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    McCONNELL APPRAISALRay McConnell 2328 Danielle CourtGeorgia Certified Real Marietta, Georgia 30062Real Estate Appraiser #CG 18 [email protected] bellsouth.netCell 770-597-4505 Fax 770-578-9619

    A SELF CONTAINED APPRAISAL REPORTOF

    AN INDUSTRIAL BUILDINGLOCATED AT2751 WINSTON INDUSTRIAL DRIVE

    WINSTON, GEORGIA 30187

    PREPARED FORFIRST CHOICE COMMUNITY BANK/VMG

    68 FIRST NATION DRIVEDALLAS, GA 30157

    PREPARED BYMcCONNELL APPRAISAL2328 DANIELLE COURT

    MARIETTA, GEORGIA, 30062

    McCONNELL APPRAISAL1

    mailto:[email protected]:[email protected]
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    McCONNELL APPRAISALRay McConnell 2328 Danielle CourtGeorgia Certified Real Marietta, Georgia 30062Real Estate Appraiser #CG 0000 18 [email protected] 770-597-4505 Fax 770-578-9619

    September 10, 2010

    First Choice Community Bank/VMG68 First National DriveDallas, GA 30157

    Re: Self Contained Appraisal Report

    2751 Winston Industrial DriveWinston, Georgia 30187

    Dear Sirs:

    As per our engagement agreement, the appraiser has inspected the above-referenced property andprepared a Self Contained Appraisal Report. The purpose of the appraisal was to form anopinion of value of the Fee Simple interest in the subject property, as of September 4, 2010. Theappraiser inspected the interior and the exterior of the subject property on September 4, 2010.

    This report has been prepared in compliance with the requirements of Title XI (and amendments)

    of the Financial Institutions Reform, Recovery and Enforcement Act of 1989; the InteragencyAppraisal and Evaluation Guidelines; the Uniform Standards of Professional Appraisal Practice(USPAP) as promulgated by the Appraisal Standards Board of the Appraisal Foundation; theethical requirements of the Appraisal Institute; the State of Georgia Real Estate AppraiserClassification and Regulation Act (O.C.G.A. 43-39A-1 - 43-39A-26); and the scope of workrequested by the client.

    McCONNELL APPRAISAL2

    mailto:[email protected]:[email protected]
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    First Choice Community Bank/VMGSeptember 10, 2010Page Two

    I certify, as the appraiser, that I have completed all aspects of this valuation, includingreconciling my opinion of value, free of influence from the client, clients representatives,

    borrower, or any other party to the transaction.

    This Self Contained Appraisal Report is intended to comply with the development and reportingrequirements set forth under Standards Rule 1 and 2-2(a) of the Uniform Standards ofProfessional Appraisal Practice. As such, it contains a complete presentation and discussion ofthe data, reasoning, and analyses used in the appraisal process to develop the opinion of value.

    It is my opinion that the As Is Market Value of the Fee Simple interest in the subject property,as of September 4, 2010, is as follows:

    FIFTY FIVE THOUSAND DOLLARS

    $55,000

    It is my opinion that the Disposition Market Value, or the value necessary to achieve a salewithin six months, of the Fee Simple interest in the subject property, as of September 4, 2010, isas follows:

    THIRTY THREE THOUSAND DOLLARS$33,000

    This letter must remain attached to the appraisal report in order for the value opinions setforth to be considered valid.

    It has been a pleasure to serve you in this matter.

    Sincerely,

    Ray McConnellMcConnell Appraisal

    By:Ray McConnellGeorgia Certified General AppraiserNo. CG0000 18

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    Self Contained Appraisal Report

    of

    An Industrial BuildingLocated At

    2751 Winston Industrial DriveWinston, Georgia 30187

    File Number 1048926

    As Of

    September 4, 2010

    Prepared For:

    First Choice Community Bank/VMG68 First National Drive

    Dallas, GA 30157

    Prepared By:

    McConnell Appraisal2328 Danielle Court

    Marietta, Georgia 30062

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    ARIAL PHOTO

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    ARIAL PHOTO

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    TABLE OF CONTENTS

    EXECUTIVE SUMMARY.........................................................................................................................................8

    APPRAISAL ASSIGNMENT, PURPOSE AND DATE OF APPRAISAL ............................................................9

    DEFINITIONS.............................................................................................................................................................9

    EXPOSURE TIME....................................................................................................................................................11MARKETING TIME................................................................................................................................................11

    INTENDED USER OF THE APPRAISAL.............................................................................................................12

    INTENDED USE OF THE APPRAISAL................................................................................................................12

    PROPERTY RIGHTS APPRAISED.......................................................................................................................12

    REAL ESTATE TAXES...........................................................................................................................................17

    STATEMENT OF LIMITING CONDITIONS AND ASSUMPTIONS...............................................................19

    EXTRAORDINARY ASSUMPTIONS OR HYPOTHETICAL CONDITIONS.................................................22

    METRO ATLANTA INDUSTRIAL MARKET.....................................................................................................23

    DOUGLAS COUNTY OVERVIEW........................................................................................................................28

    NEIGHBORHOOD OVERVIEW............................................................................................................................33

    MARKETABILITY STUDY....................................................................................................................................38

    DESCRIPTION OF THE SITE:................................................................................................................................39

    DESCRIPTION OF THE IMPROVEMENTS:......................................................................................................41

    PHOTOGRAPHS OF THE SUBJECT PROPERTY.............................................................................................42

    BUILDING SKETCH ...............................................................................................................................................52

    MAPS SECTION.......................................................................................................................................................53

    ZONING.....................................................................................................................................................................57

    HIGHEST AND BEST USE .....................................................................................................................................58

    THE VALUATION PROCESS................................................................................................................................61

    SALES COMPARISON APPROACH ....................................................................................................................63

    INCOME APPROACH.............................................................................................................................................78

    RECONCILIATION.................................................................................................................................................89

    DISPOSITION VALUE ESTIMATE......................................................................................................................90

    CERTIFICATION: ...................................................................................................................................................91

    APPRAISER QUALIFICATIONS ..........................................................................................................................92

    ADDENDUM SECTION ..........................................................................................................................................96

    EXHIBIT AENGAGEMENT LETTER: ......................................................................................................................98EXHIBIT CFLOOD MAP:.....................................................................................................................................108EXHIBIT DTAX CARD : ......................................................................................................................................109EXHIBIT ETAX PLATT .......................................................................................................................................112EXHIBIT FLOCATION MAP FOR IMPROVED SALES .............................................................................................113EXHIBIT GPROFILES FOR VACANT RENT COMPARABLES ..................................................................................114EXHIBIT HLOCATION MAP FOR RENT COMPARABLES......................................................................................121

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    EXECUTIVE SUMMARY

    Property Identification:

    Address: 2751 Winston Industrial Drive, Winston,

    Georgia 30187Parcel Identification: 5025-01-5-0-12Legal Description: 2nd Land District 5th Section Land Lot 1

    and 167Owner: First Choice Community BankCensus Tract: 804.01

    Site Information:Site Size: 0.74 AcresSite Zoning: Light Industrial, Douglas County

    Improvement Description:Building Type: Basic Metal Building with Separate Office

    StructureOffice Size: 1,920 SF. The office building is considered by

    the appraiser to be in such poor condition that itcannot be leased and would contribute no valueif sold.

    Office Condition: Very poor. Can not be Occupied.Warehouse Size: 11,460Warehouse Condition: Very Poor

    Gross Building Area: 13,380 SFGross Leasable Area: 11,460 SFYear Built : 1980Additional Improvements: Loading Dock and Parking Lot.

    Appraisal Information:Intended User of the Appraisal: First Choice Community Bank/VMGFile Number 1048926Intended Use of the Appraisal: Collateral EvaluationInterest Appraised: Fee SimpleReport Format: Self Contained

    Effective Date of Valuation: September 4, 2010Report Date: September 10, 2010Value Estimate Direct Sales: $57,000Value Estimate Income Approach: $54,000Market Value Estimate: $55,000Disposition Value Estimate: $33,000

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    APPRAISAL ASSIGNMENT, PURPOSE AND DATE OF APPRAISAL

    The assignment includes the preparation of a self contained appraisal report. Pertinent data is

    assembled and analyzed for the purpose forming an opinion of the value of the Fee Simple Estateinterest in the subject property as of September 4, 2010.

    DEFINITIONS

    Market Value:According to The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Chicago AppraisalInstitute, 2002), Market value can be defined in the following ways:The major focus of most real property appraisal assignments. Both economic and legaldefinitions of market value have been developed and refined. Continual refinement is essential to

    the growth of the appraisal profession.

    The most widely accepted components of market value are incorporated in the followingdefinition:The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in otherprecisely revealed terms, for which the specified property rights should sell after reasonableexposure in a competitive market under all conditions requisite to a fair sale, with the buyer andseller each acting prudently, knowledgeably, and for self-interest, and assuming that neither isunder undue duress.

    Market value is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) as

    follows:A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right ofownership or a bundle of such rights), as of a certain date, under specific conditions set forth inthe definition of the term identified by the appraiser as applicable in an appraisal. (USPAP,2010-2011 ed.)

    USPAP also requires that certain items be included in every appraisal report. Among these items,the following are directly related to the definition of market value:Identification of the specific property rights to be appraised.Statement of the effective date of the value opinion.Specification as to whether cash, terms equivalent to cash, or other precisely described financing

    terms are assumed as the basis of the appraisal.If the appraisal is conditioned upon financing or other terms, specification as to whether thefinancing or terms are at, below or above market interest rates and/or contain unusual conditionsor incentives. The terms of above- or below-market interest rates and/or other special incentivesmust be clearly set forth; their contribution to, or negative influence on, value must be describedand estimated; and the market data supporting the opinion of value must be described andexplained.

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    3. The following definition of market value is used by agencies that regulate federallyinsured financial institutions in the United States:The most probable price which a property should bring in a competitive and open market underall conditions requisite to a fair sale, the buyer and seller each acting prudently andknowledgeably, and assuming the price is not affected by undue stimulus. Implicit in thisdefinition is the consummation of a sale as of a specified date and the passing of title from seller

    to buyer under conditions whereby:Buyer and seller are typically motivated;Both parties are well informed or well advised, and acting in what they consider their bestinterests;A reasonable time is allowed for exposure in the open market;Payment is made in terms of cash in U.S. dollars or in terms of financial arrangementscomparable thereto; andThe price represents the normal consideration for the property sold unaffected by special orcreative financing or sales concessions granted by anyone associated with the sale.

    (12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register 12202,

    April 9, 1992; 59 Federal Register 29499, June 7, 1994)

    Extraordinary Assumption:An assumption directly related to a specific assignment which if found to be faults could alter the

    appraiser's opinion or conclusions. Extraordinary assumptions presume as a fact otherwise

    uncertain information about physical legal or economic characteristics of the subject property or

    about conditions external to the property such as market conditions or trends more about the

    integrity of data used in an analysis. Dictionary of Real Estate Appraisal, 2010, pp 73The appraisal contains no Extraordinary Assumptions.

    Hypothetical Condition:That which is contrary to what exists but is supposed for the purpose of the 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. TheDictionary of Real Estate Appraisal, 2010, pp 97

    This appraisal contains one Hypothetical Condition. The appraisal is conducted under thehypothetical condition that the physical condition of the industrial building is sufficient toallow for occupancy by a tenant or buyer, and that electrical, plumbing and other systemsare in working order.

    Fee Simple Estate:

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

    Dictionary of Real Estate Appraisal, 2010, pp 78

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    EXPOSURE TIME

    Exposure Time:1. The time a property remains on the market.

    2. The estimated length of time the property interest being appraised would have been

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

    effective date of the appraisal; a retrospective estimate based on an analysis of past events

    assuming a competitive and open market. The Dictionary of Real Estate Appraisal, 2010, pp 73

    Exposure time is always presumed to occur prior to the effective date of the appraisal. Theoverall concept of reasonable exposure encompasses not only adequate, sufficient and reasonabletime but also adequate, sufficient and reasonable effort. Exposure time is different for varioustypes of real estate and value ranges and under various market conditions. (Appraisal StandardsBoard of The Appraisal Foundation, Statement on Appraisal Standards No. 6, Reasonable

    Exposure time in Real Property and Personal Property Market Value Opinions (USPAP, 2008-2009).

    An estimate of exposure time for the subject would be approximately 12 months.

    MARKETING TIME

    Marketing Time:An opinion of the amount of time it might take to sale a real or personal property interest at the

    concluded at market value level during the period immediately after the effective date of an

    appraisal. Marketing Time differs from exposure time, which is always presumed to precede the

    effective date of an appraisal. (Advisory opinion 7 of the Appraisal Standards Board of the

    Appraisal Foundation and Statement on appraisal standards No. 6, Reasonable Exposure Time

    in Real Property and Personal Property Market Value Opinions address the determination of

    reasonable exposure and marketing Time.

    Marketing Time differs from Exposure Time, which is always presumed to precede the effective

    date of the appraisal. (Advisory Opinion 7 of the Appraisal Standards Board of The Appraisal

    Foundation and Statement on Appraisal Standards No. 6, Reasonable Exposure Time in Real

    Property and Personal Property Market Value Opinions address the determination of

    reasonable exposure and marketing time (USPAP, 2008-2009).The above definition was taken from The Dictionary of Real Estate Appraisal, 2010.

    A conclusion as to Marketing Time is based upon the foregoing definitions. The appraisers alsosolicited the opinions of real estate brokers knowledgeable of the subject market and propertytype. A days on market study was conducted for the local market. If the subject property isappropriately priced and property marketed, it is estimated an approximate time of 12 months forthe sale of the property.

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    COMPETENCY STATEMENTRay McConnell is experienced in the appraisal of retail, industrial, and commercial properties,raw land tracts, agricultural tracts, subdivisions and special use properties, fulfilling theCompetency Provision of USPAP. The reader is referred to the Qualifications of the Appraiserat the end of this report.

    INTENDED USER OF THE APPRAISAL

    Client:The party or parties who engage an appraiser (by employment or contract) in a specificassignment. Dictionary of Real Estate Appraisal, 2010, pp 34The client in this appraisal assignment is First Choice Community Bank/VMG. Any other useby any other party is strictly prohibited.

    Intended User:1. The client and any other party has identified, by name or type, as users of the appraisal,

    appraisal review, or appraisal consulting reporting by the appraiser on the basis of

    communication with the client at the time of the assignment. (USPAP, 2010-2011 ed,)

    2. A party who the appraiser intends will employ the information contained in this report.

    These definitions were taken from The Dictionary of Real Estate Appraisal, 2010, pp 103

    The client and intended user of this appraisal report is First Choice Community Bank/VMG.Any other use by any other party is strictly prohibited.

    INTENDED USE OF THE APPRAISAL

    Intended Use is defined as:

    The use or uses of an appraisers reported appraisal, appraisal review, or appraisal consulting

    assignment opinions and conclusions, as identified by the appraiser based on communication

    with the client at the time of the assignment.

    This definition was taken from the Statement on Appraisal Standards No. 9 (SMT-9), USPAP,

    The Appraisal Foundation, 2008-2009.

    The intended use of this appraisal is to aid the client, First Choice Community Bank, in collateralevaluation. Any other use by any other party is strictly prohibited.

    PROPERTY RIGHTS APPRAISED

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    The bundle of property rights considered in this appraisal is the Fee Simple Estate.

    Fee Simple Estate:Absolute ownership unencumbered by any other interest or estate subject only to the limitations

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

    The Dictionary of Real Estate Appraisal, 2010, pp 78

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    SCOPE OF WORK

    Scope of Work:Scope of work is defined as The type and extent of research and analysis in an assignment.The Dictionary of Real Estate Appraisal, 2010, pp 176.

    Identification of the Appraisal Problem:The subject of this appraisal is an industrial building in poor condition. The office buildingsection of the improvement is in very poor condition and is not leasable and has no economicvalue. The Douglas County area has an oversupply of relatively new industrial and commercialspace which is in far better condition than the subject property. Most sales and leasing activityin Douglas County involves new and modern buildings. There is very little data on olderproperties. It will be an appraiser judgment as to how much of a downward adjustment isrequired to induce an buyer or tenant to take an older building in poor condition.

    General Procedures:

    The appraisal report contains the intended user and the intended use of the appraisal. Theappraisal states the effective date of the appraisal and the type of report produced. A three yearsales history of the subject property is provided. The real property interest being appraised wasidentified. A definition of market value was provided. An appraiser certification is included inthe report.

    Area and Neighborhood:The basic demographics of Douglas County were analyzed and presented. The immediateneighborhood is defined a three mile radius of the subject property. Basic demographic andtraffic information was provided. The zoning code and property tax regulations were analyzedand presented.

    Site and Improvement Description:The subject improvement was inspected both interior and exterior. The subject wasphotographed and measured. The appraiser walked the subject site and made photographs of thesite and the subject street.

    Highest and Best Use:A highest and best use analysis is included in the report. This analysis presents conclusion aboutthe site as vacant and as improved.

    Sales Comparison Approach:

    The Sales Comparison Approach was developed in this appraisal. The appraiser researched thesubject neighborhood for sales of similar commercial buildings. These sales were confirmed bypublic records and/or discussion with participants. Adjustments were made for dissimilarfeatures and a value conclusion was reached.

    Income Approach:An Income Approach was developed in this appraisal. The appraiser researched the local marketfor comparable rentals. A conclusion was made as to an appropriate market rental for the subject

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    property. An expense structure was developed. The Net Operating Income was capitalized toprovide market value conclusion.

    Cost Approach:The Cost Approach was not utilized in this appraisal. The subject is in poor condition and an

    estimate of accrued depreciation is not possible.

    PROPERTY HISTORY

    There is a Deed Under Power conveying title to the property from George W. Harper andMatthew W. Harper to First Choice Community Bank, dated 9/1/2009. The deed is located inDeed Book 2819 Page 569, Douglas County Records. The deed shows no consideration. Thesale is documented in PT-61 048-2009-004659. A copy of the deed in included in the addendumsection.

    In 9/29/2008 First Choice Community Bank sold the subject property to George W. Harper and

    Matthew E. Harper. This transaction is recorded in Deed Book 2738 Page 40, Douglas CountyRecords. The reported consideration was $195,500.

    In 8/11/2008 First Choice Community Bank foreclosed on the subject property. The Deed underPower is recorded in Deed Book 2728 Page 600.

    The property is currently listed with Wilson Covington, of King industrial Realty. The list priceis $97,500. The property was originally listed at $127,500. Mr. Covington reports no activity onthe property.

    The Douglas County Tax Assessors Office Shows a number of deed transfers concerning the

    subject property. These transfers are summarized as follows:

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    REAL ESTATE TAXES

    The subject property is under the jurisdiction of Douglas County for real property taxation. InGeorgia, ad valorem taxes are calculated by multiplying the appropriate millage rate times 40%

    of the total appraised property value. The county has assigned the following values and realestate tax liability for the subject property for the 2009 tax year. The property tax amount of$3,330.46 is currently unpaid.

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    STATEMENT OF LIMITING CONDITIONS AND ASSUMPTIONS

    This appraisal report has been made with the following general limiting conditions:

    1. The distribution, if any, of the total valuation in this report between land and improvements

    applies only under the stated program of use. The separate allocations for land andbuildings must not be used in conjunction with any other appraisal and are invalid if soused.

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

    3. The appraiser(s) herein, by reason of this appraisal, is not required to give furtherconsultation, testimony, or be in attendance in court with reference to this appraisal report

    unless arrangements have been previously made. Any use of this appraisal by anyone otherthan the addressee without consent of the appraiser(s) is at the risk of the user only.

    4. The Bylaws and Regulations of the Appraisal Institute govern the disclosure of the contentsof this appraisal report.

    Neither all nor any part of the contents of the appraisal and/or the report (especially anyconclusions as to value, the identity of the appraiser(s) or the firm with which they areconnected, or any reference to the Appraisal Institute or to the MAI or SRA designation)shall be disseminated to the public through advertising media, public relations media, salesmedia, or any other public means of communication without the prior written consent and

    approval of the undersigned.

    5. This appraisal report has been prepared according to the instructions and requirements ofthe client. In the event this narrative report is to be submitted to another entity for reviewand/or comment, it will be necessary for the client to submit a written authorization to thisfirm before the report can be released. If it is determined that the appraisal report needs tobe modified in order to comply with requirements of the new entity, the changes will bemade for a fee in addition to the original appraisal fee.

    6. Employment of the appraiser(s) was not conditional upon the appraiser(s) producing aspecified value or a value within a given range. Future employment prospects are not

    dependent upon the appraiser(s) producing a specified value. Employment of theappraiser(s) and payment of the fee are not based on whether a loan application is approvedor disapproved.

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    Furthermore, this appraisal report has been made with the following general assumptions:

    1. No responsibility is assumed for the legal description or for matters including legal or titleconsiderations. Title to the property is assumed to be good and marketable unlessotherwise stated.

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

    3. The property history has been provided by conversations with various individualsreportedly involved with the chain of title, and if available, various documents such ascontracts, deeds, leases and closing statements. We have not performed a title search, nordo we warrant that the history, as presented herein, is completely accurate since we haverelied upon the information of others. Any person or entity contemplating an interest in thesubject should rely solely upon a title search and opinion prepared by a qualified attorney.

    4. Responsible ownership and competent property management are assumed.

    5. The information furnished by others is believed to be reliable; however, no warranty isgiven for its accuracy.

    6. Any legal descriptions, property surveys, site plans, site plats, drawings, and/or sketchescontained herein were either furnished to the appraiser(s) or are based upon data providedto the appraiser(s). These items are included herein to assist the reader in visualizing theproperty. Although, to the best of our knowledge, these items provide an accurate repre-sentation of the property, we have made no survey of the property, and we assume noresponsibility in connection with such matters.

    7. All engineering data is assumed to be correct. The plot plans and illustrative material inthis report are included only to assist the reader in visualizing the property.

    8. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, orstructures that render it more or less valuable. No responsibility is assumed for suchconditions or for arranging for engineering studies that may be required to discover them.

    9. It is assumed that there is full compliance with all applicable federal, state and localenvironmental regulations and laws unless noncompliance is stated, defined and consideredin the appraisal report.

    10. It is assumed that all applicable zoning and use regulations and restrictions have beencomplied with, unless a noncompliance has been stated, defined and considered in theappraisal report.

    11. It is assumed that all required licenses, certificates of occupancy, consents or otherlegislative or administrative authority from any local, state, federal government, privateentity or organization have been or can be obtained or renewed for any use on which thevalue opinion contained in this report is based.

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    12. It is assumed that the use of the land and improvements is within the boundaries orproperty lines of the property described and that there is no encroachment or trespassunless noted in the report.

    13. Unless otherwise stated in this report, the existence of hazardous materials, which may ormay not be present on the property, was not observed by the appraiser(s). The appraiser(s),

    however, is not qualified to detect such substances. The presence of substances such asasbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials mayaffect the value of the property. The value opinion is predicated on the assumption thatthere are no such materials on or in the property that would cause a loss in value. Noresponsibility is assumed for any such conditions or for any expertise or engineeringknowledge required to discover them. The client is urged to retain an expert in this field, ifdesired.

    The appraiser(s) hereby assumes that, to the best of his/her knowledge, the property doesnot contain any asbestos and/or other environmental hazards and that there is no structuraldamage or material deferred maintenance on the subject property. This assumption,

    however, is not guaranteed unless otherwise stated.

    14. The appraiser(s) assumes that the existing improvements meet the fire safety requirementsof all applicable state and local building codes, and it is assumed that a certificate ofoccupancy and acceptance has been issued by the state fire marshal and the localsupervisory building inspector.

    15. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We havenot made a specific compliance survey and analysis of the property to determine whether ornot it is in conformity with the various detailed requirements of the ADA. It is possiblethat a compliance survey of the property, together with a detailed analysis of the

    requirements of the ADA, could reveal that the property is not in compliance with one ormore of the requirements of the Act. If so, this fact could have a negative effect upon thevalue of the property. Since we have no direct evidence relating to this issue, we did notconsider possible non-compliance with the requirements of ADA in estimating the value ofthe property.

    16. Any projections of income and expenses, including the reversion at time of resale, are notpredictions of the future. Rather, they are our opinion of current market thinking of whatfuture trends will be. No warranty or representation is made that these projections willmaterialize. The real estate market is constantly fluctuating and changing. It is not the taskof an appraiser to estimate the conditions of a future real estate market, but rather to reflect

    what the investment community envisions for the future in terms of expectations of growthin rental rates, expenses, and supply and demand.

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    17. Additional original copies of this appraisal report are available at a minimum of $200 percopy.

    18. If it should become necessary to retain an attorney for the purpose of collection on youraccount, you are hereby notified that 25% shall be added to the principal balance for thepurpose of paying attorney's fees and court costs.

    19. This report has been prepared in compliance with the requirements of Title XI (andamendments) of the Financial Institutions Reform, Recovery and Enforcement Act of 1989,the Interagency Appraisal and Evaluation Guidelines; the Uniform Standards ofProfessional Appraisal Practice (USPAP) as promulgated by the Appraisal Standards Boardof the Appraisal Foundation; the ethical requirements of the Appraisal Institute; and theState of Georgia Real Estate Appraiser Classification Act and Rules and Regulations(O.C.G.A. Title 43, Chapter 39A).

    EXTRAORDINARY ASSUMPTIONS OR HYPOTHETICAL CONDITIONS

    1. This appraisal contains one Hypothetical Condition. The appraisal is conductedunder the hypothetical condition that the physical condition of the industrial building issufficient to allow for occupancy by a tenant or buyer, and that electrical, plumbing andother systems are in working order.

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    Metro Atlanta Industrial Market

    Overview:The Metro Atlanta industrial market is composed of 621,976,719 square feet of space. As of thesecond quarter of 2010, the vacancy rate had reached 13.7%. The Atlanta industrial market is

    composed of three basic building types, industrial, warehouse, and flex buildings. Rental ratesended the second quarter at $4.01 per square foot, a decrease from the previous quarter.

    Absorption:Net absorption for the overall Atlanta Industrial market was a positive 865,417 square feet in thesecond quarter of 2010. That compares to a negative (2,138,796) square feet in the first quarter of2010, negative (1,514,404) square feet in the fourth quarter 2009, and a negative (93,874) squarefeet in the third quarter of 2009.

    Vacancy:The industrial vacancy rate in the Atlanta market increased to 13.7 at the end of the second quarter2010. The vacancy rate was 13.6% at the end of the first quarter 2010, 13.2% at the end of thefourth quarter 2009, and 13.0% at the end of the third quarter 2009.

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    New Construction: New construction of industrial space in the Atlanta Metropolitan area hasdeclined to near zero. The following table gives figures for the nine major submarkets in MetroAtlanta. Of the nine submarkets, eight showed no new industrial facilities under construction. TheI-20 West market showed no new construction for the past year.

    Historical Rental Rates:Rental rates for industrial properties in the Atlanta area have declined consistently for the past twoyears.

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    Quoted Rental Rates by Submarket: The average quoted rental rate for industrial space was$4.01 per square foot per year at the end of the second quarter 2010. The figures for the I-20 West/Douglasville sub market was $3.42 per square foot per year.

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    Industrial Employment:Industrial employment in the Atlanta area has been in a decline since 2006. The past year has seenthe first increases in industrial employment sine the end of 2006.

    I-20 West Deliveries, Absorption, Vacancy:For the I-20 submarket, deliveries have fallen to near zero, vacancy has increased, and absorptionhas declined.

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    I-20 West Rental Rates:Rental rates for industrial buildings in the I-20 West/Douglasville area show a pattern of consistent

    decline.

    Conclusion:The industrial market in Metro Atlanta and the Douglasville area has continued to deteriorate.

    Rental rates area on the decline and vacancy rates have increased. New construction has declined tonear zero.

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    Employment:According to the Georgia Department of Labor, the labor force in Douglas County as of 2009 wasreported at 65,143 persons. The number of employed people in Douglas County in 2009 was58,262 persons, resulting in an unemployment rate of 10.4%, or 6,781 persons. The State of Georgiawas reported to have 4,768,923 persons in the labor force with 4,311,728 employed persons with457,195 unemployed persons, resulting in a 9.6% unemployment rate across the state. A

    comparison of the major components of the economic base for 2008 is presented in the followingtable. According to the graph below, the number of jobs appears to have declined since 2007.According to the Georgia Department of Labor, the states unemployment rate has climbed to10.0% as of June 2010 compared to the national average of 9.7% for the same time period.

    According to the most recent estimates from the Georgia Department of labor, as of

    June 2010, the total employed work force of Douglas County was 63,953, of which

    56,873 are employed and 7,080 are unemployed. This yields an unemployment rate

    of 11.1%. This area is suffering from relatively high unemployment which reduces

    the demand for real estate.

    APRIL 2010 EMPLOYMENT FIGURES Area Total Workforce Total Employed Total

    Unemployed

    Unemployment

    Rate

    State of Georgia 4,698,758 4,229,736 469,022 10.0%

    Atlanta MSA 2,652,829 2,379,424 273,405 10.3

    Douglas County 63,953 56,873 7,080 11.1%

    Industry Mix :The table on the following page breaks down the employment of Douglas County and the DouglasCounty area in to several sectors.

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    Top Employers:Listed below are the top employers within Douglas County and the top ten employers in theDouglas County area.

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    Transportation:The chart below shows the job commuting patterns for Douglas County residents.

    EDUCATION:Below is a graph that illustrates the educational background of the Douglas County workforce.83.2% of the Douglas County workforce has achieved a high school diploma or GED. 23.8% of theDouglas County workforce has achieved a four year degree.

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    NEIGHBORHOOD OVERVIEW

    Location:The subject property is located in the northern area of Douglas County approximately 3 miles

    north of I-20 and 4 miles west of the City of Douglasville.

    Access:The subject neighborhood has ready access to the Metro Atlanta Highway system. To reach theinterstate system traffic would travel the following route. From the subject property takeWinston Industrial Parkway south mile to Highway 78. Proceed on Highway 78 west onemile to Post Road. Travel south one mile south to Exit 30 on I-20. Take I-20 fifteen miles eastto I-285.

    Development Characteristics:The subject neighborhood is the area west of Douglasville along Highway 78. This are is composed

    of industrial and commercial buildings of various age and quality. There are homes scattered alongthe local roadways and there are numerous subdivisions.

    Single Family Home Patterns:The subject neighborhood is an area of historically low home prices. The appraiser has conducted astudy of the three mile radius surrounding the subject property. There were 64 current listings and73 sales in the past year. This equals an 11 month supply of single family homes.

    SINGLE FAMILY HOUSING CURRENT MARKET ACTIVITY-3 MILE RADIUS

    Number High Low Median

    Active Listings 64 $425,000 $11,500 $113,000

    Pending Sales 17 $330,000 $29,900 $65,500Sales for the Past Year 73 $685,000 $8,000 $76,000

    Source, FMLS-Compiled by McConnell Appraisal

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    Radius Demographics:The appraiser has conducted a demographic study with one, three, and five mile radius ringsaround the subject property. The 2010 demographic study shows a growing population withmoderate income characteristics. All radius categories show population growth.

    Population and Housing:

    The subject area has a moderate population size. The demographic study shows 65,505 personswithin the three mile radius. This population is sufficient to support commercial development.

    CATEGORY 1 MILE 3 MILES 5 MILES

    2010 Population

    Total Population 795 13,568 65,505

    Median Age 37.4 36.8 35.1

    2010 Households

    Total Households 286 4,741 22,566

    Average Household Size 2.78 2.83 2.86

    2010 Housing

    Owner Occupied Housing Units 72.8% 69.9% 69.7%

    Renter Occupied Housing Units 17.7% 21.2% 21.2%

    Vacant Housing Units 9.5% 8.9% 9.1%

    Source, STDB-Compiled by McConnell Appraisal

    Population Growth Projections:Demographic projects indicated that the local population will continue to grow into the future.Population growth is a positive factor for commercial properties.

    CATEGORY ONE MILE 3 MILES 5 MILES

    Population

    1990 Population 337 8.905 33,561

    2000 Population 431 10,106 45,378

    2010 Population 795 13,568 65,505

    2015 Population 925 15,655 76,294

    1990 2000 Annual Growth Rate 4.13% 1.94% 3.28%

    2000 2010 Annual Growth Rate 1.22% 1.86% 1.92%

    2010 2015 Annual Growth Rate 2.72% 2.46% 2.16%

    Source, STDB-Compiled by McConnell Appraisal

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    Income Levels:The subject neighborhood has a moderate income population. The income levels of the localneighborhood would be minimally sufficient to maintain a base of commercial facilities.

    CATEGORY ONE MILE 3 MILES 5 MILES

    2010 IncomeMedian Household Income $47,728 $54,774 $62,412

    Per Capita Income $18,584 $22,135 $24,524

    Average Household Income $55,418 $63,710 $70,806

    Source, STDB-Compiled by McConnell Appraisal

    The current median household income is $47,728. This compares to $54,719 for the U.S. as awhole. Current per capita income is $18,584 for the market area as compared to $27,277 for theU.S. as a whole.

    Income Growth Projections:The subject neighborhood has a moderate income population. Demographic projections are forgrowth in local income levels.

    CATEGORY ONE MILE 3 MILES 5 MILES

    Median Household Income

    1990 Median HH Income $28,125 $37,390 $37,173

    2000 Median HH Income $42,147 $45,324 $51,346

    2010 Median HH Income $47,728 $54,774 $62,412

    2015 Median HH Income $54,584 $61,863 $69,465

    1990 2000 Annual Growth Rate 4.13% 1.94% 3.28%

    2000 2010 Annual Growth Rate 1.22% 1.86% 1.92%

    2010 2015 Annual Growth Rate 2.72% 2.46% 2.16%

    Per Capita Income

    1990 Per Capita Income $10,448 $13,622 $13,951

    2000 Per Capita Income $17,369 $19,361 $21,467

    2010 Per Capita Income $18,584 $22,135 $24,524

    2015 Per Capita Income $21,385 $24,974 $27,473

    1990 2000 Annual Growth Rate 5.21% 3.58% 4.4%

    2000 2010 Annual Growth Rate 0.66% 1.31% 1.31%

    2010 2015 Annual Growth Rate 2.85% 2.44% 2.3%

    Source, STDB-Compiled by McConnell Appraisal

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    Neighborhood Growth Analysis:The neighborhood surrounding the subject has a history of significant population growth. In thenine year period between 2000 and 2009 the population grew at 3.44% per year in the three mileradius.

    CATEGORY ONE MILE 3 MILES 5 MILES

    Population

    1990 Population 138 1,703 3,949

    2000 Population 170 2,285 5,327

    2010 Population 218 2,993 7,854

    2015 Population 239 3,408 9,022

    1990-2000 Annual Growth Rate 2.11% 2.98% 3.04%

    2000-2010 Annual Growth Rate 2.46% 2.67% 3.86%

    2009-2015 Annual Growth Rate 1.86% 2.63% 2.81%

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    Traffic Patterns:The subject is located in a commercial area in Douglas County. The subject has frontage onWinston Industrial Parkway, which is less than mile from Georgia Highway 78, the main localroadway in Douglas County. The area has a moderate traffic count.

    Conclusion:In conclusion, the subject is located in a moderate income, moderate population neighborhoodlocated in Douglas County. The demographic profile of the area is considered sufficient to supportbasic commercial development.

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    MARKETABILITY STUDY

    Demographics:As was discussed in the previous section, the subject property is located just west of Douglasville onHighway 78. This area has had relatively strong population growth over the past two decades.Existing population and income projections are positive.

    Commercial Building Sales:The appraiser was able to isolate five sales of similar type commercial buildings. This dataindicates a moderate demand for such propertied in the local market.

    Days on Market:The following Days on Market Data was observed in the market. The mean Days on Market for thecomparables was 393 days.

    DAYS ON MARKET STUDY-COMMERCIAL BUILDINGS-DOUGLASVILLE

    Address Type SF Days on Market

    690 Sticher Court, Douglasville, GA Industrial 15,000 1757575 Owl Creek Drive, Douglasville, GA Industrial 4,980 626

    1471 Dale Court, Austell, GA Industrial 6,000 110

    8455 Adair Street, Douglasville, GA Industrial 4,000 395

    4170 Vansant Road, Douglasville, GA Industrial 34,000 660

    Mean Days on Market 393

    Source, McConnell Appraisal

    Local Market Listings:The appraiser observed the following listings of commercial buildings in the Douglasville Area.

    ACTIVE LISTINGS - DOUGLASVILLE MARKET COMMERCIAL BUILDING

    Address List Price Size Price Per SF

    2425 Jason Industrial Parkway, Winston, GA $329,0000 5,0000 $65.80

    1875 Jason Industrial Parkway, Winston, GA $375,000 4,8000 $78.25

    1365 Pritchett Industrial Boulevard, Austell, GA $700,000 14,000 $50.00

    7377 Strickland Street, Douglasville, GA $625,000 9,500 $65.78

    1375 Pritchett Industrial Boulevard, Austell, GA $780,000 16,000 $48.75

    392 Maxham Road, Austell, GA $720,000 11,680 $61.64

    Mean $61.70

    Source, McConnell Appraisal

    Douglas County Market Statistics:The overall market statistics for the Douglas County Industrial sector are in a state of decline.Vacancy is at 15.2%, net absorption is negative (255,269) square feet, and rental rates have fallen toan average of $3.42 per square foot per year.Conclusion:The subject property is located in a commercial and industrial area just west of Douglasville. Thearea has high vacancy, low rental rates, and negative absorption. There are a large number ofindustrial buildings for sale in the local market. Sale prices can expected to decline in the future.

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    DESCRIPTION OF THE SITE:

    The reader is referred to the Arial photograph, the Tax Plat and the Flood Zone Map in the mapssection for a depiction of the subject site.

    Area and Shape:

    The subject is rectangular in configuration. Thesite has 169.46 linear feet of frontage on WinstonIndustrial Parkway. The site measures 169 x191. This equals 32,297+- square feet or 0.743acres.

    Topography:The site is graded and slopes moderately to thenorth.

    Access:

    The subject has direct access on a small sidestreet in an industrial park. There is no access ona main road. Access to Highway 78 is milesouth.

    Exposure:The site has average exposure to Winston Industrial Parkway. There is no direct exposure tomajor roadway.

    Utilities:Electricity and water are available at the subject site. The site is served by a public sewer.

    Parking:The subject has an asphalt parking lot with space for approximately 14 vehicles.

    Easements and Encroachments:There are no known easements or encroachments. No survey was provided to the appraiser.

    Environmental:The appraiser did not observe any environmental contamination at the time of the inspection.The appraiser recommends a Phase II environmental study be conducted to determine if there isany environmental contamination. If such environmental contamination is discovered, the

    appraiser reserves the right to modify or withdraw the appraisal. The appraiser is not qualifiedto detect hazardous materials or evaluate subsoil conditions.

    The appraiser did observe active mold infestation in the office building and the industrialbuilding.

    Drainage and Flood Hazard:The subject property is not located within a 100-year flood hazard area per FEMA CommunityPanel #13097C0127C, dated August 18, 2009. For an official flood determination, the reader

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    should seek a survey or flood certification.

    Conclusion:The subject site contains average physical features to support development. The site is located inan industrial park west of Douglasville in Douglas County.

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    DESCRIPTION OF THE IMPROVEMENTS:

    The subject property is a 0.743 acre tract with a 13,380 square foot commercial building. Thereis an asphalt parking lot and a concrete loading dock. The building is composed of two parts.There is an 11,460 square foot metal building and a 1,920 square foot, two story office building.

    THE OFFICE BUILDING:The office building is in very poor condition and is not leasable and has no market value. Theinterior is filled with mold and the building has deteriorated beyond repair.

    The building is two story with wood siding. The interior has tile and carpet flooring, acousticalceiling, and drywall interior wall covering.

    THE METAL INDUSTRIAL BUILDING:

    Foundation:

    The foundation is slab on grade.

    Exterior:The exterior of the subject is improvement issheet metal. The roof is also sheet metal.

    Interior Finishes:The interior is unfinished. There is a concretefloor. There in no ceiling material. Theinterior is unfinished. There are four steel rollup doors and two steel entry doors.

    HVAC:There is no air conditioning in the industrial building. There are several gas space heaters but itis doubtful they are in working order.

    Electrical:The electrical system appears substandard. Any use of the building would require an inspectionby a qualified electrician.

    Physical Condition:The subject is in very poor condition based on the interior inspection.

    Function Utility:The improvement has average functional utility.

    Actual Age, Effective Age, Remaining Economic Life:The subject appears to be in very poor condition. According to Douglas County records thestructure was built in 1980. This equals an actual age of 21 years. The effective age is judged tobe 40 years. The economic life of the structure is estimated to be 50 years. This yields anestimated remaining economic life of 10 years.

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    PHOTOGRAPHS OF THE SUBJECT PROPERTY

    Front View and Right Side of Subject Property

    Front View of Office Building

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    Photographs of Subject Property

    Front and Left Side of Building

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    Photographs of Subject Property

    Office Building-Interior View

    Office Building-Interior View

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    Photographs of Subject Property

    Office Building Interior

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    Photographs of Subject Property

    Industrial Building-Electrical Panel

    Industrial Building-Interior

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    Photographs of Subject Property

    Industrial Building-Interior

    Industrial Building-Interior

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    Photographs of Subject Property

    Industrial Building-Fire Damage

    Industrial Building Interior

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    Photographs of Subject Property

    Industrial Building-Fire Damage

    Industrial Building

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    Photographs of Subject Property

    Industrial Building-Loading Dock

    Industrial Building

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    Photographs of Subject Property

    Street Scene Facing South

    Street Scene Facing North

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    BUILDING SKETCH

    All measurements, interior wall and door locations are approximate and are included forillustrative purposes only.

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    MAPS SECTION

    AREA MAP:

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    NEIGHBORHOOD STREET MAP

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    Traffic Count Map:

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    Traffic Count Close Up:

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    HIGHEST AND BEST USE

    DEFINITION:

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

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

    The source of the foregoing definition was taken from The Dictionary of Real Estate Appraisal,Appraisal Institute, 2010.

    Criteria:The Highest and Best Use of land as though vacant, and as improved, must meet four criteria.

    1. Legally Permissible A property use that is either currently allowed or most probablyallowed under zoning codes, building codes, environmental regulation and other applicablelaws and regulations that govern land use.

    2. Physically Possible: This study is to determine possible uses given the constraints of the size,shape and terrain of a parcel of land. Also included in this analysis are the capacity andavailability of public utilities, and the sites topography and/or subsoil conditions.

    3. Financially Feasible This study is to determine which uses are likely to produce an income,or return, equal to or greater than the amount needed to satisfy operating costs, financialobligations and capital amortization. All uses that produce a positive return to the land areregarded as Financially Feasible.

    4. Maximally Productive - Of the Financially Feasible uses, the use that produces the highestprice, or value, consistent with the rate of return warranted by the market for that use is theHighest and Best Use. When the amount of invested capital varies among alternative uses,the income from each use is related to the capital investment required by calculating the rateof return. The use producing the highest rate of return is the Highest and Best Use of theproperty as improved.

    HIGHEST AND BEST USE AS VACANT:This analysis assumes that the site is vacant or can become vacant by demolishing the existingimprovements. In this section of the report, the appraisers attempt to answer the followingquestion: If the site was vacant, what use should be made of it and when? Second, What arethe ideal improvement(s) that would maximize the return to the site? The conclusion of

    Highest and Best Use, as vacant, is the basis for valuation of the land. This determinesappropriate comparable sales with which to value the subject property.

    The Highest and Best Use of a property as improved also depends on physical considerationssuch as size, design, and condition. The condition of the improvements may affect the ability ofa property to continue in its current use. If a property must be converted to an alternate use, thecost of conversion must be analyzed with regard to the returns to be generated by the new use.

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    Legally Permissible:The subject is zoned LI, light Industrial, by the Douglas County Planning and ZoningCommission. The LI Classification is a relatively broad zoning category.

    Physically Possible:

    As stated within the Description of the Site section, the subject property contains approximately0.743 acres. The site is rectangular in shape and has 200 feet of frontage on Winston IndustrialParkway. A large number of uses would be possible on this site.

    Financial Feasibility:As noted in the Neighborhood Overview section, the subject site is located in an area that has amoderate size population with projects for significant growth. The neighborhood population hasmoderate income characteristics. However, in the present recessionary environment there is littlenew construction of industrial or retail buildings. Financing for new construction is verydifficult to obtain. Given the current recessionary environment, the most likely use of the subjectproperty is as a speculative hold.

    Maximally Productive:Based on the first three criteria of Highest and Best Use, the appraiser has determined theMaximally Productive use of the subject site, as vacant, would be as a speculative hold until theeconomic environment improves.

    Highest and Best Use As Vacant Conclusion:Based on the foregoing analysis the Highest and Best Use of the subject property would be as a

    speculative hold until economic conditions improve.

    LAND AS CURRENTLY IMPROVED:

    Legally Permissible:The site is Light Industrial. This zoning allows a number of uses.

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    McCONNELL APPRAISAL

    Physically Possible:The subject site comprises 0.743 acres and is located in an industrial park. The

    ubject improvement is in very poor condition.

    is in very poor condition. It is not considered feasible toenovate the structure.

    facility. The

    ighest and best use, as improved, is considered to be its current use.

    for the improved property is the continued use as a general

    use industrial facility.

    s

    Economically Feasible:The improvement could be used for a wide variety of uses. The building was

    constructed in 1980 andrMaximally Productive:The only use that satisfies the first three tests is continuation of the existing use.

    The property is presently operated as a general use light industrial

    h

    Highest and Best Use as Improved:Based primarily upon the type and quality of the subject improvements, the

    subjects conformance with types and quality of land uses in the area, the lack of

    any apparent alternative use that would provide a higher return to the land, as

    reflected in the valuation section of this report, it is my opinion that the current

    Highest and Best Use

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    THE VALUATION PROCESS

    The valuation process is the orderly program in which data used to estimate the value of the subjectproperty are acquired, classified, analyzed, and presented. The first step in the process is to definethe appraisal problem, i.e., identify the real estate, the effective date of value estimate, the property

    rights being appraised, and the type of value sought. Once this has been accomplished, theAppraiser collects and analyzes the factors that affect the market value of the subject property.These factors are addressed in the area and neighborhood analysis, the site and improvementanalysis, and the highest and best use analysis, and in the application of the three approaches tovalue: The sales comparison approach, the cost approach, and the income capitalization approach.

    The Appraisal of Real Estate, 13TH Edition, Appraisal Institute, 2008 outlines eight steps to thevaluation process.

    1. Identification of the problem.2. Determine the Scope of Work3. Data collection and Property Description

    4. Data Analysis5. Site Value Opinion6. Application of the Approaches to value.7. Reconciliation of Value Indications and Final Opinion of Value8. Report of Defined Value

    The Sale Comparison Approach:This approach is used to estimate the value of the property as improved. The appraiser gathers dataon sales of comparable properties and analyzes the nature and conditions of each sale, makinglogical adjustments for dissimilar characteristics. Typically, a common denominator is found. Foran improved building value, the unit of comparison is usually price per square foot. In the case of

    the subject property price per ace has been developed.

    Cost Approach:The second approach applied is the cost approach to value. Accrued depreciation is deducted fromthe new cost of the improvements and this figure is added to the land value to indicate the value ofthe whole property. This approach was not utilized in this appraisal. The subject improvement is invery poor condition and it would be difficult if not impossible to estimate accrued depreciation.

    Income Approach:The third approach applied is the income capitalization approach and is predicated on theassumption that a definite relationship exists between the amount of income a property can earn and

    its value. In other words, value is created by the expectation of benefits to be derived in the future.In this approach, the anticipated annual net income of the subject property is processed to producean indication of value. Net income is the income generated before payment of any debt service.Income is converted into value through capitalization, in which net income is divided by acapitalization rate. Factors such as risk, time, interest on capital invested, and recapture of thedepreciating assets are considered in selecting the capitalization rate.

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    Reconciliation:The final step in the valuation process is the reconciliation or correlation of the value indications. Inthe reconciliation, the Appraiser considers the relative applicability of each approach used,examines the range of the value indications, and gives most weight to the approach that appears toproduce the most reliable solution to the appraisal problem. The purpose of the appraisal, the typeproperty, and the adequacy and reliability of each approach to value are all taken into consideration.

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    SALES COMPARISON APPROACH

    The Sale Comparison Approach Method:In the sales comparison approach, an opinion of market value is developed by comparing propertiessimilar to the subject property that have recently sold, are listed for sale, or are under contract. The

    major premise of the sales comparison approach is that an opinion of the market value of theproperty can be supported by studying the market reaction to comparable and competitiveproperties.

    There are five basic steps to the sales comparison approach. The Appraisal of Real Estate, pp 302.

    1. Research the competitive market on properties that are similar to the subject property thathave recently sold, are listed for sale, or are under contract. Consider the characteristics ofthe properties such as property type, date of sale, size, physical condition, location, and landuse constraints.

    2. Verify the information by confirming that the data obtained is factually accurate and that the

    transactions reflect arms length market considerations.3. Select the most relevant units of comparison in the market and develop a comparativeanalysis for each unit.

    4. Look for differences between the comparable sale properties and the subject property usingall appropriate elements of comparison. Adjust the sale price of each single propertyreflecting how it differs to equate it to the subject property. This step typically involvesusing the most similar sale properties and then adjusting for any remaining differences.

    5. Reconcile the various value indications produced from the analysis of comparables to avalue bracket and then to a single value indication.

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    SALES COMPARABLE GRID:

    INPUT DATA:

    Subject Comp 1 Comp 2 Comp 3 Comp 4 Comp 5

    Property Type

    General

    Commercial

    Industrial

    Building

    Industrial

    Building

    Industrial

    Building

    Industrial

    Building

    Industrial

    Building

    2751 Winston

    Industrial Parkway

    2705 Strawn

    Road

    5690 Stitcher

    Court

    4170 Vansant

    Road

    1471 Dale

    Court

    6289 Highway

    78

    Location Douglasville, GA Douglasville ,

    GA

    Douglasville,

    GA

    Douglasville,

    GA

    Douglasville,

    GA

    Austell, GA

    30106

    Douglas Douglas Douglas Douglas Douglas Douglas

    FACILITY DATA:

    Year Built 1980 2003 2002 1986 1986 1973

    Building Area 11,460 41,688 15,000 34,000 6,000 15,000

    Site Size 0.74 7.14 2.00 5.40 0.72 0.64

    TRANSACTION

    DATA:

    Date of Sale 4/7/2010 7/31/2009 6/4/2009 1/20/2009 6/29/2009

    Sales Price $850,000 $500,000 $850,000 $325,000 $250,000

    Sale Price per SF $20.39 $33.33 $25.00 $54.17 $16.67

    Financing Adjustments Similar 0% Similar 0% Similar 0% Similar 0% Similar 0%

    Conditions of Sale Adjustments Similar 0% Similar 0% Similar 0% Similar 0% Similar 0%

    Market Conditions/Time Adjustments Similar 0% Similar 0% Similar 0% Similar 0% Similar 0%

    Adjusted Price 20.39 33.33 25.00 54.17 16.67

    ADJUSTMENT FACTORS:

    Location Douglas Co Similar 0% Similar 0% Superior -10% Similar 0% Superior -20%

    Zoning LI Similar 0% Similar 0% Similar 0% Similar 0% Similar 0%

    Year Built 1980 Superior -20% Superior -20% Similar 0% Similar 0% Similar 0%

    Condition Very Poor Superior -40% Superior -40% Superior -30% Superior -30% Superior -30%

    Functional Utility Average Similar 0% Similar 0% Similar 0% Similar 0% Similar 0%

    Quality of Improvements Poor Superior -30% Superior -25% Superior -30% Superior -30% Superior -10%

    Building Size/SF 11,460 Inferior 20% Similar 0% Inferior 10% Similar 0% Similar 0%

    Office Percentage 0% Superior -10% Superior -10% Superior -10% Superior -30% Superior -10%

    Access Average Similar 0% Similar 0% Similar 0% Similar 0% Similar 0%

    Land Size 0.743 Similar 0% Similar 0% Similar 0% Similar 0% Similar 0%

    Parking Average Similar 0% Similar 0% Similar 0% Similar 0% Similar 0%

    Overall Characteristics Superior -80% Superior -95% Superior -70% Superior -90% Superior -70%

    Adjusted Value per SF 4.08 1.67 7.50 5.42 5.00

    Weight Applied 100% 15% 15% 30% 20% 20%

    0.61 0.25 2.25 1.08 1.00

    Weighted Average $5.20

    Value Indications Price Per SF

    Range Minimum: $1.67 11,460 SF $5.00 $57,300

    Range Maximum: $7.50

    Range Average: $4.73 $57,000

    Standard Deviation $2.12

    Reconciled Value/SF $5.00

    Estimated Value Via the Sales Comparison Approach

    DIRECT SALES COMPARISON-2751 Winston Industrial Parkway

    MARKET CONDITIONS;

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    DISCUSSION OF ADJUSTMENT FACTORS:

    Financing Adjustments:Properties which have favorable financing tend to sell at higher nominal prices than propertieswith typical market financing. Financing concessions include seller paid closing costs, seller buydowns on interest rates, seller financing of first or second mortgages.

    Conditions of Sale:Comparable properties can be adjusted for differences in the motivation of either the buyer of theseller. Conditions of sale adjustments can include deed restrictions, matters of title, or otherownership constraints. A sale may include personal property. List price adjustments to likelysale prices are adjusted under this category.

    Market Conditions/Time Adjustments:Although the adjustment for market conditions is often referred to as a time adjustment, time isnot the cause of the adjustment. Market conditions that change over time create the need for anadjustment, not time itself. Comparables are adjusted for differences in market conditions at the

    time of sale. Sales occurring in the 2009 and 2010 time frame are considered to have sold undersimilar market conditions to the present.

    Location:Location adjustments are made to comparable sales to recognize perceived value differences inrelation to neighborhood influences, access to commercial services, location aesthetics, commercialdensity, overall exposure and visibility, and overall market demand.

    Zoning:Zoning is an important factor in value determination. Properties with zoning which allows a moreintensive use tend to sell for more than properties with more restrictive zoning.

    Year Built:Newer properties tend to sell for more than older properties. As buildings age depreciation tends toaccumulate.

    Condition:Buildings tend to vary widely in condition. Properties which have been well maintained tend to sellfor more than buildings with high levels of deferred maintenance.

    Functional Utility:Properties with poor functional utility tend to sell for less than properties with adequate functional

    properties.

    Quality of Improvements:When comparing sales in the market, the quality of construction must be noted. Quality is typicallyrelated to the class of the building. The appraiser must be aware of the materials and types ofconstruction that may be considered above standard to appropriately adjust for this factor.

    Building Size:Smaller buildings tend to sell for higher prices per square foot than larger buildings.

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    Office Percentage:Industrial properties with a higher percentage of finished office tend to sell for more than propertieswith minimal finish.

    Access:Properties which have poor access tend to sell for lower prices than those which have average offavorable access.

    Land Size:When estimating an overall value for the subject property the land size must be considered. If animprovement is situated on a larger or smaller size parcel than the subject property, anappropriate adjustment must be made to offset these factors. When considering the land of acomparable sale, the appraiser must recognize the size, estimated value, and any excess land thatcould be later divided for more development. There are scenarios where the comparable in

    question may be situated on a larger or smaller tract than the subject property but the value maybe similar requiring no adjustment. However, in most cases the land difference must be adjustedproperly to accurately conclude the appropriate value for the subject.

    Parking:Adequate parking for employees and customers is an important factor in value determination.Properties which have inadequate parking tend to sell at reduced prices.

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    DISCUSION OF IMPROVED SALES:

    Comparable Improved Sale 1: Industrial Building:

    This comparable is the sale of the propertylocated at 2705 Strawn Road, Winston, Georgia,30187. The sale occurred on April 7, 2010 and isrecorded in Deed Book 2859 Page 0152, DouglasCounty Records and in PT-61 048-2010-001682.The seller was Four Corners Realty, Inc. and thebuyer was MR.KE, LP. The sale price was$850,000. The comparable has 41,688 squarefeet and was built in 2003. This equates to a saleprice of $20.39 per square foot.

    The building is located in an industrial area in the City of Winston. The building is a basic metalindustrial building.

    Financing Adjustments:The sale was all cash.

    Conditions of Sale:Conditions of Sale are considered normal.

    Market Conditions/Time Adjustment:The sale occurred in April of 2010 in a time of similar economic conditions. The comparable is

    considered similar to the subject and no adjustment is necessary

    Location:The comparable is located in Douglas County just north of Highway 78 in an industrial park.This is similar to the subject location and no adjustment is indicated.

    Zoning/Land Use:The comparable is zoned Light Industrial. The subject is zoned Light Industrial, DouglasCounty. No adjustment is indicated.

    Age/Year Built:

    The comparable was built in 2003 as compared to the subject which was built in 1980. Thecomparable is superior and a 20% downward adjustment is indicated.

    Condition:The comparable was in average condition at the time of sale. The subject is in very poorcondition. A downward adjustment of 40% is required.

    Functional Utility: The comparable has average functional utility. No adjustment is necessary.

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    Quality of Improvements:The comparable is a standard industrial building. The subject is a lower quality building. Adownward adjustment of 30% is indicated.

    Size:

    The comparable has 41,688 square feet as compared to the subject size of 11,460 square feet.Smaller buildings tend to sell for more per square foot than larger buildings. The comparable isadjusted upward 20%.

    Office Percentage:The comparable is an industrial building with approximately 10% office. The subject has nouseable office. A downward adjustment 10% is indicated.

    Access:The comparable has adequate access on Strawn Road.

    Land Size:The comparable land size is 7.14 acres. No adjustment is indicated.

    Parking:The comparable has adequate on site parking. No adjustment is indicated.

    Overall Characteristics:Overall, the comparable is rated as superior to the subject.

    Weighting:A weighting of 15% is given to the comparable.

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    Comparable Improved Sale 2: Industrial Building:

    This comparable is the sale of the propertylocated at 5690 Stitcher Court, Douglasville,Georgia, 30134. The sale occurred on July 31,

    2009 and is recorded in Deed Book 2809 Page496, Douglas County Records and in PT-61 048-2009-004048. The seller was Eastern WallboardSupply, Inc. and the buyer was GR Properties,LLC. The sale price was $500,000. Thecomparable has 15,000 square feet and was builtin 2002. This equates to a sale price of $33.33per square foot.

    The building is located in an industrial area in the City of Douglasville. The building is a basicmetal industrial building.

    The appraiser discussed the sale with the listing broker, Danny Tillery, of Industrial PropertiesGroup. He said the sale was a normal, arms length transaction. The property was vacant at thetime of sale. The buyer will occupy the building.

    Financing Adjustments:The sale was all cash.

    Conditions of Sale:Conditions of Sale are considered normal.

    Market Conditions/Time Adjustment:The sale occurred in July 2009 in a time of similar economic conditions. The comparable isconsidered similar to the subject and no adjustment is necessary

    Location:The comparable is located in Douglas County just north of Highway 78 in an industrial park.This is similar to the location of the subject and no adjustment is indicated. No adjustment isindicated.

    Zoning/Land Use:The comparable is zoned Light Industrial. The subject is zoned Light Industrial. No adjustment

    is indicated.

    Age/Year Built:The comparable was built in 2002 as compared to the subject which was built in 1980. Thecomparable is significantly superior and a downward adjustment of 20% is indicated.

    Condition:The comparable was in average condition at the time of sale. The subject is in very poorcondition. A downward adjustment of 40% is required.

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    Functional Utility:The comparable has average functional utility. No adjustment is necessary.

    Quality of Improvements:

    The comparable is a standard industrial building. The subject is a low quality building. Adownward adjustment of 25% is indicated.

    Size:The comparable has 15,000 square feet as compared to the subject size of 11,460 square feet. Noadjustment is indicated.

    Office Percentage:The comparable is an industrial office building with approximately 10% office. The subject hasno useable office. A downward adjustment of 10% is indicated.

    Access:The comparable has adequate access on Stitcher Court.

    Land Size:The comparable land size is 2.0 acres. No adjustment is indicated.

    Parking:The comparable has adequate on site parking. No adjustment is indicated.

    Overall Characteristics:Overall, the comparable is rated as superior to the subject.

    Weighting:A weighting of 15% is given to the comparable.

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    Comparable Improved Sale 3: Industrial Building:

    This comparable is the sale of the propertylocated at 4170 Vansant Road, Douglasville,Georgia. The sale occurred June 4, 2009 and is

    recorded in Deed Book 2796 Page 698, DouglasCounty Records and in PT-61-048-2009-003132. The seller was Golden Keys InvestmentInc. and the buyer was Donald J. Sheehan. Thesale price was $850,000. The comparable has34,000 square feet and was built in 1986. Thisequates to a sale price of $25.00 per square foot.

    The building is located in an industrial area east of the City of Douglasville. The building is abasic metal industrial building.

    The appraiser discussed the sale with the listing broker, Wilson Covington, of King IndustrialRealty. He said the sale was a normal, arms length transaction. The property was vacant at thetime of sale. The buyer will occupy the building.

    Financing Adjustments:The sale was all cash.

    Conditions of Sale:Conditions of Sale are considered normal.

    Market Conditions/Time Adjustment:

    The sale occurred in June 2009 in a time of similar economic conditions. The comparable isconsidered similar to the subject and no adjustment is necessary

    Location:The comparable is located in Douglas County just south of I-20 east of the City of Douglasville.This location is considered superior to the subject, which is located on a small side street in anindustrial park. A downward adjustment of 10% is indicated.

    Zoning/Land Use:The comparable is zoned Light Industrial. The subject is zoned Light Industrial. No adjustmentis indicated.

    Age/Year Built:The comparable was built in 1986 as compared to the subject which was built in 1980. Noadjustment is indicated.

    Condition:The comparable was in average condition at the time of sale. The subject was in poor condition.A downward adjustment of 30% is indicated.

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    Functional Utility:The comparable has average functional utility. No adjustment is necessary.

    Quality of Improvements:The comparable is a standard industrial building. The subject is a lower quality building. Adownward adjustment of 30% is indicated.

    Size:The comparable has 34,000 square feet as compared to the subject size of 11,460 square feet.Smaller buildings tend to sell for more per square foot than larger buildings. An upwardadjustment of 10% is indicated.

    Office Percentage:The comparable is an industrial office building with approximately 10% office. The subject hasno usable office space. A downward adjustment of 10% is indicated.

    Access:

    The comparable has adequate access on Vansant Road.

    Land Size:The comparable land size is 5.4 acres. No adjustment is indicated.

    Parking:The comparable has adequate on site parking. No adjustment is indicated.

    Overall Characteristics:Overall, the comparable is rated as superior to the subject.

    Weighting:A weighting of 30% is given to the comparable.

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    McCONNELL APPRAISAL

    Condition:The comparable was in average condition at the time of sale. The subject was in poor condition.

    downward adjustment of 30% is indicated.

    unctional Utility

    AF : The comparable has average functional utility. No adjustment is necessary.

    Quality of Improvements:The comparable is a standard industrial building. The subject is a low quality industrial building.

    downward adjustment of 30% is indicated.ASize:The comparable has 6000 square feet as compared to the subject size of 11,460 square feet.Smaller buildings tend to sell for more per square foot than larger buildings. No adjustment isecessary.n

    Office Percentage:The comparable is an industrial office building with approximately 33% office. The subject has

    o usable office. A downward adjustment of 30% is indicated.nAccess:The comparable has adequate access on Dale Court.

    Land Size:The comparable land size is 0.72 acres. No adjustment is indicated.

    Parking:The comparable has adequate on site parking. No adjustment is indicated.

    Overall Characteristics:Overall, the comparable is rated as Superior to the subject.

    Weighting:A weighting of 20% is given to the comparable.

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    Comparable Improved Sale 5: Industrial Building:

    This comparable is the sale of the propertylocated at 6289 Highway 78, Austell, DouglasCounty, Georgia, 30168. The sale occurred on

    June 29, 2009 and is recorded in Deed Book2802 Page 0152 Douglas County Records and inPT-61 048-2009-003492. The se