North Hill

INCOME CAPITALIZATION APPROACH

NEIGHBORHOOD SHOPPING CENTER

AS IS CASH FLOW

For the P.V. of

Analysis Year Annual Cash Flow
Period Ending Cash Flow @ 7.50%

________ ________ ___________ ___________ RETURN SUMMARY

Im plied Cap Rate

Year 1 Jan-2018 $487,387 $453,383 Year One 3.97%
Year 2 Jan-2019 1,467,591 1,269,955 Year Tw o 6.43%
Year 3 Jan-2020 1,346,553 1,083,922
Year 4 Jan-2021 1,511,206 1,131,592 Year Three 6.27%
Year 5 Jan-2022 1,570,250 1,093,771
Year 6 Jan-2023 1,511,184 Year Four 6.63%
Year 7 Jan-2024 1,661,651 979,189
Year 8 Jan-2025 1,540,547 1,001,568 Year Five 6.83%
Year 9 Jan-2026 1,683,256 5-Year Average 6.03%
___________ 863,788
Total Cash Flow 12,779,625 877,959 Im plied Cash-On-Cash Return
Property Resale @ 6% Cap Rate 27,779,063 ___________
8,755,127 Year One 2.10%
Total Property Present Value 14,489,100
___________ Year Tw o 6.33%
$23,244,227
=========== Year Three 5.80%

Year Four 6.51%

Year Five 6.77%
5-Year Average 5.50%

Rounded to Thousands $23,244,000
===========

Per SqFt 378.09

Percentage Value Distribution 10.69%
26.98%
Assured Income 62.33%
Prospective Income ===========
Prospective Property Resale 100.00%

88

INCOME CAPITALIZATION APPROACH

NEIGHBORHOOD SHOPPING CENTER - AS IS CASH FLOW

For the Years Ending Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Jan-2018 Jan-2019 Jan-2020 Jan-2021 Jan-2022 Jan-2023 Jan-2024 Jan-2025 Jan-2026 Jan-2027
Potential Gross Revenue ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Base Rental Revenue
Absorption & Turnover Vacancy $1,560,545 $1,584,273 $1,574,993 $1,603,791 $1,638,451 $1,684,157 $1,760,334 $1,793,545 $1,823,440 $1,859,211
(403,800) (24,646) (60,210) (12,293) (3,151) (41,965) (12,896) (78,568) (21,852) (50,886)
Scheduled Base Rental Revenue
Expense Reimbursement Revenue ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Miscellaneous Income
1,156,745 1,559,627 1,514,783 1,591,498 1,635,300 1,642,192 1,747,438 1,714,977 1,801,588 1,808,325
Total Potential Gross Revenue
General Vacancy 311,008 528,513 546,430 571,237 587,797 588,597 614,583 611,922 640,652 645,493
Collection Loss 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914

Effective Gross Revenue ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
1,470,753 2,091,230 2,064,396 2,166,013 2,226,474 2,234,267 2,365,603 2,330,589 2,446,040 2,457,732
Operating Expenses 0 0 0 0 0 0 0 0 0 (30,517)
Common Area Maintenance (21,947) (34,633) (34,922) (35,722) (36,711) (36,644) (39,031) (39,716) (40,196) (40,168)
Insurance
Property Taxes ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Management Fee 1,448,806 2,056,597 2,029,474 2,130,291 2,189,763 2,197,623 2,326,572 2,290,873 2,405,844 2,387,047
General & Administrative
___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Total Operating Expenses
145,000 149,350 153,830 158,446 163,199 168,095 173,137 178,332 183,681 189,191
Net Operating Income 34,000 35,020 36,071 37,153 38,267 39,415 40,598 41,816 43,070 44,362

Leasing & Capital Costs 286,912 292,749 298,705 304,785 310,989 317,320 323,781 330,375 337,104 350,729
Tenant Improvements 57,952 82,264 81,179 85,212 87,591 87,905 93,063 91,635 96,234 95,482
Leasing Commissions 5,000 5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 6,524
Capital Reserves
___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Total Leasing & Capital Costs 528,864 564,533 575,090 591,060 605,674 618,531 636,549 648,307 666,423 686,288

Cash Flow Before Debt Service ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
& Taxes 919,942 1,492,064 1,454,384 1,539,231 1,584,089 1,579,092 1,690,023 1,642,566 1,739,421 1,700,759

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

206,760 2,596 19,467 4,016 0 14,768 3,009 16,240 11,172 0
213,499 9,213 75,320 10,573 0 38,886 10,681 70,657 29,417 0
12,664 13,044 13,436 13,839 14,254 14,682 15,122 15,576 16,043
12,296 ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
___________ 24,473 107,831 28,025 13,839 67,908 28,372 102,019 56,165 16,043
___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
432,555 $1,467,591 $1,346,553 $1,511,206 $1,570,250 $1,511,184 $1,661,651 $1,540,547 $1,683,256 $1,684,716
___________ =========== =========== =========== =========== =========== =========== =========== =========== ===========

$487,387 89
===========

INCOME CAPITALIZATION APPROACH

NEIGHBORHOOD SHOPPING CENTER
UPON STABILIZATION CASH FLOW

For the P.V. of

Analysis Year Annual Cash Flow
Period Ending Cash Flow @ 7.25%

________ ________ ___________ ___________ RETURN SUMMARY

Im plied Cap Rate

Year 1 Jan-2019 $1,465,442 $1,366,379 Year One 5.75%
Year 2 Jan-2020 1,344,889 1,169,209 Year Tw o 5.61%
Year 3 Jan-2021 1,510,145 1,224,127
Year 4 Jan-2022 1,569,327 1,186,108 Year Three 5.94%
Year 5 Jan-2023 1,509,589 1,063,830
Year 6 Jan-2024 1,660,556 1,091,113 Year Four 6.11%
Year 7 Jan-2025 1,538,581 942,626 Year Five 6.09%
Year 8 Jan-2026 1,681,955 960,807
Year 9 Jan-2027 1,713,115 912,453 5-Year Average 5.90%
Year 10 Jan-2028 1,400,325 695,434
Im plied Cash-On-Cash Return
Total Cash Flow ___________ ___________
Property Resale @ 6% Cap Rate 15,393,924 10,612,086 Year One 5.66%
30,809,747 15,300,835
Total Property Present Value Year Tw o 5.19%
___________
$25,912,921 Year Three 5.83%
=========== Year Four 6.06%

Year Five 5.83%
5-Year Average 5.71%

Rounded to Thousands $25,913,000
===========

Per SqFt 421.50

Percentage Value Distribution 24.52%
16.43%
Assured Income 59.05%
Prospective Income ===========
Prospective Property Resale 100.00%

90

INCOME CAPITALIZATION APPROACH

NEIGHBORHOOD SHOPPING CENTER- UPON STABILIZATION CASH FLOW

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 Jan-2019 Jan-2020 Jan-2021 Jan-2022 Jan-2023 Jan-2024 Jan-2025 Jan-2026 Jan-2027 Jan-2028 Jan-2029

Potential Gross Revenue ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Base Rental Revenue
Absorption & Turnover Vacancy $1,584,273 $1,574,993 $1,603,791 $1,638,451 $1,684,157 $1,760,334 $1,793,545 $1,823,440 $1,859,211 $1,936,439 $2,081,873

Scheduled Base Rental Revenue (24,646) (60,210) (12,293) (3,151) (41,965) (12,896) (78,568) (21,852) (50,886) (182,221) (131,226)
Expense Reimbursement Revenue
Miscellaneous Income ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

Total Potential Gross Revenue 1,559,627 1,514,783 1,591,498 1,635,300 1,642,192 1,747,438 1,714,977 1,801,588 1,808,325 1,754,218 1,950,647
Collection Loss
560,676 579,785 605,923 623,345 624,162 651,425 648,615 678,809 677,701 662,953 687,566
Effective Gross Revenue
3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 4,153
Operating Expenses
Common Area Maintenance ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Insurance
Property Taxes 2,123,393 2,097,751 2,200,699 2,262,022 2,269,832 2,402,445 2,367,282 2,484,197 2,489,940 2,421,203 2,642,366
Management Fee
General & Administrative (35,222) (35,521) (36,335) (37,339) (37,271) (39,681) (40,379) (40,869) (40,734) (39,109) (7,572)

Total Operating Expenses ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

Net Operating Income 2,088,171 2,062,230 2,164,364 2,224,683 2,232,561 2,362,764 2,326,903 2,443,328 2,449,206 2,382,094 2,634,794

Leasing & Capital Costs ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Tenant Improvements
Leasing Commissions 149,350 153,830 158,446 163,199 168,095 173,137 178,332 183,681 189,191 194,868 200,713
Capital Reserves
35,020 36,071 37,153 38,267 39,415 40,598 41,816 43,070 44,362 45,693 47,064
Total Leasing & Capital Costs
325,209 331,815 338,556 345,436 352,456 359,620 366,930 374,390 382,003 389,772 388,393
Cash Flow Before Debt Service
& Taxes 83,527 82,489 86,575 88,987 89,302 94,511 93,076 97,733 97,968 95,284 105,392

5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 6,524 6,720 6,921

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

598,256 609,510 626,194 641,517 655,064 673,836 686,303 705,208 720,048 732,337 748,483

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

1,489,915 1,452,720 1,538,170 1,583,166 1,577,497 1,688,928 1,640,600 1,738,120 1,729,158 1,649,757 1,886,311

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

2,596 19,467 4,016 0 14,768 3,009 16,240 11,172 0 58,279 67,294

9,213 75,320 10,573 0 38,886 10,681 70,657 29,417 0 174,629 212,093

12,664 13,044 13,436 13,839 14,254 14,682 15,122 15,576 16,043 16,524 17,020

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

24,473 107,831 28,025 13,839 67,908 28,372 102,019 56,165 16,043 249,432 296,407

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

$1,465,442 $1,344,889 $1,510,145 $1,569,327 $1,509,589 $1,660,556 $1,538,581 $1,681,955 $1,713,115 $1,400,325 $1,589,904

=========== =========== =========== =========== =========== =========== =========== =========== =========== =========== ===========

91

INCOME CAPITALIZATION APPROACH

DIRECT CAPITALIZATION ANALYSIS
Direct capitalization is a method utilized to convert a single-year’s estimate of net
operating income (before debt service) into an indication of value by the application of
an overall capitalization rate.

Net Operating Income
We have developed a stabilized year one pro forma based on the concluded market
rent.

Recovery income was brought up to a stabilized level based on the average percent
of expenses recovered throughout the holding period (once stabilized-Year 2 to 10).
In the following pages, we include a chart that summarizes the calculation of our
projected stabilized level of 95.0 percent of expense recovery. Our concluded vacancy
and collection loss of 5.0 percent is applied.

Other income and expenses are based on our previously presented projections (once
stabilized from Year Two). However, Real Estate Taxes and Management were re-
calculated based on the amounts derived via the Direct Capitalization Method.

Also, we applied an adjustment for the above or below market rent during the holding
period.

Furthermore, from the indicated stabilized value, we have deducted the costs of
stabilization to arrive at an “as is” value indication. The projected stabilization costs
include the lease up costs and the agreed upon pending tenant improvement
allowance ($10.00 per square foot) for Stinkin Crawfish that is scheduled to move in
by March 2017. The stabilization costs also include the lease up costs for the owner-
occupied space. The following charts summarize:

 the calculation of a stabilized level of the expense recovery income
 the adjustment for the above/below market rent during the holding period
 the projected stabilization costs

92

INCOME CAPITALIZATION APPROACH

AVERAGE PERCENT OF EXPENSES RECOVERED AFTER STABILIZATION

Expense Reimbursement Income Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Total Operating Expenses $311,005 $528,512 $546,426 $571,233 $587,788 $588,597 $614,575 $611,921 $640,650 $645,491
Recovery Percent of Expenses $528,867 $564,537 $575,095 $591,061 $605,677 $618,535 $636,554 $648,311 $666,428 $686,293

Source: CCP Valuation 59% 94% 95% 97% 97% 95% 97% 94% 96% 94%
Average percent of expenses recovered (Year 2 to 10) 95%

NEIGHBORHOOD SHOPPING CENTER --- ESTIMATE OF PRESENT VALUE OF ABOVE/BELOW MARKET RENT

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

For the Years Ending Jan-2018 Jan-2019 Jan-2020 Jan-2021 Jan-2022 Jan-2023 Jan-2024 Jan-2025 Jan-2026 Jan-2027

Contract Rent (from DCF) __________ __________ __________ __________ __________ __________ __________ __________ __________ __________
Market Rent (1)
$1,560,545 $1,584,273 $1,574,993 $1,603,791 $1,638,451 $1,684,157 $1,760,334 $1,793,545 $1,823,440 $1,859,211

$1,536,048 $1,562,581 $1,589,911 $1,618,060 $1,647,054 $1,755,110 $1,785,869 $1,817,551 $1,850,184 $1,883,796

Dif f erenc e $24,497 $21,692 ($14,918) ($14,269) ($8,603) ($70,953) ($25,535) ($24,006) ($26,744) ($24,585)
Selected discount rate 7.25%

Present Value of ($89,674)
Above/(Below ) Market Rent: ($90,000)

Rounded

(1) Adjusted by Annual Market Grow th)

93

INCOME CAPITALIZATION APPROACH

NEIGHBORHOOD SHOPPING CENTER

CALCULATION OF STABILIZATION COSTS

Monthly Recovery Loss From Argus
Market Rent
Space Square Months $/SF/Month Total Recoveries Total TI Leasing
Clas s if ic ation Feet Vacant Rent Loss
Suite Shop Space Tenant Name 3,750 $3.00 $11,250 $/SF/Month Loss Loss Commissions
9102 Anchor Space Stinkin Craw fish (Starts March/2017) 1 $1.50 $382,800
9136 Vallarta Supermarkets (Ow ner-User) 23,200 11 $0.50 $1,875 $37,500 $0

$0.50 $127,600 $162,400 $195,437

Rent Loss $394,050 $129,475 $199,900 $195,437
Recovery Loss $129,475
$199,900
TI Loss $195,437
Leasing Commissions $918,862
$275,659
Total $1,194,521
Unearned Profit at: 30%

Total Adjustment

Rounded $1,200,000

Source: Projected leasing by CCP Valuation

94

INCOME CAPITALIZATION APPROACH

DIRECT CAPITALIZATION CONCLUSION
The following table summarizes the direct capitalization analysis.

NEIGHBORHOOD SHOPPING CENTER

DIRECT CAPITALIZATION ANALYSIS

$ $/PSF % of EGI

Re ve nue s 24.99 77.8%
8.78 27.3%
Market Rent $1,536,048 0.05 0.2%
Reimbursement Income $539,623 33.81 105.3%
Other Income $3,090 -1.69 5.0%
32.12 100%
Potential Gross Revenue $2,078,761
Stabilized Vacancy & Collection Loss ($103,938)

Effective Gross Revenue $1,974,823

Operating Expenses $149,350 2.43 7.6%
Common Area Maintenance $35,020 0.57 1.8%
Insurance 4.87 15.2%
Real Estate Taxes $299,512 1.28 4.00%
Management $78,993 0.08 0.3%
General & Administrative $5,150 9.24 28.8%
568,025
Total Operating Expenses

Net Operating Incom e 1,406,799 22.88 71.2%

Overall Capitalization Rate 5.25% 5.50% 5.75%
Prospective Market Value Upon Stabilization $26,796,166 $25,578,158 $24,466,064
Rounde d $26,800,000 $25,600,000 $24,500,000
Per Square Foot
$435.93 $416.41 $398.52
Adjustment: PV of Contract Rent Above/(Below ) Market ($90,000) ($90,000) ($90,000)
Adjustment: Stabilization Costs ($1,200,000) ($1,200,000) ($1,200,000)
$25,506,166 $24,288,158 $23,176,064
Indicated "As Is" Market Value $25,500,000 $24,300,000 $23,200,000
Rounde d $414.78 $395.26 $377.37

Per Square Foot
Source: CCP Valuation

95

INCOME CAPITALIZATION APPROACH

INCOME APPROACH CONCLUSION

The following is our value conclusion via the income approach. The subject property
is considered a neighborhood shopping center with multiple tenants with varying
expense reimbursement structures. Therefore, we concluded that most buyers would
rely slightly more on the discounted cash flow, with support derived from the direct
capitalization method. Therefore, we placed slightly more reliance on the discounted
cash flow analysis.

INCOME APPROACH CONCLUSIONS

"AS IS"

Discounted Cash Flow $23,200,000

Direct Capitalization $24,300,000

Reconciled Value via the Income Approach $23,500,000

Source: CCP Valuation

INCOME APPROACH CONCLUSIONS

PMV "UPON STABILIZATION"

Discounted Cash Flow $25,900,000

Direct Capitalization $25,600,000

Reconciled Value via the Income Approach $25,800,000

Source: CCP Valuation

96

SALES COMPARISON APPROACH

SALES COMPARISON APPROACH

The Sales Comparison Approach is based on the proposition that an informed
purchaser would pay no more for a property than the cost to acquire an existing one
with the same utility. This approach, therefore, utilizes a process of comparing market
data; that is, comparing prices actually paid as well as prices asked and/or offers made
for similar type properties. Comparable sales data is analyzed according to similarities
and differences with the subject property.

By analyzing sales that qualify as arm’s-length transactions between willing and
knowledgeable buyers and sellers, market value and price trends can be identified.
Comparability in physical, location and economic characteristics is an important
criterion when comparing sales to the subject property. The basic steps involved in
the application of this approach are as follows:

1. Research recent, relevant property sales and current offerings throughout the
competitive marketplace;

2. Select and analyze properties considered most similar to the subject, giving
consideration to the time of sale, change in economic conditions which may
have occurred since the date of sale and other physical, functional or location
factors;

3. Reduce the sales prices to an easily recognizable common unit of comparison
such as sales price per square foot;

4. Make appropriate adjustments between the comparable properties and the
property appraised; and

5. Interpret the adjusted sales data and draw a logical value conclusion.

It should be noted that the reliance on substitute properties produces shortcomings in
the validity of this approach. Geographic and demographic characteristics from each
sub-market restrict which sales may be selected. Recent sales with a similar leasing
structure, tenant mix, income level, and location are also usually limited. The sales
identified, however, do establish general valuation parameters as well as provide
support to our conclusion derived through the Income Capitalization Approach.

97

SALES COMPARISON APPROACH

The most widely used, market-oriented unit of comparison for properties such as the
subject is the sale price per square foot of net rentable area. However, to accurately
adjust prices to satisfy the requirements of the Sales Comparison Approach,
numerous calculations and highly subjective judgments would be required including
consideration of numerous income and expense details for which information may be
unreliable or unknown. As such, the sales price per square foot comparison is
considered relevant to the investment decision, but primarily as a parameter against
which value estimates derived through the Income Capitalization Approach can be
judged and compared.
COMPARABLE SALES DATA
The following table summarizes the market data that we have analyzed in arriving at
our value indication for the subject property through the Sales Comparison Approach.
In this instance, we have analyzed recent sales of the most similar properties within
the subject’s competitive investment marketplace.

98

SALES COMPARISON APPROACH

IMPROVED SALES MAP

99

SALES COMPARISON APPROACH

COMPARABLE IMPROVED SALES SUMMARY

Comp No. Location Year Built SF of GLA Site SF Sale Type Date of Sale Grantor/Grantee Sale Price $ per GLA NOI/SF OAR
Sunrise Center, LLC $28,280,000 $356.73 $23.90 6.70%
1 Oak Park Center 1990/1991 79,275 291,856 Investment Dec-16 Oak Park First Plaza, LLC

640-688 Lindero Canyon Rd South Gate SPE, LLC
Lindenfield Properties, LP
Oak Park, CA
James Alliance, LLC
2 South Gate Plaza 1980 61,301 242,507 Investment Sep-16 Woodland Ow ner, LLC $23,700,000 $386.62 $18.36 4.75%
2651-2663 Santa Ana St
Bouquet Center Properties, LLC
South Gate, CA ROIC Bouquet Center, LLC

3 Woodland Hills Village 1971 67,769 125,536 Investment Jun-16 DSB Properties, Inc. $31,650,000 $467.03 $23.35 5.00%
20929 Ventura Blvd InvenTrust Properties Corp

Woodland Hills, CA HCP Burbank Tow ne Center, LLC
BRFI Burbank, LLC
4 Bouquet Center 1985/1986 148,903 533,932 Investment Apr-16 $59,000,000 $396.23 N/A N/A
26500-26588 Bouquet Canyon Rd

Santa Clarita, CA

5 Stevenson Ranch Plaza 1996-1999 187,035 823,720 Investment Apr-16 $72,500,000 $387.63 N/A N/A
24917-24975 Pico Canyon Rd

Stevenson Ranch, CA

6 Burbank Tow ne Center 1975 79,224 258,311 Investment Dec-15 $35,200,000 $444.31 N/A N/A
511-551 N Hollyw ood Way 218,828
Burbank, CA

Subject NEIGHBORHOOD SHOPPING CENTER 1970 61,478 Investment

9102-9163 Sepulveda Blvd

North Hills, CA

Source: Field Survey by CCP Valuation and verified w ith market participants

100

SALES COMPARISON APPROACH

Adjustment Method:
As delineated in the preceding table, the comparable improved sales indicate a price
range of $356.73 to $467.03 per square foot of net rentable area, before adjustments.
Adjustments have been made to the comparable sales for the following factors.

The standard unit of comparison among similar properties is the sales price per square
foot of net rentable area. In examining the comparable sales, we have applied a
subjective adjustment analysis, which includes specific adjustments derived from our
experience and consultations with the market participants.

Property Rights: To the best of our knowledge, all of the transactions
included herein involved leased fee property rights, which is similar to
the subject property. As a result, no adjustments were required.

Financing Terms: All of the comparable sales involved typical
financing terms; therefore, no adjustments are warranted for this factor
to the sales.

Conditions of Sale: To the best of our knowledge, all of the sale
comparables were arm’s-length transactions; therefore, no adjustments
are warranted.

Market Conditions: The sales closed in 2015 and 2016. Market
conditions have slightly improved since 2015; thus, we made upward
adjustments to the older sales based on the date of the sale.

Location: The sales have been adjusted for various location
differences as compared to the subject’s location. Some of the factors
considered include economic environment, supply and demand, risk of
new development, traffic patterns, etc.

Physical Aspects: We have adjusted each of the comparables for
differences in physical aspects as compared to the subject. The

101

SALES COMPARISON APPROACH

adjustments have been made based on total GLA, access/visibility,
functional utility, effective age/condition, and floor area ratio.
Other Factors: No adjustments were necessary to account for any other
additional factors.
Adjustment Grid
None of the sales required a single specific adjustment that was considered
significant. After adjustments, the comparable improved sales indicate a price range
of $367.43 to $451.15 per square foot of GLA.
We placed least reliance on Sale Nos. 5 and 6 as they were the oldest sale
transactions or required the most overall adjustments. Therefore, although we placed
emphasis on all of the sales, we placed most reliance on Sale Nos. 1, 2, 3, and 4 as
they represented the most recent closed sale transactions and/or required the least
overall adjustments.
After adjustments, the sales indicate that the value would be between the range of the
comparables. After considering the sales and the adjustments required, the following
conclusion is reached.

102

SALES COMPARISON APPROACH

NEIGHBORHOOD SHOPPING CENTER ADJUSTMENT GRID

Comparable Subject 1 234 5 6
$387.63 $444.31
Total Cost Per SF --- $356.73 $386.62 $467.03 $396.23 Leased Fee Leased Fee

Property Rights Conveyed Leased Fee Leased Fee Leased Fee Leased Fee Leased Fee 0% 0%
$387.63 $444.31
Adjustment --- 0% 0% 0% 0% Cash Equivalent Cash Equivalent

Adjusted Price --- $356.73 $386.62 $467.03 $396.23 0% 0%
$387.63 $444.31
Financing Terms Market Cash Equivalent Cash Equivalent Cash Equivalent Cash Equivalent Arm's Length Arm's Length

Adjustment --- 0% 0% 0% 0% 0% 0%
$387.63 $444.31
Adjusted Price --- $356.73 $386.62 $467.03 $396.23 Apr-16 Dec-15

Conditions of Sale Arm's Length Arm's Length Arm's Length Arm's Length Arm's Length 7% 9%
$414.76 $484.30
Adjustment --- 0% 0% 0% 0% $414.76 $484.30
Stevenson Ranch Burbank, CA
Adjusted Price --- $356.73 $386.62 $467.03 $396.23 Average
Good
Market Conditions Jan-17 Dec-16 Sep-16 Jun-16 Apr-16 0% -5%
--- ---
Adjustment --- 0% 3% 5% 7% 187,035 79,224
10% 0%
Adjusted Price --- $356.73 $398.22 $490.38 $423.97 Good/Good Good/Good
-3% -3%
Interim Adjusted Sale Price --- $356.73 $398.22 $490.38 $423.97 Average Average
0% 0%
Location (city) North Hills, CA Oak Park, CA South Gate, CA Woodland Hills, CA Santa Clarita, CA 15/Good 15/Good
-3% -3%
Overall Average Average Fair Good Average 23% 25%
0% 0%
Adjustment --- 0% 5% -5% 0% None None
0% 0%
Physical Characteristics --- --- --- --- --- 4% -11%
$431.35 $431.02
Square Feet of GLA 61,478 79,275 61,301 67,769 148,903

Adjustment 0% 0% 0% 7%

Access/Visibility Good/Average Average/Average Average/Average Good/Good Average/Good

Adjustment --- 3% 3% -3% 0%

Functional Utility Average Average Average Average Average

Adjustment --- 0% 0% 0% 0%

Effective Age/Condition 20/Good 20/Good 20/Good 15/Good 15/Good

Adjustment --- 0% 0% -3% -3%

Floor Area Ratio 27% 27% 25% 54% 28%

Adjustment --- 0% 0% 3% 0%

Other Factors --- None None None None

Adjustment --- 0% 0% 0% 0%
Net Cumulative Adjustments --- 3%
8% -8% 4%

Value Indication $367.43 $430.07 $451.15 $440.93

Analysis and Conclusion

Low $367.43 Median $431.19
Mean $425.33
High $451.15 $415.00
Conclusion
Weighted Average $417.41

Prospective Market Value Upon Stabilization $25,513,370
ROUNDED $25,500,000

Adjustment: PV of Contract Rent Above/(Below) Market ($90,000)
Adjustment: Stabilization Costs ($1,200,000)
Indicated Market Value As Is $24,223,370
Rounded $24,200,000

Net Adjustment 25%
Absolute Adjustment 20%
15%
10%

5%
0%
-5%
-10%

123456

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SALES COMPARISON APPROACH

SALES COMPARISON APPROACH CONCLUSION
The following table summarizes the Sales Comparison Approach conclusion.

INDICATED MARKET VALUE – ADJUSTMENT GRID

Value Conclusion Per Square Foot $415.00
Net Rentable Area 61,478
Prospective Market Value Upon Stabilization $25,513,370
$25,500,000
ROUNDED

Adjustment: PV of Contract Rent Above/(Below) Market ($90,000)
Adjustment for Stabilization Costs ($1,200,000)
Indicated Market Value As Is $24,223,370
$24,200,000
ROUNDED

Source: CCP Valuation

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RECONCILATION OF VALUE

RECONCILIATION OF VALUE

We were instructed to estimate the “as is” and the prospective “upon stabilization”
market values of the leased fee interest in the subject property. In analyzing the
subject, all three methods to value were considered. The value estimates based upon
each approach determined to be applicable are summarized below.

SUMMARY OF VALUE CONCLUSIONS

“As Is” Market Value – January 20, 2017 $23,500,000
Income Approach $24,200,000
Sales Comparison Approach
Cost Approach N/A
Reconciled As Is Final Value $23,500,000

Source: CCP Valuation

SUMMARY OF VALUE CONCLUSIONS $25,800,000
PROSPECTIVE “UPON STABILIZATION” $25,500,000
PMV “Upon Stabilization” Market Value – January 1, 2018
Income Approach N/A
Sales Comparison Approach $25,800,000
Cost Approach
Reconciled Prospective “Upon Stabilization” Final Value

Source: CCP Valuation

The Income Approach is considered an adequate method for valuing the subject
property. This approach is predicated on the principle of anticipated economic benefits
and therefore focuses on the investment characteristics of the subject. Interviews with
market participants indicate that investors in valuing properties such as the subject
commonly use the discounted cash flow, with secondary support via the direct
capitalization method. Therefore, we have placed greatest reliance on the discounted

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RECONCILATION OF VALUE

cash flow analysis in our value estimation. Due to the multi-tenant configuration and
the leases in place at the subject property, most buyers of this property type are
investors. Therefore, the Income Approach is given primary consideration in the
reconciliation.

The Sales Comparison Approach is predicated on the principle that an investor would
pay no more for an existing property than for a comparable property with similar utility.
This approach is contingent on the reliability and comparability of available data. The
data developed was considered sufficiently reliable to reach a value conclusion by the
Sales Comparison Approach. The majority of buyers that typically acquire properties
such as the subject are investors. Therefore, this method was given secondary
consideration in the reconciliation.

The Cost Approach is predicated on the principle that an investor would pay no more
for an existing property than it would cost to acquire land and construct a building with
similar utility. The Cost Approach was not considered applicable as it is not being
utilized in the current market for properties such as the subject due to the excessive
entrepreneurial incentive and difficulty in accurately estimating the total depreciation.

In arriving at the final value conclusion, greatest weight was placed on the Income
Approach with secondary reliance on the Sales Comparison Approach as buyers of
this property type are typically investors. The final value conclusions and the
approaches relied upon give strong consideration to the market behavior of the typical
buyer and current market environment for the property appraised.

Based on research and analysis contained in this report, it is estimated that the “as is”
market value of the leased fee interest in the subject property, as of January 20, 2017,
is:

TWENTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS
$23,500,000

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RECONCILATION OF VALUE

Based on the research and analysis contained in this report, it is our opinion that the
prospective market value “upon stabilization” of the leased fee interest in the subject
property, as of January 1, 2018, will be:

TWENTY-FIVE MILLION EIGHT HUNDRED THOUSAND DOLLARS
$25,800,000

These value estimates are based on the assumptions, limiting conditions, and
certification in the report.
EXTRAORDINARY ASSUMPTIONS

 For the prospective “upon stabilization” market value opinion, we made forecasts
based on support that exists as of the date of the report. We are not responsible for
unforeseeable events that alter market conditions prior to the effective date of
appraisal.

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CERTIFICATION OF THE APPRAISERS

CERTIFICATION OF THE APPRAISERS

The signer(s) of this appraisal report, do, by their signature(s) on this report, certify that to the best of their 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 my 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 have 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. Our analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the
Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and the requirements of the Code
of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. In addition, this
report conforms to the requirements of the Financial Institution Reform, Recovery and Enforcement Act (FIRREA).
8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized
representatives.
9. As of the date of this report, Edward Castillo, MAI has completed the continuing education program for Designated
Members of the Appraisal Institute.
10. Edward Castillo, MAI made a personal inspection of the property that is the subject of this report.
11. Edward Castillo, MAI has extensive experience in the appraisal of similar property types.
12. No one provided significant real property assistance to the persons signing this certification.
13. This appraisal assignment was not based on a requested minimum valuation, a specific valuation, or approval of a
loan.
14. We have performed no 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.

Respectfully submitted,

CCP GROUP, INC

Edward Castillo, MAI
Principal

Certified General Real Estate Appraiser
State of CA No. AG039897
Expiration Date: March 28, 2018

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ASSUMPTIONS AND LIMITING CONDITIONS

ASSUMPTIONS AND LIMITING CONDITIONS

1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties appraised
are clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely
affect marketability or value. CCP Valuation is not aware of any title defects nor has it been advised of any unless such
is specifically noted in the report. CCP Valuation, however, has not examined title and makes no representations relative
to the condition thereof. Documents dealing with liens, encumbrances, easements, deed restrictions, clouds and other
conditions that may affect the quality of the title have not been reviewed. Insurance against financial loss resulting in
claims that may arise out of defects in the subject’ titles should be sought from a qualified title company that issues or
insures title to real property. CCP Valuation assumes no private deed restrictions, limiting the use of the subject in any
way.

2. Unless otherwise specifically noted in the body of this report, it is assumed: that the property or properties being
appraised are structurally sound, seismically safe and code conforming; that all building systems (mechanical/electrical,
HVAC, elevator, plumbing, etc.) are, or will be upon completion, in good working order with no major deferred
maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the elements;
that the property or properties have been engineered in such a manner that it or they will withstand any known elements
such as windstorm, hurricane, tornado, flooding, earthquake, or similar natural occurrences; and, that the improvements,
as currently constituted, conform to all applicable local, state, and federal building codes and ordinances. CCP
Valuation’s professionals are not engineers and are not competent to judge matters of an engineering nature. CCP
Valuation has not retained independent structural, mechanical, electrical, or civil engineers in connection with this
appraisal and, therefore, makes no representations relative to the condition of improvements. Unless otherwise
specifically noted in the body of the report: no problems were brought to the attention of CCP Valuation by ownership or
management; CCP Valuation inspected less than 100 percent of the entire interior and exterior portions of the
improvements; and CCP Valuation was not furnished any engineering studies by the owners or by the party requesting
this appraisal. If questions in these areas are critical to the decision process of the reader, the advice of competent
engineering consultants should be obtained and relied upon. It is specifically assumed that any knowledgeable and
prudent purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the
structural integrity of the property and the integrity of building systems. Structural problems and or building system
problems may not be visually detectable. If engineering consultants retained should report negative factors, of a material
nature, or if such are later discovered, relative to the condition of improvements, such information could have a substantial
negative impact on the conclusions reported in this appraisal. Accordingly, CCP Valuation reserves the right to amend
the appraisal conclusions reported herein, if engineering consultants report negative findings.

3. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the
property, was not observed by the appraisers. The appraisers have no knowledge of the existence of such materials on
or in the property. The appraisers, however, are not qualified to detect such substances. The presence of substances
such as asbestos, urea formaldehyde foam insulation, contaminated ground water or other potentially hazardous
materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such
material on or in the property that 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. The client is urged to retain an expert in this field,
if desired.

4. It is assumed that all factual data furnished by the client, property owner, owner's representative, or persons designated
by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal
report. Unless otherwise specifically noted in the appraisal report, CCP Valuation has no reason to believe that any of
the data furnished contains any material error. Information and data referred to in this paragraph include, without being
limited to, numerical street address, lot and block numbers, Assessor's Parcel Numbers, land dimensions, square footage
area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count,
room count, rent schedules, income data, historic operating expenses, budgets, and related data. Any material error in
any of the above data could have a substantial impact on the conclusions reported. Thus, CCP Valuation reserves the
right to amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should carefully

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ASSUMPTIONS AND LIMITING CONDITIONS

review all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report
and should immediately notify CCP Valuation of any questions or errors.

5. Unless otherwise noted in the body of the report, it is assumed that there are no mineral or sub-surface rights of value
involved in this appraisal and that there are no air or development rights of value that may be transferred.

6. Unless otherwise noted in the body of the report, it is assumed that no changes in the present zoning ordinances or
regulations governing use, density, or shape are being considered.

7. It is assumed that all information and data furnished by third parties in connection with the preparation of this report are
accurate and correct, and CCP Valuation has no reason to believe to the contrary unless such is specifically noted in the
body of the report. Information included in this context refers to zoning data comparable rental and sales data, verification
of factual data, and general market data.

8. This study is not being prepared for use in connection with litigation. Accordingly, no rights to expert testimony, pretrial
or other conferences, deposition, or related services are included with this appraisal, except as specifically noted.

9. This study may not be duplicated in whole or in part without the specific written consent of CCP Valuation nor may this
report or copies hereof be transmitted to third parties without said consent, which consent CCP Valuation reserves the
right to deny. Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission
to attorneys, accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the
report to any court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this
appraisal was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any
public document without the express written consent of CCP Valuation which consent CCP Valuation reserves the right
to deny. Finally, this report shall not be advertised to the public or otherwise used to induce a third party to purchase the
property or to make a "sale" or "offer for sale" of any "security," as such terms are defined and used in the Securities Act
of 1933, as amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised
that they should rely on their own independently secured advice for any decision in connection with this property. CCP
Valuation shall have no accountability or responsibility to any such third party.

10. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct
or indirect recommendation of CCP Valuation to buy, sell, or hold the property or properties at the value or values stated.
Such decisions involve substantial investment strategy questions and must be specifically addressed in consultation
form.

11. If included in the analysis, cash flow are forecasts of estimated future operating characteristics and are predicated on
the information and assumptions contained within the report. Any projections of income, expenses and economic
conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market expectations
of future income and expenses. The achievement of the financial projections will be affected by fluctuating economic
conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary from the
projections contained herein. CCP Valuation does not warrant that these forecasts will occur. Projections may be affected
by circumstances beyond the current realm of knowledge or control of CCP Valuation.

12. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of
possible readily achievable barrier removal construction items in this report, CCP Valuation has not made a specific
compliance survey and analysis of this property to determine whether it is in conformance with the various detailed
requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the
requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the
ADA. If so, this fact could have a negative effect on the values estimated herein. Since CCP Valuation has no specific
information relating to this issue, nor is CCP Valuation qualified to make such an assessment, the effect of any possible
non-compliance with the requirements of the ADA was not considered in estimating the value of the subject.

110