Securities and Exchange Commission v. Nadel et al

Filing 812

NOTICE by Burton W. Wiand Notice Of Filing Appraisals Of Receivership Real Property Located In Graham, Alamance County, North Carolina (Attachments: # 1 Exhibit A - Jeffrey Skeahan Rite Aid Appraisal, # 2 Exhibit B - Roscoe Shiplett Rite Aid Appraisal)(Cohen, Jonathan)

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              EXHIBIT B  AN APPRAISAL OF REAL PROPERTY IN A SUMMARY REPORT RITE-AID 841 South Main Street Graham, NC 27253 Landauer Job No.: 12-2686-027 PERTINENT DATES: “As Is” Valuation Date: Report Date: March 30, 2012 April 4, 2012 PREPARED FOR: Mr. Burton Wiand Wiand Law 3000 Bayport Drive, Suite 600 Tampa, Fl 33607 PREPARED BY: GRUBB & ELLIS LANDAUER VALUATION ADVISORY SERVICES, LLC 7621 Little Avenue, Suite 450 Charlotte, NC 28226 April 4, 2012 Mr. Burton Wiand Wiand Law 3000 Bayport Drive, Suite 600 Tampa, Fl 33607 RE: An Appraisal of Real Property Rite-Aid 841 South Main Street Graham, NC 27253 Landauer Job No.: 12-2686-027 Dear Mr. Burton Wiand, At the request and authorization of Wiand Law , Grubb & Ellis Landauer Valuation Advisory Services (“Landauer”) has prepared an appraisal to determine the market value of the referenced property and presented our analysis in the following Summary Report. Based on the intended use and in consideration of the subject’s physical and economic characteristics, we have prepared an appropriate scope of work that will provide for a credible market value opinion. The significant elements of the scope of work include: i) observation of the subject and its surroundings; ii) collection, verification and analysis of sales and rental data; iii) analysis of the subject’s existing and/or pro-forma economic operating characteristics; and iv) completion of the appropriate approaches to value. The subject is a 13,824 square foot Rite Aid drug store. The improvements were constructed in 2004 and are 100% leased as of the date of value. The site contains 1.18 acres and is zoned B-2 by the City of Graham Data, information, and calculations leading to the value conclusion(s) are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. Based on the analysis contained in the following report, and after considering the extraordinary assumptions and hypothetical conditions listed in the Introduction section of this report, the opinion of value for the subject is shown below. Your attention is directed to the extraordinary assumptions. This report assumes that the buyer will renegotiate the current lease and the opinion of value contained in this report is contingent upon that assumption. Page 2 Mr. Burton Wiand MARKET VALUE CONCLUSION Appraisal Premise Market Value "As Is" Interest Appraised Leased Fee Date of Value March 30, 2012 Value Conclusion $2,600,000 The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Title XI Regulations, the appraisal guidelines of Wiand Law , and all applicable local and state requirements. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if Grubb & Ellis Landauer Valuation Advisory Services, LLC can be of further service, please contact us. Respectfully submitted, GRUBB & ELLIS LANDAUER VALUATION ADVISORY SERVICES, LLC Digitally signed by Roscoe W. Shiplett DN: cn=Roscoe W. Shiplett, o=Grubb and Ellis Landauer, ou=Charlotte, email=roscoe.shiplett@grubb-ellis.com, c=US Date: 2012.04.05 09:52:02 -04'00' Roscoe Shiplett, MAI Managing Director Certified General North Carolina – A1366; Exp. June 30, 2012 Phone: 704-341-3166 E-Mail: roscoe.shiplett@grubb-ellis.com Digitally signed by Michael McCaskill DN: cn=Michael McCaskill, o=Grubb and Ellis Landauer, ou=Charlotte, email=Michael.McCaskill@grubb-ellis.com, c=US Date: 2012.04.05 09:51:29 -04'00' Michael McCaskill Appraiser Licensed Appraiser Trainee North Carolina – T5427; Exp. June 30, 2012 Phone: 704-341-3166 E-Mail: michael.mccaskill@grubb-ellis.com © GRUBB & ELLIS LANDAUER VALUATION ADVISORY SERVICES, LLC 7621 LITTLE AVENUE, SUITE 450 | CHARLOTTE, NC 28226 PHONE: 704-341-3166 | W EB: WWW.GRUBB-ELLIS.COM RITE-AID CERTIFICATION CERTIFICATION We certify to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and 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. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 8. Roscoe Shiplett, MAI and Michael McCaskill have made a personal inspection of the property that is the subject of this report. 9. No one provided significant real property appraisal assistance to the persons signing this certification. 10. The appraiser(s) have performed no other services, as an appraiser or in any other capacity regarding the subject property within the three year period immediately preceding the date of acceptance of this assignment. 11. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan. 12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 13. As of the date of this report, Roscoe W. Shiplett has completed the continuing education program of the Appraisal Institute. Digitally signed by Roscoe W. Shiplett DN: cn=Roscoe W. Shiplett, o=Grubb and Ellis Landauer, ou=Charlotte, email=roscoe.shiplett@grubb-ellis.com, c=US Date: 2012.04.05 09:51:51 -04'00' Roscoe Shiplett, MAI Managing Director Certified General Real Estate Appraiser North Carolina – A1366; Exp. June 30, 2012 Digitally signed by Michael McCaskill DN: cn=Michael McCaskill, o=Grubb and Ellis Landauer, ou=Charlotte, email=Michael.McCaskill@grubbellis.com, c=US Date: 2012.04.05 09:51:39 -04'00' Michael McCaskill Appraiser Licensed Appraiser Trainee North Carolina – T5427; Exp. June 30, 2012 CERTIFICATION RITE-AID SUBJECT PHOTOGRAPHS Front Entrance Drive-thru Rear of building Side of building Dumpsters View east along West Crescent Square Drive SUBJECT PHOTOGRAPHS RITE-AID SUBJECT PHOTOGRAPHS View west along West Crescent Square Drive Interior of Subject AERIAL SUBJECT PHOTOGRAPHS RITE-AID INTRODUCTION TABLE OF CONTENTS INTRODUCTION................................................................................................................................................................................ 2 REGIONAL ANALYSIS ......................................................................................................................................................................6 NEIGHBORHOOD ANALYSIS ...........................................................................................................................................................9 PROPERTY DESCRIPTION ............................................................................................................................................................ 12 IMPROVEMENT DESCRIPTION ..................................................................................................................................................... 14 ASSESSMENT & TAXES ............................................................................................................................................................... 18 HIGHEST & BEST USE ................................................................................................................................................................... 19 APPRAISAL METHODOLOGY ........................................................................................................................................................ 20 SALES COMPARISON APPROACH ............................................................................................................................................... 21 INCOME CAPITALIZATION APPROACH ........................................................................................................................................ 25 RECONCILIATION........................................................................................................................................................................... 32 ASSUMPTIONS & LIMITING CONDITIONS .................................................................................................................................... 33 ADDENDA ADDENDUM A: DEFINITIONS ADDENDUM B: DEMOGRAPHICS ADDENDUM C: AGREEMENT OF PURCHASE AND SALE ADDENDUM D: COMPARABLE IMPROVED SALE SUMMARIES ADDENDUM E: COMPARABLE RENT SUMMARIES ADDENDUM F: CLIENT ENGAGEMENT LETTER ADDENDUM G: APPRAISER QUALIFICATIONS Page | 2 RITE-AID INTRODUCTION APPRAISAL AND SCOPE OF WORK SUMMARY General Client Client Contact Intended User(s) Intended Use(s) Interest Appraised Type of Value Wiand Law Mr. Burton Wiand Wiand Law Estimate The Market Value Of The Property Leased Fee - See extraordinary assumption Market Value (Defined below) As defined by the Office of the Comptroller of the Currency under 12 CFR, Part 34, Sub-part C – Appraisals, 34.42 Definitions (g), market value is defined as: “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 is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: • Buyer and seller are typically motivated; • Both parties are well informed or well advised, and acting in what they consider their own best interests; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and, • The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.” This definition of market value is generally accepted by agencies regulating financial institutions in the United States. Report Date Current Use of the Property Highest & Best Use - As Vacant Highest & Best Use - As Improved Extent to Which Property Was Inspected Personnel Inspecting the Property Date(s) of Inspection Type and Extent of Data Research April 4, 2012 Drug Store Hold For Future Retail Development Retail Use Complete Interior And Exterior; Photographs Taken Roscoe Shiplett, MAI & Michael McCaskill March 30, 2012 The appraiser(s) analyzed the micro and/or macro market environments with respect to physical and economic factors relevant to the valuation process; expanded this knowledge through interviews with regional and/or local market participants, and available published data and other various resources. Market and comparable data has been analyzed and confirmed with sources assumed to be reliable. The appraiser(s) analyzed the property and market data gathered through the use of accepted market-derived methods and procedures, employed the appropriate approaches to value, and correlated and reconciled the results into an estimate of market value, as defined within the appraisal report. None Type and Extent of Analysis Applied Significant Appraisal Assistance Applicable No Comments A cost approach was considered and was not developed because there is inadequate data to develop a land value, and the age of the improvements makes the depreciation difficult to accurately measure. Additionally, market participants seldom use a cost approach to base purchasing decisions for this property type. Sales Comparison Approach Yes Income Capitalization Approach Yes A sales/direct comparison approach was considered and was developed because there is adequate data to develop a value estimate and this approach reflects market behavior for this property type. An income capitalization approach was considered and was developed because the subject is an income producing property and there is adequate data to develop a value estimate with this approach. For credit tenant leased single tenant properties this is the most relevant indicator and the approach used most often by buyers. Additional Scope of Work Conditions Cost Approach Page | 3 RITE-AID INTRODUCTION LOCATION AND PHYSICAL PROPERTY CHARACTERISTICS Property Name Location County Metropolitan Statistical Area Property Tax Parcel No. Rite-Aid 841 South Main Street Graham, NC 27253 Alamance Burlington 144069 Physical Characteristics Land Area (Gross) Land Area (Net) Surplus/Excess Land Area No. of Buildings Gross Building Area (Est.) Gross Leaseable Area (GLA) No. of Stories Year Built Year Renovated (if applicable) Actual Age Effective Age Remaining Economic Life (est.) Zoning Property Condition 1.18 Ac. - 51,401 SF 1.18 Ac. - 51,401 SF 0.00 Ac. - 0 SF 1 13,824 SF 13,824 SF 1 2004 0 8 Years 8 Years 37 Years B-2 Very Good OWNERSHIP HISTORY AND TRANSACTION SUMMARY Category Current Ownership Contract Status Contract Price Property Rights Conveyed Indication Scoop Real Estate, LP Under Contract $2,400,000 Leased fee VALUATION SUMMARY Valuation Data - As Is Cost Approach Sales Comparison Approach Income Capitalization Approach $ Nominal $0 $2,281,000 $2,610,000 $/SF $0.00 $165.00 $188.80 Reconciled Market Values Reconciled Market Value - "As Is" Est. Exposure Time $ Nominal $2,600,000 9 months $/SF $188.08 The property is currently under contract for $2,400,000 between Burton W. Wiand, Receiver for Scoop Real Estate, LP and Trinet West, LLC. The contract price is similar to our estimate of market value and therefore seems reasonable. EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS Extraordinary Assumptions This appraisal employs the following extraordinary assumptions: Page | 4 RITE-AID INTRODUCTION The property is currently under contract to a buyer that plans to renegotiate the contract lease. We have assumed the lease will be renegotiated to current market rent for a Rite Aid. If this assumption proves to be false, we reserve the right to amend our market value estimates. The appraiser(s) were not provided with building plans and therefore relied upon the rent roll provided for the net rentable area. We assume the data utilized is correct and reserves the right to amend the market value estimates reported herein should it be determined otherwise. Hypothetical Conditions This appraisal employs the following hypothetical conditions: None The use of Extraordinary Assumptions and/or Hypothetical Conditions may have affected assignment results. Page | 5 RITE-AID REGIONAL ANALYSIS REGIONAL ANALYSIS The purpose of this chapter is to identify factual data regarding these forces and to analyze their impacts on real property values - in particular, that of the subject property. Primary sources of data include Moody’s Economy.com, Claritas, the U.S. Bureau of Census, U.S. Bureau of Labor, area Chambers of Commerce, area city and county governments, and others, as noted. The map below depicts the subject’s physical location within the Burlington region. The following gives an overview of the MSA, as presented by Moody’s (Economy.com). REGIONAL SUMMARY Recent Performance Labor market improvement is sustaining Burlington’s sluggish recovery. Renewed hiring in leisure and hospitality services is compensating for modest job loss in goods production. The strength in public sector payrolls is more noteworthy; local government was responsible for the largest contribution to payrolls over the past three months. At 10.7%, the unemployment rate has edged down from its highest level of the year Page | 6 RITE-AID REGIONAL ANALYSIS and is approaching the state average. Housing’s drag is lifting, as price declines are slowing and singlefamily permitting is rising from its recessionary trough. Elevated foreclosure inventories are still worrying, however. Manufacturing Manufacturing will shift from a recovery support to a drag as textile and apparel manufacturers cut production. National apparel output is expected to dip by 5%, while overall industrial production is expected to rise 3% over the same time frame. Because of Burlington’s significant exposure to textile mill and apparel manufacturing industries that will be squeezed over the next year, manufacturing employment is expected to fall in the metro area. Moreover, clothing producers uprooting or closing operations is a real threat, as evidenced by Gold Toe Moretz’s factory closure in 2008. This trend will play out in the long term. Manufacturing will diminish as producers look for cheaper labor elsewhere and productivity gains weigh on payrolls. Healthcare services Slow and steady growth in health services will supplement the short-term stability provided by Burlington’s goods producers. Healthcare, which has remained stagnant this year in contrast to the national trend of consistent growth, is poised for expansion. Labcorp, a clinical laboratory testing company, is in the process of acquiring a DNA testing company, thereby expanding its footprint among the world’s medical and diagnostic laboratories. Labcorp already provides a wide variety of testing services for hospitals, laboratories, and pharmaceutical and biotechnology companies. Industry payrolls are expected to rise in the coming years, as the firm will have to add to payrolls to meet increasing demand for these types of activities. Moreover, above-average population growth will maintain healthcare’s position as a key driver for the area’s economy in the long run. Consumers Healthy consumer balance sheets will enable Burlington’s recovery to proceed. House prices are down less than 7% from their 2007 peak, which is roughly half of the statewide price decline and one-quarter of that nationally. The relatively modest decline in house prices has preserved household equity, mitigating the damage to household finances. The area’s personal bankruptcy rate is noticeably below the national average. Relatively stable finances will allow residents to spend a greater percentage of their income. On the downside, a lack of high-paying positions outside manufacturing and healthcare will limit income growth, keeping per capita incomes depressed. Consumer spending will continue to grow, albeit slowly. Page | 7 RITE-AID REGIONAL ANALYSIS BURLINGTON, NC 2007 4.6 1.4 61.1 3.3 5.1 6.6 144.8 1,441 0 118.8 736 2.7 276 2008 4.5 -2.6 60.6 -0.9 6.5 4.5 147.9 704 56 115.6 550 2.5 300 2009 4.2 -5.6 56.4 -6.9 11.9 -4.6 150.2 441 120 111.9 713 1.8 304 2010 Indicators 4.4 Gross metro product (C$B) 3.9 % change 55.5 Total employment (000) -1.6 % change 11.4 Unemployment rate 3.5 Personal income growth 151.8 Population (000) 443 Single-family permits 404 Multifamily permits 110.7 Existing-home price ($ths) 532 Mortgage originations ($mil) 1.1 Net migration (000) 296 Personal bankruptcies 2011 4.5 3.4 55.6 0.2 10.7 4.2 153.1 474 171 109.8 428 0.8 412 2012 4.6 2.9 55.4 -0.4 12.2 3.7 154.8 698 50 111.4 323 1.2 463 2013 4.8 3.5 55.6 0.4 12.6 4.4 156.7 1,117 58 114.1 327 1.4 470 2014 5.0 3.4 56.8 2.2 11.2 6.0 158.7 1,316 54 121.7 387 1.5 470 2015 5.2 3.7 58.1 2.3 10.1 5.6 160.8 1,337 50 128.7 451 1.6 421 *Source: Moody's Economy.com Precis Metro Report 14.0 165.0 Conclusion 12.0 160.0 10.0 Burlington’s recovery remains on course, but it will proceed more slowly than the national recovery. To 155.0 some extent, manufacturing will provide near-term stability while the economy transitions into a service8.0 150.0 oriented economy driven by healthcare, but employment growth across industries will be weak. Instead, 6.0 Burlington will have to rely on its proximity to more dynamic areas for support. Longer term, strong 145.0 demographics, driven by rapid in-migration, will increase the tax base and support service growth. 4.0 Nevertheless, the metro area will struggle to attract new growth drivers to fill the void left by the secularly 140.0 2.0 declining manufacturing base, resulting in a below-average performance over the long term. 0.0 135.0 2007 2008 2009 2010 2011 Unemployment rate 2012 2013 2014 2015 Population (000) Page | 8 RITE-AID NEIGHBORHOOD ANALYSIS NEIGHBORHOOD ANALYSIS LOCATION The subject is located on the west side of South Main Street, approximately .25 mile south of I-85. The town is a mature suburban community that is proximate to the region’s highway, rail and air transportation network. Graham is served by Interstates 40/85, NC Highway 54, NC Highway 87, NC Highway 49, and is located less than four miles east of Burlington-Alamance Regional Airport. Nearby jurisdictions include Burlington to the north, Alamance to the south, Mebane to the east and Elon to the west. ACCESS Access to and from the subject neighborhood is good. Graham is served by Interstates 40/85, NC Highway 54, NC Highway 87, NC Highway 49. All of these highways provide convenient access to the surrounding region. Main Street and Moore street are primary north-south thoroughfares, while Ivey Road and Cheeks Lane are primary east-west roadways. The subject’s neighborhood is also traversed by Interstate 40, which connects Wilmington to the Asheville and continues into Tennessee. Access to the subject is via South Main Street and West Crescent Square Drive to the east and north respectively. The aerial and street maps below depict the subject’s physical location within the neighborhood. Page | 9 RITE-AID NEIGHBORHOOD ANALYSIS LAND USE PATTERNS AND TRENDS The dominant land use in the neighborhood is commercial with residential (single and multifamily) located to the south and east. The subject property is along South Main Street approximately .25 mile south of I85. The subject’s immediate area is heavily developed and mature in nature. There is minimal vacant land available for new construction. IMMEDIATE SUBJECT SURROUNDINGS The subject’s immediate surrounding area is considered to extend for about a block in any direction from the subject. The following table summarizes our findings for this immediate surrounding area. SURROUNDING LAND USES Direction Land Use North Shopping Center South Office East Strip Retail West Multifamily DEMOGRAPHIC PROFILE The following table summarizes the select neighborhood demographics in the one-, three- and five-mile concentric circles from the subject as well as the metro area. Page | 10 RITE-AID NEIGHBORHOOD ANALYSIS NEIGHBORHOOD DEMOGRAPHIC ANALYSIS 1-Mile Radius 3-Mile Radius 5-Mile Radius Burlington MSA Population 2000 4,148 29,276 66,636 130,800 Population 2012 4,239 31,730 72,013 154,498 Population 2017 4,292 32,655 74,459 163,778 % Growth 2000 - 2012 2.2% 8.4% 8.1% 18.1% % Growth 2012 - 2017 1.3% 2.9% 3.4% 6.0% Households 2000 1,693 11,826 27,094 51,584 Households 2012 1,821 12,640 29,245 61,458 Households 2017 1,843 13,016 30,400 65,479 % Growth 2000 - 2012 7.6% 6.9% 7.9% 19.1% % Growth 2012 - 2017 1.2% 3.0% 3.9% 6.5% Median Household Income 2012 $43,748 $37,313 $37,983 $42,084 Average Household Income 2012 $50,707 $45,211 $47,333 $52,827 2.3 2.5 2.4 2.4 % Owner-Occupied Housing 64.1% 62.8% 63.1% 68.7% % Renter-Occupied Housing 35.9% 37.2% 36.9% 31.3% Average Household Size Source: Claritas As presented, the one-, three-, and five-mile radii have experienced slower population and household growth relative to the metro area as a whole. Income levels are relatively similar to the metro area as a whole. NEIGHBORHOOD SUMMARY As shown above, the population within a one-, three- and five-mile radius has generally shown positive trends since 2000. The subject neighborhood is described as a mature and stable residential community. All told, the neighborhood should see nominal to declining growth typical of a mature community with limited to no available land and the outlook for the neighborhood and subject—overall—appears to be somewhat favorable in both the near and long term due to high barriers to entry. Page | 11 RITE-AID PROPERTY DESCRIPTION PROPERTY DESCRIPTION SITE DESCRIPTION The subject is located on the west side of South Main Street, approximately .25 mile south of I-85. The following description is based on our property inspection, assessment records, property deeds, survey dated 12/6/2004 prepared by Roberston & Associates and information provided by property management. SITE SUMMARY Land Data Gross Site Area Excess Site Area Net Site Area Source Shape Accessibility Corner Lot Visibility Topography Infrastructure Primary Road Primary Road Frontage Secondary Road Secondary Road Frontage Sidewalks/Curbs & Gutters Traffic Lanes Traffic Signal Utilities Flood Information Flood Map Panel Flood Map Date Flood Zone Flood Zone Description 1.18 Acres 51,401 SF 0.00 Acres 0 SF 1.18 Acres 51,401 SF Survey Roughly Rectangular Very Good Yes Very Good Level, At Street Grade South Main Street 170 Feet (Est.) Crescent Square Drive 231.52 Feet (Est.) Yes / Yes Two lanes in each direction with a central turn lane Traffic light at intersection of Crescent Square Drive and Main Street All available 3710888300J September 6, 2006 Zone X Areas of minimal flood hazard, usually depicted on FIRMs as above the 500-year flood level. Zone X is the area determined to be outside the 500-year flood and protected by levee from 100-year flood. Mandatory flood insurance purchase requirements do not apply. The site summary is continued below to include the appraiser’s observations relative to detrimental easements, encroachments, deed restrictions, reciprocal park rights, and/or common ingress/egress, as applicable. Page | 12 RITE-AID PROPERTY DESCRIPTION ZONING The applicable zoning information for the subject is summarized as follows: ZONING SUMMARY Component Zoning Jurisdiction Zoning Code Zoning Description Permitted Uses Legally Conforming Zoning Change Detail City of Graham B-2 General Business Drugstore, Restaurant, Dental/Medical Office, Barber/Beauty Shop, Carwash, Convenience Store Appears To Conform No The appraisers are not experts in the interpretation of complex zoning ordinances but the subject property appears to be a conforming use based on a review of public information. Please note that the determination of compliance is beyond the scope of a real estate appraisal. It is recommended that local planning and zoning personnel be contacted regarding more specific information that might be applicable to the subject. In addition, we know of no deed restrictions, private or public, that further limit the subject property's use. The research required to determine whether or not such restrictions exist, however, is beyond the scope of this appraisal assignment. Deed restrictions are a legal matter and only a title examination by an attorney or title company can usually uncover such restrictive covenants. Thus, we recommend a title search to determine if any such restrictions do exist. SITE SUMMARY The subject site is roughly rectangular in shape with Very Good frontage along South Main Street and Crescent Square Drive. The site is generally typical of the neighborhood and there are no known detrimental uses in the immediate vicinity. Further, the site is located in an area of minimal flood risk and does not suffer from any known environmental conditions. Based upon the foregoing, we are not aware of any physical issues with the subject site that would prevent it from being developed with its highest and best use, as vacant, or as improved. Page | 13 RITE-AID PROPERTY DESCRIPTION IMPROVEMENT DESCRIPTION The subject property is a Class A - Drug Store, known as Rite-Aid, containing 13,824 gross square feet. The following table provides a summary of subject improvements. Building plans were not provided in conjunction with this appraisal. The following is a description of the subject improvements and basic construction features derived from our physical inspection. IMPROVEMENT SUMMARY Component Property (Investment) Class & Type Construction Class Gross Building Size Gross Leaseable Area Year Built Building Actual Age Building Effective Age Current Condition No. of Buildings No. of Stories Parking Type Parking Spaces Parking Ratio Floor Area Ratio (FAR) Detail Class A - Drug Store Class C - Masonry Frame 13,824 SF 13,824 SF 2004 8 Years 8 Years Very Good 1 1 Paved open surface parking 55 Spaces 3.98 spaces per 1,000 square feet 0.27 IMPROVEMENT DESCRIPTION - EXTERIOR Exterior Components Condition Comments Foundation - assumed to be poured concrete slab Very Good (none) Structure - structural steel frame Very Good (none) Exterior Walls - brick Very Good (none) Windows / Storefront - aluminum storefront Very Good (none) Roof - flat rubber membrane Very Good (none) Page | 14 RITE-AID PROPERTY DESCRIPTION IMPROVEMENT DESCRIPTION - INTERIOR Interior Components Condition Comments Interior Walls - painted drywall Very Good (none) Flooring - carpet Very Good (none) Ceiling Cover - suspended Very Good (none) Interior Lighting - a mix of fluorescent and incandescent lighting Very Good (none) Doors - glass in aluminum Very Good (none) Windows - aluminum storefront Very Good (none) Electrical - typical; assumed to be adequate and to code (none) Plumbing - typical; assumed to be adequate and to code (none) HVAC - forced air (none) Fire Sprinklers - wet system - 100% (none) IMPROVEMENT DESCRIPTION - SITE Site & Common Area Components Parking & driveways - ashphalt paved w/ concrete curbs and sidewalks Condition Comments Very Good (none) Site Lighting - pole and building mounted fixtures Very Good (none) Signage - monument and pylon fixtures Very Good (none) Landscaping - the subject has average landscaping consistent with prevailing retail uses Very Good (none) FUNCTIONAL UTILITY The current design characteristics of the subject project as constructed and demised for single tenant use meet modern standards and are adequately suited to their current use. Based on our inspection and consideration of its current and future use, there do not appear to be any significant items of functional obsolescence. Page | 15 RITE-AID PROPERTY DESCRIPTION ADA COMPLIANCE The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made, nor are we qualified by training to make, a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey and 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 Act. If so, this fact may have a negative influence upon the value of the property. Since we have not been provided with the results of a survey, we did not analyze the results of possible non-compliance. FURNITURE, FIXTURES AND EQUIPMENT (PERSONAL PROPERTY) There are no personal property items that would be significant to the overall valuation. ENVIRONMENTAL ISSUES We were provided with a Phase I Environmental Assessment for preparation of this report. Between 1985 and 2003, the site was occupied by a retail gasoline dispensing station and in 2003 the underground storage tanks were removed. During the UST removal, soil samples revealed concentrations of petroleum hydrocarbons greater than the applicable State of North Carolina Clean-up standard. In 2004, Servco excavated and removed from the site approximately 293 tons of petroleum impacted soil and submitted a request for No Further Action to the NCDENR. On December 17, 2004 the NCDENR approved the No Further Action request. As required by the NCDENR No Further Action approval, the site property deed has been annotated with a Notice of Residual Petroleum. DEFERRED MAINTENANCE / CAPITAL EXPENDITURES Our observation of the property indicated no significant items of deferred maintenance. We are not aware of, nor were we provided with documentation indicating planned capital expenditures. ECONOMIC AGE AND LIFE The appraiser(s) estimate of the subject improvements effective age and remaining economic life is depicted in the following table: ECONOMIC AGE & LIFE Component Actual Age Effective Age Ratio (Effective vs. Actual Age) MVS Expected Life Remaining Economic Life Years 8.0 Years 8.0 Years 100.0% 45.0 Years 37.0 Years IMPROVEMENT SUMMARY The existing improvements maintain good overall design and functional utility. Furthermore, there were no signs of major deferred maintenance upon inspection and we are unaware of any major planned capital Page | 16 RITE-AID PROPERTY DESCRIPTION improvements. Consequently, there are no known physical factors that could be considered to adversely impact the marketability of the improvements. Page | 17 RITE-AID ASSESSMENT & TAXES ASSESSMENT & TAXES The assessed values in Alamance County are based upon the current conversion assessment ratio of 100% of the Assessor’s market value. Below we have summarized the pertinent information with regard to the subject’s historical (where available) and current assessment and real estate taxes. Additional discussion and detailed will be provided as needed in the section which follows. ASSESSMENT & TAX SUMMARY Description Total Assessed Value Assessed Value per SF Tax Rate Total Tax Burden Total Taxes per SF 2009 $2,041,514 $147.68 0.97 $19,701 $1.43 2010 $2,041,514 $147.68 0.97 $19,701 $1.43 2011 $2,041,514 $147.68 0.97 $19,701 $1.43 Taxes are due September 1, with a 2% discount if paid by August 31. Taxes become delinquent after January 5, with a 2% penalty added on January 6. Interest will accrue at a rate of .75% until taxes are paid in full every month thereafter. TAX COMPARABLE ANALYSIS We have analyzed the assessment and corresponding taxation of competitive properties in the marketplace as a test of reasonableness against that of the subject’s current assessment and taxation. TAX COMPARABLE SUMMARY No. 1 2 3 4 Property Name CVS Walgreens Rite-Aid Rite-Aid GLA (SF) 10,394 14,736 11,703 9,842 Total Assessed Value $1,587,296 $2,276,408 $2,235,838 $1,527,679 Assessed Value / SF $152.71 $154.48 $191.05 $155.22 As presented, assessments for like-kind assets in the marketplace range from $1,527,679 to $2,276,408 per square foot, with an average of $1,906,805 per square foot. This compares to the subject’s current assessment of $147.68 per square foot. Therefore, it appears as though the subject’s current assessment is fair under the equal and uniform tax provision of the State’s constitution. CONCLUSION Going forward, it is our opinion that most prudent investors are allowing for change in real estate assessment/taxes in instances where the current assessment is notably different than the market value. Therefore, since the subject’s current assessment is slightly lower than our estimate of market value, we expect the tax burden to increase upon the next revaluation. Page | 18 RITE-AID HIGHEST & BEST USE HIGHEST & BEST USE In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must analyze include: legally permissible; physically possible; financially feasible; and maximum profitability. Highest and best use analysis involves assessing the subject both as if vacant and as improved. AS VACANT The subject site is zoned B-2 by the City of Graham. Legally permissible uses within this zoning district include drugstore, restaurant, dental/medical office, barber/beauty shop, carwash, convenience store uses. The subject is adequately served by utilities, has an adequate shape and size, sufficient access, etc., to be a separately developable site. The subject site would support a site layout for any of the legally probable uses, which include retail uses. Given the overall depressed, but stabilizing nature of the current economic environment, it appears that retail development would have a value only marginally commensurate with its cost. In the case of the subject as if vacant, the analysis indicates that holding the site for future retail development would be most appropriate. Based on the information presented above and upon information contained in the market and neighborhood analysis, we conclude that the highest and best use of the subject as if vacant, would be to hold for future retail development when market conditions improve. AS IMPROVED The subject site is improved with a retail property, which is consistent with the highest and best use as vacant previously analyzed. The subject site is currently improved with a drug store consisting of 13,824 gross leasable square feet. The improvements have been well designed for their intended use and are considered to be in very good overall condition. The improvements currently meet the market’s expectations for a drug store and do not suffer from any measurable functional obsolescence. The existing improvements have an estimated 37.0 years of remaining economic life. As will be indicated in the forthcoming income capitalization approach, the subject is capable of producing a positive net cash flow and continued utilization of the subject as a retail property is financially feasible. Overall, it appears there are no alternative uses of the existing improvements that would produce a higher net income and/or value over time than the current use. The current improvements add value to the site as if vacant, therefore dictating a continuation of its current use. Further, no renovations or expansions are warranted. Based on the foregoing, the highest and best use as improved of the subject property is consistent with its existing use as a retail use. Page | 19 RITE-AID APPRAISAL METHODOLOGY APPRAISAL METHODOLOGY In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available. APPRAISAL METHODOLOGY Applicable No Comments A cost approach was considered and was not developed because there is inadequate data to develop a land value, and the age of the improvements makes the depreciation difficult to accurately measure. Additionally, market participants seldom use a cost approach to base purchasing decisions for this property type. Sales Comparison Approach Yes Income Capitalization Approach Yes A sales/direct comparison approach was considered and was developed because there is adequate data to develop a value estimate and this approach reflects market behavior for this property type. An income capitalization approach was considered and was developed because the subject is an income producing property and there is adequate data to develop a value estimate with this approach. For credit tenant leased single tenant properties this is the most relevant indicator and the approach used most often by buyers. Cost Approach Page | 20 RITE-AID SALES COMPARISON APPROACH SALES COMPARISON APPROACH In this sales comparison analysis, the price per square foot is used as it mirrors that of market participants when making retail investment decisions. The market was researched for sales of similar retail properties, particularly those with similar physical and income generating characteristics within reasonable proximity to the subject. These sales represent the best data available for comparison. IMPROVED SALES MAP AND SUMMARY The following map provides a visual representation of the improved sale locations relative to the subject. IMPROVED SALES SUMMARY Improved Sale No. 1 Improved Sale No. 2 Improved Sale No. 3 Improved Sale No. 4 Improved Sale No. 5 Property Name Rite Aid Rite Aid Rite Aid Rite Aid Rite Aid Rite-Aid Address 1485 River Ridge Drive 3645 Concord Parkw ay South 101 West Main Street 201 Trade Street 101 Plaza Road 841 South Main Street City Clemmons Concord Havelock Henderson Laurinburg Graham County Forsyth Cabarrus Craven Vance Scotland Alamance State NC NC NC NC NC NC Property Type Retail Retail Retail Retail Retail Retail Transaction Type Sale Sale Sale Sale Sale -- Parcel ID 4433E-0005 5509-34-9233-0000 6-060-021 0012-01036 01001601008 127-683-001-0001 Grantor Sovereign Ra, LLC DDR Southeast Concord, LLC Sovereign Ra, LLC Sovereign Ra, LLC Sovereign Ra, LLC -- Grantee 37 RA, LLC RA Concord, LLC Stanhope Apartments, LLC Diverse Real Estate Group, Avidoc Holding Corp. -- Marketing Time N/Av N/Av N/Av N/Av N/Av -- Sale Date 3/2011 1/2012 3/2010 11/2010 9/2011 -- Adj. Sale Price* $2,314,782 $1,670,636 $2,509,822 $2,385,542 $2,050,000 -- Year Built 2003 2002 2004 2003 2003 2004 Condition Good Good Good Good Good Land Size 73,181 SF Gross Leasable Area 14,547 SF 10,908 SF 13,813 SF 14,735 SF 14,388 SF 13,824 SF Construction Brick Brick Brick Brick Brick brick Occupancy 100% 100% 100% 100% 100% Net Operating Income $212,960 Cap Rate 9.20% N/Av 8.45% 8.30% 8.97% -- Sale Price Per SF $159.12 $153.16 $181.70 $161.90 $142.48 -- Verification Sperry Van Ness Colliers International Sperry Van Ness Sperry Van Ness Sperry Van Ness -- 1.68 Acres $14.64/SF 41,382 SF N/Av 0.95 Acres N/Av 76,666 SF $212,080 1.76 Acres $15.35/SF 83,200 SF $198,000 1.91 Acres $13.44/SF 82,764 SF $183,885 Subject Very Good 1.90 Acres 51,401 SF 1.18 Acres 100.0% $12.78/SF $235,008 $17.00/SF * Sale price adjusted for cash equivalency, lease-up and/or development costs (where applicable) Page | 21 RITE-AID SALES COMPARISON APPROACH ADJUSTMENT PROCESS Adjustments for the valuation analysis include the following transactional and property adjustments. Transactional adjustments applied typically applied in sequential order before property adjustments. TRANSACTIONAL AND PROPERTY ADJUSTMENTS Transactional Property Rights Conveyed Financing Terms (Cash Equivalency) Conditions of Sale (Motivation) Expenditures Immediately After Purchase Market Conditions (Time) Property Location Physical Characteristics Economic Characteristics Use Non-Realty Components Due to the imperfect nature of real estate markets, we have analyzed the comparables through the application of adjustments based on qualitative comparison. The adjustments made are subjective and are based on market evidence as well the appraiser’s research, judgment and experience. The adjustments are not based on a quantitative analysis tool such as “paired sales” due to the lack of paired sales data; or on multiple regression analysis, due to the lack of enough comparable sales to constitute a statistically valid sample. Therefore, the percentage adjustments summarized on the following grid should be viewed as conveying the degree of subjective adjustment applied, and not the result of a quantitative analysis. Page | 22 RITE-AID SALES COMPARISON APPROACH IMPROVED SALES COMPARISON ADJUSTMENT ANALYSIS Comparable Property Name Address Improved Sale No. 1 Improved Sale No. 2 Rite Aid Rite Aid 1485 River Ridge Drive 3645 Concord Parkway South Clemmons Concord Forsyth Cabarrus NC NC Retail Retail 1.68 Ac. 0.95 Ac. 2003 2002 14,547 SF 10,908 SF Sale Sale 3/2011 1/2012 $2,314,782 $1,670,636 Improved Sale No. 3 Rite Aid 101 West Main Street Improved Sale No. 4 Rite Aid 201 Trade Street Improved Sale No. 5 Rite Aid 101 Plaza Road Havelock Craven NC Retail 1.76 Ac. 2004 13,813 SF Sale 3/2010 $2,509,822 Henderson Vance NC Retail 1.91 Ac. 2003 14,735 SF Sale 11/2010 $2,385,542 Laurinburg Scotland NC Retail 1.90 Ac. 2003 14,388 SF Sale 9/2011 $2,050,000 Sale Price Per SF Transaction Adjustments $159.12 $153.16 $181.70 $161.90 $142.48 Property Rights Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Subtotal Physical Adjustments $159.12 $153.16 $181.70 $161.90 $142.48 Location/Access/Exposure Gross Adjustments Net Adjustments Superior -5.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% 5.00% -5.00% Superior -5.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% 5.00% -5.00% Superior -5.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% 5.00% -5.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% 0.00% 0.00% Inferior 5.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% Similar 0.00% 5.00% 5.00% Indicated Price Per SF $151.16 $145.50 $172.62 $161.90 $149.60 City County State Property Type Land Size (Ac.) Year Built Gross Leasable Area Transaction Type Sale Date Adj. Sale Price* Financing Conditions of Sale Market Conditions (Time) Size Age/Condition Parking Zoning Design/Quality Subject Rite-Aid 841 South Main Street Graham Alamance NC Retail Prior to adjustments the improved sales had prices ranging from $142.48 to $181.70 per square foot with a mean of $159.67 per square foot. After adjustments, the sales reflect unit prices ranging from $145.50 to $172.62 per square foot with an average of $156.16 per square foot. The subject is most similar to Sales 3 and 4 which indicate an adjusted value range of about $161.90 to $172.62 per square foot for the subject. Sale Comparable 1 is located in a good location just off Hwy 421 and is shadow anchored by a Food Lion shopping center and was adjusted downward. Sale Comparable 2 is located in a good location near the Charlotte Motor Speedway and located along a major thoroughfare connecting a large residential area to a commercial area and was adjusted downward. Sale Comparable 3 is located in a growing area near Cherry Point Marine Corps Air Base and was adjusted downward. Sale Comparable 4 is considered the strongest comp as it required no adjustments. Page | 23 RITE-AID SALES COMPARISON APPROACH Sale Comparable 5 is located in a tertiary market considered inferior to the subject and was adjusted upward. Placing primary reliance on Sales 3 and 4 we conclude an improved value indication of $165.00 per square foot. We have also considered the current contract on the property of $2,400,000 or $173.61 per square foot, this falls at the high end of our range but seems reasonable. SALES COMPARISON APPROACH CONCLUSION Based on the preceding comparison analysis, the subject value via the sales comparison approach is computed as follows: SALES COMPARISON APPROACH CONCLUSION Indicated Value per SF - Low Indicated Value per SF - High Reconciled Value per SF Subject GLA "As Is" Value Indication (Rd) "As Is" $145.50 $172.62 $165.00 13,824 SF $2,281,000 Page | 24 RITE-AID INCOME CAPITALIZATION APPROACH INCOME CAPITALIZATION APPROACH The subject is a single tenant retail asset and investors typically rely on the direct capitalization method. As such, to echo the market and considering the subject exhibits stable income and expense trends, we solely rely on the direct capitalization method. CONTRACT LEASE SYNOPSIS General Information Property Name Address City, State Rite-Aid 841 South Main Street Graham, NC Leased Premises Gross Leaseable Area (GLA) Drug Store 13,824 SF Lease Information Lease Commencement Lease Expiration Primary Term - Months Remaining Term - Months Applicable Annual Rent: Expense Treatment: Lessee's Expense Responsibility Lessor's Expense Responsibility Initial Term Option Option Option Option November 25, 2004 November 24, 2024 240 mos. 152 mos. Annual rent per schedule below Triple Net (NNN) Real Estate Taxes, Insurance, Maintenance, & Utilities None Period Start 11/25/2004 11/25/2024 11/25/2029 11/25/2034 11/25/2039 - Period End 11/24/2024 11/24/2029 11/24/2034 11/24/2039 11/24/2044 Annual Rent $396,876.96 $403,788.96 $410,700.96 $417,612.96 $424,524.96 $ Per SF $28.71 $29.21 $29.71 $30.21 $30.71 Page | 25 RITE-AID INCOME CAPITALIZATION APPROACH MARKET RENT ANALYSIS The market, or economic, rent for the subject is estimated by comparing the subject’s unit types to other comparable retail properties located within its competitive area. The rent comparables were chosen based upon similar location, age, and utility. RENT COMPARABLE MAP The following map provides a visual representation of the rent comparables’ locations relative to the subject. Page | 26 RITE-AID INCOME CAPITALIZATION APPROACH RENT COMPARABLE SUMMARY The following table provides a brief summary of the rent comparables used in the derivation of market rent for the subject space. A detailed write up of each rent comparable is provided in the Addenda. COMPARABLE RENTAL SUMMARY Property Information No. Lease Information Anchor(s) Property Nam e Location Year Built Reported Occ. % GLA (SF) Quoted Rental Rate Exp. Treatm ent Tenant Nam e Leased Area 1 1 1 1 1 Rite Aid 599 South Enota Drive Gainesville, GA Rite Aid 1996 100% 11,352 SF $15.05 Absolute Net Rite Aid 11,352 SF 2 2 2 2 2 Rite Aid 3465 South Church Street Burlington, NC Rite Aid 2003 100% 14,470 SF $21.53 Absolute Net Rite Aid 14,470 SF 3 Rite Aid Rite Aid 2003 100% 14,547 SF $14.64 Absolute Net Rite Aid 14,547 SF 3 3 3 3 1485 River Ridge Drive Clemmons, NC 4 4 4 4 4 Rite Aid 1605 East Innes Street Salisbury, NC Rite Aid 2004 100% 14,569 SF $17.52 Absolute Net Rite Aid 14,569 SF 5 Rite Aid Rite Aid 2003 100% 14,765 SF $13.47 Absolute Net Rite Aid 14,765 SF 5 5 5 5 1500 Martin Luther King Parkw ay SE Wilson, NC 2004 100.0% 13,824 SF Subject Rite-Aid 841 South Main Street Graham, NC COMPARABLE RENTAL ANALYSIS Space Type: Comp 1 2 3 4 5 Sub . Property Name Rite Aid Rite Aid Rite Aid Rite Aid Rite Aid Rite-Aid Location 599 South Enota Drive 3465 South Church Street 1485 River Ridge Drive 1605 East Innes Street 1500 Martin Luther King Parkway SE 841 South Main Street Tenant Rite Aid Rite Aid Rite Aid Rite Aid Rite Aid Size 11,352 SF 14,470 SF 14,547 SF 14,569 SF 14,765 SF Exp. Treatment Absolute Net Absolute Net Absolute Net Absolute Net Absolute Net Rental Rate / SF Qualatative Rating (Annual) Relative to Subject $15.05/SF Similar $21.53/SF Similar $14.64/SF Similar $17.52/SF Similar $13.47/SF Similar Analytics Minimum Mean Maximum Concluded $13.47 $16.44 $21.53 $17.00 Page | 27 RITE-AID INCOME CAPITALIZATION APPROACH The previous chart shows leases at Rite Aid locations in North Carolina. These rents are representative of stores where Rite Aid renegotiated the original lease to a lower rent with a new 20-year term. Overall, these leases represent market activity for properties very similar to the subject. Some variations among the comparables include date of lease inception and location. The comparable lease rates range from $13.47 to $21.53 per square foot, with an average of $16.44 per square foot. We have assumed the subject lease will be renegotiated (see extraordinary assumptions) to fall within the range of the comparable properties and to be representative of a market rental rate and terms. COMPARABLE FORMER RITE AID RENTAL SUMMARY Property Information Property Nam e Location 1 Former Eckerd - Trade It! Sublease 1 Lease Information 105 South West Greenville Boulevard No. Anchor(s) Year Built Reported Occ. % Quoted GLA (SF) Rental Rate Leased Area Base Rent/SF Trade It! 2000 100% 10,908 $9.75 NNN Trade It! 10,908 SF $9.75/SF Tuesday Morning 1997 100% 10,938 $11.00 Mod. Gross Tuesday Morning 10,938 SF $11.00/SF 1997 0% 10,908 $10.00 NNN Asking 10,908 SF $10.00/SF Ace Hardw are 1995 100% 9,600 $9.00 NNN Ace Hardw are 9,600 SF $9.00/SF Verizon 1998 100% 10,908 $10.65 NNN Verizon 10,908 SF $10.65/SF 2004 100.0% 13,824 SF Exp. Treatm ent Tenant Nam e 1 2 Former Rite Aid 2 774 East King Street 2 Boone, NC 2 3 Former Rite Aid 3 2574 South Church Street 3 4 Former Rite Aid (Ace Hardw are) 4 500 Pisgah Church Road 4 5 Former Rite Aid - Verizon Sublease 5 3001 Hope Mills Road 5 Subject Rite-Aid 841 South Main Street The previous chart summarizes lease rates for second generation Rite Aid locations. Number 3 is an asking rate of $10.00 per square foot while the others represent locations that have leased to an alternate use. The rents range from $9.00 to $11.00 per square foot. POTENTIAL RENTAL REVENUE Within this analysis, potential rental income is estimated based on the expected rental level that the subject property could be renegotiated to (See extraordinary assumptions). At $17.00 per square foot multiplied by 13,824 square feet the annual rent would be $235,008. POTENTIAL RENTAL REVENUE Subject Property $ Nominal $ Per SF Landauer Stabilized Estimate $235,008 $17.00 Page | 28 RITE-AID INCOME CAPITALIZATION APPROACH VACANCY AND CREDIT LOSS The subject property is a single tenant property with a long term lease in place. Therefore, we have taken no vacancy and collection loss. This is consistent with how investors are purchasing similar net lease investments. EFFECTIVE GROSS REVENUE The subject’s effective gross income is detailed as follows: EFFECTIVE GROSS REVENUE Subject Property $ Nominal Landauer Stabilized Estimate $235,008 OPERATING EXPENSE ANALYSIS For the purposes of this analysis we have utilized an absolute net structure whereby the tenant is directly responsible for all operating expenses and interior maintenance, including roof and structure. The landlord has no responsibility for operating expenses or maintenance. For the purposes of this analysis, we have utilized the subject’s absolute net structure thus excluding tenant expenses and reimbursement. OPERATING EXPENSE CONCLUSION The subject’s total operating expense is detailed as follows: TOTAL OPERATING EXPENSES Subject Property $ Nominal Landauer Stabilized Estimate $0 NET OPERATING INCOME CONCLUSION The subject’s net operating income is detailed as follows: NET OPERATING INCOME Subject Property $ Nominal Landauer Stabilized Estimate $235,008 DIRECT CAPITALIZATION Direct capitalization is a method used to convert a single year’s estimated stabilized net operating income into a value indication. The following subsections represent different techniques for deriving an overall capitalization rate for direct capitalization. Page | 29 RITE-AID INCOME CAPITALIZATION APPROACH Comparable Sales The OAR’s for the sales used in the sales comparison approach of this report are presented in the following table. The capitalization rate for Sale 2 was not available. COMPARABLE CAPITALIZATION RATES Sale Property Name 1 Rite Aid 2 Rite Aid 3 Rite Aid 4 Rite Aid 5 Rite Aid Estimated Cap Rate Date 3/2011 1/2012 3/2010 11/2010 9/2011 $ / SF $159.12 $153.16 $181.70 $161.90 $142.48 Occ. (%) 100% 100% 100% 100% 100% Cap Rate 9.2% N/Av 8.5% 8.3% 9.0% 9.0% Published Investor Survey Investor survey data is presented in the table below: NATIONAL INVESTOR SURVEYS : CAP RATES Survey Source PWC/Korpacz - 1Q12 Estimated Cap Rate Low 6.00% High 8.75% Average 7.46% 8.00% CAPITALIZATION RATE CONCLUSION The following table summarizes the OAR conclusions. SUMMARY OF CAPITALIZATION RATES Component Comparable Cap Rates Investor Surveys Landauer Stabilized Estimate Ranges 9.00% 8% 9.00% In reconciling to an appropriate rate of return, we have considered: x x x x x The survey data is comprised of properties of a higher investment quality/class than that of the subject. The location of the subject property in a secondary market. The below average credit rating of the tenant. The fact the subject is in the bottom 500 Rite Aid locations in terms of performance. The contract price of $2,400,000 implies a cap rate of 10.21% when using our estimate of $17.00/sf, which seems high given the comparable sales data. Our selection of a cap rate is primarily a reflection of the comparable cap rates with support from the investor surveys. Investor surveys are broad in their formulation and typically out-class the subject in terms of investment quality. This would inherently understate the rate appropriate for the subject property. Considering the data presented, the concluded overall capitalization rate appears to be supported in the local market. Page | 30 RITE-AID INCOME CAPITALIZATION APPROACH DIRECT CAPITALIZATION SUMMARY A summary of the direct capitalization of the subject at stabilized occupancy is illustrated in the following table. DIRECT CAPITALIZATION SUMMARY Revenue Potential Rental Revenue Expense Reimbursements Potential Gross Revenue Vacancy & Collection Loss Effective Gross Revenue Operating Expenses Net Operating Income Capitalization Rate "As Is" Value Indication (Rd) Nominal $235,008 $0 $235,008 $0 $235,008 $0 $235,008 9.00% $2,610,000 $ SF $17.00 $0.00 $17.00 $0.00 $17.00 $0.00 $17.00 $188.80 CONCLUSION OF INCOME CAPITALIZATION APPROACH The conclusion derived through the valuation method employed within this approach is as follows: INCOME CAPITALIZATION APPROACH CONCLUSION Direct Income Capitalization Reconciled Income Capitalization Approach Value As Is $2,610,000 $2,610,000 Page | 31 RITE-AID RECONCILIATION RECONCILIATION The value indications from the approaches to value are summarized as follows: SUMMARY OF VALUE CONCLUSIONS As Is Not Used $2,281,000 $2,610,000 $2,600,000 Cost Approach Sales Comparison Approach Income Capitalization Approach Reconciled Value In the sales comparison approach, the subject is compared to similar properties that have been sold recently or for which listing prices or offers are known. The sales used in this analysis are considered somewhat comparable to the subject. In addition, market participants are currently analyzing purchase prices on investment properties as they relate to available substitutes in the market. Therefore, the sales comparison approach is considered to provide a reliable value indication although has been given secondary emphasis in the final value reconciliation. The income capitalization approach is applicable to the subject since it is an income producing property leased in the open market. Market participants are primarily analyzing properties based on their income generating capability. Therefore, the income capitalization approach is considered a reasonable and substantiated primary value indicator and has been given greatest emphasis in the final value estimate. MARKET VALUE CONCLUSION Appraisal Premise Market Value "As Is" Interest Appraised Leased Fee Date of Value March 30, 2012 Value Conclusion $2,600,000 Page | 32 RITE-AID ASSUMPTIONS & LIMITING CONDITIONS ASSUMPTIONS & LIMITING CONDITIONS 1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties appraised is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. Landauer is not aware of any title defects nor has it been advised of any unless such is specifically noted in the report. However, Landauer 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 title have not been reviewed. Insurance against financial loss resulting in claims that may arise out of defects in the subject’s title should be sought from a qualified title company that issues or insures title to real property. 2. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on 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 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 the improvements, as currently constituted, conform to all applicable local, state, and federal building codes and ordinances. Landauer professionals are not engineers and are not competent to judge matters of an engineering nature. Landauer 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 Landauer by ownership or management; Landauer inspected less than 100% of the entire interior and exterior portions of the improvements; and Landauer 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, if negative findings are reported by engineering consultants, Landauer reserves the right to amend the appraisal conclusions reported herein. 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. Landauer has no knowledge of the existence of such materials on or in the property. Landauer, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater 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. Landauer has inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in the appraisal. 4. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real property, have been disregarded with only real property being considered in the report unless otherwise stated. Any existing or proposed improvements, on or offsite, as well as any alterations or repairs considered, are assumed to be completed in a workmanlike manner according to standard practices based upon the information submitted to Landauer. This report may be subject to amendment upon re-inspection of the subject subsequent to repairs, modifications, alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the information, conditions and projected levels of operation. 5. 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, Landauer has no reason to believe that any of the data furnished contain any material error. Information and data referred to in this paragraph include, without being limited to, numerical street addresses, 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, historical 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, Landauer reserves the right to amend conclusions reported if made aware of any such error. Accordingly, the Client should carefully review all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report and should immediately notify Landauer of any questions or errors. 6. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this appraisal. Under the terms of the engagement, we will have no obligation to revise this report to reflect events or conditions that occur subsequent to the date of the appraisal. However, Landauer will be available to discuss the necessity for revision resulting from changes in economic or market factors affecting the subject. 7. Landauer assumes no private deed restrictions, limiting the use of the subject in any way. 8. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposits or subsurface rights of value involved in this appraisal, whether they be gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred. 9. Landauer is not aware of any contemplated public initiatives, governmental development controls, or rent controls that would significantly affect the value of the subject. Page | 33 RITE-AID ASSUMPTIONS & LIMITING CONDITIONS 10. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the property, both physically and economically, on the open market. 11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics 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 considered herein. Landauer does not warrant these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of Landauer. 12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct or indirect recommendation of Landauer to buy, sell, or hold the properties at the value stated. Such decisions involve substantial investment strategy questions and must be specifically addressed in consultation form. 13. Unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or regulations governing use, density, or shape are being considered. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report is based, unless otherwise stated. 14. This study may not be duplicated in whole or in part without the specific written consent of Landauer nor may this report or copies hereof be transmitted to third parties without said consent, which consent Landauer 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 Landauer which consent Landauer 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. Landauer shall have no accountability or responsibility to any such third party. 15. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in the report. 16. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with any other property or appraisal and are invalid if so used. 17. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and reliable. None of the exhibits are to be removed, reproduced, or used apart from this report. 18. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been made known to Landauer unless otherwise stated within the body of this report. If the consultant 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 warranty is made concerning obtaining these items. Landauer assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. 19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special assumptions set forth in this report. It is the responsibility of the Client, or Client’s designees, to read in full, comprehend and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor Landauer assumes responsibility for any situation arising out of the Client’s failure to become familiar with and understand the same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting profession if so desired. 20. Landauer assumes that the subject analyzed herein will be under prudent and competent management and ownership; neither inefficient nor super-efficient. 21. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined and considered in the appraisal report. 22. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be correct. It is further assumed that no encroachments to the realty exist. 23. 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, Landauer 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 value estimated herein. Since Landauer has no specific Page | 34 RITE-AID ASSUMPTIONS & LIMITING CONDITIONS information relating to this issue, nor is Landauer 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. 24. Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client proximately result in damage to Appraiser. The Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising as a result of the Client’s failure or the failure of any of the Client’s agents to provide a complete copy of the appraisal report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be entitled to recover from the other reasonable attorney fees and costs. 25. The report is for the sole use of the Client; however, Client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the Client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by Landauer or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter. 26. Provision of an Insurable Value by the appraiser does not change the intended use or user of the appraisal. The appraiser assumes no liability for the Insurable Value estimate provided and does not guarantee that any estimate or opinion will result in the subject being fully insured for any possible loss that may be sustained. The appraiser recommends that an insurance professional be consulted. The Insurable Value estimate may not be a reliable indication of the replacement or reproduction cost for any date other than the effective date of this appraisal due to changing costs of labor and materials and due to the changing building codes and governmental regulations and requirements. Page | 35 RITE-AID ADDENDUM ADDENDUM A DEFINITIONS ADDENDUM RITE-AID ADDENDUM DEFINITIONS The following definitions are derived from The Dictionary of Real Estate Appraisal, Fifth Edition, published by the Appraisal Institute. x x x x x x x x x x x x x x x Absorption Period: The actual or expected period required from the time a property, group of properties, or commodity is initially offered for lease, purchase, or use by its eventual users until all portions have been sold or stabilized occupancy has been achieved. Absorption Rate: The rate at which properties for sale or lease have been or are expected to be successfully marketed, sold, or leased in a given area over a duration of time. Ad Valorem Tax: A tax levied in proportion to the value of the thing(s) being taxes; generally refers only to property taxes, although technically the term is applicable to income taxes, ad valorem tariffs, special property taxes, etc. Exclusive of exemptions, use value assessment provisions, and the like, the property tax is an ad valorem tax. (IAAO) Assessed Value: The value of a property according to the tax rolls in ad valorem taxation; may be higher or lower than market value, or based on an assessment ratio that is a percentage of market value. Cash Equivalency: An analytical process in which the sale price of a transaction with nonmarket financing or financing with unusual conditions or incentives is converted into a price expressed in terms of cash. Contract Rent: The actual rental income specified in a lease. Disposition Value: The most probable price that a specified interest in real property should bring under all of the following conditions: 1) Consummation of a sale will occur 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; 6) Both parties are acting in what they consider 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; and 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. Effective Rent: The rental rate net of financial concessions such as periods of no rent during the lease term and above- or below-market tenant improvements. Excess Land: Land that is not needed to serve or support the existing improvement. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land may have the potential to be sold separately and is valued separately. Excess Rent: The amount by which contract rent exceeds market rent at the time of the appraisal; created by a lease favorable to the landlord (lessor) and may reflect unusual management, unknowledgeable parties, a lease execution in an earlier, stronger rental market, or an agreement of the parties. Due to the higher risk inherent in the receipt of excess rent, it may be calculated separately and capitalized at a higher rate in the income capitalization approach. Exposure Time: 1) The time a property remains on the market. 2) The estimated length of time 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; a retrospective estimate based on an analysis of past events assuming a competitive and open market. Extraordinary Assumption: An assumption, directly related to a specific assignment, 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. (USPAP 2010-2011 ed.) Fee Simple Estate: 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. Floor Area Ratio (FAR): The relationship between the above-ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area. Fractional Vacancy: The amount of vacant space need in a market for its orderly operation. In a stabilized market, where supply and demand are in balance, fractional vacancy allows for move-in and move-outs. In markets for income-producing property, fractional vacancy measures the lost rental income as leases roll over and expire. ADDENDUM RITE-AID x x x x x x x x x x x x x x x x x x x ADDENDUM Full Service Lease: See gross lease. General Vacancy: A method of calculating any remaining vacancy and collection loss considerations when using discounted cash flow (DCF) analysis, where turnover vacancy has been used as part of the income estimate. The combined effects of turnover vacancy and general vacancy relate to total vacancy and collection loss. Going Concern Value: 1) The market value of all the tangible and intangible assets of an established and operating business with an indefinite life, as if sold in aggregate; more accurately termed the market value of the going concern. 2) The value of an operating business enterprise. Goodwill may be separately measured but is an integral component of goingconcern value when it exists and is recognizable. Gross Building Area (GBA): The 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 the region. 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. Hypothetical Condition: That which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions 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. (USPAP, 2010-2011 ed.) Investment Value: The value of a property interest to a particular investor or class of investors based on the investor’s specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market. Land-to-Building Ratio: The proportion of land area to gross building area; one of the factors determining comparability of properties. Lease: A contract in which the rights to use and occupy land or structures are transferred by the owner to another for a specified period of time in return for a specified rent. Leased Fee Interest: A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord relationship. Leasehold Interest: The tenant’s possessory interest created by a lease. Lessee: One who has the right to occupancy and use of the property of another for a period of time according to a lease agreement. Lessor: One who conveys the rights of occupancy and use to others under a lease agreement. Liquidation Value: The most probable price which a specified interest in real property should bring under all of 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 the buyer is 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 considers 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; and 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. Market Rent: The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement, including permitted uses, use restrictions, expense obligations, concessions, renewal and purchase options, and tenant improvements (TIs). Market Value: See body of report for market value definition used in this appraisal. Marketing Time: 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 an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. (Advisory Opinion 7 of the Appraisal Standards Board of The Appraisal Foundation and Statement on Appraisal Standards No. 6, “Reasonable Exposure Time in Real Property and Personal Property Market Value Opinions” address the determination of reasonable exposure and marketing time.) Net Lease: A lease in which the landlord passes on all expenses to the tenant. Net Net Net Lease: A lease in which the tenant assumes all expenses (fixed and variable) of operating a property except that the landlord is responsible for structural maintenance, building reserves, and management. Also called NNN, triple net lease or fully net lease. ADDENDUM RITE-AID x x x x x x x x x x x ADDENDUM Occupancy Rate: 1) The relationship or ratio between the income received from the rented units in a property and the income that would be received if all the units were occupied. 2) The ratio of occupied space to total rentable space in the building. Overage Rent The percentage rent paid over and above the guaranteed minimum rent or base rent; calculated as a percentage of sales in excess of a specified breakpoint sales volume Prospective Opinion of Value: A value opinion effective as of a specified future date. The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or stabilized level of long-term occupancy. Rentable Area: For office 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. The rentable area of a floor is computed by measuring to the inside finished surface of the dominant portion of the permanent building walls, excluding any major vertical penetrations of the floor. Alternatively, the amount of space on which rent is based; calculated according to local practice. Retrospective Value Opinion: A value opinion effective as of a specified historical date. The term does not define a type of value. 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 renegotiation, deficiency judgments, estate tax, and condemnation. Inclusion of the type of value with this term is appropriate, e.g., “retrospective market value opinion. Shell Rent: The typical rent paid for retail, office, or industrial tenant space based on minimal “shell” interior finishes (called vanilla finish in some areas). Usually the landlord delivers the main building shell space or some minimum level of interior build-out, and the tenant completes the interior finish, which can include wall, ceiling, and floor finishes; mechanical systems, interior electric, and plumbing. Typically these are long-term leases with tenants paying all or most property expenses. Surplus Land: Land that is not currently needed to support the existing improvements but cannot be separated from the property and sold off. Surplus land does not have an independent highest and best use and may or may not contribute value to the improved parcel. Turnover Vacancy: A method of calculating vacancy allowance that is estimated or considered as part of the potential income estimate when using discounted cash flow (DCF) analysis. As units or suites turn over and are available for releasing, the periodic vacancy time frame (vacancy window) to re-lease the space is considered. Accordingly the income estimate reflects a component of vacancy and is not true potential gross income but some level of effective gross income. Usable Area: 1) For office buildings, the actual occupied area of a floor or an office space; computed by measuring from the finished surface or the office side of corridor and other permanent walls, to the center of partitions that separate the office from adjoining usable areas, and to the inside finished surface of the dominant portion of the permanent outer building walls. Sometimes called net building area or net floor area. 2) The area that is actually used by the tenants measured from the inside of the exterior walls to the inside of walls separating the space from hallways and common areas. Value In Use: The value of a property assuming a specific use, which may or may not be the property’s highest and best use on the effective date of appraisal. Value in use may or may not be equal to market value but is different conceptually. Value Indication: An opinion of value derived through application of the appraisal process. ADDENDUM RITE-AID ADDENDUM ADDENDUM B DEMOGRAPHICS ADDENDUM Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 0.00 - 3.00 miles Radius 2 % 0.00 - 5.00 miles Radius 3 % 4,292 4,239 4,148 3,287 32,655 31,730 29,276 25,221 74,459 72,013 66,636 58,119 1.25% 2.19% 26.19% 2.92% 8.38% 16.08% 3.40% 8.07% 14.65% 4,239 31,730 72,013 3,015 71.13 813 19.18 48 1.13 63 1.49 0 0.00 197 4.65 104 2.45 18,455 58.16 7,366 23.21 457 1.44 525 1.65 4 0.01 4,080 12.86 844 2.66 43,558 17,495 674 978 32 7,444 1,832 4,239 31,730 72,013 3,860 91.06 380 8.96 252 66.32 3 0.79 1 0.26 124 32.63 25,077 6,653 5,109 127 35 1,382 Population 2017 Projection 2012 Estimate 2000 Census 1990 Census Growth 2012-2017 Growth 2000-2012 Growth 1990-2000 2012 Est. Pop by Single Race Class White Alone Black or African American Alone Amer. Indian and Alaska Native Alone Asian Alone Native Hawaiian and Other Pac. Isl. Alone Some Other Race Alone Two or More Races 2012 Est. Pop Hisp or Latino by Origin Not Hispanic or Latino Hispanic or Latino: Mexican Puerto Rican Cuban All Other Hispanic or Latino 2012 Est. Hisp or Latino by Single Race Class 380 1 Of 13 6,653 127 33.42 10 2.63 23 6.05 1 0.26 0 0.00 191 50.26 29 7.63 White Alone Black or African American Alone American Indian and Alaska Native Alone Asian Alone Native Hawaiian and Other Pacific Islander Alone Some Other Race Alone Two or More Races Prepared On: Mon Mar 26, 2012 Page 79.03 20.97 76.79 1.91 0.53 20.77 1,872 28.14 109 1.64 297 4.46 20 0.30 1 0.02 4,019 60.41 335 5.04 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: © 2012 The Nielsen Company. All rights reserved. 59,577 12,436 9,538 242 52 2,604 60.49 24.29 0.94 1.36 0.04 10.34 2.54 82.73 17.27 76.70 1.95 0.42 20.94 12,436 3,769 246 379 23 1 7,322 696 30.31 1.98 3.05 0.18 0.01 58.88 5.60 Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 2012 Est. Pop. Asian Alone Race by Cat 63 Chinese, except Taiwanese Filipino Japanese Asian Indian Korean Vietnamese Cambodian Hmong Laotian Thai All Other Asian Races Including 2+ Category 15 17 0 9 0 9 0 0 12 0 0 2012 Est. Population by Ancestry 525 23.81 26.98 0.00 14.29 0.00 14.29 0.00 0.00 19.05 0.00 0.00 978 42 8.00 115 21.90 0 0.00 31 5.90 2 0.38 213 40.57 0 0.00 0 0.00 122 23.24 0 0.00 0 0.00 45 182 0 115 81 395 0 7 151 0 1 Of 13 26 0.08 23 0.07 10 0.03 93 0.29 2,037 6.42 148 0.47 23 0.07 1,759 5.54 39 0.12 22 0.07 1,427 4.50 535 1.69 26 0.08 2,214 6.98 35 0.11 98 0.31 1 0.00 113 0.36 459 1.45 809 2.55 12 0.04 85 0.27 37 0.12 14 0.04 0 0.00 51 0.16 4 0.01 16,446 51.83 94 30 14 315 5,399 553 41 4,056 66 39 3,506 1,182 32 5,602 91 308 16 287 1,151 2,138 28 312 204 18 10 129 12 34,231 4.60 18.61 0.00 11.76 8.28 40.39 0.00 0.72 15.44 0.00 0.10 72,013 8 0.19 7 0.17 1 0.02 21 0.50 331 7.81 27 0.64 6 0.14 318 7.50 11 0.26 4 0.09 181 4.27 90 2.12 0 0.00 361 8.52 6 0.14 22 0.52 0 0.00 19 0.45 55 1.30 151 3.56 3 0.07 6 0.14 4 0.09 3 0.07 0 0.00 13 0.31 1 0.02 1,905 44.94 2 31,730 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: 0.00 - 5.00 miles Radius 3 % 4,239 Pop, Arab Pop, Czech Pop, Danish Pop, Dutch Pop, English Pop, French (except Basque) Pop, French Canadian Pop, German Pop, Greek Pop, Hungarian Pop, Irish Pop, Italian Pop, Lithuanian Pop, United States or American Pop, Norwegian Pop, Polish Pop, Portuguese Pop, Russian Pop, Scottish Pop, Scotch-Irish Pop, Slovak Pop, Subsaharan African Pop, Swedish Pop, Swiss Pop, Ukrainian Pop, Welsh Pop, West Indian (exc Hisp groups) Pop, Other ancestries Prepared On: Mon Mar 26, 2012 Page 0.00 - 3.00 miles Radius 2 % © 2012 The Nielsen Company. All rights reserved. 0.13 0.04 0.02 0.44 7.50 0.77 0.06 5.63 0.09 0.05 4.87 1.64 0.04 7.78 0.13 0.43 0.02 0.40 1.60 2.97 0.04 0.43 0.28 0.02 0.01 0.18 0.02 47.53 Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 0.00 - 3.00 miles Radius 2 % 0.00 - 5.00 miles Radius 3 % 5,184 16.34 12,148 16.87 2012 Est. Population by Ancestry Pop, Ancestry Unclassified 687 16.21 2012 Est. Pop Age 5+ by Language Spoken At Home 3,955 31,730 72,013 15,238 48.02 16,492 51.98 34,487 47.89 37,526 52.11 4,239 2012 Est. Population by Age 54,771 780 524 10,486 102 2,004 47.28 2,236 52.75 Male Female 22,530 77.10 312 1.07 278 0.95 6,093 20.85 7 0.02 4,239 2012 Est. Population by Sex 66,664 3,213 81.24 60 1.52 59 1.49 622 15.73 0 0.00 Speak Only English at Home Speak Asian/Pac. Isl. Lang. at Home Speak IndoEuropean Language at Home Speak Spanish at Home Speak Other Language at Home 29,221 31,730 72,013 Age 0 - 4 Age 5 - 9 Age 10 - 14 Age 15 - 17 Age 18 - 20 Age 21 - 24 Age 25 - 34 Age 35 - 44 Age 45 - 54 Age 55 - 64 Age 65 - 74 Age 75 - 84 Age 85 and over 284 293 276 135 138 143 548 694 564 458 314 275 117 6.70 6.91 6.51 3.18 3.26 3.37 12.93 16.37 13.31 10.80 7.41 6.49 2.76 Age 16 and over Age 18 and over Age 21 and over Age 65 and over 3,345 3,250 3,112 706 78.91 76.67 73.41 16.65 2,509 7.91 2,546 8.02 2,329 7.34 1,235 3.89 1,066 3.36 1,311 4.13 4,166 13.13 4,957 15.62 4,169 13.14 3,127 9.86 2,132 6.72 1,592 5.02 591 1.86 23,953 23,111 22,045 4,315 75.49 72.84 69.48 13.60 5,349 5,432 4,975 2,835 2,363 3,047 9,308 10,915 9,766 7,610 5,090 3,843 1,478 7.43 7.54 6.91 3.94 3.28 4.23 12.93 15.16 13.56 10.57 7.07 5.34 2.05 55,310 53,421 51,058 10,411 76.81 74.18 70.90 14.46 2012 Est. Median Age 39.36 36.42 37.47 2012 Est. Average Age 39.80 37.00 37.90 Prepared On: Mon Mar 26, 2012 Page 3 Of 13 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: © 2012 The Nielsen Company. All rights reserved. 82.16 1.17 0.79 15.73 0.15 Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 2012 Est. Male Population by Age Age 0 - 4 Age 5 - 9 Age 10 - 14 Age 15 - 17 Age 18 - 20 Age 21 - 24 Age 25 - 34 Age 35 - 44 Age 45 - 54 Age 55 - 64 Age 65 - 74 Age 75 - 84 Age 85 and over 145 151 140 68 71 67 275 352 278 204 130 94 27 7.24 7.53 6.99 3.39 3.54 3.34 13.72 17.56 13.87 10.18 6.49 4.69 1.35 0.00 - 5.00 miles Radius 3 % 15,238 2,004 0.00 - 3.00 miles Radius 2 % 34,487 1,278 8.39 1,316 8.64 1,186 7.78 648 4.25 566 3.71 649 4.26 2,005 13.16 2,478 16.26 2,060 13.52 1,415 9.29 910 5.97 565 3.71 160 1.05 2,722 2,807 2,536 1,437 1,255 1,521 4,481 5,402 4,849 3,473 2,196 1,392 416 2012 Est. Median Age, Male 37.39 34.85 35.90 2012 Est. Average Age, Male 37.30 35.00 36.10 2012 Est. Female Population by Age 2,236 16,492 7.89 8.14 7.35 4.17 3.64 4.41 12.99 15.66 14.06 10.07 6.37 4.04 1.21 37,526 Age 0 - 4 Age 5 - 9 Age 10 - 14 Age 15 - 17 Age 18 - 20 Age 21 - 24 Age 25 - 34 Age 35 - 44 Age 45 - 54 Age 55 - 64 Age 65 - 74 Age 75 - 84 Age 85 and over 140 142 136 67 67 75 273 341 286 254 184 180 90 6.26 6.35 6.08 3.00 3.00 3.35 12.21 15.25 12.79 11.36 8.23 8.05 4.03 1,231 1,230 1,143 587 500 662 2,161 2,479 2,109 1,712 1,222 1,027 430 7.46 7.46 6.93 3.56 3.03 4.01 13.10 15.03 12.79 10.38 7.41 6.23 2.61 2,627 2,626 2,439 1,398 1,109 1,527 4,827 5,513 4,917 4,137 2,894 2,451 1,062 2012 Est. Median Age, Female 41.37 37.96 39.01 2012 Est. Average Age, Female 42.10 38.70 39.70 Prepared On: Mon Mar 26, 2012 Page 4 Of 13 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: © 2012 The Nielsen Company. All rights reserved. 7.00 7.00 6.50 3.73 2.96 4.07 12.86 14.69 13.10 11.02 7.71 6.53 2.83 Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 2012 Est. Pop Age 15+ by Marital Status Total, Never Married Males, Never Married Females, Never Married Married, Spouse present Married, Spouse absent Widowed Males Widowed Females Widowed Divorced Males Divorced Females Divorced 889 447 442 1,768 182 243 68 175 303 120 183 2012 Est. Pop. Age 25+ by Edu. Attainment 2,970 Less than 9th grade Some High School, no diploma High School Graduate (or GED) Some College, no degree Associate Degree Bachelor's Degree Master's Degree Professional School Degree Doctorate Degree 190 328 685 696 260 608 159 25 18 2012 Est Pop Age 25+ by Edu. Attain, Hisp. or Lat 56,256 7,103 3,559 3,544 10,978 1,825 1,687 424 1,263 2,753 1,011 1,742 29.18 14.62 14.56 45.09 7.50 6.93 1.74 5.19 11.31 4.15 7.16 20,734 6.40 11.04 23.06 23.43 8.75 20.47 5.35 0.84 0.61 2,224 2,629 6,134 4,602 1,444 2,830 714 87 71 10.73 12.68 29.58 22.20 6.96 13.65 3.44 0.42 0.34 4,369 5,417 14,493 10,549 3,792 6,820 1,934 420 216 Of 13 3,102 1,894 61.06 546 17.60 450 14.51 97 3.13 46 1.48 59 1.90 12 0.39 3,149 984 1,108 315 113 242 46 9.10 11.28 30.19 21.97 7.90 14.21 4.03 0.87 0.45 5,957 131 71.98 31 17.03 14 7.69 0 0.00 1 0.55 4 2.20 0 0.00 5 28.46 14.41 14.05 44.08 6.93 8.24 1.56 6.68 12.28 4.69 7.58 48,010 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: 16,013 8,109 7,903 24,800 3,900 4,637 878 3,760 6,907 2,641 4,266 182 Less than 9th grade Some High School, no diploma High School Graduate (or GED) Some College, no degree Associate Degree Bachelor's Degree Graduate or Professional Degree Prepared On: Mon Mar 26, 2012 Page 26.26 13.20 13.05 52.22 5.38 7.18 2.01 5.17 8.95 3.54 5.40 0.00 - 5.00 miles Radius 3 % 24,346 3,386 0.00 - 3.00 miles Radius 2 % © 2012 The Nielsen Company. All rights reserved. 52.86 16.52 18.60 5.29 1.90 4.06 0.77 Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 0.00 - 3.00 miles Radius 2 % 0.00 - 5.00 miles Radius 3 % 1,843 1,821 1,693 1,274 13,016 12,640 11,826 10,470 30,400 29,245 27,094 24,155 1.21% 7.56% 32.89% 2.97% 6.88% 12.95% 3.95% 7.94% 12.17% 1,821 12,640 29,245 Households 2017 Projection 2012 Estimate 2000 Census 1990 Census Growth 2012-2017 Growth 2000-2012 Growth 1990-2000 2012 Est. Households by Household Type Family Households Nonfamily Households 1,171 64.31 650 35.69 2012 Est. Group Quarters Population 141 2012 HHs by Ethnicity, Hispanic/Latino 365 97 2012 Est. HHs by HH Income 5.33 1,821 Income Less than $15,000 Income $15,000 - $24,999 Income $25,000 - $34,999 Income $35,000 - $49,999 Income $50,000 - $74,999 Income $75,000 - $99,999 Income $100,000 - $124,999 Income $125,000 - $149,999 Income $150,000 - $199,999 Income $200,000 - $499,999 Income $500,000 and more 251 183 210 456 426 156 83 20 18 16 2 8,479 67.08 4,161 32.92 1,110 1,583 12.52 12,640 13.78 10.05 11.53 25.04 23.39 8.57 4.56 1.10 0.99 0.88 0.11 2,189 1,826 1,907 2,584 2,411 961 419 141 91 102 9 19,260 65.86 9,985 34.14 3,012 10.30 29,245 17.32 14.45 15.09 20.44 19.07 7.60 3.31 1.12 0.72 0.81 0.07 4,832 4,238 4,458 5,501 5,844 2,328 965 429 327 284 39 2012 Est. Average Household Income $50,707 $45,211 $47,333 2012 Est. Median Household Income $43,748 $37,313 $37,983 2012 Est. Per Capita Income $22,197 $18,217 $19,434 Prepared On: Mon Mar 26, 2012 Page 6 Of 13 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: © 2012 The Nielsen Company. All rights reserved. 16.52 14.49 15.24 18.81 19.98 7.96 3.30 1.47 1.12 0.97 0.13 Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 0.00 - 3.00 miles Radius 2 % 0.00 - 5.00 miles Radius 3 % 2012 Median HH Inc by Single Race Class. or Ethn White Alone Black or African American Alone American Indian and Alaska Native Alone Asian Alone Native Hawaiian and Other Pacific Islander Alone Some Other Race Alone Two or More Races 44,193 38,030 48,889 62,037 0 60,750 27,253 40,742 31,547 28,472 42,911 59,778 33,498 30,505 41,771 30,628 32,128 59,038 42,500 33,669 32,314 Hispanic or Latino Not Hispanic or Latino 53,052 43,416 36,920 37,368 34,577 38,412 1,171 8,479 19,260 2012 Est. Family HH Type, Presence Own Children Married-Couple Family, own children Married-Couple Family, no own children Male Householder, own children Male Householder, no own children Female Householder, own children Female Householder, no own children 247 21.09 625 53.37 40 3.42 68 5.81 142 12.13 50 4.27 2012 Est. Households by Household Size 1,821 1-person household 2-person household 3-person household 4-person household 5-person household 6-person household 7 or more person household 565 31.03 671 36.85 303 16.64 171 9.39 73 4.01 29 1.59 7 0.38 2012 Est. Average Household Size Prepared On: Mon Mar 26, 2012 Page 2.25 7 Of 13 2,322 3,148 379 365 1,317 948 27.39 37.13 4.47 4.30 15.53 11.18 12,640 3,507 4,276 2,255 1,448 658 293 204 26.72 38.47 4.01 4.02 15.46 11.32 29,245 27.75 33.83 17.84 11.46 5.21 2.32 1.61 2.48 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: 5,146 7,409 773 774 2,978 2,180 © 2012 The Nielsen Company. All rights reserved. 8,554 9,791 5,083 3,381 1,461 609 367 2.42 29.25 33.48 17.38 11.56 5.00 2.08 1.25 Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 2012 Est. Households by Presence of People Households with 1 or more People under Age 18: Married-Couple Family Other Family, Male Householder Other Family, Female Householder Nonfamily, Male Householder Nonfamily, Female Householder 466 25.59 270 57.94 38 8.15 155 33.26 1 0.21 2 0.43 Households no People under Age 18: Married-Couple Family Other Family, Male Householder Other Family, Female Householder Nonfamily, Male Householder Nonfamily, Female Householder 1,355 620 75 43 252 365 2012 Est. Households by Number of Vehicles 1,821 No Vehicles 1 Vehicle 2 Vehicles 3 Vehicles 4 Vehicles 5 or more Vehicles 74.41 45.76 5.54 3.17 18.60 26.94 106 5.82 604 33.17 690 37.89 314 17.24 71 3.90 35 1.92 2012 Est. Average Number of Vehicles 0.00 - 5.00 miles Radius 3 % 12,640 1,821 0.00 - 3.00 miles Radius 2 % 29,245 4,392 34.75 2,468 56.19 378 8.61 1,528 34.79 4 0.09 15 0.34 8,248 3,005 375 715 1,816 2,336 65.25 36.43 4.55 8.67 22.02 28.32 12,640 721 5.70 4,993 39.50 4,320 34.18 1,941 15.36 420 3.32 244 1.93 9,784 5,445 824 3,465 16 33 33.46 55.65 8.42 35.41 0.16 0.34 19,461 7,068 724 1,638 4,400 5,631 66.54 36.32 3.72 8.42 22.61 28.93 29,245 1,859 10,907 10,186 4,586 1,189 517 6.36 37.30 34.83 15.68 4.07 1.77 1.88 1.79 1.81 1,186 1,171 1,089 936 8,757 8,479 7,854 7,242 20,062 19,260 17,733 16,529 1.28% 7.53% 16.35% 3.28% 7.96% 8.45% 4.16% 8.61% 7.28% 1,171 8,479 19,260 1,011 86.34 373 31.85 6,979 82.31 3,264 38.50 16,261 84.43 7,408 38.46 160 13.66 78 6.66 1,500 17.69 1,128 13.30 2,999 15.57 2,294 11.91 Family Households 2017 Projection 2012 Estimate 2000 Census 1990 Census Growth 2012-2017 Growth 2000-2012 Growth 1990-2000 2012 Est. Families by Poverty Status 2012 Families at or Above Poverty 2012 Families at or Above Poverty with Children 2012 Families Below Poverty 2012 Families Below Poverty with Children Prepared On: Mon Mar 26, 2012 Page 8 Of 13 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: © 2012 The Nielsen Company. All rights reserved. Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % Architect/Engineer Arts/Entertain/Sports Building Grounds Maint Business/Financial Ops Community/Soc Svcs Computer/Mathematical Construction/Extraction Edu/Training/Library Farm/Fish/Forestry Food Prep/Serving Health Practitioner/Tec Healthcare Support Maintenance Repair Legal Life/Phys/Soc Science Management Office/Admin Support Production Protective Svcs Sales/Related Personal Care/Svc Transportation/Moving Prepared On: Mon Mar 26, 2012 Page 114 33,491 3,885 17,819 15,736 34,772 11,630 73.91 1,019 6.48 1,005 6.39 847 5.38 122 0.78 1,102 7.00 12 0.08 25,387 2,353 2,154 2,157 245 2,430 45 2,159 2012 Est. Civ Employed Pop 16+ by Occupation 109 0.46 14,164 59.13 2,041 8.52 7,639 31.89 1,456 67.44 145 6.72 236 10.93 121 5.60 16 0.74 185 8.57 0 0.00 For-Profit Private Workers Non-Profit Private Workers Local Government Workers State Government Workers Federal Government Workers Self-Emp Workers Unpaid Family Workers 55,310 2,159 2012 Est. Civ Employed Pop 16+ Class of Worker 23,953 21 0.63 2,192 65.53 191 5.71 941 28.13 In Armed Forces Civilian - Employed Civilian - Unemployed Not in Labor Force 0.00 - 5.00 miles Radius 3 % 3,345 2012 Est. Pop Age 16+ by Employment Status 0.00 - 3.00 miles Radius 2 % 15,736 34,772 22 1.02 77 3.57 27 1.25 61 2.83 27 1.25 13 0.60 119 5.51 189 8.75 1 0.05 57 2.64 104 4.82 59 2.73 100 4.63 11 0.51 49 2.27 164 7.60 335 15.52 240 11.12 72 3.33 356 16.49 24 1.11 51 2.36 9 Of 13 261 1.66 257 1.63 726 4.61 430 2.73 232 1.47 116 0.74 864 5.49 834 5.30 99 0.63 666 4.23 684 4.35 490 3.11 1,106 7.03 53 0.34 139 0.88 1,170 7.44 2,217 14.09 1,904 12.10 325 2.07 1,879 11.94 314 2.00 970 6.16 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: © 2012 The Nielsen Company. All rights reserved. 797 526 1,578 1,213 591 315 1,839 2,054 218 1,705 1,369 1,110 2,082 198 396 2,688 4,930 3,726 689 3,852 833 2,065 0.21 60.55 7.02 32.22 73.01 6.77 6.19 6.20 0.70 6.99 0.13 2.29 1.51 4.54 3.49 1.70 0.91 5.29 5.91 0.63 4.90 3.94 3.19 5.99 0.57 1.14 7.73 14.18 10.72 1.98 11.08 2.40 5.94 Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 2012 Est. Pop 16+ by Occupation Classification 2,159 Blue Collar White Collar Service and Farm 509 23.58 1,410 65.31 241 11.16 2012 Est. Workers Age 16+, Transp. To Work 0.00 - 3.00 miles Radius 2 % 0.00 - 5.00 miles Radius 3 % 15,736 34,772 4,843 30.78 8,273 52.57 2,620 16.65 9,711 27.93 18,927 54.43 6,134 17.64 2,111 34,099 1,856 87.92 174 8.24 0 0.00 19 0.90 1 0.05 15 0.71 46 2.18 Drove Alone Car Pooled Public Transportation Walked Bicycle Other Means Worked at Home 15,364 12,341 80.32 2,589 16.85 2 0.01 99 0.64 31 0.20 69 0.45 233 1.52 27,445 5,445 21 278 58 190 662 80.49 15.97 0.06 0.82 0.17 0.56 1.94 2012 Est. Workers Age 16+ by Travel Time to Work * Less than 15 Minutes 15 - 29 Minutes 30 - 44 Minutes 45 - 59 Minutes 60 or more Minutes 846 730 324 65 93 5,872 5,569 2,460 591 564 12,852 12,515 5,259 1,545 1,357 2012 Est. Avg Travel Time to Work in Minutes 21.88 22.09 22.43 2012 Est. Tenure of Occupied Housing Units 1,821 12,640 29,245 Owner Occupied Renter Occupied 1,168 64.14 653 35.86 7,936 62.78 4,704 37.22 18,451 63.09 10,794 36.91 2012 Owner Occ. HUs: Avg. Length of Residence 19 18 19 2012 Renter Occ. HUs: Avg. Length of Residence 6 7 7 Prepared On: Mon Mar 26, 2012 Page 10 Of 13 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: © 2012 The Nielsen Company. All rights reserved. Pop-Facts: Demographic Snapshot 2012 Report Radius 1: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 2: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate Radius 3: 841 S MAIN ST, GRAHAM, NC 27253-3763, aggregate 0.00 - 1.00 miles Description Radius 1 % 2012 Est. All Owner-Occupied Housing Values Value Less than $20,000 Value $20,000 - $39,999 Value $40,000 - $59,999 Value $60,000 - $79,999 Value $80,000 - $99,999 Value $100,000 - $149,999 Value $150,000 - $199,999 Value $200,000 - $299,999 Value $300,000 - $399,999 Value $400,000 - $499,999 Value $500,000 - $749,999 Value $750,000 - $999,999 Value $1,000,000 or more 48 4.11 16 1.37 18 1.54 49 4.20 37 3.17 324 27.74 351 30.05 271 23.20 33 2.83 3 0.26 9 0.77 0 0.00 8 0.68 2012 Est. Median All Owner-Occupied Housing Value 18,451 448 415 485 558 847 2,353 1,275 1,151 203 78 96 5 22 5.65 5.23 6.11 7.03 10.67 29.65 16.07 14.50 2.56 0.98 1.21 0.06 0.28 $125,831 14,175 32,908 80 3.98 1,337 66.48 77 3.83 85 4.23 254 12.63 61 3.03 19 0.94 99 4.92 1 0.05 2012 Est. Housing Units by Year Structure Built 2,011 Housing Unit Built 2005 or later Housing Unit Built 2000 to 2004 Housing Unit Built 1990 to 1999 Housing Unit Built 1980 to 1989 Housing Unit Built 1970 to 1979 Housing Unit Built 1960 to 1969 Housing Unit Built 1950 to 1959 Housing Unit Built 1940 to 1949 Housing Unit Built 1939 or Earlier 2012 Est. Median Year Structure Built ** 114 174 494 236 302 196 288 100 107 1981 11 Of 13 5.44 5.30 5.60 5.98 9.98 30.23 15.75 15.10 3.51 1.37 1.38 0.13 0.23 $129,287 2,011 1 Unit Attached 1 Unit Detached 2 Units 3 or 4 Units 5 to 19 Units 20 to 49 Units 50 or More Units Mobile Home or Trailer Boat, RV, Van, etc. 381 2.69 9,349 65.95 598 4.22 757 5.34 1,349 9.52 140 0.99 135 0.95 1,463 10.32 2 0.01 14,175 5.67 8.65 24.56 11.74 15.02 9.75 14.32 4.97 5.32 660 1,407 2,756 1,615 1,632 1,486 2,314 1,153 1,151 1976 704 21,222 1,383 1,719 3,344 392 526 3,612 5 2.14 64.49 4.20 5.22 10.16 1.19 1.60 10.98 0.02 32,908 4.66 9.93 19.44 11.39 11.51 10.48 16.32 8.13 8.12 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: 1,003 977 1,034 1,103 1,842 5,577 2,906 2,786 647 253 255 24 43 $163,169 2012 Est. Housing Units by Units in Structure Prepared On: Mon Mar 26, 2012 Page 0.00 - 5.00 miles Radius 3 % 7,936 1,168 0.00 - 3.00 miles Radius 2 % © 2012 The Nielsen Company. All rights reserved. 1,381 3,042 5,987 4,228 4,183 3,548 5,234 2,462 2,842 1976 4.20 9.24 18.19 12.85 12.71 10.78 15.90 7.48 8.64 Pop-Facts: Demographic Snapshot 2012 Report *This row intentionally left blank. No total category data is available. **1939 will appear when at least half of the Housing Units in this reports area were built in 1939 or earlier. Prepared On: Mon Mar 26, 2012 Page 12 Of 13 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: © 2012 The Nielsen Company. All rights reserved. Pop-Facts: Demographic Snapshot 2012 Report Appendix: Area Listing Area Name: Type: Radius 1 Reporting Detail: Aggregate Reporting Level: Block Group Radius Definition: 841 S MAIN ST Latitude/Longitude 36.054927 GRAHAM, NC 27253-3763 Radius 0.00 - -79.399969 1.00 Area Name: Type: Radius 2 Reporting Detail: Aggregate Reporting Level: Block Group Radius Definition: 841 S MAIN ST Latitude/Longitude 36.054927 GRAHAM, NC 27253-3763 Radius 0.00 - -79.399969 3.00 Area Name: Type: Radius 3 Reporting Detail: Aggregate Reporting Level: Block Group Radius Definition: 841 S MAIN ST Latitude/Longitude 36.054927 GRAHAM, NC 27253-3763 Radius 0.00 Project Information: Site: 2 Order Number: 970894456 Prepared On: Mon Mar 26, 2012 Page 13 Of 13 Prepared By: Nielsen Solution Center 1 800 866 6511 Prepared For: © 2012 The Nielsen Company. All rights reserved. - -79.399969 5.00 RITE-AID ADDENDUM ADDENDUM C AGREEMENT OF PURCHASE AND SALE ADDENDUM RITE-AID ADDENDUM ADDENDUM D COMPARABLE IMPROVED SALE SUMMARIES ADDENDUM RETAIL SALE No. 1 Rite Aid Location Data Location: County: 1485 River Ridge Drive Clemmons,NC 27012 Forsyth Assessor's Parcel No: 4433E-0005 Physical Data Type: Land Area: Excess Land: Gross Leasable Area: Anchors: Rite Aid Drug Store 1.68 Acres N/A 14,547 SF Financial Data Anchor Tenant GLA: 14,547 SF Local Tenant GLA: N/A Total GLA: 14,547 SF GLA Purchased: Source: Occupancy at Sale: Existing or ProForma Inc: Appraiser 100% N/A 14,547 SF Year Built: Parking: Condition: Exterior Walls: 2003 46 Surface Spaces Good Brick Potential Gross Income: Vacancy and Credit Loss: Effective Gross Income: Expenses and Reserves: Net Operating Income: Sale Data Transaction Type: Date: Marketing Time: Grantor: Grantee: Document No.: Sale Price: Financing: Cash Eq.Price: Req.Capital Cost: Adj. Sale Price: Verification: Sale 3/2011 N/A Sovereign Ra, LLC 37 RA, LLC 2992-4229 $2,314,782 Cash to Seller $2,314,782 $0 $2,314,782 Sperry Van Ness Total $212,960 N/A $212,960 N/A $212,960 Per SF $14.64 N/A $14.64 N/A $14.64 Analysis Buyers Underwriting Criteria.: Overall Cap. Rate (OAR): Projected IRR: Eff. Gross Multiplier (EGIM): Oper. Expense Ratio (OER): Price Per Square Foot: Direct Cap 9.20 % N/A % 10.87 N/A % $159.12 Comments This comparable represents the sale of a Rite Aid located in Clemmons, NC. The sale occurred in March 2011 for $2,314,782 ($159.12/sf). The improvements were constructed in 2003 and the parcel contains 1.68 acres. The property is 14,547sf and is 100% leased to Rite Aid. RETAIL SALE No. 2 Rite Aid Location Data Location: County: 3645 Concord Parkway South Concord,NC 28027 Cabarrus Assessor's Parcel No: 5509-34-9233-0000 Physical Data Type: Land Area: Excess Land: Gross Leasable Area: Anchors: Rite Aid Drug Store 0.95 Acres N/A 10,908 SF Financial Data Anchor Tenant GLA: 10,908 SF Local Tenant GLA: N/A Total GLA: 10,908 SF GLA Purchased: Source: Occupancy at Sale: Existing or ProForma Inc: N/A 100% N/A 10,908 SF Year Built: Parking: Condition: Exterior Walls: 2002 39 Surface spaces Good Brick Total Potential Gross Income: Vacancy and Credit Loss: Effective Gross Income: Expenses and Reserves: Net Operating Income: Sale Data Transaction Type: Date: Marketing Time: Grantor: Grantee: Document No.: Sale Price: Financing: Cash Eq.Price: Req.Capital Cost: Adj. Sale Price: Verification: Sale 1/2012 N/A DDR Southeast Concord, LLC RA Concord, LLC 9847-0093 $1,670,636 Cash to Seller $1,670,636 $0 $1,670,636 Colliers International N/A N/A N/A N/A N/A Per SF N/A N/A N/A N/A N/A Analysis Buyers Underwriting Criteria.: Overall Cap. Rate (OAR): Projected IRR: Eff. Gross Multiplier (EGIM): Oper. Expense Ratio (OER): Price Per Square Foot: Other N/A N/A % N/A N/A % $153.16 Comments This comparable represents the sale of a Rite Aid in Concord, NC. The sale occurred in January 2012 for $1,670,636 ($153.16/sf). The improvements were constructed in 2002 and the site contains .95 acres. The building contains 10,908sf and is 100% leased to Rite Aid. Colliers International was the listing broker on this deal. RETAIL SALE No. 3 Rite Aid Location Data Location: County: 101 West Main Street Havelock,NC 28532 Craven Assessor's Parcel No: 6-060-021 Physical Data Type: Land Area: Excess Land: Gross Leasable Area: Anchors: Rite Aid Drug Store 1.76 Acres N/A 13,813 SF Financial Data Anchor Tenant GLA: 13,813 SF Local Tenant GLA: N/A Total GLA: 13,813 SF GLA Purchased: Source: Occupancy at Sale: Existing or ProForma Inc: Appraiser 100% N/A 13,813 SF Year Built: Parking: Condition: Exterior Walls: 2004 N/A Good Brick Potential Gross Income: Vacancy and Credit Loss: Effective Gross Income: Expenses and Reserves: Net Operating Income: Sale Data Transaction Type: Date: Marketing Time: Grantor: Grantee: Document No.: Sale Price: Financing: Cash Eq.Price: Req.Capital Cost: Adj. Sale Price: Verification: Sale 3/2010 N/A Sovereign Ra, LLC Stanhope Apartments, LLC 2894-0129 $2,509,822 Cash to Seller $2,509,822 $0 $2,509,822 Sperry Van Ness Total $212,080 N/A $212,080 N/A $212,080 Per SF $15.35 N/A $15.35 N/A $15.35 Analysis Buyers Underwriting Criteria.: Overall Cap. Rate (OAR): Projected IRR: Eff. Gross Multiplier (EGIM): Oper. Expense Ratio (OER): Price Per Square Foot: Direct Cap 8.45 % N/A % 11.83 N/A % $181.70 Comments This comparable represents the sale of a Rite Aid in Havelock, NC. The sale occurred in March 2010 for $2,509,822 ($181.70/sf). The improvements were constructed in 2004 on a parcel containing 1.76 acres. The building contains 13,813sf and is 100% leased to Rite Aid. RETAIL SALE No. 4 Rite Aid Location Data Location: County: 201 Trade Street Henderson,NC 27536 Vance Assessor's Parcel No: 0012-01036 Physical Data Type: Land Area: Excess Land: Gross Leasable Area: Anchors: Rite Aid Drug Store 1.91 Acres N/A 14,735 SF Financial Data Anchor Tenant GLA: 14,735 SF Local Tenant GLA: N/A Total GLA: 14,735 SF GLA Purchased: Source: Occupancy at Sale: Existing or ProForma Inc: Appraiser 100% N/A 14,735 SF Year Built: Parking: Condition: Exterior Walls: 2003 72 Surface spaces Good Brick Potential Gross Income: Vacancy and Credit Loss: Effective Gross Income: Expenses and Reserves: Net Operating Income: Sale Data Transaction Type: Date: Marketing Time: Grantor: Grantee: Document No.: Sale Price: Financing: Cash Eq.Price: Req.Capital Cost: Adj. Sale Price: Verification: Sale 11/2010 N/A Sovereign Ra, LLC Diverse Real Estate Group, LLC 012220609 $2,385,542 Cash to Seller $2,385,542 $0 $2,385,542 Sperry Van Ness Total $198,000 N/A $198,000 N/A $198,000 Per SF $13.44 N/A $13.44 N/A $13.44 Analysis Buyers Underwriting Criteria.: Overall Cap. Rate (OAR): Projected IRR: Eff. Gross Multiplier (EGIM): Oper. Expense Ratio (OER): Price Per Square Foot: Direct Cap 8.30 % N/A % 12.05 N/A % $161.90 Comments This comparable represents the sale of a Rite Aid located in Henderson, NC. The sale occurred in November 2010 for $2,385,542 ($161.90/sf). The improvements were constructed in 2003 on a site containing 1.91acres. The building contains 14,735sf and is 100% leased to Rite Aid. RETAIL SALE No. 5 Rite Aid Location Data Location: County: 101 Plaza Road Laurinburg,NC 28352 Scotland Assessor's Parcel No: 01001601008 Physical Data Type: Land Area: Excess Land: Gross Leasable Area: Anchors: Rite Aid Drug Store 1.90 Acres N/A 14,388 SF Financial Data Anchor Tenant GLA: 14,388 SF Local Tenant GLA: N/A Total GLA: 14,388 SF GLA Purchased: Source: Occupancy at Sale: Existing or ProForma Inc: Appraiser 100% N/A 14,388 SF Year Built: Parking: Condition: Exterior Walls: 2003 83 Surface spaces Good Brick Potential Gross Income: Vacancy and Credit Loss: Effective Gross Income: Expenses and Reserves: Net Operating Income: Sale Data Transaction Type: Date: Marketing Time: Grantor: Grantee: Document No.: Sale Price: Financing: Cash Eq.Price: Req.Capital Cost: Adj. Sale Price: Verification: Sale 9/2011 N/A Sovereign Ra, LLC Avidoc Holding Corp. 00002301 $2,050,000 Cash to Seller $2,050,000 $0 $2,050,000 Sperry Van Ness Total $183,885 N/A $183,885 N/A $183,885 Per SF $12.78 N/A $12.78 N/A $12.78 Analysis Buyers Underwriting Criteria.: Overall Cap. Rate (OAR): Projected IRR: Eff. Gross Multiplier (EGIM): Oper. Expense Ratio (OER): Price Per Square Foot: Direct Cap 8.97 % N/A % 11.15 N/A % $142.48 Comments This comparable represents the sale of a Rite Aid located in Laurinburg, NC. The sale occurred in September 2011 for $2,050,000 ($142.48/sf). The improvements were constructed in 2003 on a site containing 1.90acres. The building contains 14,388sf and is 100% leased to Rite Aid. RITE-AID ADDENDUM ADDENDUM E COMPARABLE RENT SUMMARIES ADDENDUM RETAIL COMPARABLE No. 1 Rite Aid Location Data Location: 599 South Enota Drive Gainesville,GA County: Hall Assessor's Parcel No: N/A Physical Data Type: Gross Leaseable Area: Year Built: Exterior Walls: Condition: Parking: Anchors: Rite Aid Drug Store 11,352 SF 1996 Brick Good 60 Surface spaces 11,352 SF Anchor Tenant GLA: 11,352 SF Local Tenant GLA: N/A Total GLA: 11,352 SF Lease Data Occupancy: Local: Overall: 100% N/A 11,352 SF Typical Size: N/A Term: $15.05 Base Rent PSF: Rent Escalations: N/A Absolute Net Basis: Expense Pass-Thru: Absolute Net Free Rent (months): N/A Tenant Improvement: N/A Leasing Agent: N/A Phone No.: N/A Survey Date: N/A Comments This comparable is located on South Enota Drive in Gainesville, GA. The improvements were constructed in 1996. The property is leased to Rite Aid on a lease that was renegotiated in August 2010 for $15.05/sf through July 2025 with (5) 5-year options. The lease is on an absolute net basis with the tenant responsible for roof and structure. Sales were reported as $595/sf for 2008 and $543/sf for 2009. RETAIL COMPARABLE No. 2 Rite Aid Location Data Location: 3465 South Church Street Burlington,NC County: Alamance Assessor's Parcel No: N/A Physical Data Type: Gross Leaseable Area: Year Built: Exterior Walls: Condition: Parking: Anchors: Rite Aid Drug Store 14,470 SF 2003 Brick Good 75 Surface spaces 14,470 SF Anchor Tenant GLA: 14,470 SF Local Tenant GLA: N/A Total GLA: 14,470 SF Lease Data Occupancy: Local: Overall: 100% N/A N/A Typical Size: N/A Term: $21.53 Base Rent PSF: Rent Escalations: N/A Absolute Net Basis: Expense Pass-Thru: Absolute Net Free Rent (months): N/A Tenant Improvement: N/A Leasing Agent: N/A Phone No.: N/A Survey Date: N/A Comments This comparable is located at a major signalized intersection of South Church Street and Williamson Avenue near Elon University in the western part of Burlington, NC. The improvements were constructed in 2003. The property was originally leased to Rite Aid in 2003 but was recently renegotiated and re-signed in May 2008 at $21.53/sf through April 2028. The lease increases 10% in Year 11, and has (8) 5-year options. The lease is on an absolute net basis with tenant responsible for roof and structure. RETAIL COMPARABLE No. 3 Rite Aid Location Data Location: 1485 River Ridge Drive Clemmons,NC County: Forsyth Assessor's Parcel No: N/A Physical Data Type: Gross Leaseable Area: Year Built: Exterior Walls: Condition: Parking: Anchors: Rite Aid Drug Store 14,547 SF 2003 Brick Good 46 Surface spaces 14,547 SF Anchor Tenant GLA: 14,547 SF Local Tenant GLA: N/A Total GLA: 14,547 SF Lease Data Occupancy: Local: Overall: 100% N/A N/A Typical Size: N/A Term: $14.64 Base Rent PSF: Rent Escalations: N/A Absolute Net Basis: Expense Pass-Thru: Absolute Net Free Rent (months): N/A Tenant Improvement: N/A Leasing Agent: N/A Phone No.: N/A Survey Date: N/A Comments This comparable is located in the southwest quadrant of US 421 and Lewisville Clemmons Road, in the western part of Winston-Salem. The improvements were constructed in 2003. The property is leased to Rite on a lease that was renegotiated and re-signed in Augst 2010 at $14.64/sf through June 2028. The lease increases 10% in Year 10, and has (8) 5-year options. The lease is on an absolute net basis with the tenant responsible for roof and structure. RETAIL COMPARABLE No. 4 Rite Aid Location Data Location: 1605 East Innes Street Salisbury,NC County: Rowan Assessor's Parcel No: N/A Physical Data Type: Gross Leaseable Area: Year Built: Exterior Walls: Condition: Parking: Anchors: Rite Aid Drug Store 14,569 SF 2004 Brick Good 48 Surface spaces 14,569 SF Anchor Tenant GLA: 14,569 SF Local Tenant GLA: N/A Total GLA: 14,569 SF Lease Data Occupancy: Local: Overall: 100% N/A N/A Typical Size: N/A Term: $17.52 Base Rent PSF: Rent Escalations: N/A Absolute Net Basis: Expense Pass-Thru: Absolute Net Free Rent (months): N/A Tenant Improvement: N/A Leasing Agent: N/A Phone No.: N/A Survey Date: N/A Comments This comparable is located on East Innes Street one-half mile south of I-85 in Salisbury, NC. The property is located just east of a large retail center anchored by Lowe's, Food Lion, Circuit City and Staples. The improvements were constructed in 2004 but Rite renegotiated the lease in 2008. The renegotiated lease was signed in May 2008 with a 20 year term at $17.52/sf with a 10% increase in Year 11 and (8) 5-year options. RETAIL COMPARABLE No. 5 Rite Aid Location Data Location: 1500 Martin Luther King Parkway SE Wilson,NC County: Wilson Assessor's Parcel No: N/A Physical Data Type: Gross Leaseable Area: Year Built: Exterior Walls: Condition: Parking: Anchors: Rite Aid Drug Store 14,765 SF 2003 Brick Good 64 Surface spaces 14,765 SF Anchor Tenant GLA: 14,765 SF Local Tenant GLA: N/A Total GLA: 14,765 SF Lease Data Occupancy: Local: Overall: 100% N/A N/A Typical Size: N/A Term: $13.47 Base Rent PSF: Rent Escalations: N/A Absolute Net Basis: Expense Pass-Thru: Absolute Net Free Rent (months): N/A Tenant Improvement: N/A Leasing Agent: N/A Phone No.: N/A Survey Date: N/A Comments This comparable is located in Wilson, NC. The property is located near a residential neighborhood and is located at the signalized intersection of Ward Boulevard (Hwy 301) and Martin Luther King Jr. Boulevard. The improvements were constructed in 2003. Rite Aid renegotiated a new 20-year lease starting in May 2008 through 2028 at $13.47/sf with a 10% increase in Year 11 and (8) 5-year options. RITE-AID ADDENDUM ADDENDUM F CLIENT ENGAGEMENT LETTER ADDENDUM RITE-AID ADDENDUM ADDENDUM G APPRAISER QUALIFICATIONS ADDENDUM ROSCOE W. SHIPLETT, MAI Managing Director | Charlotte PROFESSIONAL EXPERIENCE Managing Director – Grubb & Ellis Landauer Valuation Advisory Services, LLC, Charlotte, NC Owner, R. W. Shiplett & Associates, LLC, - 2004 to 2011 Partner, Shiplett-Wilkins & Associates, Inc., Charlotte, NC - 1982 to 2004 Staff Appraiser and Partner, Callaway and Price, Inc., West Palm Beach, Florida - 1974 to 1981 Staff Appraiser, Robert Wilmoth Associates, Mortgage Bankers, Palm Beach, Florida - 1974 Right of Way Appraiser, Florida Department of Transportation, Fort Lauderdale, Florida -1971 to 1974 STATE & REGULATORY LICENSURE Member, Appraisal Institute with MAI Designation #5860 State Certified General Appraiser in the following states: North Carolina: Virginia A1366 4001 002214 South Carolina: CG1777 West Virginia: CG213 Georgia 003592 PROFESSIONAL ACTIVITIES & AFFILIATIONS Actively involved in the Appraisal Institute on a local, regional and national level. North Carolina Chapter activities include serving on the Admissions Committee, 1982 - 1988 (Chair 1986, 1987), Finance Committee, 1989 - 1990, Education Committee, 1991, Board of Directors, 1988, 2000-2002, Chapter Officer, Secretary (1989), Treasurer (1990), Second Vice President (1991), First Vice President (1992) and President (1993). Region V Representative, 1991 – 1992; 1994 – 1996 and 2000 - 2007, Nominating Committee, 1992, 1994, Chair 1999; Regional Committee, 1996-1998, 2008, 2010-2016 (Chair 1998, Vice Chair 1997, 2011-2012). National activities include serving on the Non-Residential Demonstration Report Writing Committee and Board of Examiners, 1980 - 1993 (Chairman 1986-1987, Assistant Chief Examiner, 1988-1989); External Affairs Committee 1987; Assistant Regional Member Review and Counseling Division, 1988 - 1991; Examinations Subcommittee, 1991; Seminars Division, 1995, 1996; Board of Directors, 1996-1999, 2011-2014; Audit Committee, 1997-1998; Vice Chair, National Committee of Regional Chairs, 1998; Executive Committee, 1999; Commercial Database Trust Committee, 2000-2006; Long Range Planning Committee, 2000-2002, 2004 (Chair, 2002); Instructor Subcommittee, 2000-2003 (Chair 2002, 2003), Educational Programs Committee, 2002-2004 (Vice Chair, 2004), Education Committee, 2008-2010. Development Team Member and Approved Instructor for the Appraisal Institute's Litigation Valuation Courses (700, 705 and 715). Have taught these courses on both local and national offerings. Co-authored and previous instructor for the Non-Residential Demonstration Report Seminar. Recipient of the 2001 Appraisal Institute’s Presidents Award for participation on the Commercial Database Committee including formation and publication of the Data Standards. In 2003 received the James H. Pritchett Memorial Award for overall contribution to the Appraisal profession. Grubb & Ellis | Landauer Valuation Advisory Services, LLC 7621 Little Avenue, Suite 450 Charlotte, NC 28226 Email: roscoe.shiplett@grubb-ellis.com Direct: 704-341-3166 Web: www.grubb-ellis.com ROSCOE W. SHIPLETT, MAI Managing Director | Charlotte EDUCATION Formal: Bachelor of Science in Business Administration, University of Florida - 1969; Major, Banking and Finance Appraisal Related: Attended and passed the following courses by the Appraisal Institute (or predecessor organizations): Course IA - Basic Appraisal Principles, 1972 Course IB - Capitalization Theory and Techniques, 1973 Course II - Urban Properties, 1976 Course VI - Investment Analysis, 1977 Standards of Professional Practice, 1981, 1992 (Part B), 1996 (Part A), 1998, 2003 (Part C) Market Analysis, 1985 Course 320 – General Applications, 2000 (Audit for Instructor) Attended numerous appraisal related seminars and courses sponsored by the Appraisal Institute (North Carolina and South Florida Chapter) and various other real estate related organizations. Have met all continuing education requirements for the Appraisal Institute and those states having certification. OTHER Qualified as an expert witness in the Superior Courts of Mecklenburg and Wake Counties, North Carolina, Circuit Courts of York County, South Carolina, Circuit Courts of Palm Beach, Broward and Dade Counties, Florida, and Western North Carolina District and South Carolina District Bankruptcy Court. Grubb & Ellis | Landauer Valuation Advisory Services, LLC 7621 Little Avenue, Suite 450 Charlotte, NC 28226 Email: roscoe.shiplett@grubb-ellis.com Direct: 704-341-3166 Web: www.grubb-ellis.com Michael McCaskill Associate Appraiser | Charlotte PROFESSIONAL EXPERIENCE Associate Appraiser, Grubb & Ellis Landauer Valuation Advisory Services, LLC – May 2011 - Present EDUCATION Attended and passed the following courses at Triangle Appraisal School Basic Appraisal Principles Basic Appraisal Procedures National USPAP 15-Hour Residential Market Analysis & Highest & Best Use Master of Science in Real Estate – University of Florida – May 2011 Relevant Course Work: Real Estate Appraisal Investment Property Analysis Real Estate Market & Transaction Analysis Real Estate Development Real Estate Law Real Estate Research and Technology Bachelor of Science in Business Administration – Western Carolina University – May 2007 Cum Laude, Dean’s List, Pi Gamma Mu Honor Society PROFESSIONAL ACTIVITIES & AFFILIATIONS The Appraisal Institute: Associate Member Urban Land Institute: Young Leaders Group National Association of Office and Industrial Properties International Council of Shopping Centers STATE AND REGULATORY LICENSURE Registered Trainee in the following states: North Carolina: T5427 Grubb & Ellis | Landauer Valuation Advisory Services, LLC 7621 Little Avenue, Suite 450 Charlotte, NC 28226 Email: Michael.McCaskill@grubb-ellis.com Direct: 704-341-3166 Web: www.grubb-ellis.com

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