Ordinance 2021-035 Approving a Purchase and Sale

ORDINANCE 2021-035

APPROVING A PURCHASE AND SALE AGREEMENT WITH 1011-1027 HUNTER HILLCREST LLC FOR THE HUNTER HILLCREST PROPERTY (1011- 1027 HILLCREST DRIVE, DEKALB, ILLINOIS).

WHEREAS, the City of DeKalb (the “City”) is a home rule unit of local government which may exercise any power and perform any function pertaining to its government and affairs pursuant to Article VII, Section 6, of the Illinois Constitution of 1970; and

WHEREAS, 1011-1027 Hunter Hillcrest LLC (the “Seller”) is the owner of property legally described in Exhibit A attached hereto and incorporated herein (the “Property”); and

WHEREAS, the City and Owner are parties to a Settlement and Release Agreement dated April 21, 2021 (the “Settlement Agreement”) that gave the City an option to purchase the Property at a price equal to the Property’s appraised value as determined by an agreed appraiser, plus and minus standard prorations and credits; and

WHEREAS, on July 31, 2021, the agreed appraiser determined that the Property’s appraised value as of June 29, 2021 is $1,185,000.00; and

WHEREAS, the Settlement Agreement requires that the City and Seller enter into a purchase and sale agreement for the Property within 30 calendar days from the agreed appraiser’s determination of the Property’s appraised value; and

WHEREAS, a purchase and sale agreement for the Property is attached hereto and incorporated herein as Exhibit B (the “Purchase Agreement”); and

WHEREAS, the City’s corporate authorities find that approving the Purchase Agreement is in the City’s best interests for the protection of the public health, safety, morals and welfare; and

NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of DeKalb, Illinois, as follows:

SECTION 1: The recitals to this Ordinance are true, material, adopted and incorporated herein as Section 1 to this Ordinance.

SECTION 2: The City’s corporate authorities approve the Purchase Agreement in the same or substantially similar form as Exhibit B attached hereto and incorporated herein, subject to such changes as shall be acceptable to the Mayor including, but not limited to, negotiating the final amounts of the standard prorations and credits. The City’s corporate authorities further authorize and direct the Mayor to execute, and the Executive Assistant to attest, the Purchase Agreement on behalf of the City, and for the Mayor, City Attorney and the City Manager or his designee to perform all acts necessary on the City’s behalf to effectuate the Purchase Agreement and the City’s purchase of the Property for an amount not to exceed $1,185,000.00, plus and minus standard prorations and credits.

SECTION 3: Home Rule. This Ordinance and each of its terms shall be the effective legislative act of a home rule municipality without regard to whether such ordinance should (a) contain terms contrary to the provisions of current or subsequent non-preemptive state law, or (b) legislate in a manner or regarding a matter not delegated to municipalities by state law. It is the intent of the Ordinance 2021-035

City’s corporate authorities that to the extent that the terms of this Ordinance should be inconsistent with any non-preemptive state law, that this Ordinance shall supersede state law in that regard within its jurisdiction.

SECTION 4: Effective Date. This Ordinance shall be in full force and effect from and after its passage and approval as provided by law.

PASSED BY THE CITY COUNCIL of the City of DeKalb, Illinois at a Regular meeting thereof held on the ____ day of ______2021 and approved by me as Mayor on the same day.

COHEN BARNES, Mayor

ATTEST:

______Ruth A. Scott, Executive Assistant

Ordinance 2021-035

EXHIBIT A (Legal Description of the Property)

The Property is legally described as follows:

LOT 703 IN TWELFTH ADDITION TO ROLLING MEADOWS SUBDIVISION, A SUBDIVISION OF PART OF THE NORTHWEST QUARTER OF SECTION 15, TOWNSHIP 40 NORTH, RANGE 4, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED IN BOOK “R” OF PLATS, PAGE 9 ON APRIL 14TH 1976 AS DOCUMENT NUMBER 392887, IN DEKALB COUNTY, ILLINOIS, DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHWEST CORNER OF SAID LOT 703; THENCE EASTERLY ALONG THE NORTH LINE OF SAID LOT 703, A DISTANCE OF 191.90 FEET FOR THE POINT OF BEGINNING; THENCE SOUTHERLY PARALLEL WITH THE WEST LINE OF SAID LOT 703, A DISTANCE OF 220.61 FEET TO THE NORTH LINE OF HILLCREST DRIVE, SAID NORTH LINE BEI ON A CURVE THE RADIUS OF WHICH IS 1017.69 FEET; THENCE EASTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE ON A CURVE TO THE LEFT, A DISTANCE OF 223.82 FEET (THE CHORD DISTANCE OF THE LAST DESCRIBED COURSE BEING223.37 FEET), TO A POINT OF REVERSE CURVATURE; THENCE CONTINUING EASTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE ALONG A CURVE TO THE RIGHT THE RADIUS OF WHICH IS 635.0 FEET FOR A DISTANCE OF 2.86 FEET (THE CHORD DISTANCE OF THE LAST DESCRIBED COURSE BEING 2.86 FEET); THENCE NORTHERLY PARALLEL WITH THE WEST LINE OF SAID LOT 703, A DISTANCE OF 167.12 FEET TO THE NORTH LINE OF SAID LOT 703; THENCE WESTERLY ALONG THE NORTH LINE OF LOT 703, A DISTANCE OF 219.8 FEET TO THE POINT OF BEGINNING.

AND

LOT 703 IN TWELFTH ADDITION TO ROLLING MEADOWS SUBDIVISION, A SUBDIVISION OF PART OF THE NORTHWEST QUARTER OF SECTION 15, TOWNSHIP 40 NORTH, RANGE 4, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED IN BOOK “R” OF PLATS, PAGE 9 ON APRIL 14TH 1976 AS DOCUMENT NUMBER 392887, IN DEKALB COUNTY, ILLINOIS, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 703; THENCE EASTERLY ALONG THE NORTH LINE OF SAID LOT 703, A DISTANCE OF 191.90 FEET; THENCE SOUTHERLY PARALLEL WITH THE WEST LINE OF SAID LOT 703, A DISTANCE OF 220.61 FEET TO THE NORTH LINE OF HILLCREST DRIVE, SAID NORTH LINE BEING A CURVE THE RADIUS OF WHICH IS 1017.69 FEET; THENCE WESTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE ON A CURVE TO THE RIGHT, A DISTANCE OF 129.62 FEET (THE CHORD DISTANCE OF THE LAST DESCRIBED COURSE BEING 129.53 FEET), TO THE POINT OF TANGENCY OF SAID CURVE; THENCE CONTINUING WESTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE, A DISTANCE OF 62.63 FEET TO THE SOUTHWEST CORNER OF SAID LOT 703; THENCE NORTHERLY ALONG THE WEST LINE OF SAID LOT 703, A DISTANCE OF 228.85 FEET TO THE POINT OF BEGINNING.

Common Address: 1011-1027 Hillcrest Dr., DeKalb, IL 60115

PIN: 0815151014

EXHIBIT B (Purchase and Sale Agreement 1011-1027 Hillcrest Drive)

PROPERTY PURCHASE AND SALE AGREEMENT (1011-1027 Hillcrest Drive)

THIS PURCHASE AND SALE AGREEMENT (the “Agreement”) is made as of August 30, 2021 (the “Effective Date”), by and between the City of DeKalb (the “City ” or “Purchaser”), an Illinois home rule municipal corporation, office at 164 E. Lincoln Hwy., DeKalb, IL 60115, and Hunter 1011-1027 Hillcrest LLC (“Hunter” or “Seller”), an Illinois limited liability company, office at 2201 W. Main St., Evanston, IL 60202, who are collectively referred to as the “Parties”.

NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS SET FORTH BELOW, the receipt and sufficiency of which are hereby acknowledged by the Parties, and pursuant to the Parties’ Settlement and Release Agreement dated April 21, 2021, the Parties agree as follows:

1. Purchase/Price/Property. Subject to the terms and conditions provided herein, Hunter agrees to sell and convey, or cause to be sold and conveyed, and the City agrees to purchase, for the price of $1,185,000 (One Million One Hundred Eighty Five Dollars and Zero Cents) (the “Purchase Price”), the following:

(a) the property located at 1011-1027 Hillcrest Drive, DeKalb, IL 60115, Permanent Index Number 08-15-151-012, more particularly described on Exhibit A attached hereto and incorporated herein (the “Property”), together with all of Seller's right, title, and interest in and to all easements, rights, tenements, and appurtenances thereunto belonging, including Seller's right, title, and interest in and to all streets, alleys, or public ways (whether before or after vacation thereof);

(b) Seller's right, title, and interest in and to all buildings, fixtures, and other improvements on the Property (the “Improvements”);

(c) all of Seller's right, title, and interest in and to all of Seller's tangible personal property, equipment, and supplies located on the Property or the Improvements, all of Seller's intangible personal property pertaining to the Property and Improvements consisting of, to the extent assignable (without payment of any transfer, assignment, or similar fee), (i) contract rights specifically relating to the operation, repair, maintenance, or upkeep of the Property, Improvements and tangible personal property described in this clause (c), and (ii) utility contracts (the “Personal Property”); and

(d) all of Seller's right, title, and interest in and to all agreements, pursuant to which any portion of the Property or Improvements is purportedly used or occupied by anyone other than Seller, listed and described on Exhibit B attached hereto and incorporated herein (the “Leases”).

2. Seller/Deed. Seller agrees to sell the Property at the price and terms set forth herein, and to convey or cause to be conveyed to Purchaser, or Purchaser’s nominee, title thereto by a recordable special warranty deed (the “Deed”), with release of homestead rights, if any, free Page 1 of 27

and clear of any mortgages, liens, mechanics liens, other security interests and any property taxes due and payable prior to the date of closing and subject only to: (a) covenants, conditions and restrictions of record; (b) private, public and utility easements and roads and highways, if any; (c) the Leases disclosed in Exhibit B; and (d) property taxes for the year 2021 (payable in 2022) which are not yet due and payable as of closing and subsequent years.

3. Closing. The closing shall be on October 18, 2021 before 5:00 p.m. (the “Closing Date”), or such earlier time as the Parties may mutually agree in writing, at American Title Guaranty, 2045 Aberdeen Court, Ste. B, Sycamore, IL 60178, or the office of a title company located within DeKalb County, Illinois chosen by Seller (the “Title Company”), provided title for the Property is shown to be good or is accepted by Purchaser. Seller covenants and agrees, at Seller’s sole cost and expense, to obtain releases at or prior to closing, for any and all liens affecting the Property as of the Closing Date. Possession of the Property shall be transferred to the Purchaser at Closing.

4. Closing Escrow. On or prior to the Closing Date, the Purchaser and the Seller shall establish an escrow with the Title Company through which the transfer of the Property shall be closed (the “Closing Escrow”). The escrow instructions establishing the Closing Escrow shall be in the form customarily used by the Title Company with such special provisions added thereto as may be required to conform to the provisions of this Agreement. The Closing Escrow shall be auxiliary to this Agreement, and this Agreement shall not be merged into nor in any manner be superseded by the escrow. The escrow costs and fees shall be split equally by the Parties.

4A. Seller’s Representations and Warranties.

To induce Purchaser to enter into this Agreement, Seller makes the following warranties and representations, all of which (a) shall also be true and correct as of the date of Closing, and (b) shall survive the Closing of this Agreement and not merge with the Deed:

(a) Seller now has, and will have at Closing, good and indefeasible title in fee simple to the Property, and no party, except as herein set forth, has or shall have any right in, or to acquire, the Property.

(b) At the Closing, the Property shall be free and clear of all encumbrances, except those to which the Deed may be subject as set forth in Section 2 and any encumbrances arising by or through the actions of the Purchaser.

(c) Seller has no knowledge of any labor, services or materials that have been furnished or delivered to the Property or used for improvements or repairs thereof at any time within the past four (4) months, which have not been fully and completely paid for, and to Seller’s knowledge, Seller has no debts, outstanding contracts, or liabilities that could give rise to or result in a lien or a claim of lien against the Property under the Illinois Mechanic Lien Act.

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(d) Seller knows of no actions, suits, claims, assessments, or proceedings pending or threatened that could materially adversely affect the ownership, operation, or maintenance of the Property or Seller's ability to perform hereunder.

(e) Seller has full right, power, and authority to execute, deliver, and perform this Agreement without obtaining any further consents or approvals from, or the taking of any other actions with respect to, any third parties, and this Agreement, when executed and delivered by Seller and Purchaser, will constitute the valid and binding agreement of Seller, enforceable against Seller in accordance with its terms.

(f) No uncured breach or default will exist at the Closing, whether declared or not, including, without limitation, nonpayment of any sum or nonperformance of any obligation, with regard to, any obligation of Seller that is secured by a lien on the Property, except those that are cured and resolved at the Closing, if any.

(g) All Leases on the Property are identified in Exhibit B. On or before the Effective Date, Seller shall provide to the City a correct copy of the Leases, including all amendment(s) thereto. All Leases are those then in effect. Seller shall not amend, modify or extend the Leases in any manner prior to Closing, without the written consent of Purchaser, which may be withheld for any reason. To the best of Seller's knowledge, Seller is not in default in its obligations as landlord, and no tenant has any right to extend or renew its lease except as indicated in the Leases. Seller has no knowledge of any actual or potential claim that any tenant is entitled to any concession, rebate, or refund. Seller represents that none of the Leases have been assigned, pledged, or encumbered, except to the holder of the Mortgage that will be released at Closing. Seller has no knowledge of any claims or litigation, actual or threatened, with regard to any of the Leases. There are no parties in possession of any portion of the Property, or that have a right to be in possession of the Property, other than the tenants identified in Exhibit B.

(h) There will be no contracts for services or supplies on account of maintenance or repairs which expressly or impliedly will be binding on the Purchaser after the Closing or on the Property.

(i) A true and correct copy of all agreements, easements, and other documents pertaining to the use of, or right to use, any portion of the Property by the owners or occupants of the Property and any to other property adjacent to the Property are identified in Exhibit B, except for easements of record. On or before the Effective Date, Seller shall provide to the City a correct copy of each such agreement, easement or other document and any amendments thereto. Seller states that all these agreements, easements and other documents are in effect now and that Seller will not amend, modify or extend any such agreement, easement or other document in any manner prior to closing, without the written consent of Purchaser, which may be withheld for any reason.

4B. Preliminary Estoppel Certificates. Page 3 of 27

On or before the Effective Date, Seller shall provide Purchaser with completed Preliminary Estoppel Certificates in the form attached as Exhibit D signed on behalf of each tenant identified in Exhibit B with a true and correct copy of the lease and all amendments thereto attached to the certificate for each tenant.

4C. Other Agreements

On or before the Effective Date, Seller shall provide Purchaser with a true and correct copy of any and all letters, documents, easements and any pleadings filed in any litigation pertaining to any dispute between the Seller and owner or occupant of any property adjacent to the Property. Purchaser may contact such owners or occupants to review the nature of the dispute and may enter into agreements with such owners and occupants that will only be effective after the Closing.

4D. Seller’s Obligations.

During the period between the Effective Date and the Closing Date, Seller shall:

(a) Keep and maintain the Property in the same condition in which it is currently in or in compliance with all applicable City codes and ordinances, including making repairs and replacements that are necessary to keep the condition of the Property as is or in compliance with all applicable City codes and ordinances;

(b) Not be in default of any lease, mortgage, agreement, easement, insurance policy that is not cured at Closing, if any;

(c) Not, without Purchaser’s written consent, enter into any new lease or contract pertaining to the Property, or modify any existing lease or contract pertaining to the Property or its operation or use, which cannot be terminated, at Seller’s sole expense on or before Closing. Seller shall terminate any new lease or new contract pertaining to the Property entered into without Purchaser’s approval on or before Closing. Seller shall terminate any modification to any lease or contract pertaining to the Property entered into without Purchaser’s approval on or before Closing.

(d) Seller shall notify the City in writing if any change occurs in the occupancy or conditions affecting the Property. Purchaser shall not be able to cancel this Agreement if a tenant terminates its lease or gives notice that it intends to terminate its lease before or after Closing.

(e) Not, without Purchaser’s prior written consent, enter into, amend, or terminate any Lease, nor institute any proceeding at law or in equity to enforce any Lease; and

(f) Provide Purchaser and its representatives, employees, and agents, by appointment, and subject to the rights of tenants under the Leases, with (2) two calendar days written notice, reasonable access, during normal business hours, to the Property.

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4E. Indemnification of Purchaser. To the full extent permitted by Illinois law, Seller, from and after Closing, shall defend, indemnify and hold Purchaser harmless from and against any and all damage, loss, cost, expense, obligation, claim, or liability, including reasonable attorney’s fees and reasonable expenses of investigating, defending, and prosecuting litigation (collectively, the “Damages”), suffered by Purchaser as a result of any contractual liability or obligation arising out of any Lease or other contract pertaining to the Property relating to or arising from: (A) the ownership or operation of the Property before the Closing Date; (B) the breach of any representation or warranty of Seller set forth in this Agreement; and (C) the breach of, or failure to perform or satisfy, any of the covenants of Seller set forth in this Agreement; provided, however, that Purchaser shall: (1) not induce others to seek Damages that fall under this indemnification section; (2) immediately notify Seller upon learning of a claim for damages hereunder and shall defer to Seller and allow Seller to address and resolve such matter before incurring costs.

5. Seller’s Deliveries. On the Closing Date, provided all conditions and contingencies have been satisfied, Seller shall deposit or cause to be deposited with the Title Company the following, each duly executed and notarized, as appropriate:

(a) A Warranty Deed, in recordable form, conveying fee simple title of the Property to Purchaser, meeting the requirements of this Agreement, subject only to the exceptions stated in Section 2 of this Agreement;

(b) An ALTA statement and “gap” undertaking in the form customarily required by the Title Company of a seller of property to enable it to issue the Title Policy in accordance with the terms hereof for the Property;

(d) A Bill of Sale conveying to Purchaser good title in and to the Personal Property, Improvements and fixtures (other than those owned by any tenants), with covenants and warranties that they are free and clear of all security interests, liens and encumbrances;

(e) All documents and funds necessary to release any mortgages, liens or other security interests in the Property;

(f) Such other documents or deliveries (if any) required pursuant to other provisions of this Agreement, the Closing Escrow, or otherwise reasonably required in order to consummate the transaction contemplated hereby and customarily required by the Title Company of a seller of property to enable it to issue the Title Policy in accordance with the terms hereof;

(g) An assignment, by Seller, as Landlord, in recordable form of all leases affecting the Property, together with all original executed Leases in the form attached hereto as Exhibit E;

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(h) A Final Estoppel Certificate signed by each of the tenants occupying the Property in the form attached hereto as Exhibit D, which shall be dated no more than 5 business days prior to Closing, and shall not include any new representations that were not included in the Preliminary Estoppel Certificate that Seller is required to provide to the Purchaser with seven (7) calendar days after the Effective Date;

(i) A FIRPTA Affidavit duly executed by Seller in the form requested by the Title Company; and

(j) Possession and occupancy of the Property, subject to any exceptions permitted by this Agreement.

6. Purchaser’s Deliveries. On the Closing Date, provided all conditions and contingencies have been satisfied, Purchaser shall deposit with Title Company (or deliver to Seller) the following, each dated and duly executed and notarized, as appropriate:

(a) All affidavits, indemnities, undertakings and certificates customarily required by the Title Company of a purchaser of property to enable it to issue the Title Policy in accordance with the terms hereof;

(b) The full amount of the Purchase Price and any additional amounts necessary to pay any costs and fees required to be paid by Purchaser less any applicable credits; and

(c) Such other documents or deliveries (if any) required pursuant to other provisions of this Agreement, the Closing Escrow, or otherwise reasonably required in order to consummate the transaction contemplated hereby.

7. Joint Deliveries. On the Closing Date, provided all conditions and contingencies have been satisfied, the Parties shall jointly deposit with Title Company the following, each dated and duly executed and notarized, as appropriate:

(a) Closing Statement;

(b) State, and county, if applicable, transfer tax declarations and any required forms completed to establish any exemption from any Property transfer taxes that is applicable because the transfer is to a public entity.

(c) Executed mutual releases and stipulations to dismiss all the Federal and State Court litigation pending between the Seller and the Purchaser.

8. Closing Costs. The Closing Costs shall be paid as follows:

By Seller:

(a) Preparation of the Deeds and documents required of the Seller;

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(b) Seller’s legal expenses;

(d) The cost of the Owner’s title insurance policy providing extended coverage;

(e) Survey, if not previously paid for by Seller; and

(f) Any other closing costs charged to the Seller by the Title Company that is not otherwise allocated pursuant to this Section.

By Purchaser:

(a) Preparation of the documents required of the Purchaser;

(b) Purchaser’s legal expenses;

(d) Recording fees for the Deed; and

(e) Any other closing costs charged to the Purchaser by the Title Company that is not otherwise allocated pursuant to this Section.

9. No Broker involvement. The Parties each represent to the other that it did not use the services of any broker and that no broker's commission needs to be paid. Should it be determined by a court of competent jurisdiction that any commission is due and owing to any Broker, the party who executed the listing agreement which is the basis for the commission to be paid shall be solely responsible. The obligations of this Section survive the Closing and shall not be merged with the Deed.

10. Plat of Survey. On or before the Effective Date, Seller, at its own expense, shall furnish Purchaser an ALTA survey that is not more than six (6) calendar months old for the Property and meets the ALTA minimum standards detail requirement (Feb. 2021).

11. Title Commitment. On or before the Effective Date, Seller shall order an owner's title insurance policy issued by the Title Insurance Company and transmit a title commitment for same to the City within 14 calendar days after the Effective Date. The title commitment for the owner's title insurance policy shall be in the amount of the Purchase Price, covering title to the Property on or after the Effective Date, showing title in the intended Seller subject only to (a) the general exceptions contained in the policy, (b) the title exceptions set forth above in Section 2 of this Agreement, and (c) title exceptions pertaining to liens or encumbrances of a definite or ascertainable amount which may be removed by the payment of money at the time of closing and which the Seller shall so remove at that time by using the funds to be paid upon the delivery of the Deed (all of which are herein referred to as the permitted exceptions). The title commitment shall be conclusive evidence of good title as therein shown as to all matters insured by the policy, subject Page 7 of 27

only to the exceptions as therein stated. The cost of the Owner’s title insurance policy providing extended coverage for the Purchaser shall be paid by Seller.

12. Title/Survey Defects. If the title commitment or plat of survey discloses either unpermitted exceptions or survey matters that render the title unmarketable or unacceptable to Purchaser (the "Defects"), Purchaser shall notify Seller in writing within the Inspection Period provided under Section 16 of this Agreement. Seller shall then have 15 calendar days from the date of delivery thereof to have the exceptions removed from the commitment or to correct such survey defects, and, in such event, the Inspection Period shall be extended 15 days from the date of delivery of Purchaser’s notice to Seller that there are unpermitted exceptions or survey matters that render the title unmarketable or unacceptable to Purchaser. If Seller fails to remove the unpermitted exceptions or correct any survey defects, within 15 calendar days from the date of delivery of Purchaser’s notice to Seller that there are unpermitted exceptions or survey matters that render the title unmarketable or unacceptable to Purchaser, Purchaser may, during the then extended Inspection Period, terminate this Agreement. If Purchaser elects to give written notice to terminate this Agreement during the Inspection Period or any extended Inspection Period, this Agreement shall become null and void without further action of the Parties. If Purchaser does not give written notice to terminate this Agreement during the Inspection Period or any extended Inspection Period, then Purchaser shall take title to the Property as is at Closing and accept any unpermitted exceptions disclosed on the title commitment and all survey defects and waive any and all objections that it may have to any such unpermitted exceptions or survey defects.

13. Property Taxes and Proration. Any and all unpaid property taxes due and payable prior to Closing shall be paid by Seller prior to Closing or out of the Closing proceeds. If necessary, Seller shall bring to Closing a certificate of redemption showing the amount of the property taxes owed for payments that were previously due and payable along with any penalties and interest and shall otherwise comply with all the Title Company holdback requirements pertaining to its payment of previously due but unpaid property taxes.

2021 property taxes which are not due and payable shall be prorated at Closing based on 105% of the last ascertainable full calendar year’s property taxes with Seller giving Purchaser a credit at closing of an amount equal to the prorated amount of Property taxes that are not yet due and owing for the period of Seller’s ownership of the Property from January 1, 2021 through and including the Closing Date.

The prorations as required by this Section 13 shall be final. However, Purchaser shall pay the taxes as prorated, and Seller shall be permitted to contest the taxes and recover any taxes saved for periods before the Closing Date, and Purchaser waives all right to those taxes if recovered.

13A. Lease Credits. At Closing, Seller shall give Purchaser a credit against the Purchase Price in an amount equal to the amount of all security deposits held by Seller, from each and every Tenant as disclosed in the Leases and Final Estoppel Certificates. Purchaser shall also receive a prorated credit at Closing for the amount of any rent, additional rent, CAM charge, insurance charge, or any other payments made by each and every tenant to Seller for the period of time from the Closing Date to the end of the period for which the amount was paid as disclosed in the Final Estoppel Certificates required at Closing. Page 8 of 27

14. Property Transfer Taxes. At Closing, Seller and Purchaser shall execute a completed Property Transfer Declaration in the form required pursuant to the Property Transfer Tax Act of the State of Illinois, showing the transfer of the Property to Purchaser as being exempt from any State, County or local property transfer taxes.

15. Personal Property. All Personal Property and fixtures located on or within Property, if any, shall be transferred to the Purchaser at Closing by a Bill of Sale which is in a form that is acceptable to the Purchaser. Seller shall not remove any fixtures, including but not limited to, electric poles and lines, lighting fixtures, electric and HVAC systems, water mains, sewer lines, sprinkler systems, valves, bathroom fixtures, and attached signs.

16. Purchaser’s Inspection Period. Purchaser shall have until 5:00 p.m. on October 1, 2021 to evaluate the Property and determine whether it is satisfactory for Purchaser’s intended uses and needs (the “Inspection Period”). During the Inspection Period, Purchaser and its agents and contractors (the “Purchaser’s Representatives”) shall have the right, by appointment upon two (2) calendar days written notice, to inspect the Property and all conditions affecting the Property and to determine, in its sole discretion, that the physical and environmental condition, as well as all other circumstances relevant to the Property, are satisfactory to Purchaser in all respects. During the Inspection Period, Purchaser and Purchaser’s Representatives shall have the right, by appointment upon two (2) calendar days written notice, to inspect any operating files maintained by Seller or Seller’s property manager in connection with the leasing, maintenance, and/or management of the Property, including, without limitation, the Leases, lease files, operating agreements, insurance policies, bills, invoices, receipts and other general records relating to the income and expenses of the Property, correspondence, surveys, plans and specifications, warranties for services and materials provided to the Property, engineering reports, environmental audits, and similar materials, but excluding materials not directly related to the leasing, maintenance, and/or management of the Property such as Seller's internal memoranda, financial projections, budgets, appraisals, accounting and tax records, and similar proprietary or confidential information (the “Lease Records”). Such inspection and analysis shall include, but shall not be limited to, an evaluation and analysis of (1) the structural integrity of any improvements on the Property; (2) the conformity of the improvements to any plans or specifications for the Property (including, but not limited to, any plans and specifications that may have been or that may be provided to Purchaser); (3) the conformity of the Property to past, current, or future applicable zoning, building, subdivision, land use, health, safety, environmental, or nondiscrimination laws, statutes, ordinances, rules, regulations, orders, codes, or other legal requirements or with any past, present, or future documents of record; (4) the existence of soil instability, past soil repairs, soil additions, or conditions of susceptibility to landslides; (5) the sufficiency of any undershoring; (6) the sufficiency of any drainage; (7) whether the Property is located wholly or partially in a flood plain or a flood hazard boundary or similar area; (8) the existence or non-existence of underground storage tanks; (9) any other matter affecting the stability or integrity of the land, or any buildings or improvements situated on or as part of the Property; (10) the availability of public utilities and services for the Property; (11) the fitness or suitability of the Property for Purchaser's intended use; (12) the potential for further development of the Property; (13) the existence of vested land use, zoning, building, or other entitlements affecting the Property; (14) the ability of Purchaser to obtain

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and maintain licenses and permits for intended use of the Property; and (15) the presence of toxic wastes, hazardous materials, or friable asbestos in, on, or about the Property.

From and after the Effective Date through the expiration of the Inspection Period, Purchaser and Purchaser’s Representatives shall have, by appointment upon two (2) days written notice, access to and entry upon the Property and any improvements located thereon for site analysis, engineering studies, and environmental evaluations. Purchaser shall be responsible for all the costs of its inspections of the Property. Purchaser shall restore any damage to the Property caused by Purchaser and Purchaser’s Representatives. Purchaser shall indemnify and hold Seller and Seller’s respective officers, directors, shareholders, personal representatives, trustees, agents and employees harmless from and against any and all claims, loss, cost, expense, liability and damage (including reasonable attorneys' fees and litigation expenses) arising out of or caused by the actions of Purchaser or Purchaser's Representatives with respect to Purchaser’s inspections of the Property.

Purchaser may terminate this Agreement at any time during the Inspection Period or during any extended Inspection Period if such a period is granted and documented in writing, if Purchaser determines in its sole judgment, that the Property: (i) is not suitable for any reason for Purchaser’s intended use or purpose; or (ii) has environmental risks that the Purchaser does not want to assume by giving written notice to the Seller within the Inspection Period in the manner provided by this Agreement. If Purchaser does not timely give notice of termination under this Section, then Purchaser shall be deemed to have waived all conditions and rights under this Section and shall be fully obligated under the terms and conditions of this Agreement, subject to any other contingencies set forth in this Agreement.

The Parties may agree in writing to extend the Purchaser’s Inspection Period. Furthermore, Purchaser’s Inspection Period and the Closing Date shall be extended by the amount of any time in which Seller has obstructed, interfered, impaired, denied, delayed or affected Purchaser’s rights to inspect and evaluate the Property and the Lease Records under this Section.

17. Casualty Loss. As used herein, the term “Casualty Loss” shall mean any destruction by fire, storm, or other casualty or any taking or pending or threatened taking, in condemnation or under the right of eminent domain of the Property or portion thereof, in each case prior to Closing. Seller shall promptly give Purchaser written notice (the “Casualty Notice”) of any Casualty Loss of which Seller becomes aware. Purchaser shall have the option, which must be exercised within 30 days after its receipt of the Casualty Notice, to terminate this Contract or to proceed with the Closing. If Purchaser elects to terminate this Contract, all rights, duties, obligations, and liabilities created hereunder shall cease. If Purchaser elects to proceed with Closing, it shall acquire the Property in accordance with the terms hereof, and Seller shall transfer to Purchaser all unpaid insurance proceeds, claims, awards, and other payments arising out of such Casualty Loss and pay to Purchaser all sums paid to Seller as insurance proceeds, awards, or other payments arising out of such Casualty Loss. Seller shall not voluntarily compromise, settle, or adjust any amounts payable by reason of any Casualty Loss without first obtaining the written consent of Purchaser.

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18. Compliance With Environmental Laws. Seller represents that (i) the Property has never been used by Seller or, to the best of Seller's knowledge after due inquiry, by any previous owners, occupants or the current tenants, if any, to generate, manufacture, refine, transport, treat, store, handle or dispose of any Hazardous Substances (as hereinafter defined), and no such Hazardous Substances exist on the Property or in its soil or groundwater; (ii) to the best of Seller's knowledge after due inquiry, no portion of the Improvements has been constructed with asbestos, asbestos-containing materials, urea formaldehyde insulation or any other chemical or substance which has been determined to be a hazard to health and/or the environment; (iii) to the best of Seller's knowledge after due inquiry, there are no, nor have there been, electrical transformers or other equipment which have di-electric fluid-containing polychlorinated biphenyls (PCBs) located in, on or under the Property; (iv) to the best of Seller's knowledge after due inquiry, the Property has never contained any underground storage tanks; and (v) Seller has not received nor does it have any knowledge of any summons, citation, directive, letter or other communication, oral or written, from any local, state, or federal government agency concerning (a) the existence of Hazardous Substances on the Property or in the immediate vicinity, (b) the releasing, spilling, leaking, pumping, pouring emitting, emptying, or dumping of Hazardous Substances into the Property or into waters or other lands.

The term “Hazardous Substances” as used in this Agreement shall mean any hazardous or toxic material, substance, or waste, pollutant or contaminant which is regulated under any statute, law, regulation, rule or ordinance of any local, state, regional, or federal authority having jurisdiction over the Property, or its use, including, but not limited to, any material, substance or waste which is (i) defined as a hazardous substance under any Environmental Laws; (ii) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products; (iii) polychlorinated biphenyls; (iv) lead; (v) urea formaldehyde; (vi) asbestos; (vii) flammable explosives; (viii) infectious materials; (ix) radioactive materials; or (x) defined or regulated as a hazardous substance under rules or regulations promulgated under any of the foregoing Environmental Laws.

The term “Environmental Laws” as used in this Agreement shall mean any international, federal, state, or local statute, law, regulation, order, consent, decree, judgment, permit, license, code, covenant, deed restriction, common law, treaty, convention, ordinance, or other requirement relating to public health, safety or the environment, including, without limitation, those relating to releases, discharges or emissions to air, water, land or groundwater, to the withdrawal or use of groundwater, to the use and handling of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage or management of hazardous or solid waste, or Hazardous Substances or crude oil, or any fraction thereof, or to exposure to toxic or hazardous materials, to the handling, transportation, discharge or release of gaseous or liquid Hazardous Substances and any regulation, order, notice or demand issued pursuant to such law, statute or ordinance, in each case applicable to the Property, including, without limitation, the following: the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Re-Authorization Act of 1986; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984; the Hazardous Materials Transportation Act, as amended; the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1976; the Safe Drinking Water Act; the Clean Air Act, as amended; the Toxic Substances Control Act of 1976; the Occupational Safety and Health Act of Page 11 of 27

1977, as amended; the Emergency Planning and Community Right-to-Know Act of 1986; the National Environmental Policy Act of 1975; the Oil Pollution Act of 1990, and any similar or implementing state law, and any state statute and any further amendments to these laws providing for financial responsibility for clean-up or other actions with respect to the release or threatened release of Hazardous Substances or crude oil, or any fraction thereof and all rules and regulations promulgated thereunder.

19. Condition of the Property. Except as may otherwise be provided by this Agreement, Purchaser agrees to accept the Property in its “as-is” condition, and Seller disclaims all warranties express or implied as to the condition of the Property.

20. IRS Section 1445. Seller represents that it is not a "foreign person" as defined in Section 1445 of the Internal Revenue Code, and that they are therefore exempt from the withholding requirements of said Section. Seller will furnish Purchaser at closing the Exemption Certification set forth in said Section.

21. Time is of the Essence. Time is of the essence for this Agreement. The failure to strictly conform to the time conditions provided in this Agreement shall constitute a material default of this Agreement unless expressly waived in writing as an amendment to this Agreement.

22. Notices. All notices, demands, or other communications of any type (the “Notices”) given by Seller to Purchaser or by Purchaser to Seller, whether required by this Agreement, or in any way related to the transaction contemplated herein, shall be given in accordance with the provisions of this Section. All Notices shall be in writing and delivered by electronic mail address, personal delivery, or United States Mail, as a Registered or Certified item, Return Receipt Requested. Notices by electronic mail address or personal delivery shall be effective upon receipt, and notices mailed shall be effective when deposited in a post office or other depository under the care or custody of the United States Postal Service, enclosed in a wrapper with properly postage affixed, addressed to the party at the addresses following their signatures below. Either party hereto may change the address for Notices specified above by giving the other party 10 days' advance written notice of such change of address. Notices shall be given to the following addresses:

If to the City:

City Manager City of DeKalb 164 E. Lincoln Hwy. DeKalb, IL 60115 [email protected]

with a copy to:

Matthew D. Rose Donahue & Rose, PC 9501 W. Devon Ave., Ste. 702 Page 12 of 27

Rosemont, IL 60018 [email protected]

If to Hunter:

Sam Okner Hunter Properties 2201 W. Main St. Evanston, IL 60202 [email protected]

with a copy to:

Gary Ashman Ashman & Stein, PC 8707 Skokie Blvd., Ste. 100 Skokie, IL 60077 [email protected]

23. Amendment. This Agreement may be amended only by the mutual agreement of the Parties evidenced by a written amendment executed by the Parties and duly approved by the adoption of an ordinance, resolution or motion of the Purchaser as provided by law.

24. Entire Agreement. This Agreement sets forth all agreements, understandings and covenants between and among the Parties relative to the matters herein contained. This Agreement supersedes all prior written agreements, negotiations and understandings, written and oral, and shall be deemed a full integration of the entire agreement of the Parties.

25. Illinois Law. This Agreement shall be construed its accordance with the laws of the State of Illinois.

26. Venue. The sole venue for any disputes arising out of or related to this Agreement shall be in the Circuit Court of Dekalb County, Illinois.

27. Mutual Cooperation. The Parties agree to cooperate and take any additional actions that are consistent with and may be necessary or appropriate to give full force and effect to the terms of this Agreement.

28. Interpretations. This Agreement has been jointly negotiated by the Parties and shall not be construed against a Party because that Party may have primarily assumed responsibility for the drafting of this Agreement.

29. Execution. The parties to this Agreement represent that they are authorized to enter into this Agreement.

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30. Severability. If any term or provision of this Agreement shall be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby.

31. Default. If any Party defaults under this Agreement, the other Party may either (1) waive the default and proceed to Closing, or (2) seek specific performance. Except for failure to close on the Closing Date, a Party may not exercise its remedies until after it delivers notice of the alleged default to the other Party and the other Party fails to cure within seven (7) calendar days after receipt of the default notice. The remedies provided herein shall be the sole and exclusive remedies for either Party’s default under this Agreement. In any action to enforce this Agreement, the non-defaulting prevailing party shall be entitled to payment of its reasonable attorney’s fees and costs by the other Party as awarded by the Circuit Court of DeKalb County, Illinois.

32. Counterparts; Facsimiles. This Agreement may be executed in two or more counterparts, all of which shall be read together and be construed as one instrument. A facsimile copy of a signature shall be as binding as an original signature.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement pursuant to all requisite authorizations on the dates set forth below.

SELLER PURCHASER

Hunter 1011-1027 Hillcrest LLC City of DeKalb 2201 W. Main St. 164 E. Lincoln Hwy. Evanston, IL 60202 DeKalb, IL 60115

By: ______Sam Okner, Co-Manager By: ______Cohen Barnes, Mayor Date: ______

By: ______Date: ______Eric Rothner, Co-Manager

Date: ______

PURCHASER ATTEST

______Ruth Scott, Executive Assistant

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STATE OF ILLINOIS ) ) ss. COUNTY OF DEKALB )

I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that ______as Co-Manager of ______is personally known to me as the person that executed the forgoing document as the free and voluntary act of ______for the uses and purposes therein set forth.

Given under my hand and official seal and sworn to before me this ____th day of ______, 2021.

STATE OF ILLINOIS ) ) ss. COUNTY OF DEKALB )

Given under my hand and official seal and sworn to before me this ____th day of ______, 2021.

______Notary Public

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EXHIBIT A TO PROPERTY PURCHASE AND SALE AGREEMENT (Legal Description of the Property)

The Property is legally described as follows:

LOT 703 IN TWELFTH ADDITION TO ROLLING MEADOWS SUBDIVISION, A SUBDIVISION OF PART OF THE NORTHWEST QUARTER OF SECTION 15, TOWNSHIP 40 NORTH, RANGE 4, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED IN BOOK “R” OF PLATS, PAGE 9 ON APRIL 14TH 1976 AS DOCUMENT NUMBER 392887, IN DEKALB COUNTY, ILLINOIS, DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHWEST CORNER OF SAID LOT 703; THENCE EASTERLY ALONG THE NORTH LINE OF SAID LOT 703, A DISTANCE OF 191.90 FEET FOR THE POINT OF BEGINNING; THENCE SOUTHERLY PARALLEL WITH THE WEST LINE OF SAID LOT 703, A DISTANCE OF 220.61 FEET TO THE NORTH LINE OF HILLCREST DRIVE, SAID NORTH LINE BEING ON A CURVE THE RADIUS OF WHICH IS 1017.69 FEET; THENCE EASTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE ON A CURVE TO THE LEFT, A DISTANCE OF 223.82 FEET (THE CHORD DISTANCE OF THE LAST DESCRIBED COURSE BEING223.37 FEET), TO A POINT OF REVERSE CURVATURE; THENCE CONTINUING EASTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE ALONG A CURVE TO THE RIGHT THE RADIUS OF WHICH IS 635.0 FEET FOR A DISTANCE OF 2.86 FEET (THE CHORD DISTANCE OF THE LAST DESCRIBED COURSE BEING 2.86 FEET); THENCE NORTHERLY PARALLEL WITH THE WEST LINE OF SAID LOT 703, A DISTANCE OF 167.12 FEET TO THE NORTH LINE OF SAID LOT 703; THENCE WESTERLY ALONG THE NORTH LINE OF LOT 703, A DISTANCE OF 219.8 FEET TO THE POINT OF BEGINNING.

AND

DISTANCE OF THE LAST DESCRIBED COURSE BEING 129.53 FEET), TO THE POINT OF TANGENCY OF SAID CURVE; THENCE CONTINUING WESTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE, A DISTANCE OF 62.63 FEET TO THE SOUTHWEST CORNER OF SAID LOT 703; THENCE NORTHERLY ALONG THE WEST LINE OF SAID LOT 703, A DISTANCE OF 228.85 FEET TO THE POINT OF BEGINNING.

Common Address: 1011-1027 Hillcrest Dr., DeKalb, IL 60115

PIN: 0815151014

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EXHIBIT B TO PROPERTY PURCHASE AND SALE AGREEMENT (The Leases)

The legal names of the only persons and entities having a possessory interest in the Property are set forth below:

Owner

Hunter 1011-1027 Hillcrest LLC – fee owner

Tenants

______

True and correct copies of all Leases, and any modifications or amendments thereto, for each above identified tenant/entity are attached hereto and identified below:

______

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EXHIBIT C TO PROPERTY PURCHASE AND SALE AGREEMENT (Form of Affidavit of Title )

AFFIDAVIT OF TITLE

STATE OF ILLINOIS ) ) SS. COUNTY OF DEKALB )

The undersigned, ______, as ______of Hunter 1011-1027 Hillcrest LLC (the “Seller”), hereby deposes and says as follows:

1. Seller owns the legal title in certain Property (the “Property”) that is legally described as follows:

LOT 703 IN TWELFTH ADDITION TO ROLLING MEADOWS SUBDIVISION, A SUBDIVISION OF PART OF THE NORTHWEST QUARTER OF SECTION 15, TOWNSHIP 40 NORTH, RANGE 4, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED IN BOOK “R” OF PLATS, PAGE 9 ON APRIL 14TH 1976 AS DOCUMENT NUMBER 392887, IN DEKALB COUNTY, ILLINOIS, DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHWEST CORNER OF SAID LOT 703; THENCE EASTERLY ALONG THE NORTH LINE OF SAID LOT 703, A DISTANCE OF 191.90 FEET FOR THE POINT OF BEGINNING; THENCE SOUTHERLY PARALLEL WITH THE WEST LINE OF SAID LOT 703, A DISTANCE OF 220.61 FEET TO THE NORTH LINE OF HILLCREST DRIVE, SAID NORTH LINE BEING ON A CURVE THE RADIUS OF WHICH IS 1017.69 FEET; THENCE EASTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE ON A CURVE TO THE LEFT, A DISTANCE OF 223.82 FEET (THE CHORD DISTANCE OF THE LAST DESCRIBED COURSE BEING223.37 FEET), TO A POINT OF REVERSE CURVATURE; THENCE CONTINUING EASTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE ALONG A CURVE TO THE RIGHT THE RADIUS OF WHICH IS 635.0 FEET FOR A DISTANCE OF 2.86 FEET (THE CHORD DISTANCE OF THE LAST DESCRIBED COURSE BEING 2.86 FEET); THENCE NORTHERLY PARALLEL WITH THE WEST LINE OF SAID LOT 703, A DISTANCE OF 167.12 FEET TO THE NORTH LINE OF SAID LOT 703; THENCE WESTERLY ALONG THE NORTH LINE OF LOT 703, A DISTANCE OF 219.8 FEET TO THE POINT OF BEGINNING.

AND

LOT 703 IN TWELFTH ADDITION TO ROLLING MEADOWS SUBDIVISION, A SUBDIVISION OF PART OF THE NORTHWEST Page 19 of 27

QUARTER OF SECTION 15, TOWNSHIP 40 NORTH, RANGE 4, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED IN BOOK “R” OF PLATS, PAGE 9 ON APRIL 14TH 1976 AS DOCUMENT NUMBER 392887, IN DEKALB COUNTY, ILLINOIS, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 703; THENCE EASTERLY ALONG THE NORTH LINE OF SAID LOT 703, A DISTANCE OF 191.90 FEET; THENCE SOUTHERLY PARALLEL WITH THE WEST LINE OF SAID LOT 703, A DISTANCE OF 220.61 FEET TO THE NORTH LINE OF HILLCREST DRIVE, SAID NORTH LINE BEING A CURVE THE RADIUS OF WHICH IS 1017.69 FEET; THENCE WESTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE ON A CURVE TO THE RIGHT, A DISTANCE OF 129.62 FEET (THE CHORD DISTANCE OF THE LAST DESCRIBED COURSE BEING 129.53 FEET), TO THE POINT OF TANGENCY OF SAID CURVE; THENCE CONTINUING WESTERLY ALONG THE NORTH LINE OF HILLCREST DRIVE, A DISTANCE OF 62.63 FEET TO THE SOUTHWEST CORNER OF SAID LOT 703; THENCE NORTHERLY ALONG THE WEST LINE OF SAID LOT 703, A DISTANCE OF 228.85 FEET TO THE POINT OF BEGINNING.

Common Address: 1011-1027 Hillcrest Dr., DeKalb, IL 60115

PIN: 0815151014

2. Seller is authorized to sell the Property.

3. This Affidavit is made by Seller in connection with the sale of the Property to the City of DeKalb (the “Purchaser”), and is given to induce the Purchaser to make or complete the purchase of the Property.

4. No labor, services, or materials have been furnished or delivered to the Property or used for improvements or repairs thereof at any time within the past four (4) months that have not been fully and completely paid for, and Seller has no knowledge of any debts, outstanding contracts, or liabilities that could give rise to or result in a lien or a claim of lien against the Property under the Illinois Mechanic Lien Act. Seller also states that it has not done anything to the Property that would adversely affect the title since the effective date on the title commitment up through and including the closing date.

5. All fixtures now located in or on the Property are fully paid for and are not subject to any conditional sales contracts, chattel mortgages, or other security interests.

6. Except for the parties identified in Exhibit B to the Property Purchase and Sale Agreement for the Property, no persons are in possession of the Property except Seller, and that there are no other leases, oral or written or other arrangements concerning the Property under

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which any other person, not previously identified in Exhibit B to the Property Purchase and Sale Agreement for the Property, has any possessory rights in the Property.

7. To the best of Seller’s knowledge and belief, there are no driveway agreements, overlaps, boundary lines in dispute, or unrecorded easements in regard to the Property, nor are there any improvements from adjoining properties that encroach on the Property.

8. To the best of Seller’s knowledge and belief, the Property is not subject to any taxes or special assessments other than those shown as existing liens by the public records.

9. To the best of Seller’s knowledge and belief, there are no presently existing violations of any covenants, restrictions or easements of record affecting the Property.

10. There is no outstanding contract, unrecorded deed, mortgage, or other conveyance affecting the Property executed by Seller or to the knowledge of Seller.

11. Under penalty of perjury, Seller declares that he has examined this Affidavit of Title and to the best of Seller’s knowledge and belief it is true, correct, and complete.

Dated: ______, 2021. SELLER

By: ______, Seller’s ______

STATE OF ILLINOIS ) ) ss. COUNTY OF DEKALB )

I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that ______, personally known to me to be the same person whose name is subscribed to the foregoing Affidavit of Title appeared before me this day in person, and acknowledged that he signed, sealed and delivered the said instrument as the ______of the ______as the free and voluntary act of ______for the uses and purposes therein set forth.

Given under my hand and official seal and sworn to before me this ____th day of ______, 2021.

______Notary Public

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EXHIBIT D TO PROPERTY PURCHASE AND SALE AGREEMENT (Form of Preliminary and Final Estoppel Certificates)

Preliminary/Final Estoppel Certificate

DATE: ______

TO: City of DeKalb (the “City ”)

The purpose of this certificate (the “Estoppel Certificate”) is to confirm the current status of the matters pertaining to the lease identified below. This document is for the benefit of the City and is required pursuant to a Property Purchase and Sale Agreement between the City and Hunter 1011-1027 Hillcrest LLC (the “Landlord”).

Reference is hereby made to that certain Lease effective as of ______and attached as Exhibit 1 (the “Lease”) by and between the Landlord and ______(the “Tenant”) for the premises known as ______(the “Premises”). The undersigned Tenant hereby certifies and represents unto City and their respective successors and assigns, with respect to the Lease, as follows:

1. Attached hereto as Exhibit 1 is a true, correct and complete copy of the Lease (including all amendments, modifications, supplements, renewals, side letters and other agreements pertaining to the Lease). The Lease is in full force and effect.

2. The Lease represents the entire agreement between Tenant and Landlord with respect to the leasing and occupancy of the Premises, and there are no other agreements or representations of any kind between Landlord and Tenant with respect thereto, except as follows: ______.

3. The Premises has been accepted and is currently being occupied by the Tenant pursuant to the terms of the Lease. The term of the Lease commenced on ______.

4. The term of the Lease is ______months; and will expire on the Lease termination date, which is ______, subject to any renewal option set forth below.

5. Tenant has ___ options to renew the Lease for ___ years at the Lease termination date.

6. Tenant is currently obligated to pay rent in the amount of $______per ______and such rent has been fully paid through ______, except as follows: ______.

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7. Tenant is currently obligated to pay operating charges (common area maintenance charges) in the amount of $______per ______and other amounts equal to $______per ______for ______. Tenant has fully paid operating charges (common area maintenance charges) and the other charges as identified above through ______, except as follows: ______.

8. Landlord is currently holding a security deposit under the Lease for the Tenant in the amount of $______.

9. Tenant has not paid any amounts due Landlord more than 30 days in advance of its due date, except as follows: ______.

10. There are no defaults of the Lease on the part of the Landlord, except as follows: ______.

11. Tenant has no defense to its obligations under the Lease and claims no set-off or counterclaim against the Landlord, except as follows: ______.

12. Tenant has no right to any concession (rental or otherwise) or similar compensation in connection with renting the Premises it occupies other than as provided in the Lease, except as follows: ______.

The forgoing certification is made by the undersigned tenant with knowledge that the City of DeKalb is about to purchase the Premises and other property from Landlord. The City may rely upon the representations herein made by Tenant.

IN WITNESS WHEREOF, the undersigned has executed this estoppel certificate as of the ___th day of ______, 2021.

(Signature Page Is Intentionally Omitted)

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TENANT

______.

By: Name: ______Title: ______

STATE OF ILLINOIS ) ) ss. COUNTY OF DEKALB )

I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that ______as the ______of ______, personally known to me to be the same persons whose name is subscribed to the foregoing Estoppel Certificate, appeared before me this day in person, and acknowledged that s/he signed, sealed and delivered the said instrument as a free and voluntary act for the uses and purposes therein set forth.

Given under my hand and official seal and sworn to before me this _____th day of ______, 2021.

______Notary Public

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EXHIBIT E TO PROPERTY PURCHASE AND SALE AGREEMENT (Form of Assignment and Assumption of Leases)

ASSIGNMENT AND ASSUMPTION OF LEASES

THIS ASSIGNMENT AND ASSUMPTION OF LEASES (the “Assignment”) is made and entered into as of the ______, 2021 (the “Effective Date”), by and between HUNTER 1011-1027 HILLCREST LLC, an Illinois limited liability company (“Assignor”), and CITY OF DEKALB, an Illinois home rule municipal corporation (“Assignee”).

RECITALS:

A. Assignor and Assignee have entered into that certain Purchase and Sale Agreement, effective September 1, 2021, between Assignor, as Seller, and Assignee, as Purchaser (the “Purchase Agreement”), pursuant to which Assignee has agreed to purchase certain real property more particularly described on Exhibit A attached to the Purchase Agreement and incorporated herein by reference (the “Property”) from Assignor.

B. In connection with the transactions contemplated by the Purchase Agreement, the Assignor has agreed to assign to the Assignee all of its right, title and interest in, to and under those certain Leases described on Exhibit B attached to the Purchase Agreement and incorporated herein by reference (collectively, the “Leases”).

AGREEMENT:

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee agree as follows:

1. Assignment. Effective as of the Effective Date, Assignor assigns, transfers, conveys and sets over to Assignee all of Assignor’s right, title and interest in and to the Leases and any security deposits and interest earned thereupon to date.

2. Acceptance. Assignee accepts the assignment of the Leases and agrees to assume, keep, perform and fulfill all liabilities and obligations of the landlord under the Leases which accrue from and after the Effective Date.

3. Assignee’s Indemnification. Assignee hereby indemnifies, protects, defends and holds Assignor, Assignor’s members, the partners, officers, directors and shareholders of Assignor’s members, and their respective successors, and assigns, harmless from any and all claims, damages, losses, suits, proceedings, costs and expenses, including, without limitation, reasonable attorneys’ fees (collectively, the “Losses”), both known or unknown, present and future, at law or in equity, arising out of, by virtue of or in any way related to the breach by Assignee of (or Assignee’s failure to timely perform) any or all of the obligations imposed on the lessor or the landlord under the Leases, which obligations accrue as a result of events first occurring from and after the date of the Closing.

Page 25 of 27

4. Assignor’s Indemnification. Assignor hereby indemnifies, protects, defends and holds Assignee, Assignee’s officers, employees and agents and all of their respective successors and assigns harmless from any and all Losses, both known and unknown, present and future, at law or in equity and arising out of, by virtue of, or related in any way to, the breach by Assignor of (or Assignor’s failure to timely perform) any or all of the obligations imposed on the lessor or the landlord under the Leases, which obligations accrue as a result of events first occurring on or prior to the date of the Closing.

5. Binding Effect. This Assignment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

6. No Modification. This Assignment shall not be altered, amended or otherwise modified, except as set forth in a written document executed by the parties hereto.

7. Governing Law. This Assignment and all questions arising in connection herewith shall be governed by and construed in accordance with the internal laws of the State of Illinois.

8. Counterparts; Facsimiles. This Assignment may be executed in two or more counterparts, all of which shall be read together and be construed as one instrument. A facsimile copy of a signature shall be as binding as an original signature.

IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this Assignment and Assumption of Leases as of the Effective Date.

SELLER PURCHASER

Hunter 1011-1027 Hillcrest LLC City of DeKalb 2201 W. Main St. 164 E. Lincoln Hwy. Evanston, IL 60202 DeKalb, IL 60115

By: ______Sam Okner, Co-Manager By: ______Cohen Barnes, Mayor Date: ______

By: ______Date: ______Eric Rothner, Co-Manager

Date: ______

PURCHASER ATTEST

______Ruth Scott, Executive Assistant

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STATE OF ILLINOIS ) ) ss. COUNTY OF DEKALB )

Given under my hand and official seal and sworn to before me this ____th day of ______, 2021.

STATE OF ILLINOIS ) ) ss. COUNTY OF DEKALB )

Given under my hand and official seal and sworn to before me this ____th day of ______, 2021.

______Notary Public

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Appraisal Report Of Hillcrest Mixed-Use Property 1011-1027 Hillcrest Drive, DeKalb DeKalb County IL, 60115

Property Class/Type Retail-Commercial/Mixed Use

As of June 29, 2021

Prepared For Mr. Matthew D. Rose Donahue & Rose, PC 9501 W. Devon Avenue, Suite 702 Rosemont, IL, 60018

AND

Mr. Gary D. Ashman Ashman & Stein, P.C. 8707 Skokie Blvd, Suite 100 Skokie, IL, 60077

Prepared by Valu Pros

Valu Pros File Number VP-21-121

Valu Pros 815-218-1153 126 1/2 W 2nd Street [email protected] Byron, IL 61010 www.valupros.us

July 28, 2021

Mr. Matthew D. Rose AND Mr. Gary D. Ashman Donahue & Rose, PC Ashman & Stein, P.C. 9501 W. Devon Avenue, Suite 702 8707 Skokie Blvd, Suite 100 Rosemont, IL 60018 Skokie, IL 60077

Re: Appraisal Report, Real Estate Appraisal Hillcrest Mixed-Use Property, 1011-1027 Hillcrest Drive, DeKalb, IL, 60115

File Name: VP-21-121

Dear Mr. Matthew D. Rose & Mr. Gary D. Ashman:

At your request, I have prepared an appraisal for the above referenced property, which may be briefly described as follows: The subject property is a 2.05-acre commercial site improved with a 33,316 square foot 1- and 2-story mixed-use commercial building with 14 apartments, 9 commercial units and an asphalt parking lot with roughly 140 parking spaces.. The problem to be solved is to estimate the current As Is market value, as of June 29, 2021. The intended use is to assist the clients with decisions related to the possible purchase/sale of the subject property.

Key Considerations

Strengths  The subject’s location very near the Northern Illinois University campus surrounded by multi-unit residential properties is a strength for both the subject’s retail and dwelling units.  The demand for residential rental units has been high and continues to be historically high, creating historically low vacancy rates.

Risk Factors  The subject is an older improvement and has not been updated in many years. Although the current owner has made significant investments recently in replacement of the roof and exterior maintenance, the property remains generally inferior in overall condition with like properties in the market.  The eviction moratorium is due to run out on July 31, 2021. It is not clear if congress will intervene and extend the moratorium. Additionally, the pandemic stimulus continues to bolster the residential market by assisting with rental payments for occupants unable to be employed due to the pandemic. It is unclear what the impact on the rental market when these benefits and the moratorium ends.

This valuation contains analyses, opinions, and conclusions along with market data and reasoning appropriate for the scope of work detailed herein. It was prepared solely for the intended use and intended user(s) explicitly identified in the attached report. This appraisal report is intended to conform with Uniform Standards of Professional Appraisal Practice

Valu Pros 815-218-1153 126 1/2 W 2nd Street [email protected] Byron, IL 61010 www.valupros.us

(USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, and applicable state appraisal regulations.

Based on the appraisal described in the accompanying report, subject to the Limiting Conditions and Assumptions, Extraordinary Assumptions and Hypothetical Conditions (if any), I have made the following value conclusion(s):

Value Conclusions Premise Interest Appraised Effective Date Value Conclusion Market Exposure Current As Is Market Value Fee Simple 6/29/2021 $1,185,000 9 to 18 months

Please reference Scope of Work section (page 8) of this report for important information regarding the scope of research and analysis for this appraisal, including property identification, inspection, highest and best use analysis and valuation methodology. I also direct your attention to the Limiting Conditions and Assumptions section (page 18). Acceptance of this report constitutes an agreement with these assumptions and condition. In particular, I note the following:

Extraordinary Assumptions - Due to the circumstances surrounding the COVID-19 crisis, a complete interior observation of apartment units 2, 7 and 11 was not available. Therefore, this appraisal is based on the extraordinary assumption that these units are substantially similar to the units observed and as described in this report. If this is found to be false, then it could alter my opinions and conclusions.

Hypothetical Conditions - There are no hypothetical conditions for this appraisal.

Thank you for your business. If you have any specific questions or concerns regarding the attached appraisal report, or if I can be of additional assistance, please let me know.

Respectfully submitted,

Valu Pros

______Ken Mrozek, Jr., MBA, MAI, SRA, ASA Certified General Real Estate Appraiser IL #553.001975 Exp: September 30, 2021

Table of Contents

Cover Letter ...... 1 Transmittal Letter ...... 2 Table of Contents ...... 4 Property and Assignment Overview ...... 6 Executive Summary ...... 6 Subject Photographs ...... 8 Certification ...... 17 Assumptions and Limiting Conditions ...... 19 Scope of Work ...... 21 Extraordinary Assumptions and Hypothetical Conditions ...... 22 Reporting Requirements ...... 23 Competency ...... 23 Personal Property and Intangibles...... 24 Definition of Market Value ...... 24 Market Area Analysis ...... 25 Location Map ...... 25 Market Conditions ...... 26 Rental Market...... 27 Real Estate Cycles ...... 28 Market Area Statistics ...... 29 Estimate of Exposure and Marketing Time ...... 31 Subject Property Description ...... 32 Site Details ...... 32 Legal Description ...... 33 Assessor’s Tax Map ...... 34 Subject History ...... 34 Flood Zone ...... 35 Improvements Description ...... 36 Building Summary ...... 36 Detailed Description Mixed-Use Building ...... 36 Assessment and Taxes ...... 37 Zoning ...... 37 Highest and Best Use ...... 39 Highest and Best Use As Vacant...... 39 Highest and Best Use As Improved ...... 40 Valuation Methodology ...... 42 Appraisal Process ...... 42 Sales Comparison Approach ...... 43 Comparables Sales Data ...... 44 Sale Comparables Location Map ...... 45 Sales Comparable Data Sheets ...... 46 Analysis Grid ...... 50 Comparable Sale Adjustments ...... 51 Sales Comparison Approach Conclusion ...... 53 Income Approach ...... 54 Introduction ...... 54 Income Analysis ...... 54 Subject Rental Data ...... 54 Market Rental Data ...... 55 Potential Gross Income ...... 57 Other Income ...... 57 Vacancy and Collection Loss ...... 58 Expense Analysis ...... 58 Actual Reported Expenses...... 58 Expense Commentary ...... 58 Capitalization Rate Analysis ...... 60 Market Extracted Rates ...... 60 Capitalization Rate Conclusion ...... 60 Income Capitalization Conclusions ...... 60 Final Reconciliation ...... 62 Value Indications ...... 62 Value Conclusion ...... 63 Addenda ...... 64 Rent Roll ...... 65 Historical Income and Expenses ...... 66 Major Repairs Invoices (Past 5 Years) ...... 75 Glossary ...... 84 List of Abbreviations ...... 87 Valu Pros ...... 88 Appraiser Qualifications ...... 89 1011-1027 Hillcrest Drive DeKalb, IL 60115

Property and Assignment Overview

Executive Summary

Subject Summary

Property Name Hillcrest Mixed-Use Property

Property Major Type Retail-Commercial

Address 1011-1027 Hillcrest Drive

City DeKalb

County DeKalb

State Illinois

Zip 60115

Tax ID 08-15-151-014

Legal Description Rolling Meadows Sub 12th Addition - Lot 703

Owner Hunter 1011-1027 Hillcrest LLC

Land SF 89,300

Acres 2.05

Zoning Light Commercial

GBA 33,318

No. of Units 23

No. of Buildings 1

Year Built 1974 & 1975

Date of Report: July 28, 2021 Date of Inspection: June 28, 2021

Intended Use: The intended use is to assist the clients with decisions related to the possible purchase/sale of the subject property.

Intended User(s): The clients - Mr. Matthew D. Rose and Mr. Gary D. Ashman

Highest and Best Use As Vacant: Commercial Development

Highest and Best Use As Improved: Continued Mixed Commercial/Residential Use

File # VP-21-121 6 1011-1027 Hillcrest Drive DeKalb, IL 60115

Transaction History: My research discovered the following about the subject property:

1. Based on information obtained from public records, there are no sales or transfers of the subject property in the last three years. 2. The subject property is not currently listed for sale based on a search of local MLS Databases. 3. It was previously listed on November 2, 2012, for a list price of $2,300,000 (or $69.03/SF). The subject was listed for 180 days prior to expiring without sale on April 30, 2013. 4. The main subject parcel last transferred by a Warranty Deed on July 30, 2014, for a purchase price of $1,162,500, according to assessor records. The parcel number at the time of the transfer was 08-15-151-012. A second smaller parcel was purchase on July 28, 2015, for a purchase price of $4,700, according to assessor records. These parcels were combined to for a single larger parcel, 08-15-151-014.

Summary of Conclusions:

Summary of Values Value Premise As Is Date of Value 6/29/2021 Value Type Market Value Value Perspective Current Interest Appraised Fee Simple Value Indications Cost Approach Not Developed Sales Comparison Approach $1,185,000 Income Approach $1,185,000 Value Conclusion: $1,185,000

File # VP-21-121 7 1011-1027 Hillcrest Drive DeKalb, IL 60115

Subject Photographs

Hillcrest Drive (looking E) Hillcrest Drive (looking W)

Subject Signage Subject Parking Lot

Front View (looking NE) Front View (looking NW)

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Rear View (looking SE) Rear View (looking SW)

Front Entrances (Units 1027 & 1025 ½) Interior Units 1027 & 1025 ½

Front Entrance (Unit 1025) Interior Unit 1025

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Front Entrance (Unit 1023 ½) Interior Unit 1023

Front Entrances (Units 1023 & 1021 ½ - Apartments) Interior Unit 1023

Front Entrances (Units 1021 & 1019 - Apartments) Interior Unit 1021

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Front Entrance (Unit 1015) Interior Unit 1015

Front Entrance (Unit 1013) Interior Unit 1013

Front Entrance (Unit 1011) Interior Unit 1011

File # VP-21-121 11 1011-1027 Hillcrest Drive DeKalb, IL 60115

Unit 1021 ½ A – Studio Apartment Unit 1021 ½ A – Studio Apartment

Unit 1021 ½ B – 1-Bedroom Apartment Unit 1021 ½ B – 1-Bedroom Apartment

Apartment 1 Living Room Apartment 1 Kitchen

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Unit 3 Kitchen Unit 3 Bathroom

Unit 4 Kitchen Unit 4 Bedroom

Unit 4 Bathroom Unit 5 Kitchen

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Unit 5 Bedroom Unit 5 Bathroom

Unit 6 Kitchen Unit 6 Bedroom

Unit 8 Kitchen Unit 8 Bathroom

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Unit 9 Kitchen Unit 9 Bedroom

Unit 12 Kitchen Unit 12 Bathroom

Examples of Deferred Maintenance

Unit 1021 Conference Room Water Damage Unit 1021 ½ A – Water Damage around Window

File # VP-21-121 15 1011-1027 Hillcrest Drive DeKalb, IL 60115

Unit 1021 ½ A Bathroom Under Repair Unit 1021 ½ B Living Room Under Repair

Unit 1021 ½ B Bathroom Under Repair Unit 4 Significant Wall Damage Throughout

Unit 9 Significant Wall Damage Throughout Unit 6 Wall and Door Damage Throughout

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Certification The appraiser signing this report makes the following certifications to the best of their knowledge and belief.

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

o Reported analyses, opinions, and conclusions are limited only by the assumptions and limiting conditions contained within this report, and are the appraisers' personal, impartial, and unbiased professional analyses, opinions, and conclusions.

o The appraiser has 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.

o The appraiser has no bias with respect to the property that is the subject of this report, or to the parties involved with this assignment.

o This engagement is not contingent upon developing or reporting predetermined results.

o Compensation paid to the appraiser 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 the appraisal.

o Reported analyses, opinions, and conclusions were developed, and this report was prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP)

o I made a personal inspection of the property that is the subject of this report on June 28, 2021.

o No one provided significant real property appraisal assistance to the appraiser signing this certification.

o The appraiser has not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report during the three-year period immediately preceding acceptance of this assignment

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

o Use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

File # VP-21-121 17 1011-1027 Hillcrest Drive DeKalb, IL 60115

o As of the date of this report, I have completed the continuing education program for Designated Members of the Appraisal Institute.

o After careful consideration of all factors pertaining to and influencing value, the data and analysis thereof firmly supports a final value opinion(s) for the subject property as of June 29, 2021 at $1,185,000.

______Ken Mrozek, Jr., MBA, MAI, SRA, ASA Certified General Real Estate Appraiser IL #553.001975 Exp: September 30, 2021

File # VP-21-121 18 1011-1027 Hillcrest Drive DeKalb, IL 60115

Assumptions and Limiting Conditions

Acceptance of and/or use of this report constitutes acceptance of the following limiting conditions and assumptions; these can only be modified by written documents executed by both parties.

1.This appraisal is to be used only for the purpose stated herein. While distribution of this appraisal in its entirety is at the discretion of the client, individual sections shall not be distributed; this report is intended to be used in whole and not in part.

2.No part of this appraisal, its value estimates or the identity of the firm or the appraiser(s) may be communicated to the public through advertising, public relations, media sales, or other media.

3.All files, work papers and documents developed in connection with this assignment are the property of Valucentric. Information, estimates and opinions are verified where possible, but cannot be guaranteed. Plans provided are intended to assist the client in visualizing the property; no other use of these plans is intended or permitted.

4.No hidden or unapparent conditions of the property, subsoil or structure, which would make the property more or less valuable, were discovered by the appraiser(s) or made known to the appraiser(s). No responsibility is assumed for such conditions or engineering necessary to discover them. Unless otherwise stated, this appraisal assumes there is no existence of hazardous materials or conditions, in any form, on or near the subject property.

5.Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos, polychlorinated biphenyl, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, was not called to the attention of the appraiser nor did the appraiser become aware of such during the appraiser’s inspection. The appraiser has no knowledge of the existence of such materials on or in the property unless otherwise stated. The appraiser, however, is not qualified to test for such substances. The presence of such hazardous substances may affect the value of the property. The value opinion developed herein is predicated on the assumption that no such hazardous substances exist on or in the property or in such proximity thereto, which would cause a loss in value. No responsibility is assumed for any such hazardous substances, nor for any expertise or knowledge required to discover them.

6.Unless stated herein, the property is assumed to be outside of areas where flood hazard insurance is mandatory. Maps used by public and private agencies to determine these areas are limited with respect to accuracy. Due diligence has been exercised in interpreting these maps, but no responsibility is assumed for misinterpretation.

7.Good title, free of liens, encumbrances and special assessments is assumed. No responsibility is assumed for matters of a legal nature.

8.Necessary licenses, permits, consents, legislative or administrative authority from any local, state or Federal government or private entity are assumed to be in place or reasonably obtainable.

9.It is assumed there are no zoning violations, encroachments, easements or other restrictions which would affect the subject property, unless otherwise stated.

10.The Appraiser is not required to give testimony or produce documents because of having prepared this report unless arrangements are agreed to in advance. If the Appraiser is subpoenaed pursuant to court order or required to produce documents by judicial command, the client agrees to compensate the Appraiser for his appearance time, preparation time, travel time, and document preparation time at the regular hourly rate then in effect plus expenses and attorney fees. In the event the real property appraised is, or becomes the subject of litigation, a condemnation, or other legal proceeding, it is assumed the Appraiser will be given reasonable advanced notice, and reasonable additional time for court preparation.

11.Features of the subject site such as legal description, dimensions, size, etc. were obtained from public records, information provided by the client, professional surveys, and/or other applicable sources. All information obtained therefrom is assumed reasonably correct

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12.Details of the improvements thereon including yet not limited to floor plans, construction materials, dimensions, etc. were obtained from appraiser observation and/or measurement, or other sources considered reliable. All are assumed reasonably correct.

13.Any unseen spaces are assumed to have physical condition and construction quality similar to that in observed spaces. It is further assumed the subject has no hidden defects. The appraiser(s) did not attempt to study, dig, probe, investigate, detect, remove materials, or discover unfavorable physical features.

14.If applicable, income information was provided by ownership, their representatives, or the client. Real estate tax information for the subject was obtained from a reputable source and is assumed correct. All information from any credible source is assumed reasonably correct. Moreover, this information is assumed the most recent that is expeditiously available to the public.

15.Unless stated otherwise, this appraisal assumes any water systems to the subject possess sufficient capacity to serve the intended use of the improvements, if any. This appraisal also assumes the water is potable and non-contaminated. If these systems were inadequate to serve the subject's intended use, then the subject's value and marketability could be adversely affected.

16.Appraisals are based on the data available at the time the assignment is completed. Amendments/modifications to appraisals based on new information made available after the appraisal was completed will be made, as soon as reasonably possible, for an additional fee.

17.Effective January 26, 1992, the Americans with Disabilities Act (ADA) - a national law, affects all non-residential real estate or the portion of any property, which is non-residential. The Appraiser has not observed the subject property to determine whether the subject conforms to the requirements of the ADA. It is possible a compliance survey, together with a detailed analysis of ADA requirements, could reveal the subject is not fully compliant. If such a determination was made, the subject's value may or may not be adversely affected. Since the Appraiser has no direct evidence, or knowledge pertaining to the subject's compliance or lack of compliance, this appraisal does not consider possible noncompliance or its effect on the subject's value.

18.Flood hazards are detailed elsewhere in this report. Except as enumerated herein, the appraiser(s) were not given the results of any environmental testing on or near the property being appraised. Neither observation of the subject property, or research conducted as part of a typical real estate appraisal suggest the presence of any hazardous substance or detrimental environmental condition affecting the subject. Nearby sites were not investigated to determine whether they are contaminated. Public information and other Internet sources were not researched to determine the presence of hazardous substances or detrimental environmental conditions in the subject's vicinity.

19.Federal, State, and local laws concerning any hazardous substance or gas are sometimes contradictory. Therefore, any needed clean up should comply with the most stringent laws. The appraiser(s) are not informed or trained in environmental legalities. It is assumed no hazardous substance or gas adversely affects the subject real estate. If the subject is adversely influenced by a hazardous condition, then the subject's market value would be impaired. The presence of any hazardous condition usually diminishes market value. The value opinion formed in this report assumes there is no environmental hazard affecting the subject real estate. No responsibility is assumed by the appraiser(s) or the company for any hazard, or for any expertise required to discover any environmentally hazardous condition. My client is urged to retain an expert in this field, if desired.

File # VP-21-121 20 1011-1027 Hillcrest Drive DeKalb, IL 60115

Scope of Work

According to the Uniform Standards of Professional Appraisal Practice, it is the appraiser’s responsibility to develop and report a scope of work that results in credible results that are appropriate for the appraisal problem and intended user(s).

Scope of work is the type and extent of research and analyses involved in an assignment. To determine the appropriate scope of work for the assignment, I considered the intended use of the appraisal, the needs of the user, the relevant characteristics of the subject property, and other pertinent factors. My concluded scope of work is summarized below, and in some instances, additional scope details are included in the appropriate sections of the report.

Scope of Work Problem estimate the current As Is market value

Client Donahue & Rose, PC 9501 W. Devon Avenue, Suite 702 Rosemont, IL 60018

Intended Use to assist the clients with decisions related to the possible purchase/sale of the subject property

Intended User(s) clients

Other Intended User(s) None

Appraisal Report Based on the intended users understanding of the subject's physical, economic and legal characteristics, and the intended use of this appraisal, an appraisal report format was used. This is an Appraisal Report as defined by Uniform Standards of Professional Appraisal Practice under Standards Rule 2-2(a). This format provides a summary or description of the appraisal process, subject and market data and valuation analyses.

File # VP-21-121 21 1011-1027 Hillcrest Drive DeKalb, IL 60115

Scope of Work Property Identification The subject has been identified by the assessors' parcel number. Inspection An adequate interior and exterior observation of the subject property was performed by the appraiser signing this report and photographs were taken. Apartment Units 2, 7 and 11 were not Market Analysis An analysis of market conditions has been made. The appraiser has access to adequate market data for the subject market area Highest and Best Use Analysis An as though vacant and as improved highest and best use analysis for the subject has been made. Physically possible, Information Sources The appraisal is based on information gathered during the property inspection, and from records (assessment records and property deeds) as well as interviews with the owner, property manager, broker, or buyer.

Methods Utilized Cost Approach this approach tends to lack reliability when there is a large degree of depreciation. Since the subject structure is substantially depreciated, the cost approach would not be credible and was not developed in this appraisal.

Sales Comparison Approach √ there is inadequate market data to develop a value estimate for this approach.

Income Approach √ the subject is an income producing property and there is adequate market data to develop a value estimate with this approach.

Extraordinary Assumptions and Hypothetical Conditions USPAP defines a hypothetical condition as “a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results but is used for the purpose of analysis."

An extraordinary assumption is defined by the USPAP to be “an assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinion or conclusions.” Extraordinary assumptions presume as fact otherwise uncertain information. In other words, this type of assumption involves uncertainty about an underlying premise. An example is new construction. If the improvements are built to different standards or with different materials, then the value conclusion may be negatively affected.

USPAP Standard Rule 1-2(f) requires the identification of all extraordinary assumptions that are necessary for credible assignment results.

File # VP-21-121 22 1011-1027 Hillcrest Drive DeKalb, IL 60115

Hypothetical conditions assume conditions that are contrary to known fact. An illustration is the current valuation of a proposed home. For the purpose of a rational analysis, it is assumed the home exists on the effective as is value date, but it is known the home is nonexistent. Another example is a new zoning classification, that a property does not have today, but the new zoning is assumed for the purpose of a logical current valuation. Uncertainty is not involved with a hypothetical condition. An essential premise underlying the valuation is known not to exist on the effective value date.

USPAP Standard Rule 1-2(g) requires the identification of all Hypothetical Conditions that are necessary for a credible value opinion.

Hypothetical Conditions - There are no hypothetical conditions for this appraisal.

This appraisal does not address unforeseeable events that could alter the proposed subject property and/or the market conditions reflected in these analyses. The above Extraordinary Assumptions and/or Hypothetical Conditions as well as other assumptions anywhere herein are integral premises upon which the conclusions in this document are based. If any of these assumptions are later found to be materially untrue or inaccurate, then this report’s assignment results may or may not be affected.

Reporting Requirements This appraisal is intended to conform to the requirements of the following:

Uniform Standards of Professional Appraisal Practice (USPAP) Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute Applicable state appraisal regulations Appraisal guidelines of the client/lender

Competency I have performed appraisals on properties substantially like the subject and have taken appraisal courses as well as seminars and updates. I am a Certified General Real Estate Appraiser in Illinois and possess the practical experience necessary to complete this report. My qualifications are included at the end of the appraisal in the addendum.

File # VP-21-121 23 1011-1027 Hillcrest Drive DeKalb, IL 60115

Personal Property and Intangibles Personal property is movable and not permanently affixed to the real estate. Examples of personal property are freestanding ranges, refrigerators, tables, desks, chairs, beds, linen, silverware, hand tools, and small utensils. An intangible is a nonphysical asset like franchises, trademarks, patents, goodwill, and mineral rights. Personal and intangible property included in this appraisal's value opinion, if any, is considered typical for this type of real estate, yet insignificant to the value opinion. Therefore, non-realty is not itemized or valued herein. Moreover, this report’s final value conclusion(s) excludes unaffixed equipment, detached trade fixtures, and chattel unless specifically stated to the contrary.

Definition of Market Value The definition of market value is used in all federally regulated transactions that exceed a minimum amount. This definition is mandated by Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989. The exact same definition was published in the Federal Register several times by different federal agencies. (Some printings are: 12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register 12202, April 9, 1992; and 59 Federal Register 29499, June 7, 1994.)

Market Value is defined as:

“the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:  buyer and seller are both typically motivated.  both parties are well informed or well advised and acting in what they consider their own best interests.  a reasonable time is allowed for exposure in the open market.  payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto, and  the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

Virtually the same definition is also cited in the most recent version of the USPAP.

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Market Area Analysis

Location Map

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Market Conditions Introduction The market area is the physical area where similar properties effectively compete. It can also be envisioned as the area that contains the all the primary competition, and in certain cases, some secondary competition. Market areas may contain one or more neighborhoods, districts, cities, counties, or states.

The subject is located in DeKalb, Illinois, in an area where the primary market influence is Northern Illinois University (NIU). The subject is approximately half a mile northwest of the main campus and less than a mile from the center of campus. Although NIU is the primary market area, demographic information in this area was limited; and so, most of the information below relates to the City of DeKalb.

General Market Area Boundaries North Dresser Road East N 1st Street West Annie Glidden Road South Lincoln Highway (aka IL Route 38)

Demographics Recent Population Level 43,141 people. Since 2010 the population has declined 1.9%. Median Household Income $38,357

Local Unemployment Physical Area DeKalb, Illinois Recent Pattern Increased by 2.2% Approx. Current Percent 7.0% (US Average is 6.0%)

Financing (for real estate like subject) General Loan Availability Good Interest Rate Range 2.8% to 8.2%, Average 5.5% Typical Loan-to-Value Ratio 50% to 65%, Average 58% Typical Amortization Years 15 to 35 years, Average 25 years Loan Maturity / Balloon 5 to 10 years

Local housing is a good barometer of general consumer confidence, and often influences activity in non-residential real estate and the larger economy. Non-residential real estate often experiences price movement in the same direction.

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Detached Single-Family Housing Statistics (3-mile radius)

Year 2016 2017 2018 2019 2020 2021 YTD Median Sale Price $145,934 $148,603 $156,519 $165,645 $169,500 $170,000 Annual Change in MSP - 1.83% 5.33% 5.83% 2.33% 0.29% Number Sold 340 371 400 350 355 197 Avg. Days on Market 115 81 62 70 71 34 Source: MRED

The data indicates the median sale price for detached single-family homes increased 16.15% from 2016 through 2021 YTD, indicating a 3.83% annual average increase. The table also indicates that the number of detached single-family home sales in the same period ranged from 197 to 400 with an average of 363 per year, while average marketing times ranged from 34 to 115 days with an average of 80 days. The data suggests generally increasing market conditions in recent years for detached single-family housing in the subject market. The multi- unit residential market tends to follow the housing market closely and the retail market tends to also follow, but lagging behind the housing trends.

Expected Near Future Price Change Slightly Increasing Overall Supply and Demand of Housing Slightly Under Supplied

Real Estate Like Subject Rental Market Inventory of Competing Property for Rent Given a shortage of housing supply, there is higher than normal demand for rental spaces in the market area. Consequently, the market is under supplied with inventory. Retail rental spaces have increased slightly over the past 5 years as well, but increases are not as great as the residential rental rates. Rent Rates & Occupancy Residential rental rates have increased annually over the past 5 or more year and the short supply of available units makes occupancy rates high across the region. Again, this is similar to retail units, but rental rate increases and occupancy rates are lower than residential rates.

Sales Market New Construction Due to the COVID-19 Pandemic and high construction costs, new construction has slowed down significantly in the past 12 to 18 months, for both residential and commercial. Inventory of Competing Property For Sale Inventory of multi-unit residential and retail

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properties is generally low across the region. Expected Near Future Price Change Prices for multi-unit residential and commercial properties is expected to continue to increase into the near future. The COVID-19 Pandemic has slowed down the market, but it has begun to recover and appears to be positioned for continued growth. Marketing Times Sales of multi-unit residential properties and similar mixed use commercial properties have generally ranged between 9 and 18 months. Overall Market Conditions Overall, the market is recovering from the recession that resulted from the COVID-19 Pandemic. Overall market conditions are improving and are expected to continue to improve into the near future.

Real Estate Cycles Real estate markets are characterized by cycles. Real estate cycles typically involve successive periods of expansion, peak levels of activity, contraction, and troughs. Factors that cause markets to change are distinctly different from symptoms of change. Examples of symptoms of change include changes in vacancy rates (a leading indicator), falling or rising property prices, increases in the frequency of concessions and seller financing, sales prices exceeding listing price, and other conditions symptomatic of larger, more basic problems. Factors that cause markets to change are generally the product of macro-level forces. They influence market psychology and drive behavior in profound, sometimes dramatic ways. Such causative factors can involve a single defining event or a slower moving series of events that are evolutionary in nature and sometimes not readily apparent to real time observers. Whether they consist of a single defining event or series of related events, these causative factors are indicative of shifts in underlying political and social as well as economic conditions. The subject’s market, as of the effective date of the report, is considered to be in a 'recovery', which is characterized by strengthening demand, decreasing vacancy, rental rates starting to increase, less concessions, and evidence of new construction beginning to occur. However, we refer back to the COVID-19 discussion earlier in the report which discusses the current crisis & potential for disrupting the current market trends.

File # VP-21-121 28 1011-1027 Hillcrest Drive DeKalb, IL 60115

Market Area Statistics The following table and graphs are based on a survey of 232 retail, office and multi-unit residential properties in DeKalb Illinois over the past 10 years. Information was gathered from CoStar is a commercial real estate information company.

# of % of Avg Sale Avg Av g Bldg Avg Land To Avg Price Median Price Avg Cap Median Period Sales Search Price Land SF SF Bldg Ratio Per Bldg SF Per Bldg SF Rate Cap Rate Search 232 100.0% $1,584,570 85,942 21,890 3.93 $72.32 $75.00 8.9% 7.7% 2021 YTD 13 4.5% $1,280,377 27,485 12,102 2.27 $146.19 $157.67 8.9% 8.9% 2020 18 6.3% $940,819 47,072 9,093 5.18 $96.12 $67.04 5.7% 5.7% 2019 16 5.6% $983,964 32,296 15,364 2.10 $60.31 $71.06 7.5% 7.5% 2018 25 8.7% $820,313 95,758 11,266 8.50 $182.44 $76.53 14.0% 9.0% 2017 33 11.5% $690,555 60,709 15,658 3.88 $82.88 $53.28 6.1% 6.1% 2016 26 9.1% $2,915,048 123,756 31,404 3.94 $87.22 $77.58 7.5% 7.5% 2015 22 7.7% $2,420,511 173,370 52,563 3.30 $40.68 $87.00 7.7% 7.5% 2014 34 11.8% $1,728,862 116,437 34,063 3.42 $80.71 $54.72 8.4% 8.4% 2013 15 5.2% $544,344 42,761 8,671 4.93 $64.30 $70.74 7.7% 7.7% 2012 19 6.6% $2,114,179 79,039 28,449 2.78 $64.75 $71.01 8.0% 8.0% 2011 11 3.8% $1,913,929 91,061 26,565 3.43 $55.38 $48.61 5.9% 5.9%

Avg Av g Bldg Avg Land To Avg Price Median Price Avg Cap Median Land SF SF Bldg Ratio Per Bldg SF Per Bldg SF Rate Cap Rate Low 27,485 8,671 2.10 $40.68 $48.61 5.7% 5.7% High 173,370 52,563 8.50 $182.44 $157.67 14.0% 9.0% Average 81,307 22,257 3.97 $86.11 $75.85 8.0% 7.5% Median 82,491 18,774 3.65 $76.52 $71.04 7.7% 7.6%

Considering there were very few sales of mixed commercial/residential use properties each year, I considered all retail, office and multi-unit residential property sales over the past 10 years for this trend analysis. The subject’s building size is larger than the average and the land to building ratio is smaller than the norm; and so, the subject’s price would tend to be lower. Additionally, the subject’s overall condition is below the average which would also tend to push the subject’s value below the average sale price per square foot. Given all this, the subject’s market value is expected to be well below the measures of central tendance (below $71.04/SF). Given the subject’s overall condition and increased risk, the subject’s capitalization is expected to be above the measures of central tendance (above 8.0%). Comparables selected for the sales comparison and income capitalization approaches below will provide a better indication of market value. This section is included to show the general trends in the market.

The table on the next page is an overview of the key performance indicators for these sales over the past 10 years, considering the same 153 sales of retail, office and multi-unit residential properties.

File # VP-21-121 29 1011-1027 Hillcrest Drive DeKalb, IL 60115

Market Area Statistics Analysis Vacancy Rate: The average vacancy rate for retail, office and multi-unit residential properties has most often ranged between 9.36% and 5.63% over the past 10 years, and is currently below the normal at 5.1%. The COVID-19 Pandemic does not appear to have a significant change in vacancy, but does appear to have stabilize over the past 18 months. This has in part been due to a moratorium on evictions during the first part of the pandemic, but overall, it does not appear to have significantly impacted occupancy.

Market Rent per Unit: The average rental rate has improved from a low of $13.68/SF in 2nd Quarter 2014 to the current rate of $14.34/SF (a 1.0% annual increase). Though the growth has stabilized over the past 18 months.

Market Sales Price per SF: Like market rent, the average sales price per unit has generally increased over the past 10 years from $77/SF to the current high of 117/SF (a 4.2% annual increase). Unlike market rent, the growth in market sales price per square foot appears to have continued to increase at the same rate over the past 18 months.

Market Capitalization Rate: The average market capitalization rate decreased from a high of 7.66% to the current rate of 6.92%, with some fluctuations over the past 10 years. However, it has remained relatively stable between 6.89% and 7.15% over the past 7 years. As noted above, these capitalization rates are lower than the subject given they have significantly less risk than the subject property. However, the subject’s capitalization rate would tend to follow the market trends over the past 10 years, if all else remained the same.

File # VP-21-121 30 1011-1027 Hillcrest Drive DeKalb, IL 60115

Conclusions Properties like the subject in the DeKalb market were improving in the years prior to the pandemic and have generally stabilized since the pandemic. There were no indicators that the market has declined due to the pandemic, only stabilized. It is also expected to slowly improve as the pandemic stabilizes and is no longer adversely impacting the economy.

Estimate of Exposure and Marketing Time

The average months to sale for properties most like the subject has generally remained under 18 months over the past 10 years (with the exception of 2 quarters). Properties like the subject in the region have a 62.8% probability of selling within 12 months and a 75.6% probability of selling within 18 months. Based on this, I have estimated the exposure and marketing times to be 9 to 18 months.

File # VP-21-121 31 1011-1027 Hillcrest Drive DeKalb, IL 60115

Subject Property Description

The subject property is a 2.05-acre commercial site improved with a 33,316 square foot 1- and 2-story mixed-use commercial building with 14 apartments, 9 commercial units and an asphalt parking lot with roughly 140 parking spaces.

Site Details

Land Summary Gross Land Gross Land Usable Land Usable Land Parcel ID Shape Topography (SF) (Acres) (SF) (Acres) 08-15-151-014 89,300 2.05 89,300 2.05 Irregular Level

Frontage/Access: The subject property has average access with frontage as follows:  Hillcrest Drive: 425 feet

Visibility: Average

Topography: Level

Soil Conditions: The soil conditions observed at the subject appear to be typical of the region and adequate to support development.

Utilities: Adequate Utilities

Site Improvements:  Streetlights  Sidewalks  Curbs and Gutters  Modest Landscaping

Encumbrance / There are no known adverse encumbrance or easement issues. Easement Issues: Please reference the Limiting Conditions and Assumptions section of this report.

Environmental: There are no known adverse environmental conditions on the subject site. Please reference Limiting Conditions and Assumptions.

Excess / Surplus Land: None

Surrounding Uses: Commercial and Multi-Unit Residential Uses

Site Comments: The site has typical physical features. Its overall locational attributes are considered average/good relative to competitive parcels. Its location in near proximity to Northern Illinois University has a positive impact on the subject site.

File # VP-21-121 32 1011-1027 Hillcrest Drive DeKalb, IL 60115

Legal Description A professional surveyor and / or legal counsel should verify the following legal description before relying upon, or using it as part of any conveyance, or any other document. This legal description was obtained from sources deemed reliable and is assumed accurate. The subject property (current PIN 08-15-151-014) is comprised of two retired PINS (08-15-151-011 and 08- 15-151-013). The Legal Description of these two retired parcels were taken from public record and are as follows:

Recorded Legal Description for 08-15-151-012

Recorded Legal Description for 08-15-151-011

File # VP-21-121 33 1011-1027 Hillcrest Drive DeKalb, IL 60115

Assessor’s Tax Map The subject is further identified in the DeKalb County tax records as 08-15-151-014. A copy of the relevant section of the tax map is shown below.

Subject History My research discovered the following about the subject property:

File # VP-21-121 34 1011-1027 Hillcrest Drive DeKalb, IL 60115

Flood Zone The subject is located in an area mapped by the Federal Emergency Management Agency (FEMA). According to the appropriate flood map, which is identified below, the subject is located in FEMA flood zone X, which -- classified as a flood hazard area.

FEMA Flood Map Number: 18037C0234E FEMA Flood Map Date: January 2, 2009 Flood Zone Comments: The subject is not in a flood hazard zone.

Flood map interpretation is believed accurate but cannot be guaranteed. If you need a precise determination of the subject's flood hazard classification, you should consult a professional engineer, licensed surveyor, or local governmental authority to make an exact determination.

The subject is not in a flood hazard zone.

FEMA Flood Map

File # VP-21-121 35 1011-1027 Hillcrest Drive DeKalb, IL 60115

Improvements Description Property Name Hillcrest Mixed-Use Property Property Class/Type Retail-Commercial/Mixed Use

Building Summary Building Summary Construction Gross Number of Number of Building Name/ID Year Built Condition Quality Building Area Stories Units Mixed-Use Building 1975 Fair to Average Average 33,318 1 & 2 23

Detailed Description Mixed-Use Building Foundation, Frame and Exterior Foundation: Poured Concrete Slab & Partial Basement Basement: 1,836 SF

Basement Use: Unfinished Storage (Unit 1027) Structural Frame: Mixture of Class C & Class D Exterior: Brick/Wood & Metal Siding/Average Windows: Double Hung Roof Type/Cover: Flat & Crossed Gable over Canopy / Flat - Membrane/Gable - Metal

Interior Floor Cover: Tile/Carpet Walls: Generally Painted Drywall Ceilings: Generally Painted Drywall (Some Acoustic Tiles in Retail Units) Lighting: Florescent & Incandescent Restrooms: 1 to 2 Half Bathrooms per Retail Units/1 Full Bathroom per Apartment Mechanical Systems Heating: GFA - Retail Units/EBB - Apartments Cooling: CAC - Some Retail Units/None - Apartments Electrical: Appears Adequate Plumbing Condition: Appears Adequate Sprinkler: None Elevators: None

Mixed-Use Building Comments The subject building is roughly 46 years old and is showing signs of significant wear and tear due to normal use over an extended period of time. The roof and exterior have been repaired or replaced over the past 4 years as well as many windows and doors. However, there are some windows and doors that need to be replaced. Walls, flooring and ceilings are generally functioning, but are showing signs of their age. Some apartments have holes in walls and interior door are removed. Though some units are damaged, they are occupied and repairs are not likely to be made until unit turnover. Units 1021 ½ A & B were being renovated at the time of the site visit and were not yet able to be occupied. Unit 1021 ½ A had some wall repairs around the window, some bathroom repairs, and painting required. I have estimated these repairs to be around $3,000. Unit 1021 ½ B repairs were more extensive; including, wall repair, door repairs, kitchen cabinet repairs, bathroom repairs, and painting. I have estimated these repairs to be around $7,000. And so, total estimated deferred maintenance costs are $10,000.

File # VP-21-121 36 1011-1027 Hillcrest Drive DeKalb, IL 60115

Assessment and Taxes Taxing Authority DeKalb County

Assessment Year 2021

Real Estate Assessment and Taxes Total Implied Tax ID Land Improvements Other Taxes Assessment Value 08-15-151-014 $146,466 $317,782 $0 $464,248 $1,392,744 $53,385 Notes: Assessed value is one third of the assessor's implied market value. Taxes are based on the 2020 tax year, payable 2021. The assessed values are the 2021 valuation.

Zoning Zoning Summary Zoning Authority City of DeKalb Zoning District LC Zoning Code Light Commercial Zoning Type/Description The “LC” Light Commercial District is intended to be located in areas adjacent to collector streets and some arterial streets and is designed to accommodate the retail and limited service needs of a larger consumer population than is typically served by the Neighborhood Commercial District. Actual Density of Use N/A Current Use Legally Conforming The subject is a legal and conforming use. Zoning Change Likely Not Likely Zoning Density/FAR N/A Front Set Back Distance 40 Side Yard Distance None Back Yard Distance 30 Maximum Building Height 3 Stores or 45 feet

Zoning Comments: Dwelling units when located above the ground floor, with an allowed commercial use on the ground floor is a permitted Special Land Use and Development in the 'LC' Light Commercial District.

File # VP-21-121 37 1011-1027 Hillcrest Drive DeKalb, IL 60115

Zoning Map

Red Arrow Points to the Subject Property

File # VP-21-121 38 1011-1027 Hillcrest Drive DeKalb, IL 60115

Highest and Best Use

Highest and best use may be defined as the reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The concept of Highest and Best Use is based upon four major criteria, which are summarized below.

1. Legally Permissible: The use must be legal or probable. That is, the use must conform to existing zoning restrictions, or there must be a reasonable likelihood a rezoning or variance may be granted. Private deed restrictions must not be violated.

2. Physically Possible: The use must also be physically possible to develop. Physical attributes commonly considered include size, shape, access, flood potential, topography, and availability of utilities.

3. Financially Feasible: Land may be developed with different uses. Only those uses, which produce a positive net return over time with acceptable risk, are deemed financially viable. This use must not depress surrounding property values.

4. Maximally Productive. Of all uses that survive the first three tests, there is only one use, which produces the greatest return with the least risk. This single use represents the property’s Highest and Best Use. Supply and demand are constantly fluctuating, so it is common for a property’s highest and best use to change.

Highest and Best Use of the Site The highest and best use of the site, as vacant, is for commercial development.

Highest and Best Use as Improved The highest and best use of the subject as improved continued mixed commercial/residential use.

If the subject site is vacant, then only the highest and best use as vacant is considered. If the subject site is improved, first the highest and best use of the subject site as if it were vacant and ready for development is developed. Then the highest and best use as improved is developed. The highest and best use as improved often is the same as the highest and best use as though vacant; however, this is not always the case.

Highest and Best Use As Vacant Legally Permissible The site is zoned Light Commercial. Permitted uses include a variety of commercial uses and other related accessory uses. To the best of my knowledge, there are no legal restrictions such as easements or deed restrictions that would effectively limit the use of the property.

File # VP-21-121 39 1011-1027 Hillcrest Drive DeKalb, IL 60115

Physically Possible The physical characteristics of the site do not appear to impose any unusual restrictions on development. Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses.

Financially Feasible The determination of financial feasibility is dependent primarily upon the relationship of supply and demand. Based on my analysis, demand for most property types allowed under the current zoning classification is average; however, overall price levels have increased due to a shortage of construction materials due to the COVID-19 Pandemic. This is expected to continue to improve in the near future (next 6 to 12 months); however, the costs are currently limiting new construction of commercial and residential properties.

Maximally Productive Based on the three criteria previously discussed, I are of the opinion that the most prudent and maximally productive use of the subject site as vacant would be commercial development.

Conclusion Development of the site for commercial use is the only use that meets the four tests of highest and best use. Therefore, it is the highest and best use of the property as vacant.

The most probable buyer of the subject as vacant would be a developer and timing for development would be no sooner than 6 month and likely 12 to 24 months or longer.

Highest and Best Use As Improved Legally Permissible The existing improvements generally comply with the zoning ordinance, under a special use with dwelling units on the second floor. The use is consistent with the physical and economic characteristics of the immediate area; such properties are inherently permitted. In addition, there do not appear to be any possible zoning changes in the near future.

Physically Possible As improved, the subject property is best physically suited for its current use. It is physically possible to reconfigure the subject improvements for an alternative legal use or to raze and make ready for redevelopment.

Financially Feasible The subject improvements have not yet reached the end of their economic (or useful) life. Sales of commercial land within the city of DeKalb indicated that the subject’s land value (as vacant) is likely between $4.50/SF and $7/50/SF of land, or between $400,000 and $770,000 rounded. The value of the subject property as improved is significantly greater than the value of the land as though vacant. And so, based on my observations and research, the improvements are a positive value contribution to the land; hence, they should not be razed.

Although, the subject improvements are showing signs of significant physical depreciation due to age and limited maintenance. Major components like the roof, exterior siding, and windows have been recently replaced, extending the life of the subject property. The interior of rental units and other common areas generally have not received any significant investment. It is possible to completely renovate the units; however, it is not expected to be financially feasible. In other words, the costs to vacate all units, completely renovate the interior, and then lease up

File # VP-21-121 40 1011-1027 Hillcrest Drive DeKalb, IL 60115 units to market occupancy would be more expensive than continuing to operate the subject property in its current condition with limited maintenance.

Based on my research and the current market conditions, there appears to be no alternative use that would justify the removal or substantial alteration of the existing improvements. Zoning allows for alternative uses, and it is physically possible to convert to some alternative uses; however, it is not financially feasible. The costs of converting would be greater than any additional benefits in converting. The improvements are suitable for their current use and continued use is financially feasible.

Maximum Productivity Therefore, the subject’s maximally productive use is its current use, mixed commercial/residential use.

Conclusion The subject’s current improvements were designed to serve its current use and they are compatible with nearby uses. Local costs, prices, and rents do not justify major building alterations. Therefore, the subject’s highest and best use as improved is continued mixed commercial/residential use. The most probable buyer of the subject as improved would be and investor in residential rental properties.

File # VP-21-121 41 1011-1027 Hillcrest Drive DeKalb, IL 60115

Valuation Methodology

Appraisal Process Three basic approaches may be used to arrive at an estimate of market value. They are Cost Approach, Sales Comparison Approach and Income Approach

Cost Approach The cost approach requires the estimation of a current reproduction or replacement cost for the subject's physical improvements. From total cost new, an amount must be deducted for depreciation. Depreciation is a loss in value due to any cause. It can be classified into three main types - physical deterioration, functional obsolescence, or external obsolescence. Land value is then added to the depreciated cost of the improvements thereby completing this approach.

Sales Comparison Approach The sales comparison approach compares sales of similar properties with the subject property. Each comparable sale is adjusted for its inferior or superior characteristics. The values derived from the adjusted comparable sales form a range of value for the subject. By process of correlation and analysis, a final indicated value is derived.

Income Approach The income approach is based on the premise that value is directly related to income. This approach to value converts the anticipated flow of future benefits (income) to a present value estimate through a capitalization or discounted cash flow (DCF) analysis. Capitalization is the process of converting projected income into a capital sum, whereby a single year’s net income is translated into a value indication via an overall capitalization rate. However, when the forecasted income pattern is irregular, or it is advisable to analyze net income for every year of the ownership period, yield capitalization, or discounted cash flow (DCF) analysis is generally employed, which converts a series of income streams into a present worth estimate, or value indication, via a discount rate.

Final Reconciliation The appraisal process concludes with the reconciliation of the values derived from the approaches applied for a single estimate of market value. Different properties require different means of analysis and typically lend themselves to one approach over the others.

Applicable Approaches The applicable approaches for this analysis were detailed within the Scope of Work section of the report.

As Is Value As of the effective date of value, the subject had two units (1021 ½ A and 1021 ½ B) which were being renovated and unable to be occupied. The approaches developed below consider these units as occupied. As described in the Improvements Description Section, I have estimated the remaining costs to cure the deferred maintenance at $10,000. I also considered the lost rent for 2 months while the units are being renovated and before they are rented. Lost rent is ($795 + $495) x 2 months = $2,580. Finally, I considered incentive (+20%) for a prospective investor to take on the project, finish the repairs, and lease up the spaces. And so, the total estimated discount due to deferred maintenance is estimated to be $15,000 ($12,580 x 1.2, rounded).

File # VP-21-121 42 1011-1027 Hillcrest Drive DeKalb, IL 60115

Sales Comparison Approach The sales comparison approach is based upon the principle of substitution. This principle contends an informed buyer would pay no more for a property than the price of acquiring an equally desirable substitute in an open, competitive market. It is based on the principles of supply and demand, balance, substitution and externalities. In this approach, comparables are compared to the subject. Differences are noted and dissimilarities between the subject and the comparables are categorized into elements of comparison. Adjustments, to compensate for dissimilarities, are next applied the sale prices of the comparable sales. Then, a value opinion for the subject is reconciled from the range in adjusted sale prices established by the comparables.

Given the subject’s proximity to Northern Illinois University, I considered only comparables within the City of DeKalb, which would have the most similar locational attributes. One challenge in finding comparable sales is that the subject property is unique with retail units on the first floor and dwelling units on the second floor, known as a mixed use. Most available mixed use property sales in the area are older downtown commercial buildings with 1 or more commercial units on the first floor and apartments on the second floor. Though these properties are most similar in overall use, they tend to have significantly older improvements and limited on-site parking availability. And so, I first focused on comparable sales of mixed commercial/residential use properties. For this analysis, considered current active listings as well as sales of downtown mixed use properties over the past 5 years. To find properties more similar in location and age, I also considered multi-unit residential sales over the past 12 months. The following table is a summary of the active listings found in the market research stage of this analysis.

Multi-Unit Residential Properties - Active Listings No. of Annual MLS # Address City Sale Date Price DOM Price/Unit GRM Cap Rate Units Income 1 11057151 238/242 Augusta Ave DeKalb 17 Active $369,900 $53,760 104 $21,759 6.88 Unknown 2 11151517 1121 W Hillcrest Dr DeKalb 5 Active $495,000 $65,000 19 $99,000 7.62 Unknown 3 11121718 924 Greenbrier Dr DeKalb 24 Active $500,000 $91,200 45 $20,833 5.48 10.0% 4 11123131 1010 Blackhawk Rd DeKalb 27 Active $729,000 Unknown 44 $27,000 Unknown Unknown 5 11115253 822 Russell Rd DeKalb 26 Active $1,484,000 $250,440 50 $57,077 5.93 7.8%

Downtown Mixed Use Properties - Active Listings No. of Annual MLS # Address City Sale Date Price DOM Price/Unit GRM Cap Rate GBA Price/SF Units Income 1 10794017 137 E Lincoln Hwy DeKalb 3 Active $225,000 $33,300 367 $75,000 6.76 Unknown 4,112 $54.72 2 10895570 308 E Lincoln Hwy DeKalb 4 Active $240,000 $30,000 292 $60,000 8.00 Unknown 2,480 $96.77 3 11159072 132 N 3rd St DeKalb 3 Active $270,000 Unknown 11 $90,000 Unknown Unknown 2,400 $112.50 4 10994638 150-156 E Lincoln Hwy DeKalb 7 Active $319,900 $50,400 375 $45,700 6.35 Unknown 8,800 $36.35 5 10816969 240 E Lincoln Hwy DeKalb 3 Active $340,000 Unknown 349 $113,333 Unknown Unknown 6,000 $56.67 6 10793996 143 E Lincoln Hwy DeKalb 6 Active $445,000 $66,300 367 $74,167 6.71 Unknown 5,927 $75.08 7 11101496 128 E Lincoln Hwy DeKalb 9 Active $469,900 Unknown 62 $52,211 Unknown 11.3% 7,056 $66.60

DOM Price/Unit GRM Cap Rate GBA Price/SF Low 11 $20,833 5.48 7.8% 2,400 $36.35 High 375 $113,333 8.00 11.3% 8,800 $112.50 Average 174 $61,340 6.71 9.7% 5,254 $71.24 Median 83 $58,538 6.73 10.0% 5,927 $66.60

I considered active listings for both multi-unit residential properties and downtown mixed use properties. Generally, the downtown mixed use properties are listed for greater per unit than multi-unit residential properties. This is due commercial units being greater in value than apartment units. However, the average gross rent multiplier for apartments (6.48) is similar to the gross rent multiplier for downtown mixed use properties (6.95). Note, these are active listings and these numbers tend to decrease after considering the sale price. Though capitalization rate data was only available for three listings, rates centered around 10%.

File # VP-21-121 43 1011-1027 Hillcrest Drive DeKalb, IL 60115

Multi-Unit Residential Properties - Comparable Sales No. of Annual Cap MLS # Address City Sale Date Price DOM Price/Unit GRM SP/LP Units Income Rate 1 10758652 815 Charles St DeKalb 8 4/5/2021 $170,000 $41,280 255 $21,250 4.12 12.5% 89.5% 2 10881304 1025 S 4th St DeKalb 5 1/14/2021 $195,500 $42,300 34 $39,100 4.62 12.4% 93.1% 3 10640808 824 & 829 Greenbrier Dr DeKalb 30 5/17/2021 $620,000 $147,000 384 $20,667 4.22 15.1% 78.5% 4 10379124 928 W Hillcrest Dr DeKalb 31 9/29/2020 $485,000 Unknown 466 $15,645 Unknow n Unknow n 74.6% 5 10636657 893 Fotis Dr DeKalb 16 7/17/2020 $1,100,000 $172,800 360 $68,750 6.37 8.9% 91.7%

Downtown Mixed Use Properties - Comparable Sales No. of Annual Cap MLS # Address City Sale Date Price DOM Price/Unit GRM SP/LP GBA Price/SF Units Income Rate 1 09958380 311 E Lincoln Hwy DeKalb 2 6/22/2018 $95,000 Unknown 9 $47,500 Unknow n Unknow n 86.4% 3,000 $31.67 2 09958318 249 E Lincoln Hwy DeKalb 3 7/11/2018 $115,000 Unknown 1 $38,333 Unknow n Unknow n 92.0% 3,900 $29.49 3 09303000 132 E Lincoln Hwy DeKalb 8 5/18/2017 $155,000 Unknown 261 $19,375 Unknow n Unknow n 88.1% 11,500 $13.48 4 10053830 151 N 4th St DeKalb 15 3/4/2021 $212,500 Unknown 2,316 $14,167 Unknow n Unknow n 93.8% 20,071 $10.59 5 10563701 811 & 817 W Lincoln Hwy DeKalb 19 1/28/2021 $1,250,000 Unknown 295 $65,789 Unknow n Unknow n 76.4% 25,296 $49.41 6 09950775 308 E Lincoln Hwy DeKalb 4 7/6/2018 $190,000 Unknown 29 $47,500 Unknow n Unknow n 95.5% 2,480 $76.61

DOM Price/Unit GRM Cap SP/LP GBA Price/SF Low 1 $14,167 4.12 7.8% 74.6% 2,480 $10.59 High 2316 $99,000 7.62 15.1% 95.5% 25,296 $76.61 Average 292 $38,984 5.65 11.1% 87.2% 11,041 $35.21 Median 77 $32,667 5.70 11.2% 89.5% 7,700 $30.58

I also considered sale of both multi-unit residential properties and downtown mixed use properties. Similar to listings, downtown mixed use properties sold for greater per unit than multi-unit residential properties. Again, commercial units have greater value than apartment units. Gross rent multipliers for the apartment sales averaged 4.83, which was significantly less than the multiplier for current listings. This largely due to the sale price to list price ratio which averaged 87.3% and had a median of 89.5%. Also noted, the average price per unit and average price per square foot were significantly less than the active listings. Though there are clear indications that the market is improving, it appears sellers have listed properties at a significantly higher price than the market indicates. There were four noted capitalization rates for multi-unit residential properties which centered around 11%. This is slightly greater than the listings rate of around 10%, due to generally lower sales prices.

The comparable sales are sufficient to bracket the subject’s market value. Downtown Mixed Use Sales 1 and 2 were bank owned sales at the time of sale. Although, they were also significantly smaller than the subject building (which would tend to make them superior), the subject’s market value is likely to be above these sales, above $31.67/SF. Downtown Mixed Use Sale 5 is most similar to the subject; however, it is in superior overall condition. And so, the subject’s market value is likely to be below this sale, below $49.41/SF.

Comparables Sales Data I have researched the market for all available comparable sales and have selected the best five comparable sales for this analysis; these are documented on the following pages followed by a location map and analysis grid. All comparables have been researched through numerous sources, inspected and verified by a party to the transaction. The unit of comparison for mixed use properties tends to be price per square foot, which was used for the analysis.

Downtown Mixed Use Comparables No. of MLS # Address City Sale Date Price DOM Price/Unit SP/LP GBA Price/SF Comparison Units 1 10053830 151 N 4th St DeKalb 15 3/4/2021 $212,500 2,316 $14,167 93.8% 20,071 $10.59 Far Inferior 2 10379124 928 W Hillcrest Dr DeKalb 31 9/29/2020 $485,000 466 $15,645 74.6% 12,996 $37.32 Inferior 3 10563701 811 & 817 W Lincoln Hwy DeKalb 11 1/28/2021 $1,250,000 295 $113,636 76.6% 25,296 $49.41 Superior 4 09950775 308 E Lincoln Hwy DeKalb 4 7/6/2018 $190,000 29 $47,500 95.5% 2,480 $76.61 Far Superior

File # VP-21-121 44 1011-1027 Hillcrest Drive DeKalb, IL 60115

Sale Comparables Location Map

File # VP-21-121 45 1011-1027 Hillcrest Drive DeKalb, IL 60115

Sales Comparable Data Sheets Comparable 1

ID 26 Address 151 N 4th St City DeKalb State IL Zip 60115 County DeKalb Latitude 41.9304218 Longitude -88.7498132 Tax ID 08-23-160-031 Property Major Type Retail-Commercial Property Type Mixed Use Property Sub Type

Transaction ID 26 Date 2/25/2021 Address 151 N 4th St Price $212,500 City DeKalb Price Per SF $10.59 State IL Transaction Type Closed Sale County DeKalb Financing Cash Eq Grantor Signature Five Illinois REO, Property Rights Leased Fee Grantee RichardLLC Sinclair Properties, Conditions of Sale Normal Book/Page or Reference Doc 2LLC021002992 Days on Market 2316 Verification Assessor Records Site Acres 0.2 Topography Level Land SF 7,526 Zoning Central Business Road Frontage 178 Flood Zone DX istrict Shape Rectangular Encumbrance or Easement None Noted Utilities City Environmental Issues None Noted Improvements & Financial Data GBA 20,071 Design Appeal Fair Land to Building Ratio 0.37 Parking Adequacy Limited No. of Units 15 Construction Class Class C Year Built 1961 Construction Average Condition Fair Quality Average Comments Mixed use building located in central DeKalb. There are 10 office units on the floor and 5 apartments on the second floor. Per the listing broker, only 1 office unit was tenant occupied at the time of sale and the apartments were fully occupied. The building was dated and needed to be updated. It was not ADA compliant. There is a basement parking garage with 18 parking spaces. Per the listing, the capitalization rate would be 13% if fully leased, which was higher than the market due to the subject overall condition.

File # VP-21-121 46 1011-1027 Hillcrest Drive DeKalb, IL 60115

Comparable 2

ID 27 Address 928 W Hillcrest Dr City DeKalb State IL Zip 60115 County DeKalb Latitude 41.94517787 Longitude -88.76978402 Tax ID 08-15-178-002 Property Major Type Multi-Family Property Type Student-Oriented Housing Property Sub Type Fraternity/Sorority

Transaction ID 27 Date 9/28/2020 Address 928 W Hillcrest Dr Price $485,000 City DeKalb Price Per SF $37.32 State IL Transaction Type Closed Sale County DeKalb Financing Cash Eq Grantor Sigma Kappa Gamma Property Rights Fee Simple Grantee TYM Properties LLC Conditions of Sale Normal Book/Page or Reference Doc 2021000525 Days on Market 466 Verification Assessor Records Site Acres 0.8 Topography Level Land SF 33,000 Zoning Multiple Family Road Frontage 212 Flood Zone X Shape Irregular Encumbrance or Easement None Noted Utilities City Environmental Issues None Noted Improvements & Financial Data GBA 12,996 Design Appeal Fair Land to Building Ratio 2.54 Parking Adequacy Adequate No. of Units 31 Construction Class Class C Year Built 1969 Construction Average Condition Average Quality Average Comments This is a former sorority house with 30 rooms and a 1-bedroom apartment. Brick 3-story building with wet sprinklers, wired smoke detectors, 3 upgraded washrooms, 1 full kitchen, 1 dining hall and one formal living room with a fireplace. Paved and fenced parking lot for 32 cars. Per the listing, the 30 rooms rent for $250 to $500 per month (furnished 1 or 2 bed rooms) and the apartment rents for $650 per month.

File # VP-21-121 47 1011-1027 Hillcrest Drive DeKalb, IL 60115

Comparable 3

ID 28 Address 811 & 817 W Lincoln Hwy City DeKalb State IL Zip 60115 County DeKalb Latitude 41.93167638 Longitude -88.76872686 Tax ID 08-22-151-011 & -019 Property Major Type Retail-Commercial Property Type Mixed Use Property Sub Type

Transaction ID 28 Date 1/27/2021 Address 811 & 817 W Lincoln Hwy Price $1,250,000 City DeKalb Price Per SF $49.41 State IL Transaction Type Closed Sale County DeKalb Financing Cash Eq Grantor Tor Under Sam Brody Trust Property Rights Leased Fee Grantee Michael Mosbah, LLC Conditions of Sale Normal Book/Page or Reference Doc 2021001541 Days on Market 295 Verification Assessor Records Site Acres 1.2 Topography Level Land SF 53,143 Zoning General Commercial Road Frontage 281 Flood Zone X Shape Irregular Encumbrance or Easement None Noted Utilities City Environmental Issues None Noted Improvements & Financial Data GBA 25,296 Design Appeal Average Land to Building Ratio 2.10 Parking Adequacy Adequate No. of Units 19 Construction Class Class C Year Built 1961 & 1967 Construction Average Condition Average Quality Average Comments Sale of two parcels improved with three mixed use buildings located along Lincoln Highway and next to Northern Illinois University. A total of 11 commercial units and 8 apartments. Parking lot on site with a total of 56 parking spaces. Per the listing broker, there was approximately 6,000 square feet of vacant commercial space. All apartments were occupied. Overall the property is in average condition. It has been well maintained, but has not been updated. Per the listing broker, the listing capitalization rate was about 8.5%, which would indicate a sale capitalization rate of 11.1%.

File # VP-21-121 48 1011-1027 Hillcrest Drive DeKalb, IL 60115

Comparable 4

ID 29 Address 308 E Lincoln Hwy City DeKalb State IL Zip 60115 County DeKalb Latitude 41.9297281 Longitude -88.7511287 Tax ID 08-23-164-002 Property Major Type Retail-Commercial Property Type Mixed Use Property Sub Type

Transaction ID 29 Date 7/9/2018 Address 308 E Lincoln Hwy Price $190,000 City DeKalb Price Per SF $76.61 State IL Transaction Type Closed Sale County DeKalb Financing Cash Eq Grantor James & Margaret Lemieux Property Rights Leased Fee Grantee Justin Wassman Conditions of Sale Normal Book/Page or Reference Doc 2018006645 Days on Market 29 Verification Assessor Records Site Acres 0.0 Topography Level Land SF 1,407 Zoning Central Business Road Frontage 32 Flood Zone X Shape Trapezoidal Encumbrance or Easement None Noted Utilities City Environmental Issues None Noted Improvements & Financial Data GBA 2,480 Design Appeal Avg to Abv Avg Land to Building Ratio 0.57 Parking Adequacy Off-Site Only No. of Units 4 Construction Class Class C Year Built 1889 Construction Average Condition Abv Avg Quality Average Comments Two-Story downtown commercial building with 4 fully leased units. Two retail units on the first floor and two apartment units on the second floor. Retail units each have a half bathroom and apartments have living room, kitchen, bedroom and one full bathroom. Apartments are heated by a common boiler and retail units are heated by electric baseboard het. Tenants pay their own electricity. Per the listing, the net operating income was $20,361, for a capitalization rate of 10.72%.

File # VP-21-121 49 1011-1027 Hillcrest Drive DeKalb, IL 60115

Analysis Grid Analysis Grid Subject Comp 1 Comp 2 Comp 3 Comp 4 1011-1027 Hillcrest 811 & 817 W Lincoln Address 151 N 4th St 928 W Hillcrest Dr 308 E Lincoln Hwy Drive Hwy City DeKalb DeKalb DeKalb DeKalb DeKalb State IL IL IL IL IL Date 2/25/2021 9/28/2020 1/27/2021 7/9/2018 Price $212,500 $485,000 $1,250,000 $190,000 GBA 33,318 20,071 12,996 25,296 2,480 Price Per SF $10.59 $37.32 $49.41 $76.61 Transaction Adjustments Property Rights Leased Fee 0.0% 0.0% 0.0% 0.0% Financing 0.0% 0.0% 0.0% 0.0% Conditions of Sale 0.0% 0.0% 0.0% 0.0% Expenditures After Sale $0.00 $0.00 $0.00 $0.00 Adjusted Price/SF $10.59 $37.32 $49.41 $76.61 Market Trends Through 10/1/2019 3.0% 0.0% 0.0% 0.0% 3.7% Adjusted Price/SF $10.59 $37.32 $49.41 $79.45 Subsequent Trends Ending 6/29/2021 0.0% 0.0% 0.0% 0.0% 0.0% Adjusted Price/SF $10.59 $37.32 $49.41 $79.45 Characteristics Adjustments Traffic Count 8,900 6,950 6,000 12,400 6,600 % Adjustment 0% 0% 0% 0% Qualitative Similar Similar Similar Similar $ Adjustment $0.00 $0.00 $0.00 $0.00 Condition Fair to Average Fair Average Average Abv Avg % Adjustment 189% -27% -20% -25% Qualitative Inferior Superior Superior Superior $ Adjustment $20.00 -$10.00 -$10.00 -$20.00 GBA 33,318 20,071 12,996 25,296 2,480 % Adjustment 0% 0% 0% -10% Qualitative Similar Similar Similar Superior $ Adjustment $0.00 $0.00 $0.00 -$7.94 Quality Average Average Average Average Average % Adjustment 0% 0% 0% 0% Qualitative Similar Similar Similar Similar $ Adjustment $0.00 $0.00 $0.00 $0.00 Occupancy 100% 55% 0% 76% 100% % Adjustment 10% 10% 5% 0% Qualitative Inferior Inferior Inferior Similar $ Adjustment $1.06 $3.73 $2.47 $0.00 Zoning District LC CBD MFR2 GC CBD % Adjustment 0% 5% 0% 0% Qualitative Similar Inferior Similar Similar $ Adjustment $0.00 $1.87 $0.00 $0.00 Parking Ratio GBA 4.20 0.90 2.46 2.21 0.00 % Adjustment 5% 0% 0% 5% Qualitative Inferior Similar Similar Inferior $ Adjustment $0.53 $0.00 $0.00 $3.97 Utilities City City City City City % Adjustment 0% 0% 0% 0% Qualitative Similar Similar Similar Similar $ Adjustment $0.00 $0.00 $0.00 $0.00 Adjusted Price/SF $32.18 $32.92 $41.89 $55.48 Net Adjustments 203.9% -11.8% -15.2% -30.2% Gross Adjustments 203.9% 41.8% 25.2% 40.2%

File # VP-21-121 50 1011-1027 Hillcrest Drive DeKalb, IL 60115

Comparable Sale Adjustments The subject and all cited comparable sales share generally similar characteristics and are considered comparable to the subject. These commonalities justify inclusion of these transactions in this analysis. Often there are differences between the property appraised ("the subject") and a comparable sale. When the dissimilarity affects value, an adjustment to the sale price of the comparable is necessary.

Property Rights Agreements or laws create partial interests in real estate. A deed restriction or life estate usually reduces rights and value. If the subject is not affected by these limitations and a comparable is, then the comparable's sale price needs an upward property rights adjustment. In another situation, unfavorable leases eliminate a landlord's right to collect market rent, so the real estate sells for a below-market price. If the property appraised has no lease adversities and a comparable does have unfavorable leases, then the comparable requires upward adjustment. Sales 1, 3, and 4 were tenant occupied leased fee sales like the subject and adjustments were not necessary. Comparable 2 was the sale of a sorority house in close proximity to the subject and was vacant at the time of sale. However, given this property is related to student housing, which tends to have periods of low occupancy, an adjustment was not necessary for property rights.

Financing Sub-market financing is a common technique used to finance the acquisition of real estate during periods of high interest rates. When non-market financing is used, the financing may be favorable to the buyer so the sale price is inflated. The escalated price can be envisioned as a composite of the worth of real estate plus the value of advantageous financing. Since value created by financing is not real property, the contribution of the advantageous financing must be deducted from total sale price to derive market value for just the realty. On the opposite hand, there are instances where the buyer assumes unfavorable financing, so the sale price is diminished. In the latter case, an upward adjustment must be applied to the sale price of the comparable thusly deriving the market value of the real estate. Based on available information, all sales were cash equivalent sales and adjustments for financing were not necessary.

Conditions of Sale An adjustment for conditions of sale is necessary when a criterion of market value is violated. It could compensate for unusual buyer or seller motivations. For instance, when a seller gives a buyer an atypical rebate, discount, credit, or something of value to induce a conveyance, the sale price is usually inflated. In this case, it is logical to deduct the worth of the giveback from the sale price. Residual sums represent the property's market value. In another scenario, a buyer may pay a premium to facilitate an assemblage. In this instance, the premium must be deducted from the sale price to derive market value for that conveyance. All sales were normal arms-length sales and adjustments for conditions of sale were not necessary.

Expenditure Post Sale This is a situation when a buyer is compelled to invest additional money into a property immediately after acquisition for some atypical reason. Post-sale invested sums are appropriately added to a comparable’s sale price thereby producing an adjusted sale price. Examples are demolition costs or building-code compliance costs. There were no known expenditures after sale.

File # VP-21-121 51 1011-1027 Hillcrest Drive DeKalb, IL 60115

Market Conditions Adjustments for market conditions are commonly referred to as time adjustments, but this is misleading. Value does not change due to the passage of time; sometimes it remains stable. Often real estate values fluctuate due to changes in supply and demand, interest rates, employment, and/or inflation. This type of adjustment compensates for change in market conditions between a sale’s transaction date and a later point in time.

In order to determine an appropriate adjustment for marketing conditions, I have researched the market and observed general market conditions. My research has revealed that market conditions were improving prior to the COVID-19 Pandemic and have generally stabilized since the pandemic. Comparables 1, 2 and 3 were all sold during the pandemic and adjustments were not necessary. Comparable 4 sold prior to the pandemic and required an upward adjustment to account for their older transaction dates.

Traffic Count Each property was rated to the subject for locational aspects such as value growth potential, access, visibility and general desirability. Those transactions with superior locations were adjusted downward and vice versa. All sales were located in DeKalb, Illinois and surrounding the Northern Illinois University campus. And so, general locations were all similar to the subject. Additionally, comparables had similar daily traffic count and adjustments were not necessary.

Physical Attributes Myriad physical characteristics can affect land value. Some examples are lot size, shape, site orientation, availability of utilities, and soil conditions. Those sales with superior physical qualities warrant downward adjustment and vice versa.

Condition Better maintained or more modern buildings obviously command higher prices. Each analyzed transaction was compared to the subject for physical condition. Comparable 1 was the only comparable generally inferior in condition to the subject. Per the listing agent, its overall condition and lack of updates was a significant factor in its sale price. And so, Comparable 1 was adjusted $20 per square foot to account for the differences in condition. Because of its low sales price, the adjustment as a percentage was nearly 200%, but appropriate. Likewise, Comparables 2 and 3 were adjusted -$10 per square foot and Comparable 4 -$20 per square foot.

GBA Usually there is an inverse relationship between price and building size caused primarily by economies of scale associated with construction. That is, price per square foot tends to diminish as size increases. Comparables 1, 2 and 3 were similar enough in size that adjustments for differences was not necessary. However, Comparable 4 was significantly smaller in size and these properties tend to be more affordable and sell for a higher price per square foot. And so, Comparable 4 was adjusted accordingly.

Quality Buildings built with high end materials tend to sell at a higher price. The construction quality of a building helps improve longevity as well as increase overall appeal. The overall quality of construction of comparable properties was generally similar to the subject and adjustments were not necessary.

File # VP-21-121 52 1011-1027 Hillcrest Drive DeKalb, IL 60115

Occupancy Occupancy at the time of sale does influence the amount a buyer is willing to pay. Properties at below market occupancy will require effort on the buyer’s part to bring the property to market occupancy after sale. Additionally, there is a loss of rent while bringing the property to market occupancy. For this reason, Comparables 1, 2 and 3 were adjusted for below market occupancy. Comparable 2 was vacant at the time of sale, but was a sorority house which tends to have higher vacancy rates and was adjusted +10%, as was Comparable 1. Comparable 3 was below, but closer to market occupancy and only adjusted +5%.

Zoning District The zoning classification assigned to a particular property can have a significant effect on value. Comparable 2 was located in a multi-unit residential district which has fewer alternative uses and was adjusted upward accordingly.

Parking Ratio GBA Given most mixed commercial/residential properties are attached downtown commercial buildings, parking tends to be very limited. Street parking for these properties tends to be sufficient, but does limit the potential retail tenants. For this reason, Comparables 1 and 4 were adjusted +5% for inferior parking ratios. Comparables 2 and 3 had parking ratios that were less than the subject; however, parking was sufficient and adjustments were not necessary.

Utilities All sales were located within city limits with similar access to city utilities and adjustments were not necessary.

Sales Comparison Approach Conclusion Value Ranges & Reconciled Value Number of Comps: 4 Unadjusted Adjusted % Δ Low: $10.59 $32.18 204% High: $76.61 $55.48 -28% Average: $43.48 $40.61 -7% Median: $43.37 $37.40 -14% Reconciled Value/Unit Value: $43.37 $348,750.00 $36.00 gba Subject Size: 33,318 Indicated Value: $1,199,448 Deferred Maintenance: -$15,000 Value As Is: $1,184,448 Reconciled Final Value: $1,185,000 One Million One Hundred Eighty Five Thousand Dollars

This adjusted data varies from $32.18/SF to $55.48/SF, with an average price of $40.61/SF and a median price of $37.40/SF. All comparable sales have been given consideration as each is relevant in many aspects and together, they are indicative of current trends. Comparable 2 was most similarly located; however, it was an inferior use and the subject’s market value is expected to be above $32.92/SF. Comparable 3 was most similar to the subject, but is generally superior and the subject’s market value is expected to be below $41.89/SF. After consideration of all factors pertaining to and influencing values, I have concluded a market value for the subject, via the sales comparison approach, at $36.00/SF, or $1,200,000. The As Is value considers the impact of the deferred maintenance, estimated to be $15,000, for a final estimate of $1,185,000.

File # VP-21-121 53 1011-1027 Hillcrest Drive DeKalb, IL 60115

Income Approach

Introduction The income approach is based on the premise that value is directly related to income. That is, the greater the income, the greater the value.

Capitalization is the process of converting income into a capital sum. Often this is accomplished with direct capitalization where a single year’s net income is translated into a value indication via an overall cap rate. The cap rate is a reflection of risk - the greater the risk, the greater the rate. Implicit within the rate are all investor expectations about all investment aspects including income generation, value growth, taxation, and general market risk.

Income Analysis

Subject Rental Data A summary of the subject’s current leases and terms is presented below, and is based on the rent roll provided by the property manager. Note, the gross leased square footage for each unit was estimated based on measurements taken at the time of the site visit. These are only estimates and used for purposes of comparing to market rents. Actual leased area for each tenant is expected to vary. Note: Lease agreements for each lease was not made available; and so, I have relied solely on the rent roll provided by the client for this analysis.

Subject Current Lease Rent Roll Cntr. Total Leased % of Lease Monthly Annual Rent Tenant/Lessee Suite Units SF Total Type Rent Rent Rent/SF M. Colorado 1019-01 1 830 2.7% Modified Gross $600 $7,200 $8.67 Kianne Carter 1019-02 1 830 2.7% Modified Gross $600 $7,200 $8.67 Kowon Brown 1019-03 1 830 2.7% Modified Gross $600 $7,200 $8.67 Theresa Gibson 1019-04 1 830 2.7% Modified Gross $600 $7,200 $8.67 Derrick Applewhite 1019-05 1 830 2.7% Modified Gross $600 $7,200 $8.67 Adale Cross 1019-06 1 830 2.7% Modified Gross $600 $7,200 $8.67 Latoya Riggins 1019-07 1 830 2.7% Modified Gross $600 $7,200 $8.67 Jermaine Schaffer 1019-08 1 830 2.7% Modified Gross $600 $7,200 $8.67 Matthew Moore 1019-09 1 830 2.7% Modified Gross $600 $7,200 $8.67 Corey Campbell 1019-10 1 830 2.7% Modified Gross $600 $7,200 $8.67 Tracy Schmidt 1019-11 1 830 2.7% Modified Gross $600 $7,200 $8.67 Paulina Nolton 1019-12 1 830 2.7% Modified Gross $600 $7,200 $8.67 Michael Sharp 1021-A 1 600 2.0% Modified Gross $495 $5,940 $9.90 Brent Mills 1021-B 1 1,020 3.3% Modified Gross $795 $9,540 $9.35 DeKalb Market C1011 1 1,400 4.6% Modified Gross $1,500 $18,000 $12.86 Sea Captain C1011A 1 4,176 13.6% Modified Gross $2,850 $34,200 $8.19 Unisex Hair C10115 1 1,860 6.1% Modified Gross $1,000 $12,000 $6.45 La Salsa C1017-21 1 3,600 11.7% Modified Gross $2,400 $28,800 $8.00 Huskies Tobacco C1023 1 1,545 5.0% Modified Gross $1,400 $16,800 $10.87 U Haul C1023A 1 1,450 4.7% Modified Gross $1,000 $12,000 $8.28 Antwon Dismuke C1025 1 1,296 4.2% Modified Gross $1,000 $12,000 $9.26 Rockys Annex C1025 1/2 1 1,620 5.3% Modified Gross $1,000 $12,000 $7.41 Rockys Food Mart C1027 1 2,160 7.0% Modified Gross $1,700 $20,400 $9.44 Totals 23 30,687 100.0% Total Rent $6,000 $268,080 $8.74

File # VP-21-121 54 1011-1027 Hillcrest Drive DeKalb, IL 60115

Market Rental Data It is customary and prudent to establish a market rent for the subject presuming the property is vacant and available for lease on this report’s effective value date. If the property is leased on the effective value date, a determination can be made whether contract rent equates, is more or less than market rent. With this objective in mind, rental data is now presented. I have researched the market for all available comparable leases and have selected the best lease comparables available for this analysis, which are summarized on the following pages. I considered the subject’s 1st floor commercial space rents on an annual rent per square foot and the apartment rents on a rent per month. All leases have been researched through various sources, adequately verified, and considered a reliable indication of market expectations.

Commercial Units Market Rent Analysis

Address Unit Type Size Type Terms Date Rent Mk Cndtns Taxes Insurance Adj Rent 1 311 E Lincoln Hwy Retail/Office 1,200 Asking Net 9/1/2017 $8.00 1.030 $0.92 $0.25 $9.41 2 818-848 W Lincoln Hwy Retail/Office 900 Asking Mod Gross 1/1/2018 $10.00 1.025 $10.25 3 127 E Lincoln Hwy Retail 4,000 Asking NNN 3/1/2018 $8.40 1.025 $0.72 $0.25 $9.58 4 1500 E Lincoln Hwy Office 1,800 Asking Mod Gross 9/1/2018 $9.00 1.020 $9.18 5 854 W Lincoln Hwy Retail/Office 5,000 Asking Mod Gross 2/1/2020 $10.00 1.000 $10.00 6 901 Lucinda Ave Retail 1,943 Asking NNN 9/1/2020 $8.00 1.000 $3.46 $0.25 $11.71 7 2201 N 1st St Office 1,500 Asking Mod Gross 3/1/2021 $8.00 1.000 $8.00 8 128 E Lincoln Hwy Retail/Office 3,000 Asking Mod Gross 5/25/2021 $10.00 1.000 $10.00

Low $8.00 High $11.71 Average $9.77 Median $9.79

Market Conditions Due to a lack of recent commercial lease comparables, some rent comparables were older than 1 year ago. Based on the Market Area Statistics section above, I adjusted Comparables 1-4 a rate of 1.0% per year up through January 1, 2020, when the market stabilized and rental rates became level.

Taxes & Insurance Some lease agreements were net or triple net lease terms, where the tenant is responsible for all expenses, such as taxes and insurance. And so, to compare these rents to the subject’s modified gross lease terms, I added taxes and insurance on a price per square foot basis. Note: insurance costs for comparables were not available; and so, I necessarily estimated insurance costs to be around $0.25 per square foot.

Conclusions The subject’s commercial rents, as reported, range from $6.45/SF to $12.86/SF and averages $8.73/SF. The subject’s lease range is greater than the range of rent comparables ($8.00 to $11.71/SF); however, this is due to a lack of market data to show the true range of rent comparables in the market. Additionally, there is only one lease above and one lease below the rental comparable range.

File # VP-21-121 55 1011-1027 Hillcrest Drive DeKalb, IL 60115

Apartment Units Market Rent Analysis

The graph to the right was taken from BestPlaces.net records the median montly rent by number of bedrooms for DeKalb, Illinois. As noted in the Market Area Analysis section above, the subject apartment units overall condition is significantly below the average in the market; and so, the rents are likewise expected to be well below the typical rent. The graph to the right indicates the about 50 percent of studio apartments are less than $688 and 50% are greater (subject’s studio rents for $495). The subject’s 1-bedroom apartment is expected to rent for $776, which is above the median; however, this unit is being completely renovated and is larger than typical 1-bedroom apartments. The subject’s 2-bedroom units rent for $600 per month, which is well below the market median of $1,001 per month. Again, this is largely due to their below market condition.

Address Baths Size Type Terms Date Rent Average Median Subject Studio 1 1400 W Lincoln Hwy 1.0 318 Asking Mod Gross 7/31/2021 $495 2 837 W Hillside Dr 1.0 450 Asking Mod Gross 7/31/2021 $600 3 807 Ridge Dr 1.0 204 Asking Mod Gross 7/31/2021 $620 $604 $620 $495 4 807 Ridge Dr 1.0 260 Asking Mod Gross 7/31/2021 $640 5 1212 Varsity Blvd 1.0 460 Asking Mod Gross 7/31/2021 $665

1-Bedroom 1 815 Charles St 1.0 N/Av Actual Mod Gross 6/22/2020 $320 2 815 Charles St 1.0 N/Av Actual Mod Gross 6/22/2020 $390 3 1025 S 4th St 1.0 N/Av Actual Mod Gross 9/23/2020 $575 4 1400 W Lincoln Hwy 1.0 520 Asking Mod Gross 7/31/2021 $595 $588 $598 $795 5 722 N Annie Glidden Rd 1.0 622 Asking Mod Gross 7/31/2021 $600 6 1212 Varsity Blvd 1.0 480 Asking Mod Gross 7/31/2021 $665 7 807 Ridge Dr 1.0 700 Asking Mod Gross 7/31/2021 $763 8 807 Ridge Dr 1.0 825 Asking Mod Gross 7/31/2021 $795 2-Bedroom 1 722 N Annie Glidden Rd 1.0 622 Asking Mod Gross 7/31/2021 $700 2 807 Ridge Dr 1.0 985 Asking Mod Gross 7/31/2021 $824 3 893 Fotis Dr 1.0 N/Av Actual Mod Gross 2/12/2020 $825 $863 $880 $600 4 893 Fotis Dr 1.0 N/Av Actual Mod Gross 2/12/2020 $935 5 880 Regent Dr 2.0 1,000 Asking Mod Gross 7/31/2021 $945 6 1025 S 4th St 1.0 N/Av Actual Mod Gross 9/23/2020 $950

Conclusion I considered specific apartment rent comparables in the market, by bedroom count. These comparables were the most comparable to the subject available; however, they were all superior in overall condition to the subject property. The subject’s studio and 1- bedroom apartments are within the range of market rents and the 2-bedroom is well below the market, as expected. Based on this analysis, the subject’s actual rents are considered to be at market. And so, the subject apartment’s market rents are: $495 – studio, $795 – 1-bedroom, and $600 – 2-bedroom apartments.

File # VP-21-121 56 1011-1027 Hillcrest Drive DeKalb, IL 60115

Potential Gross Income Potential Gross Income Market Market Rent Market Rent Tenant/Lessee Suite Space Type SF % of Total Lease Type Rent/SF Monthly Annual M. Colorado 1019-01 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Kianne Carter 1019-02 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Kowon Brown 1019-03 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Theresa Gibson 1019-04 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Derrick Applewhite 1019-05 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Adale Cross 1019-06 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Latoya Riggins 1019-07 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Jermaine Schaffer 1019-08 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Matthew Moore 1019-09 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Corey Campbell 1019-10 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Tracy Schmidt 1019-11 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Paulina Nolton 1019-12 2-Bedroom Apartment 830 2.7% Modified Gross $8.67 $600 $7,200 Michael Sharp 1021-A Studio Apartment 600 2.0% Modified Gross $9.90 $495 $5,940 Brent Mills 1021-B 1-Bedroom Apartment 1,020 3.3% Modified Gross $9.35 $795 $9,540 DeKalb Market C1011 Grocery Store 1,400 4.6% Modified Gross $12.86 $1,500 $18,000 Sea Captain C1011A Restaurant 4,176 13.6% Modified Gross $8.19 $2,850 $34,200 Unisex Hair C10115 Salon 1,860 6.1% Modified Gross $6.45 $1,000 $12,000 La Salsa C1017-21 Restaurant 3,600 11.7% Modified Gross $8.00 $2,400 $28,800 Huskies Tobacco C1023 Retail 1,545 5.0% Modified Gross $10.87 $1,400 $16,800 U Haul C1023A Office 1,450 4.7% Modified Gross $8.28 $1,000 $12,000 Antwon Dismuke C1025 Retail 1,296 4.2% Modified Gross $9.26 $1,000 $12,000 Rockys Annex C1025 1/2 Retail Storage 1,620 5.3% Modified Gross $7.41 $1,000 $12,000 Rockys Food Mart C1027 Retail 2,160 7.0% Modified Gross $9.44 $1,700 $20,400 Totals 30,687 100.0% $7.29 $18,640 $223,680

Other Income As reported below, the subject had had water/sewer and trash reimbursements in the three reported years (totaling: $5,455 in 2019, $7,435 in 2020 and $6,840 in 2021). Again, lease agreements were not provided; and so, I relied on the income and expense information provided and assumed it is accurate. Based on the historical income, I have estimated reimbursements to be around $7,000 annually.

Subject Income History

Income Summary Appraisal 2021 2020 2019 Unit/Space Type Amount $/SF YTD Annualized $/SF Amount $/SF Amount $/SF Actual Income $268,680 $8.06 $56,700 $226,800 $6.81 $219,447 $6.59 $223,633 $6.71 Total Rental Income $268,680 $8.06 $56,700 $226,800 $6.81 $219,447 $6.59 $223,633 $6.71 Late Fees $0 $0.00 $2,925 $11,700 $0.35 $6,900 $0.21 $3,525 $0.11 NSF Fees $0 $0.00 $0 $0 $0.00 $85 $0.00 $55 $0.00 Utilities - Water/Sewer $0 $0.00 $960 $3,840 $0.12 $4,638 $0.14 $2,105 $0.06 Utilities - Trash $0 $0.00 $750 $3,000 $0.09 $2,797 $0.08 $3,350 $0.10 Other Income $7,000 $0.21 $133 $534 $0.02 $155 $0.00 $0 $0.00 Potential Gross Income $275,680 $8.27 $61,468 $245,874 $7.38 $234,022 $7.02 $232,668 $6.98 - Vacancy & Collection Loss $21,744 $0.65 $0 $0 $0.00 $0 $0.00 $0 $0.00 Effective Gross Income $253,936 $7.62 $61,468 $245,874 $7.38 $234,022 $7.02 $232,668 $6.98

File # VP-21-121 57 1011-1027 Hillcrest Drive DeKalb, IL 60115

Vacancy and Collection Loss The subject only had two vacant units (1021½A and 1021½B) at the time of the site visit, which were being renovated. For purposes of this analysis, I have assumed these two units are ready to be occupied and the subject is fully occupied at market occupancy. There is a high demand for rental apartments in DeKalb and the region. In most properties, vacancy is at an all time low. Based on the Market Area Statistics section above, I have estimated the vacancy and collection loss rate for the subject apartments to be 5%. The commercial units were fully occupied at the time of the site visit. However, commercial unit vacancy tends to be greater than apartment vacancy rates. This was also confirmed by discussions with market participants. Based on my analysis, I have estimated the subject’s commercial unit vacancy rate to be 10%.

Expense Analysis

Actual Reported Expenses The following table summarizes the subject’s current expenses and recent history, as provided by Property Management. The current year to date included expenses for the first three months. The annualized expenses are only estimates could be significantly different depending upon the timing of the various expenses. And so, the 2021 annualized expenses were only calculated for comparison purposes, and less weight was given to these expenses.

Expense Summary Appraisal Months to Annualize: 3 $226,800 2020 $219,447 2019 $223,633 Expense Amount $/SF % EGI YTD Annualized $/SF % EGI Amount $/SF % EGI Amount $/SF % EGI Tax Expense $53,385 $1.60 21.0% $13,668 $54,673 $1.64 24.1% $53,963 $1.62 24.6% $50,618 $1.52 22.6% Insurance $6,600 $0.20 2.6% $1,575 $6,298 $0.19 2.8% $6,060 $0.18 2.8% $5,006 $0.15 2.2% Management $16,000 $0.48 6.3% $3,857 $15,429 $0.46 6.8% $16,020 $0.48 7.3% $16,540 $0.50 7.4% Electric Expense $5,000 $0.15 2.0% $524 $2,095 $0.06 0.9% $3,240 $0.10 1.5% $5,680 $0.17 2.5% Water Expense $6,000 $0.18 2.4% $1,167 $4,668 $0.14 2.1% $4,166 $0.13 1.9% $7,977 $0.24 3.6% Trash Expense $5,000 $0.15 2.0% $1,166 $4,664 $0.14 2.1% $4,612 $0.14 2.1% $5,539 $0.17 2.5% Total Utilities $16,000 $0.48 6.3% $2,857 $11,426 $0.34 5.0% $12,018 $0.36 5.5% $19,196 $0.58 8.6% Repairs and Maintenance $20,000 $0.60 7.9% $3,179 $12,715 $0.38 5.6% $15,189 $0.46 6.9% $25,444 $0.76 11.4% General and Administrative $7,500 $0.23 3.0% $1,858 $7,431 $0.22 3.3% $9,978 $0.30 4.5% $5,944 $0.18 2.7% Reserves $16,659 $0.50 6.6% $0 $0 $0.00 0.0% $0 $0.00 0.0% $0 $0.00 0.0% Total Expenses: $136,144 $4.09 53.7% $26,993 $107,973 $3.24 47.6% $113,228 $3.40 51.6% $122,748 $3.68 54.9%

Expense Commentary

Real Estate Taxes As discussed in the Real Estate Taxes section of this report, the subject’s real estate taxes are within market expectations and have been stabilized at $53,385 in the analysis.

Insurance Property insurance is projected to be about $6,300 per year. This figure is considered typical for this type of property based on competitive insurance rates and this amount would be borne by the landlord.

Management Professional management services can usually be hired for 2% to 7% of effective gross income depending on the level of service provided. Based on the information provided by property management, management expenses ranged between $15,429 to $16,540 per year. Based on the subject’s individual characteristics and that it is expected to be managed by a professional

File # VP-21-121 58 1011-1027 Hillcrest Drive DeKalb, IL 60115 service, management fees are expected to be approximately 6% of effective gross income, which is within investor expectations.

Total Utilities These expenses are generally paid by the tenant and vary depending on occupancy and use. Again, electric, water and trash were estimated based on historical information.

Repairs and Maintenance This expense accounts for normal upkeep repairs as well as normal maintenance costs, exclusive of reserves. The repairs and maintenance ranged from $12,715 to $25,444 per year; however, these numbers in many cases include expenses that should be taken from reserves. And so, I have estimated the actual repairs and maintenance costs to be lower than the actual, where the remaining repairs are considered part of the reserve expenses. I estimate these costs to be about $0.35 per SF, or $11,661.

Other This line item accounts for other general non-reimbursable expenses, such as legal and professional fees, associated with owning a similar property. The subject’s historic Other expenses, ranged from $5,944 to $9,978 annually. For the analysis, I have estimated Other expenses to be $7,500 annually, which is around 3% of the effective gross income and and in- line with market expectations.

Replacement Reserves In concept, funds are deducted from income and deposited into a safe, interest bearing account so monies will be reserved for future component replacement. Reserves are controversial because few owners actually set the funds aside. Moreover, the IRS only recognizes expenses in the year expended, not the year when funds are deposited into a reserve account. Whether funds are, or are not, deducted should not impact value. If funds are not deducted, then risk climbs because there is greater chance ownership will not have the money when needed. In compensation of increased risk, an appropriate overall cap rate should be higher.

RealtyRates.com’s Investor Survey – 2nd Quarter 2021 indicates that Reserve Requirements for retail properties ranged between $0.32/SF to $0.85/SF and averaged $0.65/SF. Apartments ranged between $165/Unit and $415/Unit and averaged $385/Unit. Considering the subject 2nd floor has a gross building area of 12,509 with 14 apartments, average of $385/Unit would be equivalent to $0.43/SF.

For this analysis, I have estimated a reserve of $0.35 per SF, which is considered reasonable. Any added risk associated with the lack of sufficient replacement reserve has been accounted for in the selection of my cap rate.

File # VP-21-121 59 1011-1027 Hillcrest Drive DeKalb, IL 60115

Capitalization Rate Analysis In the appraisal profession, capitalization is the process of converting income into value. One method extracts a capitalization rate (also called a cap rate) from sales of similar property via the following formula. An extracted rate is then divided into the subject’s net operating income (NOI) resulting in a value indication for the real estate being appraised.

Net Operating Income / Sale Price = Cap Rate

Implicit within a cap rate are all investor expectations about risk, return, and change. This methodology is simple to use, easy to explain, and directly reflects market behavior. To extract an overall cap rate from market evidence, the following was considered.

Market Extracted Rates To extract an overall cap rate from market evidence, the follow data was considered.

Comparable Sale Cap Rates Address City Property Type Price Date Cap Rate 1 893 Fotis Dr DeKalb Residential $1,100,000 7/17/2020 8.91% 2 308 E Lincoln Hwy DeKalb Mixed Use $190,000 7/6/2018 10.72% 3 128 E Lincoln Hwy DeKalb Mixed Use $469,900 7/30/2021 11.00% 4 811 & 817 W Lincoln Hwy DeKalb Mixed Use $1,250,000 1/28/2021 11.10% 5 132 E Lincoln Hwy DeKalb Mixed Use $155,000 5/18/2017 11.78% 6 1025 S 4th St DeKalb Residential $195,500 7/9/2018 12.38% 7 815 Charles St DeKalb Residential $170,000 4/5/2021 12.49% 8 824 & 829 Greenbrier Dr DeKalb Residential $620,000 5/17/2021 15.10%

Capitalization Rate Conclusion The market information was adequate to develop a strong indication of the capitalization rate for the subject property. Comparable 1 is a newer multi-unit residential property in superior condition with a capitalization rate that is expected to be below the subject. Comparables 6, 7 and 8 are smaller and older residential properties with capitalization rates which are expected to be higher than the subject. And so, the subject’s market capitalization rate is expected to be between 10.72% and 11.78%. The highlighted capitalization rate comparable (Comparable 4) is the most comparable to the subject. Given the subject’s market rents already considered the overall condition, I considered a typical risk capitalization rate. I have estimated the subject’s capitalization rate to be 11%.

Income Capitalization Conclusions Again, the analysis above considers the two vacant apartments (1021½B and 1021½B) as ready for occupancy. However, as of the effective date of value, these units were vacant and in the process of being renovated. Based on the analysis in the Appraisal Process section above, I adjusted -$15,000 for the deferred maintenance. After consideration of all factors pertaining to and influencing values, I have concluded a market value for the subject, via the income approach, at $1,850,000. The full Income Capitalization Approach analysis is on the following page.

File # VP-21-121 60 1011-1027 Hillcrest Drive DeKalb, IL 60115

Income Capitalization Analysis 1019-01 $600 $/Month 0 $7,200 2.6% 1019-02 $600 $/Month 0 $7,200 2.6% 1019-03 $600 $/Month 0 $7,200 2.6% 1019-04 $600 $/Month 0 $7,200 2.6% 1019-05 $600 $/Month 0 $7,200 2.6% 1019-06 $600 $/Month 0 $7,200 2.6% 1019-07 $600 $/Month 0 $7,200 2.6% 1019-08 $600 $/Month 0 $7,200 2.6% 1019-09 $600 $/Month 0 $7,200 2.6% 1019-10 $600 $/Month 0 $7,200 2.6% 1019-11 $600 $/Month 0 $7,200 2.6% 1019-12 $650 $/Month 0 $7,800 2.8% 1021-A $495 $/Month 0 $5,940 2.2% 1021-B $795 $/Month 0 $9,540 3.5% 1011 $1,500 $/Month 0 $18,000 6.5% 1011A $2,850 $/Month 0 $34,200 12.4% 1015 $1,000 $/Month 0 $12,000 4.4% 1017-21 $2,400 $/Month 0 $28,800 10.4% 1023 $1,400 $/Month 0 $16,800 6.1% 1023A $1,000 $/Month $12,000 4.4% 1025 $1,000 $/Month $12,000 4.4% 1025 1/2 $1,000 $/Month $12,000 4.4% 1027 $1,700 $/Month 0 $20,400 7.4% 1 Total Rental Income: $268,680 97.5% Expense Reimbursements: $0 0.0% Plus Other Income: $7,000 2.5% Potential Gross Income: $275,680 100% Less Vacancy & Collection Loss (Apartments): $5,124 95% Less Vacancy & Collection Loss (Retail): $16,620 90% Effective Gross Income (EGI): $253,936 92.1%

Expense Amount Method Annual $/SF Tax Expense $53,385 $/Year $53,385 $1.60 Insurance $6,300 $/Year $6,300 $0.19 Management 6% % of EGI $15,236 $0.46 Electric Expense $5,000 $/Year $5,000 $0.15 Water Expense $6,000 $/Year $6,000 $0.18 Trash Expense $5,000 $/Year $5,000 $0.15 Repairs and Maintenance $0.35 $/SF $11,661 $0.35 Other $7,500 $/Year $7,500 $0.23 Reserves $0.35 $/SF $11,661 $0.35 Total Expenses: $121,744 $3.65 Expense Ratio (Expenses/EGI): 47.94% Net Operating Income (NOI): $132,192 $3.97 Capitalization Rate: 11.00% Value (NOI/Cap Rate): $1,201,748 $36.07 Deferred Maintenance -$15,000 -$0.45 $1,186,748 $35.62 Rounded: $1,185,000 $35.57

File # VP-21-121 61 1011-1027 Hillcrest Drive DeKalb, IL 60115

Final Reconciliation The process of reconciliation involves the analysis of each approach to value. The quality of data was analyzed and the significance of each approach as it relates to market behavior and defensibility of each approach are considered and weighed. Finally, each is considered separately and comparatively with each other.

Value Indications Summary of Values Value Premise As Is Date of Value 6/29/2021 Value Type Market Value Value Perspective Current Interest Appraised Fee Simple Value Indications Cost Approach Not Developed Sales Comparison Approach $1,185,000 Income Approach $1,185,000

A cost approach provides an approximation of the depreciated reconstruction cost of the improvements. Added thereto is the worth of the land as though vacant. This approach is most applicable for new, or like new structures due to less uncertainty when estimating reconstruction cost or depreciation, if any. As building age increases, depreciation based on visual observation, becomes subjective. Additionally, the transference of real estate is seldom negotiated on a depreciated cost basis.

In the sales comparison approach to value, sales of similar type properties are compared to the property being appraised. This approach is very significant because it directly reflects the actions of buyers and sellers in the marketplace. It reflects economic conditions, acceptance, or rejection of various features, and trends of general desirability. This methodology is a true measure of supply and demand, accounting for all influential forces affecting the market.

The income approach is most appropriate where the primary acquisition criterion is a flow of income dollars. This methodology forecasts income that is converted into value via capitalization. It is not very appropriate for properties bought by an owner / user. An owner / user generally purchases real estate for his / her own occupancy and use. Net income and capitalization rates are of little importance to this buyer type.

File # VP-21-121 62 1011-1027 Hillcrest Drive DeKalb, IL 60115

Value Conclusion The income capitalization approach had the best data as it relates to the subject property and was considered the most applicable when considering market behavior for the subject’s property type. And so, the income capitalization approach was given the greatest weight and was well supported by the sales comparison approach. Therefore, my final market value opinion for the subject real estate is as follows:

Reconciled Value(s):

Value Conclusions Premise Interest Appraised Effective Date Value Conclusion Market Exposure Current As Is Market Value Fee Simple 6/29/2021 $1,185,000 9 to 18 months

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Addenda

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Rent Roll

Provided by Property Management

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Historical Income and Expenses

Provided by Property Management

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Major Repairs Invoices (Past 5 Years)

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Glossary This glossary contains the definitions of common words and phrases, used throughout the appraisal industry, as applied within this document. Please refer to the publications listed in the Works Cited section below for more information.

Works Cited: Appraisal Institute. The Appraisal of Real Estate. 14th ed. Chicago: Appraisal Institute, 2013. Appraisal Institute. The Dictionary of Real Estate Appraisal. 6th ed. 2015.

Band of Investment include cleaning services, parking lot sweeping A technique in which the capitalization rates and maintenances, snow removal, security, and attributable to components of an investment are upkeep. (ICSC) (Dictionary, 6th Edition) weighted and combined to derive a weighted-average rate attributable to the total investment (i.e., debt and Debt Coverage Ratio (DCR) equity, land and improvements). (Dictionary, 6th The ratio of net operating income to annual debt Edition) service (DCR = NOI/IM), which measures the relative ability of a property to meet its debt service out of net Common Area operating income; also called debt service coverage 1.The total area within a property that is not designed ratio (DSCR). A larger DCR typically indicates a for sale or rental but is available for common use greater ability for a property to withstand a reduction of by all owners, tenants, or their invitees, e.g., income, providing an improved safety margin for a parking and its appurtenances, malls, sidewalks, lender. (Dictionary, 6th Edition) landscaped areas, recreation areas, public toilets, truck and service facilities. Discount Rate 2.In a shopping center, the walkways and areas onto A rate of return on capital used to convert future which the stores face and which conduct the flow payments or receipts into present value; usually of customer traffic. (ICSC) (Dictionary, 6th Edition) considered to be a synonym for yield rate. (Dictionary, 6th Edition) Common Area Maintenance (CAM) 1.The expense of operating and maintaining common Effective Age areas; may or may not include management The age of property that is based on the amount of charges and usually does not include capital observed deterioration and obsolescence it has expenditures on tenant improvements or other sustained, which may be different from its improvements to the property. chronological age. (Dictionary, 6th Edition) CAM can be a line-item expense for a group of items that can include maintenance of the Effective Date parking lot and landscaped areas and 1.The date on which the appraisal or review sometimes the exterior walls of the buildings. opinion applies. (SVP) CAM can refer to all operating expenses. 2.In a lease document, the date upon which the CAM can refer to the reimbursement by the lease goes into effect. In a lease document, tenant to the landlord for all expenses the date upon which the lease goes into reimbursable under the lease. Sometimes effect. (Dictionary, 6th Edition) reimbursements have what is called an administrative load. An example would be a Excess Land 15% addition to total operating expenses, Land that is not needed to serve or support the which are then prorated among tenants. The existing use. The highest and best use of the excess administrative load, also called an land may or may not be the same as the highest and administrative and marketing fee, can be a best use of the improved parcel. Excess land has the substitute for or an addition to a management potential to be sold separately and is valued fee. separately. (Dictionary, 6th Edition) 2.The amount of money charged to tenants for their shares of maintaining a center’s common area. Exposure Time The charge that a tenant pays for shared services 1.The time a property remains on the market. and facilities such as electricity, security, and 2.The estimated length of time the property interest maintenance of parking lots. The area maintained being appraised would have been offered on the in common by all tenants, such as parking lots market prior to the hypothetical consummation of and common passages. The area is often defined a sale at market value on the effective date of the in the lease and may or may not include all appraisal; a retrospective estimate based on an physical area to be paid for by all tenants. Items analysis of past events assuming a competitive charged to common area maintenance may and open market. (Dictionary, 6th Edition)

File # VP-21-121 84 1011-1027 Hillcrest Drive DeKalb, IL 60115

External Obsolescence Highest & Best Use An element of depreciation; a diminution in value The reasonably probable use of property that results in caused by negative externalities and generally the highest value. The four criteria that the highest and incurable on the part of the owner, landlord, tenant. best use must meet are legal permissibility, physical (Dictionary, 6th Edition) possibility, financial feasibility, and maximum productivity.(Dictionary, 6th Edition) Extraordinary Assumption An assumption, directly related to a specific Hypothetical Condition assignment, which, if found to be false, could alter the A condition, directly related to a specific assignment, appraiser’s opinions or conclusions. Extraordinary which is contrary to what is known by the appraiser to assumptions presume as fact otherwise uncertain exist on the effective date of the assignment results, information about physical, legal, or economic but is used for the purpose of analysis. Comment: characteristics of the subject property; or about Hypothetical conditions are contrary to known facts conditions external to the property such as market about physical, legal, or economic characteristics of conditions or trends; or about the integrity of data used the subject property; or about conditions external to the in an analysis. (Dictionary, 6th Edition) property, such as market conditions or trends; or about An assignment-specific assumption as of the effective the integrity of data used in an analysis. (USPAP, date regarding uncertain information used in an 2016-2017 ed.) (Dictionary, 6th Edition) analysis which, if found to be false, could alter the appraiser’s opinion or conclusions. Lease Types (USPAP, 2020-2021 ed.) Absolute Net Lease - A lease in which the tenant pays all expenses including structural maintenance, building Fee Simple Estate reserves, and management; often a long-term lease to Absolute ownership unencumbered by any other a credit tenant. interest or estate, subject only to the limitations Gross Lease - A lease in which the landlord receives imposed by the governmental powers of taxation, stipulated rent and is obligated to pay all of the eminent domain, police power, and escheat. property’s operating and fixed expenses; also called (Dictionary, 6th Edition) full-service lease. Modified Gross Lease - A lease in which the landlord Functional Obsolescence receives stipulated rent and is obligated to pay some, The impairment of functional capacity of improvements but not all, of the property’s operating and fixed according to market tastes and standards. (Dictionary, expenses. Since assignment of expenses varies 6th Edition) among modified gross leases, expense responsibility must always be specified. In some markets, a modified Functional Utility gross lease may be called a double net lease, net net The ability of a property or building to be useful and to lease, partial net lease, or semi-gross lease. perform the function for which it is intended according (Dictionary, 6th Edition) to current market tastes and standards; the efficiency of a building’s use in terms of architectural style, Leased Fee Interest design and layout, traffic patterns, and the size and The ownership interest held by the lessor, which type of rooms. (Dictionary, 6th Edition) includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease Gross Building Area (GBA) expires. (Dictionary, 6th Edition) Total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the Market Area above-grade area. This includes mezzanines and The geographic region from which a majority of basements if and when typically included in the region. demand comes and in which the majority of (Dictionary, 6th Edition) competition is located. Depending on the market, a market area may be further subdivided into Gross Leasable Area (GLA) components such as primary, secondary, and tertiary 1. Total floor area of a building, excluding unenclosed market areas, or the competitive market area may be areas, measured from the exterior of the walls of the distinguished from the general market area. above grade area. This includes mezzanines and (Dictionary, 6th Edition) basements if and when typically included in the market area of the type of property involved. 2. Gross leasable area plus all common areas. 3. For residential space, the total area of all floor levels Market Rent measured from the exterior of the walls and including The most probable rent that a property should bring in the superstructure and substructure basement; a competitive and open market reflecting the typically does not include garage space. (Dictionary, conditions and restrictions of a specified lease 6th Edition) agreement, including the rental adjustment and

File # VP-21-121 85 1011-1027 Hillcrest Drive DeKalb, IL 60115 revaluation, permitted uses, use restrictions, expense • If the appraisal is conditioned upon financing or other obligations, term, concessions, renewal and purchase terms, specification as to whether the financing or options, and tenant improvements (TIs). (Dictionary, terms are at, below, or above market interest rates 6th Edition) and/or contain unusual conditions or incentives. The terms of above- or below-market interest rates and/or Market Value other special incentives must be clearly set forth; their A type of value that is the major focus of most real contribution to, or negative influence on, value must be property appraisal assignments. Both economic and described and estimated; and the market data legal definitions of market value have been developed supporting the opinion of value must be described and and refined, such as the following. explained. 1.The most widely accepted components of market 3. The following definition of market value is used by value are incorporated in the following definition: agencies that regulate federally insured financial The most probable price, as of a specified date, in institutions in the United States: The most probable cash, or in terms equivalent to cash, or in other price that a property should bring in a competitive and precisely revealed terms, for which the specified open market under all conditions requisite to a fair property rights should sell after reasonable sale, the buyer and seller each acting prudently and exposure in a competitive market under all knowledgeably, and assuming the price is not affected conditions requisite to a fair sale, with the buyer by undue stimulus. Implicit in this definition and seller each acting prudently, knowledgeably, is the consummation of a sale as of a specified date and for self-interest, and assuming that neither is and the passing of title from seller to buyer under under undue duress. conditions whereby: 2.Market value is described, not defined, in the • Buyer and seller are typically motivated; Uniform Standards of Professional Appraisal • Both parties are well informed or well advised, and Practice (USPAP) as follows: A type of value, acting in what they consider their best interests; stated as an opinion, that presumes the transfer of • A reasonable time is allowed for exposure in the a property (i.e., a right of ownership or a bundle of open market; such rights), as of a certain date, under specific • Payment is made in terms of cash in U.S. dollars or in conditions set forth in the definition of the term terms of financial arrangements comparable thereto; identified by the appraiser as applicable in an and appraisal. Comment: Forming an opinion of • The price represents the normal consideration for the market value is the purpose of many real property property sold unaffected by special or creative appraisal assignments, particularly when the financing or sales concessions granted by anyone client’s intended use includes more than one associated with the sale. intended user. The conditions included in market (12 C.F.R. Part 34.42(g); 55 Federal Register 34696, value definitions establish market perspectives for August 24, 1990, as amended at 57 Federal Register development of the opinion. These conditions may 12202, April 9, 1992; 59 Federal Register 29499, June vary from definition to definition but generally fall 7, 1994) into three categories: 4. The International Valuation Standards Council 1.the relationship, knowledge, and defines market value for the purpose of international motivation of the parties (i.e., seller standards as follows: The estimated amount for which and buyer); an asset or liability should exchange on the valuation 2.the terms of sale (e.g., cash, cash date between a willing buyer and a willing seller in an equivalent, or other terms); and arm’s length transaction, after proper marketing and 3.the conditions of sale (e.g., exposure where the parties had each acted knowledgeably, in a competitive market for a prudently and without compulsion. (IVS) reasonable time prior to sale). 5. The Uniform Standards for Federal Land Appraisers are cautioned to identify the exact definition Acquisitions defines market value as follows: Market of market value, and its authority, applicable in each value is the amount in cash, or on terms reasonably appraisal completed for the purpose of market value. equivalent to cash, for which in all probability the (USPAP, 2016-2017 ed.) property would have sold on the effective date of the USPAP also requires that certain items be included in appraisal, after a reasonable exposure time on the every appraisal report. Among these items, the open competitive market, from a willing and reasonably following are directly related to the definition of market knowledgeable seller to a willing and value: reasonably knowledgeable buyer, with neither acting • Identification of the specific property rights to be under any compulsion to buy or sell, giving due appraised. consideration to all available economic uses of the • Statement of the effective date of property at the time of the appraisal. the value opinion. (Uniform Appraisal Standards for Federal Land • Specification as to whether cash, terms equivalent to Acquisitions) (Dictionary, 6th Edition) cash, or other precisely described financing terms are assumed as the basis of the appraisal. Marketing Time

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An opinion of the amount of time it might take to sell a Replacement Cost real or personal property interest at the concluded The estimated cost to construct, at current prices as of market value level during the period immediately after a specific date, a substitute for a building or other the effective date of an appraisal. Marketing time improvements, using modern materials and current differs from exposure time, which is always presumed standards, design, and layout. (Dictionary, 6th Edition) to precede the effective date of an appraisal. (Advisory Opinion 7 of the Appraisal Standards Board of The Scope of Work Appraisal Foundation and Statement on Appraisal 1. The type of data and the extent of research and Standards No. 6, “Reasonable Exposure Time in Real analyses. (SVP) Property and Personal Property Market Value 2. The type and extent of research and analyses in an Opinions” address the determination of reasonable appraisal or appraisal review assignment. (USPAP, exposure and marketing time.) (Dictionary, 6th Edition) 2016- 2017 ed.) (Dictionary, 6th Edition)

Net Operating Income (NOI) Stabilized Occupancy The actual or anticipated net income that remains after 1. The occupancy of a property that would be expected all operating expenses are deducted from effective at a particular point in time, considering its relative gross income but before mortgage debt service and competitive strength and supply and demand book depreciation are deducted. Note: This definition conditions at the time, and presuming it is priced at mirrors the convention used in corporate finance and market rent and has had reasonable market exposure. business valuation for EBITDA (earnings before A property is at stabilized occupancy when it is interest, taxes, depreciation, and amortization). capturing its appropriate share of market demand. (Dictionary, 6th Edition) 2. An expression of the average or typical occupancy that would be expected for a property over a specified Obsolescence projection period or over its economic life. (Dictionary, One cause of depreciation; an impairment of 6th Edition) desirability and usefulness caused by new inventions, changes in design, improved processes for production, Surplus Land or external factors that make a property less desirable Land that is not currently needed to support the and valuable for a continued use; may be either existing use but cannot be separated from the functional or external. (Dictionary, 6th Edition) property and sold off for another use. Surplus land does not have an independent Parking Ratio highest and best use and may or may not contribute A ratio of parking area or parking spaces to an value to the improved parcel. (Dictionary, 6th economic or physical unit of comparison. Minimum Edition) required parking ratios for various land uses are often stated in zoning ordinances. (Dictionary, 6th Edition) Tenant Improvements (TIs) 1.Fixed improvements to the land or structures Rentable Area installed for use by a lessee. For office or retail buildings, the tenant’s pro rata 2.The original installation of finished tenant space in a portion of the entire office floor, excluding elements of construction project; subject to periodic change for the building that penetrate through the floor to the succeeding tenants. (Dictionary, 6th Edition) areas below. The rentable area of a floor is computed by measuring to the inside finished surface of the Vacancy and Collection Loss dominant portion of the permanent building walls, A deduction from potential gross income (PGI) made to excluding any major vertical penetrations of the floor. reflect income reductions due to vacancies, tenant Alternatively, the amount of space on which the rent is turnover, and nonpayment of rent; also called vacancy based; calculated according to local practice. and credit loss or vacancy and contingency loss. (Dictionary, 6th Edition) (Dictionary, 6th Edition)

List of Abbreviations Avg ...... Average Cash Eq ...... Cash Equivalent DOM ...... Days on Market FEMA ...... Federal Emergency Management Agency N/A or N/Av ...... Not Applicable or Not Available SF ...... Square Feet or Square Foot /SF ...... Per Square Foot USPAP ...... Uniform Standards of Professional Appraisal Practice YTD ...... Year to Date

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Valu Pros Realty Services & Consulting, LLC (RSC) was organized by Ken Mrozek in 2019, and in 2021 started doing business as Valu Pros (VP), to provide clients a wider variety of real estate valuation and consulting services. Ken has been an appraiser in northern Illinois since 2003 and has been a real estate broker since 2016. His experience as a real estate appraiser is broad and includes valuation services for agricultural, residential and commercial properties. He has extensive appraisal education and is especially equipped for complex valuation assignments. Given his main focus is on valuation services, his primary experience as a real estate broker includes brokerage services including broker price opinions (BPO’s), competitive market analysis (CMA’s), and Evaluations for financing purposes. In addition to the typical market value appraisals, VP is experienced in providing valuation services for a variety of value types and for a variety of purposes.

VP has experience in valuation services for agricultural, residential, and commercial properties. A summary of the types of properties, include:

File # VP-21-121 88 1011-1027 Hillcrest Drive DeKalb, IL 60115

Appraiser Qualifications Kenneth J. Mrozek, Jr., MBA, MAI, SRA, ASA Certified General Real Estate Appraiser State of Illinois (Expires 09/30/21) State of Iowa (Expires 06/30/21)

EDUCATION A. Graduated from United States Military Academy (June 1991) a. BS - Bachelor of Science in Engineering Management B. Graduated from Troy University (December 1995) a. MBA - Master of Business Administration C. Appraisal Certification Program from Elgin Community College a. Associate Appraiser (December 2002) b. Certified Residential Appraiser (May 2005) D. Graduated from Northern Illinois University a. BS - Bachelor of Science in Mathematics (May 2006) E. Appraisal Institute Courses taken include: a. General Appraiser Site Valuation and Cost Approach (August 2007) b. General Appraiser Income Approach, Part 1 (August 2007) c. General Market Analysis and Highest and Best Use (September 2007) d. General Appraiser Sales Comparison Approach (October 2007) e. General Appraiser Income Approach, Part 2 (October 2007) f. FHA – 2008: Clarifying the Facts, Demystifying the Fiction (April 2008) g. Real Estate Finance, Statistics, and Valuation Modeling (May 2008) h. General Appraiser Report Writing and Case Studies (May 2008) i. Sales Comparison Valuation of Small, Mixed-Use Properties (September 2008) j. Appraisal Challenges: Declining Markets and Sales Concessions (March 2009) k. Computer-Enhanced Cash Flow Modeling (September 2009) l. Advanced Residential Applications & Case Studies, Part I (March 2010) m. Advanced Residential Report Writing, Part II (March 2010) n. REO Appraisal: Appraisal of Residential Property Foreclosure (July 2010) o. Business Practices and Ethics (November 2010 & November 2016) p. Leadership Development and Advisory Council 2011 (July 2011) q. Advanced Income Capitalization (March 2012) r. Fundamentals of Separating Real Property and Personal Property (June 2012) s. Appraising the Appraisal: Appraisal Review – General (September 2012) t. Advanced Market Analysis and Highest & Best Use (September 2012) u. Advanced Concepts & Case Studies (October 2012) v. Appraising the Appraisal: Appraisal Review – Residential (June 2013) w. The Appraiser as an Expert Witness: Preparation & Testimony (August 2013) x. Litigation Appraising: Specialized Topics and Applications (June 2014) y. Condemnation Appraising: Principles and Applications (June 2014) z. AI Instructor Leadership & Development Conference (August 2014) aa. Illinois Supervisory/Trainee Seminar (October 2014) bb. Right of Way – Three Case Studies with Two Approaches to Value (October 2014) cc. Using Spreadsheet Programs in Real Estate Applications (February 2015) dd. Advanced Spreadsheet Modeling for Valuation Applications (May 2015) ee. Residential Applications: Using Technology to Measure & Support (October 2016) ff. Business Practices & Ethics (November 2016) gg. Uniform Appraisal Standards for Federal Land Acquisitions (April 2017) hh. Real Estate Finance, Statistics, and Valuation Modeling (May 2017) ii. Solving Land Valuation Puzzles (November 2017) jj. Ignorance Isn’t Bliss: Understanding and Investigation by a State (August 2018) kk. Introduction to Green Buildings: Principles & Concepts (November 2018) ll. Case Studies in Appraising Green Residential Buildings (November 2018) F. American Society of Appraisers Courses taken include: a. Allocating Components in Going Concerns Appraisals (April 2016) G. Illinois Coalition of Appraisal Professionals (ICAP) Seminars (2009 – 2019) H. Appraisal Institute Webinars & Telebriefings:

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a. Appraising Distressed Commercial Real Estate (November 2008) b. Real Implications of the HVCC on Appraisers and Lenders (January 2009) c. Introducing Valuation for Financial Reporting (April 2009) d. Appraisal Institutes Business Practices and Ethics (May 2009) e. Valuing High Performance Residential Properties (August 2009) f. Appraisal Review: Sales Comparison and Cost Approaches (January 2010) g. Self-Storage: Looking at the Past (January 2010) h. Debate on the Allocation of Hotel Total Assets (October 2010) i. Understanding and Using Investor Surveys Effectively (January 2011) j. Perspectives from Commercial Review Appraisers (July 2011) k. IRS Valuation (July 2012) l. Appraising Cell Towers (December 2013) m. One Step Further: Implementing Guide Note 12 – Analyzing Market Trends (December 2014) n. GASB Final Statement of Fair Value Measurement & Application (July 2015) o. Residential Topics Webinar Series: Advocacy and the Residential Appraiser (July 2017) p. Legal Trends and Issues Impacting Appraisers and Appraisal Firms (December 2017) q. Engagement Letters (November 2018) r. Golfonomics – Golf Property Analysis & Valuation (June 2019) I. Valuation of the Components of a Business Enterprise – Appraisal Institute J. Litigation Professional Certificate – Appraisal Institute

LICENSES & APPROVAL LISTS A. Illinois Certified General Real Estate Appraiser B. Iowa Certified General Real Property Appraiser C. Illinois Licensed Real Estate Broker D. Illinois Licensed Hotel Operator E. Approved IDOT Real Estate Appraiser F. Approved VA Real Estate Appraiser G. Approved Appraisal Institute Instructor

EXPERIENCE H. 1991 – 1996: US Army, Captain, Infantry I. 1996 – 2001: Motorola Inc., Supervisor and Program Manager J. 2001 – 2003: Knowles Electronics Inc., Operations Program Manager K. 2003 – 2005: Urban Group Appraisals, Inc., Residential Real Estate Appraiser L. 2005 – 2010: Entrepreneur – self-employed Real Estate Appraiser M. 2007 –2020: ARC Appraisals, Commercial Appraiser N. 2010 – 2020: President - ARC Appraisals O. 2009 - Present: Byron Zoning Board of Appeals – Board Member (Chairman since 2013) P. 2014 – Present: Appraisal Institute Instructor Q. 2016 – Present: Licensed Real Estate Broker (Illinois) R. 2019 – Present: Owner – Valu Pros/Realty Services & Consultants, LLC

AFFILIATIONS, LEADERSHIP, & AWARDS A. 2005 – Present: Member – Illinois Coalition of Appraisal Professionals B. 2007 – Present: Member – Appraisal Institute (Designated Member since 2010) C. 2010 – Present: Board of Directors – Northern Illinois Chapter of the Appraisal Institute D. 2011: Vice President – Northern Illinois Chapter of the Appraisal Institute E. 2012 & 2013: President – Northern Illinois Chapter of the Appraisal Institute F. 2013 – Present: Member – Chicago Chapter of the Appraisal Institute G. 2014 – Present: ICAP Board of Directors – Illinois Coalition of Appraisal Professionals H. 2014: Chicago Chapter of the Appraisal Institute – Distinguished Service Award I. 2015: ICAP Secretary - Illinois Coalition of Appraisal Professionals J. 2015 – Present: Appraisal Institute Qualified Instructor K. 2016: Accredited Senior Appraiser – American Society of Appraisers L. 2016: ICAP Treasurer - Illinois Coalition of Appraisal Professionals M. 2017: ICAP Vice President - Illinois Coalition of Appraisal Professionals N. 2018: ICAP President - Illinois Coalition of Appraisal Professionals O. 2018 – Present: Member - Illinois Real Estate Appraisal Administration and Disciplinary Board P. 2019 – Present: Chairman - Illinois Real Estate Appraisal Administration and Disciplinary Board

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End of Appraisal Report

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