APPRAISAL OF REAL PROPERTY Commercial Office Building 840 West Hafen Lane APN 001-19-501-005 Mesquite, Clark County, NV 89027 IN AN APPRAISAL REPORT As of August 25, 2020 Prepared For: City of Mesquite 10 East Mesquite Boulevard Mesquite, NV 89027 Prepared By: Cushman & Wakefield of Nevada, Inc. Valuation & Advisory 6725 Via Austi Parkway, Suite 275 Las Vegas, NV 89119 Cushman & Wakefield File ID: 20-56001-900158-001 CUSHMAN & WAKEFIELD OF NEVADA, INC. 6725 VIA AUSTI PARKWAY, SUITE 275 LAS VEGAS, NV 89119 Commercial Office Building 840 West Hafen Lane APN 001-19-501-005 Mesquite, Clark County, NV 89027 CUSHMAN & WAKEFIELD 6725 Via Austi Parkway, Suite 275 Las Vegas, NV 89119 Tel +1 702-396-7956 cushmanwakefield.com September 09, 2020 Aaron Baker City Manager City of Mesquite 10 East Mesquite Boulevard Mesquite, NV 89027 Re: Appraisal Report Commercial Office Building 840 West Hafen Lane APN 001-19-501-005 Mesquite, Clark County, NV 89027 Cushman & Wakefield File ID: 20-56001-900158-001 Dear Mr. Baker: In fulfillment of our agreement as outlined in the Letter of Engagement copied in the Addenda, we are pleased to transmit our appraisal of the above referenced property in the following Appraisal Report. This is an Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice. The subject property consists of a single-story, commercial office building which according to architectural plans contains 17,872 square feet with a 1,585 square foot covered porte-cochere canopy. The building was originally constructed as the Arcon Health Clinic and Surgery Center who ceased operations and vacated approximately 10 years ago. The space was subsequently occupied by the Mesa View Hospital entity who used some space for office/accounting but they vacated the building 5 years ago. Other than 2,000 square feet that has been leased to the Southern Nevada Health District since 2017, the building has been vacant and is in need of repairs and remodel. The lease to SNHD has been renewing on an annual basis since 2018 but is in the final year of an option period with a termination in September 2021. In addition, either party has a right to terminate the lease with a 30 day notice. We have been asked to provide a value for the subject of the fee simple interest, without any consideration of assumption that this tenant will remain. The subject is located on a parcel with 4.93 acres, or 214,751 square feet. The location along Hafen Lane is residential in nature with single family homes on every side of the parcel. The area originally used as a Helipad in the northwest corner of the parcel is now leased to the Mesquite Veterans Center who have placed a manufactured pre-fab structure for use as a veterans center. The lease was signed in 2009 for 50 years with no rental income obligations. The lease does not specify the area that can be used or the number of spaces this tenant can utilize. In preparation for potential disposition of the subject, the City of Mesquite will modify the lease to define these Aaron Baker Cushman & Wakefield of Nevada, Inc. City of Mesquite September 9, 2020 Page 4 issues but have reported that due to the free use of the site, the lease will be structured to guarantee that the building occupant will have full and functional use of the property. We have included an extraordinary assumption that this lease will be modified as needed. In recent times, the CRE market has been driven by investor demand and strong liquidity. Asset values can fall significantly in short periods of time if either of these two factors, often in conjunction with many others, change significantly. While Cushman & Wakefield is closely monitoring the latest developments and will continue to provide updates as events unfold, the reader is cautioned to consider that values and incomes are likely to change more rapidly and significantly than during standard market conditions. Furthermore, the reader should be cautioned and reminded that any conclusions presented in this appraisal report apply only as of the effective date(s) indicated. The appraiser makes no representation as to the effect on the subject property(ies) of this event, or any event, subsequent to the effective date of the appraisal. This Appraisal Report has been prepared in accordance with our interpretation of your institution’s guidelines and the Uniform Standards of Professional Appraisal Practice (USPAP). Based on the agreed-to Scope of Work, and as outlined in the report, we developed the following opinion: Value Conclusions Appraisal Premise Real Property Interest Date of Value Value Conclusion Market Value As-Is Fee Simple August 25, 2020 $1,150,000 Compiled by Cushman & Wakefield of Nevada, Inc. The value opinion in this report is qualified by certain assumptions, limiting conditions, certifications, and definitions, as well as the following extraordinary assumptions. Extraordinary Assumptions For a definition of Extraordinary Assumptions please see the Glossary of Terms & Definitions. The use of extraordinary assumptions, if any, might have affected the assignment results. The subject has a 50 year lease in place that allows for the Mesquite Veterans Center to occupy a portion of the former helipad site. The tenant currently has a manufactured pre-fab structure in that area but the lease agreement does not define the usable area or address rights to parking. In anticipation of disposition of the property, the City of Mesquite intends to modify the lease so that these and other issues are defined in a manner that guarantees a new owner can fully utilize the site to its highest and best use. The City of Mesquite representative stated that the tenant is aware that this needs to be done and is cooperative but no pending lease document is available for review. We have estimated an allocated area for the Veteran’s Center as a deduction to the usable site area for the purpose of this analysis but if a different area is allocated we may need to reconsider our value conclusion. It is an extraordinary assumption that the existing lease will be modified to make the subject marketable and usable by a new owner. The building also has deferred maintenance for various issues related to age and vacancy but no cost estimate has been obtained or provided. In addition, the current floor plan is tenant specific and dated. We do not have a specific end user plan to consider so we have estimated costs for demolition as well as costs to bring the subject to a functional usable state that considers some of the existing infrastructure and mechanicals and results in a more marketable condition for a second generation user. These costs are user specific and are likely to change. We have included an extraordinary assumption that our estimated costs are reasonable but should actual costs become available, this would likely influence our analysis and conclusion. Aaron Baker Cushman & Wakefield of Nevada, Inc. City of Mesquite September 9, 2020 Page 5 Hypothetical Conditions For a definition of Hypothetical Conditions please see the Glossary of Terms & Definitions. The use of hypothetical conditions, if any, might have affected the assignment results. This appraisal does not employ any hypothetical conditions. This letter is invalid as an opinion of value if detached from the report, which contains the text, exhibits, and Addenda. Respectfully submitted, CUSHMAN & WAKEFIELD OF NEVADA, INC. Petra Latch, MAI Executive Director Nevada Certified General Appraiser License No. A.0004239-CG [email protected] 702-605-1561 Office Direct COMMERCIAL OFFICE BUILDING CLIENT SATISFACTION SURVEY Client Satisfaction Survey V&A National Quality Control Group values your feedback! • What are we doing right? • Are there areas where we could improve? • Did our report meet your requirements? As part of our quality monitoring campaign, your comments are critical to our efforts to continuously improve our service. We’d appreciate your help in completing a short survey pertaining to this report and the level of service you received. Rest assured, any feedback will be treated with proper discretion and is not shared with executive management. If you prefer to limit who receives the survey response, the distribution can be altered at your request. Simply click https://www.surveymonkey.com/r/LQKCGLF?c=20-56001-900158-001 to respond or print out the survey in the Addenda to submit a hard copy or fax response to Rick Zbranek at (713) 963 2870. Contact our Quality Control Committee with any questions or comments: Rick Zbranek, MAI Karen Storm, MAI, AI-GRS Steve Saunders, MAI, AI-GRS, FRICS Senior Managing Director Senior Director Executive Managing Director National Quality Control - Co Leader National Quality Control Board National Quality Control Board Valuation & Advisory Valuation & Advisory Valuation & Advisory T +1 713 963 2863 T +1 503 279 1706 T +1 407 541 4384 [email protected] [email protected] [email protected] Steve Henry, MAI Clarke Lewis, MAI Sid Womack, MAI, AI-GRS, FRICS Executive Managing Director Senior Managing Director Senior Managing Director National Quality Control - Co Leader National Quality Control Board National Quality Control Board Valuation & Advisory Valuation & Advisory Valuation & Advisory T +1 949 930 9211 T +1 631 234 5140 T +1 972 663 9659 [email protected] [email protected] [email protected] CUSHMAN & WAKEFIELD 6 COMMERCIAL OFFICE BUILDING SUMMARY OF SALIENT FACTS AND CONCLUSIONS Summary of Salient Facts and Conclusions Client: City of Mesquite Intended Use: This appraisal is intended to provide an opinion of the Market Value of the Fee Simple interest in the property for the use to determine whether or not an exchange transaction is feasible.This report is not intended for any other use.