Appraisal of Real Property

Integra Realty Resources Portland Appraisal of Real Property Cully Boulevard Plaza Retail Property 6723 ‐ 6921 NE. Killingsworth St. Portland, Multnomah County, Oregon 97218 Client Reference: Contract 213006 Prepared For: Portland Development Commission Effective Date of the Appraisal: December 16, 2014 Report Format: Self‐Contained Appraisal Report IRR ‐ Portland File Number: 134 ‐2014‐0646 Draft Draft Cully Boulevard Plaza 6723 ‐ 6921 NE. Killingsworth St. Portland, Oregon Integra Realty Resources 1220 SW Morrison St. T 503.478.1002 Portland Suite 800 F 503.274.8630 Portland, OR 97205 www.irr.com January 15, 2014 Bruce Wood Portland Development Commission 222 NW Fifth Avenue Portland, OR 97209‐3859 SUBJECT: Market Value Appraisal Cully Boulevard Plaza 6723 ‐ 6921 NE. Killingsworth St. Portland, Multnomah County, Oregon 97218 Client Reference: Contract 213006 IRR ‐ Portland File No. 134‐2014‐0646 Dear Mr. Wood: Integra Realty Resources – Portland is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value of the fee simple interest in the property. As requested, we also estimate market rent for the property. The client for the assignment is Portland Development Commission, and the intended use is for toDraft assist the client in acquisition and lending decisions. The appraisal is intended to conform with the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, applicable state appraisal regulations, and the appraisal guidelines of Portland Development Commission. The appraisal is also prepared in accordance with the appraisal regulations issued in connection with the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). To report the assignment results, we use the Appraisal Report option set forth in Standards Rule 2‐2(a) of the 2014‐2015 edition of USPAP. This edition of USPAP establishes only minimum standards for the contents of an appraisal report and eliminates standards for a more comprehensive reporting format (i.e., the Self‐Contained Appraisal Report) that was available as an option previously. Nevertheless, USPAP permits appraisers to prepare a more Bruce Wood Portland Development Commission January 15, 2014 Page 2 comprehensive report if it is appropriate to the intended use and intended users of the appraisal. In this assignment, we are providing a report that meets the former requirements for a Self‐ Contained Appraisal Report that were contained in Standards Rule 2‐2(a) of the 2012‐2013 edition of USPAP. This reporting format contains the greatest depth and detail of the reporting options that were previously (and are currently) available under USPAP. It describes and explains the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. The subject is an existing L‐shaped commercial property containing 25,991 square feet of gross leasable area. The improvements were constructed in 1951. In the past, the building was occupied by several adult entertainment and restaurant businesses. Currently portions of the building are occupied by a taco restaurant and an adult entertainment business on a month‐to‐month basis.e Th building is in fair to poor condition, and re‐tenanting will require significant interior demolition as well as exterior repairs. The site area is 2.19 acres or 95,396 square feet. Draft Bruce Wood Portland Development Commission January 15, 2014 Page 3 Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value is as follows: Value Conclusion Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value Fee Simple December 16, 2014 Underlying Land Value $1,900,000 Building Shell Value $600,000 Overall Indicated Value $2,500,000 Market Rent SF NNN Rent per SF per Year Anchor Space 6,000 to 12,000 $12.00 to $15.00 Restaurant Space 1,500 to 2,500 $18 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. Our inspection was limited by a large volume of personal property stored in the building, which made access difficult. Further, parts of the building had to be inspected without lighting (using flashlights only), and we did not have access to the Mexican restaurant on the west end of the building. We primarily rely on the building inspector's report, which was also somewhat limited in scope, when analyzing conditions of the building. 2. The cost of interior demolition assumes that there are no hazardous substances. It is estimated based on "typical" building configuration, and the estimate is very approximate. We recommend that the client obtain a professional estimate. Our value conclusions are also subject to the following hypothetical conditions: 1. Large portions of the building are used for storage of personal property. Our analysis and value conclusion is based on the assumption that fixtures and personal property have been removed in order to facilitate interior demolition. 2. The concluded value excludes the used restaurant equipment. We are not qualified to estimate the salvage value, if any, of the equipment. Draft Bruce Wood Portland Development Commission January 15, 2014 Page 4 If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service. Respectfully submitted, Integra Realty Resources ‐ Portland Lenka M. Keith, MAI, MRICS Brian A. Glanville, MAI, CRE, FRICS Certified General Real Estate Appraiser Certified General Real Estate Appraiser OR Certificate # C000784 (Exp. 09/30/2015) OR Certificate # C000160 (Exp. 04/30/2015) Telephone: 503‐478‐1009 Telephone: 503‐478‐1002 Email: [email protected] Email: [email protected] Draft Table of Contents Summary of Salient Facts and Conclusions 1 Analysis and Adjustment of Sales 83 Market Rent Analysis 87 General Information 3 Reconciliation and Conclusion of Value 95 Identification of Subject 3 Current Ownership and Sales History 3 Certification 96 Purpose of the Appraisal 3 Assumptions and Limiting Conditions 98 Definition of Market Value 3 Definition of As Is Market Value 4 Addenda Definition of Property Rights Appraised 4 A. Appraiser Qualifications Intended Use and User 4 B. Comparison of Report Formats Applicable Requirements 4 C. Definitions Report Format 5 D. Financials and Property Information Prior Services 5 E. Comparable Data Scope of Work 5 Economic Analysis 8 Portland MSA Area Analysis 8 Surrounding Area Analysis 17 Retail Market Analysis 24 Multifamily Market Analysis 38 Property Analysis 51 Land Description and Analysis 51 Improvements Description and Analysis 56 Real Estate Taxes 63 Highest and Best Use 64 Valuation 67 Valuation Methodology 67 Land Valuation 68 Adjustment Factors 73 Analysis and Adjustment of Sales 75 Land Value Conclusion Draft77 Sales Comparison Approach 78 Adjustment Factors 82 Cully Boulevard Plaza Summary of Salient Facts and Conclusions 1 Summary of Salient Facts and Conclusions Part One Property Name Cully Boulevard Plaza Address 6723 ‐ 6921 NE. Killingsworth St. Portland, Multnomah County, Oregon 97218 Property Type Retail ‐ Strip/Convenience Center Owner of Record Kandace & Danielle Desmarais Tax ID R317325 (1N2E17CD TL 2000) and R317300 (1N2E17CD TL 2100) Land Area 2.19 acres; 95,396 SF Gross Building Area 25,991 SF Gross Leasable Area 25,991 SF Percent Leased 0% (Partly rented month‐to‐month) Year Built 1951 Zoning Designation EXdh, Central Employment Highest and Best Use ‐ As if Vacant Retail use Highest and Best Use ‐ As Improved Continued retail use Exposure Time; Marketing Period 6‐12 months; 6‐12 months Effective Date of the Appraisal December 16, 2014 Property Interest Appraised Fee Simple Market Value Indications Value of Underlying Land $1,900,000 ($20.00 per SF of Site) Shell Building Value $600,000 ($30.00 per SF of Building Shell) Overall As‐Is Value $2,500,000 Market Rent Anchor $12.00 to $15.00 per SF per Year Restaurant $18.00 per SF per Year The values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than Portland Development Commission and Prospective buyers, and other lenders such as Craft3, Vibrant Village Foundation, Enterprise Connumity Fund and the Conservation Fund may use or rely on the information, opinions, and conclusions contained in the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions Draft Cully Boulevard Plaza Summary of Salient Facts and Conclusions 2 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. Our inspection was limited by a large

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