OF 9515 COMMUNITY ROAD & 9539 GREENMEADOW ROAD …...Columbus Chicago West Palm Beach Cincinnati...

US Realty Consultants, Inc.2154 East Main Street, Suite 302, Columbus, Ohio 43209

614-221-9494 (p) 614-221-9941 (f)www.usrc.com

Columbus Chicago West Palm Beach Cincinnati Dallas Washington, DC

APPRAISAL REPORTOF

9515 COMMUNITY ROAD & 9539GREENMEADOW ROAD

WINDHAM, PORTAGE COUNTY, OHIO 44288RIMS #19-000366-01-01

as ofJune 12, 2019

FOR

Andrew BowersSilver Hill Funding

4425 Ponce de Leon Boulevard, 4th FloorCoral Gables, FL 33146

US Realty Consultants, Inc.2154 East Main Street, Suite 302, Columbus, Ohio 43209

614-221-9494 (p) 614-221-9941 (f)www.usrc.com

Columbus Chicago West Palm Beach Cincinnati Dallas Washington, DC

June 20, 2019

Andrew BowersSilver Hill Funding4425 Ponce de Leon Boulevard, 4th FloorCoral Gables, FL 33146

RE: RIMS #19-000366-01-019515 Community Road & 9539 Greenmeadow RoadWindham, Ohio

Dear Mr. Bowers:

In accordance with the engagement letter dated May 22, 2019, we have appraised the propertycaptioned above. The purpose of this appraisal is to express an opinion of the market value of theproperty for asset valuation. The client and intended user is Silver Hill Funding. The legalinterest appraised is the fee simple estate. The effective date of the value opinion is June 12,2019. The appraisal is based on market conditions observed as of the current date of our marketresearch, June 12, 2019.

The subject is located in Windham, Ohio. Improvements consist of a two-story, 12-unitapartment complex. A more complete description of the property is included within theappraisal report. The report also presents other information considered in our analyses, and thereasoning behind our value conclusions. Your attention is called to the standard conditions andextraordinary assumptions, which follow.

Market Value

Subject to all conditions and explanations contained in this report, and based on our analyses ofthe subject and the market, together with our experience and knowledge acquired in appraisingsimilar properties, it is our opinion that the market value of the fee simple estate in the 12-unitsubject (including the contributory value of the existing furniture, fixtures, and equipment),expressed in terms of financial arrangements equivalent to cash, as of June 12, 2019, is:

FOUR HUNDRED TEN THOUSAND DOLLARS$410,000

Andrew BowersJune 20, 2019Page Two

Contributory Value of the Furniture, Fixtures, and Equipment

The final opinion of value stated above includes the estimated contributory value of the furniture,fixtures, and equipment (FF&E). Based on our analysis, the contributory value of the FF&E, asof June 12, 2019 is $16,000 [$2,000 per unit x 12 units) * ((15-5)/15), rounded].

This report and its contents are intended solely for your information and assistance for thefunction stated above, and should not be relied on for any other purpose. Neither our report norany of its contents nor any reference to the appraisers, U S REALTY CONSULTANTS, INC., may beincluded or quoted in any document, offering circular or registration statement, prospectus, salesbrochure, other appraisal, or other document without U S REALTY CONSULTANTS, INC.'s priorwritten approval of the form and context in which it appears. This report has been conducted inconformance with Title XI of the Federal Financial Institutions Reform, Recovery andEnforcement Act of 1989 and 1994 (FIRREA), and the Uniform Standards of ProfessionalAppraisal Practice (USPAP) of the Appraisal Foundation.

We appreciate the opportunity to be of service to your organization and look forward to workingwith you again.

Respectfully submitted,

U S REALTY CONSULTANTS, INC.

Stephen P. Faherty, MAI James A. PiwarunPrincipal and Managing Director Senior Associate

9515 COMMUNITY ROAD & 9539 GREENMEADOW ROADTABLE OF CONTENTS

ASSUMPTIONS............................................................................................................................ 6

EXECUTIVE SUMMARY .......................................................................................................... 9

INTRODUCTION....................................................................................................................... 10

PROPERTY IDENTIFICATION ......................................................................................... 10PURPOSE AND INTENDED USE OF THE APPRAISAL ............................................... 10LEGAL INTEREST APPRAISED ....................................................................................... 10EFFECTIVE DATE OF VALUATION................................................................................ 10DEFINITION OF VALUE..................................................................................................... 11EXPOSURE TIME AND MARKETING PERIOD ............................................................ 11APPRAISAL DEVELOPMENT AND REPORTING PROCESS..................................... 12HISTORY OF THE SUBJECT ............................................................................................. 14COMPETENCY OF THE APPRAISERS............................................................................ 14

DESCRIPTIVE DATA............................................................................................................... 15

REGIONAL ANALYSIS ....................................................................................................... 15NEIGHBORHOOD ANALYSIS ........................................................................................... 21DESCRIPTION OF THE SITE............................................................................................. 23DESCRIPTION OF THE IMPROVEMENTS .................................................................... 26

APARTMENT MARKET ANALYSIS..................................................................................... 31

COMPARABLE RENTALS...................................................................................................... 36

MARKET RENT ANALYSIS ............................................................................................... 43HIGHEST AND BEST USE ...................................................................................................... 45

INCOME CAPITALIZATION APPROACH.......................................................................... 48

REVENUE ANALYSIS.......................................................................................................... 48EXPENSE ANALYSIS........................................................................................................... 49DIRECT CAPITALIZATION ANALYSIS ......................................................................... 52

SALES COMPARISON APPROACH ..................................................................................... 55

MARKET SALES DATA....................................................................................................... 55PHYSICAL UNITS OF COMPARISON ............................................................................. 61

RECONCILIATION .................................................................................................................. 63

CERTIFICATION...................................................................................................................... 64

INSURABLE REPLACEMENT COSTS................................................................................. 65

ADDENDUM

Engagement Letter ........................................................................................ Addenda IRent Roll ......................................................................................................... Addenda IIState of Ohio Appraiser License...................................................................Addenda IIIQualifications ................................................................................................. Addenda IV

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9515 Community Road & 9539 Greenmeadow Road

ASSUMPTIONS

The following Standard Conditions apply to real estate appraisals by U S REALTY CONSULTANTS,INC. Extraordinary assumptions are added as required.

Appraisals are performed and written reports are prepared by, or under the supervision of,members of the Appraisal Institute in accordance with the Institute's Standards of ProfessionalPractice and Code of Professional Ethics.

No opinion is rendered as to property title, which is assumed to be good and marketable. Unlessotherwise stated, no consideration is given to liens or encumbrances against the property.Sketches, maps, photos, or other graphic aids included in appraisal reports are intended to assistthe reader in ready identification and visualization of the property and are not intended fortechnical purposes.

Appraisal reports may contain prospective financial information, estimates, or opinions torepresent the appraisers' view of reasonable expectations at a particular point in time, but suchinformation, estimates, or opinions are not offered as predictions or as assurances that aparticular level of income or profit will be achieved, that events will occur, or that a particularprice will be offered or accepted. Actual results achieved during the period covered by ourprospective financial analyses will vary from those described in our report, and the variationsmay be material.

It is assumed that legal, engineering, or other professional advice, as may be required, has beenor will be obtained from professional sources and that the appraisal report will not be used forguidance in legal or technical matters such as, but not limited to, the existence of encroachmentsor easements or other discrepancies affecting the legal description of the property. It is assumedthat there are no concealed or dubious conditions of the subsoil or subsurface waters includingwater table and flood plain, unless otherwise noted. We further assume no regulations of anygovernment entity control or restrict the use of the property unless specifically referred to in thereport. It is assumed that the property will not operate in violation of any applicable governmentregulations, codes, ordinances, or statutes.

In the absence of competent technical advice to the contrary, it is assumed that the propertybeing appraised is not adversely affected by concealed or unapparent hazards such as, but notlimited to, asbestos, hazardous or contaminated substances, toxic waste, or radioactivity.

The report and the final opinion of value and prospective financial analyses included in it areintended for the information of the person or persons to whom they are addressed, solely for thepurposes stated, and should not be relied upon for any other purpose. Neither our report, nor itscontents, nor any reference to the appraisers or U S REALTY CONSULTANTS, INC. may be includedor quoted in any offering circular or registration statement, prospectus, sales brochure, otherappraisal, loan, or other agreement or document without our prior written permission. Permissionwill be granted only upon meeting certain conditions.

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Information furnished by others is presumed to be reliable, and where so specified in the report,has been verified; but no responsibility, whether legal or otherwise, is assumed for its accuracy,and it cannot be guaranteed as being certain. No single item of information was completely reliedupon to the exclusion of other information.

Appraisal assignments are accepted with the understanding that there is no obligation to furnishservices after completion of the original assignment. If the need for subsequent services relatedto an appraisal assignment (for example, testimony, updates, conferences, reprint or copyservices) is contemplated, special arrangements acceptable to U S REALTY CONSULTANTS, INC.must be made in advance.

No significant change is assumed in the supply and demand patterns indicated in the report. Theappraisal assumes market conditions as observed as of the current date of our market researchstated in the letter of transmittal. These market conditions are believed to be correct; however,the appraisers assume no liability should market conditions materially change because of unusualor unforeseen circumstances.

The valuation applies only to the property described and for the purpose so stated and should notbe used for any other purpose. Any allocation of total price between land and the improvementsas shown is invalidated if used separately or in conjunction with any other report.

Neither the report nor any portions thereof (especially any conclusions as to value, the identity ofthe appraisers or U S REALTY CONSULTANTS, INC., or any reference to the Appraisal Institute orthe MAI, CPA or ISHC designations) shall be disseminated to the public through public relationsmedia, news media, sales media or any other public means of communication without the priorwritten consent and approval of the appraisers and U S REALTY CONSULTANTS, INC.

The date of the valuation to which the value opinion conclusions apply is set forth in the letter oftransmittal and within the body of the report. The values are based on the purchasing power ofthe United States dollar as of that date.

It should be specifically noted by any prospective mortgagee that the appraisal assumes that theproperty will be competently managed, leased, and maintained by financially sound owners overthe expected period of ownership. This appraisal engagement does not entail an evaluation ofmanagement's or owner's effectiveness, nor are we responsible for future marketing efforts andother management or ownership actions upon which actual results will depend.

U S Realty Consultants, Inc. does not, as part of this valuation, perform an audit, review, orexamination (as defined by the American Institute of Certified Public Accountants) of any of thehistorical or prospective financial information used, and therefore, does not express any opinionwith regard to same.

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The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We will notbe responsible for conducting a specific compliance survey and analysis of this property todetermine whether or not it is in conformity with the various detailed requirements of ADA.

It is possible that a compliance survey of the property, together with a detailed analysis of therequirements of the ADA, could reveal that the property is not in compliance with one or more ofthe requirements of the Act. If so, this fact could have a negative effect upon the value of theproperty. Since we have no direct evidence relating to this issue, we have not considered possiblenon-compliance with the requirements of ADA in estimating the value of the property.

EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS

USPAP provides the following definitions for extraordinary assumptions and hypotheticalconditions:

“Extraordinary assumption: an assignment-specific assumption as of the effective date regardinguncertain information used in an analysis, which, if found to be false, could alter the appraiser’sopinions or conclusions.” In the Comment to the definition USPAP states: “Comment:Uncertain information might include physical, legal, or economic characteristics of the subjectproperty; or conditions external to the property, such as market conditions or trend; or theintegrity of data used in an analysis.”

There are no extraordinary assumptions that have been considered in this appraisal.

“Hypothetical Condition: a condition, directly related to a specific assignment, which is contraryto what is known by the appraiser to exist on the effective date of the assignment results, but isused for the purpose of analysis.” The USPAP Comment on hypothetical conditions states:“Comment: Hypothetical conditions are contrary to known facts about physical, legal, oreconomic 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.”

There are no hypothetical conditions that have been considered in this appraisal.

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EXECUTIVE SUMMARY

Property Identification 9515 Community Road & 9539Greenmeadow Road

Property Location 9515 Community Road9539 Greenmeadow RoadWindham, Portage County, Ohio 44288

Pertinent Dates:

Date of Inspection June 12, 2019Date of Value June 12, 2019

Legal Interest Appraised Fee Simple Estate

Property Data:

Site 0.660 acreBuilding 12 units

Highest and Best Use:

As Improved ApartmentsAs If Vacant Hold for future single-family development

Indications of Value

Income Capitalization Approach $410,000

Sales Comparison Approach $400,000

Market Value $410,000

Unit of Comparison:Value per unit $34,167

Contributory Value of Furniture,Fixtures & Equipment -Included in Market Value $16,000

Estimate of Exposure Time 6-12 months

Estimate of Marketing Period 6-12 months

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INTRODUCTION

PROPERTY IDENTIFICATION

The subject consists of a 12-unit apartment development located at 9515 Community Road &9539 Greenmeadow Road in Windham, Portage County, Ohio. The property is further describedherein.

PURPOSE AND INTENDED USE OF THE APPRAISAL

The purpose of the appraisal assignment is to communicate an opinion of the market value of thedefined legal interest in the subject. The value opinion is to be used for asset valuation.

CLIENT AND INTENDED USER

The client is defined by USPAP as follows: “Client: the party or parties who engage, byemployment or contract, an appraiser in a specific assignment.” The USPAP comment on theclient definition is as follows: “Comment: The client may be an individual, group, or entity, andmay engage and communicate with the appraiser directly or through an agent.”

The Intended User is defined by USPAP as “the client and any other party as identified, by nameor type, as users of the appraisal, appraisal review, or appraisal consulting report by the appraiseron the basis of communication with the client at the time of the assignment.”

The client and intended user is Silver Hill Funding.

LEGAL INTEREST APPRAISED

The legal interest appraised herein is the fee simple estate. A fee simple estate is defined by theDictionary of Real Estate Appraisal as follows:

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

The property rights appraised include all items of personal property, including the existingfurniture, fixtures and equipment, and licenses and agreements required to operate the propertyand related facilities.

EFFECTIVE DATE OF VALUATION

The effective date of the value opinion is June 12, 2019. The value opinion is based on marketconditions observed on the date of our inspection, June 12, 2019. James A. Piwarun’s inspectionincluded a thorough interior and exterior inspection of the subject including interior inspection ofthree units. Stephen P. Faherty, MAI did not inspect the subject.

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DEFINITION OF VALUE

The purpose of the appraisal is to communicate an opinion of the market value of the subjectproperty. Market value is defined in the Uniform Standards of Professional Practice, as follows:

"The most probable price which a property should bring in a competitive and openmarket under all conditions requisite to a fair sale, the buyer and seller each actingprudently 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 thepassing 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 whatthey consider their best interests;

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

4. Payment is made in terms of cash in United States dollars or in termsof financial arrangements comparable thereto; and

5. The price represents the normal consideration for the property soldunaffected by special or creative financing or sales concessionsgranted by anyone associated with the sale."

EXPOSURE TIME AND MARKETING PERIOD

The concept of exposure time is historical in nature and is presumed to have occurred prior to theeffective date of the appraisal. Alternatively, marketing period occurs after the effective date ofthe appraisal and may or may not be directly related to the value presented. The actual sale pricecould increase, decrease, or remain static during the marketing period depending upon marketconditions and the type of property being appraised.

The PricewaterhouseCoopers’ (PwC) Survey-First Quarter 2019 indicates the followingmarketing times for the National Apartment market.

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Since most investors' perceptions and estimates of marketing period are based largely onexposure times that they have recently encountered in similar transactions, it stands to reasonthat there should be some correlation between marketing periods and exposure times. In fact, inthe absence of perceived changes in the market or other extenuating circumstances, marketingperiod and exposure time should be identical. That is to say, if all other things are held constant,a property that (retrospectively) required an exposure time of say one year should be expected tohave a marketing period (prospectively) also of one year.

Differences in the two concepts should appear when there is a perceived change in the market.To use the same example presented above, if a property required an exposure time of one yearbut perceived market conditions are improving, an appropriate estimate of marketing periodcould reasonably be expected to be less than one year. Conversely, if market conditions wereanticipated to worsen, marketing period might exceed exposure time.

Objectively quantifying such differences would be virtually impossible; however, understandingthe relationship between the two concepts and how they are affected by perceived changes in themarket allows one to better estimate (subjectively) a reasonable period for exposure time andmarketing period. This is especially important during periods when actual market evidence islimited by a lack of transactions. Extracting transaction-driven estimates can also be tenuoussince many properties are often originally placed on the market at inflated asking prices. It isthen necessary to decide if exposure time began when the property was first offered for sale orwhen the price was dropped to (or near) the ultimate sale price. Further complicating the issue isthe question of whether exposure time ends when a sale contract is signed or whether it ends atthe closing date of a sale.

Based upon our investigations, we believe that a marketing period of 6 to 12 months isreasonably appropriate. Furthermore, it is our opinion that the exposure time commensurate withour opinion of value for the subject would also be 6 to 12 months.

APPRAISAL DEVELOPMENT AND REPORTING PROCESS

The scope of this appraisal involves the systematic research and analysis necessary to reach avalue conclusion for the subject. The initial step was to inspect the subject, general market area,and neighborhood. Market research included the assembly of data from public records, realestate specialists, governmental entities, real estate publications, as well as owners/investors,management and property managers at similar and comparable properties. Informationconcerning the subject was also collected and consisted of ad valorem taxes, zoning information,sales history, governmental restrictions, environmental regulations and other factors which mayaffect the subject property. Title studies were not commissioned at the same time USRC wasengaged to provide valuation services. USRC reserves the right to amend our value conclusions inthe event that additional studies are conducted which reveal material discrepancies. Informationfrom the market area was collected and studied in order to define the character, composition andthe propensity for change in the subject trade area. This information is analyzed to determine theinfluences, which will impact the surrounding market area and the value of the subject property.

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After analyzing the macro-environment, research was conducted relevant to the valuationprocess, including gathering income, expense, capitalization rate, and discount rate data;comparable improved sales; real estate tax, zoning, and flood plain data and any otherinformation pertinent to the valuation of the subject property. This information was reviewed,confirmed when necessary, and analyzed through the approaches to value.

The subject-specific data considered in our analysis was provided by management of the subject.The apartment market was analyzed. Market comparables were analyzed. Improved salecomparables were analyzed, and where possible were confirmed with the buyer, the seller or aknowledgeable third party.

Applicability of Approaches

The Income Capitalization Approach: This approach analyzes the property's capacity togenerate income (or other monetary benefit) and converts this capacity into an indication ofmarket value. The approach is suitable for properties that have obvious earning power andinvestment appeal but is inappropriate for properties that have no readily discernible incomepotential.

The Sales Comparison Approach: This approach compares the subject property to otherproperties that have changed hands fairly recently, at known price levels. The approach is mostmeaningful when there is adequate market data involving comparable properties. Reliability ofthe approach varies directly with the quantity and quality of available market data.

The Cost Approach: In this approach, the cost to replace the improvements is estimated. Adeduction is made for any depreciation, and the result is combined with the estimated value ofthe underlying land. The approach is applicable when each component is independentlymeasurable, and when the sum of all components is believed to reflect market value. Theapproach is not applicable to unimproved land or obsolete improvements.

Applicability to Subject Property: The income capitalization approach was deemed the mostapplicable method to determine market value for the subject. The sales comparison approach wasutilized to provide an additional point of reference. The cost approach does not generally reflectthe buying motivations of investors, and is a less reliable approach for older properties such asthe subject. Therefore, this approach was not used. At the client’s request, an insurable value wasprovided. The analysis undertaken and discussed herein is considered sufficient to provide acredible value for the intended purposes of this report.

This appraisal is a complete appraisal in a self-contained report. This appraisal engagement hasbeen conducted using applicable standard appraisal techniques and in conformity with: therequirements of the Code of Professional Ethics and the Standards of Professional Practice of theAppraisal Institute; the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA)of 1989 and 1994; and the Uniform Standards of Professional Appraisal Practice (USPAP).

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The definition of market value presented previously discusses the conditions of a market wherebuyers and sellers are acting freely and are not under duress. Within the valuation process wehave attempted to balance the buyer and seller perspectives in our consideration of assumptionsand rates. This has been done by evaluating available market data and available surveys. Inaddition, we have also spoken with active market participants. The primary emphasis of thisresearch was to discover differences in valuation criteria from a buyer's versus a seller'sperspective. The results provide support for analysis bases such as capitalization rates.

HISTORY OF THE SUBJECT

Title to the subject is currently vested in H&Y Property Holdings, LLC. The subject was built in1942 and was renovated in 1991. To the best of our knowledge there has been no transfer of titleover the past three years and that the subject is not currently listed for sale or in a purchasecontract.

COMPETENCY OF THE APPRAISERS

U S Realty Consultants, Inc. has performed numerous appraisals and reviews of appraisals onincome producing properties such as the subject, in Ohio and throughout the United States. Wehave analyzed over hundreds of apartment properties during the period 1992 through the present.Files are maintained with historical and current data relative to the changing market with respectto the subject. Competency has been established in both the property type and geographical areaof the subject either through previous engagements or through current research of germanemarket trends. Therefore, we possess the knowledge and experience to conduct the inspection,analysis, and reasoning necessary to accurately estimate the value of the appraised interest in thesubject.

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DESCRIPTIVE DATA

REGIONAL ANALYSIS

The subject is located in Windham, in Portage County, Ohio. Accordingly, its market value isinfluenced in a general manner by the economic, political, physical and social characteristics ofthe Akron Core Based Statistical Area (CBSA). A CBSA is a statistical geographic entityconsisting of one or more counties with at least one core city of at least 10,000 people. Adjacentcounties included in the CBSA must have a high degree of social and economic integration withthe core counties as measured through commuting ties with the counties containing the core. TheAkron CBSA includes Portage and Summit Counties.

The value of real property is influenced by the interaction of four basic forces. These forcesinclude social trends, economic circumstances, environmental conditions, and governmentalcontrols and regulations. The interaction of these four forces influences the value of every parcelof real estate in the market.

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Social Forces

Social forces are trends that are exerted primarily through population characteristics. Realproperty values are affected not only by population changes and characteristics, but also byvarious forms of human activity.

Demographic Trends: Changing demographics influence unemployment rates, income levels,retail sales and many other key demand parameters analyzed in determining commercial realestate productivity. The following table lists population growth trends for Windham, PortageCounty, the Akron CBSA, and Ohio.

2010 2019 2024 % Change % Change

Area Census (Est.) (Proj.) 2010-19 2019-24

Windham 2,209 2,008 1,938 -9.1% -3.5%

Portage County 161,419 162,433 163,577 0.6% 0.7%

Akron CBSA 703,200 703,754 707,379 0.1% 0.5%

Ohio 11,536,504 11,694,041 11,812,720 1.4% 1.0%

Source: Claritas, Inc.

Population Growth TrendsWindham, Ohio

As shown in the table, the estimated population of Windham decreased from 2010 to 2019, whileall other areas saw little change. These trends are projected to continue.

Recreation and Regional Attractions: Recreational facilities and regional attractions enhancean area’s quality of life. These activities also have a significant economic impact on an area byincreasing the demand for services and retail trade created by visitors.

Noted attractions in Akron include the Akron Art Museum, Akron Zoo, Hower House, JohnBrown Home, Perkins Stone Mansion, Quaker Square, Stan Hywet Hall and Gardens, the AkronFounders Home - the Simon Perkins Stone Mansion and Kent State University Museum. The2,955-seat E.J. Thomas Performing Arts Hall at The University of Akron campus is home to theAkron Symphony Orchestra. The Ohio Ballet performs at the historic Akron Civic Theatre. Thecommunity is home to The Magical Theater, one of only six residence theaters in the nationdedicated to children and family productions.

Canal Park is home of the Akron Rubber Ducks, a Class AA affiliate of the Cleveland Indians.Akron also hosts the All-American Soap Box Derby at Derby Downs.

The 30,000-acre Cuyahoga Valley National Recreation Area lies along the Cuyahoga River inthe northwestern section of Summit County and is annually visited by more than three millionpeople. Historical sites and entertainment in this area include Hale Farm & Village and WesternReserve, Boston Mills/Brandywine Ski Resorts, Blossom Music Center, and the CuyahogaValley Scenic Railroad.

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Convention Facilities: The John S. Knight Center in downtown Akron features two main exhibithalls (the largest is 30,000 square feet), 18 meeting rooms, and banquet and ballroom spacetotaling 12,000 square feet. The center annually hosts home and garden shows, shareholdermeetings, industry meetings and conventions, and is within easy access of 6,000 hotel rooms. Othernoted meeting and event facilities within the Greater Akron area include Arena Complex at theSummit County Fairgrounds and four facilities at the University of Akron - E.J. Thomas Hall,Rubber Bowl, Gardner Student Center Theatre and James A. Rhodes Arena (The JAR).

Economic Forces

Economic forces are the fundamental relationships between current and anticipated supply anddemand, and the economic activity of the population to satisfy its wants, needs and demandsthrough its purchasing power.

According to the Federal Reserve’s Beige Book released on April 17, 2019, economic activityexpanded at a slight-to-moderate pace in March and early April. While most districts reportedthat growth continued at a similar pace as the previous report, a few districts reported somestrengthening. There was little change in the outlook among contacts in reporting districts, withthose expecting slight-to-modest growth in the months ahead. Reports on consumer spendingwere mixed but suggested sluggish sales for both general retailers and auto dealers. Reports ontourism were generally more upbeat. Reports on loan demand were mixed, but indicated steadygrowth. Reports on manufacturing activity were favorable, although contacts in many districtsnoted trade-related uncertainty. Most districts reported stronger home sales, although somedistricts noted low demand for higher-priced homes. Among reporting districts, agriculturalconditions remained weak, with contacts expressing concerns over the impact of current andfuture rainfall and flooding.

Income: The economic vitality of an area is an important consideration in forecasting thedemand and potential income for commercial real estate. Income levels provide an indication ofan area’s economic vitality since they reflect an area’s economic growth and its residents’standard of living. The table below lists median household income levels for Windham, PortageCounty, the Akron CBSA, and Ohio.

2010 2019 2024 % Change % Change

Area Census (Est.) (Proj.) 2010-19 2019-24

Windham $31,889 $37,492 $39,283 17.6% 4.8%

Portage County $44,345 $52,717 $54,444 18.9% 3.3%

Akron CBSA $43,024 $54,799 $57,622 27.4% 5.2%

Ohio $41,111 $56,290 $61,163 36.9% 8.7%


Median Household Income EstimatesWindham, Ohio

Overall, these income levels have increased steadily. The income levels for Windham are thelowest listed.

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Effective Buying Income: One indicator often used to measure an area’s ability to buy is theeffective buying income (EBI). The EBI is similar to disposable personal income (money incomeless personal tax and non-tax payments). This data is useful in determining market strength. Thefollowing table lists the most current and projected EBI for Windham, Portage County, theAkron CBSA, and Ohio.

2019 2024 % Change

Area (Est.) (Proj.) 2019-24

Windham $34,265 $34,884 1.8%

Portage County $46,053 $47,438 3.0%

Akron CBSA $47,622 $49,868 4.7%

Ohio $48,915 $52,570 7.5%


Median Household EBIWindham, Ohio

As shown, the median household EBI for Windham is the lowest listed. From this analysis, wecan conclude that residents of the village have a lower level of disposable income, as a whole.By comparison, the level of median household EBI for Portage County is higher, but still belowthe CBSA and state levels.

Industries and Employment: Information on the size of a region’s labor force and the relativetrends in employment and unemployment are key local economic indicators. The widely citedunemployment rate provides a good measure of the relative utilization of labor in a region. Thesemeasures are “residency-based”, providing current information on the labor force status of theresidents of a county or region.

The following table presents historical unemployment for Portage County, the Akron CBSA,Ohio, and the United States. Generally, unemployment rises during cyclical downturns and fallsduring periods of rapid economic growth. Based on the current economic uncertainty, rates couldfluctuate going forward.

Area 2013 2014 2015 2016 2017 2018 Apr-19

Portage County 7.7% 5.9% 4.9% 5.0% 5.0% 4.6% 3.3%

Akron CBSA 7.6% 5.9% 5.0% 5.1% 5.0% 4.6% 3.4%

Ohio 7.5% 5.8% 4.9% 5.0% 5.0% 4.6% 3.3%

United States 7.4% 6.2% 5.3% 4.9% 4.4% 3.9% 3.3%

Source: United States Bureau of Employment Services

Average Annual Unemployment RatesWindham, Ohio

As shown, unemployment in Portage County fell from 7.7% in 2013 to 4.6% in 2018. As ofApril 2019, the unemployment rate was 3.3%.

The distribution of employment helps determine the economic character of an area. Thefollowing table presents a historical summary of the Akron CBSA’s nonagricultural employmentby industrial sector.

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2012 2018 2012 2018 Net Change % Change

Industry Title Total Jobs Total Jobs % of Total % of Total 2012-18 2012-18

Mining, Logging, and Construction 11,400 14,200 3.5% 4.2% 2,800 24.6%

Manufacturing 40,100 39,300 12.3% 11.6% -800 -2.0%

Wholesale Trade 17,900 18,300 5.5% 5.4% 400 2.2%

Retail Trade 35,700 36,400 11.0% 10.7% 700 2.0%

Transportation and Utilities 10,200 12,500 3.1% 3.7% 2,300 22.5%

Information 3,800 4,800 1.2% 1.4% 1,000 26.3%

Financial Activities 13,000 15,700 4.0% 4.6% 2,700 20.8%

Professional and Business Services 49,700 51,300 15.3% 15.1% 1,600 3.2%

Education and Health Services 51,100 55,400 15.7% 16.3% 4,300 8.4%

Leisure and Hospitality 29,900 34,100 9.2% 10.0% 4,200 14.0%

Other Services 13,600 13,500 4.2% 4.0% -100 -0.7%

Government 48,800 44,700 15.0% 13.1% -4,100 -8.4%

Total 325,200 340,200 15,000 4.6%

Source: United States Bureau of Employment Services

Nonagricultural Employment by IndustryAkron CBSA

Overall employment increased by 4.6% from 2012 to 2018. The largest sectors of the Akroneconomy in 2018 included Education and Health Services, Professional and Health Services, andGovernment with 16.3%, 15.1%, and 13.1% of the total, respectively.

The largest employers in the Akron Metropolitan Area are listed in the table that follows.

Firm/Organization Type of Business # Employees

Summa Health System Health Care 8,100

Akron General Health System Health Care 5,928

Akron Children's Hospital Health Care 3,697

Akron General Medical Center Health Care 3,697

The Goodyeae Tire & Rubber Co. Manufacturing 3,500

Summit County Government 3,468

Kent State University Education 3,400

Akron Public School Education 3,050

The University of Akron Education 2,845

FirstMerit Corp. Health Care 2,695

Source: Business Climate

Largest EmployersAkron Metropolitan Area

Environmental Forces

Environmental forces are both natural and manmade forces that influence real property values.Some environmental forces include climatic conditions, natural barriers to future development,primary transportation systems, and the nature and desirability of the immediate areassurrounding a property.

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Highway Transportation: Highway accessibility is a primary consideration in planning anarea’s future growth and development. Three interstate highways span throughout the GreaterAkron area including Interstates 76, 77 and the Ohio Turnpike (Interstate 80). Interstates 76 and77 intersect in downtown Akron and are connected by Interstate 277 just south of the downtownarea. Other regional interstate highways include Interstates 271 and 480, both of which arelocated in the northern portion of Summit County.

Public Transportation: The Akron Metropolitan Regional Transit Authority provides publictransportation throughout Summit County. The Kent State University Campus Service operatesin Kent, Ravenna, Stow and Akron.

Rail Transportation: The Summit County Port Authority, Conrail, Chessie, Wheeling & LakeErie and the Akron-Barberton Belt Line all provide freight rail service to the Tri-County. A new26-acre Intermodal Freight Terminal in Stark County provides highway/rail linkage for longdistance and overseas freight. Passenger rail service is available via Amtrak in Akron, Clevelandand Canton.

Air Transportation: Stark County is home to the Akron-Canton Regional Airport and isserviced by five airlines (Spirit, American Airlines, Delta Air Lines, United Airlines, andSouthwest Airlines) to fifteen nonstop destinations. The airport is also home to a Foreign TradeZone and the Port Jackson Industrial Park. The following table presents historical air passengeractivity at the Akron-Canton Regional Airport.

Year Passenger Enplanements % Change

2017 619,321 -9.7%

2016 685,553 -9.7%

2015 759,335 -1.5%

2014 771,155 -9.5%

2013 851,809 N/A

Source: Federal Aviation Administration

Airport ActivitiesAkron Canton Regional Airport

Climate: Akron is located in the Great Lakes region approximately 39 miles south of Lake Erie,on the Glaciated Allegheny Plateau. The area has a humid continental climate with four distinctseasons. Winters are cold and dry but typically bring a mix of rain, sleet, and snow withoccasional heavy snowfall and icing. Summers are typically very warm and humid. July andAugust are the warmest months, with an average temperature of 72 degrees, while February isthe coldest, with an average temperature of 28 degrees.

Outlook

Our review of the above data indicates that the economy of Windham is somewhat struggling.The area is experiencing population declines and lower but rising income levels, offset by aslight increase jobs within the CBSA.

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NEIGHBORHOOD ANALYSIS

Introduction

The subject is located in the Village of Windham, along the east side of Portage Countyapproximately 35 miles northeast of Akron and 45 miles southeast of Cleveland, Ohio. It isgenerally bounded by SR 82 to the north, Bryant Road to the west, Smalley Road to the south andthe Portage/Trumbull County Line to the east.

Transportation

The primary transportation route serving direct access to Windham is State Route 303. The mostproximate Interstate 80 (Ohio Turnpike) exits are 10+- miles west off SR 44 and seven-mileseast off SR 5. The Ohio Turnpike bisects Windham, providing access to the larger cities such asCleveland (45+- miles NW), Akron (35+- miles SW), Warren (12+- miles E) and Youngstown(30+- miles SE).

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Surrounding Land Uses

Windham is mainly comprised of residential development consisting of single and multi-family, aswell as scattered commercial development and is generally suburban in nature. The commercialdevelopment that services the local residents is located along the primary corridor State Route 303in the east direction; these facilities include government buildings, restaurants, grocery, pharmacyand various general commercial/retail supportive uses. The area has not experienced any newcommercial development in the past several years.

Summary

The subject's surrounding land uses are complementary and the infrastructure provides foroptimum utilization of the land. Access to the neighborhood is good via highways and localroutes, which are vital to the success of the neighborhood's development.

SUBJECT

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DESCRIPTION OF THE SITE

Location: The subject’s address is 9515 Community Road & 9539 Greenmeadow Road inWindham, Portage County, Ohio.

Size and Shape: The subject is comprised of two contiguous rectangular land parcels eachcontaining 0.33 acres for a total of 0.660 acres. The tax parcel maps are shown below.

Access: The subject buildings are accessed from the east side of Community Road via gravelparking areas and concrete walkways and along the north side of Greenmeadow Road via gravelparking areas and concrete walkways.

Site Conditions: The subject site is generally level at street grade. We have not been providedwith a copy of an environmental survey of the subject site. U S Realty Consultants has notperformed an engineering study nor test borings and makes no further conclusion as to thecondition of the foundation or the soil. Determination of environmental conditions is outside thescope of the appraisal process. In the event an environmental survey is done and concludes thereare environmental issues a reanalysis of value would be warranted.

Topography and Drainage: According to Flood Insurance Rate Map# 39133C0181D, datedAugust 18, 2009, the site is located in a flood zone X, an area of minimal flooding. Drainage isassumed to be adequate. A copy of the flood map can be found on the following page

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Zoning: The subject site is zoned R-2, Residential District. According to the Windham ZoningOffice, the purpose of this district is to accommodate single-family residential development andaccessory buildings; conditional uses include institutional, schools, facilities of worship, andgovernment buildings. The subject is a legal, non-conforming use. According to the zoning code“Nothing shall prevent the reconstruction, repairing or rebuilding and continued use of any non-conforming building or structure damaged by fire, collapse, explosion, or Act of God and thestructure may be rebuilt or restored provided the area is not increased or extended”.

Easements: Normal utility easements are in place. These easements are assumed to have nodetrimental effect on the value of the subject. No easements of an adverse nature were indicated atthe subject site and none are assumed to exist.

Utilities: The subject is served by all necessary public utilities.

Summary: The subject site is serviced by all necessary utilities and the site blends in well withsurrounding residential development.

Real Estate Taxes: Real estate taxes in Portage County, and all of Ohio, are assessed at 35% ofmarket value and are paid semiannually, one year in arrears (i.e. 2018 taxes are paid in 2019).The tax year 2018 county assessed market value, assessed value, and real estate tax for thesubject is shown below.

Parcel Number Land Value Building Value Total41-057-10-00.148-000 $15,000 $82,600 $97,60041-057-10-00.149-000 $15,000 $75,800 $90,800

Total $30,000 $158,400 $188,400

Parcel# Effective Rate Assessed Value Tax Liability41-057-10-00.148-000 60.7980 $34,160 $2,07741-057-10-00.149-000 60.7980 $31,780 $1,932

Total $65,940 $4,009 1

2018 County Market Value

2019 Tax Liability

For real estate tax purposes, properties in Ohio are appraised as fee simple estates based onmarket rents. If a property transfers in Ohio, the tax liability is generally based on the mostrecent transfer price. Accordingly, we have based our real estate tax projection upon ourconcluded market value (less FF&E), utilizing the current tax rate, as shown in the followingtable.

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As Is Market Value $410,000Less FF&E Value $16,000As Is Value $394,000Assessment Ratio 35.00%Estimated Assessed Value $137,900Effective Tax Rate/$1,000 60.798010Total Taxes $8,384Rounded $8,400

TAX ANALYSIS

DESCRIPTION OF THE IMPROVEMENTS

This description of the subject improvements is based on our personal inspection of the property andinformation provided by property management.

Improvements consist of two, six-unit apartment buildings originally constructed in 1942 withrenovations in 1991. The building located at 9515 Community Road contains 4,944 square feet andhas (2) 1-bedroom units, (2) 2-bedroom units, and (2) 3-bedroom units. The building located at9539 Greenmeadow Road contains 5,464 square feet and has (4) 2-bedroom units and (2) 3-bedroom units. The total rentable area is 10,408 square feet. The buildings are currently 100%occupied. The tenants pay own gas and electric and water is included in the monthly rent.

The buildings are wood-framed with vinyl siding exterior. The roofs area gable asphalt shingledwith aluminum gutters and downspouts. The interior floors are a combination of carpeting andvinyl and each unit contains a 40-gallon hot water tank and forced-air gas furnaces. Each unitincludes a laundry room with washer/dryer hook-ups, refrigerator, microwave and stove. Siteimprovements include grassy areas and concrete walkways.

The unit sizes and floor plans were requested but not provided to us. Based upon our inspection,conversation with property management and the total building square footage of 10,408 square feet,we have estimated the one-bedroom units at 600 square feet, two-bedroom units at 860 square feetand the three-bedroom units at 1,012 square feet. The following chart demonstrates the breakdownof the unit types.

Type # SF Total SF

One-Bedroom, One Bath 2 600 1,200

Two-Bedroom, One Bath 6 860 5,160

Three-Bedroom, One Bath 4 1,012 4,048

Total 12 867 10,408

Subject Unit Breakdown

Conclusion

The improvements are in generally average condition. The subject improvements conform to thesurrounding improvements in the neighborhood. Pictures of the subject are presented on thefollowing pages.

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APARTMENT MARKET ANALYSIS

We begin with an overview of the national and regional apartment markets to establish that a marketexists for the subject, and further refine the suitability of the subject to meet the demand of themarket.

NATIONAL APARTMENT MARKET OVERVIEW

The PwC Real Estate Investor Survey - First Quarter 2019 report provided the following summaryof the national apartment market:

According to the 1Q 2019 PricewaterhouseCoopers’ Survey (PwC), while this market continuesto attract capital in a prolonged cycle, investors cite rising interest rates, oversupply, politicaluncertainty, and a macro-economic slowdown as potential disruptors in the coming year.

• Despite a supply-demand imbalance in certain submarkets, the overall outlook for rentgrowth is upbeat.

• The average initial-year market rent change rate rises 24 basis points this quarter to2.64%, the second highest among the PwC survey’s national markets.

• A dip in its average overall cap rate for the fourth consecutive quarter has 56.0% ofinvestors viewing this market as overpriced while the balance see it as fairly priced.

The combination of these key factors have most PwC surveyed investors in a hold pattern. MostPwC survey participants feel that market conditions favor neither buyers or sellers.

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It is noted that the survey data above is based primarily on investment grade real estate. Theaverage overall capitalization rate in the national apartment market is 5.03%, down 13 basispoints from the previous quarter and down 30 basis points from a year prior.

LOCAL MULTI-FAMILY MARKET

The following analysis is from the CoStar Multi-Family Report for the defined subject’sOutlying Portage County submarket, which is part of the larger Akron market.

Outlying Portage County Multi-Family Submarket

The subject is located in the Outlying Portage County Multi-Family Submarket. Again we haveused data reported by CoStar for our market analysis. Below, we present the key indicators, byproperty quality, for the market.

Source: CoStar

Supply: Current supply in the Outlying Portage County MF submarket was 1,300 units. There areno units under development as of the most recent an there has not been any new inventory deliveredover the defined historical period. CoStar projects no deliveries through 2023.

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Source: CoStar

Rents: The average asking rent in the submarket was $656 per unit per month, and the averageeffective rent was $653 per unit per month. Rent growth has been positive since 2013, althoughgrowth was negative in 4Q 2017. Rent growth is projected to be negative in 2019 before becomingpositive through 2022.

Source: CoStar

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The chart below show market rent growth by bedroom. The subject contains one, two and threebedroom, units. As shown, rent growth has been steady for all three unit types.

Source: CoStar

Vacancy: Year-to-date vacancy in the submarket reported was 4.1%, which is lower than theyear-end historical periods shown on the chart on the next page. CoStar projects total yearlyvacancy for 2019 to end at 4.1%. Going forward, CoStar projects vacancy to increase to 5.0% by2023.

Source: CoStar

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Source: CoStar

Net Absoprtion: CoStar reported positive year-to-date absorption of two units. Historical netaborption has generally been positive, though it was negative most recently in 2017 and 2013.

Source: CoStar

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COMPARABLE RENTALS

The following pages detail the rental properties that were analyzed in our estimation of market rents.An analysis of current market rents at comparable apartment properties is considered relevant as anindication of the subject's market competitiveness as of the date of valuation. These properties aremost similar to the subject with respect to unit styles, location, age, and amenities. The rent rangesat the comparable rentals reflect their dissimilarities or similarities relative to the subject.

9515 Community Road & 9539 Greenmeadow RoadRent Comparables

Name Unit Count Year BuiltS Subject 12 1942

1 118 W. Main Street 12 1972

2 208 Ravenna Road 7 1920

3 9544 Cloverleaf Road 10 1942

4 10775 Main Street 12 1890

5 1379 Mahoning Ave 60 1968

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Comparable Apartment Rentals Map

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Comparable Rental #1

Community 118 W. Main StreetNewton Falls, Ohio

Description of Project

Year Built: 1975 Total Units: 12Average Unit Size (sf) 500 Occupancy Rate: 92%

Rent Concessions: MinimalMulti-Family Type Low riseConstruction Type: Masonry

Unit Mix and Rental Data

118 W. Main Street Number of Units Number of Bathrooms Size (sf) Rent Rent/sfOne Bedroom N/A N/A N/A N/A N/ATwo Bedroom 12 1 500 $564 $1.13Three Bedroom N/A N/A N/A N/A N/A

Unit Amenities:Air conditioning, refrigerator, range

Project AmenitiesNone

Utilities IncludedTrash; tenant pays water and electric

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Community 208 Ravenna RoadNewton Falls, Ohio



Rent Concessions: MinimalMulti-Family Type GardenConstruction Type: Wood-framed/wood exteriors


208 Ravenna Road Number of Units Number of Bathrooms Size (sf) Rent Rent/sfOne Bedroom 2 1 397 $456 $1.15Two Bedroom 5 1 758 $499 $0.66Three Bedroom N/A N/A N/A N/A N/A

Unit Amenities:Refrigerator, range, washer/dryer hookup


Utilities IncludedTrash

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Community 9544 Cloverleaf RoadWindham, Ohio



Rent Concessions: N/AMulti-Family Type GardenConstruction Type: Wood-frame/vinyl sided

Unit Mix and Rental Data*

9544 Cloverleaf Road Number of Units Number of Bathrooms Size (sf) Rent Rent/sfOne Bedroom N/A N/A N/A N/A N/ATwo Bedroom 4 1 612 $422 $0.69Three Bedroom 4 1 727 $442 $0.61*The property also offers two, four-bedroom units

Unit Amenities:Refrigerator, range, washer/dryer hookup


Utilities IncludedTrash

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Community 10775 Main StreetMantua, Ohio


Year Built: 1890 Total Units: 12Average Unit Size (sf) 1,030 Occupancy Rate: 100%

Rent Concessions: MinimalMulti-Family Type Low-RiseConstruction Type: Masonry


10775 Main Street Number of Units Number of Bathrooms Size (sf) Rent Rent/sfOne Bedroom N/A N/A N/A N/A N/ATwo Bedroom 11 1 1,000 $819 $0.82Three Bedroom 1 1 1,355 $813 $0.60

Unit AmenitiesRefrigerator, range, washer/dryer connections


Utilities IncludedWater, trash; tenant pays gas and electric

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Community Packard House1379 Mahoning AveWarren, Ohio



Rent Concessions: N/AMulti-Family Type GardenConstruction Type: Masonry


1379 Mahoning Ave Number of Units Number of Bathrooms Size (sf) Rent Rent/sfOne Bedroom 30 1 750 $425 $0.57Two Bedroom 30 1 1,000 $495 $0.50Three Bedroom N/A N/A N/A N/A N/A

Unit AmenitiesAir conditioning, refrigerator, range, garbage disposal

Project AmenitiesLaundry facilities, playground

Utilities IncludedWater/Sewer, Heat, Trash

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Analysis of Apartment Comparable Rentals

The preceding comparable data has been analyzed and compared to the subject in order to estimatemarket rent levels. Variances between the comparable data and the subject are predominantlyattributable to differences in the physical characteristics of the improvements and the amenitiesoffered. Other factors, such as the condition of the property, age, and the location also affect theasking rents.

The following table summarizes pertinent data for the comparable properties. The chart alsopresents the subject’s average in-place rent based on the rent roll provided.

Apartment Survey Ranges9515 Community Road & 9539 Greenmeadow Road

Unit Types

One-Bedroom, One Bath 600 $383 $0.64

Comparable Properties 397 - 750 $425 - $456 $0.57 - $1.15average of comparables 574 $441 $0.77

Two-Bedroom, One Bath 860 $523 $0.61

Comparable Properties 500 - 1,000 $422 - $819 $0.50 - $1.13average of comparables 774 $560 $0.72

Three-Bedroom, One Bath 1,012 $635 $0.63

Comparable Properties 727 - 1,355 $442 - $813 $0.60 - $0.61average of comparables 1,041 $628 $0.60

Size Rent Rent/sf

MARKET RENT ANALYSIS

Contract Rent, Asking Rents and Market Rent Conclusions

According to the rent roll, 9 of the 12 units are Section 8 tenants. Property management indicatedthat that the subject has historically been very well occupied and that the majority of the existingtenant base is comprised of long-term tenants (up to 20 years). Management confirmed that thesetenants are tenant-based Section 8, commonly known as the Housing Choice Voucher programwhereby the voucher is attached to the tenant (tenant vacates the assistance transfers). Propertymanagement stated that HUD recently completed the annual inspection of the subject and has metthe requirements. The subject’s in-place rents for the two-bedroom and three-bedroom units arebracketed by the market comparables on a monthly basis. The subject’s in-place rents are slightlybelow the market comparables on a monthly basis for the one-bedroom units but are supported on aper square foot basis.

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The table below presents our market rent conclusion. These rates are applied in our analysis viathe Income Capitalization Approach that follows.

USRC

Type # SF Estimate Per SF

One-Bedroom, One Bath 2 600 $390 $0.65

Two-Bedroom, One Bath 6 860 $525 $0.61

Three-Bedroom, One Bath 4 1,012 $635 $0.63

Total/Weighted Average 12 867 $539 $0.62

Market Rent Conclusions

Vacancy

The market comparables indicate overall vacancy rates ranging from 0% to 10% According toCoStar, the vacancy in the Outlying Portage County submarket is 4.1%. As indicated earlier, thesubject has historically been very well occupied and that the majority of the existing tenant base iscomprised of long-term tenants (up to 20 years).

For pro forma valuation purposes, we have estimated a market vacancy of 4.0%.

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HIGHEST AND BEST USE

The market value of the subject is a function of its highest and best use. Highest and best use maybe defined as the most probable, possible, and permissible use for which a property may be usedand is capable of being used. The Appraisal Institute defines highest and best use as follows:

The reasonably probable and legal use of vacant land or an improved property, which isphysically possible, appropriately supported, financially feasible, and that results in thehighest value. The four criteria the highest and best use must meet are legal permissibility,physical possibility, financial feasibility, and maximum profitability.

This definition applies specifically to the highest and best use of land or sites as though vacant.When a site contains improvements, the highest and best use may be determined to be differentfrom the existing use. The existing use will continue unless and until land value in its highest andbest use exceeds the sum of the value of the entire property in its existing use and the cost to removethe improvements.

Implied in these definitions is that the determination of the highest and best use results from theappraiser's judgment and analytical skill, which means that the use determined from analysisrepresents an opinion, not a fact to be found. In appraisal practice, the concept of highest and bestuse represents the premise upon which value is based. The procedure used to estimate the highestand best use of a property as though vacant and as improved is to test these two situations on thebasis of the categories discussed in the definition.

In any land use analysis, the following tests must be met in estimating highest and best use. The usemust be legal; the use must be probable, not speculative or conjectural; there must be a profitabledemand for such use; and it must return to the land the highest net return for the longest period oftime. The synthesis of these four factors was considered to determine a most probable andprofitable use for the subject parcel of real estate.

HIGHEST AND BEST USE AS THOUGH VACANT

In estimating highest and best use, there are essentially four criteria:

1. Possible use. What uses are possible based upon the site's size, shape, area,terrain, soil conditions, topography, and access to utilities?

2. Permissible use (legal). What uses are permitted by zoning and deed restrictions onthe site in question?

3. Feasible use. What possible and permissible uses will produce a net return to theowner of the site?

4. Highest and best use. Among the feasible uses, which use will produce thehighest net return or the highest present worth?

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The highest and best use of land if vacant and available for use may be different from the highestand best use of the improved property. This is true when the improvement is not an appropriateuse, but it makes a contribution to the total property value in excess of the site.

These four tests have been applied to the subject site, as though vacant. In arriving at the estimateof highest and best use, the subject site was analyzed as if vacant and available for development.

Possible Use

The physical aspects of the site itself dictate the first constraint imposed on the possible use of aproperty. The size and location within a given block are the most important determinants ofpotential use. In general, the larger the site, the greater its potential to achieve economies of scaleand flexibility in development. The subject site at contains 0.660 acres. The site is rectangular inshape. The smaller size of the site and the fact that it is surrounded by residential users do imposesome constraints on the flexibility of development or on the scope of possible uses.

Permissible Use

Legal restrictions as they apply to the subject are private restrictions and the public restrictions ofzoning. The site is located in the R-2, Residential District zone. The zoning is specificallydesignated for single-family development. The subject is a legal, non-conforming use. If there weredamages to the building, the property could rebuild apartment on the site (cannot add more unitsthan is existing). Under the as though vacant scenario, however, it assumes a vacant site. Thesubject would therefore be subject to the current zoning and only single-family residentialdevelopment would be permitted.

Feasible Uses

The determination of financial feasibility is more complex than the previous two criteria, requiringan examination of current market conditions. Based on market conditions in the area, it appears thatsingle-family development would not be feasible at this time.

Highest and Best Use

In the final analysis, a determination must be made as to which feasible use is the highest andbest use. Based on market conditions it is our opinion that the highest and best use for theproperty would be to hold for future single-family residential development.

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HIGHEST AND BEST USE AS IMPROVED

In analyzing the highest and best use of the existing improvements, the four tests that werepreviously discussed are also applied to the subject as improved. This simple test is undertakenin order to determine whether an alternative use could generate a greater return to the land andremoval of the existing improvements is justified.

The existence of the improvements indicates that an apartment complex is possible. The current useof the site is considered a legal, non-conforming use under the current zoning designation.Therefore, the improvements are legally permissible and meet the second criterion.

In order to meet the test of financial feasibility, rental rates for an alternative use must support areturn on the combined cost of demolishing the existing improvements and the cost ofconstructing new improvements for the desired alternative use. This usually takes place whenthe useful life of a property has been realized and the value of the underlying land comprisesmost or all of the value of the property. Since the improvements, as they currently exist,continue to make a substantial contribution to the overall value of the property, the continuationof the existing use is justified. There is no alternative, economically feasible use that couldjustify removal or conversion of the existing improvements at this time. Therefore, the highestand best use of the subject, as improved, is for continued use as apartments.

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INCOME CAPITALIZATION APPROACH

This approach analyzes a property's capacity to generate income (or other monetary benefit) andconverts this capacity into an indication of value. The approach is suitable for properties thathave obvious earning power and investment appeal but is inappropriate for properties that haveno readily discernible income potential. Further, this approach is based on the premise that thevalue of a property is represented by the present worth of anticipated future benefits to bederived from ownership. There are two basic techniques that can be used for analysis purposes:Direct Capitalization and Discounted Cash Flow (DCF).

Direct Capitalization converts an estimate of a single year's income expectancy or an annualaverage of several years' income expectancies into an indication of value in one direct step.Direct Capitalization is especially useful when analyzing the “as-is” valuation of a property.

The Discounted Cash Flow (DCF) Analysis is a market reflective method of estimating thepresent worth of anticipated income benefits. This analysis includes the conversion of a streamof expected income into a present value, and is most appropriate when valuing a property’sprospective value.

In valuing the subject, it is our opinion that the most appropriate valuation technique for valuingthe subject is the direct capitalization method. On the following pages, our estimate of netoperating income will be developed. The estimate will be followed by the application of thedirect capitalization technique that will provide a conclusion of market value by this approach.

REVENUE ANALYSIS

Market Rent Conclusion: As discussed and concluded in the market analysis, we utilizedmarket rents for the subject’s units. The monthly market rent is shown below. The annualpotential gross rental income is estimated at $77,640.

USRC

Type # SF Estimate Per SF

One-Bedroom, One Bath 2 600 $390 $0.65

Two-Bedroom, One Bath 6 860 $525 $0.61

Three-Bedroom, One Bath 4 1,012 $635 $0.63

Total/Weighted Average 12 867 $539 $0.62

Market Rent Conclusions

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Vacancy Conclusion: The subject is 100% occupied. The market comparables indicate overallvacancy rates ranging from 0% to 10% According to CoStar, the vacancy in the OutlyingPortage County submarket is 4.1%. As indicated earlier, the subject has historically been verywell occupied and that the majority of the existing tenant base is comprised of long-term tenants (upto 20 years).

For pro forma valuation purposes, we have estimated a market vacancy of 4.0%.

Effective Rental Income: After the vacancy adjustment, the projected effective rental incometotals $74,534.

Other Revenue: This includes late fees and other income. We estimate other revenue to total$1,200 annually based on the historical data.

Effective Gross Income: Our estimate of effective gross income totals $75,734 .

EXPENSE ANALYSIS

All expenses necessary to maintain the production of revenue from operating the property areincluded in the expense analysis. The property is an apartment building. We were provided withfinancial statements for 2018 as well as a TTM statement through April 2019. The chartadditionally shows two expense comparables and our estimates used in the pro forma.

Income Capitalization Approach 50


Comparable, Historical and Projected Financial Data


Units 10 12 12 12 12Square Feet 4,355 10,408 10,408 10,408 10,408Average Unit Size 436 867 867 867 867Occupancy 100% 100% 92% 100% 92%

Revenues: Dollars Per Unit Dollars Per Unit Dollars Per Unit Dollars Per Unit Dollars Per Unit

Potential Rental Revenue $0 $76,322 $6,360 $76,573 $6,381 $77,640 $6,470Vacancy Allowance $0 $0 $0 $0 $0 -$3,106 -$259Effective Rent $72,889 $7,289 $89,316 $7,443 $76,322 $6,360 $76,573 $6,381 $74,534 $6,211Other Revenue $3,977 $398 $8,274 $690 $1,265 $105 $1,153 $96 $1,200 $100Total Revenue $76,866 $7,687 $97,590 $8,133 $77,587 $6,466 $77,726 $6,477 $75,734 $6,311

Operating Expenses: Repairs & Maintenance $7,048 $705 $31,907 $2,659 $2,004 $167 $2,070 $173 $2,400 $200 Utilities $7,351 $735 $1,553 $129 $12,957 $1,080 $13,408 $1,117 $13,200 $1,100 Real Estate Taxes $10,356 $1,036 $0 $0 $4,175 $348 $4,175 $348 $8,400 $700 Insurance $1,927 $193 $0 $0 $2,551 $213 $2,551 $213 $2,640 $220 General Administrative $0 $0 $7,251 $604 $0 $0 $0 $0 $1,200 $100 Management Fees $2,912 $291 $7,127 $594 $7,632 $636 $7,657 $638 $3,787 $316 Capital Reserve $0 $0 $0 $0 $0 $0 $0 $0 $3,000 $250Total Operating Expenses $29,594 $2,959 $47,838 $3,987 $29,319 $2,443 $29,861 $2,488 $34,627 $2,886Total - % of EGI 38.5% 49.0% 37.8% 38.4% 45.7%

NET INCOME $47,272 $4,727 $49,752 $4,146 $48,268 $4,022 $47,865 $3,989 $41,108 $3,426

Capital Expenditures 0 $0 0 $0 0 $0 0 $0 $0 $0Total Capitalized Costs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

CASH FLOW $47,272 $4,727.20 $49,752 $4,146.00 $48,268 $4,022.33 $47,865 $3,988.75 $41,108 $3,425.64

Comp 1 Comp 2TTM

April-19Subject

2018USRC Projection

Year 1



Repairs and Maintenance: For pro forma valuation purposes, the cost is estimated at $200/unit.The estimate is supported by the historic data but is below the comparable data.

Utilities: The tenants pay electric and gas directly, and some tenants reimburse for water. Allother utilities are included. For pro forma valuation purposes, the cost is estimated at $1,100/unit.The estimate is supported by the historic data and is considered reasonable.

Real Estate Taxes: The real estate taxes were previously discussed in the description of the siteportion of this report. For pro forma valuation purposes, the subject’s real estate taxes totals$8,400.

Insurance: For pro forma valuation purposes, the cost is estimated at $220/unit. The estimate issupported by the historic data and expense comparables and is considered reasonable.

General and Administrative: This expense covers legal and other miscellaneous fees. Thehistorical did not include an allocation for this expense. However, some of these costs appear tohave been accounted for in the higher historical management fee expense (10.0%). We haveincluded an allocation of $1,200 to account for these typical expenses.

Management Fee: Typical management fees for apartment properties in the market range from2.5% to 5.0% of effective gross income. Based upon typical market terms, we have estimated amanagement fee of 5.0% of effective gross income.

Capital Expenditures/Replacement Reserve: Periodic replacement of short-lived building andsite improvements is essential to maintain the quality image and annual income for the subjectfacility. Since capital expenditures affect cash flow, our analysis reflected these expenses in theform of reserve for replacement in addition to any planned capital additions. A replacementallowance is generally associated with an apartment development

A survey of institutional investors by Korpacz/PriceWaterhouseCooper indicated that theirexpectations for apartment reserves ranged between $150 and $2,000 per unit, with an average of$507 per unit. The subject is an older building but it has been well kept. The property has limitedFF&E and there are no amenities at the subject. A conclusion towards the lower end of the range,or $250 per unit is considered reasonable and is used in our analysis.

Total Expenses: This line item represents the sum of all of the expense items discussedpreviously. We have estimated total expenses of $34,627. The resulting expense ratio is 45.7%.This is bracketed by the subject history and expense comparables (34.8% to 49.0%). Consideringall of the data available, and considering our inclusion of a replacement reserve and a higher realestate tax estimate, our expense estimates appear reasonable.



NET OPERATING INCOME

Net operating income (NOI) represents the income to the property after all operating expenseobligations have been met. Effective gross income less the operating expenses equals NOI. Theprospective NOI is used for estimating the property's market value via a direct capitalizationcalculation.

Pro Forma Operating Statement9515 Community Road & 9539 Greenmeadow Road 12 Units

Per Unit Total

RevenuePotential Gross Rental Income $6,470 $77,640Vacancy & Collection 4.0% $259 $3,106Effective Rental Income $6,211 $74,534Other Income $100 $1,200Effective Gross Income $6,311 $75,734

Expenses Repairs & Maintenance $200 $2,400 Utilities $1,100 $13,200 Real Estate Taxes $700 $8,400 Insurance $220 $2,640 General Administrative $100 $1,200 Management Fees 5.0% $316 $3,787 Replacement Reserve $250 $3,000

Total Expenses $2,886 $34,627

Net Operating Income $3,426 $41,108

DIRECT CAPITALIZATION ANALYSIS

The Direct Capitalization Analysis begins with the estimation of the estimate net income. Weutilized the projected net operating income of $41,108. This income figure is converted to anindication of value in a single step by applying a market-derived overall capitalization rate.

Direct Capitalization Rate Selection

We have examined data from investor surveys and extracted rates in order to arrive at anappropriate capitalization rate for the subject.

The following is a summary of apartment buildings less than 20 units with reported capitalizationrates which transferred since January 2018 within the Akron, Cleveland and Youngstown marketareas.



According to CoStar Comps, the average overall capitalization rate reported for the 32 closedtransactions was 10.4% and ranged from 5.8% to 15.0%.

As of the second quarter of 2019 (covers first quarter 2019 data), RealtyRates.com reported anaverage overall cap rate of 9.5% for apartment properties in the Cleveland/Akron market.

We have also examined data reported by RERC in their Real Estate Report for the fourth quarterof 2018. Third-tier apartment properties in the Midwest reported a going-in capitalization raterange of 6.3% to 9.0% with an average of 7.8%. Third-tier properties are defined as olderproperties with functional inadequacies and/or in marginal locations.

The extracted capitalization rate for a comparable sale utilized in the sales comparison approachwas 10.0%.

The subject is an older property with limited amenities located in a small market. Afterconsidering the foregoing data, investor survey information, the subject's age, quality, condition,and location, our inclusion of a replacement reserve and our higher real estate tax expense, aswell as our judgment and experience, we concluded that the subject's market value was bestrepresented by a 10.00% overall capitalization rate. The calculation is presented below.



Net Operating Income $41,108Overall Capitalization Rate 10.00%Value $411,077

Value Rounded $410,000

As Is Market ValueDirect Capitalization Anaylsis


CONCLUSION

Based on the preceding analyses, it is our opinion that the as is market value of the fee simpleestate in the subject (including FF&E), as indicated by the Income Capitalization Approach, as ofJune 12, 2019, is:




SALES COMPARISON APPROACH

The Sales Comparison Approach is defined in The Dictionary of Real Estate Appraisal,(published by The Appraisal Institute, 1993), as:

A set of procedures in which a value indication is derived by comparing theproperty being appraised to similar properties that have been sold recently,applying appropriate units of comparison, and making adjustments to the saleprices of the comparables based on the elements of comparison.

The Sales Comparison Approach has been used to provide a meaningful conclusion of value forthe subject. The Sales Comparison Approach is based upon the principle of substitution; that is,the value of a property is governed by prices paid for other similar properties. Since no twoproperties are ever identical, the necessary adjustments for differences in location, size, andmarketability are a function of appraisal experience and judgment.

MARKET SALES DATA

In applying the Sales Comparison Approach to value, primary emphasis was placed on recentsale transactions of similarly-positioned apartment complexes in the region of the subject.Detailed data and information concerning the individual sales are presented on the followingpages.

SUMMARY OF COMPARABLE SALESDate of Price Per

# Property City Sale Price Units Unit1 Parkview Apartments Kent September-18 $975,000 24 $40,6252 Dominion Townhomes Akron February-18 $630,000 19 $33,1583 496 Schiller Ave Akron November-18 $310,000 12 $25,8334 Hobart Apartments Akron February-18 $410,000 12 $34,167



SALE COMPARABLE MAP



Improved Comparable Sale 1

Address Parkview Apartments841 Silver Meadows BlvdKent, Ohio 44240

Date of Sale September 27, 2018

Seller Ep Madison Properties LlcBuyer Petru Properties Llc

Sales Price $975,000Property Rights Fee SimpleTerms Cash EquivalentPrice per Unit $40,625

Improvement Data

Number of Units: 24Average Unit Size: 945 sfYear Built: 1971Occupancy: 100%

Income DataNet Operating Income $97,500Overall Cap Rate 10.00%

Comments: This comparable is located in Kent, Ohio. The property includes 20, two-bedroomunits and 4, three-bedroom units. The property transferred at an in-place capitalization rate of10.00%.




Address 1723 Dominion DriveAkron, Ohio 44313

Date of Sale February 17, 2018

Seller Warm Sands LlcBuyer Dominion Townhomes Llc


Improvement Data

Number of Units: 19Average Unit Size: 1,155 sfYear Built: 1976Occupancy: 100%

Income DataNet Operating Income: N/AOverall Cap Rate: N/A

Comments: This comparable is located in Akron, Ohio. The property includes three, one-bedroomunits and 16 two-bedroom units.




Address 496 Schiller AveAkron, Ohio 44310

Date of Sale November 5, 2018

Seller R2 Akron LlcBuyer Cynthia A Bender


Improvement Data


Income DataNet Operating Income: N/AOverall Cap Rate: N/A

Comments: This comparable is located in Akron, Ohio. The property offers 12, one-bedroomunits.




Address 1492 Hobart AveAkron, Ohio 44306

Date of Sale February 27, 2018

Seller 1492 Hobart LlcBuyer Hobart Apartments Llc


Improvement Data


Income DataNet Operating Income: N/AOverall Capitalization Rate: N/A

Comments: This comparable is located in Akron, Ohio. The property includes 12 one-bedroomunits.



COMPARABLE SALES ANALYSIS

For purposes of comparison, the transactions were analyzed in terms of Price per Unit. Whenapplying the Price per Unit analysis, the nature of the current market environment for apartmentsrequires that adjustments be made. Sales comparison is traditionally applied by buyersconsidering the acquisition of an apartment complex. A grid is provided at the end of thedescriptive section which summarizes the adjustment process.

PHYSICAL UNITS OF COMPARISON

Analysis of the physical units of comparison is largely based on the principle of substitution. Thesales were compared to the subject and adjusted for differences such as interest transferred, dateof sale, location/access/exposure, age/condition, and facilities/amenities. All of the sales arerelatively different in various respects. Adjustments for the differences are difficult to supportwith market data. The adjustments made are subjective and based primarily on judgment. Prior tothe adjustments the sales ranged from $25,833 to $40,625 per unit. The following is a summaryof the various adjustments to the data sample and the basis utilized for each item.

Property Rights Conveyed: All comparable sales listed conveyed fee simple estates in apartmentcomplexes. No adjustments are required.

Terms and Conditions of Sale: Because of the variety of financing options available in themarket and their amount of favor to the buyer, sales must be adjusted for financing. Noadjustments are needed, as the sellers provided no known financing.

Market Conditions: This adjustment is based on the appreciation or depreciation that a propertyhas encountered between the date of its sale and the date of valuation. Market conditions sincethe time of sale generally indicate whether demand has increased or decreased for a property andwhether time has had any effect on the value. The comparables transferred between February2018 and November 218. No adjustment was required.

Location: Sales 2, 3, and 4 are located in areas with superior commercial and retail supportiveuses and each were given a downward adjustment.

Unit Size: A small average unit size is considered an inferior trait as it would generate less rentthan a larger unit. The subject average unit size is 867 square feet. Sales 2, 3 and 4 wereadjusted accordingly.

Age/Condition: The subject was built in 1942 and renovated in 1991. The comparables wereconstructed between 1971 and 1976. The comparables were in good condition at the time ofsale. Each comparable was given a slight downward adjustment for superior chronological age.

The improved sales adjustment grid on the following page shows the adjustments made to eachcomparable sale. The items which were compared are shown in the left column. The adjustmentsare shown under each sale.



COMPARABLE SALES ADJUSTMENT GRID

Sale 1 Sale 2 Sale 3 Sale 4

Property Parkview Apartments Dominion Townhomes 496 Schiller Ave Hobart Apartments

City, State Kent Akron Akron Akron

Adjusted Sale Price $975,000 $630,000 $310,000 $410,000

Number of Units 24 19 12 12

Sale Price per Unit $40,625 $33,158 $25,833 $34,167

Overall Cap Rate 10.00% N/A N/A N/A

Adjustments

Terms of Sale/Financing $0 0% $0 $0

Adjusted Price/Unit $40,625 $33,158 $25,833 $34,167

Conditions of Sale Arm's-length Arm's-length Arm's-length Arm's-length

Adjustment 0.0% 0.0% 0.0% 0.0%


Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple

Adjustment 0.0% 0.0% 0.0% 0.0%


Date of Sale September-18 February-18 November-18 February-18

Market Conditions 0.0% 0.0% 0.0% 0.0%


Physical Characteristics

Location 0% -2% -2% -2%

Comparable Superior Superior Superior

Avg Unit Size 0% -4% 6% 6%

867 945 1,155 481 500

Comparable Comparable Inferior Inferior

Age/Condition -2% -2% -2% -2%

Year Constructed 1971 1976 1973 1972

Total Adjustment -2.0% -8.0% 2.0% 2.0%

Total Adjusted $/Unit $39,813 $30,505 $26,350 $34,850

Rounded $/Unit $39,800 $30,500 $26,400 $34,900

After adjustments, the overall range indicated by all sales is $26,400 to $39,800 (after rounding)per available unit. The mean of the adjusted sales is $32,900 per unit. All of the sales aresimilarly sized apartment communities located less than 25 miles from the subject. All of thesales are indicative of market value. Based on the preceding analysis, we conclude to a valueindication of $33,000 per unit for the subject. The value calculation is presented below:

$33,000 per unit x 12 units = $396,000 Or $400,000 (rounded)Conclusion

It is our opinion that the market value of the fee simple estate, as indicated by the SalesComparison Approach, in the subject property (including the contributory value of the furniture,fixtures, and equipment), as of June 12, 2019 is:

Four Hundred Thousand Dollars$400,000



RECONCILIATION

Two of the three traditional approaches to value -- income capitalization approach and salescomparison approach, -- were used to estimate the market value of the subject. The indicationsof value as of June 12, 2019 are as follows:

Income Capitalization Approach: $410,000

Sales Comparison Approach: $400,000

These two approaches represent alternative ways of viewing market phenomena. A final estimateof value is selected as the dominant tendency or most probable outcome from a range of possibleoutcomes.

Within the Income Capitalization Approach, the direct capitalization analysis was used toprovide an indication of value. Both income and expense estimates were based primarily uponthe subject and comparable expense data. Current investment parameters and market conditionswere also considered. The direct capitalization approach provides an indication of value byconverting a stabilized year net operating income into value utilizing a market-drivencapitalization rate. Since properties like the subject are generally purchased for as an investmentwe have given full weight to this approach.

The Sales Comparison Approach reflects the value of the subject property based upon ananalysis of recent sales of similarly improved properties and reflects the actions of buyers andsellers of comparable properties in the market. The comparables were fairly similar to thesubject, and this approach was considered meaningful. This approach was used as support for ourconclusion of value.

Market Value As Is

Subject to all conditions and explanations contained in this report, such as the hypotheticalcondition that the subject has a new roof, and based upon our analyses of the subject propertyand the market, together with our experience and knowledge acquired in appraising similarproperties, it is our opinion that the as is market value of the fee simple estate in the subject(including FF&E), as of June 12, 2019, is:


Contributory Value of the Furniture, Fixtures, and Equipment

The final opinion of value stated above includes the estimated contributory value of the furniture,fixtures, and equipment (FF&E). Based on our analysis, the contributory value of the FF&E, asof June 12, 2019 is $16,000 [$2,000 per unit x 13 units) * ((15-5)/15), rounded].



CERTIFICATION

We certify that, to the best of our knowledge and belief:

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

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

This appraisal report was developed within the scope of the signatories' certification or licensure, asapplicable.

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

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

Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformitywith the Uniform Standards of Professional Appraisal Practice.

The reported analyses, opinions and conclusions were developed, and this report has been prepared, inconformity with the requirements of the Code of Professional Ethics and Standards of ProfessionalAppraisal Practice of the Appraisal Institute.

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

As this report date, Stephen P. Faherty, MAI has completed the continuing education program of theAppraisal Institute.

James A. Piwarun has made a personal inspection of the property that is the subject of this report. StephenP. Faherty, MAI has not made a personal inspection of the property that is the subject of this report.

No one provided significant real property appraisal assistance to the persons signing this certification. Wehave not performed any service (appraisal or other) in regard to the subject property, for any client in thepast three years.

Stephen P. Faherty, MAI James A. PiwarunOhio Certified General Appraiser #000446915 Ohio Certified General Appraiser # 2006003193Expires: 1/5/2020 Expires: 1/29/2020



INSURABLE REPLACEMENT COSTS

At the client’s request, an estimate of insurable value is provided herein. USRC has followedtraditional appraisal standards to develop a reasonable calculation based upon industry practicesand industry accepted publications such as the Marshall Valuation Service (MVS). Themethodology employed is a derivation of the cost approach that is primarily used as an academicexercise to help support the market value estimate and therefore is not reliable for InsurableValue estimates. Actual construction costs and related estimates can vary greatly from thisestimate.

This analysis should not be relied upon to determine proper insurance coverage that can only beproperly estimated by consultants considered experts in cost estimation and insuranceunderwriting. It is provided to aid the user as part of their overall decision making process and norepresentations or warranties are made by USRC regarding the accuracy of this estimate and it isstrongly recommended that other sources be utilized to develop any estimate of insurable value.

The insurable value estimate presented herein is intended to reflect the value of the destructibleportions of the subject, based on the replacement of physical items that are most likely subject toloss from hazards (excluding indestructible items such as basement excavation, foundation, sitework, land value, and direct costs). It is recommended that the user of this report retain theservices of a qualified, independent insurance adjuster to determine insurable value prior tomaking a business decision.

The insurable value of the property excludes the following:

The cost of excavations, grading, backfilling of filling (except those costs made necessarydue to repair of buildings insured under this policy from a covered cause of loss),reclaiming or restoring land or water

Bulkheads, pilings, piers, wharves, docks, dikes or dams Underground tanks, pipes, flues, drains, tunnels whether or not connected to buildings,

mines or mining property



Conclusion

We have based the insurable value on the MVS development costs less 10% for undergroundexclusions mentioned above. When estimating insurable value, site improvements, lease-upcosts, land value, entrepreneurial profit, and depreciation are not included in the base cost.These are the dominant distinctions between an insurable value analysis and the traditional costapproach. The calculation of replacement cost new less insurable exclusions is presented in thefollowing table.

Basic Replacement Cost $733,767

Less 10% ($73,377)

Plus FF&E $24,000

Total $684,390

Insurable Value (Rounded) $680,000

ESTIMATE OF INSURABLE VALUE

Based on this analysis, our estimate of insurable replacement cost of the subject, as of June 12,2019, is:

SIX HUNDRED EIGHTY THOUSAND DOLLARS$680,000

ADDENDUM I

05/22/2019

Re: Real Estate Appraisal Engagement= 19-000366-01-01

Dear Steve P.. Faherty:

This letter serves as our engagement for the appraisal services described herein. Please include a signed copy of this engagement letter in the addenda of the appraisal report. This letter is intended to summarize our understanding relative to engaging your professional appraisal services and represents Silver Hill Funding authorization to prepare an independent appraisal report for the real property described below:

Borrower Name: H & Y properties, LLCProperty Address: 9515 Community Road & 9539 Greenmeadow RoadProperty City, State, Zip: Windham, OH44288Silver Hill Funding Loan Number:

50005983

Silver Hill Funding is the client for this report. You shall perform this report as an independent contractor and not as an employee/partner, principal, or agent of this company. In addition, by signing this agreement you certify that you have no personal interest in the property to be appraised and that you will abide by the terms of this engagement letter. Please include a copy of this engagement letter within the addenda of your submitted appraisal report.

We require that you personally inspect the subject property and comparables included in the report; sub-contracting is not permitted. If anyone other than yourself will be providing assistance in the appraisal process, you must employ him or her, and we must receive their qualifications for approval, prior to accepting this assignment.

Additionally, it is required that you include a Market Value opinion and a Disposition Value Opinion for the subject property in your appraisal report. The Disposition Value Opinion is to be developed in accordance with the definitions set forth in the Addenda of this letter.

The agreed fee for the appraisal services rendered is $2,300.00. You agree to deliver a signed electronic (PDF or similar) copy of the report (with maps and color photos) on or before June 06, 2019.

All appraisal reports must be completed by their due date. A fee reduction of five percent (5%) of the fee per day may be assessed against any appraisal delivered past the due date. The appraiser must notify SHF, in writing, at least one week before the due date of any reasonable delays. Let it be known that future enlistment of your services will be influenced by your performance in meeting the due date as well as by the quality of your appraisal work.

The required scope and format of your assignment shall be as follows:

Intended Use: Use - Asset Valuation The intended use of this appraisal is for periodic valuation of the asset per policy

Intended User: User-Silver Hill Funding

The intended user of this report is Silver Hill Funding and or affiliates. Approaches to Value: Approach - Sales Comparison

Sales Comparison Approach

Approach - Income Income Approach

Inspection Requirements: Inspect - Full Subject

An interior and exterior inspection of the subject property in sufficient detail to

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determine marketability Invoice: Please upload invoice with appraisal report.

Report Type: Summary Report Format: Narrative

Premise Qualifier Interest CommentMarket Value As-Is Fee SimpleDisposition Value As-Is Fee SimpleInsurable Value As-Is Fee Simple

Comments: If your schedule does not permit the purposed delivery date, please provide us with a turn time for completion. If you are unable to bid on the job, please advise by entering $0 along with a comment. If the subject property is leased out to tenant(s) with lease terms longer than one year, please provide a Leased Fee value.

If the subject property is vacant or owner occupied, please provide a Fee Simple value. If, after being awarded the assignment, you discover a discrepancy between the collateral description furnished to you and what the collateral appears to be on inspection or from other information received, please contact this office immediately. We are striving to have the entirety of the collateral valued as it exists today.

When completed, please upload the report, invoice, and signed W-9 to www.rimscentral.com. If you have previously submitted a W-9, you will not be required to do so again. ****The invoice will not be submitted without a copy of your most recent signed W-9 form.****

Required Contents:

1. It is required that your report contains a Table of Contents. 2. Any references to source information pertaining to FIRREA contained within the appraisal report must

be from the Federal Deposit Insurance Corporation (FDIC) 12 DFR Part 323. 3. The appraisal and the appraisal report must conform to the most recent versions of the Financial

Institutions Reform, Recovery and Enforcement Act (FIRREA) and the Uniform Standards of Professional Appraisal Practice (USPAP).

4. It is required that the appraisal report contain a signed Certification, by each appraiser signing the report,

that is consistent with USPAP SR 2-3. 5. For all sale and rental comparables, adjustments must be included; and wherever possible, quantitative

adjustments should be made. Rationale for adjustments must be discussed. 6. Include a legal description of the real estate being appraised in addition to the property identification

required by USPAP. 7. Include the statement that the purpose of the appraisal assignment is to estimate market value of the

subject property as of the effective date of the appraisal. Market value "As Is" must be estimated in addition to market value "As If Stabilized" or market value "Upon Completion of Construction or Rehabilitation" when appropriate. The intended use of your report will be for collateral lending decisions.

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8. Disclosure of Competency: This appraisal report shall make an affirmative statement that the appraiser(s) is/are competent to complete this report in accordance with the Competency Rule in USPAP. In the absence of an affirmative statement, the appraiser must disclose any lack of knowledge and/or experience for this assignment and any necessary steps taken to comply with the competency provision in the USPAP.

9. Define Value: The type of value estimate required in this report is Market Value. The appraiser shall use

the definition of market value as it is cited in Title XI of the Financial Institution Reform, Recovery and Enforcement Act of 1989, and regulations promulgated by relevant regulatory agencies pursuant to the act (collectively, "FIRREA"), and (2) the definition of "Market Value" contained in FIRREA be stated in the appraisal report. No alternative definitions are acceptable to this institution. Include the following definition of Market Value in the appraisal report.

The most probable price that 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 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.

10. The appraiser must analyze and report in reasonable detail any current or prior sales of the property being appraised that occurred within the three years of the date of appraisal. If the subject property is currently under purchase contract, listed for sale, or has been transferred during the above listed periods, and the purchase price varies significantly (>10%) from the appraised value conclusions, explanation is required to reconcile the price paid with the current value estimate.

11. Analyze and report on current market conditions and trends that will affect projected income of the

absorption period, to the extent they affect the value of the subject property. Discussion must include general supply/demand levels, including commentary on vacancies, rent levels and concessions in the property type appraised. Specific to the subject property's submarket, comment on abnormally low (or high) occupancy levels, conditions of neighboring properties, and overall rate of the sub-market (e.g. newly developing, mature, declining, transitioning, etc.)

12. The appraiser must, in the course of the property inspection: 1. Comment on the possible presence of

environmental hazards, such as potential lead based paint hazards (chipping and/or peeling paint), underground fuel storage tanks, fuel pumps, surface discoloration, or other telltale evidence that would give rise to close examination by qualified personnel; 2. Physically inspect a representative sample of both occupied and unoccupied units within multi-unit buildings and a sufficiently representative percentage of other property types.

13. Include the financing terms for all sales presented in the analysis with cash equivalency adjustments

where necessary. 14. Rental data presented must discuss and appropriately adjust for rent concessions, tenant improvement

allowances, lease buyout, load factors, lease commissions, replacement reserves, expense pass-through,

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and common area maintenance (CAM), etc. leading to an indication of comparable effective market rent for the subject. Subsidized apartment properties should be market to market rent levels. Please include name and telephone number of person(s) providing information and/or verification of rental data.

15. For income producing properties, the report should include a current rent roll, historical revenues,

occupancy rates and expenses. If your projected rental income, occupancy rate, or expenses vary significantly from the reported historical data, you must reconcile any discrepancy. Furthermore, if the property is operating at a level below its anticipated market share, please discuss the cause, e.g. poor management, deferred maintenance, poor locations, etc. Please state if historical revenues, occupancies, or expenses were not provided.

16. Deductions and Discounts, "As Is" Value: Analyze and report appropriate deductions and discounts for

any proposed construction or any completed properties that are partially leased or leased at other than the market rents as of the date of the appraisal, or any tract developments with unsold units. Such deductions are intended to account for all holding costs, leasing commissions, tenant improvement costs and/or repairs necessary to bring the property to the point of stabilized occupancy. If a stabilized value is estimated, include the anticipated time period required for the property to achieve stabilization. Again, all appraisals must contain an "as is" market value estimate. Any reference to deferred maintenance must be disclosed in the improvement description of the appraisal. The cost to cure must be deducted from the stabilized value to present in "as is" value.

17. Marketing Period: Analyze and report a reasonable marketing period for the subject property for all

values given including the disclosure of the assumptions used. The "As Is" value opinion would be based on the appraiser's estimated marketing time. The exposure periods for the improved sales must be noted, where possible, and discussed as a means of support for the projected marketing period of the subject. If exposure periods are unavailable for the comparable sales, the appraiser must provide a thorough discussion supporting how the marketing period was derived. For instance, conversations with real estate professionals knowledgeable of the subject's marketplace may be documented.

18. Verification as to whether the improvements conform to zoning and building requirements or whether

they are a legal (or illegal) non-conforming use is the appraiser's responsibility and must be stated in the report.

19. Each appraiser signing the appraisal report must list their appropriate state-issued appraiser license or

certification number under their signature as it appears within the appraisal report. 20. Your report must include color photographs of all improved sale and rental comparables as well as

photographs of the interior of the subject property, unless interior access is not provided. 21. An insurable value must be calculated based on the replacement cost new of the building improvements

and reported within the Summary of Important Facts. 22. The income approach, if developed, is to include a minimum of three comparable rental properties. The

sales comparison approach, if developed, is to include a minimum of three comparables sale properties. A color photograph of each comparable property used in the appraisal report must be included or an explanation as to its exclusion must be cited within the appraisal report. Please provide copies of comparable property data sources (COMPS publication, listing sheets, etc.)

23. In the valuation of a property as a going concern, we require the appraiser to allocate the estimate of

value between the various components that comprise the value, i.e. real estate, furniture, fixtures & equipment (FF&E) and business and/or goodwill. As far as possible, please provide an estimate of the separate value components and/or provide sufficient explanatory comments delineating the actions of market participants.

24. If the subject property is a motel or hotel, we require a Smith Travel Research, STAR or Trend Report to

be included in the addenda of the appraisal report.

Silver Hill Funding is the client for this appraisal assignment. Silver Hill Funding is also the intended user of the appraisal report. All documents furnished to the appraiser by the client are to be considered confidential information,

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in accordance with the disclosure requirements in the Confidentiality Section of the Ethics Rule set forth in USPAP.

Except as provided, neither the appraiser(s) nor the appraisal firm may divulge any operating information pertaining to the property appraisal or the analysis, opinions or conclusions developed in the appraisal report. Nor may they give a copy of the report to anyone other than the client or client's designee as specified in writing. However, this condition does not apply to any request made by professional organizations and/or presiding state appraiser board for the purpose of confidential professional standards or ethics enforcement. Also, this condition does not apply to any order by a court of law or any other body with power of subpoena.

The appraiser may not discuss the appraisal or the results thereof with anyone without the prior specific approval from Silver Hill Funding.

You may arrange for an interior inspection as well as obtaining all necessary property information (leases, rent rolls, income & expense statements etc.) by contacting the following:

Property Contact/Phone #: Henrietta G Regev/650-272-1634

Alternate Contact/Phone #: /

For valuation issues, please contact Andrew Bowers 305.646.6480

We request you contact the owner/agent to arrange for an inspection as soon as reasonably possible after receiving this engagement.

Please certify your report to:

Andrew BowersVice PresidentSilver Hill Funding4425 Ponce de Leon Boulevard, 4th FloorCoral Gables, FL 33146

For Silver Hill Funding,

Andrew BowersReal Estate Manager305.646.6480

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Please sign and email to [email protected]

I agree to the terms of this engagement letter.

______________________________________________________ _________________________Appraiser's Signature Date

________________________________________________ Print Name

_______________________________________________Print Title

______________________________________________________ __________________________License or Certification # Date

_______________________________Tax Identification #

Project #: 19-000366-01-01Page 6 of 7

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Addenda

This appraisal report shall include a Disposition Valueestimate based on the definition referenced in the Appraisal Institute's, "The Dictionary of Real Estate Appraisal, Fifth Edition," (2010, pp. 59-60). We request the marketing period to be Six (6) Months.

The most probable price that a specific interest in real property is likely to bring under all of the following conditions:

1. Consummation of a sale will occur within a limited future marketing period specified by the client;

2. Actual market conditions are those currently obtaining for the property interest appraised;

3. The buyer and seller is each acting prudently and knowledgeably;

4. The Seller is under compulsion to sell;

5. The buyer is typically motivated;

6. Both parties are acting in what they consider their best interests;

7. An adequate marketing effort will be made in the limited time allowed for the completion of a sale;

8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto;

9. 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.

Special Guidance & AssumptionsWhen appraising vacant land, please include in your appraisal, reference to conversation(s) with local, active real estate brokers about land sale activity, supply and demand, and current levels or buyer's interest.

Analysis of property condition is required with appropriate deductions for deferred maintenance, adjusted for unearned profit, as a cost to cure discount.

Cap rates and income multipliers should be supported by comparable sales data for similar class properties when the Income Approach is the primary approach to value. Reliance upon hypothetical financial formulized cap rates or multipliers fails to link rates and ratios to the actions of buyers and sellers.

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RIMS Customer: Bayview Loan Services Project #: : 19-000366-01-1

Award Information

Date Awarded: 5/22/2019

Cancelled: No Directly Awarded: No

Fee: $2,300.00 Delivery Date: 6/6/2019

Property Contact(s): Henrietta G Regev, 650-272-1634

Award Comments: If, after being awarded the assignment, you discover a discrepancy between the collateral description furnished to you and whatthe collateral appears to be on inspection or from other information received, please contact this of�ce. There are cases where lotshave been sold, model homes constructed, additions made, and space leased since the last site inspection. We are striving to havethe entirety of the collateral valued as it exists today. When completed, please upoad the report, invoice, and signed W-9 to www.rimscentral.com. If you have previously submitted a W-9, you will not be required to do so again. ****The invoice will not be submitted without a copy of your most recent signed W-9form.****

Job Attachments:File Description Date Uploaded Con�rmation Number

Rent Roll.pdf Rent Roll5/21/2019 6:22:59PM EDT

YTD Pro�t and Loss Statements.pdf YTD Pro�t and Loss Statements5/21/2019 6:23:18PM EDT

Bid Information

Proposed Fee: $2,300.00 Proposed Delivery Date: 6/5/2019Signatory Information: Stephen P. Faherty, MAI Of�ce Location: Columbus, OH

Prior Services: Have you performed or provided any services regarding the subject property within the prior three years, as an appraiser or in anyother capacity? If Yes, please provide details in the Comments �eld.No

Bid Comments: We have extensive experience in northeast Ohio markets for this property type.

RFP Information

Purpose Of Request: Re�nanceResponse Deadline: 5/22/2019 Bank Contact: Andrew Bowers

Desired Delivery Date: 6/05/2019 Contact Phone: 305-646-6480

ADDRESSEES: First name Last name Company Address

Andrew Bowers Silver Hill Funding 4425 Ponce De Leon Blvd Coral Gables, FL 33146

Total Addressees: 1

DISTRIBUTION: Number Of Copies First Name Last Name Company Address

1 Andrew Bowers Coral Gables, FL 33146

Total # Hard Copies: 1

SCOPE OF SERVICES: Intended Use Use - Asset Valuation The intended use of this appraisal is for periodic valuation of the asset per policy

Intended User User-Silver Hill Funding The intended user of this report is Silver Hill Funding and or af�liates.

Approaches to Value • Approach - Sales Comparison Sales Comparison Approach

• Approach - Income Income Approach

InspectionRequirements

Inspect - Full Subject An interior and exterior inspection of the subject property in suf�cient detail to determine marketability

Additional Work Scope

Invoice Please upload invoice with appraisal report.

Report Type: SummaryReport Format: Narrative

VALUATION SCENARIOS: Valuation Premise Premise Quali�er Property Interest Comment

Market Value As-Is Fee Simple

Disposition Value As-Is Fee Simple

Insurable Value As-Is Fee Simple

RFP Comments: If your schedule does not permit the purposed delivery date, please provide us with a turntime. If you are not able to bid on the job,

please advise by entering $0 along with a comment. If the subject property is leased out to tenant(s) with lease terms longer thanone year, please provide a leased fee value. If the subject property is vacant or owner occupied, please provide a fee simple value.

Property Information

Project Name: 50005983 Property Name: 50005983Property Description / Construction Type: 12 unit multifamily 4784sf and 5252sf

Property Type: GE1 - Multi-Family - Other - All other multi-family type properties.Address: 9515 Community Road & 9539 Greenmeadow Road, Windham, OH 44288County: Portage

Improvement Size (Primary): 12 UnitsParcel Numbers: 41-057-10-00-148,41-057-10-00-149

Year Built: 1942Property Status: Existing

Property Tenancy: NA

Copyright © 2019 ExactBid, LLC. All rights reserved.

ADDENDUM II

# Bedrooms Rent Lease End Section 8

A Pat Schaeffer 1 $320 MTM NO

B Bob & Jeannie Myers 3 $625 MTM YES

C Donna Wortman 2 $425 MTM YES

D Libby Zeigler 2 $540 3/31/2018 YES

E Shannon Post 3 $640 2/28/2019 YES

F Jennifer Folger Browbn/K 1 $445 MTM NO

9539 Greenmeadow

A Mike Homacker 2 $525 MTM YES

B Nikki Sullivan 3 $625 MTM YES

C Jennifer Robinson 2 $550 3/31/2020 YES

D Charles Glaze 2 $550 4/30/2020 YES

E Deashia Robinson 3 $650 3/31/2020 YES

F Lisa Holland 2 $545 MTM NO

TOTAL $6,440 $0.0

9515 Community

ADDENDUM III

STATEOFOHIODTVISIONOFRDALESTATE

AND PROFESSIONAL LICENSING

Stephen P Faherty2154E Main St Ste 302Columbus, OH 43209-2317

AN APPRAISER LICENSFJCERTIFICATEhas been issued under ORC Chapter 4763 to:

NAME:Stephen P FahertyLIC/CERT NUMBER: 00044691 5Llc LEVEL: Cert. General R. E. Appraiser - ReciprocityCURRENT ISSUE DATE: 0111812019EXPIRATION DATE: 01 /05/2020USPAP DU E D A'tE : 01 10512020

STATEOFOHIODTVISIONOFREALESTATE

AND PROFESSIONAL LICENSINGAN APPRAISER LICENSgCERÏFICATE

has been issued under ORC Chapter 4763 to:

NAME: James Andrew PiwarunLIciCERT NUMBER: 20060031 93Lrc LEVEL: Certifìed General Real Estate AppraiserCURRENT |SSUE DATE: 0112412019EXPIRATloN DATE : 01 12912020USPAP DUE DATE: Ail2912021

James Andrew PiwarunUS Realty Consultants2154 E Main St Ste 302Columbus, OH 43209-2317

ADDENDUM IV

US Realty Consultants, Inc. Real Estate Appraisal, Hospitality Consulting,

and Litigation Support

CORPORATE

QUALIFICATION PACKAGE

CORPORATE HEADQUARTERS

2154 EAST MAIN STREET, SUITE 302

COLUMBUS, OHIO 43209

614-221-9494

WWW.USRC.COM

US Realty Consultants, Inc. Real Estate Appraisal, Hospitality Consulting,

and Litigation Support

National Headquarters 2154 E. Main St, Suite 302, Columbus, OH 43209

David A. Feeley, MAI Peter P. Hathaway, MAI Stephen P. Faherty, MAI

Principal & Managing Director Principal & Managing Director Principal & Managing Director

[email protected] [email protected] [email protected]

614-695-4435 614-695-4438 513-231-4350

Jeffrey H. Walker, MAI, CRE Karen Blosser, MAI

Chief Executive Officer Director of Appraisal Services

[email protected] [email protected]

614-695-4434 614-695-4442

Regional Offices

West Palm Beach, FL Chicago, IL Dallas, TX

C. Greg McFatter, MAI Michael J. Maslanka, MAI Tracey Burke

Director Director Senior Associate


561-741-1182 708-352-0694 630-561-2419

Washington, DC Cincinnati, OH South Bend, IN

Stuart I. Smith, MAI, MRICS Stephen P. Faherty, MAI Noah McCloskey

USRC Affiliate Principal & Managing Director Senior Associate


240-614-7713 513-231-4350 574-514-4669

mailto:[email protected]







US Realty Consultants, Inc.

About Us

Introduction U S REALTY CONSULTANTS, INC. (USRC), founded in 1983, is a Columbus-based firm that specializes in commercial real estate appraisal and market analysis. With regional and satellite offices located in West Palm Beach, Chicago, Cincinnati, Dallas, Washington D.C. (affiliate), and South Bend, USRC has grown to be one of the premier real estate appraisal and consulting practices in the United States. America is our market. We continue to grow and our professionals annually consult on hundreds of assignments involving billions of dollars of real estate. As we have evolved over the last thirty years, we have become industry leaders in several specific areas for the real estate industry:

Hospitality & Resort Industry Services, Water Park Services, Real Estate Appraisal Services, Self-Storage Industry Services, and Golf and Country Club Services.

Real Estate Appraisal Services USRC’s reputation in appraisal services is long and respected: our associates were original members of a movement that pioneered the development of a national appraisal practice. As industry leaders, we specialize in the valuation of real estate portfolios, disbursed both geographically and by property type. Our diverse valuation expertise in commercial real estate has emphasized office, industrial, retail, self-storage, mixed-use, hotel, resort, golf course, other special-use, and multifamily projects. Our multi-family projects have included market studies and appraisal applications for submission through HUD Multi-family Accelerated Processing (MAP). These projects included market-rate housing, Section 8 housing, and student housing.

Hospitality & Resort Industry Services Our Hospitality team is a strong and diverse group whose backgrounds as market analysts, appraisers, and operational specialists have established USRC’s hospitality & resort consulting practice as second-to-none. Our professionally trained hotel and resort specialists have over one hundred combined years of industry experience and with our constant involvement in consulting and appraising hotels, motels, restaurants, resorts, water parks, and convention centers we are entrenched in this dynamic and evolving industry. Our professionals combine in-depth industry experience, strong analytical and communication skills, and the latest market data and technology to yield effective results for each specific engagement.

Golf and Country Club Services USRC has developed a practice devoted to golf-related and recreational facilities, including valuation and consultation for private country clubs, daily-fee golf courses, surrounding residential development, and resort destinations.

Self-Storage Appraisal Services Our self-storage appraisal team has appraised over one thousand self-storage facilities since 2000. From our offices in Columbus, Chicago and Florida, as well as our satellite offices in Cincinnati, Washington, D.C., and South Bend, we have handled a multitude of national self-storage projects and portfolios. We have appraised nationally dispersed portfolio projects as well as locally owned single-entity facilities. All of the appraisers on our self-storage team have extensive experience in this property type.




614-221-9494

WWW.USRC.COM


Properties/Locations

The following charts display the approximate breakdown of property types we have appraised, as well as property locations, over the past five years.

Alabama 26 to 50 Kentucky over 100 North Dakota 11 to 25

Alaska 1 to 10 Louisiana 26 to 50 Ohio over 100

Arizona over 100 Maine 1 to 10 Oklahoma 26 to 50

Arkansas 26 to 50 Maryland over 100 Oregon 51 to 100

California over 100 Massachusetts 11 to 25 Pennsylvania over 100

Colorado over 100 Michigan over 100 Rhode Island 1 to 10

Connecticut 11 to 25 Minnesota over 100 South Carolina over 100

Delaware 1 to 10 Mississippi 51 to 100 South Dakota 1 to 10

DC over 100 Missouri over 100 Tennessee 51 to 100

Florida over 100 Montana 1 to 10 Texas over 100

Georgia over 100 Nebraska 11 to 25 Utah 26 to 50

Hawaii 1 to 10 Nevada 11 to 25 Virginia over 100

Idaho 1 to 10 New Hampshire 1 to 10 Washington 51 to 100

Illinois over 100 New Jersey 51 to 100 West Virginia 51 to 100

Indiana over 100 New Mexico 11 to 25 Wisconsin 51 to 100

Iowa 11 to 25 New York over 100 Wyoming 1 to 10

Kansas 26 to 50 North Carolina over 100

Approximate Number of Projects by State


Sample List of Clients

Lenders

Bank of America BB&T

Citizens National Bank Crédit Agricole

Fifth Third Bank Goldman Sachs Heartland Bank

Huntington National Bank JP Morgan Chase Bank

Key Bank PNC Bank

Regions Bank Suntrust Bank

TD Bank Wells Fargo Wesbanco

Institutional Investors

Blackrock

CalStrs Clarion

Barings Real Estate Dividend Capital

Ohio Teachers Retirement System Illinois Teachers Retirement System

JPMorgan PNC Realty Advisors

PGIM UBS Realty Investors

Special Servicers

C-III Asset Management

LNR Partners

Attorneys

Numerous attorneys for estate planning, tax appeal,

and bankruptcy purposes


Client References

REFERENCES AVAILABLE UPON REQUEST


Hospitality Industry Services

Among the various segments of the commercial real estate industry, the hotel & resort segment is widely recognized as potentially the most dynamic. In this ever-changing environment, an increasing number of lenders, operators, and individual or multiple property owners require additional support from independent, third-party specialists. USRC’s Hospitality Specialists Group is exceptionally well suited to provide a myriad of services for a wide variety of hospitality uses including hotels, limited-service and select service properties, resorts, casinos, waterparks, spas, residential hotels, interval ownership and residence clubs, convention centers, and mixed- use projects. While we offer a broad spectrum of services to the hospitality & resort industries, each assignment contains in-depth, detailed analysis, specifically tailored to each client’s needs. Our Hospitality & Resort Industry Services include the following: Market Studies: Market Analysis, Statistical Demand Analysis, Market Positioning

Analysis, and Market Feasibility Analysis. Impact Studies: Utilize specialized spreadsheet program determining base

and incremental impact. Valuation Studies: Investment Analysis, Portfolio and Asset Analysis, and

Tax Appeal Appraisals. Acquisition Consulting: Purchase price analysis, Proforma Development. Project Planning: Site Analysis, Concept Development Planning, and

Facility Planning and Evaluation. Legal Support: Litigation Support, and Expert Testimony.

Having completed over 3,000 hotel & resort-related engagements since 1992, USRC has

tracked both the growth and decline of the U.S. hospitality industry. We have knowledge of all

product segment types, from limited-service to full-service, from economy to luxury destination

resort, from commercial to convention, from extended-stay to all-suite. We have been active in

specialized property types, including waterparks, spas, interval ownership/timeshares,

conference centers, casinos, and destination condominiums. While our scope of services has

taken us across the country, we possess strong local market knowledge in most markets

nationwide due to the depth of our experience. We provide the USRC Hotel Investor Survey,

one of the most widely quoted sources of Hotel Investor parameters, twice annually.




614-221-9494

WWW.USRC.COM


Self-Storage Services

USRC’s self-storage experience includes high-rise, urban facilities in densely populated markets as well as single-story facilities in sparsely populated suburban and rural markets. We have extensive experience in all of the major markets in the United States, as well as larger markets in Canada. We have appraised proposed construction, new construction, and high rise buildings that have been converted to self-storage, as well as existing, older facilities. Self-storage often involves the valuation of additional income generators. Our list of projects includes a mix of both single-entity facilities across the country as well as the following extensive portfolio work. Our self-storage appraisal team has appraised over 800 self-storage facilities since 2000, with an average of 150 facilities per year since the beginning of 2003. From our offices in Columbus, Chicago and Florida, as well as our satellite offices in Cincinnati and South Bend, we have been able to handle a multitude of national self-storage projects. We have appraised nationally dispersed portfolio projects as well as locally owned single-entity facilities. All of the appraisers on our self-storage team have extensive experience in this property type.




614-221-9494

WWW.USRC.COM


Golf Industry Services

USRC has developed a practice devoted to golf-related and recreational facilities. The services offered under this practice include valuation and consultation for private country clubs, daily-fee golf courses, surrounding residential developments, and resort destinations. USRC has the expertise to provide consultation to clubs of all types, with respect to supply and demand, operational reviews, pricing policies, and membership structure.

Valuation Studies: Narrative Appraisal of Market Value, Investment Value, or Value-in

-use, Portfolio and Asset Analysis, and Tax Appeal Appraisals.

Lender Due Diligence: Due diligence to help lenders determine if a loan commitment is advisable. This includes evaluations of a facility and its operations, and the best- case/worst-case scenarios the lender could experience if committing to a particular

loan.

Market Studies: Market Analysis, Impact Analysis, Statistical Demand Analysis, Market Positioning Analysis, Strategic Business Plans, and Market Feasibility Analyses.

Purchase Consultation/Due Diligence: Analysis of a property vis-a-vis the existing market

and the potential for realizing an acceptable return of, and on, invested capital.

Membership Surveys: Surveying membership perceptions and opinions about policies and pricing, effectiveness of club management, etc.

Operational Studies: Operational Review, Food & Beverage Review, Quality Assurance, Strategic Planning, Budgeting Review, Management Evaluation and Interviewing,

Staffing and Compensation Review, and Income/Expense Analysis.

Revenue Enhancement: Complete Marketing Management, Marketing Plan Development,

Advertising-Promotion-Public Relations Support, Yield Management Analysis, and Sales and Marketing Review.

Project Planning: Site Analysis, Concept Development Planning, and Facility Planning and Evaluation.

Legal Support: Litigation Support and Expert Testimony.




614-221-9494

WWW.USRC.COM

Stephen P. Faherty, MAI

Principal and Managing Director

[email protected]

Phone 513-231-4350

Elected to the Appraisal Institute, MAI, 2007, Mr. Faherty has been involved in the valuation of commercial real estate since 1994. Mr. Faherty is a graduate of the University of Cincinnati, Bachelor of Science (Major: Economics), 1992. Mr. Faherty joined USRC in 2000 as an associate of the firm and is now a Director of Appraisal Services. Mr. Faherty has been involved in Appraisal and Portfolio Analysis of Investment-grade Real Estate such as Office Buildings, Apartments, Office/Warehouse, Retail Centers, Student Housing, Hotels, and Self-Storage. Education Bachelor of Science (Major: Economics), University of Cincinnati, 1992.

Completed the following Appraisal Institute Courses/Exams:

Appraisal Procedures Basic Income Capitalization Advanced Income Capitalization Highest and Best Use and Market Analysis Advanced Sales Comparison and Cost Approach Advanced Applications All USPAP Courses and Update Courses Appraisal Institute’s Comprehensive Appraisal Examination Appraisal Institute’s Continuing Education Classes

Attended the following Appraisal Institute Seminars:

Various Continuing Education Classes through the Appraisal Institute Appraisal Search Strategies and the Internet General Appraisal Review Evaluation of Commercial Construction General Demonstration Appraisal Report Writing Office Building Valuation: A Contemporary Perspective Various Annual Economic Seminars – Columbus, OH Self-Storage Economics and Appraisal REITs and the role of the appraiser Economic Seminar Various online seminars

Professional Affiliations Member, Appraisal Institute State Certification

Mr. Faherty holds certification as a General Real Estate Appraiser in Ohio, Arizona, California, Florida, Georgia, Kentucky, Maryland, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Utah, Virginia, Washington, and Washington D.C.


James A. Piwarun

Senior Associate

[email protected]

Phone 513-236-3869

Since joining the firm in 2000, James Piwarun has provided research, analysis, valuation, and strategic advice on all commercial property types, including extensive work within the self-storage industry. Mr. Piwarun has completed more than 400 self-storage appraisal assignments across the United States, including Alaska and Hawaii. Prior to joining USRC, Mr. Piwarun held positions with Hyatt Hotels and as an Operations/Financial Analyst with several national Hotel Management and Hotel Development Companies. Over the past 12 years, Mr. Piwarun has performed over 150 hotel appraisals including limited- and full-service hotels and major convention hotels. In addition to self-storage properties and hotels, Mr. Piwarun is active in the valuation of other income-producing properties, including office, retail, multifamily and mobile home parks. Education

Bachelor of Business Administration (Major: Finance), University of Wisconsin Whitewater, 1986

Appraisal Institute Courses

Appraisal Procedures Appraisal Principals Basic Income Capitalization Highest and Best Use and Market Analysis All USPAP Courses and Update Courses

Other courses include Investments Analysis for Appraisers and Appraising Unique Properties

Various Seminars and Programs sponsored by The Appraisal Institute Various Hilton Corporation Certifications

State Certification

Mr. Piwarun holds certification as a General Real Estate Appraiser in Ohio and Pennsylvania.


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