two properties - reno–tahoe international airport...lake tahoe office: p.o. box 11430 zephyr cove,...

R14-008

A SUMMARY APPRAISAL OF

TWO PROPERTIES

LOCATED ON

THE RENO-STEAD AIRPORT AT

THE NORTHEAST AND NORTHWEST CORNERS OF ARMY AVIATION DRIVE AND ALPHA AVENUE,

RENO, WASHOE COUNTY, NEVADA

OWNED BY

THE RENO-TAHOE AIRPORT AUTHORITY

PREPARED FOR

THE RENO-TAHOE AIRPORT AUTHORITY

J P AOHNSON ERKINS SSOCIATES,&R E A L E S T A T E A P P R A I S E R S & C O N S U L T A N T S

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A Summary Appraisal Of

Two Properties

Located On

The Reno-Stead Airport At

The Northeast and Northwest Corners Of Army Aviation Drive and Alpha Avenue,

Reno, Washoe County, Nevada

Owned By

The Reno-Tahoe Airport Authority

Prepared For

The Reno-Tahoe Airport Authority

For the Purpose of Estimating Market Value

As of January 6, 2014

Karen K. SandersGregory D. RuzzineChad Gerken

Stephen R. Johnson, MAI, SREA

Reese Perkins, MAI, SRA

Cynthia Johnson, SRA

Cindy Lund Fogel, MAI

Scott Q. Griffin, MAI

Daniel B. Oaks, MAI

Benjamin Q. Johnson, MAI

Main Office: 295 Holcomb Avenue, Suite 1 ■ Reno, Nevada 89502 ■ Telephone (775) 322-1155Lake Tahoe Office: P.O. Box 11430 ■ Zephyr Cove, Nevada 89448 ■ Telephone (775) 588-4787

FAX: Main Office (775) 322-1156 ■ Lake Tahoe Office (775) 588-8295E-mail: [email protected] ■ [email protected]


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January 27, 2014 Mr. David Mieding Real Estate Supervisor Reno-Tahoe Airport Authority P.O. Box 12490 Reno, Nevada 89510-2490 Re: Two Parcels of Land at the Reno-Stead Airport, Reno, Washoe County, Nevada Dear Mr. Mieding: This is in response to your request for an appraisal report of two properties located at the Reno-Stead Airport, situated in the Reno-Stead area of Washoe County, Nevada. Subject Property 1 is located on the northwest corner of Army Aviation Drive and Alpha Avenue and contains 90± acres. Subject Property 1 is currently vacant and unimproved. Subject Property 2 is located on the northeast corner of Army Aviation Drive and Alpha Avenue and contains 3.57± acres of net usable land area. Subject Property 2 is improved with asphalt paved interior taxiways, as it had been planned to be developed with a hangar project for cold storage of small aircraft. The subject properties are identified as portions of Washoe County Assessor's Parcel Number 086-240-11. The subject properties are owned by the Reno-Tahoe Airport Authority. The subject properties are more completely described in the following report. The appraisal report has been prepared for the purpose of estimating the fee simple Market Value of each of the subject properties as of a current date of value. We have also


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been requested to provide an analysis addressing the Market Ground Rent of each of the subject properties. The intended users of the appraisal report include the Reno-Tahoe Airport Authority and their representatives. The intended use of the appraisal report is to assist the client in negotiations to lease the subject properties. Any other use of the appraisal report requires the prior written authorization of these appraisers. This is an Appraisal Report and adheres to the reporting requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice for an Appraisal Report. As such, it presents summary discussions of the data, reasoning and analyses that are used in the appraisal process to develop the appraisers’ opinion of value. Supporting documentation concerning the data, reasoning and analyses is retained in these appraisers’ files. The depth of the discussion contained in the report is specific to the needs of the client and for the intended use as stated herein. This appraisal firm is not responsible for unauthorized use of the report. The appraisal has been prepared based upon the following Extraordinary Assumption:

As per the client’s instructions, this analysis has been prepared under the assumptions that the subject will be leased on a long-term, NNN, basis.

The appraisal has been prepared based upon the following hypothetical condition:

The land areas for the subject properties were provided by the Reno-Tahoe Airport Authority and are assumed to be correct.

After careful consideration of all data available, and upon thorough personal investigation of the subject properties and the comparable properties analyzed, the Market Value and Market Land Rent of the subject properties, under the special assumptions set forth herein, as of January 6, 2014, are as follows:


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MARKET VALUE AND MARKET LAND RENT CONCLUSIONS SUBJECT PROPERTY 1 - 90± ACRE SITE

LAND VALUE CONCLUSION – PER SQUARE FOOT $2.00/SF FINAL MARKET VALUE CONCLUSION $7,850,000 (Fee Simple Interest, as of January 6, 2014) MARKET LAND RENT CONCLUSION $.16 Per S.F. Per YEAR (Subject Property 1 – 90± Acres)

MARKET VALUE AND MARKET LAND RENT CONCLUSIONS SUBJECT PROPERTY 2 - 3.57± ACRE SITE

LAND VALUE CONCLUSION – PER SQUARE FOOT $3.00/SF FINAL MARKET VALUE CONCLUSION $465,000 (Fee Simple Interest, as of January 6, 2014) MARKET LAND RENT CONCLUSION $0.24 Per S.F. Per YEAR (Subject Property 2 – 3.57± Acres – Net Useable Land Area) Respectfully submitted, ______________________________ Stephen R. Johnson, MAI, SREA Nevada Certified General Appraiser License Number A.0000003-CG Cindy Lund Fogel, MAI Nevada Certified General Appraiser License Number A.0002312-CG


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TABLE OF CONTENTS Cover Title Page Letter of Transmittal Table of Contents

Page

Summary of Salient Facts and Important Conclusions 1 Property Rights Appraised 3 Market Values Defined 4 Scope of Appraisal 6 Reno-Sparks/North Valley Area Map 8 Neighborhood Map 9 Neighborhood Description 10 Industrial Market Analysis 17 Subject Aerial Photograph 22 Subject Photographs 23 Subject Plot Map 29 Subject Parcel Map 30 Subject Zoning Map 31 Subject Master Plan Map 32 Subject Flood Zone Map 33 Property Identification and Site Description 34 Highest and Best Use Analysis 43 Introduction to Valuation Analysis 48 Subject Property 1 Sales Comparison Approach 49 Comparable Industrial Land Sales Chart 50 Comparable Land Sales Map 51 Comparable Land Sale Aerial Map and Discussions 52 Comparable Land Sales Discussion And Comparison 60 Subject Property 2 Sales Comparison Approach 67 Comparable Industrial Land Sales Chart 68 Comparable Land Sale Aerial Map and Discussions 69 Comparable Land Sales Discussion And Comparison 74 Market Rental Analysis 81 Appraiser’s Certification 86 Standard Assumptions and Limiting Conditions 88 Qualifications of Appraisers 95


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SUMMARY OF SALIENT FACTS AND IMPORTANT CONCLUSIONS Assessor’s Parcel Number Portions of 086-240-11 Location Subject Property One Industrial Land at the Reno-Stead Airport

Northwest corner of Army Aviation Drive and Alpha Avenue, Reno, Washoe County, Nevada

Subject Property Two Aeronautical Land at the Reno-Stead Airport Northeast corner of Army Aviation Drive and

Alpha Avenue, Reno, Washoe County, Nevada Legal Description Portions of Parcel 4 of Parcel Map No. 5018, as

shown on that certain map entitled “Parcel Map for Reno-Tahoe Airport Authority” as filed on December 14, 2009 as File No. 3829772, in the office of the County Recorder of Washoe County, Nevada.

Owner of Record Reno-Tahoe Airport Authority Shape Subject Property One Rectangular Subject Property Two Rectangular Land Area Subject Property One 90± Acres (3,920,400± Square Feet) Subject Property Two 3.57± Acres (155,509± Square Feet)-Net Usable

Land Area The land areas for the subject properties were provided by the Reno-Tahoe Airport Authority and are assumed to be correct.

Current Use Vacant Industrial and Aeronautical Land City of Reno Zoning (MURS) Mixed Use Reno Stead Airport City of Reno Land Use SPD-Reno-Stead Airport Regional Center


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Highest and Best Use As Vacant Future development with airport related

utilizations such as commercial aviation or other airport support uses and/or commercial or industrial uses as allowed under the current zoning. Due to the large size of Subject Property 1, it is our expectation that development would most likely occur in phases over an extended time period.

Property Rights Appraised Fee Simple Market Value and Market Rent Type of Report Appraisal Report Effective Date of Valuation January 6, 2014 Date of Report January 27, 2014

MARKET VALUE AND MARKET LAND RENT CONCLUSIONS SUBJECT PROPERTY 1 - 90± ACRE SITE

LAND VALUE CONCLUSION – PER SQUARE FOOT $2.00/SF FINAL MARKET VALUE CONCLUSION $7,850,000 (Fee Simple Interest, as of January 6, 2014) MARKET LAND RENT CONCLUSION $.16 Per S.F. Per YEAR (Subject Property 1 – 90± Acres)


LAND VALUE CONCLUSION – PER SQUARE FOOT $3.00/SF FINAL MARKET VALUE CONCLUSION $465,000 (Fee Simple Interest, as of January 6, 2014) MARKET LAND RENT CONCLUSION $0.24 Per S.F. Per YEAR (Subject Property 2 – 3.57± Acres – Net Useable Land Area)


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PROPERTY RIGHTS APPRAISED

The property rights being appraised are the fee simple Market Value and the Market

Ground Rent of each of the subject properties.

INTENDED USE OF APPRAISAL

It is our understanding that the Market Value and Market Rent will be utilized by the

client, the Reno-Tahoe Airport Authority, in negotiations in regards to potential land leases of

the subject sites. Any other use of this appraisal report requires the prior written authorization

of these appraisers.

INTENDED USERS OF APPRAISAL

The intended users of this appraisal include the Reno-Tahoe Airport Authority and

their representatives.

DATE OF INSPECTION

The subject property was inspected on January 6, 2014.

EFFECTIVE DATE OF VALUATION

The opinions of value, as set forth in this report, apply as of January 6, 2014.

COMPLETION DATE OF REPORT

This report was completed on January 27, 2014.

FEE SIMPLE ESTATE DEFINED

Fee simple estate is defined as “Absolute ownership unencumbered by any other

interest or estate, subject only to the limitations imposed by the governmental powers of

taxation, eminent domain, police power, and escheat.”1

1 Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, 2010, page 78.


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MARKET VALUE DEFINED

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) 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.2

2 Rules and Regulations, Federal Register, Vol. 55, No. 165, Page 34696, 12CFR Part 34.42(f)


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MARKET RENT DEFINED

Market Rent is defined as the most probable rent that a property should bring in a

competitive and open market, reflecting all conditions and restrictions of the lease agreement,

including a term, permitted uses, use restrictions, expense obligations, term, concessions,

renewal and purchase options, and tenant improvements.3

This definition is predicated on the lessee and lessor each acting prudently and

knowledgably, and assuming consummation of a lease contract as of a specified date, and the

passing of the leasehold from lessor to lessee under conditions whereby:

1. Lessee and lessor are typically motivated.

2. Both parties are well informed or well advised, and acting in what they

consider their best interest.

3. A reasonable time is allowed for exposure in the open market.

4. The rent payment is made in terms of cash in United States dollars, and is

expressed as an amount per time period consistent with the payment schedule

of the lease contract.

5. The rental amount represents the normal consideration of the property leased

unaffected by special fees or concessions granted by anyone associated with

the transaction.

3 The Dictionary of Real Estate Appraisal, Fifth Edition; Appraisal Institute; 2010.


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SCOPE OF APPRAISAL

The preparation of this appraisal included:

Identification, inspection and analysis of the subject properties;

Identification and analysis of the subject neighborhood;

Completion of a Highest and Best Use Analysis;

Research, verification, inspection and analysis of comparable land sales;

Completion of a Sales Comparison Approach to Land Value Analysis for each

of the subject properties;

An analysis and determination of an appropriate rate of return, which will be

applied to the fee simple land value to arrive at an indication of the Market

Land Rent which would be applicable to each of the subject properties;

Completion of Reconciliations and Final Market Land Rent Conclusions;

Preparation of the appraisal report.

TYPE OF REPORT

This is an Appraisal Report and adheres to the reporting requirements set forth under

Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice for an

Appraisal Report. As such, it presents summary discussions of the data, reasoning and

analyses that are used in the appraisal process to develop the appraisers’ opinion of value.

Supporting documentation concerning the data, reasoning and analyses is retained in these

appraisers’ files. The depth of the discussion contained in the report is specific to the needs of

the client and for the intended use as stated herein. This appraisal firm is not responsible for

unauthorized use of the report.


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EXTRAORDINARY ASSUMPTIONS

This report, and the value conclusions set forth herein, is subject to extraordinary

assumptions. An extraordinary assumption is defined as “An assumption, directly related to a

specific assignment, which, if found to be false, could alter the appraiser’s opinions or

conclusions.”4 This appraisal has been prepared subject to the following extraordinary

assumptions:

The appraisal has been prepared based upon the following Extraordinary

Assumptions:

As per the client’s instructions, this analysis has been prepared under the

assumptions that the subject will be leased on a long-term, NNN, basis.

HYPOTHETICAL CONDITIONS

A hypothetical assumption is defined as “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.”5

This appraisal report has been prepared subject to the following Hypothetical

Conditions:

The land areas for the subject properties of 90± acres for Subject 1 and 3.57± acres

of net useable land area for Subject 2 were provided by the Reno-Tahoe Airport Authority and are assumed to be correct.

4 Source: USPAP 2010-2011 Edition, Definitions; The Appraisal Foundation, Page U-3. 5 Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, 2010, page 97.


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RENO-SPARKS/NORTH VALLEY AREA MAP

SUBJECT 2

SUBJECT 1


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NEIGHBORHOOD MAP

SUBJECT 2

SUBJECT 1


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NEIGHBORHOOD DESCRIPTION The subject properties are located in the Stead area of the City of Reno which is

situated in a region known as the North Valleys Area. The Stead area is located

approximately ten miles northwest of the downtown Reno core area and approximately

thirteen miles northwest of the downtown Sparks core area. Commute time to Stead from the

Reno-Sparks area is approximately 10 to 15 minutes. The major roadway between Reno-

Sparks and the Stead area is Interstate 580 (U.S. 395).

Interstate 580 is a four-lane, two-way, limited access freeway. There are full

interchanges from Interstate 580 into the subject neighborhood at the Golden Valley, Lemmon

Valley, Stead, and Red Rock exits. Interstate 580 also provides good access from the subject

neighborhood to northern and southern California. As it intersects with Interstate 80, a major

east-west freeway, the subject neighborhood has good access to the Reno-Sparks area as well

as other portions of the western United States.

Stead is a former Air Force Base that was deactivated in 1966. Upon closure, the Air

Force Base was deeded by the United States Government to the City of Reno and the

University of Nevada. The Stead area was subsequently incorporated into the Reno city

limits. The Stead area can be separated into two areas. The first area is the old Stead Air

Force Base which includes former military housing and older industrial utilizations. The

newer portion of the Stead area can be distinguished by newer housing subdivisions, such as

Sky Vista, and the Silver Lake Business Center, which has been developed with modern,

industrial facilities.

The Reno-Stead Airport is a 5,000 acre general aviation facility that serves as a

reliever airport for Reno-Tahoe International Airport. The Reno-Stead Airport has been

adequately maintained over the years and is presently utilized for general aviation purposes.

The Reno-Tahoe Airport Authority indicates that long range plans involve using the Reno-

Stead Airport for the majority of the general aviation traffic in the area. The airport also hosts

the Reno National Championship Air Races, one of the Reno area's largest tourist events.


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Approximately 200 aircraft are based at the Reno-Stead Airport. The airfield earned

an Airport Safety Award in 2006 from the Federal Aviation Administration in recognition of

its safety enhancements, tenant relations and community outreach. Located approximately 15

miles north of Reno, Reno-Stead Airport is working to develop itself as a major economic hub

in the North Valleys. Recent improvements have included a new air tanker facility opened by

the Bureau of Land Management, as well as 9,000 feet of new runway and upgrades to

runway lighting. Several on-airport road reconstructions have improved access and security.

Construction of the new Reno-Stead Airport terminal building was recently completed, the

new two-story, 12,000± square foot terminal building includes an emergency operation

center, administrative offices, community conference room and a pilot’s lounge.

The Federal Aviation Administration has recently announced that the State of Nevada

has been approved as a national test site for commercial drones. Two airport sites in Southern

Nevada will participate and two in the north including Reno-Stead Airport and the Fallon

Naval Air Station located 60 miles east of Reno-Sparks. The designation means the State will

serve as one of only six sites in the United States where manufacturers of drones can test their

products and potential users can try them out for applications such as fire fighting, search and

rescue or delivering retail products. The State will also be working with the FAA on testing

how to integrate commercial drones into NextGen, the FAA’s evolving air traffic control

system. Rod Hooper, Executive Director, Common Northern Nevada Development

Authority, says “Northern Nevada has a head start because the area’s manufacturing base

already has many businesses working with the Aerospace and Defense Industry connected to

Military UAV’s (Unmanned Aerial Vehicles). Overall, it is felt that the Reno-Stead Airport is

well positioned for incoming drone business. The Reno-Stead Airport comes with a number

of advantages including existing infrastructure; aviation experience as the decades long

location for the annual Reno National Championship Air Races, it has an identified air space

corridor because of the air races and it is far from military air space which demands much

stricter security.” Steven Hill, Executive Director of the Governor’s Office of Economic

Development, says “he believes the real boom to the economy will be landing more


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permanent businesses with manufacturing, research and development and other operations

and bringing permanent jobs with them.”6

The portion of the old Air Force Base facility deeded to the University of Nevada is

primarily used for the Sierra Nevada Job Corps Training Center facility. Many of the old

military barracks house students who attend the training center and a number of the other

buildings are used for a variety of vocational training purposes. Additionally, the Nevada

Terawatt Facility of the University of Nevada is located in the subject neighborhood.

The Stead area is primarily a suburban bedroom community for the Reno-Sparks area.

Residential development in the Stead area is primarily average quality single family and

multi-family uses. Since the mid-1970s, several large subdivisions have been developed

including Sierra Sage, Granite Hills, Eldorado Villas, the Silver Lake Subdivision, Leareno

Estates and most recently, Sky Vista. The Sky Vista master plan community is located in the

most southeasterly portion of Stead. In addition to single family residential development, the

Stead area has experienced apartment development. The development of Sky Vista is

anticipated to increase the market acceptance of multi-family housing in the Stead area. The

installation of Sky Vista Parkway between Lemmon Drive and Stead Boulevard through Sky

Vista subdivision has increased the linkage with the Lemmon Valley area.

The Stead area has historically experienced limited commercial development. The

Stead Boulevard corridor near Interstate 580 includes low intensity residential, office, school

and older retail uses. There is limited availability of land for commercial development along

Stead Boulevard near Interstate 580. The train tracks to the west of Stead Boulevard limit the

developable depth of parcels along the west side of Stead Boulevard. The competing

commercial sites on Lemmon Drive and Golden Valley Drive have more extensive existing

retail development. In addition, these competing developments have anchor stores with

national tenants and generally have superior curb appeal as compared to the retail

developments on Stead Boulevard near U.S. 395.

6 Source: Northern Nevada Business Weekly – January 6, 2014, Reno Gazette Journal (January 5, 2014).


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There is an 89,265 square foot shopping center located at the Lemmon Drive/

Highway 395 interchange, just outside of the Stead neighborhood. The Lemmon Drive

interchange shopping area is also experiencing further development at the intersection of

Lemmon Drive and Sky Vista Parkway with a service station, a Walgreen’s and a Smith’s

Grocery Store, a Smith’s gas station, a Bank of America Bank branch, Starbuck’s Coffee,

Jack-in-the Box and McDonald’s fast food restaurants and various in-line retailers. A new

super Wal-Mart was constructed at this intersection. A new O’Reilly’s Auto Parts is located

on Lemmon Drive across the street from the Jack-in-the Box. Further to the south on North

Hills Boulevard near Golden Valley Drive is the North Hills Shopping Center, an 114,515

square foot neighborhood commercial shopping center, which is anchored by a Raley’s store.

The Stead Plaza Shopping Center is located on the west side of Stead Boulevard. This

small neighborhood shopping center contains approximately 30,000 square feet of gross

building area. Located immediately to the north of the Stead Plaza Shopping Center is a

Terrible’s convenience store, and self-service gas facility located on the southeast corner of

Stead Boulevard and Lear Boulevard. Also located on this corner is the Stead Marketplace

shopping center. Further to the north, at the northwest corner of Stead Boulevard and Silver

Lake Boulevard, is the Silver Lake Center, an unanchored 11,506 square foot shopping

center.

The Sky Vista Planned Unit Development also has 15 acres of undeveloped

commercial land located on Sky Vista Boulevard in the central portion of the Sky Vista

subdivision.

Although the subject neighborhood has experienced limited commercial development,

Stead has experienced significant industrial development. The majority of the industrial

development in the Stead area has occurred subsequent to the deeding of the Air Force Base

facility to the City of Reno and the University of Nevada. The late William Lear, a prominent

aviation entrepreneur, purchased a large portion of the facility and began to renovate a

number of the old military buildings for his aviation-related business. Mr. Lear also


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purchased the southern portion of Stead for industrial and single family residential

development.

In 1968, J.C. Penney Company purchased a 203 acre site from Mr. Lear and

developed a 1.6 million square foot catalog distribution center. Craftsman West Press

developed a 170,000 square foot facility in 1997 immediately south of J. C. Penney. In late

1984, the R.R. Donnelley Company purchased a 119 acre site located north of the J.C.

Penney catalog distribution center. R.R. Donnelley Company is one of the world's largest

printing companies.

The Union Pacific Land Company purchased 393 acres located west and northwest

of the J. C. Penney Company site. This industrial park was subsequently purchased by

Dermody Properties. This development is known as the Silver Lake Business Center.

Several companies have constructed facilities in the Silver Lake Business Center, including

the Spirolite Company, Freightliner Mercedes Benz Corporation, Hidden Valley Ranch

Company and Kleerdex. Additionally, General Motors, V.E.K.A., B-Line Systems, Sally

Beauty and Barnes Industries have built facilities adjacent to the Silver Lake Business Center.

The Lear Industrial Center contains 100± acres located at the west terminus of Echo

Avenue, southwest of the Reno Stead Airport property. The Lear Industrial Center has been

developed with a 390,000± square foot multi-tenant industrial building and has enough land

to build up to 1.8 million square feet. The LogistiCourt development is proximate to the Lear

Industrial Center and involves over 500,000 square feet of multi-tenant industrial space.

Trammel Crow purchased 17.097± acres on Echo Avenue, proximate to the Lear Industrial

Center, and has constructed a speculative 334,500± square foot distribution warehouse on the

site.

DP Partners developed the Sage Point Business Park, which is anchored by the

Sherwin Williams Distribution Center located on Military Road in Lemmon Valley. The Red

Rock Business Center is located near Red Rock Road on Moya Boulevard. Just to the south


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of the Red Rock Business Center, is a Centex Homes high density single family residential

subdivision.

One of the primary problems hindering development in the Reno-Stead area is a

limited water supply. The Truckee Meadows Water Authority services properties within

incorporated Reno-Stead. The Truckee Meadows Water Authority will not accept new

annexations to the service area until the water supply infrastructure is upgraded.

Vidler Water Company completed the North Valley’s Water Importation project,

which is capable of delivering approximately 8,000 acre feet of water from the Fish Springs

Ranch, approximately 32 miles north of Reno. The Washoe County Commission has

accepted the water rights, wells and pipeline system, as well as easements donated by Vidler

Water Company. Initially, water service will be provided to residential properties in Lemmon

Valley.

The Reno-Stead Sewer Treatment plant provides sewer service to Stead. Natural gas

service and electricity are provided by NV Energy. Telephone service is provided by various

carriers.

Recreation facilities in the Stead area include the Sierra Sage Golf Course, Mayor's

Park, and the 85± acre North Valley Regional Park. Other public facilities located in Reno-

Stead include a small branch library, operated by the Washoe County Library System, and a

branch of the U.S. Post Office.

There are three elementary schools and one middle school located in the subject

neighborhood. The new North Valleys High School is located on Golden Valley Road,

southeast of the subject neighborhood.

The City of Reno furnishes public services to the Stead area. The Reno City Police

Department provides police protection and fire protection. The Regional Transportation


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Commission provides bus service to Stead. Public services in the subject neighborhood are

considered to be adequate.

In summary, the Stead area is located approximately ten miles northwest of the

downtown Reno core area and driving time to the employment centers in Reno and Sparks is

approximately 10 to 15 minutes. Access to the area is provided by the U.S. 395 Freeway and

is considered to be good. Primary land uses in the Stead area are industrial and residential

developments. Secondary land uses include commercial, public and recreational uses.

Utilities are generally immediately available to the subject neighborhood. In recent years, the

Stead area has experienced a reasonably strong industrial market, with several companies

having constructed medium to large size facilities in the area.


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INDUSTRIAL MARKET ANALYSIS In an effort to diversify the economic base of the area, community leaders have

focused upon the expansion of the industrial segment of the economy. The industrial industry

has experienced substantial growth over the past decade as a result of the region’s central

location, good transportation, infrastructure and liberal tax laws. At the present time, over

500 major U.S. and foreign corporations have headquarters or have located large facilities in

the area, including Amazon.com, International Gaming Technology (IGT), Barnes and Noble,

Patagonia, Sherwin Williams, Wal-Mart Distribution Center, PetSmart Distribution Center,

J.C. Penney’s Catalog Distribution Center, and R.R. Donnelley, one of the nation’s largest

publishers. A new 472,720± square foot distribution facility for Urban Outfitters was

constructed in Reno-Stead in 2011. A new 130,000± square foot light manufacturing

distribution facility was constructed for NOW Health Foods in 2012 in east Sparks.

As most major cities in the western portion of the United States are located within

relatively close proximity and driving time to Northern Nevada, the Reno-Sparks area is a

major distribution warehousing center. This development is further being enhanced by the

favorable tax environment in the state of Nevada.

The NAI Alliance 4th Quarter 2013 Industrial Market Survey reports, “strong activity

carried into the 4th Quarter resulting in high absorption numbers and another significant drop

in vacancy. Our market is viewed as balanced when vacancy is in the 8% to 10% range. This

provides enough vacancy to accommodate demand, but not too high forcing rent discounts.

Through the “great recession”, like other markets around the country, the Northern Nevada

Industrial Market was well in excess of 10% vacancy. As of the 4th Quarter, the vacancy rate

dropped below 10% for the first time since the 1st Quarter of 2008. The industrial market is

considered in the healthy range finishing the year at 9.1% (excluding sublease space, vacancy

is 8%). For the year, 15 transactions were completed with users in excess of 100,000 square

feet, which was significantly higher than prior years. We are now concerned about not having

a product available to capture the demand should activity continue. The area has a number of

developers who own land and are ready to act, however few are willing to build on


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speculation. Only one developer is currently grading for a new 399,000 square foot

speculative product. Lack of options will result in a tightening market throughout 2014 and

possible transaction loss to other markets due to tenant inability to wait for ground up

development. Rental rates have firmed and are now increasing for most all product types.

There remains plenty of options for seekers of Class B and C product, as well as smaller 5,000

to 20,000 square feet spaces. Rents for these spaces are increasing but are not high enough to

justify new development. Today’s need is for large bulk warehouse buildings.”

NAI Alliance projects lower vacancy, higher rents and more construction over the

coming year. Industrial land sales will see increasing activity as both users and developers

recognize the need to build.

The following charts summarize the overall and submarket industrial markets, and

include data related to rental rates and vacancies. The data is from the NAI Alliance 4th

Quarter 2013 Reno Industrial Report.

INDUSTRIAL GROSS AND NET ABSORPTION


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VACANCY

MEDIAN ASKING RATES

Q4 2013 MARKET AT A GLANCE


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Leases for industrial users in the Reno-Sparks market are typically based upon triple

net lease terms, in which tenants are responsible for a majority of all operating costs

associated with the property.

In regards to land and construction NAI Alliance notes that this sector has been very

quiet over the last five years, however, between existing building expansions, new build-to-

suits and possible speculative construction of Class A product, they anticipate increased

construction activity in 2014.

No new construction was reported for 2012 and it is our understanding that

construction in 2013 was primarily build-to-suit projects. There is a 525,000± square foot

speculative building currently under construction in the Tahoe Reno Industrial Center in

Storey County east of Reno-Sparks. A 66± acre site was recently purchased in the Spanish

Springs Business Center, north of Sparks and is planned to be ultimately developed with 1.5

million square feet of distribution warehouse space. The buyer has indicated that they are in

negotiations with a potential tenant in its first building which will contain 600,000± square

feet. Dermody Properties purchased a bank-owned 90± acre residential subdivision site in the

North Valleys area which they plan to development with a 1.23 million square foot industrial

park. The first structure is planned to be a 624,000± square foot speculative Class A

industrial building with a 36 foot clear height which is in demand by e-commerce companies

that utilize three tiered mezzanine storage.

Market optimism is increasing as corporate earnings; housing, business investment

and unemployment are all trending in the right direction helping the economy. NAI Alliance

projects industrial rental rates increasing, build-to-suit interest increasing and strong

investment sales activity.

Northern Nevada offers significant tax and geographic incentives, making the area

attractive to distribution and online order fulfillment industries. The primary employment

centers for the industrial market include South Sparks, Reno-Stead, which is north of Reno,


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the Airport market located east of the Reno-Tahoe International Airport and the South

Meadows Business Park, which is located in South Reno. Secondary industrial areas include

the Reno West Business Park, the Parr Boulevard area, and the Spanish Springs Business

Center. The Tahoe Reno Industrial Center (TRIC) is located approximately 15 miles east of

Sparks and is a major industrial park having direct access from Interstate 80 at USA Parkway.

In recent years, there has been an emphasis on attracting hi-tech and back office

industry to the area. The area offers a sophisticated telecommunications infrastructure that

can accommodate these types of uses. Nevada Bell (now AT&T) has installed a state-of-the-

art telecommunications infrastructure including fiber optics and digital switching equipment.

The Reno-Sparks industrial market remains an attractive area for distributors.

Shipping has become more efficient, sophisticated and competitive in today’s market.

Demand for shipping has increased due, in part, to the growth of e-commerce as well as mail-

order. The central location of the Reno-Sparks in the western United States is expected to

continue to attract the warehousing and shipping industries.


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SUBJECT PROPERTIES AERIAL PHOTOGRAPH

Subject Assessor’s Parcel Numbers Land Areas

1 086-240-011 (Portion) 90± Acres – Gross Land Area

2 086-240-011 (Portion) 3.57± Acres – Net Usable Land Area


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SUBJECT STREET PHOTOGRAPHS

VIEW LOOKING NORTHWESTERLY ALONG ARMY AVIATION DRIVE

ADJACENT TO THE SUBJECT

VIEW LOOKING WESTERLY ALONG ALPHA AVENUE IN THE

VICINITY OF THE SUBJECT


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SUBJECT PROPERTY ONE PHOTOGRAPHS

VIEW LOOKING WESTERLY TOWARD SUBJECT PROPERTY 1 FROM

ARMY AVIATION DRIVE

VIEW LOOKING SOUTHWESTERLY TOWARD SUBJECT PROPERTY 1

FROM NEAR ARMY AVIATION DRIVE


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SUBJECT PROPERTY ONE PHOTOGRAPHS

VIEW LOOKING SOUTHEASTERLY TOWARD THE SUBJECT FROM NEAR ITS

SOUTHWEST CORNER

VIEW LOOKING NORTHEASTERLY TOWARD THE SUBJECT

PROPERTY 1 SITE


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SUBJECT PROPERTY TWO PHOTOGRAPHS

VIEW LOOKING SOUTHWESTERLY TOWARD SUBJECT PROPERTY 2

FROM THE TAXIWAY

VIEW LOOKING SOUTHERLY TOWARD THE WEST PORTION OF

SUBJECT PROPERTY 2


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VIEW LOOKING SOUTHEASTERLY TOWARD THE CENTRAL PORTION OF

SUBJECT PROPERTY 2

VIEW LOOKING NORTHWESTERLY TOWARD THE

SUBJECT PROPERTY 2 SITE


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VIEW LOOKING EASTERLY ALONG THE TAXIWAY ADJACENT TO

SUBJECT PROPERTY 2

VIEW OF ONE OF THE DETENTION PONDS LOCATED ON

SUBJECT PROPERTY 2


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SUBJECT PROPERTIES PLOT MAP Portions of A.P.N. 086-240-11

Subject Land Areas: 1 90± Acres (Gross Land Area) 2 3.57± Acres (Net Usable Land Area


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SUBJECT PROPERTIES RECORDED PARCEL MAP

Portions of Parcel 4 of Parcel Map No. 5018A Recorded December 14, 2009

Document No. 3829772


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SUBJECT ZONING MAP (City Of Reno Zoning: MU/RSARC)


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SUBJECT PROPERTIES MASTER PLAN MAP (City Of Reno Land Use: Reno-Stead Airport Regional Plan)


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SUBJECT FLOOD ZONE MAP

Federal Emergency Management Agency’s Flood Insurance Rate Map Community Panel Number 32031C2825H

Effective Date: June 18, 2013 Flood Zone “X”


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PROPERTY IDENTIFICATION AND SITE DESCRIPTION Assessor’s Parcel Number Portions of 086-240-11 Location Subject Property One Industrial Land at the Reno-Stead Airport

Northwest corner of Army Aviation Drive and Alpha Avenue, Reno, Washoe County, Nevada

Subject Property Two Aeronautical Land at the Reno-Stead Airport Northeast corner of Army Aviation Drive and

Alpha Avenue, Reno, Washoe County, Nevada Legal Description Portions of Parcel 4 of Parcel Map No. 5018, as

shown on that certain map entitled “Parcel Map for Reno-Tahoe Airport Authority” as filed on December 14, 2009 as File No. 3829772, in the office of the County Recorder of Washoe County, Nevada.

Owner of Record Reno-Tahoe Airport Authority Shape Subject Property One Rectangular Subject Property Two Rectangular Land Area Subject Property One 90± Acres (3,920,400± SF) – Gross Land Area Subject Property Two 3.57± Acres (155,509± SF) – Net Usable Land

Area The land areas for the subject properties were provided by the Reno-Tahoe Airport Authority and are assumed to be correct.

City of Reno Zoning (MURS) Mixed Use Reno-Stead Airport


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City of Reno Land Use SPD - Reno-Stead Airport Regional Center

This Regional Center Plan covers the Reno-Stead Airport, including adjacent

properties owned by the Airport Authority.

The main focus of the Reno-Stead Airport Regional Center Plan is to further the

development of the Reno-Stead Airport and to promote non-residential

development in appropriate locations. The Reno-Stead Airport Regional Center

Plan recognizes and plans for the unique land use compatibility issues associated

with development near a large airport. The plan also helps to implement the

desired regional development pattern of infill development within designated

centers and corridors.

The Development Concept for the Reno-Stead Airport Regional Center Plan is

categorized into 2 districts - the Mixed-Use District and the Residential Buffer

District. The Development Concept anticipates the Reno-Stead Airport becoming

an increasingly important regional employment center in the next 20-years. The

planned increase in employment capacity will provide additional opportunities for

Stead residents to work near their home. Over time, new employment

opportunities in Stead should help address traffic congestion during the rush hour

commute to and from central Reno.

The Mixed-Use District will contain facilities directly associated with airport

operations (i.e., runways, airplane hangars, terminal buildings, etc.). Other airport

compatible developments may also be located within the Mixed-Use District.

Appropriate land uses include industrial, office, commercial and public facility

developments. Residential development, and other airport incompatible land uses

(schools, churches, etc.), are not allowed within the Reno-Stead Airport Regional

Center Plan. In addition, the minimum non-residential intensities that are identified

in the Regional Plan (1.5 floor-area ratio) do not apply within this Regional Center

Plan because safety and noise concerns generally make high occupancy land uses

incompatible with airport operations. The airport critical zone requires low

occupancy land uses and sound-attenuating construction methods in key over-

flight areas.


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The Residential Buffer District is intended to provide an open space area between

nonresidential development within this Regional Center Plan and nearby

residential areas. Properties in the Residential Buffer District will be retained as

open space. Small scale developments, such as recreational and utility facilities

may also be appropriate in the Residential Buffer District, subject to limitations of

the City's Open Space zoning district.

Prior to build-out of land uses identified in this Reno-Stead Airport Regional

Center Plan, increased quantities of potable water will be needed in the Stead area.

The Regional Water Planning Commission is exploring water supply options for

the Stead area. Water importation, effluent re-use and/or new water conservation

measures will likely be necessary.

It is noted that the very westerly portion of Subject 1 is designated as Open Space

which is intended to provide a buffer between non-residential development within the

Regional Center Plan and nearby residential areas.

Based upon discussions with Mr. David Mieding, of the Reno-Tahoe Airport

Authority, it is our understanding that the subject properties lie outside of the Airport Critical

Zone.

Roadway Frontage/Access

Subject Property 1 is generally located on the northwest corner of Army Aviation

Drive and Alpha Avenue. Subject Property 2 is generally located on the northeast corner of

Army Aviation Drive and Alpha Avenue. Both Army Aviation Drive and Alpha Avenue are

interior airport roadways. Each of these streets is a two-way, asphalt paved roadway that is in

average condition.

Access to the Reno-Stead Airport is provided by the airport’s main entry as well as by

the west entry gate located along the north side of Alpha Avenue at its intersection with Mt.

Anderson Street. This west entry provides access onto the Reno-Stead Airport property and is


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located a short distance east of the subject. Although the subject parcels do not have direct

access from the city street, they are accessed by way of the interior roadway system on the

airport property. For the purposes of this analysis, it is assumed that the subject properties do

have adequate access.

Flood Zone

According to the Federal Emergency Management Agency's Flood Insurance Map

Community Panel Number 32031C2825H, with an effective date of June 18, 2013, the subject

properties are located in a Flood Zone “X”. Areas within a Flood Zone “X” are determined to

be areas outside the 500-year flood plain. Federal flood insurance is not required in areas

located in a Flood Zone “X”.

Earthquake Zone

In 2005, the City of Reno adopted the International Building Code. The International

Building Code does not directly address earthquake hazards by geologic regions. However, it

requires that all building plans be reviewed by a structural engineer to assess earthquake

issues. Prior to 2005, the City of Reno utilized the Uniform Building Code. According to the

1997 edition of the Uniform Building Code, the Reno-Sparks area is located in a Seismic Risk

Zone 3. This zone encompasses areas which have a number of local faults and where there is

a relatively strong probability of moderate to strong seismic activity. The Uniform Building

Code does require special construction techniques as a result of earthquake hazards.

Additionally, a structural engineer typically reviews plans for residential and commercial

buildings in order to assess earthquake hazards.

As a result, for the purposes of this analysis, it is being assumed that the subject

properties are not impacted by earthquake hazards to a greater degree than is typical for the

North Valleys area.


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Utilities Utility Service Provider

Electricity NV Energy Natural Gas NV Energy Telephone Various Carriers

Water Truckee Meadows Water Authority (TMWA) Sewer City of Reno

Waste Disposal Waste Management Cable Various Carriers

Internet Various Carriers

Utility services, including electricity, natural gas service, water and sewer service, as

well as cable and phone service are available to the perimeter of Subject Property 1. It is

noted that development of Subject Property 1 will require extension of utilities to the interior

portions of the site. As Subject Property 2 had been planned to be developed with a hangar

project, water hydrants had been installed throughout the property, electric service was

extended to the southwest corner of the site and a drainage system was completed, including

two detention basins. In discussions with Mr. David Mieding, of the Reno-Tahoe Airport

Authority, it was indicated that natural gas has not yet been extended to Subject Property 2.

He also indicated that there is adequate water and sewer capacity for development of the

subject properties.

Public Services

The subject property has adequate access to all public services. Fire protection for the

subject is provided by the Reno Fire Department. Police protection is provided by the Reno

Police Department. Public transportation is provided by Citifare, a regional mass

transportation system. Citifare does maintain a number of bus stops along Alpha Avenue in

the vicinity of the subject.

Easements

A Preliminary Title Report was not provided to us prior to completion of the appraisal

report. Based upon a review of Parcel Map 5818, recorded with the Washoe County

Recorder’s Office as File Number’s 3829772 on December 14, 2009, the subject sites are

encumbered by the following easements:


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An access easement (Army Aviation Drive), it is our understanding that this easement is relocateable and appears to effect Subject 1 and 2;

A public utility easement encumbers the east portion of Subject 1 in a north-south direction;

Development requiring new or expanded utility services will require an easement, 10 feet in width, to be granted to the public utility (sewer, electric power, natural gas) and 20 feet in width for Truckee Meadows Water Authority for development operations, and maintenance of the utility services. The location to be mutually agreed upon considering future development and consistent with airport operations. Cable television systems under franchise to the City of Reno are included as a utility service.

Sewage disposal shall be by connection to a public sewer system unless otherwise approved at the time of development.

If an existing easement does not already exist, then an underground gas and electric easement 10 feet in width and a Truckee Meadows Water Authority easements 20 feet in width, centered on all existing underground electric, gas and water lines is hereby granted.

The owner, at their expense, has the right to relocated existing utility lines and easements to alignments mutually agreed upon by the owner of record at time of realignment and the utility company.

Our physical inspection of the subject properties revealed no overt signs of any

easements which would impact their development potential. For the purposes of this

appraisal report, it is assumed that the subject sites are not subject to any easements which

would limit development on the sites, or detract from the Market Value of the properties.

Topography

Subject Property 1 has generally level to gently undulating topography. It is noted

that development of the site will in all likelihood require drainage improvements.

Subject Property 2 has been graded and has level topography. It is noted that there is a

detention basin in the southeast corner and one in the southwest corner of Subject Property 2.

Overall, Subject Property 2 is considered to have adequate topography for development and

provides adequate drainage.


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Environmental and Soils Data

An environmental site assessment was not provided to these appraisers by our client.

However, based upon the surrounding improvements, it is our expectation that the subject

properties have adequate soils to allow for normal development. This appraisal report

assumes that the subjects’ soils are sufficient for development on the subject sites.

Hazardous Substances

Our standard on-site inspection of the subject properties did not reveal any readily

apparent evidence suggesting the presence of contaminants or hazardous wastes on any

portion of the subject sites. It is noted that the Reno-Stead Airport was a former US Air Force

Base. As a result, remediation of contaminated soils has been conducted in the past. As we

have not been provided with an Environmental Assessment on the sites, this appraisal report

assumes that the subject sites are free and clear of contamination. For the purposes of this

appraisal, it is assumed that the value of the subject properties is not negatively impacted by

the existence of toxic materials or hazardous waste.

Surrounding Utilizations

The subject properties are located in the southwest corner of the Reno-Stead Airport

property. The property to the west of the subject is the Silver Knolls single family residential

subdivision. The property to the north of the subject includes large tracts of additional vacant

airport land. The Army National Guard facility is located a short distance northeast of the

subject, also on airport property. The development to the east of the subject involves a series

of individual hangars which are utilized for cold storage of small aircraft. This includes the

Reno-Stead Airport West End Flightline Development. The main runway for the airport is

located directly northeast of the subject properties and, as a result, the subject neighborhood

does experience periods of aircraft noise.

Those properties located to the south of the subject site, across Alpha Avenue, are

developed with a variety of industrial utilizations. The 394,400± square foot General Motors

Service & Parts distribution warehouse is located on the northwest corner of Moya Boulevard


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and Echo Avenue. The Lear Industrial Center contains 100± acres located at the west

terminus of Echo Avenue, southwest of the Reno-Stead Airport property. The LogistiCourt

development is proximate to the Lear Industrial Center and involves over 500,000 square feet

of multi-tenant industrial space.

Current Improvements

Subject Property 1 is currently vacant and unimproved. Subject Property 2 is

improved with asphalt paved interior taxiways, as it had been planned to be developed with a

hangar project for cold storage of small aircraft. Development of the Subject 2 property

included site preparation. As Subject Property 2 had been planned to be developed with the

hangar project, water hydrants had been installed throughout the property, electric service was

extended to the southwest corner of the site and a drainage system was completed including

two detention basins. Other than the infrastructure, the proposed project was never

developed.

Subject Sales History

There have been no arms length sales with respect to the subject property within the

last five years.

Tax Data

At the present time, the subject property is owned by the Reno-Tahoe Airport

Authority and has been declared exempt from taxation by the Washoe County Assessor’s

office.

Special Assessments

According to the Washoe County Treasurer's office, there are no special assessments

owing against the subject property.


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Summary

To summarize, the subject properties are situated on the Reno-Stead Airport property

which is located in the Reno-Stead area of Washoe County, Nevada. Subject Property 1 is

located on the northwest corner of Army Aviation Drive and Alpha Avenue and contains 90±

acres. Subject Property 1 is currently vacant and unimproved. Subject Property 2 is located

on the northeast corner of Army Aviation Drive and Alpha Avenue and contains 3.57± acres

of useable land area. Subject Property 2 is improved with asphalt paved interior taxiways, a

drainage system, as it had been planned to be developed with a hangar project for cold storage

of small aircraft. The subject properties are identified as portions of Washoe County

Assessor's Parcel Number 086-240-11.

Reference is made to photographs and a plot plan of the subject properties contained

elsewhere in this appraisal report which will enable the reader to better visualize the subject

sites.


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HIGHEST AND BEST USE ANALYSIS Highest and best use is defined in the 5th Edition of The Dictionary of Real Estate

Appraisal (Appraisal Institute, Chicago, 2010) as “The reasonably probable and legal use of

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

financially feasible, and that results in the highest value. The four criteria the highest and best

use must meet are legal permissibility, physical possibility, financial feasibility, and

maximum productivity.”

Highest and best use is typically a three-step process. The first step is to determine the

highest and best use of the subject site as vacant and available to be developed to its highest

and best use. The determination must be made to leave the site vacant or to improve it. If the

conclusion is to improve the site, the second step is to determine the ideal improvement.

Highest And Best Use As Though Vacant

Physically Possible

The subject properties are situated within the southwest corner of the Reno-Stead

Airport property, located in the Reno-Stead area of Washoe County, Nevada. Subject

Property 1 is located on the northwest corner of Army Aviation Drive and Alpha Avenue and

contains 90± acres. Subject Property 2 is located on the useable northeast corner of Army

Aviation Drive and Alpha Avenue and contains 3.57± acres of net useable land area. Both

Army Aviation Drive and Alpha Avenue are interior airport roadways. The subject properties

have adequate access. The subject properties are considered to have adequate topography for

development.

The subject properties have reasonable access to all utilities, including water service,

gas service, electric service, telephone service and sewer service. However, it is noted that for

any intensive development of Subject Property 1, that utilities services will need to be

extended to the interior portions of the site. As fire hydrants have been installed throughout

Subject Property 2, water service is available. It is our understanding that electric service was

extended to the southwest corner of Subject Property 2 and a drainage system was completed.


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The subject sites are of sufficient size to support a variety of utilizations. Overall, the subject

properties’ size, shape, topography, access and availability of utilities are not considered to be

physically limiting to the development potential of the properties. We are not aware of any

earthquake hazards or soil conditions that impact the subjects to a greater degree than would

be typical for the subject neighborhood.

Legally Permissible

According to the City of Reno Community Development Department, the subject

properties are zoned Mixed Use/Reno-Stead Airport. The properties are master planned SPD

and lie within the Reno-Stead Airport Regional Center Plan district. The main focus of the

Reno-Stead Airport Regional Center Plan is to further the development of the Reno-Stead

Airport and to promote non-residential development in appropriate locations. This Reno-

Stead Airport Regional Center Plan recognizes and plans for the unique land use

compatibility issues associated with development near a large airport. The Mixed-Use

District will contain facilities directly associated with airport operations (i.e., runways,

airplane hangars, terminal buildings, etc.). Other airport compatible developments may also

be located within the Mixed-Use District. Appropriate land uses include industrial, office,

commercial and public facility developments. Residential development, and other airport

incompatible land uses (schools, churches, etc.), are not allowed within the Reno-Stead

Airport Regional Center Plan.

Based upon the subjects’ current zoning and master plan designation, the subjects’

legally permissible uses include a variety of airport related utilizations as well as industrial

and industrial-commercial uses.

Financially Feasible

The highest and best use of the subject sites must be financially feasible. To be

financially feasible, there must be adequate demand to support the highest and best use of the

subject properties.


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The land uses surrounding the subject sites include the Reno-Stead Airport, a variety

of industrial and residential utilizations and large tracts of vacant land. Single family

residential utilizations are located the west of the subject sites. Industrial utilizations are

located south of the subject sites. The Reno-Stead area has experienced significant industrial

development including the Silver Lake Business Center, the Lear Industrial Center and the

LogistiCourt development, all of which have met with adequate to good market acceptance.

The Federal Aviation Administration has recently announced that the State of Nevada

has been approved as a national test site for commercial drones. The designation means the

State will serve as one of only six sites in the United States where manufacturers and potential

users of drones can test their products. The State will also be working with the FAA on

testing how to integrate commercial drones into NextGen, the FAA’s evolving air traffic

control system. Rod Hooper, Executive Director, Common Northern Nevada Development

Authority, says “Northern Nevada has a head start because the area’s manufacturing base

already has many businesses working with the Aerospace and Defense Industry connected to

Military UAV’s (Unmanned Aerial Vehicles). Overall, it is felt that the Reno-Stead Airport is

well positioned for incoming drone business. The Reno-Stead Airport comes with a number

of advantages including existing infrastructure; aviation experience as the decades long

location for the annual Reno National Championship Air Races, it has an identified air space

corridor because of the air races and it is far from military air space which demands much

stricter security.” Steven Hill, Executive Director of the Governor’s Office of Economic

Development, says he “believes the real boom to the economy will be landing more

permanent businesses with manufacturing, research and development and other operations

and bringing permanent jobs with them.”

The NAI Alliance 4th Quarter 2013 Industrial Market Survey reports, “strong activity

carried into the 4th Quarter resulting in high absorption numbers and another significant drop

in vacancy. Our market is viewed as balanced when vacancy is in the 8% to 10% range. This

provides enough vacancy to accommodate demand, but not too high forcing rent discounts.

Through the “great recession”, like other markets around the country, the Northern Nevada


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Industrial Market was well in excess of 10% vacancy. As of the 4th Quarter, the vacancy rate

dropped below 10% for the first time since the 1st Quarter of 2008. The industrial market is

considered in the healthy range finishing the year at 9.1% (excluding sublease space, vacancy

is 8%). NAI Alliance projects lower vacancy, higher rents and more construction over the

coming years. Industrial land sales will see increasing activity as both users and developers

recognize the need to build.”

The subject properties are situated on airport property at Reno-Stead Airport. For the

most part, utilizations within the immediate subject neighborhood include airport related uses

and industrial warehouse and distribution uses. With consideration given to the types of

utilizations which have experienced success in the subject neighborhood, it is our opinion that

airport related uses and/or industrial or industrial commercial utilizations on the subject sites

would be financially feasible.

Maximally Productive

To be maximally productive, the highest and best use of the subject properties must be

the most intense use to which the sites, as if vacant, could be developed and remain

financially feasible.

With consideration given to the physical, legal, financial and maximally productive

characteristics of the subject properties, and as the subject does have direct access to the

Reno-Stead Airport, it is our opinion that the highest and best use of the subject sites, as

vacant, is for development with airport related uses and/or industrial or industrial commercial

utilizations.

Highest And Best Use As Improved

Subject Property 1 is currently vacant and unimproved.

Subject Property 2 had been planned to be developed with a hangar project for cold

storage of small aircraft. Development of the property included site preparation, asphalt


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paved interior taxiways, water hydrants had been installed for fire protection, and electric

service was extended to the southwest corner of the site and drainage improvements for the

proposed project.

In determining the highest and best use of the subject, as improved, consideration is

given to its location on airport at the Reno Stead Airport, its net useable land area, existing

infrastructure and improvements. Consideration is also given to its access and other physical

characteristics. It is recognized that the subject has access to the airport facilities and

amenities. It is also recognized that, in its current configuration, the utilization of the site is,

in all likelihood, limited to a hangar project.

The subject property is felt to benefit from its direct access to the Reno-Stead Airport

property. Overall, it is our opinion that Subject Property 2’s current on-site improvements

may help to facilitate the development of the subject site at a future date. With consideration

given to the subject's existing improvements, and as the subject does have direct access to the

Reno Stead Airport, the highest and best use of the subject site would involve development

with an airport hangar project.


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INTRODUCTION TO VALUATION ANALYSIS MARKET VALUE AND MARKET LAND RENT ANALYSIS

The purpose of this report is to estimate the Market Value and the Market Rent of the

subjects’ land. This valuation analysis will include two distinct steps. The first step is to

estimate the Market Value of the underlying land area for each of the subject properties.

Typically, when valuing vacant land, the Sales Comparison is the most reliable approach to

value. The Sales Comparison Approach is based on the principal of substitution, which holds

that the value of the subject property tends to be set by the price that would be paid to acquire

a substitute property of similar utility and desirability.

Once the unencumbered fee simple value of each of the subject sites has been

estimated, the next step in the Market Land Rent Analysis is to derive an appropriate rate of

return applicable to the subject. The selected rate of return will then be applied to the

estimated Market Value of the subject land to arrive at an estimate of the appropriate Market

Land Rent applicable to the subject property on an annual basis.


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SALES COMPARISON APPROACH TO LAND VALUE SUBJECT PROPERTY 1 – 90± ACRE SITE

To establish an estimate of the Market Value of Subject Property 1, the Official

Records of Washoe County were searched for sales of similar larger acreage parcels in the

Reno-Sparks area. All land sales found were investigated, analyzed and compared to the

subject property. Research for current larger acreage land listings considered similar to the

subject property was also conducted. The sales and listings set forth on the following chart

were considered to be indicative of the Market Value of the subject site. The sales and

listings utilized will be compared to Subject Property 1 on a price per square foot of land area

basis.


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COMPARABLE INDUSTRIAL LAND SALES CHART


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COMPARABLE LAND SALES MAP

SUBJECT


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COMPARABLE LAND SALE AERIAL MAP AND DISCUSSION SALE LS-1

Property Type: Vacant Land City: Stead (Reno) Address/Location: 12055 Moya Boulevard County: Washoe A.P.N.: 090-040-43 State: Nevada Topography: Level Flood Zone: Zone “X”, Minimal Risk Areas Zoning: I (Industrial) Utilities: Available Parcel Acreage: 38.34± Acres Shape: Generally Rectangular Parcel Square Feet: 1,670,090± Square Feet Proposed Use: Urban Outfitters Warehouse Recording Date: May 13, 2011 Price/Square Foot: $2.04 Sale Price: $3,404,432 Terms Of Sale: Cash to Seller Grantor: DP Partners Stead I, LLC Grantee: Urban Outfitters, Inc. Document Number: 4002688 Verification: Seller’s Representative; Public

Records This is the May 2011 sale of a 38.34± acre parcel located within the Dermody Properties Silver Lake Business Park in Stead (Reno), Nevada. In discussions with a representative of DP Partners the seller, it was indicated that this site was sold as raw land. Utilities and access needed to be extended and the site had not been graded. This parcel was subsequently improved with a 462,000± square foot warehouse, which will be expandable to almost twice that size. The property does not have direct street frontage, but is accessed from Moya Boulevard via a non-exclusive 40 foot wide access road.


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Property Type: Vacant Land City: Sparks, Spanish Springs Address/Location: Kiley Ranch North , NEC Pyramid

Highway and Sparks Boulevard County: Washoe

A.P.N.: 083-024-18 (Was 083-024-01, & 083-024-02 Portion)

State: Nevada

Topography: Level to Gentle, Partially Below Grade

Flood Zone: Zone “X”, Minimal Risk Areas

Zoning: NUD (Commercial) Utilities: All Reasonably Available Parcel Acreage: 40.564± Acres Shape: Slightly Irregular Parcel Square Feet: 1,766,968± Square Feet Proposed Use: Future Medical Facility

Development Recording Date: March 7, 2013 Price/Square Foot: $4.44 Sale Price: $7,840,800 Terms Of Sale: Cash to Seller Grantor: KM2 Development, Inc. Grantee: Renown Health Document No.: Date of Inspection:

4212424 October 31, 2013

Verification: Steve Tapogna, Renown Health and Public Records

This comparable is located on the Pyramid Highway in the Spanish Springs area of Sparks. This comparable is a corner site, having additional frontage on Sparks Boulevard and David Allen Parkway. This comparable is part of the Kiley Ranch North Development and has Handbook approvals for arterial-commercial development. It is our understanding that under the Kiley Ranch PUD Handbook, that this site is entitled for development with an 180,000± square foot, eight story, 300 bed medical facility. The property has reasonable access to all utilities. The site does have good roadway exposure from the Pyramid Highway, a major arterial. This sale was verified and confirmed by Mr. Steve Tapogna, Director of Real Estate with Renown Health, the buyer.


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Property Type: Vacant Land City: McCarran Address/Location: Tahoe Reno Industrial Center on

the NW side of West Sydney Drive, 750±’ east of USA Parkway

County: Storey

A.P.N.: 005-071-40 & 41 State: Nevada Topography: Level to Gentle Flood Zone: Zone X, Minimal Risk Areas Zoning: I-2 (Heavy Industrial) Utilities: All Reasonably Available Parcel Acreage: 68.27± Acres Shape: Slightly Irregular Parcel Square Feet: 2,973,841± Square Feet Proposed Use: Future Industrial Development Recording Date: September 4, 2013 Price/Square Foot: $1.14 Sale Price: $3,395,920 Terms Of Sale: Cash Grantor: PCCP Reno Industrial Grantee: Gonsalves & Santucci Inc. Document No.: 119214 Verification: Tobi Whitten, Storey County

Assessor’s Office and Public Records

This comparable is the September 2013 sale of an industrial site located within the Reno Tahoe Industrial Center (TRIC). The sale included two adjoining parcels, both of which are vacant and unimproved. The sale property has level to gently undulating topography and all utilities were reasonably available. The property has extensive frontage on West Sydney Drive, which is a connector street within the Tahoe Reno Industrial Center. At the time of inspection, it was noted that there is a drainage ditch along the sale property’s street frontage; as a result access to the site will require a culvert. This comparable was verified with Ms. Tobi Whitten, Personal Property Appraiser III with the Storey County Assessor’s office, Storey County, Nevada.


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Property Type: Vacant Land City: Reno Address/Location: E/S of Lemmon Drive, between

US 395 and North Virginia Street County: Washoe

A.P.N.: 570-081-Various; 570-12 thru 19 All

State: Nevada

Topography: Level to Gentle, Graded Flood Zone: X, Minimal Risk Areas Zoning: Mixed Use/North Valleys Utilities: All Reasonably Available Parcel Acreage: 90.36± Acres Shape: Slightly Irregular Parcel Square Feet: 3,936,162± Square Feet Proposed Use: Future LogistiCenter 395

Industrial Park Recording Date: September 18, 2013 and September

24, 2013 (Re-recorded) Price/Square Foot: $.95

Sale Price: $3,750,000 Terms Of Sale: Cash Grantor: Sterns Bank National Association Grantee: DP-Clark North Valleys, LLC Document No.: 4281038/4283177 Verification: Northern Nevada Business

Weekly and the Washoe County Assessor’s Office and Public Records

This comparable is located in the North Valleys area of Reno-Sparks. The property consists of the partially completed Miravalle Subdivision. The property was purchased by Dermody Property’s, who plan to develop the site with a industrial park. Dermody Property plans to ultimately improve the site with 1.23 million square feet of industrial space. The first building will include 624,000± square feet and will be a spec building. This sale was featured in the September 30, 2013 issue of the Northern Nevada Business Weekly and was also verified by the Washoe County Assessor’s Office. It is noted that this property did involve a bank sale.


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Property Type: Vacant Land City: Sparks, Spanish Springs Address/Location: Just NE/S of Sha Neva Road, at the

North terminus of Ingenuity Avenue

County: Washoe

A.P.N.: 538-010-03 State: Nevada Topography: Level to Gentle Flood Zone: Zone “X”, Minimal Risk Areas Zoning: I (Industrial) Utilities: All Available Parcel Acreage: 66.00± Acres Shape: Slightly Irregular Parcel Square Feet: 2,874,960± Square Feet Proposed Use: Distribution-Warehouse

Development Recording Date: October 16, 2013 Price/Square Foot: $2.27 Sale Price: $6,532,258 Terms Of Sale: Cash Grantor: Spanish Springs Associates LP Grantee: J & J Spanish Springs, LLC Document No.: 4289896 Verification: Jesse Haw, Seller’s

Representative and Public Records

This comparable is the October 2013 sale of 66± acres in the Spanish Springs Business Park in north Sparks. The Spanish Springs Business Center is a 411± acre master planned Business Park located along the west side of Pyramid Highway, north of West Calle de la Plata. This Business Park includes manufacturing and distribution uses including Leviton, Wurth USA, and Silver State Liquor and Wine. The buyer plans to ultimately improve the site with 1.5 million square feet of distribution space. The buyer is reportedly in negotiations with a potential tenant in its first 600,000 square foot building to be constructed in 2014. Site work is currently underway on the property. This sale was confirmed by Mr. Jesse Haw of the Spanish Springs Associates LP, the seller. Mr. Haw is the President of Hawco Properties, the developers of the Spanish Springs Business Park.


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COMPARABLE LAND SALE MAP AND DISCUSSION SALE LS-6

Property Name: Vacant Land City: Reno (South Meadows) Location: East Terminus of Ampere

Drive, 640’ South of Mill Street

County: Washoe

A.P.N.: 012-282-07 & 13 012-283-01,02,03&08 (Portion)

State: Nevada

Topography: Level Flood Zone: “X”, Minimal Risk Areas Zoning: IC (Industrial Commercial) Utilities: Available Parcel Acreage: 18.8477± Acres Shape: Slightly Irregular Parcel Square Feet: 821,005± Square Feet Proposed Use: Acquisition by NV Energy Sale Date: December 13, 2013 Price Per Square Foot: $4.57 Sale Price: $3,750,690 Terms Of Sale: Cash to Seller Grantor: George Avanzino Family

Limited Partnership Grantee: NV Energy

Document Number: 4308000 Verification: Kathy Renfrow, NV Energy

The sale property is a portion of the original Avanzino Ranch, which contains approximately 29± acres. The entire property had been listed for sale for in excess of three years with the most recent asking price of $7,750,000, or $6.00 per square foot. The sale property has access from the east terminus of Ampere Drive via South Rock Boulevard to the west and from the west terminus of Ampere Drive via Edison Way to the east. The sale property has adequate access, but limited street exposure. The property is being purchased by NV Energy, an adjoining property owner.


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COMPARABLE LAND LISTING AERIAL MAP LISTING LL-7

COMPARABLE LAND SALE AERIAL MAP

LISTING LL-8


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COMPARABLE LAND LISTING AERIAL MAP LISTING LL-9


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COMPARABLE LAND SALES DISCUSSION AND COMPARISON (Subject Property 1)

The comparable land sales utilized in this analysis range in date of sale from May of

2011 to December of 2013. We have also included three current land listings. The

comparables range in land area from 18.9477± acres to 104± acres, as compared to Subject

Property 1 which contains 90± acres. The comparables illustrate prices ranging from $.95 to

$4.44 per square foot.

Discussion of Adjustments

The comparable properties utilized in this analysis will be compared and correlated to

the subject property based upon several adjustment criteria. These include property rights

conveyed, financing terms, conditions of sale, market conditions, development potential,

location and other physical characteristics. The sales will be analyzed based upon a sale price

per square foot basis.

Due to a lack of paired sales, qualitative adjustments will be made to the sales for the

adjustment criteria. An upward adjustment is made to the comparable’s price per square foot

when the subject is superior to the sale or listing for a specific criteria; likewise, a downward

adjustment is made to the comparable’s price per square foot when the subject is inferior to

the sale or listing for a specific criteria.

Property Rights Conveyed

In this appraisal, the fee simple Market Value of the subject site is being estimated.

As each of the sales utilized in this analysis involve the sale of the fee simple interest of the

property, no adjustment for property rights is required.

Financing-Terms of Sale (Cash Equivalency)

All of the sales utilized in this analysis were cash to seller or cash equivalent

transactions; therefore, no adjustment for cash equivalency is required to the sales.


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Conditions of Sale

Based upon a review of the public records and/or interviews with the persons involved

with each of the sales utilized in this analysis, adjustments for conditions of sales are required

for Sales LS-4 and LS-6. Sale LS-4 involved a bank sale, requiring upward adjustment. Sale

LS-6 was purchased by NV Energy, an adjoining property owner, as plottage, requiring a

downward adjustment.

None of the other sales require adjustments for this criteria, as there were no known

conditions of sale, other than typical buyer and seller motivations, which impacted the sale

prices.

Market Conditions (Date of Sale)

In analyzing 2011/2013 market conditions, we have interviewed a number of real

estate brokers considered knowledgeable in the land submarket. It was the sense of the

interviewees that the real estate market is showing signs of recovery and although there is

increasing interest in industrial land, there remains limited consummated land sales activity to

date. In reviewing the sales data, there is no market evidence to suggest a market conditions

adjustment to the sales at the present time. Therefore, the sales utilized are felt to represent

market conditions as of the subject’s current date of valuation. As Listings LL-7 through LL-

9 involve asking prices, each of these comparables requires downward adjustment due to their

listing status.

Topography

The subject property has level to gentle topography as does each of the comparables,

therefore, no adjustments for topography are required.

Availability of Utilities

Utility services, including electrical, natural gas, water and sewer services, as well as

cable and phone service, are available to the perimeter of Subject Property 1. It is noted that

development of Subject Property 1 will require extension of utilities to the interior portions of


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the site. Each of the comparables had immediate or reasonable access to utilities. As a result,

no adjustment for availability of utilities is indicated.

Zoning

The subject property is zoned Mixed Use and is located in the Reno-Stead Airport

Regional Center Planning Area Overlay District. The Mixed-Use District will contain

facilities directly associated with airport operations. Other compatible developments may

also be located in the Mixed-Use District. Appropriate land uses include commercial, office,

industrial, and public facility developments.

Sale LS-2 is part of the Kiley Ranch North Development and has Handbook approvals

for arterial-commercial development. Overall, this comparable is considered superior to the

subject in regards to development potential.

None of the other sales require adjustments for this criteria, as they were considered to

have similar zoning and development potential as the subject.

Frontage/Access

The subject property has access from Alpha Avenue and Army Aviation Drive, both

of which are interior airport roadways. The subject does not have direct frontage on a public

street, but is felt to have adequate access.

Sale LS-1 is in an interior parcel, having access from an ingress and egress easement.

Sale LS-5 has access from the north terminus of Ingenuity Avenue. Sale LS-6 has no direct

street frontage and is accessed from the terminus of Ampere Drive. As a result, each of these

comparables is considered similar to the subject in regards to street frontage and access.

Each of the other comparables have superior street frontage and access as compared to

the subject requiring downward adjustments.


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Size

The comparable sales range in land area from 18.9477± acres to 104± acres, as

compared to the subject site, which contains 90± acres. Generally a relationship exists

between the size of the parcel and the per unit price paid. For those sales which are smaller

than the subject property, a downward adjustment will be made to the price per square foot.

Conversely, for those sales which are larger than the subject property, an upward adjustment

will be made to the price per square foot.

Adjustments to Sales

Sale LS-1 is located in the Silver Lake Business Park in the subject neighborhood. In

comparison with the subject, this comparables requires a large downward adjustment due to

its smaller size at 38.34± acres as compared to the subject at 90± acres. On the other hand,

upward adjustments to the comparable are necessary due to its lack of infrastructure and due

to the subject’s location on Airport property. Overall, Sale LS-1, at $2.04 per square foot, is

considered to be a reasonable indicator of an appropriate per unit land value for Subject

Property 1.

Sale LS-2 is located in the Spanish Springs Valley area of Sparks in the Kiley Ranch

North planned development. In comparison with the subject, this comparable requires large

downward adjustments due to its smaller size and its corner situs at two arterial roadways. A

downward adjustment is required due to this comparable’s superior general location. A

downward adjustment is necessary as this property has Handbook approvals for arterial

commercial development. On the other hand, an upward adjustment is necessary due to the

subject’s location on Airport property. Overall, Sale LS-2, at $4.44 per square foot, is

considered to be a very high indicator of an appropriate per unit land value for Subject

Property 1.

Sale LS-3 is located in the Tahoe Reno Industrial Center east of Sparks. In

comparison with the subject, this comparables requires downward adjustments due to its

smaller size and its superior street frontage. On the other hand, a large upward adjustment is


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required due to the subject’s superior general location. An upward adjustment is necessary

due to the subject’s location on Airport property. Overall, Sale LS-3, at $1.14 per square foot,

is considered to be a low indicator of an appropriate per unit land value for Subject

Property 1.

Sale LS-4 is located in the North Valleys area on the east side of Lemmon Drive,

between U.S. 395 and North Virginia Street. In comparison with the subject, this comparable

requires downward adjustments due to its superior street frontage and freeway visibility. On

the other hand, a large upward adjustment is required as this comparable involved a distressed

sale. An upward adjustment is necessary due to the subject’s superior general location in an

established Industrial neighborhood. Further upward adjustment is necessary as the subject is

located on Airport property. Overall, Sale LS-4, at $.95 per square foot, is felt to be a very

low indication of an appropriate per unit land value for Subject Property 1.

Sale LS-5 is a 66± acre site located in the Spanish Springs Business Center in north

Sparks. In comparison with the subject, this comparable requires a large downward

adjustment due to its smaller size. On the other hand, an upward adjustment is necessary due

to the subject’s superior general location and its location on Airport property. This

comparable is similar to the subject in regards to street frontage. Overall, Sale LS-2, at $2.27

per square foot, is considered to be a slightly high indicator of an appropriate per unit land

value for Subject Property 1.

Sale LS-6 is located south of Mill Street and east of South Rock Boulevard in

southeast Reno. In comparison with the subject, this comparable requires a large downward

adjustment due to its superior closer-in location. A large downward adjustment is necessary

due to this comparable’s much smaller size. A downward adjustment is necessary due to this

comparable’s plottage considerations. On the other hand, an upward adjustment is necessary

as the subject is located on Airport property. Overall, Sale LS-6, at $4.57 per square foot, is

felt to be a very high indication of an appropriate per unit land value for Subject Property 1.


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Listing LL-7 includes five adjoining parcels that are currently available for sale

within the subject neighborhood. The site is located on the east side of Stead Boulevard at the

west terminus of Silver Dollar Lane. The site is situated just north of the U.S. 395/Stead

Boulevard interchange. In comparison with the subject, this comparable requires a downward

adjustment due to its superior freeway visibility. A downward adjustment is necessary due to

this comparable’s listing status. A large downward adjustment is necessary due to this

comparable’s smaller land area. On the other hand, an upward adjustment is necessary as this

comparable is an REO property. Further upward adjustment is necessary as the subject is

located on Airport property. Overall, Listing LL-7, at $2.19 per square foot, is considered to

be a slightly high indication of an appropriate per unit land value for Subject Property 1.

Listing LL-8 includes various parcels that are currently available for sale in the

Spanish Springs Business Center in north Sparks. In comparison with the subject, this

comparable requires downward adjustments as it does involve an asking price and generally

much smaller land areas that the subject’s 90± acre site. On the other hand, upward

adjustments are necessary due to the subject’s superior general location and its location on

Airport property. Overall, Listing LL-8, at $2.95 per square foot, is considered to be a high

indication of an appropriate per unit land value for Subject Property 1.

Listing LL-9 includes two adjoining parcels that are currently available for sale in the

Tahoe Reno Industrial Center east of Sparks. In comparison with the subject, this comparable

requires downward adjustments as it involves an asking price and due to its superior street

frontage. On the other hand, a large upward adjustment is required due to the subject’s

superior general location. An upward adjustment is necessary due to the subject’s location on

Airport property. Overall, Listing LL-9, at $1.45 per square foot, is considered to be a low

indication of an appropriate per unit land value for Subject Property 1.

In summary Sales LS-2 and LS-6, at $4.44 and $4.57 per square foot, were considered

to be very high indicators of an appropriate per unit land value for the subject. Listing LL-8,

at $2.95 per square foot, was considered to be a high indicator. Sale LS-3, LS-4 and Listing


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LL-9, at $.95 to $1.45 per square foot, were considered to be low to very low indicators.

Sales LS-1, LS-5 and Listing LL-8 at $2.19 and $2.27 per square foot, were felt to be slightly

high indicators. Sale LS-1, at $2.04 per square foot, was considered to be a reasonable

indicator of an appropriate per unit land value for Subject Property 1.

In estimating an appropriate per square foot land value for the subject, consideration is

given to its general location, its location on airport at the Reno Stead Airport, development

potential, its size, accessibility and other physical characteristics. Consideration is also given

to this comparable’s gently undulating topography, as development will require the extension

of utilities to the interior portions of the site and will also require drainage improvements.

Based upon a careful review of the available data, it is our opinion that an appropriate

per square foot land value applicable to the subject, as of January 6, 2014, is $2.00 per square

foot. Applying the selected per square foot value to the subject property’s 3,920,400± square

feet indicates a Market Value of $7,840,800, which is rounded to $7,850,000.

FINAL MARKET VALUE CONCLUSION $7,850,000 (Subject’s 90± Acre Site, as of January 6, 2014)


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SALES COMPARISON APPROACH TO LAND VALUE SUBJECT PROPERTY 2 – 3.57± ACRE SITE

To establish an estimate of the Market Value of Subject Property 2, the Official

Records of Washoe County were searched for sales of similar parcels in the Reno-Sparks

area. All land sales found were investigated, analyzed and compared to the subject property.

Research for current land listings considered similar to the subject property was also

conducted. The sales and listings set forth on the following chart were considered to be

indicative of the Market Value of the subject site. The sales and listings utilized will be

compared to Subject Property 2 on a price per square foot of land area basis.


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COMPARABLE LAND SALES CHART (Subject Property 2)

Zoning

Sale A.P.N. Sale Date Topography Price Number Address or Location Sale Price Flood Zone Land Area Per S.F.

CLOSED SALES LS-1 082-492-17

NEC of North End of Security Circle, Reno (North Valleys)

11/23/2011 $538,500

MUNV Level “X”

2.989 130,201

AC SF

$4.14

LS-2 212-050-12 07/5/2012 MUW4 1.02 AC $5.76 SWC of Woodland Avenue & White Fir Street $256,000 Level 44,431 SF Reno West Business Park, West Reno "X"

LS-3 538-161-03 (Portion) 07/27/2012 I 1.238 AC $3.15 SEC of Ingenuity Ave. & Hawco Ct. $169,876 Level 53,928 SF Sparks (Spanish Springs) "X"

LS-4 082-492-21 08/02/2012 MUNV 1.636 AC $2.39 Near The SEC of Old N. Virginia St. & Security Cir. $170,000 Level 71,264 SF Reno (North Valleys) “X”

LS-5 163-090-15 South Meadows Business Park NE/S Technology Way, 870± Ft. N. of Double Diamond Parkway, Reno

10/16/2012 $1,295,400

PUD Level to Moderate

“X”

9.576 AC $3.10 417,131 SF

CURRENT LISTINGS LL-6 090-051-10 & 090-052-01 & 02

SEC and SWC of Moya Boulevard and Echo Avenue, Reno (Stead)

Current Listing 01/06/2014

Various

I Level “X”

3.875± 168,795±

5.18± 225,641±

6.847± 298,255±

AC SF AC SF AC SF

$2.50

LL-7 086-149-07 Current Listing I 4.875 AC $4.00 NWC Mt. Bismark St. & Mt. Anderson St. 01/06/2014 Level 212,355 SF Reno (Stead) $849,420 "X"

SUBJECT PROPERTY Subject 086-240-11 (Portion) Date of Value MURS 3.57 AC ---

Property NEC Army Aviation Way and Alpha Avenue 01/06/2014 Graded, Level 155,509 SF 2 Reno-Stead Airport "X"


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Property Type: Vacant Land City: Reno Location: Northeast Corner Security Circle County: Washoe A.P.N.: 082-492-17 State: Nevada Topography: Level Flood Zone: Zone “X” Zoning: MUNV (Mixed Use/North Valleys) Utilities: Available Parcel Acreage: 2.989 Acres Shape: Irregular Parcel Square Feet: 130,201 Square Feet Proposed Use: Investment/Expansion Recording Date: November 23, 2011 Price Per Acre: $180,161 Sale Price: $538,500 Price/Square Foot: $4.14 Grantor: The Lee M. Steinberg Family Trust Terms Of Sale: Cash to Seller Grantee: Kappes, Cassiday & Associates Conditions of Sale: Plottage Document No.: 4061062 Verification: Terry Albert This parcel was purchased by an adjoining property owner. The site is level, at street grade and has rail access. Access is available from Security Circle. The surrounding uses include a number of industrial uses. Kappes, Cassiday purchased the site as a long term investment and possible expansion, but had no immediate plans for development when the sale closed.


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Property Type: Vacant Land City: Reno Location: SEC Woodland Ave. & White Fir St. County: Washoe A.P.N.: 212-050-12 State: Nevada Topography: Level Flood Zone: Zone “X” Zoning: MUW4 Utilities: Available Parcel Acreage: 1.02 Acres Shape: Generally Rectangular Parcel Square Feet: 44,431 Square Feet Proposed Use: Landscape Business Recording Date: July 5, 2012 Price Per Acre: $250,982 Sale Price: $256,000 Price/Square Foot: $5.76 Grantor: Messenger Molding, Inc. Terms Of Sale: Cash to Seller Grantee: Rocking O, LLC Conditions of Sale: None Document No.: 4128787 Verification: Scott Owen This is a level site located at the entrance of the Reno/West Business Park. In the years prior to the sale, the property had been offered for lease at $0.10/ per square foot per month. The buyer owns Reno Green Landscaping and had tried to purchase the property in the past. The site has level topography and access to all public utilities. Surrounding properties include a multi-tenant industrial and warehouse/distribution buildings. The Union Pacific Railroad right-of-way is located across White Fir Street from this parcel, and there is a rail crossing at Woodland Avenue just north of the site.


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Property Type: Vacant Land City: Reno, North Valleys Address/Location: Spanish Springs Business Center County: Washoe A.P.N.: 538-161-03 (Ptn.) State: Nevada Topography: Level Flood Zone: Zone “X” Zoning: I (Industrial) Utilities: All Available Parcel Acreage: 1.238± Acres Shape: Rectangle Parcel Square Feet: 53,928± Square Feet Proposed Use: Future Expansion-Plottage Recording Date: July 27, 2012 Price/Square Foot: $3.15 Sale Price: $169,873 Terms Of Sale: Cash to Seller Grantor: Spanish Springs Associates, LP Grantee: Silverado Land Management

LLC Document No.: 4136983 Verification: Jesse Haw, Spanish Springs

Associates This comparable sale is located in the Spanish Springs Business Center. This property is a portion of a larger parcel which is in the process of a boundary line adjustment to create the 1.238± acre sale site. The property was purchased by the adjoining property owner, Silverado Land Management, LLC.


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Property Type: Vacant Land City: Reno Address/Location: 145±’ South of Security Circle, 225±’

East of Old N. Virginia Street County: Washoe

A.P.N.: 082-492-21 State: Nevada Topography: Generally Level Flood Zone: Zone “X” Zoning: MUNV(Mixed Use North Valleys) Utilities: All Available Parcel Acreage: 1.636± Acres Shape: L Shaped Parcel Square Feet: 71,264± Square Feet Proposed Use: N/A Recording Date: August 2, 2012 Price Per Acre: $100,856 Sale Price: $170,000 Price/Square Foot: $2.39 Grantor: Teresa M. Rietz, Successor Trustee of

the Johnson Family Trust Terms Of Sale: $50,000 Down Payment, Seller

Financing, Remainder Balance at Undisclosed Terms

Grantee: Ghumman Trucking, Inc. and Cool Express, Inc.

Transfer Tax: $697.00

Document No.: 4138000 Verification: Brian Armon, Commercial Real Estate Solutions and Public Records

This comparable is a recent sale of 1.636± acres located off Old North Virginia Street and Security Circle in the North Valleys area of Reno. This parcel is an interior site having level topography. This property has no public street frontage and is accessed via a 30 foot wide access easement via Security Circle. The southwest corner and a portion of the property’s westerly boundary are encumbered with a 20 foot wide emergency access easement. Mr. Brian Armon of Commercial Real Estate Solutions (Cushman & Wakefield) did indicate that the sale price includes two acre feet of water rights and all utilities are at the site.


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Property Type: Vacant Land City: Reno Location: Northeast Side of Technology

Way, 870± Feet North of Double Diamond Parkway

County: Washoe

A.P.N.: 163-090-15 State: Nevada Topography: Level to moderate with up

sloping topography to the north Flood Zone: Zone “X” (LOMR Case No. 96-

09-652P) Zoning: PUD (Planned Unit

Development) Utilities: Immediately Available

Parcel Acreage: 9.576± Ac Shape: Irregular Parcel Square Feet: 417,131±SF Proposed Use: Future Development Recording Date: October 16, 2012 Price Per Acre: $135,276 Sale Price: Grantor: Grantee: Document Number:

$1,295,400 Prologis Land, LLC LSPI Exchange Corp./McKenzie Properties 4163445

Price/Square Foot: Terms of Sale: Transfer Tax: Verification:

$3.10 Cash $5,313.60 Michael Hoeck, SIOR, NAI Alliance & Public Records

This comparable is located in the South Meadows Business Park. The property is situated on Technology Way, generally between Double Diamond Parkway and Double R Boulevard. The property is approximately 870± feet north of Double Diamond Parkway and 900± feet east of Double R on the northeast side of Technology Way. The property is surrounded by office-warehouse buildings to the south and west, along with a moderately steep hill to the northeast. In discussions with the listing broker, Mr. Hoeck, it was indicated that this parcel, as well as, two others were purchased by McKenzie Properties from Prologis Land, LLC. The sales closed on October 16, 2012 and the total sale price was $2,000,000.


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COMPARABLE LAND SALES DISCUSSION AND COMPARISON (Subject Property 2)

Subject Property 2 is generally located at the northeast corner of Army Aviation Way

and Alpha Avenue and contains 3.57± acres of net usable land area. As Subject Property 2

had been planned to be developed with a hangar project, water hydrants had been installed

throughout the property, electric service was extended to the southwest corner of the site and

a drainage system was completed, including two detention basins.


given to its general location, its location on airport at the Reno Stead Airport, its net useable

land area, existing infrastructure and improvements. Consideration is also given to its access

and other physical characteristics. It is recognized that the subject has access to the airport

facilities and amenities. On the other hand, it is recognized that, in its current configuration,

the utilization of the site is, in all likelihood, limited to a hangar project.

The comparable land sales utilized in this analysis range in date of sale from

November of 2011 to October of 2012. The two listings are current as of the date of

valuation. The comparables range in land area from 1.02± acres to 9.576± acres, as compared

to Subject Property 2 which contains 3.57± acres. The comparables illustrate prices ranging

from $2.50 to $4.14 per square foot.

Discussion of Adjustments

The comparable properties utilized in this analysis will be compared and correlated to

the subject property based upon several adjustment criteria. These include property rights

conveyed, financing terms, conditions of sale, market conditions, development potential,

location and other physical characteristics. The sales will be analyzed based upon a sale price

per square foot basis.

Due to a lack of paired sales, qualitative adjustments will be made to the sales for the

adjustment criteria. An upward adjustment is made to the comparable’s price per square foot


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when the subject is superior to the sale or listing for a specific criteria; likewise, a downward

adjustment is made to the comparable’s price per square foot when the subject is inferior to

the sale or listing for a specific criteria.

Property Rights Conveyed

In this portion of the appraisal, the fee simple Market Value of the subject site is being

estimated. As each of the sales utilized in this analysis involve the sale of the fee simple

interest of the property, no adjustment for property rights is required.

Financing-Terms of Sale (Cash Equivalency)

All of the sales utilized in this analysis were cash to seller or cash equivalent

transactions; therefore, no adjustment for cash equivalency is required to the sales.

Conditions of Sale

Based upon a review of the public records and/or interviews with the persons involved

with each of the sales utilized in this analysis, adjustments for conditions of sales are required

for Sales LS-1, LS-3 and LS-5. Sales LS-1 and LS-3 were each purchased by an adjoining

property owner as plottage, requiring downward adjustment. Sale LS-5 was purchased as part

of a larger portfolio and as a result was discounted, requiring an upward adjustment.

None of the other sales require adjustments for this criteria, as there were no known

conditions of sale, other than typical buyer and seller motivations, which impacted the sale

prices.

Market Conditions (Date of Sale)

In analyzing 2011/2013 market conditions, we have interviewed a number of real

estate brokers considered knowledgeable in the land submarket. It was the sense of the

interviewees that the real estate market is showing signs of recovery and although there is

increasing interest in industrial land, there remains limited consummated land sales activity to

date. In reviewing the sales data, there is no market evidence to suggest a market conditions


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adjustment to the sales at the present time. Therefore, the sales utilized are felt to represent

market conditions as of the subject’s current date of valuation. As Listings LL-6 and LL-7

involve asking prices, each of these comparables requires downward adjustment due to their

listing status.

Topography

The subject property has level to gentle topography as do all of the comparables, with

the exception of Sale LS-5 which has level to moderate topography, requiring an upward

adjustment for topography.

Availability of Utilities

The subject property has reasonable access to all necessary utilities. Each of the

comparables had immediate or reasonable access to utilities. As a result, no adjustment for

availability of utilities is indicated.

Zoning

The subject property is zoned Mixed Use and is located in the Reno-Stead Airport

Regional Center Planning Area Overlay District. The Mixed-Use District will contain

facilities directly associated with airport operations. Other compatible developments may

also be located in the Mixed-Use District. Appropriate land uses include commercial, office,

industrial, and public facility developments.

None of the comparables require adjustments for this criteria, as they were considered

to have similar zoning and development potential as the subject.

Frontage/Access

The subject property has access from Alpha Avenue and Army Aviation Drive, both

of which are interior airport roadways. The subject does not have direct frontage on a public

street, but is felt to have adequate access.


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Sale LS-4 is in an interior parcel, having access from an ingress and egress easement,

which is considered inferior to the subject’s access and frontage on the airport interior

roadways.

Each of the other comparables has public street frontage and access as compared to the

subject requiring downward adjustments.

Size

The comparable sales range in land area from 1.02± acres to 9.576± acres, as

compared to Subject Property 2 which is assumed to contain 3.57± acres of net usable land

area. Generally a relationship exists between the size of the parcel and the per unit price paid.

For those sales which are smaller than the subject property, a downward adjustment will be

made to the price per square foot. Conversely, for those sales which are larger than the

subject property, an upward adjustment will be made to the price per square foot.

Adjustments to Sales

Sale LS-1 is located on Security Circle in the North Valleys area of Reno. In

comparison with the subject, this comparable requires a downward adjustment due to its

public street frontage and access. A downward adjustment is necessary due to this

comparable’s superior development potential as development of the subject will most likely

be limited to a hangar project. A downward adjustment is necessary due to this comparable’s

plottage considerations. On the other hand, upward adjustments are required due to the

subject’s location on Airport property and its existing infrastructure. This comparable is

similar in size to the subject. Overall, Sale LS-1, at $4.14 per square foot, is considered to be

a high indicator of an appropriate per unit land value for Subject Property 2.

Sale LS-2 is located in the Reno West Business Park, which involves a secondary

industrial submarket within the Reno-Sparks area. This business park is generally situated

between Old Highway 40 and the Truckee River in West Reno. In comparison with the

subject, this comparable requires a large downward adjustment due to its smaller size. A


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downward adjustment is required due to this comparable’s public street frontage and access

from two roadways. Downward adjustments are required due to this comparable’s proximity

to the Truckee River greenbelt, an amenity which is considered to enhance the desirability of

the Reno West Business Park. A downward adjustment is required due to this comparable’s

superior development potential. On the other hand, upward adjustments are necessary due to

the subject’s location within the Reno-Stead industrial submarket and due to its location on

Airport property and its existing infrastructure. Overall, Sale LS-2, at $5.76 per square foot,

is considered to be a very high indicator of an appropriate per unit land value for Subject

Property 2.

Sale LS-3 is located in the Spanish Springs Business Center in north Sparks. In

comparison with the subject, this comparable requires downward adjustments due to its

smaller size and its superior public street frontage. A downward adjustment is necessary due

to this comparable’s plottage considerations. A downward adjustment is required due to this

comparable’s superior development potential. On the other hand, an upward adjustment is

required due to the subject’s superior general location. An upward adjustment is necessary

due to the subject’s location on Airport property and due to its existing infrastructure.

Overall, Sale LS-3, at $3.15 per square foot, is considered to be a slightly high indicator of an

appropriate per unit land value for Subject Property 2.

Sale LS-4 is an interior parcel located east of North Virginia Street and south of

Security Circle in the North Valleys area. In comparison with the subject, this comparable

requires a downward adjustment due to its smaller size. A downward adjustment is required

due to this comparable’s superior development potential. On the other hand, an upward

adjustment is required due to this comparable’s inferior accessibility. Further upward

adjustment is necessary as the subject is located on Airport property and due to its existing

infrastructure. Overall, Sale LS-4, at $2.39 per square foot, is felt to be a very low indication

of an appropriate per unit land value for Subject Property 2.


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Sale LS-5 is a 9.576± acre site located in the South Meadows Business Park in

southeast Reno. In comparison with the subject, this comparable requires a large downward

adjustment due to its superior location in the premier business park in the Reno-Sparks area.

A downward adjustment is necessary due to this comparable’s superior public street frontage.

A downward adjustment is required due to this comparable’s superior development potential.

On the other hand, this comparable requires an upward adjustment due to conditions of sale.

Upward adjustments are required due to this comparable’s larger land area and inferior

topography as compared to the subject. An upward adjustment is necessary due to the

subject’s location on Airport property and due to its existing infrastructure. Overall, Sale LS-

5, at $3.10 per square foot, is considered to be a slightly high indicator of an appropriate per

unit land value for Subject Property 2.

Listing LL-6 includes three individual parcels that are currently available for sale

within the subject neighborhood. The parcels are located on the southeast and southwest

corners of Moya Boulevard and Echo Avenue. In comparison with the subject, these

comparable parcels require downward adjustments due to their public street frontage and

access from two roadways. A large downward adjustment is necessary due to this

comparable’s listing status. A downward adjustment is required due to this comparable’s

superior development potential. On the other hand, a minor upward adjustment is necessary

as this comparable is located in a floodplain. An upward adjustment is necessary as the two

parcels located on the southwest corner of Moya Boulevard and Echo Avenue are encumbered

with a 100 foot wide drainage easement. Further upward adjustment is necessary as the

subject is located on Airport property and due to its existing infrastructure. Overall, Listing

LL-6, at $2.50 per square foot, is considered to be a low indication of an appropriate per unit

land value for Subject Property 2.

Listing LL-7 is a 4.875± acre parcel that is currently available for sale within the

subject neighborhood. The parcel is located on the northwest corner of Mt. Anderson and Mt.

Bismark Streets. In comparison with the subject, this comparable requires a downward

adjustment due to its public street frontage and access. A downward adjustment is required


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due to this comparable’s superior development potential. A large downward adjustment is

necessary due to this comparable’s listing status. On the other hand, an upward adjustment is

necessary due to this comparable’s larger size. Further upward adjustment is necessary as the

subject is located on Airport property and due to its existing infrastructure. Overall, Listing

LL-7, at $4.00 per square foot, is considered to be a high indication of an appropriate per unit

land value for Subject Property 2.

In summary Sale LS-1 and Listing LL-7, at $4.14 and $4.00 per square foot, were

considered to be high indicators of an appropriate per unit land value for the subject. Sale LS-

2, at $5.76 per square foot, was considered to be a very high indicator. Sale LS-3 and LS-5, at

$3.10 to $3.15 per square foot, were considered to be slightly high indicators. Sale LS-4 and

Listing LL-6, at $2.39 and $2.50 per square foot, were considered to be a low to very low

indicators of an appropriate per unit land value for Subject Property 2.


given to its general location, its location on airport at the Reno Stead Airport, its net useable

land area, existing infrastructure and improvements. Consideration is also given to its access

and other physical characteristics. It is recognized that the subject has access to the airport

facilities and amenities. On the other hand, it is recognized that, in its current configuration,

the utilization of the site is in all likelihood, limited to a hangar project.

Based upon a careful review of the available data, it is our opinion that an appropriate

per square foot land value applicable to the subject, as of January 6, 2014, is $3.00 per square

foot. Applying the selected per square foot value to the subject property’s 155,509± square

feet of net usable land area indicates a Market Value of $466,527, which is rounded to

$465,000.

FINAL MARKET VALUE CONCLUSION $465,000 (Subject’s 3.57± Acre Site, as of January 6, 2014)


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MARKET LAND RENTAL ANALYSIS

In order to arrive at an estimate of the Market Rent which would be applicable to the

subject sites, a rate of return must be selected. The selected rate of return will then be applied

to the estimated Market Value of the subject sites to arrive at an estimate of the appropriate

market rent applicable to the subject sites on an annual basis.

In order to estimate an appropriate rate of return, we interviewed several brokers and

property owners active in the Northern Nevada and Northern California real estate markets.

In discussions with officials of the Reno-Tahoe Airport Authority, it was indicated

that the Airport Authority has leased several acres on the east side of the Reno airport which

is referred to as the Airport East Property. Federal Express Ground and R Supply currently

occupy two sites in the Airport East Property. It was indicated that both of these sites have

each been leased for a 50 year period based upon NNN terms. The rental rates are adjusted

every five years based on the Consumer Price Index (CPI). It was further indicated that these

properties were leased at an 8% rate of return applied to the value of the land.

The Reno-Tahoe Airport Authority also negotiated a long-term land lease in 2005 for

the new Hyatt Place hotel located on the west side of the airport. This lease involves a

favorable commercial location near the freeway, and at the entrance to the airport. The

appraised value in 2005 was $18.00 per square foot of land area. It is our understanding that

the site area is 2.60± acres. The initial lease rate for the first two years was at a reduced rate

of $125,000 per year, while the project was under construction, equating to a rate of return of

6.13%. The current rental rate is $176,462.28 per year, which based upon the 2005 value,

equates to a rate of return of 8.66%.

In an interview with officials of the Reno-Tahoe Airport Authority, they also reported

that they are currently negotiating several potential leases of land located to the south of the

Reno airport on McCarran Boulevard. They explained that there have been recent

negotiations involving an 8% rate of return on the land.


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These appraisers also spoke with Mr. Drew Mickel of Reynolds & Brown, a

commercial real estate development and management company with offices in Concord and

San Leandro, California. Reynolds & Brown owns an approximately seven acre parcel on the

northwest corner of Brockway Road and Palisades Drive in Truckee. They are currently in

the process of negotiating a long term land lease for a portion of their parcel to Grocery

Outlet. Mr. Mickel stated that he could not divulge the terms of the lease, but did state that an

appropriate rate of return in the current market is 8%. Reynolds & Brown does a number of

ground leases, primarily in the East Bay area.

In discussions with Mr. Don Welsh of Trammel Crow Company, it was indicated that

his company typically bases land leases on a rate of return from 8% to 9% on a NNN basis.

Mr. Frank Gallagher of Commercial Partners of Nevada has indicated that the land

leases with which he has been involved have been based upon a rate of return in the range of

10%. He also pointed out that these leases generally involve retail-commercial properties and

typically have a CPI adjustment every one to three years for long-term leases.

This firm interviewed Bruce D. Storey, Director, Investment Committee & CFO

Emeritus of Dermody Properties of Reno, Nevada. Mr. Storey indicated that Dermody

Properties entered into a long term land lease, as the Lessee, for a site in Allentown,

Pennsylvania during the first week of 2006. The rate of return which Dermody Properties

was willing to pay for the long term land lease was based upon 7.50% of the market value of

the property. Mr. Storey indicated that the land rent will be adjusted every 5 years during the

50 year term of the lease.

Mr. Storey also stated that Dermody Properties negotiated potential land leases in

2013 on two different properties for two different clients. One property involved a potential

land lease in North Las Vegas. A prospective tenant of a Dermody warehouse building

needed additional parking. They approached the adjacent land owner and negotiated a long

term land lease based upon a rate of return of 8%. The prospective tenant subsequently


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decided that the warehouse space did not suit their needs and therefore the ground lease was

never executed.

The second potential land lease involved a prospective tenant who wanted Dermody

Properties to build them a building in the Harry Reid Research Park, which is operated by the

University of Nevada Las Vegas. Dermody Properties entered into negotiations with UNLV

to lease the land. Both parties then agreed to a rate of return of 8% for the long term ground

lease. The prospective tenant subsequently determined that the cost to construct their desired

improvements was too high and they therefore abandoned the project.

Mr. John Pinjuv, SIOR of Avison Young, indicated that the land leases which he has

negotiated have been based on a rate of return of approximately 9% to 10%. Mr. Pinjuv did

note that the properties he has been involved with are commercial sites and the lease terms are

typically 30 years with options to extend the term. He further noted that rates of return may

have softened due to the weakening economy and lower interest rates.

Mr. Bruce Robertson with Sperry Van Ness in Carson City stated that he was involved

with a ground lease in Carson City. This ground lease was for an Auto Zone store on S.

Carson Street. The ground lease was executed in November of 2011 with an initial term of 15

years, with four five-year options to renew. The lease stipulates that the rate for the first three

years is $37,200 per year. The rate increases to $42,000 per year for years 4 and 5. In years 6

through 10, the lease rate will be $46,200 per year. The lease rate for the remaining five years

of the initial lease term will be $50,820 per year. The total land area of the site is 36,155±

square feet. Based upon a land value of $12.50 per square foot, the initial lease rate equates to

a rate of return of 8.23%.

Finally, a long term ground lease was negotiated for a new McDonald’s restaurant to

be located in Spanish Springs Valley, northeast of Reno, based upon a 7.5% rate of return.


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In summary, our interviews indicate that long term land leases are typically based on

rates of return generally ranging from 7.5% to 9.0% applied to the value of the land. The

majority of the data supports a rate of return on long term land leases of 8.0%. Based upon

the interviews and investigations completed by these appraisers, it is our opinion that an

appropriate rate of return applicable to the subject’s proposed long term leases would be

8.0%.

Applying the selected 8% rate of return to the land value estimate of $2.00 per square

foot for Subject Property 1 results in an annual rental rate for Subject Property 1, as of

January 6, 2014, of $.16 per square foot per year.

MARKET LAND RENT INDICATION

90± ACRE SITE

Per Square Foot Land Value $2.00 Rate of Return 8.0% Indicated Market Land Rent $.16/SF/Year Land Area 3,920,400± SF Market Land Rent Indication $627,264 MARKET LAND RENT CONCLUSION (RD) $630,000/YEAR (3,920,400± SF Site @ $.16/SF/Year) MARKET LAND RENT CONCLUSION $.16 Per S.F. Per YEAR (Subject Property 1 – 90± Acres)


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Applying the selected 8% rate of return to the land value estimate of $3.00 per square

foot for Subject Property 2 results in an annual rental rate for Subject Property 2, as of

January 6, 2014, of $.24 per square foot per year.

MARKET LAND RENT INDICATION 3.57± ACRE SITE

Per Square Foot Land Value $3.00 Rate of Return 8.0% Indicated Market Land Rent $.24/SF/Year Land Area 155,509± SF Market Land Rent Indication $37,322 MARKET LAND RENT CONCLUSION (RD) $40,000/YEAR (155,509± SF Site @ $.24/SF/Year) MARKET LAND RENT CONCLUSION $0.24 Per S.F. Per YEAR (Subject Property 2 – 3.57± Acres – Net Useable Land Area)


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APPRAISERS’ CERTIFICATION

Each of the undersigned does hereby certify that, unless otherwise noted in this

appraisal report:

I made a personal inspection of the property that is the subject of this report. The statements of fact contained in this report are true and correct. The reported analyses, opinions and conclusions are limited only by the reported

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

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

I have not performed services, as an appraiser, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

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

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

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

My analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal

Practice. No one provided significant real property appraisal assistance to the person signing

this certificate. The appraisal was not based upon a requested minimum valuation, a specific

valuation, or the approval of a loan. The appraiser’s state registration/certification has not been revoked, suspended,

canceled or restricted. The Appraisal Institute conducts a mandatory program of continuing

education for its designated members. As of the date of this report, Stephen R. Johnson and Cindy Lund Fogel have completed the requirements under the continuing education program of the Appraisal Institute.

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


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After careful consideration of all data available, and upon thorough personal

investigation of the subject properties and comparable properties analyzed, it is our opinion

that the Market Value of the subject properties is set out as follows:

MARKET VALUE AND MARKET LAND RENT CONCLUSIONS

SUBJECT PROPERTY 1 - 90± ACRE SITE LAND VALUE CONCLUSION – PER SQUARE FOOT $2.00/SF FINAL MARKET VALUE CONCLUSION $7,850,000 (Fee Simple Interest, as of January 6, 2014) MARKET LAND RENT CONCLUSION $.16 Per S.F. Per YEAR (Subject Property 1 – 90± Acres)


LAND VALUE CONCLUSION – PER SQUARE FOOT $3.00/SF FINAL MARKET VALUE CONCLUSION $465,000 (Fee Simple Interest, as of January 6, 2014) MARKET LAND RENT CONCLUSION $0.24 Per S.F. Per YEAR (Subject Property 2 – 3.57± Acres – Net Useable Land Area) Respectfully submitted, ______________________________ Stephen R. Johnson, MAI, SREA Nevada Certified General Appraiser License Number A.0000003-CG Cindy Lund Fogel, MAI Nevada Certified General Appraiser License Number A.0002312-CG


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STANDARD ASSUMPTIONS AND LIMITING CONDITIONS The acceptance of this appraisal assignment and the completion of the appraisal report

submitted herewith are contingent upon the following assumptions and limiting conditions. LIMITS OF LIABILITY

This report was prepared by Johnson-Perkins and Associates, Inc. All opinions, recommendations, and conclusions expressed during the course of this assignment are rendered by the staff of Johnson-Perkins and Associates, as employees, not as individuals. The liability of Johnson-Perkins & Associates, Inc. and its employees and associates is limited to the client only and to the fee actually received by the appraisal firm. There is no accountability, obligation, or liability to any third party. If the appraisal report is disseminated to anyone other than the client, the client shall make such party or parties aware of all limiting conditions and assumptions affecting the appraisal assignment. Neither the appraisers nor the appraisal firm is in any way to be responsible for any costs incurred to discover or correct any physical, financial and/or legal deficiencies of any type present in the subject property. In the case of limited partnerships or syndication offerings or stock offerings in real estate, the client agrees that in the event of a lawsuit brought by a lender, a partner or part owner in any form of ownership, a tenant or any other party, the client will hold the appraiser(s) and the appraisal firm completely harmless in such action with respect to any and all awards or settlements of any type in such lawsuits.

COPIES, PUBLICATION, DISTRIBUTION AND USE OF REPORT Possession of this report or any copy thereof does not carry with it the right of publication,

nor may it be used for any purpose or any function other than its intended use, as stated in the body of the report. The appraisal fee represents compensation only for the analytical services provided by the appraiser(s). The appraisal report remains the property of the appraisal firm, though it may be used by the client in accord with these assumptions and limiting conditions.

This appraisal is to be used only in its entirety, and no part is to be used without the whole

report. All conclusions and opinions concerning the analysis as set forth in the report were prepared by the appraiser(s) whose signature(s) appears on the appraisal report, unless it is indicated that one or more of the appraisers was acting as "Review Appraiser." No change of any item in the report shall be made by anyone other than the appraiser(s). The appraiser(s) and the appraisal firm shall bear no responsibility for any such unauthorized changes.

CONFIDENTIALITY Except as provided for subsequently, neither the appraiser(s) nor the appraisal firm may

divulge the analyses, opinions or conclusions developed in the appraisal report, nor may they give a copy of the report to anyone other than the client or his designee as specified in writing. However, this condition does not apply to any requests made by the Appraisal Institute for purposes of confidential ethics enforcement. Also, this condition does not apply to any order or request issued by a court of law or any other body with the power of subpoena.


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INFORMATION SUPPLIED BY OTHERS Information (including projections of income and expenses) provided by informed local

sources, such as government agencies, financial institutions, Realtors, buyers, sellers, property owners, bookkeepers, accountants, attorneys, and others is assumed to be true, correct and reliable. No responsibility for the accuracy of such information is assumed by the appraiser(s). Neither the appraiser(s) nor the appraisal firm is liable for any information or the work product provided by subcontractors. The client and others utilizing the appraisal report are advised that some of the individuals associated with Johnson-Perkins & Associates, Inc. are independent contractors and may sign the appraisal report in that capacity. The comparable data relied upon in this report has been confirmed with one or more parties familiar with the transaction or from affidavit or other sources thought reasonable. To the best of our judgment and knowledge, all such information is considered appropriate for inclusion. In some instances, an impractical and uneconomic expenditure of time would be required in attempting to furnish absolutely unimpeachable verification. The value conclusions set forth in the appraisal report are subject to the accuracy of said data. It is suggested that the client consider independent verification as a prerequisite to any transaction involving a sale, a lease or any other commitment of funds with respect to the subject property.

TESTIMONY, CONSULTATION, COMPLETION OF CONTRACT FOR APPRAISAL SERVICE The contract for each appraisal, consultation or analytical service is fulfilled and the total

fee is payable upon completion of the report. The appraisers(s) or those assisting in the preparation of the report will not be asked or required to give testimony in court or in any other hearing as a result of having prepared the appraisal, either in full or in part, except under separate and special arrangements at an additional fee. If testimony or a deposition is required, the client shall be responsible for any additional time, fees and charges, regardless of the issuing party. Neither the appraiser(s) nor those assisting in the preparation of the report is required to engage in post- appraisal consultation with the client or other third parties, except under a separate and special arrangement and at an additional fee.

EXHIBITS AND PHYSICAL DESCRIPTIONS It is assumed that the improvements and the utilization of the land are within the boundaries of the

property lines of the property described in the report and that there is no encroachment or trespass unless noted otherwise within the report. No survey of the property has been made by the appraiser(s) and no responsibility is assumed in connection with such matters. Any maps, plats, or drawings reproduced and included in the report are there to assist the reader in visualizing the property and are not necessarily drawn to scale. They should not be considered as surveys or relied upon for any other purpose, nor should they be removed from, reproduced or used apart from the report.

TITLE, LEGAL DESCRIPTIONS, AND OTHER LEGAL MATTERS No responsibility is assumed by the appraiser(s) or the appraisal firm for matters legal in

character or nature. No opinion is rendered as to the status of title to any property. The title is presumed to be good and merchantable. The property is appraised as if free and clear, unless otherwise stated in the appraisal report. The legal description, as furnished by the client, his designee or as derived by the appraiser(s), is assumed to be correct as reported. The appraisal is not to be construed as giving advice concerning liens, title status, or legal marketability of the subject property.


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ENGINEERING, STRUCTURAL, MECHANICAL, ARCHITECTURAL CONDITIONS This appraisal should not be construed as a report on the physical items that are a part of

any property described in the appraisal report. Although the appraisal may contain information about these physical items (including their adequacy and/or condition), it should be clearly understood that this information is only to be used as a general guide for property valuation and not as a complete or detailed report on these physical items. The appraiser(s) is not a construction, engineering, or architectural expert, and any opinion given on these matters in this report should be considered tentative in nature and is subject to modification upon receipt of additional information from appropriate experts. The client is advised to seek appropriate expert opinion before committing any funds to the property described in the appraisal report.

Any statement in the appraisal regarding the observed condition of the foundation, roof,

exterior walls, interior walls, floors, heating system, plumbing, insulation, electrical service, all mechanicals, and all matters relating to construction is based on a casual inspection only. Unless otherwise noted in the appraisal report, no detailed inspection was made. For instance, the appraiser is not an expert on heating systems, and no attempt was made to inspect the interior of the furnace. The structures were not investigated for building code violations, and it is assumed that all buildings meet the applicable building code requirements unless stated otherwise in the report.

Such items as conditions behind walls, above ceilings, behind locked doors, under the floor, or

under the ground are not exposed to casual view and, therefore, were not inspected, unless specifically so stated in the appraisal. The existence of insulation, if any is mentioned, was discovered through conversations with others and/or circumstantial evidence. Since it is not exposed to view, the accuracy of any statements regarding insulation cannot be guaranteed.

Because no detailed inspection was made, and because such knowledge goes beyond the scope of

this appraisal, any comments on observed conditions given in this appraisal report should not be taken as a guarantee that a problem does not exist. Specifically, no guarantee is given as to the adequacy or condition of the foundation, roof, exterior walls, interior walls, floors, heating systems, air conditioning systems, plumbing, electrical service, insulation, or any other detailed construction matters. If any interested party is concerned about the existence, condition, or adequacy of any particular item, we would strongly suggest that a mechanical and/or structural inspection be made by a qualified and licensed contractor, a civil or structural engineer, an architect or other experts. This appraisal report is based on the assumption that there are no hidden, unapparent or apparent conditions on the property or improvements which would materially alter the value as reported. No responsibility is assumed for any such conditions or for any expertise or engineering to discover them. All mechanical components are assumed to be in operable condition and standard for the properties of the subject type. Conditions of heating, cooling, ventilating, electrical and plumbing equipment are considered to be commensurate with the condition of the balance of the improvements unless otherwise stated. No judgment is made in the appraisal as to the adequacy of insulation, the type of insulation, or the energy efficiency of the improvements or equipment which is assumed to be standard for the subject's age, type and condition.

TOXIC MATERIALS AND HAZARDS Unless otherwise stated in the appraisal report, no attempt has been made to identify or

report the presence of any potentially toxic materials and/or condition such as asbestos, urea formaldehyde foam insulation, PCBs, any form of toxic waste, polychlorinated biphenyl, pesticides, lead-based paints or soils or ground water contamination on any land or improvements described in the appraisal report. Before committing funds to any property, it is strongly advised that appropriate experts be employed to inspect both land and improvements for the existence of such potentially toxic materials and/or conditions. If any potentially toxic materials and/or conditions are present on the property, the value of the property may be


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adversely affected and a re-appraisal at an additional cost may be necessary to estimate the effects of such circumstances.

SOILS, SUB-SOILS, AND POTENTIAL HAZARDS It is assumed that there are no hidden or unapparent conditions of the soils or sub-soil

which would render the subject property more or less valuable than reported in the appraisal. No engineering or percolation tests were made and no liability is assumed for soil conditions. Unless otherwise noted, the land and the soil in the area being appraised appeared to be firm, but no investigation has been made to determine whether or not any detrimental sub-soil conditions exist. Neither the appraiser(s) nor the appraisal firm is liable for any problems arising from soil conditions. These appraisers strongly advise that, before any funds are committed to a property, the advice of appropriate experts be sought.

If the appraiser(s) has not been supplied with a termite inspection report, survey or

occupancy permit, no responsibility is assumed and no representation is made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained.

Neither the appraiser(s) nor the appraisal firm assumes responsibility for any costs or for

any consequences arising from the need or 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.

ARCHEOLOGICAL SIGNIFICANCE

No investigation has been made by the appraiser and no information has been provided to the appraiser regarding potential archeological significance of the subject property or any portion thereof. This report assumes no portion of the subject property has archeological significance.

LEGALITY OF USE This appraisal report assumes that there is full compliance with all applicable federal, state and

local environmental regulations and laws, unless non-compliance is stated, defined and considered in the appraisal report. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a non-conformity has been stated, defined and considered in the appraisal report. It is assumed that all required licenses, consents, or other legislative or administrative authority from any local, state or national government, private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based.

COMPONENT VALUES Any distribution of the total value between the land and improvements, between partial ownership

interests or any other partition of total value applies only under the stated use. Moreover, separate allocations between components are not valid if this report is used in conjunction with any other analysis.


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COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT

The Americans with Disabilities Act ("ADA") became effective January 26, 1992. It is assumed that the property is in direct compliance with the various detailed requirements of the ADA.

AUXILIARY AND RELATED STUDIES No environmental or impact studies, special market studies or analyses, special highest

and best use studies or feasibility studies have been requested or made by the appraiser(s) unless otherwise specified in an agreement for services and so stated in the appraisal report.

DOLLAR VALUES AND PURCHASING POWER The estimated market value set forth in the appraisal report and any cost figures utilized

are applicable only as of the date of valuation of the appraisal report. All dollar amounts are based on the purchasing power and price of the dollar as of the date of value estimates.

ROUNDING

Some figures presented in this report were generated using computer models that make calculations based on numbers carried out to three or more decimal places. In the interest of simplicity, most numbers have been rounded. Thus, these figures may be subject to small rounding errors.

QUANTITATIVE ANALYSIS

Although this analysis employs various mathematical calculations to provide value indications, the final estimate is subjective and may be influenced by our experience and other factors not specifically set forth in this report.

VALUE CHANGE, DYNAMIC MARKET, ALTERATION OF ESTIMATE BY APPRAISER All values shown in the appraisal report are projections based on our analysis as of the date of

valuation of the appraisal. These values may not be valid in other time periods or as conditions change. Projected mathematical models set forth in the appraisal are based on estimates and assumptions which are inherently subject to uncertainty and variations related to exposure, time, promotional effort, terms, motivation, and other conditions. The appraiser(s) does not represent these models as indicative of results that will actually be achieved. The value estimates consider the productivity and relative attractiveness of a property only as of the date of valuation set forth in the report.

In cases of appraisals involving the capitalization of income benefits, the estimate of market value,

investment value or value in use is a reflection of such benefits and of the appraiser's interpretation of income, yields and other factors derived from general and specific client and market information. Such estimates are as of the date of valuation of the report, and are subject to change as market conditions change.

This appraisal is an estimate of value based on analysis of information known to us at the time the

appraisal was made. The appraiser(s) does not assume any responsibility for incorrect analysis because of incorrect or incomplete information. If new information of significance comes to light, the value given in this report is subject to change without notice. The appraisal report itself and the value


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estimates set forth therein are subject to change if either the physical or legal entity or the terms of financing are different from what is set forth in the report.

ECONOMIC AND SOCIAL TRENDS

The appraiser assumes no responsibility for economic, physical or demographic factors which may affect or alter the opinions in this report if said economic, physical or demographic factors were not present as of the date of value of this appraisal. The appraiser is not obligated to predict future political, economic or social trends.

EXCLUSIONS Furnishings, equipment, other personal property and value associated with a specific

business operation are excluded from the value estimate set forth in the report unless otherwise indicated. Only the real estate is included in the value estimates set forth in the report unless otherwise stated.

SUBSURFACE RIGHTS

No opinion is expressed as to the value of subsurface oil, gas or mineral rights or whether the property is subject to surface entry for the exploration or removal of such materials, except as is expressly stated.

PROPOSED IMPROVEMENTS, CONDITIONED VALUE It is assumed in the appraisal report that all proposed improvements and/or repairs, either

on-site or off-site, are completed in an excellent workmanlike manner in accord with plans, specifications or other information supplied to these appraisers and set forth in the appraisal report, unless otherwise explicitly stated in the appraisal. In the case of proposed construction, the appraisal is subject to change upon inspection of the property after construction is completed. The estimate of market value is as of the date specified in the report. Unless otherwise stated, the assumption is made that all improvements and/or repairs have been completed according to the plans and that the property is operating at levels projected in the report.

MANAGEMENT OF PROPERTY It is assumed that the property which is the subject of the appraisal report will be under

typically prudent and competent management which is neither inefficient nor superefficient. FEE The fee for any appraisal report, consultation, feasibility or other study is for services rendered and,

unless otherwise stated in the service agreement, is not solely based upon the time spent on any assignment.


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LEGAL EXPENSES

Any legal expenses incurred in defending or representing ourselves concerning this assignment will be the responsibility of the client.

CHANGES AND MODIFICATIONS The appraiser(s) reserves the right, at the cost of the client, to alter statements, analyses,

conclusions, or any value estimates in the appraisal if any new facts pertinent to the appraisal process are discovered which were unknown on the date of valuation of this report.

DISSEMINATION OF MATERIAL

Neither all nor any part of the contents of this report shall be disseminated to the general public through advertising or sales media, public relations media, new media or other public means of communication without the prior written consent and approval of the appraiser(s).

The acceptance and/or use of the Appraisal Report by the client or any third party

constitutes acceptance of the Assumptions and Limiting Conditions set forth in the preceding

paragraphs. The appraiser’s liability extends only to the specified client, not to subsequent

parties or users. The appraiser’s liability is limited to the amount of the fee received for the

services rendered.


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QUALIFICATIONS OF APPRAISER STEPHEN R. JOHNSON

Professional Designations MAI - Member Appraisal Institute 1976 SREA - Senior Real Estate Analyst; Society of Real Estate Appraisers 1984 State Licensing and Certification Certified General Appraiser-State of Nevada 1991 License #A.0000003-CG (Certified through 04/30/2015) Certified General Appraiser-State of California 1992 License #AG007038 (Certified through 06/18/2015) Association Memberships and Affiliations Member Reno Board of Realtors Member Nevada Association of Realtors International Right-of-Way Association Member Nevada State Board of Equalization - 1984-1991 (Appointed by Governor Richard Bryan, January 1984 & 1988) (Appointed by Governor Kenny C. Guinn, March 2000 & 2004) 2000-2008 Member Nevada Commission of Appraisers of Real Estate - 1989-1994 (Appointed by Governor Bob Miller, August 7, 1989) Commissioner, Nevada Commission of Appraisers of Real Estate 2009-Present (Appointed by Governor Jim Gibbons, 2009) (Appointed by Governor Sandoval, 2012) President, Nevada Commission of Appraisers of Real Estate 2012-2013 Offices Held Chairman, National Ethics Administration Division 1995 Vice Chairman, National Ethics Commission 1993/94 Regional Member, Ethics Administration Appraisal Institute, Region 1 1989-1992 President, Sierra-Nevada Chapter #60, AIREA - 1989 Vice President, Sierra-Nevada Chapter #60, AIREA - 1988 Secretary, Sierra-Nevada Chapter #60, AIREA - 1987 Vice Governor District 3 (Northern California & Nevada) Society of Real Estate Appraisers (SREA) - 1980-1981 Past President & Membership Chairman - Reno/Carson/Tahoe Chapter #189 Member 1976 Young Men's Council, SREA, Atlanta, Georgia


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Offices Held (continued) Discussion Leader 1977 Young Men's Council, SREA, Las Vegas, Nevada Elected 1 of 2 National Representatives to the Inter- National Board of Governors of the SREA, representing the Young Men's Council - 1977 International Professional Practice Committee, SREA - 1978-1981 International Conference Committee, SREA - 1978 & 1979 National Candidates Guidance Committee of the American Institute of Real Estate Appraisers (AIREA) - 1978-1981 Chairman National Division of Member and Chapter Services, AIREA - 1981 Board of Directors Northern California Chapter #11, AIREA -1 1980 Admissions Committee, Sierra-Nevada Chapter #60, AIREA Board of Directors, Sierra-Nevada Chapter #60, AIREA 1984-1986 Board of Directors, Reno-Carson-Tahoe Chapter Appraisal Experience Independent Fee Appraiser 1976 to present President, Stephen R. Johnson & Associates 1976-1992 President, Johnson - Wright & Associates President, Johnson - Perkins & Associates 1994 to present (Staff of 11 Appraisers) Alves Appraisal Associates 1972-1976 Alves-Kent Appraisal Associates 1970-1972 Qualified as an Expert Witness Nevada District Courts: Washoe County, Carson City, Douglas County, and Elko County U.S. Bankruptcy Courts: Reno, Las Vegas, Sacramento, and Los Angeles U.S. District Court, San Francisco, California United States Tax Court Arizona Superior Court, Maricopa County, Phoenix Douglas County Board of Equalization Washoe County Board of Equalization Nevada State Board of Equalization King County Superior Court, Seattle, Washington


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Formal Education Reno High School Graduate - 1966 Bachelor of Science Degree in Business Administration Majoring in Real Estate, from the University of Nevada, Reno - 1972 Appraisal Education University of Nevada: B.A. 430 Real Estate Evaluation 1970 B.A. 432 Real Estate Appraisal Problems 1971 American Institute of Real Estate Appraisers: Course 1A Basic Appraisal Principles, Methods & Techniques, San Francisco, CA 1972 Course 1B Capitalization Theory & Techniques, San Francisco, California 1973 Course 2 Urban Properties, San Francisco, California Course 6 Investment Analysis, Memphis, Tennessee 1976 Society of Real Estate Appraisers: Course 301 Special Applications of Appraisal Analysis, Pomona, California 1974 Numerous Continuing Education Seminars and Courses Appraisal Instructor Nevada Association of Realtors Department of Commerce, Real Estate Division, State of Nevada Appraisal "A" Residential Appraising Appraisal "B" Apartment and Commercial Property Appraising Western Nevada Community College R.E. 206 Real Estate Appraising Northern Nevada Real Estate School Real Estate Appraisal


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REPRESENTATIVE APPRAISAL CLIENTS AND PROPERTIES BARTON MEMORIAL HOSPITAL WASHOE MEDICAL CENTER CITY OF RENO PLAZA RESORT CLUB CITY OF SPARKS ROYAL BANK OF SCOTLAND COLONIAL BANK CARSON-TAHOE HOSPITAL R.J.B. DEVELOPMENT COMPANYCARSON CITY JOHNNY RIBEIRO BUILDER DOUGLAS COUNTY KEEVER CONSTRUCTION COMPANY LINCOLN COUNTY SIERRA PACIFIC POWER COMPANY LYON COUNTY SOUTH LAKE TAHOE PUBLIC UTILITY DIST. WASHOE COUNTY TAHOE DOUGLAS SEWER DISTRICT MINERAL COUNTY GLENBROOK WATER COMPANY EMERALD BAY POST OFFICE TAHOE PARK WATER COMPANY NEVADA STATE PARK SYSTEM NORTH FOOTHILL APARTMENTS NEVADA STATE DEPT. OF TRANSPORTATION MEADOWOOD APARTMENTS NEVADA STATE DIVISION OF LANDS WOODSIDE VILLAGE APARTMENTS NEVADA ATTORNEY GENERAL'S OFFICE SIERRA WOODS APARTMENTS U.S. DEPARTMENT OF NAVY AMESBURY PLACE APARTMENTS U.S. FOREST SERVICE SUNDANCE APARTMENTS FNMA - REGIONAL OFFICE KEYSTONE SQUARE SHOPPING CTR. INTERNAL REVENUE SERVICE POZZI MOTORS FEDERAL TRADE COMMISSION CARSON CITY DATSUN-AMC-JEEP WASHOE COUNTY REGIONAL TRANS. LEMMON VALLEY LAND COMPANY RENO TAHOE AIRPORT AUTHORITY CONSOLIDATED FREIGHTWAYS TAHOE REGIONAL PLANNING AGENCY RINGSBY UNITED CALIFORNIA ATTY GENERAL'S OFFICE SYSTEMS 99 CALIFORNIA TAHOE CONSERVANCY EASTMAN KODAK CITY OF SOUTH LAKE TAHOE HALLMARK CARDS PLACER COUNTY REDEVELOPMENT AGENCY OSCAR MEYER AND COMPANY NEW HAMPSHIRE DEPARTMENT OF JUSTICE GENERAL ELECTRIC MISSOURI HWY AND TRANS. DEPT COMMISSION CHEMETRO IDAHO TRANSPORTATION DEPARTMENT CITY SERVICES MINERAL CO. COLONIAL BANK SUPERIOR OIL COMPANY PLUMAS BANK TRAVELERS INSURANCE SECURITY BANK OF NEVADA FARMERS INSURANCE COMPANY LIBERTY BANK FIRST AMERICAN TITLE CO. OF NV. FIRST INDEPENDENT BANK OF NV FIDELITY TITLE INSURANCE CO NORTHERN NEVADA BUSINESS BANK MERRILL LYNCH RELOCATION NEVADA STATE BANK YOUNG ELECTRIC SIGN COMPANY UNION BANK THE TRUST FOR PUBLIC LANDS VALLEY BANK OF NEVADA THE TRUCKEE DONNER LAND TRUST BANK OF AMERICA THE CONSERVATION FUND THE BANK OF CALIFORNIA THE NATURE CONSERVANCY CROCKER NATIONAL BANK SUGAR BOWL SKI RESORT WELLS FARGO BANK THE FEATHER RIVER LAND TRUST B OF A TRUST DEPARTMENT SKI INCLINE RESORT FIRST FEDERAL SAVINGS & LOAN KIRKWOOD ASSOCIATES FIRST WESTERN SAVINGS & LOAN NORTHSTAR AMERICAN SAVINGS AND LOAN SQUAW VALLEY U.S.A. NEVADA SAVINGS & LOAN LEWIS HOMES OF NEVADA DILORETO CONST. & DEVELOPMENT SYNCON HOMES DERMODY PROPERTIES MGM GRAND HOTEL CASINO & THEME PARK TRAMMELL CROW CO. EL DORADO HOTEL - CASINO MCKENZIE PROPERTIES COMSTOCK HOTEL – CASINO HOMEWOOD HIGH & DRY MARINA LAKESIDE INN HOTEL - CASINO TAHOE KEYS MARINA RAMADA EXPRESS HOTEL - CASINO TAHOE CITY MARINA


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QUALIFICATIONS OF APPRAISER CINDY LUND FOGEL

Professional Designations MAI – Member of the Appraisal Institute 2000 State Licensing and Certification Nevada Certified General Appraiser License #A.0002312-CG (Certified through 5/31/14) 1996 Offices Held Board of Directors, Reno/Carson/Tahoe Chapter Appraisal Institute 2011/2012 President, Reno/Carson/Tahoe Chapter Appraisal Institute 2009/2010 Vice President, Reno/Carson/Tahoe Chapter Appraisal Institute 2008 Education Chair, Reno/Carson/Tahoe Chapter Appraisal Institute 2002 to Present President, Reno/Carson/Tahoe Chapter Appraisal Institute 2001 Vice President, Reno/Carson/Tahoe Chapter Appraisal Institute 2000 Treasurer, Reno/Carson/Tahoe Chapter Appraisal Institute 1999 Secretary, Reno/Carson/Tahoe Chapter Appraisal Institute 1998 Occupational History Johnson - Perkins & Associates 1994 - Present Real Estate Appraiser Johnson - Wright & Associates 1992 - 1994 Real Estate Appraiser Stephen R. Johnson & Associates 1990 - 1992 Real Estate Appraiser Admitted as Expert Witness Washoe County Board of Equalization Nevada State Board of Equalization Appraisal Education & Technical Training Real Estate 103 and 202 1986 Real Estate Financing 1986 American Institute of Real Estate Appraisers 1991 Course 1A-1 "Real Estate Appraisal Principles" Course 1A-2 "Basic Valuation Procedures" Course 1BA "Cap Theory & Tech, Part A" 1992 Course 1BB "Cap Theory & Tech, Part B" Nevada Law (NRS 645C) 1993 Standards of Professional Practice Parts A & B 1993


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Appraisal Education & Technical Training (Continued) Advanced Applications 1993 Report Writing and Valuation Analysis 1995 Case Studies in Law and Ethics 1998 Standards of Professional Practice, Part C 1998 Advanced Income Capitalization 1999 Standards of Professional Practice, Part C 2000 & 2002 7-Hour National USPAP Update Course 2004 7-Hour National USPAP Update Course 2006 Cost Approach to Commercial Appraising 2006 Uniform Appraisal Standards/Federal Land Acquisitions 2007 7-Hour National USPAP Update Course 2007 7-Hour National USPAP Update Course 2008 Business Practices and Ethics 2008 Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book) 2009 7-Hour National USPAP Update Course 2010 Business Practices and Ethics 2010 Corridor Valuation & Yellow Book Issues and Divided Partial Interests 2010 7-Hour National USPAP Update Course 2012 State of Nevada Economic Overview, Brian Bonnenfant 2013 Appraisal Seminars Effective Rent and Seller Concessions in Market Value Appraisals 2013 Appraisal Curriculum Overview 2011 Diminution of Value and Severance Damages 2011 Qualitative Analysis: How and Why it is Important 2011 The Lending World in Crisis-What Clients Need 2011 Forecasting Revenue/Appraising Distressed Commercial Real Estate 2009 Valuation of Easements and Other Partial Interests 2009 Construction Defects and Cost Trends & Feasibility Analysis 2008 Valuation of Detrimental Conditions 2008 Spotlight on Common Errors & Confidentiality USPAP Issues 2008 The Essentials, Current Issues & Misconceptions in Appraising 2007 Attacking & Defending an Appraisal in Litigation 2007 Market Analysis and Site to do Business 2006 Analyzing Distressed Properties 2005 Appraising From Blueprints and Specifications 2005 Appraisal Valuation Modeling 2004 Subdivision Valuation 2004 The Road Less Traveled: Special Purpose Properties 2004 Scope of Work Seminar 2003 Appraisal Consulting: A Solutions Approach for Professionals 2002


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Formal Education University of Nevada-Reno: Bachelor of Arts, College of Arts and Science 1989 Truckee Meadows Community College, Associate in Arts 1984 Sparks High School, Sparks, Nevada 1975

two properties - reno–tahoe international airport...lake tahoe office: p.o. box 11430 zephyr cove,...

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