Restricted Appraisal Report of Real Property:

Downtown Office Building 101 North Cedar Street Abilene, Kansas 67410

Effective Date of Valuation: November 1, 2017

Date of Report: November 17, 2017

Prepared For: Scott Ostermann Abilene, Kansas

Prepared By: Gareth Rohr

Mike Skochdopole

November 17, 2017 Mr. Scott Ostermann 102 Highland Drive Abilene, Kansas 67410 Re: Appraisal report of real property located at 101 North Cedar Street, Abilene,

Kansas 67410 Dear Mr. Ostermann: As requested, we have made an inspection and analysis of the above referenced property for the purpose of to develop an opinion of market value of the subject property fee simple; and the function of the assignment is to assist the client in financial and planning decisions. The attached appraisal report is intended to comply with the scope of work and requirements agreed upon by the Client and The Simmons Company. This report is a Restricted Appraisal Report in accordance with Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice. Additional supporting documentation is retained in the Appraiser’s work file. The Appraiser’s opinions and conclusions set forth in this report may not be understood fully without additional information in the Appraiser’s work file. However, in order to meet the requirements for an “evaluation” according to the Interagency Appraisal and Evaluation Guidelines, this report has been supplemented with additional information about the subject property and its market, as well as the data, reasoning, and analyses that were used in the valuation process. The opinion of market value of the fee simple interest for the subject real estate, as of November 1, 2017, is:

THIRTY-EIGHT THOUSAND DOLLARS ($38,000)

In addition to the standard assumptions and limiting conditions, the following extraordinary assumptions and hypothetical conditions correspond to the concluded value opinions. If any of them are found to be false, it could alter the Appraiser’s opinions or conclusions.

Extraordinary Assumptions

• None

Hypothetical Conditions

• None

The analyses, opinions and conclusions communicated within this appraisal report were developed based upon our interpretation of the requirements and guidelines of the current Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation; the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. This appraisal report sets forth the identification of the property, the assumptions and limiting conditions, and the results of the investigation. Please pay particular attention to the Extraordinary Assumptions and Hypothetical Conditions identified in this report, as the value opinions expressed could be different without these assumptions and conditions. This appraisal report should be read in its entirety, including all attachments, addendums, and cover pages. Lastly, you are specifically referred to sections entitled Environmental Hazards and ADA (Americans with Disabilities Act) identified in this report. Respectfully Submitted,

Gareth Rohr Mike Skochdopole Certified General Appraiser Appraiser Trainee State of Kansas Cert. No. MS/GR/bw

USPAP 2016-2017 Certification

I certify that, to the best of my knowledge and belief:

• The statements of fact contained in this report are true and correct.

• The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions and is my personal, impartial and unbiased professional analyses, opinions and conclusions.

• We have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved.

• We have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

• We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

• Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

• Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result or the occurrence of a subsequent event directly related to the intended use of this appraisal.

• Our analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

• One of us, or both, as indicated below, has made a personal inspection of the property that is the subject of this report.

• The reported analyses, opinions and conclusions were completed by Mike Skochdopole and reviewed by Gareth Rohr.

• The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Stands of Professional Appraisal Practice of the Appraisal Institute.

• The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

Gareth Rohr Mike Skochdopole Certified General Appraiser Appraiser Trainee State of Kansas Cert. No. November 17, 2017 Date

TABLE OF CONTENTS Title Page Letter of Transmittal USPAP Certification Table of Contents Appraisal Details .......................................................................................................................... 1

Subject Property Details .............................................................................................................. 5

Valuation ....................................................................................................................................... 8

Sales Comparison Approach .................................................................................................. 8

Cost Approach ........................................................................................................................ 10

Income Capitalization Approach ......................................................................................... 10

Reconciliation and Final Value Opinion ............................................................................. 12

Underlying Assumptions and Limiting Conditions ............................................................. 15

ADDENDUM ............................................................................................................................. 18

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Appraisal Details Client and Intended User: The intended user is the addressee of this report. The Appraiser does not authorize, and is not responsible for use of this appraisal by any party other than the Client or intended user. Intended Use: The function and intended use is to assist the Client in financial and planning decisions. Any other use is prohibited. The acceptance of this assignment, by the Appraiser, is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the Client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. Objective of Appraisal: The purpose of the appraisal is to develop an opinion of market value of the subject property fee simple, as of the effective date of the appraisal. Market value is defined as follows: "Market value means 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." Pertinent Dates: Date of valuation: November 1, 2017 Date of site visit: November 1, 2017 Date of report: November 17, 2017

Uniform Standards of Professional Appraisal Practice (USPAP) 2016-2017 Edition, Appraisal Foundation, Advisory Opinion 22, pg. 150-151

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Property Rights Appraised: The property rights appraised are the fee simple interest, defined as follows:

“An absolute ownership unencumbered by any other interest; subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police

power, and escheat.”

Market Exposure Time: The market exposure time is presumed to precede the effective date of the appraisal. Exposure time may be defined as follows:

“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 opinion based on an analysis of past

events assuming a competitive and open market” Exposure time is a function of price, time, and use. It must be noted that the concept of reasonable exposure time encompasses not only adequate, sufficient, and reasonable time, but adequate, sufficient, and reasonable effort. The estimated exposure time presented herein is based on analysis of the following factors:

• statistical information about days on market

• information gathered through sales verification

• interviews with market participants

• anticipated changes in market conditions

Based on the data presented in this report, and the fact that the market value estimated herein is representative of a price based on current acceptable returns indicated by market participants, we are of the opinion that the reasonable exposure time for the subject property in its present use would be approximately 1 to 2 years.

The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal Institute, 2015 USPAP 2016-2017 Edition, Appraisal Foundation, Advisory Opinion 35, p. 195

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Scope of Work: Based on conversations with the Client and intended users, the completion of the sales comparison, and the income capitalization approaches was considered appropriate to produce a credible report. The data researched and the type and extent of analysis, along with the detail of this appraisal report, is commensurate with the size, complexity, and type of property appraised, which includes the following:

• Mike Skochdopole and Gareth Rohr viewed the exterior and interior of the subject property on November 1, 2017. In addition, the subject market area was viewed.

• The Appraiser researched and compiled market data for comparable improved sales, and analyzed the information gathered in order to complete the sales comparison and income capitalization approaches.

• The Appraiser considered the sales comparison and income capitalization approaches to value, and then reconciled it to arrive at a final opinion of market value for the subject real estate, as of the effective date of this appraisal.

• The cost approach is a method of estimating value where the cost to replace the improvements, less accrued depreciation, is added to the site value. A cost approach indication was not considered necessary for the completion of a credible appraisal assignment, and was not completed. The elimination of this approach does not limit this appraisal, and does not prohibit the completion of a credible appraisal.

• Because the appraisal is for internal purposes only, the people relying on this appraisal are highly familiar with the city, neighborhood, and subject property; therefore, in depth descriptions and analysis have been purposefully omitted.

Sources of Information:

• The Simmons Company proprietary database

• County Records – Dickinson County

• Interviews with local real estate professionals including realtors, brokers, property managers

• Representatives from financial institutions

• Property owner

• Interflood.com for flood maps and flood plain information

• Tax information – Dickinson County Appraiser

• Zoning information – City of Abilene

• Legal description – Dickinson County Appraiser Information Not Available:

• None

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In addition to the standard assumptions and limiting conditions, the following extraordinary assumptions and hypothetical conditions, may correspond to the concluded value opinions. If any of them are found to be false, it could alter the Appraiser’s opinions or conclusions. An extraordinary assumption is defined as “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.”1 Extraordinary Assumptions

• None A hypothetical condition is defined as “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.”2 Hypothetical Conditions

• None

1 The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal Institute, 2015 2 The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal Institute, 2015

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Subject Property Details Property Address: 101 North Cedar Street, Abilene, Kansas 67410 Country Parcel ID Number: 021-115-16-0-30-41-009.01-0 Legal Description: The South Fifty-one (51) Feet of Lots Twenty-seven (27),

and Twenty-nine (29), on First Street, Thompson and McCoy's Addition to the City of Abilene, Dickinson County, Kansas

Current Ownership: Scott L. Ostermann and Christine C. Ostermann Sales History: The subject property has not sold within the past three years. The owner of record purchased the property in March of 2003 for $24,000. In addition, the subject is currently not listed for sale on the open market, and the Appraiser is unaware of any pending sales contract, or unofficial or unsolicited offers to purchase the subject.

Land Description

Location: The subject site is in the downtown area of Abilene, one block west of the main downtown corridor of Buckeye Avenue. It is noted that the subject site is located south of the railroad tracks.

Land Area (sf): 4,080

Land Area (acres): 0.09

Number of Lots: 1

Shape: Rectangular

Parcel Type: Corner

Frontage (ft): 51

Frontage Street Type: Major Collector

Frontage Description: The subject has frontage along the east side of North Cedar Street and an additional 80 feet of frontage along the north side of West 1st Street.

Topography: Level

Access: Paved Road

Visibility: Average

Adjacent Land Uses:

North - Retail Building

South - Vacant Land/Historical Building

East - BAR/Tavern

West- Service Commercial Building

Flood Zone: Flood Hazard Zone X500

Flood Map Number 20041C0070C

Flood Map Eff. Date: December 16, 1988

Zoning: The subject site is zoned B-5, Central Business District

Utilities: All city utilities are available and installed

Site Improvements: The site is improved with a mostly gravel surfaced alleyway and a fenced in gravel area in the rear.

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Comments and Analysis: The subject site is located in the southern portion of Abilene in the Central Business District, one block west of Buckeye Avenue. Buckeye Avenue is the main arterial for downtown Abilene. The site is located south of the railroad tracks that run in an east- west direction through downtown Abilene. The area south of the railroad tracks consists mostly of service commercial and industrial buildings, making it less desirable as a location for retail or office buildings as compared to the core downtown area. The site is accessed by Cedar Street along the west side of the site, or 1st Street along the south side of the site, both of which are major collector streets in the City of Abilene. The site is improved with mostly gravel surfacing and a fenced in area along the east side of the site. Additionally, maps indicating the location and other details of the subject property are included in the addendum.

Improvements Description Type: Office Building

Construction Class: C - Masonry

Year Built: 1940

Levels: 1

Number of Buildings: 1

Building Area: Gross: 1,792 SF Rentable: 1,216 SF

Foundation Poured-concrete

Basement Type: None

Exterior Walls: Stucco and Concrete block

Framing: Concrete block

Roof: Hipped, Ceramic Tile

HVAC: Central HVAC

Sprinklers: None

Quality: Average

Condition: Average

Interior Finish:

The office area interior finish consists of basic finishes with a combination of painted concrete and painted plywood sheet flooring. The walls are a mix of painted drywall as well as painted concrete block. The lighting in the office is a combination of fluorescent and standard light fixtures with tile and textured ceilings. The garage/shop area consists of limited finish with painted concrete walls, concrete floors, exposed ceilings and fluorescent lighting.

Interior Layout:

The interior of the building is separated into office space and a garage/shop area. The office area consists of approximately 1,216 square feet of mostly open space with partial walls separating out three different sections. Within the office area is a sink, a bathroom and a storage closet. The HVAC system is also housed in the office area. The garage/shop area consists of about 576 square feet and is separated into two different areas by a concrete block wall. The western portion has a 12-foot overhead door and the eastern portion has an 8-foot overhead door, both of which have automatic openers.

Comments and Analysis: The subject property consists of a one-level office building and garage/shop. The exterior finish is of average appeal and in average condition. The interior finish is in

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good condition with below average finish and appeal. Overall the interior finish is functional for its current use as an office building; however, it lacks some amenities of a modern move-in-ready office.

Market Conditions and Trends: The Abilene real estate market is generally considered stable. It is projected that most of the commercial growth in Abilene will likely concentrate in the North Buckeye Avenue (KS Highway 15) corridor near Interstate 70. The downtown market is characterized as stable. Abilene has had a relatively stable economy for approximately 50 years with a current city population of 6,469 (2016 Census Estimate) and a Dickinson County population of 19,303 (2015 Census Estimate). Abilene serves as the county seat and is the most populous city in Dickinson County. The economy includes a diversified mix of tourism, government services, elementary and secondary education, manufacturing, warehousing and distribution, retail trade, consumer and professional services, agriculture, and the specialized industry in greyhound breeding and racing. Tourism is the major industry in Abilene with the Dwight D. Eisenhower Memorial, Museum, and Library being the centerpiece. Other major attractions include the Greyhound Hall of Fame, Old Abilene Town, the Heritage Center, Abilene/Smoky Valley Railroad, and historic mansions that offer tours. Also, Abilene is known for its quaint antique shoppes, bed and breakfasts, and popular restaurants. These economic conditions support reasonable activity in the commercial real estate business, although not particularly active due to the small size of the community and lack of significant economic growth. Within the community, the North Buckeye area is the most dynamic commercial real estate market, and the downtown area is considered a declining commercial real estate market; however, it is common for downtown areas to see periods of revitalization that renew interest. More specifically, the downtown area has generally experienced a steady history of high occupancies for both commercial and residential operations. Therefore, based on the stability of both the community and the downtown areas, it is reasonable that the trend of a stable economy will continue into the future.

Highest and Best Use – As Vacant: Speculative Highest and Best Use – As Improved: Continued office building use

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Valuation This appraisal report is intended to comply with the scope of work and requirements agreed upon by the Client and The Simmons Company; therefore, the following provides a brief summary of the comparable data and the valuation techniques utilized.

Sales Comparison Approach

The sales comparison approach is a method of valuation where comparable sales from the market are identified, adjusted to account for significant differences, and then reconciled to form an indication of value. The Appraiser reviewed numerous sales in the Abilene marketplace. Of these, five were identified as most comparable to the subject property, and were analyzed more specifically. The following table summarizes the five comparable sales.

Summary of Improved Sales Grid

After reviewing the comparable sales summarized above, it becomes apparent that adjustments must be made to account for differences between each comparable sale. The most common unit of comparison for commercial or office properties is price per square foot of gross building area or rentable area. For purposes of this appraisal the sales price per square foot of rentable area was used as the unit of comparison. First, adjustments were made to account for differences in terms/financing, property rights, conditions of sales, and buyer expenditures; explanations for any adjustments can be found in the comparable write-ups at the end of this section. A market conditions adjustment is needed if property values have appreciated or depreciated over time. The four comparable sales occurred from May 2015 to April 2017. Each comparable sale was adjusted 1 percent, per year, to account for general appreciation primarily based on inflationary pressure and the increased cost of construction.

Sales Comparables Summary: Subject Comparable 1 Comparable 2 Comparable 3 Comparable 4 Comparable 5

Address:101 North Cedar

Street

108 NW 3rd

Street

200 North

Broadway

201 North

Buckeye Avenue

308 N Broadway

Street

417 NW 3rd

Street

City Abilene Abilene Abilene Abilene Abilene Abilene

Sale Price $115,000 $100,000 $22,000 $62,000 $45,000

Sale Date Apr-17 Jan-17 May-16 Dec-15 May-15

Land Size (SF) 4,080 2,185 2,310 1,483 1,725 2,400

Gross Building Area (GBA) 1,792 2,139 4,592 1,883 4,575 3,502

Rentable Area (RA) 1,216 2,139 2,816 1,298 1,700 3,062

Land-to-Building Ratio 2.28 1.02 0.50 0.79 0.38 0.69

Constructed 1940 1910 1950 1869 1900 1896

Overall Rate (OAR) N/A N/A N/A N/A N/A

Zoning B-5 B-5 B-5 B-5 B-5 B-5

Sale Price per SF of GBA $54 $22 $12 $14 $13

Sale Price per SF of RA $54 $36 $17 $36 $15

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In addition, adjustments were made to account for physical differences between the comparable sales and the subject. Adjustments were made for improvement size, location, and age/condition/design/appeal. Size adjustments were made based on the rentable area of each comparable. Comparable Sales 1, 2 and 5 have a significantly larger amount of rentable area compared to the subject and required an upward adjustment. Comparable Sales 3 and 4 were considered similar in regard to the amount of rentable area. It was noted earlier that the subject is located within the downtown area of Abilene; however, it is located south of the railroad tracks. The area south of the tracks contains more service commercial and industrial properties than retail/office properties; therefore, all five comparables are considered to be in a superior location as they are located in the core downtown district, north of the railroad tracks. Age/Condition/Design/Appeal adjustments are made considering the estimated age of the subject, the overall condition, and the market design/appeal as estimated by the Appraiser. The basis for these adjustments is the experience and judgement of the Appraiser. Adjustments were made to account for differences between the comparable sales and the subject. The table following table is a summary of the adjustments made to the comparable sales.

Sales Comparison Adjustments Grid

After adjustments, the comparable sales ranged from $15 to $51 per square foot of rentable area, with an average indication of $31 per square foot. All five comparable sales were relied upon to reconcile a final indication of value. Therefore, the indication of value by the sales comparison approach is $38,000 (rounded), or $31 per square foot

Transaction Adjustments: Subject Comparable 1 Comparable 2 Comparable 3 Comparable 4 Comparable 5

Sale Date/Time Apr-17 Jan-17 May-16 Dec-15 May-15

Sale Price $115,000 $100,000 $22,000 $62,000 $45,000

Property Rights Adj. $0 $0 $0 $0 $0

Adjusted Sale Price $115,000 $100,000 $22,000 $62,000 $45,000

Terms/Financing Adj. $0 $0 $0 $0 $0

Adjusted Sale Price $115,000 $100,000 $22,000 $62,000 $45,000

Conditions of Sale $0 $0 $0 $0 $0

Adjusted Sale Price $115,000 $100,000 $22,000 $62,000 $45,000

Buyer Expenditures $0 $0 $0 $0 $0

Adjusted Sale Price $115,000 $100,000 $22,000 $62,000 $45,000

Market Conditions (time) 0.5% 1.0% 1.5% 2.0% 2.5%

Cumulative Adjusted Sale Price $115,575 $101,000 $22,330 $63,240 $46,125

Adjusted Price per SF of GBA $54 $22 $12 $14 $13

Adjusted Price per SF of RA $54 $36 $17 $37 $15

Physical Adjustments:

Improvement Size (SF of RA) 5% 10% 0% 0% 15%

Location -10% -10% -10% -10% -5%

Age/Condition/Desing/Appeal Superior Superior Inferior Equal Inferior

Gross Adjustment (%) 15% 20% 10% 10% 20%

Net Adjustment (%) -5% 0% -10% -10% 10%

Adjusted Sales Price $ 109,796 $ 101,000 $ 20,097 $ 56,916 $ 50,738

Indication per SF of GBA $51 $22 $11 $12 $14

Indication per SF of RA $51 $36 $15 $33 $17

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of rentable area.

Cost Approach

The Cost Approach is a method of estimating value where the cost to replace the improvements, less accrued depreciation, is added to the site value. The market for this type of property is composed of purchasers who are concerned with yield or utility, rather than with the cost to construct. In addition, the cost approach becomes less reliable, as properties get older and/or have undergone renovation or remodeling, because the estimate of physical depreciation becomes subjective. For these reasons, the Appraiser has elected not to complete the cost approach to value; however, the elimination of this approach does not limit this appraisal, and does not prohibit the completion of a credible appraisal.

Income Capitalization Approach

The income capitalization approach is a method of valuation used primarily in the appraisal of investment property. It is a method of estimating value where the anticipated income is converted into an investment value. Potential income and expenses are projected by comparing current income and expenses for the subject, with those of the market. The estimated expenses are then subtracted from the estimated potential gross income. The resulting value is the income remaining to the investor, which is referred to as net operating income (NOI). The NOI is then capitalized using market extracted or derived cap rates to arrive at an indication of value. The first step in the completion of the income capitalization approach is to estimate the potential gross income (PGI) of the subject property. The subject is currently owner-occupied, and no contract leases were available for analysis. Therefore, market rent must be identified by analyzing the rental rates of comparable properties. The following is a summary of the four most applicable leases in the Abilene Market.

The market rents provided above indicate a range of $4.52 to $7.94 per square foot. Market rent for the subject is projected to be $6.00 per square foot, on a gross lease basis with the landlord paying real estate taxes, insurance, and maintenance.

Comparable 1 Comparable 2 Comparable 3 Comparable 4

Address/Name 202 NW 2nd St 206 NW 2nd St 300 N Cedar St 306 N Cedar St

City Abilene Abilene Abilene Abilene

Unit Type Gross Gross Gross Gross

Size 950 1,200 1,284 1,300

Monthly Rent $500 $500 $850 $490

Rent/SF $6.32 $5.00 $7.94 $4.52

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Reconstructed Operating Statement Utilizing the income and expenses projected above, an operating statement can be developed.

Projected Operating Statement

Total Expenses and Net Operating Income The projected total expenses for the subject are $3,236, or 49% of the EGI. The real estate tax expense is based on the 2017 county appraised value applied to the 2016 mill rate. Expenses for insurance, maintenance, and management are based on market expenses for similar properties. Therefore, after consideration of the owner’s expenses, the projected NOI is $3,329. Capitalization rates can be derived from comparable sales when the necessary data is available from each sale. At a minimum, the NOI and sale price are needed to derive a cap rate from a market sale; however, specific information on income, expenses, financing terms, and market conditions can provide a more accurate extracted cap rate. None of comparable sales utilized in the sales comparison exhibited a market extracted capitalization rate. An analysis of over 30 commercial property sales in the region from the past three years indicated a range from 3.99 to 16.06 percent, with an average of near 9.00 percent. After determining the capitalization rate, it is utilized to capitalize the net operating income as follows:

Therefore, the indication of value for the subject property, by the income capitalization approach, is $37,000 (rounded).

Rental Income: Size (SF) Rent/SF Monthly Rent Annual Rent % of PGI

Office Space 1,216 $6.00 $600 $7,295 100%

Per SF % of PGI

$7,295 $6.00 100%

$730 $0.60 10%

$6,566 $5.40 90%

Expenses: Amount Per SF % of EGI

Real Estate Taxes $1,686 $1.39 26%

Insurance $500 $0.41 8%

Utilities $0 $0.00 0%

Maintenance & Reserves $525 $0.43 8%

Management $525 $0.43 8%

$3,236 $2.66 49%

$3,329 $2.74 51%

Potential Gross Income (PGI)

Less Vacancy & Collection Loss

Effective Gross Income (EGI)

Total Operating Expenses

Net Operating Income (NOI)

Net Operating Income (NOI) $3,329

Capitalization Rate 9.00%

Indication of value by the income approach $36,989

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Reconciliation and Final Value Opinion

Final reconciliation is the process of analyzing the value indication, from each approach completed, in order to consider the level of emphasis each value is given when a final value opinion is reconciled. Typically, this process considers the quantity, quality, and integrity of the information used to complete each approach. In addition, the sensitivity of the value indication to inaccurate information is also considered. The final value opinion does not simply represent an average of the value indications derived, but rather, relies upon the opinion and judgment of the Appraiser. Two approaches to value were completed for the subject property, producing the following indications of value: Sales Comparison Approach $38,000 Income Approach $37,000 Two approaches to value were completed, and the range of the indications was good. The quantity and quality of data was good for both approaches; however, most weight was given to the sales comparison indication as most office properties in the market are owner-occupied and expense data is limited. Therefore, as a result of our analysis and based on our judgment and experience, the opinion of market value for the fee simple interest for the subject real estate, as of November 1, 2017, is:

THIRTY-EIGHT THOUSAND DOLLARS

($38,000) The above opinion of market value does not include the contributing value of any Furniture, Fixtures and Equipment (FF&E).

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QUALIFICATIONS OF GARETH ROHR EMPLOYMENT

The Simmons Company - Manhattan, Kansas, August 2010 - Present Full-time Appraiser focusing on commercial real estate in Manhattan, Junction

City, and surrounding area PepsiCo – Quaker Oats Division - Manhattan, Kansas, April 2008 - August 2010

Financial Supervisor, responsible for locations financial controls, financial reporting and the oversight of the facility’s budget and financial planning

Redi Systems Inc. - Manhattan, Kansas, July 2007 – April 2008 Director of Operations, responsible for all bookkeeping, and business accounting

as well as advise on finances, marketing, and sales Cargill Inc. – Kansas City, Kansas, January 2004 - November 2006

District Merchant, responsible for six facilities daily operations by providing adequate raw materials inventories within critical timelines by purchasing commodities at a favorable value while managing logistics

EDUCATION

Bachelor of Science degree in Business Administration, Finance, Kansas State University, 2003 Successfully completed the following courses and examinations by the Appraisal Institute:

o Basic Appraisal Principles, Clive, IA o Basic Appraisal Procedures, Clive, IA o Uniform Standards of Professional Appraisal Practice – 2010, Clive, IA o General Appraiser Income Approach Part I, Tigard, OR o General Appraiser Site Valuation and Cost Approach, Online o General Appraiser Report Writing and Case Studies, Chicago, IL o General Appraiser Sales Comparison Approach, Online o Real Estate Finance, Statistics, and Valuation Modeling, Online o General Appraiser Market Analysis and Highest and Best Use, Chicago, IL o General Appraiser Income Approach Part II, Kansas City, MO o Expert Witness for Commercial Appraisers, Online, McKissock LP – Elective o Commercial Appraisal Review, Online, McKissock LP - Elective

STATE APPOINTMENTS AND LICENSE/CERTIFICATION

Kansas Real Estate License No. SP00228606

REPRESENTATIVE CLIENTS A list will be furnished upon request.

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QUALIFICATIONS OF MIKE SKOCHDOPOLE EMPLOYMENT

The Simmons Company – Manhattan, Kansas, June 2016 – Present Full-time Appraiser Trainee focusing on commercial real estate in Manhattan, Junction City, and surrounding area

Landmark National Bank – Manhattan, Kansas, January 2015 – June 2016 Loan Operations, assisted in daily operations relating to the loan department for twenty-nine branch facilities across Kansas

EDUCATION Bachelor of Science degree in Agribusiness, Kansas State University, 2014

Successfully completed the following courses and examinations by the Appraisal Institute:

o Basic Appraisal Principles, Appraisal Institute Online o Basic Appraisal Procedures, Appraisal Institute Online o 2016-2017 15-Hour Equivalent USPAP Course, Appraisal Institute Online o General Appraiser Sales Comparison Approach, Tulsa, OK o General Appraiser Income Approach/Part 1, Chicago, IL

REPRESENTATIVE CLIENTS A list will be furnished upon request

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Underlying Assumptions and Limiting Conditions This appraisal is also subject to the following general assumptions and limiting conditions.

1. Title to the property is assumed to be good and marketable and the legal

description correct. 2. No responsibility for legal matters is assumed. All existing liens, mortgages, or

other encumbrances have been disregarded and the property is appraised as though free and clear, under responsible ownership and competent management.

3. All sketches in this report are intended to be visual aids and should not be construed as surveys of engineering reports.

4. All information in this report has been obtained from reliable sources. We cannot, however, guarantee or be responsible for the accuracy of information furnished by others.

5. This opinion of value applies to land and improvements only. The value of trade fixtures, furnishings and other equipment has not been included with the value of the real estate.

6. Possession of this report or a copy thereof does not imply the right of publication or use for any purpose by any other than the addressee, without the written consent of the Appraisers.

7. We are not required to give testimony or attendance in court by reason of this appraisal, unless prior agreements have been made in writing.

8. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used.

9. The land, particularly the soil, of the area under appraisement appears firm and solid. Subsidence in the area is unknown or uncommon, but we do not warrant against this condition or occurrence.

10. Subsurface rights (minerals and oil) were not considered in making this appraisal.

11. We inspected the buildings involved, if any, in this appraisal report and damage, if any, by termites, dry rot, wet rot, or other infestations was reported as a matter of information, and no guarantee of the amount or degree of damage, if any, is implied.

12. The comparable sales data relied upon in this appraisal is believed to be from reliable sources; however, it was not possible to inspect the comparables completely, and it was necessary to rely upon information furnished by others as to said data; therefore, the value conclusions are subject to the correctness and verification of said data.

13. We inspected, as far as possible, by observation the land and the improvements thereon; however, it was not possible to personally observe conditions beneath the soil or hidden structural components within the improvements. Therefore,

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no representations are made herein as to these matters; and unless specifically considered in the report, the value estimate is subject to any such conditions that could cause a loss in value. Condition of heating, cooling, ventilating electrical and plumbing equipment is considered to be commensurate with the condition of the balance of the improvements unless otherwise stated.

14. Unless otherwise stated in this report, the existence of hazardous substances (including, without limitation, mold, asbestos, polychlorinated biphenyl, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, or other environmental conditions) were not called to our attention nor did we become aware of such during our inspection. We have no knowledge of the existence of such materials on or in the property unless otherwise stated. However, we are not qualified to test such substances or conditions. If the presence of substances such as mold, asbestos, urea formaldehyde foam insulation, radon gas or other hazardous substances or environmental conditions may affect the value of the property, the value estimated is predicated on the assumption that there is no such condition on or in the property or in such proximity thereto that it would cause a loss in value. No responsibility is assumed for any such conditions, nor for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in the field or environmental impacts upon real estate if so desired.

15. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. Unless otherwise noted within the appraisal report, we have not made 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 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 Act. If so, this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible noncompliance with the requirements of the ADA in estimating the value of the property.

16. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales, or other media, without the written consent and approval of the author, particularly as to the valuation conclusions, the identity of the appraiser or firm with which he is connected, or any reference to the Appraisal Institute.

17. It is common practice for real estate appraisers in this geographical area to utilize county assessment records (ICS-Inventory Contents Sheets) for building improvement and land size. For the most part, County personnel spend significant time measuring and compiling size data and this data is regularly updated when changes occur (through building permit notification). Therefore, the benefit of using this data provides efficiencies of time and also is helpful when access to properties (particularly comparable sales) is not readily available. Users of this report should understand that County data is most likely utilized in this appraisal for estimating the size of building improvements and land, which can include not only comparable sales, but the subject property.

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18. No Certificate of Title was provided to the Appraisers. Completing abstract or title research are not a part of the scope of this assignment and should be completed by professionals with expertise in these areas. Unless otherwise noted, standard utility and right-of-way easements are insignificant to value. However, a current locational or boundary survey, which was unavailable to the Appraisers, may reveal encroachments, easements, zoning violations or other matters of interest that could warrant modification of the appraised value. Statements regarding zoning compliance are intended only in the most general sense. Zoning and building ordinances vary significantly from one municipality to another, and can be extremely detailed. The scope of this report does not include a comparison of every potentially significant characteristic of the subject property's site and improvements relative to zoning, building ordinances, and codes. It is, therefore, not known to the Appraisers if the building improvements have been built to code, or are in code compliance.

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ADDENDUM

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Aerial Map of Subject

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Subject Area Map

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Flood Map

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Subject Photographs

View from northwest corner of property

View from southwest corner of property

View from northeast corner of property

View from southeast corner of property

View of office/living area

View of sink

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View of office/living area

View of office/living area

View of restroom

View of garage area

View of garage/shop area