VALUATION CONSULTANTS

An Appraisal Report of an Existing Multi-Tenant Retail Center Known As:

TROPICAL GARDENS

Location:

The Subject Wraps The Northeast Corner Of East Tropicana Avenue And South Nellis Boulevard. The Local Street Addresses are 5020 And 5030 East Tropicana Avenue Las Vegas, Nevada 89122

Prepared For

ONE NEVADA CREDIT UNION ATTN.: Business Lending Department 2645 South Mojave Road Las Vegas, Nevada 89121

Prepared By

Keith Harper, MAI Charlton Wood Valuation Consultants File Number RT-17-68

Date of Report

December 21, 2017

Date of “As Is” Market Value Opinion

December 11, 2017

4200 Cannoli Circle, Las Vegas, Nevada 89103 Telephone (702) 222-0018 Fax (702) 222-0047

December 21, 2017

One Nevada Credit Union ATTN.: Business Lending Department 2645 South Mojave Road Las Vegas, Nevada 89121

RE: An Appraisal Report of an existing multi-tenant retail center known as Tropical Gardens. The subject wraps the northeast corner of East Tropicana Avenue and South Nellis Boulevard. The local street addresses are 5020 and 5030 East Tropicana Avenue, Las Vegas, Nevada 89122.

To Whom It May Concern,

Per your request, Charlton Wood and Keith Harper, MAI, have performed an appraisal of the above referenced property. The appraisers have visited the site of the subject property and all of the comparable data used in the attached appraisal.

The subject is actually two separate, but contiguous parcels that, according to the subject’s recorded Parcel Map in File 64, Page 11 of Parcel Maps, contains a total of 69,250 net square feet or 1.59 net acres. It is noted that the Clark County Assessor’s Office indicates that the two parcels have a total of 1.65 net acres. For the purposes of this appraisal, the appraisers have used a total land size of 69,250 net square feet or 1.59 net acres.

The two parcels are improved with two multi-tenant retail buildings that have a total of 21,006 square feet of rentable area. There are two vacant spaces of 1,000 square feet (Suite A-7) and 540 square feet (Suite B-2). As a result, the subject property is currently 93% leased and occupied. Later in the attached appraisal report, the appraisers will conclude that the subject’s stabilized occupancy is 93%.

The purpose of the attached Appraisal Report is to form opinions of value based upon the following valuation scenarios:

 “As Is” Market Value - Leased Fee Interest  Insurable Cost

ATTN.: Business Lending Department

December 21, 2017 Page iii

The intended user of the attached Appraisal Report is the client, Nevada One Credit Union. The intended use of the attached Appraisal Report is to assist the intended user in the mortgage lending process.

To develop the opinions of value, the appraisers have performed an Appraisal Report as defined by the 2016-2017 Edition of the Uniform Standards of Professional Appraisal Practice (USPAP). This is an Appraisal Report, which is intended to comply with the reporting requirements set under Standards Rule 2-2(a) of the 2016-2017 Edition of USPAP for an Appraisal Report.

After considering all of the available facts and subject to the underlying assumptions and limiting conditions contained herein, it is the appraisers’ opinion that the market value of the subject property is as follows:

Value Identification Effective Date of Value Final Value Opinion “As Is” Market Value - Leased Fee Interest December 11, 2017 $3,450,000 Insurable Cost December 11, 2017 $1,940,000

Thank you for the opportunity to complete this appraisal assignment.

Sincerely,

VALUATION CONSULTANTS

Keith Harper, MAI Charlton H. Wood Certified General Appraiser Certified General Appraiser License Number A.0000604-CG License Number A.0000873-CG State of Nevada State of Nevada Expires - March 31, 2018 Expires - November 30, 2018

EXECUTIVE SUMMARY

Location: The subject wraps the northeast corner of East Tropicana Avenue and South Nellis Boulevard. The local street addresses are 5020 and 5030 East Tropicana Avenue, Las Vegas, Nevada 89122.

Assessor’s Parcel Nos.: 161-21-411-064 & -066

Census Tract #: 1718

Site Area: According to the subject’s recorded Parcel Map, the subject contains a total approximately 69,250 net square feet or 1.59 net acres.

Zoning: C-2 – General Commercial District (Clark County).

Floodplain: The property is not in the 100-year floodplain (FIRM Panel #2580).

Current Use: The 1.59 net acres mentioned above contains two, multi- tenant retail buildings that contain a total of 21,006 square feet.

Highest and Best Use: As Though Vacant: Hold for future commercial development As Improved: Continued Use of the existing improvements.

Purpose of Appraisal: To form an opinion as to the following valuation scenario:

- “As Is” Market Value

- Insurable Cost

Date of “As Is” Value Opinion: December 11, 2017

Last Date of Site Visit: December 11, 2017

Date of Insurable Cost: December 11, 2017

Date of Appraisal: December 21, 2017

Intended Use/User: The intended user of this Appraisal Report is the client, One Nevada Credit Union. The intended use of this Appraisal Report is to assist the intended user in the mortgage lending process.

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Interests Appraised: Leased Fee Interest

Remaining Economic Life: Approximately 30 Years

Exposure Time: Approximately 12 months

Marketing Time: Approximately 12 months

Summary of Final Value Opinion:

“As Is” Market Value of the Leased Fee Interest: $3,450,000

Insurable Cost: $1,940,000

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TABLE OF CONTENTS

Photographs of the Subject ...... 4 Property Introduction ...... 17 Las Vegas Area Analysis ...... 22 Immediate Subject Market Area Overview ...... 45 Retail Market Report...... 50 Property Taxes and Assessor’s Values ...... 55 Site Data ...... 61 Description of the Improvements ...... 63 Highest and Best Use Analysis ...... 66 Method of Valuation ...... 70 Insurable Cost ...... 71 Sales Comparison Approach ...... 73 Income Approach ...... 88 Reconciliation of Final “As Is” Market Value – Leased Fee Interest ...... 118 Exposure Time and Marketing Time ...... 119 Assumptions and Limiting Conditions ...... 120 Certification ...... 122

Addenda

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SUBJECT PHOTOGRAPHS

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Facing West – A View of East Tropicana Avenue as it Intersects With South Nellis Boulevard - The Subject is on the Right

Facing East – A View of East Tropicana Avenue – The Subject is on the Left

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Facing South – A View of South Nellis Boulevard as it Intersects With East Tropicana Avenue - The Subject is on the Left

Facing North – A View of South Nellis Boulevard - The Subject is on the Right

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Facing Northeast – An Exterior View of 5030 East Tropicana Avenue

Facing Southwest – An Exterior View of the Eastern Side of 5020 East Tropicana Avenue

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Facing Northwest – An Exterior View of the Central Portion of 5020 East Tropicana Avenue

Facing Northeast – An Exterior View of the Western Side of 5020 East Tropicana Avenue

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Interior View – Space Occupied by Discount Market (5030 East Tropicana Avenue – Suite B)

Interior View – Space Occupied by Servi-Mex (5030 East Tropicana Avenue – Suite A)

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Interior View – Space Occupied by Boxing Gym (5020 East Tropicana Avenue – Suites 9, 10 & 11)

Interior View – Space Occupied by Herbalife (5020 East Tropicana Avenue – Suite B-8)

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Interior View – Space Occupied by Funds N Advance (5020 East Tropicana Avenue – SuiteB-6)

Interior View – Space Occupied by El Cordobes Mexican Restaurant (5020 East Tropicana Avenue – Suite B-3 & 4)

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Interior View – Space Occupied by Metro PCS (5020 East Tropicana Avenue – Suite A-6)

Interior View – Space Occupied by Pocket Change (5020 East Tropicana Avenue – Suite A-2&3)

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Interior View – Vacant Space (5020 East Tropicana Avenue – Suite A-7)

Interior View – Vacant Space (5020 East Tropicana Avenue – Suite B-2)

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Interior View – Ground Lease to The Water Bottle

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Subject

Aerial Photograph of Subject Property and Surrounding Area (Photo Obtained From Clark County Assessor’s Web Site – Photo Taken March 2017)

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5020 E. Tropicana

Not A Part 5030 E. Tropicana

Aerial Photograph of Subject Property - Close-Up (Aerial Photo Obtained From Clark County Assessor’s Web Site – Photo Taken March 2017)

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PROPERTY INTRODUCTION

Subject Identification

The subject wraps the northeast corner of East Tropicana Avenue and South Nellis Boulevard. The local street addresses are 5020 and 5030 East Tropicana Avenue, Las Vegas, Nevada 89122. The subject is also known as Clark County Assessor’s Parcel Numbers 161-21-411-064 & -066.

The subject property contains approximately 1.59 net acres and is improved with two, multi- tenant retail buildings that have a total of 21,006 square feet of rentable area. There are two vacant spaces of 540 square feet and 1,000 square feet. As a result, the subject is currently 93% leased and occupied.

Property Ownership and History

Clark County Assessor’s Parcel Number 161-21-411-064

According to public records, this parcel is owned by Giancarlo Zaretti and Laura Zaretti, Trustees of the Zaretti Family Trust, who acquired ownership on June 10, 2013 via Grant Bargain & Sale Deed, from Nevacal Investments, LLC, as recorded in Document Number 20130610:02065, in the Office of the County Recorder, Clark County, Nevada. This was not an arm’s length transaction as it was a transfer to a trust without consideration.

Clark County Assessor’s Parcel Number 161-21-411-064

According to public records, this parcel is owned by Giancarlo Zaretti and Laura Zaretti, Trustees of the Zaretti Family Trust, who acquired ownership on June 10, 2013 via Grant Bargain & Sale Deed, from Nevacal Investments, LLC, as recorded in Document Number 20130610:02044, in the Office of the County Recorder, Clark County, Nevada. This was not an arm’s length transaction as it was a transfer to a trust without consideration.

Nevacal Investments, LLC, had owned both parcels since 2002.

To the best of the appraisers’ knowledge, the subject is not currently listed for sale, or in escrow.

Legal Description

The subject is legally described as being Parcels 2A and 2B as shown by map thereof on file in File 64 of Parcel Maps, Page 11, in the Office of the County Recorder, Clark County, Nevada.

The above legal descriptions were taken from the Grant, Bargain Sale Deeds mentioned above conveying the subject property to the current owner, copies of which are located in the Addenda of this appraisal. As the legal descriptions were taken from public records, they are assumed to be accurate and correct.

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Purpose of the Appraisal

The purpose of this Appraisal Report is to form opinions of value based upon the following valuation scenarios:

 “As Is” Market Value - Leased Fee Interest  Insurable Cost

Intended Use and Intended Users of the Appraisal

The intended user of this Appraisal Report is the client, One Nevada Credit Union. The intended use of this Appraisal Report is to assist the client in the mortgage lending process.

Property Rights Appraised

Leased Fee Estate (aka Leased Fee Interest) is defined as, “The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.” (Source: The Dictionary of Real Estate Appraisal, 6th ed. [Chicago: Appraisal Institute, 2015] page 128).

Exposure Time Defined

Estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. (Source: 2016-2017 Edition of USPAP, page 2).

Marketing Time Defined

“An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal.” (Source: The Dictionary of Real Estate Appraisal, 6th ed. [Chicago: Appraisal Institute, 2015] page 140).

Date of Property Visit

The subject property was last visited on December 11, 2017.

Date of “As Is” Market Value

December 11, 2017

Date of Report

The date of this report is December 21, 2017.

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Market Value Defined

"Market Value" means 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:

(1) Buyer and seller are typically motivated; (2) Both parties are well informed or well advised, and acting in what they consider their own best interests; (3) A reasonable time is allowed for exposure in the open market; (4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

(Source: Code of Federal Regulations; Title 12 – Banks and Banking; Chapter I – Comptroller of the Currency, Department of the Treasury; Part 34 – Real Estate Lending and Appraisals; Subpart C – Appraisals; Sec. 34.42 – Definitions [g]; Revised as of May 16, 2016.

“As Is” Market Value Defined

“As Is” Market Value is defined as, “The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date.” (Source: The Dictionary of Real Estate Appraisal, 6th ed. [Chicago: Appraisal Institute, 2015] page 13.

Type of Report

In compliance with Standards Rule 2-2 (a) of the 2016-2017 Edition of the Uniform Standards of Professional Appraisal Practice (USPAP) this is identified as being an Appraisal Report.

Scope of the Appraisal

The scope of the appraisal required investigating sufficient data relative to the subject property to derive the opinions of value. The depth of the analysis was intended to be appropriate in relation to the significance of the appraisal problem.

 Extent to which the property is identified – The appraisers were not provided with a metes and bounds descriptions of the property. The legal descriptions were taken from the Clark County Recorder’s Office from two Grant Bargain & Sale Deeds conveying the property to the current owner as well as the subject’s recorded Parcel Map. The appraisers have relied on the Clark County Assessor records for an accurate reflection of the size and shape of the subject site, as well as the history of the existing improvements. The appraisers reserve the right to modify the final conclusions based upon surveys or other studies that reflect different sizes or dimensions than used in this appraisal. Based

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on visual observations at the site, there does not appear to be any easements or encroachments that would adversely affect the subject property.

 Extent to which tangible property is visited – On November 20, 2017; Charlton Wood visited the site and obtained the interior and exterior pictures which are presented herein. Later that same day, Keith Harper, MAI, visited the site in order to develop impressions of the physical characteristics based on visual observations of apparent and unapparent conditions. On December 11, 2017, Charlton Wood re-visited the site. The appraisers have driven the immediate area and viewed the comparables from the street.

The appraisers did not notice any apparent damage to the exterior of the building. However, this appraisal is not a property condition report, and should not be relied upon to disclose any conditions present in the property, and it does not guarantee the property to be free of defects. The appraisers are not licensed inspectors, and did not make an “inspection” of the property.

The appraisers are not qualified to detect or identify hazardous substances, which may, or may not, be present on, in, or near the subject property. The presence of hazardous materials may negatively affect market value. The appraisers have no reason to suspect the presence of hazardous substances, and valued the subject assuming that none are present.

No responsibility is assumed for any such conditions or for any expertise or engineering required to detect or discover them. The appraisers urge the user(s) of this report to obtain the services of specialists for the purpose of conducting inspections, engineering studies, or environmental audits. While it is noted that the subject does not lie within the 100-year flood plain, and the appraisers refer to FEMA flood maps, the appraisers are not surveyors and not qualified to make flood plain determinations. It is recommended that a qualified party be consulted before any investment-type decision is made.

 The type and extent of data researched - Sales and rental data leads were obtained by researching the CoStar Comps service, Property Line, public records and the appraisers’ office files. The comparable properties were analyzed with consideration of such differences as legal encumbrances, conditions of sale, financing terms, market conditions, location, physical characteristics, availability of utilities, zoning, and highest and best use.

 The type and extent of analysis applied – This appraisal is an Appraisal Report and it is intended to comply with the 2016-2017 edition of USPAP. The subject’s existing buildings are considered to be at their stabilized occupancy. Therefore, in concluding the subject’s “As Is” Market Value, two of the three traditional approaches to value will be used; the Sales Comparison Approach and the Income Approach. The development was completed in 1988 and, as a result, due to the age of the improvements, the Cost Approach was not used. In valuing the Insurable Cost, the Marshall Valuation Service has been used.

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Environmental Problems Observed

The appraisers were not provided with any type of environmental reports. Visual observations of the property did not reveal any environmental hazards. It is noted that the subject is located adjacent to an existing gasoline station/convenience store which has underground gasoline storage tanks. It is assumed that this property does not pose any environmental hazards to the subject.

However, the appraisers are not experts in environmental matters and this appraisal assumes that the subject property is not adversely affected by any on-site or off-site environmental hazards.

Extraordinary Assumptions

None.

Hypothetical Conditions

None.

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LAS VEGAS AREA ANALYSIS

Geographic Orientation

Las Vegas is situated at the southern tip of Nevada in the Great Basin – the western region between the Sierra Nevada and Wasatch Mountain ranges, which contains isolated mountains. Known as the most populous city in Nevada, it was established in 1905 and officially became a city in 1911. The name Las Vegas is often applied to the unincorporated areas of Clark County that surround the city, especially the resort areas on and near the Las Vegas ‘Strip’. This 6-mile stretch of Las Vegas Boulevard is mostly outside of the Las Vegas city limits, in the unincorporated town of Paradise.

Market Area Map

Subject

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Forces of Demand & Value

The principal forces of demand fall into the broad categories of population, employment and income. Changes within these metrics impact the need for more or less office, industrial, retail and residential space and consequently the demand for land.

Of the general forces that affect value, the trends in population would fall into the category of social forces. Populations change in terms of their number but also in terms of their quality such as their makeup based on age and family composition and character. In the category of economic forces, basic trends in employment have a direct impact on the overall quantity of product and services that are demanded. Trends in overall income as a characteristic of employment have significant effects on the quality of these products and services. In terms of basic environmental and/or geographic forces, the overall location of the region or individual property and their relationship to surrounding areas or properties affects value and examples of this would be the overall quality of transportation as evidenced by the availability of adequate primary linkages such as highways and arterials. In a city such as Las Vegas which is hundreds of miles from other similarly sized cities, air transportation has an outsized impact. This is logically exaggerated when the base economy is footed in tourism. The fact that Nevada has a very favorable tax climate would be an example of governmental forces that affect value.

Following is a discussion on trends in population, employment, tourism and gaming, trends in air transportation, visitor volumes and Nevada’s tax advantages as these are the factors that have the greatest degree of saliency in terms of impacting the demand for and impact on the commercial real estate markets of Las Vegas.

Population

Historically, the growth of Clark County has been very strong. The following chart illustrates the historical population growth in Clark County based on U.S. Census Bureau data. From 1960 to 2010, the Clark County population grew at a compounded 57.7% per decade. The improvements are projected to continue through 2017 and there are projections that the population of Clark County will grow an additional 425,000 people between 2015 and the year 2035.

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Historical Clark County Population

3,000,000

2,500,000

1,951,269 2,000,000 n

1,500,000 Populatio 1,000,000

500,000 127,016

0 1960 1970 1980 1990 2000 2010 Year

Each year, the Regional Transportation Commission of Southern Nevada (RTC), the Southern Nevada Water Authority (SNWA), the Southern Nevada Regional Planning Coalition (SNRPC), the Center for Business and Economic Research (CBER) at the University of Nevada, Las Vegas, and a group of community demographers and analysts work together to provide a long- term forecast of economic and demographic variables influencing Clark County's population growth.

The resulting long-term forecast predicts positive population growth throughout the range of the forecast. By 2035, CBER predicts that Clark County’s population will reach approximately 2.72 million and by 2050, it will reach nearly 2.89 million. This represents a long-term convergence to the national average annual population growth rate.

Using an average of the population forecasts from a report published by the State Demographer, Nevada County Population Projections 2016 to 2035, published in October 2016 and those of the Center for Business and Economic Research – UNLV (CBER) May 2016 publication Population Forecasts: Long Term Projections for Clark County, Nevada 2016-2050, and using 2016 as a baseline, from 2017 to 2021 Clark County is projected to grow at an average 1.55, 1.65, 1.60, 1.55 and 1.25%. Starting in 2022, the population growth rate for Clark County is projected to range decelerating from 1.20 to 0.85% during the next five years. This reflects a 1.57% average annual growth rate for the first 5 years (starting in 2017) and a projected population growth expectation for the following 5 years that averages 1.03% annually. This results in a total 5-year non-compounded growth of 7.60% for the first 5-year period and 5.05% for the following 5 years and a total 5-year compounded growth of 7.83% for the first 5-year period and 5.15% for the following 5 years.

The following chart illustrates the forecasted population growth in Clark County based on data published by the State Demographer, Center for Business and Economic Research’s (CBER) and calculated based on the average growth rate of these projections.

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Averaged Clark County Population Forecast

2,600,000

2,500,000

2,400,000 CBER 2,300,000 Averaged Estimate based on Avg. Growth Rate 2,200,000

Population State Demographer

2,100,000

2,000,000

1,900,000

Year

(Source: Prepared from data reported by the State Demographer in Nevada County Population Projections 2016 to 2035, October 2016 and CBER’s Population Forecasts: Long Term Projections for Clark County, Nevada 2016-2050, May 2016)

In projecting population growth for Clark County an average of the estimates by the State Demographer and those of the Center for Business and Economic Research would be the likely basis for any residual demand projection.

Employment / Unemployment

Nevada was the most negatively affected state during the recession that emerged in late 2008. This was mostly due to the significant loss of jobs in the construction industry because the demand for new construction basically stopped in late 2008/2009. Also, the State’s reliance on tourism and gaming affected the unemployment rate because most of the major resorts contracted their work forces during the recession. However, this has greatly changed. Nevada’s unemployment rate in December 2016 fell to a seasonally adjusted 5.1 percent – the lowest unemployment rate since November 2007.

Employment levels in Nevada are increasing and are exceeding national levels. Nevada is taking advantage of an improving national and international economy which feeds disposable income into Nevada’s leisure, hospitality and gaming industries. With nearly 1.32 million jobs, Nevada has a new all-time high in employment. In March 2017, Nevada added 38,300 jobs over March last year which represents an increase of 3.0 percent. This marks the 75th consecutive month of year-over-year growth and the 56th month the State has exceeded national job gains. The United States jobs grew 1.55 percent in March. The following chart illustrates Nevada’s job growth during the two-year time frame of April 2015 through March 2017.

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Nevada Job Growth (SA)

(Source: http://www.nevadaworkforce.com \Nevada Economy in Brief\March 2017)

Overall, Nevada’s job growth statistics as illustrated in the following chart are better than the national average and job growth is increasing. This has led to improvements in most aspects of the Las Vegas economy, specifically in the real estate markets. Clearly, the economic situation is improving in Nevada.

Job Growth: Nevada vs. US (YOY % Change; SA)

(Source: http://www.nevadaworkforce.com \Nevada Economy in Brief\March 2017)

The following chart illustrates that in March Nevada had a 4.8% unemployment rate which was down 0.1% from February and from 6.0% from one year ago. At the same time the U.S. reflected a 4.5% unemployment rate which was down 0.2% from February and from 5.0% from one year ago. There was a 0.3% difference between Nevada and the U.S. in March 2017 as compared to a 4.4% difference at the height of the recession.

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Nevada Unemployment vs. U.S. Unemployment Rate (SA)

(Source: http://www.nevadaworkforce.com \Nevada Economy in Brief\March 2017)

The statewide improvement can be in part attributed to employment projected by Tesla’s Gigafactory in Northern Nevada and numerous other business starts. The number of employers in Nevada stands at 67,700 which is at a record high and over 11,700 more since the recession. The Las Vegas employment market has continued to improve as well. The following chart illustrates the unprecedented decline in employment growth for the Las Vegas area and the local market’s continuing trajectory of improvement.

Changes in Las Vegas Employment Growth (in Thousands)

(Source: Applied Analysis Las Vegas Quarterly Office Market Report, 1st Quarter 2017)

Following is a summary chart of the largest employers in Clark County as of May 2017 as published by the Las Vegas Global Economic Alliance. The fact that the majority of the largest employers in the region are casino hotels is no surprise. Historically, the economic base of Las Vegas has been driven by gaming and tourism.

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Largest Employers in Clark County

Emplorer Employees Industry MGM Resorts International 56000+ Hospitality Clark County School District 35000+ K-12 Education Caesars Entertainment 26600+ Hospitality Nellis & Creech AFB 14000+ National Security Wynn Resorts 11000+ Hospitality Stations Casinos 10000+ Hospitality Las Vegas Sands Corporation 8800+ Hospitality Clark County 8500+ Municipal Government Boyd Gaming Corporation 7300+ Hospitality University of Nevada Las Vegas 5000+ Higher Education Valley Health System 4500+ Health Care Las Vegas Metropolitan Police Department 4500+ Police Protection Sunrise Health System 4100+ Health Care Blackstone Group, LP 4100+ Hospitality American Casino & Entertainment Properties 3700+ Hospitality University Medical Center 3500+ Health Care Southwest Airlines 3000+ Air Transportation City of Henderson 3000+ Municipal Government City of Las Vegas 3000+ Municipal Government (Source: https://www.lvgea.org/market-information/major-employers/ \May 2017)

Tourism & Gaming

The Las Vegas Convention Center, the primary convention facility, is the largest convention complex in the United States with a total square footage of 3.2 million. The Las Vegas Convention Center now features approximately 2 million square feet of net exhibit space and 380,000 square feet of net meeting room space, accommodating 170 meeting rooms with seating capacities from 20 to 7,500. The Sands Hotel Expo and Convention Center has an additional 1,200,000 square feet of exhibition space, bringing Las Vegas’ total meeting and exhibition space to more than 9,500,000 square feet, more than any other city in the nation. There is another 95,000 square feet planned to start construction in 2017.

Las Vegas welcomed a record 42,936,109 million visitors in 2016. The record visitation generated more than $40 billion in economic impact for the local economy in 2016. The December 2016 year-end statistics, released by the Las Vegas Convention and Visitors Authority (LVCVA), point to continued recovery for Las Vegas tourism with increases in all of the key core indicators.

The Las Vegas Convention and Visitors Authority reported that in March 2017 some new highs were reached when compared with the same months in the previous year although the first three months of 2017 economic indicators were generally on pace on a year-to-date (YTD) basis.

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Following is a monthly and year over year Executive Summary as published by the Las Vegas Convention and Visitors Authority.

(Source: http://www.lvcva.com /Stats & Facts / Visitor Statistics / March 2017 Executive Summary)

While the number of conventions and meetings held is slightly down from year to date, the number of convention attendees is also up 3.4% over the same period. The average citywide lodging occupancy increased slightly, or 0.5% through March 2017 from the same period in 2016. At the same time, through March 2017, the Las Vegas average daily room rate increased 8.3% or $10.78 up to $140.31 from the same period in 2016. Clark County gross gaming revenue reached over $2.609 billion through March 2017, which was an increase of 5.6% over the same period for 2016.

Several high profile mega projects have been announced and initiated. The Las Vegas Global Business District, a vision and development by the Las Vegas Convention and Visitors Authority is a $2.3 billion expansion and redevelopment of the current Las Vegas Convention Center and will include 2.5 million square feet of new convention space and will increase the current total footprint of 3.2 million square feet to nearly 5.7 million square feet.

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Genting Group has broken ground on their $4.0 billion Chinese-themed Resorts World Las Vegas casino resort which will include 3,307 rooms in the first phase (to possibly expand to 7,000 rooms in four room towers) and 657,000 square feet of public space, which will include a movie theater, conference center, 175,000 square feet of casino space, and all of the amenities expected in an ultra-resort of this size, including a 29,350-square foot lake as part of a Chinese garden.

These two projects alone are expected to provide significant economic impacts. The construction of the Las Vegas Global Business District expansion is projected to generate $3.6 billion in economic activity in and of itself. The two projects are estimated to create nearly 20,000 direct permanent jobs.

Las Vegas Stadium Proposal/Las Vegas Convention Center Expansion

In October 2016, Nevada Lawmakers approved Senate Bill 1 (SB1), which authorized a $750 million tax incentive to build a 65,000-seat domed stadium to entice the National Football League's Oakland Raiders to move to Las Vegas. The total cost of the stadium is projected at $1.9 billion, with the Raiders contributing $500 million and Bank of America financing the remainder. In March 2017, NFL owners approved the Raiders request to move to Las Vegas from Oakland. The new stadium would also house the UNLV Rebels football team.

There were several sites in the running for the new stadium, but the final decision has been to purchase an approximately 62-acre site along the west side of Interstate 15 at the northeast corner of West Russell Road and South Polaris Avenue. According to the Clark County Recorder’s Office, the team paid $77.5 million for the 62 acres and closed the transaction on May 1, 2017. Construction is projected to commence by year-end 2017, with completion by August 2020 to start the inaugural NFL season of the Las Vegas Raiders.

SB1 also approved an additional $1.4 billion expansion and renovation of the Las Vegas Convention Center. The funding would be bonded out over a 30-year period. The expansion would primarily be on the site formerly improved with the Riviera Hotel, which was imploded in June 2016.

The $750 million is the largest public contribution to a stadium in history. It would be funded via a 0.88% increase in the room tax, while another $400 million was approved via a 0.5% increase in the room tax for the convention center expansion.

The economic benefit of the proposed stadium is strongly debated. Proponents argue the stadium could host as many as 50 events annually drawing an estimated 450,000 incremental visitors to Las Vegas. Convention Sports & Leisure International estimated that a Las Vegas stadium hosting 26 events could produce a total economic output of $785.6 million and $49.4 million in new tax revenue yearly. Separately a sports economist working with UNLV estimated the total economic output of the stadium hosting 20 events would be $908.9 million, and would generate $61.7 million in new tax revenue annually.

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The positive near future effect of the Raiders moving to Las Vegas and the construction of the stadium is the increase in construction jobs. This will have an immediate effect on the local economy.

National Hockey League (NHL) Team - Vegas Golden Knights

In addition to the Las Vegas Raiders, in the Fall of 2017 the Vegas Golden Knights began their inaugural season as an NHL expansion team. They are the first major league professional team in Las Vegas and are playing their home games at the T-Mobile Arena.

Transportation & Visitor Traffic

Clark County overall has excellent transportation facilities. Three major highways directly connect Las Vegas to Los Angeles, Phoenix, Salt Lake City and Reno. Interstate 15 extends between Los Angeles and Las Vegas and handles approximately 50% of the total incoming motor vehicle traffic. The most significant regional transportation improvement and expansion currently underway is Project Neon by the Nevada Department of Transportation (NDOT).

Interstate Highway 15 (I-15) which travels north and south through the market area has for the last eight to 10 years been slowly upgraded in an effort to accommodate the significant growth of the Las Vegas community and those that travel through it. These various projects have not kept pace with the growth of the Las Vegas region. I-15 links Southern California to Salt Lake City, Utah and continues north to Canada, serving the entire southwest and as local traffic volumes increased, congestion, safety and delays undermined its utility. The $1.4 to $1.8 billion 3.7-mile Project Neon project undertaken by NDOT will provide improvements to the I-15/U.S. Highway 95 system interchange, colloquially referred to as the ‘Spaghetti Bowl’, and numerous roadways and bridges at several arterial intersections to its south. This billion-dollar endeavor is planned to take three to five years and when completed will significantly enhance transportation throughout the Las Vegas market and to and from the surrounding region.

McCarran International Airport was ranked as the ninth busiest in North America. The airport has two terminals, 1 and 3, with Terminal 3 serving international travelers. In keeping with the image of Las Vegas, there are over 1,300 gaming terminals located throughout the airport.

McCarran International welcomed 45.4 million arriving and departing passengers last year, making 2015 the third-busiest year in the airport’s 67-year history and extending the recent trend of year-over-year increases for a fifth consecutive year. The 2015 total marked a 5.8% upturn from 2014, and was the airport’s busiest year since the economic downturn. McCarran’s annual peak was in 2007 at nearly 48 million passengers.

Below is the most recent air passenger traffic information published by McCarran International Airport. April 2017 represented the first April to ever report over 4 million passengers.

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(Source: http://www.mccarran.com /Find/News and Public Affairs)

The following graph illustrates the significant increase over the past 3 years in visitor volume. With the continued expansion of world class casino resort offerings as well as expanded and upgraded convention space, the trend in visitor volume in projected to continue.

Changes in Las Vegas Visitor Volume

Trailing 12 Months in Millions (Source: Applied Analysis Las Vegas Quarterly Office Market Report, 1st Quarter 2017)

Housing Market

Single-Family and Condominium Market

Home Builders Research Inc., provided a set of summary conclusions for the Las Vegas housing market for 2016:

The 2016 new home closings in the Las Vegas area were the best since 2008. The 2016 permit tally is the highest since 2007. The resale closings were the highest since 2012. New home prices continued their steady increase since the Great Recession, up 59 percent since 2011. The annual permit tally has steadily risen since it bottomed during the Great Recession, up by 129 percent since 2011.

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Overall, residential land/lot prices were pretty flat in 2016. The shortage of replacement lots for many builders remains a serious issue. The land shortage has not improved for most with recent BLM sales. Local economic news regarding job growth and unemployment is overwhelmingly optimistic. The amount of negative equity and number of underwater mortgages continued to steadily improve.

For a look into the current housing market, the May 26, 2017 edition of The Las Vegas Housing Market Letter as published by Home Builders Research, Inc., has been analyzed. They state that “April data continues to make a very strong statement toward 2017 becoming a ‘game changer’ for the new home industry in Las Vegas. The robust beginning of the spring selling season continues in high gear. There were 633 new home closings in April, placing the 2017 sum at 2,656. This is a year to year increase of 628 transactions, or 30.9 percent.”

It was projected at the beginning of 2016 and into 2017 that mortgage rates would rise and that would limit the sales of new houses. However, interest rates remained fairly stable and did not increase significantly in 2016 and remain below four percent. There are projections that there will be at least two more interest rate increases of 25 basis points in 2017 (June 13 and December 13) by the Federal Reserve with three 25 basis point increases projected for 2018 and another three in 2019. The latest rate increase in March 2017 was the third increase since the economic crash in 2008. This increase signifies the economy is doing well and confidence is returning to the market.

Following is a summary chart of New Home Monthly Closings since 2012:

(Source: “The Las Vegas Housing Market Letter”, Home Builders Research, Inc., Volume 355, May 26, 2017)

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A summation of each homebuilder’s sales in the Las Vegas area are included as follows:

During the last 12 months, there have been 8,617 new home closing, which is 22.8 percent more than the prior 12-month period. This upward trend falls in line with the median price of the April new home closings at $336,534. This is a 3.4 percent or $11,227 increase from the prior year. New home closings along with median sale prices are anticipated to rise at a steady pace. This is supported by the April year-to-date permit total of 3,053 or 149 permit increase (5 percent) since April 2016.

According to Home Builders Research, Inc. on the resale market, “We sorted through 4,027 resale closings in April. It brings our 2017 total to 14,908, a year to year increase of 1,128, or 8.2 percent. Although the April sum was a month to month decline of 464 transactions, any monthly total over 4,000 per month suggests a very healthy resale segment. Given the continued low supply of listings, it should follow that the monthly totals going forward through 2017 should remain near the 3,500 – 4,200 level. At the end of this calendar year we presently believe the annual increase will be at roughly 6 – 8 percent. This would be a very good annual increase, unexpected by some who believe the tight supply will only get worse in the months ahead, holding down the number of sales in the resale sector.”

Following is the chart prepared by Home Builders Research, Inc. that shows the historical monthly resale closings since January 2014:

(Source: “The Las Vegas Housing Market Letter”, Home Builders Research, Inc., Volume 355, May 26, 2017)

According to Home Builders Research, Inc “the number of existing home sales is being affected by the supply of listings. It has to. The robust demand for new homes that currently exists Valuation Consultants 34 File No. RT-17-68

suggests existing home sales would be higher if there were a greater number of listings. This is old news however, and it isn’t only taking place in Las Vegas, as national market watchers and organizations regularly report that many of the major housing markets also have a very tight supply of existing homes listed for sale.”

The median price of the resale closings in April 2017 for all product types was $219,000 or 11.1 percent above the prior year. The monthly resale median price is continuing upward alongside positive local and national economic conditions.

According to Greater Las Vegas Association of Realtors (GLVAR), there were a total of 780 condo units sold in May 2017. This is a 17.6 percent increase from April 2017 and 21.7 percent from May 2016. The median sale price of $137,950 is 6.1 percent higher from April 2017 and an increase of 16.9 percent from the prior year. Further, 630 condos and townhomes were on the market without offers by May’s end, down 11.9 percent from April and 71.8 percent from May 2016.

The conclusion is that the Las Vegas single-family market improved in all segments through May 2017 and projections are that it will continue to remain robust throughout 2017, assuming that there are not greater than expected increases in mortgage rates.

Multi-Family Housing Market

In terms of the multi-family housing market, according to the Lied Institute For Real Estate Studies-Lee Business School Apartment Market Trends in 3rd Quarter 2016, the overall Las Vegas apartment market saw an increase in the average asking rent and a slight decrease in the vacancy rate during the 3rd Quarter of 2016. This was the seventh consecutive quarter where the average asking rent increased. This quarter saw a 2.3% increase in the average asking rent and the average asking rent was $900 per unit per month in the 3rd Quarter of 2016. The average asking rents are up 5.9% since the 2nd Quarter of 2015 when it was $850 per unit per month. As of the 3rd Quarter 2016, the Las Vegas average asking rent was slightly higher than the peak of $876 per unit per month in 2007 before the recession that started in late 2008. This shows that the multi-family market has basically recovered from the effects of the recession because the average asking rent as of the 3rd Quarter 2016 was also 21.4% higher than the low point in 2013 when the average asking rent was $741 per unit per month.

Seventeen (17) zip codes saw a decrease in the vacancy rate while 35 zip codes saw an increase in the vacancy rate this quarter. The center region saw the most significant decreases in the vacancy rate this quarter. The vacancy rate decreased 4.3 percentage points in the 89109-zip code the largest decrease of any zip code this quarter. Also in the center region, the 89101-zip code saw a 1 percentage point decrease in the vacancy rate. However, the 89146-zip code saw a 1.4 percentage point increase in the vacancy rate. The western region saw some of the largest increases in the vacancy rate this quarter. The 89128, 89117, and 89145 zip codes all saw increases in the vacancy rate of more than 1 percentage point. The 89178-zip code, which is in the southwestern region, saw the largest increase in the vacancy rate this quarter (4.1 percentage points). All other zip codes in the southwestern region saw minimal changes in the vacancy rate this quarter. The south and eastern regions also saw minimal changes in the vacancy rate this quarter.

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The center region saw the most significant decreases in the vacancy rate on a year over year basis. The 89104, 89118, 89106, and 89101 zip codes all saw decreases in the vacancy rate of more than 1 percentage point on a year over year basis. The 89141 and the 89183 zip codes, which are in the southern region, also saw decreases.

The zip codes generating the highest rents are within the Southwest, West, Northwest, North Las Vegas and Henderson submarkets. The following charts illustrate the performance of the Las Vegas Apartment Market.

(Source: Lied Institute for Real Estate Studies – Lee Business School Apartment Market Trends, 3rd Quarter, 2016)

(Source: Lied Institute for Real Estate Studies – Lee Business School Apartment Market Trends, 3rd Quarter, 2016)

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In general, the Las Vegas multi-family market is strong and is projected to continue to show an increase in rents into 2017. With the increase in rents, new construction of apartment complexes has started again with new projects recently being completed and currently under construction in the Southwest, Henderson and North Las Vegas submarkets.

Commercial Real Estate Market Segments

The region’s growth in population, improving employment and increases in tourism and gaming as well as overall visitorship are reflected in the following discussions of the principal commercial real estate market segments, represented by the office, retail and industrial markets.

The Office Market

Applied Analysis’ First Quarter 2017 Las Vegas Quarterly Office Market Report survey indicates the office market citywide is bottoming out. Historically vacancies have generally ranged from 13.0 to 26%. With only 106,351 square feet of new inventory in the last quarter, only 635,072 square feet of new inventory under construction and little having been added over the last 6 quarters, this has been an important component in the office market’s slow but potentially accelerating improvement. During the last 13 quarters, vacancies have gently but consistently descended. However, this acceleration declined in the last quarter and suggests that although demand is outpacing supply, the difference in the last quarter was marginal. Of the 9 office submarkets, only two experienced negative absorption in the last quarter. Overall, the quarter recorded a positive net absorption of approximately 275,411 square feet.

The following graphs illustrate the inventory and vacancy rates for the Las Vegas office market since 2007 as well as the average change in rental rates during the same time frame.

Office Inventory vs. Vacancy 64 28%

54 22%

44 16%

34

10% Percent Vacant

Square Feet(in millions) 24 4% 2007 2008 2009 2010 2011 2012 2013 2014 2015 20162017*

Office Inventory Average Vacancy

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.

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Average Change in Rental Rate

6.0%

3.0%

0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* -3.0%

Percent Change -6.0%

-9.0%

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.

The following graph illustrates the accumulative magnitude of rental rate changes reported for the Las Vegas office market since 2007. This illustrates that although vacancy has stabilized, there is still little pressure on rental rates.

Office Rental Rates

$2.60

$2.40

$2.20

$2.00 Rent/SF $1.80

$1.60 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Years

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.

The Retail Market

Applied Analysis’ First Quarter 2017 Las Vegas Quarterly Retail Market Report survey indicates a retail market citywide that is still challenged but is steadily improving. Historically vacancies have generally ranged from 2.5 to 10.8%. Vacancy rates hit their peak in 2011 and have been essentially declining since that time. In 2013, vacancy continued to decline even with the addition of new inventory and this was true throughout 2014 as well. The net absorption for 2014 was a positive 1,738,930 square feet. Much of this absorption came as a result of the completion and opening in October 2014 of the Downtown Summerlin open air mall. Of the 7 retail submarkets, 3 submarkets experienced negative absorption in the last quarter. The total net absorption however, was a positive 111,359 square feet in the last quarter. Currently, there are 442,388 square feet reported to be under construction.

The following graphs illustrate the inventory and vacancy rates for the Las Vegas retail market since 2007 as well as the average change in rental rates during the same time frame.

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Retail Inventory vs. Vacancy 60 12%

54 9%

48 6%

42 3% Percent Vacant

Square Feet(in millions) 36 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 20162017*

Retail Inventory Average Vacancy

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.

Average Change in Retail Rental Rates

15.0%

10.0%

5.0%

0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* -5.0%

-10.0% Percent Change -15.0%

-20.0%

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.

The following graph illustrates the accumulative magnitude of rental rate changes reported for the Las Vegas retail market since 2007. The effects of increased demand are demonstrated by both high absorption as well as increasing rental rates.

Retail Rental Rates

$2.50

$2.25

$2.00

$1.75 Rent/SF $1.50

$1.25 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Years

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.

As the saying goes, “retail follows rooftops”, and clearly as Las Vegas’ population grew, so too did the inventory of retail space. Concurrently, taxable retail sales increased as well. However, from 2007, although the inventory of retail space remained, taxable sales declined 22.1% to 2010. The following chart illustrates the trajectory of taxable retail sales from 2003 and

Valuation Consultants 39 File No. RT-17-68 illustrates continued annualized improvement from 2010. Total taxable sales in 2014 exceeded their high in 2007. Total taxable sales in 2016 continued this trend.

Clark County Taxable Retail Sales

$45

$40

$35

$30

$25 In BillionsIn $20

$15

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or annualized average through last survey published. (Source: http://tax.nv.gov/Publications/Monthly_Taxable_Sales_Statistics/ )

The Industrial Market

Applied Analysis’ First Quarter 2017 Las Vegas Quarterly Industrial Market Report survey indicates a strengthening industrial market citywide. Historically vacancies have generally ranged from 5.0 to 19%. The result of the national and local recession was that significant space was returned to the market as businesses contracted or left the market. Very little in the way of new inventory was added and most of that was build-to-suit. However, as of the 4th quarter of 2014, the construction of speculative buildings commenced and continues. The last quarter reported a 964,144-square foot positive net absorption. This continued the significant net absorption during the last three years, although the addition of inventory may have increased faster than demand in the last quarter. Currently, there are a reported 5,201,477 square feet under construction and the timing of its completion will reflect if supply continues to outpace demand.

The following graphs illustrate the inventory and vacancy rates for the Las Vegas industrial market since 2007 as well as the average change in rental rates during the same time frame.

Industrial Inventory vs. Vacancy 130 20%

115 15%

100 10%

85 5% Percent Vacant

Square Feet(in millions) 70 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 20162017*

Industrial Inventory Average Vacancy

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.

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Average Change in Industrial Rental Rates

10.0%

5.0%

0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* -5.0%

-10.0% Percent Change -15.0%

-20.0%

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.

The following graph illustrates the accumulative magnitude of rental rate changes reported for the Las Vegas industrial market since 2007. With high absorption, declining vacancy rates and upward pressure on rental rates, the industrial market demonstrates gathering momentum.

Industrial Rental Rates

$0.90

$0.80

$0.70

$0.60 Rent/SF

$0.50

$0.40 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Years

* Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.

Overall, for all the commercially improved markets, rents, which were increasing during the beginning of the last real estate building cycle, stalled, fell and reached a new equilibrium. The office market has moved past a persistent bottoming out and evidence suggests further declines are unlikely. As economically occupied but physically underutilized space continues to be ‘absorbed’ as well as new inventory, the office market reflects office employment based strength. National retail and industrial real estate markets already demonstrate improvement and within the local retail and industrial markets vacancies have declined and average changes in rent are in positive territory. Space utilization metrics suggest that the Las Vegas retail and industrial commercial marketplaces are moving in tandem with national trends, although industrial inventory narrowly outpaced absorption in the last quarter.

The Land Market

Given the fundamentals in the market, the pricing for speculative land sales is still considerably below historical records. The historically reduced volume of activity reflects impacts associated with the ‘Great Recession’ which started in 2008. However, this is steadily changing.

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As indicated in the following table, the land sale market experienced a significant reduction in price since its high in 2007. The average pricing low was recorded in the 3rd quarter of 2011 and pricing has since been advancing. Sales volume as well declined from 2007 but is also staging a comeback. The data was collected by Applied Analysis. The transactions reported do not include ‘Strip’ or resort property sales and are representative of the broader land market

Las Vegas Vacant Land Sales*

Transactions 2007 2012 2013 2014 2015 2016 Q2 2016 Q2 2017 Parcels Sold 543 2,546 4,479 2,943 1,517 2,114 607 234 Acres Sold 2,236 2,342 3,769 3,457 2,983 2,504 550.2 695 Price Per Acre $784,150 $150,702 $209,146 $283,125 $320,397 $391,066 $367,947 $415,188 Price Per Square Foot $18.00 $3.46 $4.80 $6.50 $7.36 $8.98 $8.45 $9.53 Quarter-over-quarter Change 16.3% 5.9% Year-over-year Change -5.1% 38.8% 35.4% 13.2% 22.1% 10.9% 12.8%

Source: Applied Analysis *Excluding Resort Property

In surveys of the Las Vegas commercial real estate markets, vacancy rates have stabilized and in the case of the retail and industrial markets, have shown marked improvement. Although typical speculative development has not advanced across the board significantly, the retail market and industrial market are demonstrating demand for well-located parcels and large scale speculative developments, respectively.

Residential markets have broadly improved. Although multi-family developers have reduced the purchase of project based sites, home builders are steadily adding to their project pipelines.

The overall market eroded from its peak in 2007 and bottomed in the 3rd quarter of 2011. Based on the yearly averages presented above, the Las Vegas land market is on average, advancing. Outside of slight retracements in a number of quarters, the last several years present an increase in overall average pricing. Year over year changes in the 2nd quarter of 2016 and 2017 demonstrate the increasing strength of the Las Vegas land market and the rate of price increase year-over-year has remained strong.

In the following two charts, the history of land sales is illustrated. Note that although the average price per acre has risen from 2013, that the aggregate volume of acreage recorded during that period has declined.

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Las Vegas Land Sales: Average Price Per Acre* (Exclusive of Resort Property)

(Source: Applied Analysis Press Release: Second Quarter 2017 Vacant Land Transactions. * Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.)

Las Vegas Land Sales: Number of Acres Sold* (Exclusive of Resort Property)

(Source: Applied Analysis Press Release: Second Quarter 2017 Vacant Land Transactions. * Note: Cumulative annual totals reported at end of 4th Quarter. Current year reflects cumulative total or average through last survey published.) Taxation

In comparison to neighboring western states, Nevada residents and businesses enjoy a significant tax advantage. Nevada has no personal income, inheritance, state, gift, or inventory/floor taxes. Taxes are kept low primarily due to tax revenues generated from tourist-related and gaming expenditures.

Nevada has a Freeport law allowing goods to escape taxation while warehoused, assembled, or repackaged in the state. Las Vegas has been designated as a foreign trade zone where firms can store, manufacture, assemble, or repair goods for shipping to other destinations without paying a tax or duty.

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Government

Clark County is operated as an independent political entity and is administered by a County Manager who is supervised by a seven-member board of County Commissioners. The City of Las Vegas government consists of an elected mayor, a City Council and a City Manager. The city’s governing bodies and those of Henderson and North Las Vegas, work together to promote growth of the areas’ tourism industries as well as diversification of the local economic base. With the exception of Boulder City, no residential, commercial or industrial moratoriums, rent control statutes or similar measures are in effect.

Area Conclusion

Population growth within the Las Vegas area market has been historically very strong. Within the next 15 years the population is projected to increase by approximately 650,000 persons. Although Nevada currently lags behind the nation in terms of its unemployment rate, its rate of job growth has surpassed that of the nation and based on the number and size of local mega developments, the unemployment rate is projected to continue to descend and the amount of local total employment is estimated to be positively impacted. The construction industry has improved during the past year with a number of new construction projects underway including Project Neon. The improvements in this sector has created the demand for jobs and positively affected the unemployment rate.

As Las Vegas continues to reinvent itself through significant new tourism and expanded conventioneer centric offerings, the current and expanding transportation systems are projected to accommodate this growth. The positively trending principal forces of demand, supported by an attractive tax structure, are anticipated to have a long term positive affect on the region and the subject property.

Although there are still issues in the office market due to the vacancy rate, the majority of the Class A and superior office properties in the Las Vegas Valley are showing significant absorption. There has not been any significant new office space developed in the past 10 years in places of high demand such as Summerlin. Now land prices have increased to levels that may hinder the construction of new office space in the high demand areas. Also, the typical, traditional office space layout is being replaced by open-space types of office set-ups that can accommodate more employees. This has created parking issues for some of the older properties. Some developers and existing office building owners have anticipated this issue and built parking structures to accommodate the demand.

The retail, multi-family and industrial markets are all healthy and fairly stable. The demand for e-commerce companies has created the need for the construction of new warehouses and distribution centers. Southern Nevada is drawing attention for these types of businesses due to its favorable transportation costs, business-friendly environment, labor pool and tax structure.

In conclusion, there is demand for commercial real estate in Southern Nevada and all segments of the market are projected to continue to improve through 2017.

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IMMEDIATE SUBJECT MARKET AREA OVERVIEW

The subject market area is located in the southeastern portion of the Las Vegas Valley area. The following map serves as a visual guide for the subject’s immediate market area boundaries, which are delineated by a 1, 3 and 5-mile radius. The subject property is located in the center of the defined area.

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Access

Access to, from, and within the area is provided by several roadways. The main arterial is US Highway 95, which generally traverses the market area in a north/south direction and provides excellent access to other parts of the Las Vegas area. It is situated approximately 1 mile west of the subject. There is a full interchange at the intersection of East Tropicana Avenue and US Highway 95. Other major east/west roadways include Charleston Boulevard, Sahara Avenue, Desert Inn Road, Flamingo Road and Tropicana Avenue. Major north/south arterials include Maryland Parkway, Eastern Avenue, Lamb Boulevard and Nellis Boulevard.

Land Uses

The market area is developed with a blend of residential and commercial uses. The predominant land use in the area is residential, defined by numerous subdivisions and multi-family developments. The subject market area is well established in its development and population as there is very little vacant land left for development. What vacant land is available for development is comprised of small in-fill parcels. Much of the residential and commercial development in the subject’s more immediate area goes back to the 1970s.

The commercial developments are typically located along the major roadways. Charleston Boulevard, Sahara Avenue, Desert Inn Road, Maryland Parkway, Tropicana Avenue and Eastern Avenue are major roadways and known as commercial corridors.

Infrastructure and Zoning

The land area of the market area is located within the governing jurisdiction of Clark County and The City of Las Vegas. As such, these authorities regulate the land uses. A variety of residential and commercial zoning classifications can be found in the market area. The commercially zoned properties are typically located along the major arterials.

The Las Vegas Valley Water District directly or through the local political jurisdiction provides water service to the market area and wastewater service is provided ultimately by Clark County Water Reclamation District. Nevada Energy provides electricity and Southwest Gas provides natural gas service to the market area. All services are generally available in adequate capacity to serve the properties in the subject’s immediate area

Proximity to Support Facilities

There is an array of support facilities such as schools, places of worship, shopping areas, civic, recreational and cultural facilities within the market area or located in close proximity within minutes from the area. The subject market area is located within the boundaries of the Clark County School District and there are a number of public schools scattered throughout the area that adequately serve the needs of the residents.

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LAS VEGAS RETAIL MARKET THIRD QUARTER 2017

The data used in the retail market analysis was obtained from Applied Analysis, a local company that provides quarterly statistics for apartment, housing, industrial, office, retail and vacant land. The quarterly retail report is based on data provided by Las Vegas area brokers, property managers and building owners. It includes speculative and non-speculative power, community and neighborhood centers with 30,000 square feet or more of gross leasable area, or rentable area. Shopping Malls, including those in suburban locations and on the Las Vegas Strip, are not covered.

Between approximately 2009 and 2013, the Las Vegas/Clark County area experienced a dramatic decline in all areas of the real estate market. During this time frame, market conditions created a situation where landlords that were able to lease space did so at a much lower rate and sometimes with significant concessions in the form of free rent, which translated into lower income streams. Owners were very conscious of the market and instead of sitting on vacant space in the hopes of obtaining a higher rental rate, they opted to adjust to the ever changing conditions and adjust rents downward accordingly.

The tightening of the credit markets, the increasing lack of consumer confidence and the overall instability of the economy as a whole caused a minimal amount of sales of investment type properties during that time frame. While there were some sales of investment type properties, the vast majority of the sales were non-arm’s length transactions.

Another issue experienced in the Las Vegas market is that tenants who signed leases prior to and during 2009 to 2013, tried, and in many instances were successful, in re-negotiating rental rates. Additionally, tenants whose leases expired over the last couple of years were able to renegotiate a lower rent. Many tenants were able to have their rents temporarily frozen and/or lowered. For years, the Las Vegas retail market was a “landlord’s market” and tenants were certainly aware of the real estate market conditions. While tenants renegotiated their rental rates, some did not achieve rents as low as then current market rent as the tenant also had issues to consider, such as re-location costs, if they decided to move to another property for a lower rental rate.

However, over the last couple of years, the retail market has shown some positive signs. According to Applied Analysis, city-wide, vacancy rates have slowly been declining. The average asking rents have slightly increased and annual rent growth has slightly increased.

Over the last few years, several national retailers such as Macy’s and Dillard’s have opened new stores in a large open air mall known as Downtown Summerlin. Located in the western portion of the Las Vegas area other national tenants include Dave & Busters, The Gap, Banana Republic, Chico’s, Crate & Barrel, Ann Taylor Loft, Nordstrom Rack just to name a few as well as numerous restaurants.

In 2016, IKEA, a Swedish based retailer, opened a store of over 300,000 square feet. It is located in the southwestern portion of the Las Vegas area. Located adjacent to the IKEA store, a local furniture store, Walker Furniture, has recently purchased land and will build a store of

Valuation Consultants 50 File No. RT-17-68 around 125,000 square feet. Sprout’s Farmers Market, a regional grocery store chain based out of Phoenix, Arizona with over 250 stores, entered the Las Vegas market several years ago and continues to open new stores in both existing shopping centers as well as new developments. Wal-Mart continues to expand with a new Super Center in the southwestern portion of the Las Vegas area. Albertson’s and Smith’s Grocery Stores continue to expand in the Las Vegas area. Fast food restaurants such as Taco Bell, McDonald’s, Burger King, etc. continue to building new stores. Chick-Fil-A recently entered the Las Vegas market and Starbuck’s continues to build its new free-standing store concept around town. National chain restaurants such as Olive Garden, Chili’s, On-The Border, Macaroni Grill, etc. continue their presence in the Las Vegas area and Cracker Barrel entered the Las Vegas market in 2016 with two new stores.

There are three retail building types used in the Applied Analysis report; Power Centers, Community Centers and Neighborhood Centers which are defined below.

Power Centers are defined as, “Centers with a 100,000 square feet and up with multiple anchors which represent more than one-half of the total space within the center.”

Community Centers are defined as, “Centers with multiple anchors.”

Neighborhood Centers are defined as, “Retail centers greater than 30,000 square feet with a supermarket anchor.”

Below is a chart illustrating the growth/decline in taxable retail sales in the Clark County area over the last 10 years.

Clark County Retail Sales (in 000s) Percent Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Change 2006 $8,676,512 $9,228,349 $9,093,418 $8,982,877 $35,981,156 5.42% 2007 $8,973,491 $9,195,295 $8,884,980 $9,314,483 $36,368,249 1.08% 2008 $8,653,144 $9,077,764 $8,646,628 $8,207,588 $34,585,124 -4.90% 2009 $7,291,785 $7,235,241 $6,810,934 $7,165,964 $28,503,924 -17.60% 2010 $6,730,217 $7,262,174 $6,997,231 $7,318,303 $28,307,925 -0.69% 2011 $7,164,357 $7,606,829 $7,383,929 $7,990,280 $30,145,395 6.49% 2012 $7,539,315 $8,167,355 $7,832,630 $8,429,481 $31,968,781 6.05% 2013 $7,919,538 $8,385,017 $8,336,146 $8,874,636 $33,515,337 4.84% 2014 $8,636,085 $9,031,079 $9,079,625 $9,598,791 $36,345,580 8.44% 2015 $9,170,848 $9,647,809 $9,597,010 $10,141, 307 $38,556,974 6.08% 2016 $9,397,698 $10,106,713 $9,991,289 $10,432,826 39,928,520 3.56% 2017 $10,067,888 $10,396,474 $10,263,838 - - - Source: State of Nevada Department of Taxation

As the chart illustrates, retail sales in the Las Vegas area generally grew steadily from quarter to quarter during 2006 and 2007. However, between 2007 and 2008 retail sales decreased by approximately 4.90%. Between 2008 and 2009, sales dropped approximately 17.60% and between 2009 and 2010, sales dropped slightly by approximately .69%. While sales generally dropped from quarter to quarter between the 2nd Quarter 2008 to the 1st Quarter of 2010, sales have generally risen slowly from the 1st Quarter of 2010 to the 1st Quarter 2016. Sales increased approximately 6.50% between 2010 and 2011. They increased approximately 6.0% between

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2011 and 2012. They increased approximately 5% between 2012 and 2013. A large increase in sales of approximately 8.44% was experienced between 2013 and 2014 and an increase of around 6% occurred between 2014 and 2015. There was a 3.56% gain between 2015 and 2016. The First Quarter 2017 indicates an increase 7.13% over the First Quarter 2016. There was a 2.87% increase from the Second Quarter 2016 to the Second Quarter 2017 and there was a 2.73% increase from the Third Quarter 2016 to the Third Quarter 2017.

The city-wide survey covered a total of 357 developments representing approximately 53.6 million square feet. Over the last nine quarters, the city-wide vacancy rates have been slowly declining, while the average city-wide lease rate has been rather stable. This is shown in the following chart.

City-Wide Vacancy Rates and Average Lease Rates

Quarter Vacancy Rate Avg. Lease Rate Third Quarter 2015 8.90% $1.57 Fourth Quarter 2015 9.10% $1.63 First Quarter 2016 8.80% $1.60 Second Quarter 2016 8.70% $1.59 Third Quarter 2016 8.50% $1.61 Fourth Quarter 2016 8.50% $1.62 First Quarter 2017 8.30% $1.65 Second Quarter 2017 8.10% $1.65 Third Quarter 2017 8.20% $1.63

The following chart illustrates the city-wide’s absorption, new construction, planned construction and under construction over the last nine quarters.

City-Wide – Absorption, New Construction, Planned Construction & Under Construction

Quarter Absorption New Planned Under (SF) Construction (SF) Construction (SF) Construction (SF) Third Quarter 2015 112,872 70,000 3,472,468 784,000 Fourth Quarter 2015 <131,940> -0- 3,643,368 822,100 First Quarter 2016 527,406 431,000 3,520,880 504,588 Second Quarter 2016 116,850 73,100 2,920,389 1,150,629 Third Quarter 2016 83,375 -0- 3,010,271 978,490 Fourth Quarter 2016 303,752 241,758 3,163,671 825,555 First Quarter 2017 111,359 25,728 3,448,307 442,388 Second Quarter 2017 199,647 75,638 3,753,907 374,750 Third Quarter 2017 5,736 -0- 3,954,357 598,750

Absorption over the last 9 quarters has been erratic ranging from a negative 131,940 square feet in the Fourth Quarter 2015 to a positive 527,406 square feet in the First Quarter 2016. However, with the exception of the Fourth Quarter 2015, each quarter has shown some type of positive absorption.

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East Submarket

The subject is located in the East Submarket. The subject is situated in the central portion of the submarket. The Applied Analysis survey for the submarket included a total of 44 properties representing a total of approximately 6.4 million square feet.

The boundary lines for the East Submarket are Paradise Road approximately 4.5 miles to the west; East Charleston Boulevard approximately 4 miles to the north and East Russell Road approximately 1 mile to the south. The aerial photograph below outlines the East Submarket’s boundary lines.

Downtown

The Strip Subject

The following chart outlines the East Submarket’s vacancy rates and average lease rates over the last nine quarters.

East Submarket Vacancy Rates and Average Lease Rates Quarter Vacancy Rate Avg. Lease Rate Third Quarter 2015 13.30% $1.20 Fourth Quarter 2015 13.40% $1.29 First Quarter 2016 12.80% $1.34 Second Quarter 2016 13.10% $1.34 Third Quarter 2016 12.30% $1.32 Fourth Quarter 2016 11.20% $1.29 First Quarter 2017 11.20% $1.43 Second Quarter 2017 10.90% $1.42 Third Quarter 2017 10.90% $1.45

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As can be seen, the vacancy rates for the East Submarket are a little higher than the city-wide vacancy rates. Generally speaking, the East Submarket’s vacancy rate has steadily been declining over the last nine quarters while the average lease rate has been generally increasing.

The following chart illustrates the West Submarket’s absorption, new construction, planned construction and under construction over the last nine quarters.

East Submarket – Absorption, New Construction, Under Construction & Planned Construction

Quarter Absorption New Under Planned (SF) Construction (SF) Construction Construction Third Quarter 2015 <2,385> -0- -0- -0- Fourth Quarter 2015 <28,861> -0- -0- -0- First Quarter 2016 55,402 -0- -0- -0- Second Quarter 2016 <31,869> -0- -0- -0- Third Quarter 2016 53,860 -0- -0- -0- Fourth Quarter 2016 69,368 -0- -0- -0- First Quarter 2017 <2,289> -0- -0- -0- Second Quarter 2017 18,037 -0- -0- -0- Third Quarter 2017 1,487 -0- -0- -0-

As the chart illustrates, absorption over the last nine quarters has been erratic ranging from a negative 31,869 square feet in the Second quarter 2016 to a positive 69,368 square feet in the Fourth Quarter 2016. No new construction has occurred over the last nine quarters, no new projects have been under construction over the last nine quarters and there have been no planned projects over the last nine quarters. This is indicative as to the maturity of the submarket.

Generally speaking, the data reflects positive signs in the retail market in the Las Vegas area. This is seen in the increasing retail sales in the Clark County area over the last couple of years. Additionally, it is seen in the declining city-wide vacancy rates as well as the declining Southeast Submarket vacancy rates. Also, the data indicates that, generally speaking, the average lease rates city-wide and in the Southeast Submarket are increasing. Additionally, over the last couple of years more and more lenders have become much more active in financing various real estate products in the Las Vegas area.

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PROPERTY TAXES AND ASSESSOR’S VALUES

Assessment Introduction

The State of Nevada operates on a fiscal basis with a fiscal year, which begins on July 1st and ends on June 30th of the following calendar year. Taxes are paid in advance and are due by July of every year. However, the taxes can be paid in four installments. In Clark County there are a number of tax districts. The tax rates for the respective districts are based on the amount of monies budgeted to them for the necessary maintenance and improvements of their facilities and services. The tax rates vary depending on the type of services provided to a particular area.

The subject is in tax district #570 (Whitney Artesian Basin). The historic tax rate from the past three years is summarized in the following table.

District 570 2015-2016 2016-2017 2017-2018 Tax Per $100 Of Assessed Value $2.9328 $2.9328 $2.9328 Percent Change - 0% 0%

As the chart indicates, over the past three years, the tax rate has remained the same.

Subject Assessment

The subject property is known as Clark County Assessor’s Parcel Number 161-21-411-064 and - 066. The following charts outline the 2017/2018 and 2018/2019 assessed values for the subject parcel. As the two parcels are being appraised as one property, the assessed values have been combined.

Parcel No. 161-21-411-064 &-066 2017/2018 2018/2019 Land Assessed Value $125,780 $150,936 Improvement Assessed Value $450,841 $438,793 Total Assessed Value* $576,621 $589,729 Total Taxable Value $1,647,489 $1,684,940 Total Taxable Value/ Bldg Area (21,006) $78.43 $80.21 *The Assessed Value is 35% of the Taxable Value

According to the Clark County Treasurer’s Office, the 2017/2018 taxes for 161-21-411-064 and - 066 are $16,914.74. According to the same source, the taxes are not current and an additional $169.11 is owed in penalty. It is noted that while the 2018/2019 assessed values have been set, the tax rates for 2018/2019 will not be set until June/July 2018.

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ASSESSOR’S PARCEL MAP;

RECORDED SURVEY MAP;

&

FLOODPLAIN MAP

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ASSESSOR’S PARCEL MAP

Subject

Subject

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RECORDED SURVEY MAP

Subject

Subject

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FLOODPLAIN MAP

Subject

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FLOODPLAIN MAP

Subject

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SITE DATA

Location

The subject wraps the northeast corner of East Tropicana Avenue and South Nellis Boulevard. The local street addresses are 5020 and 5030 East Tropicana Avenue, Las Vegas, Nevada 89122. The subject is also known as Clark County Assessor’s Parcel Numbers 161-21-411-064 & -066.

Size/Configuration

According to the subject’s recorded Parcel Map, the subject contains a total of 69,250 net square feet or 1.59 net acres. The site is generally described as having an irregular shape.

Topography and Flood Hazard

The subject site’s topography is described as generally being level at street grade. According to FEMA Community Panel Number 2580, the subject is not located within a flood hazard zone.

Soils and Subsoil

The appraisers were not provided with a soils report. Visual observations of the property did not reveal any soils issues that would adversely affect the development of the property.

However, the appraisers are not experts in such matters and this appraisal report assumes that the subject site is not adversely affected by any soils hazards.

Easements and Encroachments

A visit to the site did not reveal any easements or encroachments that would adversely affect the site’s development. The subject does have cross access easements for ingress and egress with each other as well as an adjacent property that is improved with a gasoline station/convenience store.

Environmental

The appraisers were not provided with any environmental reports. Visual observations at the site did not reveal any environmental hazards. As has been mentioned, the subject is adjacent to a property that is improved with a gasoline station/convenience store which has underground gasoline storage tanks. It is assumed that this property poses no environmental hazards to the subject.

However, the appraisers are not experts in such matters and this appraisal report assumes that the subject site is not adversely affected by any on-site or off-site environmental hazards.

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Street Improvements and Access

The subject has road frontage along the north side of East Tropicana Avenue and along the east side of South Nellis Boulevard. South Nellis Boulevard is a major north/south arterial traversing the eastern portion of the Las Vegas area. East Tropicana Avenue is a major east/west roadway traversing the southern portion of the Las Vegas area. As they front the subject, East Tropicana Avenue is a 6-lane street and South Nellis Boulevard is a 4-lane street. Both roadways are asphalt paved with concrete curbs, gutters and sidewalks.

Utilities

All public utilities (water, wastewater, electrical, telephone and natural gas) are readily available to the site and, to the best of the appraisers’ knowledge, contain sufficient capacity to properly service the subject.

Zoning

The site is zoned C-2 – General Commercial District (Clark County). This classification allows for a wide variety of retail, office, restaurant and public uses. Therefore, the site is a legal conforming use.

Adjacent Land Uses

North and south of the subject, South Nellis Boulevard is mainly residential in nature with some commercial properties located at major intersections. East and west of the subject, East Tropicana Avenue is mainly commercial in nature.

Functional Adequacies

The subject site is of adequate size and utility to accommodate a commercial/retail development.

Conclusion

In conclusion, the site’s characteristics are such to accommodate a commercial/retail use. The proper zoning is in place, utilities are in place and there are no known easements, encroachments or environmental issues that adversely affect the site. Overall, the site is adequate for a variety of commercial/retail developments. However, as will be discussed later in the Highest and Best Use section, it is currently not feasible to develop the site.

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DESCRIPTION OF THE IMPROVEMENTS

Type of Improvement: Multi-tenant retail

Total Number Of Buildings: Two

Total Building Area: As has been discussed, the existing development contains a total of approximately 21,006 square feet of rentable building area.

Number of Stories: One

Year Built: According to public records, the building was completed in 1988.

Construction Components:

Foundation: The foundation is reinforced concrete slab on grade.

Structural System: The building is of concrete block and metal/wood frame construction.

Roof: The building has a pitched, built-up roof system supported by pre-fabricated wood/steel trusses and steel vertical columns.

Exterior Walls: The exterior has a painted stucco finish.

Interior Walls: The interior walls are wood/metal frame construction that typically have a painted and textured gypsum board finish.

Floor Finish: The floor coverings are generally vinyl/ceramic tile, carpet and/or finished concrete.

Plumbing: It is assumed that all plumbing systems are per code and in good working condition.

Electricity: It is assumed that all electrical systems are per code and in good working condition.

HVAC: It is assumed that all HVAC systems are per code, in good working order and contain adequate tonnage to properly service the building/spaces.

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Ceilings and Lighting: The ceilings are typically drop-down acoustical tiles and the light fixtures in the spaces are typically recessed fluorescent fixtures. However, the leased spaces also have some tract/accent lighting.

Interior and Exterior Doors: The spaces are accessed by typical retail store fronts that are glass doors and windows in aluminum frames. Interior doors include a variety of solid and hollow-core wooden doors.

Site Improvements: The property has minimal desert landscaping with sprinkler systems on the site.

The parking area is asphalt paved with concrete curbs, gutters and sidewalks.

The subject property appears to have been very well maintained since construction. The pictures presented earlier in report give an indication as to the quality of construction, the various interior and exterior finishes and general appeal of the property. The owner has informed the appraisers that he will be painting the exterior of the buildings at a cost of $17,000 to $18,000 and will be placing new signage above each space at a cost of around $28,000.

Environmental Considerations

The subject was originally constructed in 1988. Due to its age, it is doubtful that any environmentally hazardous materials were used in the construction. It is assumed that the subject property is not adversely affected by the presence of any environmentally hazardous materials. The appraisers are not experts in such matters and this appraisal report assumes that there are no environmental hazards present in the buildings.

Construction Class/Economic Life

According to the Marshall Valuation Service National Cost Reference Manual, the subject is classified as a Good, Class “C’ Neighborhood Center. The economic life for these types of structures is approximately 40 years. As a result, the appraisers are of the opinion that the subject has an economic life of 40 years.

Effective Age/Condition

The improvements were constructed in 1988 giving them an actual age of approximately 29 years. However, a visit to the site revealed the improvements to be in good condition for their age. As a result, the appraisers are of the opinion that the improvements’ effective age is 10 years. With an economic life of 40 years and an effective age of 10 years, the subject’s improvements have a remaining economic life of approximately 30 years.

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Economic Utility

The subject improvements maximally utilize the subject site. The buildings have good accessibility and no functional problems appear to be evident. However, as will be discussed later in the Highest and Best Use “As Though Vacant” section, it is not currently feasible to develop the site.

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HIGHEST AND BEST USE ANALYSIS

Highest and best use, as used in this report, is defined as follows:

“The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.” (Source: The Dictionary of Real Estate Appraisal, 6th ed. [Chicago: Appraisal Institute, 2015] page 109).

Highest and Best Use of the Site, “As Though Vacant”

Legally Permissible

The retail site is located within the jurisdiction of Clark County, Nevada and is subject to their zoning regulations. The subject is zoned C-2 – General Commercial District. This zoning classification allows for a wide variety of retail, office, restaurant and public uses. As stated in the site analysis, the subject property is not encumbered with any known easements or encroachments that adversely affect the site. The appraisers know of no other land use restrictions on the subject, other than those under the existing zoning classification. Based on the legally permissible uses, it would appear that a variety of commercial uses would be legally permissible.

Physically Possible

The subject site contains a total of approximately 1.59 net acres and wraps the northeast corner of south Nellis Boulevard and East Tropicana Avenue. Both roadways are considered to be major arterials in the Las Vegas area. The site is generally at street grade. The site has an irregular shape and is generally similar to other parcels within the area. Thus, offering adequate utility for an array of uses. Full utility services are available. A soils report was not provided and it is assumed that there are no atypical soils issues that would prevent supporting a range of developments. Also, there are no adverse environmental conditions known. The subject’s overall physical attributes are similar to other parcels in the immediate proximity.

Overall, there does not appear to be any physical constraints, which would limit development of the property. The legally permissible uses indicated some type of commercial development. Given its location, existing development east and west of the subject and the overall size and configuration of the site, the physically possible uses also indicate some type of commercial/retail development.

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Financially Feasible

The next criteria for estimating the subject's highest and best use is that of financial feasibility, specifically, whether or not a commercial development which is indicated by the legally permissible and physically possible considerations is profitable at this time. In other words, do the potential benefits from this type of operation outweigh the cost of constructing such a project?

As the financial markets seized up in the 2nd half of 2007, demand for many types of real estate products became very limited. The ending of sub-prime lending products, as well as the macroeconomic factors that affected the real estate markets, limited demand.

The housing market in Las Vegas has basically recovered and is fairly stable. There is demand for the new construction of single-family, multi-family and industrial uses. However, the office and retail markets are lagging behind and there is still some existing space that needs to be absorbed along with an increase in rents before there is demand created for the new construction of this type of space.

Although lending sources are readily available as compared to 2009 through 2013, there is still not enough demand for new construction on the subject site. Potential buyers of commercial sites such as the subject would have to hold the property until macro and micro economic factors improve. There are some positive aspects in the Las Vegas market including some new development and improvements to existing properties along the Strip that have created new jobs. However, until the global, national and local economies improve and the supply of existing retail and office space is absorbed, the demand for the new construction of small retail projects will be limited.

Given the fundamentals in the market as of the effective date of this appraisal report, speculative retail properties are still limited. The recovery of the retail market has lagged behind a recovery in the residential and industrial markets. Median home prices for both existing and new homes have been steadily increasing over the past year. Credit markets and sources of loans have improved. There are still concerns regarding the overall economic climate on both a national and local level but the Las Vegas economy continues to improve with job growth and a slight increase in population. There are positive signs in the real estate market. However, the demand for new retail construction is still limited due to the supply of existing space that needs to be absorbed.

There is not enough demand in the market to allow for new construction of a commercial/retail use on the subject site. Therefore, it is not feasible to develop the site “as though vacant” at this time. However, it is noted that there have been improvements in the real estate market over the last 12 to 18 months and there are positive signs that these improvements will continue in the next few years.

Maximally Productive

The final step in estimating the highest and best use is to determine which use among the feasible uses would produce the highest net return or the highest net present value of the property. This analysis also focuses on the most appropriate density and other attributes that are more specific to the use of the property. Valuation Consultants 67 File No. RT-17-68

The size of the site would limit the amount of development, which could occur on the property. The site contains a total of approximately 69,250 net square feet or 1.59 net acres. According to a rent roll provided to the appraisers, the site contains an actual building area of approximately 21,006 square feet. This would equate to a site coverage of approximately 30%. The Las Vegas area retail market generally indicates a site coverage of 10% to 30% for retail oriented properties depending on the use. Therefore, the maximally productive use of the site, as though vacant, is a total building area of approximately 21,000 square feet.

Conclusion of Highest and Best Use “As Though Vacant”

In conclusion, the highest and best use of the site, “as though vacant”, as of December 11, 2017, is to develop the site with a retail use when market conditions improve.

Highest and Best Use “As Improved”

In determining highest and best use as improved, questions must be addressed using the four criteria (legally permissible, physically possible, financially feasible, maximally productive) as tools. This "improved" scenario is typically applied to construction above ground but can also be applicable to site improvements necessary to make the site ready for construction of buildings.

Legally Permissible

As discussed, the subject property is currently zoned C-2 – General Commercial District. Therefore, the existing improvements are a legally conforming use.

Physically Possible

The site is improved with a total of 21,006 square feet of building area. The structure is within the property’s boundaries and meet all parking, landscaping and set back requirements and is considered the physically possible use of the site.

Financially Feasible

It was determined previously that it is currently not feasible to develop the site, as though vacant. However, the property is 93% leased and occupied. The subject is producing income and there are no changes known that would enhance the feasibility of the existing development.

Maximally Productive

The existing retail development is improved with a total of 21,006 square feet of building area. As previously discussed, this represents a site coverage of around 30%, which is supported in the market. Therefore, the existing improvements represent the maximally productive use of the site.

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Conclusion of Highest and Best Use - As Improved

In conclusion, after analyzing the legally permissible use, the physically possible use, the financially feasible use and the maximally productive use, it is felt that the subject’s highest and best use, as improved, is for the continued use of the existing development.

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METHOD OF VALUATION

Valuation Approaches

There are three standard approaches to valuing properties. These are the cost approach, the sales comparison approach, and the income capitalization approach. The type and age of the property and the quantity and quality of data affect the applicability of each approach for a specific appraisal problem.

The cost approach is based upon the principle that an informed purchaser would pay no more than the cost to produce a substitute property with the same utility as the subject property. It is particularly applicable when the property being appraised involves relatively new improvements, which represent the highest and best use of the land, or when specialized improvements are involved and limited comparable sale data is available.

The sales comparison approach utilizes prices paid in actual market transactions of similar properties to conclude the value of the subject. This appraisal technique is dependent upon analyzing truly comparable sales, which have occurred recently enough to reflect market conditions relative to the time period of the subject appraisal.

The income approach is widely applied in appraising income producing properties. Anticipated net operating income is converted to a present worth through the capitalization process. The income approach relies upon market data to establish current market rents and expense levels to arrive at an expected net operating income.

The resulting indications of value from the three approaches are correlated into a final opinion of value for the subject property. The nature of the property being appraised, and the amount, quality, and type of data available dictates the use of each of the three approaches.

Valuation Scenario

As has been mentioned, the subject is considered to be at its stabilized occupancy. Therefore, in concluding the “As Is” Market Value, two of the three traditional approaches to value will be used; the Sales Comparison Approach and the Income Approach. The Cost Approach has not been used due to the age of the improvements. In concluding the Insurable Cost, the Marshall Valuation Service has been used.

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INSURABLE COST

The Cost Approach involves a set of procedures, in which a value indication is derived by projecting the current cost to reproduce or replace the existing structure, deducting for all accrued depreciation (i.e. deterioration and obsolescence) and adding the opinion of the land value. Typically, the first step is to conclude an opinion of the land value for the site, as though vacant. The exception to this is when the cost approach has not been used. For this analysis, the Cost Approach has not been used because the property was originally constructed in 1988. The cost approach has not been used because its inclusion would not increase the credibility of the conclusions contained herein and the subject is beyond the stage at which market participants typically use this methodology to price and value assets similar to the subject, marginalizing the applicability of this approach. Therefore, the cost approach is not considered necessary to the assignment and not using this approach does not reduce the credibility of the conclusions contained herein.

However, the client’s scope of work requirements included a request to provide an insurable cost.

An opinion of insurable cost utilizing the Marshall Valuation Service (MVS) cost manual was developed. Actual construction costs and related values can vary greatly from the MVS manual. Therefore, this conclusion should not be relied upon to determine the type or level of insurance coverage for the subject of this report. These elements should be projected by experts in cost estimating and/or insurance underwriting. Any conclusion of insurable cost was provided solely as an aid to the client as part of their overall decision making process and there are no representations or warranties regarding the accuracy of this value. It is strongly suggested that the client engage the appropriate experts to provide an insurable cost on which the client may rely.

It is noted that the subject is comprised of a two, multi-tenant retail buildings that contain approximately 21,006 square feet. The Marshall Valuation Service has been used in providing an opinion as to the insurable cost.

The final opinion of insurable cost is located on the following page.

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INSURABLE COST

Property Type: Multi-Tenant Retail Street Address: 5020 and 5030 East Tropicana Avenue City: Las Vegas County: Nevada State NV Zip: 89122 Property ID (APN #) 161-21-411-064 and -066

BASE COST (including multipliers) PSF Average Cost Class “C” Neighborhood Center with sprinklers ($89.02/SF) $89.02 Current Multiplier x1.04 Local Multiplier x1.11

TOTAL BASE COST PER SQ. FT $102.76 Building Area Square Footage 21,006 SF

TOTAL REPLACEMENT COST NEW $2,158,577

EXCLUSIONS Per SF Percent Excavations $ % $ Foundations $ 3.4% $73,392 Site Work $% $ Site Improvements $ % $ Architect’s Fees $ 5.9% $127,356 Underground Piping $ 1.0% $21,586

TOTAL EXCLUSIONS $222,334

INCLUSIONS Appliance Packages (Multifamily only) $0 Patios / Balconies, etc. (Multifamily only)$0

TOTAL INCLUSIONS $-0-

CONCLUDED INSURABLE COST Total Replacement Cost New $2,158,577 Less Total Exclusions $222,334 Plus Total Inclusions $ -0- Indicated Insurable Cost $1,936,243

CONCLUDED INSURABLE COST (Rounded) $1,940,000

1 (Base Cost includes Contractor’s overhead & profit – taken from Marshall & Swift)

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SALES COMPARISON APPROACH

The sales comparison approach derives a value indication by comparing recent sales of similar properties to the subject. Adjustments are made based upon the elements of comparison to the sale prices of the comparables. From these adjustments, a market value for the subject is concluded.

The subject property is comprised of a two, multi-tenant retail buildings that contain a total of 21,006 square feet. The building is 93% occupied. Four closed sales have been used in the analysis. The following pages provide a location map and details of the sales. A summary of four sales is presented in the chart below.

IMPROVED SALES SUMMARY

Sale # 1 2 3 4 5 Date of Sale 10/17 8/17 5/16 2/16 12/15 Sale Price $5,700,000 $18,000,000 $6,785,000 $3,350,000 $2,839,000 Price Per SF $185.97 $220.99 $148.73 $154.38 $179.80

Location 1750 South 7060 & 7070 8665 West 4226 South 2375-2475 South Rainbow South Durango Flamingo Road Durango Drive Jones Boulevard Boulevard Drive Property Rights Leased Fee Leased Fee Leased Fee Leased Fee Leased Fee Conditions of Sale None None None REO None Building SF NRA 30,650 81,450 45,620 21,700 15,794 Occupancy @ Sale 94% 100% 80% 100% 100% Year Built 1985 2016 1998 2001 1987 Condition Good Good Good Good Good OAR N/A 6.58% 7.00% N/A 7.43%

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RETAIL CENTER SALES LOCATION MAP

1

5

3 4 Subject

2

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RETAIL CENTER SALE NUMBER ONE

Location/Address: The property wraps the northeast corner of South Rainbow Boulevard and West Oakey Boulevard. The local street address is 1750 South Rainbow Boulevard, Las Vegas, Nevada 89146.

Assessor’s Parcel Number: 163-02-212-001

Sale Date: October 11, 2017

Document Number: 20171011:001096

Seller: Rainbow Express Center, LLC

Buyer: Y&S H, Inc.

Verification: Costar Comps and public records, CHW.

Price and Valuation Indicators:

Total Sale Price: $5,700,000

Financing: Cash to seller

Interest Transferred: Leased Fee

Price/SF of Building Area: $185.97

Physical Characteristics:

Total Building Area: 30,650 square feet

Land Size: 2.20 acres or 95,832 square feet

Lot Coverage: 32%

Construction Date: 1985

Basic Construction: Wood/metal construction with painted stucco finish, built-up roof system and glass store fronts.

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Income Data:

Occupancy at Sale: 94%

Overall Capitalization Rate: Income data not available.

Comments: This was not an REO sale. The property is an unanchored, multi-tenant retail center.

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RETAIL CENTER SALE NUMBER TWO

Location/Address: The property is located along the north side of West Arby Avenue just east of South Durango Drive. The local street addresses are 7060 and 7070 South Durango Drive, Las Vegas, Nevada 89113.

Assessor’s Parcel Number: 176-04-301-010

Sale Date: August 30, 2017

Document Number: 20170830:003322

Seller: Durango Arby Plaza, LLC

Buyer: KlossCo Durango, LLC

Verification: Costar Comps and public records, CHW.

Price and Valuation Indicators:

Total Sale Price: $18,000,000

Financing: Cash to seller

Interest Transferred: Leased Fee

Price/SF of Building Area: $220.99

Physical Characteristics:

Total Building Area: 81,450 square feet

Land Size: 4.54 acres or 197,762 square feet

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Lot Coverage: 41%

Construction Date: 2015

Basic Construction: Concrete block and wood/metal construction with painted stucco finish, built-up roof system, glass store fronts and stone accents. Income Data:

Occupancy at Sale: 100%

Overall Capitalization Rate: According to the confirming source, the property sold with a cap rate of approximately 6.58% based on income at the time of sale.

Comments: This was not an REO sale. The property is an multi-tenant retail center that is anchored by an EOS Fitness Center.

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RETAIL CENTER SALE NUMBER THREE

Location/Address: The property is located along the south side of West Flamingo Road just west of South Durango Drive. The local street address is 8665 West Flamingo Road, Las Vegas, Nevada 89147.

Assessor’s Parcel Number: 163-20-503-013

Sale Date: May 27, 2016

Document Number: 20160527:003088

Seller: 12142 Oxnard, LLC, et al

Buyer: MYCHIA Properties, LLC

Verification: Costar Comps and public records, CHW.

Price and Valuation Indicators:

Total Sale Price: $6,785,000

Financing: Cash to seller

Interest Transferred: Leased Fee

Price/SF of Building Area: $148.73

Physical Characteristics:

Total Building Area: 45,620 square feet

Land Size: 3.15 acres or 137,214 square feet

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Lot Coverage: 33%

Construction Date: 1998

Basic Construction: Wood/metal construction with painted stucco finish, built-up roof system and glass store fronts. Income Data:

Occupancy at Sale: 80%

Overall Capitalization Rate: According to the confirming source, the property sold with a cap rate of approximately 7.00% based on income at the time of sale.

Comments: This was not an REO sale. The property is an unanchored, multi-tenant retail center.

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RETAIL CENTER SALE NUMBER FOUR

Location/Address: The property is located along the east side of South Durango Drive approximately 200 feet north of West Rochelle Avenue. The local street address is 4226 South Durango Drive, Las Vegas, Nevada 89147.

Assessor’s Parcel Number: 163-21-121-012 and -013

Sale Date: February 1, 2016

Document Number: 20160201:01804

Seller: IPTV-B-L6-188, LLC

Buyer: Durango Rochelle, LLC

Verification: CoStar Comps and public records, 2/16, CHW.

Price and Valuation Indicators:

Total Sale Price: $3,350,000

Financing: Cash to seller

Interest Transferred: Leased Fee

Price/SF of Building Area: $154.38

Physical Characteristics:

Total Building Area: 21,700 square feet

Land Size: 1.81 acres or 78,884 square feet

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Lot Coverage: 28%

Construction Date: 2001

Basic Construction: Wood/metal construction with painted stucco finish, built-up roof system and glass store fronts. Income Data:

Occupancy at Sale: 100%

Overall Capitalization Rate: Income data was not available.

Comments: This was an REO sale. The seller took the property back via Trustee’s Deed Upon Sale on October 13, 2010 as recorded in Document Number 20101013:003086, in the Office of the County Recorder, Clark County, Nevada.

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RETAIL CENTER SALE NUMBER FIVE

Location/Address: The property is located along the west side of South Jones Boulevard approximately 200 feet north of West Sahara Avenue. The local street addresses are 2375-2475 South Jones Boulevard, Las Vegas, Nevada 89146.

Assessor’s Parcel Number: 163-02-802-006

Sale Date: December 28, 2015

Document Number: 20151228:01228

Seller: The Newberg Group, LLC

Buyer: Sahara/Jones, LLC

Verification: Jack Woodcock (broker), 362-8700 and public records, 2/16, CHW.

Price and Valuation Indicators:

Total Sale Price: $2,839,800

Financing: Cash to seller

Interest Transferred: Leased Fee

Price/SF of Building Area: $179.80

Physical Characteristics:

Total Building Area: 15,794 square feet

Land Size: 1.18 acres or 51,401 square feet

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Lot Coverage: 31%

Construction Date: 1987

Basic Construction: Wood/metal construction with painted stucco finish, built-up roof system and glass store fronts. Income Data:

Occupancy at Sale: 100%

Overall Capitalization Rate: According to the confirming source, the property sold with a cap rate of approximately 8.25%; however, this was based on a gross income of $234,284. If an 8% vacancy and collection loss and 5% management fee is applied, the adjusted NOI is $204,764, which reflects an adjusted cap rate of 7.21%.

Comments: This was not an REO sale. The property is an unanchored, multi-tenant retail center. The confirming source indicated that there were no unusual conditions with the sale and it was a straightforward arm’s length transaction.

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Analysis and Valuation of Building Area

In order to form an opinion of the market value for the subject property via the improved comparable sales, it is necessary to analyze the comparable sales prices for physical/economic characteristics that are similar or dissimilar to those of the subject.

Adjustment Considerations

The appropriate sequence of adjustments is as follows:

• Property Rights Conveyed • Terms of Sale • Conditions of Sale • Market Conditions • Physical Characteristics (location, age, etc.)

Property Rights Conveyed

The subject is being valued in leased fee interest. All five sales were conveyances that involved the leased fee interests and no adjustment is needed.

Terms of Sale

All of the sales involved terms that were cash to the seller. As a result, no cash equivalency adjustments are necessary.

Conditions of Sale

To the best of the appraisers’ knowledge, there were no unusual conditions of sale affecting Sale Number One, Two, Three and Five. Sale Four was an REO sale. Research in the Las Vegas market reveals that REO sales have been selling for 10% to 30% less than sales between private parties. This is due to the limited exposure time and the pressure that lenders have to sell properties once they take title through foreclosure. Therefore, a 15% upward adjustment has been applied to Comparable Sale Four. No adjustment was made to Sales One, Two, Three or Five.

Market Conditions

All of the comparable sales closed between December 2015 and October 2017. The data does not indicate a market conditions adjustment.

Physical Characteristics

Location

The first attribute, which requires an adjustment, is for the location differences. The subject property wraps the northeast corner of South Nellis Boulevard and East Tropicana Avenue. This

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is the intersection of two major roadways, Tropicana Avenue being commercial in nature and South Nellis Boulevard being more residential in nature. The properties in the area are older.

On an overall basis, Sales Two, Three, Four and Five are considered similar in their locations and no adjustments have been made to these four sales. Sale One is located along South Rainbow Boulevard, which is a major commercial arterial. It is considered superior and has been adjusted down 20%.

Size

The next attribute which requires an adjustment is for building size. The subject has a total of 21,006 square feet of rentable area. Sales One, Three, Four and Five have sizes ranging from 15,794 square feet to 45,620 square feet and are considered similar to the subject. No adjustment was made to these four sales. Sale Two has a size of 81,450 square feet and is considered inferior. This sale has been adjusted up 5%.

Age

As has been discussed, the subject was constructed in 1988. Sales One and Five were built between 1985 and 1987 and are considered similar. No adjustments were made to these two sales. Sales Three and Four were built between 1998 and 2001 and are considered slightly superior. These two sales have been adjusted down 10%. Sale Two was built in 2015. It is considered superior and was adjusted down 20%.

Anchor Influence

The subject property does not have an anchor influence. Sales One, Three, Four and Five also do not have an anchor influence and are considered similar. No adjustment has been made to these four sales. Sale Two is anchored by an EOS Fitness Center and is considered superior. It has been adjusted down 10%.

Occupancy

The subject is at its stabilized occupancy of 93%. Sales One, Two, Four and Five were at their stabilized occupancies at the times of their respective sales and are considered similar. No adjustments have been made to these four sales. Sale Three had an occupancy of 80% at the time of sale and is considered inferior. It has been adjusted up 10%.

The final adjusted prices are detailed in the following grid.

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Adjustment Grid

Comparable Number 1234 5 Date of Sale 10/17 8/17 5/16 2/16 12/15 Year of Construction 1985 2015 1998 2001 1987 Occupancy 94% 100% 80% 100% 100% Sales Price $5,700,000 $18,000,000 6,785,000 $3,350,000 $2,839,000 Building Size (SF) 30,650 81,450 45,620 21,700 15,794 Price Per SF $185.97 $220.99 $148.73 $154.38 $179.80 Property Rights Conveyed 0% 0% 0% 0% 0% Terms of Sale 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% +15% 0% Market Conditions (Time) 0% 0% 0% 0% 0% Adjusted Sales Prices $185.97 $220.99 $148.73 $177.54 $179.80 Location -20% 0% 0% 0% 0% Size 0% +5% 0% 0% 0% Age 0% -20% -10% -10% 0% Anchor Influence 0% -10% 0% 0% 0% Occupancy 0% 0% +10% 0% 0% Total Adjustments -20% -25% 0% -10% 0% Indicated Value Per SF $150.38 $165.74 $148.73 $159.79 $179.80

Reconciliation of Value

Before the adjustment process, the sales had prices ranging from $148.73 per square foot to $220.99 per square foot. After adjusting the comparables for conditions of sale, location, size, age, anchor influence and occupancy; the adjusted prices ranged from $148.73 per square foot to $179.80 per square foot.

After analyzing the data, the appraisers have given the most weight to Sales One and Two. They are the most recent sales and the other three sales generally support the range indicated by Sales One and Two. As a result, the appraisers are of the opinion that the subject property has an “As Is” Market Value, via the Sales Comparison Approach, as of December 11, 2017 as follows:

21,006 SF of Building Area x $155/SF = $3,255,930: Say: $3,260,000

THREE MILLION TWO HUNDRED SIXTY THOUSAND DOLLARS ($3,260,000)

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INCOME CAPITALIZATION APPROACH

The income capitalization approach to value is based upon analysis of the income-producing potential of a property. This approach assumes that the purchaser of an investment type property will pay a price which bears a relationship to the net operating income which the property is capable of producing. There are two recognized methodologies in the income capitalization approach: direct capitalization and discounted cash flow analysis. In direct capitalization, one year’s net operating income is divided by an overall capitalization rate which is derived from available market data. The discounted cash flow analysis analyzes the projected change in income and expenses over an anticipated holding period. Both of these approaches will be used in this analysis.

Subject Property

The subject property is 93% leased and occupied by 15 tenants. The appraisers were provided with a rent roll, a copy of which is located in the Addenda of this appraisal. Below is a reconstructed rent roll.

Rent Roll Tenant Suite Space Start End Monthly Rent/SF/ Size Date Date Rent Month 5020 East Tropicana Avenue Little Caesar’s Pizza A-1 1,320 SF 4/1/1989 3/31/2021 $2,217 $1.68 Pocket Change A 2-3 2,829 SF 8/26/1999 9/30/2022 $3,174 $1.12 Dolex A-4 867 SF 6/1/2004 4/30/2019 $1,225 $1.41 Shoe Store A-5 1,100 SF 11/1/2017 10/31/2020 $830 $0.75 Metro PCS A-6 1,200 SF 11/1/2011 9/30/2021 $1,350 $1.13 VACANT A-7 1,000 SF - - - - La Jeresana B-1 1,745 SF 1/1/2007 3/31/2021 $964 $0.55 VACANT B-2 540 SF - - - - El Cordobes B 3-4 1,188 SF 6/1/1998 11/30/2019 $1,763 $1.48 Tropicana Medical Supply B-5 1,004 SF 6/1/1998 5/30/2019 $1,093 $1.09 Funds N Advance B-6 508 SF 4/30/1999 5/30/2019 $645 $1.27 Sylvia’s Beauty B-7 757 SF 6/1/1997 4/30/2019 $713 $0.94 Herbalife B-8 648 SF 1/15/2016 1/14/2019 $615 $0.95 Boxing Gym B 9-10-11 1,800 SF 5/1/2015 M-T-M $437 $0.24 5030 East Tropicana Avenue Servi-Mex A 1,000 SF 11/1/2002 9/30/2020 $1,136 $1.14 Discount Market B 3,500 SF 7/1/2010 7/31/2022 $4,097 $1.17 Total 21,006 SF $20,259 $1.04-Avg. The Water Bottle (ground lease) $745

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Lease Summaries

Little Caesar’s Pizza

This tenant occupies 1,320 square feet of space. The lease originally commenced on April 1989. The tenant is currently operating under a Fifth Amendment with a lease term of April 1, 2016 to March 31, 2021. The rent is currently $1.68 per square foot per month and it will increase 10% in April 1, 2019. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Pocket Change

This tenant occupies 2,829 square feet of space. The lease originally commenced on August 1999. The tenant is currently operating under an Extension Letter with a lease term of October 1, 2017 to September 30, 2022. The rent is currently $1.12 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Dolex

This tenant occupies 867 square feet of space. The lease originally commenced on June 1, 2004. The tenant is currently operating under an Extension Letter with a lease term of May 1, 2016 to April 30, 2019. The rent is currently $1.41 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Shoe Store

This tenant occupies 1,100 square feet of space. The lease commenced on November 1, 2017 and will expire on October 31, 2020. The rent is currently $0.75 per square foot per month and it will increase to $0.82 per square foot per month on November 1, 2018 and it will increase 3% on November 1, 2019. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Metro PCS

This tenant occupies 1,200 square feet of space. The lease originally commenced on November 1, 2011. The tenant is currently operating under an Extension Letter with a lease term of October 1, 2016 to September 30, 2021. The rent is currently $1.13 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

La Jeresana

This tenant occupies 1,745 square feet of space. The lease originally commenced on January 1, 2007. The tenant is currently operating under an Extension Letter with a lease term of April 1, 2016 to March 31, 2021. The rent is currently $0.55 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses. Valuation Consultants 89 File No. RT-17-68

El Cordobes

This tenant occupies 1,188 square feet of space. The lease originally commenced on June 1, 1998. The tenant is currently operating under an Extension Letter with a lease term of December 1, 2014 to November 30, 2019. The rent is currently $1.48 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Tropical Medical Supply

This tenant occupies 1,004 square feet of space. The lease originally commenced on June 1, 1998. The tenant is currently operating under an Extension Letter with a lease term of June 1, 2016 to May 30, 2019. The rent is currently $1.09 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Funds N Advance

This tenant occupies 508 square feet of space. The lease originally commenced on April 30, 1999. The tenant is currently operating under an Extension Letter with a lease term of June 1, 29016 to May 30, 2019. The rent is currently $1.27 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Sylvia’s Beauty

This tenant occupies 757 square feet of space. The lease originally commenced on June 1, 1997. The tenant is currently operating under an Extension Letter with a lease term of May 1, 2016 to April 30, 2019. The rent is currently $0.94 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Herbalife

This tenant occupies 648 square feet of space. The lease commenced on January 15, 2016 and will expire on January 14, 2019. The rent is currently $0.95 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Boxing Ring

This tenant occupies 1,800 square feet of space. The lease originally commenced on May 1, 2015 and expired May 1, 2017. This tenant is month-to-month. The rent is currently $0.24 per square foot per month. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

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Servi-Mex

This tenant occupies 1,000 square feet of space. The lease originally commenced on November 1, 2002. The tenant is currently operating under an Extension Letter with a lease term of October 1, 2015 to September 30, 2020. The rent is currently $1.14 per square foot per month and it will increase 3% per year. The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

Discount Market

This tenant occupies 3,500 square feet of space. The lease originally commenced on July 1, 2010. The tenant is currently operating under an Extension Letter with a lease term of August 1, 2017 to July 31, 2022. The rent is currently $1.17 per square foot per month and it will increase 1.5% every other year. ($1.19/SF/Month on August 1, 2019 and $1.21/SF/Month on August 1, 2021). The lease is triple net as the tenant pays his pro-rata share of the operating expenses.

The Water Bottle

This tenant ground leases approximately 225 square feet of land in the subject’s parking lot and is used as a water dispensing kiosk. The lease had a 5-year term which began in September 1, 2012 and expired on August 31, 2017. The lease has 4, 5-year options. The original lease had a rental rate of $600 per month. They recently began their first option, which will expire on August 31, 2022. The rental rate is $695 per month plus $50 for water for total of $745 per month. The rent is flat for the 5-year term. The second option period will have a rental rate of $806 plus $50 for water for a total monthly rent of $856. The rent stays flat for the second 5-year option. The lease did not have the rental rates for the third and fourth option periods.

Located on the following pages are the rent comparables used in this analysis.

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RETAIL RENT COMPABLE MAP

3

1 2

5

4 Subject

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COMPARABLE RETAIL RENT ONE

General Location: The property is located at the northwest corner of East Desert Inn Road and South Mojave Road. The local street address is 3160 East Desert Road, Las Vegas, Nevada 89121.

Total Rentable Area: Approximately 22,720 square feet

Year Of Construction: 1988

Property Description Concrete block and wood frame construction with painted stucco finish, aluminum framed, glass storefronts and pitched, built-up roof system.

Base Rent: $0.75 per square foot per month (see comments)

Expense Basis: Triple Net

Lease Term: 5 years

Rental Rate Escalation: 3%

CAM Fee: $0.45 per square foot per month

Concessions: None

Improvement Allowance: None

Current Occupancy: Approximately 81% occupied (see comments)

Comments: This comparable represents an unanchored retail center of around 22,720 square feet. There are five vacant spaces of 750 SF to 990 SF indicating an occupancy of 81%.

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The most recent lease was signed in 2017 for 1,000 SF. It has a 5-year term with an initial rental rate of $0.75/SF/Month and increases 3% per year. There was no free rent given and no TIs given.

Confirmation: Hillary Steinberg (leasing agent), 702-388-1800, CHW

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COMPARABLE RETAIL RENT TWO

General Location: The property is located at the southeast corner of East Desert Inn Road and South Sandhill Road. The local street address is 3342 South Sandhill road, Las Vegas, Nevada 89121.

Total Rentable Area: Approximately 13,200 square feet

Year Of Construction: 1976

Property Description Concrete block and wood frame construction with painted exterior finish, aluminum framed, glass storefronts and pitched, built-up roof system.

Base Rent: $0.85 per square foot per month (see comments).

Expense Basis: Triple Net

Lease Term: 3 years

Rental Rate Escalation: 3% annual increases.

CAM Fee: Not available

Concessions: 3 months free rent (see comments).

Improvement Allowance: None

Current Occupancy: Around 64%

Comments: This comparable represents an unanchored multi-tenant retail center of 13,200 SF. There are 4 vacant spaces of 1,200 SF each indicating an occupancy of 64%. They are asking $0.85/SF/Month for the vacant space.

The agent stated that the last space leased in the center was in 2017. It had 2,400 SF of space. It was a 3-year lease. The rental rate was Valuation Consultants 95 File No. RT-17-68

$0.85/SF/Month increasing 3% per year. No TIs were given, but 3 months of free rent was given.

Confirmation: Laramie Bracken (broker), 702-221-8226, CHW

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COMPARABLE RETAIL RENT THREE

General Location: The property wraps the northwest corner of South Nellis Boulevard and Vegas Valley Drive. The local street addresses are 2755, 2775, 2785, 2845 & 2875 South Nellis Boulevard, Las Vegas, Nevada 89121.

Total Rentable Area: Approximately 130,000 square feet

Year Of Construction: 1992

Property Description Concrete block and wood frame construction with painted exterior finish, aluminum framed, glass storefronts and pitched, built-up roof system.

Base Rent: $1.10 per square foot per month (see comments).

Expense Basis: Triple Net

Lease Term: 3 years

Rental Rate Escalation: 3% annual increases.

CAM Fee: $0.37 per square foot per month

Concessions: 3 months free rent (see comments).

Improvement Allowance: None

Current Occupancy: Around 89%

Comments: This comparable represents a multi-tenant retail center anchored by an Albertson’s Grocery Store. They are asking $1.10/SF/Month to $1.40/SF/Month for the vacant space.

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The agent stated that the last space leased in the center was in 2016. It had 1,190 SF of space. It was a 3-year lease. The rental rate was $1.10/SF/Month increasing 3% per year. No TIs were given, but 3 months of free rent was given.

Confirmation: David Grant (broker), 702-836-3785, CHW

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COMPARABLE RETAIL RENT FOUR

General Location: The property wraps the northwest corner of South Pecos Road and East Tropicana Avenue. The local street addresses are 4855 South Pecos Road and 3350 East Tropicana Avenue, Las Vegas, Nevada 89121.

Total Rentable Area: Approximately 20,000 square feet

Year Of Construction: 1986

Property Description Concrete block and wood frame construction with painted exterior finish, aluminum framed, glass storefronts and pitched, built-up roof system.

Base Rent: $1.00 per square foot per month (see comments).

Expense Basis: Triple Net

Lease Term: 3 years

Rental Rate Escalation: $0.10/SF/Month increases every year.

CAM Fee: $0.45 per square foot per month

Concessions: 4 months free rent (see comments).

Improvement Allowance: None

Current Occupancy: Around 75%

Comments: This comparable represents an unanchored multi-tenant retail center of 20,000 SF. They are asking $1.15/SF/Month to $1.20/SF/Month for the vacant space.

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The agent stated that the last space leased in the center was in 2015. It had 1,080 SF of space. It was a 3-year lease. The rental rate was $1.00/SF/Month increasing $0.10/SF/Month every year. No TIs were given, but 4 months of free rent was given.

Confirmation: Robin Civish (broker), 702-550-4977, CHW

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COMPARABLE RETAIL RENT FIVE

General Location: The property is located at the northeast corner of East Flamingo Road and South Pearl Street. The local street addresses are 3620 and 3650 East Flamingo Road, Las Vegas, Nevada 89121.

Total Rentable Area: Approximately 26,000 square feet

Year Of Construction: 1985-1986

Property Description Concrete block and wood frame construction with painted exterior finish, aluminum framed, glass storefronts and pitched, built-up roof system.

Base Rent: $1.00 to $1.07 per square foot per month (see comments).

Expense Basis: Triple Net

Lease Term: 3-5 years

Rental Rate Escalation: 3% annual increases.

CAM Fee: $0.35 per square foot per month

Concessions: Not available.

Improvement Allowance: None – “as is”

Current Occupancy: Around 80%

Comments: This comparable represents an unanchored multi-tenant retail center of around 26,000 SF. They were asking $1.00 to $1.25/SF/Month for the vacant space.

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The agent stated that within the last year or so, three spaces were leased. They ranged in size from 1,000 SF to 3,000 SF. The rental rates ranged from $1.00 to $1.07/SF/Month. One space had a 3% annual increase and the other two were flat rental rates. The leases were 3-5 years. No TIs were given.

The agent stated that he lost the listing around the first of November 2017. The information above was prior to his losing the listing.

Confirmation: Scott Prince (broker), 702-376-8776, CHW

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Analysis of Retail Rents

SUMMARY OF COMPARABLE RETAIL RENTS

Comparable Size Rental Rate Expense Number (SF) Per SF/Mo Basis

1 1,000 $0.75 Triple Net

2 2,400 $0.85 Triple Net

3 1,190 $1.10 Triple Net

4 1,080 $1.00 Triple Net

5 1,000 SF to $1.00 to $1.07 Triple Net 3,000 SF

The rent comparables indicate a range of rental rates from $0.75 per square foot per month to $1.10 per square foot per month. All of the rents are on a triple net expense basis.

Rent Number One is an unanchored retail center located at the northwest corner of East Desert Inn Road and South Mojave Road. The most recent lease was for 1,000 square feet at $0.75 per square foot per month.

Rent Number Two is an unanchored retail center located at the northeast corner of East Desert Inn Road and South Sandhill Road. The most recent lease was for a 2,400 square foot space with a rental rate of $0.85 per square foot per month.

Rent Number Three is a multi-tenant retail center located at the northwest corner of South Nellis Boulevard and Vegas Valley Road. It is anchored by an Albertson’s Grocery Store. The most recent lease was for a 1,190 square foot space with a rental rate of $1.10 per square foot per month.

Rent Number Four is an unanchored retail center located at the northwest corner of South Pecos Road and East Tropicana Avenue. The most recent lease was for a 1,080 square foot space with a rental rate of $1.00 per square foot per month.

Rent Number five is an unanchored retail center located at the northeast corner of East Flamingo Road and South Pearl Street. The three most recent leases had sizes ranging from 1,000 square feet to 3,000 square feet and rental rates that ranged from $1.00 per square foot to $1.07 per square foot.

Subject Property

The subject is two, multi-tenant retail buildings that have a total of 21,006 square feet. As was shown earlier in the subject’s rent roll, the property has a variety of tenants with a variety of bay Valuation Consultants 103 File No. RT-17-68

sizes. The rental rates range from $0.24 per square feet per month to $1.68 per square foot per month. As was also shown, many tenants have been in the center for years and are currently operating under Lease Amendments or Extension Letters. The two most recent leases are with a shoe store and Herbalife. The shoe store leased 1,100 square feet in November 2017 with a rental rate of $0.75 per square foot per month; however, its first annual increase will be approximately 9.3% with the second annual increase being 3%. The owner stated that he gave them a break on the first year rent. Herbalife leased a 648 square foot space in January 2016 with a rental rate of $0.95 per square foot per month. The rent increases 3% per year. There are two vacant spaces of 1,000 square feet and 540 square feet and they are asking $1.00 per square foot per month. The two highest rents are restaurants (El Cordobes and Little Caesar’s Pizza). El Cordobes is paying $1.48 per square foot per month and Little Caesar’s is paying $1.68 per square foot per month. Restaurants typically pay a higher rent per square foot due to the additional costs associated with restaurant spaces. On an overall basis, the overall weighted average rental rate of all the occupied space in the subject is $1.04 per square foot per month. If the two restaurants are omitted, the overall weighted average rental rate is $0.96 per square foot per month. Based on the data, the appraisers are of the opinion that the overall market rent for the retail space is $1.00 per square foot per month and the overall average rental rate for the restaurant space is $1.50 per square foot per month.

Other Income

The subject receives other income from two other source; expense reimbursements and The Water Bottle kiosk. It has been discussed that the subject leases are triple net which is a situation where the tenants pay the owner their pro-rata share of the operating expenses. The owner would be responsible for these expenses during vacancy. Later in the Argus cash flow, the operating expenses (taxes, insurance, utilities, administrative, repairs & maintenance and management fee) will be placed in the cash flow as reimbursable expenses. The reserves expenses will be placed in the cash flow as non-reimbursable expenses.

The second source of Other Income is The Water Bottle kiosk who ground leases around 225 square feet of land in the subject’s parking lot. They are paying $745 per month which will escalate in about five years.

Vacancy & Collection Loss

The citywide retail market indicates a vacancy rate of about 8.20%. The subject’s Submarket (East) has an overall retail vacancy of around 10.90%. The subject is currently 93% leased and occupied. As was shown earlier, they have had good tenant retention as many tenants have been in the center for years. As a result, the appraisers are of the opinion that the subject’s stabilized vacancy is it current vacancy of 7%.

Operating Expense Estimate

In developing an operating expense projection, the expenses and income loss normally associated with the day-to-day operations and maintenance of the subject property must be recognized. The subject is leased on a triple net basis as are the rent comparables. This is a situation whereby the real estate taxes, insurance, repairs & maintenance and utilities are passed Valuation Consultants 104 File No. RT-17-68

directly thru to the tenants on a pro-rata basis. Additionally, some centers are also able to pass through the management fee, which is the case for the subject. The appraisers have been provided with the subject’s actual 2014, 2015 and 2016 expenses. Copies of the expenses are located in the Addenda of this appraisal. They are summarized and reproduced in the following chart.

Subject Property Operating Expenses

2016 2016 2015 2015 2014 2014 Expense Expense Expense Expense Expenses Expense Expense Per SF Per SF Per SF Real Estate Taxes $17,087 $0.81 $17,036 $0.81 $16,774 $0.80 Insurance $7,550 $0.36 $7,504 $0.36 $9,153 $0.44 Utilities $23,669 $1.13 $24,925 $1.19 $28,228 $1.34 Repairs and Maintenance $27,921 $1.33 $28,671 $1.36 $26,550 $1.26 Management Fee $17,700 $0.84 $17,700 $0.84 $19,175 $0.91 Administrative Expense -0- -0- $1,867 $0.09 $274 $0.01

Total $93,927 $4.47 $97,703 $4.65 $100,154 $4.77

The appraisers have also used expenses comparables, which are shown in the following chart. Expense Comparable One is the 2015 expenses for a 14,183 square foot retail center built in 1996. Expense Comparable Two is the 2014 budgeted expenses for a multi-tenant retail center built in 1998 that has 21,200 square feet. Expense Comparable Three is the actual 2015 expenses for a 25,917 square foot retail center built in 2005. Expense Comparable Four is the actual 2012 expenses for a 66,250 square foot retail center built in 1979, but renovated in 2010. Expense Comparable Five is the 2016 budget for a 19,470 square foot retail center built in 2005. The data was obtained from confidential sources.

Expense Comparables

Expense Expense Expense Expense Expense Expense Comparable Comparable Comparable Comparable Comparable 1 2 3 4 5 Real Estate Taxes $1.09 $0.96 $1.49 $0.88 $1.29 Insurance $0.36 $0.39 $0.32 $0.15 $0.36 Repairs & Maintenance $1.68 $1.33 $0.84 $1.59 $0.74 Utilities $0.72 $1.09 $1.96 $1.02 $0.62 Administrative $0.14 $0.29 $0.06 $0.63 -0- Management Fee $0.94 $0.88 $2.32 $1.42 $1.66

Total/SF/Year $4.93 $4.93 $6.99 $5.69 $4.67

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Real Estate Taxes:

Earlier in this appraisal report, the 2017/2018 taxes for the subject property were reported to be $16,914.74 or $0.81 per square foot. This is a fixed expense and, as a result, the appraisers have projected a rounded tax expense of $17,000.

Insurance:

This expense item includes a multi-peril insurance policy for fire, liability and extended coverage. The five expense comparables indicate a range of $0.15 to $0.39 per square foot. The subject’s 2014 expense was $0.44 per square foot, the 2015 expense was $0.36 per square foot and the 2016 expense was $0.36. This is a fixed expense and the appraisers have used a rounded expense of $7,550 or $0.36 per square foot.

Repairs and Maintenance:

This expense item includes on-going costs associated with the day-to-day operation of the property. This expense consists of general external building repairs, electrical repairs, landscape maintenance (on the subject site), parking lot repairs and trash removal expenses. This expense can vary widely depending upon the age of the property and the management style of the owner. This is shown in the five expense comparables that indicate a range of $0.74 to $1.68 per square foot. The subject’s 2014 expense was $1.26 per square foot. The 2015 expense was $1.36 per square foot and the 2016 expense was $1.33 per square foot. Based on the data, the appraisers have projected a rounded expense of $28,000 or $1.33 per square foot.

Utilities:

Expenses included in this category include all water, wastewater, gas and common area electrical costs and trash pickup associated with the subject property. The five expense comparables have a range of $0.62 to $1.96 per square foot. The subject’s 2014 expense was $1.34 per square foot. The 2015 expense was $1.19 per square foot and the 2016 expense was $1.13 per square foot. Based on the data, the appraisers have projected a rounded expense of $24,000 or $1.14 per square foot.

Management

This expense item covers the day-to-day operation of the property. In the Las Vegas area, this expense is typically associated with a property like the subject. Management fees, per the market, range from 3% to 5% of the effective gross income. The subject’s owner is charging a flat rate of $1,475 per month or $17,700 per year. This equates to approximately 5% of EGI and a management fee of 5% has been used.

Administrative Expense

This is basically a miscellaneous expense that covers expenses like accounting, legal, marketing, bank fees, etc. The subject’s 2014 expense was $0.01 per square foot. The 2015 expense was $0.09 per square foot and no administrative expense was reported in 2016. Four of the five Valuation Consultants 106 File No. RT-17-68

expense comparables indicated a very wide range of $0.06 per square foot to $0.63 per square foot. The appraisers believe that an administrative expense of $0.10 per square foot for a rounded expense of $2,100 per square foot is reasonable.

Reserves For Replacement:

The reserves category is an annual allowance which typically provides a liquid reserve account with the funds to be used in the replacement of those items whose useful life is shorter than that of the buildings. These short-lived items deteriorate and will eventually need to be replaced. For example, heating and air conditioning units may need to be replaced after 10 years or so and parking areas may need to be re-surfaced after 10 to 15 years or so.

In theory, funds should be set aside every year (or every month) to build up a reserve account for the replacement of the short-lived items. Market participants indicate differences with regard to this expense. With new properties, some owners include reserves in their analysis and some do not. The expense comparables do not indicate any type of reserve expense. The appraisers have used a reserves expense of $0.15 per square foot for a rounded total of $3,200 ($0.15/SF x 21,006 SF = $3,150.90).

Following is a summary of the property’s operating expenses:

Operating Expense Summary

Pass Through Expenses Real Estate Taxes - $17,000 Insurance - $ 7,550 Utilities - $24,000 Repairs & Maintenance - $28,000 Administrative - $ 2,100 Management - $17,527* $96,177

Non-Pass Through Expenses Reserves for Replacement - $ 3,200 $ 3,200

Total Operating Expenses $99,377

*As calculated later in the Argus cash flow

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Net Operating Income Schedule

With all income and expenses projected, a reconstructed operating statement is presented below. This statement has been derived by utilizing the contract rents, market rents and projected operating expenses. The year one stabilized conclusions have been taken from the Discounted Cash Flow model, the Argus software, and is recreated below.

POTENTIAL GROSS REVENUE Potential Base Rent $272,468 Less: Absorption and Turnover Vacancy <$ 1,742> SCHEDULED BASE RENT $270,726 Plus: Expense Reimbursements $ 95,512 Plus: The Water Bottle $ 8,940 TOTAL POTENTIAL GROSS REVENUE $375,178 Less: Vacancy & Collection <$ 24,642> EFFECTIVE GROSS REVENUE $350,536 Less: Operating Expenses: Real Estate Taxes $17,000 Insurance $ 7,550 Repairs & Maintenance $28,000 Utilities $24,000 Management Fee $17,527 Administrative $ 2,100 Reserves For Replacement $ 3,200 Total Operating Expenses <$ 99,377> NET OPERATING INCOME $251,159

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Direct Capitalization

Capitalization is the process of converting a net income stream into an indication of value. There are several types of capitalization methods that can be utilized to derive a value via the Income Approach. The Direct Capitalization Method converts a single year’s net operating income estimate into a value indication by applying an overall capitalization rate.

Three of the five sales presented earlier had indicated capitalization rates. Sale Two is an 81,450 square foot multi-tenant retail center anchored by an EOS Fitness Center. It was 100% occupied at sale and had a cap rate of 6.58%. Sale Three is a multi-tenant retail center of 45,620 square feet. It was 80% occupied at the time of sale and sold with a cap rate of 7.00%. Sale Five is a multi-tenant retail center. It contained a total of 15,794 square feet and was 100% occupied at sale. The cap rate was 7.43%.

Also given consideration in the overall rate selection is information published in PwC Real Estate Investor Survey for the Fourth Quarter 2017. The survey shows the National Strip Shopping Center Market capitalization rates to range from 4.00% to 9.50% with an average rate of 6.38%. This range is for institutional grade properties. A year earlier, the average rate was 6.18%.

The subject property is an unanchored multi-tenant retail center that was originally built in 1988. The property is currently 93% leased and occupied. While the property is in an older part of town, it is located at the intersection of two major roadways. The subject’s owner manages the property himself and is very “hands-on”. The center has a good history of tenant retention as many tenants have been in the property for years. It has been discussed that the property is in good condition for its age and will be painted and each space will receive new signage.

Based on the data, as well as the subject’s location, construction quality and tenant mix, it is the appraisers’ opinion that a capitalization rate of 7.00% is reasonable.

Valuation Indication Via Direct Capitalization

The indicated value of the subject property via direct capitalization is calculated as follows:

Net Operating Income = $251,159 = $3,587,986 SAY: $3,590,000 Capitalization Rate 0.0700

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DISCOUNTED CASH FLOW ANALYSIS (DCF)

A Discounted Cash Flow Analysis is used to convert the income stream into an indication of value. A value from this method is derived by adding the present value of the income stream to the present value of the reversion. The software used in this analysis is Argus, a financial analysis program designed to analyze present and future cash flows on a lease-by-lease basis.

Following is a discussion of the necessary inputs required for the DCF analysis.

Holding Period

A 10-year holding period will be utilized to analyze the subject property. Most owners and potential investors are utilizing this holding period to analyze income-producing property.

Potential Gross Revenue

The potential gross revenue calculated in the Argus program is the total base rental revenue from the property, plus the expense reimbursement, rental adjustments and any other income generated by the property. The program calculates the change in rental rates based on stepped increases, or anticipated CPI increases, depending upon the lease structure. Additional income such as scheduled expense reimbursements, annual CPI adjustment and other income is added to the Scheduled Base Rental Revenue to derive the Total Potential Gross Revenue.

The assumptions made in this analysis attempt to reflect the current market in the Las Vegas area based on available market data.

Base Rental Revenue Inputs and Assumptions

A. The various contract and market rents as outlined earlier in the report have been entered into the Argus cash flow. Throughout the cash flow, the rents are adjusted based on fixed percentage increases or changes in consumer price index, depending upon the market terms of the various leases that encumber the site.

B. When an existing lease expires, it is rolled into the projected market rental rate. The market rents are increased based upon the market data. Several specific notes need to be made with regard to the cash flow.

1) The existing tenants’ lease terms have been placed in the Argus cash flow. These were discussed earlier.

2) The Boxing Gym is a month-to-month tenant. It has been placed in the cash flow with its current rent for one year and then it will be rolled into market.

3) The ground rent received from The Water Bottle has been placed in the cash flow as Other Income.

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4) The two vacant spaces have been placed in the cash flow as five year leases with a market rent of $1.00 per square foot per month increasing 3% per year.

C. The subject’s leases are triple net and the tenants are responsible for CAM reimbursements, as discussed previously.

General Vacancy

A. In this analysis, a vacancy and collection loss of 7 percent has been used. This was discussed earlier in this section. In addition to this 7 percent vacancy and collection loss, the appraisers have also included two months of downtime between tenant rollovers.

B. Market participants have renewal expectations of approximately 75 percent for retail space. As a result, in this analysis, the probability of the retail tenants’ renewals have been projected at 75%.

Operating Expenses

As discussed earlier, the subject leases are on a triple net basis which is a situation where the tenants pay their share of the operating expenses. This was discussed above. The real estate tax, insurance, utility, administrative, repairs & maintenance and management expenses have been placed in the cash flow as reimbursable expenses. The reserves for replacement expenses have been placed in the cash flow as a non-reimbursable expense. The owner is responsible for this expense as well as the expenses during vacancy. Throughout the DCF analysis, the operating expenses have been increased three percent annually.

Releasing & Capital Costs

This category includes those expenses that cannot be passed through to the tenants and are generally considered capital improvements. The necessary inputs for these items include the following:

A. Releasing costs for tenant improvements are divided by Argus into new and re-newel categories. When a tenant moves out to be replaced by a new tenant, it is typical to provide the new tenant with some type of interior finish-out budget. The current market indicates that many landlords are still trying to lease space “as is” with no tenant improvements. However, this cash flow is for a 10-year period and the appraisers have included a second-generation improvement allowance of $5.00 per square foot of area for a new tenant moving in. For renewals of existing tenants, no allowance has been given.

B. Leasing expenses, known as commissions, are generally incurred in almost every new lease. Market participants indicate that for retail properties, a commission of 5% for new tenants and a commission of 2% for existing tenants that renew are reasonable. These leasing commissions have been placed in the cash flow.

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Reversion Assumption

The subject property is being analyzed based upon a 10-year holding period. The cash flow utilizes a hypothetical sale at the end of this holding period. The value of the reversion has been projected by capitalizing the subject's 11th year net operating income.

The terminal capitalization rate requires consideration for potential loss in the competitive market standing of the property over the holding period due to the normal aging process, as well as the overall inherent risk in the property as it ages. Additionally, the future net operating income stream is more speculative and difficult to predict when compared to the current income level that is known to exist. The risk associated with this future income stream can vary depending upon the type of property being analyzed.

According to most investors, residual or “going out” capitalization rates are typically between 50 to 100 basis points higher than the “going in” rate. According to a national investor survey known as the PwC Real Estate Investor Survey for strip shopping center properties in the Fourth Quarter 2017, the average residual capitalization rate is 6.80%. This represents an increase of 43 basis points higher than the average “going-in” cap rate at 6.38%.

The overall risk is not expected to be significantly different 10 years from now due to the location, age and tenancy of the subject. Therefore, it is the appraisers’ opinion that a “going out” cap rate of 7.50% is reasonable.

A total sales cost of 3% has been used in the reversion. This cost accounts for any sales commissions, document preparation, title policy costs, surveys, etc.

Discount Rate

A discount rate is a rate of return on capital used to convert future payments or receipts into present value. The rate of return on capital may be described as a discount rate, an equity yield rate, an internal rate of return or a risk rate depending on the context. Capital, one of the four elements of production must receive compensation or it will not be available.

By definition, the ‘discount rate’ is also known as the Internal Rate of Return (IRR) and is defined as, “the rate of return on invested capital that is generated, or is capable of being generated, within an investment during the period of ownership. In other words, it is a rate of profit (or loss) or a measure of performance. It is literally, an interest rate. The effective interest rate on a real estate investment is the equity investors’ IRR. The yield to maturity on a bond is the bond holder’s IRR, when the bond is held for its full term. The IRR is the rate of return on capital expressed as a ratio per unit of time; for example, 10 percent per annum.” (Source: The Internal Rate of Return in Real Estate Investments, Charles B. Akerson, A.S.R.E.C., Chicago, Illinois, 1978.

There is no universal equity yield rate for all property types at any given time. The highest rates are applied to the riskiest investments while the lowest rates are applied to the safer investments. With a limited amount of money to invest, investors must pick and choose among investments. The final selection of an investment is based upon a choice between risk and return. The yield on the best investment alternatives, given the identical risk level, is defined as the opportunity Valuation Consultants 112 File No. RT-17-68

cost of capital. Capital will not be attracted to an investment if an investor senses that the chance for satisfying personal objectives is better in other markets. These markets include, but are not limited to, those instruments such as corporate bonds, U.S. Treasury securities, stocks, etc.

The discount rate, as used herein, is the equity yield rate. This rate is used to discount the net income stream in order to yield an indication of the present value of the subject. Two approaches to estimating the appropriate rate at which to discount the revenues for the subject have been considered. These approaches are the components of discount rate approach and the secondary sources approach.

In applying the components of discount rate approach, it is evident from most textbooks or articles that discount rates can be broken into three components: the real return to the investor, the adjustment for inflation, and the risk premium for a particular project. The rate of real return to the investor is approximately 3.0 to 4.0%. The CPI-U (Consumer Price Index – All Urban Consumers) as published by the Bureau of Labor Statistics has increased from an average of 88.6 in 1960 to an average of 538.8 in 2002 (using the base period of 1967 = 100). This represents a compounded growth rate (measure of inflation) of approximately 4.39% annually over this period of time. The rate from 2002 to 2007 was 2.88% and the rate from 2007 to 2012 was 2.06%. In 2013 the rate averaged 1.5%. For 2014 if Energy is excluded, 2014 averaged roughly 1.75%. (With the inclusion of Energy, the average for 2014 was 0.8%, but the sudden drop in oil prices is considered an outlier event.) With the improving job market, the longer term trend would include an increase in inflation due to wage increases. A 2.5% rate was selected as the indicated average adjustment for inflation during the next 10 years. The sum of these two returns results in a 5.5% to 6.5% “risk free” rate range.

It is believed that a 3.0% to 4.0% risk premium, or adjustment above the “risk free” rate, is appropriate for the subject property. This premium includes the compensation for the illiquidity risk, management efforts and the business risk. By adding these three components, a discount rate of 8.50% to 10.50% is shown for the subject.

In applying the secondary sources approach, investment surveys are one of the primary sources to obtain yield rates. These surveys show what investors actually demand as yields on real estate investments. Again, data published in the Fourth Quarter 2017 PwC Real Estate Investor Survey reports a range of free and clear IRR yields for the National Strip Shopping Center Market to be 5.50% to 10.50% with an average of 7.50%.

Conclusion

The approaches reveal a range of discount rates from approximately 5.50% to 10.50%. The PwC investor survey indicated an average of 7.50% for the National Strip Shopping Center Market. In this analysis, a range of 8.00% to 10.00% is included in the Argus DCF analysis. Presented on the following pages is the Discounted Cash Flow Analysis of the subject property utilizing the Argus software. The reader's attention is directed to the Appendix of this report for a copy of the inputs and supporting schedules for the following DCF.

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Discounted Cash Flow Conclusions

A 10-year cash flow was used to analyze the subject property. This cash flow was performed using the Argus software, which is a standardized lease-by-lease DCF program that is recognized and used nationally. The assumptions previously explained were incorporated into the analysis. The printouts detailing the inputs are included in the Appendix of this report. The present value of the income stream and reversion at the various yield rates indicated the following values.

Yield Rate Indicated Value*

8.00% $3,570,000 8.50% $3,450,000 9.00% $3,330,000 9.50% $3,220,000 10.00% $3,120,000

*Rounded to the nearest ten thousand

The overall results from the Discounted Cash Flow appear to be accurate and reasonable. For this analysis, the appraisers are of the opinion that the subject’s discount rate is 9.00%. This rate is felt to account for the risk involved in the subject. It recognizes the current market conditions, the subject’s location attributes, the overall age and condition of the subject and the current tenant mix. Therefore, the value of the subject, via the DCF is approximately $3,330,000.

Income Approach Conclusion

Two methods, the Direct Capitalization Method and the Discounted Cash Flow (DCF) Analysis, have been employed to arrive at a value conclusion for the subject via the Income Approach. The Direct Capitalization technique indicates a rounded value of $3,590,000. This technique values the property based on the net operating income of one year’s income and expenses. It does not require the numerous assumptions and inputs that the yield capitalization method requires.

The DCF can project the future income stream of the property over a 10-year holding period. Potential investors could analyze the existing leases, future rent increases and operating expenses in order to determine the net operating income of the subject. The Discounted Cash Flow provides a reasonable conclusion of the leased fee interest of the subject. The cash flow has been reasonably projected throughout the holding period. This valuation method indicates a value of $3,330,000 for the subject.

In the final analysis, the appraisers have given equal weight to the direct capitalization and yield capitalization techniques. Therefore, it is the appraisers’ opinion the indicated value for the subject is $3,450,000.

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As a result, the appraisers are of the opinion that the “As Is” Market Value of the Leased Fee Interest, as of December 11, 2017, via the Income Approach, is concluded to be $3,450,000.

THREE MILLION FOUR HUNDRED FIFTY THOUSAND DOLLARS

($3,450,000)

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RECONCILIATION OF FINAL “AS IS” MARKET VALUE – LEASED FEE INTEREST

The “As Is” Market Value of the leased fee interest is based upon value indicators derived from two of the three traditional approaches to value. The indications are summarized as follows:

Cost Approach N/A Sales Comparison Approach $3,260,000 Income Capitalization Approach $3,450,000

Cost Approach

For this analysis, the cost approach has not been used due to the age of the improvements.

Sales Comparison Approach

Five closed sales of retail properties were used in the sales analysis. The Sales Comparison Approach was completed by applying adjustments to the sales’ prices per square foot in order to conclude an overall value of the property. In the final analysis, no weight has been given to the Sales Comparison Approach conclusions. While it does provide strong support for the Income Approach conclusions, investors do not typically analyze an income producing property on a price per square foot of building area.

Income Approach

The income approach provides the value indication for the subject property. The property is projected to have a stabilized occupancy of 97%. The property is a multi-tenant retail center. The reliability of the income approach is enhanced by the large quantity of market data that is available to develop projections of rental rates and operating expenses, leasing costs, etc. It is the appraisers’ opinion that, for a property like the subject, the income approach most closely mirrors the methodologies that would be used by investors in purchasing a property like the subject.

Conclusion

Based upon the available information and subject to the assumptions and limiting conditions contained herein, the “As Is” Market Value of the Leased Fee Interest, as of December 11, 2017, is concluded to be:

THREE MILLION FOUR HUNDRED FIFTY THOUSAND DOLLARS ($3,450,000)

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Exposure Time and Marketing Time

A reasonable exposure time is projected to be 12 months. Based on the market activity and recognizing the economic climate on both a national and local level, the marketing time is also projected to be approximately 12 months.

The credit markets have improved in the past 12 to 18 months and there are more lending sources and opportunities as compared to the past few years. Real estate transactions are occurring more often and are beginning to reach the peak years of the mid-2000s. Given the fundamentals in the market as of the effective date of this appraisal report, speculative commercial properties are in demand and there is planned new construction in all segments. The recovery of the commercial market lagged slightly behind the recovery in the residential market, but has gained momentum and is showing signs of improvement that has led to some new construction. Credit markets and sources of loans have improved which has also helped to spur new construction.

The major concerns regarding the overall economic climate on both a national and local level have been alleviated and the Las Vegas economy continues to improve with job growth and an increase in population. Some speculative new construction has occurred and is continuing to occur in the commercial markets. Specifically, there is some new construction in the industrial market due to the demand as well as in the multi-family and retail markets. There is also some limited new construction in the office market with the majority of it being for owner occupancy.

The national economy started to improve in 2015 and has continued to improve to date in 2017. This trend has also been true in the Las Vegas economy. All segments of the local real estate market have shown signs of improvement after they started to stabilize in 2013. The Las Vegas market improved in 2015 and continued to improve throughout 2016. The improvements have continued to date in 2017 and are projected to continue to improve through the remainder of 2017 and into 2018. There are projections that the population of Clark County will grow an additional 425,000 people by the year 2035 with the Clark County population adding 47,800 residents in 2016. The local economy has seen improvement in job growth and the lowering of the unemployment rate.

Other positive news is that the residential market has significantly improved in the past year and is projected to continue to improve with increasing median home values. This is based on an increase in the prices being paid for both existing and new homes, the activity of builders purchasing vacant lots and land and the increase in the number of permits that builders are pulling for the construction of new homes in Las Vegas. There are signs that the overall real estate market is in a growth phase and the concerns regarding the overall economic climate on both a national and local level due to the recession that began in late 2008 are a thing of the past.

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ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal report has been made with the following general assumptions:

1. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report.

2. The property is appraised free and clear of any or all liens and encumbrances unless otherwise stated in this report.

3. Responsible ownership and competent property management are assumed unless otherwise stated in this report.

4. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy.

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

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

7. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in this report.

8. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in this appraisal report.

9. It is assumed that all required licenses, certificates of occupancy consents, or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.

10. Any sketch in this report may show approximate dimensions and is included to assist the reader in visualizing the property. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee as to accuracy is expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report.

11. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report.

12. The appraisers are not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraisers that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment.

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The presence of substances such as asbestos, urea-formaldehyde foam insulation or other potentially hazardous materials may affect the value of the property. The appraisers’ value conclusion is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report.

No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraisers’ descriptions and resulting comments are the result of the routine observations made during the appraisal process.

13. Unless otherwise stated in this report, the subject property is appraised without a specific compliance survey having been conducted to determine if the property is or is not in conformance with the requirements of the Americans with Disabilities act. The presence of architectural and communications barriers that are structural in nature that would restrict access by disabled individuals may adversely affect the property's value, marketability, or utility.

14. The remaining improvements that need to be completed are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications.

15. Neither Valuation Consultants, nor any of its employees has a financial interest in the property appraised.

16. The fee for this report is not contingent upon the value reported.

17. The appraisers assume that there are no hidden or unapparent conditions of the property, subsoil, or structures that 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.

18. It is assumed that all of the building areas, land areas, income, and operating expense information provided to the appraisers are accurate as the appraisers have relied heavily on this data in the valuation process.

Valuation Consultants 121 File No. RT-17-68

CERTIFICATION

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

1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and is our personal, impartial, and unbiased professional analyses, opinions and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and have no personal interest with respect to the parties involved. 4. We have not performed services as appraisers, or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. Charlton H. Wood and Keith Harper, MAI, have made a personal visit to the property that is the subject of this report. 9. No one has provided significant real property appraisal assistance to the persons signing this certification. 10. 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 & Standards of Professional Appraisal Practice of the Appraisal Institute. 11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 12. As of the date of this report, I, Keith Harper, MAI, have completed the continuing education program for Designated Members of the Appraisal Institute. 13. Our state certifications have not been revoked, suspended, canceled, or restricted.

VALUATION CONSULTANTS

Keith Harper, MAI Charlton H. Wood Certified General Appraiser Certified General Appraiser License Number A.0000604-CG License Number A.0000873-CG State of Nevada State of Nevada Expires: March 31, 2018 Expires: November 30, 2018

Valuation Consultants 122 File No. RT-17-68

ADDENDA

ARGUS CASH FLOW SUPPORT SCHEDULES

RENT ROLL AND OPERATING EXPENSES

COPIES OF GRANT BARGAIN & SALE DEEDS CONVEYING THE SUBJECT TO THE CURRENT OWNER

LETTER OF ENGAGEMENT

APPRAISERS’ QUALIFICATIONS

QUALIFICATIONS OF KEITH HARPER, MAI

I, Keith Harper, MAI graduated with a Bachelor of Arts from the University of Texas at Austin. I am currently President/Owner of Harper Appraisal, Inc. a Nevada corporation dba Valuation Consultants located at 4200 Cannoli Circle, Las Vegas, Nevada, 89103-5404. My direct phone number is (702) 222-0018, ext. 11 and the fax number is (702) 222-0047. My email address is [email protected]. A partial resume of specific qualifications is outlined as follows:

Professional Memberships and Licenses Held

Designated Member of the Appraisal Institute #9262 Certified General Appraiser - Nevada, License Number A.0000604-CG, Expires March 31, 2018

Las Vegas Chapter of the Appraisal Institute

1994 – Vice President 1995 – President 1995 – Regional Representative 2010 – Nominating Committee Latter Part of 2010 – Government Relations Chair 2011 to 2015 – Government Relations Chair and/or Government Relations Committee

Nevada Department of Taxation

Member, State Board of Equalization – Appointed in April 2013

University of Nevada – Las Vegas

Spring Semester 2011 – Part Time Instructor; RE 333 Real Estate Valuation Spring Semester 2012 – Part Time Instructor; RE 333 Real Estate Valuation Spring Semester 2013 – Part Time Instructor; RE 333 Real Estate Valuation

Formal Education

University of Texas at Austin, B.A., August 1984, Minor in Business Administration

Appraisal Education

 1985 The Appraisal Institute’s Course 1A1 – R.E. Appraisal Principles  1986 The Appraisal Institute’s Course 1A2 – Basic Valuation Procedures  1986 The Appraisal Institute’s Course 1BA – Cap Theory & Tech, Part A  1987 International Right of Way Association – The Appraisal of Partial Acquisitions  1987 The Appraisal Institute’s Course 1BB – Cap Theory & Tech, Part B  1987 International Right of Way Association – Skills of Expert Testimony  1987 International Right of Way Association – Easement Valuation  1988 The Appraisal Institute’s Course 022 – Valuation Analysis and Report Writing

 1989 The Appraisal Institute’s Course SPP – Standards of Professional Practice  1990 International Right of Away Association – Legal Aspects of Easements  1990 The Appraisal Institute’s Course 2-1 – Case Studies in R.E. Valuation  1992 The Real Estate Exam Center’s Course – Nevada Appraisal Law  1993 Bank of California – Commercial Fee Panel Seminar  1993 The Appraisal Institute’s Course I410 – Standards of Professional Practice, Part A  1993 The Appraisal Institute’s Course II420 – Standards of Professional Practice, Part B  1994 International Right of Way Association Course 101 – Law (Principles of Land Acquisition, Law Segment)  1994 The Appraisal Institute’s Program – Cash Equivalency  1995 The Appraisal Institute Program – Marketing for Appraisers  1997 Commercial Investment Real Estate Institute – CI 101: Financial Analysis for Commercial Investment Real Estate  1997 The Appraisal Institute’s Program – Litigation Appraisals and Expert Testimony: Mock Trial  1997 The Appraisal Institute’s Program R600 – The FHA Appraisal  1997 The Appraisal Institute’s Program – Understanding and Using DCF Software  1998 The Appraisal Institute’s Program R6127 – Historic and Estate Homes  1999 The Appraisal Institute’s Course II430 – Uniform Standards of Professional Appraisal Practice (USPAP) Part C  2000 The Appraisal Institute’s Course #A7478 – Attacking and Defending an Appraisal in Litigation  2000 Nevada Appraisal Seminars – Appraising Atypical Properties  2001 The Appraisal Institute’s Program – Condemnation Appraising: Basic Principles and Applications  2002 Course Sponsored by Gregory A. Hoefer, MAI and Approved for Continuing Appraisal Education by The Nevada Commission of Appraisers – National USPAP 2002 Update – A7453ES  2002 The Chicopee Group – Introduction to Commercial Appraising  2002 The Appraisal Institute’s Online Course – Internet Search Strategies for R.E. Appraisers  2002 The Appraisal Institute’s Program – Appraisal Consulting  2002 The Appraisal Institute’s Course SE700 – The Appraiser as an Expert Witness: Preparation and Testimony  2003 United States Department of the Interior BLM Workshop – SNPLMA Appraisal Compliance Nevada Course Code A7681  2004 CLE International – Eminent Domain Conference  2004 Institute for Real Estate and Appraisal Studies – 7-Hour National USPAP Course  2005 CLE International – Eminent Domain Conference  2006 The Appraisal Institute’s Course 1400 – 7-Hour National USPAP Update  2006 Institute for Real Estate and Appraisal Studies – Highest and Best Use  2006 The Appraisal Institute’s Online Course - Analyzing Operating Expenses  2007 The Appraisal Institute’s Online Course 420 - Business Practice and Ethics

 2007 The Appraisal Institute’s Program Online Course - Analyzing Distressed Real Estate  2007 The Appraisal Institute’s Online Course - Condominiums, Co-ops and PUDs  2007 The Appraisal Institute’s Online Course - Cool Tools: New Technology for Real Estate Appraisers  2007 The Appraisal Institute’s Online Course – What Commercial Clients Would Like Appraisers to Know  2007 The Appraisal Institute’s Online Course - Scope of Work: Expanding Your Range of Services  2007 The Appraisal Institute’s Online Course – Apartment Appraisal, Concepts & Applications  2008 Las Vegas Chapter of the Appraisal Institute’s Seminar – Spotlight on Common Errors and Confidentiality USPAP Issues  2008 The Appraisal Institute’s Course 1400 – 7-Hour National USPAP Update  2010 The Appraisal Institute’s Seminar – Appraisal Policy Changes: Challenges & Opportunities  2010 The Appraisal Institute’s Online Course - Business Practices and Ethics  2010 The Appraisal Institute’s Online Course - Supervising Appraisal Trainees  2010 The Appraisal Institute’s Online Course - Eminent Domain and Condemnation  2010 The Appraisal Institute’s Online Course – Site Use and Valuation Analysis  2010 The Appraisal Institute’s Course – 7-Hour National USPAP Update  2010 The Appraisal Institute’s Seminar – Appraisal Regulatory Update  2010 Coalition of Appraisers in Nevada - Legislative Update  2011 Las Vegas Market Symposium 2011  2012 The Appraisal Institute’s Course – 7-Hour National USPAP Update  2012 The Appraisal Institute’s Course – Fundamentals of Separating Real Property, Personal Property, and Intangible Business Assets  2013 Las Vegas Market Symposium – November 7, 2013  2014 The Appraisal Institute’s Course – 7‐Hour National USPAP Update  2014 The Appraisal Institute’s Online Course – Comparative Analysis  2014 The Appraisal Institute’s Online Course – Data Verification Methods  2014 The Appraisal Institute’s Online Course – Business Practices and Ethics  2015 Las Vegas Market Symposium – November 5, 2015  2016 The Appraisal Institute’s Course – 7-Hour National USPAP Update  2016 The Appraisal Institute’s Online Course – Thinking Outside the Form  2016 The Appraisal Institute’s Online Course – The Discounted Cash Flow Model: Concepts, Issues, and Applications  2016 The Appraisal Institute’s Online Course – Using Your HP12C Financial Calculator

Experience

In 1985, I started my career as a commercial appraiser when I joined Trans-Texas Land Services in Austin, Texas. During 1985 to 1988, I was associated with this firm that specialized in the field of eminent domain. I was involved in their commercial appraisal and right-of-way acquisition departments. I was then associated for four years from 1988 to 1992 as a Vice

President of McCluskey-Jenkins Appraisal, Inc. also in Austin. During my employment at this firm, I was involved in the analysis and valuation of commercial real estate.

In March of 1992, I moved to Las Vegas and started an office as one of the three owners/partners of Morgan, Beebe & Harper, Inc. which had been legally incorporated in The State of Texas as of the effective date of February 20, 1992. This partnership was ended in late 1997, but this Texas Corporation and partnership was not legally dissolved until Articles of Dissolution were filed with The State of Texas Secretary of State on January 12, 2000. I filed Articles of Incorporation with the State of Nevada Secretary of State on December 28, 1999 in order to form a new Nevada Corporation known as Morgan, Beebe & Harper of Nevada, Inc. I am the 100 percent shareholder of this corporation.

On August 28, 1998, I formed a new partnership and we filed Articles of Organization with the State of Nevada Secretary of State that formed Valuation Consultants, LLC, a Nevada limited liability company. Valuation Consultants, LLC dba Snyder-Harper & Associates operated until this partnership was ended as of April 1, 2006. A legal Dissolution of Valuation Consultants, LLC was filed with the State of Nevada Secretary of State effective as of July 28, 2006. Since April 1, 2006 through December 31, 2012, I operated as the 100 percent owner of Morgan, Beebe & Harper of Nevada, Inc., a Nevada corporation dba Valuation Consultants.

On January 1, 2013, Larry Snyder, MAI and I formed a new partnership, Harper-Snyder & Associates, LLC, a Nevada limited liability company. We operated under the legal entity of Harper-Snyder & Associates, LLC, a Nevada limited liability company dba Valuation Consultants until this LLC was dissolved on December 31, 2014.

As of January 1, 2015, I am operating as the 100 percent owner of Harper Appraisal, Inc., a Nevada corporation dba Valuation Consultants.

I have over 30 years of experience in the appraisal of a variety of commercial properties.

Types of Properties Appraised/Services Provided

Adult Use, Apartments, Condemnation (total and partial takes), Condominium Projects (High- Rise and Garden Style), Daycare Facilities, Gaming Resorts, Golf Courses, Health/Fitness Centers, Hotels, Industrial Properties, Leasehold/Leased Fee Interests, Litigation Support, Master Planned Communities (Residential and Commercial), Medical Offices, Motels, Office Buildings/Complexes, Residential Subdivisions, Retail Projects, Self-Storage Facilities, Taverns, Triple Net Properties, Vacant Land (all types).

I assist companies in cases involving disputes arising from transactions involving real estate appraisals and estimated valuation opinions of real estate. I have been involved in various real estate litigations involving the application of proper appraisal standards such as FIRREA and USPAP. I help counsel evaluate real estate appraisal issues, identify key documents obtained during discovery and prepare for depositions and trial, and draft court filings. I have testified before the District Courts in Nevada and the Federal Bankruptcy Courts. I have also provided

litigation consulting services on real estate appraisal matters to various parties throughout the State of Nevada.

Clients

Clients include banks, other lenders, insurance companies, attorneys and private parties. A list is available upon request.

QUALIFICATIONS OF CHARLTON H. WOOD

Charlton Wood graduated with a Bachelor of Science degree from the University of Texas at Tyler. He is currently employed as a Senior Appraiser for Valuation Consultants located at 4200 Cannoli Circle, Las Vegas, Nevada, 89103. A partial resume of specific qualifications is outlined as follows:

Professional Memberships and Licenses Held Certified General Appraiser–State of Nevada #A.0000873-CG–Expires November 30, 2018

Formal Education University of Texas at Tyler, B.S., May 1984.

Appraisal Education American Institute of Real Estate Appraisers courses Exam 1A-1 - Real Estate Appraisal Principles Exam 1A-2 - Basic Valuation Procedures Exam 1B-A - Capitalization Theory and Techniques, Part A Exam 1B-B - Capitalization Theory and Techniques, Part B Exam SPP - Standards of Professional Practice

Appraisal Institute courses Exam 2-1 - Case Studies in Real Estate Valuation Exam 2-2 - Report Writing and Valuation Analysis Course 410 - Standards of Professional Practice, Part A Course 420 - Standards of Professional Practice, Part B Course 430 - Standards of Professional Practice, Part C Course 520 - Highest and Best Use and Market Analysis Course 530 - Advanced Sales Comparison & Cost Approaches

Seminars completed include Discounted Cash Flow Analysis (American Institute of Real Estate Appraisers); Rates, Ratios and Reasonableness (Appraisal Institute); USPAP Statements (Appraisal Institute); Valuation of Local Retail Properties (Appraisal Institute); Valuation of Detrimental Conditions in Real Estate (Appraisal Institute); Case Studies in Commercial Highest and Best Use; Effects of Overhead Electrical Transmission Lines on Property Values.

Experience

Mr. Wood has 25 years of experience in the appraisal of a variety of commercial properties. This experience includes multi-family developments from 30 to 300 units, office buildings and office condominiums, subdivisions, industrial, retail, vacant land and special purpose properties such as churches, a private school, a full service car wash, a veterinarian clinic and gravel pits. Mr. Wood specializes in the appraisal of retail properties. He has appraised retail properties ranging from small, unanchored strip centers to large multi-anchored power centers.

Prior to becoming a fee appraiser for Valuation Consultants, Mr. Wood was associated for three years with McCluskey-Jenkins Appraisal, Inc. in Austin, Texas and was involved in the analysis and valuation of commercial real estate. During 1986 through 1989, Mr. Wood was with an insurance company as a Multi-Line Claims Representative. From 1984 through 1986, he was associated with a real estate brokerage firm in Tyler, Texas.