693 1,067 3,033Annual Growth 2006 - 2011 1.74% 2.51% 2.13%Annual Growth 2000 - 2006 1.04% 2.12% 1.72%Annual Growth 1990 - 2000 4.80% 5.93% 5.41%

Source: CBRE

Population and households represent the basic units of demand in the retail market. According to the

data presented, the subject’s neighborhood is experiencing increases in both population and

households in a three and five mile radius.



21

Income Distributions

Household income available for expenditure on consumer items is a primary factor in determining the

retail supply and demand levels in a given market area. In the case of this study, a projection of

household income identifies (in gross terms) the market from which the subject submarket draws. The following table illustrates estimated household income distribution for the subject neighborhood.

HOUSEHOLD INCOME DISTRIBUTIONRadius 1.0 Radius 3.0 Radius 5.0

Households by Income Distribution - 2006 Mile Mile Mile

Less than $15K 4.92% 5.67% 4.64%$15K - $25K 3.90% 5.57% 6.41%$25K - $35K 4.92% 4.92% 6.87%$35K - $50K 10.10% 10.73% 14.20%$50K - $75K 25.30% 25.59% 24.63%$75K - $100K 18.85% 19.14% 16.97%$100K - $150K 21.39% 18.81% 16.60%$150K - $250K 8.40% 7.06% 7.06%$250K - $500K 1.70% 1.90% 1.90%$500K or more 0.59% 0.60% 0.72%

Source: CBRE

The following table illustrates the median and average household income levels for the subject

neighborhood.

HOUSEHOLD INCOME LEVELSRadius 1.0 Radius 3.0 Radius 5.0

Income Mile Mile Mile

2006 Median HH Inc $76,043 $72,443 $67,6352006 Estimated Average Household Income $91,047 $86,991 $84,5152006 Estimated Per Capita Income $38,681 $37,073 $32,451

Source: CBRE

An analysis of the income data indicates that the submarket is generally comprised of upper-middle income economic cohort groups, which include the target groups to which the subject is oriented.

Retail Sales Volumes

The following table illustrates retail sales for the subject’s market area at given radii intervals from the

subject.



22

RETAIL EXPENDITURES ($000's)SUBJECT'S SUBMARKET

Radius 1.0 Mile Radius 3.0 Mile Radius 5.0 MileProduct Sample 2006 2011 %/Yr 2006 2011 %/Yr 2006 2011 %/YrAll Retail Stores 41,884 53,142 4.9% 73,914 97,605 5.7% 196,597 254,725 5.3%Grocery Stores 7,856 9,534 3.9% 14,043 17,803 4.9% 38,095 47,503 4.5%Eating Places 5,176 6,584 4.9% 9,234 12,203 5.7% 23,954 31,030 5.3%Drinking Places 279 356 4.9% 495 651 5.7% 1,242 1,603 5.2%Health and Personal Care Stores 1,883 2,897 9.0% 3,250 5,171 9.7% 8,541 13,376 9.4%Building Material & Garden Equipment & Supplies 1,144 1,317 2.9% 2,009 2,416 3.8% 5,198 6,102 3.3%Hardware Stores 138 179 5.3% 245 331 6.2% 632 835 5.7%Lawn & Garden Equipment & Supplies Dealers 154 197 5.1% 272 361 5.8% 705 916 5.4%Furniture Stores 1,047 1,355 5.3% 1,818 2,438 6.0% 4,709 6,171 5.6%Other Home Furnishing Stores 771 970 4.7% 1,324 1,730 5.5% 3,394 4,335 5.0%Household Appliance Stores 253 298 3.3% 446 547 4.2% 1,161 1,397 3.8%Radio/TV/Other Electronics Stores 574 703 4.2% 1,017 1,295 4.9% 2,653 3,309 4.5%Department Stores (Excluding Leased) 4,230 5,369 4.9% 7,416 9,807 5.7% 19,703 25,566 5.3%Clothing and Clothing Accessory Stores 3,168 3,901 4.2% 5,551 7,123 5.1% 14,641 18,453 4.7%Shoe Stores 362 426 3.3% 642 794 4.3% 1,753 2,139 4.1%General Merchandise Stores 6,141 7,746 4.8% 10,804 14,199 5.6% 28,775 37,110 5.2%Warehouse Clubs and Superstores 1,456 1,802 4.4% 2,589 3,345 5.3% 6,971 8,838 4.9%Full Service Restaurants 3,067 3,916 5.0% 5,389 7,128 5.8% 13,671 17,696 5.3%Fast Food Restaurants 2,109 2,667 4.8% 3,844 5,073 5.7% 10,281 13,332 5.3%Jewelry Stores 597 751 4.7% 1,023 1,331 5.4% 2,562 3,262 4.9%Book Stores 526 653 4.4% 913 1,174 5.2% 2,286 2,888 4.8%Gift, Novelty, and Souvenir Shops 307 381 4.4% 538 692 5.1% 1,375 1,727 4.7%Florists 65 85 5.4% 113 153 6.2% 290 384 5.8%Hobby, Toy, and Game Shops 331 429 5.4% 579 788 6.4% 1,540 2,054 5.9%Sporting Goods Stores 468 613 5.6% 811 1,112 6.5% 2,133 2,860 6.0%Camera/Photographic Supply Stores 43 48 2.4% 74 87 3.4% 190 218 2.8%Luggage and Leather Goods Stores 40 53 5.5% 69 93 6.2% 176 230 5.6%Sew/Needlework/Piece Goods Stores 76 90 3.5% 133 164 4.3% 344 416 3.9%Convenience Stores 404 481 3.5% 729 906 4.5% 1,958 2,386 4.0%Home Centers 288 338 3.2% 507 619 4.1% 1,309 1,562 3.6%Nursery and Garden Centers 134 172 5.1% 236 313 5.9% 606 795 5.6%Computer and Software Stores 337 441 5.5% 589 802 6.4% 1,513 2,020 6.0%Clothing Accessory Stores 55 69 4.7% 95 124 5.4% 247 311 4.8%Auto Dealers 8,602 10,729 4.5% 15,166 19,657 5.3% 40,974 52,125 4.9%Automotive Part, Accessories & Tire Stores 410 475 3.0% 720 865 3.7% 1,945 2,297 3.4%Gasoline Stations with Convenience Stores 2,264 3,056 6.2% 4,101 5,767 7.1% 11,019 15,183 6.6%Gasoline Stations without Convenience Stores 1,016 1,474 7.7% 1,838 2,772 8.6% 4,931 7,290 8.1%Electronic Shopping and Mail Order 1,363 1,777 5.4% 2,378 3,219 6.2% 6,173 8,204 5.9%Total Accommodation and Food Services 6,783 8,728 5.2% 12,025 16,056 6.0% 31,075 40,645 5.5%

Source: CBRE

Based on this analysis, the immediate area surrounding the subject is projected to experience

moderate growth relative to households, population, income levels and retail expenditures into the

near future.

Outlook

Based on this analysis, the immediate area surrounding the subject is projected to experience

moderate, positive growth relative to households, population, income levels and retail expenditures

into the near future. Given the area demographics, it appears that demand for both comparable

surrounding area retail properties and the subject will continue to be favorable.

GENERAL OFFICE MARKET OVERVIEW

The following discussion illustrates some general observations in the national office market.



23

The office market displayed average improvement during the second quarter, with the vacancy rate

falling 30 basis points from the previous quarter and 130 basis points over the year. These results line up with median declines in the vacancy rate since the third quarter of 2003, when the office market

began to recover. Across the markets TWR analyzes, the vacancy rate now reads 13.1%. Overall, the

downtown market displayed a stronger improvement in the vacancy rate than the suburban market for

the third consecutive quarter. The downtown vacancy rate fell to 11.2%, or 240 basis points below the historical median. Downtown demand is a medium to late-cycle phenomenon that reflects

confidence about the strength and duration of the business cycle. With the lag time between the

strategic decision to expand downtown, and the leasing of that space, Q2 demand was most likely planned for in late-2004 or 2005. Moreover, supply growth is more constrained in the large

downtown markets, so the increase in demand translates directly into lower vacancy rates. After

dipping during the first three months of the year, aggregate demand rebounded during the second

quarter, rising 9.8 msf from the previous quarter to almost 22 msf. Demand during the second quarter was consistent with the pace since 2004. Office-using job growth has been fairly steady of late. A

four-quarter moving average puts job growth at 2.5% year-on-year since mid-year 2005, which is

reflected in steady absorption. Moreover, pre-leasing is easing-off the pace of recent years, so office absorption more closely matches actual job growth.

The national trend in supply remains constrained. The second quarter displayed a pickup in building,

with quarterly completions coming in at 12.7 msf—the second highest tally since 2002. Average trend

completions are running at a bit over 9 million sf per quarter since mid-2003. The most recent turnout is at the high-end of that range. High construction costs are preventing a development response to



24

falling vacancy rates in many metros. Torto Wheaton analysis suggests that there are currently only a

handful of markets where replacement costs are below sale values.

Rent growth across TWR markets came in weaker than expected during the second quarter, but the

difference was statistically insignificant. Quality-adjusted rents advanced 4.6% year-to-year during

Q2, whereas trend rent growth is running at 5%. The second quarter is the seventh consecutive

quarter of positive year-to-year rent growth, and current performance is quite similar to the rent growth observed at the same point of the last office market expansion.

CONCLUSION

Torto Wheaton’s baseline outlook for the national office market anticipates that demand will continue

to progress at a moderate pace over the next two years. The remainder of 2006 through 2007 is expected to be characterized by slower growth in the economy in general and office-using

employment in particular, as a down-cycle in finance and housing sap economic growth. The

medium-term forecast finds demand accelerating again in 2008, as the economy recovers from its slow-down. Farther out, demand grows at a steady pace that is slightly ahead of the average during

previous periods of expansion.

Near-term demand is distinguished from recent history in a sharp downshift in the pace of absorption.

Net absorption averaged 19.5 million sf from 2004 through 2005, and then fell to 16 million sf during the first half of 2006 due to a weak first quarter. A softer pace of absorption is expected to

continue until 2008 for two reasons. First, corporations are backing off pre-leasing that occurred

during 2004 and 2005. Flush with enough space to accommodate expansion plans, demand will not necessarily match growth in the economy over the near term. Second, the macroeconomy will weaken

moderately from a slowdown in the housing market, and a concomitant down cycle in the finance

industry. Industries that receive merely a glancing blow from the housing correction and loss of

consumer purchasing power will merely cap hiring. Those industries that incur a direct hit, such as banks and nonbank consumer finance firms, will suffer declines in profitability and respond by

shedding staff built up during the housing and related consumer finance boom.

Further, slower productivity growth and higher wage pressures will induce businesses to restrain hiring to contain cost pressures over the near term. Further office market imbalances are not expected to

emerge, however, as the supply side is forecast to remain quiet through 2008. The vacancy rate is

still well above the pre-recession average in most markets. Moreover, while rent growth is improving,

the abundance of available space in many markets is preventing a sharp run-up in rental rates. Given that construction costs are so high, and are not expected to fall in the near term, rent growth is not

sufficient to cover replacement costs, and building activity will remain muted. Torto Wheaton does not

anticipate a sustained period of strong development until farther out in the forecast horizon—2009 at



25

the earliest. By then, the vacancy rate will have fallen below 12%, and local markets will face a

shortage of modern class A space.

Most of the improvement to national office markets occurred during the last two years, and gains

going forward will be steady, but slow. From 2004 through the first quarter of 2006, the national

vacancy rate declined by an average of 40 basis points per quarter. By contrast, the near- to

medium-term forecast horizon is characterized by a rough balance between supply and demand that permits a comparatively gradual decline in the vacancy rate. Through the medium term (2006

through 2011), the national vacancy rate is expected to decline by an average of just ten basis points

per year. Median rent growth, then, averages just 4.9% over the outlook, versus 7.6% during the 1990s.

GENERAL RETAIL MARKET OVERVIEW

Consumers have been forced to adjust their spending recently, as high gas prices at the pump and the

slowing housing market are taking a big chunk out of their discretionary income. Evidence of this can be seen in moderating retail sales growth during the past couple of months. Since May, year-over-

year growth in total retail sales has gone from 7.6% to 4.8%, a meaningful drop. Retail property

performance has unsurprisingly reflected these challenging conditions. As you can see in the above

graph, rents have declined and are expected to continue to decline in 2006, and the availability rate will jump to over 8% by the end of 2006. This will be the first time rents have declined since 1993, an

obvious signal that something is awry.

Services-producing employment is up just over 1% compared to last year, and goods-producing employment—up about 1.3% compared to last year—is only slightly stronger. Still, the quality of the

jobs being created is on the rise. The higher quality, service-providing jobs in occupations such as

computer systems, architecture and engineering, business consulting, accounting, finance, and health

care are now sustaining the economy. The increase in the quality of the jobs, even though overall employment is slowing, means continued expansion and therefore a recovery in consumer spending

after a bit of a downturn this year.



26

CONCLUSION

As consumers grow more frugal we expect the remainder of 2006 to be a bit of a bummer. After

2006, retail fundamentals will regain some strength though, and although availability will continue to rise, absorption will have a huge turnaround. The increase in absorption coupled with low

completions will help to drive retail rents up in 2007, paving the way for continually improving

conditions in 2008.

GENERAL INDUSTRIAL MARKET OVERVIEW

The following discussion illustrates some general observations in the national industrial market. The short-term forecast calls for overall positive growth in manufacturing and distribution workers. Total

net absorption is forecasted to be a positive 3.2m square feet, out-pacing supply during the same

period. By year-end 2007, the availability rate is expected to be 10.6% while rents are forecasted to grow - reaching $4.84 compared to current market rents of $4.74.

Historical minimum, maximum, and average values for each variable are provided to put current

market performance in perspective. The time period from which these values are calculated is 1980

(or the earliest year of available data) to the current year. TWR expects net absorption to be higher than long-term averages during the forecast, though still below historical peaks.



27

CONCLUSION

Distribution and manufacturing employment are the primary determinants of demand. We define distribution employment as all of the Wholesale Trade sector plus Transportation (Trucking and

Warehouse). The latest estimates of distribution and manufacturing employment for Denver are

86,000 workers and 91,900 workers, respectively. Over the last 5 years, distribution employment in

Denver has declined by 1.3% while manufacturing employment has declined by 3%. Over the last 12 months distribution employment has grown by 3% and manufacturing employment has grown by

0.9%. Demand for industrial space peaked in 2000 with 204,100 jobs in the industrial sectors. We

expect industrial employment to grow 1.3% per year over the next six years - but despite this growth, employment is not expected to hit previous peaks. Rents have declined 3.4% per year over the last 3

years, which, combined with the forecasted job growth, will help to lift absorption in the coming years.

Net absorption is expected to average 3.1 msf per year while supply is expected to average 2.1 msf,

lagging net absorption. Availability rates are forecasted to improve, dropping to 8.5%, while rents are forecasted to rise to $5.57.

FRISCO COMMERCIAL REAL ESTATE MARKET

There is no published data in the local market that tracks inventory, occupancy, absorption and lease rate trends. The commercial and retail/office markets are relatively small overall and there has been

little speculative development in the immediate area. Based on the appraiser’s survey of the area and

discussions with brokers, it appears that the Summit County/Frisco area has a mixed-use occupancy rate of 95% or above. Based on the discussion with local market participants, the most likely potential

purchaser of commercial property in the Town of Frisco is a private investor.



28

CONCLUSION

Based on the market trend for office, light industrial and retail space in the region and submarket the

short and long-term outlook for the subject submarket, vacancy rates should remain flat. The forecast for 2006 is for moderate growth. The subject has an average market position because of its location

along Ten Mile Drive and proximity to Interstate 70. In consideration of the above factors we estimate

the long-term vacancy and collection loss at 5%.


FRISCO PLAZA SITE ANALYSIS

29

PLAT MAP



30

SITE ANALYSIS

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

SITE SUMMARY

Physical DescriptionNet Site Area 2.87 Acres 124,948 Sq. Ft.Primary Road Frontage Ten Mile Drive 900 FeetSecondary Road Frontage Lagoon Drive 140 FeetExcess Land Area NoneSurplus Land Area NoneZoning DistrictFlood Map Panel No. & Date 0802450001C 2-Nov-94Flood Zone X

Source: Various sources compiled by CBRE

CT, Contractor Trades District

LOCATION

The subject is located along Ten Mile Drive situated east of State Highway 9 / Summit Boulevard and

north of Logoon Drive. The street address is 719-815 Ten Mile Drive. Common ingress and egress is available to the site via Ten Mile Drive.

ASSESSOR’S PARCEL NUMBER

The Summit County Tax Assessor’s parcel number(s) is/are as follows: 2097-2630-06-001, 2097-

2630-06-002, 2097-2630-06-004 and 2097-2630-37-007.

LAND AREA

The site consists of 2.16-acres or 94,090 square feet. There is no unusable, excess or surplus land

area.

SHAPE AND FRONTAGE

The site is irregular and has adequate frontage along Ten Mile and Lagoon Drives.

TOPOGRAPHY AND DRAINAGE

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

impediment to the development of the property. During our inspection of the site, we observed no

drainage problems and assume that none exist.



31

SOILS

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

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

EASEMENTS AND ENCROACHMENTS

Based on an inspection and review of the site plan and title report, the property does not appear to be

adversely affected by any easements or encroachments.

COVENANTS, CONDITIONS AND RESTRICTIONS

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

affect the marketability or highest and best use.

UTILITIES AND SERVICES

The site is within the jurisdiction of Frisco and is provided all municipal services, including police and fire protection. All utilities are available to the site in adequate quality and quantity to service the

highest and best use.

FLOOD ZONE

According to flood hazard maps published by the Federal Emergency Management Agency (FEMA),

the site is within Zone X, as indicated on the indicated Community Map Panel No. 0802450001C.

FEMA Zone X: Areas determined to be outside the 500-year flood plain.

ENVIRONMENTAL ISSUES

CBRE has not observed and is not qualified to detect, the existence of potentially hazardous material

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

has specifically assumed that the property is not affected by any hazardous materials that may be

present on or near the property.

ADJACENT PROPERTIES

The adjacent land uses are summarized as follows:



32

North: Multi-Family / Condominium Use South: Industrial Use East: Multi-Family / Condominium Use West: Ten Mile Drive / Retail Uses

CONCLUSION

The site is well located and afforded average access and visibility from roadway frontage. The size of

the site is typical for the area and use, and there are no known detrimental uses in the immediate vicinity. Overall, there are no known factors which are considered to prevent the site from

development to its highest and best use, as if vacant, or adverse to the existing use of the site.


FRISCO PLAZA IMPROVEMENTS ANALYSIS

33

IMPROVEMENTS LAYOUT



34

IMPROVEMENTS ANALYSIS

The following chart depicts a summary of the improvements.

IMPROVEMENTS SUMMARY

Source: Various sources compiled by CBRE

Property Type

Total Spaces:

Open

65

1 and 2

56,743 SF

5,898 SF

4,785 SF

4

45.4%

Number of Buildings

Number of Stories

Gross Leasable Area

Major Tenants

Parking Improvements

Colorado Motor Parts

Specialized Truck & SUVSite CoverageLand-to-Building Ratio 2.2 : 1


Building plans and specifications were not provided for the preparation of this appraisal. The

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

YEAR BUILT

The subject was built in 1976, 1978 and 1983. The property was most recently renovated from 2003

through 2004 at a cost of $354,738. Improvements to the property included a stone veneer exterior, new paint, updating the power systems and roof.

FOUNDATION

The foundation consists of a concrete slab poured on reinforced concrete footings.

CONSTRUCTION COMPONENTS/EXTERIOR WALLS

The construction components include concrete block, wood/stone veneer and glass panel windows.



35

FLOOR STRUCTURE

The floor structure is summarized as follows:

Ground Floor: Concrete slab on compacted fill

ROOF COVER

The building roof area are comprised of concrete decking with a rubber membrane cover with river

rock ballast.

INTERIOR FINISHES

The typical interior finish of the retail shop space is summarized as follows:

Floor Coverings: Combinations of exposed concrete, ceramic tile and carpet.

Walls: Combinations of exposed concrete block and textured/painted sheetrock.

Ceilings: Combinations of exposed concrete decking, textured /painted sheetrock and suspended acoustical tile.

Lighting: Combinations of incandescent, fluorescent and high intensity fixtures.

Summary: The interior areas are considered to be average and commensurate with competitors in the area.

BALCONY/MEZZANINE AREAS

Most of the units throughout the development are improved with unfinished mezzanine levels primarily

utilized for additional storage.

HVAC

The HVAC system is assumed to be in good working order and adequate for the buildings. The warehouse portions of the property are heated by ceiling mounted gas fired space heaters.

ELECTRICAL

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



36

PLUMBING

The plumbing components reportedly comply with current codes.

RESTROOMS

The restroom finish is considered building standard and commensurate with competitors in the area.

FIRE PROTECTION

The improvements are not fire sprinklered via an overhead wet system. It is assumed the

improvements have adequate fire alarm systems, fire exits, fire extinguishers, fire escapes and/or other

fire protection measures to meet local fire marshal requirements.

PARKING AND DRIVES

The property features an adequate number of surface parking spaces, including reserved

handicapped spaces. All parking spaces and vehicle drives are concrete paved and considered to be

in average condition. Patron parking areas are primarily located along the west side of the building.

LANDSCAPING

The landscaping throughout the development is minimal.

QUALITY AND STRUCTURAL CONDITION

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

did not observe any evidence of structural fatigue and the improvements appear structurally sound for occupancy. However, CBRE is not qualified to determine structural integrity and it is recommended

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

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

FUNCTIONAL UTILITY

The overall layout of the property is considered functional in utility and provides adequate accessibility and visibility to the individual spaces.

ADA COMPLIANCE

All common areas of the property appear to have handicap accessibility with the exception of the

mezzanine and second level office areas. The client/reader’s attention is directed to the specific limiting conditions regarding ADA compliance.



37

FURNITURE, FIXTURES AND EQUIPMENT

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

the overall value of the real estate.

ENVIRONMENTAL ISSUES

CBRE has not observed and is not qualified to detect the existence of any potentially hazardous

materials such as lead paint, asbestos, urea formaldehyde foam insulation, or other potentially

hazardous construction materials on or in the improvements. The existence of such substances may affect the value of the property. For this assignment, we have specifically assumed that any hazardous

materials that would cause a loss in value do not affect the subject.

DEFERRED MAINTENANCE

Our inspection of the property indicated no significant items of deferred maintenance.

ECONOMIC AGE AND LIFE

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

the following chart:

ECONOMIC AGE AND LIFE

Actual Age 23, 28 and 30Effective Age 10 YearsMVS Expected Life 45 YearsRemaining Economic Life 35 YearsAccrued Physical Incurable Depreciation 22.2%

Compiled by CBRE

The overall life expectancy is based upon our on-site observations and a comparative analysis of typical life expectancies reported for buildings of similar construction as published by Marshall and

Swift, LLC, in the Marshall Valuation Service cost guide. While CBRE did not observe anything to

suggest a different economic life, a capital improvement program could extend the life expectancy.

CONCLUSION

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

impact the marketability of the improvements.


FRISCO PLAZA ZONING

38

ZONING

The following chart summarizes the subject’s zoning requirements.

ZONING SUMMARYCurrent Zoning CT, Contractor Trades DistrictLegally Conforming YesUses Permitted Various light industrial and commercial land usesZoning Change Not likely

Source: Town of Frisco, Planning and Zoning Department

ANALYSIS AND CONCLUSION

The improvements represent a legally-conforming use and, if damaged, may be restored without

special permit application. If additional information is required, please contact the local planning and/or zoning office.


FRISCO PLAZA TAX AND ASSESSMENT DATA

39

TAX AND ASSESSMENT DATA

The following summarizes the subject’s market value, assessed value, and taxes, and does not include

any furniture, fixtures and equipment.

AD VALOREM TAX INFORMATIONAssessor's Market Value 2006 Pro Forma

2097-2630-06-001 $1,204,8012097-2630-06-002 1,939,125 2097-2630-06-004 814,628 2097-2630-37-007 1,058,511

Subtotal $5,017,065 $5,017,065

Assessed Value @ 29% 29%$1,454,949 $1,454,949

General Tax Rate (per $1,000 A.V.) 48.703000 48.703000

Total Taxes $70,860 $70,860

Source: Summit County Treasurer's Office

The County Assessor revalues real estate in Colorado every two years (odd years only). In Colorado,

all commercial property is assessed at 29% of the Assessor’s determination of market value.

However, Assessors’ values typically lag behind actual property values. The TABOR Amendment to the Colorado Constitution limits taxing authority budget increases at 5.5%, unless, a higher amount is

approved by voters. Other limitations to revenue growth are inflation as measured by the CPI and

local growth determined by school enrollment and new construction. Improved residential property is assessed at variable rates in order to maintain a balance with commercial property values. The

current residential rate is 7.96%. As area property values have increased over the last several years,

mill levies have declined in order to comply with the TABOR Amendment. This has been most

significant in revaluation years. However, we anticipate actual tax increases commensurate with inflation over the long term.

According to a representative of the Summit County Treasurer’s office, the 2005 taxes payable in

2006 are paid in full in the amount of $43,500. Taxes are paid in arrears and are due on April 30 of the year following the tax year. Alternatively, the tax payment can be split with the first half due in

February of the following year and the second half due in June. The next re-assessment is scheduled

for January 2007 and values should be published by May 2007. According to a representative of the Summit County Treasurer’s office, there are no delinquent property taxes encumbering the subject.


FRISCO PLAZA HIGHEST AND BEST USE

40

HIGHEST AND BEST USE

In appraisal practice, the concept of highest and best use represents the premise upon which value is

based. The four criteria the highest and best use must meet are:

• legal permissibility; • physical possibility; • financial feasibility; and • maximum profitability.

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

AS VACANT

Legal Permissibility

The legally permissible uses were discussed in detail in the site analysis and zoning sections of this

report. The site is zoned for contractor trades district allowing for various light industrial and

commercial land uses.

Physical Possibility

The physical characteristics of the subject site were discussed in detail in the site analysis. Overall, a wide range of legally permissible uses would be physically possible.

Financial Feasibility

The financial feasibility of a specific property is market driven, and is influenced by surrounding land

uses. Based on the subject’s specific location and physical characteristics, development of the site

with a commercial oriented use that is complimentary to the surrounding land uses would represent the most likely financially feasible option.

Maximum Profitability

The use that results in the maximum profitability of the site is beyond the scope of this assignment.

The recipient of the property’s productivity (e.g., the lender, equity investor, the public, etc.) greatly

determines what the use should be. Regardless, the use for the subject should conform to the neighborhood trends and be consistent with existing land uses.

CONCLUSION: HIGHEST AND BEST USE AS VACANT

Based on the foregoing analysis, the highest and best use of the site as though vacant would be for

commercial development, including industrial, office and retail uses.


FRISCO PLAZA HIGHEST AND BEST USE

41

AS IMPROVED

Legal Permissibility

The subject site is approved for commercial uses. The improvements represent a legally conforming

use.

Physical Possibility

The subject improvements were discussed in detail in the Improvement Analysis. The layout and positioning of the improvements are functional for various commercial uses based on comparison to

neighborhood properties.

Financial Feasibility

The financial feasibility for a commercial property is based on the amount of rent which can be

generated, less operating expenses required to generate that income; if a residual amount exists then the land is being put to a productive use. As will be indicated in the Income Capitalization Approach,

the subject is capable of producing a positive net cash flow and continued utilization of the

improvements for industrial, office and retail related purposes is considered financially feasible.

Maximum Profitability

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

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

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

produces the highest price or value is typically the highest and best use. However, the recipient of the property’s productivity greatly determines what actual use maximizes profitability. It appears there are

no alternative uses of the existing improvements that would produce a higher net income and/or value

over time than the current use.

CONCLUSION: HIGHEST AND BEST USE AS IMPROVED

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

existing uses, as a multi-tenant mixed-use development.


FRISCO PLAZA APPRAISAL METHODOLOGY

42

APPRAISAL METHODOLOGY

In appraisal practice, an approach to value is included or omitted based on its applicability to the

property type being valued and the quality and quantity of information available.

COST APPROACH

The cost approach is based upon the proposition that the informed purchaser would pay no more for

the subject than the cost to produce a substitute property with equivalent utility. This approach is

particularly applicable when the property being appraised involves relatively new improvements that represent the highest and best use of the land, or when it is improved with relatively unique or

specialized improvements for which there exist few sales or leases of comparable properties.

SALES COMPARISON APPROACH

The sales comparison approach utilizes sales of comparable properties, adjusted for differences, to

indicate a value for the subject. Valuation is typically accomplished using physical units of comparison such as price per square foot, price per unit, price per floor, etc., or economic units of comparison

such as gross rent multiplier. Adjustments are applied to the physical units of comparison derived

from the comparable sale. The unit of comparison chosen for the subject is then used to yield a total value.

INCOME CAPITALIZATION APPROACH

The income capitalization approach reflects the subject’s income-producing capabilities. This

approach is based on the assumption that value is created by the expectation of benefits to be derived in the future. Specifically estimated is the amount an investor would be willing to pay to receive an

income stream plus reversion value from a property over a period of time. The two common

valuation techniques associated with the income capitalization approach are direct capitalization and

the discounted cash flow (DCF) analysis.

METHODOLOGY APPLICABLE TO THE SUBJECT

In valuing the subject, only the Sales Comparison and Income Capitalization Approaches are

applicable and have been used. The Cost Approach is not applicable in the estimation of market

value due to the age of the improvements and the difficulty in accurately estimating all forms of accrued depreciation. However, the replacement cost was estimated within the analysis of Insurable

Value.


FRISCO PLAZA INSURABLE VALUE

43

INSURABLE VALUE

As part of the client’s requested scope of work, an estimate of insurable value is provided herein.

CBRE has followed traditional appraisal standards to develop a reasonable calculation based upon industry practices and industry accepted publications such as Marshall Valuation Service. The

methodology employed is a derivation of the cost approach and is not reliable for insurable value

estimates. Actual construction costs and related estimates can vary greatly from this estimate.

The insurable value estimate presented herein is intended to reflect the value of the destructible portions of the subject, based on the replacement of physical items that are subject to loss from

hazards (excluding indestructible items such as basement excavation, foundation, site work, land value

and indirect costs). In the case of the subject, this estimate is based upon the base building costs (direct costs) as obtained via the Marshall Valuation Service handbook, with appropriate deductions.

This analysis should not be relied upon to determine proper insurance coverage as only consultants

considered experts in cost estimation and insurance underwriting are qualified to provide an insurable value. It is provided to aid the client/reader/user as part of their overall decision making process and

no representations or warranties are made by CBRE regarding the accuracy of this estimate and it is

strongly recommend that other sources be utilized to develop any estimate of insurable value.


FRISCO PLAZA INSURABLE VALUE

44

INSURABLE VALUE CONCLUSION

Building Type: Height per Story: 18'Effective Age: Number of Buildings: 4Quality/Condition: Gross Building Area: 56,743 SFExterior Wall: Net Rentable Area: 56,743 SFNumber of Stories:

MVS Sec/Page/Class 0 0 0 0 13/26/May 06'Building Component 0 0 0 0 Retail StoresComponent Sq. Ft. 0 SF 0 SF 0 SF 0 SF 56,743 SFBase Square Foot Cost $0.00 $0.00 $0.00 $0.00 $83.36

Square Foot RefinementsHeating and Cooling $0.00 $0.00 $0.00 $0.00 $0.00Sprinklers $0.00 $0.00 $0.00 $0.00 $0.00Subtotal $0.00 $0.00 $0.00 $0.00 $83.36

Height and Size RefinementsNumber of Stories Multiplier 0.00 0.00 0.00 0.00 1.00Height per Story Multiplier 0.00 0.00 0.00 0.00 1.00Floor Area Multiplier 0.00 0.00 0.00 0.00 1.00Subtotal $0.00 $0.00 $0.00 $0.00 $83.36

Cost MultipliersCurrent Cost Multiplier 0.00 0.00 0.00 0.00 1.02Local Multiplier 0.00 0.00 0.00 0.00 1.02

Final Square Foot Cost $0.00 $0.00 $0.00 $0.00 $86.73Base Component Cost $0 $0 $0 $0 $4,921,192

Base Building Cost (via Marshall Valuation Service cost data) $4,921,192

Insurable Value Exclusions 10.0% of Total Building Cost ($492,119)

Insurable Value Indication $4,429,073Rounded $4,400,000Value Per SF $77.54

Compiled by CBRE

1 and 2

Retail10 YRSAverageStone/Wood Veneer


FRISCO PLAZA SALES COMPARISON APPROACH

45


The following map and table summarize the comparable data used in the valuation of the subject. A

detailed description of each transaction is included in the addenda.

SUMMARY OF COMPARABLE RETAIL SALES

Year GLA Actual Sale Price NOINo. Name Type Date Built (SF) Price Per SF 1 Occ. Per SF OAR

1 Boardwalk Building,Frisco, CO

Sale Mar-05 1978 10,000 $1,625,000 $162.50 100% NAV NAV

2 Eagle Market Center,Eagle, CO

Sale May-05 1997 11,266 $1,500,000 $133.14 100% $8.52 6.40%

3 Brian Avenue Industrial Building,Silverthorne, CO

Sale Mar-06 1971 13,000 $1,100,000 $84.62 100% NAV NAV

4 Mountain View Plaza,Keystone, CO

Listing Nov-06 1982 19,934 $4,150,000 $208.19 91% $14.03 6.74%

Subj.Pro

Forma

Frisco Plaza,Frisco, Colorado

--- --- 1976, 1978 and 1983

56,743 --- --- 95% $11.34 ---

1 Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable)

Compiled by CBRE

Transaction



46

The sales utilized represent the best data available for comparison with the subject. They were

selected from our research within the immediate area and expanded to include the resort community of Eagle, Colorado. Recent applicable improved sale data in the immediate area was limited. To the

north of Interstate 70 in the town of Silverthorne, Wagner Equipment Rental purchased a 5,304

square foot building on a 1.28-acre site. The property sold for $1,050,000 or $197.96 per square

foot in October 1999. In addition, there is also a newer industrial condominium development located along Buffalo Mountain Drive in Silverthorne. The property is considered incubator space and

sells for approximately $115.00 per square foot. According to the listing agent, space sizes are

available from 880 to 2,160 square feet. At the time of sale, the units sell in shell condition and are primarily utilized for RV/boat storage.

Improved Sale One

This is the March 2005 sale of the 10,000 square foot Boardwalk Building. The property is located at

720 Granite Street in Frisco. The property was developed in 1978, consists of a mixture of office and

retail uses and was reportedly 100% occupied at the time of sale. The selling broker was unable to confirm income and expense data for the property. Comparable 1 warranted a downward adjustment

for size. Upward adjustments are required for age/condition and quality of construction. Overall,

Comparable 1 is inferior to the subject property and required upward net adjustments.

Improved Sale Two

This is the May 2005 sale of the 11,266 square foot Eagle Market Center. The property is located at 94 Market Street in Eagle. The property was developed in 1997, consists of a mixture of office and

retail uses and was 100% occupied at the time of sale. The two-story improvements are structured

with ground floor retail areas and second level office suites. The net operating income at the time of sale was $8.52 per square foot and the indicated overall rate was 6.40%. Comparable 2 warranted

an upward adjustment for location and income characteristics. A downward adjustment is required

for size and age/condition. Overall, Comparable 2 is inferior to the subject property and required

upward net adjustments.

Improved Sale Three

This is the March 2006 sale of a 13,000 square foot single-tenant industrial building. The property is

located at 371 Brian Avenue in Silverthorne. The property was developed in 1971, and is currently

100% owner-occupied. Income and expense information for the property was not available.

Comparable 3 warranted an upward adjustment for location, age/condition and quality of construction. A downward adjustment is required for size. Overall, Comparable 3 is inferior to the

subject property and required upward net adjustments.



47

Improved Sale Four

This is the current listing of the Mountain View Plaza building. The property is located at 22869

Highway 6 in Keystone. The property was developed in 1982 and is currently 90.9% occupied. The

two-story improvements are structured with ground floor retail areas and second level office suites. The net operating income at the time of the listing is $14.03 per square foot and the implied overall

rate is 6.74%. Comparable 4 warranted an upward adjustment for location and quality of

construction. A downward adjustment is required for size and income characteristics. Overall, Comparable 4 is inferior to the subject property and required upward net adjustments.

SUMMARY OF ADJUSTMENTS

Based on the foregoing discussions, the following table presents the adjustments warranted to each

sale, as compared to the subject. The following adjustment grid implies a level of accuracy that may not exist in the current market. However, the grid has been included in order to illustrate the

magnitude of the warranted adjustments. Use of an adjustment grid in making quantitative

adjustments is only appropriate and reliable when the extent of adjustment for each particular factor is

well supported and the dollar or percentage adjustment is derived through either paired sales analysis or other data relevant to the market. In instances where paired sales and market data was not readily

available, we used our best judgment to make a reasonable estimate for the appropriate warranted

adjustment.

RETAIL SALES ADJUSTMENT GRID

Comparable Number 1 2 3 4Subj.Pro

FormaTransaction Type Sale Sale Sale Listing ---Transaction Date Mar-05 May-05 Mar-06 Nov-06 ---Year Built 1978 1997 1971 1982 1976, 1978 and 198GLA (SF) 10,000 11,266 13,000 19,934 56,743Actual Sale Price $1,625,000 $1,500,000 $1,100,000 $4,150,000 ---Price Per SF 1 $162.50 $133.14 $84.62 $208.19 ---Occupancy 100% 100% 100% 91% 95%NOI Per SF NAV $8.52 NAV $14.03 $11.34OAR NAV 6.40% NAV 6.74% ---Adj. Price Per SF $162.50 $133.14 $84.62 $208.19Property Rights Conveyed 0% 0% 0% 0%Financing Terms 1 0% 0% 0% 0%Conditions of Sale 0% 0% 0% -5%Market Conditions (Time) 0% 0% 0% 0%Subtotal - Price Per SF $162.50 $133.14 $84.62 $197.78Location 0% 15% 10% 5%Size -10% -10% -10% -5%Age/Condition 10% -5% 20% 0%Quality of Construction 10% 0% 5% 0%Income Characteristics 0% 20% 0% -10%Total Other Adjustments 10% 20% 25% -10%

Indicated Value Per SF $178.75 $159.77 $105.78 $178.00

1 Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable)

Compiled by CBRE



48

SALE PRICE PER SQUARE FOOT CONCLUSION

Based on the preceding discussions of each comparable and the foregoing adjustment analysis, a

price per square foot indication near the middle of the range for the least adjusted Comparables 1, 2 and 4 is considered most appropriate for the subject. The following chart presents the valuation

conclusion:


GLA (SF) X Value Per SF = Value56,743 X $172.00 = $9,759,796

VALUE CONCLUSION

Indicated Stabilized Value $9,759,796Deferred Maintenance $0Value Indication $9,759,796Rounded $9,800,000Value Per SF $172.71

Compiled by CBRE


FRISCO PLAZA INCOME CAPITALIZATION APPROACH

49

INCOME CAPITALIZATION APPROACH

The following map and table summarize the comparable data used in the valuation of the subject. A

detailed description of each transaction is included in the addenda.

SUMMARY OF COMPARABLE RETAIL RENTALSComp.

No.Property Nameand Location Year Built Occ. GLA (SF)

QuotedRental Rate

Expense Basis

TenantName Base Rent

1 1983 100% 5,600 $11.37/SF NNN United Rentals $11.37 PSFQuoted $11.37/SF

2 1982 91% 19,934 $15.00/SF NNN Quoted $15.00/SF

3 Frisco Plaza In-Line Space807-849 Summit Boulevard,Frisco, CO

1983 100% 21,179 $18.31-$24.50/SF NNN Colorado Motor Parts $18.31 PSF

Christy Sports, LLC $18.90 PSFAB Ski & Sports $20.57 PSF

Copy $24.50 PSFQuoted $18.31-$24.50/SF

4 Drake Landing Building E 2003 0% 6,386 $23.90/SF NNN Quoted $23.90 PSF375 Ten Mile DriveFrisco, CO

Subj.Pro

Forma

Frisco Plaza719-815 Ten Mile Drive,Frisco, Colorado

1976, 1978 and 1983

99% 56,743 --- --- ---

Compiled by CBRE

United Rentals Building191 Adams Avenue,Silverthorne, CO

Mountain View Plaza22869 Highway 6,Keystone, CO



50

The comparables utilized represent the best data available for comparison with the subject. They were

selected from our research of comparable mixed-use commercial leases recently occurring with the towns of Frisco, Keystone and Silverthorne.

DISCUSSION/ANALYSIS OF RENT COMPARABLES

Rent Comparable One

This comparable rental is a 5,600 square foot freestanding commercial property located at 191

Adams Avenue in Silverthorne. The improvements were constructed in 1986 and were considered in

average condition at the time of our research. The exterior walls are a combination of masonry block and glass panel windows. The property is currently 100% occupied at a flat rate set to expire in

August 2008. Overall, this building is considered inferior to the subject due to the location and

quality of construction of the property.

Rent Comparable Two

This comparable rental is a 19,934 square foot mixed-use commercial retail/office property located at 22869 Highway 6 in Keystone. The improvements were constructed in 1982 and were considered

in average condition at the time of our research. The exterior walls are a combination of wood

veneer and glass panel windows. The property is currently 90.9% occupied.

Rent Comparable Three

This comparable rental is a 21,179 square foot in-line commercial property located at 807-849 Summit Boulevard in Frisco. The improvements were constructed in 1983 and were considered in

average condition at the time of our research. The exterior walls are a combination of wood veneer

and glass panel windows. The property is currently 100% occupied with in-place leases ranging from $18.31 to $24.50 per square foot on a triple net basis.

Rent Comparable Four

This comparable rental is a 6,386 square foot office facility located at 375 Ten Mile Drive in Frisco.

The improvements were constructed in 2003 and were considered in average condition at the time of

our research. The exterior walls are a combination of wood/stone veneer and glass panel windows. The space is available for lease with a current asking lease rate of $23.90 per square foot on a triple

net basis. The space is leased as white box only with the finish left up to the tenant.

SUBJECT RENTAL INFORMATION

Current asking rates are in-line with the recently signed leases, which is typical in the subject facility. Lease terms have typically been in the five year range, which appears consistent with market terms.

Recently signed leases are typically in the range of $10.00 to $12.00 per square foot on a triple net



51

basis. The subject currently has one remaining space available for lease in the second floor office

area. The current asking lease rate is $12.00 per square foot on a triple net basis with annual CPI escalations. The property is exclusively leased on a triple net basis with the exception of Sherwin

Williams and Safelite Auto Glass. Both tenants are leased on a modified gross basis and have been

reflected in our Cash Flow analysis.

MARKET RENT CONCLUSION

The subject’s most recent contract lease rates are supported by current market data. Based on the foregoing analysis and discussion, the following depicts the market rent conclusions for the subject.

MARKET RENT CONCLUSIONS

CategoryGLA (SF) 56,743Percent of Total SF 100.0%Market Rent ($/SF/Yr.) $12.00Concessions NoneReimbursements NNNAnnual Escalation Annual CPITenant Improvements (New Tenants) $5.00Tenant Improvements (Renewals) $2.50Average Lease Term 3-5 Years

Compiled by CBRE

Subject Property



52

RENT ROLL ANALYSIS

The subject’s rent roll is illustrated as follows:



53



54



55

POTENTIAL RENTAL INCOME CONCLUSION

Within this analysis, potential rental income is estimated based upon the actual income in-place over

the next twelve months. This method of calculating rental income is most prevalent in the local market and is consistent with the method used to derive overall capitalization rates from the comparable sales

data.

In estimating the subject’s pro forma operating data, the actual operating history and budgets have

been analyzed. The following table presents the available operating data history for the subject.

OPERATING HISTORY

Year-Occupancy 2004 20052006

Annualized

Total $/SF Total $/SF Total $/SFIncome

Rental Income $618,965 $10.91 $591,532 $10.42 $646,569 $11.39Other Income 2,061 0.04 26,085 0.46 36,514 0.64 Expense Reimbursements 157,919 2.78 199,021 3.51 215,258 3.79 Effective Gross Income $778,945 $13.73 $816,638 $14.39 $898,342 $15.83

ExpensesReal Estate Taxes $69,627 $1.23 $65,260 $1.15 $77,312 $1.36Property Insurance 22,616 0.40 28,349 0.50 24,989 0.44 Common Area Maintenance 112,624 1.98 45,618 0.80 66,556 1.17 Management Fee 46,628 0.82 48,998 0.86 51,000 0.90 Reserves for Replacement - - - - Operating Expenses $251,494 $4.43 $188,225 $3.32 $219,857 $3.87

Net Operating Income $527,450 $9.30 $628,413 $11.07 $678,485 $11.96

Source: Operating statements

VACANCY

The subject’s estimated stabilized occupancy rate was previously discussed in the market analysis. The subject’s long-term economic vacancy is estimated at 5.0%.

ROOF / REMODEL REIMBURSEMENTS

The property was most recently renovated from 2003 through 2004 at a cost of $354,738. All of the

roof and remodeling costs were incurred at the cost of the owner of which approximately $179,948 was passed onto the tenants for reimbursement. According to the tenant lease agreements, any costs

incurred by the landlord in making capital improvements or other modifications to the building or any

part thereof, which costs shall be amortized over the useful life of such improvement or modification

with interest at the rate of twelve percent per annum.

The capital expenses made to the roof in 1997 are amortized through 2011 at a cost of $2,292 per

annum. The recent renovations to the property in 2003 and 2004 are amortized for a fifteen year



56

period set to expire in December 2019. This is reflected in both our Direct Capitalization and

Discounted Cash Flow Analysis.

EXPENSE REIMBURSEMENTS

The subject’s leases are typically based on a triple net structure whereby the tenant reimburses the

owner for a pro rata share of common area maintenance, real estate taxes, and property insurance.

The subject’s expense reimbursements are detailed as follows:

EXPENSE REIMBURSEMENTS

Year Total $/SF 2004 $157,919 $2.78 2005 $199,021 $3.51 2006 Annualized $215,258 $3.79 CBRE Estimate $211,606 $3.73

Compiled by CBRE

EFFECTIVE GROSS INCOME

The subject’s effective gross income is detailed as follows:

EFFECTIVE GROSS INCOME

Year Total % Change2004 $778,945 --- 2005 $816,638 5%2006 Annualized $898,342 10%CBRE Estimate $887,611 -14%

Compiled by CBRE

Our pro forma estimate is based on our cash flow analysis and is approximately 8.69% higher than

the most recent full year and below the 2006 Annualized amount. The increase in 2005 is largely attributed to the year to year changes in annual rent increases. The above estimate is considered

reasonable and appropriate.

OPERATING EXPENSE ANALYSIS

Expense Comparables

The following chart summarizes expenses obtained from recognized industry publications and/or

comparable properties.



57

EXPENSE COMPARABLES

Comparable Number 1 2

Location Eagle County Pitkin CountyGLA (SF) 16,000 16,200Expense Year 2005 2005

Expenses $/SF $/SF

Real Estate Taxes $2.00 $0.76Property Insurance 0.44 0.21 Common Area Maintenance 1.60 2.69 Management Fee --- 0.65

(as a % of EGI)Reserves for Replacement --- ---

Operating Expenses $4.04 $4.31

* The median total differs from the sum of the individual amounts.

Source: Actual Operating Statements

The following subsections represent the analysis for the pro forma estimate of each category of the

subject’s stabilized expenses.

Real Estate Taxes

The real estate taxes for the subject were previously discussed. The subject’s expense is detailed as

follows:

REAL ESTATE TAXES

Year Total $/SF 2004 $69,627 $1.23 2005 $65,260 $1.15 2006 Annualized $77,312 $1.36 Expense Comparable 1 N/A $2.00 Expense Comparable 2 N/A $0.76 CBRE Estimate $70,860 $1.25

Compiled by CBRE

The subject’s recent historical and budgeted amounts are generally consistent and based upon the historical assessment of the property. The 2006 annualized amount is not representative of the

property as payments for the year were made in February and June. Our estimate is based on the

current property assessment and tax rate.



58

Property Insurance

Property insurance expenses typically include fire and extended coverage and owner’s liability

coverage. The subject’s expense is detailed as follows:

PROPERTY INSURANCE


Compiled by CBRE

We have concluded at an insurance expense amount slightly higher than the 2005 indication. This is

considered appropriate due to the trend of increasing insurance costs and the comparable data cited.

Common Area Maintenance

This broad based expense category includes the following:

Utilities expenses typically include electricity, natural gas, water, sewer and trash removal.

General operating expenses typically include all payroll and related items for directly-

employed administrative personnel such as building managers, administrative assistants and bookkeepers.

Repairs and maintenance expenses typically include all payroll and related items for employed

maintenance personnel.

Landscaping and security expenses are typically handled through outside service contracts.

Janitorial expenses typically include the outside service contract for cleaning.

The subject’s detailed expense is as follows:



59

COMMON AREA MAINTENANCE


Compiled by CBRE

We have concluded within the range of the historical and annualized data for the property.

Management Fee

Management expenses are typically negotiated as a percentage of collected revenues (i.e., effective

gross income). The subject’s expense is detailed as follows:

MANAGEMENT FEE

Year Total % EGI 2004 $46,628 6.0% 2005 $48,998 6.0% 2006 Annualized $51,000 5.7% CBRE Estimate $53,257 6.0%

Compiled by CBRE

Professional management fees in the local market range from 3.0% to 6.0% for comparable properties. Historically, the subject has incurred a 6.0% management fee. Given the subject’s size

and the competitiveness of the local market area, we believe an appropriate management expense for

the subject would be towards the upper end of the range.

Reserves for Replacement

Reserves for replacement have been estimated based on discussions with knowledgeable market participants who indicate a range from $0.10 to $0.15 per square foot for comparable properties.

The subject’s expense is detailed as follows:

OPERATING EXPENSE CONCLUSION

The subject’s expense is detailed as follows:



60

OPERATING EXPENSES


Compiled by CBRE

The subject’s per square foot operating expense pro forma is in line with the total per square foot

operating expenses indicated by the historical performance of the property and the expense

comparables.

NET OPERATING INCOME CONCLUSION

The subject’s net operating income is detailed as follows:

NET OPERATING INCOME

Year Total $/SF 2004 $527,450 $9.30 2005 $628,413 $11.07 2006 Annualized $678,485 $11.96 CBRE Estimate $661,356 $11.66

Compiled by CBRE

Our pro forma estimate is approximately 2.40% higher than the most recent full year due to annual increases the tenant base. Further, the pro forma estimate is within 5.43% of the budgeted figures for

the coming year and therefore appears reasonable.

DIRECT CAPITALIZATION

Direct capitalization is a method used to convert a single year’s estimated stabilized net operating

income into a value indication. The following subsections represent different techniques for deriving an overall capitalization rate for direct capitalization.

Comparable Sales

The overall capitalization rates (OARs) confirmed for the comparable sales analyzed in the sales

comparison approach are as follows:



61

COMPARABLE CAPITALIZATION RATESSale Sale Price

Sale Date $/SF Occupancy OAR1 Mar-05 $162.50 100% NAV2 May-05 $133.14 100% 6.40%3 Mar-06 $84.62 100% NAV4 Nov-06 $208.19 91% 6.74%

Indicated OAR: 95% 6.50%

Compiled by: CBRE

Published Investor Surveys

The results of the most recent National Investor Survey, published by CBRE, are summarized in the

following chart.

OVERALL CAPITALIZATION RATESInvestment Type OAR Range Average

CBRE General InvestmentClass A 6.50% - 9.50% 7.65%Class B 7.00% - 9.70% 8.08%Class C 7.50% - 10.00% 8.75%

CBRE All ResponsesClass A 5.00% - 9.50% 7.11%Class B 5.00% - 9.75% 7.58%Class C 6.00% - 10.75% 8.45%

Indicated OAR: 6.50%-7.00%

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

The subject is considered to be a Class A/B investment property. Because of the subject’s condition and location within a resort community, an OAR towards the low-end of the range indicated in the

preceding table is considered appropriate.

Market Participants

Local brokers report market capitalization rates for the Summit County area to range from 6.50% to

7.50%. The low cost of capital and the amount of investment dollars seeking assets is substantial. Stable investment real estate has become a desirable vehicle for the substantial amount of capital

chasing limited investment opportunities.

Band of Investment

The band of the investment technique has been utilized as a crosscheck to the foregoing techniques.

The analysis is shown in the following table.



62

BAND OF INVESTMENTMortgage Interest Rate 5.65%Mortgage Term (Amortization Period) 30 YearsMortgage Ratio (Loan-to-Value) 80%Mortgage Constant 0.06927Equity Dividend Rate (EDR) 10%

Mortgage Requirement 80% x 0.06927 = 0.05542Equity Requirement 20% x 0.10000 = 0.02000

100% 0.07542

Indicated OAR: 7.50%Compiled by: CBRE

Capitalization Rate Conclusion

The following chart summarizes the OAR conclusions.

OVERALL CAPITALIZATION RATE - CONCLUSIONSource Indicated OARComparable Sales 6.50%National Investor Survey 6.50%-7.00%Market Participants 6.50%-7.50%Band of Investment 7.50%CBRE Estimate 6.50%

Compiled by: CBRE

Direct Capitalization Summary

A summary of the direct capitalization at stabilized occupancy is illustrated in the following chart.



63

DIRECT CAPITALIZATION SUMMARY

Income $/SF/Yr Total Potential Rental Income $12.02 $681,890Vacancy 5.00% (0.60) (34,095)

Net Rental Income $11.42 $647,796

Roof Reimbursements 0.04 2,293 Remodel Reimbursements 0.46 25,916 Expense Reimbursements 3.32 188,389

Effective Gross Income $15.23 $864,394

ExpensesReal Estate Taxes $1.25 $70,860Property Insurance 0.50 28,372 Common Area Maintenance 1.15 65,254 Management Fee 6.00% 0.91 51,864 Reserves for Replacement 0.15 8,511

Operating Expenses $3.96 $224,861

Operating Expense Ratio 26.01%

Net Operating Income $11.27 $639,532OAR / 6.50%Indicated Stabilized Value $9,838,956

Deferred Maintenance - Value Indication $9,838,956Rounded $9,800,000Value Per SF $172.71

Matrix Analysis Cap Rate Value6.25% $10,232,5006.50% $9,839,0006.75% $9,474,500

Compiled by CBRE



64

DISCOUNTED CASH FLOW ANALYSIS (DCF)

The DCF assumptions concluded for the subject are summarized as follows:

SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS

General Assumptions

Start Date Nov-06Terms of Analysis 10 YearsBasis FiscalSoftware ARGUS

Growth Rate Assumptions

Income Growth 3.00%Expense Growth 3.00%Inflation (CPI) 3.00%Real Estate Tax Growth 3.00%

Market Leasing Assumptions

Category Subject PropertyMarket Rent ($/SF/Yr.) $12.00Concessions NoneReimbursements NNNAnnual Escalation Annual CPITenant Improvements (New Tenants) $5.00Tenant Improvements (Renewals) $2.50Average Lease Term 3-5 YearsRenewal Probability 75%Leasing Commissions (Cashed-Out)

New Leases 6.0%Renewal Leases 3.0%

Down Time Before New Tenant Leases 3 Months

Occupancy Assumptions

Total Operating Expenses ($/SF/Yr.) $3.99Current Occupancy 99.16%Stabilized Occupancy 95.00%

Financial Assumptions

Discount Rate 8.75%Terminal Capitalization Rate 7.00%

Other Assumptions

Cost of Sale 2.00%

Compiled by CBRE

Provided on the following pages is a discussion of the leasing assumptions used in the discounted cash flow analysis that were not analyzed in the direct capitalization approach.

General Assumptions

The DCF analysis utilizes a 10-year projection period. This is consistent with current investor

assumptions. The analysis is done with Argus software.

Growth Rate Assumptions

The inflation and growth rates for the DCF analysis have been estimated by analyzing the expectations typically used by buyers and sellers in the local marketplace. Published investor surveys, an analysis of



65

the Consumer Price Index (CPI), as well as CBRE's survey of brokers and investors active in the local

market form the foundation for the selection of the appropriate growth rates. The compilation is shown in the following chart.

SUMMARY OF GROWTH RATESInvestment Type Rent Expenses Inflation

U.S. Bureau of Labor Statistics (CPI-U)10-Year Snapshot Average as of Mar-05 2.47%

CBRE General InvestmentClass A - Average 3.59% 2.82% 3.18%Class B - Average 3.28% 2.78% 3.22%Class C - Average 3.25% 2.75% 3.25%

CBRE Estimate 3.00% 3.00% 3.00%


We have used an income and expense growth rate of 3.00% per annum.

Leasing Assumptions

The contract lease terms for the existing tenants are utilized within the DCF analysis, with market leasing assumptions applied for renewals and absorption tenants. The previously concluded pro

forma income and expenses have been utilized as the basis for market leasing projected in Year 1 of

the holding period. All subsequent years vary according to the growth rate assumptions applied to the

Year 1 estimate.

Renewal Probability

The renewal probability incorporated within the market leasing assumptions has been estimated at

75.0%. This rate is considered reasonable based on the rent comparable data, a survey of market

participants, and our analysis of actual leasing activity at the subject.

Downtime Between Leases

The downtime estimate at lease rollover incorporated within the market leasing assumptions has been estimated at three months. This rate is considered reasonable based on the rent comparable data, a

survey of market participants, and our analysis of actual leasing activity at the subject.

Occupancy Assumptions

The occupancy rate over the holding period is based on the subject’s estimated stabilized occupancy

rate and estimated lease-up period to achieve a stabilized occupancy position.



66

Vacancy, Credit Loss and Absorption

Please refer to the market analysis of this report for a detailed discussion of these elements.

Financial Assumptions

Discount Rate Analysis

The results of the most recent National Investor Survey, published by CBRE, are summarized in the

following chart.

DISCOUNT RATESInvestment Type Rate Range Average

CBRE General InvestmentClass A 8.00% - 11.00% 9.55%

Class B 8.50% - 11.50% 10.25%

Class C 9.00% - 13.00% 11.13%

CBRE Estimate 8.75%


The subject is considered to be a Class A/B investment property. Because of the subject’s condition

and location within a resort community, a discount rate near the low-end of the range indicated in the preceding table is considered appropriate.

Terminal Capitalization Rate

The reversionary value of the subject is based on an assumed sale at the end of the holding period

based on capitalizing the Year 11 NOI at a terminal capitalization rate. Typically, for properties

similar to the subject, terminal capitalization rates are 50 to 100 basis points higher than going-in capitalization rates (OARs). This is a result of the uncertainty of future economic conditions and the

natural aging of the property. For the subject, we have concluded a load factor of 50 basis points to

be appropriate.

TERMINAL CAPITALIZATION RATESInvestment Type Rate Range Average

CBRE General InvestmentClass A 6.50% - 9.50% 8.16%

Class B 7.00% - 10.00% 8.56%

Class C 8.00% - 10.00% 9.06%

CBRE Estimate 7.00%




67

Discounted Cash Flow Conclusion

The DCF schedule(s) and value conclusions are depicted on the following page(s).



68



69



70



71

CONCLUSION OF INCOME CAPITALIZATION APPROACH

The conclusions via the valuation methods employed for this approach are as follows:

INCOME CAPITALIZATION APPROACH VALUESDirect Capitalization Method $9,800,000 Discounted Cash Flow Analysis $9,600,000 Reconciled Value $9,700,000

Compiled by CBRE

Primary emphasis has been placed on the Direct Capitalization Method tempered toward the lower

Discounted Cash Flow Analysis.


FRISCO PLAZA RECONCILIATION OF VALUE

72

RECONCILIATION OF VALUE

The value indications from the approaches to value are summarized as follows:

SUMMARY OF VALUE CONCLUSIONSSales Comparison Approach $9,800,000 Income Capitalization Approach $9,700,000 Reconciled Value $9,700,000

Compiled by CBRE

In the Sales Comparison Approach, the subject property is compared to similar properties that have

been sold recently or for which listing prices or offers are known. The sales used in this analysis are

considered highly comparable to the subject, and the required adjustments were based on reasonable and well-supported rationale. In addition, market participants are currently analyzing purchase prices

on investment properties as they relate to available substitutes in the market. Therefore, the Sales

Comparison Approach is considered to provide a reliable value indication, although has been given secondary emphasis in the final value reconciliation.

The Income Capitalization Approach is applicable to the subject property since it is an income

producing property leased in the open market. Market participants are primarily analyzing properties

based on their income generating capability. Therefore, the Income Capitalization Approach is considered a reasonable and substantiated value indicator and has been given greatest emphasis in

the final value estimate.

Based on the foregoing, the market value of the subject has been concluded as follows:

MARKET VALUE CONCLUSIONAppraisal Premise Interest Appraised Date of Value Value Conclusion

As Is Leased Fee Interest November 18, 2006 $9,700,000

Compiled by CBRE


FRISCO PLAZA ASSUMPTIONS AND LIMITING CONDITIONS

73

ASSUMPTIONS AND LIMITING CONDITIONS

1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties appraised is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE is not aware of any title defects nor has it been advised of any unless such is specifically noted in the report. CBRE, however, has not examined title and makes no representations relative to the condition thereof. Documents dealing with liens, encumbrances, easements, deed restrictions, clouds and other conditions that may affect the quality of title have not been reviewed. Insurance against financial loss resulting in claims that may arise out of defects in the subject’s title should be sought from a qualified title company that issues or insures title to real property.

2. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on the property or properties being appraised are structurally sound, seismically safe and code conforming; that all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the elements; that the property or properties have been engineered in such a manner that the improvements, as currently constituted, conform to all applicable local, state, and federal building codes and ordinances. CBRE professionals are not engineers and are not competent to judge matters of an engineering nature. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. Unless otherwise specifically noted in the body of the report: no problems were brought to the attention of CBRE by ownership or management; CBRE inspected less than 100% of the entire interior and exterior portions of the improvements; and CBRE was not furnished any engineering studies by the owners or by the party requesting this appraisal. If questions in these areas are critical to the decision process of the reader, the advice of competent engineering consultants should be obtained and relied upon. It is specifically assumed that any knowledgeable and prudent purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. Structural problems and/or building system problems may not be visually detectable. If engineering consultants retained should report negative factors of a material nature, or if such are later discovered, relative to the condition of improvements, such information could have a substantial negative impact on the conclusions reported in this appraisal. Accordingly, if negative findings are reported by engineering consultants, CBRE reserves the right to amend the appraisal conclusions reported herein.

3. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property was not observed by the appraisers. CBRE has no knowledge of the existence of such materials on or in the property. CBRE, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.

We have inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in the appraisal.

4. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real property, have been disregarded with only real property being considered in the report unless otherwise stated. Any existing or proposed improvements, on or off-site, as well as any alterations or repairs considered, are assumed to be completed in a workmanlike manner according to standard practices based upon the information submitted to CBRE This report may be subject to amendment upon re-inspection of the subject subsequent to repairs, modifications, alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the information, conditions and projected levels of operation.

5. It is assumed that all factual data furnished by the client, property owner, owner’s representative, or persons designated by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal report. Unless otherwise specifically noted in the appraisal report, CBRE has no reason to believe that any of the data furnished contain any material error. Information and data referred to in this paragraph include, without being limited to, numerical street addresses, lot and block numbers, Assessor’s Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any material error in any of the above data could have a substantial impact on the conclusions reported. Thus, CBRE reserves the right to amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should carefully review



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all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report and should immediately notify CBRE of any questions or errors.

6. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this appraisal. Under the terms of the engagement, we will have no obligation to revise this report to reflect events or conditions which occur subsequent to the date of the appraisal. However, CBRE will be available to discuss the necessity for revision resulting from changes in economic or market factors affecting the subject.

7. CBRE assumes no private deed restrictions, limiting the use of the subject in any way.

8. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposit or subsurface rights of value involved in this appraisal, whether they be gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred.

9. CBRE is not aware of any contemplated public initiatives, governmental development controls, or rent controls that would significantly affect the value of the subject.

10. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the property, both physically and economically, on the open market.

11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics are predicated on the information and assumptions contained within the report. Any projections of income, expenses and economic conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market expectations of future income and expenses. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary from the projections considered herein. CBRE does not warrant these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of CBRE

12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct or indirect recommendation of CBRE to buy, sell, or hold the properties at the value stated. Such decisions involve substantial investment strategy questions and must be specifically addressed in consultation form.

13. Also, unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or regulations governing use, density, or shape are being considered. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report is based, unless otherwise stated.

14. This study may not be duplicated in whole or in part without the specific written consent of CBRE nor may this report or copies hereof be transmitted to third parties without said consent, which consent CBRE reserves the right to deny. Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission to attorneys, accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the report to any court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this appraisal was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any public document without the express written consent of CBRE which consent CBRE reserves the right to deny. Finally, this report shall not be advertised to the public or otherwise used to induce a third party to purchase the property or to make a “sale” or “offer for sale” of any “security”, as such terms are defined and used in the Securities Act of 1933, as amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised that they should rely on their own independently secured advice for any decision in connection with this property. CBRE shall have no accountability or responsibility to any such third party.

15. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in the report.

16. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with any other property or appraisal and are invalid if so used.



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17. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and reliable. None of the exhibits are to be removed, reproduced, or used apart from this report.

18. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been made known to CBRE unless otherwise stated within the body of this report. If the Consultant has not been supplied with a termite inspection, survey or occupancy permit, no responsibility or representation is assumed or made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No representation or warranty is made concerning obtaining these items. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance.

19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special assumptions set forth in this report. It is the responsibility of the Client, or client’s designees, to read in full, comprehend and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor CBRE assumes responsibility for any situation arising out of the Client’s failure to become familiar with and understand the same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting profession if so desired.

20. CBRE assumes that the subject analyzed herein will be under prudent and competent management and ownership; neither inefficient or super-efficient.

21. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined and considered in the appraisal report.

22. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be correct. It is further assumed that no encroachments to the realty exist.

23. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of possible readily achievable barrier removal construction items in this report, CBRE has not made a specific compliance survey and analysis of this property to determine whether it is in conformance with the various detailed requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect on the value estimated herein. Since CBRE has no specific information relating to this issue, nor is CBRE qualified to make such an assessment, the effect of any possible non-compliance with the requirements of the ADA was not considered in estimating the value of the subject.

24. Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client proximately result in damage to Appraiser. The Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising as a result of the Client’s failure or the failure of any of the Client’s agents to provide a complete copy of the appraisal report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be entitled to recover from the other reasonable attorney fees and costs.

25. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter.

26. As part of the client’s requested scope of work, an estimate of insurable value is provided herein. CBRE has followed traditional appraisal standards to develop a reasonable calculation based upon industry practices and industry accepted publications such as the Marshal Valuation Service handbook. The methodology employed is a derivation of the cost



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approach which is primarily used as an academic exercise to help support the market value estimate and therefore is not reliable for Insurable Value estimates. Actual construction costs and related estimates can vary greatly from this estimate.

This analysis should not be relied upon to determine proper insurance coverage which can only be properly estimated by consultants considered experts in cost estimation and insurance underwriting. It is provided to aid the client/reader/user as part of their overall decision making process and no representations or warranties are made by CBRE regarding the accuracy of this estimate and it is strongly recommend that other sources be utilized to develop any estimate of insurable value.


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ADDENDA


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ADDENDUM A

GLOSSARY OF TERMS


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assessed value Assessed value applies in ad valorem taxation and refers to the value of a property according to the tax rolls. Assessed value may not conform to market value, but it is usually calculated in relation to a market value base. †

cash equivalency The procedure in which the sale prices of comparable properties sold with atypical financing are adjusted to reflect typical market terms.

contract rent The actual rental income specified in a lease. ‡

effective rent The rental rate net of financial concessions such as periods of no rent during the lease term; may be calculated on a discounted basis, reflecting the time value of money, or on a simple, straight-line basis. ‡

excess land In regard to an improved site, the land not needed to serve or support the existing improvement. In regard to a vacant site or a site considered as though vacant, the land no needed to accommodate the site’s primary highest and best use. Such land may be separated from the larger site and have its own highest and best use, or it may allow for future expansion of the existing or anticipated improvement. See also surplus land. ‡

extraordinary assumption An assumption directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. See also hypothetical condition. ‡

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

floor area ratio (FAR) The relationship between the above-ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area; also called building-to-land ratio. ‡

full service lease A lease in which rent covers all operating expenses. Typically, full service leases are combined with an expense stop, the expense level covered by the contract lease payment. Increases in expenses above the expense stop level are passed

through to the tenant and are known as expense pass-throughs.

going concern value Going concern value is the value of a proven property operation. It includes the incremental value associated with the business concern, which is distinct from the value of the real estate only. Going concern value includes an intangible enhancement of the value of an operating business enterprise which is produced by the assemblage of the land, building, labor, equipment, and marketing operation. This process creates an economically viable business that is expected to continue. Going concern value refers to the total value of a property, including both real property and intangible personal property attributed to the business value. †

gross building area (GBA) The total floor area of a building, including below-grade space but excluding unenclosed areas, measured from the exterior of the walls. Gross building area for office buildings is computed by measuring to the outside finished surface of permanent outer building walls without any deductions. All enclosed floors of the building including basements, mechanical equipment floors, penthouses, and the like are included in the measurement. Parking spaces and parking garages are excluded. ‡

hypothetical condition That which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. See also extraordinary assumption. ‡

insurable value Insurable Value is based on the replacement and/or reproduction cost of physical items that are subject to loss from hazards. Insurable value is that portion of the value of an asset or asset group that is acknowledged or recognized under the provisions of an applicable loss insurance policy. This value is often controlled by state law and varies from state to state. †

investment value Investment value is the value of an investment to a particular investor based on his or her investment requirements. In contrast to market value, investment value is value to an individual, not value in the marketplace. Investment value reflects the subjective relationship between a particular investor and a given investment. When measured in dollars, investment value is the price an investor would pay for an investment in light of its perceived capacity to satisfy his or her desires, needs, or investment goals. To estimate investment value, specific investment criteria must be known. Criteria to evaluate a real estate


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investment are not necessarily set down by the individual investor; they may be established by an expert on real estate and its value, that is, an appraiser.

†

leased fee See leased fee estate

leased fee estate An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease.‡

leasehold See leasehold estate

leasehold estate The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions.‡

market rent The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations. ‡

market value Market value is one of the central concepts of the appraisal practice. Market value is differentiated from other types of value in that it is created by the collective patterns of the market. Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1) A reasonable time is allowed for exposure in the open market; 2) Both parties are well informed or well advised, and acting in what they consider their own best interests; 3) Buyer and seller are typically motivated; 4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.§

marketing period The time it takes an interest in real property to sell on the market subsequent to the date of an appraisal. ‡

net lease Lease in which all or some of the operating expenses are paid directly by the tenant. The landlord

never takes possession of the expense payment. In a Triple Net Lease all operating expenses are the responsibility of the tenant, including property taxes, insurance, interior maintenance, and other miscellaneous expenses. However, management fees and exterior maintenance are often the responsibility of the lessor in a triple net lease. A modified net lease is one in which some expenses are paid separately by the tenant and some are included in the rent.

net rentable area (NRA) 1) The area on which rent is computed. 2) The Rentable Area of a floor shall be computed by measuring to the inside finished surface of the dominant portion of the permanent outer building walls, excluding any major vertical penetrations of the floor. No deductions shall be made for columns and projections necessary to the building. Include space such as mechanical room, janitorial room, restrooms, and lobby of the floor. *

occupancy rate The relationship or ratio between the income received from the rented units in a property and the income that would be received if all the units were occupied.‡

prospective value opinion A forecast of the value expected at a specified future date. A prospective value opinion is most frequently sought in connection with real estate projects that are proposed, under construction, or under conversion to a new us, or those that have not achieved sellout or a stabilized level of long-term occupancy at the time the appraisal report is written. ‡

reasonable exposure time The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based upon an analysis of past events assuming a competitive and open market. ††

rent See full service lease net lease market rent contract, coupon, face, or nominal rent effective rent

shell rent The typical rent paid for retail, office, or industrial tenant space based on minimal “shell” interior finishes (called plain vanilla finish in some areas). Usually the landlord delivers the main building shell space or some minimum level of interior build-out, and the tenant completes the interior finish, which can include wall, ceiling, and floor finishes; mechanical systems, interior electric, and plumbing. Typically these


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are long-term leases with tenants paying all or most property expenses. ‡

surplus land Land not necessary to support the highest and best use of the existing improvement but, because of physical limitations, building placement, or neighborhood norms, cannot be sold off separately. Such land may or may not contribute positively to value and may or may not accommodate future expansion of an existing or anticipated improvement. See also excess land. ‡

usable area 1) The area actually used by individual tenants. 2) The Usable Area of an office building is computed by measuring to the finished surface of the office side of corridor and other permanent walls, to the center of partitions that separate the office from adjoining usable areas, and to the inside finished surface of the dominant portion of the permanent outer

building walls. Excludes areas such as mechanical rooms, janitorial room, restrooms, lobby, and any major vertical penetrations of a multi-tenant floor. *

use value Use value is a concept based on the productivity of an economic good. Use value is the value a specific property has for a specific use. Use value focuses on the value the real estate contributes to the enterprise of which it is a part, without regard to the property’s highest and best use or the monetary amount that might be realized upon its sale. †

value indication An opinion of value derived through application of the appraisal process. ‡

† The Appraisal of Real Estate, Twelfth Edition, Appraisal Institute, 2001.

‡ The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute, 2002.

§ Office of Comptroller of the Currency (OCC), 12 CFR Part 34, Subpart C – Appraisals, 34.42 (g); Office of Thrift Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP).

* 2000 BOMA Experience Exchange Report, Income/Expense Analysis for Office Buildings (Building Owners and Managers Association, 2000)

†† Statement on Appraisal Standard No. 6, Appraisal Standards Board of The Appraisal Foundation, September 16, 1993, revised June 15, 2004.


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ADDENDUM B

IMPROVED SALE DATA SHEETS


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ADDENDUM C

RENT COMPARABLE DATA SHEETS


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ADDENDUM D

OPERATING DATA


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ADDENDUM E

ARGUS SUPPORTING SCHEDULES


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ADDENDUM F

TITLE REPORT / LEGAL DESCRIPTION / FLOOD PLAIN MAP


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ADDENDUM G

REQUIRED CLIENT INFORMATION


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ADDENDUM H

QUALIFICATIONS


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ZACHARY D. ALM Real Estate Analyst

CB Richard Ellis, Inc.

Valuation & Advisory Services 1225 17th Street, Suite 1570 Denver, Colorado 80202

(303) 628-1754 [email protected]

EDUCATIONAL Bachelor of Arts, Economics, Colorado State University, Fort Collins, Colorado

LICENSE(S)/CERTIFICATION(S) Registered Appraiser: State of Colorado (No. AR40033969) Associate Broker: State of Colorado (No. FA40026656)

EMPLOYMENT EXPERIENCE 2001-2002 Real Estate Research Assistant, W R Hopping & Company, Littleton, Colorado 2002-2003 Real Estate Research Assistant, CB Richard Ellis - Valuation & Advisory Services, Denver, Colorado 2003-Present Real Estate Analyst, CB Richard Ellis - Valuation & Advisory Services, Denver, Colorado Professional experience has been in the fee preparation of real estate appraisals and feasibility studies of commercial properties. Primary experience encompasses a wide variety of property types including office, retail, industrial, hotel/motel, medical office buildings, nursing homes, car washes, restaurants, and special purpose. Assignments completed in Colorado and Wyoming. Primary geographical experience is metropolitan Denver, Colorado Springs, Fort Collins and the Front Range of Colorado and various Colorado mountain resort communities. The Intermountain Region of CB Richard Ellis, Inc. Valuation & Advisory Services covers the states of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, Nevada, New Mexico, North and South Dakota, Utah, and Wyoming. The regional office is based in Phoenix, Arizona, with satellite offices in the cities of Denver, Des Moines, Las Vegas, Minneapolis, Salt Lake City, and Tucson.


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QUALIFICATIONS OF

THOMAS D. BAROCH, MAI

Managing Director

CB Richard Ellis, Inc. Valuation & Appraisal Services 1225 17th Street, Suite 1570 Denver, Colorado 80202

(303) 628-7474

EDUCATIONAL Bachelor of Science Degree, Biology, San Diego State University, San Diego, California

LICENSE(S)/CERTIFICATION(S) Certified General Real Estate Appraiser: State of Colorado (No. CG01315467) Certified General Real Estate Appraiser: State of Wyoming (No. 348)

PROFESSIONAL

Appraisal Institute Designated Member (MAI), Certificate No. 8824

CB Richard Ellis Lodging Appraisal Group

EMPLOYMENT EXPERIENCE 1986-1991 Real Estate Appraiser, Burke Hansen, Inc., Phoenix, Arizona 1991-1994 Assistant Vice President, CB Richard Ellis, Inc., Phoenix, Arizona 1994-2002 Vice President, CB Richard Ellis, Inc., Denver, Colorado 2002-Present Managing Director, CB Richard Ellis, Inc, Denver, Colorado Appraisal experience has been in the fee preparation of real estate appraisals, feasibility studies, rent analyses and market studies of commercial and multifamily residential properties. Experience encompasses a wide variety of property types including office, retail, industrial, multifamily, hotel/motel, casinos, resorts, net leased investments, fractional interests, medical office buildings, nursing homes, restaurants, car washes, sand and rock mining and other special purpose properties as well as both urban and rural lands. Assignments completed in Arizona, Colorado, Utah and Wyoming as well as in Southern California, Iowa, Nebraska and New Mexico. Primary geographical experience is metropolitan Denver, Colorado Springs, Fort Collins and the Front Range of Colorado, various Colorado mountain resort communities, metropolitan Salt Lake City, Utah, and Maricopa County (metropolitan Phoenix) Arizona. The Intermountain Region of CB Richard Ellis, Inc. Valuation & Appraisal Services covers the states of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, Nevada, New Mexico, North and South Dakota, Utah, and Wyoming. The regional office is based in Phoenix, Arizona, with satellite offices in the cities of Denver, Des Moines, Las Vegas, Minneapolis, Salt Lake City, and Tucson.