November 30 2015 the Leser Group, Ltd. 1481 47 Street Brooklyn, NY 11219 Re: Appraisal File No. 8251 Norden Park 10 Norden Place

November 30th 2015

The Leser Group, Ltd. 1481 47th Street Brooklyn, NY 11219

Re: Appraisal File No. 8251 Norden Park 10 Norden Place and 6 Norden Place Norwalk, CT 06855

Dear Mr. Leser,

We confirm that we have given our full consent to the inclusion or reference of the appraisal of the above captioned properties (value date of 30th of September 2015) in its entirety within the Leser Group Ltd. financial statements to be published in the Tel Aviv stock Exchange in 2015. In addition, we confirm that we have given our full consent to the inclusion of this consent letter within the Leser Group Ltd. financial statements to be published in the Tel Aviv stock Exchange in 2015.

Yours Sincerely,

Joel Leitner, MAI, CRE, FRICS Managing Director State Certified General Appraiser #RCG000.1050

Melissa P. Sohn Senior Appraiser (212) 682-2869 [email protected] State Certified General Appraiser #RCG0001417

APPRAISAL REPORT

Norden Park 10 Norden Place and 6 Norden Place Norwalk, CT 06855

REQUESTED BY

The Leser Group, Ltd. 1481 47th Street Brooklyn, NY 11219

PREPARED BY

Butler Burgher Group, Inc. Formerly Leitner Group, Inc. 79 Madison Avenue New York, NY 10016

DATE OF VALUE

September 30, 2015

November 30, 2015

The Leser Group, Ltd. 1481 47th Street Brooklyn, NY 11219

Re: Appraisal File No. 8251 Norden Park 10 Norden Place and 6 Norden Place Norwalk, CT 06855

Dear Mr. Leser:

In accordance with your request, we have completed an appraisal of the above captioned property for the purpose of estimating the "as is" fair value of the subject property's leased fee interest.

The subject property consists of the main multi-tenanted building known as 10 Norden Place, and a newly constructed data center building, known as 6 Norden Place, that is fully occupied by a single tenant: CyrusOne LP, formerly known as Cervalis. The main two-story, plus basement, Class B+ office and industrial building was constructed in 1960 with an addition in 1968, and the entire complex was renovated in 2001/02 and is in very good condition. The main building contains approximately 615,357+/- square feet of leasable area and is situated on approximately 37.21+/- acres of land which provides for ample on-site parking. The property is currently 31.19% occupied with approximately 423,421 square feet of vacant space. Northorp Grumman previously occupied 320,230+/- square feet, and they vacated the space December 31, 2014. The subject property is located on the northeast corner of Norden Place and Woodside Avenue, in the City of Norwalk, Fairfield County, State of Connecticut. The site is zoned RI Restricted Industrial Neighborhood Business and is identified on the City of Norwalk, Fairfield County tax maps as District 3, Block 17, Lots 40A and 40B. The site area contains approximately 37.21 acres±.

Mr. Abe Leser Page 2 November 30, 2015

The highest and best use of the subject property is as an office/industrial property. This conclusion is based upon the physical characteristics of the subject property, the nature of the subject's location, the current zoning and general trends affecting the property.

The appraisal analyses, opinions, and conclusions were developed, and this appraisal has been prepared, in conformance with all regulations issued by the appropriate regulatory entities regarding the enactment of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). In addition, the appraisal report has been prepared in conformity with the requirements of the Standards of Professional Appraisal Practice of the Appraisal Institute, the Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by The Appraisal Foundation, and with the requirements of the State of Connecticut for State Certified Appraisers.

Mr. Abe Leser Page 2 November 30, 2015

After carefully considering all available information concerning the subject property and all apparent factors affecting value, it is the opinion of the appraisers that the fair value of the leased fee interest in 10 Norden Place, as of September 30, 2015, is:

SIXTY NINE MILLION FIVE HUNDRED THOUSAND DOLLARS $69,500,000

FIFTY SIX MILLION DOLLARS $56,000,000

The opinions of value expressed herein are subject to the certification, assumptions and limiting conditions, and all other information contained in the following written appraisal report.

Thank you for the opportunity to serve you.

Sincerely,

Joel Leitner, MAI, CRE, FRICS Managing Director State Certified General Appraiser #RCG000.1050

Melissa P. Sohn Senior Appraiser (212) 682-2869 [email protected] State Certified General Appraiser #RCG0001417

SUMMARY OF SALIENT FACTS AND CONCLUSIONS

Subject Property: Norden Park 10 Norden Place and 6 Norden Place Norwalk, CT 06855

Building Description: The subject property consists of the main multi-tenanted building known as 10 Norden Place, and a newly constructed data center building, known as 6 Norden Place, that is fully occupied by a single tenant: CyrusOne LP, formerly known as Cervalis. The main two-story, plus basement, Class B+ office and industrial building was constructed in 1960 with an addition in 1968, and the entire complex was renovated in 2001/02 and is in very good condition. The main building contains approximately 615,357+/- square feet of leasable area and is situated on approximately 37.21+/- acres of land which provides for ample on-site parking. The property is currently 31.19% occupied with approximately 423,421 square feet of vacant space. Northorp Grumman previously occupied 320,230+/- square feet, and they vacated the space December 31, 2014.

Location: The subject property is located on the northeast corner of Norden Place and Woodside Avenue, in the City of Norwalk, Fairfield County, State of Connecticut.

Block/Lot: District 3, Block 17, Lots 40A and 40B

Construction Date/Age: Main Building - 1960/1968, renovated 2001/02

Data Center – Construction Completed 12/18/13.

Site Area: 37.21 acres± square feet

Zoning: RI Restricted Industrial

SUMMARY OF SALIENT FACTS AND CONCLUSIONS (CONT.)

Occupancy: 10 Norden Place - 31.19%

6 Norden Place (Data Center) - 100% by CyrusOne LP on a triple net lease basis

Flood Hazard Status: Zone X, area of minimal flooding, according to FIRM Community Panel #09001C0532F dated June 18, 2010.

Marketing Time: Between six months and one year.

Exposure Time: Between six months and one year.

Property Rights Appraised: Leased fee

Date of Valuation: September 30, 2015

Date of Inspection: March 10, 2015

Fair Value Conclusions: “AS IS” 10 NORDEN PLACE - $69,500,000

“AS IS” 6 NORDEN PLACE - $56,000,000

TABLE OF CONTENTS

INTRODUCTION ...... 1 IDENTIFICATION OF THE SUBJECT PROPERTY ...... 1 LEGAL DESCRIPTION – ENTIRE SITE ...... 2 LEGAL DESCRIPTION – CYRUSONE LP DATA CENTER ...... 3 PURPOSE OF THE APPRAISAL ...... 3 INTENDED USER/FUNCTION OF THE APPRAISAL ...... 3 PROPERTY RIGHTS APPRAISED ...... 3 DATE OF VALUE ESTIMATE ...... 4 HISTORY OF THE SUBJECT PROPERTY ...... 4 EXPOSURE TIME ...... 6 ESTIMATE OF REASONABLE MARKETING TIME ...... 6 COMPETENCY ...... 7 DEFINITION OF FAIR VALUE...... 7 SCOPE OF THE APPRAISAL ...... 8 CURRENT ECONOMIC CONDITIONS ...... 16 AREA ECONOMIC ANALYSIS - CONNECTICUT ...... 24 FAIRFIELD COUNTY ...... 32 NEIGHBORHOOD DESCRIPTION – CITY OF NORWALK ...... 41 OFFICE MARKET ANALYSIS ...... 50 ZONING SUMMARY ...... 63 SITE DESCRIPTION...... 76 SUBJECT PROPERTY PHOTOS ...... 78 BUILDING DESCRIPTION ...... 111 HIGHEST AND BEST USE ...... 116 APPRAISAL VALUATION PROCESS ...... 120 INCOME APPROACH ...... 121 PROPERTY ANALYSIS – 10 NORDEN PLACE ...... 121 INCOME ...... 122 ESTIMATED OPERATING EXPENSES ...... 149 CASH FLOW ANALYSIS ...... 157 DISCOUNT RATE ...... 158 SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS ...... 161 PROPERTY ANALYSIS – 6 NORDEN PLACE - DATA CENTER ...... 164 ESTIMATED OPERATING EXPENSES ...... 170 DISCOUNT RATE ...... 172 SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS ...... 175 SALES COMPARISON APPROACH ...... 177 MAIN BUILDING – 10 NORDEN PLACE ...... 177 BUILDING SALES ADJUSTMENT GRID ...... 189 6 NORDEN PLACE - DATA CENTER BUILDING ...... 191 BUILDING SALES ADJUSTMENT GRID ...... 193 RECONCILIATION AND FINAL VALUE ESTIMATE ...... 195

ADDENDA ...... 197

INTRODUCTION

IDENTIFICATION OF THE SUBJECT PROPERTY

The subject property is located on the northeast corner of Norden Place and Woodside Avenue, in the City of Norwalk, Fairfield County, State of Connecticut. The site is zoned RI Restricted Industrial Neighborhood Business and is identified on tax maps as District 3, Block 17, Lots 40A and 40B. The site area contains approximately 37.21 acres± square feet.

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LEGAL DESCRIPTION – ENTIRE SITE

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LEGAL DESCRIPTION – CYRUSONE LP DATA CENTER

PURPOSE OF THE APPRAISAL

The purpose of the appraisal is to estimate the fair value of the leased fee interest of the subject property, in accordance with its highest and best use and the definition of market value provided in this report. The definition of market participants meets the criteria of IFRS 13.

INTENDED USER/FUNCTION OF THE APPRAISAL

The intended user of the appraisal is The Leser Group, Ltd. and its affiliates. The intended use of this appraisal is for internal management purposes. Additionally, this appraisal will be used for preparation of financial statements.

PROPERTY RIGHTS APPRAISED

The existence of leases within the subject property indicates that the property should be appraised on the basis of a leased fee estate (encumbered). A leased fee estate is created by a lease (or several leases) on a property and reflects the lessor's (landlord's) ownership interest in the real estate. The lessor's interest consists of the right to receive contract rental payments during the term of the lease and the ultimate return of the rights of use and possession of the property at lease expiration. According to the Dictionary of Real Estate Appraisal, "A leased fee estate is an ownership interest held by a landlord with the right of use and occupancy conveyed

BUTLER BURGHER GROUP, INC. 3 0115008251 INTRODUCTION by lease to others; the rights of the lessor (the leased fee owner) and leased fee are specified by contract terms contained within the lease."

DATE OF VALUE ESTIMATE

The date of our “as is” valuation is September 30, 2015. The subject property was inspected by Melissa P. Sohn on March 10, 2015.

HISTORY OF THE SUBJECT PROPERTY

The tax records indicate the owner of the subject property as Norwalk Center LLC. The last sale of the subject property was December 2005. The details of this transaction can be found in the chart below.

Seller: Norden Place LLC Purchaser: Norwalk Center LLC Sale Date: December-05 Sales Price: $87,000,000 Sales Price/SF: $141 Document Number: 6059-243

The subject property includes a newly constructed data center building which contains 167,691 square feet within two-stories plus a basement. Approximately 4.999 acres of the existing site belongs to this property. Construction commenced November 2012 and was completed December 18, 2013. The construction budget totaled $32,661,313 ( $194.77 per sf) for hard and soft costs. The data center is 100% leased, on a triple net basis to CyrusOne LP who recently acquired Cervalis, LLC, the original tenant. We will value this property separately within this appraisal. The lease is dated July 2012 and contains the following terms:

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CyrusOne / Cervalis Lease Abstract Lease Lease Option Lease Annual Annual Tenant Date Lease Commencement Term Period Year Rent Size (SF) Rent/SF Lease Terms Cyrusone Jul-12 Within 112 days of 21 Years 10 years 1 $3,672,433 167,691 $21.90 This is a triple net lease whereby the LP f.k.a. building shell completion 2 $3,709,157 $22.12 tenant is responsible for ALL of the Cervalis (December 18, 2013): 3 $3,746,249 $22.34 operating expenses pertaining to the property inclusive of all allocated 4 $3,783,711 $22.56 Lease Commencement: real estate taxes. $22.79 March 31, 2014 5 $3,821,549 6 $3,859,764 $23.02 Base Rent escalates by 1% per 7 $3,898,362 $23.25 annum. 8 $3,937,345 $23.48 9 $3,976,719 $23.71 Base rent for the first year of the lease is reduced by 2/3's and base 10 $4,016,486 $23.95 rent for the second year of the lease $24.19 11 $4,056,651 is reduced by 1/3. Therefore, the 12 $4,097,217 $24.43 base rent for year 1 is $1,224,144 13 $4,138,189 $24.68 (concession is $2,448,289) and the 14 $4,179,571 $24.92 base rent for year 2 is 2,472,771 15 $4,221,367 $25.17 (concession is $1,236,386). 16 $4,263,581 $25.43 There is one 10-year option period. 17 $4,306,217 $25.68 18 $4,349,279 $25.94 19 $4,392,771 $26.20 20 $4,436,699 $26.46 21 $4,481,066 $26.72

Based upon the actual completion date of December 18, 2013, the lease commenced March 31, 2014. The base rent for the first two years contains concessions of two thirds of the rent in year 1 and one third of the rent in year two. Therefore, the base rent to be paid in year 1 was $1,211,903 and the base rent to be paid in year 2 was $2,485,135.

There is currently is 103,191 square feet of vacant space representing 16.77% of the building. In addition, on December 31, 2014 Northorp Grumman vacated 320,230 square feet at the subject property, representing 52.04% of the building. Therefore, the current vacancy rate at the subject property equates to 68.81%. Prior to the Grumman vacancy, the building contained a typical vacancy rate within the market between 15% and 20%.

Tenant % of Total Vacant Space Description Size (SF) GBA Vacant Grumman Space 320,230 52.04% All Other Vacant Space 103,191 16.77%

Total SF 423,421 Total SF as % of building: 68.81%

Discussions with ownership reveal that the continuous vacancy during 2015 is predominantly attributable to the fact that they were negotiating with their lender during most of this year, which kept leasing at a standstill. Over the past couple of months, management has had interest from an existing tenant, Red 7, for a 10,000 square foot expansion, as well as discussions with a school to move into 60,000 square feet. These discussions are in the beginning stages and leases have not been signed.

BUTLER BURGHER GROUP, INC. 5 0115008251 INTRODUCTION

EXPOSURE TIME

Exposure time has been defined, as the estimated length of time the real property interest appraised would have been offered in the market prior to the hypothetical consummation of a sale at market value on the effective date of appraisal; a retrospective estimate based on an analysis of past events assuming a competitive and open market.

Exposure time is always presumed to precede the effective date of appraisal. It is our opinion that a normal exposure time for the subject property is between six months and one year. This conclusion is predicated on interviews with brokers and other real estate industry sources and on information obtained in the verification process. The value reported herein presumes such an exposure time.

ESTIMATE OF REASONABLE MARKETING TIME

Given the subject's present condition and location and the marketing times for similar properties, we estimate the marketing time for the subject to be between six months and one year.

Source: PricewaterhouseCoopers 3rd quarter 2015 Real Estate Investor Survey

DEFINITION OF EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS

Extraordinary Assumptions

An extraordinary assumption is defined by the Uniform Standards of Professional Appraisal Practice as “an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.”

There are no extraordinary assumptions

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Hypothetical Conditions

A hypothetical condition is defined by the Uniform Standards of Professional Appraisal Practice as “that which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.”

There are no hypothetical conditions.

COMPETENCY

We have specific knowledge of appraisal methods and practices to complete the assignment competently and have extensive experience in appraising similar properties.

DEFINITION OF FAIR VALUE

IFRS 13.9: This IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

IFRS 13.A: Market participants: Buyers and sellers in the principal (or most advantageous) market for the asset or liability that have all of the following characteristics:

1. They are independent of each other, ie they are not related parties as defined in IAS 24, although the price in a related party transaction may be used as an input to a fair value measurement if the entity has evidence that the transaction was entered into at market terms.

2. They are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information, including information that might be obtained through due diligence efforts that are usual and customary.

3. They are able to enter into a transaction for the asset or liability.

4. They are willing to enter into a transaction for the asset or liability, ie they are motivated but not forced or otherwise compelled to do so.

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SCOPE OF THE APPRAISAL

Butler Burgher Group, Inc. has been retained by The Leser Group, Ltd. and its affiliates to prepare a fair valuation of the subject property. Within the course of this assignment, the appraisers have:

1. Inspected the interior and exterior of the subject property March 10, 2015.

2. Researched and investigated the subject's location in terms of its economic activity, development patterns, and future trends and related their impact on the subject’s office and industrial market.

3. Conducted a market survey of rent levels and vacancy levels of similar Class A and B properties.

4. Determined the Highest and Best Use of the subject property based on an analysis of all relevant factors.

5. Abstracted and analyzed the subject leases and historical operating expenses for the subject property; projected the subject's stabilized net operating income and applied market- derived capitalization and discount rates in order to derive a current market value for the subject property.

6. Researched and ascertained comparable office building sales in supporting or deriving a current market value estimate for the subject property.

7. Estimated the "as is" market values of the leased fee interest in the subject property as of September 30, 2015.

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AERIAL MAP OF SUBJECT PROPERTY

Cervalis Data Center

Existing Property

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SITE PLAN/LAYOUT OF EXISTING SUBJECT PROPERTY

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SITE PLAN OF CERVALIS DATA CENTER BUILDING

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SITE PLAN/LAYOUT WITH DATA CENTER – CERVALIS, LLC

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PHOTOS OF SUBJECT PROPERTY AS OF MARCH 10, 2015 10 NORDEN PLACE – MAIN BUILDING

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DATA CENTER – CERVALIS BUILDING

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AREA MAP

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CURRENT ECONOMIC CONDITIONS

U.S. Economy – The economy appears to be following last year’s pattern with a weak first quarter followed by a recovery. Indicators are showing much stronger second quarter performance with employment, consumer spending, and housing markets all improving from the first quarter pause.

Financial Markets – While Wall Street profits were up strongly in the first quarter, the outcome was due mainly to lower expenses. Heightened uncertainty in Europe and Asia has impacted markets with equity indices falling over 2% in June, leaving markets flat for the year.

Monetary Policy & Inflation – Inflation continues to run well below the Fed’s target rate of 2%, but a hike of the federal funds rate appears likely in the second half of 2015.

NYC Labor Market – After 3 consecutive years of decline, annual average real wages saw growth in 2014. However, the fastest employment expanding sectors are not the highest paid. Wages in the securities sector surpassed their previous peak in 2014; employment, however, is still well below its pre-recession level as jobs flow elsewhere.

NYC Office Market – The New York City office market has exhibited solid performance in the beginning of 2015, but leasing activity has slowed from the 2014 pace. Opening dates for 3 World Trade Center and 10 Hudson Yards have been pushed back.

NYC Tourism Market – Through May 2015, tourism is strong with the City’s attractions showing high attendance. The hotel industry continues to fare well with room nights filled up 3.8%, occupancy at 93%, and an average daily room rate of $317.00.

NYC Metropolitan Statistical Area – As of February 2013, the delineation for the New York- Newark-Jersey City, NY-NJ-PA MSA has been revised. Although the new definitions induce a revision of data reported at the MSA level, growth trends for most of these indicators remain nearly the same.

The U.S. Economy

The U.S. economy has been sending mixed messages for over a year now. Last year, activity paused with negative growth in the first quarter, only to be followed by the strongest growth since 2003 in the subsequent 2 quarters. Similarly, 2015 started off balance, but the picture now appears to be brightening. If there is a lesson from recent history, it is that the economy continues to show resilience in the face of external shocks, including turmoil in Asia and Europe, the sharp correction in energy prices, and the rapid strengthening of the U.S. dollar.

The Bureau of Economic Analysis released its third estimate of first quarter GDP at the end of June which revealed a decline of 0.2% growth (annualized). While this was an upward revision from the prior estimate of -0.7%, it suggests that the economy is following the same volatile pattern as last year. This year’s impediments included another hard winter, a labor dispute in

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California that disrupted trade flows, and the impact of the stronger dollar. While the first two factors are temporary, the dollar is expected to remain strong since the Federal Reserve’s monetary policy is expected to tighten later this year. Net exports subtracted a full percentage point from growth in first quarter 2014 and nearly 1.9 percentage points in the first quarter. However, in the second quarter, the dollar has weakened by about 2% against major currencies which should help mitigate the trade drag.

On the domestic front, there are many signs of recovery in the second quarter. The Blue Chip forecast consensus expects growth to rebound to 2.9% on an annualized basis while the Atlanta Fed’s GDPNow forecast, which updates its estimate as new data becomes available, is predicting 2.4$ growth. If the economy grows at 2.5% in the second quarter, the first half of 2015 will have expanded at the same pace as the first half of last year.

Most of the recent national data has been positive. Employment in June expanded by 223,000 which brings the second quarter average monthly pace to 221,000, up from only 195,000 in the first quarter. The number of job seekers per opening has continued to drop, falling to 1.6 in May and closing in on the all-time low of 1.5 set at the beginning of 2007. These tighter labor market conditions seem to finally be producing wage gains. The employment cost index for the first quarter grew 2.7% (seasonally adjusted annual rate), nearly a full percentage point faster than the post-recession average. The Atlanta Fed’s monthly wage growth tracker, which is based on tracing individuals in the Current Population Survey, is currently showing wage growth at 3.3%, the highest since the recession. However, average hourly wages have been more sluggish. On a monthly basis, pay in June was unchanged from May’s reading and growing at an annual rate of only 2%.

One ongoing puzzle has been the behavior of consumers who initially saved most of the large energy windfall they received last year. From mid-2014 to early 2015, gasoline prices dropped by over a third, resulting in a consumer bonus estimated to range from $100 to $150 billion. This was expected to translate into stronger spending on other consumer goods. However, contrary to this prediction, sales data has been mixed, showing below average growth from December through February with a similar pattern in the personal consumption expenditure (“PCE”) numbers. However, more recent retail sales data showed a 3-month turnaround before slumping again. From March to May, retail sales grew by 2.6% but struggled in June, dropping by 0.3%. PCE likewise surged in May, growing by 0.9%, the largest monthly change since August 2009. One consequence has been a decline in the savings rate to 5.1% in May, down from a February peak of 5.7% as shoppers spent more freely.

Another factor that bodes well for the economy is a recovering housing sector that is starting to pull its weight. In May, existing home sales rose a healthy 5.1% from April to a seasonally adjusted annual rate of 5.4 million units. The last time the housing market saw sales this strong was over 5 years ago during the spike of purchases prompted by the first-time homebuyer’s tax credit—enacted by Congress in 2008 to jump start the moribund housing sector. Likewise, new home sales have jumped this year. May sales of new homes grew by 2.2% (month over month), hitting an annual rate of 546,000. This is the fastest pace in 7 years, and year to date new home sales are running 24% higher than the same 5-month period last year. Moreover, pending home

BUTLER BURGHER GROUP, INC. 17 0115008251 MARKET AND AREA ANALYSIS sales—an index derived from signed existing home contracts—reached its highest level since April 2006. Since this is a forward looking indicator, housing momentum should remain strong through the summer. While the latest strength is a welcome recovery after last year’s pause, there are potential clouds on the horizon as the Federal Reserve will likely begin raising interest rates sometime later this year. It is possible that some of the heightened activity now is the result of buyers accelerating plans to lock in favorable mortgage rates prior to expected increases. The housing market saw similar behavior in 2013 as activity jumped prior to the Fed’s anticipated plans to taper its bond purchase program (quantitative easing).

While labor and housing markets and consumer spending are all showing strength, the erratic path of business investment continues to be a major soft spot. Total durable goods declined by 1.8% from April to May and are down 2.5% on a year over year basis. Non-defense capital goods (excluding the volatile aircraft category)—a proxy for business investment—is down 0.9% year over year. On a monthly basis, this measure has been negative for 3 out of 5 months so far this year. This lethargy partly reflects the steep drop in spending in the energy sector combined with more cautious investment in sectors exposed to the weak export market. With the Fed expected to transition to a tighter monetary policy while other central banks remain accommodative, the dollar will likely remain strong. As a result, continued weak export growth and below average investment spending appear likely.

Financial Markets

The first quarter results for the full set of NYSE member firms were released last month. The headline profit figures were up strongly by 22.3% over the first quarter last year. However, revenue growth was flat (-0.3%) while expenses declined by 3.5%, driven primarily by a steep decrease (down 11%, or $1.7 billion) in expenses unrelated to compensation any interest. This drop is due mainly to dwindling litigation expenses as the pipeline of fines and settlements from the housing crash tapers. Additional evidence of this trend was contained in the second quarter “Big Five” earnings reports which showed litigation expenses declining by 70% compared to last year.

On the revenue side, one surprise was the weak performance of the trading and investment business line which declined by over 25% (down $1.6 billion) from the first quarter last year despite evidence of increasing equity and bond trading volumes on exchanges. In addition, net interest income continues to be weak, suppressed by the low interest environment as the spread between funding (such as bank deposits) and interest on assets (such as loans and investments) remains compressed. Net interest income at the Big Five banks contracted by 2% in the first quarter only to grow by 1% in the second as yields recovered. Although tighter monetary policy should help steepen the yield curve later this year, it has become clear that the Fed’s liftoff will be gradual at best, particularly with heightened global uncertainty in Europe and Asia.

Financial markets have been somewhat mixed given the Greek crisis and the steep correction in Chinese equity markets. After moving sideways in the first quarter, the S&P 500 and Dow Jones indices gained 2.4% and 1.1%, respectively, in April and May. However, both fell over 2% in June, leaving the S&P up only 0.2% and the Dow down 1.1% through the first half of the year.

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In June, the level of short sales on the NYSE (positions taken by traders betting that the market will fall) reached their highest level since the financial crisis.

On a more optimistic note, volatility has been relatively stable. The Chicago Board Options Exchange volatility index (“VIX”) ended the first quarter at a value of 15 and increased to 18 by the end of the second quarter, still below the long run average of around 21. The trading days ratio—the share of S&P 500 trading days with an increase or decrease in excess of 1%--declined from 31% in the first quarter to only 14% in the second. Likewise, the uptick in trading volume on the NYSE seen at the end of 2014 appears to be continuing into 2015. Starting from the recession in 2008, total trading volume declined for 5 consecutive years. Last year, trading turned up slightly, increasing a scant 0.5% over 2013. Through the first half of 2015, volume has continued to strengthen, up about 11% compared to the first half of 2014.

Bond markets have gone through a number of gyrations with yields being pushed up by expectations of tighter monetary policy and ongoing growth but pulled down by precautionary purchases by risk adverse investors reacting to events in Greece and Asia. Yields on the benchmark 10-year treasury notes hovered around 2% for most of the first quarter but started to trend upward in the second, hitting a year high of 2.5% in July. However, with uncertainty about Greece intensifying through the beginning of July, yields dropped as much as 30 basis points as investor demand for safer assets grew. Average daily bond trading volume has decelerated somewhat, falling to 1.0% growth (year over year) from 7.2% in the prior quarter. Issuance of new bonds continue to be strong with growth in the first half of 2015 up 11.3% compared to the first half of last year. Bond sales by the corporate sector continue to be brisk, up 9% for the first 2 quarters of 2015. At this pace, corporate debt issuance will again extend the current 3-year run of record borrowing driven by low interest rates.

One consequence of higher interest rates is the negative impact on bond prices which move inversely to interest rates, eroding the value of bond funds. In the last half of 2013 when 10-year interest rates jumped a full percentage point, bond mutual funds saw outflows of over $175 billion. With more stable interest rates in 2014, flows reversed with net inflows of $32 billion. So far in the first 6 months of 2015, these funds have gained $34 billion and $24 billion in the first and second quarters, respectively, which may signal that bond investors are confident that the Fed will move slowly in raising rates. In contrast, equity funds saw $26 billion of inflows in the first quarter, but $6.5 billion of outflows in the second.

Looking forward, financial markets will have to grapple with continued uncertainty from Asia and Europe and the anticipated Fed tightening later this year. At the end of the first half last year, the S&P 500 index had gained 6% and finished up 11% for the year, a performance that seems increasingly unlikely this year. With international sales accounting for 30% to 40% of S&P 500 firms’ revenue, the strong dollar and weak global growth are likewise challenges to earnings. With the second quarter earnings season just underway, markets will likely become choppier in the near future.

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Monetary Policy & Inflation

Inflation pressures remain subdued. Slow growth in the first quarter, combined with a stronger dollar that reduced import prices and a sharp drop in energy prices, allowed the Fed to maintain its accommodative monetary stance. The likelihood for liftoff of the federal funds rate within the next couple of months declined. Still, the Federal Open Market Committee (“FOMC”) is signaling at least one rate hike this year, which would be the first tightening since June 2006.

The consumer price index (“CPI”) has increased for 5 consecutive months as of June. Core CPI edged up to 1.8%. The personal consumption expenditure price index measured 0.2% year over year in May (core: 1.2%). Inflation data is still being weighed down by the precipitous drop in oil prices.

The first rate hike will be decided on a meeting-by-meeting basis and depends on the strength of labor market and inflation data. If future employment reports continue to be as strong as in June, then the Fed will feel comfortable raising the fed funds rate this year, reflecting the expectations of the majority of the FOMC voting members. However, global performance and turbulence could delay the first increase, especially the weakness in the Eurozone and China’s economic slowdown. Citing this unpredictable environment, the IMF has urged the Fed to hold off on tightening until 2016.

The Fed will employ a couple of new tools to manage the fed funds target range as it tightens. Interest on excess reserves will be the primary tool to move the rate into its announced range and to set the upper bound. The overnight reverse repurchase (“ON RRP”) facility, a new policy tool, has undergone significant testing and will be used to set the floor of the fed funds rate range when normalization begins.

An ON RRP agreement is an open market operation where the Fed agrees to sell a security and repurchase it at a predetermined time (typically the next business day) and price. Banks and other dealers will submit bids including the amount of securities to be purchased and an interest rate. The prevailing rate depends on whether or not the sum of bids exceeds the total size of assets offered. If the total value of the bids is less than or equal to the offered amount, then each bid is awarded at the highest offered rate. When the bids exceed the amount offered, then bids are awarded in ascending order of submitted interest rate in full or as a proportion of the total requested value until the overall size limit is reached. The program will only be used until it is no longer necessary.

The Chicago Board of Trade provides probability estimates of Fed actions using fed funds futures prices. Currently, futures markets expect the first rate hike to occur by December, and Fed officials have indicated the path of subsequent rate increases will be modest. With the Fed’s balance sheet at $4.5 trillion, normalization of monetary policy still has a long way to go.

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New York City Labor Market

Against the backdrop of record high employment gains, the average wage across the City has started to accelerate. Real wages grew by 3.76% on an annual average basis after 3 consecutive years of decline. Compared to the U.S., New York City’s real wage growth has outpaced the nation, which contracted 0.1% in 2014.

The fastest employment expanding sectors are not the highest paid. The real average wage for the leisure & hospitality sector contracted 2% from its level 6 years ago while accounting for more than 32% of total jobs since the financial crisis. Similarly, education & health, whose workers also received 2% real wage cuts since 2009, contributed more than 15% of jobs, an increase of 122,000 positions or almost 1 in every 3 new jobs since the financial crisis trough. Conversely, the financial activities and information industries, two sectors that have exhibited the fastest wage growth, added less than 30,000 new jobs, or less than 10% of the total employment gain. Employment in financial activities has increased only 3% during the current expansion. Thus, the expansion of New York City’s labor market since the recession has been skewed toward lower wage jobs.

A Closer Look: The Securities Sector Wall Street is back, according to a recent New York Times piece, it just isn’t back on Wall Street. Securities employment at the national level has surpassed levels set in early 2007, but at the city level, employment is still 18,000 below its pre-recession peak.

The securities sector in New York City peaked in November 2007, the month prior to the onset of the Great Recession, at a seasonally adjusted level of 189,000. Over the following 21 months, the industry shed 28,000 positions to reach its trough (161,000) in August 2009. Since then, only 10,300 jobs have been added, but there is momentum in the industry as over 50% of those positions have been created in 2015.

Although employment growth has been sluggish in New York City’s securities sector, wage gains have been strong. Unadjusted for inflation, wages grew by 14.5% in 2014 to finish the year at $407,500, eclipsing the prior peak set in 2007.

Even with the recent employment and wage gains over the past 12 months, the City’s securities sector has yet to return to its pre-recession strength. Furthermore, the recession may have provided an opportunity for firms to relocate positions to other cities. As of December 2014, seasonally adjusted gains from November 2007 have been greater in Texas with over 14,600 jobs added, followed by Pennsylvania (+12,500), and Missouri (+5,100).

New York City still remains the largest securities hub in the nation, but other areas are growing their industry at a much faster pace. The City accounts for approximately 19% of total securities employment, a share that has declined from 32% in 1990. California’s share—the state with the second largest securities payroll—is nearly 10%.

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Texas trails California by nearly 30,000 positions, but its employment grew by approximately 30% over the period spanning November 2007 through December 2014. It is unlikely that these states will surpass New York City’s securities employment share any time in the near future, but the declining trend is likely to continue. Moreover, competition from outside the U.S. is increasing with challenges from London, Hong Kong, and other cities across the globe.

There have been positive signs recently, and the securities sector in the City still has room to grow. Nevertheless, it is possible that the recession, coupled with advances in technology, provided the industry an opportunity to move jobs closer to certain industries such as oil and gas in Texas.

New York City Office Market

The Manhattan office market remained on firm footing in May with strong leasing activity leading to lower vacancy rates. Expected completion dates of 3 World Trade Center and 10 Hudson Yards were both pushed back. Leasing activity has slowed following a robust 2014 but remains strong with 4 consecutive months of activity exceeding 2 million square feet. Through May, leases have totaled 12.3 million square feet, down 13.6% from the same period a year ago. The Midtown market has accounts for 74% of leasing in the primary and secondary Manhattan office markets.

The growth in occupied space drove the primary office market vacancy rate down to 10% from 10.2% in April. The vacancy rate has not been this low since March 2013 when it measured 9.8%. Vacancy in the secondary office market edged up for the second consecutive month to nearly 8% as more space opened up in both Downtown and Midtown over the past 2 months.

Two large projects—3 World Trade Center and 10 Hudson Yards—had their completion dates pushed back. According to Cushman & Wakefield, 10 Hudson Yards was previously expected to open in 2015 but is now planned to open in the first quarter of 2017. The delay for 3 World Trade Center was not as drastic with its expected completion date moved from 2017 to the first quarter of 2018. Delays of these two large blocks of new inventory might affect future leasing decisions.

New York City Tourism Market

In 2014, a record 56.4 million visitors came to take advantage of the sights and sounds of New York City. This, in turn, stimulated economic activity is the leisure & hospitality industry. The average daily room rate for the year was $295.00, and occupancy was at 89% (a record high). Broadway also broke new records with shows raking in gross earnings of $1.4 billion and attendance up 13%. Due to the damage wrought by Superstorm Sandy in 2012, the Statue of Liberty was closed off to visitors through mid-2013. However, tourists flocked back to the attraction once it was reopened, and 4.2 million visitors paid homage to Lady Liberty in 2014.

Despite complaints that the winter weather was especially frigid this year, tourism through the first quarter fared better compared to the same time last year. Year to date through May,

BUTLER BURGHER GROUP, INC. 22 0115008251 MARKET AND AREA ANALYSIS recreational visitors to the Statue of Liberty have increased 2.1% from the prior year. Hotel room nights filled through May were up 3.8%, and Broadway attendance was also strong, up 4.5% from the prior year. The average daily room rate for the month was $320.00, slightly higher than last May’s figure of $319.00. Occupancy was at 93%, slightly under the 94% of last year.

New York City Metropolitan Statistical Area

In February 2013, the U.S. Office of Management and Budget (“OMB”) revised the delineation of the metropolitan statistical area (“MSA”) to reflect the 2010 Census Bureau data and standards. After a lengthy trial period, BLS made the transition to the new delineations in the first quarter of this year. Previously, the New York-Northern New Jersey-Long Island, NY-NJ- PA MSA was comprised of 23 counties in the tristate area. The new area, denominated as the New York-Newark-Jersey City, NY-NJ-PA MSA, contains the same counties as previously, but includes Orange County and Dutchess County, New York.

The addition of the two counties increases the population by about 700,000 people to a total of 19.7 million in 2011 and increases personal income and gross domestic product levels. As of December 2013, the two additional counties made up 2.8% of total employment in the MSA, and the average annual wage in 2013 for the two counties was $42,858, about 37% below the overall average for the area of $68,513.

With the inclusion of these two counties, growth trends in gross domestic product and local area personal income remain almost identical between the prior and current MSA delineation with growth rates for local area personal income only varying on average 30± basis points over the 30-year span of 1970 through 2000.

On a more localized level, the delineations for the metropolitan divisions, subsets of counties of the MSA, have also been revised. Previously, the Case-Shiller home price index reflected the New York-White Plains-Wayne, NY-NJ Metropolitan Division. The new metropolitan division drops Putnam County but expands to include Middlesex, Monmouth, and Ocean Counties in New Jersey and Orange County in New York.

The new, expanded metropolitan division bumped up the price index. On average, the new area is about 5 points above the prior division for the span from 1975 to 2010. However, in the past 4 years, the difference has declined to a little over 1 point. The two Case-Shiller indices had been close estimators for New York City 1- to 3-family home prices up until 2006. Subsequently, New York City’s house prices, as measured by the New York City Department of Finance (“DOF”), rose significantly faster than that of its neighboring counterparts due, in part, to the influence of new luxury condo sales that bias the DOF measure upward. The Case-Shiller index includes only repeat sales and is less influenced by new construction. Since the trough, the City’s market has continued to recover rapidly, and it is likely that the disparity between price growth in New York City versus its surrounding areas will continue to expand.

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AREA ECONOMIC ANALYSIS - CONNECTICUT

The subject property is situated in Fairfield County, Connecticut, the southernmost county in Connecticut. The following excerpts were taken from the Connecticut Center of Economic Analysis (CCEA), University of Connecticut, dated February 2015:

Introduction

Is Connecticut on a roll? The state has enjoyed more than four years of continuous, month over month, job growth, adding a stunning 25,000 jobs in 2014. Since the end of the Rell Recession—a four year contraction, among the worst in the nation, that only ended in 2011, more than two years after the national recovery began and cut nearly 9% from state output— Connecticut has grown steadily, apparently faster than any of its northeastern neighbors, save Massachusetts.

Preliminary estimates for 2014 show Connecticut growing faster than the national economy and then surging by a stunning (and dubious) 8.1% in 2015, before tapering off to 3.2% growth in 2016. Connecticut might now be on a strong growth trajectory, driven by biotechnology, aerospace engineering, venture capital, and a significantly more competitive environment. But if history predicts a rosy future, the array of downside risks is unusually long.

Before looking closely at the Connecticut forecast, we need to consider that the reality we live in is an increasingly unstable and uncertain world, whether politically because of ISIS, the Ukraine, and other hot spots, or economically, with dramatic volatility in currency markets, the threatened deflation in the Euro zone—if not the collapse of the monetary union itself—a stunning fall in not just oil prices, but most commodities, and nearly unprecedented shifts in exchange rates. The dramatic economic dynamics are themselves feeding back into political instability and conflict. Have we seen this dynamic before?

A century ago, adoption of disruptive technologies in manufacturing (automobiles and other mass‐produced goods), communications (telephones), and transportation (railroads, airplanes, diesel‐powered ships, etc.) fundamentally transformed the world and power relationships. The great powers of those days – Germany, Austria‐Hungary, France, Britain, Russia, Italy and the Ottoman Empire – mechanized their armed forces and sought to incorporate new technologies into everyday life. Leaders accustomed to bluffing among these Great Powers remained incapable of controlling extra‐nationalist terrorists in their midst. Few leaders in early 1914 foresaw that within months Europe would be engulfed in the horrors of the Great War, let alone stalemated for years within entrenched quagmires.

A century later, national leaders still (or again) are failing to control sophisticated resident terrorists who use increasingly diversified methods to attack and destabilize societies, highlighted by recent terrorist attacks in France and Denmark, as well as political antics surrounding the recent Olympics and continuing commercial battles to attract or regain trading block partners, access routes, control of administered prices of fossil fuels midst shifting global supplies, and claims of religious superiority.

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In contrast to a century ago, the current direction of state and American national employment transitions have shifted from manufacturing in favor of services. Inter‐related forces facilitating this transition include sophisticated robotic processing and manufacturing, outsourcing, increased leisure time to enjoy various pursuits (such as life‐long learning), digital compression, advanced biotechnologies and major improvements in global enhancement of communications and memory, as well as medical treatments to extend life, all providing consumers with manifold choices. Militarily there is also hope (or risk) that the United States and most of its allies now are both working to reduce nuclear stockpiles and downsizing rather than mustering and extending their standing armies as the Great Powers did leading into the debacle a century ago.

This Outlook considers the potential impacts of the price of fossil fuels, the US dollar exchange rate, and trends in service industries in Connecticut and the nation. Between (approximately) 2000 and 2013, America’s economy experienced a revolution in its service sectors. The shift was profound. Nationally, employment in manufacturing shrank by nearly a quarter between 2000 and 2010, dropping to nearly 12% of all jobs, while private sector service jobs surged to nearly 65%. By 2013, private sector service jobs increased their share another 9%, accounting for 71%; in Connecticut—still known for the strength of its manufacturing sector—the share of service job reached 72.5%. At the same time, between 2007 and 2013, wages in every service sector in Connecticut, save one, either grew significantly slower than the national pattern or actually shrank. But questions remain how well economists and policy analysts understand the service economy’s dynamics.

This analysis suggests that despite improved data collection and advances in statistical methodology, the risks to the Outlook forecast are only marginally less than they would have been a century ago. In other words, while extensive progress has been made in the social sciences—including statistical forecasting — world economies are still fraught with uncertainty, as shifting prices and new knowledge continue to drive unexpected change, and new technologies lead to paths never before imagined. Perhaps the economy has “progressed.” However, in light of the challenges Connecticut and the nation now face, we must ask ourselves what “progress” truly means and if and how Connecticut’s high‐income status relative to the rest of the nation can be maintained? Although these factors are not directly linked to the Outlook’s model, they are essential in framing its interpretation.

Average Weekly Earnings by Service Industry

The services sector has diversified with certain industries yielding considerably higher average weekly earnings than others. Using 2013 Connecticut manufacturing average weekly earnings for all manufacturing workers ($1,209.42) and production workers ($893.39) as benchmarks, it is possible to shift to either higher paying or lower paying positions in services as noted in the following table.

This table clearly shows that in two Connecticut service industries – Professional and Business Services and Financial Services - average weekly earnings exceeded those paid to production workers in Manufacturing. Two other industries – Trade, Transportation and Utilities (TTU) and

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Education, Health and Social Assistance - average weekly earnings are comparable with manufacturing production earnings. Leisure and Hospitality and Other Services paid less. Segments within these industries experienced higher or lower average remuneration. There are no Connecticut data on Information Services earnings, but earnings in surrounding states and nationally are high compared to manufacturing production workers.

AVERAGE WEEKLY EARNINGS BY SERVICE INDUSTRY

Within the seven‐year period shown in the table below , Connecticut’s wage and salary gap among service industries generally widened with negative rates of growth, measured at constant average growth rates (CAGR), for the two lower wage industries (Leisure and Hospitality and Other Services). While recent changes to the minimum wage will redress some that trend, doing so may restrain employment growth in those industries. Growth rates for weekly earnings have been positive in other service industries, particularly TTU and Financial Services. For each service industry except TTU, national average growth rates in average weekly earnings exceeded those in the state. As a result, in Connecticut earnings fell back toward national levels and in Education, Health and Social Assistance as well as Other Services fell below national levels. Thus Connecticut is increasingly competitive in labor costs.

By 2013, national Manufacturing average weekly ($994.42) earnings exceeded those of all state manufacturing workers with the subset of national production workers earning $807.67.

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With the addition of Information Services, the same service industries as in Connecticut had higher earnings than those earned in manufacturing. Unlike the Connecticut situation, the average weekly earnings in the remaining four national service industries fell below national manufacturing standards during the last seven years. Given these relative levels of weekly earnings among service industries, the impact on overall remuneration from the employment shift to services will clearly depend on what service industries are expanding, both nationally and within Connecticut, to determine the overall influence on incomes of shifting to services from manufacturing.

Outlook

This Outlook continues to deploy two models, the first using housing starts, then replaced in the second model by a gradually accelerating bank rate – about 68 basis points‐‐over the eight quarters to the end of 2016. The second model produces more bullish results. Initial annual projections for national Real Gross Domestic Product (RGDP) growth using this approach generated preliminary data for 2014 at 2.4% followed by 4.85% for each of the years 2015 and 2016. These results are consistent with the University of Michigan expected 2.4% RGDP growth for 2014 and higher that its 3.3% growth for 2015. CCEA’s current projections are more optimistic than previous national projections because they more fully take account of early indicators for cuts in fossil fuel prices and assume those cuts remaining in place over the next two years. Moreover, should appreciation of the dollar hold, suppressing inflation by the Federal Reserve may require less monetary constraint than it has traditionally.

Connecticut RGDP

The corresponding estimates for Connecticut Real Gross Domestic Product (CTRGDP) are noted in chart below. These figures may appear to be unfamiliar to the reader. Because the Bureau of Economic Analysis (BEA) has rebased all its state GDP data to 2009, the numbers are not comparative with earlier Outlooks. Less obvious is the basis for Connecticut growth that has been established over the last few years with the staffing up of several important initiatives such as UConn’s expanded Health Center, Jackson Laboratories, and co‐location effects in biotechnology and aerospace engineering. With minimal change in housing permits, CTRGDP is projected as having grown 4.8% in 2014, and with the expectation of adding a whopping 8.1% in 2015, before tapping off to 3.2% in 2016. Expansion in 2015 also reflects a healthier financial sector, including bonuses as well as solid employment expansion in excess of previous highs. Given the extension of modest interest rates, that version of the model suggests even higher growth.

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More robust national growth in keeping with the RSQE outlook would supplement Connecticut growth by $360 million in 2014 and another $366 million in 2015. The cumulated impact in 2015 would be $0.7 billion and in excess of $17.5 billion in 2016 shown in the graph. But, given the severe drop in U.S. growth rate in 2014Q1, this scenario is, frankly, unlikely.

Employment

Official unemployment percentages significantly understate the situation, due to discouraged workers dropping out of the labor force. In July of 2010, there were 1,950,927 participants in the Connecticut labor force. By July of 2014 labor force participation had declined to 1,900,492, a cut of over 50,000. If all those workers leaving the work force are treated as discouraged workers who, given the opportunity, would return to the labor force, Connecticut’s unofficial but realistic unemployment rate for July 2014 would rise from the official 6.5% to 9.1%. [The national situation is no better; the labor force participation rate has fallen nearly four percent since 2007, which if maintained would translate into a national unemployment rate of more than 10%.]

In Connecticut, lackluster national recovery has curtailed growth expectations and limited state growth, though employment has been mildly recovering since October, 2010. CCEA’s least spectacular outlook, based on unit housing permits, nudges the state close to its previous high employment levels, before flattening out at about 1,728 thousand employed. The alternative model while allowing for some interest rate creep bursts through previous ceilings, adding an additional 44,000 jobs to reach 1,772 thousand by 2016Q4.

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As noted in the following table, growth in Construction employment is expected to expand, consistent with ongoing public works, the rise in housing permits, and growth of the national economy. Commensurate with the recovery, employment expands in each of TTU and FIRE, though at slower rates. Following slight growth in 2014, Manufacturing and Resource employment stabilize, while Government employment expands following recent contractions.

The major employment expansions continue in the Other Services inclusive of planned educational expansions at UConn, including the medical school, and continuing growth at Jackson Laboratories.

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An Uncertain World: Risks to this Outlook

CTRGDP data for 2013 are preliminary and may be adjusted by the BEA. CCEA’s extrapolations of the BEA data into the 2014Q1 may be biased upwards as profits fall, but are apt to have the opposite impact when profits are rising. Thus, while the approach has been slightly upward biased in the recent past, that tendency is unlikely to be the case for 2014 when profits have been recuperating. Such recuperation is however dependent on a quick reversal of the first quarter dip in nation’s GDP. Any continuing downward pressures in 2014 could reduce the CTRGDP growth needed to achieve the indicated employment levels.

Serious government belt‐tightening could severely damage Connecticut’s robust recovery and thwart its opportunity to finally experience sustained employment growth. As mentioned at the outset, neither the depth nor the duration of the currently low prices for crude oil is known. The threat of the price rising introduces risks and uncertainties that add complexities in readjusting trade‐flows, currency revaluations, and in making investments at home and abroad.

Reductions in major project construction and defense contracting could adversely impact Connecticut’s economy. While increases in residential construction will offset some of the decline in government‐driven construction projects, the safety net for specialized defense manufacturing is thinner.

While national vehicle sales show robust growth, consumers may be belt‐tightening other expenditures to replace the heretofore aging light vehicle fleet.

Concluding Comments

For more than two decades, Connecticut has enjoyed essentially no net job creation—it is still below its peak of 2008, which barely exceeded the level twenty years earlier—and its growth in output has been at best modest. It has historically lagged the nation in achieving recovery—most strikingly in the latest cycle when national recovery began in mid‐2009, but Connecticut’s economy continued to contract until the end of 2011. But, perhaps surprisingly, Connecticut has been on what seems to be a powerful upward trajectory. The strongest confirmation was the nearly unprecedented creation of 25,000 new jobs in 2014, consistent with the estimated growth in output of 4.8%‐‐well ahead of the national rate. Stunningly, the more optimist forecasting model projects growth in output of 8.1% in 2015. We won’t believe it until we see it—it is hard to see where Connecticut has in place the spare capacity to deliver that level of growth. But there now appear to be powerful processes of both internal growth in bioscience and external attraction through co‐location: a major genome sequencing facility coming to Branford; an aerospace engineering firm opening offices in East Hartford; a surge of venture capital carrying Connecticut into one of the top targets measured on a per capita basis.

But Connecticut’s failure for a generation to invest in infrastructure clearly handicaps the economy, its failure to have a coherent vision and implementation strategy for what is close to global leadership in installed fiber optic cable (100G capacity!) or exploit the potential to have the Holy Grail of IT: the high capacity, high speed network connected to that rarest of IT

BUTLER BURGHER GROUP, INC. 30 0115008251 MARKET AND AREA ANALYSIS facilities—one with the electricity for power and water for cooling that permits co‐location of massive data storage and high performance computing. The continuing weakness or even absence of quality data on company formation, economic dynamics, and demography profoundly undermines policy development and assessment. The current Outlook is the most optimistic forecast to come out of the modeling methodology to date. But there are unusually large potential downside risks to Connecticut’s economy delivering on that forecast, and the state itself continues to undermine its own future with inadequate public sector investment, inattention to major strategic opportunities, and poor data: do we really understand how we are performing and what we might achieve?

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FAIRFIELD COUNTY

Overview

Fairfield County is a county located in the southwestern corner of the U.S. State of Connecticut. Its population according to the 2000 census was 882,567, but a 2013 Census survey put the population at 939,904. It is the most populous county in the State of Connecticut, and contains four of the State's largest cities. When combined, Bridgeport (1st), Stamford (4th), Norwalk (6th) and Danbury (7th) contain about 420,000 people; almost half the population of the county.

Fairfield County is one of the highest-income counties in the United States, which helps to make Connecticut one of the richest states in the United States. The towns in the southwestern part of the county are generally considered to be exceptionally wealthy. This area is known as the Gold Coast, and runs approximately from Greenwich to Fairfield, although is sometimes meant to include all of the coastal towns to Stratford. Fairfield was ranked 6th by the Bureau of Economic Analysis. In addition to its wealthy communities, Fairfield County is also home to lower-middle and working class-cities such as Bridgeport, and Norwalk. Other communities are more densely populated and economically diverse than the affluent areas for which the county is better known.

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History

Fairfield County was established by an act of the Connecticut General Court in Hartford along with Hartford County, New Haven County, and New London County; which were the first four Connecticut counties, on May 10, 1666. The original Fairfield County consisted of the towns of Rye, Greenwich, Stamford, Norwalk, Fairfield, and Stratford. In 1673, the town of Woodbury was incorporated and added to Fairfield County. In 1683, New York and Connecticut reached a final agreement regarding their common border. This resulted in the cession of the town of Rye to New York.

From the late 17th to early 18th centuries, several new towns were incorporated in western Connecticut and added to Fairfield County, namely Danbury (1687), Ridgefield (1709), Newtown (1711), and New Fairfield (1740). In 1751, Litchfield County was constituted, taking over the town of Woodbury. The final boundary adjustment to Fairfield County occurred in 1788 when the town of Brookfield was incorporated from parts of Newtown, Danbury, and New Milford, with Fairfield County gaining territory from Litchfield County. Fairfield County, along with all other Connecticut counties, was abolished as a governmental agency in accord with state legislation that took effect October 1, 1960.

Geography

According to the U.S. Census Bureau, the county has a total area of 837 square miles of which 626 square miles is land and 211 square miles is water. The terrain of the county trends from flat near the coast to hilly and higher near its northern extremity. The highest elevation is 1,290 feet above sea level along the New York state line south of Branch Hill in the Town of Sherman; the lowest point is sea level itself.

The Taconic Mountains and the Berkshire Mountains ranges of the Appalachian Mountains run through Fairfield County. The Taconics begin roughly in Ridgefield and the Berkshires begin roughly in Northern Trumbull, both running north to Litchfield County and beyond. A portion of the Taconics also is in rural Greenwich and rural North Stamford in Fairfield County and run north into Westchester County, New York, eventually re-entering Fairfield County in Ridgefield. Also a small portion of the Appalachian Trail runs through the county. The Appalachian Trail enters Connecticut in the northernmost and least populous town in the county, Sherman, and moves east into Litchfield County which encompasses the majority of the Appalachian Trail in Connecticut.

The county is home to the Byram River, Housatonic River, Mianus River, Mill River (Fairfield), Norwalk River, Pequonnock River, Rippowam River, and the Saugatuck River. Lake Candlewood is situated within the northern part of the county in the Appalachian Mountains; this is an area where the Taconics and Berkshires come fairly close to each other.

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Government and Municipal Services

As is the case with all eight of Connecticut's counties, there is no county government and no county seat. As an area it is only a geographical point of reference.

In Connecticut the cities and towns are responsible for all local governmental activities including fire and rescue, schools, and snow removal; in a few cases, neighboring towns will share certain resources. In order to address issues concerning more than one town, several regional agencies that help coordinate the towns for infrastructure, land use, and economic development concerns have been established.

The geographic area of the county is served by the three separate judicial districts: Danbury, Stamford-Norwalk, and Fairfield. Each judicial district has a superior court located, respectively, in Danbury, Stamford, and Bridgeport. Each judicial district has one or more geographical area courts ("GA"'s), subdivisions of the judicial districts that handle lesser cases such as criminal misdemeanors, small claims, traffic violations, and other civil actions.

Population

Fairfield County is considered a relatively stable, mature county in terms of growth and is among the largest counties in Connecticut in terms of population, comprising nearly 25% of the State of Connecticut’s population. The 2000 census revealed a population of 882,567 persons, representing a 6.64% increase over the 1990 population level of 827,645 persons. The 2010 Census indicated a population figure of 916,829 persons. The following table illustrates historical and projected population, households and other pertinent demographic data for Fairfield County.

FAIRFIELD COUNTY DEMOGRAPHIC CHARACTERISTICS 2010 2015 2020 % Change % Change Category Census Estimate Projection 2010–2015 2015–2020 Population 916,829 949,354 976,420 3.55% 2.85% Households 335,545 346,940 356,460 3.40% 2.74% Families 232,896 240,345 246,571 3.20% 2.59% Housing Units 361,221 372,904 382,644 3.23% 2.61% Source: Claritas

Commensurate with the nominal increase in population over the past 15 years, the number of households, families and housing units has also experienced relatively minimal growth, with nominal additional growth projected through 2020. Based upon the foregoing, this area is considered to be one of modest growth for the foreseeable future and representative of a stable, mature market area.

Income

Income levels in Fairfield County are well above average for Connecticut overall, and is one of the higher income counties on the east coast. The projected 2015 average household income of $124,109 is well above the projected Connecticut state average of $96,119, and higher than the

BUTLER BURGHER GROUP, INC. 34 0115008251 MARKET AND AREA ANALYSIS adjacent New Haven County projected average household income level of $83,615. Income trends for Fairfield County are presented in the following table.

FAIRFIELD COUNTY INCOME CHARACTERISTICS 2000 2015 2020 % Change % Change Category Census Estimate Projection 2000–2015 2015–2020 Average Household Income $100,132 $124,109 $128,354 23.95% 3.42% Median Household Income $65,965 $80,998 $84,270 22.79% 4.04% Source: Claritas

As evident, growth in median household income has been consistent at roughly 1% to 1.5% per annum between 2000 and 2015, with more modest growth levels projected over the next 5 years.

Employment

Although it is located near the middle of the New York City/Boston corridor, southern and central Connecticut has a strong economic base independent of these two major commerce centers. South-Central Connecticut is a dynamic entrepreneurial region driven by 18 colleges and universities, including Yale, Fairfield, New Haven and Quinnipiac. Three of the nation's largest pharmaceutical research and manufacturing centers; more than $250 million in federally funded bio-science research; the Yale School of Medicine; and nearly two-dozen leading biotech companies make this one of the largest biomedical, biotech and pharmaceutical communities in the world. The following overview of current economic conditions within the Bridgeport/Stanford/Norwalk region (as of September 2014) in this region was obtained from Economy.com, a leading independent provider of economic research:

Recent Performance. The recovery in Bridgeport-Stamford-Norwalk is starting to pick up. Employment grew faster in the past six months than in the previous year, and the unemployment rate has fallen to 6%, lower than at any time since 2008. The local economy is not out of the woods yet, however. A significant portion of job gains have been one-time hires in professional services due to startups, and outside this industry and healthcare, there is little high-skill job growth. Despite substantial multifamily construction over the past year and a half, there has been little recovery in construction payrolls, and softening demand has led to slowing house price growth despite few additions to the single-family housing stock.

Manufacturing. After a long period of retrenchment, manufacturing will help provide a short- term boost to the recovery. Sikorsky, the metro area’s top employer, has stabilized payrolls after a long period of decline. Sikorsky may even have added jobs in the last few months thanks to increased orders for S-92 and S76D helicopters. The new S97 helicopter, which uses a new rotor system that improves maneuverability and nearly doubles cruising speed, has done well in trials and will soon reach the production stage. The good news is not limited to just Sikorsky. Local computer and electronics firms have started to expand; BRP’s large pool of skilled workers and the presence of GE’s corporate headquarters as a source of product demands point to a strong recovery. Chemical manufacturing, led by pharmaceuticals, has also started to recover as the U.S. economy picks up.

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Financials. The recent news for finance stands in sad contrast to good manufacturing news, and puts in doubt any near-term recovery for financial industry payrolls.

Despite a 2012 agreement with the state government to keep its North American headquarters in BRP, UBS has now put its Stamford building on the rental market, heralding its eventual exit and the eventual layoff or relocation of 4,000 positions. Smaller banks are not doing well either; for example, First Niagara has announced it will close four branches in the metro area. This will have a much smaller effect on jobs but is emblematic of the poor situation of large and small financial firms, both of which are being saddled with high business costs and reduced local activity. For example, mortgage originations are at record lows due to the slow recovery in home sales volume and the bottoming of interest rates, which has cut off refinancing applications.

Construction. Whereas manufacturing is looking better and financial services look pessimistic, local construction prospects are merely mediocre and will take at least another year to contribute significantly to the local recovery. The single-family home sales volume is still little more than half of its 2005 peak, while office vacancy rates are still elevated. The good news, though, is that office vacancy is at last starting to diminish, while residential rental vacancy rates are still low despite a recent surge in multifamily construction, consistent with strong demand for apartments. New apartments will soon come into the market as construction of these multifamily units is completed. As such, BRP will have a moderate if unspectacular construction recovery in the coming year.

Outlook: Job growth in Bridgeport-Stamford-Norwalk will continue at a steady pace, so that the metro area will regain its prerecession employment peak by the middle of next year. However, the overall BRP labor market will take longer to fully recover and will not regain its historical average unemployment rate before the end of the decade. In the long term, BRP’s high business costs will hinder business expansion, and high living costs will also pull down the region’s population growth rate. The metro area will track the U.S. growth rate in terms of household income but will lag the U.S. in terms of job growth for the foreseeable future.

Unemployment Rate

Overall unemployment rates throughout Connecticut have increased during the past 12-month period, in step with regional market conditions since late 2008. As indicated in the following table, the State of Connecticut has historically retained higher employment levels over the nation as a whole, while the Fairfield MSA (Bridgeport/Stamford/Norwalk) has reported slightly lower unemployment rates than the state level. The overall unemployment rate within Fairfield County has decreased over the past several months to a current low of 5.8% as of October 2014. The following table illustrates historical unemployment rates for Fairfield County, as well as the New Bridgeport/Stamford/Norwalk MSA, Connecticut and the United States as a whole.

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UNEMPLOYMENT RATES Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Oct. 2014 Fairfield County 4.4% 4.4% 3.9% 4.0% 5.1% 7.7% 8.4% 8.1% 7.6% 7.1% 5.8% Fairfield MSA* 4.6% 4.5% 4.0% 4.1% 5.2% 7.8% 8.6% 8.3% 7.8% 7.2% 5.9% Connecticut 4.9% 4.9% 4.4% 4.6% 5.6% 8.2% 9.3% 8.9% 8.3% 7.8% 6.4% United States 5.5% 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 8.9% 8.1% 7.4% 5.8% Source: Bureau of Labor Statistics; * Bridgeport/Norwalk/Stamford MSA

As evident, Fairfield County has historically demonstrated lower unemployment rates relative to county and state levels.

Some of the largest employers in Fairfield County include UBS AG, Sikorsky Aircraft Corp., General Electric Inc., Diageo, SAC Capital, Unilever AG, Xerox Corp., Pitney Bowes Inc. and Boehringer Ingelheim Pharmaceuticals Inc., Stolt-Nielsen S.A., Connecticut Travelers Casualty Co. and Aetna Inc.

Transportation

MAJOR ROADWAYS AND HIGHWAYS

Fairfield County is benefitted by a quality network of roadways and highways; however, the rapid growth of the county over the past several decades has contributed to increased traffic. Major roads include U.S. 1 (also known by various names along its length, most commonly "Boston Post Road" or simply "Post Road"), is the oldest east-west route in the county, running through all of its shoreline cities and towns. Route 1 is generally improved with a variety of office and commercial uses along its span. Other primary corridors include Route 8, which terminates in downtown Bridgeport from I-95 with Connecticut Route 25 and goes north. Route 25 Starts in downtown Bridgeport from I 95 with Route 8 and goes north. It splits from Connecticut Route 8 at the Bridgeport—Trumbull town line and continues into Trumbull. The limited access divided expressway ends in northern Trumbull, but Route 25 continues into Monroe, Newtown, and Brookfield.

The primary area highways include Interstate 95 and the Merritt Parkway. The western portion of Interstate 95 (known as the Connecticut Turnpike) in Fairfield County crosses the state approximately parallel to U.S. Route 1. The road is most commonly referred to as "I-95". The highway is six lanes (sometimes eight lanes) throughout the county. The Merritt Parkway, also known as "The Merritt" or Connecticut Route 15, is a truck-free scenic parkway that runs through the county parallel and generally several miles north of Interstate 95. It begins at the New York state line where it is the Hutchinson River Parkway and terminates on the Igor I. Sikorsky Memorial Bridge where it becomes the Wilbur Cross Parkway at the New Haven county line.

Interstate 84, which runs through Danbury, is scheduled to be widened to a six-lane highway at all points between Danbury and Waterbury. State officials say they hope the widening will not only benefit drivers regularly on the route but also entice some cars from the more crowded

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Interstate 95, which is roughly parallel to it. Heavier trucks are unlikely to use Interstate 84 more often, however, because the route is much hillier than I-95 according to a state Department of Transportation official.

With its southern terminus at Interstate 95 in central Norwalk, U.S. Route 7 heads north through Wilton, Ridgefield, and Danbury to points north. In Danbury and almost all of Norwalk, the route is a highway (known as "Super 7" in the Danbury area or "The Connector" in Norwalk) but it becomes a four-lane road just south of the Wilton-Norwalk border and up to Danbury.

AIR TRANSPORTATION

Within Fairfield County there are two regional airports: Igor I. Sikorsky Memorial Airport in Stratford and the Danbury Municipal Airport in Danbury. The county is also served by larger airports such as Bradley International Airport, John F. Kennedy International Airport, LaGuardia Airport, Newark Liberty International Airport, Tweed New Haven Regional Airport, and Westchester County Airport.

BUS SERVICE

Connecticut Transit's Stamford division runs local and inter-city buses to the southern part of the county. The Norwalk Transit District serves the Norwalk area in the southern central portion of the county; the Greater Bridgeport Transit Authority serves Bridgeport and eastern Fairfield County; and the Housatonic Area Regional Transit agency serves Danbury and the northern portions of the county.

FERRY SERVICE

The Bridgeport–Port Jefferson Ferry carries passengers and cars from Bridgeport to Port Jefferson, New York across Long Island Sound. Ferry lines in and out of Stamford are also in development.

RAIL

Commuter Rail is perhaps Fairfield County's most important transportation artery, as it allows its residents an efficient ride to Grand Central Terminal in New York City. Service is provided on Metro-North's New Haven Line, and every town on the shoreline has at least one station. Connecting lines bring service to New Canaan from Stamford on the New Canaan branch, and to Danbury from South Norwalk on the Danbury Branch. Many trains run express from New York to Stamford, making it an easy 35 minute ride.

Bridgeport and Stamford are also served by Amtrak, and both cities see a significant number of boardings on the "Regional Northeast Route" (Boston to Newport News, VA). This route also serves other Amtrak stations in Connecticut, including New Haven, New London, and Mystic.

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Education / Hospitals

Education within in the county is usually provided by the town governments. The exceptions are the towns of Redding and Easton, which joined together to form a regional school district (Region 9). In terms of higher education, Fairfield County is home to a number of colleges and universities including Housatonic Community College in Bridgeport, University of Bridgeport in Bridgeport, University of Connecticut at Stamford, Fairfield University in Fairfield, Norwalk Community College, St. Vincent's College in Bridgeport, Sacred Heart University in Fairfield and Western Connecticut State University in Danbury.

Fairfield County also has an extensive health care network with the following major health care facilities: Bridgeport Hospital, Danbury Hospital, Greenwich Hospital, Norwalk Hospital, St. Vincent's Medical Center (Bridgeport) in Bridgeport and Stamford Hospital.

Conclusion

Fairfield County enjoys a fairly diverse economic base, which has historically helped it to recover from recessionary economics. Although, population growth has slowed, there has been a marked increase in income levels and this trend is expected to continue.

As unemployment has ticked downward, Fairfield County has also become a fairly important suburban region to New York City. The continued growth in the service employment sectors, as well as below average unemployment within the county should ensure that Fairfield County remains a viable location going forward.

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NEIGHBORHOOD MAP

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NEIGHBORHOOD DESCRIPTION – CITY OF NORWALK

The subject is located within the City of Norwalk within the central portion of Fairfield County, approximately 45 miles east of New York City. According to 2013 Census Bureau estimates, the population of the city is 87,776, making it the sixth largest city in Connecticut, and the third largest in Fairfield County. The city is part of the New York metropolitan area. Norwalk is bordered on the east by Westport; on the north by Wilton; on the northwest by New Canaan; on the west by Darien and on the south by Long Island Sound. According to the United States Census Bureau, the city has a total area of 36.3 square miles, of which, 22.8 square miles is land and 13.5 square miles is water. Norwalk is composed of approximately 24 neighborhoods.

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History

The city was founded in 1640 when the land that makes up Norwalk was purchased by Roger Ludlow. The original purchase included all land between the Norwalk and Saugatuck rivers and a “day’s walk north from the sea”. Norwalk was chartered as a town on September 11, 1651.

In 1849 the New York and New Haven Railroad started operating through Norwalk. In 1852 the Danbury and Norwalk Railroad connected Norwalk with Danbury. Both railroads eventually became parts of the New York, New Haven and Hartford Railroad. The first major U.S. railroad bridge disaster occurred in Norwalk in 1853 when a train plunged into the Norwalk River. Forty- six deaths and about 30 injuries resulted.

Oyster farming in Norwalk peaked from the late 1800s to the early part of the 20th century. By 1880, it had the largest fleet of steam-powered oyster boats in the world.

Norwalk was reincorporated as a borough in 1836 then reincorporated as a city in 1893. It was consolidated with the City of South Norwalk in 1913. This latter event gave rise to the 1913 year that appears on the seal of the city. The name “Norwalk” itself comes from the Algonquin word “noyank” meaning “point of land”.

Land Use

Residential development is located primarily in the northern sector of the city. Development includes mostly single-family homes, but the type of development within the city ranges from very large estate properties located along the Wilton, New Canaan, Darien, and Westport borders as well as along Long Island Sound in the Rowayton section of the city, to subsidized multifamily housing located south of Interstate 95. Industrial development is located primarily in the southern sector of the city and along Long Island Sound. Commercial retail development is found on US Route 1 and Route 7 which are the main arterial east-west and north-south roadways in the city. The two greatest retail concentrations are located on the Connecticut Avenue portion of US Route 1, located in the western part of the city and Westport Avenue in the eastern part of the city. Significant office development is located on Route 7 at its intersection with The Merritt Parkway in the northern part of the city in an area known as Merritt 7 Corporate Park.

Connecticut Avenue began its transformation into the premier retail destination location for lower Fairfield County in 1994. Commencing one mile east of the subject and continuing two miles west, the area that surrounds the subject has seen redevelopment of almost 2 million square feet of commercial property. This redevelopment has ranged from small neighborhood shopping centers to big-box retailers to self-storage facilities to grocery stores.

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Demographic Profile

Similar to Fairfield County, the City of Norwalk is considered a mature, stable area with modest growth potential. Population and household levels have increased over the past 10 years, with continued upward trends anticipated through 2020 despite an aging population base and the lack of suitable developable land available for additional in-migration. Norwalk is considered to be relatively affluent, with income levels slightly below the averages for Fairfield County. The following table illustrates historical and projected population, households and other pertinent demographic data for the City of Norwalk.

NORWALK CITY DEMOGRAPHIC CHARACTERISTICS 2010 2015 2020 % Change % Change Category Census Estimate Projection 2010–2020 2015–2020 Population 85,603 88,284 90,479 3.13% 2.49% Households 33,217 34,194 35,005 2.94% 2.37% Families 21,156 21,763 22,254 2.87% 2.26% Housing Units 35,415 36,430 37,263 2.87% 2.29% Average Household Income $80,935 $104,526 $108,572 29.15% 3.87% Median Household Income $61,342 $73,180 $75,956 19.30% 3.79% Source: Claritas Inc.

The 2010 census revealed a population of 85,603 persons, representing a 3.20% increase over the 2000 population level of 82,951 persons. Population is expected to increase by 2.49% through 2020. The above data indicates similar historical and projected increases in the number of households, families and housing units. Average and Median income levels are anticipated to increase measurably over the next 5 years.

Additional demographic information is provided on the following pages. The data was provided from the Connecticut Economic Resource Center:

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Employment and Labor Force

While preserving its suburban character, the City is a significant commercial, industrial and service center. Many corporations, including the Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB), have chosen to locate their headquarters in Norwalk. While unemployment rates have continued to climb nationally, the current level of unemployment in Norwalk continues to be significantly lower than the State and national levels. The City’s strategic location and aggressive planning and development efforts continue to make the City a vibrant retail, corporate and tourist center. And while Norwalk is host to many regional and corporate headquarters, no one employer accounts for more than 2.5% of the total jobs and only one commercial account constitutes more than 1.4% of the City’s total grand list. This extraordinary diversity among employment sectors and industries affords the City exceptional insularity from economic downturns.

The largest employers in Norwalk include the following: Applera Corp., Cervalis, Diageo North America, Dooney & Bourke, Emcor Group Inc., FactSet Research Systems, GE Capital, IMS Health, Kayak.com, Media Storm LLC, MBI (parent company of The Danbury Mint and Easton Press), Northrop Grumman Norden Systems, Pepperidge Farm, priceline.com, SoBe, Southern Air, Stew Leonard's, Tauck, Tower Optical, Trans-Lux, Virgin Atlantic Airways, The influential Financial Accounting Standards Board and related Government Accounting Standards Board, and Xerox.

Education, Recreation, Arts and Culture

The diverse educational needs of Norwalk children are met through a system of 12 elementary schools, 4 middle schools, 2 high schools, and 1 vocational school. The system also includes a nationally recognized Magnet elementary school; extensive special education, bilingual education, gifted and talented programs; and a full-day kindergarten. Total enrollment within the school system currently exceeds 11,000 students within 19 schools; as of October 1, 2013, total enrollment in Norwalk Public Schools was 11,078 students, an increase of 21 compared to the prior year. About 92% of Norwalk’s graduating seniors pursue some type of post-secondary education.

The City's Recreation and Parks Division maintains over 1,200 acres of public park land, including 2 public beaches on Long Island Sound, 198 acres of open space at Cranbury Park, 70 acres of waterfront park land at Veteran's Park and Calf Pasture Beach, and many neighborhood parks. The Department also maintains numerous athletic fields, tennis and basketball courts, and playgrounds located throughout the community. Additionally, a riverfront park known as Heritage Park opened in June 2001 for walking trails and has undergone continual enhancements. The Department's Recreation Division sponsors a full complement of active and passive recreational programs for all age groups. In addition, the City owns an 18-hole golf course located at Oak Hills Park and leases the property to the Oak Hills Park Authority, which manages the operations of the golf course and park. The City also funds the Historical Commission, which operates and maintains publicly owned historical buildings, including Lockwood-Mathews Mansion, the Norwalk Museum and Mill Hill Park Museum; and the

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Norwalk Public Library, which operates two branches within the City, with a collection of over 400,000 items for public circulation.

Emergency Medical Services

Norwalk is served 24/7 by Norwalk Hospital and Norwalk Hospital EMS, a progressive 911 paramedic service. The service consists of hospital based paramedics and EMT-Is who serve Norwalk as well as New Canaan, Wilton, Weston, and Westport. Norwalk Hospital EMS is widely known as one of the top services in the state and region. Typically the ambulances respond out of Norwalk Hospital as the paramedics and EMT-I assist in the Emergency Department while not in the field. NHEMS works closely with other Norwalk first responders (Norwalk Fire and Police Departments).

Transportation

Public transportation within Norwalk is provided primarily by the Norwalk Transit District's "WHEELS" buses. The WHEELS buses offer extensive service in Norwalk and Westport and the Norwalk Transit District operates services throughout southwestern Connecticut. The state run Connecticut Transit Coastal Link buses operate through Norwalk as part of the Stamford Division. As for rail service, the Metro-North Railroad's main New Haven and Danbury branch lines both run through Norwalk. Metro-North provides passenger and commuter service to four stations within the city, with direct connections to New York City, Stamford, Bridgeport, and New Haven. The main line comprises a segment along Amtrak's Northeast Corridor though the national passenger railroad does not provide service to Norwalk. The nearest stations that Amtrak does stop at are Stamford and Bridgeport. The Connecticut Department of Transportation's Shore Line East passenger service trains also run through Norwalk, though only a few SLE trains stop at South Norwalk station. Shore Line East trains also stop at nearby Stamford and Bridgeport stations.

Freight service over the rail lines in Norwalk is provided by CSX Transportation and the Providence and Worcester Railroad. During the week, over 200 trains a day pass through Norwalk. Nearby area airports include LaGuardia Airport and John F. Kennedy International Airport in New York City; Newark Liberty International Airport in Newark, New Jersey; Westchester County Airport in Westchester County; Stewart International Airport in Newburgh, New York; and Bradley International Airport in Windsor Locks (near Hartford) Connecticut. Nearby general aviation airports include Danbury Municipal Airport in Danbury, Sikorsky Memorial Airport in Stratford, and the Tweed New Haven Regional Airport in New Haven.

Roads and Highways

Interstate 95 crosses through Norwalk, and there are several exits within the Norwalk city limits. The Merritt Parkway also crosses through Norwalk. Both of these roads are designated to be north/south routes, but through Norwalk, both of them primarily travel east/west. The major north-south artery is Route 7, which begins at Interstate 95. There is an exit to the Merritt Parkway, but only southbound towards New York City, as environmental activists have

BUTLER BURGHER GROUP, INC. 47 0115008251 MARKET AND AREA ANALYSIS successfully blocked a full interchange between the two arteries. In northern Norwalk, Route 7 changes from a limited access, divided highway to an ordinary surface road. Originally, the intent was to build the "Super 7" highway (in a different place than the current Route 7), which would link Interstate 95 with Interstate 84 in Danbury, but environmental groups and slow- growth advocates succeeded in preventing this highway from being built (although the state of Connecticut continues to own the land to build the highway). Other state highways in Norwalk are Route 53, Route 123, and Route 136.

The Specific Subject Location

The subject property is located on the northeast corner of Norden Place and Woodside Avenue, in the City of Norwalk, Fairfield County, State of Connecticut. The immediate area is generally mixed use in nature with commercial, retail and residential development surrounding the subject property. The primary thoroughfares in the immediate area are East Avenue and West Avenue, multi-lane, north south thoroughfares that are improved with a variety of commercial and light automotive type uses. To the south of I-95, West Avenue turns into South Main Street which houses a number of shops, restaurants and taverns and is the heart of Norwalk commercial activity. Another main retail thoroughfare for Norwalk is located along Connecticut Avenue, and includes such big box retailers as Sports Authority, Home Depot, Circuit City, Petsmart and Levitz Furniture.

New developments along Connecticut Avenue include:

587 Connecticut Ave: A new mixed use development with an 98,576 square foot self-storage facility and a 4 story 50 unit multifamily building, approved in November 2014.

A Lowe’s Home Improvement Center: 80-100 Connecticut Ave – A new 1 story, 135,000 sq. ft. home improvement center which is currently under construction; expected opening July 2015

New Developments Along Main Avenue North include:

Brightview Assisted Living: 162 New Canaan Ave - New 90 unit congregate housing facility at site of former Quartette Club. Currently under construction.

New developments in the Norwalk Center & East Avenue corridor include:

Norwalk Inn & Conference Center: 93 & 99 East Avenue – A Third floor 37 room addition to existing hotel and historic rehabilitation/conversion of former rooming house to 11 hotel rooms with kitchens; modified plans to add new 3 story addition with indoor pool/fitness club at rear. Rehab of 93 East Av complete; Currently under construction on rear addition and elevator for third story.

Waypointe: 515 West Ave/Orchard St/Merwin Sts – New mixed use developments for Midblock & North block approved in 2011. Construction underway on all Blocks except 25 Butler St.

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• Midblock: 494,578 sq. ft. mixed use development with 362 multifamily units, 38,431 sf retail, 11,550 sf restaurant & 850 space parking garage. Construction underway; CZC issued for ±240 units, Sedona Taphouse and Chase Bank. Zoning permit issued for Colony Grill and 4 offsite workforce housing units at 33 Orchard St

•North Block: 145,951 sf mixed use development with 98 units, 3,815 sf retail & restaurant. Construction underway

•East Block: 26-36 Orchard St/2 Quincy St – Quincy Lofts new 6 story, 69 unit multifamily building with 87 space parking lot. Approved May 2014; currently under construction.

•25 Butler St: Relocate 8,600 sf historic building from 3 Quincy St for reuse as office. Approved by Commission April 2015; no permits issued for construction. •South Block: 467 West Ave/17 Butler (2 parcels) - 138,630 sf mixed use development with 54,250 sf retail, 3,229 sf restaurant, 11,441 sf gym and 620 seat iPic theater and expanded parking garage. Approved Sept 2014; zoning permit issued to start construction.

•West Block: The Berkeley 500 & 520 West Ave (2 parcels) - 6 story, 177,302 sf mixed use development w/ 4,932 sf restaurant, 6,943 sf medical office, 129 units; adjacent Frost Bldg to remain. Approved October 2014; currently under construction.

Norwalk Hospital: 34 Maple Street - New 96,700 sq. ft. outpatient & private physician addition with relocated helicopter landing site approved in February 2012. Currently under construction.

The immediate Norwalk area also includes many cultural and recreational amenities. The City of Norwalk’s 22.8 square miles extend from rolling hills, woods and meadows of the north to the shoreline, coves and tributaries on the Five Mile and Norwalk Rivers and Long Island Sound to the south. As a result of these natural amenities, area residents enjoy numerous wooded and waterfront natural parks and beaches. From a cultural perspective, residents can enjoy the Norwalk Symphony and the Westport Playhouse, as well as an abundant number of theaters, restaurants and lively cafes. A large number of these amenities are located in the revitalized area of South Norwalk (SoNo). One of SoNo’s primary attractions is The Maritime Aquarium at Norwalk, which features an IMAX movie theater and boat collection. Attendance at the Aquarium averages over 525,000 visitors annually, making it one of the largest attractions not only in Connecticut but also within 100 miles of New York City. A wide variety of restaurants are located in SoNo, just minutes from the subject, including Amberjack’s, Barcelona, Porterhouse, Ocean Drive, Match and Pasta Nostra, to name a few.

Neighborhood access is excellent with major east/west routes throughout the city that include Route 1, Interstate 95, and State Route 15 (Merritt Parkway). Route 1 is the major commercial thoroughfare in the city. Interstate 95, which traverses the south-central portion of the city, provides four entrance/exit ramps. The Merritt Parkway, a limited access highway that allows

BUTLER BURGHER GROUP, INC. 49 0115008251 MARKET AND AREA ANALYSIS only automobile traffic, traverses the city along its northern tier. The Route 7 connector that runs north/south connects Interstate 95 with the Merritt Parkway, as well as the Town of Wilton, north of the city.

There are many public transportation options for commuters working in this area. Metro North Commuter Railroad provides rail transportation between New York City and New Haven, servicing stations in nearly every town throughout southern Connecticut, including the Merritt 7 station and the East Norwalk station. The Norwalk “Wheels” local transit network provides local shuttle service throughout the city of Norwalk, with more than 300 stops. Additionally, the Fairfield County “Coastal Link” transit service provides town-to-town connectivity along the Route 1 (Boston Post Road) corridor.

Conclusion

The subject is situated outside the Downtown Norwalk City CBD, an established area that is both a destination recreation and retail/restaurant destination and a thriving business and residential community. Market conditions for commercial space remain relatively strong as does the local economy, and residential housing prices have generally held up well despite weakened regional market conditions. With below average unemployment and a diverse economy, the city appears well positioned going forward.

OFFICE MARKET ANALYSIS

The Fairfield County Office market ended the third quarter 2015 with a vacancy rate of 15.5%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 353,430 square feet in the third quarter. Vacant sublease space decreased in the quarter, ending the quarter at 239,876 square feet. Rental rates ended the third quarter at $32.60, an increase over the previous quarter. A total of one building delivered to the market in the quarter totaling 20,405 square feet, with 160,980 square feet still under construction at the end of the quarter.

Absorption

Net absorption for the overall Fairfield County office market was positive 353,430 square feet in the third quarter 2015. That compares to negative (328,585) square feet in the second quarter 2015, negative (654,481) square feet in the first quarter 2015, and positive 60,969 square feet in the fourth quarter 2014.

Tenants moving out of large blocks of space in 2015 include: RBS moving out of 147,904 square feet at 1000 Lafayette Boulevard in Bridgeport; GE Capital Corporation moving out of 92,725 square feet at 401 Merritt 7 in Norwalk; and GE Capital Corporation moving out of 71,272 square feet at 83 Wooster Height Road in Danbury.

Tenants moving into large blocks of space in 2015 include: United Healthcare moving into 103,596 square feet at 4 Research Drive in Shelton; Sikorsky moving into 92,109 square feet at 1

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Far Mill Crossing C in Shelton; and Vineyard Vines moving into 91,040 square feet at 181 Harbor Drive in Stamford.

The Class-A office market recorded net absorption of positive 320,723 square feet in the third quarter 2015, compared to negative (95,145) square feet in the second quarter 2015, negative (320,448) in the first quarter 2015, and positive 230,425 in the fourth quarter 2014.

The Class-B office market recorded net absorption of positive 15,903 square feet in the third quarter 2015, compared to negative (224,227) square feet in the second quarter 2015, negative (342,186) in the first quarter 2015, and negative (78,364) in the fourth quarter 2014.

The Class-C office market recorded net absorption of positive 16,804 square feet in the third quarter 2015 compared to negative (9,213) square feet in the second quarter 2015, positive 8,153 in the first quarter 2015, and negative (91,092) in the fourth quarter 2014.

Vacancy

The office vacancy rate in the Fairfield County market area decreased to 15.5% at the end of the third quarter 2015. The vacancy rate was 16.0% at the end of the second quarter 2015, 15.5% at the end of the first quarter 2015, and 14.7% at the end of the fourth quarter 2014.

Class-A projects reported a vacancy rate of 16.4% at the end of the third quarter 2015, 17.4% at the end of the second quarter 2015, 17.0% at the end of the first quarter 2015, and 16.0% at the end of the fourth quarter 2014.

Class-B projects reported a vacancy rate of 18.8% at the end of the third quarter 2015, unchanged from the end of the second quarter 2015, 17.7% at the end of the first quarter 2015, and 16.1% at the end of the fourth quarter 2014.

Class-C projects reported a vacancy rate of 7.6% at the end of the third quarter 2015, 7.7% at the end of second quarter 2015, 7.7% at the end of the first quarter 2015, and 8.6% at the end of the fourth quarter 2014.

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Largest Lease Signings

The largest lease signings occurring in 2015 included: the 119,216-square-foot lease signed by UBS at 600 Washington Boulevard in the Stamford market; the 84,504-square-foot lease signed by Frontier Communications at 401 Merritt 7 in the Norwalk market; and the 68,690-square-foot deal signed by Harman International at 400 Atlantic St in the Stamford market.

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Sublease Vacancy

The amount of vacant sublease space in the Fairfield County market decreased to 239,876 square feet by the end of the third quarter 2015, from 302,328 square feet at the end of the second quarter 2015. There was 294,948 square feet vacant at the end of the first quarter 2015 and 197,413 square feet at the end of the fourth quarter 2014.

Fairfield County’s Class-A projects reported vacant sublease space of 191,716 square feet at the end of third quarter 2015, down from the 239,665 square feet reported at the end of the second quarter 2015. There were 261,499 square feet of sublease space vacant at the end of the first quarter 2015, and 164,511 square feet at the end of the fourth quarter 2014.

Class-B projects reported vacant sublease space of 36,685 square feet at the end of the third quarter 2015, down from the 51,263 square feet reported at the end of the second quarter 2015. At the end of the first quarter 2015 there were 25,949 square feet, and at the end of the fourth quarter 2014 there were 27,902 square feet vacant.

Class-C projects reported a slightly increased vacant sublease space from the second quarter 2015 to the third quarter 2015. Sublease vacancy went from 11,400 square feet to 11,475 square feet during that time. There was 7,500 square feet at the end of the first quarter 2015, and 5,000 square feet at the end of the fourth quarter 2014.

Rental Rates

The average quoted asking rental rate for available office space, all classes, was $32.60 per square foot per year at the end of the third quarter 2015 in the Fairfield County market area. This represented a 0.5% increase in quoted rental rates from the end of the second quarter 2015, when rents were reported at $32.43 per square foot.

The average quoted rate within the Class-A sector was $38.78 at the end of the third quarter 2015, while Class-B rates stood at $27.26, and Class-C rates at $23.81. At the end of the second quarter 2015, Class-A rates were $38.46 per square foot, Class-B rates were $27.23, and Class-C rates were $23.64.

Deliveries and Construction

During the third quarter 2015, one building totaling 20,405 square feet was completed in the Fairfield County market area. This compares to two buildings totaling 34,156 square feet that were completed in the second quarter 2015, one building totaling 6,000 square feet completed in the first quarter 2015. No buildings completed in the fourth quarter 2014.

There were 160,980 square feet of office space under construction at the end of the third quarter 2015.

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Some of the notable 2015 deliveries include: Maplewood Medical Center at 164 Mount Pleasant Road in Newtown, a 28,000-square-foot facility that delivered in second quarter 2015 and is now 41% occupied, and 3272 Main Street in Stratford, a 20,405-square-foot building that delivered in third quarter 2015 and is now 81% occupied.

The largest projects underway at the end of third quarter 2015 were 5520 Park Avenue in Trumbull, a 120,000-squarefoot building with 100% of its space pre-leased, and 170 Mount Pleasant Road in Newtown, a 28,000-square-foot facility that is 57% pre-leased.

Inventory

Total office inventory in the Fairfield County market area amounted to 66,562,848 square feet in 2,710 buildings as of the end of the third quarter 2015. The Class-A office sector consisted of 32,235,967 square feet in 218 projects. There were 871 Class-B buildings totaling 21,956,755 square feet, and the Class-C sector consisted of 12,370,126 square feet in 1,621 buildings. Within the Office market there were 107 owner-occupied buildings accounting for 4,553,244 square feet of office space.

CURRENT MARKET STATS TOTAL OFFICE MARKET

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CURRENT MARKET STATS CLASS A OFFICE MARKET

CURRENT MARKET STATS CLASS B OFFICE MARKET

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NORWALK SUB MARKET STATISTICS

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As reported in the charts above, absorption in Norwalk was positive in six of the past eight quarters. The current quarter shows a positive net absorption of 88,446 square feet. The large negative absorption in the 1st quarter of 2015 is predominantly attributable to the Grumman vacancy at the subject property (320,230 square feet). The vacancy rate had been trending down since the third quarter of 2013, and after the Grumman vacancy in the first quarter of 2015, the vacancy rate has started to trend downward once again. The present quarter shows a vacancy rate of 16.8%, mirroring the vacancy rate at the subject property, prior to the Grumman move-out. Quoted rents currently average $28.91 per square foot and have generally been trending upwards consistently since the fourth quarter of 2010.

Butler Burgher Group, Inc. has surveyed office rents within the immediate subject vicinity as follows:

SURVEY OF COMPARABLE OFFICE LEASES Comp Area Start Base # Address (SF) Date Rent Leasing Terms 1 142 East Avenue 3,225 8/15 $24.00 1sth Floor. $15.00/sf workletter, 1 month free Confidential rent. Op. Exp. And Taxes over BY plus utilities. 5 year term.

2 257 Riverside Avenue 1,601 7/15 $28.00 1st Floor. $20.00/sf workletter, no free rent. Op. Confidential Exp. And Taxes over BY plus utilities. 5 year term.

3 800 Connecticut Avenue 19,266 6/15 $28.00 4th Floor. 4 months free rent. $25.00/sf The Priceline Group workletter. Op. Ex. And Taxes over BY plus utilities.

4 13 Marshall Street 8,905 5/15 $25.00 1st Floor . 3 months free rent. $20.00 workletter. Confidential Op. Ex. And Taxes over BY plus Utilities.

5 101 Merritt 7 18,578 1/15 $21.75 1st Floor. 3 months free rent. $10.00 workletter. HEI Hotels, LLC Op. Ex. And Taxes over BY plus Utilities. 10 year term.

6 200 Connecticut Avenue 2,850 3/15 $26.50 6th Floor. 2 months free rent. $10.00 workletter. Confidential Op. Ex. And Taxes over BY plus utilities. 10 year term.

7 1465 Post Road E. 4,400 1/15 $30.00 2nd Floor. 1 month free rent, $10/sf workletter. Confidential Op. Ex. And Taxes over BY plus utilities. 7 year term.

Minimum 1,601 $21.75 Maximum 19,266 $30.00 Average 8,404 $26.18 Source: Field Survey prepared by Butler Burgher Group, Inc.

The comparable rentals range from $21.75 to $30.00 with an overall average rent of $26.18 per square foot.

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Lease Terms

Lease terms are typically such that tenants will pay increases in real estate taxes over a base year, plus all utilities associated with their space. Additionally tenants typically pay operating expenses over a base year amount on a pro rata share basis.

Rent Increases

Leases are showing rent bumps between 1% and 3% per annum, $0.50 or $1.00 on an annual basis, or increases between $1.00 and $2.00 every couple of years.

Tenant Improvement Allowances

Tenant work-letters (TI's) are a typical feature within the subject's office market. A tenant workletter is paid by the landlord in order to finish the space according to individual tenant requirements. The cost of the landlord’s tenant work-letter will fluctuate directly with the negotiated contract rent and lease term. Tenant work-letters within the subject's market typically range from $10.00 to $25.00 per square foot within the subject's submarket. Lower TI allowances are offered for smaller space users under shorter term leases, or for space that is already in reasonably good condition. Conversely, the largest and most comprehensive landlord contributions are negotiated in longer term, large space leases and can be as high as the $30.00 to $40.00 per square foot range.

Free Rent Periods

Like TI Allowances, free rent periods are indicative of relative market strength; thus, the stronger the market the shorter the free rent period. Many market participants cite free rent periods of between 2 and 12 months of abatement, although the majority of our rent comparables show between 0 and 4 months of free rent. Typically, the length of the term and amount of construction time for the tenant is also influencing factor in the negotiation of such.

Conclusion/Competitive Position of the Subject Property

The subject property is well located in the Norwalk Office Submarket. Based upon its size and tenancy, the subject is larger than many of the surrounding properties in the area and as such can accommodate larger tenancies in contiguous space. Additionally, the subject property provides 2,042 parking spaces, which results in approximately 3.3 parking spaces for every 1,000 square feet of space.

In almost all cases, the communities of southwestern Fairfield County and coastal Long Island Sound are prestigious and highly affluent. The area’s accessibility is its relative strong point, as Exit 16 of I- 95 enter/exit within a few blocks of the subject property. Fairfield County is generally an upper income area with an increasing population trend.

The surrounding competition exhibit relatively high occupancy rates and strong rent levels, and there appears to be limited potential for new development within the area. Based on these factors, the

BUTLER BURGHER GROUP, INC. 60 0115008251 MARKET AND AREA ANALYSIS subject should continue to be a highly competitive office/industrial park location for the foreseeable future.

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ZONING MAP

SUBJECT

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ZONING SUMMARY

The property is zoned Norwalk RI, Restricted Industrial by the City of Norwalk. The majority of the subject property is located in the RI Restricted Industrial Zone as promulgated by the City of Norwalk. It is the purpose of this zone to provide areas exclusively for light industrial manufacturing uses and other compatible uses, including single- and multifamily residential uses with recreational facilities, on a parcel containing 25 acres or more, as well as limited areas of artist workspace, non-accessory office, college or university use, which will contribute to the economic base of the city and which will constitute a harmonious and appropriate part of the physical development of the city. This zone is designed to apply in areas suitable for industrial development and where sufficient space, adequate transportation and compatible utilities are available. The provisions of these regulations are intended to encourage the efficient operation, continuation and expansion of industrial, research and development and office uses without encroachment from uses which are inappropriate and which could equally well be located elsewhere. Permitted uses include manufacturing and the processing or assembly of goods; research and development facilities; and public utility or storage facilities. Accessory uses include office, warehouse etc. The schedule of limiting height and Bulk of Buildings, Commercial and Industrial Uses is shown below.

Maximum Building Height: 4 stories and 55 feet

Minimum Size of Plot: 43,560± SF

Width: 100 feet

Yards: Front: 30 feet from centerline of street. Side: None, except where residence zone abuts, 10 feet per story or 20 feet, whichever is greater. Aggregate Side: None, except where residential zone or coastal waters abut 10 feet per story or 20 feet, whichever is greater. Rear: 10 feet, except where residence zones or coastal waters abut, 10 feet per story or 20 feet, whichever is greater.

Maximum Building Area: 50% for buildings

A small portion is located in the RD Research & Development District. The schedule of limiting height and Bulk of Buildings, Commercial and Industrial Uses in the RD zone is shown below.

Maximum Building Height: 2 stories and 35 feet Minimum Size of Plot: 10 acres Width: 400 foot circle will fit on the lot Yards: Front: 80 feet Side: 25% but not to exceed 80 feet Rear: 25% but not to exceed 80 feet. Maximum Building Area: 10% for buildings 25% for buildings and paved areas

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Summary of Zoning

When the subject was renovated in 2001/2002 the RI zone was amended to allow for 30% of the property to be office space. Based upon our discussions with Michael Mankowich, former Director of Portfolio Management for Fortis Property Group, with the most recent rezoning from industrial to office, the property is now zoned to allow for 60% office space. At the present time, the property contains approximately 40% of its space dedicated to office use. Additionally, the subject property obtained approvals for the new data center building to be occupied by Cervalis, LLC, which has recently been acquired by CyrusOne LP, and to contain 167,691 square feet of additional buildable area within three stories. The zoning approvals can be seen on the following pages. There was a Conditional Certificate of Occupancy issued December 24, 2013 for this building.

The subject site contains 37.21 acres+/- square feet and based upon the existing RI Restricted Industrial zoning regulations, along with our discussions with the property management, the subject property conforms the current RI Restricted Industrial zoning. Additionally, the subject’s parking is in compliance.

It should be noted that we are not experts in the interpretation of complex zoning ordinances. The determination of compliance, however, is beyond the scope of a real estate appraisal. We know of no deed restrictions, private or public, that further limit the subject's use. The research required to determine whether or not such restrictions exist, however, is beyond the scope of this appraisal assignment. Deed restrictions are a legal matter, and only a title examination by an attorney or title company can usually uncover such restrictive covenants. Thus, we recommend a title search to determine if any such restrictions do exist.

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ZONING APPROVALS

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CERTIFICATE OF OCCUPANCY

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ASSESSED VALUE AND REAL ESTATE TAXES

The subject property is designated on the tax maps of the City of Norwalk, as District 3, Block 17, Lots 40A and 40B. Below, we show the current assessments for the subject property.

10 NORDEN PLACE 2014/15 A.V. Lot 40A Land $9,959,050 Building + 33,325,230 Total $43,284,280

6 NORDEN PLACE – FULL AV 2014/15 A.V. Lot 40B - Full AV Land $3,084,788 Building + 16,803,192 Total $19,887,980

Based upon the current tax bill, 10 Norden Place is assessed at $43,284,280 and is known as Tax Lot 40-A. Discussions with the Norwalk Assessor, Bill O’Brien, reveal that the Data Center Building – 6 Norden Place, known as Tax Lot 40-B, is currently shown on the books to be assessed at 100% of the market value as of October 1, 2014. The City of Norwalk underwent a revaluation October 1, 2013 based upon an equalization ratio of 70%. The tax year runs on an October to September fiscal year. The 2014/2015 tax rate (mill rate) for the city is $25.371 per $1,000 of assessed value. We show the five year mill rate history along with the projected 2014/15 mill rate below:

MILL RATE HISTORY 5-yr. Mill Rate History % Chg. 2010/11 $20.517 -8.72% 2011/12 $20.742 1.10% 2012/13 $21.331 2.84% 2013/14 $22.142 3.80% 2014/15 $25.041 13.09% 2015/16 $25.371 1.32%

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2015/2016 Tax Liability Calculation

10 NORDEN PLACE Current Tax Total Taxable Rate Per $1,000 Total Tax Total GBA (SF Total Tax AV Lot 40A of AV Liability Incl. Bsmt.) Liability PSF $43,284,280 x $25.371 = $1,098,165 / 615,357 = $1.78

6 NORDEN PLACE Current Tax Total Taxable Rate Per $1,000 Total Tax Total GBA (Incl. Total Tax AV Lot 40B of AV Liability Bsmt) Liability PSF $19,887,980 x $25.371 = $504,578 / 167,691 = $3.01

Assessment Per Square Foot Analysis

10 NORDEN PLACE Actual AV GBA (SF) AV PSF $43,284,280 / 615,357 = $70.34

6 NORDEN PLACE Actual AV GBA (SF) AV PSF $19,887,980 / 167,691 = $118.60

The subject’s assessment equates to $70.34 per square foot of gross building area for 10 Norden Place and $118.60 per square foot of gross building area for the Cervalis Data Center. To determine the reasonableness of the subject’s tax burden, we have researched assessments for comparable properties within the subject area. The tax comparables are as follows:

ASSESSMENT COMPARABLES Address - Office and Industrial Year Built/Renov. Type Area (SF) Actual AV PSF 145 Woodward Avenue 1980 Class B Ind./Flex 66,000 $46.25 535 Connecticut Avenue 1988/newly renov. Class A Office 173,000 $59.57 2 Testa Place 1986 Class C Industrial 20,000 $74.59 40 Richards Avenue 1985 Class B Office 145,487 $76.67 488 Main Avenue 1984 Class B Office 35,843 $98.68 761 Main Avenue 1980 Mix: Office/Retail/Warehouse 381,968 $103.33 20 Glover Avenue 1980 Class A Office 229,690 $117.18 200 Connecticut Avenue 1985/2001 Class A Office 125,000 $126.62 800 Connecticut Avenue 1984 Class A Office 478,600 $137.89 Average: $93.42

Due to the fact that 10 Norden Place consists of a mix of office and industrial flex-type space, as well as some basement level space, we show tax comparables of office, industrial and office/industrial mixed properties. The tax comparables’ assessments range from $46.25 to $137.89 per square foot, averaging $93.42 per square foot.

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The subject’s actual assessed value of $70.34 per square foot for 10 Norden Place is within the comparable range, although below the average. Based upon the comparables and the subject’s space-type mix, we believe the current overall assessments to be fair and reasonable. Discussions with ownership reveal that due to the current high vacancy rate at the property, they are in the midst of filing for certiorari in hopes of a tax reduction. Their first pre-trial conference did not lead to any counter offers, and their next meeting is scheduled in late December. Predicting the settled valuation given the variables associated with litigation is difficult. If a tax reduction is granted, the value of the subject property arrived at within this appraisal could increase.

The subject’s full assessed value of $118.60 per square foot for the Data Center – 6 Norden Place is also within the comparable range and above the average. Based upon the comparables and the subject building’s new construction, we believe the current assessments to be fair and reasonable.

2015/2016 Tax Liability Calculation – Inclusive of Sewer Tax

10 Norden Place

In addition to the real estate taxes calculated above, the owner of the subject property is also responsible for approximately $51,885 in Sewer tax, therefore, total real estate taxes for 10 Norden Place are calculated to be $1,150,050.

Total Taxable AV Tax Rate Per Tax Lot 40A $1,000 of AV Liability $43,284,280 x $25.371 = $1,098,165 Add: Water and Sewer Charge $51,885 Total Tax Liability 2015/16 $1,150,050

In the discounted cash flow analysis, we show real estate taxes at $1,098,165. This expense is passed through to some of the tenants in the building and is partially recovered in the upcoming year. We include the above Sewer charge in a separate category of Water and Sewer in the cash flow.

6 Norden Place

In addition to the real estate taxes calculated above, the owner of the subject property is also responsible for approximately $1,844 in Sewer tax, therefore, total real estate taxes for 6 Norden Place are calculated to be $506,422.

Total Taxable AV Tax Rate Per Tax Lot 40B $1,000 of AV Liability $19,887,980 x $25.371 = $504,578 Add: Water and Sewer Charge $1,844 Total Tax Liability 2015/16 $506,422

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Real estate taxes are projected to be $506,422 for the upcoming year. The tenant has signed a triple net lease with the property owners and as such is fully responsible for this expense. This expense will be passed through and fully reimbursed by the tenant in our projections.

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AERIAL MAP OF SUBJECT PROPERTY

Cervalis Data Center

Existing Property

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SITE PLAN/LAYOUT OF EXISTING SUBJECT PROPERTY

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SITE PLAN OF CERVALIS DATA CENTER BUILDING

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SITE PLAN/LAYOUT WITH PROPOSED DATA CENTER – CERVALIS, LLC

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SITE DESCRIPTION

The particulars of the site are summarized as follows:

Location: The subject property is located on the northeast corner of Norden Place and Woodside Avenue, in the City of Norwalk, Fairfield County, State of Connecticut.

Site Area: 37.21 acres ±

Of the total site area, Cervalis, LLC Data Center will occupy 4.999± acres

Shape: Irregular

Frontage: The subject site is an irregular-shaped parcel and contains ample frontage on Woodside Avenue and Norden Place. Additionally, the complex has visibility from I-95.

Drainage: Adequate

Off-site Improvements: All streets are paved with asphalt and have concrete sidewalks and curbing. Sets are drained with catch basins emptying into the municipal sewer system.

Site Exposure and The subject has adequate visibility and exposure. Accessibility:

Subsoil Conditions: We are not aware of any adverse subsoil conditions affecting the property.

Topography and Terrain: The site is generally level with a downward sloping topography in an easterly direction. Although no soil or subsoil studies have been conducted, based on the existence of the subject as well as the neighboring structures, the soil load bearing capabilities appear adequate.

Environmental Issues: We have not observed and are not qualified to detect, the existence of any potentially hazardous materials or underground storage tanks which may be present and have an effect on the value of the property. For the purpose of this assignment, we have specifically assumed that the subject is not affected by any hazardous

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materials and/or underground storage tanks, which may be present on or near the property.

Utilities Water Supply: Supplied by the City of Norwalk.

Gas Service: Yankee Gas Company. All gas piping is copper and steel.

Telephone: Provided by Verizon or similar carriers.

Electrical: Electrical service is supplied by the Connecticut Light and Power & SNEW

Flood Hazard Status: The subject property is located in Zone X, area of minimal flooding, according to FIRM Community Panel #09001C0532F dated June 18, 2010.

Conclusion: The subject site has characteristics, both external and internal, that are functional and marketable within the local market area. The site conforms to neighborhood standards in most respects. There are no significant negative locational factors affecting the site. It is our opinion, based on the foregoing, that the subject site is well suited for a host of uses.

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SUBJECT PROPERTY PHOTOS AS OF THE DATE OF INSPECTION MARCH 10, 2015 EXTERIOR BUILDING PHOTOS

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EXTERIOR BUILDING PHOTOS MAIN ENTRANCE

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CERVALIS DATA CENTER EXTERIOR

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EXTERIOR BUILDING PHOTOS

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EXTERIOR BUILDING PHOTOS

PARKING LOT PHOTOS

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PARKING LOT PHOTOS

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INTERIOR TENANT SPACE PHOTOS

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INTERIOR TENANT SPACE PHOTOS

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INTERIOR TENANT SPACE PHOTOS

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VACANT SPACE PHOTOS

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MAIN ENTRY LOBBY

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CAFETERIA

OUTDOOR DINING/SITTING AREA

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GYM

COMMON AREA HALLWAY

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COMMON AREA HALLWAYS

COMMON AREA STAIRWAYS

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COMMON AREA RESTROOMS

FREIGHT ELEVATOR

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NORTHORP GRUMMAN SPACE INTERIOR

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NORTHORP GRUMMAN SPACE INTERIOR

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NORTHORP GRUMMAN SPACE INTERIOR

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ROOF

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BASEMENT HALLS

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HVAC SYSTEMS

WATER TANKS

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CERVALIS DATA CENTER PHOTOS ENTRANCE

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COMMON HALLWAYS

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UPS ROOMS

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FINISHED DATA CENTER SPACE

UNFINISHED DATA CENTER SPACE

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CUSTOMER OFFICE SPACE

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CERVALIS OFFICE SPACE

UNFINISHED SPACE

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CAFETERIA / BREAKROOM

RESTROOM

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STAIRWELLS

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LOADING BAYS

PARKING

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ROOF

ROOFTOP CHILLERS

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WOODSIDE AVENUE FACING EAST

WOODSIDE AVENUE FACING WEST

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NORDEN PLACE FACING NORTH

NORDEN PLACE FACING SOUTH

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BUILDING DESCRIPTION

The subject property consists of the main multi-tenanted building known as 10 Norden Place, and a newly constructed data center building, known as 6 Norden Place, that is fully occupied by a single tenant: CyrusOne LP, formerly known as Cervalis. The main two-story, plus basement, Class B+ office and industrial building was constructed in 1960 with an addition in 1968, and the entire complex was renovated in 2001/02 and is in very good condition. The main building contains approximately 615,357+/- square feet of leasable area and is situated on approximately 37.21+/- acres of land which provides for ample on-site parking. The property is currently 31.19% occupied with approximately 423,421 square feet of vacant space. Northorp Grumman previously occupied 320,230+/- square feet, and they vacated the space December 31, 2014. Currently the subject building contains approximately 40% office space, with the balance used as flex and ancillary office space.

In addition to the main building, the subject property includes a newly constructed data center which contains 167,691+/- square feet within two stories, plus basement, and occupies approximately 4.999 acres of the existing site. The building contains 77,000+/- square feet on each the first and second floors, plus 13,691+/- square feet of basement space. Construction commenced November 2012 and was completed December 18, 2013. The data center is 100% leased, on a triple net basis, to CyrusOne LP, f.k.a. Cervalis, LLC. The lease commencement date is March 31, 2014. We will value this portion of the subject property separately within this appraisal. This building was built-to-suit based upon the tenant’s specs. The owner delivered a vanilla box to the tenant. The construction budget totaled $32,661,313 for hard and soft costs. This equates to $194.77 per square foot. The detailed construction budget can be found in the Addenda of this appraisal.

10 Norden Place Building Description

Foundation Poured concrete and masonry foundation with masonry and street framing.

Exterior Walls: Combination of masonry in the industrial sections and reflective glass and aluminum exterior walls in the office portion.

Roof: Metal deck with a combination of built-up roof and rubber membrane roof. The roof over the industrial portion of the building was recently replaced. Portions of roof contain gravel covering.

Entrances: Multiple entrances around building. Generally consist of aluminum framed glass swing doors.

Windows: Fixed aluminum with insulated glass.

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MECHANICALS

HVAC: Heat and air conditioning is supplied by three oil fired boilers using #2 oil. There are two 20,000 gallon oil storage tanks buried at the rear of the building. The building has several zones.

Electric: Ample circuit breakers, switches, lighting fixtures and outlets. Electricity provided by Connecticut Light & Power and SNEW. This expense is passed through to the tenants and approximately 95% is recovered on an annual basis.

Elevators / Stairwells: Two, three-stop elevators and a freight elevator.

Multiple stairwells throughout building.

Plumbing: Copper with cast iron waste plumbing. Water and sewer service is provided by the City of Norwalk. Plumbing is assumed to be adequate for this property-type.

INTERIOR LAYOUT AND SQUARE FOOTAGE Space Breakout/Tenancy Tenant Total Area (SF) 1 Vacant Grumman Space 210,230 2 Vacant Grumman Bsmt. Space 110,000 3 All Other Vacant Space 103,191 4 Comphealth Associates, Inc 19,525 5 Katherine Gibbs School 64,545 6 Connolly Bsmt. Expansion 6,293 10 Red 7 Media 11,690 11 Tauck Inc. 42,700 12 Tauck Inc. 11,057 13 Tauck Inc. 1,380 14 Ventus Networks 17,266 15 Ventus Networks Expansion 1,840 16 Kent Holdings-Mgmt. Office 1,630 17 Ventus Storage 2,945 18 Connolly Basement 11,065 Total RSF 615,357 Total Occupied RSF 191,936 Total Vacant RSF 423,421 Percentage Occupancy 31.19%

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INTERIOR LAYOUT AND FINISH

Interior Layout: The building is accessed from a first level at the front, side and rear of the building. The offices on the upper floors are accessed via elevators and stairwells. The industrial portion is accessed at the front of the building at the eastern end of the complex. The majority of the industrial space is utilized as flex/office space. It is easily adaptable to office use. Based upon the existing zoning, the property is zoned to allow for up to 60% office space.

Interior Finishes: The interior space is generally finished with carpet and/or granite and/or vinyl tile, painted cinder block and sheetrock walls and acoustic tile ceilings with hanging fluorescent lighting.

Some offices contain a much more upscale finish such as the Tauck Space. Discussions with Jodie Dostal, the property broker with Cushman and Wakefield, reveal that the now vacant Grumman space will require a cost of approximately $5.00/sf for demolition and $15.00/sf for vanilla box build out. This equates to a capital expenditure of approximately $6.4 million to bring the space to vanilla box condition ($20.00/sf x 210,230 = $6,404,600). This is considered to be reasonable and with market parameters. We include this capital expense in year one of our discounted cash flow analysis as this tenant vacated the property December 2014.

The majority of the vacant space in the building is raw and unfinished as can be seen by the photos.

There are ample shared restrooms in the common areas with ceramic tile finishes, standard toilets and sinks. The common area amenities within the building include an outdoor area in the center of the building, a gym and a food court.

Building Management/Maintenance

The building has been well maintained and provides a good appearance relative to competing buildings within its submarket. The building uses outside contractors for cleaning and other maintenance items. This appraisal is subject to the subject property being operated under prudent management. Leases in the subject vicinity for similar Class B office space and high end flex space are typically made on a semi-gross basis with the tenant’s responsible for their pro rata share of utilities and operating expenses and real estate taxes over a base year amount.

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Functional Utility

The building is considered to be in very good condition as it was renovated in 2001/02 and has been well-maintained. Based on its location, layout, use, and physical characteristics, the subject property contains a good office and flex space utility.

6 Norden Place - Data Center Description

The newly constructed data center was built-to-suit for the tenant and delivered in vanilla box condition December 18, 2013. The lease commencement date was March 31, 2014. The exterior shell was built by Fortis Property Group LLC, while Matassa Construction of Long Island did the interior build out. The new data center contains 50,000 square feet of raised floor data center space, with 16 MW of utility power and 3,500 tons of cooling capacity, enabling Cervalis to support high power density configurations. Utility power will be delivered to the building from two providers utilizing three different utility substations. Customer configurations will be powered by 2N UPS systems and the entire Connecticut data center will be supported by N+1 generator backup redundancy. The facility is designed to have no single points of failure and the infrastructure combines multiple levels of technology and security.

The space is generally finished with vinyl tile and carpet floors in the common areas and hallways, with raised flooring (3 feet) throughout most of the data center space and some of the hallways as well. The walls are painted sheetrock in common areas and data centers and ceilings are acoustical tile in the office areas and throughout most of the building. The building contains approximately 30 workers on site.

The first floor houses two network areas, 50,000 square feet of data center space, UPS (uninterrupted power supply) rooms and small office areas. The second floor houses the Cervalis office area, the lunch area/break room, the second 50,000 square foot data center space and various conference rooms and customer areas.

The basement houses the mechanicals, fire systems, switch gear room and generator rooms. The building is heated via gas heat and electric baseboard heat with a central air conditioning system with rooftop chillers and condensers.

The building contains two elevators: a passenger elevator with a 4,000 pound capacity and a freight elevator with a 12,000 pound capacity. There are 6 stairwells; three loading bays and 1 dock. The roof is rubberized. It currently houses two chillers and provides room for two more. There are three separate utility feeds from two utility companies: Connecticut Light and Power and the Third Taxing District of the City of Norwalk.

The building was built-to-suit and, as such, contains excellent functional utility. CyrusOne, a publicly traded company, purchased Cervalis, which had four data centers and two disaster recovery centers in the New York metro area, this past summer. The acquisition brings the size of publicly traded CyrusOne’s portfolio to 31 data centers across 12 markets: 10 U.S. cities plus London and

BUTLER BURGHER GROUP, INC. 114 0115008251 PROPERTY DATA

Singapore. The Carrollton, Texas-based data center provider converted into a real estate investment trust and went public in 2013.

Conclusion

The information contained in the sections entitled "Site Description" and "Building Description" was obtained from the following sources:

1. Formal field inspection, March 10, 2015

2. Information provided by Fortis Property Group

3. Information provided by the City of Norwalk Assessor’s Office

4. City of Norwalk Zoning and Planning Office records.

BUTLER BURGHER GROUP, INC. 115 0115008251 HIGHEST AND BEST USE

HIGHEST AND BEST USE

The following definition of Highest and Best Use is set forth in Real Estate Appraisal Terminology sponsored by the American Institute of Real Estate Appraisers. Highest and Best Use is:

"That reasonable and probable use that will support highest present value, as defined, as of the effective date of the appraisal.

Alternately, that use, from among reasonable, probable and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in the highest land value."

In determining highest and best use, we have considered the following:

1. The current trends of supply and demand on the market.

2. Current zoning regulations and other possible restrictions.

3. Neighboring land uses.

It is to be recognized that in cases where a site has existing improvements on it, the highest and best use may very well be determined to be different from the existing use. The existing use will continue, however, unless and until land value in its highest and best use exceeds the total value of the property in its existing use.

In estimating highest and best use, alternative uses are considered and tested for the subject site.

1. Possible Use - An analysis to determine those uses of the subject which can be deemed physically possible;

2. Permissible Use - An investigation into existing zoning regulations, lease terms, and deed restrictions on the site to determine which uses are legally permitted;

3. Feasibility - An analysis to determine which of those uses deemed possible and legal can provide a net return to the owner of the site;

4. Highest and Best Use - Among the feasible uses, which use will provide the highest net return or highest present worth.

BUTLER BURGHER GROUP, INC. 116 0115008251 HIGHEST AND BEST USE

As Vacant

Legally Permissible The subject property is zoned RI Restricted Industrial and is located along Norden Place in Norwalk, a good location for office or industrial utilizations. The site has good visibility from I-95 although access is somewhat secondary from East Avenue to Strawberry Hill Avenue. Thus the site is physically capable of supporting a variety of commercial uses although given the generally residential surrounding areas, retail is not a likely use of the subject site. Given the commercial nature of the area and the noise and traffic produced by I-95, commercial development is the most likely for the site. Aside from the site's zoning and regulations, we are not aware of any legal restrictions that limit the potential uses of the subject. No known zoning change is currently being considered or anticipated. The nature of the subject’s location, together with the current and expected trends in supply and demand, supports the current zoning. It is our opinion that the site, if vacant, could be developed for the above legally permitted uses.

Physically Possible The subject site is of good size and has good street access and frontage. All necessary utilities are available, and there are no apparent easements or encroachments that would hinder or prevent development. The subject site size falls within the range of improved business parks in the area and is not considered to restrict the utility of the subject in relation to competing sites. Any of the above legally permitted uses, therefore, are considered physically possible.

Financially Feasible The subject site is situated within a mixed industrial and office use zone. Assuming an average rental of $32.00 psf on a semi gross basis, with a general vacancy and collection loss of 10% and expenses of 40%, an NOI of $17.30 psf is suggested. Average overall capitalization rates for Class A business parks would be between 5% and 6%; therefore, a value of $300 per square foot is suggested. Construction costs for Class A office buildings range from $200 to $250, suggesting nominal residual to land value and entrepreneurial profit. Additionally, due to current economic conditions in the subject vicinity, financing for speculative new construction is extremely scarce. Based on

BUTLER BURGHER GROUP, INC. 117 0115008251 HIGHEST AND BEST USE

the foregoing, the only feasible use is to hold the land vacant until market and financing conditions improve.

Maximally Productive/ Highest All legally permissible, physically possible, and and Best Use financially feasible uses of the subject property, as vacant, have been presented and examined. In conclusion, it is the opinion of the appraiser that the highest and best use of the subject property, as vacant, is land banking until financing and market conditions improve.

As Improved Legally Permissible The subject represents a legally complying use and conforming bulk. In terms of age, size, condition and construction characteristics, the subject building conforms to surrounding improvements in its office market. It is anticipated that improvements similar to the subject will continue for the foreseeable future and that no change in permitted uses will occur that would negatively impact the value of the subject property, as improved.

Physically Possible The physical possibility of the subject improvement is manifest by its existence. Moreover, the presence of similar improvements in the immediate area attests to the physical possibility of such improvements. The subject buildings were observed, upon inspection, to be in good condition.

Financially Feasible The main building is currently 31.19% occupied by 6 tenants. The data center is 100% occupied by a triple net lease tenant for a 21-year term. The projected net operating income generated by the subject property provides a sufficient return to the land. The subject, as improved, continues to add value to the land. Therefore, it would be considered unreasonable to demolish the existing improvement because the subject maintains value based upon its continued use.

Maximally Productive/ Highest All legally permissible, physically possible, and and Best Use financially feasible alternative uses of the subject property, as improved, have been presented and examined. In summary, the subject is in a stable and desirable office park area and is expected to continue to

BUTLER BURGHER GROUP, INC. 118 0115008251 HIGHEST AND BEST USE

generate a return to the land. Therefore, with an active and aggressive leasing program, the present improvements represent the highest and best use of the property as improved.

BUTLER BURGHER GROUP, INC. 119 0115008251 APPRAISAL VALUATION PROCESS

APPRAISAL VALUATION PROCESS

In arriving at the value of the subject, the appraiser considered the three primary approaches to real estate valuation: the Income Approach; the Sales Comparison Approach; and, the Cost Approach.

The Income Approach can be based on two methods of valuation: Direct Capitalization and Discounted Cash Flow. Direct capitalization measures a single year's anticipated income in order to determine its capital sum by means of an overall capitalization rate. This appropriate rate considers risk, debt, and equity goal requirements. This analysis relies on existing income and market expenses in order to determine annual net operating income levels. The net operating income is capitalized to a present market value. Direct Capitalization is especially useful when valuing properties with market level leases, when a property is owner occupied in which case a market rent is ascribed to the property or when the income stream is stable. In a situation where a property is encumbered by a lease that is above market, or below market and expiring within the next few years, or where a property is encumbered by several leases that will expire within a typical holding period of 10-years, a DCF analysis is considered appropriate because this analysis considers fluctuations in the income stream over the holding period. We have utilized the discounted cash flow method for appraising our subject property. Due to the large amount of vacant space at the main building, the property is not stabilized until year 6 of our projection period; therefore we have not utilized the direct capitalization method.

For the Sales Comparison Approach, market value will be estimated by comparing the subject property to similar office properties that have been sold recently. This approach is based on the principle of substitution, which states that a knowledgeable investor will pay no more for a property than the amount that would be paid for a comparable substitute property. Based on a dearth of large building sales, we have been able to determine an estimate of value via the Sales Comparison Approach but it will only be utilized as support for the Income Approach.

The Cost Approach is traditionally a good indicator of value when properties being appraised are new or close to new. The main building on the subject building was constructed in the 1960s. Due to the fact that this building is over 55 years old, difficulty in estimating all forms of accrued depreciation limits the reliability of this approach. This fact tends to make the Cost Approach a less effective and unreliable tool for estimating market value. In addition, the Cost Approach gives only indirect consideration of the income-producing capabilities of a property such as the subject. Real estate investors today give little consideration to the Cost method of estimating value for investment-type properties such as the appraised property.

Finally, the approaches to value are reconciled into a final market value estimate. The strengths and weaknesses of each approach are discussed, and a final value estimate is made.

BUTLER BURGHER GROUP, INC. 120 0115008251 INCOME APPROACH

INCOME APPROACH

The Income Approach is predicated on the assumption that there is a definite relationship between the amount of income that a property is capable of producing and its value. This Approach considers the ability of a property to produce income and recognizes that value is the present worth of future benefits resulting from ownership of the property. The basic steps of the Income Approach are to estimate the gross income the property is capable of generating, deducting vacancies and any rent deficiencies, which leaves effective gross income. The estimated annual expenses are then deducted from the effective gross income. The result is the indication of net operating income before debt service. The net operating income is capitalized into an indication of value by the use of a capitalization rate, or it is projected into the future over a selected but appropriate holding period and discounted along with the anticipated reversion (sale price at the end of the holding period) at the investor's or market discount rate in order to arrive at the net present value for the subject property.

The discounted cash flow method has been utilized by the appraiser in order to arrive at an Income Approach value. We analyze and value the newly constructed Data Center and Cervalis lease separately subsequent to our analysis of the main multi-tenanted building utilizing the same methods of valuation.

PROPERTY ANALYSIS – 10 NORDEN PLACE

The discounted cash flow method has been utilized by the appraiser in order to arrive at an Income Approach value. The subject leases contain various rent steps that will be considered in a cash flow analysis. Additionally, as of the date of this report, there is a total of 423,421 square feet of vacant space representing approximately 68.81% of the building.

We will lease up this vacant space based upon market leasing terms and assumptions during the first four years of our projection period. Additionally, many of the current in place leases expire between 2016 and 2019. Therefore, the property is not stabilized until year 6 of our projection period and a discounted cash flow is most appropriate for this property.

A space break-out, lease abstract report and rent roll summary for the main building can be found on the following pages.

BUTLER BURGHER GROUP, INC. 121 0115008251 INCOME APPROACH

INCOME

The gross leasable area of the subject property is 615,357± square feet. The subject property is 31.19% occupied as of September 30, 2015 as follows:

Space Breakout/Tenancy Tenant Total Area (SF) 1 Vacant Grumman Space 210,230 2 Vacant Grumman Bsmt. Space 110,000 3 All Other Vacant Space 103,191 4 Comphealth Associates, Inc 19,525 5 Katherine Gibbs School 64,545 6 Connolly Bsmt. Expansion 6,293 10 Red 7 Media 11,690 11 Tauck Inc. 42,700 12 Tauck Inc. 11,057 13 Tauck Inc. 1,380 14 Ventus Networks 17,266 15 Ventus Networks Expansion 1,840 16 Kent Holdings-Mgmt. Office 1,630 17 Ventus Storage 2,945 18 Connolly Basement 11,065 Total RSF 615,357 Total Occupied RSF 191,936 Total Vacant RSF 423,421 Percentage Occupancy 31.19%

On the following pages we show the subject lease abstracts, a summary rent roll and market rent comparables for both office and flex industrial space. The lease abstracts on the following pages include the re-absorption of the vacant space and old Northorp Grumman space over the next four years commencing March 2016 and ending March 2020.

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DESCRIPTION OF THE OCCUPANCY LEASES - LEASE ABSTRACTS Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015 for 615,357 Square Feet

Tenant Name Floor Rate & Amount Months Pcnt Description of Imprvmnts Commssns Assumption about Type & Suite Number SqFt per Year Changes Changes to to Operating Expense Rate Rate subsequent terms Lease Dates & Term Bldg Share per Month on to Abate Abate Reimbursements Amount Amount for this tenant ______

1 Comphealth Associates $0.00 Mar-2012 $22.75 - - See method: - - Option Office 19,525.00 $0 Jan-2013 $23.25 Comphealth See assumption: Jan-2012 to Apr-2017 3.17% $0.00 Jan-2014 $23.75 age Market Rent 64 Months $0 Jan-2015 $24.25 Jan-2016 $24.75 Jan-2017 $25.25 Mar-2017 $0.00

2 Katherine Gibbs Schoo $0.00 Nov-2010 $19.50 - - See method: - - Market Office 64,545.00 $0 Feb-2012 $20.50 Katherine Gibbs See assumption: Feb-2003 to Jul-2018 10.49% $0.00 Mar-2015 $21.50 Katherine Gibbs 186 Months $0

3 Connolly Bsmt. Expans $15.00 Jun-2016 $16.00 - - See method: - - Market Office 6,293.00 $94,395 Jun-2019 $17.00 Average market See assumption: Feb-2014 to May-2026 1.02% $1.25 Jun-2022 $18.00 renewals Basement Market 148 Months $7,866 Jun-2024 $19.00

4 Red 7 Media $0.00 Nov-2010 $23.00 - - See method: Red 7 - - Option Office 11,690.00 $0 May-2012 $25.50 media See assumption: May-2006 to Aug-2016 1.90% $0.00 May-2014 $27.00 age Market Rent 124 Months $0

5 Tauck Inc. $0.00 Nov-2010 $18.50 - - See method: Tauck - - Market Office 42,700.00 $0 Sep-2013 $21.00 See assumption: Mar-2003 to Aug-2016 6.94% $0.00 Tauck 162 Months $0

6 Tauck Inc. $0.00 Nov-2010 $18.50 - - Full Service: - - Market Office 11,057.00 $0 Sep-2013 $21.00 Pays no expense See assumption: Aug-2006 to Aug-2016 1.80% $0.00 reimbursement. Tauck 121 Months $0

7 Tauck Inc. $0.00 Nov-2010 $13.88 - - Full Service: - - Market Office 1,380.00 $0 Sep-2013 $15.75 Pays no expense See assumption: Mar-2003 to Aug-2016 0.22% $0.00 reimbursement. Tauck 162 Months $0

8 Ventus Networks $0.00 Nov-2010 $18.25 - - See method: - - Option Office 17,266.00 $0 Jan-2011 $18.75 Ventus Networks See assumption: Jan-2009 to Jun-2019 2.81% $0.00 Jul-2013 $19.25 Ventus 126 Months $0 Jul-2015 $19.75 Jul-2017 $20.25

9 Ventus Networks Expan $19.50 - - - - See method: - - Market Office 1,840.00 $35,880 Ventus Expansion See assumption: Jun-2012 to Jun-2019 0.30% $1.63 License age Market Rent 85 Months $2,990

BUTLER BURGHER GROUP, INC. 123 0115008251 INCOME APPROACH

DESCRIPTION OF THE OCCUPANCY LEASES - LEASE ABSTRACTS Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015 for 615,357 Square Feet

10 Ventus Storage $15.00 - - - - Full Service: - - Market Office 2,945.00 $44,175 Pays no expense See assumption: Jun-2015 to Jun-2019 0.48% $1.25 reimbursement. Basement Market 49 Months $3,681

11 Kent Holdings - Mgmt $24.75 - - - - Full Service: - - Market Office 1,630.00 $40,338 Pays no expense See assumption: Jan-2013 to Dec-2030 0.26% $2.06 reimbursement. age Market Rent 216 Months $3,361

12 Connolly Basement $15.50 Jun-2016 $16.50 - - See method: - - Market Office 11,065.00 $171,508 Jun-2019 $17.50 Connolly See assumption: Jun-2012 to Jun-2026 1.80% $1.29 Jun-2022 $18.50 Basement Market 169 Months $14,292 Jun-2024 $19.50

S1 Old Grumman Space $25.00 Jun-2017 $25.75 1-4 100.00% Gross: Pays the $40.00 $15.10 Market Office, Suite: Qtr 3 13,139.38 $328,485 Jun-2018 $26.52 increases over a 5.43% See assumption: Jun-2016 to May-2026 2.14% $2.08 Jun-2019 $27.32 base year ending $525,575 $198,401 Market Leasing 120 Months $27,374 Jun-2020 $28.14 Sep-2016: $5.97. Jun-2021 $28.98 Jun-2022 $29.85 Jun-2023 $30.75 Jun-2024 $31.67 Jun-2025 $32.62

S1 Old Grumman Space $25.00 Sep-2017 $25.75 1-4 100.00% Gross: Pays the $40.00 $15.10 Market Office, Suite: Qtr 4 13,139.37 $328,484 Sep-2018 $26.52 increases over a 5.43% See assumption: Sep-2016 to Aug-2026 2.14% $2.08 Sep-2019 $27.32 base year ending $525,575 $198,401 Market Leasing 120 Months $27,374 Sep-2020 $28.14 Sep-2016: $5.97. Sep-2021 $28.98 Sep-2022 $29.85 Sep-2023 $30.75 Sep-2024 $31.67 Sep-2025 $32.62

S1 Old Grumman Space $25.75 Dec-2017 $26.52 1-4 100.00% Gross: Pays the $40.00 $15.55 Market Office, Suite: Qtr 5 13,139.38 $338,339 Dec-2018 $27.32 increases over a 5.43% See assumption: Dec-2016 to Nov-2026 2.14% $2.15 Dec-2019 $28.14 base year ending $525,575 $204,353 Market Leasing 120 Months $28,195 Dec-2020 $28.98 Sep-2017: $7.36. Dec-2021 $29.85 Dec-2022 $30.75 Dec-2023 $31.67 Dec-2024 $32.62 Dec-2025 $33.60

S1 Old Grumman Space $25.75 Mar-2018 $26.52 1-4 100.00% Gross: Pays the $40.00 $15.55 Market Office, Suite: Qtr 6 13,139.37 $338,339 Mar-2019 $27.32 increases over a 5.43% See assumption: Mar-2017 to Feb-2027 2.14% $2.15 Mar-2020 $28.14 base year ending $525,575 $204,353 Market Leasing 120 Months $28,195 Mar-2021 $28.98 Sep-2017: $7.36. Mar-2022 $29.85 Mar-2023 $30.75 Mar-2024 $31.67 Mar-2025 $32.62 Mar-2026 $33.60

S1 Old Grumman Space $25.75 Jun-2018 $26.52 1-4 100.00% Gross: Pays the $40.00 $15.55 Market Office, Suite: Qtr 7 13,139.38 $338,339 Jun-2019 $27.32 increases over a 5.43% See assumption: Jun-2017 to May-2027 2.14% $2.15 Jun-2020 $28.14 base year ending $525,575 $204,353 Market Leasing 120 Months $28,195 Jun-2021 $28.98 Sep-2017: $7.36. Jun-2022 $29.85

BUTLER BURGHER GROUP, INC. 124 0115008251 INCOME APPROACH

DESCRIPTION OF THE OCCUPANCY LEASES - LEASE ABSTRACTS Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015 for 615,357 Square Feet

Jun-2024 $31.67 Jun-2025 $32.62 Jun-2026 $33.60

S1 Old Grumman Space $25.75 Sep-2018 $26.52 1-4 100.00% Gross: Pays the $40.00 $15.55 Market Office, Suite: Qtr 8 13,139.37 $338,339 Sep-2019 $27.32 increases over a 5.43% See assumption: Sep-2017 to Aug-2027 2.14% $2.15 Sep-2020 $28.14 base year ending $525,575 $204,353 Market Leasing 120 Months $28,195 Sep-2021 $28.98 Sep-2017: $7.36. Sep-2022 $29.85 Sep-2023 $30.75 Sep-2024 $31.67 Sep-2025 $32.62 Sep-2026 $33.60

S1 Old Grumman Space $26.52 Dec-2018 $27.32 1-4 100.00% Gross: Pays the $40.00 $16.02 Market Office, Suite: Qtr 9 13,139.38 $348,489 Dec-2019 $28.14 increases over a 5.43% See assumption: Dec-2017 to Nov-2027 2.14% $2.21 Dec-2020 $28.98 base year ending $525,575 $210,483 Market Leasing 120 Months $29,041 Dec-2021 $29.85 Sep-2018: $8.87. Dec-2022 $30.75 Dec-2023 $31.67 Dec-2024 $32.62 Dec-2025 $33.60 Dec-2026 $34.61

S1 Old Grumman Space $26.52 Mar-2019 $27.32 1-4 100.00% Gross: Pays the $40.00 $16.02 Market Office, Suite: Qtr 10 13,139.37 $348,489 Mar-2020 $28.14 increases over a 5.43% See assumption: Mar-2018 to Feb-2028 2.14% $2.21 Mar-2021 $28.98 base year ending $525,575 $210,483 Market Leasing 120 Months $29,041 Mar-2022 $29.85 Sep-2018: $8.87. Mar-2023 $30.75 Mar-2024 $31.67 Mar-2025 $32.62 Mar-2026 $33.60 Mar-2027 $34.61

S1 Old Grumman Space $26.52 Jun-2019 $27.32 1-4 100.00% Gross: Pays the $40.00 $16.02 Market Office, Suite: Qtr 11 13,139.38 $348,489 Jun-2020 $28.14 increases over a 5.43% See assumption: Jun-2018 to May-2028 2.14% $2.21 Jun-2021 $28.98 base year ending $525,575 $210,483 Market Leasing 120 Months $29,041 Jun-2022 $29.85 Sep-2018: $8.87. Jun-2023 $30.75 Jun-2024 $31.67 Jun-2025 $32.62 Jun-2026 $33.60 Jun-2027 $34.61

S1 Old Grumman Space $26.52 Sep-2019 $27.32 1-4 100.00% Gross: Pays the $40.00 $16.02 Market Office, Suite: Qtr 12 13,139.37 $348,489 Sep-2020 $28.14 increases over a 5.43% See assumption: Sep-2018 to Aug-2028 2.14% $2.21 Sep-2021 $28.98 base year ending $525,575 $210,483 Market Leasing 120 Months $29,041 Sep-2022 $29.85 Sep-2018: $8.87. Sep-2023 $30.75 Sep-2024 $31.67 Sep-2025 $32.62 Sep-2026 $33.60 Sep-2027 $34.61

S1 Old Grumman Space $27.32 Dec-2019 $28.14 1-4 100.00% Gross: Pays the $40.00 $16.50 Market Office, Suite: Qtr 13 13,139.38 $358,944 Dec-2020 $28.98 increases over a 5.43% See assumption: Dec-2018 to Nov-2028 2.14% $2.28 Dec-2021 $29.85 base year ending $525,575 $216,798 Market Leasing 120 Months $29,912 Dec-2022 $30.75 Sep-2019: $10.30. Dec-2023 $31.67

DESCRIPTION OF THE OCCUPANCY LEASES - LEASE ABSTRACTS

BUTLER BURGHER GROUP, INC. 125 0115008251 INCOME APPROACH

Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015 for 615,357 Square Feet

Dec-2025 $33.60 Dec-2026 $34.61 Dec-2027 $35.64

S1 Old Grumman Space $27.32 Mar-2020 $28.14 1-4 100.00% Gross: Pays the $40.00 $16.50 Market Office, Suite: Qtr 14 13,139.37 $358,944 Mar-2021 $28.98 increases over a 5.43% See assumption: Mar-2019 to Feb-2029 2.14% $2.28 Mar-2022 $29.85 base year ending $525,575 $216,798 Market Leasing 120 Months $29,912 Mar-2023 $30.75 Sep-2019: $10.30. Mar-2024 $31.67 Mar-2025 $32.62 Mar-2026 $33.60 Mar-2027 $34.61 Mar-2028 $35.64

S1 Old Grumman Space $27.32 Jun-2020 $28.14 1-4 100.00% Gross: Pays the $40.00 $16.50 Market Office, Suite: Qtr 15 13,139.38 $358,944 Jun-2021 $28.98 increases over a 5.43% See assumption: Jun-2019 to May-2029 2.14% $2.28 Jun-2022 $29.85 base year ending $525,575 $216,798 Market Leasing 120 Months $29,912 Jun-2023 $30.75 Sep-2019: $10.30. Jun-2024 $31.67 Jun-2025 $32.62 Jun-2026 $33.60 Jun-2027 $34.61 Jun-2028 $35.64

S1 Old Grumman Space $27.32 Sep-2020 $28.14 1-4 100.00% Gross: Pays the $40.00 $16.50 Market Office, Suite: Qtr 16 13,139.37 $358,944 Sep-2021 $28.98 increases over a 5.43% See assumption: Sep-2019 to Aug-2029 2.14% $2.28 Sep-2022 $29.85 base year ending $525,575 $216,798 Market Leasing 120 Months $29,912 Sep-2023 $30.75 Sep-2019: $10.30. Sep-2024 $31.67 Sep-2025 $32.62 Sep-2026 $33.60 Sep-2027 $34.61 Sep-2028 $35.64

S1 Old Grumman Space $28.14 Dec-2020 $28.98 1-4 100.00% Gross: Pays the $40.00 $16.99 Market Office, Suite: Qtr 17 13,139.38 $369,712 Dec-2021 $29.85 increases over a 5.43% See assumption: Dec-2019 to Nov-2029 2.14% $2.34 Dec-2022 $30.75 base year ending $525,575 $223,302 Market Leasing 120 Months $30,809 Dec-2023 $31.67 Sep-2020: $11.86. Dec-2024 $32.62 Dec-2025 $33.60 Dec-2026 $34.61 Dec-2027 $35.64 Dec-2028 $36.71

S1 Old Grumman Space $28.14 Mar-2021 $28.98 1-4 100.00% Gross: Pays the $40.00 $16.99 Market Office, Suite: Qtr 18 13,139.37 $369,712 Mar-2022 $29.85 increases over a 5.43% See assumption: Mar-2020 to Feb-2030 2.14% $2.34 Mar-2023 $30.75 base year ending $525,575 $223,302 Market Leasing 120 Months $30,809 Mar-2024 $31.67 Sep-2020: $11.86. Mar-2025 $32.62 Mar-2026 $33.60 Mar-2027 $34.61 Mar-2028 $35.64 Mar-2029 $36.71

S2 Old Grumman BSMT $14.00 Jun-2017 $14.42 1-4 100.00% Net: Pays a full $10.00 $8.46 Market Office, Suite: Qtr 3 6,875.00 $96,250 Jun-2018 $14.85 pro-rata share of 5.43% See assumption: Jun-2016 to May-2026 1.12% $1.17 Jun-2019 $15.30 all reimbursable $68,750 $58,134 MT Mkt. Leasing 120 Months $8,021 Jun-2020 $15.76 expenses. Jun-2021 $16.23

BUTLER BURGHER GROUP, INC. 126 0115008251 INCOME APPROACH

DESCRIPTION OF THE OCCUPANCY LEASES - LEASE ABSTRACTS Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015 for 615,357 Square Feet

Jun-2023 $17.22 Jun-2024 $17.73 Jun-2025 $18.27

S2 Old Grumman BSMT $14.00 Sep-2017 $14.42 1-4 100.00% Net: Pays a full $10.00 $8.46 Market Office, Suite: Qtr 4 6,875.00 $96,250 Sep-2018 $14.85 pro-rata share of 5.43% See assumption: Sep-2016 to Aug-2026 1.12% $1.17 Sep-2019 $15.30 all reimbursable $68,750 $58,134 MT Mkt. Leasing 120 Months $8,021 Sep-2020 $15.76 expenses. Sep-2021 $16.23 Sep-2022 $16.72 Sep-2023 $17.22 Sep-2024 $17.73 Sep-2025 $18.27

S2 Old Grumman BSMT $14.42 Dec-2017 $14.85 1-4 100.00% Net: Pays a full $10.00 $8.71 Market Office, Suite: Qtr 5 6,875.00 $99,138 Dec-2018 $15.30 pro-rata share of 5.43% See assumption: Dec-2016 to Nov-2026 1.12% $1.20 Dec-2019 $15.76 all reimbursable $68,750 $59,878 MT Mkt. Leasing 120 Months $8,261 Dec-2020 $16.23 expenses. Dec-2021 $16.72 Dec-2022 $17.22 Dec-2023 $17.73 Dec-2024 $18.27 Dec-2025 $18.81

S2 Old Grumman BSMT $14.42 Mar-2018 $14.85 1-4 100.00% Net: Pays a full $10.00 $8.71 Market Office, Suite: Qtr 6 6,875.00 $99,138 Mar-2019 $15.30 pro-rata share of 5.43% See assumption: Mar-2017 to Feb-2027 1.12% $1.20 Mar-2020 $15.76 all reimbursable $68,750 $59,878 MT Mkt. Leasing 120 Months $8,261 Mar-2021 $16.23 expenses. Mar-2022 $16.72 Mar-2023 $17.22 Mar-2024 $17.73 Mar-2025 $18.27 Mar-2026 $18.81

S2 Old Grumman BSMT $14.42 Jun-2018 $14.85 1-4 100.00% Net: Pays a full $10.00 $8.71 Market Office, Suite: Qtr 7 6,875.00 $99,138 Jun-2019 $15.30 pro-rata share of 5.43% See assumption: Jun-2017 to May-2027 1.12% $1.20 Jun-2020 $15.76 all reimbursable $68,750 $59,878 MT Mkt. Leasing 120 Months $8,261 Jun-2021 $16.23 expenses. Jun-2022 $16.72 Jun-2023 $17.22 Jun-2024 $17.73 Jun-2025 $18.27 Jun-2026 $18.81

S2 Old Grumman BSMT $14.42 Sep-2018 $14.85 1-4 100.00% Net: Pays a full $10.00 $8.71 Market Office, Suite: Qtr 8 6,875.00 $99,138 Sep-2019 $15.30 pro-rata share of 5.43% See assumption: Sep-2017 to Aug-2027 1.12% $1.20 Sep-2020 $15.76 all reimbursable $68,750 $59,878 MT Mkt. Leasing 120 Months $8,261 Sep-2021 $16.23 expenses. Sep-2022 $16.72

BUTLER BURGHER GROUP, INC. 127 0115008251 INCOME APPROACH

DESCRIPTION OF THE OCCUPANCY LEASES - LEASE ABSTRACTS Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015 for 615,357 Square Feet

Sep-2024 $17.73 Sep-2025 $18.27 Sep-2026 $18.81

S2 Old Grumman BSMT $14.85 Dec-2018 $15.30 1-4 100.00% Net: Pays a full $10.00 $8.97 Market Office, Suite: Qtr 9 6,875.00 $102,112 Dec-2019 $15.76 pro-rata share of 5.43% See assumption: Dec-2017 to Nov-2027 1.12% $1.24 Dec-2020 $16.23 all reimbursable $68,750 $61,674 MT Mkt. Leasing 120 Months $8,509 Dec-2021 $16.72 expenses. Dec-2022 $17.22 Dec-2023 $17.73 Dec-2024 $18.27 Dec-2025 $18.81 Dec-2026 $19.38

S2 Old Grumman BSMT $14.85 Mar-2019 $15.30 1-4 100.00% Net: Pays a full $10.00 $8.97 Market Office, Suite: Qtr 10 6,875.00 $102,112 Mar-2020 $15.76 pro-rata share of 5.43% See assumption: Mar-2018 to Feb-2028 1.12% $1.24 Mar-2021 $16.23 all reimbursable $68,750 $61,674 MT Mkt. Leasing 120 Months $8,509 Mar-2022 $16.72 expenses. Mar-2023 $17.22 Mar-2024 $17.73 Mar-2025 $18.27 Mar-2026 $18.81 Mar-2027 $19.38

S2 Old Grumman BSMT $14.85 Jun-2019 $15.30 1-4 100.00% Net: Pays a full $10.00 $8.97 Market Office, Suite: Qtr 11 6,875.00 $102,112 Jun-2020 $15.76 pro-rata share of 5.43% See assumption: Jun-2018 to May-2028 1.12% $1.24 Jun-2021 $16.23 all reimbursable $68,750 $61,674 MT Mkt. Leasing 120 Months $8,509 Jun-2022 $16.72 expenses. Jun-2023 $17.22 Jun-2024 $17.73 Jun-2025 $18.27 Jun-2026 $18.81 Jun-2027 $19.38

S2 Old Grumman BSMT $14.85 Sep-2019 $15.30 1-4 100.00% Net: Pays a full $10.00 $8.97 Market Office, Suite: Qtr 12 6,875.00 $102,112 Sep-2020 $15.76 pro-rata share of 5.43% See assumption: Sep-2018 to Aug-2028 1.12% $1.24 Sep-2021 $16.23 all reimbursable $68,750 $61,674 MT Mkt. Leasing 120 Months $8,509 Sep-2022 $16.72 expenses. Sep-2023 $17.22 Sep-2024 $17.73 Sep-2025 $18.27 Sep-2026 $18.81 Sep-2027 $19.38

S2 Old Grumman BSMT $15.30 Dec-2019 $15.76 1-4 100.00% Net: Pays a full $10.00 $9.24 Market Office, Suite: Qtr 13 6,875.00 $105,175 Dec-2020 $16.23 pro-rata share of 5.43% See assumption: Dec-2018 to Nov-2028 1.12% $1.27 Dec-2021 $16.72 all reimbursable $68,750 $63,524 MT Mkt. Leasing 120 Months $8,765 Dec-2022 $17.22 expenses. Dec-2023 $17.73 Dec-2024 $18.27 Dec-2025 $18.81 Dec-2026 $19.38 Dec-2027 $19.96

S2 Old Grumman BSMT $15.30 Mar-2020 $15.76 1-4 100.00% Net: Pays a full $10.00 $9.24 Market Office, Suite: Qtr 14 6,875.00 $105,175 Mar-2021 $16.23 pro-rata share of 5.43% See assumption: Mar-2019 to Feb-2029 1.12% $1.27 Mar-2022 $16.72 all reimbursable $68,750 $63,524 MT Mkt. Leasing 120 Months $8,765 Mar-2023 $17.22 expenses. Mar-2024 $17.73 Mar-2025 $18.27 Mar-2026 $18.81 Mar-2027 $19.38 Mar-2028 $19.96

S2 Old Grumman BSMT $15.30 Jun-2020 $15.76 1-4 100.00% Net: Pays a full $10.00 $9.24 Market Office, Suite: Qtr 15 6,875.00 $105,175 Jun-2021 $16.23 pro-rata share of 5.43% See assumption: Jun-2019 to May-2029 1.12% $1.27 Jun-2022 $16.72 all reimbursable $68,750 $63,524 MT Mkt. Leasing 120 Months $8,765 Jun-2023 $17.22 expenses. Jun-2024 $17.73

BUTLER BURGHER GROUP, INC. 128 0115008251 INCOME APPROACH

DESCRIPTION OF THE OCCUPANCY LEASES - LEASE ABSTRACTS Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015 for 615,357 Square Feet

S2 Old Grumman BSMT $15.30 Sep-2020 $15.76 1-4 100.00% Net: Pays a full $10.00 $9.24 Market Office, Suite: Qtr 16 6,875.00 $105,175 Sep-2021 $16.23 pro-rata share of 5.43% See assumption: Sep-2019 to Aug-2029 1.12% $1.27 Sep-2022 $16.72 all reimbursable $68,750 $63,524 MT Mkt. Leasing 120 Months $8,765 Sep-2023 $17.22 expenses. Sep-2024 $17.73 Sep-2025 $18.27 Sep-2026 $18.81 Sep-2027 $19.38 Sep-2028 $19.96

S2 Old Grumman BSMT $15.76 Dec-2020 $16.23 1-4 100.00% Net: Pays a full $10.00 $9.52 Market Office, Suite: Qtr 17 6,875.00 $108,330 Dec-2021 $16.72 pro-rata share of 5.43% See assumption: Dec-2019 to Nov-2029 1.12% $1.31 Dec-2022 $17.22 all reimbursable $68,750 $65,430 MT Mkt. Leasing 120 Months $9,028 Dec-2023 $17.73 expenses. Dec-2024 $18.27 Dec-2025 $18.81 Dec-2026 $19.38 Dec-2027 $19.96 Dec-2028 $20.56

S2 Old Grumman BSMT $15.76 Mar-2021 $16.23 1-4 100.00% Net: Pays a full $10.00 $9.52 Market Office, Suite: Qtr 18 6,875.00 $108,330 Mar-2022 $16.72 pro-rata share of 5.43% See assumption: Mar-2020 to Feb-2030 1.12% $1.31 Mar-2023 $17.22 all reimbursable $68,750 $65,430 MT Mkt. Leasing 120 Months $9,028 Mar-2024 $17.73 expenses. Mar-2025 $18.27 Mar-2026 $18.81 Mar-2027 $19.38 Mar-2028 $19.96 Mar-2029 $20.56

S3 Vacant Space $25.00 Mar-2017 $25.75 1-4 100.00% Gross: Pays the $25.00 $15.10 Market Office, Suite: Qtr 2 8,599.25 $214,981 Mar-2018 $26.52 increases over a 5.43% See assumption: Mar-2016 to Feb-2026 1.40% $2.08 Mar-2019 $27.32 base year ending $214,981 $129,846 age Market Rent 120 Months $17,915 Mar-2020 $28.14 Sep-2016: $5.97. Mar-2021 $28.98 Mar-2022 $29.85 Mar-2023 $30.75 Mar-2024 $31.67 Mar-2025 $32.62

S3 Vacant Space $25.00 Jun-2017 $25.75 1-4 100.00% Gross: Pays the $25.00 $15.10 Market Office, Suite: Qtr 3 8,599.25 $214,981 Jun-2018 $26.52 increases over a 5.43% See assumption: Jun-2016 to May-2026 1.40% $2.08 Jun-2019 $27.32 base year ending $214,981 $129,846 age Market Rent 120 Months $17,915 Jun-2020 $28.14 Sep-2016: $5.97. Jun-2021 $28.98 Jun-2022 $29.85 Jun-2023 $30.75 Jun-2024 $31.67 Jun-2025 $32.62

S3 Vacant Space $25.00 Sep-2017 $25.75 1-4 100.00% Gross: Pays the $25.00 $15.10 Market Office, Suite: Qtr 4 8,599.25 $214,981 Sep-2018 $26.52 increases over a 5.43% See assumption: Sep-2016 to Aug-2026 1.40% $2.08 Sep-2019 $27.32 base year ending $214,981 $129,846 age Market Rent 120 Months $17,915 Sep-2020 $28.14 Sep-2016: $5.97. Sep-2021 $28.98 Sep-2022 $29.85 Sep-2023 $30.75 Sep-2024 $31.67 Sep-2025 $32.62

BUTLER BURGHER GROUP, INC. 129 0115008251 INCOME APPROACH

DESCRIPTION OF THE OCCUPANCY LEASES - LEASE ABSTRACTS Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015 for 615,357 Square Feet

S3 Vacant Space $25.75 Dec-2017 $26.52 1-4 100.00% Gross: Pays the $25.00 $15.55 Market Office, Suite: Qtr 5 8,599.25 $221,431 Dec-2018 $27.32 increases over a 5.43% See assumption: Dec-2016 to Nov-2026 1.40% $2.15 Dec-2019 $28.14 base year ending $214,981 $133,741 age Market Rent 120 Months $18,453 Dec-2020 $28.98 Sep-2017: $7.36. Dec-2021 $29.85 Dec-2022 $30.75 Dec-2023 $31.67 Dec-2024 $32.62 Dec-2025 $33.60

S3 Vacant Space $25.75 Mar-2018 $26.52 1-4 100.00% Gross: Pays the $25.00 $15.55 Market Office, Suite: Qtr 6 8,599.25 $221,431 Mar-2019 $27.32 increases over a 5.43% See assumption: Mar-2017 to Feb-2027 1.40% $2.15 Mar-2020 $28.14 base year ending $214,981 $133,741 age Market Rent 120 Months $18,453 Mar-2021 $28.98 Sep-2017: $7.36. Mar-2022 $29.85 Mar-2023 $30.75 Mar-2024 $31.67 Mar-2025 $32.62 Mar-2026 $33.60

S3 Vacant Space $25.75 Jun-2018 $26.52 1-4 100.00% Gross: Pays the $25.00 $15.55 Market Office, Suite: Qtr 7 8,599.25 $221,431 Jun-2019 $27.32 increases over a 5.43% See assumption: Jun-2017 to May-2027 1.40% $2.15 Jun-2020 $28.14 base year ending $214,981 $133,741 age Market Rent 120 Months $18,453 Jun-2021 $28.98 Sep-2017: $7.36. Jun-2022 $29.85 Jun-2023 $30.75 Jun-2024 $31.67 Jun-2025 $32.62 Jun-2026 $33.60

S3 Vacant Space $25.75 Sep-2018 $26.52 1-4 100.00% Gross: Pays the $25.00 $15.55 Market Office, Suite: Qtr 8 8,599.25 $221,431 Sep-2019 $27.32 increases over a 5.43% See assumption: Sep-2017 to Aug-2027 1.40% $2.15 Sep-2020 $28.14 base year ending $214,981 $133,741 age Market Rent 120 Months $18,453 Sep-2021 $28.98 Sep-2017: $7.36. Sep-2022 $29.85 Sep-2023 $30.75 Sep-2024 $31.67 Sep-2025 $32.62 Sep-2026 $33.60

S3 Vacant Space $26.52 Dec-2018 $27.32 1-4 100.00% Gross: Pays the $25.00 $16.02 Market Office, Suite: Qtr 9 8,599.25 $228,074 Dec-2019 $28.14 increases over a 5.43% See assumption: Dec-2017 to Nov-2027 1.40% $2.21 Dec-2020 $28.98 base year ending $214,981 $137,754 age Market Rent 120 Months $19,006 Dec-2021 $29.85 Sep-2018: $8.87. Dec-2022 $30.75 Dec-2023 $31.67 Dec-2024 $32.62 Dec-2025 $33.60 Dec-2026 $34.61

BUTLER BURGHER GROUP, INC. 130 0115008251 INCOME APPROACH

DESCRIPTION OF THE OCCUPANCY LEASES - LEASE ABSTRACTS Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015 for 615,357 Square Feet

S3 Vacant Space $26.52 Mar-2019 $27.32 1-4 100.00% Gross: Pays the $25.00 $16.02 Market Office, Suite: Qtr 10 8,599.25 $228,074 Mar-2020 $28.14 increases over a 5.43% See assumption: Mar-2018 to Feb-2028 1.40% $2.21 Mar-2021 $28.98 base year ending $214,981 $137,754 age Market Rent 120 Months $19,006 Mar-2022 $29.85 Sep-2018: $8.87. Mar-2023 $30.75 Mar-2024 $31.67 Mar-2025 $32.62 Mar-2026 $33.60 Mar-2027 $34.61

S3 Vacant Space $26.52 Jun-2019 $27.32 1-4 100.00% Gross: Pays the $25.00 $16.02 Market Office, Suite: Qtr 11 8,599.25 $228,074 Jun-2020 $28.14 increases over a 5.43% See assumption: Jun-2018 to May-2028 1.40% $2.21 Jun-2021 $28.98 base year ending $214,981 $137,754 age Market Rent 120 Months $19,006 Jun-2022 $29.85 Sep-2018: $8.87. Jun-2023 $30.75 Jun-2024 $31.67 Jun-2025 $32.62 Jun-2026 $33.60 Jun-2027 $34.61

S3 Vacant Space $26.52 Sep-2019 $27.32 1-4 100.00% Gross: Pays the $25.00 $16.02 Market Office, Suite: Qtr 12 8,599.25 $228,074 Sep-2020 $28.14 increases over a 5.43% See assumption: Sep-2018 to Aug-2028 1.40% $2.21 Sep-2021 $28.98 base year ending $214,981 $137,754 age Market Rent 120 Months $19,006 Sep-2022 $29.85 Sep-2018: $8.87. Sep-2023 $30.75 Sep-2024 $31.67 Sep-2025 $32.62 Sep-2026 $33.60 Sep-2027 $34.61

S3 Vacant Space $27.32 Dec-2019 $28.14 1-4 100.00% Gross: Pays the $25.00 $16.50 Market Office, Suite: Qtr 13 8,599.25 $234,916 Dec-2020 $28.98 increases over a 5.43% See assumption: Dec-2018 to Nov-2028 1.40% $2.28 Dec-2021 $29.85 base year ending $214,981 $141,886 age Market Rent 120 Months $19,576 Dec-2022 $30.75 Sep-2019: $10.30. Dec-2023 $31.67 Dec-2024 $32.62 Dec-2025 $33.60 Dec-2026 $34.61 Dec-2027 $35.64

Total Occupied SqFt 191,936.00 Total Available SqFt 423,421.00

BUTLER BURGHER GROUP, INC. 131 0115008251 INCOME APPROACH

SUMMARY RENT ROLL Scheduled Scheduled Potential Lease Start Expiration Base Rental Base Rental Expense Gross Tenant Name Size (SF) Date Date Revenue Revenue/SF Reimb. Revenue Vacant Grumman Space 210,230 from 6/16-3/20 10 Yr. Terms $0 $0.00 $0 $0 Vacant Grumman Bsmt. Space 110,000 from 6/16-3/20 10 Yr. Terms $0 $0.00 $17,097 $17,097 Remaining Vacant Space 103,191 from 3/16-3/18 10 Yr. Terms $53,745 $0.52 $0 $53,745 Comphealth Associates, Inc. 19,525 1/1/2012 4/1/2017 $480,803 $24.62 $25,775 $506,578 Katherine Gibbs School 64,545 2/1/2003 7/1/2018 $1,387,718 $21.50 $387,165 $1,774,883 Connolly Bsmt. Expansion 6,293 2/1/2014 5/1/2026 $96,493 $15.33 $8,356 $104,849 Red 7 Media 11,690 5/1/2006 8/1/2016 $289,328 $24.75 $21,333 $310,661 Tauck Inc. 42,700 3/1/2003 8/1/2016 $846,329 $19.82 $202,313 $1,048,642 Tauck Inc. 11,057 8/1/2006 8/1/2016 $212,847 $19.25 $0 $212,847 Tauck Inc. 1,380 3/1/2003 8/1/2016 $19,924 $14.44 $0 $19,924 Ventus Networks 17,266 1/1/2009 6/1/2019 $341,004 $19.75 $28,262 $369,266 Ventus Networks Expansion 1,840 6/1/2012 6/1/2019 $35,880 $19.50 $3,006 $38,886 Kent Holdings - Mgmt office 1,630 1/1/2013 12/1/2030 $40,338 $24.75 $0 $40,338 Connolly Basement 11,065 6/1/2012 6/1/2026 $175,196 $15.83 $46,129 $221,325 Ventus Storage 2,945 6/1/2015 6/1/2019 $44,175 $15.00 $0 $44,175

Totals 615,357 $4,023,780 $739,436 $4,763,216 Vacant Space 423,421 68.81% Occupied Space 191,936 31.19%

The subject’s contract rents generally range from $14.44 to $24.75 per square foot with an overall average rent of $19.93 per square foot. The lower rents (Tauck Basement, Ventus Storage and Connelly Basement) consist of basement space tenants with rents in the $14.44 to $15.83 per square foot range.

Exclusive of the basement space, the range of rents for office space at the subject property is from $19.25 to $24.75 per square foot and the average in-place office space rent at the subject property is $21.74 per square foot. Discussions with the leasing broker for the vacant spaces at the subject reveal asking rents ranging from $24.00 to $26.00 per square foot depending on size and location within the property.

The most recent lease at the subject is the Connolly basement expansion and Ventus Storage space as follows:

Recent Leases Size (SF) Comm. Date Exp. Date Base Rent/SF Floor Connolly Bsmt. Expansion 6,293 2/1/2014 5/1/2026 $15.00 Bsmt. Ventus Storage 2,945 6/1/2015 6/1/2019 $15.00 Storage Basement $15.00

The most recent basement lease expansion with Connelly was signed at $15.00 per square foot, with rent increases up to $19.00 per square foot over the term of the lease.

BUTLER BURGHER GROUP, INC. 132 0115008251 INCOME APPROACH

Lease Terms

Some of the subject leases are structured on a net basis and some are structures on a semi-gross basis as per the chart below:

Space Breakout/Tenancy Tenant Lease Structure 1 Comphealth Associates, Inc Gross 2 Katherine Gibbs School Net 3 Connolly Bsmt. Expansion Gross 4 Red 7 Media Gross 5 Tauck Inc. Net 6 Ventus Networks Gross 7 Kent Holdings-Mgmt. Office No Add. Rent 8 Ventus Storage No Add. Rent 9 Connolly Basement Net

The net tenants generally pay their pro rata share of real estate taxes and operating expenses. The gross tenants generally pay their pro rata share of increases over base year real estate taxes and operating expenses. All tenants reimburse the landlord for their electric usage. In addition, certain tenants have periodic base rent increases as shown in the Lease Descriptions on the prior pages. Tenant improvements at the subject property generally range from $20 to $30 per square foot and free rent ranges from 3 to 6 months.

Rent Comparable Analysis

In order to estimate the market rental rate for the vacant spaces and leased space upon lease expirations, we have gathered comparable rental data in the general market area. The following office rents have been utilized in estimating market rent. All market comparables pay for their own electric, periodic step-ups plus their proportionate share of real estate taxes and or operating expenses above base year. Additionally, we provide a rental survey for comparable industrial/flex/basement space to provide a market rent for the basement storage, office and flex space at the subject.

BUTLER BURGHER GROUP, INC. 133 0115008251 INCOME APPROACH

OFFICE RENT COMPARABLE MAP

BUTLER BURGHER GROUP, INC. 134 0115008251 INCOME APPROACH

2 257 Riverside Avenue 1,601 7/15 $28.00 1st Floor. $20.00/sf workletter, no free rent. Op. Confidential Exp. And Taxes over BY plus utilities. 5 year term.

3 800 Connecticut Avenue 19,266 6/15 $28.00 4th Floor. 4 months free rent. $25.00/sf The Priceline Group workletter. Op. Ex. And Taxes over BY plus utilities.

4 13 Marshall Street 8,905 5/15 $25.00 1st Floor . 3 months free rent. $20.00 workletter. Confidential Op. Ex. And Taxes over BY plus Utilities.

5 101 Merritt 7 18,578 1/15 $21.75 1st Floor. 3 months free rent. $10.00 workletter. HEI Hotels, LLC Op. Ex. And Taxes over BY plus Utilities. 10 year term.

6 200 Connecticut Avenue 2,850 3/15 $26.50 6th Floor. 2 months free rent. $10.00 workletter. Confidential Op. Ex. And Taxes over BY plus utilities. 10 year term.

7 1465 Post Road E. 4,400 1/15 $30.00 2nd Floor. 1 month free rent, $10/sf workletter. Confidential Op. Ex. And Taxes over BY plus utilities. 7 year term.

Minimum 1,601 $21.75 Maximum 19,266 $30.00 Average 8,404 $26.18

The comparable rentals range from 1,601 to 19,266 square feet and rent for between $21.75 to $30.00 per square foot, annually, with an average rental rate of $26.18 per square foot on a semi- gross basis. Tenants are generally responsible for operating expenses and real estate taxes over a base year amount plus all utilities.

BUTLER BURGHER GROUP, INC. 135 0115008251 INCOME APPROACH

COMPARABLE RENTAL PHOTOS – OFFICE SPACE

COMPARABLE 1 - 142 EAST AVENUE

COMPARABLE 2 - 257 RIVERSIDE AVENUE

BUTLER BURGHER GROUP, INC. 136 0115008251 INCOME APPROACH

COMPARABLE 3 - 800 CONNECTICUT AVENUE

COMPARABLE 4 - 13 MARSHALL STREET

BUTLER BURGHER GROUP, INC. 137 0115008251 INCOME APPROACH

COMPARABLE 5 101 MERRITT 7

COMPARABLE 6 - 200 CONNECTICUT AVENUE

BUTLER BURGHER GROUP, INC. 138 0115008251 INCOME APPROACH

COMPARABLE 7 - 1465 POST ROAD E.

BUTLER BURGHER GROUP, INC. 139 0115008251 INCOME APPROACH

COMPARABLE FLEX/BASEMENT SPACE MAP

BUTLER BURGHER GROUP, INC. 140 0115008251 INCOME APPROACH

SURVEY OF COMPARABLE FLEX/BASEMENT LEASES Comp Area Start Base # Address (SF) Date Rent Leasing Terms 350 Dr. Martin Luther King 40,000 4/15 $15.00 Triple net lease. Industrial space 1 Jr. Dr. Confidential

2 444 Westport Avenue 1,930 1/15 $14.50 Plust utilities. Flex office space. Confidential

3 143-145 Main Street 6,500 12/14 $13.50 Triple net lease. Flex space Confidential

4 41 N Main Street 3,400 11/14 $22.00 Gross lease. Basement office space. Confidential Minimum 1,930 $13.50 Maximum 40,000 $22.00 Average 12,958 $16.25

The comparable rentals range from 1,930 to 40,000 square feet and rent for between $13.50 and $22.00 with an average of $16.25 per square foot, annually. Three of four leases are structured on a triple net basis, while the highest rent is structured on a gross basis.

BUTLER BURGHER GROUP, INC. 141 0115008251 INCOME APPROACH

COMPARABLE RENTAL PHOTOS INDUSTRIAL/FLEX SPACE

COMPARABLE 1 - 350 DR. MARTIN LUTHER KING JR. DR.

COMPARABLE 2 - 444 WESTPORT AVENUE

BUTLER BURGHER GROUP, INC. 142 0115008251 INCOME APPROACH

COMPARABLE 3 – 143-145 MAIN STREET

COMPARABLE 4 – 41 N MAIN STREET

BUTLER BURGHER GROUP, INC. 143 0115008251 INCOME APPROACH

Market Rents and Vacant Space Analysis

The office rent comparables range from $21.75 to $30.00 per square foot with an average rent of $26.18 per square foot. The flex and basement level rent comparables range from $13.50 to $22.00 per square foot. Based upon our rent comparables and our discussions with leasing brokers in and around the subject property, we have applied the following rents to the subject’s vacant office and basement spaces:

Vacant Space Projections Size (SF) Proj. Comm. Proj. Expiry. Mkt. Rent/SF Floor Vacant Grumman Space 210,230 from 6/16-3/20 10 Yr. Terms $25.00 1st & 2nd Vacant Grumman Bsmt. Space 110,000 from 6/16-3/20 10 Yr. Terms $14.00 Bsmt Remaining Vacant Space 103,191 from 3/16-3/18 10 Yr. Terms $25.00 1st & 2nd

Total Vacant Space 423,421

In general, we assume an average market rent of $25.00 per square foot for new office leases with pro rata share of operating expenses and real estate taxes over a base year amount. Utilities are passed through directly on a pro rata share basis.

In general, we assume an average market rent of $14.00 per square foot for the vacant Grumman basement space and $15.00 per square foot for the other basement space at the property with triple net lease terms as is typical in the market.

The Old Grumman Space lease expired at the end of 2014. Based upon our discussions with the leasing broker for the subject property Mr. Jodi Dostal, the office portion of the space requires approximately $5.00 per square foot for demolition and $15.00 per square foot to bring it to vanilla box condition. Based upon the size of the space, the initial capital expenditures are projected to total approximately $6,400,000 (210,230 square feet x $20.00/sf). We project a six month build out period to get the space to vanilla box condition. Re-leasing of this space is therefore projected to commence June 2016. We project a four year lease-up period for the office space which equates to 13,139+/- square feet leased per quarter as well as a four year lease-up period for the basement level space which equates to 6,875+/- square feet leased per quarter.

The first floor office space consists of approximately 210,230 square feet, and the basement level space consists of approximately 110,000 square feet. We apply a market rent of $25.00 per square foot, plus electric on a straight pass through basis, and operating expenses and real estate taxes over a base year amount, to lease-up the office space. We apply a market rent of $14.00 per square foot to lease up the basement space on a triple net basis.

We lease up all of the vacant Grumman space quarterly over 48 months (16 quarters) commencing June 2016 and completing March 2020. We provide the new office tenants with a $40.00 per square foot work letter and the new basement tenants with a $10.00 per square foot work letter. Market leasing commissions will be taken as well. Additionally, new office and basement tenants will receive 4 months free rent and will contain 10 year lease terms.

BUTLER BURGHER GROUP, INC. 144 0115008251 INCOME APPROACH

The remaining vacant office space at the subject property comprises a total of 103,191 square feet. We lease this space with our average market leasing assumptions. There will be 4 months free rent provided, full leasing commissions and a $25/sf TI will be applied to this space. It will be leased at the average market rent of $25.00 per square foot on a semi-gross basis with utilities passed directly through to the tenant and real estate taxes and operating expenses paid on a pro rata basis over the base year. We assume this space is leased quarterly over a two year period from 3/16-3/18 with approximately 8,599+/- square feet leased per quarter. New leases are projected to contain 10 year terms.

For the occupied spaces upon turnover, we typically assume 3 months of free rent, and 4 to 6 months of vacancy between leases generally varying based upon the size of the space. We assume 6 months of free rent for the Katherine Gibbs space upon vacancy due to its larger size. Renewal probabilities are typically 75.00% on average. We assume 0.00% renewal probability for Tauck, Inc. as they have already moved out of their space. The Katherine Gibbs space contains a 0% renewal probability since they too have moved out. In both cases, we therefore show 6 months downtime upon the lease expirations as well as full leasing commissions and tenant alterations.

Workletters are projected at $25.00 per square foot for office space and $10.00 per square foot for basement space. Leasing commissions are based upon a sliding scale as follows: 7.5% yrs 1-5 and 3.75% yrs 6-10. 50% of these leasing commissions are payable on renewals.

For all new leases, we project rent increases at 3% per annum. Lease terms are projected at 10 years for all new leases.

The detailed Market Leasing Assumptions can be found in the chart on the following page.

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SUBJECT PROPERTY RENTAL ANALYSIS AND MARKET RENT CONCLUSIONS AND LEASING ASSUMPTIONS For the Year Ending 9/30/16 Market Leasing Assumption Results In Inflated Dollars for the Fiscal Year Beginning 10/1/15

Northrop Northrop Grumman Vacant Grumman Vacant Basement MLA Categories Average Market Office Basement Katherine Gibbs Tauck Market Ventus

Renewal Probability 75.00% 75.00% 75.00% 0.00% 0.00% 75.00% 80.00%

Market Rent $/SqFt/Yr $/SqFt/Yr $/SqFt/Yr $/SqFt/Yr $/SqFt/Yr $/SqFt/Yr $/SqFt/Yr New: $25.00 $25.00 $14.00 $25.00 $24.00 $15.00 $24.00 Renewal: $25.00 $25.00 $14.00 $25.00 $24.00 $15.00 $24.00 Result: $25.00 $25.00 $14.00 $25.00 $24.00 $15.00 $24.00

Months Vacant New: 4.00 4.00 4.00 6.00 6.00 6.00 6.00 Renewal: 0 0 0 0 0 0 0

Tenant Improvements $/SqFt $/SqFt $/SqFt $/SqFt $/SqFt $/SqFt $/SqFt New: $25.00 $40.00 $10.00 $25.00 $25.00 $10.00 $25.00 Renewal: $0.00 $0.00 $0.00 $0.00 $25.00 $10.00 $25.00

Leasing Commissions Percent Percent Percent Percent Percent Percent Percent 7.5% yrs 1-5 and 7.5% yrs 1-5 and 7.5% yrs 1-5 and 7.5% yrs 1-5 and 7.5% yrs 1-5 and 7.5% yrs 1-5 and 7.5% yrs 1-5 and New: 3.75% yrs 6-10 3.75% yrs 6-10 3.75% yrs 6-10 3.75% yrs 6-10 3.75% yrs 6-10 3.75% yrs 6-10 3.75% yrs 6-10 Renewal: 3.75% 3.75% 3.75% 3.75% 3.75% 3.75% 3.75% Result: 4.50% 4.50% 4.50% 7.50% 4.13% 4.69% 4.50%

Rent Abatements New: 3.00 3.00 3.00 6.00 3.00 3.00 3.00 Renewal: 3.00 3.00 3.00 6.00 3.00 3.00 3.00 Result: 3.00 3.00 3.00 6.00 3.00 3.00 3.00

Non-Weighted Items Rent Changes 3% per annum 3% per annum 3% per annum 3% per annum 3% per annum 3% per annum 3% per annum Retail Rent Changes Reimbursements Gross Gross Net Gross Tauck/Gross on Exp. Net Gross

Term Lengths 10 years 10 years 10 years 10 years 10 years 10 years 10 years

BUTLER BURGHER GROUP, INC. 146 0115008251 INCOME APPROACH

Vacancy and Collection Loss

The subject property is well-located within a desirable suburban community. According to the CoStar Third Quarter 2015 Office Market Report, office space in the subject’s Norwalk submarket contains a vacancy rate of 16.8% compared to 15.5% for Fairfield County as a whole. Occupancy rates within large office complexes within Fairfield County are shown in the chart below:

Fairfield County Office Building Occupancy Rates Address Location Building Size (SF) Occupancy % 45 Glover Avenue Norwalk, CT 250,000 100.00% 761 Main Avenue Norwalk, CT 368,685 89.90% Merritt 7 Corporate Center Norwalk, CT 1,373,065 76.00% 383 Main Avenue Norwalk, CT 264,473 95.00% 40 Richards Avenue Norwalk, CT 150,000 67.00% 100 Nill Plain Road Danbury, CT 156,498 92.00% 6 Armstrong Road Shelton, CT 175,000 92.70% 100 Beard Sawmill Road Shelton, CT 148,525 80.20% 333 Ludlow Street Stamford, CT 430,428 100.00% Average 368,519 88.09% Minimum 148,525 67.00% Maximum 1,373,065 100.00%

Average occupancy is approximately 88.09% overall and more specifically 85.58% in the Norwalk properties. The subject property currently contains a 31.19% occupancy rate, predominantly due to the recent vacancy by Northorp Grumman representing over 50% of the building.

Based on a blending of occupancy rates exhibited in comparable neighboring buildings and the subject property's present occupancy rate and expiration schedule, vacancy and collection loss has been estimated at 15.00% throughout the projection period.

Upon lease expirations, we have assumed an average overall 75% renewal probability, although for Ventus we assume an 80% renewal probability. Tauck and Katherine Gibbs both contain 0.00% renewal probabilities.

It is also anticipated that there will be a lag period of 4 to 6 months to lease vacated space.

Due to the high vacancy rate at the subject property, vacancy and collection loss totals $0 in year 1 of our projection. True vacancy shows up in Absorption turnover and vacancy which equates to ($6,749,955) in year 1.

BUTLER BURGHER GROUP, INC. 147 0115008251 INCOME APPROACH

Effective Gross Income

Effective gross income for the first year of our projection period, which begins October 1, 2015, totals $4,763,216 and is shown below:

Year 1 For the Years Ending Sep-2016 ______Potential Gross Revenue Base Rental Revenue $11,111,943 Absorption & Turnover Vacancy ($6,749,955) Base Rent Abatements ($338,208) ______Scheduled Base Rental Revenue $4,023,780

Expense Reimbursement Revenue Real Estate Taxes $360,271 Electric & Heat $243,391 CAM Reimbursement $135,774 Total Reimbursement Revenue $739,436

Total Potential Gross Revenue $4,763,216 General Vacancy $0

Effective Gross Revenue $4,763,216

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ESTIMATED OPERATING EXPENSES

An analysis of the subject's existing use and occupancy was utilized in conjunction with market- derived findings and historical expense information. Historical information was provided for 2011, 2012, 2013, 2014 and year to date September 2015 which we have annualized in our charts below. The historicals were cross checked with respective market trends as compared to other similar office buildings located in the subject's market area. Expenses are analyzed on a per square foot basis.

OPERATING HISTORY Operating Expenses 2014 2013 2012 2011 Average Insurance $96,641 $97,001 $90,627 $89,721 $93,498 Heat $465,533 $496,967 $383,952 $505,976 $463,107 Electric $1,674,585 $1,886,868 $2,123,030 $2,638,118 $2,080,650 Water and Sewer $39,406 $29,474 $33,750 $48,347 $37,744 Repairs and Maintenance $692,884 $707,855 $918,097 $953,442 $818,070 Cleaning $416,702 $404,542 $392,417 $347,395 $390,264 Grounds/Security/Food Court $415,930 $464,130 $457,897 $454,445 $448,101 Administrative and Payroll $504,229 $495,488 $581,494 $572,937 $538,537 Management Fees $413,207 $416,795 $425,732 $460,474 $429,052 Total Operating Expenses $4,719,117 $4,999,120 $5,406,996 $6,070,855 $5,299,022

Operating Expenses PSF 2014 2013 2012 2011 Average Insurance $0.16 $0.16 $0.15 $0.15 $0.15 Heat $0.76 $0.81 $0.62 $0.82 $0.75 Electric $2.72 $3.07 $3.45 $4.29 $3.38 Water and Sewer $0.06 $0.05 $0.05 $0.08 $0.06 Repairs and Maintenance $1.13 $1.15 $1.49 $1.55 $1.33 Cleaning $0.68 $0.66 $0.64 $0.56 $0.63 Grounds/Security/Food Court $0.68 $0.75 $0.74 $0.74 $0.73 Administrative and Payroll $0.82 $0.81 $0.94 $0.93 $0.88 Management Fees $0.67 $0.68 $0.69 $0.75 $0.70 Total Operating Expenses PSF $7.67 $8.12 $8.79 $9.87 $8.61

Historical Expense Summary PSF Min Max Avg Insurance $0.15 $0.16 $0.15 Heat $0.62 $0.82 $0.75 Electric $2.72 $4.29 $3.38 Water and Sewer $0.05 $0.08 $0.06 Repairs and Maintenance $1.13 $1.55 $1.33 Cleaning $0.56 $0.68 $0.63 Grounds/Security/Food Court $0.68 $0.75 $0.73 Administrative and Payroll $0.81 $0.94 $0.88 Management Fees $0.67 $0.75 $0.70 Total Operating Expenses PSF $7.67 $9.87 $8.61

BUTLER BURGHER GROUP, INC. 149 0115008251 INCOME APPROACH

Annualized Third Quarter 2015 I&E YTD 9/30/15 Annualized 2015 Income Whole Dollar PSF Whole Dollar PSF Total Rental Income $3,188,487 $5.18 $4,251,316 $6.91 CAM $342,531 $0.56 $456,708 $0.74 Insurance $3,233 $0.01 $4,311 $0.01 Real Estate Taxes $267,931 $0.44 $357,241 $0.58 Submetered Electric $691,636 $1.12 $922,181 $1.50 Storage Rent $14,725 $0.02 $19,633 $0.03 Potential Gross Income $4,508,543 $7.33 $6,011,391 $9.77 Less Vacancy and Collection Loss 0 0.00 0 0.00 Effective Gross Income $4,508,543 $7.33 $6,011,391 $9.77

Operating Expenses Real Estate Taxes $806,410 $1.31 $1,075,213 $1.75 Insurance $72,171 $0.12 $96,228 $0.16 Electric $1,136,713 $1.85 $1,515,617 $2.46 Fuel $243,818 $0.40 $325,091 $0.53 Water and Sewer $112,397 $0.18 $149,863 $0.24 Repairs and Maintenance $364,614 $0.59 $486,152 $0.79 Cleaning $287,307 $0.47 $383,076 $0.62 Grounds/Security/Food Court $194,939 $0.32 $259,919 $0.42 Administrative and Payroll $494,934 $0.80 $659,912 $1.07 Management Fees $0 $0.00 $0 $0.00 Total Operating Expenses $3,713,303 $6.03 $4,951,071 $8.05

Total Expenses Excluding RE Taxes $2,906,893 $4.72 $3,875,857 $6.30

Net Operating Income $795,240 $1.29 $1,060,320 $1.72 Operating Expense Ratio 82.36% 82.36%

The appraiser's reconstructed income and operating expense analysis was projected over the next 12 months from the effective date of valuation and is presented on the following pages.

BUTLER BURGHER GROUP, INC. 150 0115008251 INCOME APPROACH

ESTIMATED OPERATING EXPENSES

The following is a summary of our year 1 expense estimates as applied to the subject property based upon a stabilized occupancy and prudent management.

Real Estate Taxes: The subject's real estate tax payment for the main building was based on the current projected tax payment of $1,098,165 or $1.78 per square foot. Based on assessment comparables (see "Assessed Value and Real Estate Taxes" section), the subject's assessments and real estate tax burden appears reasonable. Discussions with ownership reveal that they are in the process for filing for a tax reduction. If achieved, the value of the subject property could increase.

Insurance: Historically, this expense ranged from $0.15 to $0.16 per square foot with an average of $0.15 per square foot. The annualized pro forma suggests $0.16 per square foot. Insurance costs vary by the type of coverage. Costs are generally lower for larger buildings (on a per square foot basis) or multi-building policies. We will project an insurance expense of $0.16 per square foot, or $100,000 for the upcoming year.

Electric and Heat: This combined expense is generally reimbursed to the landlord by the tenants. The subject history shows this combined expense to range from $3.35 to $5.11 per square foot with an average of $4.13 per square foot. This expense is predominantly, although not fully, reimbursed by the tenants. This expense is variable based upon occupancy. As the subject property contains vacant space comprising 423,421+/- square feet or 68.81% of the building, this expense has decreased to vary directly with the occupancy of the building and as the space gets re-let over the next three years, this expense slowly increases to represent a stabilized occupancy. On a stabilized basis, we project this expense at $4.00/sf. In year 1 of our projection with 31.19% occupancy, this expense equates to $1.33/sf or $817,119.

BUTLER BURGHER GROUP, INC. 151 0115008251 INCOME APPROACH

Water and Sewer: Historically the sewer expense averages $0.06 per square foot. The annualized 2015 water and sewer expense equates to $0.24/sf. We project the subject’s water and sewer expense at $0.24 per square foot or $150,000 for the upcoming year. This includes the sewer charge of $51,885 as shown in the "Assessed Value and Real Estate Taxes" section of the appraisal.

Repairs and Maintenance: This expense varies depending on the age and quality of each building, management philosophy, services provided, and accounting methodology. Some management companies expense items which typically are included as a capital cost. In addition, repairs and maintenance costs may change from year to year; in some cases, repairs that require attention may be postponed due to cash flow considerations. In projecting a repairs and maintenance cost for the upcoming year, we considered the age and condition of the building as well as services provided. This expense does not include cleaning. Historically, this expense ranged from $1.13 to $1.55 per square foot with an average of $1.33 per square foot. We have decreased this expense to account for the current low occupancy at the subject property and more in line with the 2015 actual numbers. Based on the foregoing, we project a repair & maintenance expense of $0.50 per square foot, or $306,420 for the upcoming year. This expense will increase with the occupancy at the subject property and stabilized in year 6.

Cleaning: Based upon the subject’s history the cleaning services provided at the subject building range from $0.56 to $0.68 per square foot. We project this expense at $0.65 per square foot or $400,000 for the upcoming year.

Grounds, Security and Food This expense is for maintenance and upkeep of the Court: business park grounds. It also includes security costs. Historically this expense ranged from $0.68 to $0.75 and averaged $0.73 per square foot. We have decreased this expense to account for the current low occupancy at the subject property and more in line with the 2015 actual numbers. We project this expense at $0.25 per square foot or $153,210 for the upcoming year. This expense will increase with the occupancy at the subject property and stabilized in year 6.

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Administrative and Payroll: The building employs one chief engineer, two engineers, two full-time porters, one assistant, one part-time matron and one full-time concierge. The building uses outside contractors for cleaning and other maintenance items. This expense also includes legal and professional fees and allows for any expenditure not included in the above categories of expenses including fees, permits, uniform cleaning, building supplies, telephone usage, and other miscellaneous items. Historically, this expense averaged $0.88 per square foot. We project this expense at $0.81 per square foot or $500,000 for the upcoming year.

Management: Fees charges by local management companies for similar office properties are usually 2% to 5% of effective gross revenue (including recoveries). We estimate management at 3.00% of total effective gross revenue (including recoveries). This fee does not include leasing commissions. The 3.00% management fee translates into $147,660 in the first year of our analysis or $0.24 per square foot. This is lower than the historicals since it is based upon occupancy. This expense will increase with the releasing of the vacant space and with be in line with the subject history upon a stabilized occupancy.

Reserves

Reserves provide for the periodic replacement of building components that wear out more rapidly than the building itself and that must be replaced periodically during the building's economic life. This item is estimated at $0.25 per square foot or $153,839 in year 1 increasing at 3% per annum.

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Year 1 Income And Expense Statement Income Whole Dollar PSF Scheduled Base Rental Revenue $4,023,780 $6.54 Real Estate Taxes $360,271 $0.59 Electric & Heat $243,391 $0.40 CAM Reimbursement $135,774 $0.22 Total Potential Gross Revenue $4,763,216 $7.74 General Vacancy $0 $0.00 Effective Gross Revenue $4,763,216 $7.74 Operating Expenses Real Estate Taxes $1,098,165 $1.78 Electric & Heat $817,119 $1.33 Water and Sewer $150,000 $0.24 Insurance $100,000 $0.16 Repairs and Maintenance $306,420 $0.50 Cleaning $400,000 $0.65 Reserves for Replacements $153,839 $0.25 Grounds/Security/Food Court $153,210 $0.25 Administrative $500,000 $0.81 Management Fee $147,660 $0.24 Total Operating Expenses $3,826,413 $6.22 Total Expenses Excluding RE Taxes $2,728,248 $4.43

Net Operating Income $936,803 $1.52 Operating Expense Ratio 80.33%

BUTLER BURGHER GROUP, INC. 154 0115008251 INCOME APPROACH

Total Operating Expenses

Operating expenses were estimated for the initial projection year at $6.22 per square foot. Excluding real estate taxes, the subject's expenses were estimated at $4.43 per square foot.

OPERATING EXPENSE COMPARABLES Matrix Corporate 100 Mill Plain 20 South 555 Theodore 120 Bloomingdale Center - 39 Old Road Broadway Fremd Avenue Road Address: Ridgebury Road Danbury, CT White Plains, NY Rye, NY White Plains, NY Average Stories: 4 Stories 4 stories SF: 1,250,000 91,553 148,593 170,973 155,223 Date of Construction: 1981 1981 Expense Year: 2013 Budget 2014 2013 2013 2013 Total Operating Expenses Exclusive of R.E. Taxes/SF $6.67 $10.03 $7.13 $7.52 $10.46 $8.36

The 2015 Institute of Real Estate Management (IREM) office building operating expense report is summarized within the following table. The chart shows operating expenses from over 150 suburban office buildings surveyed along the eastern coastline from Virginia to Maine (Regions 1, 2 & 3).

IREM 2015 Suburban Office Buildings Regions 1, 2 & 3 Operating Expense Median Low High Insurance $0.14 $0.08 $0.21 Utilities $1.99 $1.42 $2.82 Repairs & Maintenance $2.40 $1.90 $2.96 Administrative & Payroll $1.34 $1.02 $1.72 Services $0.97 $0.77 $1.32 Management $0.71 $0.46 $0.94 Operating Expenses $7.55 $5.65 $9.97 Real Estate Taxes $2.19 $1.74 $2.81 Total Operating Expenses $9.74 $7.39 $12.78

Excluding real estate taxes, the comparable expenses range from $6.67 to $10.46 per square foot with an average expense of $8.36 per square foot. Historically, excluding real estate taxes, operating expenses for the subject ranged from $7.67 to $9.87 per square foot. Our projection is below the ranges of both the comparables and the subject history. The lower operating expense in year one of our projection is predominantly due to the fact that certain variable expenses including the heat and utilities, repairs and maintenance, and grounds and security are below the market due to the subject’s current high vacancy rate. These expenses vary directly with occupancy in our projection and as such, upon stabilized occupancy, projected by years 5 and 6 of our cash flow, the subject’s expense estimate is considered in line with the market. Our operating expenses for the subject property are considered reasonable and will be applied in our analysis.

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Expense Growth Rates

Real estate taxes are projected to increase at 3% per annum. With the exception of the management expense, which is a percentage of effective gross income, and the variable expenses that vary directly with occupancy, the balance of the operating expenses are projected to escalate at a rate of 3% per annum.

Leasing Fees And Tenant Improvements

Tenant improvements were based on various TIs as expressed in the Market Leasing Assumptions chart on page 146 and total $1,833,593 year one of our projection. Conversations with local Fairfield County real estate brokers indicate commission schedules of 7.5% yrs 1-5 and 3.75% yrs 6-10 for large space-user buildings such as the subject property. The higher commission schedule is generally a function of the fact that the commissions are split between the tenant rep broker and the building broker. In year 1 of our projection, leasing commissions are estimated to total $960,214 . In years 2, 3 and 4 of our projection period these expenditures increase with the leasing up of the vacant space.

In the first year of our analysis, we apply a one-time capital expenditure cost of $6,400,000 to the Northorp Grumman space to bring it to vanilla box condition. This equates to approximately $20.00 per square foot of the grade-level office space.

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CASH FLOW ANALYSIS Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 10/1/2015

Expense Reimbursement Revenue Real Estate Taxes $360,271 $342,102 $418,282 $326,997 $458,824 $508,710 $534,318 $570,898 $607,341 $639,713 $653,026 Electric & Heat $243,391 $381,262 $754,776 $1,113,109 $1,705,974 $1,845,131 $1,924,828 $2,028,940 $2,105,816 $2,212,925 $2,255,551 CAM Reimbursement $135,774 $229,174 $557,951 $794,775 $1,282,140 $1,436,654 $1,523,511 $1,639,278 $1,740,916 $1,861,689 $1,875,957 Total Reimbursement Revenue $739,436 $952,538 $1,731,009 $2,234,881 $3,446,938 $3,790,495 $3,982,657 $4,239,116 $4,454,073 $4,714,327 $4,784,534

Total Potential Gross Revenue $4,763,216 $6,087,148 $10,398,024 $12,930,332 $18,098,464 $19,564,068 $20,003,807 $21,066,102 $21,650,371 $22,524,863 $22,614,854 General Vacancy $0 $0 $0 $0 ($2,477,739) ($2,910,612) ($2,959,286) ($3,159,915) ($3,210,373) ($3,378,729) ($3,200,399)

Effective Gross Revenue $4,763,216 $6,087,148 $10,398,024 $12,930,332 $15,620,725 $16,653,456 $17,044,521 $17,906,187 $18,439,998 $19,146,134 $19,414,455 ______Operating Expenses Real Estate Taxes $1,098,165 $1,131,110 $1,165,043 $1,199,995 $1,235,994 $1,273,074 $1,311,266 $1,350,604 $1,391,123 $1,432,856 $1,475,842 Electric & Heat $817,119 $1,183,458 $1,756,502 $2,222,045 $2,717,797 $2,848,952 $2,931,302 $3,027,246 $3,110,773 $3,211,605 $3,262,913 Water and Sewer $150,000 $154,500 $159,135 $163,909 $168,826 $173,891 $179,108 $184,481 $190,016 $195,716 $201,587 Insurance $100,000 $103,000 $106,090 $109,273 $112,551 $115,927 $119,405 $122,987 $126,677 $130,477 $134,392 Repairs and Maintenance $306,420 $443,797 $658,688 $833,267 $1,019,174 $1,068,357 $1,099,238 $1,135,217 $1,166,540 $1,204,352 $1,223,592 Cleaning $400,000 $412,000 $424,360 $437,091 $450,204 $463,710 $477,621 $491,950 $506,708 $521,909 $537,567 Grounds/Security/Food Court $153,210 $221,898 $329,344 $416,633 $509,587 $534,179 $549,619 $567,609 $583,270 $602,176 $611,796 Administrative $500,000 $515,000 $530,450 $546,363 $562,754 $579,637 $597,026 $614,937 $633,385 $652,387 $671,958 Management Fee $147,660 $188,702 $322,339 $400,840 $484,242 $516,257 $528,380 $555,092 $571,640 $593,530 $601,848 ______Total Operating Expenses $3,672,574 $4,353,465 $5,451,951 $6,329,416 $7,261,129 $7,573,984 $7,792,965 $8,050,123 $8,280,132 $8,545,008 $8,721,495 ______Net Operating Income $1,090,642 $1,733,683 $4,946,073 $6,600,916 $8,359,596 $9,079,472 $9,251,556 $9,856,064 $10,159,866 $10,601,126 $10,692,960

Leasing & Capital Costs Tenant Improvements $1,833,593 $4,657,002 $3,237,224 $4,400,280 $1,188,650 $0 $232,952 $0 $546,801 $0 $511,198 Leasing Commissions $960,214 $2,517,903 $1,639,644 $2,432,952 $577,464 $0 $355,391 $0 $192,199 $0 $571,549 Reserves for Replacements $153,839 $158,454 $163,208 $168,104 $173,147 $178,342 $183,692 $189,203 $194,879 $200,725 $206,747 ______Total Leasing & Capital Costs $2,947,646 $7,333,359 $5,040,076 $7,001,336 $1,939,261 $178,342 $772,035 $189,203 $933,879 $200,725 $1,289,494 Const Costs for Grumman Space $6,400,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash Flow Before Debt Service ($8,257,004) ($5,599,676) ($94,003) ($400,420) $6,420,335 $8,901,130 $8,479,521 $9,666,861 $9,225,987 $10,400,401 $9,403,466 & Taxes

BUTLER BURGHER GROUP, INC. 157 0115008251 INCOME APPROACH

DISCOUNT RATE

In order to develop an indication of value by the Income Approach, it is necessary to establish an acceptable yield rate to discount the annual cash flows and the reversion value.

Typical investors require a rate of return for investment quality property such as the subject which is greater than the safe or "riskless" rates offered for long term treasury notes and bonds or high grade corporate bonds. The difference between an investor's required rate of return and the safe rate is basically the premium necessary to compensate the investor for the added risks of inflation, management, and lack of liquidity offered by a real estate investment. The following rates have been used as market indicators:

Indicator Rate (%) Prime Rate 3.25% Federal Funds 0.10% 10-yr. T-Note 2.15% 30-yr. T-Note 2.93% Corporate Bonds (10 year - AAA) 2.83% Municipal Bonds (10 year - tax 1.99% November-15

The Federal Funds Rate is a foundational rate determining the cost of funds by Federal Reserve banks to depository institutions. The Prime Rate is a base rate posted by large banks for loans to corporations. Long term issues such as 10 year Treasury Bonds are guaranteed by the federal government. Corporate Bonds are long term securities protected by the creditworthiness of the issuer. Municipal Bonds are free of tax liabilities and, therefore, the return is typically less than investment opportunities which are taxable.

Another source of anticipatory yield rates is provided by the Real Estate Research Corporation's and PricewaterhouseCoopers' investment surveys, which summarize expected rates of return, including capitalization rates and income and expense growth rates, from a representative sample of institutional investors. The rates reflect acceptable expectations of yields desired by investors currently in the market place. The rates reflect acceptable expectations of yields desired by investors currently in the market place.

Survey Type of Product Discount Rate (IRR) PwC National Net Lease 6.00%-10.00% Third Quarter 2015 Market 8.00% average

National Suburban 5.75%-10.00% Office Market 7.64% average

R.E.R.C. Suburban Office 6.50%-10.00% Second Quarter 2015 Institutional Investors 8.20% average

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R.E.R.C. and PricewaterhouseCoopers report pre-tax yields for the National Suburban Office Markets ranging from 5.75% to 10.00% with an average around 7.64% to 8.20%. National net leased properties range from 7.0% to 9.0% with an average of 7.94%.

In selecting an appropriate discount rate, we have considered the foregoing yields as well as the subject property's location, age, and condition relative to competing properties. We have also taken into consideration its current leasing status and tenancy. In the development of the discount rate for the subject property, consideration was given to the risk, liquidity, and the time and expense of asset management inherent with income-producing property investment. The summation approach was utilized to account for yield expectations associated with these investment considerations. A 3.0% basic rate was used based on the return exhibited by corporate and municipal bonds. The 3.0% basic rate is increased by 150 basis points for liquidity, 150 basis points for asset management, and 350 basis points for risk. This results in a 9.50% yield rate. Based on the foregoing, it is our opinion that a 9.50% before tax discount or yield rate would be required by an investor for the subject Class B+ suburban office park property with its current high vacancy rate.

The consensus of those actively engaged in the marketplace for office buildings is that internal rates of return (based upon forecasting techniques and assumptions similar to those utilized herein) fall within a broad range depending upon numerous risk factors, including, among others:

⋅ Location: the better the location, the lower the IRR. The subject is well-located in the Fairfield County Office Market.

⋅ Physical Characteristics of the Subject Property: the newer the property, the higher the quality of construction and finishes, and the better the design and layout of the physical plant, the lower the IRR. The subject is of older construction, although recently renovated, well-maintained and in very good condition.

⋅ Degree of Forecasted Cash Flow Growth: the greater the growth forecasted, the higher the IRR. The degree of cash flow growth is based on historic trends and current economic conditions.

⋅ Amount of Equity Investment Required: the greater the required equity investment (that portion of the total acquisition cost not typically funded by conventional financing), the higher the IRR.

⋅ Length of Projection Period: the longer the projection period, the higher the IRR.

⋅ Type of Investment: the riskier the perceived return on investment, for a particular type of real estate, the higher the IRR.

In our opinion, due to the subject property's: (a) good location within southern Fairfield County; (b) very good condition; (c) the caution used in forecasting the market rents and lease terms and lease-up of the vacant space (d) the lack of available financing resulting in a higher amount of equity that would be required in today's economic climate; (e) relatively typical holding period;

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(f) higher level of risk due to current high vacancy level and level of risk associated with the upcoming lease expirations; g) the current demand for the specific subject location and space; we believe that an 9.50% discount rate is appropriate for the subject property.

Terminal Capitalization Rate and Estimated Reversion

Terminal cap rates as reported by PricewaterhouseCoopers' and RERC are as follows:

Terminal Survey Type of Product Capitalization Rate PwC National Net Lease 7.00%-9.00% Third Quarter 2015 Market 7.81% average

National Suburban 5.50%-9.75% Office Market 7.25% average

R.E.R.C. Suburban Office 6.00%-8.50% Second Quarter 2015 Institutional Investors 7.20% average

As indicated in the investment survey, nationally, terminal capitalization rates range from 5.50% to 9.75% for institutional-quality investments with an average of around 7.25%. Net leased properties range from 7.0% to 9.0% with an average of 7.81%.

Based on the subject's physical and locational characteristics, along with the fact that the property is projected to be stabilized at the time of reversion, it is our opinion that a terminal capitalization rate of 7.50% is appropriate. We have applied a terminal capitalization rate of 7.50%, which will be used to capitalize the reversionary year's projected net operating income into a reversion value. From this amount, we have also deducted a 4.00% cost of sale.

Our Discounted Cash Flow Assumptions are presented on the following page.

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SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS

Holding Period: 10 years

Discount Rate: 9.50%

Reversion Rate: 7.50%

Cost of Sales: 4.00%

Renewal Probability: 75.00% generally (see chart on page 146 for specific tenant renewals)

Market Rent: $24.00 to $25.00 per square foot office – semi gross (see chart on page 146 for specific tenant/space rents)

$14.00 to $15.00 per square foot basement and flex – NNN (see chart on page 146 for specific tenant rents)

Market Rent Growth Rate: 3% per annum

Rent Escalations for New Tenant 3% per annum Leases:

New Lease Terms: 10 years

Lease Structure: Office - Gross

Basement - Net

Leasing Commissions: 7.5% yrs 1-5 and 3.75% yrs 6-10

56.25% on a 10 year term, assuming co-broke.

Estimated at $960,214 in year 1.

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SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS (CONT.)

Tenant Installations: Varies according to space size, condition and tenancy (see chart on page 146 for specifics). Average market leasing assumptions dictate a workletter of $25.00 per square foot for typical office space. We assume a $40.00 per square foot workletter for the old Grumman space and a work letter of $10.00 per square foot for the basement and flex space at the subject property.

Estimated at $1,833,593 in year one.

Free Rent: 3.00 months and 6.00 months

Lag Vacancy - Time Between 4.00 months; blended with renewal probabilities 1 to 2 Leases: months in general. 6.00 months for larger spaces over 20,000 square feet (Tauck and Katherine Gibbs).

General Vacancy and Collection 15.00% Loss:

Expenses: Year 1 expenses will be entered according to the estimates summarized earlier.

Operating Expenses Real Estate Taxes $1,098,165 $1.78 Electric & Heat $817,119 $1.33 Water and Sewer $150,000 $0.24 Insurance $100,000 $0.16 Repairs and Maintenance $306,420 $0.50 Cleaning $400,000 $0.65 Reserves for Replacements $153,839 $0.25 Grounds/Security/Food Court $153,210 $0.25 Administrative $500,000 $0.81 Management Fee $147,660 $0.24 Total Operating Expenses $3,826,413 $6.22 Total Expenses Excluding RE Taxes $2,728,248 $4.43 Expense Growth Rate: 3%

Management Costs: 3% of effective gross revenue

Value Conclusion: $69,500,000

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PRESENT VALUE CALCULATION Prospective Present Value Cash Flow Before Debt Service plus Property Resale For the P.V. of Analysis Year Annual Cash Flow Period Ending Cash Flow @ 9.50%

Year 1 Sep-2016 ($8,257,004) ($7,540,643) Year 2 Sep-2017 (5,599,676) (4,670,191) Year 3 Sep-2018 (94,003) (71,598) Year 4 Sep-2019 (400,420) (278,522) Year 5 Sep-2020 6,420,335 4,078,375 Year 6 Sep-2021 8,901,130 5,163,693 Year 7 Sep-2022 8,479,521 4,492,338 Year 8 Sep-2023 9,666,861 4,677,056 Year 9 Sep-2024 9,225,987 4,076,484 Year 10 Sep-2025 10,400,401 4,196,710 ______Total Cash Flow 38,743,132 14,123,702 Property Resale @ 7.50% Cap 136,869,888 55,228,942 ______Total Property Present Value $69,352,644 ======Rounded: $69,500,000 ======Per SqFt $112.94

MAIN BUILDING – 10 NORDEN PLACE VALUE VIA THE INCOME APPROACH AS OF SEPTEMBER 30, 2015 SIXTY NINE MILLION FIVE HUNDRED THOUSAND DOLLARS $69,500,000

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PROPERTY ANALYSIS – 6 NORDEN PLACE - DATA CENTER

Income

The gross leasable area of the data center is 167,691± square feet. Construction commenced November 2012 and was completed December 2013. Ownership has provided us with their construction budget as follows (a detailed construction budget and construction schedule can be found in the Addenda of this appraisal):

Norden Park Cervalis Project Budget

Square Feet 167,691

Project Costs: $ $ PSF

HARD COSTS: Building Shell Construction $ 18,802,360 $ 112.13 Sitework $ 4,856,599 28.96$ Insurance, General Conditions and Profit$ 2,937,071 17.51$

SOFT COSTS: Financing & Other Soft Costs $ 6,065,283 36.17$ TOTAL HARD AND SOFT COSTS $ 32,661,313 $ 194.77

Hard and soft costs for the development total $32,661,313 or $194.77 per square foot. The exterior shell was built by Fortis Property Group LLC, while Matassa Construction of Long Island did the interior build out. The new data center contains 50,000 square feet of raised floor data center space, with 16 MW of utility power and 3,500 tons of cooling capacity, enabling Cervalis to support high power density configurations. Utility power will be delivered to the building from two providers utilizing three different utility substations. Customer configurations will be powered by 2N UPS systems and the entire Connecticut data center will be supported by N+1 generator backup redundancy. The facility is designed to have no single points of failure and the infrastructure combines multiple levels of technology and security.

The new building was 100% pre-leased to Cervalis, LLC on a triple net basis. The building was built-to-suit and, as such, contains excellent functional utility. CyrusOne, a publicly traded company, purchased Cervalis LLC, which had four data centers and two disaster recovery centers in the New York metro area, this past summer. The acquisition brings the size of publicly traded CyrusOne’s portfolio to 31 data centers across 12 markets: 10 U.S. cities plus London and Singapore. The Carrollton, Texas-based data center provider converted into a real estate investment trust and went public in 2013.

The lease terms are abstracted in the following chart:

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CYRUSONE F.K.A CERVALIS, LLC LEASE ABSTRACT CyrusOne / Cervalis Lease Abstract Lease Lease Option Lease Annual Annual Tenant Date Lease Commencement Term Period Year Rent Size (SF) Rent/SF Lease Terms Cyrusone Jul-12 Within 112 days of 21 Years 10 years 1 $3,672,433 167,691 $21.90 This is a triple net lease whereby the LP f.k.a. building shell completion 2 $3,709,157 $22.12 tenant is responsible for ALL of the Cervalis (December 18, 2013): 3 $3,746,249 $22.34 operating expenses pertaining to the property inclusive of all allocated 4 $3,783,711 $22.56 Lease Commencement: real estate taxes. $22.79 March 31, 2014 5 $3,821,549 6 $3,859,764 $23.02 Base Rent escalates by 1% per 7 $3,898,362 $23.25 annum. 8 $3,937,345 $23.48 9 $3,976,719 $23.71 Base rent for the first year of the lease is reduced by 2/3's and base 10 $4,016,486 $23.95 rent for the second year of the lease $24.19 11 $4,056,651 is reduced by 1/3. Therefore, the 12 $4,097,217 $24.43 base rent for year 1 is $1,224,144 13 $4,138,189 $24.68 (concession is $2,448,289) and the 14 $4,179,571 $24.92 base rent for year 2 is 2,472,771 15 $4,221,367 $25.17 (concession is $1,236,386). 16 $4,263,581 $25.43 There is one 10-year option period. 17 $4,306,217 $25.68 18 $4,349,279 $25.94 19 $4,392,771 $26.20 20 $4,436,699 $26.46 21 $4,481,066 $26.72

BUTLER BURGHER GROUP, INC. 165 0115008251 INCOME APPROACH

The subject lease is triple net, with the tenant responsible for all operating expenses. The tenant’s current base rent is $22.12 per square foot (Year 2 of the lease) with 1% annual increases throughout the lease term.

Based upon the lease terms, this lease was to commence within 112 days of completion, which has been established to be March 31, 2014. Additionally, the base rent for the first year of the lease was reduced by 2/3's and base rent for the second year of the lease is reduced by 1/3. Therefore, the base rent for year 1 is $1,224,144 (concession is $2,448,289 – 8 months) and the base rent for year 2 is 2,472,771 (concession is $1,236,386 – 4 months).

We show the tenant lease cash flow summary on the following page. Based upon the lease terms the first stabilized year would commence April 2016, when all of the concessions are over.

BUTLER BURGHER GROUP, INC. 166 0115008251 INCOME APPROACH

TENANT CASH FLOW SUMMARY Individual Tenant Cash Flow & Summary Cyrusone f.k.a. Cervalis, Suite Whole Building, 167,691 Square Feet, Market Leasing Cervalis

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending Sep-2016 Sep-2017 Sep-2018 Sep-2019 Sep-2020 Sep-2021 Sep-2022 Sep-2023 Sep-2024 Sep-2025 Sep-2026 ______Tenant Potential Gross Revenue Base Rental Revenue $3,109,510 $3,764,980 $3,802,630 $3,840,656 $3,879,063 $3,917,854 $3,957,032 $3,996,602 $4,036,568 $4,076,934 $4,117,703 Absorption & Turnover Vacancy Base Rent Abatements ______Scheduled Base Rental Revenue 3,109,510 3,764,980 3,802,630 3,840,656 3,879,063 3,917,854 3,957,032 3,996,602 4,036,568 4,076,934 4,117,703 Base Rental Step Revenue Expense Reimbursement 506,422 521,615 537,263 553,381 569,982 587,082 604,694 622,835 641,520 660,766 680,589 ______Total Potential Gross Revenue 3,615,932 4,286,595 4,339,893 4,394,037 4,449,045 4,504,936 4,561,726 4,619,437 4,678,088 4,737,700 4,798,292 ______Leasing & Capital Costs Tenant Improvements Leasing Commissions ______Total Leasing & Capital Costs ______Tenant Potential Net Cash Flow $3,615,932 $4,286,595 $4,339,893 $4,394,037 $4,449,045 $4,504,936 $4,561,726 $4,619,437 $4,678,088 $4,737,700 $4,798,292 ======For This Tenant Lease Expiration Date Potential Market Rent per SqFt 22.00 22.66 23.34 24.04 24.76 25.50 26.27 27.06 27.87 28.71 29.57 Scheduled Base Rent per SqFt 18.54 22.45 22.68 22.90 23.13 23.36 23.60 23.83 24.07 24.31 24.56

Average Occupancy 167,691 167,691 167,691 167,691 167,691 167,691 167,691 167,691 167,691 167,691 167,691

BUTLER BURGHER GROUP, INC. 167 0115008251 INCOME APPROACH

Market Rents Vs. Contract Rent

As discussed in the previous Income Approach Analysis for the main building, office rent comparables in and around the subject area range from $21.75 to $30.00 per square foot with an average of $26.18 per square foot. Leases are generally made on a semi-gross basis, with the tenant responsible for all utilities, and operating expenses and real estate taxes over a base year amount. Additionally leases typically contain annual escalations of $0.50 to $1.00 per square foot or 2% to 3% per annum. The subject lease is structured on a triple net basis at a current rent of $22.12 per square foot with annual escalations of 1% per year. Operating expenses typically average $8.00 per square foot exclusive of real estate taxes. Real estate taxes are estimated at $3.01 per square foot for the subject upon completion. Therefore, total expenses including real estate taxes are generally $11.00 per square foot for stabilized properties. Utilities generally comprise approximately $4.00 per square foot of the total expense leaving a net of approximately $7.00 in operating expenses. Therefore, the grossed up rent for the Cervalis, LLC lease would equate to approximately $29.00 per square foot, which is indicative of a Class A office rent within in the subject market. This is considered reasonable based upon the subject’s excellent and new condition. We consider the subject’s contract rent to be at market. The 1% annual escalations on the base rent represent the low end of the range of market rent comparables.

Vacancy and Collection Loss

The new building was 100% pre-leased to Cervalis, LLC on a triple net basis. The building was built-to-suit and, as such, contains excellent functional utility. CyrusOne, a publicly traded company, purchased Cervalis LLC, this past summer. CyrusOne Inc. is a real estate investment trust engaged in providing enterprise data centre colocation, engineering facilities with the highest power redundancy (2N architecture) and power-density infrastructure services in the United States, Europe, and Asia. CyrusOne Inc. is headquartered in Carrollton, United States. The acquisition brings the size of publicly traded CyrusOne’s portfolio to 31 data centers across 12 markets: 10 U.S. cities plus London and Singapore. The Carrollton, Texas-based data center provider converted into a real estate investment trust and went public in 2013.

Cincinnati Bell acquired CyrusOne in 2010 and then spun it out in 2013. Cincinnati Bell still owns 68 per cent of CyrusOne, which Cincinnati Bell values at $927 million. CyrusOne serves customers in a range of industries, including energy, oil and gas, medical, technology, finance and consumer goods and services. The company's customers include 160 of the Fortune 1000 companies and nine of the Fortune 20. In May 2013, CyrusOne launched a national internet exchange, CyrusOne National IX, delivering interconnection between twelve of CyrusOne's data center facilities. In April 2015, CyrusOne announced its acquisition of Cervalis, expanding the company's footprint into the Northeast.

BUTLER BURGHER GROUP, INC. 168 0115008251 INCOME APPROACH

The subject property is well-located within a desirable suburban community. According to the CoStar Fourth Quarter 2014 Office Market Report, office space in the subject’s Norwalk submarket contain a Class A vacancy rate of 13.1% compared to 15.3% for Class A properties in Fairfield County as a whole. The subject property is currently 100% occupied by a single tenant for a 31 year term, inclusive of options. Discussions with management reveal that the tenant has put over $60,000,000 into their build out of the space. Based upon the huge expense, it is unlikely that the tenant will default or leave during the lease term. We have estimated a modest 3% collection loss throughout our projection. Collection loss is estimated at $(108,478) for the first year of our projection.

Effective Gross Income

Effective gross income for the first year of our projection period, which begins September 1, 2015, totals $3,507,454 and is shown below:

YEAR 1

Year 1 For the Years Ending Sep-2016 Potential Gross Revenue Base Rental Revenue $3,109,510 ______Scheduled Base Rental Revenue 3,109,510

Expense Reimbursement Revenue Real Estate Taxes 506,422 ______Total Reimbursement Revenue 506,422

______Total Potential Gross Revenue 3,615,932 Collection Loss (108,478) ______Effective Gross Revenue 3,507,454

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ESTIMATED OPERATING EXPENSES

The subject property is a new building, and as such, no operating history exists. The subject lease is structured on a triple net basis. As such, the landlord is responsible for minimal expenses associated with the property.

ESTIMATED OPERATING EXPENSES

The following is a summary of our year 1 expense estimates as applied to the subject property based upon a stabilized occupancy and prudent management.

Real Estate Taxes: The subject's real estate tax payment was based on the projected tax payment of $506,422 or $3.01 per square foot. Based on assessment comparables (see "Assessed Value and Real Estate Taxes" section), the subject's assessments and real estate tax burden appears reasonable. This expense is passed through and fully recovered by the tenant. The real estate taxes are projected to grow at a 3% annual growth rate.

Administrative: The subject lease is structured on a triple net basis, where the tenant is responsible for all operating expenses for this property. We apply a small miscellaneous expense to the landlord to account for administrative expenses, professional fees, reserves and management fees. We estimate this expense at 3% of effective gross income. This expense is projected to be $105,224 in the first year of our projection.

Expense Growth Rates

Real estate taxes are projected to increase at 3% per annum throughout our projection period.

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CASH FLOW ANALYSIS – “AS IS” AS OF SEPTEMBER 30, 2015 Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 10/1/2015

Expense Reimbursement Revenue Real Estate Taxes 506,422 521,615 537,263 553,381 569,982 587,082 604,694 622,835 641,520 660,766 680,589 ______Total Reimbursement Revenue 506,422 521,615 537,263 553,381 569,982 587,082 604,694 622,835 641,520 660,766 680,589

______Total Potential Gross Revenue 3,615,932 4,286,595 4,339,893 4,394,037 4,449,045 4,504,936 4,561,726 4,619,437 4,678,088 4,737,700 4,798,292 Collection Loss (108,478) (128,598) (130,197) (131,821) (133,471) (135,148) (136,852) (138,583) (140,343) (142,131) (143,949) ______Effective Gross Revenue 3,507,454 4,157,997 4,209,696 4,262,216 4,315,574 4,369,788 4,424,874 4,480,854 4,537,745 4,595,569 4,654,343 ______Operating Expenses Real Estate Taxes 506,422 521,615 537,263 553,381 569,982 587,082 604,694 622,835 641,520 660,766 680,589 Admin and Mgmt 105,224 124,740 126,291 127,866 129,467 131,094 132,746 134,426 136,132 137,867 139,630 ______Total Operating Expenses 611,646 646,355 663,554 681,247 699,449 718,176 737,440 757,261 777,652 798,633 820,219 ______Net Operating Income 2,895,808 3,511,642 3,546,142 3,580,969 3,616,125 3,651,612 3,687,434 3,723,593 3,760,093 3,796,936 3,834,124 ______Cash Flow Before Debt Service $2,895,808 $3,511,642 $3,546,142 $3,580,969 $3,616,125 $3,651,612 $3,687,434 $3,723,593 $3,760,093 $3,796,936 $3,834,124 & Taxes ======

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DISCOUNT RATE

In order to develop an indication of value by the Income Approach, it is necessary to establish an acceptable yield rate to discount the annual cash flows and the reversion value.

Indicator Rate (%) Prime Rate 3.25% Federal Funds 0.10% 10-yr. T-Note 2.15% 30-yr. T-Note 2.93% Corporate Bonds (10 year - AAA) 2.83% Municipal Bonds (10 year - tax 1.99% November-15

Survey Type of Product Discount Rate (IRR) PwC National Net Lease 6.00%-10.00% Third Quarter 2015 Market 8.00% average

National Suburban 5.75%-10.00% Office Market 7.64% average

R.E.R.C. Suburban Office 6.50%-10.00% Second Quarter 2015 Institutional Investors 8.20% average

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In selecting an appropriate discount rate, we have considered the foregoing yields as well as the subject property's location, age, and condition relative to competing properties. We have also taken into consideration its current leasing status and tenancy. In the development of the discount rate for the subject property, consideration was given to the risk, liquidity, and the time and expense of asset management inherent with income-producing property investment. The summation approach was utilized to account for yield expectations associated with these investment considerations. A 3.0% basic rate was used based on the return exhibited by corporate and municipal bonds. The 3.0% basic rate is increased by 150 basis points for liquidity, 100 basis points for asset management, and 150 basis points for risk. This results in a 7.00% yield rate. Based on the foregoing, it is our opinion that a 7.00% before tax discount or yield rate would be required by a typical investor for a newly constructed Class A Triple Net Leased suburban office park building like the subject.

⋅ Location: the better the location, the lower the IRR. The subject is well-located in the Fairfield County Office Market.

⋅ Physical Characteristics of the Subject Property: the newer the property, the higher the quality of construction and finishes, and the better the design and layout of the physical plant, the lower the IRR. The subject is new construction, and as such it is in excellent condition.

⋅ Degree of Forecasted Cash Flow Growth: the greater the growth forecasted, the higher the IRR. The degree of cash flow growth is based on the subject lease and limited to approximately 1% per annum based upon the lease terms. Additionally, the tenant represents a quality tenancy.

⋅ Amount of Equity Investment Required: the greater the required equity investment (that portion of the total acquisition cost not typically funded by conventional financing), the higher the IRR.

⋅ Length of Projection Period: the longer the projection period, the higher the IRR.

⋅ Type of Investment: the riskier the perceived return on investment, for a particular type of real estate, the higher the IRR.

In our opinion, due to the subject property's: (a) good location within southern Fairfield County; (b) excellent condition; (c) the caution used in forecasting the market rents and lease terms combined with high quality tenancy (d) the lack of available financing resulting in a higher

BUTLER BURGHER GROUP, INC. 173 0115008251 INCOME APPROACH amount of equity that would be required in today's economic climate; (e) relatively typical holding period; (f) lower level of risk due to the quality and long term tenant; g) the high demand for the specific subject location and space; we believe that a 7.00% discount rate is appropriate for the subject property.

Terminal Capitalization Rate and Estimated Reversion

Terminal cap rates as reported by PricewaterhouseCoopers' and RERC are as follows:

Terminal Survey Type of Product Capitalization Rate PwC National Net Lease 7.00%-9.00% Third Quarter 2015 Market 7.81% average

National Suburban 5.50%-9.75% Office Market 7.25% average

R.E.R.C. Suburban Office 6.00%-8.50% Second Quarter 2015 Institutional Investors 7.20% average

As indicated in the investment survey, nationally, terminal capitalization rates range from 5.50% to 9.75% for institutional-quality investments with an average of 7.25% Net leased properties range from 7.0% to 9.0% with an average of 7.81%.

Based on the subject's physical and locational characteristics, as well as its long-term quality tenancy, it is our opinion that a terminal capitalization rate of 6.00% is appropriate. We have applied a terminal capitalization rate of 6.00%, which will be used to capitalize the reversionary year's projected net operating income into a reversion value. From this amount, we have also deducted a 4.00% cost of sale.

Our Discounted Cash Flow Assumptions are presented on the following page.

BUTLER BURGHER GROUP, INC. 174 0115008251 INCOME APPROACH

SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS

Holding Period: 10 years

Discount Rate: 7.00%

Reversion Rate: 6.00%

Cost of Sales: 4.00%

Market Rent: $22.00 per square foot NNN or

$29.00/sf Gross

Lease Structure: Triple Net

Leasing Commissions: Already Paid

Free Rent: As per lease:

Year 1 of lease - $2,448,289

Year 2 of lease - $1,236,386

General Vacancy and Collection Loss: 3%

Expenses: Year 1 expenses will be entered according to the estimates summarized earlier.

Operating Expenses Real Estate Taxes 506,422 Admin and Mgmt 105,224 ______Total Operating Expenses 611,646 Expense Growth Rate: 3% for real estate taxes,

Admin and management is projected at 3% of EGI

Value Conclusion: AS IS SEPTEMBER 30, 2015 - $56,000,000

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PRESENT VALUE CALCULATION – “AS IS” Prospective Present Value as of October 1, 2015 Cash Flow Before Debt Service plus Property Resale For the P.V. of Analysis Year Annual Cash Flow Period Ending Cash Flow @ 7.00%

Year 1 Sep-2016 $2,895,808 $2,706,363 Year 2 Sep-2017 3,511,642 3,067,204 Year 3 Sep-2018 3,546,142 2,894,708 Year 4 Sep-2019 3,580,969 2,731,904 Year 5 Sep-2020 3,616,125 2,578,247 Year 6 Sep-2021 3,651,612 2,433,223 Year 7 Sep-2022 3,687,434 2,296,349 Year 8 Sep-2023 3,723,593 2,167,165 Year 9 Sep-2024 3,760,093 2,045,241 Year 10 Sep-2025 3,796,936 1,930,170 ______Total Cash Flow 35,770,354 24,850,574 Property Resale @ 6% Cap Rate 61,345,984 31,185,188 ______Total Property Present Value $56,035,762 ======Rounded: $56,000,000 ======Per SqFt $333.95

VALUE VIA THE INCOME APPROACH AS OF SEPTEMBER 30, 2015 FIFTY SIX MILLION DOLLARS $56,000,000

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SALES COMPARISON APPROACH

MAIN BUILDING – 10 NORDEN PLACE

“In the Sales Comparison Approach, market value is estimated by comparing the subject property to similar properties that have been sold recently or for which offers to purchase have been made. A major premise of the sales comparison approach is that the market 1 value of a property is directly related to the prices of comparable, competitive properties.”

The Sales Comparison Approach is based on the principle of substitution. This principle implies that a knowledgeable investor will pay no more for a property than the price that would be paid for a substitute property of similar utility and desirability. The procedure involved in this approach is to research the market for sales of properties which are comparable to the subject, select appropriate units of comparison, adjust the sale prices to the subject, and then reconcile the range of adjusted sale prices into a single indication of value for the subject property.

Limitations of the Sales Comparison Approach

This approach generally offers limited reliability because many properties have unique characteristics regarding tenancy, lease terms, and rents. It’s common for appraisers and market participants to use this approach to provide secondary support to the Income Approach, primarily due to a lack of recent sales with similar characteristics available. The major difference between the subject and the sales is the net operating income on a per square foot basis. Since we don’t know the income specifics of each sale regarding its current income and lease status, the sales comparison approach becomes less meaningful because the subject and sales have very different income structures. Therefore, we will consider this approach mainly as a check on the value derived via the Income Approach.

Unit of Comparison

In order to evaluate the comparable sales, it is generally necessary to convert the sales prices to an appropriate unit of comparison. This process facilitates price comparisons between properties of different sizes, and it also enables the appraiser to adjust for qualitative differences. The comparable sales will be analyzed on the basis of price per square foot, the unit of comparison most commonly used to analyze sales of office buildings in the subject's market area. There has been a dearth of large office building and business park sales over the past two to three years. We have broadened our search to include all of Fairfield County. We have found four sales within 15 months of our appraisal date.

Our office building sales are described on the following pages, along with a picture of each sale and a map of the sales' locations.

1The Appraisal of Real Estate, Appraisal Institute,11th Edition, 1996, page 397

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COMPARABLE SALES MAP

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COMPARABLE BUILDING SALE NO. 1 599 W. PUTNAM AVENUE

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1 SALE NO: LOCATION: 599 W. Putnam Avenue Greenwich, CT 06830 BLOCK/LOT: GREE-000007-000000-002384S SITE AREA (SF): 2.24 acres GROSS LEASABLE AREA: 50,449 PROPERTY DESCRIPTION: An affiliate of Catterton Partners purchased 599 W Putnam Ave, a three-story office building in Greenwich, for $21.93 million or about $435 psf. The transaction closed on August 6, 2015. The office building has 50,449 rentable square feet that Catterton has been a tenant of for the past 15 years. The office building was completed in 1979 and has a historic cottage attached to the property that will be demolished, as the new owners plan to renovate the property to be their permanent headquarters. The buyer secured financing with Bankwell Bank, terms of the mortgage were not immediately disclosed. The buyer plans to create a bosque in the space occupied by the old cottage and stone wall along Putnam Ave at the corner of Weaver St. They have taken the proposals to the Planning & Zoning commission. The seller was affiliated with a fund sponsored by Clarion Partners on behalf of the Oregon Public Employees Retirement System. The deal was executed through a lease option to buy excercised by the tenant. Information is based on public records.

SALE DATE: August-15 YEAR BUILT: 1979 GRANTOR: 599 Landlord LLC GRANTEE: Property Connecticut OBJLW One Corp. SALE PRICE: $21,930,000 PRICE PER SF: $435 DOCUMENT NO.: 6941-0277 TERMS: Market

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COMPARABLE BUILDING SALE NO. 2 100 MILL PLAIN ROAD - PLAZA WEST

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2 SALE NO: LOCATION: 100 Mill Plain Road - Plaza West Danbury, CT 06811 BLOCK/LOT: DANB-000000-000000-C014058 SITE AREA (SF): 4.11 acres GROSS LEASABLE AREA: 91,553 PROPERTY DESCRIPTION: An entity related to principals of New York City-based EVO Real Estate Group, acquired 100 Mill Plain Rd, known as Plaza West, for approximately $12.4 million or about $135 psf. The transaction closed on April 23, 2015. The four-story, Class A office property was built in 1981, and renovated in 2010. It is located less than a half-mile from Exit 2 of I-84 in Danbury. The building has 91,553 rental square feet situated on a 4.11-acre parcel. The multi-tenanted building was 92% occupied at the time of sale to a diverse tenant roster which includes US Bank Corp., Energy USA, and Morganti Group, Inc. In place rents ranged from $11.46/sf to $31.04/sf at the time of the sale. The buyers secured acquisition financing with Signature Bank, however, terms of the loan were not disclosed at the time of this report. The sale represents a coveted acquisition of Class A office space in the historically tight Northern Fairfield office submarket. The seller, Lemle Danbury LLC, was a CT-based private investor. CBRE Institutional Properties Stamford team handled the transaction.

SALE DATE: April-15 YEAR BUILT: 1981, renovated 2010 GRANTOR: 100 Mill Plain Investors LLC GRANTEE: Lemle Danbury LLC SALE PRICE: $12,400,000 PRICE PER SF: $135 DOCUMENT NO.: 2311-0505 TERMS: Market

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COMPARABLE BUILDING SALE NO. 3 30 BUXTON FARMS ROAD

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3 SALE NO: LOCATION: 30 Buxton Farms Road Stamford, CT 06905 BLOCK/LOT: STAM -000000-000000-007230 SITE AREA (SF): 1.74 acres GBA (ABOVE GRADE): 63,000 PROPERTY DESCRIPTION: An affiliate of Hobbs Inc., a home building company, paid $13.475 million or about $214 psf, for 30 Buxton Farms Rd in Stamford, CT on September 12th, 2014. The Class B plus office property is located at Exit 35 of the Merritt Pky/CT-15 and High Ridge Rd. Constructed in 1971, renovated in 1997 and 2007, the three-story building totals approximately 63,000 square feet situated on 1.74 acres. The property was 87% occupied by 14 tenants, ranging from medical offices to the financial industry. RHYS Commercial, LLC represented the buyer in this off market transaction. The seller was self-represented. The buyers approached RHYS with the task of finding a property where they could own and occupy space in. The New Canaan, CT-based company will be relocating their headquarters into the remaining vacant space in the building. The seller was an affiliate of GHP Office Realty, LLC, the building division of Houlihan-Parnes Realtors. The related principals of the company and a group of private investors purchased the property for $8 million in 2007. The acquisition was financed at approximately 75% LTV rate by Fairfield County Bank. The transaction took about five months to close.

SALE DATE: September-14 YEAR BUILT: 40193 GRANTOR: 1973, renovated 1997 GRANTEE: MSIH, LLC SALE PRICE: GHP Buxton LLC PRICE PER UNIT: $13,475,000 DOCUMENT NO.: 011086000218 TERMS: Market

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COMPARABLE BUILDING SALE NO. 4 200, 300, 400 AND 500 NYALA FARMS ROAD

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4 SALE NO: LOCATION: 200, 300, 400 and 500 Nyala Farms Road Westport, CT 06880 BLOCK/LOT: Multiple SITE AREA (SF): 50.42 acres GROSS LEASABLE AREA: 373,334 PROPERTY DESCRIPTION: On the 27th of June 2014, the Nyala Farms Corporate Center in Westport, Connecticut was sold for $130 million, or almost $350 per rentable foot. At the time the transaction closed, it was the largest in the state for 2014. It also happens to set the record for the largest transaction ever in Westport. Nyala Farms Corporate Center was built in 1977 and is comprised of five, two- and three-story office buildings with 373,334 rentable feet situated on 50+/- acres. It was fully occupied at the time the transaction closed. It is home to Terex, Bridgewater Associates, Morgan Stanley, and RBC, some of the state's premier businesses. All tenants are currently in their extension period and have had their base expenses reset. There is a very stable tenancy since no leases roll until 2016. However, after 2016, there is a substantial amount of roll in the ensuing five years. 2016 has 17.9% roll, 2017 has 39% roll, 2018 has 15% roll, 2019 has 7% roll, and 2020 has 21.1% roll. It's a safe assumption to assume that Bridgewater Associates will renew after their experience with Stamford in their relocation. OpEx ran $11 psf with taxes of $3.90 baked in. There was another $5 psf in OpEx for after hours HVAC, but that wasn't’t included. Reimbursements ran base year and were about $1.30 psf. Vacancy allowance wasn’t included since there was none. A source deemed reliable reported an in- place NOI of $8.972 million. This translates to a capitalization rate of 6.90%.

SALE DATE: June-14 YEAR BUILT: 1972-1978 GRANTOR: 60 Nyala Farms Road LLC GRANTEE: Nyala Farms Inc. SALE PRICE: $130,000,000 PRICE PER SF: $348 DOCUMENT NO.: 3533-0324 TERMS: Market

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SALES SUMMARY GRID Sale Price No. Address Sale Date SF Sale Price Per SF 1 599 W. Putnam Avenue Aug-15 50,449 $21,930,000 $435 2 100 Mill Plain Road - Plaza West Apr-15 91,553 $12,400,000 $135 3 30 Buxton Farms Road Sep-14 63,000 $13,475,000 $214 4 200, 300, 400 and 500 Nyala Farms Road Jun-14 373,334 $130,000,000 $348

Adjustments

Adjustments for the comparable sales have been considered, based on comparison to the subject, for property rights, appraised, financing terms, conditions of sale, market conditions (time), location, size, utility, income level and condition.

Property Rights Appraised The purpose of this adjustment is to account for differences in the property rights which were transferred with the sale. All of the sales were either of leased fee or fee simple estates. The leased fee transfers were at market rents. No adjustments are applied.

Financing Terms The purpose of adjusting for financing terms is to determine cash equivalent sale prices for the comparable sales in accordance with the definition of market value for this report. All of the sales were cash transactions or financed at market rates. No adjustments were required.

Conditions of Sale Conditions of sale refers to the motivations of the buyer and seller involved in a particular transaction. All sales appear to be arm's length transactions and did not require adjustments for this purpose.

Sale 1 was purchased by the occupant. We make a downward adjustment to account for the fact that the tenant would likely pay a premium to purchase the building they are in.

Market Conditions (Time) The comparable sales took place between June 2014 and the present. All of the sales have occurred within 15 months of our valuation date and no adjustments are warranted.

Location The subject is situated in a primary suburban office park location in Norwalk, Connecticut. Comparable 1 is situated in Greenwich and contains a superior location. Downward adjustment is applied. Comparable 4 is also situated in Stamford, but in a secondary location near the Merritt Parkway. This is considered comparable to the subject and

BUTLER BURGHER GROUP, INC. 187 0115008251 SALES COMPARISON APPROACH

no adjustments are applied. Comparable 3 is situated in Westport and is considered comparable to the subject and no adjustments are applied. Comparable 1 situated in a less central and less accessible location in northern Fairfield County in Danbury. Upward adjustments are applied.

Size The subject contains 615,357 square feet. The sales range from 50,449 to 373,334 square feet. Typically smaller properties tend to sell for more, on a per square foot basis, compared to larger properties as there are more available purchasers in the market. We apply downward adjustments to sales 1, 2 and 3 for their smaller sizes. Comparable 4 is similar in size and no adjustments are applied.

Occupancy All of the sales are 87% to 100% occupied at the time of the sale. The subject property is currently 31.19% occupied. We apply downward adjustments to each sale, in varying degrees, for their stronger occupancy as compared to the subject.

Utility This adjustment accounts for such factors as building height, layout, exterior appeal, frontage, and above and below grade level space. All of the comparables contain similar utility with good frontage, ample on-site parking and good exterior appeal. The subject property contains approximately sf of basement space representing over 20% of the leasable area. This is an inferior feature and downward adjustments are applied to each comparable.

Condition The subject property was constructed in the 1960s and renovated in 2001/2002 and is a Class B property considered to be in very good condition. Comparables 2 and 4 are both in superior condition compared to the subject. A downward adjustment is applied to each. Comparables 1 and 3 were constructed in the 1970s and are both Class B office properties. They are considered to be in similar condition compared to the subject. No adjustments are applied

BUTLER BURGHER GROUP, INC. 188 0115008251 SALES COMPARISON APPROACH

BUILDING SALES ADJUSTMENT GRID Sale No. 1 2 3 4 Address: 599 W. Putnam 100 Mill Plain 30 Buxton Farms 200, 300, 400 and Avenue Road - Plaza Road 500 Nyala Farms West Road Contract Date: August-15 April-15 September-14 June-14 SF: 50,449 91,553 63,000 373,334 Sale Price: $21,930,000 $12,400,000 $13,475,000 $130,000,000 Sale Price Per SF: $435 $135 $214 $348 Property Rights: 0% 0% 0% 0% Financing Terms: 0% 0% 0% 0% Conditions of Sale: -10% 0% 0% 0% Market Conditions (Time): 0% 0% 0% 0% Trended Price Per SF: $391 $135 $214 $348 Location: -20% 40% 0% 0% Size: -10% -10% -10% 0% Occupancy: -35% -30% -30% -35% Utility: -10% -10% -10% -10% Condition: 0% -10% 0% -20% Total Adjustments: -75% -20% -50% -65% Adjusted Price PSF: $98 $108 $107 $122 UNADJUSTED ADJUSTED LOW $135 $98 HIGH $435 $122 AVERAGE $283 $109 MEDIAN $281 $108

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All adjustments are percentages. A positive adjustment indicates an inferior characteristic to the subject. A negative adjustment indicates a superior characteristic to the subject.

Before adjustments, the comparable sales show a price range from $135 to $435 per square foot. After adjustments, the comparable sales show a tighter range of $98 to $122 per square foot, with an average of $109 and a median of $108 per square foot.

We have concluded to an “as is” market value of $110 per square foot or an indicator of value of $67,500,000 (rd).

$110 PER SF X 615,357 SF = $67,689,270 ROUNDED TO: $67,500,000

MAIN BUILDING VALUE VIA THE SALES COMPARISON APPROACH AS OF SEPTEMBER 30, 2015 SIXTY SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS $67,500,000

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6 NORDEN PLACE - DATA CENTER BUILDING

This building contains 167,691 square feet and is newly constructed. It is 100% occupied by CyrusOne on a long term basis, via a triple net lease.

Adjustments

Sale 1 was purchased by the occupant. We make a downward adjustment to account for the fact that the tenant would likely pay a premium to purchase the building they are in.

Market Conditions (Time) The comparable sales took place between June 2014 and the present. All of the sales have occurred within 15 months of our valuation date and no adjustments are warranted.

BUTLER BURGHER GROUP, INC. 191 0115008251 SALES COMPARISON APPROACH

adjustments are applied. Comparable 1 situated in a less central and less accessible location in northern Fairfield County in Danbury. Upward adjustments are applied.

Size The subject contains 167,691 square feet. The sales range from 50,449 to 373,334 square feet. Typically smaller properties tend to sell for more, on a per square foot basis, compared to larger properties as there are more available purchasers in the market. We apply an upward adjustment to sale 4 for its larger size. Comparables 1, 2 and 3 are considered to be within similar size categories and no adjustments are applied.

Condition The subject property was constructed in 2013 and is a Class A property that is considered to be in excellent condition. All of the comparables older and in inferior condition and upward adjustments are applied to each sale, in varying degrees.

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BUILDING SALES ADJUSTMENT GRID 1 2 3 4 Address: 599 W. Putnam 100 Mill Plain 30 Buxton Farms 200, 300, 400 and Avenue Road - Plaza Road 500 Nyala Farms West Road Contract Date: August-15 April-15 September-14 June-14 SF: 50,449 91,553 63,000 373,334 Sale Price: $21,930,000 $12,400,000 $13,475,000 $130,000,000 Sale Price Per SF: $435 $135 $214 $348 Property Rights: 0% 0% 0% 0% Financing Terms: 0% 0% 0% 0% Conditions of Sale: -10% 0% 0% 0% Market Conditions (Time): 0% 0% 0% 0% Trended Price Per SF: $391 $135 $214 $348 Location: -20% 40% 0% 0% Size: 0% 0% 0% 10% Utility: 0% 0% 0% 0% Condition: 25% 20% 25% 15% Total Adjustments: 5% 60% 25% 25% Adjusted Price PSF: $411 $217 $267 $435 UNADJUSTED ADJUSTED LOW $135 $217 HIGH $435 $435 AVERAGE $283 $333 MEDIAN $281 $339

BUTLER BURGHER GROUP, INC. 193 0115008251 DISPOSITION VALUE

All adjustments are percentages. A positive adjustment indicates an inferior characteristic to the subject. A negative adjustment indicates a superior characteristic to the subject.

Before adjustments, the comparable sales show a price range from $135 to $435 per square foot. After adjustments, the comparable sales show a range of $217 to $435 per square foot, with an average of $333 and a median of $339 per square foot.

We have concluded to a market value of $335 per square foot or an indicator of value of $56,000,000 (rd).

$335 PER SF X 615,357 SF = $56,176,485 ROUNDED TO: $56,000,000

6 NORDEN PLACE – DATA CENTER VALUE VIA THE SALES COMPARISON APPROACH AS IS AS OF SEPTEMBER 30, 2015 FIFTY SIX MILLION DOLLARS $56,000,000

BUTLER BURGHER GROUP, INC. 194 0115008251 RECONCILIATION AND FINAL VALUE ESTIMATE

RECONCILIATION AND FINAL VALUE ESTIMATE

The estimated values arrived at by the approaches to value used in this report are as follows:

Value Estimates

10 Norden Place

Cost Approach Not Used

10 Norden Place - Income Approach as of $69,500,000 September 30, 2015

10 Norden Place - Sales Comparison Approach $67,500,000 as of September 30, 2015

6 Norden Place

6 Norden Place - Income Approach as of “As Is” $56,000,000 September 30, 2015

6 Norden Place Sales Comparison Approach – $56,000,000 “As is” as of September 30, 2015

The Cost Approach is traditionally a good indicator of value when properties being appraised are new or close to new. The subject improvements were constructed in 1960s and suffer from accrued physical depreciation as a result of age and normal wear. Difficulty in estimating all forms of accrued depreciation limits the reliability of this Approach. The Cost Approach, therefore, has not been utilized in this report.

The Income Approach is considered to be a good indicator of value when market rents, stabilized expenses, capitalization rates, discount rates and vacancy rates are based on reliable market data. For our analysis, income and expenses were derived from actual and market figures and were considered reliable. Vacancy rates were based on a neighborhood survey and were considered to be reflective of market demand for the subject property. The capitalization and discount rates were derived from reliable market surveys of investor criteria.

The Sales Comparison Approach is considered a reliable indicator of value when few differences exist between the comparable sales and the subject, and the sales data collected is considered to be reliable and accurate. There has been a dearth of comparable large office park sales in and around the subject area. As such the data obtained is limited and the reliability on this approach is therefore limited.

BUTLER BURGHER GROUP, INC. 195 0115008251 RECONCILIATION AND FINAL VALUE ESTIMATE

In the case of the subject property, the two approaches have produced similar value indicators. For properties such as the subject, the Income Approach is considered more valid indicator of value than the Sales Comparison approach. The value indicated by the Income Approach represents a prudent investor's analysis of an income producing property. Since the subject property is income producing by nature, and currently contains long term leases with rent step ups and lease expirations over the holding period, an analysis of income, expenses, and yield rates is considered to be the more appropriate method.

Therefore, with sole consideration given to the Income Approach to value, the final fair value estimate for the leased fee interest in 10 Norden Place as of September 30, 2015, is:

SIXTY NINE MILLION FIVE HUNDRED THOUSAND DOLLARS $69,500,000

Therefore, with sole consideration given to the Income Approach to value, the final fair value estimate for the leased fee interest in the 6 Norden Place as of September 30, 2015, is:

FIFTY SIX MILLION DOLLARS $56,000,000

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ADDENDA

1. CONSTRUCTION BUDGET DATA CENTER

2. CONTINGENT AND LIMITING CONDITIONS

3. CERTIFICATION

4. QUALIFICATIONS

ADDENDUM

CONSTRUCTION BUDGET Norden Data Center Norwalk, CT Construction Hard Costs

Square Feet 167,691 PSF FINAL PRICING Core and Shell: Excavation $410,567.00 $2.45 Foundation $3,989,062.00 $23.79 Superstructure & Exterior Wall $10,951,245.00 $65.31 Roof $1,714,417.20 $10.22 Walkways $345,069.00 $2.06 Metal $575,000.00 $3.43 Fins $650,000.00 $3.88 Waterproofing & Roof Drains $167,000.00 $1.00 Total Core & Shell $18,802,360.20 $112.13

Site Costs: Site & Infrastructure Drainage $776,000.00 $4.63 Sewer $339,625.00 $2.03 Water $170,500.00 $1.02 Lighting and transformer pad and manhole $310,000.00 $1.85 Soil Corrosion Treatment $42,650.00 $0.25 Pavements $1,108,450.00 $6.61 Turf, Landings, Fencing, Gates, Stairs, Retention Walls $533,250.00 $3.18 Earthwork $699,500.00 $4.17 North Trench - Utility, Electrical and Telecom Work Out of Contract* South Telecom Trench and Conduit $250,000.00 $1.49 Off Site Traffic Light/Fencing $252,000.00 $1.50 Misc. $174,624.00 $1.04 Total Site and Infrastructure $4,656,599.00 $27.77 Wetlands $200,000.00 $1.19 Total Site Costs: $4,856,599.00 $28.96

TOTAL HARD & SITE COSTS $23,658,959.20 $141.09

Contingency Built In to Hard and Site Costs Insurance $473,179.18 2.0% $2.82 General Conditionals (Not included in Hard Costs) $1,689,249.69 7.0% $10.07 Profit $774,641.64 3.0% $4.62 $2,937,070.51 $17.51

TOTAL CONSTUCTION COSTS $26,596,029.71 $158.60

ADDENDUM

Norden Data Center Norwalk, CT Soft Costs

Square Feet 167,691

Construction Soft Costs: Cost Cost per sq. ft. Project Architect $ 448,000.00 $ 2.67 Site/Civil Engineer $ 279,450.00 $ 1.67 Surveys $ 20,000.00 $ 0.12 Landscape Architect $ 25,000.00 $ 0.15 Environmental Engineer $ 25,000.00 $ 0.15 Phase 1 incl Geotechnical Investitgations $ 75,000.00 $ 0.45 MEP/FP/FA Engineer $ 50,000.00 $ 0.30 Wetlands Engineer $ 70,000.00 $ 0.42 Structural Engineer $ 162,000.00 $ 0.97 Garage Arch/Engineering and Pricing$ 100,000.00 $ 0.60 Project Manager $ 100,000.00 $ 0.60 Filing Fees $ 50,000.00 $ 0.30 Bond $ 50,000.00 $ 0.30 Printing $ 20,000.00 $ 0.12 Zoning - Environmental- Legal$ 100,000.00 $ 0.60 Parking/Zoning Change $ 100,000.00 $ 0.60 Contracts - Legal $ 100,000.00 $ 0.60 Construction accounting $ 25,000.00 $ 0.15 Insurance - Builders Risk & Property$ 100,000.00 $ 0.60 Soft Cost Contingency $ 125,000.00 $ 0.75 Construction Soft Subtotal $ 2,024,450.00 $ 12.07

Other Soft Costs: Title Insurance $ 50,000.00 $ 0.30 Mortgage Broker Fee $ 297,528.24 $ 1.77 Developer legal financing $ 100,000.00 $ 0.60 Developer accounting $ 10,000.00 $ 0.06 Lender Legal $ 100,000.00 $ 0.60 Lender Inspection $ 50,000.00 $ 0.30 Appraisal $ 20,000.00 $ 0.12 Financing Fees $ 297,528.24 $ 1.77 Developer Overhead $ 371,910.30 $ 2.22 Developer Fee $ 1,115,730.89 $ 6.65 Interest $ 1,428,135.54 $ 8.52 Other Soft Costs Subtotal $ 3,840,833.20 $ 27.12 Legal Condo/Joint Utility and REA $200,000.00 TOTAL SOFT COST $ 6,065,283.20 $ 39.19

ADDENDUM

Norden Park Cervalis Project Budget

Square Feet 167,691

Project Costs: $ $ PSF

HARD COSTS: Building Shell Construction $ 18,802,360 $ 112.13 Sitework $ 4,856,599 28.96$ Insurance, General Conditions and Profit$ 2,937,071 17.51$

SOFT COSTS: Financing & Other Soft Costs $ 6,065,283 36.17$ TOTAL HARD AND SOFT COSTS $ 32,661,313 $ 194.77

ADDENDA

CONTINGENT AND LIMITING CONDITIONS

This appraisal has been made with the following general assumptions:

1. Any legal description or plats reported herein are assumed to be accurate. Any sketches, surveys, plats, photographs, drawings or other exhibits are included only to assist the intended user to better understand and visualize the subject property, the environs, and the competitive data. We have made no survey of the property and assume no responsibility in connection with such matters. 2. The appraiser has not conducted any engineering or architectural surveys in connection with this appraisal assignment. Information reported pertaining to dimensions, sizes, and areas is either based on measurements taken by the appraiser or the appraiser’s staff or was obtained or taken from referenced sources and is considered reliable. No responsibility is assumed for the costs of preparation or for arranging geotechnical engineering, architectural, or other types of studies, surveys, or inspections that require the expertise of a qualified professional. 3. No responsibility is assumed for matters legal in nature. Title is assumed to be good and marketable and in fee simple unless otherwise stated in the report. The property is considered to be free and clear of existing liens, easements, restrictions, and encumbrances, except as stated. 4. Unless otherwise stated herein, it is assumed there are no encroachments or violations of any zoning or other regulations affecting the subject property and the utilization of the land and improvements is within the boundaries or property lines of the property described and that there are no trespasses or encroachments. 5. Butler Burgher Group, Inc. assumes there are no private deed restrictions affecting the property which would limit the use of the subject property in any way. 6. It is assumed the subject property is not adversely affected by the potential of floods; unless otherwise stated herein. 7. It is assumed all water and sewer facilities (existing and proposed) are or will be in good working order and are or will be of sufficient size to adequately serve any proposed buildings. 8. Unless otherwise stated within the report, the depiction of the physical condition of the improvements described herein is based on visual inspection. No liability is assumed for the soundness of structural members since no engineering tests were conducted. No liability is assumed for the condition of mechanical equipment, plumbing, or electrical components, as complete tests were not made. No responsibility is assumed for hidden, unapparent or masked property conditions or characteristics that were not clearly apparent during our inspection. 9. If building improvements are present on the site, no significant evidence of termite damage or infestation was observed during our physical inspection, unless so stated in the report. No termite inspection report was available, unless so stated in the report. No responsibility is assumed for hidden damages or infestation. 10. Any proposed or incomplete improvements included in this report are assumed to be satisfactorily completed in a workmanlike manner or will be thus completed within a reasonable length of time according to plans and specifications submitted. 11. No responsibility is assumed for hidden defects or for conformity to specific governmental requirements, such as fire, building, safety, earthquake, or occupancy codes, except where specific professional or governmental inspections have been completed and reported in the appraisal report. 12. Responsible ownership and competent property management are assumed.

ADDENDA

13. The appraisers assume no responsibility for any changes in economic or physical conditions which occur following the effective date of value within this report that would influence or potentially affect the analyses, opinions, or conclusions in the report. Any subsequent changes are beyond the scope of the report. 14. The value estimates reported herein apply to the entire property. Any proration or division of the total into fractional interests will invalidate the value estimates, unless such proration or division of interests is set forth in the report. 15. Any division of the land and improvement values estimated herein is applicable only under the program of utilization shown. These separate valuations are invalidated by any other application. 16. Unless otherwise stated in the report, only the real property is considered, so no consideration is given to the value of personal property or equipment located on the premises or the costs of moving or relocating such personal property or equipment. 17. Unless otherwise stated, it is assumed that there are no subsurface oil, gas or other mineral deposits or subsurface rights of value involved in this appraisal, whether they are gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered; unless otherwise stated. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred. 18. Any projections of income and expenses, including the reversion at time of resale, are not predictions of the future. Rather, they are our best estimate of current market thinking of what future trends will be. No warranty or representation is made that these projections will materialize. The real estate market is constantly fluctuating and changing. It is not the task of an appraiser to estimate the conditions of a future real estate market, but rather to reflect what the investment community envisions for the future in terms of expectations of growth in rental rates, expenses, and supply and demand. The forecasts, projections, or operating estimates contained herein are based on current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changes with future conditions. 19. Unless subsoil opinions based upon engineering core borings were furnished, it is assumed there are no subsoil defects present, which would impair development of the land to its maximum permitted use or would render it more or less valuable. No responsibility is assumed for such conditions or for engineering which may be required to discover them. 20. Butler Burgher Group, Inc. representatives are not experts in determining the presence or absence of hazardous substances, defined as all hazardous or toxic materials, wastes, pollutants or contaminants (including, but not limited to, asbestos, PCB, UFFI, or other raw materials or chemicals) used in construction or otherwise present on the property. We assume no responsibility for the studies or analyses which would be required to determine the presence or absence of such substances or for loss as a result of the presence of such substances. Appraisers are not qualified to detect such substances. The client is urged to retain an expert in this field. 21. We are not experts in determining the habitat for protected or endangered species, including, but not limited to, animal or plant life (such as bald eagles, gophers, tortoises, etc.) that may be present on the property. We assume no responsibility for the studies or analyses which would be required to determine the presence or absence of such species or for loss as a result of the presence of such species. The appraiser hereby reserves the right to alter, amend, revise, or rescind any of the value opinions based upon any subsequent endangered species impact studies, research, and investigation that may be provided. 22. No environmental impact studies were either requested or made in conjunction with this analysis. The appraiser hereby reserves the right to alter, amend, revise, or rescind any of the value

ADDENDA

opinions based upon any subsequent environmental impact studies, research, and investigation that may be provided. 23. The appraisal is based on the premise that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in the report; further, that all applicable zoning, building, and use regulations and restrictions of all types have been complied with unless otherwise stated in the report; further, it is assumed that all required licenses, consents, permits, or other legislative or administrative authority, local, state, federal and/or private entity or organization have been or can be obtained or renewed for any use considered in the value estimate. 24. Neither all nor any part of the contents of this report or copy thereof, shall be conveyed to the public through advertising, public relations, news, sales, or any other media, without the prior written consent and approval of the appraisers. This limitation pertains to any valuation conclusions, the identity of the analyst or the firm and any reference to the professional organization of which the appraiser is affiliated or to the designations thereof. 25. Although the appraiser has made, insofar as is practical, every effort to verify as factual and true all information and data set forth in this report, no responsibility is assumed for the accuracy of any information furnished the appraiser either by the client or others. If for any reason, future investigations should prove any data to be in substantial variance with that presented in this report, the appraiser reserves the right to alter or change any or all analyses, opinions, or conclusions and/or estimates of value. 26. If this report has been prepared in a so-called “public non-disclosure” state, real estate sales prices and other data, such as rents, prices, and financing, are not a matter of public record. If this is such a “non-disclosure” state, although extensive effort has been expended to verify pertinent data with buyers, sellers, brokers, lenders, lessors, lessees, and other sources considered reliable, it has not always been possible to independently verify all significant facts. In these instances, the appraiser may have relied on verification obtained and reported by appraisers outside of our office. Also, as necessary, assumptions and adjustments have been made based on comparisons and analyses using data in the report and on interviews with market participants. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. 27. The American Disabilities Act (ADA) became effective January 26, 1992. The appraiser has not made a specific compliance survey or analysis of the property to determine whether or not it is in conformity with the various detailed requirements of ADA. It is possible that a compliance survey of the property and a detailed analysis of the requirements of the ADA would reveal that the property is not in compliance with one or more of the requirements of the act. If so, this fact could have a negative impact upon the value of the property. Since the appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of ADA was not considered in estimating the value of the property. 28. This appraisal report has been prepared for the exclusive benefit of the client. It may not be used or relied upon by any other party. Any other party who is not the identified client within this report who uses or relies upon any information in this report does so at their own risk. 29. The dollar amount of any value opinion herein rendered is based upon the purchasing power and price of the United States Dollar as of the effective date of value. This appraisal is based on market conditions existing as of the date of this appraisal. 30. The right is reserved by the appraiser to make adjustments to the analyses, opinions, and conclusions set forth in this report as may be required by consideration of additional or more reliable data that may become available. No change of this report shall be made by anyone other than the appraiser or appraisers. The appraiser(s) shall have no responsibility for any unauthorized change(s) to the report.

ADDENDA

31. If the client instructions to the appraiser were to inspect only the exterior of the improvements in the appraisal process, the physical attributes of the property were observed from the street(s) as of the inspection date of the appraisal. Physical characteristics of the property were obtained from tax assessment records, available plans, if any, descriptive information, and interviewing the client and other knowledgeable persons. It is assumed the interior of the subject property is consistent with the exterior conditions as observed and that other information relied upon is accurate. 32. The submission of this report constitutes completion of the services authorized. It is submitted on the condition the client will provide reasonable notice and customary compensation, including expert witness fees, relating to any subsequent required attendance at conferences, depositions, and judicial or administrative proceedings. In the event the appraiser is subpoenaed for either an appearance or a request to produce documents, a best effort will be made to notify the client immediately. The client has the sole responsibility for obtaining a protective order, providing legal instruction not to appear with the appraisal report and related work files and will answer all questions pertaining to the assignment, the preparation of the report, and the reasoning used to formulate the estimate of value. Unless paid in whole or in part by the party issuing the subpoena or by another party of interest in the matter, the client is responsible for all unpaid fees resulting from the appearance or production of documents regardless of who orders the work. 33. Use of this appraisal report constitutes acknowledgement and acceptance of the general assumptions and limiting conditions, special assumptions (if any), extraordinary assumptions (if any), and hypothetical conditions (if any) on which this estimate of market value is based. 34. If provided, the estimated insurable value is included at the request of the client and has not been performed by a qualified insurance agent or risk management underwriter. This cost estimate should not be solely relied upon for insurable value purposes. The appraisers are not familiar with the definition of insurable value from the insurance provider, the local governmental underwriting regulations, or the types of insurance coverage available. These factors can impact cost estimates and are beyond the scope of the intended use of this appraisal. The appraisers are not cost experts in cost estimating for insurance purposes.

ADDENDA

CERTIFICATION

The appraisers certify that:

1. Melissa P. Sohn has personally inspected and prepared the analysis concerning the real estate that is the subject of this appraisal report.

2. Joel Leitner, MAI, CRE, FRICS, has personally inspected the property and reviewed the analyses, opinions and conclusions concerning the real estate contained in this appraisal report and fully concurs with the final market value conclusion.

3. The statements of fact contained in this report are true and correct.

4. The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan.

5. The reported analysis, opinions and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, unbiased professional analyses, opinions and conclusions.

6. The undersigned have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

7. Our compensation is not contingent on an action or event resulting from the analysis, opinions or conclusions in, or the use of, this report.

8. Our analyses, opinions and conclusions were developed and this report has been prepared in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute.

9. No one provided significant professional assistance to the persons signing this appraisal report.

10. We have previously provided appraisal services on this property as of October 28, 2010, November 1, 2011, December 31, 2012, December 31, 2013, and December 31, 2014.

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

12. The undersigned’s engagement in this assignment was not contingent upon developing or reporting pre-determined results.

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

14. Joel Leitner, MAI, CRE, FRICS, is currently certified under the continuing education program of the Appraisal Institute. He is also certified by the State of New York as a General Real Estate Appraiser.

______Melissa Sohn Joel Leitner, MAI, CRE, FRICS Senior Appraiser Managing Director State Certified General Appraiser #RCG0001417 State Certified General Appraiser #RCG000.1050

ADDENDA

QUALIFICATIONS

ADDENDA

LICENSES

November 30th 2015

The Leser Group, Ltd. 1481 47th Street Brooklyn, NY 11219

Re: Valuation Report of Notes Secured by Office Building Located at 10 Norden Place

Dear Mr. Leser,

We confirm that we have given our full consent to the inclusion or reference of the valuation report of the above captioned loans (value date of 14th of August 2015) in its entirety within the Leser Group Ltd. financial statements to be published in the Tel Aviv stock Exchange in 2015. In addition, we confirm that we have given our full consent to the inclusion of this consent letter within the Leser Group Ltd. financial statements to be published in the Tel Aviv stock Exchange in 2015.

Yours Sincerely,

______Kenneth P. Riggs, Jr. President

APPRAISAL REPORT

As of August 14, 2015 APPRAISAL OF

Notes Secured by Office Building Located at 10 Norden Place Norwalk, Connecticut

Prepared for Mr. Abraham Leser

The Leser Group, Ltd. 1481 47th Street Brooklyn, NY 11219

Prepared by RERC

150 East 52nd Street, Suite 4002 New York, NY 10022 (212) 294-1376 www.rerc.com

RERC is an SEC-Registered Investment Advisor

COLLATERAL PHOTOS

Front of the Building

Rear of the Building

November 30, 2015

Mr. Abraham Leser The Leser Group, Ltd. 1481 47th Street Brooklyn, NY 11219

Re: Notes Secured by Office Building Located at 10 Norden Place

Dear Mr. Leser:

RERC provided valuation services (the “Services”) to The Leser Group, Ltd. (the “Company” or “Client”). Pursuant to our engagement agreement dated November 16, 2015, RERC has estimated a fair value of Notes A‐1 and A‐2 (collectively, the “Notes” or the “Loans”) secured by an office building located at 10 Norden Place in Norwalk, CT (the “Property” or the “Collateral”).

The purpose of this appraisal report is to estimate the fair value of the Notes. The effective date of value is August 14, 2015, with the date of report being November 30, 2015.

The appraisal is performed for financial reporting purposes in accordance of IFRS 13, Fair Value Measurement.

This document is an appraisal report that complies with the reporting requirements set forth in Standards Rule 10 of the Uniform Standards of Professional Appraisal Practice (USPAP). The following report identifies the Collateral, summarizes the terms of the Notes, data gathered in our investigation, and the methods of our analysis. In addition, the report lists our assumptions and describes the limiting conditions under which our value opinion has been made.

This appraisal has been conducted to conform to USPAP as promulgated by the Appraisal Foundation and the Code of Professional Ethics of the Appraisal Institute.

November 30, 2015 Mr. Leser Page 2 Based on our research and analysis, and subject to the assumptions and limiting conditions described in the accompanying report, it is our opinion that the fair value estimate of the Notes, as of August 14, 2015 is as follows:

$15,200,000

The above fair value estimate assumes that the Notes will be sold together to one buyer.

Based on our agreement with the Client, the Company provided RERC with an estimate of fair value of the Collateral and RERC relied on that estimate in its analysis of the Loans. RERC did not directly or indirectly verify the accuracy or reasonableness of the fair value estimate of the Collateral. The estimate of the fair value of the Collateral is the ultimate responsibility of the Company not RERC. If the fair value of the Collateral turns out to be materially different than what was represented by the Client, our fair value estimate for the Notes might be impacted.

In addition, we relied on the information provided by the Client’s Lawyer relating to the interpretation of the legal documents which outline the behavior of the Notes. We are not legal experts and if information provided by the Client’s Lawyer during our discussion turns out to be materially different than what was represented by the Client’s Lawyer, our fair value estimate for the Notes might be impacted.

The above estimate is subject to certification, standard conditions, special conditions and significant issues.

The accompanying analyses are based on estimates and assumptions developed in connection with the appraisal. Some assumptions, however, inevitably may not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our prospective financial analysis may vary from our estimates. These variations may be material. RERC has not been engaged to evaluate the effectiveness of management. RERC is not responsible for future marketing efforts and other ownership actions upon which actual results will depend.

This report and its contents are intended solely for your information and assistance for the function stated above, and should not be relied upon for any other purpose. Neither our report nor any of its contents, nor any reference to the appraisers or our firm, may be included or quoted in any offering circular or registration statement, prospectus, sales brochure, other appraisal, or any other document without RERC’s prior written approval of the form and context in which it will appear.

November 30, 2015 Mr. Leser Page 3 RERC appreciates this opportunity to be of service to you. If you have any questions or comments about this report, please do not hesitate to call us.

Respectfully submitted,

RERC

______Lev Yagudayev, MAI Director, Northeast Practice Leader 152 East 52nd Street, Suite 4002 New York, NY 10022 [email protected] 212.294.1376

TABLE OF CONTENTS

TABLE OF CONTENTS ...... I

INTRODUCTION ...... 6

CAPITAL MARKETS OVERVIEW ...... 14

VALUATION METHODOLOGY ...... 18

INCOME APPROACH ...... 19

CERTIFICATION ...... 23

ADDENDA ...... 24

ADDENDA

Assumptions and Limiting Conditions Client Provided Documents Qualifications

INTRODUCTION

LOAN IDENTIFICATION

The two tables below provide a summary of certain terms for Note A‐1 and Note A‐2 which are part of our analysis.

10 Norden Place: Note A-1 Summary Note Date: 8/14/2015 Borrower: Norwalk Center, LLC Lender: NP Note Acquistion LLC Note Split Date: 8/14/2015 Note Amount at Split Date: $17,500,000 Note Maturity Date: 8/14/2020 Extension Options: None Recourse: Non-Recourse Annual Interest Rate: 10.00% Interest and Principal Payment Dates: Interest Only, Paid Monthly Liens: First Mortgage Source: Promissory Note A-1 dated August 14, 2015.

10 Norden Place: Note A-2 Summary Borrower: Norwalk Center, LLC Lender: NP Note Acquistion LLC Note Split Date: 8/14/2015 Note Amount at Split Date: $54,854,156 Note Maturity Date - No Rezoning of the Property [1]: 8/14/2025 Note Maturity Date - Rezoning of the Property Occures: 10 Years Follow Effective Date of Rezoning Extension Options: None Recourse: Non-Recourse Annual Interest Rate: 2.67% Interest and Principal Payment Dates [2]: See below Liens: First Mortgage Source: Promissory Note A-2 dated August 14, 2015. [1] Rezoning of the Property shall mean that the zoning of the Property has been reclassified by the appropriate Governmental Authorities to permit the development on the Property of at least two hundred and fifty (250) residential dwelling units (as reasonably determined by Lender). [2] "Interest only", and only out of available cash flow from the operation of the property and debt service of Note A‐ 1 (so that in fact ‐ up until the Rezoning of the property ‐ the interest will be accrued and not paid regularly); So long as no Event of Default has occurred and is continuing payment of any excess amounts (“Excess Cash Flow”) shall be paid as follows: (A) at any time prior to the Rezoning of the Property, to Borrower; and (B) at any time from and after the Rezoning of the Property, (I) first, to the members of Borrower and any third‐party investors that have contributed New Capital to the Borrower until such time as such members and third party investors, if any, have received a fifteen percent (15%) IRR on such New Capital, (II) second, to Lender to pay for all accrued and unpaid interest due and payable under Note A‐2, and (III) third, seventy‐five percent (75%) to Borrower, and twenty‐five percent (25%) to Lender for the payment of principal due under Note A‐2.

INTRODUCTION

COLLATERAL OVERVIEW

Physical Description: The Collateral consists of a two‐story, plus basement, Class B/C office and industrial building which was constructed in 1960 with an addition in 1968. The building contains approximately 615,000 square feet of leasable area and is situated on approximately 37 acres of land. According to the Client, the Collateral is approximately 31% occupied with approximately 425,000 square feet of vacant space. Northorp Grumman previously occupied approximately 320,000 square feet, however they moved out of the building in December 2014.

The Client provided us with an appraisal of the Collateral (the “Collateral Appraisal”) which was prepared by Butler Burgher Group, Inc., which estimated the value of the Collateral as of September 30, 2015 to be $69,500,000. We note that based on the Scope of Work agreed with the Client as outlined in our Engagement Agreement dated November 16, 2015, the Company will provide RERC with an estimate of fair value of the Collateral and RERC will rely on that estimate in its analysis of the Loans. RERC will not directly or indirectly verify the accuracy or reasonableness of the fair value estimate of the Collateral. The estimate of the fair value of the Collateral is the ultimate responsibility of the Company not RERC.

Financial Operation: The following chart presents year‐to‐date operating history as of September 30, 2015, as well as annualized figures.

Property Historical Operating History

YTD September 2015 PSF Annualized 2015 PSF Effective Gross Income $4,508,543 $7.33 $6,011,391 $9.77 Operating Expenses $3,713,303 $6.03 $4,951,071 $8.05 Net Operating Income [1] $795,240 $1.30 $1,060,320 $1.72

Notes: Source: Documents provided by the Client. [1] Does not include management fees, replacement reserves, and does not account for leasing costs (TI's & LC's) to maintain the Property at the current occupancy.

As can be seem in the chart above, at its current condition the Property generates very low net operating income (less than $2.00 per square foot). Further adjustment for management fees and replacement reserves, typical line items which are not accounted for in the chart above, and expected additional vacancy in the coming years (for example: Katherine Gibbs School which leases approximately 65,000 square feet however does not occupy the space), coupled with very limited to no prospects for new tenants, no net operating income, and potentially negative cash flow, are expected in the coming years.

INTRODUCTION

BACKGROUND RELATED TO THE NOTES

The Company (also the Borrower for the purposes of the Loans) acquired the Property in December 2005 for approximately $87,000,000. To facilitate this acquisition, on December 8, 2005 the Borrower obtained a mortgage loan (the “Original Loan”) from Column Financial Inc. (the “Original Lender”) in the principle amount of $76,800,000, as evident by a promissory note dated as of December 8, 2005, made by the Borrower in favor of Original Lender in the original principal amount of the Loan (the “Original Note”). The Original Loan carried an interest rate of 5.51% and had a maturity date in January 2016. The Original Loan was later assigned to Wells Fargo Bank, N.A., as trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass‐Through Certificates, Series 2006‐C3 (the “Seller”).

Following Northorp Grumman move out from the Property in December 2014, the Borrower reportedly defaulted on the Original Loan, and in August 14, 2015 the Original Loan was sold to a third party (NP Note Acquisition LLC or the “New Lender”) for $17,500,000. The outstanding balance of the Original Loan as of the date of sale was $72,354,156. It is our understanding that the Company provided a $3 million loan to a principle of the New Lender for the acquisition of the Original Note.

Concurrently with this sale, the Borrower and the New Lender have agreed that the Original Note shall be split into two promissory notes together representing the outstanding principal balance of the Original Loan as of the date of the sale. The first note, referred to as Note A‐1, is in the stated principal amount of $17,500,000 and the second note, referred to as Note A‐2, is in the stated principal amount of $54,854,156. The terms of the Notes were summarized in the Loan Identification Section above.

We note that, upon reading the Notes and based on our discussion with the lawyer who wrote the notes (Naftali Weg of DLA Piper, the “Lawyer”), both Notes are collateralized by the same mortgage and there is no subordination of any of the Notes to the other in a liquidation event. Further, based on our discussion with the Lawyer, while not specified in the Notes, it is expected that any proceeds received in a liquidation event will be divided pro‐rata between Note A‐1 and Note A‐2.

NATURE AND SCOPE OF THE ASSIGNMENT

The objective of this appraisal is estimate a fair value of the Notes, as of the effective date of value (August 14, 2015).

In preparing this appraisal, we performed an analysis of the current lending environment and the transaction market. We reviewed information provided by the Client to understand the Notes, the Property and its characteristics. We performed research relevant to our analysis which included collecting financial information, market data, and other relevant information on the Loan and the Property.

INTRODUCTION

This report contains descriptions of the Notes and the Property which secures the Notes, focuses on likely future trends in market conditions. The report also contains a discussion of the methodology and assumptions used to estimate the fair value of the Notes. The data used in this report have been confirmed to the extent appropriate, unless otherwise expressly noted.

There are three main aspects to the development and reporting of this appraisal. First, there are certain necessary procedures that were followed to arrive at a credible value estimate. Second, the report scope and content reflects the specific needs of the client. In other words, certain procedures and analyses may have been included or excluded to the extent that they were requested by the client and did not prevent a credible value estimate from being reported. Lastly, there is a type of report, or level of detail, in which the appraisal has been communicated.

A representative of the Client provided us with an estimate of fair value for the Property. We used this estimate in our analysis to estimate the fair value of the Notes. Pursuant to our engagement agreement dated November 16, 2015, estimating the Property fair value is the responsibility of the Client, not RERC. RERC will not directly or indirectly verify the accuracy or reasonableness of the fair value estimate of the Collateral.

Appraisal Procedures and Analysis: The checklist below summarizes the procedures and analysis performed in conjunction with this appraisal assignment and deemed necessary in order to arrive at a credible fair value estimate for the Loans, as of the effective date of fair value.

INTRODUCTION

Procedure/Analysis Yes No N/A Researched regional, city, and neighborhood data. X Researched market trends (i.e. inventory, vacancy, absorption, new construction, etc.) for the subject property type. X Researched the current lending environment. Considered relevant comparable improved sales, comparable improved building rental information, and comparable site X sales. Analyzed site data. X Reviewed data regarding taxes, zoning, utilities, easements, X and city services that impact the subject property. [1] Analyzed information pertaining to any physical X improvements located on the subject site. Physically visited and observed the subject property and its X surrounding market area. Determined the Highest and Best Use of the site as vacant and X as currently improved. Performed an Income Capitalization Approach to estimate the X fair value of the Loans. Performed a Sales Comparison Approach to estimate the fair X value of the Loans. Performed a Cost Approach to estimate the fair value of the X Loans. Determined the approach or approaches to value that are most reliable and reconciled to a final value conclusion for the X Loan. Estimated the fair value of the Property. X Determined reasonable exposure time associated with the X concluded fair value. [1] Held a discussion with the Borrower's rezoning attorney

Client Provided Information: As part of this analysis, the Client provided RERC with the following information:

 Note Splitter and Loan Modification Agreement, dated August 14, 2015;  Promissory Note A‐1, dated August 14, 2015;  Promissory Note A‐2, dated August 14, 2015;  Immediate Report to the Tel Aviv Stock Exchange Ltd, Dated August 17, 2015; and  The Collateral Appraisal.

In addition, as part of this assignment we spoke to the following individuals associated with the Client:

INTRODUCTION

List of Contacts Name Company Title Avrumie Furst The Leser Group Director Jonathan Landau Fortis Property Group CEO Alex Czertok Fortis Property Group Property Manager Naftali Weg DLA Piper Partner Frank Zullo Tierney, Zullo, Flaherty & Murphy P.C. Zoning Attorney Jodie Dostal Cushman and Wakefield of Connecticut Senior Director

We relied on information provided by the Client and by the contacts listed above relating to the Notes and the Property, and we did not verify the accuracy of such information.

DEFINITION OF VALUE

For financial reporting purposes, the type of value is fair value. Fair value is defined by IFRS 13, Fair Value Measurement, as the “price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”.

INTENDED USER

As specified in the engagement agreement between RERC and The Leser Group, Ltd. dated November 16, 2015, the Services (defined in the engagement agreement) and the Report (defined in the engagement agreement) are for the use and benefit of, and may be relied upon solely by the The Leser Group, Ltd. (the “Company”), and its Affiliates (defined in the engagement agreement). The Report shall remain confidential, but for the purposes of its Intended Use (defined in the engagement agreement), RERC understands that the Report will be disclosed to the following: a. Independent auditors, accountants, attorneys and other professionals acting on behalf of the Company its Affiliates; b. Governmental agencies having regulatory authority over the Company, and its Affiliates; c. Designated persons pursuant to an order or legal process of any court or governmental agency having jurisdiction over the Company, and its Affiliates;

RERC understands that the Report is to be used to aid The Leser Group, Ltd. and its Affiliates in the preparation of Financial Statements for the The Leser Group, Ltd. The Report is to be used in whole and not in part. No part of the Report shall be used in conjunction with any other analysis. Except as otherwise stated herein, the Report may not be used by any person other than the parties to whom it is addressed or for purposes other than that for which it was prepared. No part of the Report shall be conveyed to the public through advertising, or used in any sales, promotion, offering or SEC material without RERC’s prior written consent.

INTRODUCTION

In providing any consent RERC will note that an appraisal: (1) is an estimate of value as of a point in time, (2) is not a guarantee of financial results, (3) is not a due diligence document beyond the estimate of value. No matter the care exercised, the results achieved in an actual transaction may be different than the appraisal results, as the appraisal is an estimate of value. Any opinion of value is inherently subjective and the results speculative, as they are based on information available at the time the value opinion was being prepared, and are influenced by matters relating to operations, projections of the future, as well as the appraisers’ interpretation of the market. As such, relying on an appraisal is subject to risks and uncertainties. The appraisal report is prepared for the specifically identified use and user and not intended, permitted, nor appropriate to be relied on for other uses or by other users. The reader and user must rely on their own due diligence and analysis of the subject property in evaluating the overall security transaction, and not rely on the appraisal for their final decision making. In addition, the reader and user is/are encouraged to refer to the definition of fair value (defined in the previous paragraph).

OWNERSHIP HISTORY

Notes History: The New Lender (NP Note Acquisition LLC) acquired the Original Loan on August 14, 2017 for $17,500,000. The outstanding balance of the Original Loan as of the date of sale was $72,354,156.

We are not aware of any other transactions involving the Property or the Loans within the past three years. The Property or the Loans are not currently being marketed for sale.

LIMITING CONDITIONS AND ASSUMPTIONS

This valuation report is subject to the general limiting conditions as well as the general and specific assumptions stated herein. Your attention is directed to the list of general and specific limiting conditions and assumptions contained in the Addenda of this report, as they are an integral part of the valuation process and value conclusions.

SPECIFIC CONDITIONS

As already indicated, based on our agreement with the Client, the Company provided RERC with an estimate of fair value of the Collateral and RERC relied on that estimate in its analysis of the Loans. RERC did not directly or indirectly verify the accuracy or reasonableness of the fair value estimate of the Collateral. The estimate of the fair value of the Collateral is the ultimate

INTRODUCTION responsibility of the Company not RERC. If the fair value of the Collateral turns out to be materially different than what was represented by the Client, our fair value estimate for the Notes might be impacted.

CAPITAL MARKETS OVERVIEW

As we look ahead to commercial real estate expectations for 2016, there is a sense that the risk for commercial real estate has increased. The Federal Reserve has noted the rapid increase in property prices in 2015 and has expressed its concern about the financial stability of the sector, especially when interest rates begin to increase. Investors have noted the similarity in pricing trends to those seen in 2007 and wonder if we are currently in a bubble.

In Situs RERC’s Fall 2015 Real Estate Report, survey respondents gave commercial real estate the highest rating among the investment alternatives, though it declined slightly to 6.6 on a scale of 1 to 10, with 10 being excellent, in the third quarter 2015 (see table below). According to respondents, relatively strong fundamentals and “the inflow of foreign capital and increasing employment and consumer confidence that would support commercial real estate” were the key reasons why. However, this was the lowest rating for commercial real estate in nearly two years. Likewise, the rating for stocks decreased to 5.0 (the lowest rating in nearly four years). In comparison, the rating for cash further increased to 4.6, the highest rating in more than five years, and the rating for bonds increased to 3.8.

Investment Ratings 3Q 2015 2Q 2015 1Q 2015 4Q 2014 3Q 2014 2Q 2014 Stocks 5.0 5.1 5.5 5.4 5.5 5.2 Bonds 3.8 3.7 3.6 3.6 3.7 4.0 Commercial Real Estate 6.6 6.7 6.7 7.0 6.8 6.8 Cash 4.6 4.4 3.8 4.0 4.2 3.9 Source: RERC 3Q 2015 Investment Survey Ratings are based on a scale of 1 to 10, with 10 being high

While third quarter 2015 performance reflects losses in the more volatile financial sectors (including the major stock market indices), other returns serve as “safe harbor” investments (including private equity real estate and 10‐year Treasuries) and we can expect rational perform‐ ance. The table below illustrates required yields for commercial real estate compared to corporate bonds and treasuries:

CAPITAL MARKETS OVERVIEW

Required Real Estate Yields vis-à-vis Capital Market Returns 3Q 2015 2Q 2015 3Q 2014 3Q 2014 3Q 2012 3Q 2011 Real Estate Yield (%) 7.9 7.9 8.1 8.4 8.8 8.8 Moody’s Baa Corporate (%) 5.2 4.8 4.7 5.4 4.9 5.5 Moody’s Aaa Corporate (%) 4.1 3.9 4.1 4.5 3.5 4.6 10-Year Treasuries (%) 2.2 2.2 2.5 2.7 1.6 2.6 Yield Spread (percentage points) Moody’s Baa Corporate (%) 2.7 3.1 3.4 3.0 3.9 3.3 Moody’s Aaa Corporate (%) 3.8 4.0 4.0 3.9 5.3 4.2 10-Year Treasuries (%) 5.7 5.7 5.6 5.7 7.2 6.2 Sources: RERC Investment Survey, Federal Reserve. Total transaction volume declined to approximately $115 billion in third quarter 2015, according to Real Capital Analytics (RCA). Although second quarter’s transaction volume was revised upwards to nearly $123 billion, this is the second consecutive quarter with declining volume. In addition, third quarter volume for each of the individual property sectors decreased from the previous quarter, with the exception of the apartment sector volume, which increased slightly.

According to Real Capital Analytics, the transaction cap rate in 2Q 2015 was 6.29%, a slight decrease while the transaction volume has slowed.

CAPITAL MARKETS OVERVIEW

Real estate yields are connected to the capital markets and traditional assets classes (stocks and bonds), which has contributed to the competitiveness in real estate underwriting and in lowering return requirements over the past couple of years. Starting in 3Q 2015, there is a notable shift in the lender composition for the year. While CMBS leads the lending share, they are closely followed by Government Agencies, National Banks, and Insurance Companies. CMBS had been taking a larger share each year since the recession, until 3Q 2015.

Total loans outstanding for commercial real estate increased to $3.48 trillion in second quarter 2015, an increase of 1.66 percent over the previous quarter, according to the Federal Reserve’s

CAPITAL MARKETS OVERVIEW

Flow of Funds. Commercial/multifamily originations were 3 percent higher in third quarter 2015 compared to second quarter, according to the Mortgage Bankers Association (MBA). Originations in the office sector increased 37 percent and 27 percent in the retail sector. However, there was a 1‐percent decrease in originations for industrial properties, an 8‐percent decrease for multifamily properties, and a 29‐percent decrease for hotel properties compared to the previous quarter.

Looking forward, Situs RERC views that the federal funds rate and the London interbank offered rate (LIBOR) will continue to track fairly closely over the next five years.

Situs RERC’s consensus is that a zero‐percent short‐term interest rate policy will continue to be predominant over the next three years. The Federal Reserve will need to keep their 2‐percent inflation target (their preferred measure) in sight before they consider a “meaningful” increase, and some economists consider this to be several years out.

After the Federal Reserve’s decision in September 2015 to maintain the status quo, many economists believe that there will not be even a slight rate increase until 2016, although stronger job growth numbers in October 2015 have increased the possibility that the Federal Reserve may raise the federal funds rate at their December 2015 meeting.

Many pundits do not believe the Federal Reserve will begin increasing short‐term interest rates much over the next 12 months, given the anticipated effect on the stock market and the fact that 2016 is an election year. Situs RERC’s institutional investment survey respondents predict that 10‐year Treasury rates will average 2.40 percent over the next 6 months and 2.69 percent over the next 12 months.

Situs RERC’s third quarter 2015 institutional investment survey respondents said that when the federal funds rate does begin to increase, the main concerns associated with commercial real estate are: debt refinancing, increasing cap rates, less interest from foreign investors, capital to be concentrated in cash, Increasing importance of net operating income (NOI), and potential decline in value.

VALUATION METHODOLOGY

We considered and evaluated the three traditional approached to value the Loans: income capitalization, market comparison, and cost. We relied on the income approach to value, because we believe (1) it is appropriate for the valuation analysis and (2) sufficient information was available for its use. We did not rely upon the market and cost approaches because we did not consider them to be applicable to the analysis.

The three approaches are defined briefly as follows:

Cost Approach. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (often referred to as current replacement cost). From the perspective of a market participant (seller), the price that would be received for the asset is determined based on the cost to a market participant (buyer) to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence. Obsolescence encompasses physical deterioration, functional (technological) obsolescence, and economic (external) obsolescence and is broader than depreciation for financial reporting purposes (an allocation of 1 historical cost) or tax purposes (based on specified service lives).

1Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures

Market Approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering factors specific to the measurement (qualitative and quantitative). Valuation techniques consistent with the market approach include matrix pricing. Matrix pricing is a mathematical technique used principally to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on 2 the securities’ relationship to other benchmark quoted securities.

2Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures

Income Approach. The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. Those valuation techniques include present value techniques; option‐pricing models, such as the Black‐Scholes‐Merton formula (a closed‐form model) and a binomial model (a lattice model), which incorporate present value techniques; and the multiperiod excess 3 earnings method, which is used to measure the fair value of certain intangible assets.

3Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures

INCOME APPROACH

NOTE A‐1

Background: Based on our discussions with several market participants active in acquiring, managing and selling notes collateralized by real estate, the following baseline assumptions would be made in pricing Note A‐1 in a hypothetical transaction:

1. Considering that there is no inter‐creditor agreement between Note A‐1 and Note A‐2 and Note A‐2 is not subordinate to Note A‐1 in a Property disposition, or liquidation, or foreclosure events, Note A‐1 will not be acquired without the acquirer obtaining control over Note A‐2 as well. As such, it is an assumption of this appraisal that the Notes will be sold together to one buyer.

2. Considering that the Property does not generate and is not expected to generate positive cash flow sufficient to serve the debt in the near to medium future, as well as the fact that the Notes do not provide for interest reserves funds, a potential buyer would assume a foreclosure on the Property immediately after acquisition.

Accordingly, our income analysis assumes a foreclosure scenario with the following assumptions:

Foreclosure Timing and Costs: The time it takes to foreclose on a property depends on many factors, most importantly being the type of foreclosure process (judicial vs. non‐judicial) required by the state in which the property is located. According to market participants, typical assumptions range from 6 months to 24 months. The State of Connecticut is strictly a judicial foreclosure state, implying a lengthy foreclosure procedure. Based on discussions market participants, we assumed a foreclosure timeframe of 12 months. Further, based on discussions with market participants, costs associated with the foreclosure process are typically assumed at $15,000 per month (with anywhere between $100,000 and $200,000 for the entire period). Accordingly, we assumed $15,000 per month, which sums up to $180,000 in foreclosure costs over the assumed 12 months foreclosure period.

Marketing period and Carrying Costs: Considering the Property’s location, current level of operation, and the limited tenancy prospects, market participants indicated that for the purpose of valuing Note A‐1, a lengthy marketing time of at least three years would be assumed (from the date the property is foreclosed on to the date of sale). During this period, carrying costs associated with operating the property would typically be assumed (taxes, insurance, utilities), offset by any projected rental revenue.

Considering the Property’s 2015 financials, we assumed a three year marketing time during which the entire carrying costs would be offset by revenue from the property.

INCOME APPROACH

Sale Price and Selling Expenses: Based on our discussions with market participants, estimating a sale price at the end of the marketing period would be done very conservatively, through a heavy discount of around 50% of a current appraisal value estimate and potentially an additional “haircut” of up to 20% to 30%, or a discounted broker’s opinion of value. Market participants also indicated that selling costs of at least 5% would be applied.

Accordingly, we assumed a sale price range of 40% (scenario 1) to 55% (scenario 2) discount to the current Client provided appraised value of $69,500,000 (55% discount was calculated by an additional “haircut” of 25% to the discount appraised value), and 5% selling costs.

Discount Rate (Required IRR): To estimate the discount rate for this investment we interviewed market participants and considered rates of returns published by Real Estate Alert. Market participants indicated a discount rate range of 20% to 25% that would be used within the scenarios described above. According to the March 2015 Real Estate Alert Survey (latest available), opportunistic investors which invest in distressed debt target returns of at least 16% and high‐yield debt investors which invest in distressed debt target returns of at least 13%.

Accordingly, we assumed a 25% discount rate in scenario 1 (smaller discount to appraised value), and a 20% discount rate in scenario 2 (larger discount to appraised value).

Summary of Assumptions: The following table summarizes our income approach assumptions.

Assumptions Foreclosure: Months Quarters Foreclosure Timing 12 4 Foreclosure Costs $15,000 $45,000

Carrying Period: Carrying Costs $0 $0 Liquidation Period 36 12

Scenario 1 Scenario 2 Liquidation: Apprasial Value $69,500,000 $69,500,000 Discount To Appraisal 40.0% 55.0% Selling Costs 5% 5%

Discount Rate (Annual): 25.0% 20.0%

Our flow analysis is presented in the following table.

INCOME APPROACH

Analysis Year 1111222233334444 Analysis Quarter 12345678910111213141516

Property Cash Flow $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Scenario 1: Foreclosure Costs ($45,000) ($45,000) ($45,000) ($45,000) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Carrying Costs $0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0 Sales Proceeds ------$41,700,000 Sales Costs ------($2,085,000) Net Sales Proceeds ------$39,615,000 Net Cash Flow ($45,000) ($45,000) ($45,000) ($45,000) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $39,615,000

Discount Factor 0.9457 0.8944 0.8459 0.8000 0.7566 0.7155 0.6767 0.6400 0.6053 0.5724 0.5414 0.5120 0.4842 0.4579 0.4331 0.4096 Net Cash Flow - Discounted ($42,558) ($40,249) ($38,065) ($36,000) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $16,226,304 Net Present Value $16,069,431 Net Present Value (Rounded) $16,100,000

Scenario 2: Foreclosure Costs ($45,000) ($45,000) ($45,000) ($45,000) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Carrying Costs $0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0 Sales Proceeds ------$31,275,000 Sales Costs ------($1,563,750) Net Sales Proceeds ------$29,711,250 Net Cash Flow ($45,000) ($45,000) ($45,000) ($45,000) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $29,711,250

Discount Factor 0.9554 0.9129 0.8722 0.8333 0.7962 0.7607 0.7268 0.6944 0.6635 0.6339 0.6057 0.5787 0.5529 0.5283 0.5047 0.4823 Net Cash Flow - Discounted ($42,995) ($41,079) ($39,249) ($37,500) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $14,328,342 Net Present Value $14,167,519 Net Present Value (Rounded) $14,200,000

Min Max Average Value Range $14,200,000 $16,100,000 $15,150,000 Value Conclusion $15,200,000 % Par 86.9%

INCOME APPROACH

Final Fair Value Conclusion Note A‐1: Based on the analysis presented above, we concluded a fair value of $15,200,000 for Note A‐1. As noted earlier in the report, this value conclusion assumes that Note A‐1 buyer also obtain control over Note A‐2.

NOTE A‐2

In the Immediate Report released by the Company notifying the public about the restructuring of the Original Loan, the Company’s management indicated that it “estimates that the likelihood of Note A‐2's principle to be repaid either in full or in part is low, taking into account the repayment terms of this note.” Please refer to the Addenda for a copy of the Immediate Report released by the Company.

Upon reading the Note‐Splitter and Loan Modification Agreement, as well as Promissory Note A‐ 2, and based on discussions with market participants, this Note is essentially a “hope note” with very slim likelihood of generating any future cash flow, and as such any scenario that would result in a cash flow to a Note A‐2 holder would commend an extremely high IRR (at least 50%) which would be considered too risky, even by the most aggressive troubled debt investors.

Final Fair Value Conclusion Note A‐2: As such, market participant indicated that they would not be willing to pay anything for Note A‐2, and accordingly we concluded a value of $0 for Note A‐ 2.

The above fair value estimates for Note A‐1 and Note A‐2, assume that the Notes will be sold together to one buyer.

CERTIFICATION

I certify that, to the best of my 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 limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. ‐ I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. ‐ I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. ‐ My engagement in this assignment was not contingent upon developing or reporting predetermined results. ‐ My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. ‐ Lev Yagudayev visited and toured the property that is the collateral to subject of this report on November 24, 2015. ‐ Roiy Guy provided real property appraisal assistance to the persons signing this certification. He assisted in the research and collection of data and the preparation of the appraisal report. ‐ The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, which includes the Uniform Standards of Professional Appraisal Practice. ‐ The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. ‐ I have not performed a previous appraisal of the Loans within the three years prior to this assignment. ‐ As of the date of this report, Lev Yagudayev, MAI has completed the requirements of the continuing education program of the Appraisal Institute.

RERC

______Lev Yagudayev, MAI Director, Northeast Practice Leader 152 East 52nd Street, Suite 4002 New York, NY 10022 [email protected] 212.294.1376

ADDENDA

ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal report has been based on, and is subject to, the following general assumptions and limiting conditions:

 The value reported is only applicable to the purpose, function, and terms stated in this report and shall not be used for any other purpose.  The appraisers have assumed that the reader(s) of this report is well versed in real estate and is a sophisticated and knowledgeable business person(s).  No responsibility is assumed for the legal description provided or for matters pertaining to legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report.  Responsible ownership and competent property management are assumed.  The information furnished by others is believed to be reliable, but no warranty is given for its accuracy.  All engineering studies are assumed to be correct. The plot plans and illustrative material in this report are included only to help the reader visualize the property.  It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them.  It is assumed that the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described and considered in the appraisal report. It is assumed that all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based.  It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless nonconformity has been identified, described and considered in the appraisal report.  The appraisers shall not be required to give testimony as a witness or to appear in any capacity in any legal or administrative hearing or procedure, or to have any continued service responsibility unless compensated, by the engager of this report, in advance, according to their fee schedule then in effect.  Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such material on or in the property. The appraiser, however is not qualified to detect such substances. The presence of substances such as asbestos, urea‐formaldehyde foam insulation, and other potentially hazardous materials may affect the value of the property. The value estimated is predicated on the assumption

ADDENDA

that there are no such material on or in the property that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.  The Appraisers are not engineers, no warranties are made by references to physical property characteristics in terms of quality, condition, cost, suitability, soil conditions, flood risk, obsolescence, etc., and no liability is assumed for any engineering‐related issues.  Possession of this report or a copy thereof does not imply right of publication, nor use for any purpose by any other than the person to whom it is addressed, without the written consent of Real Estate Research Corporation.  The liability of RERC, and its employees is limited to the client. This appraisal was prepared specifically for our client, to whom this appraisal was addressed.  The Client acknowledges that RERC is a corporation and agrees that any claim made by the Client arising out of any act or omission of any director, officer, agent, or employee of RERC, in the execution or performance of its contractual or professional responsibilities shall be made solely against RERC in its corporate capacity and not against any such director, officer, agent or employee.  Cash flow projections are forecasts of estimated future operating characteristics and are predicated on the information and assumptions contained within the appraisal report. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may well vary from the projections contained herein. The appraisers do not warrant that these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of the appraisers. The appraisers are not trying to forecast the future but rather are attempting to replicate techniques utilized by market participants for properties similar to the subject.  The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements for the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non‐compliance with the requirements of the ADA in estimating the value of the property.

ADDENDA

Note Splitter and Loan Modification Agreement

any distributions from the Lockbox Account unless (i) such distributions are requested by Lender in writing, and (ii) Borrower has obtained each of Lender’s and Taconic’s prior written consent thereto (such consent to be given or withheld in each of Taconic’s and Lender’s sole and absolute discretion), in which case, Borrower shall do or cause to be done all actions required to effect such requested distribution. The Borrower hereby agrees that upon receipt of the Cash Management Notice, Borrower shall comply with the terms set forth in Section 2.7 of the Loan Agreement, including, if applicable, by delivering to all tenants new written directions instructing such tenants to deliver all Rents into the Lockbox Account. The parties hereto agree that Taconic is a third-party beneficiary of the covenants set forth in this Section 14 and that any breach of such covenants shall entitle Taconic to enforce its rights (in both equity and in law) with respect thereof as an explicit third party beneficiary of this Section 14.

For the purposes of this Section 14, the following definitions shall apply:

“Taconic Lockbox Account” shall mean an account acceptable to Taconic

“Cash Management Notice” shall mean written notice delivered by Taconic to Borrower, and acknowledged by Lender, confirming that: (a) the New Cash Management Provisions are no longer in effect; and (b) the provisions set forth in Section 2.7 of the Loan Agreement have been reinstated and are in full force and effect as of the date of such written notice.

15. All references in any of the Loan Documents from and after the date hereof to the term “Note” shall mean the Note, as that defined term contained in Article 1 of the Loan Agreement has been amended on the date hereof pursuant to this Agreement.

16. Borrower represents, warrants and covenants that there are no offsets, counterclaims or defenses against the Debt, this Agreement, the Loan Agreement, the Mortgage Deed or the Replacement Notes arising solely by reason of entering into this Agreement.

17. Borrower represents, warrants and covenants that Borrower (and the undersigned representative of Borrower) has the full power, authority and legal right to execute this Agreement and to keep and observe all of the terms of this Agreement on its part to be observed or performed.

18. All references in the Loan Documents to the Loan Agreement shall mean the Loan Agreement as hereby modified.

19. As amended by this Agreement, all terms, covenants and provisions of the Loan Agreement are ratified and confirmed and shall remain in full force and effect as first written.

20. This Agreement may not be modified, amended, changed or terminated orally, but only by an agreement in writing signed by the party against whom the enforcement of the modification, amendment, change or termination is sought.

21. This Agreement shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and permitted assigns.

EAST\102261573.4 6

ADDENDA

Promissory Note A‐1

ADDENDA

Promissory Note A‐2

ADDENDA

TASE – Immediate

The Leser Group Ltd. ("the Company")

The Securities Authority Tel Aviv Stock Exchange Ltd. www.isa.gov.il www.tase.co.il

August 17, 2015

Re: Immediate Report

Further to the content of Section 8.4.3 of Chapter A, "Description of the Company's Business" in the Company's periodic report for 20141 regarding the departure of the main tenant of the Connecticut property2 (hereinafter: the "Property") without exercising the extension option and further to the content of Section 5 in Part I of the report of the Company's board of directors of March 31, 20153 regarding the management's examination of alternatives for stabilizing the property, the Company respectfully informs that on August 17, 2015 the senior debt that was made available to the associate company (Company's share – 49.99%4) and which was secured with a first mortgage on its rights in the property was restructured, all as set forth hereunder.

The Previous Senior Debt A long-term loan (ten years) of USD 76,800 thousand was made available to the associate company in December 20055 against a first mortgage on the full rights of the associate company in the property. Said loan bears a fixed annual interest rate of 5.51% and is repaid (interest and principal) on a monthly basis (approximately USD 436 thousand per month) with the balance of the principal of USD 71,454 thousand being to be paid in January 2016. The controlling shareholder of the Company, Mr. Abraham Leser and the partner in the associate company provided personal guarantees ("Bad Boy") in connection with the breach of environmental undertakings, fraud, gross negligence and other acceptable clauses.

The purchase of the Previous Senior Debt by a third party To the best of the Company's knowledge, on August 17 2015, a third party (hereinafter: the "New Lender") completed the purchase of the Previous Senior Debt from the Lender for a total consideration of approximately USD 17.5 million. It should be mentioned that the Company provided a loan (hereinafter: the "Company's Loan") to a principle of the New Lender (hereunder: the "Principle") terms of which are described herewith.

1 Published on April 1, 2015 [Ref No. 2015-01-070837]. 2 Norden Park, 10 Norden Place, Norwalk CT. 3 Published on May 31, 2015 [Ref No. 2015-01-035298]. 4 It is noted that the rest of the rights in the associate are held by Mr. Joel Kestenbaum together with his family members and a foreign trust under their control (hereinafter jointly: "the Partner"). 5 It is noted that the full rights of the controlling shareholder in the Company, Mr. Avraham Leser, in the associate (49.99% of the rights in this company) have been transferred to the Company in November 2011. 1

Total scope USD 3 million Type of loan A non-recourse loan Guarantors None Final maturity date until 13 August 2025 Loan term extension None options Annual interest rate 10% Interest and principal Monthly interest only payments. The principal shall be fully repayable payment dates upon final maturity date. To the extent that the Principle receives any income, directly or indirectly, from Note A-1 and Note A-2 (as defined hereunder), all such income shall be utilized by the Principle to pay all accrued interest and outstanding principal under the Company's Loan. Liens None Prepayment right May be prepaid in full or in part at any time without premium or penalty. No prepayment shall be made or accepted in installments of less than $100,000.

In addition to repayment of the principle and accrued interest of the Company's Loan, the Company might be entitled to receive additional payments subject to the occurrence of certain conditions (including the Rezoning as described below). The Company's management estimates, taking into consideration the low likelihood of Note A-2's (as defined below) principle to be repaid (which is the source for payment of the additional payments) the amount of additional payments, if and when paid to the Company, is not expected to be material.

The Splitter Agreement and restructure of the debt On August 17, 2015, the associate company entered into a Note Splitter and Loan Modification Agreement with the new Lender (hereinafter: "the Splitter Agreement"). Under the Splitter Agreement, the Previous Senior Debt was split into two separate loans – the first loan (hereinafter: "Note A-1") with a total of USD 17.5 million and the second loan (above and hereinafter: "Note A-2") with a total of approximately USD 54.9 million [amount to be updated]. Following are the main terms of said notes:

Note A-1 Total scope USD 17.5 million Type of loan A non-recourse loan, except for fraud, gross negligence and other acceptable clauses. Guarantors Messr Abraham Leser, chairman of the Board of Directors, President and the controlling shareholder of the Company and the partner of the Company in the associate company. Final maturity date until 14 August 2020 Loan term extension None options Annual interest rate 10% Interest and principal Monthly interest only payments. The principal shall be fully repayable payment dates upon final maturity date. Liens first mortgage on its rights in the property

Note A-2 Total scope Approximately USD 54.9 million Type of loan A non-recourse loan, except for fraud, gross negligence and other acceptable clauses. Guarantors Messr Abraham Leser, chairman of the Board of Directors, President and the controlling shareholder of the Company and the partner of the Company in the associate company. Final maturity date until 14 August 2025; or if prior to that date a Rezoning of the Property6 has occurred then the Note A-2 Maturity Date shall be the date that is ten (10) years following the effective date of the Rezoning of the Property Loan term extension None options Annual interest rate 2.67% Interest and principal "interest only" and only out of available cash flow of the associate payment dates company (so that in fact - up until the Rezoning of the property - the interest will be accrued and not paid regularly). so long as no Event of Default has occurred and is continuing payment of any excess amounts (“Excess Cash Flow”) shall be paid as follows: (A) at any time prior to the Rezoning of the Property, to Borrower; and (B) at any time from and after the Rezoning of the Property, (I) first, to the members of Borrower and any third-party investors that have contributed New Capital to the Borrower until such time as such members and third party investors, if any, have received a fifteen percent (15%) IRR on such New Capital, (II) second, to Lender to pay for all accrued and unpaid interest due and payable under Note A-2, and (III) third, seventy-five percent (75%) to Borrower, and twenty-five percent (25%) to Lender for the payment of principal due under Note A-2 Liens first mortgage on its rights in the property

The Company's management estimates that the likelihood of Note A-2's principle to be repaid either in full or in part is low, taking into account the repayment terms of this note. The Company's management estimates that the restructuring of the debt might cause an increase in the Company's equity. The Company is examining the effect of the restructuring of the debt on its Financial Statements, which might be material.

Yours sincerely, The Leser Group Ltd. By Avraham Leser, Chairman of the Board of Directors and Company President

6 the zoning of the Property has been reclassified by the appropriate Governmental Authorities to permit the development on the Property of at least two hundred and fifty (250) residential dwelling units.

ADDENDA

Collateral Appraisal ‐ Excerpts

APPRAISAL REPORT

Norden Park 10 Norden Place and 6 Norden Place Norwalk, CT 06855

REQUESTED BY

The Leser Group, Ltd. 1481 47th Street Brooklyn, NY 11219

PREPARED BY

Butler Burgher Group, Inc. Formerly Leitner Group, Inc. 79 Madison Avenue New York, NY 10016

DATES OF VALUE

September 30, 2015

Mr. Abe Leser Page 2 November 30, 2015

SIXTY NINE MILLION FIVE HUNDRED THOUSAND DOLLARS $69,500,000

FIFTY SIX MILLION DOLLARS $56,000,000

The opinions of value expressed herein are subject to the certification, assumptions and limiting conditions, and all other information contained in the following written appraisal report.

Thank you for the opportunity to serve you.

Sincerely,

Joel Leitner, MAI, CRE, FRICS Managing Director State Certified General Appraiser #RCG000.1050

Melissa P. Sohn Senior Appraiser (212) 682-2869 [email protected] State Certified General Appraiser #RCG0001417

ADDENDA

Qualifications

Employee Profile

Academic Background Fordham University M.B.A., finance and professional accounting Hofstra University B.S., biochemistry

Experience Lev Yagudayev serves as director of appraisal and litigation services and is the Lev Yagudayev Northeast practice leader for Situs RERC’s based in the New York office. Mr. Yagudayev MAI has over 15 years of experience in different facets of commercial real estate and is a Director specialist in the area of valuation for financial reporting purposes. He has valued real estate and instruments secured by real estate in nearly every major market in the U.S. 212.294.1376 and comprising most property types. [email protected] Mr. Yagudayev is responsible for managing Situs RERC’s Northeast practice and delivering the following services: portfolio valuation services, purchase price allocation studies, International Financial Reporting Standards (IFRS) valuation services, and due diligence services.

Prior to joining Situs RERC, Mr. Yagudayev worked for nine years in the real estate consulting practice at Deloitte. In his latest role, he served as senior manager and portfolio valuation services leader for the East region. While at Deloitte, Mr. Yagudayev provided valuation and due diligence services to alternative investment managers; advised and consulted clients on a variety of issues relating to commercial real estate and real estate instruments; worked with clients to improve their processes relating to valuation, financial reporting, and investor reporting; and interacted daily with senior executives and decision makers at many real estate firms.

Prior to Deloitte, Mr. Yagudayev worked at Emigrant Bank, where he focused on commercial real estate valuation, REO management/disposition, mortgage underwriting, loan origination, and foreclosures.

Mr. Yagudayev is also an adjunct professor at the Fordham Graduate School of Business where he teaches real estate finance and is a faculty advisor to the real estate club.

Professional Designations and Affiliations • Appraisal Institute - MAI designation • Certified General Real Estate Appraiser • State of New York license number 46000044217 • State of Connecticut license number RCG.0001039 • State of New Jersey license number 42RG00208500 Employee Profile

Roiy Guy Academic Background Assistant Director New York University 212.294.1356 M.S., real estate, finance and investments [email protected] University of Massachusetts M.S., civil engineering Israel Institute of Technology B.S., civil engineering

Experience Roiy Guy serves as an assistant director in Situs RERC’s New York office. He has over 10 years of experience with different facets of commercial real estate, and is a specialist in the area of valuation for financial reporting purposes, including:

• Portfolio valuation services, • Purchase price allocation studies, • International Financial Reporting Standards (IFRS) valuation services, and • Due diligence services.

Mr. Guy has valued real estate and instruments secured by real estate in nearly every major market in the U.S. for most property types, including: senior housing, student housing, self-storage, condominiums, community developments, single-family platforms, and vacant land.

Prior to joining Situs RERC, Mr. Guy worked at Deloitte Financial Advisory Services LLP as a real estate consulting manager. While there, he provided valuation and due diligence services to alternative investment managers; advised and consulted clients on a variety of issues relating to commercial real estate and real estate instruments; worked with clients to improve their processes relating to valuation, financial reporting, and investor reporting; and interacted daily with senior executives and decision makers at many real estate firms.

Mr. Guy is also an experienced geotechnical engineer, and has planned, monitored, and analyzed site subsurface investigations and has made foundation design recommendations for various development projects.

In addition, Mr. Guy is knowledgeable about and adept at using Microsoft Office and ARGUS.