D.F. DAVIS REAL ESTATE INC. A P P R A I S A L R E P O R T FAIR MARKET VALUE OF EXISTING STADIUM SITE 135.12 acres of land primarily being used as SDCCU Stadium located on the south side of Friars Road at Mission Village Drive (9449 Friars Road) San Diego, CA 92108 APPRAISED FOR The Board of Trustees of the California State University c/o San Diego State University Business & Financial Affairs 5500 Campanile Drive San Diego, CA 92182-1620 City of San Diego Real Estate Assets Department 1200 Third Avenue, Suite 1700, MS 51A San Diego, CA 92101-4199 AP 631304 DATE OF VALUATION September 30, 2017 (retrospective) DATE OF REPORT September 30, 2019 APPRAISED BY D.F. Davis Real Estate, Inc. David F. Davis, MAI 860 Jamacha Road, Suite 206 El Cajon, CA 92019 File No. 19-14 D.F. DAVIS REAL ESTATE 860 Jamacha Road, Suite 206, El Cajon, CA 92019 • Tel. (858) 485-5000 • (619) 401-9000 INC. September 30, 2019 The Board of Trustees of the California State University c/o Mr. Tom McCarron Senior Vice President, SDSU Mission Valley Development San Diego State University Business & Financial Affairs 5500 Campanile Drive San Diego, CA 92182-1620 Ms. Jean V.G. Catling, MAI Principal Appraiser/Program Manager/Valuation City of San Diego – Real Estate Assets Department 1200 Third Avenue, Suite 1700, MS 51A San Diego, CA 92101-4199 Re: Fair Market Value of Existing Stadium Site 135.12 acres of land primarily being used as SDCCU Stadium 9449 Friars Road San Diego, CA 92108 Dear Mr. McCarron and Ms. Catling: At your request and authorization, the above-referenced property and its environs were inspected for the purpose of formulating an opinion of the fair market value of the subject property as of the retrospective effective date of valuation of September 30, 2017. The subject property was valued as if the existing stadium is no longer operational and no stadium expenses were deducted from the appraised value. The subject property was appraised in fee simple interest, at the highest and best use and disregarding any leases. These requirements represent hypothetical conditions and extraordinary assumptions. Highest and best use is defined as: "The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value." The intent of this appraisal is that it reflects the residual value of a hypothetical third-party market- rate project and not the SDSU Mission Valley project. Of the three traditional valuation approaches, Cost, Sales Comparison and Income Capitalization, the valuation utilizes the Income Approach via Discounted Cash Flow Analysis which, in this case, reflects the value of the subject property in its present condition by hypothetically forecasting its development in to finished lots for sale to third- parties and deducting the commensurate costs. 19-14 ii David F. Davis MAI D.F. DAVIS REAL ESTATE INC. EXISTING STADIUM SITE Discounted Cash Flow Analysis begins with a projection of revenue over the analysis period. Expense items must then be deducted to arrive at net cash flows which are discounted for entrepreneurial incentive to arrive at a present value indication which is the market value estimate. The Sales Comparison Approach was used to estimate the value of the different components that comprise the projected revenue in the Discounted Cash Flow Analysis. The Sales Comparison Approach to value involves the comparison of the subject property with recent sales of comparable properties and then isolating pertinent units of comparison which can be applied to the subject. The sale price per acre, lot/unit or per square foot are typically the units of comparison utilized. The Cost Approach is based on the proposition that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. The Cost Approach was not completed as the residual land value exceeds the value as improved. The following report, of which this letter is a part, describes the facts and reasoning upon which the opinions are supported. The valuations were based on market data and economic trends present before the retrospective effective date of value and projected as of the date of value, and is subject to the attached Assumptions and Limiting Conditions. At the request of the clients, the definition of fair market value used for this appraisal is: Appraiser’s opinion of the Fair Market Value of the Existing Stadium Site shall be based on the Municipal Code and these Instructions and shall reflect the most probable price which the Existing Stadium Site should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and the seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Appraiser shall assume the conveyance of title in the Existing Stadium Site from the seller to the buyer under conditions whereby: (a) the seller and the buyer are typically motivated; (b) both the seller and the buyer are well informed or well advised, and acting in what they consider their own best interests; (c) a reasonable time is allowed for exposure in the open market; (d) payment is made in terms of cash in U.S. dollars or comparable financial arrangements; and (e) 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. This appraisal values the fee simple interest in the 135.12 acres but includes the cost of constructing a 34.6 acre River Park adjacent to the south. A requirement for development of the 135.12 acres at highest and best use is the construction of a regional River Park on the 34.6 acres. The River Park land is contemplated for long term lease by the developer from the City of San Diego. Based upon investigation and analysis, the estimated fair market value of the fee simple interest of the subject property, as of September 30, 2017, subject to the attached assumptions and limiting conditions, was: $68,200,000 The value reflects the cost of major items, entitlement expenses, including demolition of the existing stadium, grading and flood plain remediation, on and off-site work, developing the river park, an allowance for deep foundation costs, and other development expenses. (These major items are shown on Page 2 and further discussed in the Income Approach – Discounted Cash Flow Analysis section.) 19-14 iii David F. Davis MAI D.F. DAVIS REAL ESTATE INC. EXISTING STADIUM SITE Very truly yours, David F. Davis, MAI President #AG002752 DFD/sts 19-14 iv David F. Davis MAI D.F. DAVIS REAL ESTATE EXISTING STADIUM SITE INC. TABLE OF CONTENTS LETTER OF TRANSMITTAL……………………………………………………………………………………………….ii TABLE OF CONTENTS ..................................................................................................................... iv ADDENDUM ..................................................................................................................................... vii EXISTING STADIUM SITE ............................................................................................................... 1 SUMMARY OF SALIENT FACTS AND CONCLUSIONS .............................................................. 2 ASSUMPTIONS AND LIMITING CONDITIONS ............................................................................ 3 DISCLOSURE OF COMPETENCY .................................................................................................... 5 DESCRIPTIVE SECTION ................................................................................................................. 11 INTRODUCTION ....................................................................................................................... 11 Stadium History .................................................................................................................... 14 TYPE AND DEFINITION OF VALUE ..................................................................................... 17 PROPERTY RIGHTS APPRAISED ........................................................................................... 18 DATE OF VALUATION ............................................................................................................ 18 INTENDED USE/INTENDED USER OF THE APPRAISAL .................................................. 18 SCOPE OF WORK ...................................................................................................................... 18 PROPERTY IDENTIFICATION ................................................................................................ 18 Legal Description ................................................................................................................. 18 Location ................................................................................................................................ 19 Owner of Record - History ................................................................................................... 19 AREA MAP ................................................................................................................................. 20 AREA DESCRIPTION – AS OF 2017 ....................................................................................... 21 NEIGHBORHOOD MAP ........................................................................................................... 22 Mission Valley Community Plan