USPAP Report Option: Appraisal ReportSyn-Mar Report Option: Summary-Form
| ASSIGNMENT INFORMATION | ||
| Property Identification: 1136-1150 South Vail Avenue Montebello, California 90640 | Report Prepared By: Larry P. Hampton, CGREA Jeffrey O. Eggleston, CGREA Stephen P. Rethmeier, CGREA Syn-Mar Associates 1420 North Lakeview Avenue Anaheim, CA 92807 714-692-6955 jeff@syn-mar.com | Report Prepared For (Client): China Fisheries North America Inc. c/o Mr. Hua Liu 246 South De Lacey Avenue Pasadena, CA 91105 626-458-5500 |
| Tax Parcel ID(s): 6353-016-017 | ||
| Tax Assessment: $7,143,100 | ||
| Owner: China Fisheries North America, Inc. | ||
| Syn-Mar File No.: 21-378 | ||
| Date of the Report: September 20, 2021 Date of Valuation: August 20, 2021 Date of Inspection: August 20, 2021 | ||
| SCOPE OF WORK | |
| Report Type: | This is an Appraisal Report as defined by Uniform Standards of Professional Appraisal Practice under Standards Rule 2-2(a). This format provides a summary description of the appraisal process, subject, market data, and valuation analyses. |
| Property Identification: | The subject has been identified by the assessor parcel number, the assessor parcel map, a building sketch, photographs of the subject, and the descriptions in this report. |
| Inspection: | An interior and exterior inspection of the subject property has been made, and photographs taken by John D. Moonitz, CRREA. Larry P. Hampton, CGREA, conducted the research into the physical and economic factors affecting the subject property, the data research, and the analysis applied to arrive at the opinions and conclusions herein. Jeffrey O. Eggleston, CGREA, also inspected the property and, along with Stephen P. Rethmeier, CGREA, assisted in the analysis, provided oversight as needed, supervised the assignment, and reviewed the report. |
| Market Area and Analysis of Market Conditions: | A complete analysis of market conditions has been made. The appraiser maintains and has access to comprehensive databases for this market area and has reviewed the market for transactions and listings relevant to this analysis. The comparable data relied upon in this report has been confirmed with one or more parties familiar with the transaction or other sources thought reasonable, and all are considered appropriate for inclusion to the best of our factual judgment and knowledge. We consider the data to have an appropriate degree of reliability. |
| Highest and Best Use Analysis: | A limited as vacant and as improved highest and best use analysis for the subject has been made. Physically possible, legally permissible and financially feasible uses were considered, and the maximally productive use was concluded. |
| Valuation Analyses | A Cost Approach was not applied. An Income Capitalization Approach was applied. A Sales Comparison Approach was applied. |
| Information Provided: | ? Rent roll dated 7/28/2021. Copy of lease for Unit 1146. ? YTD 2021 Profit & Loss statement through June. ? Appraisal of the subject prepared by CBRE (valuation date: 9/6/2018), and an offering memorandum prepared by CBRE. |
| Information Not Provided: | ? The leases encumbering Units 1136, 1140 and 1150. A preliminary title report. ? It is assumed that all information known to the client and relative to the valuation has been accurately furnished and that there are no undisclosed reports, leases, agreements, options, liens, or other encumbrances affecting the use or value of the property. |
| LOCATION AND MARKET ANALYSIS |
| The subject is in the city of Montebello in a mature neighborhood predominated by older industrial uses, which essentially border the subject on all sides. Based on comments from local market participants, as well as recent appraisals completed in the area, the subject is in an established market with a 0.5% vacancy rate. This low vacancy indicates a severe undersupply of available product for this market (a market is considered to be in balance as vacancy approaches 10%). Reportedly, the market is strong and rental rates and property values are increasing. |
LOCATION AND MARKET ANALYSISExisting RBA:10,446,963
| Existing RBA:10,446,963 |
| Vacant:53,4690.5% |
| Occupied:10,393,49499.5% |
| Properties:255 |
| Existing: 255 |
| Average Building Size:40,968 |
| Spaces:5 |
| absorption activity* |
| Absorption:351,2713.4% |
| Net Absorption:118,2241.1% |
Industrial Avg:$1.05/SF/mo
Industrial Avg:$1.05/SF/mo*Data reflects QTD plus trailing 3 quarters.Source: CoStar Property. Syn-Mar Associates does not guarantee the accuracy of the data.
| *Data reflects QTD plus trailing 3 quarters.Source: CoStar Property. Syn-Mar Associates does not guarantee the accuracy of the data. | City of Montebello Industrial/Flex Submarket | ||||
| 0.0%0.5%1.0%1.5%2.0%2.5%$0.00$0.20$0.40$0.60$0.80$1.00$1.20Vacancy RateRental RatesVacancy/Rental Rate Trend--Size RangeVacancy RateRental Rate | |||||
| occupancy | |||||
| average rent | |||||
| Survey Completed on 09/06/21 | |||||
| ANALYSIS OF SALE, OPTION, LISTING AND OFFER HISTORY |
| According to public records, title to the subject is vested in China Fisheries North America, Inc. Public records also indicate that this entity has held title to the subject for more than 3 years. The subject is not currently listed for sale or under contract. |
| PROPERTY DESCRIPTION | |||
| Building Area: | 49,810 SF | Source of Building Area: | Physical measurement |
| Site Size: | 98,446 SF | Property Type: | Industrial |
| Year Built: | 1967 | Current Use: | Multi-Tenant Industrial Building |
| Remaining Economic Life: | 35 years | Occupancy (owner vs. tenant / %): | 100% tenant-occupied |
| Quality: | Average | Zoning: | M1 - Light Manufacturing |
| Condition: | Average | Conformance to Zoning: | The subject is a pre-existing legal, non-conforming use. See comments. |
| Date of Inspection: | August 20, 2021 | Property Inspected by: | John D. Moonitz, CRREA and Jeffrey O. Eggleston, CGREA |
| FEMA Flood Zone: | The subject is not within a flood zone (Zone X). | ||
| Seismic Hazards (Earthquake): | According to the State of California Department of Conservation website, the subject is not located in an Alquist-Priolo Earthquake Fault Zone. | ||
| The subject consists of a 49,810-SF, construction Class “C”, concrete tilt-up, multi-tenant industrial building, of which roughly 6,612 SF (13%) is office space. The building is demised into four units ranging in size from 9,880 SF to 14,960 SF. Each unit has a small amount of office and a warehouse area. Units 1146 and 1150 are improved with cold storage improvements which will command a higher rent than standard industrial units. This will be accounted for in our analysis. The improvements are situated on a generally rectangular-shaped corner site totaling approximately 98,446 SF. The improvements were constructed in 1967, and based on the site inspection appear to be in average-to-good condition, considering their chronological age. Based on this, we estimate an effective age of 15 years for the subject, with 35 years of remaining economic life. During our physical site inspection, we noted that the subject's asphalt paving in the yard/parking area is showing signs of deterioration. Other areas of the paving are in average condition. The cost to repair these areas would be considered nominal in relation to the overall building value and it has been factored into the subject's overall effective age. The subject, as an industrial property is allowed in the "M1 - Light Manufacturing" zone. City parking requirements for industrial uses specify 1 space per 500 SF gross floor area. Applied to the subject, the result is a total requirement of 100 spaces. The subject site provides +/-89 spaces; therefore, it is pre-existing, legal, non-conforming use with respect to parking. | |||
| HIGHEST AND BEST USE | |
| Highest and Best Use as Vacant: | The site is generally rectangular in shape, easily accessible, and fairly level so that most any development would be physically possible. The only inhibiting factor would be size. From the legally permissible standpoint, the zoning for the subject calls for industrial uses. Residential and commercial uses are prohibited. Rental rates and values are improving, but in many cases are insufficient to support profitable speculative development. Most developers would not undertake a speculative project but would likely hold the property until economic conditions show further improvement and/or a user requiring a specific building (build-to-suit) is found. Based on the foregoing discussion, we conclude the highest and best use as vacant is to hold for future development as market conditions allow. |
| Highest and Best Use as Improved: | The existing improvements have demonstrated a reasonable level of functional utilization and thereby pass the test of "a physically possible use." Since the improvements are also a "grandfathered" use under this zoning classification, they also pass the test of "legally permissible." Finally, during this appraisal, we found that the Income Capitalization Approach and Sales Comparison Approach indicate higher values for the property as improved than if the land were vacant (based on estimates of regional and local land values). This demonstrates that the improvements have contributory value which would be lost if they were demolished for redevelopment. Based on these three tests, we conclude the highest and best use as improved is the continuation of the existing use. |
| Most Probable Buyer: | As of the date of value, the most probable buyer of the subject property is an investor. |
SUBJECT RENT ROLL
Rent RollRent Escalations
| Portor Industry, Inc.1136Industrial110,01020.1%1/1/201912/31/2021364N/A$6,000$0.60Portor Industry, Inc.1140Industrial19,88019.8%6/1/20195/31/2022369N/A$7,600$0.77Koi Koi Trading, Inc.1146Industrial - Cold Storage114,96030.0%3/16/20203/31/20256144Fixed$14,000$0.94Poke Q Corporation1150Industrial - Cold Storage114,96030.0%6/1/20185/31/2022489N/A$16,000$1.07 |
| Totals449,81099.9%$43,600$0.88 |
| Leased449,810100.0%$43,600$0.88 |
| Vacant000.0% |
Regarding the fixed increases for Unit 1146, the contract remains flat until April 1, 2023, when it increases to $14,420/month. The final increase occurs on April 1, 2024to $14,852.60. This tenant also has 1 @ 5-year option.
We were not provided with leases for three of the units. Thus, the information above is based on a rent roll provided by the client. In addition, the client reports that thesubject units are leased on a modified gross basis, whereby the landlord pays taxes, insurance, repairs/maintenance, common area utilities, and management, while thetenant pays utilities for the unit and janitorial direct. This appears to be correct as the profit and loss statements do not include any reimbursement income. Since we didnot get all the leases, we assume all information in the rent roll and provided by the client is true and accurate.
According to the rent roll provided by the client, a portion of the subject site is leased to Verizon Wireless, which operates a communications cell tower from the site at arental rate of $2,138.65/month. The lease originally commenced in March 2009. An extension was exercised in 2016 with an expiration date of February 28, 2034 and six5-year options. No value has been assigned to this lease because, with the introduction of 5G service on a large scale, many legacy antennas will be consideredtechnologically obsolete. Most current antennas are large, freestanding structures, while the antennas of the future will be smaller devices mounted onto lampposts, lowrooftops, traffic lights and other appropriate spots within service areas. In fact, it is speculated that individual cell phones will also serve as antennas for bouncing serviceover networks. While the need and demand for legacy antenna towers is still present, the number and the types of antennas will change, and many leases could beterminated or restructured. While it is not possible to predict the immediate impact on cellular antenna revenue, market participants indicate that many prospectivebuyers are starting to recognize limited to no value. On the other hand, an existing antenna with rental income can be an enhancement to marketability. Therefore, thisappraisal assigns no value to the lease.
Regarding the fixed increases for Unit 1146, the contract remains flat until April 1, 2023, when it increases to $14,420/month. The final increase occurs on April 1, 2024to $14,852.60. This tenant also has 1 @ 5-year option.
We were not provided with leases for three of the units. Thus, the information above is based on a rent roll provided by the client. In addition, the client reports that thesubject units are leased on a modified gross basis, whereby the landlord pays taxes, insurance, repairs/maintenance, common area utilities, and management, while thetenant pays utilities for the unit and janitorial direct. This appears to be correct as the profit and loss statements do not include any reimbursement income. Since we didnot get all the leases, we assume all information in the rent roll and provided by the client is true and accurate.
According to the rent roll provided by the client, a portion of the subject site is leased to Verizon Wireless, which operates a communications cell tower from the site at arental rate of $2,138.65/month. The lease originally commenced in March 2009. An extension was exercised in 2016 with an expiration date of February 28, 2034 and six5-year options. No value has been assigned to this lease because, with the introduction of 5G service on a large scale, many legacy antennas will be consideredtechnologically obsolete. Most current antennas are large, freestanding structures, while the antennas of the future will be smaller devices mounted onto lampposts, lowrooftops, traffic lights and other appropriate spots within service areas. In fact, it is speculated that individual cell phones will also serve as antennas for bouncing serviceover networks. While the need and demand for legacy antenna towers is still present, the number and the types of antennas will change, and many leases could beterminated or restructured. While it is not possible to predict the immediate impact on cellular antenna revenue, market participants indicate that many prospectivebuyers are starting to recognize limited to no value. On the other hand, an existing antenna with rental income can be an enhancement to marketability. Therefore, thisappraisal assigns no value to the lease.
| Income Capitalization Approach | ||||||||
| Expense Terms | ||||||||
| 16164 Eastern AveCommerce1950/Renov 19917,25218%2.4$1.109/1/202136$1.10Modified Gross | ||||||||
| 23525 Greenwood AveCommerce19504,8002%1.5$1.004/1/202112$1.00Modified Gross | ||||||||
| 37460 Bandini BlvdCommerce195021,20016%1.5$0.832/1/202160$0.89Industrial Gross | ||||||||
| 4544 Montebello WayMontebello19776,83315%2.4$0.963/1/202112$0.96Modified Gross | ||||||||
| 5617 W Olympic BlvdMontebello19626,82018%1.6$0.835/1/202036$0.90Industrial Gross | ||||||||
| 66840-6846 Suva StBell Gardens197914,9888%2.1$1.05ListingNegotiable$1.05Modified Gross | ||||||||
| Income Capitalization Approach | |||||||||||||
| Income Capitalization Approach | ||||||||
| Income Capitalization Analysis | ||||||||
| Potential Gross Income: | Taxes$135,187$135,187$2.71Insurance$0.20$9,962$0.20Repairs/Maintenance$0.50$24,905$0.50Utilities - Common Area$0.30$14,943$0.30UtilitiesPaid by TenantPaid by TenantN/AJanitorialPaid by TenantPaid by TenantN/AManagement3.0%$18,961$0.38$203,958$4.0932.27%$428,071$8.594.50%$9,512,689$190.98$9,515,000$191.03 | |||||||
| Vacancy & Collection Loss | ||||||||
| Effective Gross Income (EGI): | ||||||||
| Method | ||||||||
| $/Year | ||||||||
| $/SF | ||||||||
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| % of EGI | ||||||||
| Total Expenses: | ||||||||
| Expense Ratio (Expenses/EGI): | ||||||||
| Net Operating Income (NOI): | ||||||||
| Capitalization Rate: | ||||||||
| Value (NOI/Cap Rate): | ||||||||
| Rounded: | ||||||||
Based on the above, the “As Stabilized” value, assuming market rent and terms, equates to $9,515,000. However, as stated earlier, the contract rent for the subject isbelow market. In order to render the subject’s “As Is” value we must account for the rent loss over the terms of the leases. Below is a table which calculates the total lossduring the period in which the subject is leased at a below market rate. The boxed cash flow illustrates when contract rent rolls over to market.
| Based on our analysis, the total rent loss over the course of the existing lease term is ($192,454), or ($190,000) (rounded). The reader will note that we have not "discounted" this amount to a present value. This is because under the theory of discounting, only future benefits are discounted. This contrasts with immediate losses and remaining costs which are simply deducted (it would be a misapplication of the theory of discounting to discount a loss). When this is deducted from the "As Stabilized" market value above, it results in a current "As Is" market value of the leased fee interest, in the amount of $9,325,000. | ||||||
| Indicated Value of the Subject by the Income Capitalization Approach (Rounded): | $187.21/SF | $9,325,000 | ||||
| Sales Comparison Approach | ||||||||
| The adjusted values of the comparable properties range from $176.75/SF to $202.03/SF. The average of all adjusted indications is $187.16/SF, while the average of best indicators (Comparables #2 and #3) is $187.64/SF. As a result of the adjustment process, we conclude on an “As Stabilized” value indication via the Sales Comparison Approach in the amount of $9,340,000, or$187.51. From this we must deduct the rent loss ($190,000)) estimated earlier in the Income Capitalization Approach. This results in an “As Is” value, via the Sales Comparison Approach, in the amount of $9,150,000. | ||||||||
Indicated Value of the Subject by the Sales Comparison Approach (Rounded):
| Indicated Value of the Subject by the Sales Comparison Approach (Rounded): | $9,150,000 |
| FINAL VALUE ESTIMATE |
| Value Indications Income Capitalization Analysis $9,325,000 Sales Comparison Analysis $9,150,000 Since the subject is a leased fee investment, the Income Capitalization Approach was considered the most reliable value indicator and was considered the primary analysis. Thus, we have relied on the Income Capitalization to estimate the "As Stabilized" market value of the property. Based on the above, we conclude on an estimate of a current "As Is" market value of the leased fee interest, assuming market rent and terms, as of the appraisal date, in the amount of $9,325,000. |
FINAL VALUE ESTIMATEEffective Date of Value
| Effective Date of Value | Interest Appraised | As Is Market Value |
| August 20, 2021 | Leased Fee | $9,325,000 |
As of the date of value and the date of this report, the nation, region, and market area are impacted by the COVID-19 pandemic. This could have a delayedand/or prolonged effect on macroeconomic conditions, though at this time the length of duration and depth of impact is unknown. The perceived impacton real estate varies depending on several factors including asset class, use, tenancy, and location. The conclusions presented herein apply only as ofthe effective date(s) indicated. The appraiser makes no representation as to the effect on the subject property from any unforeseen event, after the effectivedate of the appraisal. It is recommended the client continue to monitor the subject property to determine whether an update appraisal is necessary onceconditions become more clearly defined and/or markets stabilize.
| EXPOSURE TIME / MARKETING TIME | |
| Reasonable Exposure Time: 3 to 6 months | Marketing Time Opinion: 3 to 6 months |
| EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS |
| Hypothetical Conditions: ? There are no hypothetical conditions for this appraisal. Extraordinary Assumptions*: ? There are no extraordinary assumptions for this appraisal. *It is a requirement of USPAP to notify the reader that the use of Extraordinary Assumptions (if any) “may have affected the assignment results.” |
| DEFINITION OF MARKET VALUE |
| 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 best interests; 3.) a 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. Source: OCC 12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register 12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994; Interagency Appraisal and Evaluation Guidelines, December 2, 2010. |
| INTENDED USE/INTENDED USER/REPORT TYPE |
| The intended use of the appraisal is estimation of applicable and reasonable market value as of appraisal date for internal decision-making related to potential sale. This report will not be used in conjunction with a loan. The client and intended user of the appraisal is China Fisheries North America Inc., or their assignees. |
| This Appraisal Report conforms to USPAP requirements. |
| CERTIFICATION | |||
| We certify that, to the best of our 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 our personal, impartial, and unbiased professional analyses, opinions, and conclusions. ? We have no present or prospective future interest in the property that is the subject of this report and have no personal interest with respect to the parties involved. ? We have no bias with respect to the property that is the subject of this report, or to the parties involved with this assignment. ? Our engagement in this assignment was not contingent upon developing or reporting predetermined results. ? 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 estimate, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. ? Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP). ? John D. Moonitz, CRREA provided significant real property appraisal assistance (site inspection) to the person(s) signing this certification. Mr. Moonitz assisted with the site inspection. ? We certify sufficient competence to appraise this property through education and experience, in addition to the internal resources of the appraisal firm. ? The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. ? This appraisal is intended to comply with the OCC's amended Appraisal Rule, effective June 7, 1994, as published in the Federal Register, Volume 59, No. 108, and with the Interagency Appraisal and Evaluation Guidelines, dated December 10, 2010. ? We have performed no other services, as appraisers or in any other capacity, regarding the property that is the subject of this report within the 3-year period immediately preceding acceptance of this assignment. ? The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. ? As of the date of this report, Stephen P. Rethmeier has completed the continuing education program for a Practicing Affiliate of the Appraisal Institute. ? The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. ? Larry P. Hampton has not conducted an inspection of the subject property. ? Jeffrey O. Eggleston has conducted an inspection of the subject property. ? Stephen P. Rethmeier has not conducted an inspection of the subject property. | |||
| Appraiser’s Name / Signature: Larry P. Hampton | State Certification #: AG027563 | Date: March 23, 2022 | |
| Appraiser’s Name / Signature: Jeffrey O. Eggleston | State Certification #: AG017079 | Date: April 6, 2023 | |
| Appraiser’s Name /Signature: Stephen P. Rethmeier | State Certification #: AG012653 | Date: June 30, 2023 | |
| DEFINITIONS |
| "As Is" Market Value:1 The estimate of the market value of real property in its current physical condition, use, zoning as of the appraisal date. Prospective Market Value "As Completed":1 The prospective market value "as completed" reflects the property’s market value as of the time that development is expected to be completed. Prospective Market Value "As Stabilized":1 The prospective market value "as stabilized" reflects the property’s market value as of the time the property is projected to achieve stabilized occupancy. Prospective Value:1 A forecast of the value expected at a specified future date. A prospective value opinion is most frequently sought in connection with real estate projects that are proposed, under construction, or under conversion to a new use, or those that have not achieved sellout or stabilized level of long-term occupancy and income at the time the appraisal report is written. Fair Market Value:2 The price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent's gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate. Retrospective Value Opinion:1 A value opinion effective as of a specified historical date. The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific prior date. Value as of a historical date is frequently sought in connection with property tax appeals, damage models, lease renegotiations, deficiency judgments, estate tax, and condemnation. Disposition Value:1 The most probable price that a specified interest in real property should bring under the following conditions: 1. Consummation of a sale within a future exposure time specified by the client. 2. The property is subjected to market conditions prevailing as of the date of valuation. 3. Both the buyer and seller are acting prudently and knowledgeably. 4. The seller is under compulsion to sell. 5. The buyer is typically motivated. |
Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute).
The IRS Estate Tax Regulation §20.2031-1.
| DEFINITIONS |
| 6. Both parties are acting in what they consider to be their best interests. 7. An adequate marketing effort will be made during the exposure time specified by the client. 8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. 9. 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. Liquidation Value:1 The most probable price that a specified interest in real property should bring under the following conditions: 1. Consummation of a sale within a short time period. 2. The property is subjected to market conditions prevailing as of the date of valuation. 3. Both buyer and seller are acting prudently and knowledgeably. 4. The seller is under extreme compulsion to sell. 5. The buyer is typically motivated. 6. Both parties are acting in what they consider to be their best interests. 7. A normal marketing effort is not possible due to the brief exposure time. 8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. 9. 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. A Fee Simple estate is defined1 as: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. A Leased Fee interest is defined1 as: A freehold (ownership interest) where the possessory interest has been granted to another party by the creation of a contractual landlord-tenant relationship (i.e., a lease). A Leasehold interest is defined1 as: The interest held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease. A Sandwich Lease interest is defined1 as: A lease in which an intermediate, or sandwich, leaseholder is the lessee of one party and the lessor of another. The owner of the sandwich lease is neither the fee owner nor the user of the property; he or she may be a leaseholder in a chain of leases, excluding the ultimate sublessee. An Extraordinary Assumption is defined1 as: An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. A Hypothetical Condition is defined1 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. Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. Marketing Time is defined1 as: An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of the appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of the appraisal. Exposure Time is defined1 as: Estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal (exposure time is a retrospective opinion based on an analysis of past events assuming a competitive and open market). Market Rent:1 The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the lease agreement, including permitted uses, use restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements (TIs). Lease Expense Terms:1 Gross Lease: A lease in which the landlord receives stipulated rent and is obligated to pay all of the property's operating and fixed expenses, also called full-service lease. Modified Gross Lease: A lease in which the landlord receives stipulated rent and is obligated to pay some, but not all, of the property's operating and fixed expenses. Since assignment of expenses varies among modified gross leases, expense responsibility must always be specified. Industrial Gross Lease: A type of modified gross lease of an industrial property in which the landlord and tenant share expenses. The landlord receives stipulated rent and is obligated to pay certain operating expenses, often structural maintenance, insurance, and real property taxes, as specified in the lease. There are significant regional and local differences in the use of this term. Net Lease: A lease in which the landlord passes on all expenses to the tenant. Inspection:1 Personal observation of the exterior or interior of the real estate that is the subject of an assignment performed to identify the property characteristics that are relevant to the assignment, such as amenities, general physical condition, and functional utility. Gross Building Area (GBA):1 Total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the above-grade area. This includes mezzanines and basements if and when typically included in market area of the type of property involved. |
DEFINITIONS
Rentable Area (RA):
For office or retail buildings, the tenant’s pro rata portion of the entire office floor, excluding elements of the building that penetrate through the floor to the areas below. Therentable area of a floor is computed by measuring the inside finished surface of the dominant portion of the permanent building walls, excluding any major permanentpenetrations of the floor. Alternatively, the amount of space on which the rent is based; calculated according to local practice.
Gross Leasable Area (GLA):
Total floor area designed for the occupancy and exclusive use of tenants, including basements and mezzanines; measured from the center of joint partitioning to the outside wallsurfaces.
Rentable Area (RA):
For office or retail buildings, the tenant’s pro rata portion of the entire office floor, excluding elements of the building that penetrate through the floor to the areas below. Therentable area of a floor is computed by measuring the inside finished surface of the dominant portion of the permanent building walls, excluding any major permanentpenetrations of the floor. Alternatively, the amount of space on which the rent is based; calculated according to local practice.
Gross Leasable Area (GLA):
Total floor area designed for the occupancy and exclusive use of tenants, including basements and mezzanines; measured from the center of joint partitioning to the outside wallsurfaces.
GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal report has been made with the following general assumptions:
1. Acceptance of and/or use of this report constitutes acceptance of the following limiting conditions and assumptions; these can only be modified by written documents executed
by both parties.
2. The client agrees that, in the case of lawsuit (brought by lender, partner, or part owner in any form of ownership, tenant, or any other party), any and all awards or settlements ofany type in such suit, regardless of outcome, client will hold appraiser completely harmless in any such action.
3. If the appraisers are subpoenaed pursuant to a court order, the client agrees to pay the appraiser(s) Syn-Mar Associates’ regular per diem rate plus expenses.
4. The liability of Syn-Mar Associates (The Appraiser), its employees, and subcontractors is limited to the client only. Further, there is no accountability, obligation, or liability to anythird party. If this report is placed in the hands of anyone other than the client, the client shall make such party aware of all limited conditions and assumptions of the assignmentand related discussions. The appraiser(s) is in no way to be responsible for any costs incurred to discover or correct any deficiencies of any type present in the property: physically,financially, and/or legally.
5. Possession of this report or any copy thereof does not carry with it the right of publication, nor may it be used for other than its intended use. All files, work papers and documentsdeveloped in connection with this assignment are the property of Syn-Mar Associates. Information, estimates and opinions are verified where possible, but cannot be guaranteed.Plans provided are intended to assist the client in visualizing the property; no other use of these plans is intended or permitted.
6. This appraisal is to be used only for the purpose stated herein. While distribution of this appraisal in its entirety is at the discretion of the client, individual sections shall not be
distributed; this report is intended to be used in whole and not in part. No change of any item in the report shall be made by anyone other than the appraiser and/or officer of thefirm. The appraiser and firm shall have no responsibility if any such unauthorized change is made.
7. No part of this appraisal, its value estimates or the identity of the firm or the appraiser(s) may be communicated to the public through advertising, public relations, media sales, orother media.
8. It is assumed that all information known to the client and relative to the valuation has been accurately furnished and that there are no undisclosed reports, leases, agreements,options, liens, or other encumbrances affecting the use or value of the subject property.
9. No responsibility is assumed for accuracy of information furnished by the work of or work by others, the client, his designee, or public records. Furthermore, no liability is assumedfor such information or the work of possible subcontractors. Be advised that some of the people associated with our firm and possibly signing the report are independentcontractors.
10. The sketches and maps in this report are included to assist the reader in visualizing the property and are not necessarily to scale. Various photos, if any, are included for the samepurpose as of the date of the photos. Site plans are not surveys unless shown from separate surveyor.
11. While the building size used herein is assumed to be correct, we cannot warrant its accuracy and assume no related liability. If there is a concern with respect to our conclusion of
building size and the expectation of the client, borrower, or other market participant, we recommend a qualified individual (i.e., an architect) be engaged to measure the buildingbased on current BOMA standards.
12. No responsibility is assumed for matters legal in character or nature, nor of any architectural, structural, mechanical, or engineering nature. No opinion is rendered as to the title,which is presumed to be good and merchantable. The property is appraised as if free and clear, unless otherwise stated parts of the report. Property taxes are assumed to becurrent, unless otherwise stated parts of the report. The legal description is assumed to be correct as used in this report as furnished by the client, his designee, or as derived bythe appraiser.
13. No hidden or unapparent conditions of the property, subsoil, or structure, which would make the property more or less valuable, were discovered by the appraiser(s) or madeknown to the appraiser(s). No responsibility is assumed for such conditions or engineering necessary to discover them. Unless otherwise stated, this appraisal assumes there is noexistence of hazardous materials or conditions, in any form, on or near the subject property.
14. No advice is given regarding mechanical equipment or structural integrity or adequacy; nor soils and potential for settlement, drainage, and such (seek assistance from qualifiedarchitect and/or engineer); nor matters concerning liens, title status, and legal marketability (seek legal assistance); and such.
15. Unless otherwise stated, this appraisal assumes the roof is watertight and that the building’s systems, including electrical, mechanical, and plumbing are in good operating condition.These systems have not been inspected by us, nor are we qualified to comment on their condition. Appropriate experts in these fields should be retained for such a determination.Except as otherwise noted in this report, the property appraised as though these systems are operating adequately. No judgment may be made by us as to adequacy of insulation,type of insulation, or energy efficiency of the improvements or equipment which is assumed standard for subject age and type. The value estimate considers there being no suchconditions that would cause a loss of value.
16. Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos, polychlorinated biphenyl, petroleum leakage, or agricultural
chemicals, which may or may not be present on the property, was not called to the attention of the appraiser nor did the appraiser become aware of such during the appraiser’sinspection. The appraiser has no knowledge of the existence of such materials on or in the property unless otherwise stated. The appraiser, however, is not qualified to test forsuch substances. The presence of such hazardous substances may affect the value of the property. The value opinion developed herein is predicated on the assumption that nosuch hazardous substances exist on or in the property or in such proximity thereto, which would cause a loss in value. No responsibility is assumed for any such hazardoussubstances, nor for any expertise or knowledge required to discover them.
17. Endangered species may be prevalent in undeveloped land in the area. Visual inspection denotes no presence of an endangered species of habitat. However, the appraiser is notan expert in the identification of endangered species or habitats, and this report should not be relied upon to determine whether sensitive ecological issues impact the property.This fact can only be determined by a biological survey of the property. Existence of such species or habitats on the property could affect potential uses and value. Further, it shouldbe emphasized, this appraisal report was prepared for the sole use of the client and does not constitute an expert biological assessment of the subject property.
18. Unless stated herein, the property is assumed to be outside of areas where flood hazard insurance is mandatory. Maps used by public and private agencies to determine theseareas are limited with respect to accuracy. Due diligence has been exercised in interpreting these maps, but no responsibility is assumed for misinterpretation.
19. If the appraiser(s) has not been supplied with a termite inspection, survey, or occupancy permit, no responsibility or representation is assumed or made for any costs associated
with obtaining same or for any deficiencies discovered before or after they are obtained. No representation or warranties are made concerning obtaining the above-mentioneditems.
20. Necessary licenses, permits, consents, legislative or administrative authority from any local, state, or Federal government or private entity are assumed to be in place or reasonably
obtainable.
21. It is assumed there are no zoning violations, encroachments, easements, or other restrictions which would affect the subject property, unless otherwise stated.
22. Furnishings and equipment or personal property or business operations, except as specifically indicated and typically considered as a part of real estate, have been disregardedwith only the real estate being considered in the value estimate unless otherwise stated. In some property types, business and real estate interests and values are combined.
23. Improvements proposed, if any, on- or offsite, as well as any repairs required, are considered, for purposes of this appraisal, to be completed in good and workmanlike manneraccording to information submitted and/or considered by the appraisers. In cases of proposed construction, the appraisal is subject to change upon inspection of property afterconstruction is completed. This estimate of market value is as of the date shown, as proposed, as if completed, and operating at levels shown and projected.
| GENERAL ASSUMPTIONS AND LIMITING CONDITIONS |
| 24. The appraisal may have been prepared using a variety of available software, including Microsoft Word, Microsoft Excel, Adobe Acrobat, Argus, etc. The reader should be aware that the calculating conventions regarding rounding iterations used by Excel and Argus differ from that of other software and handheld calculators. As a result, attempts to verify the mathematical calculations using other devices and software may yield slightly different results than stated herein. 25. Provision of an Insurable Value or Replacement Cost Estimate by the appraiser does not change the intended user or intended purpose of the appraisal. The appraiser assumes no liability for the Insurable Value or Replacement Cost Estimate provided and does not guarantee that any estimate or opinion will result in the subject property being fully insured for any possible loss that may be sustained. The appraisers recommend that a professional cost estimator be consulted. The Insurable Value or Replacement Cost Estimate may not be a reliable indication of reproduction cost for any date other than the effective date of this appraisal due to changing costs of labor and materials and to changing building codes and governmental regulations and requirements. 26. In cases of appraisals involving the capitalization of income benefits, the estimate of market value or investment value or value in use is a reflection of such benefits and the appraiser's interpretation of income and yields and other factors derived from general and specific client and market information. Such estimates are based on income as of the appraisal date along with any reasonable expectations of change in that income over the succeeding 12 months to the extent estimable on the appraisal date; they are, however, subject to change or outcomes other than anticipated due to the dynamic nature of the real estate market. 27. The "estimate of market value" in the appraisal report is not based in whole or in part upon the race, color, or national origin of the present owners or occupants of the properties in the vicinity of the property appraised. 28. It is assumed that the property which is the subject of this report will be under prudent and competent ownership and management, neither inefficient nor superefficient. 29. The fee for this appraisal or study is for the service rendered and not for the time spent on the physical report or the physical report itself. 30. The appraiser(s) are not required to give testimony in Court in connection with this appraisal. 31. Appraisals are based on the data available at the time the assignment is completed. Amendments or modifications to appraisals based on new information made available after the appraisal was completed will be made, as soon as reasonably possible, for an additional fee. 32. Unless otherwise noted herein, the review appraiser has supervised and directed all of the research effort, has taken a major role in the analysis of the data produced by this research, but has not personally performed the research and has not necessarily inspected the subject or market comparable properties. 33. Americans with Disabilities Act (ADA) of 1990—A civil rights act passed by Congress guaranteeing individuals with disabilities equal opportunity in public accommodations, employment, transportation, government services, and telecommunications. Statutory deadlines become effective on various dates between 1990 and 1997. Syn-Mar Associates has not decided regarding the subject’s ADA compliance or non-compliance. Non-compliance could have a negative impact on value; however, this has not been considered or analyzed in this appraisal. |
| ADDENDA |
| 1) Contract Letter 2) Aerial Photo 3) Subject Photographs 4) Plat Map 5) Site Plan – Floor Plan – Appraiser’s Measurements 6) Site Plan – Floor Plan – Previous Brochure 7) Comparable Photographs 8) Rent Comparable Map 9) Sales Comparable Map 10) Appraisers’ Qualifications 11) Copy of Appraisers’ State Certification/License |
ENGAGEMENT LETTER
AERIAL PHOTO
SUBJECT PHOTOGRAPHS
| The subject is located at 1136-1150 South Vail Avenue in Montebello. | Front view. | |
| A side view. | The rear view. | |
| Unit 1136 office improvements. | Unit 1136 warehouse. |
| Unit 1140 office improvements. | Unit 1140 warehouse. | |
| Unit 1146 office improvements. | Unit 1146 warehouse. | |
| Unit 1146 cold storage box. | Unit 1150 office improvements. |
| Unit 1150 warehouse. | Unit 1150 cold storage box. | |
| Rear yard, parking, and cell tower. | Cell tower on southeasterly side of subject lot. | |
| The front parking lot. | Portions of the asphalt paving are in fair condition. |
| Northeast view of Vail Avenue. | Southwest view of Vail Avenue. | |
| Northwest view of Date Street. | Southeast view of Date Street. |
PLAT MAP
SITE PLAN – FLOOR PLAN – APPRAISER’S MEASUREMENTS
SITE PLAN – FLOOR PLAN – PREVIOUS BROCHURE
COMPARABLE PHOTOS
| Rent Comparable #1—6164 Eastern Ave., Commerce | Rent Comparable #2—3525 Greenwood Ave., Commerce | |
| Rent Comparable #3—7460 Bandini Blvd., Commerce | Comparable #4—544 Montebello Wy., Montebello | |
| Rent Comparable #5—617 W. Olympic Blvd., Montebello | Rent Comparable #6—6840-6846 Suva St., Bell Gardens |
| Sale Comparable #1—14030-14044 Orange Ave., Paramount | Sale Comparable #2—200-204 W. 140th St., Los Angeles | |
| Sale Comparable #3—12906 Telegraph Rd., Santa Fe Springs | Sale Comparable #4—13040-13060 Tom White Wy., Norwalk | |
| Sale Comparable #5—245-261 E. 157th St., Gardena | ||
RENT COMPARABLES MAP
Note: the indicator for Comparable #3 is hidden by the indicator for Comparable #2.
SALES COMPARABLES MAP
APPRAISER'S QUALIFICATIONS
COPY OF APPRAISER'S STATE CERTIFICATION/LICENSE