Valuation Analysis of Prepared for Prepared By

The Austin McGuire Company Navigating the built environment

Valuation Analysis Of

The Waterfront Located at 100-146 West Bridge Street Homestead, Pennsylvania 15120

Prepared For

BIG Shopping Centers (2004) LTD. Elad Pedy | Chief Financial Officer BIG Shopping Centers USA, Inc. One East Washington Street | Suite 430 | Phoenix AZ 85004

Prepared By

The Austin McGuire Company 64 Wall Street, Suite 401 Norwalk, Connecticut 06850

www.austinmcguire.com ∙ 64 Wall Street, suite 401, Norwalk, CT 06850 ∙ (203) 299-0101

The Austin McGuire Company

64 Wall Street, Suite 401 Norwalk, CT 06850 [email protected] Navigating the built environment o (203) 299-0101

November 21, 2018

PERSONAL AND CONFIDENTIAL

BIG Shopping Centers (2004) LTD. Elad Pedy | Chief Financial Officer BIG Shopping Centers USA, Inc. One East Washington Street | Suite 430 | Phoenix AZ 85004

Re: Valuation of The Waterfront located at 100-146 West Bridge Street in Homestead, Pennsylvania 15120

Dear Mr. Pedy:

Per your request, we have completed our appraisal assignment to estimate the market value of the referenced property (“subject property”) according to the definitions stated herein and subject to the assumptions, limiting conditions, and certification also contained in the report. The subject property consists of the land and improvements located along Waterfront Drive on either side of the Homestead Grays Bridge. Once the site of the world’s largest steel mill, The Waterfront has been transformed into a mixed-use development including retail, restaurants, office, residential, and recreation. It spans the burroughs of Homestead, West Homestead, and Munhall near Pittsburgh and sits on land once occupied by U.S. Steel's Homestead Steel Works plant, which closed in 1987. The development extends along the south bank of the Monogahela River. According to Allegheny County assessor records, the subject property contains 90.34 acres of land in aggregrate in 20 tax lots. Notably, this valuation does not include any parcels owned by the Waterfront Owner’s Association or the Waterfront TIF.

The Waterfront was developed as a suburban fashion center with retail, residential, and office spaces all being separated from each other by parking lots and roadways. The development officially opened in 1999 followed by the construction of additional buildings. The subject property includes four individually identified shopping centers located in the central portion of The Waterfront. The subject centers are identified in the chart on the following page.

www.austinmcguire.com ∙ 64 Wall Street, suite 401, Norwalk, CT 06850 ∙ (203) 299-0101

The Austin McGuire Company Navigating the built environment

Mr. Elad Pedy November 21, 2018 Page 2

Property Size (SF) Type Occupancy No. Units Tenancy Type of Space Major Tenants

Market on the Waterfront 259,456 Power Center 90.9% 13 Multi Anchor/In-Line/ Best Buy, Michael's, TJ Maxx, Ross, DSW, Bed Freestanding Bath & Beyond, Marshall's

Market Amity 83,428 Power Center 100.0% 4 Multi Anchor Dick's Sporting Goods, Crunch Amity Square 13,727 Strip Center 100.0% 4 Multi In-Line Waterfront Town Center/ 406,343 Lifestyle Center/ 96.6% 49 Multi Lifestyle Loews Theatre, Barnes & Noble, Dave & Stacks at the Waterfront Entertainment Buster's Center Sub-Total 762,954 95.1% Macy's 138,140 0.0% Total 901,094 80.6%

Notably, the subject proeprty is 95.1 percent occupied when the former Macy’s space is removed from the equation. With the former Macy’s space the vacancy rate drops to 80.6 percent. For purposes of this report we will be deviding each of the four centers up for indiviaul analysis within both the Income and Sales Comparison Approaches to value.

The purpose of this report is to render an opinion of the as-is market value of the leased fee estate in the subject property, as of September 30, 2018, the stipulated date of value. The function of this appraisal is to estimate the market value of the property in conjunction with financial reporting for filling with the Israel Securities Authority (“ISA”).

This report has been prepared in conformance with Standards One and Two of the Uniform Standards of Professional Appraisal Practice (USPAP) and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). We have considered all three classical approaches in determining value, the Income, Cost, and Sales Comparison Approaches. For this analysis primary reliance has been placed on the Income Approach with secondary support from the Sales Comparison Approach. It is the result of a complete appraisal process and is intended to comply with the reporting requirements set forth under Standards Rule 2-2 of the USPAP for an appraisal report.

Based upon our research and analyses, we have formed the opinion that the as-is market value of the leased fee interest in the subject property, as of September 30, 2018, free and clear of financing, is:

$148,000,000

www.austinmcguire.com ∙ 64 Wall Street, suite 401, Norwalk, CT 06850 ∙ (203) 299-0101

The Austin McGuire Company Navigating the built environment

Mr. Elad Pedy November 21, 2018 Page 3

The report has been prepared by Michael McGuire, MAI. His certification is part of the report. The Austin McGuire Company has no present or contemplated interest in the property, nor any other interest that might prevent an unbiased valuation. According to data from the PwC Real Estate Investor Survey, survey respondents indicated marketing times between 3 and 18 months for power centers and strip shopping centers with the majority between 3 and 9 months. Overall, the subject will likely face marketing and exposure periods of 3 to 9 months.

Extraordinary Assumptions

1) We have not measured the subject property. We have relied on the rent rolls provided by the client. We reserve the right to alter or change our opinion of value if, subsequent to our appraisal, the measurement data is shown to be in error.

2) It is assumed that all easements and restrictive covenants encumbering the subject property are typical of the area with no adverse impact on the use or value of the subject. We reserve the right to alter or change our opinion of value if subsequent data indicates otherwise.

3) During the inspection of the subject, no conditions were observed that would indicate the presence or existence of hazardous substances, such as petroleum leakage, asbestos, or other adverse environmental conditions. However, prior to redevelopment, the site was considered to be a superfund site. No environmental site assessments were provided to the appraiser. The value stated within this report is subject to change if any other hazardous substances or environmental conditions are detected by an expert in the field. The appraiser is not qualified to detect or measure hazardous materials and this appraisal is predicated upon the assumption that environmental hazards do not exist on the subject.

www.austinmcguire.com ∙ 64 Wall Street, suite 401, Norwalk, CT 06850 ∙ (203) 299-0101

The Austin McGuire Company Navigating the built environment

Mr. Elad Pedy November 21, 2018 Page 4

4) Given the nature of the subject as a redevelopment, it is part of a tax increment district for the Waterfront redevelopment. As reported by the client, the presence of the TIF district has no impact on the value of the subject with no impact on the subject revenue or expenses. We reserve the right to alter or change our opinion of value if subsequent information indicates otherwise.

5) Information regarding the expense reimbursements has been supplied by the client. Given the highly complex and varying nature of the reimbursement calculations as structured in the leases, we have hard coded the reimbursement revenue by tenant in the ARGUS program. If this information is shown to be in error we reserve the right to alter or amend our report to reflect the updated or corrected information.

Very truly yours,

Michael D. McGuire, MAI Pennsylvania Temp Practice Permit No. 93653

www.austinmcguire.com ∙ 64 Wall Street, suite 401, Norwalk, CT 06850 ∙ (203) 299-0101

The Austin McGuire Company

Table of Contents

Page

Table of Contents 5 Area Map 6 Location Map 6 Aerial View 7 Executive Summary 8 Introduction 10 Identification and History of the Subject Property 10 Purpose and Use of the Appraisal 11 Intended Use of the Report 11 Effective Date of Value Estimate 11 Relevant Definitions 11 Scope of Work 12 Area Analysis 13 Market Analysis 24 Description of the Property 27 Site Description 27 Improvement Description 30 Real Estate Taxes 35 Highest and Best Use 37 Income Approach 39 Sales Comparison Approach 102 Reconciliation and Value Conclusion 106 General Assumptions and Limiting Conditions 107 Certification 109 Qualifications 111 Addenda 113

5 The Austin McGuire Company

Subject

Regional Map

Subject

Location Map

6 The Austin McGuire Company

Aerial View

7 The Austin McGuire Company

Executive Summary

Property Location: The subject property is located along Waterfront Drive on either side of the Homestead Grays Bridge. It spans the boroughs of Homestead, West Homestead, and Munhall near Pittsburgh, Pennsylvania.

Purpose of the Appraisal: To estimate the as-is market value of the leased fee interest.

Function of the Appraisal: To estimate the market value of the property for financial reporting purposes.

Site Size: 90.34 acres in 20 tax parcels

Property Description: The subject property is composed of five shopping centers located within the larger Waterfront redevelopment of the former U.S. Steel Homestead Steel Works plant. The subject centers contain 762,323 square feet in aggregate. Anchor tenants include Best Buy, Office Depot, TJ Maxx, Loews Theatre, and Barnes and Noble among others. The redevelopment originally opened in 1999 with other buildings constructed subsequently. The combined occupancy is 79.6 percent, but without the former Macy’s space included the occupancy rate is 93.9 percent.

Zoning: Waterfront Development District

Flood Zone: Zone X (areas of minimal flooding) according to Flood Insurance Rate Map #42003C 0366H, 0367H, and 0368H dated September 26, 2014

Highest and Best Use: The existing improvements reflect the highest and best use of the property.

Capitalization Rates: Going In 6.25 percent Terminal 6.50 percent

Discount Rate: 7.75-8.25 percent

Value Conclusions: Income Approach $148,000,000 Sales Comparison Approach $151,500,000 Final Value Estimate $148,000,000

8 The Austin McGuire Company

Date of Value: September 30, 2018 Date of Inspection: September 30, 2016 Date of Report: November 21, 2018

A breakdown of values is as follows:

Stacks and Market on the Waterfront Town Waterfront Market Amity Amity Square Center

Reconciled Value $45,900,000 $17,000,000 $6,500,000 $78,600,000 Discounted Cash Flow $45,900,000 $17,500,000 $6,480,000 $79,250,000 Direct Capitalization $45,740,000 $16,700,000 $6,850,000 $75,680,000 Sales Comparison Approach $48,000,000 $16,700,000 $6,700,000 $80,100,000

Final Value Estimate $45,900,000 $17,000,000 $6,500,000 $78,600,000

9 The Austin McGuire Company

Introduction

Identification and History of the Subject Property

The subject property consists of the land and improvements located along Waterfront Drive on either side of the Homestead Grays Bridge. It spans the burroughs of Homestead, West Homestead, and Munhall near Pittsburgh and sits on land once occupied by U.S. Steel's Homestead Steel Works plant, which closed in 1987. According to Allegheny County assessor records, the subject property contains 90.34 acres of land in aggregrate in 20 tax lots. The parcels are identified in the following chart.

Land Size Parcel ID Address Municipality (Acres) Owner Acquired

0130-C-00125-0000-00 Waterfront Drive East Homestead 17.52 M&J Big Waterfront Market LLC Oct-12 0130-C-00200-0000-00 680 Waterfront Drive East Munhall 4.65 M&J Big Waterfront Market LLC Oct-12 0130-D-00225-0000-00 Waterfront Drive East Munhall 3.77 M&J Big Waterfront Market LLC Oct-12 0089-H-00055-0000-00 185 Waterfront Drive West Homestead 1.82 M&J Big Waterfront Town Center II LLC Oct-12 0089-M-00301-0000-00 201 Waterfront Drive West Homestead 2.20 M&J Big Waterfront River Parcel LLC Aug-13 0130-E-00300-0003-00 350 Waterfront Drive East Homestead 7.12 M&J Big Waterfront Market Amity LLC Oct-12 0130-E-00276-0000-00 324-338 Amity Street Homestead 1.45 M&J Big Waterfront Amity Square LLC Oct-12 0130-J-00100-0000-00 West Bridge Street Homestead 2.67 M&J Big Waterfront Town Center 1 LLC Oct-12 0130-E-00155-0000-00 172 West Bridge Street Homestead 1.67 M&J Big Waterfront Town Center 1 LLC Oct-12 0130-J-00152-0000-00 158 West Bridge Street Homestead 1.89 M&J Big Waterfront Town Center 1 LLC Oct-12 0130-E-00160-0000-00 153 East Bridge Street Homestead 1.91 M&J Big Waterfront Town Center 1 LLC Oct-12 0130-E-00176-0000-00 180 Waterfront Drive East Homestead 8.19 M&J Big Waterfront Town Center 1 LLC Oct-12 0130-J-00145-0000-00 100 West Bridge Street Homestead 5.34 M&J Big Waterfront Town Center 1 LLC Oct-12 0130-J-00170-0000-00 148 West Bridge Street Homestead 0.93 M&J Big Waterfront Town Center 1 LLC Oct-12 0130-N-00401-0000-00 148 West Bridge Street West Homestead 1.17 M&J Big Waterfront Town Center 1 LLC Oct-12 0089-S-00175-0000-00 226-270 West Bridge Street West Homestead 4.77 M&J Big Waterfront Town Center 1 LLC Oct-12 0089-M-00100-000B-00 300 Waterfront Drive West West Homestead 18.09 M&J Big Waterfront Town Center 1 LLC Oct-12 0089-M-00085-0000-00 299 West Bridge Street West Homestead 0.61 M&J Big Waterfront Town Center 1 LLC Oct-12 0089-M-00075-0000-00 241 West Bridge Street West Homestead 1.48 M&J Big Waterfront Town Center 1 LLC Oct-12 0089-M-00050-0000-00 105-149 West Bridge Street Homestead 3.09 M&J Big Waterfront Town Center 1 LLC Oct-12 Total 90.34

This land area is slightly larger than that in the last full valuation as it reflects the acquisition of the “River Parcel” (parcel ID 0089-M-00301-0000-00) . Notably, this valuation does not include any parcels owned by the Waterfront Owner’s Association or the Waterfront TIF.

From information obtained from tax records, the owner of record is M&J Big Waterfront, a joint venture of M&J Wilkow, Ltd. and BIG Shopping Centers USA, under various LLCs. All but one of the parcels was acquired in October 2012 at a price of $112,250,000. The original contract price was $123,000,000 and was adjusted downward for the impact of the recent court ordered reassessment. The purchase contract also contained provisions in the event that the pending LA Fitness lease deal fell through, which ultimately did happen. Overall, the contract price at $112,500,000 was considered to reflect market pricing at the time of sale. The higher concluded value in this report is reflective primarily of leasing efforts since the acquisition, as well as market changes during that time. After the initial acquisition, the “River Parcel” (parcel ID 0089-M-00301-0000-00) was acquired in August 2013 at a price of $962,500. The property was acquired at auction with the recorded seller

10 The Austin McGuire Company being Ameriserv Financial Bank. As indicated, the subject site is currently improved with five shopping centers containing 762,323 square feet in total.

The property was acquired from DDR Corp., which acquired the property in a series of transaction in March and July of 2007. The combined acquisition price was $171,395,006. The appraiser was not aware of any listing agreements, pending contracts, or purchase agreements existing at the time of appraisal.

Purpose and Use of the Appraisal

Intended Use of the Report

This report is intended for use in financial reporting purposes only. Further, this report is intended for use only by BIG Shopping Centers and its subsidiaries (“BIG”). We understand that this report may be included in future prospectus published by BIG.

Effective Dates of Value Estimates

The effective date of our as-is market value estimate is September 30, 2018, the stipulated date of value. The property was inspected by Michael McGuire on September 305, 2016. The property was originally inspected by Michael McGuire on September 10, 2013. The date of the report is November 21, 2018.

Relevant Definitions

Market Value1 is defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition are 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 interest; 3. 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.

1Source: Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). 11 The Austin McGuire Company

A Leased Fee interest in real estate is defined in the 12th Edition of the Appraisal of Real Estate as, “An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others; the rights of the lessor (the leased fee owner) and the lessee (leaseholder) are specified by contract terms contained within the lease.”

A Value As-is, as defined by the Dictionary of Real Estate Appraisal, is “The value of specific ownership rights to an identified parcel of real estate as of the effective date of the appraisal; relates to what physically exists and is legally permissible and excludes all assumptions concerning hypothetical market conditions and rezoning.”

Marketing Period as defined by the Dictionary of Real Estate Appraisal is “The time it takes an interest in real property to sell on the market subsequent to the date of appraisal”.

Exposure Period is defined in the Dictionary of Real Estate Appraisal as “The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value…Exposure time is always presumed to occur prior to the effective date of the appraisal”.

Scope of Work

The scope of work addresses the application and extent of appraisal development. As noted, the function of this appraisal is to estimate the market value of the property in conjunction with financial reporting for filling with the Israel Securities Authority. To that end, we originally appraised the property as of March 31, 2013 with quarterly valuations and adjustments thereafter as warranted. As required for financial reporting purposes, appraisals for each property are to be updated on an annual basis. This report constitutes an annual update of the original assignment. For purposes of this assignment, the scope of work included:

1. Update of local market data and market conditions, including interviews of local real estate professionals, review of local market surveys, and review of publicly available market data. 2. Review and update of the subject rent roll and operating expenses. 3. Research and update of current capitalization and discount rates, including interviews of real estate professionals, review of investor surveys, and research of comparable sales. 4. Update of information from local assessors and the client. 5. Valuation analysis of the leased fee interest of the subject via the Income and Sales Comparison Approaches. 6. Primary reliance has been placed on the Income Approach with secondary support from the Sales Comparison Approach.

Notably, an on-site inspection was not performed in connection with this assignment. We relied on details of the subject property and its condition as of the original valuation, including the original property inspection on September 10, 2013. The valuation is the result of a complete appraisal process and is intended to comply with the reporting requirements set forth under Standards Rule 2-2 of the USPAP for an appraisal report.

12 The Austin McGuire Company

Area Analysis

Introduction

The subject property is located in the west central portion of Pennsylvania in the Pittsburgh MSA. It is further located in the central portion of Allegheny County. It is situated across the Monongahela River from the city of Pittsburgh.

The economic and population figures used in this analysis have been taken from various reports, blogs, and news articles published by government entities, universities, and private real estate, financial and economic entities, found on the internet. They have been sourced and recorded in the appraisal file, but not necessarily sourced in the appraisal report issued to the client.

Global Economy

Short-term prospects for the world economy have generally improved over the last six months. According to the World Economic Situation and Prospects as of mid-2018 report, global economic growth is expected to reach 3.2 per cent in both 2018 and 2019, marking an upward revision of 0.2 and 0.1 percentage points compared to forecasts released in December (figure 1). This is the fastest rate of growth since 2011, and reflects upward revisions to forecasts for roughly 40 per cent of the world’s economies.

Underpinning this is a stronger outlook for developed economies, reflecting rising wages, favorable investment conditions and the short-term impact of fiscal stimulus measures in the United States. Many commodity-exporting countries are also benefitting from higher prices of energy and metals.

However, alongside the improvement in short-term prospects, downside risks to global growth have also been building. This means that there is a greater probability that economic growth could turn out far worse than current baseline projections. Key risks include the build-up of trade tensions among major economies; increasing geopolitical tensions; greater uncertainty about the path of monetary policy adjustment in developed economies; and high and rising levels of debt in both developed and developing countries. Any of these factors have the potential to derail the recent improvement in economic prospects.

While monetary policy adjustment in developed economies is progressing at a gradual pace, the procyclical nature of fiscal policy in the United States, coupled with potential upward pressure on inflation from proposed import tariffs, has led to increased uncertainty around the pace of adjustment, and raised the probability of a more rapid withdrawal of monetary stimulus. This uncertainty increases the risk of global financial market volatility. Many developing countries are exposed to associated risks, especially where the rise in debt in recent years reflects significant amounts of dollar-denominated debt. The prospects of tighter liquidity conditions and potential spikes in risk aversion expose emerging economies to higher borrowing costs, depreciation of domestic currencies and a decline in equity prices. This could adversely impact banking and corporate sector balance sheets as well as the capacity to roll over debt. Furthermore, the corporate sector will face a heavy debt servicing

13 The Austin McGuire Company schedule in the next few years, especially in the case of a sudden appreciation of the dollar. The effects on real economic activity could prove large, through a sharp slowdown in investment, higher inflation or fiscal adjustment measures.

Global Economic and Political Uncertainties - Both state and nonstate actors are contributing to an international environment in which greater turbulence and fragility are becoming the norm.

Among states there is growing multipolarity: The U.S. is pulling back from global leadership in diplomacy, security and trade, with rising powers like China and Russia stepping into the void. New powers are emerging, particularly in the Middle East, where the U.S. pullback has enabled Iran and Russia to play a more active role, and with Turkey also considering its position.

North Korea remains a significant area of worry. Both China and the U.S. recognize they must find a diplomatic solution, but China has incentives to delay resolution, and Russia’s presence is complicating the situation. Brinksmanship increases the risk of miscalculation.

Nonstate actors add a layer of complexity: Notably, terror networks will continue to pose a threat and cyberattacks are becoming commonplace. In addition, weather (witness the violent 2017 hurricane season) and epidemics can have far-reaching effects that challenge the capacity of the international system to respond.

One of the biggest changes is the ongoing rise in anti-globalization, populist movements. Politically, these movements promote nationalism and weaken international cooperation. Economically, they inhibit trade, immigration and economic integration, while increasing the use of fiscal policy for political purposes, even when cyclical conditions don’t require fiscal action.

Despite ebbs and flows, populism appears likely to remain an important political force in the advanced economies and in some emerging markets as well.

Continued Strong Foreign Capital Flows - Global economic and political uncertainty continues to drive capital to the United States, the new administration notwithstanding. International capital flows into U.S. real estate assets will continue—and increase. The U.S. property market is the most stable and transparent in the world, with higher relative yields and price appreciation potential, making it an easy investment choice. And though slowing growth in China and much of Europe may dampen currency values and incomes overseas, there is still abundant non-U.S. capital looking for placement and very strong demand for U.S. assets, as 2015 and 2016 proved with record inflows.

Among Associated of Foreign Investors in Real Estate (AFIRE) members, a substantial proportion expect to increase investment in the United States in 2019, with investors looking to enhance positions in major gateway cities as well as higher-yielding secondary markets. While foreign investment in major U.S. cities was the highest in the world in 2016, London has now captured the top spot for inflows of foreign capital.

14 The Austin McGuire Company

Changes in the 1980 Foreign Investment in Real Property Tax Act (FIRPTA) that now allow foreign investors to be treated similarly to their U.S. counterparts, will likely lead to an increase in foreign investment in U.S. real estate. Though Trump has been rattling the saber about foreign goods imported into the United States, he has said nothing against inbound foreign investment in domestic commercial real estate.

Rising-Interest-Rate Environment - The Fed is committed to raising short-term rates this year and next because it’s concerned about the tightening labor market. The Fed very much wants to stay ahead of any inflation that rising wages may generate and will lift short-term rates by a quarter of a percentage point twice more this year (after June’s hike). That would put the federal funds rate at 2.5% heading into 2019, when another three to four increases are expected.

The new administration’s expansionist policy rhetoric—pledging significant spending on new infrastructure, higher exports, higher import tariffs, lower taxes, and reduced regulation—could spur inflation and lead to higher interest rates. Many have predicted the end of the 35-year bond bull run and of record-low interest rates.

The squeeze on cap rate spreads remains of some concern for real estate investments should rates rise more rapidly than expected. As seen with the “frothiness” experienced in certain gateway, Class A markets. Little indication exists now that a rate increase will push cap rates dramatically higher. Spreads are still historically high for commercial real estate. The historical spread for core real estate over the long-term ten-year rate is about 250 basis points. For most commercial real estate, that spread is still 300 to 350 basis points, so there is quite a way to compress before there is upward pressure on cap rates.

Nonetheless, indications exist that yields may begin to drift upward. And, as pricing in first tier markets stalls and yields hover in the sub–4 percent range in some of the major gateway markets—which are, in some cases, already in peak pricing territory—investors probably can be expected to move more aggressively into secondary and tertiary markets. They can also be expected to move into opportunities beyond core assets—to core-plus and value-add properties, as well as some of the niche property sectors, including medical real estate and student and senior housing.

Slowing New Supply for Commercial Real Estate - Additions to supply will remain limited across the board, with only modest supply growth in a few sectors—multifamily housing (slowing in the new year), senior housing (creeping up), and single-tenant industrial, such as regional/nodal distribution centers—and repurposing in others, such as suburban malls.

Lending sources have been extremely skeptical of funding new construction in the wake of the Great Recession, and the current lending environment is showing signs of reticence as bank reserve requirements from Basel III and commercial mortgage–backed securities (CMBS) risk-retention requirements from Dodd-Frank went into effect in late 2016. Even if Dodd-Frank has been slightly modified, it would take years for the banking system to return to its old levels of funding commercial real estate and its looser underwriting standards.

15 The Austin McGuire Company

Because many local and regional banks left real estate lending altogether and seem to be no worse for it, this group should not be expected to get back into commercial lending, because prices are inflated and interest rates have gone up. Market volatility has sharply reduced CMBS offerings as well. Insurance companies are stepping in to fill some gaps, and private debt funds are emerging as an alternative space.

The retail world continues to reimagine itself, as major department stores (Macy’s, Sears, JCPenney) close and other mall staples (The Limited, Abercrombie & Fitch) fade away. The digital environment—the “Amazon effect”—continues to undermine brick-and-mortar retail platforms, particularly in smaller, sub-regional suburban malls. Some developers and investors are turning to new mixed-use live/work/play venues with entertainment, high-end dining, and digital/showroom retail combinations. The retail sector will continue to evolve in the foreseeable future.

Alternative, niche sectors are beginning to attract investor interest, including student housing and senior housing, among others, and will continue to do so as demographics and economic fundamentals point to increasing demand. Medical-office supply remains at a fraction of its long-term levels due to the long-term uncertainly around the implementation of the Affordable Care Act. Tenants, particularly medical tenants, are traditionally extremely risk averse, and the perceived risk of further regulatory changes will keep most hospitals and doctors on the sidelines of development, reluctant to sign up for new buildings, while continuing to expand in existing buildings.

National Economy

The U.S. economic outlook is healthy according to key economic indicators. The most critical indicator is gross domestic product, which measures the nation's production output. The GDP growth rate is expected to remain between the 2 percent to 3 percent ideal range. Unemployment is forecast to continue at the natural rate. There isn't much inflation or deflation. That's a Goldilocks economy – an economy that is not too hot nor too cold, or otherwise sustaining moderate economic growth.

GDP Growth Rate in the United States is expected to be 2.60 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, GDP Growth Rate in the United States is expected to stand at 2.60 in 12 months time. In the long-term, the United States GDP Growth Rate is projected to trend around 2.00 percent in 2020, according to econometric models. This forecast begins to take into account the impact of Trump's policies.

Employment – The unemployment rate will drop to 3.6 percent in 2018, and 3.5 percent in 2019 and 2020. That's lower than the Fed's 6.7 percent target. But former Federal Reserve Chair Janet Yellen admitted a lot of workers are part-time and would prefer full-time work. Also, most job growth is in low-paying retail and food service industries. Some people have been out of work for so long that they'll never be able to return to the high-paying jobs they used to have. Structural unemployment has increased as well. These traits are unique to this recovery.

16 The Austin McGuire Company

Yellen admitted that the real unemployment rate is more accurate. It's double the widely- reported rate.

Consumer Confidence and Consumer Spending - The Conference Board Consumer Confidence Index® increased marginally in July, following a modest decline in June. The Index now stands at 127.4 (1985=100), up from 127.1 in June. The Present Situation Index improved from 161.7 to 165.9, while the Expectations Index declined from 104.0 last month to 101.7 this month. “Consumer confidence increased moderately in July, following a small decline in June,” said Lynn Franco, Director of Economic Indicators at The Conference Board, adding that consumers’ assessment of current conditions improved to a nearly 16-year high. Meanwhile, expectations for the short-term have eased somewhat, but are still upbeat. Overall, consumers anticipate the economy will continue expanding in the months ahead, but they do not foresee the pace of growth accelerating.

Consumer spending is also expected to increase during 2018, albeit a weak start in the beginning of the year due to inclement weather. Economists at Forbes expect a continued increase in consumer spending into 2019.

Housing - Existing-home sales dropped in June for a third straight month. Purchases of new homes are at their slowest pace in eight months. Inventory, which plunged for years, has begun to grow again as buyers move to the sidelines, sapping the fuel for surging home values. Prices for existing homes climbed 6.4 percent in May, the smallest year-over-year gain since early 2017, and have gained the least over three months since 2012, according to the Federal Housing Finance Agency.

Ed Stansfield, chief property economist at Capital Economics Ltd., projects a 5 percent gain this year and a 3 percent increase in 2019. That compares with 10.7 percent in 2005, shortly before the crash.

Existing-home sales, which make up about 90% of the market, fell for a third straight month in June to an annual pace of 5.38 million units, according to the National Association of Realtors. And new residential construction, or housing starts, softened in June to an annual rate of 1.17 million units, according to the Census Bureau. In March, starts were at an annual rate of 1.33 million.

Inflation – In its latest meeting on March 21st, the Federal Open Market Committee (FOMC) forecasted that the PCE inflation rate in the United States will average at 1.9 percent in 2018 before increasing to 2.0 percent in 2019, and stabilizing at 2.0 percent over 2020. According to different agencies, US CPI inflation will be within the range from 2 to 2.5 percent in 2018 and average about 2.2 percent in 2019. The European commission, IMF, and United Nations all estimate that CPI inflation will increase in 2018, and the USDA considers inflation will remain stable at 2.3 percent. Over the longer term up to 2022, CPI inflation in the US is expected to be 2.3 percent.

Pennsylvania

Pennsylvania, officially the Commonwealth of Pennsylvania, is a state that is located in the Northeastern and Mid-Atlantic regions of the United States, and the Great Lakes Region. The 17 The Austin McGuire Company state borders Delaware to the southeast, Maryland to the south, West Virginia to the southwest, Ohio to the west, Lake Erie to the northwest, New York to the north, and New Jersey to the east.

The state's four most populous cities are Philadelphia, Pittsburgh, Allentown, and Erie. The state capital is Harrisburg. It is the 33rd largest state in the United States. Pennsylvania has 51 miles of coastline along Lake Erie and 57 miles of shoreline along the Delaware Estuary.

Philadelphia in the southeast corner, Pittsburgh in the southwest corner, Erie in the northwest corner, Scranton-Wilkes-Barre in the northeast corner, and Allentown-Bethlehem-Easton in the east central region are urban manufacturing centers. Much of the Commonwealth is rural; this dichotomy affects state politics as well as the state economy. Philadelphia is home to six Fortune 500 companies, with more located in suburbs like King of Prussia; it's a leader in the financial and insurance industry. The population of Pennsylvania in 2018 is approximately 12.8 million, which ranks 6th in the nation.

The Pennsylvania Turnpike system is 535 miles long with the mainline portion stretching from Ohio to Philadelphia and New Jersey. Another major east–west route is I-80, which runs primarily in the northern tier of the state from Ohio to New Jersey at the Delaware Water Gap. I-90 travels the relatively short distance between Ohio and New York through Erie County, in the extreme northwestern part of the state.

Primary north–south highways are I-79 from its terminus in Erie through Pittsburgh to West Virginia, I-81 from New York through Scranton and Harrisburg to Maryland and I-476, which begins 7 miles north of the Delaware border, in Chester, Delaware County and travels to Clarks Summit where it joins I-81.

The Southeastern Pennsylvania Transportation Authority (SEPTA) operates the commuter, heavy and light rail transit, and transit bus service in the Philadelphia metropolitan area. The Port Authority of Allegheny County provides transit bus and light rail service in and around Pittsburgh. Intercity passenger rail transit is provided by Amtrak, with the majority of traffic occurring on the Keystone Service in the high-speed Keystone Corridor between Harrisburg and Philadelphia's 30th Street Station before heading north to New York City. There are 67 short-line, freight railroads operating in Pennsylvania, the highest number in any U.S. state. Pennsylvania has six major airports: Philadelphia International, Pittsburgh International, Lehigh Valley International, Harrisburg International, Erie International, and Wilkes- Barre/Scranton International. The port of Pittsburgh is the second largest inland port in the United States and the 18th largest port overall; the Port of Philadelphia is the 24th largest port in the United States. Pennsylvania's only port on the Great Lakes is located in Erie.

Pennsylvania Economy

In 2017, Pennsylvania had a per capita personal income (PCPI) of $52,096. This PCPI ranked 16th in the United States and was 103 percent of the national average, $50,392. The 2017 PCPI reflected an increase of 2.7 percent from 2016. The 2016-2017 national change was 2.4 percent. In 2007, the PCPI of Pennsylvania was $40,302 and ranked 18th in the United States. The 2007-2017 compound annual growth rate of PCPI was 2.6 percent. The compound annual growth rate for the nation was 2.4 percent. 18 The Austin McGuire Company

In 2017, Pennsylvania current-dollar GDP was $752.1 billion and ranked 6th in the United States. Pennsylvania real GDP also grew 1.8 percent; the 2016-2017 national change was 2.1 percent.

The largest industry in Pennsylvania was finance, insurance, real estate, rental, and leasing. This industry accounted for 19.4 percent of Pennsylvania GDP and had 1.3 percent real growth in 2017. The second largest industry was professional and business services, which accounted for 12.6 percent of Pennsylvania GDP and had 2.4 percent real growth. The largest contributor to real GDP growth in Pennsylvania was mining, quarrying, and oil and gas extraction. This industry accounted for 0.38 percentage point of the total growth in real GDP. The second largest contributor was information. This industry accounted for 0.31 percentage point of the total growth in real GDP.

Philadelphia is home to six Fortune 500 companies, and Pittsburgh is home to eight Fortune 500 companies, including U.S. Steel, PPG Industries, and H.J. Heinz. In all, Pennsylvania is home to fifty Fortune 500 companies. Erie is also home to GE Transportation Systems, which is the largest producer of train locomotives in the United States.

Pennsylvania ranks 19th overall in agricultural production, but first in mushrooms valuing over $330 million per year. They also rank second in apples, third in Christmas trees and layer chickens, fourth in nursery and sod, milk, corn for silage, grapes grown (including juice grapes), and horse production. It also ranks 8th in the nation in winemaking. Production agriculture and agribusiness contribute nearly $75 billion to Pennsylvania’s economy in total.

Casino gambling was legalized in Pennsylvania in 2004. Currently, there are nine casinos across the state with three under construction or in planning. Only horse racing, slot machines and electronic table games were legal in Pennsylvania, although a bill to legalize table games was being negotiated in the fall of 2009. Table games such as poker, roulette, black jack and dice were finally approved by the state legislature in January 2010, being signed into law by the Governor. Sports’ betting remains illegal in the state of Pennsylvania.

As of July 2017, the unemployment rate for Pennsylvania was 5 percent, which is above the national average of 4.3 percent, but lower year-over-year when the rate was 5.5 percent in July 2016.

Allegheny County and Pittsburgh MSA

Allegheny is one of 67 counties in Pennsylvania. It is part of the Pittsburgh, PA Metropolitan Statistical Area. Its 2015 population of 1,230,459 ranked 2nd in the state.

As of 2017 Allegheny County, PA has a population of 1.23M people with a median age of 40.6 and a median household income of $56,140. Between 2016 and 2017 the population of Allegheny County, PA declined from 1.23M to 1.23M, a 0.41% decrease and its median household income grew from $54,467 to $56,140, a 3.07% increase.

Pittsburgh is the second largest city in Pennsylvania and the county seat of Allegheny County. Regionally, it anchors the largest urban area of both Appalachia and the Ohio River 19 The Austin McGuire Company

Valley. Nationally, it is the 22nd largest urban area in the United States. Downtown Pittsburgh retains substantial economic influence, ranking at 25th in the nation for jobs within the urban core and 6th in job density. The characteristic shape of Pittsburgh's central business district is a triangular tract carved by the confluence of the Allegheny and Monongahela rivers, which form the Ohio River. Pittsburgh is known colloquially as "the City of Bridges" and "the Steel City" for its many bridges and former steel manufacturing base.

Economy - While the city is historically known for its steel industry, today its economy is largely based on healthcare, education, technology, robotics, and financial services. The downturn of the steel industry left no steel mills within city limits and only two remaining mills (the Edgar Thomson Steel Works and Brackenridge Works) in the county though more than 300 steel-related businesses remain in the area. By contrast, the region now supports 1,600 technology and research companies, ranging from major campuses for Google, Intel, RAND, Apple and Disney Research to small startups. Reflecting the citywide shift from industry to technology, some former factories have been directly renovated into modern office space. For example, Google operates an office in a former Nabisco factory, a complex known as Bakery Square. Some of the factory's original equipment, such as a large dough mixer, was left standing in homage to the site's industrial roots. Pittsburgh's generally successful shift away from its industrial past has led to it being characterized as "the poster child for managing industrial transition".

In 2017, Pittsburgh had a per capita personal income (PCPI) of $50,756. This PCPI ranked 49th in the United States and was 105 percent of the national average. The 2015 PCPI reflected an increase of 4.5 percent from 2014. The 2005-2015 compound annual growth rate of PCPI was 3.5 percent.

Pittsburgh has grown its economic base in recent years to include technology, retail, finance, education, and medicine. Despite earlier corporate defections, Pittsburgh still maintains its status as a corporate headquarters city, with six Fortune 500 companies calling the area home, including PNC Financial Services (#192), PPG Industries (#198), U.S. Steel (#176), H. J. Heinz Company (#272), WESCO International (#360), and Dick's Sporting Goods (#393). In 2006, Expansion Magazine ranked Pittsburgh among the top 10 metropolitan areas in the nation for climates favorable to business expansion.

Employment - Health services in particular, constitute a large proportion of total employment in the city. The largest single employer in the city is the University of Pittsburgh Medical Center (UPMC), with 62,000 employees (full time and part time). It is a global nonprofit health enterprise that has 21 hospitals with more than 5,100 licensed beds, 400 clinical locations including outpatient sites and doctors’ offices, a 2.3 million-member health insurance division, as well as commercial and international ventures.

Education is another major industry in the region. The largest single employer in that industry is the University of Pittsburgh, with 12,448 employees. Other colleges and universities in the city include Carnegie Mellon University and Duquesne University among others.

The top ten employers in Pittsburgh are as follows: 20 The Austin McGuire Company

During the recession of 2009, Pittsburgh remained economically strong, adding jobs when most cities were losing them, and becoming one of the few cities in the United States to see housing property values rise. In the period between 2006 and 2011, the Pittsburgh MSA experienced over 10 percent appreciation in housing prices—the highest appreciation out of the 25 largest MSA’s in the United States.

Pittsburgh as a whole had an unemployment rate above the national average at 5.4 percent as of July 2017, compared to 4.3 percent for the nation. However, this is an improvement from 6.2 percent one year ago.

Major publications often note Pittsburgh's high livability compared to other American cities, with the city claiming the top overall spot in the United States in recent "most livable city" lists by Places Rated Almanac (2007), Forbes (2010), and The Economist (2011). Livability rankings typically consider factors such as cost of living, crime, and cultural opportunities. Pittsburgh has a low cost of living compared to other cities in the northeastern U.S.

The Pittsburgh metropolitan area ranks sixth in having the worst pollution in both short-term and year-round particle pollution and 20th in having the worst ozone (smog) pollution according to the American Lung Association. Notably, pollution levels have demonstrated substantial improvement compared to previous decades on every measure of air quality. Given the heavy industry in the city’s past, many of the area rivers are contaminated as well. The Ohio River as a whole is ranked as the most polluted river in the U.S. based on 2009 and 2010 data.

Population and income - The population of the city of Pittsburgh according to the U.S. Census Bureau in 2016 was 303,625, while that of the seven-county metropolitan area stood at 2,659,937. The city’s population has decreased 0.7 percent since 2010. The average household income based on 2011-2015 data was $40,715, which is less than the state of $53,599 and the nation with $53,889. The percentage of individuals living below the poverty line was 22.9 percent.

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Homestead

Homestead is a borough in Allegheny County, Pennsylvania. It is located in the "Mon Valley," 7 miles southeast of downtown Pittsburgh and directly across the river from the city limit line. The borough is known for the Homestead Strike of 1892, an important event in the history of labor relations in the United States. The population of Homestead was 3,161 at the 2016 estimated census. Surrounding neighborhoods include Squirrel Hill (a Pittsburgh neighborhood), over the Homestead Grays Bridge across the Monongahela River to the north, Munhall (an Allegheny county borough) to the east, and West Homestead (an Allegheny county borough) to the west.

At the turn of the 20th century, in 1900, the population of Homestead was 12,554 people, of whom some 7,000 were employed in the plants. Due mostly to immigration from Eastern and Southern Europe, by 1910 the population jumped to 18,713, then to 20,452 in 1920. In 1940, 19,041 people lived in Homestead. During the early 1940s half the population was displaced as the U.S. government added on to the steel mills to have the capacity for armor plating for ships and tanks (preparing for World War II). After the end of the war, a decline in the steel- making industry of the United States took place.

By 1980, it had become difficult to obtain employment at the Homestead Works, which was not producing much steel at that time. In 1984, the mill closed and the Homestead Works was demolished, replaced in 1999 by The Waterfront shopping mall. As a direct result of the loss of mill employment, the number of people living in Homestead dwindled. By the time of the 2010 census, the borough population was 3,165. The borough began financially recovering in 2002, with the enlarging retail tax base.

As of the census of 2000, there were 3,569 people. The median income for a household in the borough was $25,859. Median home value is $42,900, which represents a 7.52 percent increase year-over-year. The city has a 24 percent level of residents living below the poverty line.

Since the closing of the steel mills in the 1980s, the population and business district of Homestead seriously declined, causing many older buildings to be abandoned. The final nail in the coffin of the formerly thriving business district, mainly along 8th Avenue, was the opening of The Waterfront development. In 2000, Continental Real Estate Companies opened The Waterfront. This large lifestyle shopping center was built on the former site of the U.S. Steel Homestead Steel Works plant. Most of the structures associated with the steel mills on this site were demolished during construction. Still standing in The Waterfront development are some of the brick stacks from the Homestead Steel Works. In addition, near the river is a former mill structure known as the Pump House which was restored by the developer.

The following chart illustrates the demographic statistics for the subject property’s neighborhood.

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Conclusion

While viewpoints differ on the current state of the U.S. economic cycle, with some suggesting it is near the end of the current cycle and others suggesting the economic expansion will continue, the U.S. economy has performed much better than any other major developed economy since the financial crisis. As a result, the U.S. has represented both a safe haven and a prospect for global capital preservation. Over the past year, the economy has benefitted from an increase in consumer confidence, low unemployment, rising home sales and median prices, and inflation returning to more normal levels.

The subject is located in the Pittsburgh MSA in the central portion of Allegheny County. It is situated across the Monongahela River from the city of Pittsburgh. Overall, the local market is fairly stable with declining vacancy rates and increasing rental rates, particularly for the retail sector. The subject’s market appears to have been slightly less affected by the economic slowdown and recession with some optimism for the local commercial market. Going forward, the recovery is expected to continue assuming no further significant setbacks in the national or global economies.

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Market Analysis

The following market analysis discussion is taken from retail market surveys published by Colliers and Marcus & Millicap (as of the 4th Q 2017).

Revitalization efforts keep retail vacancy tight. Redevelopments in Downtown Pittsburgh are reviving the riverfront, creating a destination spot with retail, housing and recreational activities. The South Shore is a focal point for many of these projects, including rehabbing older buildings into retail concepts and mixed-used spaces. One notable conversion is turning a former whiskey distillery into an artisan market with a rooftop restaurant and an entertainment venue.

On the North Side riverfront, a 13-acre development is planned proximate to the former Lazarus-Macy’s store that is being transformed into retail, housing and office space. These redevelopments will attract both residents and retailers to the area, keeping vacancy below the metro average. Market wide, retail sales remain healthy amid steady economic growth as the metro evolved from being a manufacturing powerhouse to housing strong tech and healthcare industries. As a result, retail vacancy remains one of the lowest among the major metros and steady rent growth persists.

Rental Rates

After strong growth in 2017, rental increases are beginning to stabilize. Asking rent will reach $17.04 per square foot in 2018, according to the most recent Q1 market report by Marcus & Millichap.

Vacancy Rates

Marcus & Millichap’s report also reported that demand outstrips supply, lowering vacancy to a tight 3.3 percent. Last year, vacancy increased 10 basis points on net absorption of 580,000 square feet.

Construction, Absorption and Sales

Completions in 2018 have been moderate from the 740,000 square feet delivered in 2017. The majority of projects are single-tenant buildings of less than 15,000 square feet, according to Marcus & Millichap.

CoStar’s most recent market analysis for Pittsburgh (Q4 2017) reports that during the fourth quarter 2017, 12 buildings totaling 210,177 square feet were completed in the Pittsburgh retail market. Over the past four quarters, a total of 843,784 square feet of retail space has been built in Pittsburgh. In addition to the current quarter, 25 buildings with 230,472 square feet were completed in third quarter 2017, 15 buildings totaling 214,950 square feet completed in second quarter 2017, and 188,185 square feet in 12 buildings completed in first quarter 2017.

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There were 330,149 square feet of retail space under construction at the end of the fourth quarter 2017. One of the notable 2017 deliveries was: 100 Siena Dr, an 85,000-square-foot facility that delivered in fourth quarter. Total retail inventory in the Pittsburgh market area amounted to 146,164,431 square feet in 14,404 buildings and 682 centers as of the end of the fourth quarter 2017.

CoStar also reported that retail net absorption was slightly negative in Pittsburgh fourth quarter 2017, with negative 129,888 square feet absorbed in the quarter. In third quarter 2017, net absorption was negative 133,942 square feet, while in second quarter 2017; absorption came in at positive 427,922 square feet. In first quarter 2017, positive 577,881 square feet was absorbed in the market.

Tenants moving into large blocks of space in 2017 include: Lowes moving into 88,000 square feet at 1025 Mountain View Dr; Homestore moving into 57,764 square feet at 7215 McKnight Road and Northway Christian Community moving into 49,362 square feet at Madison Square - Building A.

The following table depicts the retail market for all submarkets as of the end of 2017, as per the most recent report by Collier’s.

Source: Colliers International 2017

Subject Submarket

As of Collier’s latest report on the retail market in the Parkway East Corridor (Q4 2017), the submarket had 2,221 retail buildings totaling 16,299,132 square feet. Total vacancy in the area sat at 677,344 sf, or 4.2% of the entire Parkway East Corridor. Year-to-Date net absorption was 110,625 square feet, while deliveries at the year stood at 108,590 square feet, with 30,597 more under construction. Rental rates for NNN leases were at $13.33/sf at the time the report was written, well below the Pittsburgh Metro Area average of $14.29/sf.

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August 2018 conversations with local brokers reveal that rollover percentage for tenants in the Parkway East submarket is around 5%, and when vacancies do occur they are generally filled within 6-12 months (in some cases less). Although not used as much as in the past, up to three months free rent is occasionally offered to national tenants, and NNN pricing is between $5-7. Shopping centers with more service oriented tenants such as restaurants, gyms, and laundromats, have not seen much of a change in sales or foot traffic even with the advent of online shopping, and brokers agree that the sales lost due to online shopping appear to have leveled out for now. Broker commissions have stayed stable as well, sitting at around 6%.

Conclusion

Colliers International believes the Pittsburgh retail market continues to remain relatively stable with new development and retail expansion popping up sporadically. Other than a couple of large-scale developments such as McCandless Crossing in the North Hills, The Old Mill in Washington, and the redevelopment of the former Northway Mall along McKnight Road, new construction has been fairly limited in recent years. Other, smaller scale development, such as The Siena at St. Clair, adjacent to South Hills Village Mall, and Cranberry Springs, adjacent to the Lemieux Sports complex in Cranberry, are on-going. Newbury Market in South Fayette is planned to include restaurants, a grocery store, inline retail, and entertainment venues, is now underway, as well.

Mirroring national trends, as a result of changing business models, and growing pressure from e-commerce, many national retailers are closing stores. Within the Pittsburgh market, numerous store closures have been announced. Major retailers, such as Kmart and Sears have all announced closures in the Pittsburgh market. In addition, store closures for in-line retailers such as Abercrombie & Fitch, Finish Line, American Eagle Outfitters, Ann Taylor, Guess, Loft, Dress Barn, Gymboree, Payless, Lane Bryant, Justice, BCBG, Bebe, Chico’s, and numerous others continue to be announced. Overall, as a result of what appears to be a fundamental shift in the traditional retail environment, Integra Realty Resources expects rental rate growth to remain limited, while vacancy rates and capitalization rates slowly climb into the foreseeable future.

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Description of the Property

Site Description

The subject property is located along Waterfront Drive on either side of the Homestead Grays Bridge. It spans the boroughs of Homestead, West Homestead, and Munhall near Pittsburgh and sits on land once occupied by U.S. Steel's Homestead Steel Works plant, which closed in 1987. The development extends along the south bank of the Monogahela River. According to Allegheny County assessor records, the subject property contains 90.34 acres of land in aggregate in twenty tax lots identified as follows. As illustrated on the assessor map, not all of the parcels are contiguous.

Land Size Parcel ID Property Address Municipality (Acres)

0130-C-00125-0000-00 Market on the Waterfront Waterfront Drive East Homestead 17.52 0130-C-00200-0000-00 Market on the Waterfront 680 Waterfront Drive East Munhall 4.65 0130-D-00225-0000-00 Market on the Waterfront Waterfront Drive East Munhall 3.77 0089-H-00055-0000-00 Market on the Waterfront 185 Waterfront Drive West Homestead 1.82 0089-M-00301-0000-00 Market on the Waterfront 201 Waterfront Drive West Homestead 2.20 0130-E-00300-0003-00 Market Amity 350 Waterfront Drive East Homestead 7.12 0130-E-00276-0000-00 Amity Square 324-338 Amity Street Homestead 1.45 0130-J-00100-0000-00 The Stacks at the Waterfront West Bridge Street Homestead 2.67 0130-E-00155-0000-00 The Stacks at the Waterfront 172 West Bridge Street Homestead 1.67 0130-J-00152-0000-00 The Stacks at the Waterfront 158 West Bridge Street Homestead 1.89 0130-E-00160-0000-00 The Stacks at the Waterfront 153 East Bridge Street Homestead 1.91 0130-E-00176-0000-00 Waterfront Town Center 180 Waterfront Drive East Homestead 8.19 0130-J-00145-0000-00 Waterfront Town Center 100 West Bridge Street Homestead 5.34 0130-J-00170-0000-00 Waterfront Town Center 148 West Bridge Street Homestead 0.93 0130-N-00401-0000-00 Waterfront Town Center 148 West Bridge Street West Homestead 1.17 0089-S-00175-0000-00 Waterfront Town Center 226-270 West Bridge Street West Homestead 4.77 0089-M-00100-000B-00 Waterfront Town Center 300 Waterfront Drive West West Homestead 18.09 0089-M-00085-0000-00 Waterfront Town Center 299 West Bridge Street West Homestead 0.61 0089-M-00075-0000-00 Waterfront Town Center 241 West Bridge Street West Homestead 1.48 0089-M-00050-0000-00 Waterfront Town Center 105-149 West Bridge Street Homestead 3.09 Total 90.34

This land area is slightly larger than that in the original valuation as it reflects the acquisition of the “River Parcel” (parcel ID 0089-M-00301-0000-00). Notably, this valuation does not include any parcels owned by the Waterfront Owner’s Association or the Waterfront TIF.

The Waterfront is accessible from the Parkway East via the Homestead High Grays Bridge. Pennsylvania Route 837, which runs through the town of Homestead also connects to The Waterfront via Amity Street and Waterfront Drive. Within The Waterfront development, two primary roads, Waterfront Drive and Amity Street, provide access in, out and around the development. Amity Street connects with ramps on either side of the Homestead Grays Bridge. In addition, Amity Street extends into Homestead and connects with the primary east/west artery, Eighth Avenue. The Homestead Grays Bridge leads to I-376 less than two miles from the property. 27 The Austin McGuire Company

The development is separated from the original sections of Homestead, West Homestead, and Munhall by railroad tracks and does not physically or visually connect with the older sections of the municipalities.

All public utilities common to the area, including electricity, gas, water, and sewer, are available to the site. The shape of each site is somewhat irregular but with sufficient width and depth to be suitable for development. Further, each site is generally level and at street grade. As per National Flood Insurance Rate Map #42003C 0366H, 0367H, and 0368H (dated September 26, 2014), the subject is located in Zone X, an area of minimal flood hazard.

The site is zoned Waterfront Development District by the jurisdictions of Munhall and Homestead. This district was created specifically to accommodate development in The Waterfront. In total, the development contains 2.4 million square feet with 800,000 square feet of office/R&D space, 500 apartments and 1 million square feet of commercial space

During the inspection of the subject no conditions were observed that would indicate the presence or existence of hazardous substances, such as petroleum leakage, asbestos, or other adverse environmental conditions. However, prior to redevelopment, the site was considered to be a superfund site. No environmental site assessments were provided for this appraisal. The value stated within this report is subject to change if any hazardous substances or environmental conditions are detected by an expert in the field. The appraiser is not qualified to detect or measure hazardous materials and this appraisal is predicated upon the assumption that environmental hazards do not exist on the subject site.

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Assessors Map

Aerial View of Subject

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Improvement Description

The following description is based on documentation provided by the client and an on-site inspection.

Overview: Once the site of the world’s largest steel mill, The Waterfront has been transformed into a mixed-use development including retail, restaurants, office, residential, and recreation. It spans the boroughs of Homestead, West Homestead, and Munhall near Pittsburgh. The shopping mall sits on land once occupied by U.S. Steel's Homestead Steel Works plant, which closed in 1987. The development officially opened in 1999 followed by the consruction of additional buildings. From its storied past, only smokestacks remain on the site that once helped to give Pittsburgh the name "Steel City."

The Waterfront was developed in a suburban fashion center with retail, residential, and office spaces all being separated from each other by parking lots and roadways. The subject property includes five individually identified shopping centers located in the central portion of the Waterfront. It accounts for over half of the 1.4 million square feet of retail space at the Waterfront and is the region’s second largest shopping center. The subject centers are identified as follows:

Property Size (SF) Type Occupancy No. Units Tenancy Type of Space Major Tenants

Market on the Waterfront 259,456 Power Center 90.9% 13 Multi Anchor/In-Line/ Best Buy, Michael's, TJ Maxx, Ross, DSW, Bed Freestanding Bath & Beyond, Marshall's

The Waterfront Town Center area of the development is home to stores one would find in most malls, including New Balance, Gap, and Victoria's Secret, Barnes & Noble, and a Loews Cineplex are located in this area as well. The eastern end of the development resembles more of a traditional suburban strip mall with many big-box retail stores fronting a large parking lot. Stores here include Bed, Bath, & Beyond and Dick's Sporting Goods, as well as shadow anchors Giant Eagle grocery, Lowe's, and Target. Other shadow anchors include Costco on the western end of the development. Around the perimeter of the complex, particularly along the Monongahela River, are most of the development's restaurants, almost all of which are typical chain restaurants like Red Robin, T.G.I. Friday's, and P. F. Chang's China Bistro, as well as several fast food locations. An apartment complex, a few office buildings, fueling station, and a hotel are also located along the river perimeter.

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Site Plan Layout

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Building Area and Layout: The subject is comprised of multiple buildings in five individually identified shopping centers totaling 762,323 square feet of space. The design and layout of the centers varies from traditional power centers to smaller strip centers to more modern lifestyle centers, as well as an entertainment/retail center. Other than the smaller retail centers, each center is anchored with at least one anchor tenant.

The site has ample parking in attractive, well-landscaped parking lots surrounding the various improvements. In addition a structured parking garage is part of the Stacks at the Waterfront, adjacent to the former Macy’s space.

Despite the ample parking, sources note traffic congestion within the development is common due to the large distances between outlets and the lack of sidewalks and pathways; the limited entrances into and out of The Waterfront also add to the congestion.

Construction: The steel-framed buildings are constructed with concrete columns, caissons, and spread footings. The rear and side walls are brick and split-faced concrete block walls. Storefronts are plate glass in aluminum tubular frames. Rubber membrane roofing covers a corrugated steel deck sub-floor, and concrete slab flooring is poured over a compacted gravel base.

Interior Finishes: As would be expected, the interior finishes vary depending on the tenant but are generally upscale as is typical for this level of retailing. The stores, offices, and employee areas have painted drywall; storage and receiving areas have painted concrete block walls. Acoustical lay-in ceiling paneling are in a suspended metal grid system. Varied floor finishes include vinyl composition tile, carpet and concrete. The units are provided to the tenants as a “vanilla box” or “broom clean”, essentially a blank canvas. Each unit is separately metered for electricity and each building is fully sprinkled. HVAC is provided by a package system with gas fired heat.

Building Occupancy: In aggregate, the subject is presently 79.6 percent leased. However, when removing the former Macy’s space the occupancy rate increases to a healthier 93.9 percent The individual occupancy rates are reflected in the chart on the preceding page.

Site Improvements: The majority of the site improvements consist of asphalt paving located along the perimeter of each of the buildings. Further a parking garage is part of The Stacks at the Waterfront. It is situated adjacent to shadow anchor Macy’s. Other site improvements include sidewalks, exterior lighting, signage, and landscaping.

Condition: Overall, the subject is considered to be in average to good condition displaying no significant signs of deferred maintenance.

Comments: This is a well-built, well-designed development. Due to its Homestead location with limited visibility, it is considered to be a destination retail development. It has a strong tenant mix reflecting many of the nation’s retailers. Presently the subject is 92.9 percent leased. Overall, it is considered to be a B+ asset with a B location and an A tenant mix.

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Real Estate Taxes

The site is comprised of twenty tax parcels as outlined in the table on the following page. The indicated full value is $96,715,150 (rounded) according to the aggregate tax bills, which is lower than the market value concluded in this report and lower than the combined purchase price as the property owner was successful in appealing the valuation resulting from the most recent court ordered reassessment. The respective mill rates are presented in the following chart.

Waterfront- Property Details Total 2017 Tax Total Tax Parcel ID Address Owner Acreage 2017 FMV Assessed Rate 2017 Tax Credits Liability

0130-C-00125-0000-00 0 E Waterfront Drive M&J BIG Waterfront Market LLC 17.52 $19,603,400 $19,603,400 0.004635 $90,870 - $90,869.60 0130-C-00200-0000-00 680 E Waterfront Drive M&J BIG Waterfront Market LLC 4.65 $5,220,000 $5,220,000 0.004635 $24,197 - $24,196.79 0130-D-00225-0000-00 0 E Waterfront Drive M&J BIG Waterfront Market LLC 3.77 $3,187,900 $3,187,900 0.004635 $14,776 - $14,775.92 0089-H-00055-0000-00 185 Waterfront Drive West M&J BIG Waterfront Town Center II LLC 1.82 $2,191,700 $2,191,700 0.004635 $10,159 - $10,158.53 0089-M-00301-0000-00 201 Waterfront Drive West M&J BIG Waterfront River Parcel I LLC 2.1999 $962,500 $962,500 0.004635 $4,461 - $4,461.19 0130-E-00300-0003-00 205-350 Waterfront Drive East M&J BIG Waterfront Market Amity LLC 7.412 $9,661,500 $9,661,500 0.004635 $44,781 - $44,781.05 0130-E-00276-0000-00 324-338 Amity Street M&J BIG Waterfront Market Amity LLC 1.45 $2,060,200 $2,060,200 0.004635 $9,549 - $9,549.03 0130-J-00100-0000-00 West Bridge Street M&J BIG Waterfront Town Center I LLC 2.67 $1,277,850 $1,277,850 0.004635 $5,923 - $5,922.83 0130-E-00155-0000-00 171 West Bridge Street M&J BIG Waterfront Town Center I LLC 1.67 $4,894,600 $4,894,600 0.004635 $22,686 - $22,686.47 0130-J-00152-0000-00 152-154 E Bridge Street M&J BIG Waterfront Town Center I LLC 1.89 $2,150,900 $2,150,900 0.004635 $9,969 - $9,969.42 0130-E-00160-0000-00 153-167 E Bridge Street M&J BIG Waterfront Town Center I LLC 1.9099 $4,106,300 $4,106,300 0.004635 $19,033 - $19,032.70 0130-E-00176-0000-00 180 E Waterfront Drive M&J BIG Waterfront Town Center I LLC 8.19 $4,995,200 $4,995,200 0.004635 $23,153 - $23,152.75 0130-J-00145-0000-00 100-146 W Bridge Street M&J BIG Waterfront Town Center I LLC 5.34 $3,949,700 $3,949,700 0.004635 $18,307 - $18,306.86 0130-J-00170-0000-00 148 West Bridge Street M&J BIG Waterfront Town Center I LLC 0.93 $522,750 $522,750 0.004635 $2,423 - $2,422.95 0130-N-00401-0000-00 148 West Bridge Street M&J BIG Waterfront Town Center I LLC 1.17 $1,161,700 $1,161,700 0.004635 $5,384 - $5,384.48 0089-S-00175-0000-00 210-270 W Bridge Street M&J BIG Waterfront Town Center I LLC 4.77 $2,191,700 $2,191,700 0.004635 $10,159 - $10,158.53 0089-M-00100-000B-00 300 Waterfront Drive West M&J BIG Waterfront Town Center I LLC 18.09 $17,425,150 $17,425,150 0.004635 $80,766 - $80,765.57 0089-M-00085-0000-00 299 West Bridge Street M&J BIG Waterfront Town Center I LLC 0.61 $1,858,650 $1,858,650 0.004635 $8,615 - $8,614.84 0089-M-00075-0000-00 217-245 W Bridge Street M&J BIG Waterfront Town Center I LLC 1.48 $4,065,900 $4,065,900 0.004635 $18,845 - $18,845.45 0089-M-00050-0000-00 105-149 West Bridge Street M&J BIG Waterfront Town Center I LLC 3.09 $5,227,550 $5,227,550 0.004635 $24,230 - $24,229.69 47.47 $96,715,150 $96,715,150 $448,285 $196,653.55 Tax PSF $0.31

Based on the aggregate assessment, the aggregate tax liability is $196,653. Notably, in this area, a property owner has the opportunity to take advantage of the 2 percent early payment discount on some of the payments, which the subject owner often does. Tax liability calculations in the following chart are reflective of the face value tax liability or 100 percent with no discount applied.

35 The Austin McGuire Company

Waterfront- Property Details 2018 Property Assessments Total 2018 Tax Total Tax Parcel ID Address Owner Acreage 2018 FMV Assessed Rate 2018 Tax Credits Liability

0130-C-00125-0000-00 0 E Waterfront Drive M&J BIG Waterfront Market LLC 17.52 $19,603,400 $19,603,400 0.004635 $90,870 - $90,869.60 0130-C-00200-0000-00 680 E Waterfront Drive M&J BIG Waterfront Market LLC 4.65 $3,670,800 $3,670,800 0.004635 $17,014 - $17,014.16 0130-D-00225-0000-00 0 E Waterfront Drive M&J BIG Waterfront Market LLC 3.77 $3,187,900 $3,187,900 0.004635 $14,776 - $14,775.92 0089-H-00055-0000-00 185 Waterfront Drive West M&J BIG Waterfront Town Center II LLC 1.82 $2,191,700 $2,191,700 0.004635 $10,159 - $10,158.53 0089-M-00301-0000-00 201 Waterfront Drive West M&J BIG Waterfront River Parcel I LLC 2.20 $962,500 $962,500 0.004635 $4,461 - $4,461.19 0130-E-00300-0003-00 205-350 Waterfront Drive East M&J BIG Waterfront Market Amity LLC 7.41 $9,661,500 $9,661,500 0.004635 $44,781 - $44,781.05 0130-E-00276-0000-00 324-338 Amity Street M&J BIG Waterfront Market Amity LLC 1.45 $2,060,200 $2,060,200 0.004635 $9,549 - $9,549.03 0130-J-00100-0000-00 West Bridge Street M&J BIG Waterfront Town Center I LLC 2.67 $1,277,850 $1,277,850 0.004635 $5,923 - $5,922.83 0130-E-00155-0000-00 171 West Bridge Street M&J BIG Waterfront Town Center I LLC 1.67 $4,894,600 $4,894,600 0.004635 $22,686 - $22,686.47 0130-J-00152-0000-00 152-154 E Bridge Street M&J BIG Waterfront Town Center I LLC 1.89 $2,150,900 $2,150,900 0.004635 $9,969 - $9,969.42 0130-E-00160-0000-00 153-167 E Bridge Street M&J BIG Waterfront Town Center I LLC 1.91 $4,106,300 $4,106,300 0.004635 $19,033 - $19,032.70 0130-E-00176-0000-00 180 E Waterfront Drive M&J BIG Waterfront Town Center I LLC 8.19 $4,995,200 $4,995,200 0.004635 $23,153 - $23,152.75 0130-J-00145-0000-00 100-146 W Bridge Street M&J BIG Waterfront Town Center I LLC 5.34 $3,949,700 $3,949,700 0.004635 $18,307 - $18,306.86 0130-J-00170-0000-00 148 West Bridge Street M&J BIG Waterfront Town Center I LLC 0.93 $522,750 $522,750 0.004635 $2,423 - $2,422.95 0130-N-00401-0000-00 148 West Bridge Street M&J BIG Waterfront Town Center I LLC 1.17 $1,161,700 $1,161,700 0.004635 $5,384 - $5,384.48 0089-S-00175-0000-00 210-270 W Bridge Street M&J BIG Waterfront Town Center I LLC 4.77 $2,191,700 $2,191,700 0.004635 $10,159 - $10,158.53 0089-M-00100-000B-00 300 Waterfront Drive West M&J BIG Waterfront Town Center I LLC 18.09 $17,425,150 $17,425,150 0.004635 $80,766 - $80,765.57 0089-M-00085-0000-00 299 West Bridge Street M&J BIG Waterfront Town Center I LLC 0.61 $1,858,650 $1,858,650 0.004635 $8,615 - $8,614.84 0089-M-00075-0000-00 217-245 W Bridge Street M&J BIG Waterfront Town Center I LLC 1.48 $4,065,900 $4,065,900 0.004635 $18,845 - $18,845.45 0089-M-00050-0000-00 105-149 West Bridge Street M&J BIG Waterfront Town Center I LLC 3.09 $5,227,550 $5,227,550 0.004635 $24,230 - $24,229.69 47.47 $95,165,950 $95,165,950 $441,102 $196,653.55 Tax PSF $0.26

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Highest and Best Use

Highest and Best Use as Though Vacant

Physical Possibilities: The subject site contains 90.34 acres comprised of twenty non- contiguous parcels. It is located along Waterfront Drive on either side of the Homestead Grays Bridge. It spans the boroughs of Homestead, West Homestead, and Munhall near Pittsburgh and sits on land once occupied by U.S. Steel's Homestead Steel Works plant

The development property extends along the south bank of the Monogahela River. It is separated from the original sections of Homestead, West Homestead, and Munhall by railroad tracks and does not physically or visually connect with the older sections of the municipalities.

All public utilities common to the area are available to the site. The shape of each site is somewhat irregular but with sufficient width and depth to be suitable for development. Further, each site is generally level and at street grade. The subject is located in Zone X, an area of minimal flood hazard.

As indicated, the subject is part of the massive redevelopment of the Homestead Works. It does not physically or visually connect with the immediate area. In and of inself, the development site would be suitable for virtually any use. However, development would have to conform with the numerous tax parcels into which it has been subdivided.

Legal Restrictions: Legal restrictions as they apply to the subject property are private restrictions and the public land use regulations of zoning. The site is zoned Waterfront Development District by the jurisdictions of Munhall and Homestead. This district was created specifically to accommodate development in The Waterfront. In total, the development permits 2.4 million square feet with 800,000 square feet of office/R&D space, 500 apartments and 1 million square feet of commercial space

It is assumed that any easements are located along the site perimeter as is typical in the neighborhood. It is also assumed that the subject is not affected by any covenants and restrictions, which would have an impact on value. In general, there are virtually no adverse restrictions on the development of the subject tract. Thus, the site is suitable for commercial or mixed-use development in accordance with the zoning in place.

Financially Feasible and Maximally Productive: Financial feasibility analysis is the process of ascertaining which use, from those that are both physically and legally permissible, will return the highest net profit to the land.

The subject is located in the Pittsburgh MSA in the central portion of Allegheny County. It is situated across the Monongahela River from the city of Pittsburgh. Overall, the local market is fairly stable with declining vacancy rates and increasing rental rates, particularly for the retail sector. The subject’s market appears to have been slightly less affected by the economic slowdown and recession with some optimism for the local commercial market. With regard to the local retail market, it remains relatively strong with low vacancy rates.

37 The Austin McGuire Company

Occupancies have remained consistently high at 95+ percent. For the local retail market, vacancy rates have been on a declining trend since 2009 and are considered to be at stabilized levels. As a result, historic rental rates increased modestly in from 2013 through 2017 thus far. Going forward, the recovery is expected to continue Barring unforeseen events as noted previously.

After considering legal, physical and financial alternatives, the highest and best use of the subject tract, as if vacant, would be for commercial or mixed-use development with a highly preleased development.

Highest and Best Use as Improved

The subject is improved with a 762,323 square foot power center known as The Waterfront. Once the site of the world’s largest steel mill, The Waterfront has been transformed into a mixed-use development including retail, restaurants, office, residential, and recreation. The design and layout of the centers varies from traditional power centers to smaller strip centers to more modern lifestyle centers, as well as an entertainment/retail center. Other than the smaller retail centers, each center is anchored with a least one anchor tenant. In aggregate the subject is presently 95.5 percent leased.

Physical Possibilities: Given the size, configuration, topography, and utility availability of the subject site, virtually any type of development would be acceptable. As indicated, the subject is part of the massive redevelopment of the Homestead Works. It does not physically or visually connect with the immediate area. In and of itself, the development site would be suitable for virtually any use. It is considered to be somewhat of a destination retail center as it is not situated along a freeway or major commercial corridor as is typical for a large retail property. Overall, the improvements are in conformity with physical possibilities.

Legal Restrictions: The most prevalent legal restriction on the subject is the zoning. The site is zoned Waterfront Development District by the jurisdictions of Munhall and Homestead. This district was created specifically to accommodate development in The Waterfront. Given the subject’s fairly recent construction, it is assumed to conform with the legal restrictions.

Financially Feasible and Maximally Productive: The final analysis between the highest and best use as vacant and the highest and best use as improved considers the contributory value of the improvements. Wherein, if the overall value of the property as improved exceeds the value of the property as vacant, a prudent purchaser would leave the existing improvements intact or would commence with planned improvements. As will be shown later in this report, the improvements are capable of producing a satisfactory return on investment.

After considering the physical, legal, and financial characteristics of the improvements, the existing improvements reflect the highest and best use of the property, as improved.

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Income Approach

Typical investors price real estate on their expectations of the magnitude and certainty of receiving these benefits and their judgment of the risks involved. Our valuation endeavors to reflect the most likely actions of typical buyers and sellers of property interests similar to this one. The two commonly used techniques of valuation associated with the Income Approach are Direct Capitalization and the Discounted Cash Flow.

Direct Capitalization

Direct Capitalization is a method of converting a single year’s stabilized income and expense statement into value using the formula Value = Income/Capitalization Rate. In Direct Capitalization, a precise allocation between return on and return of capital is not made because investor assumptions or forecasts concerning the holding period, pattern of income, or changes in value of the original investment are not simulated. The following steps are undertaken:

1. Estimate the Potential Gross Income from all sources that a competent owner should be able to generate from a property based on existing and/or market rents, 2. Deduct an estimate for Vacancy and Collection Loss to arrive at Effective Gross Income, 3. Deduct operating expenses from the estimated Effective Gross Income to arrive at Net Operating Income, 4. Determine an appropriate Overall Rate to apply to the investment, 5. Divide the Net Operating Income by the Overall Rate to derive a value estimate.

Discounted Cash Flow Analysis

Investors in assets such as the subject customarily make a forecast of net operating income over a period of time, typically ten years. This projection is then utilized to determine a purchase price that will justify the degree of risk inherent in the proposed investment. The DCF analysis specifies the quantity, variability, timing, and duration of NOIs and cash flows. Since we are estimating the present value of a set income stream the following steps are taken.

1. Analyze the current income stream - Determine if the established rent is close to market rents reflected in other similar commercial properties and project future revenues. 2. Estimate a reasonable Vacancy and Collection Loss for a multi-tenant property. 3. Project the Operating Expenses, considering any tenant reimbursements as well, that are to be paid by the owner of the building as stipulated by the lease. 4. Derive the most probable Net Operating Income to be generated by the property. 5. Capitalize the Net Operating Income into a reversionary sales price at the end of the holding period. 6. Deduct the Cost of Sale (broker’s commission) from the reversion to arrive at net reversion payable to the owner. 7. Discount the Cash Flows into an indication of value.

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A computer software program known as “ARGUS” has been used to model the annual cash flows. The program allows for individual characteristics of each lease or component to be entered separately, including base rent, percentage rent, escalations in base rent, expense recoveries, leasing commission, and tenant improvements for each space.

Methodology

Several factors play in the decision of an investor to look at a discounted cash flow analysis or one year’s projected stabilized income and expenses. Consideration is given to the structure of the subject’s leases. Where the subject’s leases generally reflect market rates and are stable and predictable, the direct capitalization technique may be appropriate. However, where there are different lease rates, escalations, and treatment of expense recoveries, the discounted cash flow method may be more appropriate. Selection of the appropriate methodology also depends upon the behavior of typical buyers of retail properties. In this analysis, we have utilized both methods.

Market Rent

In the valuation of leased properties, we typically analyze the local market in order to determine appropriate market rental rates for the subject property. Below is a summary of lease terms in shopping centers comparable to The Waterfront.

40 The Austin McGuire Company

Market Parameters For: Subject - Waterfront Plaza at Robinson Town Bakery Square Settler's Ridge Towne Center Centre

Address 100-146 West Bridge St 1400 Park Manor Blvd 6425 Penn Avenue 200 Chestnut Ridge Dr (aka 2200 Settler's Ridge Center Drive) Homestead, PA Pittsburgh, PA Pittsburgh, PA Pittsburgh, PA Size (SF) 769,397 456,029 394,000 600,000 Description and Anchors A power/lifestyle/ Large community A 400,000 mixed-use Regional lifestyle center entertainment center shopping center anchored specialty center on former which includes a Marriott anchored by Loew's by IKEA, Marshalls, Nabisco factory site. Couryard Hotel and Theaters, Dave and Value City Furniture, Anchors include a 42,000 lifestyle restaurants. Busters, Dicks, Best Buy, Home Goods SF fitness center & 110 Anchors include Giant Michael's, Petco, TJ Maxx, room Marriott Suites Eagle, REI, LA Fitness, 16, Bed Bath and Beyond, Hotel, Anthopologie, screen theater and P.F. Marshalls, Barnes and Boxwood and Coffee Tree Changs Noble, and shadow Roasters anchors Giant Eagle, Lowe's, Macy's and Target Broker, Company Herky Pollock, CBRE Michael Rivitto, Zamagias Allison, Walnut Capital Jaime Sakmar, ECHO Real Properties Estate Services Company Phone # 412-394-9840 412-391-7887 412-661-0200 412-968-1660 Survey Date Current Aug-16 Aug-16 Jul-15 Compared to Subject NA Lower to similar rents Similar to higher rents Similar rents Current Vacancy Rate 7% 7% Unknown 1% Mkt Rent Small In Line 1,000-5,000 SF = $22.00 to 1,000-5,000 SF = $25.00 to 1,000-5,000 SF = $30.00 to 1,000-5,000 SF = $35.00 $34.00 per SF NNN $29.00 per SF NNN $35.00 per SF NNN per SF NNN Mkt Rent Mid/Lg In Line >10,000 SF $20.00 per SF 5,000-15,000 SF $15.00 to 5,000-15,000 SF $25.00 to 5,000-15,000 SF $31.00 per NNN $19.00 per SF NNN $29.00 per SF NNN SF NNN Big Box >20,000 SF $10.00 to >20,000 $14.00 to $15.00 >20,000 $17.00/SF NNN >20,000 $14.00 to $15.00 $20.00 per SF NNN PSF, $16.00 to $20.00 jr (deal) per SF NNN >100,000 $9.37 per SF anchor NNN Freestanding $20.00 to $61.00 per SF $175,000 per year, not by $35.00 to $42.00 per SF "high $20's" per SF NNN NNN SF NNN Downtime if vacant (months) 4-6 months 3 - 6 months 6 to 8 months 6 months Initial Lease Term 5 years for local tenants 5 years for local tenants 5 to 10 years Mostly 10 years with a and 5-10 years for and 10 years for regional/ few 5 year initial lease regional/ national tenant national tenant terms Rent Escalations 2% annually 7-10% every 5 years 3 % annually 8-10% every five years CAM Expenses Varies $2.71 PSF Unknown Landlord TI (per SF) "Rarely offer TI except to $10 to $25 range $40 to $50 (non- $20 for non-restaurants best tenants" restaurant) and $100 and $50 for restaurants (restaurant) Tenant Retention Rate 90%+ High High Leasing Commissions 4% one broker; 6% co- 4-6% one or co-broker 4-6% (cobroke) for initial 4-6% (cobroke) for initial broker lease term and 3% for lease term renewals

Bakery Square is a 400,000 square foot mixed use specialty center located about four miles east of downtown Pittsburgh that was constructed on a former Nabisco factory site. This site has kicked off the gentrification of the East Liberty area, located adjacent to and just south of the university district in Oakland. Currently, the retail here stands are roughly 95 percent occupancy. In addition to retail there is a significant office component as well.

Settler’s Ridge is a 600,000 square foot lifestyle center that is about four miles west of downtown Pittsburgh near the intersection of I-376 and State Route 22, close by the Mall at Robinson. Settlers Ridge is essentially a smaller version of the Waterfront and has many of the same retailers.

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Plaza at Robinson Town Center is a 456,000 square foot community shopping center that is located 12 miles west of downtown just off of I-376 and close by Settlers Ridge and the Mall at Robinson.

The centers that are most similar to the subject in terms of design are Bakery Square, which is constructed on a former bakery site, and Settler’s Ridge, which is a large lifestyle center like the subject property. However it is not possible to generalize any other similarities with the subject because the subject is a somewhat unique property in its own trade area.

Discussions with area brokers indicate the following estimated market rents for the subject:

 In-line (up to 5,000 square feet): $20.00 to $35.00 per square foot  Larger In-line (up to 15,000 square feet): $15.00 to $33.00 per square foot  Anchors $7.00 to $17.00 per square foot

All rents are quoted on a triple net basis. The brokers estimate the market vacancy rate at 5 percent. Market lease terms range from 5 to 10 years with leasing commission between 4 and 6 percent for the initial lease term. Rent concessions are typically 3 to 6 months of free rent, often coinciding with build-out. Tenant improvement allowances vary widely but generally range from $20.00 per square foot for non-restaurants spaces and $50.00 to $100.00 for restaurant spaces.

As noted in the Market Analysis section, after strong growth in 2017, rental increases are beginning to stabilize. Asking rent will reach $17.04 per square foot in 2018, according to the most recent Q1 market report by Marcus & Millichap.

Given the subject’s unique location and development mix, it is essentially it’s own best comparable. For reference, we present the following chart that deals recently signed leases at the subject for 2017 and 2018.

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Size Lease Lease Expense Tenant Name Type of Lease (SF) Begin End Rent Rent/SF Basis

Anchor Best Buy Renew 30,055 Feb-19 Mar-20 $11.50 NNN TJ Maxx Renew 30,000 Feb-17 Jan-22 $11.00 NNN Ross Dress for Less New 25,000 Mar-17 Jan-28 $14.50 NNN Minimum 25,000 $11.00 Maximum 30,055 $14.50 Median 30,000 $11.50 Average 28,352 $12.33 In-Line 1,000-5,000 SF El Campsion New 3,762 Oct-18 Dec-28 $28.42 Gross Claire's Accessories Renew 1,226 Jun-18 Sep-19 $49.75 Gross Throw New 2,711 Sep-18 Aug-23 $11.80 Gross Sprint Spectrum Renew 2,038 Aug-17 Jul-22 $33.71 NNN Mens Warehouse Renew 6,764 Aug-17 Jul-22 $32.00 NNN Bath & Body Works Renew 3,000 Feb-18 1.31.28 $25.00 NNN Cakery Square New 2,493 Sep-17 Aug-18 $4.81 Gross Europe Nails Renew 2,998 Apr-18 Dec-28 $34.00 NNN Gordon Shoes Renew 2,264 May-18 Apr-21 $20.00 Gross Justices Renew 3,546 Feb-18 Jan-19 $12.98 Gross New Balance Renew 2,028 May-18 Apr-21 $20.00 Gross Primanti Brothers New 4,040 May-17 Aug-27 $30.00 NNN The Children's Place Renew 4,427 Feb-18 Jan-19 $15.51 Gross Torrid Renew 3,505 Jul-18 Jan-29 $28.53 Gross Minimum 2,028 $4.81 Maximum 6,764 $34.00 Median 3,000 $25.00 Average 3,373 $23.32 In-Line-Medium 5,000-10,000 SF Express New 7,500 Feb-19 Jan-20 $16.00 Gross Ann Taylor Loft Renew 6,000 Feb-17 Jan-20 $34.00 NNN The Improv New 7,500 Jan-18 Oct-29 $44.25 NNN Lane Bryant Renew 6,048 May-17 Apr-22 $27.00 Gross Victoria's Secret Renew 6,000 Feb-18 Jan-19 $23.00 NNN Minimum 6,000 $23.00 Maximum 7,500 $44.25 Median 6,024 $30.50 Average 6,387 $32.06 In-Line-Large >10,000 SF Petco Renew 16,049 Feb-17 Jan-27 $19.63 NNN Rock Bottom Brewery Renew 15,118 Apr-17 Mar-22 $26.59 NNN Minimum 15,118 $19.63 Maximum 16,049 $26.59 Median 15,584 $23.11 Average 15,584 $23.11 Freestanding PF Changs Renew 7,000 Oct-16 Sep-21 $14.29 NNN

43 The Austin McGuire Company

Analysis of Contract Rents

The Waterfront was developed in a suburban fashion center with retail, residential, and office spaces all being separated from each other by parking lots and roadways. The subject property includes five individually identified shopping centers located in the central portion of the Waterfront, including Market on the Waterfront, Market Amity, Amity Square at the Waterfront, The Stacks at the Waterfront, and Waterfront Town Center. For purposes of this analysis and valuation, The Stacks at the Waterfront and Waterfront Town Center will be valued together. The rent rolls, adapted from information provided by the client, are presented on the following pages.

The Waterfront Town Center area of the development is home to stores one would find in most malls, including New Balance, Gap, and Victoria's Secret., Barnes & Noble, and a Loews Cineplex are located in this area as well. The eastern end of the development resembles more of a traditional suburban strip mall with many big-box retail stores fronting a large parking lot. Stores here include Bed, Bath, & Beyond and Dick's Sporting Goods, as well as shadow anchors Giant Eagle grocery, Lowe's, Target and Costco. Around the perimeter of the complex, particularly along the Monongahela River, are most of the development's restaurants, almost all of which are typical chain restaurants like Red Robin, T.G.I. Friday's, and P. F. Chang's China Bistro, as well as several fast food locations.

The subject’s respective rent rolls are discussed in more detail on the following pages.

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Market on the Waterfront Size Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type (SF) Begin End Increases /SF Date Renewals Expenses Comments

Vacant 003 Speculative Anchor 23,487 Temp lease to Spirit of Halloween

Best Buy 001 Existing Anchor 30,055 Feb-14 Jan-19 $300,550 $10.00 Current Three 5-yr NNN Reflects 5-year renewal in 2014 at reduced rent, 2nd renewal at $11.50, 3rd at $13.00, 4th at $14.50 Michael's 002 Existing Anchor 23,847 Sep-16 Aug-21 $436,399 $14.52 Sep-16 Two 5-yr NNN Reflects execution of 5-year option at option rent

Petco 004 Existing In-Line-Large 16,049 Feb-17 Jan-27 $315,122 $19.63 Feb-17 NNN Reflects 10-year renewal in 2017 at same rent increasing 10% in year 5 $346,498 $21.59 Feb-22 TJ Maxx 005 Existing Anchor 30,000 Feb-17 Jan-22 $330,000 $11.00 Feb-17 One 5-yr NNN Reflects 5-year renewal in 2017 at slightly higher rent, in exchange for TJ Maxx consenting to Ross Dress For Less, they are granted a $50,000 rent concession for 12 months following the Ross opening in Mar 2017, effective rent is $9.33/sf Bath and Body Works 006 Existing In-Line 3,000 Jul-18 Oct-18 $54,000 $18.00 Bath and BodyWorks moving to 311 #6 at lease end

Mattress Firm 007 Existing In-Line 6,139 Jan-14 Jun-24 $162,684 $26.50 Jul-14 NNN Formerly Dress Barn (LED 9/30/13), TI $7.44 psf and LC $10.92, estimated NNN $6.40 in year 1 $187,240 $30.50 Jul-19 Ross Dress For Less 008 Existing Anchor 25,000 Apr-17 Jan-28 $362,500 $14.50 Mar-17 Four 5-yr NNN Formerly Old Navy backfilled with Ross, TI $45.00 plus base building cost of $5.00 and LC $8.50, estimated NNN $6.40 in year 1, space delivery Feb 2017, per RR LED 1/24 DSW Shoe Warehouse 009 Existing Anchor 25,529 Nov-15 Nov-20 $446,758 $17.50 Nov-17 Three 5-yr NNN Reflects 5-year renewal at lower rent

45 The Austin McGuire Company

Market on the Waterfront Size Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type (SF) Begin End Increases /SF Date Renewals Expenses Comments

Bed Bath & Beyond 010 Existing Anchor 38,000 Feb-16 Jan-21 $420,000 $11.05 Current Two 5-yr Gross 5-year renewal in 2016 at same rent, rent is equal to 8% of gross sales of $5.25M lower than prior Marshall's 011 Existing Anchor 30,000 Feb-16 Jan-21 $419,400 $13.98 Feb-16 NNN Reflects exercise of option in 2016, similar to TJ Maxx $50,000 rent concession for 12 months in exchange for consent to allow Ross Dress For Less opened Mar 2017, effective rent $12.31/sf BJ's Brewhouse Pending Ground lease Current indications from management indicate discussions with the tenant are continuing, current and active, but not included in budgeting at this point, $100,000 annual rent commencing 2019, as compared to $140,000 commencing 2018, deal contingent on AMC deal Outback Steakhouse Pending Ground lease Current indications from management indicate there are no active or recent discussions with this tenant, $100,000 annual rent commencing 2019, as compared to $120,000 commencing 2018, deal contingent on AMC deal Mitchell's Fish Company Existing Freestanding 8,350 Jul-00 Jul-20 $506,344 $60.64 Aug-15 Four 5-yr NNN Located on waterfront near Waterfront Town Center; this bldg area is not listed in this rent roll. We previously have 8,350 sf listed, and the AMLS states that the rent is still current.

Total/Average 259,456 $3,699,756 $27.81

46 The Austin McGuire Company

Market on the Waterfront: This center is located on the eastern end of the development and reflects a traditional power center with several big-box retail stores fronting a large parking lot. As such, the subject contains predominantly anchor tenants with a few in-line tenants and two freestanding restaurants. Given the rent differentials for in-line space within the local market, we have broken in-line space into two categories. The current contract rents vary depending on the type of space as follows:

Type of Space Size (SF) Rents PSF

Anchor 225,918 $10.00-$19.63 Avg $13.90 In-Line 9,139 $26.50 In-Line-Large (>10,000 sf) 16,049 $19.63 Freestanding 15,154 $60.64

As is typical, the larger anchor tenants pay discounted rental rates, while the freestanding tenants pay premium rental rates for superior locational features. The indicated rental rates reflect the current contract rents and are quoted on a triple net basis.

Notably, the subject has been successful in retaining tenants with one new lease and five renewal leases signed in 2016 and 2017. One new anchor lease was signed with Ross Dress for Less to backfill the Old Navy space at a rent of $14.50 per square foot. Additionally, four anchor tenants renewed their leases at rents ranging from $11.00 to $14.52 per square foot with an average of $12.64 per square foot. One renewal lease was signed for large in-line space at $19.63 per square foot.

Overall, the subject has historically presented a stable rental roll with the present tenants being the original tenants. Notably, management has re tenanted by replacing Old Navy with Ross Dress for Less. Given the number of recently signed leases at the subject, they are considered to be the best indicator of market rent for the subject. Further, they are within the parameters indicated in our conversations with local brokers. In the discounted cash flow, we have utilized the current contract rents through the remaining term of the lease unless otherwise indicated. Thereafter, we have utilized the market rents illustrated below.

Type of Space Market Rent PSF

Anchor $13.00 In-Line $26.00 In-Line-Large (>10,000 sf) $20.00 Freestanding $55.00

47 The Austin McGuire Company

Market Amity Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type Size (SF) Begin End Increases /SF Date Renewals Expenses Comments

Dicks Sporting Goods Existing Anchor 45,000 Feb-12 Jan-22 $495,000 $11.00 Two-5-yr NNN 10-yr renewal in 2012 at reduced rent

Cornerstone Fitness (aka Existing Anchor 20,000 Mar-14 Sep-24 $295,000 $14.75 Oct-17 NNN New lease, six months free rent, Crunch) second floor space, estimated NNN $6.40 in year 1 $315,000 $15.75 Oct-21

PLCB Existing In-Line- 9,800 Jul-15 Jun-25 $215,600 $22.00 Sep-15 Two-5-yr Gross New lease to state run liquor Medium store, all costs expended

$235,200 $24.00 Sep-20 DXL Mens Apparel Existing In-Line- 8,628 Aug-14 Jul-24 $207,072 $24.00 Aug-14 NNN New lease Medium $227,779 $26.40 Aug-19 Total/Average 83,428 $1,212,672 $14.54

48 The Austin McGuire Company

Market Amity: This center is located just west of Market on the Waterfront, being separated by shadow anchors Target and Giant Eagle. Originally constructed as two big-box retail spaces, the former Filene’s space has been demised and re-tenanted to accommodate smaller retail tenants. The current contract rent is as follows:

Type of Space Size (SF) Rents PSF

Anchor 65,000 $10.00-$13.75 Avg $11.88 In-Line 18,428 $22.00-$24.00 Avg $23.00

The indicated rental rate reflects the negotiated rents for the subject space and is quoted on a triple net basis.

Three leases were negotiated to backfill the Filene’s space. The largest space was leased to Crunch Fitness for $13.75 per square foot, which is reasonable for an anchor space. For the remaining two spaces, which reflect in-line space, the negotiated rents are $18.00 (converted from gross lease) and $24.00 per square foot.

This part of the subject had struggled in the past with the vacating of Filene’s Basement. Although this space was vacant for a number of years, management has been successful in re-tenanting the space. Overall, the recent renewal and the new lease deals are considered to be the best indicator of market rent for the subject. Further, they are within the parameters indicated in our conversations with local brokers. In the discounted cash flow, we have utilized the current contract rents through the remaining term of the lease unless otherwise indicated. Thereafter, we have utilized the market rents illustrated below.

Type of Space Market Rent PSF

Anchor $13.00 In-Line $24.00

49 The Austin McGuire Company

Waterfront Amity Square Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type Size (SF) Begin End Increases /SF Date Renewals Expenses Comments

PNC Bank 70 New In -Line 3,720 Sep-18 Aug-32 $130,200 $35.00 NNN Formerly Mattress Discounters, vacated at Jun 2017 LED, PNC Bank$35 NNN; 15 Yrs. No TI.

H&R Block 71 Existing In -Line 1,200 May-15 Apr-20 $36,000 $30.00 NNN Reflects renewal in 2015 $38,400 $32.00 May-18 Sprint Spectrum 72 Existing In -Line 2,038 Aug-17 Jul-22 $68,701 $33.71 Aug-17 NNN Reflects 5-yr renewal at same terms Mens Wearhouse 73 Existing In -Line 6,764 Aug-17 Jul-22 $216,448 $32.00 Aug-17 NNN Reflects 5-yr renewal at slightly higher rent Total/Average 13,722 $451,349 $32.89

50 The Austin McGuire Company

Amity Square: This center is the smallest of the subject centers including four tenant in-line tenant spaces. It backs up to the parking structure at The Stacks at the Waterfront. The current contract rents are as follows:

Type of Space Size (SF) Rents PSF

In-Line 13,722 $30.00-$33.71 Avg $31.90

As with the Market on the Waterfront, the subject has been successful in retaining tenants with one lease being renewed in 2015 at $30.00 per square foot and two leases being renewed in 2017 at $32.00 and $33.71 per square foot. The most recent lease was for the former Mattress Discounters which vacated their space at the end of their lease. A new lease with PNC Bank for the entire 3,720 square feet was done with a starting date of September 2018 for $35 per square foot NNN on a 15 year deal.

Overall, the subject has historically presented a stable rental roll with the present tenants being the original tenants. Given the recently signed renewals at the subject, they are considered to be the best indicator of market rent for the subject. Further, they are within the parameters indicated in our conversations with local brokers. In the discounted cash flow, we have utilized the current contract rents through the remaining term of the lease unless otherwise indicated. Thereafter, we have utilized the market rents illustrated below.

Type of Space Market Rent PSF

In-Line $34.00

51 The Austin McGuire Company

Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type Size (SF) Begin End Increases /SF Date Renewals Expenses Comments

Vacant 031 Speculative In-Line 7,159 Vacant 064 Speculative In-Line 3,762 Vacant 066 Speculative In-Line 2,711

Vacant Speculative Anchor 138,140 Former Macy's

Loews AMC Theatre 001 Existing Theater 117,248 Feb-00 Dec-20 $1,098,250 $9.37 Jan-16 Three 10-yr NNN Ground lease, approx 5,000 seats. Lease expires '12/31/2020. Paying $25.67/sf mod. NNN resulting in a healthy ratio of 28.6% based on lowest sales ever recorded due to industry trend.

Surefire Restaurants (dba 002 Existing In-Line 4,300 Mar-13 Jan-24 $116,100 $27.00 Mar-13 Two 5-yr NNN New lease, RCD and increase dates taken Burgatory) from rent roll $124,700 $29.00 Feb-19

Rocket Fizz 002B Existing In-Line 2,000 May-16 Apr-21 $60,000 $30.00 May-16 NNN New lease in 2016, TI $35.00/sf and LC $9.00/sf Charming Charlie 003 Existing In-Line 6,500 Jul-13 Jan-24 $150,000 $23.08 Nov-13 One 5-yr NNN New lease, RCD and increase dates taken from rent roll, TI $90.00 $165,000 $25.38 Feb-19

PA Wine Cellar 004 Existing In-Line 2,000 Apr-13 Mar-15 $60,000 $30.00 NNN Due to below market rent, LL planning not to renew, month-month, modelled as vacated

Carhartt 005 Existing In-Line 3,529 Mar-15 Apr-25 $99,189 $28.11 May-17 NNN New lease in 2015, LL TI $50.00 $101,173 $28.67 May-18 $103,196 $29.24 May-19 $105,260 $29.83 May-20 $107,365 $30.42 May-21 $109,513 $31.03 May-22 $111,703 $31.65 May-23 $113,937 $32.29 May-24

Victoria's Secret 006 Existing In-Line 6,000 Oct-16 Jan-19 $138,000 $23.00 NNN Reflects 16-month extension in 2016, expect 1-year extension at same rent

The Children's Place 007 Existing In-Line 4,427 Feb-16 Jan-19 $68,643 $15.51 Gross Tenant since 2001, 1-year renewal at 8% of gross sales, space is actively being 52 marketed

The Austin McGuire Company

Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type Size (SF) Begin End Increases /SF Date Renewals Expenses Comments

Torrid 008 New In-Line 3,505 Jul-18 Jan-29 $99,998 $28.53 New Lease - Torrid @$28 PSF

$74,000 $31.06 Aug-21 $34.16 Aug-25

Ethan Allen 009 Existing In-Line 5,883 Jan-15 Jan-25 $138,251 $23.50 Jan-15 NNN Executed lease, LL TI $45.00 $152,076 $25.85 Jan-20

Gap Kids 010 Existing In-Line-Large 11,000 Feb-16 Jan-19 $79,203 $7.20 Gross Reflects 3-year extension at 6% of gross sales, 120 day mutual termination right

Bath & Body Works 011 Existing In-Line 3,000 Oct-16 Jan-18 $75,000 $25.00 NNN Reflects 16-month extension in 2016, expect to extend 1-year at same terms $27.50 Feb-23 $2.00 Aug-18 Storage Income, in ARGUS added this to total rent

Express 012 Existing In-Line 7,500 Feb-18 Jan-20 $120,000 $16.00 Feb-18 Gross Reflects 1-year extension, rent is higher of 10% of sales or $13,333.33 per month, expect to extend 1-year at same terms Feb-18 Lease has been renewed, no info yet

Europe Nails 013 New In-Line 2,998 May-18 Apr-28 $96,000 $32.02 NNN Tenant renewed thru 2028. $101,932 $34.00 May-18 Rent Roll also lists added income from ADV. $35.02 May-19 $36.07 May-20 $37.15 May-21 $38.27 May-22 $39.42 May-23 $40.60 May-24 $41.82 May-25 $43.07 May-26 $44.36 May-27

53 The Austin McGuire Company

Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type Size (SF) Begin End Increases /SF Date Renewals Expenses Comments

Lane Bryant 014 Existing In-Line 6,048 May-17 Apr-22 $163,296 $27.00 Gross Reflects 5-year renewal in 2017

Ulta Salon 015 Existing In-Line-Large 10,349 Oct-12 Sep-22 $170,759 $16.50 Oct-17 One 5-yr NNN Reflects 5-yr renewal at far lower rent, tenant to renovate in 2013, Tis $35.00/sf

Barnes & Noble 016 Existing Anchor 23,876 Feb-16 Jan-21 $296,784 $12.43 Feb-16 NNN Reflects 5-year renewal in 2016 at lower rent

New Balance 017 Existing In-Line 2,028 May-18 Apr-21 $40,560 $20.00 May-18 Gross Reflects 3-year renewal in 2018 at same terms with LL right to terminate

Gordon's Comfort Shoe 018 Existing In-Line 2,264 May-18 Apr-21 $45,280 $20.00 May-18 Gross Reflects 3-year renewal in 2018 at same terms

General Nutrition Center 019 Existing In-Line-Small 1,314 Nov-11 Oct-21 $49,275 $37.50 Nov-17 NNN 10-year renewal in 2011 at higher rent (but less than stipulated in original lease)

$49,932 $38.00 Nov-18 $50,589 $38.50 Nov-19 $51,246 $39.00 Nov-20

Claire's Accessories 020 Existing In-Line-Small 1,226 Oct-17 Sep-18 $36,400 $29.69 Gross Reflects 1-year extension at same rent - New lower rent 2018. Filed Bankruptcy. Tenant extended for one more year at reduced rent.

Sunglass Hut 021 Existing In-Line-Small 889 Nov-15 Oct-18 $24,003 $27.00 Nov-17 NNN Reflects 3-year renewal at same rent, expect 1-year extension at same terms. A long term lease ext. has been executed. Terms not in the RR.

54 The Austin McGuire Company

Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type Size (SF) Begin End Increases /SF Date Renewals Expenses Comments

Ann Taylor Loft 022 Existing In-Line 6,000 Feb-17 Jan-20 $204,000 $34.00 Feb-17 One 5-yr NNN Reflects 3-year renewal in 2017; Lease expires 1/31/2020. Rent reduced to $29 beginning 8/1/2018 thru remainder of lease. Sales have fallen from $1.65m in 2012 to less than $900,000 in 2017 resulting in a health ratio of 23.9% Famous Footwear 023 Existing In-Line 6,500 Oct-17 Sep-18 $125,970 Gross Reflects 1-year extension at same rent, paying 7.25% of gross sales. Sales have been flat. One year Ext. proposed.

Paint Monkey 024 Existing In-Line 3,786 Oct-16 Sep-19 $19,800 $5.23 Full Formerly Lintons (vacated Jun 2016), Service temporary tenant, lease can be terminated by LL at any time with 120 days notice

Yankee Candle 025 Existing In-Line 2,015 Feb-12 Jan-22 $72,540 $36.00 Feb-17 NNN 10-year renewal in 2012 at higher rent

GoodyHouse 026 Pending In-Line-Small 609 Oct-15 Jul-16 $13,800 $22.66 Oct-15 Pop-up/temp tenant, assumed as-is lease, mo-mo, expect to continue mo-mo

PF Changs 027 Existing Freestanding- 7,000 Oct-16 Sep-21 $100,000 $14.29 Oct-16 One 5-yr NNN Ground lease, tenant since 2001, tenant Large exercised 5-year option

Panera Bread 028 Existing In-Line 5,000 Nov-16 Oct-21 $127,050 $25.41 Nov-16 N Reflects renewal in 2016 at option higher rent

Journeys 029 Existing In-Line-Small 1,611 Feb-16 Jan-21 $34,849 $21.63 Feb-18 NNN Reflects 5-yr renewal at same rent/Rent roll now reflects $36,243 $22.50 Feb-19 OTR, ADV, INS, and RTX pmts $37,693 $23.40 Feb-20

Justice 030 Existing In-Line 3,546 Feb-18 Jan-19 $37,000 Feb-18 Gross Reflects 1-year extension at 5% of sales, RR does not show income

Carter's 030B Existing In-Line 4,571 Oct-08 Jan-19 $155,414 $34.00 Nov-15 One 5-yr Full Service Eyebrow Threading 063 New In-Line 1,000 Apr-18 $15,600 $15.60 Gross Temp tenant, LL and T have 30 day termination right

Jimmy Johns 032 Existing In-Line 1,500 Mar-16 Feb-26 $48,000 $32.00 Mar-16 NNN New lease in 2016, TI $95.00/sf and LC $7.56/sf $52,800 $35.20 Mar-21

Bar Louie 033 Existing In-Line 5,072 May-12 Apr-22 $182,592 $36.00 May-17 NNN 10-year renewal in 2012 at higher rent as stipulated in the original lease

Bravo Cucina Italiana 034 Existing In-Line 6,864 Apr-16 Mar-21 55$229,052 $33.37 Apr-16 One 5-yr NNN Tenant since 2001, reflects renewal for 5 years The Austin McGuire Company

Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type Size (SF) Begin End Increases /SF Date Renewals Expenses Comments

The Improv 036 Existing In-Line 7,500 Jan-18 Oct-29 $210,300 $28.04 Jan-18 One 5-yr NNN Reflects 10-year renewal in 2018, LL TI $1,200,000 $331,875 $44.25 Jul-18 $354,375 $47.25 Jul-20 $365,006 $48.67 Jul-21 $375,956 $50.13 Jul-22 $387,235 $51.63 Jul-23 $398,852 $53.18 Jul-24 $410,818 $54.78 Jul-25 $423,142 $56.42 Jul-26 $435,837 $58.11 Jul-27 $448,912 $59.85 Jul-28

Rock Bottom Brewery 037 Existing In-Line-Large 15,118 Apr-17 Mar-22 $401,953 $26.59 Apr-17 One 5-yr NNN Reflects 5-year renewal in 2017, 10,932 sf at market rent and 4,186 sf at $5,000/mo

Dave & Buster's 038 Existing Anchor 59,760 Dec-00 Dec-20 $1,192,810 $19.96 Jan-16 Two 5-yr Full Service

Starbucks Coffee 045 Existing Freestanding- 1,500 Mar-12 Feb-22 $72,000 $48.00 Mar-17 One 5-yr NNN 10-year renewal in 2012 at higher rent as Small stipulated in the original lease

Yokoso Japanese 055 Existing In-Line 6,500 Dec-15 Nov-20 $195,000 $30.00 Dec-17 NNN Reflects renewal in 2015 at slightly Steakhouse reduced rent

Rally House 056 Existing In-Line 3,491 May-16 Jan-27 $130,042 $37.25 Nov-16 Two 5-yr NNN Formerly You're Putting Me On, Rally House is replacement tenant, NNN only for first four months, includes two 5-year options, TI $20.00/sf, RCD Nov 2016

Rally House 057 New In-Line 1,996 Jan-18 $23.70 Nov-16 This added space is now in the RR; No additional rent listed $26.07 Nov-21 Cakery Square 058 Existing In-Line 2,493 Sep-17 Aug-18 $12,000 $4.81 Sep-17 Gross Temp tenant leasing on quarterly basis, leased as-is; Bank of America 5 yr $35 NNN

Verizon Wireless 059 Existing In-Line 4,416 Sep-15 Aug-20 56 $132,480 $30.00 Sep-15 NNN Reflects renewal in 2015 The Austin McGuire Company

Lease Lease Rent Increases Increase Tenant Name Suite No. Type Lease Space Type Size (SF) Begin End Increases /SF Date Renewals Expenses Comments

Eyepolis 060 Existing In-Line 2,939 Sep-15 Aug-20 $50,698 $17.25 Sep-15 One 5-yr NNN Reflects renewal in 2015

Primanti Bros. 061-062 Existing In-Line 4,040 May-17 Aug-27 $121,200 $30.00 May-17 Three 5-yr NNN Formerly El Patron, executed deal, TI $100.00/sf, CAM $5.36, RET $2.79. Ins $0.19, per RR LED 8/27 $133,320 $33.00 May-22

PNC Bank National Jan-18 Dec-20 RR now includes these two tenants. One Assoc. is an ATM and the other is a Pad Site.; add. Inc. shown for PY1 Chick-Fill-A Mar-13 Feb-18

$145,047 Total/Average 406,343

57 The Austin McGuire Company

Waterfront Town Center/The Stacks at the Waterfront: For purposes of this analysis and valuation, The Stacks at the Waterfront and Waterfront Town Center will be valued together plus the addition of the former Macy’s space. The Stacks at the Waterfront is located in the central portion of the development and includes entertainment type uses and restaurants. It includes in-line space of various sizes ranging from small (less than 2,000 square feet) to large (over 10,000 square feet). This center has struggled more than any other within The Waterfront development.

The Waterfront Town Center is a lifestyle center and is home to stores one would find in most malls, including Gap, and Victoria's Secret, as well as anchors Barnes & Noble and a Loews Cineplex. Shadow anchors include Costco. For former Macy’s spaces is on the eastern fringe of this center. Overall, it contains a variety of tenant spaces. Given the rent differentials for in-line space within the local market, we have broken in-line space into three categories. The current contract rents vary depending on the type of space as follows:

Type of Space No Size (SF) Rents PSF

Anchor 2 83,636 $12.45-$19.96 Avg $16.21 Theater 1 117,248 $9.37 In-Line 34 142,082 $4.81-$36.00 Avg $25.85 In-Line-Small (<2,000 sf) 7 6,379 $21.63-$29.69 Avg $25.25 In-Line-Large (>10,000 sf) 3 36,467 $7.20-$25.59 Avg $16.43 Freestanding-Small 1 1,500 $48.00 Freestanding-Large 1 7,000 $14.29

Regarding the former Macy’s we have summarized the Waterfront’s anchor tenant leases, or those of 20,000 square feet in size, in the chart on the following page.

Based on the noted in the chart on the next page we have estimated a NNN lease rate for the first floor space at $12.00 per square foot. Based on our experience we have noted that 2nd floor retail spaces normally lease for a significant discount from 50 to 75 percent of the ground level retail. Based on this analysis we have assumed the second floor space would lease for 50 percent of the ground floor space, or $6.00 per square foot NNN.

Former Macy's Space NNN Rent Estimate

1st Floor $12.00 2nd Floor $6.00 Average $9.00

58 The Austin McGuire Company

Type Space Lease Increases/ NNN Tenant Name Suite No. Lease Type Size (SF) Begin Lease End SF Expenses Equivalent

Dave & Buster's 038 Existing Anchor 59,760 Dec-00 Dec-20 $19.96Full Service $11.96 Loews AMC Theatre 001 Existing Theater 117,248 Feb-00 Dec-20 $9.37 NNN $9.37 Barnes & Noble 016 Existing Anchor 23,876 Feb-16 Jan-21 $12.43 NNN $12.43 Dicks Sporting Goods Existing Anchor 45,000 Feb-12 Jan-22 $11.00 NNN $11.00 Best Buy 001 Existing Anchor 30,055 Feb-14 Jan-19 $10.00 NNN $10.00 Michael's 002 Existing Anchor 23,847 Sep-16 Aug-21 $14.52 NNN $14.52 TJ Maxx 005 Existing Anchor 30,000 Feb-17 Jan-22 $11.00 NNN $11.00 Ross Dress For Less 008 Existing Anchor 25,000 Apr-17 Jan-28 $14.50 NNN $14.50 DSW Shoe Warehouse 009 Existing Anchor 25,529 Nov-15 Nov-20 $17.50 NNN $17.50 Bed Bath & Beyond 010 Existing Anchor 38,000 Feb-16 Jan-21 $11.05 Gross $3.05 Marshall's 011 Existing Anchor 30,000 Feb-16 Jan-21 $13.98 NNN $13.98

Max 117,248 $17.50 Min 23,847 $3.05 Average 40,756 $11.76 Median 30,000 $11.96

As noted above, The Stacks had struggled more than any other within The Waterfront development with historical occupancy rates in the mid 80s. The Waterfront Town Center has similarly struggled with vacancy among in-line spaces in recent years. However, management has been successful in repositioning some of the underperforming spaces. The result being a historical occupancy rates of 90+ percent. Presently, the combined occupancy for the Stacks and Waterfront Town Center is 96.7 percent not inclusive of the vacant former Macy’s space. In the discounted cash flow, we have utilized the current contract rents through the remaining term of the lease unless otherwise indicated. Thereafter, we have utilized the market rents illustrated below.

Type of Space Market Rent PSF

Anchor $15.00 Major Anchor* $9.00 In-Line $27.00 In-Line-Small (<2,000 sf) $30.00 In-Line-Large (>10,000 sf) $18.00 Freestanding-Small $45.00 Freestanding-Large $20.00 * AverageRent of 1st & 2nd Floor

Tenant Reimbursements

As indicated previously, the typical lease is triple net, in which the tenant is responsible for the payment of taxes, insurance, common area maintenance, and management, as well as utilities. These expenses are usually paid by the landlord and then reimbursed by the tenant. In some cases, primarily utilities, the tenant may be directly responsible. The property owner would normally be responsible for all other operating expenses, as well as reimbursable expenses during periods of vacancy. In the case of the subject property, the tenant reimbursements are somewhat complicated, varying from tenant to tenant and

59 The Austin McGuire Company often incorporating caps. Tenant reimbursements have been included as a separate line item and have been modeled based on the indicated reimbursements for each tenant.

Information regarding the expense reimbursements has been supplied by the client. Given the highly complex and varying nature of the reimbursement calculations as structured in the leases, we have hard coded the reimbursement revenue for CAM, insurance, and real estate taxes by tenant in the ARGUS program. As is typical, management reimbursements are effectively captured through the administration fee applied to CAM reimbursements. However, we were not provided with sufficient information to hard code for management reimbursements. Therefore, it has been bundled with CAM charges throughout the cash flow. Finally, we perform a final recovery analysis over the course of the holding period/cash flow to ensure that tenant reimbursements are trending as expected.

Other Income

The subject property in this case has other income from other sources. The other income for each property is summarized below:

 Market on the Waterfront – $33,000 for water/sewer reimbursements, as well as income of $100,000 per year for two planned out lots.  Market Amity - $18,000 for storage income and $15,000 for water/sewer reimbursements.  Amity Square – $10,000 for water/sewer reimbursements.  The Stacks at the Waterfront/Waterfront Town Center – $60,000 for miscellaneous income, $300,000 for water/sewer reimbursements, and $50,000 for contributions by certain tenants to the marketing fund.

Vacancy and Collection Loss

As indicated in the Market Analysis section, Collier’s latest report on the retail market in the Parkway East Corridor (Q4 2017), the submarket had 2,221 retail buildings totaling 16,299,132 square feet. Total vacancy in the area sat at 677,344 sf, or 4.2% of the entire Parkway East Corridor. Year-to-Date net absorption was 110,625 square feet, while deliveries at the year stood at 108,590 square feet, with 30,597 more under construction. Rental rates for NNN leases were at $13.33/sf at the time the report was written, well below the Pittsburgh Metro Area average of $14.29/sf.

Overall, the Pittsburgh retail market remains relatively strong with low vacancy rates. Occupancies have remained consistently high at 95+ percent. For the local retail market, vacancy rates have been on a declining trend since 2009 and are considered to be at stabilized levels.

For the most part, the subject has maintained a stable and improving operating level for the past three years. The respective occupancy rates for the subject centers are summarized in the following chart.

60 The Austin McGuire Company

Property Size (SF) Type Occupancy

Market on the Waterfront 259,456 Power Center 90.9%

Market Amity 83,428 Power Center 100.0% Amity Square 13,727 Strip Center 100.0% Waterfront Town Center/ 406,343 Lifestyle Center/ 96.6% Stacks at the Waterfront Entertainment Center Sub-Total 762,954 95.1% Macy's 138,140 0.0% Total 901,094 80.6%

While the chart does show an overall occupancy rate of 80.6 percent, removing the former Macy’s vacant space and the occupancy rate climbs to 95.1 percent.

Bad debt or collection loss has been fairly minimal, typically less than 1.0 percent. Overall, in this analysis, it is considered to be factored into the vacancy rate.

Based on the preceding discussion, we have utilized vacancy and collection loss factors of 2.0 to 5.0 percent of potential gross income. The stabilized vacancy and collection loss has been applied as follows:

 Market on the Waterfront - Large power center with several national tenants – 2 percent for anchor tenants and 5 percent for all other tenants.  Market Amity - Two large anchor tenants with national tenants – 2 percent.  Amity Square - Small in-line strip with several national tenants – 5 percent.  The Stacks at the Waterfront/Waterfront Town Center - Food/entertainment center combined with a large lifestyle center with local and national tenants – 2 percent for anchor tenants and 5 percent for all other tenants.

Operating Expenses

Our projections for the subject’s operating expenses reflect the typical costs that are incurred by an owner/investor, such as real estate taxes, insurance, common area maintenance, management, landlord expenses, general and administrative expenses, and miscellaneous or other fees. In analyzing the subject’s operating expenses, we have historical expenses for 2008 through 2011, annualized figures for 2012 (acquisition year), 2013, projected figures for 2014, 2015, 2016, 2017 and budget figures for 2018. For this analysis, we present the previous five year’s operating expenses along with our pro-forma estimate of expenses in the following table.

61 The Austin McGuire Company

Market on the Waterfront

Operating History Market on the Waterfront Homestead, PA

2014 2015 2016 2017 2018 Budget Appraisal Pro-Forma Annual PSF Annual PSF Annual PSF Annual PSF Annual PSF Annual PSF Reimbursable Expenses CAM $575,900 $2.16 $562,396 $2.11 $625,512 $2.35 $407,640 $1.53 $542,667 $2.04 $543,000 $2.04 Management Fees $148,365 $0.56 $153,246 $0.58 $144,014 $0.54 $118,699 $0.45 $127,349 $0.48 $127,000 $0.48 Insurance $85,529 $0.32 $76,048 $0.29 $82,915 $0.31 $71,375 $0.27 $70,456 $0.26 $70,000 $0.26 Real Estate Taxes $1,195,113 $4.49 $1,143,148 $4.29 $1,187,652 $4.46 $1,087,624 $4.08 $1,106,749 $4.16 $1,107,000 $4.16 Total Reimbursable Expenses $2,004,907 $7.53 $1,934,838 $7.27 $2,040,093 $7.66 $1,685,338 $6.33 $1,847,220 $6.94 $1,847,000 $6.94 Non-Reimbursable Expenses Landlord Expenses $5,562 $0.02 $3,437 $0.01 $428 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 General & Administrative Expenses $0 $0.00 $19,008 $0.07 $13,026 $0.05 $11,746 $0.04 $11,746 $0.04 $12,000 $0.05 Other Income & Expenses $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 Total Non-Reimbursable Expenses $5,562 $0.02 $22,445 $0.08 $13,454 $0.05 $11,746 $0.04 $11,746 $0.04 $12,000 $0.05 Total Expenses $2,010,469 $7.55 $1,957,283 $7.35 $2,053,547 $7.71 $1,697,084 $6.37 $1,858,966 $6.98 $1,859,000 $6.98

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Common Area Maintenance: The common area maintenance expense for the subject includes repairs, maintenance, outside services, and supplies. These costs of ranged from $1.53 to 2.16 per square foot. For 2018 management has budgeted $2.04 which is within reasonable historic norms and will be sued for this analysis.

Management Fee: Management expenses typically range from 3.0 to 5.0 percent of effective gross income. The management expense reported for the subject indicates a management fee between 2.9 and 3.4 percent. Under the current management, the management fee is indicated to be 3.0 percent. In this analysis, we have utilized a management expense of 3.0 percent of effective gross income.

Insurance: As presented, the insurance expenses have ranged from $0.27 to $0.32 per square foot. They have hovered around $0.30 per square foot for the past five years. For this analysis, we have utilized an insurance expense of $70,000, or $0.26 per square foot.

Real Estate Taxes: In this analysis, the real estate taxes are based on the actual tax liability.

Landlord Expenses: The landlord expenses for the subject include repairs, maintenance, outside services, and supplies that are not included with CAM and passed on to the tenant. The landlord expenses are typically minimal. As none were budgeted we have included none in our analysis.

General and Administrative: The general and administrative category includes primarily fees for legal and accounting services. In this analysis, we have included general and administrative fees of $12,000.

Other/Miscellaneous: None included.

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Market Amity

Operating History Market Amity Homestead, PA

2014 2015 2016 2017 2018 Budget Appraisal Pro-Forma Reimbursable Expenses CAM $213,456 $0.80 $208,385 $2.50 $243,896 $2.92 $175,714 $2.11 $234,866 $2.82 $235,000 $2.82 Management Fees $31,481 $0.12 $46,568 $0.56 $52,415 $0.63 $50,497 $0.61 $52,540 $0.63 $53,000 $0.64 Insurance $28,272 $0.11 $25,113 $0.30 $26,846 $0.32 $24,042 $0.29 $24,621 $0.30 $25,000 $0.30 Real Estate Taxes $385,442 $1.45 $372,766 $4.47 $376,100 $4.51 $380,604 $4.56 $390,165 $4.68 $390,000 $4.67 Total Reimbursable Expenses $658,651 $2.47 $652,831 $7.83 $699,257 $8.38 $630,857 $7.56 $702,191 $8.42 $703,000 $8.43 Non-Reimbursable Expenses Landlord Expenses $11,750 $0.04 $2,023 $0.02 $0 $0.00 $658 $0.01 $660 $0.01 $700 $0.01 General & Administrative Expenses $0 $0.00 $1,610 $0.02 $4,297 $0.05 $1,452 $0.02 $1,370 $0.02 $1,500 $0.02 Other Income & Expenses $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 Total Non-Reimbursable Expenses $11,750 $0.04 $3,633 $0.04 $4,297 $0.05 $2,110 $0.03 $2,030 $0.02 $2,200 $0.03 Total Expenses $670,401 $2.52 $656,464 $7.87 $703,554 $8.43 $632,967 $7.59 $704,221 $8.44 $705,200 $8.45

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Common Area Maintenance: The common area maintenance expense for the subject includes repairs, maintenance, outside services, and supplies. We have utilized a CAM expense of $235,000, or $2.82 per square foot which is within historic norms

Management Fee: Management expenses typically range from 3.0 to 5.0 percent of effective gross income. The management expense reported for the subject indicates a management fee between 2.6 and 4.0 percent. Under the current management, the management fee is indicated to be 3.0 percent. In this analysis, we have utilized a management expense of 3.0 percent of effective gross income.

Insurance: For this analysis, we have utilized an insurance expense of $25,000, or $0.30 per square foot.

Real Estate Taxes: In this analysis, the real estate taxes are based on the actual tax liability.

Landlord Expenses: The landlord expenses for the subject include repairs, maintenance, outside services, and supplies that are not included with CAM and passed on to the tenant. The landlord expenses are typically minimal. In this case, the elevated landlord expense is attributed to the vacant space. We have included landlord expenses of $700.

Other/Miscellaneous: None included.

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Amity Square

Operating History Amity Square Homestead, PA

2014 2015 2016 2017 2018 Budget Appraisal Pro-Forma Annual PSF Annual PSF Annual PSF Annual PSF Annual PSF Annual PSF Reimbursable Expenses CAM $35,798 $0.13 $36,415 $2.65 $48,869 $3.56 $51,609 $3.76 $48,719 $3.55 $49,000 $3.57 Management Fees $18,033 $0.07 $15,860 $1.16 $14,757 $1.08 $14,131 $1.03 $15,481 $1.13 $15,000 $1.09 Insurance $4,257 $0.02 $3,903 $0.28 $4,221 $0.31 $3,771 $0.27 $3,920 $0.29 $4,000 $0.29 Real Estate Taxes $101,389 $0.38 $79,488 $5.79 $80,200 $5.84 $81,157 $5.91 $83,198 $6.06 $83,000 $6.05 Total Reimbursable Expenses $159,478 $0.60 $135,666 $9.89 $148,047 $10.79 $150,668 $10.98 $151,319 $11.03 $151,000 $11.00 Non-Reimbursable Expenses Landlord Expenses $438 $0.00 $0 $0.00 $0 $0.00 $658 $0.05 $675 $0.05 $700 $0.05 General & Administrative Expenses $0 $0.00 $1,705 $0.12 $4,354 $0.32 $822 $0.06 $900 $0.07 $900 $0.07 Other Income & Expenses $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 Total Non-Reimbursable Expenses $438 $0.00 $1,705 $0.12 $4,354 $0.32 $1,480 $0.11 $1,575 $0.11 $1,600 $0.12 Total Expenses $159,916 $0.60 $137,371 $10.01 $152,401 $11.11 $152,148 $11.09 $152,894 $11.14 $152,600 $11.12

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Management Fee: Management expenses typically range from 3.0 to 5.0 percent of effective gross income. The management expense reported for the subject indicates a management fee between 3.0 and 4.2 percent. Under the current management, the management fee is indicated to be 3.0 percent. In this analysis, we have utilized a management expense of 3.0 percent of effective gross income.

Insurance: For this analysis, we have utilized an insurance expense of $4,000, or $0.29 per square foot.

Real Estate Taxes: In this analysis, the real estate taxes are based on the actual tax liability.

Other/Miscellaneous: None included.

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Waterfront Town Center and The Stacks at the Waterfront

Operating History Waterfront TC and Stacks Homestead, PA

2014 2015 2016 2017 Projected 2018 Budget Appraisal Pro-Forma Annual PSF Annual PSF Annual PSF Annual PSF Annual PSF Annual PSF Reimbursable Expenses CAM $1,814,933 $6.82 $1,704,506 $4.20 $1,860,073 $4.58 $1,543,357 $3.80 $1,884,825 $4.64 $1,885,000 $4.64 Management Fees $269,062 $1.01 $288,114 $0.71 $266,785 $0.66 $298,156 $0.73 $264,410 $0.65 $264,000 $0.65 Insurance $134,245 $0.50 $124,564 $0.31 $136,818 $0.34 $125,797 $0.31 $384,567 $0.95 $385,000 $0.95 Real Estate Taxes $2,157,755 $8.10 $2,160,126 $5.32 $2,180,674 $5.37 $2,219,580 $5.47 $2,287,146 $5.63 $2,287,000 $5.63 Total Reimbursable Expenses $4,375,995 $16.44 $4,277,310 $10.54 $4,444,350 $10.95 $4,186,890 $10.31 $4,820,947 $11.87 $4,821,000 $11.87 Non-Reimbursable Expenses Legal Fees $304,209 $1.14 $351,292 $0.87 $480,438 $1.18 $84,663 $0.21 $96,290 $0.24 $96,000 $0.24 General & Administrative Expenses $0 $0.00 $175,052 $0.43 $273,595 $0.67 $34,825 $0.09 $50,000 $0.12 $50,000 $0.12 Advertising & Promo $0 $0.00 $0 $0.00 $0 $0.00 $640,937 $1.58 $595,000 $1.47 $595,000 $1.47 Other Income & Expenses $0 $0.00 $0 $0.00 $0 $0.00 $55,486 $0.14 $54,630 $0.13 $55,000 $0.14 Total Non-Reimbursable Expenses $304,209 $1.14 $526,343 $1.30 $754,032 $1.86 $815,911 $2.01 $795,920 $1.96 $796,000 $1.96 Total Expenses $4,680,205 $17.58 $4,803,654 $11.83 $5,198,382 $12.80 $5,002,801 $12.32 $5,616,867 $13.84 $5,617,000 $13.84

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Notably, the operating information provided for the Waterfront and The Stacks were combined.

Common Area Maintenance: The common area maintenance expense for the subject includes repairs, maintenance, outside services, and supplies. We have utilized a CAM expense of $1,885,000, or $4.64 per square. Notably this reflects a significant increase under the current ownership.

Management Fee: Management expenses typically range from 3.0 to 5.0 percent of effective gross income. The management expense reported for the subject indicates a management fee between 2.9 and 4.1 percent. In this analysis, we have utilized a management expense of 3.0 percent of effective gross income.

Insurance: For this analysis, we have utilized an insurance expense of $124,393, or $0.31 per square foot.

Real Estate Taxes: In this analysis, the real estate taxes are based on the actual tax liability.

Legal Fee: The landlord expenses for the subject include repairs, maintenance, outside services, and supplies that are not included with CAM and passed on to the tenant. The landlord expenses are typically minimal. We have included landlord expenses of $96,000.

Advertising & Promotion: This expense was $1.58 in 2017 and is projected to be $1.47 in 2018 and reflects the increased costs of social media and advertising necessary in today’s e- commerce world.

Other/Miscellaneous: Other costs included various items and amounted ot $55,000 or $0.14 per square foot.

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Discounted Cash Flow Assumptions

Inflation Rate: Based on data from investor surveys, we have applied a general inflation rate of 3.0 percent per year. We have applied an inflation rate of 2.0 percent for market rents.

Renewal Probability: According to the PwC Real Estate Investor Survey, tenant retention among survey respondents ranges from 50 to 80 percent. The subject’s rent roll exhibits strong tenant retention. Reportedly, nearly 80 percent of the current tenants have been there since the center opened in 2001. Further, several have recently signed renewal leases. In this analysis, an 80 percent renewal probability is considered reasonable and appropriate. Where indicated by management, we have included assumptions regarding upcoming renewal and vacancies. The renewals have been based on market rents at the time of renewal.

Vacancy Between Tenants: Over the course of the cash flow, a lease-up period between leases of 6 months has been utilized, which downtime estimate reflects the time involved in securing a tenant and preparing the space for occupancy. For the remaining vacant space, we assume orderly lease-up over the next 18 months. In the calculation of the general vacancy and collection loss, this deduction for tenant turnover and absorption was taken into consideration.

Lease Terms: Based on market data and leases already signed for the subject, the typical lease term is assumed to be 5 years with anchor and freestanding tenants having typical lease terms of 10 years.

Market Rents: We have utilized market rents as previously discussed and concluded.

Step Rents: Rental increases were based on $0.50 per square foot in year three for the in-line tenants. Rental increases for anchor and freestanding tenants were based on a 10 percent increase every five years.

Replacement Reserve: Based on information from investor surveys, replacement reserves were estimated at $0.20 per square foot

Capital Improvements: No deductions taken. However, a deduction of $100,000 has been included in the cash flow for Market on the Waterfront in order to make the two pad sites ready.

Options: Not included.

Rent Abatement: None included.

Percentage Rents: None included except where percentage rents are in lieu of a fixed rent.

Vacancy and Collection Loss: In our cash flow projections, we have utilized vacancy and collection loss factors of 2.0 to 5.0 percent of potential gross income. The stabilized vacancy and collection loss has been applied as follows:

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 Market on the Waterfront - 2 percent for anchor tenants and 5 percent for all other tenants  Market Amity - 2 percent for anchor and national tenants  Amity Square - 5 percent  The Stacks at the Waterfront - 5 percent  Waterfront Town Center - 2 percent for anchor tenants and 5 percent for all other tenants

For the vacant space at the Stacks at the Waterfront and Waterfront Town Center, it is assumed to be leased up in orderly manner over 18 months.

Leasing Commissions: Leasing commissions for the new commercial tenants are calculated based on 6 percent of annual gross rent for new leases and 3 percent for renewals. The model anticipates that commissions are paid in the year of lease commencement.

Tenant Workletter Allowances: The space is assumed to be leased with tenant improvements of $20.00 per square foot for new leases on in-line space and $30.00 per square foot for new leases on anchor or freestanding space. The cost to split and reconfigure the former Macy’s space has been estimated by management to cost $90.00 per square foot which will be utilized in our analysis. For renewals, it is assumed that space is leased with tenant improvements of $5.00 per square foot.

Capitalization Rate

For this capitalization rate discussion, we have determined an overall going-in capitalization rate utilizing several different methods – investor surveys, market publications, Mortgage/Equity Analysis, and confirmed sales from the marketplace. With this in mind, we considered the following in deriving a capitalization rate.

Investor Surveys

PwC Real Estate Investor Survey: In the third quarter of 2018, the average overall capitalization (cap) rate decreases in 18 Survey markets, increases in nine, and holds steady in eight compared to the second quarter of 2017. This is the highest number of markets posting quarterly declines since the third quarter of 2016 when the total was 19 markets. Most of the cap rate decreases are in city-specific office markets. Over the next six months, most surveyed investors foresee overall cap rates holding steady in 32 of the 35 markets analyzed. In the national net lease and the Houston office markets, most of them forecast rates to increase.

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Specific to the retail sector, the third quarter 2017 PwC Real Estate Investor Survey notes “The U.S. retail sector’s continuing transformation is making it difficult for many cities to show any improvement and by year-end 2018 most metros in our analysis will be in recession. As this sector moves through 2019 and into 2020, the recovery and expansion phases are forecast to represent a larger portion of markets. Over the next four years, the southern region of the country looks to outperform the others.

For 2018 PwC Real Estate Investor Survey notes the retail sector “will remain a difficult year for the U.S. retail sector as 33 metros are forecast to be in the recession phase of the real estate cycle, including Los Angeles, Boston, and Providence. Unfortunately, this sector is projected to suffer through 2019 with 75.% of the metros analyzed in recession. Forecasting this sector is extremely difficult as it continues to struggle with the structural change created by e-commerce. While the forecast shows some growing relief by year-end 2020 and into 2021, the sector will remain bifurcated over the next few years”. The PwC forecast is shown in the following chart.

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Extrapolating the above information across the portfolio we have developed the following charts which outline investor sentiment regarding the subject’s market areas. The above chart is instructive in that it reflects the projected overall marketplace for the retail sector going forward through 2021. The color coding reflects the present and projected state of the various local economies based on the following color wheel showing the natural investment cycle for owned properties.

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Using the above information we have developed the following chart which effectively drills down into the subject portfolio’s locations using the extrapolated data noted above and in reference to the color wheel.

The above chart reflects the subject holdings in various markets, most of which are entering a period of protracted downturn based on the available data. However, this reflects the market overall and does not address the specifics of a market nor the impact on the quality of assets within the market areas. As an overview we have again looked to the 2nd Q 2018 PwC Real Estate Investor Survey for specifics on each major retail class – Malls, Power Centers, and Neighborhood and Community Strip Centers.

Drilling down into the retail market specifically (malls, power centers, strip centers) suggests a fragmented marketplace where quality is king. Here location and quality play big roles in success with Class A properties being in high demand. Clearly as retailers pull back on their footprints, owners have to reshuffle the tenant space to match the needs of the local market base. The following paragraphs, from the 2nd Q 2018 PwC Real Estate Investor Survey, summarize more specific commentary on the various retail sectors:

National Regional Mall Market - “While the vacancy rate for the national regional mall market rose during the second quarter of 2018 compared to both the prior quarter and a year ago, the performance gap between higher-end malls and lower-end malls appears to be widening. “Better geographies, better tenant mixes, and better retail sales drive the Class-A mall segment,” states a participant. On the other hand, weaker retail mixes tend to make up the Class-C and lower segment, which continues to struggle. As a whole, the vacancy rate for the national regional mall market stood at 8.6% in the second quarter of 2018 – up 20 basis points from the prior quarter and 50 basis points from a year ago, as

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per Reis. When looking at the overall cap rates for the national regional mall market, the averages for both the Class-A+ and Class-A segment each slip this quarter to 4.75% and 5.47%, respectively. At the same time, the average for the Class-B+ segment inches up to 6.78%. Interestingly, as a whole, the average overall cap rate stands only 20 basis points below the average five years ago. When looking ahead to the next 12 months, our surveyed investors feel that e-commerce trends, interest rate shifts, and unemployment and income changes will have the greatest impact on this sector’s performance.”

National Power Center Market - “Quarterly changes in the national power center market’s key cash flow assumptions illustrate a sector in flux. First, its average tenant retention rate dips slightly to 68.0%. Second, the average amount of free rent offered on a ten-year lease increases to six months while the portion of Survey participants using free rent rises to 67.0%. Lastly, the average marketing time jumps to 6.8 months – its highest average in five years. While these changes suggest a weakening outlook on the part of surveyed investors, a decent increase in its average initial-year market rent change rate and a decline in its average overall cap rate both signify a brighter outlook. As noted in the Key 3Q18 Survey Stats, the average overall cap rate slips for each category this quarter. With an average of 6.53%, power centers with 75.0% big-box space report the lowest average this quarter. For the near term, our surveyed investors are divided with regard to where cap rates will trend. While 50.0% feel that overall cap rates will increase in this market, 33.0% believe they will hold steady. The remainder foresees them declining. Investors plan to keep a close eye on e-commerce trends, tenant credit ratings, and vacancy rates over the next 12 months.”

National Strip Center Market - “Negative net absorption resulting from unending retail store closures and downsizings continues to plague the overall performance of the national strip shopping center market. In the second quarter of 2018, negative net absorption was widespread with 58 of the 80 metros tracked by Reis reporting negative totals. As a result, the overall vacancy rate for the sector moved up to 10.2%. “Tenants are thinning out in the national retail landscape,” remarks a participant. As the retail industry continues to adapt to growing Internet sales, the stability of brick-and-mortar tenants remains a key concern for many investors. “Retail is dying,” exclaims a participant. “Ongoing retail bankruptcies and negative headlines do little to help cast a positive light on this sector,” says another. Still, many investors continue to search for buying opportunities, looking for strong grocery-anchored centers in dominant trade areas with little in-line vacancy and a lack of available land for new development. “Location is a key driver of a property’s success,” affirms another. Cities noted by Survey participants for “solid shopping center investing” include Austin, San Diego, Raleigh-Durham, Miami, and Orange County.”

The following chart provides a summary of capitalization and discount rates for the respective retail categories. It reflects the changes in rates on a year over year basis.

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Market Segment Overall Rates Residual Rates Discount Rates

National Regional Mall Market 4.00% – 10.00% 4.25% – 10.00% 5.00% – 11.50% Average 6.30% 6.80% 7.55% Change from year ago +7 bp +10 bp -5 bp National Power Center Market 5.25% – 9.00% 5.50% – 9.00% 6.00% – 11.00% Average 6.48% 6.83% 7.60% Change from year ago +8 bp -5 bp +7 bp National Strip Shopping Center Market 4.00% – 9.50% 4.50% – 9.75% 5.50% – 10.50% Average 6.27% 6.84% 7.43% Change from year ago +8 bp +27 bp +18 bp Source: PwC 3rd Quarter Real Estate Investor Survey

Notably, the IRR’s and OAR’s for various retail segments are showing slight upward trend save for a slight drop in the Discount Rate for Regional Malls and the residual cap rates for Power Centers.

Market Publications

The following is from the REIS September 14, 2018 Retail Capital Market Update, Q2 2018

Retail Market: National Cap Rate Trends

“The Retail cap rate trend demonstrated as much volatility as the office cap rate trend – although this would be expected given the turmoil in the retail sector. Given all of the store closures in 2017 and thus far in 2018, it is surprising that retail cap rates have held up as well as they have and remained below the 10-year average, as shown by the light blue dotted line in the chart below”.

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REIS goes on in the same report to note: “However, as we frequently caution, there are a number of things to consider for retail cap rates. First, transaction volume has declined consistently every quarter, and the second quarter was no exception, falling 30% from a year ago. Thus, it is likely that only better properties are trading – and there are plenty of retail properties that have not only survived the e-commerce retail tsunami, but have thrived over the last few years. Secondly, until this quarter, the retail real estate statistics had defied the store closure reports. However, net absorption for retail properties was negative 3.5 million square feet, due largely to the Toys R Us store closings. The retail vacancy rate climbed to 10.2% from 10.0%. Finally, we should add that the retail real estate landscape varies widely by metro. A number of metros have seen negative net absorption in retail space along with declines in retail employment, while others with strong tourism have seen positive occupancy growth and positive retail employment growth. Our data shows that a number of metros with negative net absorption had positive increases in retail cap rates. Although retail fundamentals are arguably weaker, some investors clearly still see opportunities in retail properties. That said, retail cap rates are close to the ten-year average of 7.9%. They are likely to see further increases in 2018 as the Fed raises rates. Finally, retail cap rates will likely see continued volatility as the gap between the better markets and worse markets could widen over the next few quarters”.

Retail Market: Cap Rate Trends by Region

The graph below shows glaring volatility in the Southwest due to a wide range of transactions that closed over the last few quarters. This has created significant selection bias in the trend data. It should be noted that the Southwest transactions do not weigh heavily on the national average.

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The West, again, has the lowest cap rates, followed by the Northeast. Retail cap rates in the Midwest had tracked the national average throughout most of 2017 but have since trended higher. Our metro-level retail statistics show that the impact of the negative net absorption and rent declines in the second quarter was spread out across the U.S. – hitting some in the Northeast such as Fairfield County and Long Island; some in the Midwest such as Wichita and Chicago; and some in the South Atlantic including Columbia and Tampa. Many of the West Coast metros were not as affected, and a number of metros saw positive net absorption as well as rent growth and retail employment growth. Thus, the stability in the retail cap rates reflects the fact that better properties remain in demand for investors.

According to National Real Estate Investor, a recent May 2, 2018 article by David Bodamer entitled NREI – Retail’s Ruinous Run

“Respondents increasingly expect cap rates in their regions to rise. A year ago, 59.6 percent of respondents said they expected cap rates to rise in the following 12 months. In this year’s survey, that number jumped to 63.2 percent. What’s more, 4.9 percent of respondents expect cap rates to rise by more than 100 basis points—more than double the 2.1 percent that answered that way in 2017. In the first two years of the survey, the amount of respondents expecting cap rates to rise was closer to 40 percent.

In addition, only 14.9 percent expect that cap rates will decrease in their regions over the next 12 months. That’s up slightly from 12.7 percent in 2017, but down from 20.7 percent in 2016 and 21.1 percent in 2015.

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As in past years, respondents’ views on the outlook nationally were slightly more bearish than for their specific regions. In this year’s survey, 67.4 percent said they expect cap rates to rise nationally, up from 63.8 percent in 2017, 47.5 percent in 2016 and 43.7 percent in 2015. Only 13.3 percent expect they will be flat and 19.3 percent expect them to fall.

In an open-ended question, survey respondents were asked what kinds of retail assets currently offer the potential for the highest yields. Many respondents identified single-tenant net lease assets occupied by necessity retail tenants and big-box stores.

“Retailers are right-sizing their stores, creating supply concerns, which provides opportunities for better yield to those able to handle the uncertainty,” one respondent wrote. Another added, “If you’re going to be in retail it should be the standalone store—the owners of those kinds of businesses are still willing to take the risk.”

In a recent report, Moody’s Investors Services found that there were nine retail corporate defaults in the first quarter, marking a record high.

Coresight Research, a retail think tank, found that there have been 3,264 major U.S. store closure announcements year-to-date and 1,699 store openings, with Dollar General leading the way. Last year, there were 7,066 announced store closures—RadioShack shuttered the most locations. There were 3,157 openings, with Dollar General again opening the most stores.

In terms of multi-tenant retail spaces, a number of respondents identified grocery-anchored shopping centers as continuing to be attractive assets, “particularly those anchored by supermarkets, gyms and other ‘internet-proof’ tenants” as one respondent explained.

BarBara Byrne Denham, Senior Economist at REIS noted the following: The Toys R Us store closing impacted the second quarter statistics more than any other retailers has in any quarter over the last nine years. That being said, we (REIS) believe most of the Toys R Us stores are now closed and that most of the negative net absorption is behind us. Although we do not expect the vacancy rate to improve in the near future, it will not increase that much more in the coming quarters.

Conclusion of Market Survey –

Based on the above information we can expect Class A properties in all markets to hold their own with some possible slight increases in capitalization rates. For inferior B- to C- level properties the increase in capitalization rates appears to be inevitable and notable.

Mortgage/Equity Analysis: Mortgage/Equity Analysis is a widely used method that is based on the premise that financing is typically involved in a real estate transaction, and that equity investors seek the best available financing in order to maximize the potential benefits of

79 The Austin McGuire Company leverage. In addition, this method demonstrates an allowance for equity build-up and a property’s potential appreciation in value over time.

Based on available data for the comparable sales, financing terms are varied at this time. Realtyrates.com 3rd Quarter 2018 survey indicates average interest rates of 6.10 percent up 68 basis points from last year’s 5.42 percent which itself is up 36 basis points since the third quarter of 2016, based on an average spread of 304 basis points over 10-year U.S. treasuries that are currently at 3.068 percent. Average loan to value ratios are 71 percent, and average amortization periods are 25 years.

The following analysis is the development of the capitalization rate using a range of equity yield rates from 9.00 to 11.00 percent, in keeping with the PwC Real Estate Investor Survey outlined previously indicating equity yield rates for all cash transactions which hovered in the 7.5 percent range for institutional retail properties. With the use of leverage, risk increases and is compensated for by a higher return requirement.

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Interest rates for institutional grade assets such as the subject are typically 170 to 200 basis points over treasury rates. For example, current rates on 10-year Treasury bills in September averaged around 3.06 percent. Accordingly, interest rates for 70 percent loans would be 4.76 to 5.06 percent for a 10-year term.

The following table outlines the various inputs and results of the mortgage-equity method of capitalization rate development.

Interest R. 4.85% Term 25 years Holding Per. 10 LTV 70% Equity 9-11% Appr. 1.5% /year 9.0% 11.0% 70% x 0.069106 = 0.048374 0.069106 = 0.048374 30% x 0.090000 = 0.027000 0.110000 = 0.033000 0.075374 0.081374 Less Credit for Equity Build-up 70% x 0.2645177 (x) 0.065820 (y) = (0.012187) 0.059801 (y) = (0.011073) 0.063187 0.070301 Less Credit for Appreciation 15% (z) 0.065820 (y) = (0.009873) 0.059801 (y) = (0.008970) 0.053314 0.061331 x – Equity Build-Up y – Sinking Fund Factor z - Appreciation over the holding period

Based on the above inputs for likely mortgage rates, required yields, and duration of holding periods, the resulting capitalization rate range would be 5.3 to 6.1 percent. This appears in keeping with what is being achieved in the marketplace for quality, investment grade assets like the subject.

Market Derived Rates: Given the changing market conditions, derivation of capitalization rates from recent sales activity is the most instructive measure of current market conditions. The following pages contain information on 43 sales of comparable “core asset” shopping centers located throughout the U.S, primarily in states in which the subject portfolio properties are located. In an effort to replicate the subject portfolio, we have focused on a variety of general retail centers, grocery anchored centers, power centers, and lifestyle centers. For the most part, the transactions are recent having closed over the since June 2017. The sales include transaction data obtained from CoStar. The sales indicate a range of capitalization rates from 5.2 to 10.1 percent with an average of 6.8 percent and a median of 6.73 percent, both of which reflect an increase of 29 and 23 basis points.

81 The Austin McGuire Company

Property Name City State Sale Date Price Size (SF) Price/ SF Occup. Cap Rate NOI NOI/ SF NOIM Notes Vestavia Hills City Center Vestavia Hills AL Pending $60,300,000 394,294 $152.93 100% 7.8% $4,673,250 $11.85 12.90 AMC Vestavia Hills 10, Jimmy Johns, OrangeTheory Fitness Madison Marketplace Fair Oaks CA Pending $46,650,000 258,981 $180.13 100% 7.3% $3,382,125 $13.06 13.79 Raley's Supermarket, TJ Maxx, Petco, Dollar Tree Belden Park Crossings North Canton OH Pending $67,000,000 482,534 $138.85 100% 8.0% $5,360,000 $11.11 12.50 Kohl’s, Dick’s SG, Value City Furniture, Fresh Thyme, Ulta, Petsmart and DSW LaCenterra at Cinco Ranch Cinco Ranch TX Sep-18 $159,500,000 390,274 $408.69 100% 5.5% $8,772,500 $22.48 18.18 Alamo Drafthouse Cinema, The Grand at LaCenterra Miracle Mile Shopping Center Monroeville PA Aug-18 $78,000,000 299,905 $260.08 100% 7.0% $5,428,800 $18.10 14.37 Office Max, Marshalls, LA Fitness, DSW McCarran Marketplace Las Vegas NV Aug-18 $41,000,000 575,560 $71.23 100% 7.8% $3,198,000 $5.56 12.82 Walmart, Lowes Ellsworth Place Silver Springs MD Jul-18 $92,000,000 347,172 $265.00 100% 7.4% $6,808,000 $19.61 13.51 Ross Dress for Less, Burlington, TJ Maxx, Marshalls Martin Square Stuart FL Jul-18 $22,000,000 331,585 $66.35 100% 6.7% $1,474,000 $4.45 14.93 Home Depot, Walgreens, Staples Market at Estrella Falls Goodyear AZ Jul-18 $49,100,000 284,863 $172.36 100% 7.3% $3,584,300 $12.58 13.70 TJ Maxx, Old Navy, Homegoods Broadway Plaza Chula Vista CA Jun-18 $58,500,000 356,335 $164.17 100% 5.5% $3,217,500 $9.03 18.18 Costco, Walmart, Petco Silver Spring Square Mechanicsburg PA Apr-18 $80,810,000 342,600 $235.87 100% 7.0% $5,656,700 $16.51 14.29 Wegmans, Target, Kohls, Bed Bath & Beyond, PetCo Cerritos Town Center Cerritos CA Mar-18 $97,000,000 368,798 $263.02 100% 7.2% $6,984,000 $18.94 13.89 Best Buy, Edwards Stadium 10 Cinemas, Ross, Trader Joe's, Walmart Village at Leesburg Leesburg VA Mar-18 $175,000,000 538,304 $325.10 100% 5.9% $10,325,000 $19.18 16.95 Wegmans, Cobb, LA Fitness, Borders Yorkshire Plaza Aurora IL Feb-18 $18,000,000 361,991 $49.72 100% 7.8% $1,395,000 $3.85 12.90 Best Buy, VCF, Pier 1 Imports, Planet Fitness Tates Creek Centre/Millpond Center Lexington KY Feb-18 $59,700,000 320,526 $186.26 100% 6.8% $4,029,750 $12.57 14.81 Kroger Meridian Crossroads Meridian ID Feb-18 $78,700,000 530,410 $148.38 100% 6.0% $4,722,000 $8.90 16.67 Petco, Ross Dress for Less, TJ Mazxx, Bed Bath & Beyond Best in the West Las Vegas NV Feb-18 $87,000,000 464,917 $187.13 100% 7.9% $6,829,500 $14.69 12.74 Best Buy, Bed Bath & Beyond, DSW, Babies R Us Marketplace at 4 Corners Aurora OH Jan-18 $55,675,000 525,708 $105.90 100% 7.2% $3,997,465 $7.60 13.93 Walmart, Kohl's, Dick's, Michael's, Petsmart JANAF Shopping Yard Norfolk VA Jan-18 $85,650,000 887,917 $96.46 100% 6.9% $5,909,850 $6.66 14.49 BJ's, BIG Lots!, TJ Maxx, Office Max, K&G, Fallas. Moore Plaza Corpus Christi TX Jan-18 $75,000,000 271,617 $276.12 100% 8.0% $6,000,000 $22.09 12.50 HEB, Target, Stein Mart, PetSmart, Marshalls Lake Nona Landing Orlando FL Dec-17 $58,000,000 311,382 $186.27 100% 5.5% $3,190,000 $10.24 18.18 Walmart, Sam's Club, TJ Maxx, Petsmart Central Park Commons Eagan MN Dec-17 $126,250,000 403,219 $313.11 100% 5.8% $7,259,375 $18.00 17.39 HyVee, Hobby Lobby, Sierra Trading Post, DSW, Fairview Centerton Square Mt. Laurel NJ Oct-17 $129,600,000 426,415 $303.93 100% 5.8% $7,516,800 $17.63 17.24 Costco, DSW, Target, Bed Bath & Beyond, Wegmans, Sports Authority Whittwood Town Center Whittier CA Oct-17 $123,000,000 772,022 $159.32 100% 5.2% $6,396,000 $8.28 19.23 JC Penney, Kohl's, Sears, Target, The Shoppes at Grand Prairie Peoria IL Oct-17 $22,000,000 468,127 $47.00 100% 7.8% $1,705,000 $3.64 12.90 Bergner's, Dick's, H&M, Marshalls, DSW Brookwood Square Austell GA Sep-17 $21,500,000 440,147 $48.85 100% 6.3% $1,343,750 $3.05 16.00 LA Fitness, Pollo Tropical Murrieta Town Center Murrieta CA Sep-17 $56,600,000 320,949 $176.35 100% 6.0% $3,396,000 $10.58 16.67 Burlington, Ross, Rite Aid, Marshalls Mall at Mill Creek Secaucus NJ Sep-17 $76,000,000 312,457 $243.23 100% 6.4% $4,826,000 $15.45 15.75 Boscov's, JC Penney, Macy's, Dick's Sporting Goods Florin Town Centre Sacramento CA Aug-17 $32,460,000 273,240 $118.80 100% 6.5% $2,109,900 $7.72 15.38 24 hr fitness, PetSmart, Sears, Walmart Harris Teeter Germantown MD Jul-17 $9,000,000 43,256 $208.06 100% 5.6% $504,000 $11.65 17.86 Harris Teeter (single tenant) Riverlakes Village Bakersfield CA Jun-17 $23,825,000 92,212 $258.37 97% 6.6% $1,572,450 $17.05 15.15 Vons, CVS (NAP), Winco (NAP) Sierra del Oro Towne Center Cornona CA Jun-17 $28,600,000 110,004 $259.99 93% 6.0% $1,716,000 $15.60 16.67 Ralphs, Dollar Tree River Park Shopping Center Fresno CA Jun-17 $29,100,000 121,107 $240.28 100% 6.4% $1,862,400 $15.38 15.63 Sprouts, Ross, Bed Bath & Beyond Marigold Center San Luis Obsipo CA Jun-17 $43,550,000 174,428 $249.67 89% 5.3% $2,308,150 $13.23 18.87 Vons, CVS, Michael's Fox Creek Village Longmont CO Jun-17 $24,825,000 107,533 $230.86 97% 5.5% $1,365,375 $12.70 18.18 King Soopers Willow Creek Shopping Center Arapahoe CO Jun-17 $11,500,000 162,897 $70.60 80% 6.3% $724,500 $4.45 15.87 Vasa Fitness, ARC Thrift Hilltop Square Virginia Beach VA Jun-17 $17,500,000 91,563 $191.13 92% 7.3% $1,277,500 $13.95 13.70 Wal-Mart (NAP), CHKD Thrift Store, Advanced Auto Parts, UFC Gym Festival at Manassas Manassas VA Jun-17 $20,000,000 118,000 $169.49 97% 8.5% $1,700,000 $14.41 11.76 Global Food, Cici's Pizza, Furniture House Market at Opitz Crossing Woodbridge VA Jun-17 $29,300,000 158,286 $185.11 96% 7.8% $2,285,400 $14.44 12.82 PriceRite, Chipotle, Advanced Auto Parts, Dollar Tree Merchants Walk Richmond VA Jun-17 $16,150,000 220,001 $73.41 94% 10.1% $1,631,150 $7.41 9.90 Food Lion, Marshalls, JoAnn Fabrics, UFC Gym, Cititrends Fourth Plain Center Vancouver WA Jun-17 $21,500,000 117,143 $183.54 73% 6.3% $1,354,500 $11.56 15.87 24 Hour Fitness, Walgreens Marketplace at Potomac Towne Center Ranson WV Jun-17 $35,900,000 367,547 $97.67 92% 8.2% $2,943,800 $8.01 12.20 Weis Markets, Kohl's, Home Depot, Petco Low $47.00 5.20% $3.05 9.90 Hgh $408.69 10.10% $22.48 19.23 Average $184.97 6.80% $12.22 15.03 Median $184.32 6.73% $12.58 14.87

82 The Austin McGuire Company

Selection of Rate: Using the methods illustrated above, the overall rates are as follows:

Method Rates

PwC Real Estate Investor Survey 4.00%-10.00% Averages 6.27%-6.48% Mortgage/Equity Analysis 5.33%-6.130% Market Derived 5.20%-10.10% Average 6.80%

The U.S. property market landscape in 2018 has been characterized by continued strong fundamentals, increased investment flows, and high transaction volume. The broader U.S. economy should continue to grow given the tax cuts and growth of the underlying economy which is resulting in a stronger jobs market. U.S. employment gains continue to be strong, with unemployment dropping to all-time records lows 2018, adding to demand for commercial real estate in a variety of sectors.

With respect to the retail market sector, investor outlook is somewhat jaundice given the impact of e-commerce and on-going FED increases in the federal funds rate. While the e- commerce changes are far from over, what has resulted is the continued creative destruction within the retail sector, with savvy retailers shifting with the marketplace along with property owners re-tenanting to capture the more experiential aspects of retail. What is clear is that quality is king – well located centers with a strong tenant base and limited exposure to troubled big-box stores are expected to do well. Even with the advent of such notable store closures as Toys R Us there is opportunity to re-tenant with stronger tenants more in keeping with centers target audience.

Going forward, the following trends are expected to play a continued and ongoing significant role in commercial real estate include:

 E-Commerce  Interest Rates  Strong domestic economy  Global economic uncertainty  Strong foreign capital inflows  Very stable domestic energy market  Limited new supply of commercial retail real estate.

Of the methods of capitalization rate development noted above the most applicable is Market Derived Rates from sales of recent, investment grade retail properties similar to the subject. As indicated in the investor survey discussion, the compression of capitalization rates accelerated from 2013-2016, began to wane in 2017 and is now appears to be sliding back in 2018. With heavy investor interest on the top tier core assets, many investors are turning to secondary and tertiary markets for better yield.

83 The Austin McGuire Company

Overall, this is a well-built, well designed, and well positioned upper-scale retail property. It is considered to be a Class A asset in the local market. It has a A location and an A tenant roster making this an overall A asset that once built out and fully stabilized will be a solid A asset. Given the risks associated with this property we have applied a capitalization rate of 6.25 percent.

Discount Rate

In selecting a discount rate to apply to annual cash flows projected over the holding period and to the reversion upon resale, we have reviewed surveys of investor sentiment and considered yields on various investment alternatives. As an aid in gauging investor sentiment, we have utilized the PwC Real Estate Investor Survey, a quarterly review of the investment criteria and analytic approaches of market participants who are involved in an aggregate of over $150 billion in real estate assets.

It should be noted that the data yielded by the survey, including discount rates, overall rates and residual capitalization rates tend to reflect the assumptions used in evaluating current holdings or hypothetical deals rather than actual transactions. Yield criteria of individual participants in the survey varied considerably and appeared to depend on assumptions regarding projected cash flow.

The following chart illustrates a range of discount rates for institutional investors as reported by the PwC Real Estate Investor Survey for the third quarter of 2018.

Market Segment Discount Rates

National Regional Mall Market 5.00%-11.50% Average 7.60% Change from year ago -15 bp National Power Center Market 6.00%-10.00% Average 7.53% Change from year ago -14 bp National Strip Shopping Center Market 5.50%-10.50% Average 7.25% Change from year ago -21 bp

The above chart is instructive in that it demonstrates the range of discount rates acceptable to institutional investors relative to neighborhood shopping centers investments. Again rates for non-institutional investors would be considerably higher.

Issues that tend to raise the discount rate  The possibility of further increases in interest rates.  The possibility of extended marketing periods for the currently and/or soon to be vacated space.  The possibility of limited asset value appreciation.  The possibility of erosion in the retail sector due to increased e-commerce.

84 The Austin McGuire Company

 The potential for tenant loss due to increased store closings in 2017.

Issues that tend to lower the discount rate  The stable income stream with numerous long-term tenants and with strong tenant retention.  The strength and health of the local market with stable market fundamentals.  A location in one of the gateway markets or a dominant center in a secondary or tertiary market.

Although the build-up method often results in a more current view as opposed to the more dated survey data, it was not utilized due largely to the Federal Reserve’s ongoing bond- buying program, which has held Treasury and mortgage rates at artificially low levels. They remain very close to their 50-year low.

The above information would suggest discount rates for the subject property from 5.00 to 11.50 percent. As an A center in an A location with an A tenant roster, we have concluded a discount rate range from 7.00 to 8.50 percent. Based on the preceding discussion, it is our opinion that the subject’s risk would lie near the middle portion of the indicated range. In this analysis, we have utilized a discount rate of 7.75 percent with the exception of Waterfront Town Center which contains the former Macy’s space. Given the lease up costs and risk we have added an additional 25 basis point to the discount rate to 8.0 percent.

Reversion

At the end of September 2028, the 10th year of the projection, the property is assumed to be resold based on the 11th year net operating income capitalized at 6.75 percent. We note that this rate is 25 basis points higher than the overall capitalization rate previously derived. The following chart illustrates a range of residual capitalization rates for institutional investors as reported by the PwC Real Estate Investor Survey for the third quarter of 2017.

Market Segment Residual Rates

National Regional Mall Market 4.25% – 10.00% Average 6.80% Change from year ago +10 bp National Power Center Market 5.50% – 9.00% Average 6.83% Change from year ago -5 bp National Strip Shopping Center Market 4.50% – 9.75% Average 6.84% Change from year ago +27 bp

Results from the investor survey indicate spreads of 35 to 57 basis points between going-in and residual capitalization rates. Concerns also noted by investors included how to effectively select an exit capitalization rate in the future when interest rates will likely be

85 The Austin McGuire Company higher and the possibility of limited asset appreciation. In this analysis, we consider the long term risk to be slightly higher than the near term risk. Costs associated with the sale have been estimated at 2.0 percent of the gross sales proceeds. The Spreads in the going-in and residual cap rate for this property have been checked against these survey results.

The cash flow, based on the preceding assumptions, along with the yield capitalization and direct capitalization results for each of the properties is presented on the following pages.

86 The Austin McGuire Company

Market at the Waterfront Softw are: ARGUS Ver. 15.0.1.26 Homestead, PA File: 314 Market on the Waterfront Sept 2018 - Trial Property Type: Retail Portfolio: BIG Realty Date: 11/19/18 Time: 2:16 pm Ref#: AIK Page: 1 Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 10/1/2018

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending Sep-2019 Sep-2020 Sep-2021 Sep-2022 Sep-2023 Sep-2024 Sep-2025 Sep-2026 Sep-2027 Sep-2028 Sep-2029 ______Potential Gross Revenue Base Rental Revenue $4,026,960 $4,056,086 $3,991,568 $4,063,050 $4,101,492 $4,138,105 $4,182,020 $4,313,886 $4,427,768 $4,468,693 $4,547,177 Absorption & Turnover Vacancy (286,387) (39,036) (132,295) (34,489) (21,863) (31,340) (32,367) (94,843) ______Scheduled Base Rental Revenue 3,740,573 4,017,050 3,859,273 4,028,561 4,101,492 4,116,242 4,182,020 4,313,886 4,396,428 4,436,326 4,452,334 Base Rental Step Revenue 1,250 1,500 250 1,637 4,569 2,933

Expense Reimbursement Revenue CAM 302,504 341,321 378,468 390,331 400,639 409,001 414,912 427,357 425,565 432,084 446,719 RE Tax 797,836 885,970 1,007,510 1,043,852 1,069,385 1,096,286 1,124,742 1,158,487 1,169,627 1,186,035 1,180,748 Insurance 9,118 15,711 33,005 49,201 54,558 56,450 59,925 61,723 66,907 76,664 88,420 ______Total Reimbursement Revenue 1,109,458 1,243,002 1,418,983 1,483,384 1,524,582 1,561,737 1,599,579 1,647,567 1,662,099 1,694,783 1,715,887

Spirit Hallow een 18,875 BJ Grill Ground Lease 103,000 106,090 109,273 112,551 115,927 119,405 122,987 126,677 130,477 134,392 Outback Ground Lease 106,090 109,273 112,551 115,927 119,405 122,987 126,677 130,477 134,392 ______Total Potential Gross Revenue 4,868,906 5,363,052 5,490,436 5,731,741 5,852,676 5,910,083 6,020,409 6,207,427 6,313,518 6,396,632 6,439,938 General Vacancy (69,900) (125,012) (98,218) (140,982) (178,088) (158,295) (183,108) (188,622) (160,245) (161,740) (101,807) ______Effective Gross Revenue 4,799,006 5,238,040 5,392,218 5,590,759 5,674,588 5,751,788 5,837,301 6,018,805 6,153,273 6,234,892 6,338,131 ______Operating Expenses RE Tax 1,186,910 1,222,517 1,259,193 1,296,969 1,335,878 1,375,954 1,417,232 1,459,749 1,503,541 1,548,649 1,595,107 CAM 543,000 559,290 576,069 593,351 611,151 629,486 648,370 667,822 687,856 708,492 729,747 Management 128,000 131,840 135,795 139,869 144,065 148,387 152,839 157,424 162,147 167,011 172,021 Insurance 70,000 72,100 74,263 76,491 78,786 81,149 83,584 86,091 88,674 91,334 94,074 Landlord Expenses General & Administrative 12,000 12,360 12,731 13,113 13,506 13,911 14,329 14,758 15,201 15,657 16,127 ______Total Operating Expenses 1,939,910 1,998,107 2,058,051 2,119,793 2,183,386 2,248,887 2,316,354 2,385,844 2,457,419 2,531,143 2,607,076 ______Net Operating Income 2,859,096 3,239,933 3,334,167 3,470,966 3,491,202 3,502,901 3,520,947 3,632,961 3,695,854 3,703,749 3,731,055 ______Leasing & Capital Costs Tenant Improvements 728,610 86,005 992,249 588,401 84,757 162,643 326,193 502,170 Leasing Commissions 206,507 177,209 478,548 281,022 47,551 68,272 146,934 232,642 Reserves 51,891 53,448 55,051 56,703 58,404 60,156 61,961 63,820 65,734 67,706 69,737 Pad Site Costs 100,000 ______Total Leasing & Capital Costs 987,008 316,662 1,625,848 926,126 58,404 192,464 61,961 63,820 296,649 540,833 804,549 ______Cash Flow Before Debt Service $1,872,088 $2,923,271 $1,708,319 $2,544,840 $3,432,798 $3,310,437 $3,458,986 $3,569,141 $3,399,205 $3,162,916 $2,926,506 & Taxes ======87 ======The Austin McGuire Company

Based on the preceding analysis, the discounted cash flow based on a 10-year hold and subject to the income investment parameters discussed above are presented in the following chart.

Market atSoftw the Waterfront are: ARGUS Ver. 15.0.1.26 File: 314 MarketHomestead, on the Waterfront PA Sept 2018 - Trial Property Type: Retail Portfolio: BIG Realty Date: 11/19/18 Time: 2:16 pm Ref#: AIK Page: 3 Prospective Present Value Cash Flow Before Debt Service plus Property Resale Discounted Annually (Endpoint on Cash Flow & Resale) over a 10-Year Period

For the P.V. of Analysis Year Annual Cash Flow Period Ending Cash Flow @ 7.75% ______

Year 1 Sep-2019 $1,872,088 $1,737,437 Year 2 Sep-2020 2,923,271 2,517,877 Year 3 Sep-2021 1,708,319 1,365,580 Year 4 Sep-2022 2,544,840 1,887,953 Year 5 Sep-2023 3,432,798 2,363,534 Year 6 Sep-2024 3,310,437 2,115,348 Year 7 Sep-2025 3,458,986 2,051,293 Year 8 Sep-2026 3,569,141 1,964,380 Year 9 Sep-2027 3,399,205 1,736,289 Year 10 Sep-2028 3,162,916 1,499,390 ______Total Cash Flow 29,382,001 19,239,081 Property Resale @ 6.50% Cap 56,252,829 26,666,842 ______Total Property Present Value $45,905,923 ======

Rounded to Thousands $45,906,000 ======

Per SqFt 176.93

Percentage Value Distribution

Assured Income 19.84% Prospective Income 22.07% Prospective Property Resale 58.09% ======100.00%

88 The Austin McGuire Company

Based on the preceding income and expense discussions, the in place net operating income is summarized in the following table.

Market at the Waterfront Softw are: ARGUS Ver. 15.0.1.26 Homestead, PAFile: 314 Market on the Waterfront Sept 2018 - Trial Property Type: Retail Portfolio: BIG Realty Date: 11/19/18 Time: 2:16 pm Ref#: AIK Page: 2 Direct Capitalization Value Summary In Inflated Dollars for the Fiscal Year Beginning 10/1/2018

1-12 For the Months Total ______Potential Gross Revenue Base Rental Revenue $4,026,960 Absorption & Turnover Vacancy (286,387) ______Scheduled Base Rental Revenue 3,740,573 Base Rental Step Revenue

Expense Reimbursement Revenue CAM 302,504 RE Tax 797,836 Insurance 9,118 ______Total Reimbursement Revenue 1,109,458

Spirit Hallow een 18,875 BJ Grill Ground Lease Outback Ground Lease ______Total Potential Gross Revenue 4,868,906 General Vacancy (69,900) ______Effective Gross Revenue 4,799,006 ______Operating Expenses RE Tax 1,186,910 CAM 543,000 Management 128,000 Insurance 70,000 Landlord Expenses General & Administrative 12,000 ______Total Operating Expenses 1,939,910 ______Net Operating Income 2,859,096

Capitalization Rate 6.25% Capitalized Value $45,745,536

89 The Austin McGuire Company

Market Amity Softw are: ARGUS Ver. 15.0.1.26 Homestead, PA File: Market Amity Sept 2018 - Trial Property Type: Retail Portfolio: BIG Realty Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 10/1/2018

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending Sep-2019 Sep-2020 Sep-2021 Sep-2022 Sep-2023 Sep-2024 Sep-2025 Sep-2026 Sep-2027 Sep-2028 Sep-2029 ______Potential Gross Revenue Base Rental Revenue $1,216,123 $1,235,012 $1,252,979 $1,356,850 $1,398,786 $1,398,927 $1,384,852 $1,407,106 $1,443,319 $1,469,186 $1,471,169 Absorption & Turnover Vacancy (51,734) (19,052) (46,473) (21,035) ______Scheduled Base Rental Revenue 1,216,123 1,235,012 1,252,979 1,305,116 1,398,786 1,379,875 1,338,379 1,407,106 1,443,319 1,469,186 1,450,134 CPI & Other Adjustment Revenue 572 8,771 23,840 39,360 52,311

Expense Reimbursement Revenue CAM 143,496 147,802 152,236 193,067 233,521 238,818 238,292 285,260 293,817 302,631 308,349 Insurance 15,591 16,058 16,541 16,096 18,003 18,306 26,355 30,751 31,675 32,624 33,311 RE Taxes 352,080 362,644 373,522 362,261 391,486 399,136 412,185 480,959 495,388 510,249 520,995 ______Total Reimbursement Revenue 511,167 526,504 542,299 571,424 643,010 656,260 676,832 796,970 820,880 845,504 862,655

Miscellaneous Income 18,000 18,540 19,096 19,669 20,259 20,867 21,493 22,138 22,802 23,486 24,190 Water/Sew er 15,000 15,450 15,914 16,391 16,883 17,389 17,911 18,448 19,002 19,572 20,159 ______Total Potential Gross Revenue 1,760,290 1,795,506 1,830,288 1,912,600 2,078,938 2,074,391 2,055,187 2,253,433 2,329,843 2,397,108 2,409,449 General Vacancy (10,531) (10,969) (11,391) (11,455) (11,521) (14,683) (15,123) (15,577) ______Effective Gross Revenue 1,749,759 1,784,537 1,818,897 1,901,145 2,067,417 2,074,391 2,055,187 2,238,750 2,314,720 2,381,531 2,409,449 ______Operating Expenses CAM 235,000 242,050 249,311 256,791 264,495 272,429 280,602 289,020 297,691 306,622 315,820 Management 53,000 54,590 56,228 57,915 59,652 61,442 63,285 65,183 67,139 69,153 71,228 Insurance 25,000 25,750 26,523 27,318 28,138 28,982 29,851 30,747 31,669 32,619 33,598 RE Taxes 391,000 402,730 414,812 427,256 440,074 453,276 466,874 480,881 495,307 510,166 525,471 Landlord Expenses 700 721 743 765 788 811 836 861 887 913 941 General & Administrative 1,500 1,545 1,591 1,639 1,688 1,739 1,791 1,845 1,900 1,957 2,016 ______Total Operating Expenses 706,200 727,386 749,208 771,684 794,835 818,679 843,239 868,537 894,593 921,430 949,074 ______Net Operating Income 1,043,559 1,057,151 1,069,689 1,129,461 1,272,582 1,255,712 1,211,948 1,370,213 1,420,127 1,460,101 1,460,375 ______Leasing & Capital Costs Tenant Improvements 491,727 100,022 355,827 Leasing Commissions 234,665 41,152 158,356 Reserves 16,686 17,186 17,702 18,233 18,780 19,343 19,923 20,521 21,137 21,771 22,424 ______Total Leasing & Capital Costs 16,686 17,186 17,702 744,625 18,780 160,517 534,106 20,521 21,137 21,771 22,424 ______Cash Flow Before Debt Service $1,026,873 $1,039,965 $1,051,987 $384,836 $1,253,802 $1,095,195 $677,842 $1,349,692 $1,398,990 $1,438,330 $1,437,951 & Taxes ======

90 The Austin McGuire Company

Based on the preceding analysis, the discounted cash flow based on a 10-year hold and subject to the income investment parameters discussed above are presented in the following chart.

MarketSoftw Amity are: ARGUS Ver. 15.0.1.26 Homestead,File: Market PA Amity Sept 2018 - Trial Property Type: Retail Portfolio: BIG Realty Prospective Present Value Cash Flow Before Debt Service plus Property Resale Discounted Annually (Endpoint on Cash Flow & Resale) over a 10-Year Period

For the P.V. of Analysis Year Annual Cash Flow Period Ending Cash Flow @ 7.75% ______

Year 1 Sep-2019 $1,026,873 $953,014 Year 2 Sep-2020 1,039,965 895,745 Year 3 Sep-2021 1,051,987 840,927 Year 4 Sep-2022 384,836 285,501 Year 5 Sep-2023 1,253,802 863,262 Year 6 Sep-2024 1,095,195 699,822 Year 7 Sep-2025 677,842 401,983 Year 8 Sep-2026 1,349,692 742,842 Year 9 Sep-2027 1,398,990 714,593 Year 10 Sep-2028 1,438,330 681,845 ______Total Cash Flow 10,717,512 7,079,534 Property Resale @ 6.50% Cap 22,017,962 10,437,688 ______Total Property Present Value $17,517,222 ======

Rounded to Thousands $17,517,000

91 The Austin McGuire Company

Based on the preceding income and expense discussions, the in place net operating income is summarized in the following table.

Market Amity Softw are: ARGUS Ver. 15.0.1.26 Homestead, PA File: Market Amity Sept 2018 - Trial Property Type: Retail Portfolio: BIG Realty Direct Capitalization Value Summary In Inflated Dollars for the Fiscal Year Beginning 10/1/2018

1-12 For the Months Total ______Potential Gross Revenue Base Rental Revenue $1,216,123 Absorption & Turnover Vacancy ______Scheduled Base Rental Revenue 1,216,123 CPI & Other Adjustment Revenue

Expense Reimbursement Revenue CAM 143,496 Insurance 15,591 RE Taxes 352,080 ______Total Reimbursement Revenue 511,167

Miscellaneous Income 18,000 Water/Sew er 15,000 ______Total Potential Gross Revenue 1,760,290 General Vacancy (10,531) ______Effective Gross Revenue 1,749,759 ______Operating Expenses CAM 235,000 Management 53,000 Insurance 25,000 RE Taxes 391,000 Landlord Expenses 700 General & Administrative 1,500 ______Total Operating Expenses 706,200 ______Net Operating Income 1,043,559

Capitalization Rate 6.25% Capitalized Value $16,696,944

92 The Austin McGuire Company

Amity Square Softw are: ARGUS Ver. 15.0.1.26 Homestead, PA File: Amity Square Sept 2018 - Trial Property Type: Retail Portfolio: BIG Realty Date: 10/10/18 Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 10/1/2018

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending Sep-2019 Sep-2020 Sep-2021 Sep-2022 Sep-2023 Sep-2024 Sep-2025 Sep-2026 Sep-2027 Sep-2028 Sep-2029 ______Potential Gross Revenue Base Rental Revenue $453,749 $455,089 $456,965 $462,372 $489,401 $502,421 $503,865 $506,752 $509,507 $546,820 $561,142 Absorption & Turnover Vacancy (3,468) (26,466) (3,829) (29,220) ______Scheduled Base Rental Revenue 453,749 451,621 456,965 435,906 489,401 502,421 500,036 506,752 480,287 546,820 561,142 Base Rental Step Revenue 200 600 767 4,401 4,034 150 600

Expense Reimbursement Revenue CAM 58,617 59,698 61,414 58,668 54,338 55,969 57,226 59,376 57,883 62,993 64,882 Insurance 4,096 4,189 4,345 4,221 4,504 4,638 4,742 4,920 4,795 5,219 5,377 RE Taxes 84,514 86,343 89,470 87,028 93,433 96,235 98,396 102,095 99,496 108,314 111,563 ______Total Reimbursement Revenue 147,227 150,230 155,229 149,917 152,275 156,842 160,364 166,391 162,174 176,526 181,822

Water/Sew er 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439 ______Total Potential Gross Revenue 610,976 612,151 622,803 596,750 653,131 671,456 673,108 689,843 659,163 736,544 757,003 General Vacancy (30,549) (27,313) (31,140) (4,695) (32,657) (33,573) (30,018) (34,492) (5,199) (36,827) (37,850) ______Effective Gross Revenue 580,427 584,838 591,663 592,055 620,474 637,883 643,090 655,351 653,964 699,717 719,153 ______Operating Expenses CAM 49,000 50,470 51,984 53,544 55,150 56,804 58,509 60,264 62,072 63,934 65,852 Management 15,000 15,450 15,914 16,391 16,883 17,389 17,911 18,448 19,002 19,572 20,159 Insurance 4,000 4,120 4,244 4,371 4,502 4,637 4,776 4,919 5,067 5,219 5,376 RE Taxes 83,000 85,490 88,055 90,696 93,417 96,220 99,106 102,080 105,142 108,296 111,545 Landlord Expenses 700 721 743 765 788 811 836 861 887 913 941 General & Administrative 900 927 955 983 1,013 1,043 1,075 1,107 1,140 1,174 1,210 ______Total Operating Expenses 152,600 157,178 161,895 166,750 171,753 176,904 182,213 187,679 193,310 199,108 205,083 ______Net Operating Income 427,827 427,660 429,768 425,305 448,721 460,979 460,877 467,672 460,654 500,609 514,070 ______Leasing & Capital Costs Tenant Improvements 9,888 76,946 11,463 91,877 Leasing Commissions 7,534 57,482 8,314 64,694 Reserves 2,744 2,827 2,912 2,999 3,089 3,182 3,277 3,375 3,477 3,581 3,688 ______Total Leasing & Capital Costs 2,744 20,249 2,912 137,427 3,089 3,182 23,054 3,375 3,477 160,152 3,688 ______Cash Flow Before Debt Service $425,083 $407,411 $426,856 $287,878 $445,632 $457,797 $437,823 $464,297 $457,177 $340,457 $510,382 & Taxes ======

93 The Austin McGuire Company

Based on the preceding analysis, the discounted cash flow based on a 10-year hold and subject to the income investment parameters discussed above are presented in the following chart.

AmitySoftw Square are: ARGUS Ver. 15.0.1.26 Homestead,File: Amity PASquare Sept 2018 - Trial Property Type: Retail Portfolio: BIG Realty Date: 10/10/18 Prospective Present Value Cash Flow Before Debt Service plus Property Resale Discounted Annually (Endpoint on Cash Flow & Resale) over a 10-Year Period

For the P.V. of Analysis Year Annual Cash Flow Period Ending Cash Flow @ 7.75% ______

Year 1 Sep-2019 $425,083 $394,509 Year 2 Sep-2020 407,411 350,912 Year 3 Sep-2021 426,856 341,216 Year 4 Sep-2022 287,878 213,569 Year 5 Sep-2023 445,632 306,825 Year 6 Sep-2024 457,797 292,529 Year 7 Sep-2025 437,823 259,644 Year 8 Sep-2026 464,297 255,539 Year 9 Sep-2027 457,177 233,522 Year 10 Sep-2028 340,457 161,395 ______Total Cash Flow 4,150,411 2,809,660 Property Resale @ 6.50% Cap 7,750,594 3,674,195 ______Total Property Present Value $6,483,855 ======

Rounded to Thousands $6,484,000 ======

Per SqFt 472.52

Percentage Value Distribution

Assured Income 29.24% Prospective Income 14.09% Prospective Property Resale 56.67% ======100.00%

94 The Austin McGuire Company

Based on the preceding income and expense discussions, the in place net operating income is summarized in the following table.

Amity Square Softw are: ARGUS Ver. 15.0.1.26 Homestead, PA File: Amity Square Sept 2018 - Trial Property Type: Retail Portfolio: BIG Realty Date: 10/10/18 Direct Capitalization Value Summary In Inflated Dollars for the Fiscal Year Beginning 10/1/2018

1-12 For the Months Total ______Potential Gross Revenue Base Rental Revenue $453,749 Absorption & Turnover Vacancy ______Scheduled Base Rental Revenue 453,749 Base Rental Step Revenue

Expense Reimbursement Revenue CAM 58,617 Insurance 4,096 RE Taxes 84,514 ______Total Reimbursement Revenue 147,227

Water/Sew er 10,000 ______Total Potential Gross Revenue 610,976 General Vacancy (30,549) ______Effective Gross Revenue 580,427 ______Operating Expenses CAM 49,000 Management 15,000 Insurance 4,000 RE Taxes 83,000 Landlord Expenses 700 General & Administrative 900 ______Total Operating Expenses 152,600 ______Net Operating Income 427,827

Capitalization Rate 6.25% Capitalized Value $6,845,232

95 The Austin McGuire Company

The Waterfront Softw are: ARGUS Ver. 15.0.1.26 The Stacks at the Waterfront File: 311 Waterfront Tow n Center Sept 2018 - Trial Waterfront Tow n Center Property Type: Retail Homestead, PA Portfolio: BIG Realty Date: 11/19/18 Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 10/1/2018

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending Sep-2019 Sep-2020 Sep-2021 Sep-2022 Sep-2023 Sep-2024 Sep-2025 Sep-2026 Sep-2027 Sep-2028 Sep-2029 ______Potential Gross Revenue Base Rental Revenue $8,899,475 $9,421,638 $9,389,917 $9,416,257 $9,498,082 $9,651,621 $9,979,956 $10,297,862 $10,561,690 $10,738,576 $10,856,795 Absorption & Turnover Vacancy (1,482,735) (344,398) (356,062) (105,157) (19,413) (151,854) (102,203) (71,972) (127,154) (22,505) (266,501) ______Scheduled Base Rental Revenue 7,416,740 9,077,240 9,033,855 9,311,100 9,478,669 9,499,767 9,877,753 10,225,890 10,434,536 10,716,071 10,590,294 Base Rental Step Revenue 10,152 28,907 30,468 23,725 27,989 31,065 42,674 42,258 Retail Sales Percent Revenue 95,683

Expense Reimbursement Revenue CAM 918,995 1,577,770 1,939,784 2,039,327 2,054,757 2,102,568 2,145,956 2,190,779 2,223,499 2,270,232 2,268,847 Insurance 34,879 56,127 126,833 180,221 200,103 207,712 217,177 224,841 233,074 244,075 246,569 RE Taxes 1,537,417 1,693,831 1,579,543 1,596,869 1,575,181 1,613,990 1,655,971 1,693,545 1,721,062 1,766,783 1,773,842 ______Total Reimbursement Revenue 2,491,291 3,327,728 3,646,160 3,816,417 3,830,041 3,924,270 4,019,104 4,109,165 4,177,635 4,281,090 4,289,258

Miscellaneous Income 60,000 61,800 63,654 65,564 67,531 69,556 71,643 73,792 76,006 78,286 80,635 Water/Sew er 300,000 309,000 318,270 327,818 337,653 347,782 358,216 368,962 380,031 391,432 403,175 Marketing Fund 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339 65,239 67,196 ______Total Potential Gross Revenue 10,413,714 12,827,268 13,114,984 13,585,687 13,799,076 13,929,807 14,410,144 14,867,292 15,162,612 15,574,792 15,472,816 General Vacancy (66,760) (213,371) (457,543) (465,199) (556,105) (435,566) (505,457) (551,227) (509,319) (627,930) (389,578) ______Effective Gross Revenue 10,346,954 12,613,897 12,657,441 13,120,488 13,242,971 13,494,241 13,904,687 14,316,065 14,653,293 14,946,862 15,083,238 ______Operating Expenses CAM 1,885,000 1,941,550 1,999,797 2,059,790 2,121,584 2,185,232 2,250,789 2,318,312 2,387,862 2,459,497 2,533,282 Management 264,000 271,920 280,078 288,480 297,134 306,048 315,230 324,687 334,427 344,460 354,794 Insurance 385,000 396,550 408,446 420,700 433,321 446,321 459,710 473,501 487,706 502,338 517,408 RE Taxes 2,287,000 2,355,610 2,426,278 2,499,067 2,574,039 2,651,260 2,730,798 2,812,722 2,897,103 2,984,016 3,073,537 Legal Fees 96,000 98,880 101,846 104,902 108,049 111,290 114,629 118,068 121,610 125,258 129,016 General & Administrative 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339 65,239 67,196 Other 55,000 56,650 58,349 60,100 61,903 63,760 65,673 67,643 69,672 71,763 73,915 Advertising & Promo 595,000 612,850 631,236 650,173 669,678 689,768 710,461 731,775 753,728 776,340 799,630 ______Total Operating Expenses 5,617,000 5,785,510 5,959,075 6,137,848 6,321,983 6,511,643 6,706,993 6,908,202 7,115,447 7,328,911 7,548,778 ______Net Operating Income 4,729,954 6,828,387 6,698,366 6,982,640 6,920,988 6,982,598 7,197,694 7,407,863 7,537,846 7,617,951 7,534,460 ______Leasing & Capital Costs Tenant Improvements 6,938,484 6,450,266 2,337,671 429,302 93,183 561,876 361,138 254,141 405,912 194,996 730,707 Leasing Commissions 614,808 480,480 1,053,509 273,435 42,305 330,188 222,116 156,391 224,803 102,119 428,830 Reserves 108,897 112,163 115,528 118,994 122,564 126,241 130,028 133,929 137,947 142,085 146,348 ______Total Leasing & Capital Costs 7,662,189 7,042,909 3,506,708 821,731 258,052 1,018,305 713,282 544,461 768,662 439,200 1,305,885 ______Cash Flow Before Debt Service ($2,932,235) ($214,522) $3,191,658 $6,160,909 $6,662,936 $5,964,293 $6,484,412 $6,863,402 $6,769,184 $7,178,751 $6,228,575 & Taxes ======

96 The Austin McGuire Company

Based on the preceding analysis, the discounted cash flow based on a 10-year hold and subject to the income investment parameters discussed above are presented in the following chart.

TheSoftw Waterfront are: ARGUS Ver. 15.0.1.26 File: 311The Waterfront Stacks at Tow the Waterfront n Center Sept 2018 - Trial Waterfront Tow n CenterProperty Type: Retail Homestead, PA Portfolio: BIG Realty Date: 11/19/18 Prospective Present Value Cash Flow Before Debt Service plus Property Resale Discounted Annually (Endpoint on Cash Flow & Resale) over a 10-Year Period

For the P.V. of Analysis Year Annual Cash Flow Period Ending Cash Flow @ 8.00% ______

Year 1 Sep-2019 ($2,932,235) ($2,715,032) Year 2 Sep-2020 (214,522) (183,918) Year 3 Sep-2021 3,191,658 2,533,641 Year 4 Sep-2022 6,160,909 4,528,452 Year 5 Sep-2023 6,662,936 4,534,682 Year 6 Sep-2024 5,964,293 3,758,516 Year 7 Sep-2025 6,484,412 3,783,592 Year 8 Sep-2026 6,863,402 3,708,083 Year 9 Sep-2027 6,769,184 3,386,277 Year 10 Sep-2028 7,178,751 3,325,151 ______Total Cash Flow 46,128,788 26,659,444 Property Resale @ 6.50% Cap 113,596,474 52,617,147 ______Total Property Present Value $79,276,591 ======

Rounded to Thousands $79,277,000 ======

Per SqFt 145.60

Percentage Value Distribution

Assured Income 22.54% Prospective Income 11.09% Prospective Property Resale 66.37% ======100.00%

97 The Austin McGuire Company

Based on the preceding income and expense discussions, the in place net operating income is summarized in the following table.

The Waterfront Softw are: ARGUS Ver. 15.0.1.26 The Stacks at the WaterfrontFile: 311 Waterfront Tow n Center Sept 2018 - Trial Waterfront Tow n Center Property Type: Retail Homestead, PA Portfolio: BIG Realty Date: 11/19/18 Direct Capitalization Value Summary In Inflated Dollars for the Fiscal Year Beginning 10/1/2018

1-12 For the Months Total ______Potential Gross Revenue Base Rental Revenue $8,899,475 Absorption & Turnover Vacancy (1,482,735) ______Scheduled Base Rental Revenue 7,416,740 Base Rental Step Revenue Retail Sales Percent Revenue 95,683

Expense Reimbursement Revenue CAM 918,995 Insurance 34,879 RE Taxes 1,537,417 ______Total Reimbursement Revenue 2,491,291

Miscellaneous Income 60,000 Water/Sew er 300,000 Marketing Fund 50,000 ______Total Potential Gross Revenue 10,413,714 General Vacancy (66,760) ______Effective Gross Revenue 10,346,954 ______Operating Expenses CAM 1,885,000 Management 264,000 Insurance 385,000 RE Taxes 2,287,000 Legal Fees 96,000 General & Administrative 50,000 Other 55,000 Advertising & Promo 595,000 ______Total Operating Expenses 5,617,000 ______Net Operating Income 4,729,954

Capitalization Rate 6.25% Capitalized Value $75,679,264

98 The Austin McGuire Company

For reference, the aggregate cash flow and discounted cash flow for The Waterfront is presented as follows:

Waterfront Softw are: ARGUS Ver. 15.0.1.26 File: Waterfront Rollup Sept 2018 Property Type: Portfolio Portfolio: Date: 11/19/18 Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 10/1/2018

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 For the Years Ending Sep-2019 Sep-2020 Sep-2021 Sep-2022 Sep-2023 Sep-2024 Sep-2025 Sep-2026 Sep-2027 Sep-2028 ______Gross Revenue Potential Rental Revenue $14,596,307 $15,167,825 $15,091,429 $15,298,529 $15,487,761 $15,691,074 $16,050,693 $16,525,606 $16,942,284 $17,223,275 Absorption & Turnover Vacancy (1,769,122) (386,902) (488,357) (217,846) (19,413) (192,769) (152,505) (71,972) (187,714) (54,872) ______Scheduled Base Rental Revenue 12,827,185 14,780,923 14,603,072 15,080,683 15,468,348 15,498,305 15,898,188 16,453,634 16,754,570 17,168,403 Base Rental Step Revenue 11,402 30,607 31,318 24,492 32,390 36,736 47,393 CPI & Other Adjustment Revenue 572 8,771 23,840 39,360 Retail Sales Percent Revenue 95,683 Expense Reimbursement Revenue 4,259,143 5,247,464 5,762,671 6,021,142 6,149,908 6,299,109 6,455,879 6,720,093 6,822,788 6,997,903 Miscellaneous Revenue 471,875 569,590 692,768 713,551 734,958 757,005 779,717 803,107 827,202 852,017 ______Total Gross Revenue 17,653,886 20,597,977 21,058,511 21,826,778 22,383,821 22,585,737 23,158,848 24,017,995 24,465,136 25,105,076 General Vacancy (177,740) (376,665) (598,292) (622,331) (778,371) (627,434) (718,583) (789,024) (689,886) (842,074) ______Effective Gross Revenue 17,476,146 20,221,312 20,460,219 21,204,447 21,605,450 21,958,303 22,440,265 23,228,971 23,775,250 24,263,002 ______Operating Expenses Reimbursable Expenses 7,603,910 7,832,027 8,066,990 8,308,999 8,558,269 8,815,016 9,079,466 9,351,850 9,632,405 9,921,378 Office & Retail Expenses 811,800 836,154 861,239 887,076 913,688 941,097 969,333 998,412 1,028,364 1,059,214 ______Total Operating Expenses 8,415,710 8,668,181 8,928,229 9,196,075 9,471,957 9,756,113 10,048,799 10,350,262 10,660,769 10,980,592 ______Net Operating Income 9,060,436 11,553,131 11,531,990 12,008,372 12,133,493 12,202,190 12,391,466 12,878,709 13,114,481 13,282,410 ______Leasing & Capital Costs Tenant Improvements 7,667,094 6,546,159 3,329,920 1,586,376 93,183 746,655 728,428 254,141 568,555 613,066 Leasing Commissions 821,315 665,223 1,532,057 846,604 42,305 418,891 388,786 156,391 293,075 313,747 Capital Costs & Reserves 180,218 185,624 291,193 196,929 202,837 208,922 215,189 221,645 228,295 235,143 ______Total Leasing & Capital Costs 8,668,627 7,397,006 5,153,170 2,629,909 338,325 1,374,468 1,332,403 632,177 1,089,925 1,161,956 ______Cash Flow Before Debt Service $391,809 $4,156,125 $6,378,820 $9,378,463 $11,795,168 $10,827,722 $11,059,063 $12,246,532 $12,024,556 $12,120,454 & Taxes ======

99 The Austin McGuire Company

WaterfrontSoftw are: ARGUS Ver. 15.0.1.26 File: Waterfront Rollup Sept 2018 Property Type: Portfolio Portfolio: Date: 11/19/18 Prospective Present Value Cash Flow Before Debt Service plus Property Resale Discounted over a 10-Year Consolidated Period

For the Analysis Year Annual P.V. of Period Ending Cash Flow Cash Flow ______

Year 1 Sep-2019 $391,809 $369,928 Year 2 Sep-2020 4,156,125 3,580,616 Year 3 Sep-2021 6,378,820 5,081,364 Year 4 Sep-2022 9,378,463 6,915,475 Year 5 Sep-2023 11,795,168 8,068,303 Year 6 Sep-2024 10,827,722 6,866,215 Year 7 Sep-2025 11,059,063 6,496,512 Year 8 Sep-2026 12,246,532 6,670,844 Year 9 Sep-2027 12,024,556 6,070,681 Year 10 Sep-2028 12,120,454 5,667,781 ______Total Cash Flow 90,378,712 55,787,719 Property Resale 199,617,859 93,395,872 ______Total Property Present Value $149,183,591 ======

Rounded to Thousands $149,184,000 ======

Per SqFt 165.56

Percentage Value Distribution

Assured Income 22.25% Prospective Income 15.15% Prospective Property Resale 62.60% ======100.00%

The roll-up total varies slightly from the sum of the parts total due to reconciliation between the direct capitalization method and the discounted cash flow method combined with routine rounding.

100 The Austin McGuire Company

Value Conclusion

In this analysis, we have valued the subject via two methods. The corresponding results are summarized as follows:

Stacks and Market on the Waterfront Town Waterfront Market Amity Amity Square Center

Primary emphasis was placed on the yield capitalization method since it more accurately reflects the complexities of the subject cash flow. The yield capitalization is based upon the current leases in place. Given the complexity of the subject cash flow, the yield capitalization method is considered to be more reliable. Nonetheless, both methods returned generally supportive value conclusions. Therefore, the as-is market value of the subject property via the Income Approach, as of September 30, 2018, is:

$148,000,000

101 The Austin McGuire Company

Sales Comparison Approach

The Sales Comparison Approach is based upon an analysis of actual sales and current listings of similar type properties located in the market. Sales of similar properties represent the actions of typical buyers and sellers in the marketplace. When there are an adequate number of sales of similar properties with sufficient information for comparison, a range of value for the subject property can be developed.

Inherent in this approach is the principle of substitution, which holds that when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, (assuming that no costly delay is encountered in making the substitution).

By analyzing sales that qualify as arm's-length transactions between willing knowledgeable buyers and sellers with reasonable market exposure, we can identify price trends from which value parameters may be extracted. Comparability in physical, location, and economic characteristics are important criteria in evaluating the sales in relation to the subject property. The basic steps involved in the application of this approach are as follows:

1. Researching recent relevant property sales, contracts pending, and current offerings to purchase throughout the competitive area. 2. Selecting properties considered most similar to the subject, and then analyzing the selected comparable properties giving consideration to the time of sale and any change in economic conditions, which may have occurred to the date of the value. Other relevant factors of a physical, functional, or locational nature are also considered. 3. Reducing the sales price to common units of comparison (i.e., price per square foot of building area). 4. Making appropriate adjustments between the comparable properties and the property appraised. 5. Interpreting the adjusted sales data and drawing a valid conclusion.

The Sales Comparison Approach is limited depending upon the similarity of the circumstances involved in the comparable sales. Differences always exist among properties even though they may be almost identical. Adjustments for these differences serve to define more clearly the price that could reasonably be expected, subject to the limitations of the definition of market value. This assumes the price is agreeable to a willing buyer and seller, both are aware of all the information regarding the property, and after a reasonable exposure to the market.

The purpose of this analysis is the valuation of the leased fee estate of the subject property. Since the subject is a multi-tenant, multi-building property with numerous long-term leases in place, the Sales Comparison Approach has been included only as a crosscheck.

102 The Austin McGuire Company

Comparable Sales

For this analysis, we researched transaction activity across the U.S., focusing primarily on states in which the subject portfolio properties are located. Based on our research, the market for core retail assets is active. Reference is made to the comparable sales presented in the Capitalization Rate discussion. The data reflects 42 comparable sales that have taken place since June 2017.

The sales include transaction data provided by the client, some of which were independently verified, as well as recent transactions obtained through our research including Loopnet, CoStar/Comps Express, and the internet. In the valuation of retail centers, price per square foot of building area and NOI multipliers are considered the most appropriate units of measure. We have considered both units of measure in this analysis.

Property Name City State Sale Date Price Size (SF) Price/ SF Cap Rate NOI NOI/ SF NOIM Vestavia Hills City Center Vestavia Hills AL Pending $60,300,000 394,294 $152.93 7.8% $4,673,250 $11.85 12.90 Madison Marketplace Fair Oaks CA Pending $46,650,000 258,981 $180.13 7.3% $3,382,125 $13.06 13.79 Belden Park Crossings North Canton OH Pending $67,000,000 482,534 $138.85 8.0% $5,360,000 $11.11 12.50

LaCenterra at Cinco Ranch Cinco Ranch TX Sep-18 $159,500,000 390,274 $408.69 5.5% $8,772,500 $22.48 18.18 Miracle Mile Shopping Center Monroeville PA Aug-18 $78,000,000 299,905 $260.08 7.0% $5,428,800 $18.10 14.37 McCarran Marketplace Las Vegas NV Aug-18 $41,000,000 575,560 $71.23 7.8% $3,198,000 $5.56 12.82 Ellsworth Place Silver Springs MD Jul-18 $92,000,000 347,172 $265.00 7.4% $6,808,000 $19.61 13.51 Martin Square Stuart FL Jul-18 $22,000,000 331,585 $66.35 6.7% $1,474,000 $4.45 14.93 Market at Estrella Falls Goodyear AZ Jul-18 $49,100,000 284,863 $172.36 7.3% $3,584,300 $12.58 13.70 Broadway Plaza Chula Vista CA Jun-18 $58,500,000 356,335 $164.17 5.5% $3,217,500 $9.03 18.18 Silver Spring Square Mechanicsburg PA Apr-18 $80,810,000 342,600 $235.87 7.0% $5,656,700 $16.51 14.29 Cerritos Town Center Cerritos CA Mar-18 $97,000,000 368,798 $263.02 7.2% $6,984,000 $18.94 13.89 Village at Leesburg Leesburg VA Mar-18 $175,000,000 538,304 $325.10 5.9% $10,325,000 $19.18 16.95 Yorkshire Plaza Aurora IL Feb-18 $18,000,000 361,991 $49.72 7.8% $1,395,000 $3.85 12.90 Tates Creek Centre/Millpond Center Lexington KY Feb-18 $59,700,000 320,526 $186.26 6.8% $4,029,750 $12.57 14.81 Meridian Crossroads Meridian ID Feb-18 $78,700,000 530,410 $148.38 6.0% $4,722,000 $8.90 16.67 Best in the West Las Vegas NV Feb-18 $87,000,000 464,917 $187.13 7.9% $6,829,500 $14.69 12.74 Marketplace at 4 Corners Aurora OH Jan-18 $55,675,000 525,708 $105.90 7.2% $3,997,465 $7.60 13.93 JANAF Shopping Yard Norfolk VA Jan-18 $85,650,000 887,917 $96.46 6.9% $5,909,850 $6.66 14.49 Moore Plaza Corpus Christi TX Jan-18 $75,000,000 271,617 $276.12 8.0% $6,000,000 $22.09 12.50 Lake Nona Landing Orlando FL Dec-17 $58,000,000 311,382 $186.27 5.5% $3,190,000 $10.24 18.18 Central Park Commons Eagan MN Dec-17 $126,250,000 403,219 $313.11 5.8% $7,259,375 $18.00 17.39 Centerton Square Mt. Laurel NJ Oct-17 $129,600,000 426,415 $303.93 5.8% $7,516,800 $17.63 17.24 Whittwood Town Center Whittier CA Oct-17 $123,000,000 772,022 $159.32 5.2% $6,396,000 $8.28 19.23 The Shoppes at Grand Prairie Peoria IL Oct-17 $22,000,000 468,127 $47.00 7.8% $1,705,000 $3.64 12.90 Brookwood Square Austell GA Sep-17 $21,500,000 440,147 $48.85 6.3% $1,343,750 $3.05 16.00 Murrieta Town Center Murrieta CA Sep-17 $56,600,000 320,949 $176.35 6.0% $3,396,000 $10.58 16.67 Mall at Mill Creek Secaucus NJ Sep-17 $76,000,000 312,457 $243.23 6.4% $4,826,000 $15.45 15.75 Florin Town Centre Sacramento CA Aug-17 $32,460,000 273,240 $118.80 6.5% $2,109,900 $7.72 15.38 Harris Teeter Germantown MD Jul-17 $9,000,000 43,256 $208.06 5.6% $504,000 $11.65 17.86 Riverlakes Village Bakersfield CA Jun-17 $23,825,000 92,212 $258.37 6.6% $1,572,450 $17.05 15.15 Sierra del Oro Towne Center Cornona CA Jun-17 $28,600,000 110,004 $259.99 6.0% $1,716,000 $15.60 16.67 River Park Shopping Center Fresno CA Jun-17 $29,100,000 121,107 $240.28 6.4% $1,862,400 $15.38 15.63 Marigold Center San Luis Obsipo CA Jun-17 $43,550,000 174,428 $249.67 5.3% $2,308,150 $13.23 18.87 Fox Creek Village Longmont CO Jun-17 $24,825,000 107,533 $230.86 5.5% $1,365,375 $12.70 18.18 Willow Creek Shopping Center Arapahoe CO Jun-17 $11,500,000 162,897 $70.60 6.3% $724,500 $4.45 15.87 Hilltop Square Virginia Beach VA Jun-17 $17,500,000 91,563 $191.13 7.3% $1,277,500 $13.95 13.70 Festival at Manassas Manassas VA Jun-17 $20,000,000 118,000 $169.49 8.5% $1,700,000 $14.41 11.76 Market at Opitz Crossing Woodbridge VA Jun-17 $29,300,000 158,286 $185.11 7.8% $2,285,400 $14.44 12.82 Merchants Walk Richmond VA Jun-17 $16,150,000 220,001 $73.41 10.1% $1,631,150 $7.41 9.90 Fourth Plain Center Vancouver WA Jun-17 $21,500,000 117,143 $183.54 6.3% $1,354,500 $11.56 15.87 Marketplace at Potomac Towne Center Ranson WV Jun-17 $35,900,000 367,547 $97.67 8.2% $2,943,800 $8.01 12.20 Low $47.00 5.20% $3.05 9.90 Hgh $408.69 10.10% $22.48 19.23 Average $184.97 6.80% $12.22 15.03 Median $184.32 6.73% $12.58 14.87

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Price Per Square Foot

From the data in the Income Approach, we focused primarily on the anchored center sales as being most similar to the subject property. The comparable sales indicate a range of prices between $47.00 and $408.69 per square foot with an average of $184.97 per square foot and a median of $184.32 per square foot. The low end of the range reflects either distressed sales or sales in the hardest hit market areas. The high end of the range reflects the more premium properties. With consideration for the subject’s location, tenant profile, size, age, and quality, the estimated price would be near the middle of the range.

NOI Multiplier (NOIM)

For this analysis, we considered each of the comparable sales with confirmed capitalization rates. Based on the capitalization rate and the purchase price, we derived the implied NOI and NOI per square foot. The NOI was then divided into the purchase price to determine the NOI multiplier. For the range of 28 comparable sales noted above the range of NOI multipliers is as follows:

Range NOI Multiplier

Low 9.90 Hgh 19.23 Average 15.03 Median 14.87

The NOI per square foot for the comparable sales ranges from $3.05 to $22.48 per square foot with an average of $12.11 per square foot as compared to $9.20 to $12.51 per square foot for the subject as derived from the NOI in the cash flow analysis. Overall, we have utilized an NOI multiplier near the upper- midpoint of the range. The indicated value via the NOI multiplier is estimated in the following table.

Stacks and Market on the Waterfront Waterfront Market Amity Amity Square Town Center

NOI/SF $11.26 $12.51 $30.61 $9.20 Size (SF) 266,260 83,428 13,722 544,127 NOI $2,997,646 $1,043,559 $420,032 $5,007,094 NOI Multiplier 16.00 16.00 16.00 16.00 Indicated Value $47,962,336 $16,696,944 $6,720,512 $80,113,504 Rounded $48,000,000 $16,700,000 $6,700,000 $80,100,000 Per Square Foot $180.27 $200.17 $488.27 $147.21

As indicated, the prices per square foot range from $147.21 to $488.27 per square foot. The broad range is reflective of the varied income streams among the individual centers that comprise the subject property.

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Value Conclusion

As noted previously, the Income Approach is considered to be the primary means of estimating value for a property such as the subject. As a result, the Sales Comparison Approach has been included only as a crosscheck. In this analysis, the Sales Comparison Approach presents a meaningful crosscheck based on the availability of recent transaction activity. Based on the preceding discussion, the as-is market value of the subject property via the Sales Comparison Approach, as of September 30, 2018, is:

$151,500,000

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Reconciliation and Value Conclusion

The subject property consists of the land and improvements comprising The Waterfront in Homestead, Pennsylvania. The site contains 90.34 acres. The subject property is composed of five shopping centers located within the larger Waterfront redevelopment of the former U.S. Steel Homestead Steel Works plant. The subject centers contain 762,323 square feet in aggregate. Anchor tenants include Best Buy, Office Depot, TJ Maxx, Loews Theatre, and Barnes and Noble among other. The combined occupancy is 92.9 percent. The function of this appraisal is to estimate the market value of the property in conjunction with financial reporting for filling with the Israel Securities Authority (“ISA”).

The concluded values in this analysis are:

Stacks and Market on the Waterfront Town Waterfront Market Amity Amity Square Center

Final Value Estimate $45,900,000 $17,000,000 $6,500,000 $78,600,000

The Income Approach is considered to be the most reliable indication of value in this case because of the long-term leases encumbering the subject space. As such, it is the most meaningful in terms of investor expectations. In this analysis, we utilized the contract rents in place according to the lease agreements. We utilized both the direct capitalization and the discounted cash flow methods with both resulting in mutually supporting value conclusions. The Sales Comparison Approach was only included as a crosscheck.

Based upon our research and analyses, the as-is market value of the subject property as of September 30, 2018, free and clear of financing, is:

$148,000,000

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General Assumptions and Limiting Conditions

This appraisal report, the letter of transmittal and the certificate of value as well as all opinions formulated and the conclusions stated regarding the subject property are subject to and contingent upon all of the following general assumptions and limiting conditions and any additional assumptions and limiting conditions that may be set out elsewhere in this report. Acceptance and/or use of this report constitutes acceptance of all assumptions and limiting conditions in the report.

The legal description of the subject property, which was furnished by others, is assumed to be current, accurate and reliable. We assume no responsibility for legal matters and render no opinion whatsoever with respect to the accuracy of the legal description or the title to the subject property, which was assumed to be good and marketable.

Any information provided by the client or by a third party and relied upon by us in the performance of our services is assumed to be true, correct and reliable. To the extent deemed reasonable and necessary, we make a reasonable effort to verify any such information provided by others. However, we assume no responsibility whatsoever with respect to the accuracy of any such information provided.

Unless otherwise specified, all mortgages, deeds of trust, liens, security agreements, encumbrances, mineral rights, leases, and servitudes pertaining to the subject property were disregarded.

The value estimates assume responsible ownership and capable management of the subject property.

We assume no liability whatsoever with respect to the condition of the subject property or for hidden or unapparent conditions, if any, of the subject property, subsoil or structures, and further assume no liability or responsibility whatsoever with respect to the correction of any defects which may develop in the future. Equipment components considered, if any, were assumed to be adequate for the needs of the property's improvements, and in good working condition, unless otherwise reported.

Any maps, drawings or sketches provided by us in connection with the performance of our services were provided in order to aid the client in visualizing the subject property or the item that is the subject of such map, drawing or sketch. We made no survey of the subject property and assume no responsibility for such matters. It was also assumed that there was no property encroachment or trespass existing on the subject property, unless otherwise stated.

It was assumed that all public and private zoning and use restrictions and regulations had been complied with, unless non-conformity was stated, defined and considered in the report.

Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos, polychlorinated biphenyls, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, or other environmental

107 The Austin McGuire Company conditions, were neither called to our attention nor were we aware of such during our inspection. We have no knowledge of the existence of such materials on or in the property, unless otherwise stated. We are, however, not qualified to test for such substances or conditions. If the presence of such substances, such as asbestos, urea formaldehyde from insulation or other hazardous substances or environmental conditions may affect the value of the property, the value estimated is predicated on the assumption that there is no such condition on or in the property or in such proximity thereto that it would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them.

Any written report or analysis provided by us to the client in connection with performance of our professional services is for the sole use and benefit of the client, and shall not be utilized or relied upon by any third party without our express prior written consent. Possession of this report or a copy of this report does neither imply the right of publication or use, nor may the report be reproduced in whole, or in part, in any manner, by any person, without prior written consent.

Any apportionment or distribution of total value between land and improvements thereon apply only under the existing or specified program utilization. Separate valuation for land and building thereon shall not be used in conjunction with any other study or appraisal, and shall be invalid, if so used.

All analyses and reports were made in conformity with and are subject to the requirements of the Standards of Professional Practice and Conduct of the Appraisal Institute.

Neither all nor any part of the contents of this report, especially any conclusions as to value, the identity of the appraiser or appraiser's agents or employees, or any reference to the Appraisal Institute professional designations, shall be disseminated to the public through advertising media, public relations media, news media, sales media or any other public means of communication without prior written consent.

We are prepared but not required to give testimony or attendance in any legal or other proceeding relative to this valuation of the subject property, unless satisfactory additional arrangement are made prior to such needs.

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Certification

I certify that, to the best of my knowledge and belief….

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

The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions and conclusions.

I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to parties involved.

I have performed services, as an appraiser, regarding the properties that are the subject of this report within the three-year period immediately preceding acceptance of this assignment. The services include quarterly and annual valuations of the subject properties.

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

My engagement in this assignment was not contingent upon developing or reported predetermined results.

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

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

Michael McGuire has made a personal inspection of the property that is the subject of this report.

As of the effective date of appraisal and as of the writing of this appraisal, Michael McGuire has complied with the continuing education requirements of the Appraisal Institute.

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

______Michael McGuire, MAI

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Michael D. McGuire, MAI

Michael McGuire has over 20 years of experience in real estate ranging from residential development to financial analysis of complex properties and is a principal of the Austin McGuire Company. Mr. McGuire is a member of the Appraisal Institute (MAI) and a Member of the Commercial Investment Real Estate Institute (CIREI) holding the Certified Commercial Investment Member (CCIM) designation.

Mr. McGuire’s focus is bringing traditional and non-traditional real estate problem solving skills to meet the needs of real estate investors as well as local communities and the businesses that reside there. The Austin McGuire Company provides real estate counseling services related to highest and best use analyses, disposition and acquisition strategy analyses, feasibility studies, financial analyses, value enhancement and alternative use studies, litigation support, and valuation.

In addition, Mr. McGuire views his role as that of a facilitator of his extensive network of professional contacts to solve client problems relating to environmental issues, development analysis, planning and zoning issues, traditional and alternative financial structuring, and architectural and construction issues among others.

Mr. McGuire has participated as a principal in the acquisition and rehabilitation of two multifamily residential and one mixed-use project in Westchester County, New York, a commercial office building in Norwalk, Connecticut, and a residential subdivision in Rowayton, Connecticut.

Prior to joining The Austin McGuire Company, Mr. McGuire was the National Director of Real Estate Valuations for KPMG Peat Marwick LLP. During his five years with KPMG, Mr. McGuire was exposed to a variety of real estate related problems presented by the broad spectrum of KPMG clients.

Mr. McGuire has provided valuations for regional malls, community and neighborhood retail centers, suburban and CBD offices, multifamily properties, sub-divisions, hotels, and industrial properties. A sub-specialty is valuations of value diminution based on damages from environmental or other external factors.

COURT TESTIMONY Mr. McGuire has testified as an expert witness in the following jurisdictions:  Federal Tax Court, Minneapolis, Minnesota  Nassau County Supreme Court, Hempstead, New York  Stamford Superior Court, Stamford, Connecticut  Bankruptcy Court, New Haven, Connecticut  Circuit Court of Oakland County, Michigan  Bridgeport Superior Court, Bridgeport, Connecticut

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PROFESSIONAL AFFILIATIONS/ LICENSES Member - Commercial Investment Real Estate Institute (CIREI) holding the CCIM designation Member - Appraisal Institute (MAI) Member - New York Chapter of the Appraisal Institute State of New York – Certified General Real Estate Appraiser State of Connecticut - Certified General Real Estate Appraiser #RCG.809

TEACHING EXPERIENCE/LECTURES Guest Lecturer - New York University Real Estate Institute- Masters Program “Demand Analysis in the Office Markets” Fall Semester 2006, Spring Semester 2007 Speaker – Center for Real Estate and Urban Economic Studies, University of Connecticut 2005 CT Commercial Real Estate Conference, “New Haven County Office Market Segmentation – Risks & Opportunities” Speaker – Center for Real Estate and Urban Economic Studies, University of Connecticut 2004 CT Commercial Real Estate Conference, “A 10 year projection for the New Haven County Office Market” Speaker – Center for Real Estate and Urban Economic Studies, University of Connecticut “ 2003 CT Commercial Real Estate Conference, New Haven County Office Market” Guest Lecturer - New York University Real Estate Institute “Enhancing Value” August 1995 Panel Speaker - KPMG Peat Marwick Japanese Practice “Current Market Perspectives” September 30995

EDUCATION State University of New York - Cortland - B.S. 1984 Mathematics/Computer Science, Minor in Economics New York University and the New York Institute of Finance - 1991-1996 Professional course work in financial markets & the tax aspect of real estate Urban Land Institute - 1993-Present Professional course work for real estate investment and development Commercial Investment Real Estate Institute- Member 2000 Designated Member “CCIM” Appraisal Institute - Member 1994 Designated Member of the Appraisal Institute “MAI”.

PREVIOUS EXPERIENCE KPMG Peat Marwick LLP, New York, New York Senior Manager - Director Real Estate Valuations Moran & Associates, Stamford, Connecticut Commercial Real Estate Appraiser McGrath, Basciani & Associates/Doern Appraisals (both in Westchester County) Staff Appraiser

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Addenda

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Sensitivity Analysis Sensitivity Analysis Changes in Value Sep-17 Dollars Percentage Vacancy Rate Increase of 5% -$1,700,000 -1.2% Decrease of 5% $2,400,000 1.6% Cap rate Increase of 5% -$7,000,000 -4.8% Decrease of 5% $7,700,000 5.2% NOI Increase of 5% $7,300,000 5.0% Decrease of 5% -$7,400,000 -5.0%

Note: The Sensitivity Analysis is based on the first year cash flow that does not reflect stabilized occupancy.

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