Wawa Ground Lease South Easton Road and Waverly Road Glenside, Montgomery County, PA 19038 NKF Job No.: 19-0013166-1 Client Reference: 191119001 Appraisal Report Prepared For: Rosemary Rockwood Firstrust Bank 15 E Ridge Pike Conshohocken, PA 19428-2123 Prepared By: Newmark Knight Frank Valuation & Advisory, LLC 200 S. Broad St., Suite 510 Philadelphia, PA 19102 December 12, 2019 Rosemary Rockwood Firstrust Bank 15 E Ridge Pike Conshohocken, PA 19428-2123 RE: Appraisal of a proposed ground-leased convenience store with gas located at South Easton Road and Waverly Road, Glenside, Montgomery County, PA 19038, prepared by Newmark Knight Frank Valuation & Advisory, LLC (herein “Firm” or “NKF”) NKF Job No.: 19-0013166-1 Client Reference: 191119001 Dear Ms. Rockwood: The “Subject Property” is a 69,785 square foot development site, ground leased to Wawa. The development site is an assemblage of six parcels. Three of the parcels have been purchased by the developer, while the remaining three are under agreement of sale. The parcels that have been purchased are a former Lukoil gas station, which has been demolished. The remaining parcels all feature existing improvements which are to be demolished prior to delivery of the site to Wawa for development. The developer anticipates completion of site work and delivery of pad to tenant by June 2020, with rent expected to commence December 2020 upon completion of the improvements. The subject is 100% leased to Wawa for a twenty-year term on an absolute net basis, with 10% increases every five years. Upon expiration of the initial lease term, there are six, five-year options, each with 10% increases. The leasehold improvements are to be constructed by the tenant, Wawa; as our analysis is reflective of the leased fee interest, no consideration is given to the leasehold improvements. Key Value Considerations Strengths The parcel is subject to a twenty-year ground lease, with rent expected to commence December 2020, and 10% increases every five years. Upon expiration of the initial term in November 2040, there are six, five-year options to extend. There is strong investor demand for net-leased Wawa’s, with capitalization rates averaging 4.73% according to Net Lease Advisors. Prominent corner location at the intersection of Easton and Waverly Roads. Risk Factors Although situated at a signalized intersection, there will not be access to the site from the signal. There is to be two right in/right out access points, and one full service. Newmark Knight Frank 200 S. Broad St., Suite 510 Philadelphia, PA 19102 www.ngkf.com December 12, 2019 Rosemary Rockwood According to our discussions with the developer, construction permits remain to be secured, though all approvals have been achieved. The analysis herein assumes permits are granted. Demolition of existing improvements on the site. Based on the analysis contained in the following report, the opinions of value for the subject are: Value Conclusions Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value "As Is" Leased Fee 12/5/2019 $2,430,000 Prospective Market Value "Upon Completion" Leased Fee 12/1/2020 $7,900,000 Compiled by NKF Extraordinary Assumptions An extraordinary assumption is defined in USPAP as an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions. The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. 1. The developer reports they have received all approvals for the project and only permits remain to be secured. We assume that permits are secured as reported. 2. We assume that the pending contracts will close as scheduled, completing the planned assemblage to make way for the proposed development. The use of these extraordinary assumptions might have affected assignment results. Hypothetical Conditions A hypothetical condition is defined in USPAP as a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. 1. None Client Reliance Statement The appraisal was developed based on, and this report has been prepared in conformance with the Client’s appraisal requirements, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, Title XI of the Financial Institution Reform, Recovery and Enforcement Act (FIRREA) of 1989, and the Interagency Appraisal and Evaluation Guidelines (December 2, 2010). Wawa Ground Lease Certification 4 Certification We certify that, to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 5. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 6. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 7. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan. 8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of Pennsylvania. 9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 11. As of the date of this report, Emily J. Risser, MAI and Michael Silverman, MAI, CRE, MRICS have completed the continuing education program for Designated Members of the Appraisal Institute. 12. Emily J. Risser, MAI and Matthew McDonough made a personal inspection of the property that is the subject of this report. Michael Silverman, MAI, CRE, MRICS has not personally inspected the subject. 13. No one provided significant real property appraisal assistance to the person(s) signing this certification. 14. The Firm operates as an independent economic entity. Although employees of other service lines or affiliates of the Firm may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest. 15. Within this report, "Newmark Knight Frank", "NKF Valuation & Advisory", "NKF, Inc.", and similar forms of reference refer only to the appraiser(s) who have signed this certification and any persons noted above as having provided significant real property appraisal assistance to the persons signing this report. Wawa Ground Lease Certification 5 16. Emily J. Risser, MAI has not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Michael Silverman, MAI, CRE, MRICS has not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Matthew McDonough has not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Emily J. Risser, MAI Michael Silverman, MAI, CRE, MRICS Senior Vice President, Valuation & Advisory Executive Vice President, Valuation & Advisory Certified General Real Estate Appraiser Certified General Real Estate Appraiser Pennsylvania # GA003445 Pennsylvania # GA001541R Telephone: 215-587-6006 Telephone: 215-587-6002 Email: [email protected] Email: [email protected] Matthew McDonough Senior Analyst, Valuation & Advisory Certified General Real Estate Appraiser Pennsylvania # LAT000978 Telephone: 215-825-7550 Email: [email protected] Wawa Ground Lease Table of Contents Table of Contents D. Comparable Data Appraisal Transmittal and Certification E. Land Sales Certification Improved Sales Table of Contents Lease Comparables Subject Maps F. Appraiser Qualifications and Licenses Subject Photographs Executive Summary 10 Introduction 13 Economic