Appraisal Report

APPRAISAL REPORT Property Located at 1915 Spring Garden Street & 903 Reynolds Place, Greensboro, NC Prepared for Robert S. Fuller American National Bank Hawthorne Communities, LLC Effective Date of Appraisal October 19th, 2018 Prepared by Merritt Wilson & Dick Foster, MAI Foster Appraisal Services, Inc 351 S. Swing Road Greensboro, NC 27409 1915 Spring Garden Street, Greensboro, NC October 30th, 2018 File # M181003 Revised October 31, 2018 Dick Foster, MAI and Merritt Wilson Foster Appraisal Services, Inc. 351 S. Swing Road Greensboro, NC 27409 Robert Fuller American National Bank 628 Main Street, Danville, VA 24541 Re: Appraisal of Reynolds Place Apartments at: 1915 Spring Garden Street & 903 Reynolds Place, Greensboro, NC Dear Mr. Fuller: As per your request, I have visited and appraised the above referenced real properties for the purpose of estimating the market value of the Leased Fee interest. The effective date of this appraisal is October 19th, 2018, the date of site visitation for the value estimate “As Is”. The estimated date of completion and prospective date of value from the value “At Completion” is May 1, 2019. The attached report contains the data and analysis utilized in arriving at this estimate. As a result of my analysis and investigation, I have estimated the market value of the leased fee interest of the property subject to all assumptions and limitations as specifically provided within this narrative report to be: AS IS $1,985,000 (Including Excess Land) AS COMPLETE & STABILIZED $2,860,000 This appraisal complies with the Uniform Standards of Professional Appraisal Practice, Title XI of FIRREA. This is an Appraisal Report, which is intended to comply with the reporting requirements set forth under the Uniform Standards of Professional Appraisal Practice. As such, it presents summary discussions of the data, reasoning, and analysis that were used in the appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser’s file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated within. The appraisers are not responsible for unauthorized use of this report. Foster Appraisal Services, Inc. 1 1915 Spring Garden Street, Greensboro, NC It was a pleasure preparing this report for you and your institution. Please contact me if I may be of further assistance in the interpretation of these findings and conclusions. Sincerely, Dick Foster, MAI Merritt Wilson NC State Certificate #A-1070 NC State Certificate #A-7427 Foster Appraisal Services, Inc. 2 1915 Spring Garden Street, Greensboro, NC TABLE OF CONTENTS INTRODUCTION Title Page Letter of Transmittal ....................................................................................1 Table of Contents .........................................................................................3 Summary of Salient Facts & Conclusions ...................................................4 Assumptions and Limiting Conditions ........................................................6 Scope of work ..............................................................................................9 Extraordinary Assumptions and Hypothetical Conditions ........................11 Client, Intended Use of the Report ............................................................12 Type of Opinion .........................................................................................12 Interest Valued ...........................................................................................12 Effective Date of Value .............................................................................13 Reasonable Exposure Time & Marketing Time ........................................13 Purpose of the Appraisal ............................................................................13 Appraisal Development and Reporting Process ........................................14 Greensboro Area Data ................................................................................15 Neighborhood Description .........................................................................26 FACTUAL DESCRIPTIONS Site Analysis ..............................................................................................27 Description of Improvements ....................................................................29 Legal Description .......................................................................................33 History of Ownership .................................................................................33 Assessed Tax Value ...................................................................................34 ANALYSIS AND CONCLUSIONS Highest and Best Use .................................................................................34 Cost Approach ...........................................................................................45 Income Approach .......................................................................................51 Market Rentals Summary ..........................................................................60 Income Approach Conclusion to Value .....................................................69 Market Approach .......................................................................................69 Market Approach Conclusion to Value .....................................................76 Final Analysis ............................................................................................77 Certification ...............................................................................................78 Addenda .....................................................................................................82 Foster Appraisal Services, Inc. 3 1915 Spring Garden Street, Greensboro, NC SUMMARY OF SALIENT FACTS AND CONCLUSIONS PROPERTY LOCATION: Existing 16 Unit 48 Bed Student Housing Complex with Proposed 12 Units 24 Bed Building Reynolds Place 1915 Spring Garden Street Greensboro, North Carolina EFFECTIVE DATE OF APPRAISAL: October 19th, 2018 “As Is” PROSPECTIVE DATE OF VALUE: May1, 2019 “At Completion” PROPERTY RIGHTS: Leased Fee LAND DESCRIPTION: +/-1.42 +/- acres or 61,855 square feet served by all city utilities and re-zoned RM-26. The site has frontage on Spring Garden Street, and Reynolds Avenue and is accessed off both. The site is served by public water, sewer, electricity, gas, and telephone. Parking is on-site. IMPROVEMENT DESCRIPTION: 16-unit, 48-bedroom apartment complex containing 2 buildings, built in 1999. The complex contains all, three-bed, three-bath units with a shared kitchen and living room. The buildings are both identical with +/-9,312 SF of NLA each, concrete footing and subfloor, wood frame, brick exterior, and asphalt shingle roof. Each building contains 8, +/-1,164 SF units. NLA is +/-18,624 SF. The owner plans to remove an existing duplex, which is being utilized as the campus office and construct a three story +/-14,406 SF, 12-unit building. This building will be of similar construction to the existing buildings but will have brick veneer on the first floor and siding on the second and third floors. Additionally, this building will contain all 2 bed 2 bath units. Foster Appraisal Services, Inc. 4 1915 Spring Garden Street, Greensboro, NC HIGHEST AND BEST USE: Multi-Family LAND VALUE: $790,000 As If Vacant Cost Approach $5,590,000 As Is $3,050,000 At Compl. Income Approach $1,985,000 As Is $2,860,000 At Compl. & Stab Sales Comparison Approach $1,900,000 As Is $3,040,000 At Compl. & Stab FINAL CONCLUSION OF VALUE: $1,985,000 “As Is” $2,860,000 “At Compl. & Stabilized” Foster Appraisal Services, Inc. 5 1915 Spring Garden Street, Greensboro, NC ASSUMPTIONS AND LIMTING CONDITIONS The certification of the Appraisers appearing in the appraisal report is subject to the following conditions and to such specific and limiting conditions as are set forth by the Appraisers in the report. 1. The appraisers assume no responsibility for matters of legal nature affecting the property appraised or the title thereto, nor do the appraisers render any opinion as to the title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership. 2. Any sketch in the report may show approximate dimensions and is included to assist the reader in visualizing the property. The appraisers have made no survey of the property. 3. The appraisers are not required to give testimony or appear in court because of having made the appraisal with reference to the property in question, unless arrangements have been previously made therefore. 4. Any distribution of the valuation in the report between land and improvements applies only under the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. 5. The appraisers assume that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The appraisers assume no responsibility for such conditions, or for engineering which might be required to discover such factors. 6. Information, estimates, and opinions furnished to the appraisers, and contained in this report, were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy of such items furnished the appraisers

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