SPECIAL NOTE Commissioners will tour Scarpino 329 N West Ave at 100 pm prior to the regularly scheduled meeting

AGENDA ADVERTISING AND PROMOTION COMMISSION

April 9 2012 200 pm Fayetteville Town Center I Call to Order ndash Maudie Schmitt

II Reports

A Approval of Minutes for March monthly meeting B Addition to By-Laws of Open and Responsive Operation C Financial Report

1 HMR Revenues ndash Marilyn Heifner 2 Financial Statements - Keith Glass 3 Update from City Attorney re delinquent tax collection efforts ndash Kit

Williams D Departmental Reports

1 Clinton House Museum 2 Convention and Visitors Bureau 3 Town Center 4 Executive Director

E Advertising Agency Report ndash Mike Sells

III Old Business

AOld Post Office 1 Appraisal 2 Hiring Real Estate Attorney

B Scarpino

IV New Business ANational Park Service public input session on Butterfield Overland Mail Route

National Trail ndash 41112 ndash 10 am until noon City Hall Room 326

V Adjourn

ADVERTISING AND PROMOTION COMMISSION

REGULAR MEETING

March 12 2012

Commissioners Present Bob Davis Lioneld Jordan Brandon Karn Bill Lyle Maudie Schmitt and Justin

Tennant

Commissioners Absent Hannah Mills

Staff Present Sandra Bennett

CALL TO ORDER

Maudie Schmitt called the regular monthly meeting of the Fayetteville Advertising and Promotion

Commission to order on March 12 2012 at 200 pm

MINUTES

Davis moved to approve the minutes of Januaryrsquos meeting second by Jordan Motion carried

HMR REPORT

It was reported that HMR was up 1281 with total collections of $178289 Last year same time

increase was 980

FINANCIAL REPORT

Keith Glass presented the financial report Final Financials for December show the asset component

reclassified Through month of January HMR revenue is up $1400000 CVB shows $30000 loss as a

result of store inventory The difference in salaries is because of timing of pay day being on weekend

which sometimes pushes it into the next month

DELINQUENT TAX COLLECTIONS

Kit Williams reported $1228144 in collections in February 2012 with a year to date total of

$1893493 Of the 29 cases more than half show a zero balance

CLINTON HOUSE MUSEUM

2000 tulip bulbs were planted as part of their Plant the Town RED program Free admission February

20th in honor of Presidentrsquos Day

CONVENTION VISITORS BUREAU

Visitor Center had $454824 in sales There were 1024 visitors during the month of February

TOWN CENTER

Sandra reported that the Town Center was up in almost every category from last year Town Center staff

is working on University events community and non-profit events

AD AGENCY

Mike Sells reported for the Agency They are currently working on the Fayetteville guide January ndash

February has shown an increase of web activity Theyrsquove expanded geographical region and all areas

show an increase Drew presented the new First Thursday logo

OLD BUSINESS

Quotes for appraisals of Old Post Office

Mark Riskrsquos quote for $200000

Parrishrsquos quote Restricted use - $150000 USPAP $250000

Restricted Use = Simple cut and dry report with value of property

USPAP = In-depth exposition of material that elaborates on the restricted use report Land sales lease

analysis and retail business

Motion to have Parrish appraise Old Post Office using the Restricted Use Report for $150000 by Davis

second by Tennant

Motion carried

NEW BUSINESS

Gina Scarpino amp Richard Berquist offered their building as an alternative for a venue for the Fayetteville

Underground They invited Commissioners to come to the space and look at it and consider it as a

location instead of the Old Post Office It could be used as an event venue and artist studios Itrsquos over

6000 square feet they are asking for $99000000

Commissioners discussed meeting at 100 pm on April 8th at Scarpinorsquos before the 200 pm meeting

Hiring an attorney for negotiations on purchase of Old Post Office

Kit recommended the Commission select an attorney experienced in real estate to draft documents and

be involved in all negotiations

Sandra was asked to place an Ad in paper to solicit legal services

Davis moved to look for an attorney with real estate experience second by Jordan

Motion carried

Applications for AampP Commission

Two applicants disqualified because they did not fulfill the requirements for the open positions

Tennant moved to go into executive session second by Davis

After executive session Maudie called meeting back to order

Karn moved to accept Bill Lyle to second term second by Tennant

Motion carried

There being no further business the meeting was adjourned

Respectfully submitted

Sandra Bennett

Facilities Manager

Fayetteville Town Center

Current Year HMR Collected (21200912410100) 20229179$ Prior Year Collected (21200912410101) (127630)$ First Security Investment Interest Revenue (21200912470800) 88054$

Total Revenues 20189603$

Annual Bond Audit Expense (21209120760260) -$ Collection Expense (21209120533300) (402175)$ Bank of OK Quarterly Fee (21209120571200) -$ Town Center Bond Payment (21209120571200) (5613399)$ 2010 Property Taxes on Town Center (21209120760260)

Total Expenses (6015574)$

Total Check to AampP 14174029$

~ This report represents HMR collections through the end of the monthThese figures may include past due amounts

For month of March 2012Advertising and Promotion Commission

City of Fayetteville ArkansasMonthly HMR Tax Collections 2008-2011

2009 2010 2010 2011 2011 2012 2012 Total Total Change Over Total Change Over Total Change Over

HMR Taxes HMR Taxes Prior Year HMR Taxes Prior Year HMR Taxes Prior Year

January $166214 $166645 000 $179546 774 $205939 1470

February $167141 $143940 -1388 $158037 980 $178289 1281

March $180027 $172662 -409 $169093 -206 $201015 1888$506675

April $191542 $187730 -200 $187976 000

May $190320 $185096 -274 $188149 165

June $190237 $184371 -308 $205700 1157

July $180944 $196323 008 $205438 460

August $167897 $180741 765 $189839 503

September $176463 $184471 454 $195427 594

October $189728 $195169 287 $214713 1001

November $190887 $213494 1184 $203529 -467

December $174568 $171511 -018 $202027 1779

Total $ $2165969 $2182155 075 $2806149 538 $585243 1551

filename

Departmental CorrespondenceFa~ettevitle LEGAL

wwwaccessfayettevilleorg DEPARTMENT

Kit Williams City Attorney

Jason B Kelley TO Mayor Jordan 4ssistant City Attorney

AampP Commissioners

CC Don Marr Chief of Staff Casey Jones Prosecuting Attorney -J

FROM Kit Williams City Attorney _~L-_--A__xJmiddot--+-____

DATE April 3 2012

RE Overdue HMR collection efforts

The City Prosecutors Office collected $745846 of overdue HMR taxes in March of 20 12 Thus for the first quarter of 20 12 the City Prosecutors Office has collected $2639339 in overdue Hotel Motel and Restaurant taxes

Seven of the 29 open cases showed a zero delinquent balance at this time Unfortunately no case was closed and seven show a delinquent balance in excess of$IOOOOO Only one of those seven is for an operating business

ADVERTISING AND PROMOTION COMMISSION

REGULAR MEETING

March 12 2012

Commissioners Present Bob Davis Lioneld Jordan Brandon Karn Bill Lyle Maudie Schmitt and Justin

Tennant

Commissioners Absent Hannah Mills

Staff Present Sandra Bennett

CALL TO ORDER

Maudie Schmitt called the regular monthly meeting of the Fayetteville Advertising and Promotion

Commission to order on March 12 2012 at 200 pm

MINUTES

Davis moved to approve the minutes of Januaryrsquos meeting second by Jordan Motion carried

HMR REPORT

It was reported that HMR was up 1281 with total collections of $178289 Last year same time

increase was 980

FINANCIAL REPORT

Keith Glass presented the financial report Final Financials for December show the asset component

reclassified Through month of January HMR revenue is up $1400000 CVB shows $30000 loss as a

result of store inventory The difference in salaries is because of timing of pay day being on weekend

which sometimes pushes it into the next month

DELINQUENT TAX COLLECTIONS

Kit Williams reported $1228144 in collections in February 2012 with a year to date total of

$1893493 Of the 29 cases more than half show a zero balance

CLINTON HOUSE MUSEUM

2000 tulip bulbs were planted as part of their Plant the Town RED program Free admission February

20th in honor of Presidentrsquos Day

CONVENTION VISITORS BUREAU

Visitor Center had $454824 in sales There were 1024 visitors during the month of February

TOWN CENTER

Sandra reported that the Town Center was up in almost every category from last year Town Center staff

is working on University events community and non-profit events

AD AGENCY

Mike Sells reported for the Agency They are currently working on the Fayetteville guide January ndash

February has shown an increase of web activity Theyrsquove expanded geographical region and all areas

show an increase Drew presented the new First Thursday logo

OLD BUSINESS

Quotes for appraisals of Old Post Office

Mark Riskrsquos quote for $200000

Parrishrsquos quote Restricted use - $150000 USPAP $250000

Restricted Use = Simple cut and dry report with value of property

USPAP = In-depth exposition of material that elaborates on the restricted use report Land sales lease

analysis and retail business

Motion to have Parrish appraise Old Post Office using the Restricted Use Report for $150000 by Davis

second by Tennant

Motion carried

NEW BUSINESS

Gina Scarpino amp Richard Berquist offered their building as an alternative for a venue for the Fayetteville

Underground They invited Commissioners to come to the space and look at it and consider it as a

location instead of the Old Post Office It could be used as an event venue and artist studios Itrsquos over

6000 square feet they are asking for $99000000

Commissioners discussed meeting at 100 pm on April 8th at Scarpinorsquos before the 200 pm meeting

Hiring an attorney for negotiations on purchase of Old Post Office

Kit recommended the Commission select an attorney experienced in real estate to draft documents and

be involved in all negotiations

Sandra was asked to place an Ad in paper to solicit legal services

Davis moved to look for an attorney with real estate experience second by Jordan

Motion carried

Applications for AampP Commission

Two applicants disqualified because they did not fulfill the requirements for the open positions

Tennant moved to go into executive session second by Davis

After executive session Maudie called meeting back to order

Karn moved to accept Bill Lyle to second term second by Tennant

Motion carried

There being no further business the meeting was adjourned

Respectfully submitted

Sandra Bennett

Facilities Manager

Fayetteville Town Center

Current Year HMR Collected (21200912410100) 20229179$ Prior Year Collected (21200912410101) (127630)$ First Security Investment Interest Revenue (21200912470800) 88054$

Total Revenues 20189603$

Annual Bond Audit Expense (21209120760260) -$ Collection Expense (21209120533300) (402175)$ Bank of OK Quarterly Fee (21209120571200) -$ Town Center Bond Payment (21209120571200) (5613399)$ 2010 Property Taxes on Town Center (21209120760260)

Total Expenses (6015574)$

Total Check to AampP 14174029$

~ This report represents HMR collections through the end of the monthThese figures may include past due amounts

For month of March 2012Advertising and Promotion Commission

City of Fayetteville ArkansasMonthly HMR Tax Collections 2008-2011

2009 2010 2010 2011 2011 2012 2012 Total Total Change Over Total Change Over Total Change Over

HMR Taxes HMR Taxes Prior Year HMR Taxes Prior Year HMR Taxes Prior Year

January $166214 $166645 000 $179546 774 $205939 1470

February $167141 $143940 -1388 $158037 980 $178289 1281

March $180027 $172662 -409 $169093 -206 $201015 1888$506675

April $191542 $187730 -200 $187976 000

May $190320 $185096 -274 $188149 165

June $190237 $184371 -308 $205700 1157

July $180944 $196323 008 $205438 460

August $167897 $180741 765 $189839 503

September $176463 $184471 454 $195427 594

October $189728 $195169 287 $214713 1001

November $190887 $213494 1184 $203529 -467

December $174568 $171511 -018 $202027 1779

Total $ $2165969 $2182155 075 $2806149 538 $585243 1551

filename

Departmental CorrespondenceFa~ettevitle LEGAL

wwwaccessfayettevilleorg DEPARTMENT

Kit Williams City Attorney

Jason B Kelley TO Mayor Jordan 4ssistant City Attorney

AampP Commissioners

CC Don Marr Chief of Staff Casey Jones Prosecuting Attorney -J

FROM Kit Williams City Attorney _~L-_--A__xJmiddot--+-____

DATE April 3 2012

RE Overdue HMR collection efforts

The City Prosecutors Office collected $745846 of overdue HMR taxes in March of 20 12 Thus for the first quarter of 20 12 the City Prosecutors Office has collected $2639339 in overdue Hotel Motel and Restaurant taxes

Seven of the 29 open cases showed a zero delinquent balance at this time Unfortunately no case was closed and seven show a delinquent balance in excess of$IOOOOO Only one of those seven is for an operating business

OLD BUSINESS

Quotes for appraisals of Old Post Office

Mark Riskrsquos quote for $200000

Parrishrsquos quote Restricted use - $150000 USPAP $250000

Restricted Use = Simple cut and dry report with value of property

USPAP = In-depth exposition of material that elaborates on the restricted use report Land sales lease

analysis and retail business

Motion to have Parrish appraise Old Post Office using the Restricted Use Report for $150000 by Davis

second by Tennant

Motion carried

NEW BUSINESS

Gina Scarpino amp Richard Berquist offered their building as an alternative for a venue for the Fayetteville

Underground They invited Commissioners to come to the space and look at it and consider it as a

location instead of the Old Post Office It could be used as an event venue and artist studios Itrsquos over

6000 square feet they are asking for $99000000

Commissioners discussed meeting at 100 pm on April 8th at Scarpinorsquos before the 200 pm meeting

Hiring an attorney for negotiations on purchase of Old Post Office

Kit recommended the Commission select an attorney experienced in real estate to draft documents and

be involved in all negotiations

Sandra was asked to place an Ad in paper to solicit legal services

Davis moved to look for an attorney with real estate experience second by Jordan

Motion carried

Applications for AampP Commission

Two applicants disqualified because they did not fulfill the requirements for the open positions

Tennant moved to go into executive session second by Davis

After executive session Maudie called meeting back to order

Karn moved to accept Bill Lyle to second term second by Tennant

Motion carried

There being no further business the meeting was adjourned

Respectfully submitted

Sandra Bennett

Facilities Manager

Fayetteville Town Center

Current Year HMR Collected (21200912410100) 20229179$ Prior Year Collected (21200912410101) (127630)$ First Security Investment Interest Revenue (21200912470800) 88054$

Total Revenues 20189603$

Annual Bond Audit Expense (21209120760260) -$ Collection Expense (21209120533300) (402175)$ Bank of OK Quarterly Fee (21209120571200) -$ Town Center Bond Payment (21209120571200) (5613399)$ 2010 Property Taxes on Town Center (21209120760260)

Total Expenses (6015574)$

Total Check to AampP 14174029$

~ This report represents HMR collections through the end of the monthThese figures may include past due amounts

For month of March 2012Advertising and Promotion Commission

City of Fayetteville ArkansasMonthly HMR Tax Collections 2008-2011

2009 2010 2010 2011 2011 2012 2012 Total Total Change Over Total Change Over Total Change Over

HMR Taxes HMR Taxes Prior Year HMR Taxes Prior Year HMR Taxes Prior Year

January $166214 $166645 000 $179546 774 $205939 1470

February $167141 $143940 -1388 $158037 980 $178289 1281

March $180027 $172662 -409 $169093 -206 $201015 1888$506675

April $191542 $187730 -200 $187976 000

May $190320 $185096 -274 $188149 165

June $190237 $184371 -308 $205700 1157

July $180944 $196323 008 $205438 460

August $167897 $180741 765 $189839 503

September $176463 $184471 454 $195427 594

October $189728 $195169 287 $214713 1001

November $190887 $213494 1184 $203529 -467

December $174568 $171511 -018 $202027 1779

Total $ $2165969 $2182155 075 $2806149 538 $585243 1551

filename

Departmental CorrespondenceFa~ettevitle LEGAL

wwwaccessfayettevilleorg DEPARTMENT

Kit Williams City Attorney

Jason B Kelley TO Mayor Jordan 4ssistant City Attorney

AampP Commissioners

CC Don Marr Chief of Staff Casey Jones Prosecuting Attorney -J

FROM Kit Williams City Attorney _~L-_--A__xJmiddot--+-____

DATE April 3 2012

RE Overdue HMR collection efforts

The City Prosecutors Office collected $745846 of overdue HMR taxes in March of 20 12 Thus for the first quarter of 20 12 the City Prosecutors Office has collected $2639339 in overdue Hotel Motel and Restaurant taxes

Seven of the 29 open cases showed a zero delinquent balance at this time Unfortunately no case was closed and seven show a delinquent balance in excess of$IOOOOO Only one of those seven is for an operating business

Current Year HMR Collected (21200912410100) 20229179$ Prior Year Collected (21200912410101) (127630)$ First Security Investment Interest Revenue (21200912470800) 88054$

Total Revenues 20189603$

Annual Bond Audit Expense (21209120760260) -$ Collection Expense (21209120533300) (402175)$ Bank of OK Quarterly Fee (21209120571200) -$ Town Center Bond Payment (21209120571200) (5613399)$ 2010 Property Taxes on Town Center (21209120760260)

Total Expenses (6015574)$

Total Check to AampP 14174029$

~ This report represents HMR collections through the end of the monthThese figures may include past due amounts

For month of March 2012Advertising and Promotion Commission

City of Fayetteville ArkansasMonthly HMR Tax Collections 2008-2011

2009 2010 2010 2011 2011 2012 2012 Total Total Change Over Total Change Over Total Change Over

HMR Taxes HMR Taxes Prior Year HMR Taxes Prior Year HMR Taxes Prior Year

January $166214 $166645 000 $179546 774 $205939 1470

February $167141 $143940 -1388 $158037 980 $178289 1281

March $180027 $172662 -409 $169093 -206 $201015 1888$506675

April $191542 $187730 -200 $187976 000

May $190320 $185096 -274 $188149 165

June $190237 $184371 -308 $205700 1157

July $180944 $196323 008 $205438 460

August $167897 $180741 765 $189839 503

September $176463 $184471 454 $195427 594

October $189728 $195169 287 $214713 1001

November $190887 $213494 1184 $203529 -467

December $174568 $171511 -018 $202027 1779

Total $ $2165969 $2182155 075 $2806149 538 $585243 1551

filename

Departmental CorrespondenceFa~ettevitle LEGAL

wwwaccessfayettevilleorg DEPARTMENT

Kit Williams City Attorney

Jason B Kelley TO Mayor Jordan 4ssistant City Attorney

AampP Commissioners

CC Don Marr Chief of Staff Casey Jones Prosecuting Attorney -J

FROM Kit Williams City Attorney _~L-_--A__xJmiddot--+-____

DATE April 3 2012

RE Overdue HMR collection efforts

The City Prosecutors Office collected $745846 of overdue HMR taxes in March of 20 12 Thus for the first quarter of 20 12 the City Prosecutors Office has collected $2639339 in overdue Hotel Motel and Restaurant taxes

Seven of the 29 open cases showed a zero delinquent balance at this time Unfortunately no case was closed and seven show a delinquent balance in excess of$IOOOOO Only one of those seven is for an operating business

City of Fayetteville ArkansasMonthly HMR Tax Collections 2008-2011

2009 2010 2010 2011 2011 2012 2012 Total Total Change Over Total Change Over Total Change Over

HMR Taxes HMR Taxes Prior Year HMR Taxes Prior Year HMR Taxes Prior Year

January $166214 $166645 000 $179546 774 $205939 1470

February $167141 $143940 -1388 $158037 980 $178289 1281

March $180027 $172662 -409 $169093 -206 $201015 1888$506675

April $191542 $187730 -200 $187976 000

May $190320 $185096 -274 $188149 165

June $190237 $184371 -308 $205700 1157

July $180944 $196323 008 $205438 460

August $167897 $180741 765 $189839 503

September $176463 $184471 454 $195427 594

October $189728 $195169 287 $214713 1001

November $190887 $213494 1184 $203529 -467

December $174568 $171511 -018 $202027 1779

Total $ $2165969 $2182155 075 $2806149 538 $585243 1551

filename

Departmental CorrespondenceFa~ettevitle LEGAL

wwwaccessfayettevilleorg DEPARTMENT

Kit Williams City Attorney

Jason B Kelley TO Mayor Jordan 4ssistant City Attorney

AampP Commissioners

CC Don Marr Chief of Staff Casey Jones Prosecuting Attorney -J

FROM Kit Williams City Attorney _~L-_--A__xJmiddot--+-____

DATE April 3 2012

RE Overdue HMR collection efforts

The City Prosecutors Office collected $745846 of overdue HMR taxes in March of 20 12 Thus for the first quarter of 20 12 the City Prosecutors Office has collected $2639339 in overdue Hotel Motel and Restaurant taxes

Seven of the 29 open cases showed a zero delinquent balance at this time Unfortunately no case was closed and seven show a delinquent balance in excess of$IOOOOO Only one of those seven is for an operating business

Departmental CorrespondenceFa~ettevitle LEGAL

wwwaccessfayettevilleorg DEPARTMENT

Kit Williams City Attorney

Jason B Kelley TO Mayor Jordan 4ssistant City Attorney

AampP Commissioners

CC Don Marr Chief of Staff Casey Jones Prosecuting Attorney -J

FROM Kit Williams City Attorney _~L-_--A__xJmiddot--+-____

DATE April 3 2012

RE Overdue HMR collection efforts

The City Prosecutors Office collected $745846 of overdue HMR taxes in March of 20 12 Thus for the first quarter of 20 12 the City Prosecutors Office has collected $2639339 in overdue Hotel Motel and Restaurant taxes

Seven of the 29 open cases showed a zero delinquent balance at this time Unfortunately no case was closed and seven show a delinquent balance in excess of$IOOOOO Only one of those seven is for an operating business

MANDY FINKLEA CLINTON K JONES OFFICE ADMINISTRATOR Emiddotmail hotcheckltifayettevillearus CITY PROSECUTOR Ole PHONE (479) 575-8377 BRIAN THOMAS (479) 575-8378

ARKANSAS Hot Checks (479) 575middot8254 DEPUTY CITY PROSECUTOR FAX (479) 575-8373

OFFICE OF CITY PROSECUTOR

MEMO

TO K Williams Fayetteville City Attorney

FROM Casey Jones Fayetteville City Prosecutor

DATE April 2 2012

RE Status of Active HMR cases

When a Criminal Summons is issued for a violation and the Defendant subsequently pays the delinquent balance the Criminal Summons remains active and is then routinely dismissed by the Judge at arraignment ifthe Defendant is still current and not in violation

1 Acambaro Four Business Closed

Jesus Socarro Active Criminal Summons Delinquent Balance $146804

2 Antoinettes Special Cakes amp Catering

Antoinette R Harris Jami A Harris

Active Criminal Summons Active Criminal Summons Delinquent Balance -0shy

3 Brendas Drive-In Collin L Wilkins Active Criminal Summons Delinquent Balance -0shy

4 Butcher Block Business Closed

Gary W Bell Active Contempt of Court Delinquent Balance $187128

5 Cafe Delta Soul Michael L Vaughn Trial date 52112 Delinquent Balance $198000

6 Dickson Dining (Joses)

Sidney O Crawford Jr Paid -0shyDelinquent Balance No Forms

7 Dominoes Pizza Business Closed

Lloyd W Hardison Active Criminal Summons Delinquent Balance $439066

8 GreenRoom Laurie L Fuller Rustin E Fuller

Arraignment 4612 Arraignment 4612 Delinquent Balance -0shy

Telecommunication Device for the Deaf TOO (479) 521middot1316 176 South Church Suite 2 - Fayetteville AR 72701

15

Kit Williams April 2 2012 Page 2

9 Hogwild Pizzeria Business Closed

13 Mama Deans

Neon Ice

16 Northern Exposure Business Closed

19 Rowdy Beaver Den

21 Seafood Market BarGrill Business Closed

22 Shanghai Chinese and China Garden Businesses Closed

23 Sipamouane Twin Kitchen

24 Soul Restaurant amp Lounge Business Closed

27 Tims Pizza (North) Business Closed

28 Uncle Gaylords Business Closed

29 WOW Japanese Bistro Business Closed

David S Mackey

Meneria D Morrison Terry L Morrison

Brandon S Pooree William S Pooree

Kevin M Laughlin

Amber M Biason-Dunn

Craig Dowd

Hsiao L J Shen

Jeffrey Sipamouane

Casey E Dighero

Michael A Stephens

Hiram F Brandon

ChongN Kim

TOTAL $745846

Letter Delinquent Balance $133000

TD 44112 TD 44112 Delinquent Balance -0shy

Active Criminal Summons Active Criminal Summons Delinquent Balance No Forms

Arraignment 427112 Paid $655349 (issued new check-cleared) Delinquent Balance No Forms

Active Criminal Summons Paid $90497 Delinquent Balance -0shy

Paid -0shyDelinquent Balance $436760

Active Contempt of Court Delinquent Balance $309000

Arraignment 49112 Delinquent Balance -0shy

Paid -0shyDelinquent Balance $11864

Active Criminal Summons Delinquent Balance -0shy

FTA Warrant Delinquent Balance No Forms

FTA Warrant Delinquent Balance $204200

CLINTON HOUSE MUSEUM

MONTHLY REPORT MARCH 2012

The Clinton House Museum had a total of 323 visitors in the month of March

MUSEUM ACTIVITIES AND EVENTS

March and the spring weather increased traffic dramatically in the House this month In addition to having five group tours on the schedule we continually see visitors from all over the world Spring Break has also brought in many families from around northwest Arkansas neighboring states and those from coast to coast Additional inventory in the gift shop has increased sales as well The First Ladies Garden is blooming making the Clinton House a ldquomust stoprdquo for visitors and locals alike

March 3rd ndash GROUP TOUR ndash Arkansas Historical Society Living History Tour ndash 12 visitors

March 6th ndash GROUP TOUR ndash Arkadelphia AR ndash 30 visitors

March 14th ndash GROUP TOUR ndash Salvation Army Spring Campaign ndash 15 visitors

March 22nd ndash GROUP TOUR ndash Backyard Billionaire Tour ndash 57 visitors

March 23rd ndash GROUP TOUR ndash Heritage Club FAM Tour ndash 35 visitors

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Sales Totals $186393 $454824 $451675

2011 Totals $85492 $126224 $245088 $522072 $737000 $635651 $570779 $965033 $518226 $722130 $479754 $1074122

Change

from 2011 1180 2603 843 -1000 -1000 -1000 -1000 -1000 -1000 -1000 -1000 -1000

Visitor Count 686 1043 1213

2011 Totals 295 238 691 1301 1454 1463 1441 1457 1313 1189 1103 1283

Change

from 2011 13254 33824 7554 -10000 -10000 -10000 -10000 -10000 -10000 -10000 -10000 -10000

2011 Goal = $30000year or $2500month 2011 Totals

$6681571 $1092892

13228 2942

Change = divide the difference between the two numbers by the 2010 numberthen move the decimal two spaces right

2011 monthly sales average= $556798 2012 monthly sales average= $364297

2011 monthly visitor average= 1102 2012 monthly visitor average 981

2011 sales per visitor = $505 2012 sales per visitor = $371

Fayetteville Visitor Center - 2012 Sales amp Visitor Count

SalesSales

Visitors Visitors

2012 Totals

Inquiries by StateCountryFrom 112004 To 3292012

Showing all records

InquiriesStateCountry

20709None Entered

15671Texas

12468Missouri

8729Illinois

8706Arkansas

5210Oklahoma

4919Tennessee

4837Louisiana

4818Michigan

4567Florida

4531Kansas

4511Wisconsin

4363Ohio

4124Indiana

3851California

3123Iowa

3109Minnesota

2772Mississippi

2454New York

2197Pennsylvania

1951Georgia

1877North Carolina

1788Alabama

1631Kentucky

1373Virginia

1363Nebraska

1334New Jersey

1101Arizona

1096South Carolina

1045Colorado

897Washington

879Maryland

736Massachusetts

Page 1 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

Inquiries By SourceFrom 312012 To 3312012

InquiriesSource $Inquiry

Showing all records

417Travel Guides Free $000

259Travel Informationcom $000

235 Website $000

93UA Graduate School $000

9Midwest Living $000

1013

Page 1 of 1 432012 0211 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

578Oregon

542West Virginia

496Connecticut

458Ontario

446South Dakota

414Nevada

400New Mexico

318North Dakota

302Utah

252Quebec

241New Hampshire

227Idaho

225Maine

197Montana

178Delaware

162Alaska

135Rhode Island

123Wyoming

120Hawaii

104Vermont

93Alberta

88British Columbia

81Puerto Rico

64Manitoba

51Nova Scotia

50Washington DC

48New Brunswick

32Saskatchewan

24New Foundland

20AE

19ca

18Irn

11CANADA

8AP

7Prince Edward Island

7CROATIA

5Guam

3OT

3TURKEY

3AUSTRALIA

Total 149293

Page 2 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

2Virgin Islands

2Netherlands

2Argentina

2ENGLAND

1Finland

1ENGLAND UK

1Turkey 06650

1UNITED KINGDOM

1Australia 2162

1TURKEY 06100

1Italy

1Northumberland

1Northwest Territories

1PR

1Mexico

1Russia

1Luxemborg

1Korea

1South Africa

1Thailand

1Japan

1France

1Sweden

1Indonesia

1Switzerland

1Taiwan

1Mlt

1Greece

1Germany

1The Netherlands

1Spain

Total 149328

Page 3 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

Definite Bookings By Booking Date

March 2012 Meeting Dates Attnd Peak Rooms $ Value

HootensKickoff Classic

150000830201208302012

155700050 50

15000 $15570001 MeetingsSub-Total for March 50

GRAND TOTAL 15000 50 $15570001 Meetings

Printed 432012 205PMPage 1 of 1

Fayetteville Town Center Managerrsquos Activity Report March 1 2012 to March 31 2012 Sales

MARCH 2011 (base)

MARCH 2012

Month Change

YTD 2011

YTD 2012

YTD Change

Sales ( returned contracts by log date ndash GL) 21 14 (33) 54 41 (24)

Complete Events (PaidSponsored) (EMS Calendar) 17 21 24 44 49 11

Sales ($ returned contracts by log date ndash GL) $2718900 $2227500 (18) $7881175 $8335300 6

Collections ($ - Payment Log) $3126910 $3196807 2 $8337553 $9561543 15

$ Executed Contracts $3595000 $3455000 (4) $10858500 10535000 (3) Credit ($ - GL) -0- -0- NA -0- -0- NA

Average per event ($ Sales Sales) $129471 $159107 23 $145948 $203300 39

Operations Items o Carpet Cleaned o Getting quote on roof re-surfacing o Working with Simplex-Grinnell on trouble alarm

Sales and Coordination Fayetteville Teen Leadership-Mock Crime ScenemdashWorking with Chamber on this Non-profit organizations - Lifesource AR Support Network and the Rain Garden Academy We worked with the Visitors Bureau on coordinating and hosting the Arkansas Historical Society State

Meeting which was a three day conference filled with historical artifacts lectures and workshops University events - Kappa Kappa Gamma Sigma Chi and Sound of Africa University Relations Walton

College Business and College Education and Health Professionals Most of these events are re-bookings We have also booked NABC Conference-a 3 day full facility event with the Plant Pathology Dept Here Comes the Bride a Town Center ticketed Event ndash We had 150-200 total attendance with over 30

vendors Ticket sales were over $100000 Hospitality Summit ndash Event promoting the Hospitality industry through continuing education and networking

opportunities We worked with the Visitors Bureau and UA Hospitality students who coordinated this event Dig In ndash a nonprofit group centered on organic food and the importance of local farmers feeding the less

fortunate

Event List March 2 ndash AR Living History March 16 ndashGalbavi March 2 ndash Dig In March 17 - Galbavi March 3 ndash AR Living History March 23 - Franklin-Covey March 4 ndash AR Living History March 27 ndash Fred Pryor March 6 ndash ASCE March 28 ndash UA Industrial Engineering March 6 ndash Walton College of Business March 28 ndash Fred Pryor March 11 ndash Here Comes the Bride March 29 ndash Blue Cliff March 14 ndash Hospitality Summit March 30 ndash Irsquom with Miller March 15 ndash Fred Pryor March 31 ndash Dover March 15 ndash PepsiCo March 31 ndash West Fork Prom March 16 ndash Fred Pryor

Event Breakdown Non-profit events ndash 33 Social events ndash 14 FTC event ndash 5 UA events ndash 14 Corporate events ndash 33

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Sales Totals $186393 $454824 $451675

2011 Totals $85492 $126224 $245088 $522072 $737000 $635651 $570779 $965033 $518226 $722130 $479754 $1074122

Change

from 2011 1180 2603 843 -1000 -1000 -1000 -1000 -1000 -1000 -1000 -1000 -1000

Visitor Count 686 1043 1213

2011 Totals 295 238 691 1301 1454 1463 1441 1457 1313 1189 1103 1283

Change

from 2011 13254 33824 7554 -10000 -10000 -10000 -10000 -10000 -10000 -10000 -10000 -10000

2011 Goal = $30000year or $2500month 2011 Totals

$6681571 $1092892

13228 2942

Change = divide the difference between the two numbers by the 2010 numberthen move the decimal two spaces right

2011 monthly sales average= $556798 2012 monthly sales average= $364297

2011 monthly visitor average= 1102 2012 monthly visitor average 981

2011 sales per visitor = $505 2012 sales per visitor = $371

Fayetteville Visitor Center - 2012 Sales amp Visitor Count

SalesSales

Visitors Visitors

2012 Totals

Inquiries by StateCountryFrom 112004 To 3292012

Showing all records

InquiriesStateCountry

20709None Entered

15671Texas

12468Missouri

8729Illinois

8706Arkansas

5210Oklahoma

4919Tennessee

4837Louisiana

4818Michigan

4567Florida

4531Kansas

4511Wisconsin

4363Ohio

4124Indiana

3851California

3123Iowa

3109Minnesota

2772Mississippi

2454New York

2197Pennsylvania

1951Georgia

1877North Carolina

1788Alabama

1631Kentucky

1373Virginia

1363Nebraska

1334New Jersey

1101Arizona

1096South Carolina

1045Colorado

897Washington

879Maryland

736Massachusetts

Page 1 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

Inquiries By SourceFrom 312012 To 3312012

InquiriesSource $Inquiry

Showing all records

417Travel Guides Free $000

259Travel Informationcom $000

235 Website $000

93UA Graduate School $000

9Midwest Living $000

1013

Page 1 of 1 432012 0211 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

578Oregon

542West Virginia

496Connecticut

458Ontario

446South Dakota

414Nevada

400New Mexico

318North Dakota

302Utah

252Quebec

241New Hampshire

227Idaho

225Maine

197Montana

178Delaware

162Alaska

135Rhode Island

123Wyoming

120Hawaii

104Vermont

93Alberta

88British Columbia

81Puerto Rico

64Manitoba

51Nova Scotia

50Washington DC

48New Brunswick

32Saskatchewan

24New Foundland

20AE

19ca

18Irn

11CANADA

8AP

7Prince Edward Island

7CROATIA

5Guam

3OT

3TURKEY

3AUSTRALIA

Total 149293

Page 2 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

2Virgin Islands

2Netherlands

2Argentina

2ENGLAND

1Finland

1ENGLAND UK

1Turkey 06650

1UNITED KINGDOM

1Australia 2162

1TURKEY 06100

1Italy

1Northumberland

1Northwest Territories

1PR

1Mexico

1Russia

1Luxemborg

1Korea

1South Africa

1Thailand

1Japan

1France

1Sweden

1Indonesia

1Switzerland

1Taiwan

1Mlt

1Greece

1Germany

1The Netherlands

1Spain

Total 149328

Page 3 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

Definite Bookings By Booking Date

March 2012 Meeting Dates Attnd Peak Rooms $ Value

HootensKickoff Classic

150000830201208302012

155700050 50

15000 $15570001 MeetingsSub-Total for March 50

GRAND TOTAL 15000 50 $15570001 Meetings

Printed 432012 205PMPage 1 of 1

Fayetteville Town Center Managerrsquos Activity Report March 1 2012 to March 31 2012 Sales

MARCH 2011 (base)

MARCH 2012

Month Change

YTD 2011

YTD 2012

YTD Change

Sales ( returned contracts by log date ndash GL) 21 14 (33) 54 41 (24)

Complete Events (PaidSponsored) (EMS Calendar) 17 21 24 44 49 11

Sales ($ returned contracts by log date ndash GL) $2718900 $2227500 (18) $7881175 $8335300 6

Collections ($ - Payment Log) $3126910 $3196807 2 $8337553 $9561543 15

$ Executed Contracts $3595000 $3455000 (4) $10858500 10535000 (3) Credit ($ - GL) -0- -0- NA -0- -0- NA

Average per event ($ Sales Sales) $129471 $159107 23 $145948 $203300 39

Operations Items o Carpet Cleaned o Getting quote on roof re-surfacing o Working with Simplex-Grinnell on trouble alarm

Sales and Coordination Fayetteville Teen Leadership-Mock Crime ScenemdashWorking with Chamber on this Non-profit organizations - Lifesource AR Support Network and the Rain Garden Academy We worked with the Visitors Bureau on coordinating and hosting the Arkansas Historical Society State

Meeting which was a three day conference filled with historical artifacts lectures and workshops University events - Kappa Kappa Gamma Sigma Chi and Sound of Africa University Relations Walton

College Business and College Education and Health Professionals Most of these events are re-bookings We have also booked NABC Conference-a 3 day full facility event with the Plant Pathology Dept Here Comes the Bride a Town Center ticketed Event ndash We had 150-200 total attendance with over 30

vendors Ticket sales were over $100000 Hospitality Summit ndash Event promoting the Hospitality industry through continuing education and networking

opportunities We worked with the Visitors Bureau and UA Hospitality students who coordinated this event Dig In ndash a nonprofit group centered on organic food and the importance of local farmers feeding the less

fortunate

Event List March 2 ndash AR Living History March 16 ndashGalbavi March 2 ndash Dig In March 17 - Galbavi March 3 ndash AR Living History March 23 - Franklin-Covey March 4 ndash AR Living History March 27 ndash Fred Pryor March 6 ndash ASCE March 28 ndash UA Industrial Engineering March 6 ndash Walton College of Business March 28 ndash Fred Pryor March 11 ndash Here Comes the Bride March 29 ndash Blue Cliff March 14 ndash Hospitality Summit March 30 ndash Irsquom with Miller March 15 ndash Fred Pryor March 31 ndash Dover March 15 ndash PepsiCo March 31 ndash West Fork Prom March 16 ndash Fred Pryor

Event Breakdown Non-profit events ndash 33 Social events ndash 14 FTC event ndash 5 UA events ndash 14 Corporate events ndash 33

wwwtwncentercom

DashboardMar 1 2012 - Mar 31 2012

Comparing to Site

0

50

100

0

50

100

Mar 5 Mar 12 Mar 19 Mar 26

Visits

Site Usage

1174 Visits

3186 Pageviews

271 PagesVisit

4540 Bounce Rate

000125 Avg Time on Site

7572 New Visits

Traffic Sources Overview

Search Engines86900 (7402)

Referring Sites19900 (1695)

Direct Traffic10600 (903)

Content Overview

Pages Pageviews Pageviews

NaN 2600 8161

180 565

weddingshtml 70 220

locationshtml 60 188

socialshtml 55 173

1 Google Analytics

wwwtwncentercom

Traffic Sources OverviewMar 1 2012 - Mar 31 2012

Comparing to Site

0

50

100

0

50

100

Mar 5 Mar 12 Mar 19 Mar 26

Visits

All traffic sources sent a total of 1174 visits

903 Direct Traffic

1695 Referring Sites

7402 Search Engines

Search Engines86900 (7402)

Referring Sites19900 (1695)

Direct Traffic10600 (903)

Top Traffic Sources

Sources Visits visits

google (organic) 748 6371

(direct) ((none)) 106 903

bing (organic) 58 494

facebookcom (referral) 56 477

yahoo (organic) 44 375

Keywords Visits visits

fayetteville town center 278 3199

(not provided) 132 1519

town center fayetteville ar 38 437

dogwood room fayetteville town 24 276

fayetteville ar town center 23 265

2 Google Analytics

wwwtwncentercom

Content OverviewMar 1 2012 - Mar 31 2012

Comparing to Site

0

150

300

0

150

300

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

Pages on this site were viewed a total of 3186 times

3186 Pageviews

1449 Unique Views

4540 Bounce Rate

Top Content

Pages Pageviews Pageviews

NaN 2600 8161

180 565

weddingshtml 70 220

locationshtml 60 188

socialshtml 55 173

3 Google Analytics

wwwexperiencefayettevillecom

DashboardMar 1 2012 - Mar 31 2012

Comparing to Site

0

400

800

0

400

800

Mar 5 Mar 12 Mar 19 Mar 26

Visits

Site Usage

15155 Visits

49651 Pageviews

328 PagesVisit

4643 Bounce Rate

000230 Avg Time on Site

7912 New Visits

Traffic Sources Overview

Search Engines934000 (6163)

Referring Sites365000 (2408)

Direct Traffic216500 (1429)

Content Detail 2011VisitorsGuide

0

10

20

0

10

20

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

Pageviews

318

Content Overview

Pages Pageviews Pageviews

playphp 7337 1478

6639 1337

calendarphp 5680 1144

eatphp 1548 312

visitorsphp 1526 307

1 Google Analytics

wwwexperiencefayettevillecom

Traffic Sources OverviewMar 1 2012 - Mar 31 2012

Comparing to Site

0

400

800

0

400

800

Mar 5 Mar 12 Mar 19 Mar 26

Visits

All traffic sources sent a total of 15155 visits

1429 Direct Traffic

2408 Referring Sites

6163 Search Engines

Search Engines934000 (6163)

Referring Sites365000 (2408)

Direct Traffic216500 (1429)

Top Traffic Sources

Sources Visits visits

google (organic) 8162 5386

(direct) ((none)) 2165 1429

facebookcom (referral) 1396 921

yahoo (organic) 563 371

bing (organic) 421 278

Keywords Visits visits

(not provided) 1387 1485

fayetteville ar 779 834

things to do in fayetteville ar 649 695

fayetteville arkansas 390 418

fayetteville ar 121 130

2 Google Analytics

wwwexperiencefayettevillecom

Content Detail2011VisitorsGuide

Mar 1 2012 - Mar 31 2012Comparing to Site

0

10

20

0

10

20

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

This page was viewed 318 times318 Pageviews

291 Unique Views

000436 Time on Page

10000 Bounce Rate

5629 Exit

$000 $ Index

3 Google Analytics

wwwexperiencefayettevillecom

Content OverviewMar 1 2012 - Mar 31 2012

Comparing to Site

0

1000

2000

0

1000

2000

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

Pages on this site were viewed a total of 49651 times

49651 Pageviews

37418 Unique Views

4643 Bounce Rate

Top Content

Pages Pageviews Pageviews

playphp 7337 1478

6639 1337

calendarphp 5680 1144

eatphp 1548 312

visitorsphp 1526 307

4 Google Analytics

wwwexperiencefayettevillecom

DashboardMar 26 2012 - Apr 1 2012

Comparing to Site

0

300

600

0

300

600

Mar 26

Visits

Site Usage

3168 Visits

9594 Pageviews

303 PagesVisit

4959 Bounce Rate

000216 Avg Time on Site

7797 New Visits

Traffic Sources Overview

Search Engines190600 (6016)

Referring Sites79400 (2506)

Direct Traffic46800 (1477)

Content Detail 2011VisitorsGuide

0

5

10

0

5

10

Mar 26

Pageviews

Pageviews

51

Content Overview

Pages Pageviews Pageviews

1431 1492

playphp 1206 1257

calendarphp 1169 1218

eatphp 323 337

historicalAttractionsphp 276 288

1 Google Analytics

wwwexperiencefayettevillecom

Traffic Sources OverviewMar 26 2012 - Apr 1 2012

Comparing to Site

0

300

600

0

300

600

Mar 26

Visits

All traffic sources sent a total of 3168 visits

1477 Direct Traffic

2506 Referring Sites

6016 Search Engines

Search Engines190600 (6016)

Referring Sites79400 (2506)

Direct Traffic46800 (1477)

Top Traffic Sources

Sources Visits visits

google (organic) 1695 5350

(direct) ((none)) 468 1477

facebookcom (referral) 254 802

yahoo (organic) 92 290

accessfayettevilleorg (referral) 80 253

Keywords Visits visits

(not provided) 288 1511

fayetteville ar 147 771

things to do in fayetteville ar 106 556

fayetteville arkansas 74 388

fayetteville ar 26 136

2 Google Analytics

wwwexperiencefayettevillecom

Content Detail2011VisitorsGuide

Mar 26 2012 - Apr 1 2012Comparing to Site

0

5

10

0

5

10

Mar 26

Pageviews

This page was viewed 51 times51 Pageviews

47 Unique Views

000326 Time on Page

10000 Bounce Rate

5882 Exit

$000 $ Index

3 Google Analytics

wwwexperiencefayettevillecom

Content OverviewMar 26 2012 - Apr 1 2012

Comparing to Site

0

1000

2000

0

1000

2000

Mar 26

Pageviews

Pages on this site were viewed a total of 9594 times

9594 Pageviews

7292 Unique Views

4959 Bounce Rate

Top Content

Pages Pageviews Pageviews

1431 1492

playphp 1206 1257

calendarphp 1169 1218

eatphp 323 337

historicalAttractionsphp 276 288

4 Google Analytics

RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Inquiries by StateCountryFrom 112004 To 3292012

Showing all records

InquiriesStateCountry

20709None Entered

15671Texas

12468Missouri

8729Illinois

8706Arkansas

5210Oklahoma

4919Tennessee

4837Louisiana

4818Michigan

4567Florida

4531Kansas

4511Wisconsin

4363Ohio

4124Indiana

3851California

3123Iowa

3109Minnesota

2772Mississippi

2454New York

2197Pennsylvania

1951Georgia

1877North Carolina

1788Alabama

1631Kentucky

1373Virginia

1363Nebraska

1334New Jersey

1101Arizona

1096South Carolina

1045Colorado

897Washington

879Maryland

736Massachusetts

Page 1 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

Inquiries By SourceFrom 312012 To 3312012

InquiriesSource $Inquiry

Showing all records

417Travel Guides Free $000

259Travel Informationcom $000

235 Website $000

93UA Graduate School $000

9Midwest Living $000

1013

Page 1 of 1 432012 0211 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

578Oregon

542West Virginia

496Connecticut

458Ontario

446South Dakota

414Nevada

400New Mexico

318North Dakota

302Utah

252Quebec

241New Hampshire

227Idaho

225Maine

197Montana

178Delaware

162Alaska

135Rhode Island

123Wyoming

120Hawaii

104Vermont

93Alberta

88British Columbia

81Puerto Rico

64Manitoba

51Nova Scotia

50Washington DC

48New Brunswick

32Saskatchewan

24New Foundland

20AE

19ca

18Irn

11CANADA

8AP

7Prince Edward Island

7CROATIA

5Guam

3OT

3TURKEY

3AUSTRALIA

Total 149293

Page 2 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

2Virgin Islands

2Netherlands

2Argentina

2ENGLAND

1Finland

1ENGLAND UK

1Turkey 06650

1UNITED KINGDOM

1Australia 2162

1TURKEY 06100

1Italy

1Northumberland

1Northwest Territories

1PR

1Mexico

1Russia

1Luxemborg

1Korea

1South Africa

1Thailand

1Japan

1France

1Sweden

1Indonesia

1Switzerland

1Taiwan

1Mlt

1Greece

1Germany

1The Netherlands

1Spain

Total 149328

Page 3 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

Definite Bookings By Booking Date

March 2012 Meeting Dates Attnd Peak Rooms $ Value

HootensKickoff Classic

150000830201208302012

155700050 50

15000 $15570001 MeetingsSub-Total for March 50

GRAND TOTAL 15000 50 $15570001 Meetings

Printed 432012 205PMPage 1 of 1

Fayetteville Town Center Managerrsquos Activity Report March 1 2012 to March 31 2012 Sales

MARCH 2011 (base)

MARCH 2012

Month Change

YTD 2011

YTD 2012

YTD Change

Sales ( returned contracts by log date ndash GL) 21 14 (33) 54 41 (24)

Complete Events (PaidSponsored) (EMS Calendar) 17 21 24 44 49 11

Sales ($ returned contracts by log date ndash GL) $2718900 $2227500 (18) $7881175 $8335300 6

Collections ($ - Payment Log) $3126910 $3196807 2 $8337553 $9561543 15

$ Executed Contracts $3595000 $3455000 (4) $10858500 10535000 (3) Credit ($ - GL) -0- -0- NA -0- -0- NA

Average per event ($ Sales Sales) $129471 $159107 23 $145948 $203300 39

Operations Items o Carpet Cleaned o Getting quote on roof re-surfacing o Working with Simplex-Grinnell on trouble alarm

Sales and Coordination Fayetteville Teen Leadership-Mock Crime ScenemdashWorking with Chamber on this Non-profit organizations - Lifesource AR Support Network and the Rain Garden Academy We worked with the Visitors Bureau on coordinating and hosting the Arkansas Historical Society State

Meeting which was a three day conference filled with historical artifacts lectures and workshops University events - Kappa Kappa Gamma Sigma Chi and Sound of Africa University Relations Walton

College Business and College Education and Health Professionals Most of these events are re-bookings We have also booked NABC Conference-a 3 day full facility event with the Plant Pathology Dept Here Comes the Bride a Town Center ticketed Event ndash We had 150-200 total attendance with over 30

vendors Ticket sales were over $100000 Hospitality Summit ndash Event promoting the Hospitality industry through continuing education and networking

opportunities We worked with the Visitors Bureau and UA Hospitality students who coordinated this event Dig In ndash a nonprofit group centered on organic food and the importance of local farmers feeding the less

fortunate

Event List March 2 ndash AR Living History March 16 ndashGalbavi March 2 ndash Dig In March 17 - Galbavi March 3 ndash AR Living History March 23 - Franklin-Covey March 4 ndash AR Living History March 27 ndash Fred Pryor March 6 ndash ASCE March 28 ndash UA Industrial Engineering March 6 ndash Walton College of Business March 28 ndash Fred Pryor March 11 ndash Here Comes the Bride March 29 ndash Blue Cliff March 14 ndash Hospitality Summit March 30 ndash Irsquom with Miller March 15 ndash Fred Pryor March 31 ndash Dover March 15 ndash PepsiCo March 31 ndash West Fork Prom March 16 ndash Fred Pryor

Event Breakdown Non-profit events ndash 33 Social events ndash 14 FTC event ndash 5 UA events ndash 14 Corporate events ndash 33

wwwtwncentercom

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903 Direct Traffic

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Direct Traffic10600 (903)

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Direct Traffic216500 (1429)

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Inquiries By SourceFrom 312012 To 3312012

InquiriesSource $Inquiry

Showing all records

417Travel Guides Free $000

259Travel Informationcom $000

235 Website $000

93UA Graduate School $000

9Midwest Living $000

1013

Page 1 of 1 432012 0211 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

578Oregon

542West Virginia

496Connecticut

458Ontario

446South Dakota

414Nevada

400New Mexico

318North Dakota

302Utah

252Quebec

241New Hampshire

227Idaho

225Maine

197Montana

178Delaware

162Alaska

135Rhode Island

123Wyoming

120Hawaii

104Vermont

93Alberta

88British Columbia

81Puerto Rico

64Manitoba

51Nova Scotia

50Washington DC

48New Brunswick

32Saskatchewan

24New Foundland

20AE

19ca

18Irn

11CANADA

8AP

7Prince Edward Island

7CROATIA

5Guam

3OT

3TURKEY

3AUSTRALIA

Total 149293

Page 2 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

2Virgin Islands

2Netherlands

2Argentina

2ENGLAND

1Finland

1ENGLAND UK

1Turkey 06650

1UNITED KINGDOM

1Australia 2162

1TURKEY 06100

1Italy

1Northumberland

1Northwest Territories

1PR

1Mexico

1Russia

1Luxemborg

1Korea

1South Africa

1Thailand

1Japan

1France

1Sweden

1Indonesia

1Switzerland

1Taiwan

1Mlt

1Greece

1Germany

1The Netherlands

1Spain

Total 149328

Page 3 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

Definite Bookings By Booking Date

March 2012 Meeting Dates Attnd Peak Rooms $ Value

HootensKickoff Classic

150000830201208302012

155700050 50

15000 $15570001 MeetingsSub-Total for March 50

GRAND TOTAL 15000 50 $15570001 Meetings

Printed 432012 205PMPage 1 of 1

Fayetteville Town Center Managerrsquos Activity Report March 1 2012 to March 31 2012 Sales

MARCH 2011 (base)

MARCH 2012

Month Change

YTD 2011

YTD 2012

YTD Change

Sales ( returned contracts by log date ndash GL) 21 14 (33) 54 41 (24)

Complete Events (PaidSponsored) (EMS Calendar) 17 21 24 44 49 11

Sales ($ returned contracts by log date ndash GL) $2718900 $2227500 (18) $7881175 $8335300 6

Collections ($ - Payment Log) $3126910 $3196807 2 $8337553 $9561543 15

$ Executed Contracts $3595000 $3455000 (4) $10858500 10535000 (3) Credit ($ - GL) -0- -0- NA -0- -0- NA

Average per event ($ Sales Sales) $129471 $159107 23 $145948 $203300 39

Operations Items o Carpet Cleaned o Getting quote on roof re-surfacing o Working with Simplex-Grinnell on trouble alarm

Sales and Coordination Fayetteville Teen Leadership-Mock Crime ScenemdashWorking with Chamber on this Non-profit organizations - Lifesource AR Support Network and the Rain Garden Academy We worked with the Visitors Bureau on coordinating and hosting the Arkansas Historical Society State

Meeting which was a three day conference filled with historical artifacts lectures and workshops University events - Kappa Kappa Gamma Sigma Chi and Sound of Africa University Relations Walton

College Business and College Education and Health Professionals Most of these events are re-bookings We have also booked NABC Conference-a 3 day full facility event with the Plant Pathology Dept Here Comes the Bride a Town Center ticketed Event ndash We had 150-200 total attendance with over 30

vendors Ticket sales were over $100000 Hospitality Summit ndash Event promoting the Hospitality industry through continuing education and networking

opportunities We worked with the Visitors Bureau and UA Hospitality students who coordinated this event Dig In ndash a nonprofit group centered on organic food and the importance of local farmers feeding the less

fortunate

Event List March 2 ndash AR Living History March 16 ndashGalbavi March 2 ndash Dig In March 17 - Galbavi March 3 ndash AR Living History March 23 - Franklin-Covey March 4 ndash AR Living History March 27 ndash Fred Pryor March 6 ndash ASCE March 28 ndash UA Industrial Engineering March 6 ndash Walton College of Business March 28 ndash Fred Pryor March 11 ndash Here Comes the Bride March 29 ndash Blue Cliff March 14 ndash Hospitality Summit March 30 ndash Irsquom with Miller March 15 ndash Fred Pryor March 31 ndash Dover March 15 ndash PepsiCo March 31 ndash West Fork Prom March 16 ndash Fred Pryor

Event Breakdown Non-profit events ndash 33 Social events ndash 14 FTC event ndash 5 UA events ndash 14 Corporate events ndash 33

wwwtwncentercom

DashboardMar 1 2012 - Mar 31 2012

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50

100

0

50

100

Mar 5 Mar 12 Mar 19 Mar 26

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Site Usage

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7572 New Visits

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Content Overview

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NaN 2600 8161

180 565

weddingshtml 70 220

locationshtml 60 188

socialshtml 55 173

1 Google Analytics

wwwtwncentercom

Traffic Sources OverviewMar 1 2012 - Mar 31 2012

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50

100

0

50

100

Mar 5 Mar 12 Mar 19 Mar 26

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903 Direct Traffic

1695 Referring Sites

7402 Search Engines

Search Engines86900 (7402)

Referring Sites19900 (1695)

Direct Traffic10600 (903)

Top Traffic Sources

Sources Visits visits

google (organic) 748 6371

(direct) ((none)) 106 903

bing (organic) 58 494

facebookcom (referral) 56 477

yahoo (organic) 44 375

Keywords Visits visits

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(not provided) 132 1519

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2 Google Analytics

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150

300

Mar 5 Mar 12 Mar 19 Mar 26

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3186 Pageviews

1449 Unique Views

4540 Bounce Rate

Top Content

Pages Pageviews Pageviews

NaN 2600 8161

180 565

weddingshtml 70 220

locationshtml 60 188

socialshtml 55 173

3 Google Analytics

wwwexperiencefayettevillecom

DashboardMar 1 2012 - Mar 31 2012

Comparing to Site

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400

800

0

400

800

Mar 5 Mar 12 Mar 19 Mar 26

Visits

Site Usage

15155 Visits

49651 Pageviews

328 PagesVisit

4643 Bounce Rate

000230 Avg Time on Site

7912 New Visits

Traffic Sources Overview

Search Engines934000 (6163)

Referring Sites365000 (2408)

Direct Traffic216500 (1429)

Content Detail 2011VisitorsGuide

0

10

20

0

10

20

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

Pageviews

318

Content Overview

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6639 1337

calendarphp 5680 1144

eatphp 1548 312

visitorsphp 1526 307

1 Google Analytics

wwwexperiencefayettevillecom

Traffic Sources OverviewMar 1 2012 - Mar 31 2012

Comparing to Site

0

400

800

0

400

800

Mar 5 Mar 12 Mar 19 Mar 26

Visits

All traffic sources sent a total of 15155 visits

1429 Direct Traffic

2408 Referring Sites

6163 Search Engines

Search Engines934000 (6163)

Referring Sites365000 (2408)

Direct Traffic216500 (1429)

Top Traffic Sources

Sources Visits visits

google (organic) 8162 5386

(direct) ((none)) 2165 1429

facebookcom (referral) 1396 921

yahoo (organic) 563 371

bing (organic) 421 278

Keywords Visits visits

(not provided) 1387 1485

fayetteville ar 779 834

things to do in fayetteville ar 649 695

fayetteville arkansas 390 418

fayetteville ar 121 130

2 Google Analytics

wwwexperiencefayettevillecom

Content Detail2011VisitorsGuide

Mar 1 2012 - Mar 31 2012Comparing to Site

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10

20

0

10

20

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

This page was viewed 318 times318 Pageviews

291 Unique Views

000436 Time on Page

10000 Bounce Rate

5629 Exit

$000 $ Index

3 Google Analytics

wwwexperiencefayettevillecom

Content OverviewMar 1 2012 - Mar 31 2012

Comparing to Site

0

1000

2000

0

1000

2000

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

Pages on this site were viewed a total of 49651 times

49651 Pageviews

37418 Unique Views

4643 Bounce Rate

Top Content

Pages Pageviews Pageviews

playphp 7337 1478

6639 1337

calendarphp 5680 1144

eatphp 1548 312

visitorsphp 1526 307

4 Google Analytics

wwwexperiencefayettevillecom

DashboardMar 26 2012 - Apr 1 2012

Comparing to Site

0

300

600

0

300

600

Mar 26

Visits

Site Usage

3168 Visits

9594 Pageviews

303 PagesVisit

4959 Bounce Rate

000216 Avg Time on Site

7797 New Visits

Traffic Sources Overview

Search Engines190600 (6016)

Referring Sites79400 (2506)

Direct Traffic46800 (1477)

Content Detail 2011VisitorsGuide

0

5

10

0

5

10

Mar 26

Pageviews

Pageviews

51

Content Overview

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1431 1492

playphp 1206 1257

calendarphp 1169 1218

eatphp 323 337

historicalAttractionsphp 276 288

1 Google Analytics

wwwexperiencefayettevillecom

Traffic Sources OverviewMar 26 2012 - Apr 1 2012

Comparing to Site

0

300

600

0

300

600

Mar 26

Visits

All traffic sources sent a total of 3168 visits

1477 Direct Traffic

2506 Referring Sites

6016 Search Engines

Search Engines190600 (6016)

Referring Sites79400 (2506)

Direct Traffic46800 (1477)

Top Traffic Sources

Sources Visits visits

google (organic) 1695 5350

(direct) ((none)) 468 1477

facebookcom (referral) 254 802

yahoo (organic) 92 290

accessfayettevilleorg (referral) 80 253

Keywords Visits visits

(not provided) 288 1511

fayetteville ar 147 771

things to do in fayetteville ar 106 556

fayetteville arkansas 74 388

fayetteville ar 26 136

2 Google Analytics

wwwexperiencefayettevillecom

Content Detail2011VisitorsGuide

Mar 26 2012 - Apr 1 2012Comparing to Site

0

5

10

0

5

10

Mar 26

Pageviews

This page was viewed 51 times51 Pageviews

47 Unique Views

000326 Time on Page

10000 Bounce Rate

5882 Exit

$000 $ Index

3 Google Analytics

wwwexperiencefayettevillecom

Content OverviewMar 26 2012 - Apr 1 2012

Comparing to Site

0

1000

2000

0

1000

2000

Mar 26

Pageviews

Pages on this site were viewed a total of 9594 times

9594 Pageviews

7292 Unique Views

4959 Bounce Rate

Top Content

Pages Pageviews Pageviews

1431 1492

playphp 1206 1257

calendarphp 1169 1218

eatphp 323 337

historicalAttractionsphp 276 288

4 Google Analytics

RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

578Oregon

542West Virginia

496Connecticut

458Ontario

446South Dakota

414Nevada

400New Mexico

318North Dakota

302Utah

252Quebec

241New Hampshire

227Idaho

225Maine

197Montana

178Delaware

162Alaska

135Rhode Island

123Wyoming

120Hawaii

104Vermont

93Alberta

88British Columbia

81Puerto Rico

64Manitoba

51Nova Scotia

50Washington DC

48New Brunswick

32Saskatchewan

24New Foundland

20AE

19ca

18Irn

11CANADA

8AP

7Prince Edward Island

7CROATIA

5Guam

3OT

3TURKEY

3AUSTRALIA

Total 149293

Page 2 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

2Virgin Islands

2Netherlands

2Argentina

2ENGLAND

1Finland

1ENGLAND UK

1Turkey 06650

1UNITED KINGDOM

1Australia 2162

1TURKEY 06100

1Italy

1Northumberland

1Northwest Territories

1PR

1Mexico

1Russia

1Luxemborg

1Korea

1South Africa

1Thailand

1Japan

1France

1Sweden

1Indonesia

1Switzerland

1Taiwan

1Mlt

1Greece

1Germany

1The Netherlands

1Spain

Total 149328

Page 3 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

Definite Bookings By Booking Date

March 2012 Meeting Dates Attnd Peak Rooms $ Value

HootensKickoff Classic

150000830201208302012

155700050 50

15000 $15570001 MeetingsSub-Total for March 50

GRAND TOTAL 15000 50 $15570001 Meetings

Printed 432012 205PMPage 1 of 1

Fayetteville Town Center Managerrsquos Activity Report March 1 2012 to March 31 2012 Sales

MARCH 2011 (base)

MARCH 2012

Month Change

YTD 2011

YTD 2012

YTD Change

Sales ( returned contracts by log date ndash GL) 21 14 (33) 54 41 (24)

Complete Events (PaidSponsored) (EMS Calendar) 17 21 24 44 49 11

Sales ($ returned contracts by log date ndash GL) $2718900 $2227500 (18) $7881175 $8335300 6

Collections ($ - Payment Log) $3126910 $3196807 2 $8337553 $9561543 15

$ Executed Contracts $3595000 $3455000 (4) $10858500 10535000 (3) Credit ($ - GL) -0- -0- NA -0- -0- NA

Average per event ($ Sales Sales) $129471 $159107 23 $145948 $203300 39

Operations Items o Carpet Cleaned o Getting quote on roof re-surfacing o Working with Simplex-Grinnell on trouble alarm

Sales and Coordination Fayetteville Teen Leadership-Mock Crime ScenemdashWorking with Chamber on this Non-profit organizations - Lifesource AR Support Network and the Rain Garden Academy We worked with the Visitors Bureau on coordinating and hosting the Arkansas Historical Society State

Meeting which was a three day conference filled with historical artifacts lectures and workshops University events - Kappa Kappa Gamma Sigma Chi and Sound of Africa University Relations Walton

College Business and College Education and Health Professionals Most of these events are re-bookings We have also booked NABC Conference-a 3 day full facility event with the Plant Pathology Dept Here Comes the Bride a Town Center ticketed Event ndash We had 150-200 total attendance with over 30

vendors Ticket sales were over $100000 Hospitality Summit ndash Event promoting the Hospitality industry through continuing education and networking

opportunities We worked with the Visitors Bureau and UA Hospitality students who coordinated this event Dig In ndash a nonprofit group centered on organic food and the importance of local farmers feeding the less

fortunate

Event List March 2 ndash AR Living History March 16 ndashGalbavi March 2 ndash Dig In March 17 - Galbavi March 3 ndash AR Living History March 23 - Franklin-Covey March 4 ndash AR Living History March 27 ndash Fred Pryor March 6 ndash ASCE March 28 ndash UA Industrial Engineering March 6 ndash Walton College of Business March 28 ndash Fred Pryor March 11 ndash Here Comes the Bride March 29 ndash Blue Cliff March 14 ndash Hospitality Summit March 30 ndash Irsquom with Miller March 15 ndash Fred Pryor March 31 ndash Dover March 15 ndash PepsiCo March 31 ndash West Fork Prom March 16 ndash Fred Pryor

Event Breakdown Non-profit events ndash 33 Social events ndash 14 FTC event ndash 5 UA events ndash 14 Corporate events ndash 33

wwwtwncentercom

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

2Virgin Islands

2Netherlands

2Argentina

2ENGLAND

1Finland

1ENGLAND UK

1Turkey 06650

1UNITED KINGDOM

1Australia 2162

1TURKEY 06100

1Italy

1Northumberland

1Northwest Territories

1PR

1Mexico

1Russia

1Luxemborg

1Korea

1South Africa

1Thailand

1Japan

1France

1Sweden

1Indonesia

1Switzerland

1Taiwan

1Mlt

1Greece

1Germany

1The Netherlands

1Spain

Total 149328

Page 3 of 3 432012 0333 PM

Fayetteville Convention amp Visitors Bureau

21 S Block ~ Fayetteville AR 72701Phone (800) 766-4626 (479) 521-5776 ~ Fax (479) 571-4731 ~ infoexperiencefayettevillecom ~ Web

wwwexperiencefayettevillecom

Definite Bookings By Booking Date

March 2012 Meeting Dates Attnd Peak Rooms $ Value

HootensKickoff Classic

150000830201208302012

155700050 50

15000 $15570001 MeetingsSub-Total for March 50

GRAND TOTAL 15000 50 $15570001 Meetings

Printed 432012 205PMPage 1 of 1

Fayetteville Town Center Managerrsquos Activity Report March 1 2012 to March 31 2012 Sales

MARCH 2011 (base)

MARCH 2012

Month Change

YTD 2011

YTD 2012

YTD Change

Sales ( returned contracts by log date ndash GL) 21 14 (33) 54 41 (24)

Complete Events (PaidSponsored) (EMS Calendar) 17 21 24 44 49 11

Sales ($ returned contracts by log date ndash GL) $2718900 $2227500 (18) $7881175 $8335300 6

Collections ($ - Payment Log) $3126910 $3196807 2 $8337553 $9561543 15

$ Executed Contracts $3595000 $3455000 (4) $10858500 10535000 (3) Credit ($ - GL) -0- -0- NA -0- -0- NA

Average per event ($ Sales Sales) $129471 $159107 23 $145948 $203300 39

Operations Items o Carpet Cleaned o Getting quote on roof re-surfacing o Working with Simplex-Grinnell on trouble alarm

Sales and Coordination Fayetteville Teen Leadership-Mock Crime ScenemdashWorking with Chamber on this Non-profit organizations - Lifesource AR Support Network and the Rain Garden Academy We worked with the Visitors Bureau on coordinating and hosting the Arkansas Historical Society State

Meeting which was a three day conference filled with historical artifacts lectures and workshops University events - Kappa Kappa Gamma Sigma Chi and Sound of Africa University Relations Walton

College Business and College Education and Health Professionals Most of these events are re-bookings We have also booked NABC Conference-a 3 day full facility event with the Plant Pathology Dept Here Comes the Bride a Town Center ticketed Event ndash We had 150-200 total attendance with over 30

vendors Ticket sales were over $100000 Hospitality Summit ndash Event promoting the Hospitality industry through continuing education and networking

opportunities We worked with the Visitors Bureau and UA Hospitality students who coordinated this event Dig In ndash a nonprofit group centered on organic food and the importance of local farmers feeding the less

fortunate

Event List March 2 ndash AR Living History March 16 ndashGalbavi March 2 ndash Dig In March 17 - Galbavi March 3 ndash AR Living History March 23 - Franklin-Covey March 4 ndash AR Living History March 27 ndash Fred Pryor March 6 ndash ASCE March 28 ndash UA Industrial Engineering March 6 ndash Walton College of Business March 28 ndash Fred Pryor March 11 ndash Here Comes the Bride March 29 ndash Blue Cliff March 14 ndash Hospitality Summit March 30 ndash Irsquom with Miller March 15 ndash Fred Pryor March 31 ndash Dover March 15 ndash PepsiCo March 31 ndash West Fork Prom March 16 ndash Fred Pryor

Event Breakdown Non-profit events ndash 33 Social events ndash 14 FTC event ndash 5 UA events ndash 14 Corporate events ndash 33

wwwtwncentercom

DashboardMar 1 2012 - Mar 31 2012

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50

100

0

50

100

Mar 5 Mar 12 Mar 19 Mar 26

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Site Usage

1174 Visits

3186 Pageviews

271 PagesVisit

4540 Bounce Rate

000125 Avg Time on Site

7572 New Visits

Traffic Sources Overview

Search Engines86900 (7402)

Referring Sites19900 (1695)

Direct Traffic10600 (903)

Content Overview

Pages Pageviews Pageviews

NaN 2600 8161

180 565

weddingshtml 70 220

locationshtml 60 188

socialshtml 55 173

1 Google Analytics

wwwtwncentercom

Traffic Sources OverviewMar 1 2012 - Mar 31 2012

Comparing to Site

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50

100

0

50

100

Mar 5 Mar 12 Mar 19 Mar 26

Visits

All traffic sources sent a total of 1174 visits

903 Direct Traffic

1695 Referring Sites

7402 Search Engines

Search Engines86900 (7402)

Referring Sites19900 (1695)

Direct Traffic10600 (903)

Top Traffic Sources

Sources Visits visits

google (organic) 748 6371

(direct) ((none)) 106 903

bing (organic) 58 494

facebookcom (referral) 56 477

yahoo (organic) 44 375

Keywords Visits visits

fayetteville town center 278 3199

(not provided) 132 1519

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2 Google Analytics

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0

150

300

Mar 5 Mar 12 Mar 19 Mar 26

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3186 Pageviews

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4540 Bounce Rate

Top Content

Pages Pageviews Pageviews

NaN 2600 8161

180 565

weddingshtml 70 220

locationshtml 60 188

socialshtml 55 173

3 Google Analytics

wwwexperiencefayettevillecom

DashboardMar 1 2012 - Mar 31 2012

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400

800

0

400

800

Mar 5 Mar 12 Mar 19 Mar 26

Visits

Site Usage

15155 Visits

49651 Pageviews

328 PagesVisit

4643 Bounce Rate

000230 Avg Time on Site

7912 New Visits

Traffic Sources Overview

Search Engines934000 (6163)

Referring Sites365000 (2408)

Direct Traffic216500 (1429)

Content Detail 2011VisitorsGuide

0

10

20

0

10

20

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

Pageviews

318

Content Overview

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calendarphp 5680 1144

eatphp 1548 312

visitorsphp 1526 307

1 Google Analytics

wwwexperiencefayettevillecom

Traffic Sources OverviewMar 1 2012 - Mar 31 2012

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400

800

0

400

800

Mar 5 Mar 12 Mar 19 Mar 26

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All traffic sources sent a total of 15155 visits

1429 Direct Traffic

2408 Referring Sites

6163 Search Engines

Search Engines934000 (6163)

Referring Sites365000 (2408)

Direct Traffic216500 (1429)

Top Traffic Sources

Sources Visits visits

google (organic) 8162 5386

(direct) ((none)) 2165 1429

facebookcom (referral) 1396 921

yahoo (organic) 563 371

bing (organic) 421 278

Keywords Visits visits

(not provided) 1387 1485

fayetteville ar 779 834

things to do in fayetteville ar 649 695

fayetteville arkansas 390 418

fayetteville ar 121 130

2 Google Analytics

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Content Detail2011VisitorsGuide

Mar 1 2012 - Mar 31 2012Comparing to Site

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10

20

0

10

20

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

This page was viewed 318 times318 Pageviews

291 Unique Views

000436 Time on Page

10000 Bounce Rate

5629 Exit

$000 $ Index

3 Google Analytics

wwwexperiencefayettevillecom

Content OverviewMar 1 2012 - Mar 31 2012

Comparing to Site

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1000

2000

0

1000

2000

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

Pages on this site were viewed a total of 49651 times

49651 Pageviews

37418 Unique Views

4643 Bounce Rate

Top Content

Pages Pageviews Pageviews

playphp 7337 1478

6639 1337

calendarphp 5680 1144

eatphp 1548 312

visitorsphp 1526 307

4 Google Analytics

wwwexperiencefayettevillecom

DashboardMar 26 2012 - Apr 1 2012

Comparing to Site

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300

600

0

300

600

Mar 26

Visits

Site Usage

3168 Visits

9594 Pageviews

303 PagesVisit

4959 Bounce Rate

000216 Avg Time on Site

7797 New Visits

Traffic Sources Overview

Search Engines190600 (6016)

Referring Sites79400 (2506)

Direct Traffic46800 (1477)

Content Detail 2011VisitorsGuide

0

5

10

0

5

10

Mar 26

Pageviews

Pageviews

51

Content Overview

Pages Pageviews Pageviews

1431 1492

playphp 1206 1257

calendarphp 1169 1218

eatphp 323 337

historicalAttractionsphp 276 288

1 Google Analytics

wwwexperiencefayettevillecom

Traffic Sources OverviewMar 26 2012 - Apr 1 2012

Comparing to Site

0

300

600

0

300

600

Mar 26

Visits

All traffic sources sent a total of 3168 visits

1477 Direct Traffic

2506 Referring Sites

6016 Search Engines

Search Engines190600 (6016)

Referring Sites79400 (2506)

Direct Traffic46800 (1477)

Top Traffic Sources

Sources Visits visits

google (organic) 1695 5350

(direct) ((none)) 468 1477

facebookcom (referral) 254 802

yahoo (organic) 92 290

accessfayettevilleorg (referral) 80 253

Keywords Visits visits

(not provided) 288 1511

fayetteville ar 147 771

things to do in fayetteville ar 106 556

fayetteville arkansas 74 388

fayetteville ar 26 136

2 Google Analytics

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Content Detail2011VisitorsGuide

Mar 26 2012 - Apr 1 2012Comparing to Site

0

5

10

0

5

10

Mar 26

Pageviews

This page was viewed 51 times51 Pageviews

47 Unique Views

000326 Time on Page

10000 Bounce Rate

5882 Exit

$000 $ Index

3 Google Analytics

wwwexperiencefayettevillecom

Content OverviewMar 26 2012 - Apr 1 2012

Comparing to Site

0

1000

2000

0

1000

2000

Mar 26

Pageviews

Pages on this site were viewed a total of 9594 times

9594 Pageviews

7292 Unique Views

4959 Bounce Rate

Top Content

Pages Pageviews Pageviews

1431 1492

playphp 1206 1257

calendarphp 1169 1218

eatphp 323 337

historicalAttractionsphp 276 288

4 Google Analytics

RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Definite Bookings By Booking Date

March 2012 Meeting Dates Attnd Peak Rooms $ Value

HootensKickoff Classic

150000830201208302012

155700050 50

15000 $15570001 MeetingsSub-Total for March 50

GRAND TOTAL 15000 50 $15570001 Meetings

Printed 432012 205PMPage 1 of 1

Fayetteville Town Center Managerrsquos Activity Report March 1 2012 to March 31 2012 Sales

MARCH 2011 (base)

MARCH 2012

Month Change

YTD 2011

YTD 2012

YTD Change

Sales ( returned contracts by log date ndash GL) 21 14 (33) 54 41 (24)

Complete Events (PaidSponsored) (EMS Calendar) 17 21 24 44 49 11

Sales ($ returned contracts by log date ndash GL) $2718900 $2227500 (18) $7881175 $8335300 6

Collections ($ - Payment Log) $3126910 $3196807 2 $8337553 $9561543 15

$ Executed Contracts $3595000 $3455000 (4) $10858500 10535000 (3) Credit ($ - GL) -0- -0- NA -0- -0- NA

Average per event ($ Sales Sales) $129471 $159107 23 $145948 $203300 39

Operations Items o Carpet Cleaned o Getting quote on roof re-surfacing o Working with Simplex-Grinnell on trouble alarm

Sales and Coordination Fayetteville Teen Leadership-Mock Crime ScenemdashWorking with Chamber on this Non-profit organizations - Lifesource AR Support Network and the Rain Garden Academy We worked with the Visitors Bureau on coordinating and hosting the Arkansas Historical Society State

Meeting which was a three day conference filled with historical artifacts lectures and workshops University events - Kappa Kappa Gamma Sigma Chi and Sound of Africa University Relations Walton

College Business and College Education and Health Professionals Most of these events are re-bookings We have also booked NABC Conference-a 3 day full facility event with the Plant Pathology Dept Here Comes the Bride a Town Center ticketed Event ndash We had 150-200 total attendance with over 30

vendors Ticket sales were over $100000 Hospitality Summit ndash Event promoting the Hospitality industry through continuing education and networking

opportunities We worked with the Visitors Bureau and UA Hospitality students who coordinated this event Dig In ndash a nonprofit group centered on organic food and the importance of local farmers feeding the less

fortunate

Event List March 2 ndash AR Living History March 16 ndashGalbavi March 2 ndash Dig In March 17 - Galbavi March 3 ndash AR Living History March 23 - Franklin-Covey March 4 ndash AR Living History March 27 ndash Fred Pryor March 6 ndash ASCE March 28 ndash UA Industrial Engineering March 6 ndash Walton College of Business March 28 ndash Fred Pryor March 11 ndash Here Comes the Bride March 29 ndash Blue Cliff March 14 ndash Hospitality Summit March 30 ndash Irsquom with Miller March 15 ndash Fred Pryor March 31 ndash Dover March 15 ndash PepsiCo March 31 ndash West Fork Prom March 16 ndash Fred Pryor

Event Breakdown Non-profit events ndash 33 Social events ndash 14 FTC event ndash 5 UA events ndash 14 Corporate events ndash 33

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Fayetteville Town Center Managerrsquos Activity Report March 1 2012 to March 31 2012 Sales

MARCH 2011 (base)

MARCH 2012

Month Change

YTD 2011

YTD 2012

YTD Change

Sales ( returned contracts by log date ndash GL) 21 14 (33) 54 41 (24)

Complete Events (PaidSponsored) (EMS Calendar) 17 21 24 44 49 11

Sales ($ returned contracts by log date ndash GL) $2718900 $2227500 (18) $7881175 $8335300 6

Collections ($ - Payment Log) $3126910 $3196807 2 $8337553 $9561543 15

$ Executed Contracts $3595000 $3455000 (4) $10858500 10535000 (3) Credit ($ - GL) -0- -0- NA -0- -0- NA

Average per event ($ Sales Sales) $129471 $159107 23 $145948 $203300 39

Operations Items o Carpet Cleaned o Getting quote on roof re-surfacing o Working with Simplex-Grinnell on trouble alarm

Sales and Coordination Fayetteville Teen Leadership-Mock Crime ScenemdashWorking with Chamber on this Non-profit organizations - Lifesource AR Support Network and the Rain Garden Academy We worked with the Visitors Bureau on coordinating and hosting the Arkansas Historical Society State

Meeting which was a three day conference filled with historical artifacts lectures and workshops University events - Kappa Kappa Gamma Sigma Chi and Sound of Africa University Relations Walton

College Business and College Education and Health Professionals Most of these events are re-bookings We have also booked NABC Conference-a 3 day full facility event with the Plant Pathology Dept Here Comes the Bride a Town Center ticketed Event ndash We had 150-200 total attendance with over 30

vendors Ticket sales were over $100000 Hospitality Summit ndash Event promoting the Hospitality industry through continuing education and networking

opportunities We worked with the Visitors Bureau and UA Hospitality students who coordinated this event Dig In ndash a nonprofit group centered on organic food and the importance of local farmers feeding the less

fortunate

Event List March 2 ndash AR Living History March 16 ndashGalbavi March 2 ndash Dig In March 17 - Galbavi March 3 ndash AR Living History March 23 - Franklin-Covey March 4 ndash AR Living History March 27 ndash Fred Pryor March 6 ndash ASCE March 28 ndash UA Industrial Engineering March 6 ndash Walton College of Business March 28 ndash Fred Pryor March 11 ndash Here Comes the Bride March 29 ndash Blue Cliff March 14 ndash Hospitality Summit March 30 ndash Irsquom with Miller March 15 ndash Fred Pryor March 31 ndash Dover March 15 ndash PepsiCo March 31 ndash West Fork Prom March 16 ndash Fred Pryor

Event Breakdown Non-profit events ndash 33 Social events ndash 14 FTC event ndash 5 UA events ndash 14 Corporate events ndash 33

wwwtwncentercom

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50

100

0

50

100

Mar 5 Mar 12 Mar 19 Mar 26

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Site Usage

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271 PagesVisit

4540 Bounce Rate

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7572 New Visits

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Referring Sites19900 (1695)

Direct Traffic10600 (903)

Content Overview

Pages Pageviews Pageviews

NaN 2600 8161

180 565

weddingshtml 70 220

locationshtml 60 188

socialshtml 55 173

1 Google Analytics

wwwtwncentercom

Traffic Sources OverviewMar 1 2012 - Mar 31 2012

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50

100

0

50

100

Mar 5 Mar 12 Mar 19 Mar 26

Visits

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903 Direct Traffic

1695 Referring Sites

7402 Search Engines

Search Engines86900 (7402)

Referring Sites19900 (1695)

Direct Traffic10600 (903)

Top Traffic Sources

Sources Visits visits

google (organic) 748 6371

(direct) ((none)) 106 903

bing (organic) 58 494

facebookcom (referral) 56 477

yahoo (organic) 44 375

Keywords Visits visits

fayetteville town center 278 3199

(not provided) 132 1519

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dogwood room fayetteville town 24 276

fayetteville ar town center 23 265

2 Google Analytics

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Content OverviewMar 1 2012 - Mar 31 2012

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0

150

300

Mar 5 Mar 12 Mar 19 Mar 26

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Pages on this site were viewed a total of 3186 times

3186 Pageviews

1449 Unique Views

4540 Bounce Rate

Top Content

Pages Pageviews Pageviews

NaN 2600 8161

180 565

weddingshtml 70 220

locationshtml 60 188

socialshtml 55 173

3 Google Analytics

wwwexperiencefayettevillecom

DashboardMar 1 2012 - Mar 31 2012

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400

800

0

400

800

Mar 5 Mar 12 Mar 19 Mar 26

Visits

Site Usage

15155 Visits

49651 Pageviews

328 PagesVisit

4643 Bounce Rate

000230 Avg Time on Site

7912 New Visits

Traffic Sources Overview

Search Engines934000 (6163)

Referring Sites365000 (2408)

Direct Traffic216500 (1429)

Content Detail 2011VisitorsGuide

0

10

20

0

10

20

Mar 5 Mar 12 Mar 19 Mar 26

Pageviews

Pageviews

318

Content Overview

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6639 1337

calendarphp 5680 1144

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visitorsphp 1526 307

1 Google Analytics

wwwexperiencefayettevillecom

Traffic Sources OverviewMar 1 2012 - Mar 31 2012

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400

800

0

400

800

Mar 5 Mar 12 Mar 19 Mar 26

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1429 Direct Traffic

2408 Referring Sites

6163 Search Engines

Search Engines934000 (6163)

Referring Sites365000 (2408)

Direct Traffic216500 (1429)

Top Traffic Sources

Sources Visits visits

google (organic) 8162 5386

(direct) ((none)) 2165 1429

facebookcom (referral) 1396 921

yahoo (organic) 563 371

bing (organic) 421 278

Keywords Visits visits

(not provided) 1387 1485

fayetteville ar 779 834

things to do in fayetteville ar 649 695

fayetteville arkansas 390 418

fayetteville ar 121 130

2 Google Analytics

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0

10

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Mar 5 Mar 12 Mar 19 Mar 26

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10000 Bounce Rate

5629 Exit

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3 Google Analytics

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Mar 5 Mar 12 Mar 19 Mar 26

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49651 Pageviews

37418 Unique Views

4643 Bounce Rate

Top Content

Pages Pageviews Pageviews

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calendarphp 5680 1144

eatphp 1548 312

visitorsphp 1526 307

4 Google Analytics

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300

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Mar 26

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7797 New Visits

Traffic Sources Overview

Search Engines190600 (6016)

Referring Sites79400 (2506)

Direct Traffic46800 (1477)

Content Detail 2011VisitorsGuide

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5

10

0

5

10

Mar 26

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51

Content Overview

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1431 1492

playphp 1206 1257

calendarphp 1169 1218

eatphp 323 337

historicalAttractionsphp 276 288

1 Google Analytics

wwwexperiencefayettevillecom

Traffic Sources OverviewMar 26 2012 - Apr 1 2012

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300

600

0

300

600

Mar 26

Visits

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1477 Direct Traffic

2506 Referring Sites

6016 Search Engines

Search Engines190600 (6016)

Referring Sites79400 (2506)

Direct Traffic46800 (1477)

Top Traffic Sources

Sources Visits visits

google (organic) 1695 5350

(direct) ((none)) 468 1477

facebookcom (referral) 254 802

yahoo (organic) 92 290

accessfayettevilleorg (referral) 80 253

Keywords Visits visits

(not provided) 288 1511

fayetteville ar 147 771

things to do in fayetteville ar 106 556

fayetteville arkansas 74 388

fayetteville ar 26 136

2 Google Analytics

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Content Detail2011VisitorsGuide

Mar 26 2012 - Apr 1 2012Comparing to Site

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5

10

0

5

10

Mar 26

Pageviews

This page was viewed 51 times51 Pageviews

47 Unique Views

000326 Time on Page

10000 Bounce Rate

5882 Exit

$000 $ Index

3 Google Analytics

wwwexperiencefayettevillecom

Content OverviewMar 26 2012 - Apr 1 2012

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1000

2000

0

1000

2000

Mar 26

Pageviews

Pages on this site were viewed a total of 9594 times

9594 Pageviews

7292 Unique Views

4959 Bounce Rate

Top Content

Pages Pageviews Pageviews

1431 1492

playphp 1206 1257

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eatphp 323 337

historicalAttractionsphp 276 288

4 Google Analytics

RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwtwncentercom

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Direct Traffic216500 (1429)

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4643 Bounce Rate

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Content Detail 2011VisitorsGuide

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwtwncentercom

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Mar 5 Mar 12 Mar 19 Mar 26

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Direct Traffic216500 (1429)

Top Traffic Sources

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Keywords Visits visits

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwtwncentercom

Content OverviewMar 1 2012 - Mar 31 2012

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Mar 5 Mar 12 Mar 19 Mar 26

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3 Google Analytics

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400

800

Mar 5 Mar 12 Mar 19 Mar 26

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7912 New Visits

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Mar 5 Mar 12 Mar 19 Mar 26

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4 Google Analytics

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Mar 26

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Direct Traffic46800 (1477)

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2 Google Analytics

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9594 Pageviews

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4 Google Analytics

RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwexperiencefayettevillecom

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwexperiencefayettevillecom

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwexperiencefayettevillecom

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwexperiencefayettevillecom

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwexperiencefayettevillecom

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwexperiencefayettevillecom

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwexperiencefayettevillecom

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

wwwexperiencefayettevillecom

Content OverviewMar 26 2012 - Apr 1 2012

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1000

2000

Mar 26

Pageviews

Pages on this site were viewed a total of 9594 times

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RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

RESTRICTED USE REPORT

LAND AND RESTAURANTOFFICE BUILDING LOCATED AT

THE OLD POST OFFICE1 CENTER STREET FAYETTEVILLE

WASHINGTON C OTINTY ARKANSAS

FOR

SANDRA BENNETTFAYETTEVILLE ADVERTISING amp PROMOTION COMMISSION

FAYETTEVILLE ARKANSAS

AS OF

DATE OF REPORT _ MARCH 192012DATE OF INSPECTION MARCH T52OT2DATE OF VALUATION - MARCH I52OI2

BYSTUART SANDERS STATE CERTIFIED

GENERAL REAL ESTATE APPRAISER CG 1738

HANK BROYLES STATE REGISTEREDREAL ESTATE APPRAISAL TRAINEE SR 3635

PARRISH APPRAISALS INCPO BOX 846

FAYETTEVILLE ARKANSAS ]27 02

-^ itqxffr-euroi4xs48

PARRISH

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

MARCH T92OI2

Sandra BennettFayetteville Advertising amp Promotion CommissionFayetteville Town Center BuildingFayetteville AR 7210I

RE Restricted Use Report regarding the Minimum Market Value of a commercial buildingand lot located at 1 Center Street Fayetteville Washington County Arkansas

TO Sandra Bennett

Pursuant to your request I have conducted an investigation of and improved tract of land locatedat 1 Center Street Fayetteville Washington County Arkansas

The purpose of this Analysis Report is to estimate and assist the client in establishing marketvalue for use in internal decision matters as of March 152012

As per our agreement the data and analysis is presented in a Summary Format and the reportdoes deviate from the USPAP as permitted upon agreement between client and appraiser At ourclients request the results of our investigation and analyses which comprise a Restricted UseReport Estimate are being presented via a Restricted Use Report Format Therefore theappraiser invokes the departure rule as allowed under Appraisal Standards Nos 1 and 2 Rule 2-2 adopted by the Appraisal Standards Board on March 22 1994 effective July 1 7994 andrevised January 1 2000 Only the Sales Comparison Approach was deemed appropriate Theappraisers opinions and conclusions set forth in this reports may not be understood withoutadditional information in the appraisers work file A full file memorandum is maintained in myoffice

We certifu that to the best of our knowledge and belief

(1) INSPECTION-An interior and exterior inspection of the subject property was conductedon March 152012

(2) PROPERTY CHARACTERISTICS-The subject property is an improved commercial plotof land with a I4278+l-sf two-story building (includes basement) located in the city of

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Fayetteville Arkansas We are familiar with the physical and economic trends in the subjectsmarket areas from past research and experience

(3) CONDITIONS OF ASSISIGNMENT-This report is intended to assist in establishingmarket value for use in internal decision matters as of March 152012

(4) EXTENT OF RESEARCH- Based upon the requirements of the client and the intendeduse of the report the Cost Approach (Land Only) Sales Comparison Approach and the IncomeApproach to value were analyzed and are deemed to be sufficient to solve the appraisal problem

(5) EXTENT OF DATA RESEARCH - We researched the sales data for this assignmentusing county records and Sales information using the MLS system We have researched the sales

of lots and office buildings which were considered similar and arnlyzed comparable sales datainthe surrounding area

LEGAL DESCRIPTION

Apart of block 27 ofthe Original Town Plat of Fayetteville Arkansas- Beginning ata point which is 18252 feet West and 5760 feet South of the ]ortheast corner ofsaid Block 27 ta theNW comer of anow existing Old Post Office Building thencewith the foundation of said building the foliowing bearings and distances South2145 feet West 39 feet South 785 feei East 39 feet South 216 feet East 172feet South 0 feet East 63 South 2565 feet East 383 feet Norrh 42 feet East106 feetNorth 180 feet West 43 feet tlorth 105 feet East 105 feet North 655feet East39 fee North 720 feel West 39 feetNorth 244 feet East39 feet North715 feet East 39 feet North 38 feet East 23 feet West 23 feet South 5 feetWest 565 feet North 39 feet West 715 feet South 39 West 215 feet Nodh 105feet West 552 feet South 11 feet to the point of begiruring all being situated inWashi ngton County Arkansas

REAL PROPERT INTEREST APPRAISED

Fee Simple Interest

INTENDED USE OF THE APPRAISAL

The purpose of this appraisal is for intemal decision matters as of the effective date of the

appraisal

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

EFFECTIVE DATE OF THIS APPRAISAL

The effective date of the Appraisal is March 152012

The property was inspected on March 152012

EFFECTIVE DATE OF REPORT

The effective date of the Report is March 192012

FUNCTION OF APPRAISAL

The function of this Appraisal is to estimate the Market Value of the subject property As Is

for use in intemal decision matters

HIGHEST AND BEST USE AS IMPROVED

The highest and best use for the subject properly as improved is for continued us as a commercial

restaurant offrce building

HYPOTHETICAL CONDITION(s)

NA

EXTRAORDINARY ASSUMPTIONS

The exact site size for the subject property is unknown as the client did not provide a survey

The site size is based on the legal description provided by the client which is apparently

incorrect The appraiser has estimated the site size to be 6050+- SF This is considered an

extraordinary assumption The appraiser fuither assumes that the subject improvements do in

fact lie on the subject site This is nearly impossible to determine with out a site survey If either

or both of these extraordinary assumptions prove to be untrue the appraiser reserves the right to

alter the appraisal report andlor its value conclusion

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

ANALYSIS OF CONTRACTLISTING

It is the appraisers understanding that subject property is not currently listed for sale under option

to purchase or under contract Apparently some recent offers and counter offers have been made

concerning the subject property however the appraiser has not been presented with these

contracts and is not familiar with their particular terms We can not comment conceming their

validity or whether or not they are atlbelowlabove market value The property has not changed

ownership since at least 1985

SCOPE AND BASIS OF THE APPRAISAL

This appraisal has been made in accordance with the Uniform Standards of Professional Appraisal

Practice of the Appraisal Foundation (12 CFR) At our clients request the results of our

investigation and analyses which comprise a Complete Appraisal are being presented via a

Restricted Use Appraisal Report Format as permitted by Standad 2-2b The value set forth

herein was estimated after application and analysis of the applicable approaches to value ie the

Cost (Land Only) Sales Comparison and Income Approaches to value were utilized in this Report

This appraisal included the inspection of the subject property on March 152012 and an analysis

of the surrounding neighborhood with recognition of existing and future trends Market data

including sales and listing of comparable properties were obtained from sources believed to

reliable There was no personal property (except minimal contributory of restaurant fixtures)

included in this valuation process

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

til

o)tFI

3 Main Level

AREA CATCULATIONS SUMMARY)ods Description

lBAl irst Floorlop Fl-oor

Net Size NetTotals

Buildinq FootprjntlasehenL

5050 3240575935 I

203297

39 x39 x39 e3-9 x

18-0 x4 2 x

4d6 xb-J x

171 x

05 x 00 x10 i

12

48 I

6135950 850 I00

5s -2

34_900

10051844As0810x

5524S 938 3

30-628L27921 9

e842r60 I

2134 0

866 18746

4455 2

13869 5

0100

424 8

762A18 1

880 2

2734O364 5

20328Nat BUILDING Area

Top Flaor 05 x 00 x

i og x oo x0 x82 r58 x

i 150 x u x Building Footlrrifci 1o xI ro n --

1 42 I 440 63 r11 ltees Not Listed

20328

Basement

Rounded) 36 ltems (Rounded)

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

LAND VALUE

The Direct Sales Approach Method was utilized to derive the value of the land as if

unimproved Land sales were located in the subject and competing market areas These sales

were compared to the subject As If Vacant and adjusted for any differences Additionally the

land value must be estimated The following table is a summary of the land sales utilized in this

analysis

SUMMARY OF LANDIMPROVED SALES

Statistical Conclusion from Market Data

Mean 51729 per sf

Median $1628 per sf

Land Value 922 SF X 6050 SF $133100 Say $133000

SaleNo

Location Sale Price Sale Date SF Land PriceSF

Subj L Center Street - Fayetteville (Land Only) 6000

I 3 East Rock Fayetteville $200000 07107 18630 $10742 305 N Universiw Favetteville $ 131000 t2lI0 5063 $2587a-l 6thStEastem Ave Fayetteville $3s0000 02109 19223 $ 1821

4 2372 Collese Ave Fayetteville $275000 02nI 19166 s 1435

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

SalePriceSquare FootageAcresPriceSF

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Market Cond

Location

Topography

Shape

Size

Road Frontage

Utilities

lmprovements

lndicated ValueSF of Adjustment

MeanMedianBest Sales

Market Value

1

$20000018630043

$1074

00

56($240)

$833

625

000

000

125

(117)

000

000

146637

$2004$1979$2ss1

$2191

2$131 000

5063012

$2587

00

16($166)

$2422

484

000

000

000

(3 15)

000

000

2591oo

3

$35000019223044

$1821

0

0

37($26e)

$1551

543

000

039

233

(186)

000

(100)

208014

4$275000

1 91 66044

$1435

0013

($075)

$1360

476

000

061

204

(10e)

000

(1 15)

187731

Say $22

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

The Subject property is Zoned Main Street Center that allows for commercial office use and the

properly is improved with a 14278+-sqft (includes basement) wood-framed and concrete

(brick) Class C commercial building on a concrete basement The effective age of the

building is 25+l- years The economic life of the building is estimated at 80 years The

structures general appeal is considered to be average

The commercial sales comps are considered similar to the subject and are to be used in the Direct

Sales Comparison Approach listed in the Summary below

SUMMARY OF IMPROVED SALES _ BUILDING ONLY

Sale Address SaleDate

Sale Price SF Bldg Sale PricePer SF

Subi I Center St -Favetteville 14278I 106 Block Fayetteville 101 1 $242000 6889 $26102 315 W Mountain Favetteville 091t1 $575000 6r44 $s843J 115 N Block St Fayetteville 12111 s425000 2705 s84804 509 Sorins St Favetteville 02t11 $ 1850000 45000 $27605 15 Church St Fayetteville 081 1 $256000 6689 $ 1065

6 113 Walnut Ave Rosers 041r1 $267000 6500 $4108

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

SalePrice

Property RightsConditions of SaleMonths Since SaleMarket Conditions

After Mkt Cond

Site ValueTime AdjustmentUpdated Site ValueSite Adjustment

Gross Building SizeBld Size Adj

Extra Features

Building Age

Building Quality

Historic Premium

Site lmprovements

lndicated Value of Adjustment

Weighted

MeanMedianWeighted Average

Market Value

1

$242000

0

0

5

$2420

$239580

130000($2600)$127400

$5600

4291$170142

$130000

$0

$16800

$30300

-$2500

$589922144

1

$716263$735320$739916

$730500

2

$575000

00

6($6900)

$568100

216000($5184)

$210816-$77816

6144$92316

$130000

$0

$53900

$71900

-$4200

$83420045

2

3$425000

0

03

($2550)

$422450

1 10000($1320)

$108680$24320

2705$236754

$109000

-$39400

$47250

$53 I 00

-$5700

$84777499

1

41850000

0013

($48100)

$1801900

600000($31200)

$568800-$435800

45292-$775950

$100000

-$218750

$93800

$231250

-$8900

$787550-57

2

5$256000

0

07

($3584)

$252416

175000

($4eoo)

$1 701 00-$371 00

6689$69426

$130000

$105000

$12200

$32000

-$8900

$555042117

1

6$267000

0

011

($5874)

$261126

26000($1 144)$24856

$1 081 44

6482$781 20

$130000

$241 00

$48200

$33400

$0

$683090156

1

10

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

INCOME APPROACH

The income approach to value is predicated on the assumption that there is a direct relationship

between the amount of income a property produces and its market value In this approach the

appraiser processes expected future income benefits into an indication of value Value is

therefore the present value of future income a property will likely generate This approach

depends upon the accuracy of three basic steps they are forecasting income and expenses

deriving a net income and selecting or developing an appropriate rate and caprtahzing the net

income at an appropriate rate of return by the property method

In applying the income approach the appraiser follows certain steps He projects the quantity of

the prospective gross income after considering the record of actual gross income in previous

years and current contract rent market rental rates for comparable space and the effect of

vacancy andor credit loss He projects the quantity of expenses after considering the record of

actual expenses for previous years and expense histories of comparable properties and by

abstraction computes the expected net operating income to be capitalized The Income Stream is

analyzed by way of several methods as follows

1 Obtain actual rent schedules for the property being appraised as well as the comparable

properties in the area then derive the gross rental data as well as projected gross income

expectancy

2 Appraiser obtains and analyzes the actual occupancy data for the subject property and for

the comparable properties in the area Then a projected occupancy rate is estimated for

the subject property which is deducted from the gross income to arrive at an adjusted

gross income estimate

3 Appraiser obtains and analyzes expense data such as taxes insurance utilities and other

pertinent costs for the property being appraised and other comparable properties in the

l1

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

area An expense estimate is derived for the property which is deducted from the

adjusted gross income to derive a net income estimate

4 An estimate of the remaining economic life is made to establish an estimated life of the

income stream

5 Appraiser selects the appropriate capitalization rate

6 Using capitalization rate appraiser derives estimated market value by way of net income

The net income is capitalized by the approprrate rate and method to derive an estimate of value

for the property being appraised by the formula Value Income divided by Rate

ANALYSIS OF GROSS ECONOMIC RENT AND iROSS INCOME ESTIMATE

The subject property is an improved restaurantoffice building Improved office rentals have

been utilized The properly is an occupied office building with parking area The typical lease

anangement for this property tlpe is a triple net agreement The Lessee pays utilities taxes and

maintenance costs and some improvement costs when desired by the tenant (Lessee) In any

event proper appraisal technique dictates that income and expenses be derived from the

marketplace

SUMMARY OF RENTAL DATA

The subject property consists of one 14218 sq ft (includes basement area) commercial

restaurantbarloffice structure to be occupied by three or more tenants The property is currently

about 10 The property is in below average condition and it is assumed that it might be leased

on a gross basis with the Lessor responsible for actual expenses including routine maintenance

and utilities

t2

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

TOTAL PROJECTED GROSS RENTAL

Listed below are the subjects actual rentals which are

RestaurantOffi ce Market

INCOME $117912

indicative of the Central Favetteville

Lessor Suite s

Vacant Basement Basement

VacantRestaurantBar Street

Projected

Monthly Rents

$2968

s4452

Square Ft RateSFYR

5936

5936

2406

$600

$900

s1200Partially Occupied

Office Space

Average Blended Rate

Level

Upper $2406

Level

$726

The subject property consists of a total of 14278 +- SF Subjects rents support a blended rate

of $726SFYR for the subject

Gross Potential Operating Income (GPI) is the total income that the properly could be expected toproduce at full (100) occupancy with no deduction for possible collection loss The subject propertywill be a mixed use building with full occupancy Projected GPI for the first (1st) year of the projected

holding period is $117912

Vacanc) amp Collection (VampC) Loss refers to the periodic loss of potential gross operating income due toa projected stabilized rate of vacancy or uncollected rents (etc) over an entire holding period It isusually stated as a percentage of potential gross operating income

When the purpose of analysis is to obtain an indicated Market Value determination of the appropriateallowance for this consideration should be based on the typical rates of vacancy andor collection loss forthe type of property being analyzed In this regard a reasonable allowance for V amp C Loss is typicallywarranted -- even if the property being analyzed has a history of 0oo V amp C Loss or is leased (at fulloccupancy) for the foreseeable future This is true for instance where typical operations of similarproperties reflect losses of potential gross income due to these causes Based on similar properties in themarket area the properly should experience approximately 82 occupancy

The subjects vacancy is actually 90+yo However the market (4th Quarter 2011 Skyline Report) as awhole is indicates avacancy of approximately l76Yo The V amp C Loss used in this analysis is 18 or

$21224

13

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Effective Gross Operating Income (EGI) is the gross income amount actually realized from operation of aproperty It is calculated by deducting anticipated market vacancy and collection loss from potentialgross operating income As illustrated by the following income and expense summary projectedEffective Gross Operating Income for the first (1st) year of the projected holding period is $96688

Variable Operating Expenses refers to those operating expenses which are often directly influenced byoccupancy andor collection levels for the property being analyzed

Variable Operating Expenses typically include such expense categories as Accounting AdministrationAdvertising Contract Services Repair amp Maintenance Management Utilities Etc In other wordsVariable Operating Expenses include any legitimate operating expense (other than Fixed OperatingExpenses and Reserves for Replacement) which would typically be incurred in operating an incomeproducing property under sound management practices As illustrated by the following income andexpense summary

Variable Operating Expense

Management (Market Rate 5 of EGI)

MaintenanceRepairs (Market Rate 5 of EGI)

$4834

s4834

Estimated Miscellaneous Expense $1000

Variable Operating Expenses for the first (1st) year of the holding period are projected at $10669

Fixed Operating Expenses refers to those operating expenses which are not usually influenced byoccupancy andlor collection levels forthe property being analyzed

Since the Assessed Value of a property and its resulting property tax liability is not usually consideredto be effected by variations in occupancy levels Property Tax is generally considered to be a FixedOperating Expense Likewise Real Estate Insurance expense is generally regarded as being a FixedExpense since it is relatively unaffected by yearly variations in a properfys occupancy level Asillustrated by the following income and expense summary

Fixed Operating Expense

Property Tax (Based on actual)

Estimated Building Insurance (Market Rate (3lsf))

$5822

$ 4400

Fixed Operating Expenses for the first (1st) year of the holding period are projected at $10222

The Replacement Reserves (Reserves) Operating Expense category is a projected allowance for periodic

14

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

replacement of short lived component parts of real estate improvements This expense category accountsfor those reasonably anticipated future expenses that normally occur less frequently than once a year

In projecting the appropriate replacement reserves allowance care has been taken to avoid duplication ofnormal repair amp maintenance expenses Expenses for such things as roof repairs interior andor exteriorpainting and other normal maintenance items are typically not considered under replacement reservesAs illustrated by the following income and expense summary projected Reserves for the first (1st) yearofthe holding period are projected at $3033

Net Operating Income NOI) is that annual income amount left over after all operating expenses havebeen deducted from effective gross operating income As shown below this income capitalizationanalysis does not consider annual debt service or income tax as operating expenses NOI for the first ( 1 st)year of the holding period is projected at$72764

An Overall Capitalization Rate (OAR) is a ratio of one years Net Operating Income to the Value of theproperty that produces that income

It is used in the Income Capitalization Approach to convert anticipated future income into an indicatedvalue When the rate is applied directly to the forecast income (dividing the income by the rate) theprocedure is called Direct Capitalization

An OAR can be obtained by various generally accepted methods andlor techniques These include theComparative Method Band-of-Investment Techniques the Built-Up Rate Method Yield AnalysisMethods and others Regardless of how its obtained an OAR is nothing more than a measure of therelationship between a properf5rs Value and its NOI for one (particular) year

Mortgage Constant (Rm) is the ratio of uniform annual mortgage payments (principal and interest) to theinitial loan amount It is analogous to a mortgage capitalization rate

An Equiqr Dividend Rate (Re) is a ratio of one years Equity Dividend to the Value of initial EquityInvestment For Appraisal Purposes the equity capitalization rate for the subject property is theanticipated return to the investor usually for the first year of the holding period

The following terms are indicated by Northwest Arkansas Financial Institutions on moftgage loans onproperties ofthe subjects nature

Typical Interest Rate (Variable)

Amortization Period

Loan to Value Ratio

Annual Constant (based on 7 5oo20 year term)

Debt Coverage Ratio

750

20Year

80

0966712

12-12s

15

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

The First Quarter issue of Valuation Insights and Perspectives published by the Appraisal Institute provides arange of 50oo to l0oh and an average of 695oh for Class A CBD Office property fype investments in the thirdquarter of 201l Subject is not Class A Space They utilize the KORPACZ REAL ESTATE INVESTOR SURVEYconducted by PricewaterhouseCoopers LLP

Band of Investment or weighted average formula for deriving at an Overall Rate when the mortgageconstant and equity dividend rates are known is

Ro MxRm+(1-M)xRerherefore

3irr1

trfo x oeo)

Utilizing the Debt Coverage Formula the following Overall Rate is indicated

Ro LN Ratio x Rm x Debt Coverage Ratio 80 x 0966712x125 096

Considering Band of Investment The Debt Coverage Fonnula and Market Abstraction anOverall Rate of 107o is considered applicable for the subject

Value Proposed Net Operating IncomeOverall Rate

ValueValueSay

9727641t0$727640$728000

SUMMARY OF INCOME APPROACH

The Mortgage Equity Capitahzation Method is being used to project expected futureincome from the subject property The estimated value of the Subject property via the IncomeApproach is $728000

Therefore the indicated value by use of the Income Approach to Value As Is as of March 15

2012 is

SEVEN HUNDRED TWENTY-EIGHT THOUSAND DOLLARS

$728000

16

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

I certify that to the best of our knowledge and belief

(1) The statements of fact contained in this report upon which the analysis opinions andconclusions expressed herein are based are true and correct

(2) The reported analyses opinions and conclusions are limited only by the reportedassumptions and limiting conditions and is our personal unbiased professional analysesopinions and conclusions

(3) I have no present or prospective interest in the property that is the subject of this analysisand I have no personal interest or bias with respect to the property or parties involved with thisassignment

(4) My compensation is not contingent upon an action or event resulting from the analysesopinions or conclusions in or use oi this report or upon developing or reporting of apredetermined value or direction of value that favors the cause of the client the amount of thevalue opinion the attainment of a stipulated result or the occuffence of a subsequent eventdirectly related to the use of the appraisal

(5) This assignment was not based upon a requested minimum value a specific valuation orthe approval of a loan

(6) My analyses opinions and conclusions were developed and this report has been preparedin conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as

promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code ofProfessional Ethics and Standards of the National Association of Master Appraisers

I hereby certift that I have inspected the property described by way of a Complete PhysicalInspection It is felt that all data gathered by -y investigation is from sources believed reliableand true

According to Standards Rule 2-2(c) a Limited RestrictedSummary Appraisal Report shouldhave these minimum requirements

- Describe the extent of the process collecting confirming and reporting data

- State all assumptions and limiting conditions that affect the analyses opinions andconclusions

- State the appraisal procedures followed state the value conclusion and reference theexistence of specific file information in support of the conclusion

17

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

- State the appraisers opinion of highest and best use of the real estate when such an opinionis necessary and appropriate

- State the exclusion of any of the usual valuation approaches

- Contain a prominent use restriction that limits reliance on the report to the client and warnsthat the report cannot be understood properly without additional information in the work file ofthe appraiser and clearly identifu and explain permitted departures from the specific guidelinesofStandard 1

- Include a signed certification in accordance with Standards Rule 2-3

The function of this appraisal is to assist the client in determining a fair and equitable MarketValue of the subject property The value estimate is based on the real property only Nofurniture equipment or personal property is included in the value estimate

The value is based on the definition of Market Value as set forth by the FIRREA Act of 1989effective August 241990 Please refer to the definition in Exhibit A following this letter

In the accompanying report you will find the results of my investigation containing the factsanalysis and conclusions pertaining to the subject property and the final estimate of value

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe analysis supports a Land Value of

ONE HUNDRED THIRTY THREE THOUSAND DOLLARS$133000

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Sales Comparison Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY ONE THOUSAND DOLLARS$ 731000

As a result of investigation studies and analyses of sales offers of sales and all factors inmarketplace which affect value it is the opinion and judgment of the appraiser on March 152012the Income Approach Analysis supporls an Improved Value (Land and Buitding) of

SEVEN HUNDRED TWENTYEIGHT THOUSAND DOLLARS$ 728000

thethat

l8

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

As a result of investigation studies and analyses of sales offers of sales and all factors in themarketplace which affect value it is the opinion and judgment of the appraiser on March 152012thatthe Reconciled Analysis supports an Improved Value (Land and Building) of

SEVEN HUNDRED THIRTY THOUSAND DOLLARS8 730000

Respectfully submitted

H APPRAISALSINCATE CERTIFIED GENERAL

REAL ESTATE APPRAISER GC1738

PARzuSH APPRAISSTATE REGISTEREDREAL ESTATE TRAINEE SR3635

19

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

EXHIBIT A

Market Value DefinitionFinancial Institution Reform Recovery and

Enforcement Act of 1989 (FIRREA)Effective August 24 1990

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 lwtowledgeably and assuming the price is not affected by undue stimulus Implicit

in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby

(1) Buyer and seller are typically motivated

(2) Both parties are well informed or well advised and acting in what they consider their

own best interest

(3) A reasonable time is allowed for exposure in the open market

(4) Payment is made in terms of cash in US dollars or in terms of financial arrangements

comparable thereto and

(5) The price represents the normal consideration for the property sold unaffected by special

or creative financing or sales concessions granted by anyone associated with the sale

20

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

UALIFICATIONS OF STUART H SANDERS

EDUCATION

July 1999 li atSanAntonioBachelor of Business Administration Finance Building amp Land Development Concentration

PROFESSIONAL COURSES COMPLETED

Real Estate Principles UTSA-1997 Real Estate Investments - UTSA-1998 Real Estate Appraisal UTSA-1999 Real Estate Finance - UTSA-I999 Building Construction Estimating -- UTSA-I999

The following courses and exams given by The Appraisal Institute have been successfully completed

Course 101- Uniform Standards Of Professional Appraisal Practice Update --2010Course 410 Uniform Standards Of Professional Appraisal Practice Part A -- 2000Course 310 - Basic Income Capitalization -- 2001Course 210 - Residential Case Study - 2000Course 5 10 - Advanced Income Capitalization -- 2005Course 520 - Highest and Best Use - 2003 (Course Only)Course 530 - Advanced Sales Comparison and Cost Approaches -2004Course 540 - Report Writing 2007Course 550 - Advanced Applications -2007 (Course Only)General Appraiser Market Analysis amp Highest and Best Use - 2009

WORKEXPERIENCE

August 99 - October 2005 Staff Appraiser for Reed amp Associates Inc- Springdale ARJune 06 - Present Commercial Appraiser for Parrish Appraisals Inc - Fayetteville ARCondemnation Work - Cities of Rogers Springdale Farmington Fayetteville Cave Springs amp BentonvillePublic Utilities including Beaver and Two Ton Water Districts Swepco Ozark and Carroll Electric CosArkansas State Government including Parks and Recreation Natural Heritage Commission Department ofTransportationUnited States Government including Headstart Program Veterans Administration Housing and Urban Development

RELEVANT COLLEGE COURSES

Accounting Principles I amp II Business Law Intro to Communications Intro to Microeconomics Intro toMacroeconomics Principles of Finance Information Systems Mgt Organizational Theory BusinessCommunications Strategic Management Principles of Marketing Management Science Business StatisticsPrinciples of Real Estate Real Estate Investment Real Estate Mortgage and Banking Real Estate LawConstruction I Housing and Land Development Professional Practice Arch Documents Building amp ConstructionEstimating Project Development Construction Management Urban Planning Building and Land DevelopmentPracticum Computer Applications in Design I amp II

REFERENCES

Upon Request

21

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Real Estate Legal Services Page 1 of 3

Fayetteville Town Center 15 W Mountain St

Fayetteville AR 72701

Real Estate Legal Services DATE ISSUED DEADLINE Contact Person Sandra Bennett (479) 587-9944

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Real Estate Legal Services Page 2 of 3

REQUEST FOR PROPOSAL LEGAL SERVICES

Real Estate Legal Services

The Fayetteville Town Center is requesting proposals for an attorney or law firm to serve as attorney for the Town Center for various real estate matters

Scope of Services

The Fayetteville Town Center seeks to retain the services of an independent attorney or firm to provide legal services regarding real estate transactions The selected attorney will advise in all aspects of real estate including negotiation drafting and structure of documents and enforcement of contracts or agreements including but not limited to purchase and sale agreements etc

Requirements

Applicants must be licensed to practice law in Arkansas and possess experience in the area of real estate law Applicants must include the following information with their response

a Resumes experience record etc b Representative list of clients for whom real estate law services have been performed c Fee schedule Will be considered during the negotiating process and will be a factor

in the award of any proposed contract d Past record of malpractice claims or professional conduct claims including the

outcome and resolution Selection Process

A In evaluating the qualifications of each firm or individual the following items shall be considered

(1) Specialized experience and technical competence of the firm with respect to real estate

law (2) Capacity and capability of the firm to perform the work in question including

specialized services within the time limitations fixed for the completion of the project (3) Past record of performance of the firm with respect to such factors as control of costs

quality of work and ability to meet schedules and deadlines and

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Real Estate Legal Services Page 3 of 3

(4) Firms proximity to and familiarity with the area in which the project is located (5) Pricing Schedule Terms and Conditions

1 Proposal must be submitted no later than March 30th 2012 200 PM Central Standard Time Proposals received after this date and time will not be opened or accepted for consideration

2 Proposals should be mailed or hand-delivered to

Fayetteville Town Center Attn Sandra Bennett Facilities Manager PO Box 4157

15 West Mountain Street Fayetteville AR 72701

3 One (1) copy of each proposal should be provided in addition to one (1) electronic copy The use of PDF documents is highly recommended but not required

3 Label your proposal ldquoReal Estate Legal Servicesrdquo on the outside of the sealed envelope 4 Awarded firm must provide and maintain in force at all times during the term of the

contract errors and omissions liability Proof of such shall be submitted within five (5) calendar days after contract award

5 It shall be clearly understood that any costs incurred by the Proposer in responding to

this request is at the Proposerrsquos own risk and expense as a cost of doing business and the Fayetteville Town Center is not liable for reimbursement to the Proposer for any expense so incurred regardless of whether or not the proposal is accepted

6 The competitive selection for this request for proposal shall be conducted by a review

committee

5 All questions related to Proposals should be addressed to Sandra Bennett- (479) 587-9944 or sbennetttwncentercom

Davis Clark Butt Carithers amp Taylor PLC

Real Estate Legal Services Proposal to the

Fayetteville Advertising and Promotions Commission

TABLE OF CONTENTS

I Introduction

II Attorney Biographies

III Real Estate Experience

IV Representative Clients

V No Malpractice Claims

VI Fee Schedule

VII Scope of Representation

VIII Contact Information

IX Conclusion

Real Estate Legal Services Proposal

Davis Clark Butt Carithers amp Taylor PLC (ldquoDavis Law Firmrdquo) submits this Real Estate LegalServices Proposal in accordance with the requirements outlined by the Fayetteville Advertising andPromotions Commission Davis Law Firm is equipped to provide real estate legal services to theFayetteville Advertising and Promotions Commission and would be honored to represent theCommission in that capacity

I INTRODUCTION

Davis Law Firm is one of the oldest law firms in Northwest Arkansas with over half a century ofexperience We enjoy the best attributes of both small and large firms ndash close relationships withinthe firm and with individual clients the ability to provide clients a wide array of legal services andthe ability to use a team approach with complex and multiparty litigation issues and transactionsFor every client and case our persistent goal is to obtain the very best result in an efficientprofessional manner We are deeply connected to our community providing leadership in civicorganizations and nonprofit entities We are also active in state and local bar association mattersand serve on several Supreme Court appointed committees Above all we cherish our reputation forhonesty integrity and competence built since 1953

We practice before all Arkansas local state and federal courts the United States Court of Appealsfor the Eighth Circuit and the United States Supreme Court We also regularly practice beforevarious local state and federal administrative regulatory and governing boards and agencies Ourpractice focuses in the Northwest Arkansas counties of Washington Benton Carroll and Madisonbut extends statewide We are conveniently located on Mountain Street just steps from both theFayetteville Town Center and the Fayetteville Advertising and Promotions Commissionrsquos offices

Our credentials demonstrate the quality our practice offers our clients Seven of our partners arerated ldquoAVrdquo (ldquopreeminentrdquo) and one is rated ldquoBVrdquo (ldquodistinguishedrdquo) by Martindale-Hubbell The firmis designated as among the Best Law Firms in the United States by Best Lawyers in America whichalso lists five of our partners individually in diverse practice areas and two of our lawyers asldquoLawyer of the Year 2012rdquo Mid-South Super Lawyers also lists five of our partners in variouspractice areas two being among Super Lawyersrsquo top fifty lawyers in Arkansas Two of our partnersare Fellows in the American College of Trial Lawyers

Among our diverse practice areas we have several attorneys whose practice includes real estatematters With multiple Davis Law Firm attorneys practicing in the area of real estate law theFayetteville Advertising and Promotions Commission will have ready access to an attorney to assistit with any real estate issues that may arise In addition the Fayetteville Advertising and PromotionsCommission will benefit from the combined knowledge of multiple Davis Law Firm attorneys whoare able to provide different perspectives on complex real estate issues thus alleviating the need toseek a second opinion from another law firm

-1-

II ATTORNEY BIOGRAPHIES

The following Davis Law Firm attorneys would be the primary attorneys to assist the FayettevilleAdvertising and Promotions Commission with real estate related legal services

Constance G Clark attended Vanderbilt University from 1972 to 1974 and graduated from theUniversity of Arkansas at Fayetteville in 1976 where she was elected to membership in Phi BetaKappa She received her JD with Honors from the University of Arkansas at Fayetteville in 1979 While in law school she served as an associate editor of the Arkansas Law Review Connie joinedDavis Law Firm upon graduation from law school She has served as Secretary-Treasurer of theWashington County Bar Association and as a member of the Arkansas Bar Association serving inits House of Delegates from 1990 to 1993 She was appointed as a Special Associate Justice of theArkansas Supreme Court in 1991 and 1996 and served two terms on the Arkansas Supreme CourtCommittee on Civil Practice including as Chair of the Committee She is rated AV-Preeminent byMartindale-Hubbell and is listed in Best Lawyers in America and Super Lawyers

William Jackson ldquoJackrdquo Butt II was born in Fayetteville Arkansas in 1950 Jack was admittedto the Virginia Bar in 1975 and the Arkansas Bar in 1981 He received his BA in 1972 from theUniversity of Virginia and his JD with Honors in 1975 and LLM in Taxation in 1979 from TheNational Law Center of George Washington University He joined the firm in 1981 after four yearsrsquopractice with the Army Judge Advocate Generalrsquos Corps and two yearsrsquo private practice in FairfaxVirginia Jack regularly litigates in state and federal courts and before various administrativeagencies

He was first qualified as an Arkansas Board Recognized Tax Specialist in 1986 has been ratedAV-Preeminent by Martindale-Hubbell since 1994 was recognized by the Arkansas Timesrsquo 1995and 2000 polls as one of the top 10 business lawyers in Arkansas and is listed in Best Lawyers inAmerica in Trusts and Estates and in Super Lawyers in Commercial Litigation Jack was Presidentof the Washington County Bar Association in 1996-1997 served as President of the NorthwestArkansas Estate Planning Council from 2004-2006 and is an emeritus member of the William BPutman Inns of Court serving as President 2010-2011 He received the Arkansas Bar AssociationrsquosOutstanding Lawyer Citizen Award for 1999-2000 Jack is a member of the Washington County andArkansas Bar Associations and is admitted to practice before the United States Tax Court and theUnited States Supreme Court

Casey D Lawson graduated in 2000 from the University of Arkansas with a Bachelor of Sciencedegree in Business Administration Summa Cum Laude majoring in accounting Casey was the FirstRanked Senior Scholar and Outstanding Senior in Accounting in the business college She receivedher Juris Doctor degree Magna Cum Laude in 2003 from the University of Arkansas School of Lawat Fayetteville In law school she served on the Arkansas Law Review and was Treasurer of PhiAlpha Delta legal fraternity She received the Award for Top Student in Taxation and BusinessPlanning was awarded Best Oralist in the prize round of the Ben J Altheimer Moot Court

-2-

Competition and was a finalist in the Spring Moot Court Competition Casey has been ratedAV-Preeminent by Martindale-Hubbell

Joshua D McFadden attended John Brown University (Bachelor of Science in BusinessAdministration Magna Cum Laude 2001 MBA 2004) He was a Soderquist Fellow at theSoderquist Center for Leadership and Ethics while earning his MBA Joshua was awarded his JurisDoctor degree Magna Cum Laude in 2007 from the University of Arkansas School of Law atFayetteville where he was an ABA Foundation Ethics Scholar served as Associate Editor of theArkansas Law Review (2006-2007) served on the Honor Council and belonged to the Phi Delta Phiinternational legal fraternity Joshua is a Barrister member of the William B Putman Inns of Courta member of the Washington County and Arkansas Bar Associations and has been ratedBV-Distinguished (44 out of 50) by Martindale-Hubbell

William F Clark was born and raised in Fayetteville Arkansas He graduated from VanderbiltUniversity in 2007 with a Bachelor of Arts in Political Science Cum Laude and received his JurisDoctor degree from the University of Arkansas School of Law at Fayetteville Magna Cum Laudein 2010 In law school Will was named the Joe C Barrett Commercial Transactions Scholar was a member of the Board of Advocates and served as an Associate Editor for the Arkansas LawReview where his case note Blazing a New Trail The Effect of Medical Liability Mutual InsuranceCo v Alan Curtis on the ldquoAmerican Rulerdquo and an Insurerrsquos Right to Attorneysrsquo Fees was publishedin 2009

III REAL ESTATE EXPERIENCE

Davis Law Firm has regularly represented residential and commercial real property owners in thenegotiation purchase sale development and leasing of real estate ranging from modest residencesto multimillion-dollar developed and undeveloped commercial property purchases and sales Thesetransactions include the Curry to U of A sale of the Razorback Road property at approximately$2500000 recent Lloyd to commercial developer for student high-rise property at the northwestcorner of Lafayette Street and West Avenue ($825000) and in and around 2000 several Ben IsraelDixie Development commercial acquisitions on both Joyce Street and Highway 71 (before themarket fell with resulting financial distress) Our firm has also regularly represented developersseeking zoning and use permits before city agencies such as Walgreens at Highway 62Walmart andthe Strip Center at the southeast corner of Sycamore Street and College Avenue We representedabout half of the medical clinics involved in the development of North Hills Medical Park (NWARadiology McDonald Eye Associates Highlands Oncology Group Ozark Orthopaedic) in theiracquisition of lots and the resulting development and construction of North Hills Medical Park More recently we represented Highlands Oncology Group in its acquisition and constructiondevelopment of its 8-figure clinic on Horse Barn Road at Pinnacle Point in Rogers In recent yearswith the severe recession in development and construction we have not represented real estateacquisition and development companies so much as regular business clients in their acquisition anddevelopment of their own business properties We have represented Coldwell Banker Harris

-3-

McHaney Faucette Real Estate one of the two largest real estate firms in Northwest Arkansas formany years

The following is a list of the types of real estate related legal services for which our firm has beenretained

bull Drafting and review of real estate contracts including those for commercial

developments

bull Negotiation drafting and review of commercial and residential real estate leaseagreements

bull Lease disputes and related litigation

bull Reviewing real estate purchase agreements and lease agreements associated withfranchise purchases

bull Drafting deeds for the transfer of real property

bull Advising clients regarding the implications of the purchase of real estate inconjunction with the overall purchase of a business

bull Assisting subdivisions in the drafting of restrictive covenants

bull Represented developers seeking zoning and use permits

bull Land dispute litigation including easement boundary line and adverse possessionclaims

bull Real estate related litigation including

- successful unlawful detainer and ejectment actions

- successful real estate foreclosure and materialmanrsquos lien foreclosurelawsuits and

- successful defense of claims against real estate companies and theiragents

bull Appeals to Arkansas appellate courts in cases involving various real estate issues

-4-

IV REPRESENTATIVE CLIENTS

The following are representative of those clients who have received real estate related legal servicesfrom Davis Law Firm

bull JV Manufacturing Incbull Ben Israel Dixie Developmentbull Highlands Oncology Group PA bull Transwesternbull Vista Healthbull Coldwell Banker Harris McHaney Faucette Real Estatebull Northwest Arkansas Radiology Associates PAbull McDonald Eye Associatesbull Ozark Orthopaedicbull Melodyrsquos Choicesbull N2 Yogurtbull Port Elgin Incbull Prairie Creek Veterinary Hospital PAbull Polo Country Estatesbull Walton Arts Centerbull National Association of Credit Management - Lien and Bond Servicesbull Simmons First Bank of Northwest Arkansas bull Farm Credit Services of Western Arkansas bull Western Federal Credit Unionbull Oklahoma State Bankbull Travelers Insurance Companybull Coldwell Banker Fleming-Lau Realtybull King Realty Groupbull Downum Realty Group Incbull Clark Long amp Associates Real Estate and Insurance LLCbull National Loan Investors LPbull Rajesh Rana bull Scutterrsquos Cafeacute LLCbull White River Natural Foods LLC bull Schumacher Homes of Arkansas Inc bull Scherrie L Bolinbull Cecil R Combsbull UARK Federal Credit Unionbull American Residential Communities andbull Stoneleigh Centerton Apartments

-5-

V NO MALPRACTICE CLAIMS

The above-listed Davis Law Firm attorneys are not aware of any malpractice claims or professionalconduct claims ever being lodged against them

VI FEE SCHEDULE

The Davis Law Firm fee scale is as follows

Senior Partner Rate $25000hour(25 years plus experience)

Partner Rate $17500hour

Associate Rate $15000hour

Paralegal Rate $7500hour

Law Clerk Rate $5000hour

Attorneysrsquo fees will be charged along with expenses incurred in connection with each matter DavisLaw Firm prides itself on providing quality legal services in an economical manner While legalissues will be handled at the lowest fee level that is appropriate for a given matter you will benefitfrom the experience and insights of senior partners as dictated by the circumstances of each uniquesituation

VII SCOPE OF REPRESENTATION

Davis Law Firm is interested in representing the Fayetteville Advertising and PromotionsCommission on real estate related matters Any representation of the Fayetteville Advertising andPromotions Commission would not constitute representation of the City of Fayetteville Davis LawFirm reserves the right to represent clients that are potentially adverse to the City of Fayetteville solong as those matters do not involve issues directly related to the Fayetteville Town Center andorthe Fayetteville Advertising and Promotions Commission

VIII CONTACT INFORMATION

Joshua McFaddenDavis Clark Butt Carithers amp Taylor PLCPO Box 1688Fayetteville AR 72702-1688

Telephone (479) 521-7600Fax (479) 521-7661

jmcfaddendavis-firmcom

-6-

TABLE OF CONTENTS

I Introduction

II Attorney Biographies

III Real Estate Experience

IV Representative Clients

V No Malpractice Claims

VI Fee Schedule

VII Scope of Representation

VIII Contact Information

IX Conclusion

Real Estate Legal Services Proposal

Davis Clark Butt Carithers amp Taylor PLC (ldquoDavis Law Firmrdquo) submits this Real Estate LegalServices Proposal in accordance with the requirements outlined by the Fayetteville Advertising andPromotions Commission Davis Law Firm is equipped to provide real estate legal services to theFayetteville Advertising and Promotions Commission and would be honored to represent theCommission in that capacity

I INTRODUCTION

Davis Law Firm is one of the oldest law firms in Northwest Arkansas with over half a century ofexperience We enjoy the best attributes of both small and large firms ndash close relationships withinthe firm and with individual clients the ability to provide clients a wide array of legal services andthe ability to use a team approach with complex and multiparty litigation issues and transactionsFor every client and case our persistent goal is to obtain the very best result in an efficientprofessional manner We are deeply connected to our community providing leadership in civicorganizations and nonprofit entities We are also active in state and local bar association mattersand serve on several Supreme Court appointed committees Above all we cherish our reputation forhonesty integrity and competence built since 1953

We practice before all Arkansas local state and federal courts the United States Court of Appealsfor the Eighth Circuit and the United States Supreme Court We also regularly practice beforevarious local state and federal administrative regulatory and governing boards and agencies Ourpractice focuses in the Northwest Arkansas counties of Washington Benton Carroll and Madisonbut extends statewide We are conveniently located on Mountain Street just steps from both theFayetteville Town Center and the Fayetteville Advertising and Promotions Commissionrsquos offices

Our credentials demonstrate the quality our practice offers our clients Seven of our partners arerated ldquoAVrdquo (ldquopreeminentrdquo) and one is rated ldquoBVrdquo (ldquodistinguishedrdquo) by Martindale-Hubbell The firmis designated as among the Best Law Firms in the United States by Best Lawyers in America whichalso lists five of our partners individually in diverse practice areas and two of our lawyers asldquoLawyer of the Year 2012rdquo Mid-South Super Lawyers also lists five of our partners in variouspractice areas two being among Super Lawyersrsquo top fifty lawyers in Arkansas Two of our partnersare Fellows in the American College of Trial Lawyers

Among our diverse practice areas we have several attorneys whose practice includes real estatematters With multiple Davis Law Firm attorneys practicing in the area of real estate law theFayetteville Advertising and Promotions Commission will have ready access to an attorney to assistit with any real estate issues that may arise In addition the Fayetteville Advertising and PromotionsCommission will benefit from the combined knowledge of multiple Davis Law Firm attorneys whoare able to provide different perspectives on complex real estate issues thus alleviating the need toseek a second opinion from another law firm

-1-

II ATTORNEY BIOGRAPHIES

The following Davis Law Firm attorneys would be the primary attorneys to assist the FayettevilleAdvertising and Promotions Commission with real estate related legal services

Constance G Clark attended Vanderbilt University from 1972 to 1974 and graduated from theUniversity of Arkansas at Fayetteville in 1976 where she was elected to membership in Phi BetaKappa She received her JD with Honors from the University of Arkansas at Fayetteville in 1979 While in law school she served as an associate editor of the Arkansas Law Review Connie joinedDavis Law Firm upon graduation from law school She has served as Secretary-Treasurer of theWashington County Bar Association and as a member of the Arkansas Bar Association serving inits House of Delegates from 1990 to 1993 She was appointed as a Special Associate Justice of theArkansas Supreme Court in 1991 and 1996 and served two terms on the Arkansas Supreme CourtCommittee on Civil Practice including as Chair of the Committee She is rated AV-Preeminent byMartindale-Hubbell and is listed in Best Lawyers in America and Super Lawyers

William Jackson ldquoJackrdquo Butt II was born in Fayetteville Arkansas in 1950 Jack was admittedto the Virginia Bar in 1975 and the Arkansas Bar in 1981 He received his BA in 1972 from theUniversity of Virginia and his JD with Honors in 1975 and LLM in Taxation in 1979 from TheNational Law Center of George Washington University He joined the firm in 1981 after four yearsrsquopractice with the Army Judge Advocate Generalrsquos Corps and two yearsrsquo private practice in FairfaxVirginia Jack regularly litigates in state and federal courts and before various administrativeagencies

He was first qualified as an Arkansas Board Recognized Tax Specialist in 1986 has been ratedAV-Preeminent by Martindale-Hubbell since 1994 was recognized by the Arkansas Timesrsquo 1995and 2000 polls as one of the top 10 business lawyers in Arkansas and is listed in Best Lawyers inAmerica in Trusts and Estates and in Super Lawyers in Commercial Litigation Jack was Presidentof the Washington County Bar Association in 1996-1997 served as President of the NorthwestArkansas Estate Planning Council from 2004-2006 and is an emeritus member of the William BPutman Inns of Court serving as President 2010-2011 He received the Arkansas Bar AssociationrsquosOutstanding Lawyer Citizen Award for 1999-2000 Jack is a member of the Washington County andArkansas Bar Associations and is admitted to practice before the United States Tax Court and theUnited States Supreme Court

Casey D Lawson graduated in 2000 from the University of Arkansas with a Bachelor of Sciencedegree in Business Administration Summa Cum Laude majoring in accounting Casey was the FirstRanked Senior Scholar and Outstanding Senior in Accounting in the business college She receivedher Juris Doctor degree Magna Cum Laude in 2003 from the University of Arkansas School of Lawat Fayetteville In law school she served on the Arkansas Law Review and was Treasurer of PhiAlpha Delta legal fraternity She received the Award for Top Student in Taxation and BusinessPlanning was awarded Best Oralist in the prize round of the Ben J Altheimer Moot Court

-2-

Competition and was a finalist in the Spring Moot Court Competition Casey has been ratedAV-Preeminent by Martindale-Hubbell

Joshua D McFadden attended John Brown University (Bachelor of Science in BusinessAdministration Magna Cum Laude 2001 MBA 2004) He was a Soderquist Fellow at theSoderquist Center for Leadership and Ethics while earning his MBA Joshua was awarded his JurisDoctor degree Magna Cum Laude in 2007 from the University of Arkansas School of Law atFayetteville where he was an ABA Foundation Ethics Scholar served as Associate Editor of theArkansas Law Review (2006-2007) served on the Honor Council and belonged to the Phi Delta Phiinternational legal fraternity Joshua is a Barrister member of the William B Putman Inns of Courta member of the Washington County and Arkansas Bar Associations and has been ratedBV-Distinguished (44 out of 50) by Martindale-Hubbell

William F Clark was born and raised in Fayetteville Arkansas He graduated from VanderbiltUniversity in 2007 with a Bachelor of Arts in Political Science Cum Laude and received his JurisDoctor degree from the University of Arkansas School of Law at Fayetteville Magna Cum Laudein 2010 In law school Will was named the Joe C Barrett Commercial Transactions Scholar was a member of the Board of Advocates and served as an Associate Editor for the Arkansas LawReview where his case note Blazing a New Trail The Effect of Medical Liability Mutual InsuranceCo v Alan Curtis on the ldquoAmerican Rulerdquo and an Insurerrsquos Right to Attorneysrsquo Fees was publishedin 2009

III REAL ESTATE EXPERIENCE

Davis Law Firm has regularly represented residential and commercial real property owners in thenegotiation purchase sale development and leasing of real estate ranging from modest residencesto multimillion-dollar developed and undeveloped commercial property purchases and sales Thesetransactions include the Curry to U of A sale of the Razorback Road property at approximately$2500000 recent Lloyd to commercial developer for student high-rise property at the northwestcorner of Lafayette Street and West Avenue ($825000) and in and around 2000 several Ben IsraelDixie Development commercial acquisitions on both Joyce Street and Highway 71 (before themarket fell with resulting financial distress) Our firm has also regularly represented developersseeking zoning and use permits before city agencies such as Walgreens at Highway 62Walmart andthe Strip Center at the southeast corner of Sycamore Street and College Avenue We representedabout half of the medical clinics involved in the development of North Hills Medical Park (NWARadiology McDonald Eye Associates Highlands Oncology Group Ozark Orthopaedic) in theiracquisition of lots and the resulting development and construction of North Hills Medical Park More recently we represented Highlands Oncology Group in its acquisition and constructiondevelopment of its 8-figure clinic on Horse Barn Road at Pinnacle Point in Rogers In recent yearswith the severe recession in development and construction we have not represented real estateacquisition and development companies so much as regular business clients in their acquisition anddevelopment of their own business properties We have represented Coldwell Banker Harris

-3-

McHaney Faucette Real Estate one of the two largest real estate firms in Northwest Arkansas formany years

The following is a list of the types of real estate related legal services for which our firm has beenretained

bull Drafting and review of real estate contracts including those for commercial

developments

bull Negotiation drafting and review of commercial and residential real estate leaseagreements

bull Lease disputes and related litigation

bull Reviewing real estate purchase agreements and lease agreements associated withfranchise purchases

bull Drafting deeds for the transfer of real property

bull Advising clients regarding the implications of the purchase of real estate inconjunction with the overall purchase of a business

bull Assisting subdivisions in the drafting of restrictive covenants

bull Represented developers seeking zoning and use permits

bull Land dispute litigation including easement boundary line and adverse possessionclaims

bull Real estate related litigation including

- successful unlawful detainer and ejectment actions

- successful real estate foreclosure and materialmanrsquos lien foreclosurelawsuits and

- successful defense of claims against real estate companies and theiragents

bull Appeals to Arkansas appellate courts in cases involving various real estate issues

-4-

IV REPRESENTATIVE CLIENTS

The following are representative of those clients who have received real estate related legal servicesfrom Davis Law Firm

bull JV Manufacturing Incbull Ben Israel Dixie Developmentbull Highlands Oncology Group PA bull Transwesternbull Vista Healthbull Coldwell Banker Harris McHaney Faucette Real Estatebull Northwest Arkansas Radiology Associates PAbull McDonald Eye Associatesbull Ozark Orthopaedicbull Melodyrsquos Choicesbull N2 Yogurtbull Port Elgin Incbull Prairie Creek Veterinary Hospital PAbull Polo Country Estatesbull Walton Arts Centerbull National Association of Credit Management - Lien and Bond Servicesbull Simmons First Bank of Northwest Arkansas bull Farm Credit Services of Western Arkansas bull Western Federal Credit Unionbull Oklahoma State Bankbull Travelers Insurance Companybull Coldwell Banker Fleming-Lau Realtybull King Realty Groupbull Downum Realty Group Incbull Clark Long amp Associates Real Estate and Insurance LLCbull National Loan Investors LPbull Rajesh Rana bull Scutterrsquos Cafeacute LLCbull White River Natural Foods LLC bull Schumacher Homes of Arkansas Inc bull Scherrie L Bolinbull Cecil R Combsbull UARK Federal Credit Unionbull American Residential Communities andbull Stoneleigh Centerton Apartments

-5-

V NO MALPRACTICE CLAIMS

The above-listed Davis Law Firm attorneys are not aware of any malpractice claims or professionalconduct claims ever being lodged against them

VI FEE SCHEDULE

The Davis Law Firm fee scale is as follows

Senior Partner Rate $25000hour(25 years plus experience)

Partner Rate $17500hour

Associate Rate $15000hour

Paralegal Rate $7500hour

Law Clerk Rate $5000hour

Attorneysrsquo fees will be charged along with expenses incurred in connection with each matter DavisLaw Firm prides itself on providing quality legal services in an economical manner While legalissues will be handled at the lowest fee level that is appropriate for a given matter you will benefitfrom the experience and insights of senior partners as dictated by the circumstances of each uniquesituation

VII SCOPE OF REPRESENTATION

Davis Law Firm is interested in representing the Fayetteville Advertising and PromotionsCommission on real estate related matters Any representation of the Fayetteville Advertising andPromotions Commission would not constitute representation of the City of Fayetteville Davis LawFirm reserves the right to represent clients that are potentially adverse to the City of Fayetteville solong as those matters do not involve issues directly related to the Fayetteville Town Center andorthe Fayetteville Advertising and Promotions Commission

VIII CONTACT INFORMATION

Joshua McFaddenDavis Clark Butt Carithers amp Taylor PLCPO Box 1688Fayetteville AR 72702-1688

Telephone (479) 521-7600Fax (479) 521-7661

jmcfaddendavis-firmcom

-6-

Real Estate Legal Services Proposal

Davis Clark Butt Carithers amp Taylor PLC (ldquoDavis Law Firmrdquo) submits this Real Estate LegalServices Proposal in accordance with the requirements outlined by the Fayetteville Advertising andPromotions Commission Davis Law Firm is equipped to provide real estate legal services to theFayetteville Advertising and Promotions Commission and would be honored to represent theCommission in that capacity

I INTRODUCTION

Davis Law Firm is one of the oldest law firms in Northwest Arkansas with over half a century ofexperience We enjoy the best attributes of both small and large firms ndash close relationships withinthe firm and with individual clients the ability to provide clients a wide array of legal services andthe ability to use a team approach with complex and multiparty litigation issues and transactionsFor every client and case our persistent goal is to obtain the very best result in an efficientprofessional manner We are deeply connected to our community providing leadership in civicorganizations and nonprofit entities We are also active in state and local bar association mattersand serve on several Supreme Court appointed committees Above all we cherish our reputation forhonesty integrity and competence built since 1953

We practice before all Arkansas local state and federal courts the United States Court of Appealsfor the Eighth Circuit and the United States Supreme Court We also regularly practice beforevarious local state and federal administrative regulatory and governing boards and agencies Ourpractice focuses in the Northwest Arkansas counties of Washington Benton Carroll and Madisonbut extends statewide We are conveniently located on Mountain Street just steps from both theFayetteville Town Center and the Fayetteville Advertising and Promotions Commissionrsquos offices

Our credentials demonstrate the quality our practice offers our clients Seven of our partners arerated ldquoAVrdquo (ldquopreeminentrdquo) and one is rated ldquoBVrdquo (ldquodistinguishedrdquo) by Martindale-Hubbell The firmis designated as among the Best Law Firms in the United States by Best Lawyers in America whichalso lists five of our partners individually in diverse practice areas and two of our lawyers asldquoLawyer of the Year 2012rdquo Mid-South Super Lawyers also lists five of our partners in variouspractice areas two being among Super Lawyersrsquo top fifty lawyers in Arkansas Two of our partnersare Fellows in the American College of Trial Lawyers

Among our diverse practice areas we have several attorneys whose practice includes real estatematters With multiple Davis Law Firm attorneys practicing in the area of real estate law theFayetteville Advertising and Promotions Commission will have ready access to an attorney to assistit with any real estate issues that may arise In addition the Fayetteville Advertising and PromotionsCommission will benefit from the combined knowledge of multiple Davis Law Firm attorneys whoare able to provide different perspectives on complex real estate issues thus alleviating the need toseek a second opinion from another law firm

-1-

II ATTORNEY BIOGRAPHIES

The following Davis Law Firm attorneys would be the primary attorneys to assist the FayettevilleAdvertising and Promotions Commission with real estate related legal services

Constance G Clark attended Vanderbilt University from 1972 to 1974 and graduated from theUniversity of Arkansas at Fayetteville in 1976 where she was elected to membership in Phi BetaKappa She received her JD with Honors from the University of Arkansas at Fayetteville in 1979 While in law school she served as an associate editor of the Arkansas Law Review Connie joinedDavis Law Firm upon graduation from law school She has served as Secretary-Treasurer of theWashington County Bar Association and as a member of the Arkansas Bar Association serving inits House of Delegates from 1990 to 1993 She was appointed as a Special Associate Justice of theArkansas Supreme Court in 1991 and 1996 and served two terms on the Arkansas Supreme CourtCommittee on Civil Practice including as Chair of the Committee She is rated AV-Preeminent byMartindale-Hubbell and is listed in Best Lawyers in America and Super Lawyers

William Jackson ldquoJackrdquo Butt II was born in Fayetteville Arkansas in 1950 Jack was admittedto the Virginia Bar in 1975 and the Arkansas Bar in 1981 He received his BA in 1972 from theUniversity of Virginia and his JD with Honors in 1975 and LLM in Taxation in 1979 from TheNational Law Center of George Washington University He joined the firm in 1981 after four yearsrsquopractice with the Army Judge Advocate Generalrsquos Corps and two yearsrsquo private practice in FairfaxVirginia Jack regularly litigates in state and federal courts and before various administrativeagencies

He was first qualified as an Arkansas Board Recognized Tax Specialist in 1986 has been ratedAV-Preeminent by Martindale-Hubbell since 1994 was recognized by the Arkansas Timesrsquo 1995and 2000 polls as one of the top 10 business lawyers in Arkansas and is listed in Best Lawyers inAmerica in Trusts and Estates and in Super Lawyers in Commercial Litigation Jack was Presidentof the Washington County Bar Association in 1996-1997 served as President of the NorthwestArkansas Estate Planning Council from 2004-2006 and is an emeritus member of the William BPutman Inns of Court serving as President 2010-2011 He received the Arkansas Bar AssociationrsquosOutstanding Lawyer Citizen Award for 1999-2000 Jack is a member of the Washington County andArkansas Bar Associations and is admitted to practice before the United States Tax Court and theUnited States Supreme Court

Casey D Lawson graduated in 2000 from the University of Arkansas with a Bachelor of Sciencedegree in Business Administration Summa Cum Laude majoring in accounting Casey was the FirstRanked Senior Scholar and Outstanding Senior in Accounting in the business college She receivedher Juris Doctor degree Magna Cum Laude in 2003 from the University of Arkansas School of Lawat Fayetteville In law school she served on the Arkansas Law Review and was Treasurer of PhiAlpha Delta legal fraternity She received the Award for Top Student in Taxation and BusinessPlanning was awarded Best Oralist in the prize round of the Ben J Altheimer Moot Court

-2-

Competition and was a finalist in the Spring Moot Court Competition Casey has been ratedAV-Preeminent by Martindale-Hubbell

Joshua D McFadden attended John Brown University (Bachelor of Science in BusinessAdministration Magna Cum Laude 2001 MBA 2004) He was a Soderquist Fellow at theSoderquist Center for Leadership and Ethics while earning his MBA Joshua was awarded his JurisDoctor degree Magna Cum Laude in 2007 from the University of Arkansas School of Law atFayetteville where he was an ABA Foundation Ethics Scholar served as Associate Editor of theArkansas Law Review (2006-2007) served on the Honor Council and belonged to the Phi Delta Phiinternational legal fraternity Joshua is a Barrister member of the William B Putman Inns of Courta member of the Washington County and Arkansas Bar Associations and has been ratedBV-Distinguished (44 out of 50) by Martindale-Hubbell

William F Clark was born and raised in Fayetteville Arkansas He graduated from VanderbiltUniversity in 2007 with a Bachelor of Arts in Political Science Cum Laude and received his JurisDoctor degree from the University of Arkansas School of Law at Fayetteville Magna Cum Laudein 2010 In law school Will was named the Joe C Barrett Commercial Transactions Scholar was a member of the Board of Advocates and served as an Associate Editor for the Arkansas LawReview where his case note Blazing a New Trail The Effect of Medical Liability Mutual InsuranceCo v Alan Curtis on the ldquoAmerican Rulerdquo and an Insurerrsquos Right to Attorneysrsquo Fees was publishedin 2009

III REAL ESTATE EXPERIENCE

Davis Law Firm has regularly represented residential and commercial real property owners in thenegotiation purchase sale development and leasing of real estate ranging from modest residencesto multimillion-dollar developed and undeveloped commercial property purchases and sales Thesetransactions include the Curry to U of A sale of the Razorback Road property at approximately$2500000 recent Lloyd to commercial developer for student high-rise property at the northwestcorner of Lafayette Street and West Avenue ($825000) and in and around 2000 several Ben IsraelDixie Development commercial acquisitions on both Joyce Street and Highway 71 (before themarket fell with resulting financial distress) Our firm has also regularly represented developersseeking zoning and use permits before city agencies such as Walgreens at Highway 62Walmart andthe Strip Center at the southeast corner of Sycamore Street and College Avenue We representedabout half of the medical clinics involved in the development of North Hills Medical Park (NWARadiology McDonald Eye Associates Highlands Oncology Group Ozark Orthopaedic) in theiracquisition of lots and the resulting development and construction of North Hills Medical Park More recently we represented Highlands Oncology Group in its acquisition and constructiondevelopment of its 8-figure clinic on Horse Barn Road at Pinnacle Point in Rogers In recent yearswith the severe recession in development and construction we have not represented real estateacquisition and development companies so much as regular business clients in their acquisition anddevelopment of their own business properties We have represented Coldwell Banker Harris

-3-

McHaney Faucette Real Estate one of the two largest real estate firms in Northwest Arkansas formany years

The following is a list of the types of real estate related legal services for which our firm has beenretained

bull Drafting and review of real estate contracts including those for commercial

developments

bull Negotiation drafting and review of commercial and residential real estate leaseagreements

bull Lease disputes and related litigation

bull Reviewing real estate purchase agreements and lease agreements associated withfranchise purchases

bull Drafting deeds for the transfer of real property

bull Advising clients regarding the implications of the purchase of real estate inconjunction with the overall purchase of a business

bull Assisting subdivisions in the drafting of restrictive covenants

bull Represented developers seeking zoning and use permits

bull Land dispute litigation including easement boundary line and adverse possessionclaims

bull Real estate related litigation including

- successful unlawful detainer and ejectment actions

- successful real estate foreclosure and materialmanrsquos lien foreclosurelawsuits and

- successful defense of claims against real estate companies and theiragents

bull Appeals to Arkansas appellate courts in cases involving various real estate issues

-4-

IV REPRESENTATIVE CLIENTS

The following are representative of those clients who have received real estate related legal servicesfrom Davis Law Firm

bull JV Manufacturing Incbull Ben Israel Dixie Developmentbull Highlands Oncology Group PA bull Transwesternbull Vista Healthbull Coldwell Banker Harris McHaney Faucette Real Estatebull Northwest Arkansas Radiology Associates PAbull McDonald Eye Associatesbull Ozark Orthopaedicbull Melodyrsquos Choicesbull N2 Yogurtbull Port Elgin Incbull Prairie Creek Veterinary Hospital PAbull Polo Country Estatesbull Walton Arts Centerbull National Association of Credit Management - Lien and Bond Servicesbull Simmons First Bank of Northwest Arkansas bull Farm Credit Services of Western Arkansas bull Western Federal Credit Unionbull Oklahoma State Bankbull Travelers Insurance Companybull Coldwell Banker Fleming-Lau Realtybull King Realty Groupbull Downum Realty Group Incbull Clark Long amp Associates Real Estate and Insurance LLCbull National Loan Investors LPbull Rajesh Rana bull Scutterrsquos Cafeacute LLCbull White River Natural Foods LLC bull Schumacher Homes of Arkansas Inc bull Scherrie L Bolinbull Cecil R Combsbull UARK Federal Credit Unionbull American Residential Communities andbull Stoneleigh Centerton Apartments

-5-

V NO MALPRACTICE CLAIMS

The above-listed Davis Law Firm attorneys are not aware of any malpractice claims or professionalconduct claims ever being lodged against them

VI FEE SCHEDULE

The Davis Law Firm fee scale is as follows

Senior Partner Rate $25000hour(25 years plus experience)

Partner Rate $17500hour

Associate Rate $15000hour

Paralegal Rate $7500hour

Law Clerk Rate $5000hour

Attorneysrsquo fees will be charged along with expenses incurred in connection with each matter DavisLaw Firm prides itself on providing quality legal services in an economical manner While legalissues will be handled at the lowest fee level that is appropriate for a given matter you will benefitfrom the experience and insights of senior partners as dictated by the circumstances of each uniquesituation

VII SCOPE OF REPRESENTATION

Davis Law Firm is interested in representing the Fayetteville Advertising and PromotionsCommission on real estate related matters Any representation of the Fayetteville Advertising andPromotions Commission would not constitute representation of the City of Fayetteville Davis LawFirm reserves the right to represent clients that are potentially adverse to the City of Fayetteville solong as those matters do not involve issues directly related to the Fayetteville Town Center andorthe Fayetteville Advertising and Promotions Commission

VIII CONTACT INFORMATION

Joshua McFaddenDavis Clark Butt Carithers amp Taylor PLCPO Box 1688Fayetteville AR 72702-1688

Telephone (479) 521-7600Fax (479) 521-7661

jmcfaddendavis-firmcom

-6-

II ATTORNEY BIOGRAPHIES

The following Davis Law Firm attorneys would be the primary attorneys to assist the FayettevilleAdvertising and Promotions Commission with real estate related legal services

Constance G Clark attended Vanderbilt University from 1972 to 1974 and graduated from theUniversity of Arkansas at Fayetteville in 1976 where she was elected to membership in Phi BetaKappa She received her JD with Honors from the University of Arkansas at Fayetteville in 1979 While in law school she served as an associate editor of the Arkansas Law Review Connie joinedDavis Law Firm upon graduation from law school She has served as Secretary-Treasurer of theWashington County Bar Association and as a member of the Arkansas Bar Association serving inits House of Delegates from 1990 to 1993 She was appointed as a Special Associate Justice of theArkansas Supreme Court in 1991 and 1996 and served two terms on the Arkansas Supreme CourtCommittee on Civil Practice including as Chair of the Committee She is rated AV-Preeminent byMartindale-Hubbell and is listed in Best Lawyers in America and Super Lawyers

William Jackson ldquoJackrdquo Butt II was born in Fayetteville Arkansas in 1950 Jack was admittedto the Virginia Bar in 1975 and the Arkansas Bar in 1981 He received his BA in 1972 from theUniversity of Virginia and his JD with Honors in 1975 and LLM in Taxation in 1979 from TheNational Law Center of George Washington University He joined the firm in 1981 after four yearsrsquopractice with the Army Judge Advocate Generalrsquos Corps and two yearsrsquo private practice in FairfaxVirginia Jack regularly litigates in state and federal courts and before various administrativeagencies

He was first qualified as an Arkansas Board Recognized Tax Specialist in 1986 has been ratedAV-Preeminent by Martindale-Hubbell since 1994 was recognized by the Arkansas Timesrsquo 1995and 2000 polls as one of the top 10 business lawyers in Arkansas and is listed in Best Lawyers inAmerica in Trusts and Estates and in Super Lawyers in Commercial Litigation Jack was Presidentof the Washington County Bar Association in 1996-1997 served as President of the NorthwestArkansas Estate Planning Council from 2004-2006 and is an emeritus member of the William BPutman Inns of Court serving as President 2010-2011 He received the Arkansas Bar AssociationrsquosOutstanding Lawyer Citizen Award for 1999-2000 Jack is a member of the Washington County andArkansas Bar Associations and is admitted to practice before the United States Tax Court and theUnited States Supreme Court

Casey D Lawson graduated in 2000 from the University of Arkansas with a Bachelor of Sciencedegree in Business Administration Summa Cum Laude majoring in accounting Casey was the FirstRanked Senior Scholar and Outstanding Senior in Accounting in the business college She receivedher Juris Doctor degree Magna Cum Laude in 2003 from the University of Arkansas School of Lawat Fayetteville In law school she served on the Arkansas Law Review and was Treasurer of PhiAlpha Delta legal fraternity She received the Award for Top Student in Taxation and BusinessPlanning was awarded Best Oralist in the prize round of the Ben J Altheimer Moot Court

-2-

Competition and was a finalist in the Spring Moot Court Competition Casey has been ratedAV-Preeminent by Martindale-Hubbell

Joshua D McFadden attended John Brown University (Bachelor of Science in BusinessAdministration Magna Cum Laude 2001 MBA 2004) He was a Soderquist Fellow at theSoderquist Center for Leadership and Ethics while earning his MBA Joshua was awarded his JurisDoctor degree Magna Cum Laude in 2007 from the University of Arkansas School of Law atFayetteville where he was an ABA Foundation Ethics Scholar served as Associate Editor of theArkansas Law Review (2006-2007) served on the Honor Council and belonged to the Phi Delta Phiinternational legal fraternity Joshua is a Barrister member of the William B Putman Inns of Courta member of the Washington County and Arkansas Bar Associations and has been ratedBV-Distinguished (44 out of 50) by Martindale-Hubbell

William F Clark was born and raised in Fayetteville Arkansas He graduated from VanderbiltUniversity in 2007 with a Bachelor of Arts in Political Science Cum Laude and received his JurisDoctor degree from the University of Arkansas School of Law at Fayetteville Magna Cum Laudein 2010 In law school Will was named the Joe C Barrett Commercial Transactions Scholar was a member of the Board of Advocates and served as an Associate Editor for the Arkansas LawReview where his case note Blazing a New Trail The Effect of Medical Liability Mutual InsuranceCo v Alan Curtis on the ldquoAmerican Rulerdquo and an Insurerrsquos Right to Attorneysrsquo Fees was publishedin 2009

III REAL ESTATE EXPERIENCE

Davis Law Firm has regularly represented residential and commercial real property owners in thenegotiation purchase sale development and leasing of real estate ranging from modest residencesto multimillion-dollar developed and undeveloped commercial property purchases and sales Thesetransactions include the Curry to U of A sale of the Razorback Road property at approximately$2500000 recent Lloyd to commercial developer for student high-rise property at the northwestcorner of Lafayette Street and West Avenue ($825000) and in and around 2000 several Ben IsraelDixie Development commercial acquisitions on both Joyce Street and Highway 71 (before themarket fell with resulting financial distress) Our firm has also regularly represented developersseeking zoning and use permits before city agencies such as Walgreens at Highway 62Walmart andthe Strip Center at the southeast corner of Sycamore Street and College Avenue We representedabout half of the medical clinics involved in the development of North Hills Medical Park (NWARadiology McDonald Eye Associates Highlands Oncology Group Ozark Orthopaedic) in theiracquisition of lots and the resulting development and construction of North Hills Medical Park More recently we represented Highlands Oncology Group in its acquisition and constructiondevelopment of its 8-figure clinic on Horse Barn Road at Pinnacle Point in Rogers In recent yearswith the severe recession in development and construction we have not represented real estateacquisition and development companies so much as regular business clients in their acquisition anddevelopment of their own business properties We have represented Coldwell Banker Harris

-3-

McHaney Faucette Real Estate one of the two largest real estate firms in Northwest Arkansas formany years

The following is a list of the types of real estate related legal services for which our firm has beenretained

bull Drafting and review of real estate contracts including those for commercial

developments

bull Negotiation drafting and review of commercial and residential real estate leaseagreements

bull Lease disputes and related litigation

bull Reviewing real estate purchase agreements and lease agreements associated withfranchise purchases

bull Drafting deeds for the transfer of real property

bull Advising clients regarding the implications of the purchase of real estate inconjunction with the overall purchase of a business

bull Assisting subdivisions in the drafting of restrictive covenants

bull Represented developers seeking zoning and use permits

bull Land dispute litigation including easement boundary line and adverse possessionclaims

bull Real estate related litigation including

- successful unlawful detainer and ejectment actions

- successful real estate foreclosure and materialmanrsquos lien foreclosurelawsuits and

- successful defense of claims against real estate companies and theiragents

bull Appeals to Arkansas appellate courts in cases involving various real estate issues

-4-

IV REPRESENTATIVE CLIENTS

The following are representative of those clients who have received real estate related legal servicesfrom Davis Law Firm

bull JV Manufacturing Incbull Ben Israel Dixie Developmentbull Highlands Oncology Group PA bull Transwesternbull Vista Healthbull Coldwell Banker Harris McHaney Faucette Real Estatebull Northwest Arkansas Radiology Associates PAbull McDonald Eye Associatesbull Ozark Orthopaedicbull Melodyrsquos Choicesbull N2 Yogurtbull Port Elgin Incbull Prairie Creek Veterinary Hospital PAbull Polo Country Estatesbull Walton Arts Centerbull National Association of Credit Management - Lien and Bond Servicesbull Simmons First Bank of Northwest Arkansas bull Farm Credit Services of Western Arkansas bull Western Federal Credit Unionbull Oklahoma State Bankbull Travelers Insurance Companybull Coldwell Banker Fleming-Lau Realtybull King Realty Groupbull Downum Realty Group Incbull Clark Long amp Associates Real Estate and Insurance LLCbull National Loan Investors LPbull Rajesh Rana bull Scutterrsquos Cafeacute LLCbull White River Natural Foods LLC bull Schumacher Homes of Arkansas Inc bull Scherrie L Bolinbull Cecil R Combsbull UARK Federal Credit Unionbull American Residential Communities andbull Stoneleigh Centerton Apartments

-5-

V NO MALPRACTICE CLAIMS

The above-listed Davis Law Firm attorneys are not aware of any malpractice claims or professionalconduct claims ever being lodged against them

VI FEE SCHEDULE

The Davis Law Firm fee scale is as follows

Senior Partner Rate $25000hour(25 years plus experience)

Partner Rate $17500hour

Associate Rate $15000hour

Paralegal Rate $7500hour

Law Clerk Rate $5000hour

Attorneysrsquo fees will be charged along with expenses incurred in connection with each matter DavisLaw Firm prides itself on providing quality legal services in an economical manner While legalissues will be handled at the lowest fee level that is appropriate for a given matter you will benefitfrom the experience and insights of senior partners as dictated by the circumstances of each uniquesituation

VII SCOPE OF REPRESENTATION

Davis Law Firm is interested in representing the Fayetteville Advertising and PromotionsCommission on real estate related matters Any representation of the Fayetteville Advertising andPromotions Commission would not constitute representation of the City of Fayetteville Davis LawFirm reserves the right to represent clients that are potentially adverse to the City of Fayetteville solong as those matters do not involve issues directly related to the Fayetteville Town Center andorthe Fayetteville Advertising and Promotions Commission

VIII CONTACT INFORMATION

Joshua McFaddenDavis Clark Butt Carithers amp Taylor PLCPO Box 1688Fayetteville AR 72702-1688

Telephone (479) 521-7600Fax (479) 521-7661

jmcfaddendavis-firmcom

-6-

Competition and was a finalist in the Spring Moot Court Competition Casey has been ratedAV-Preeminent by Martindale-Hubbell

Joshua D McFadden attended John Brown University (Bachelor of Science in BusinessAdministration Magna Cum Laude 2001 MBA 2004) He was a Soderquist Fellow at theSoderquist Center for Leadership and Ethics while earning his MBA Joshua was awarded his JurisDoctor degree Magna Cum Laude in 2007 from the University of Arkansas School of Law atFayetteville where he was an ABA Foundation Ethics Scholar served as Associate Editor of theArkansas Law Review (2006-2007) served on the Honor Council and belonged to the Phi Delta Phiinternational legal fraternity Joshua is a Barrister member of the William B Putman Inns of Courta member of the Washington County and Arkansas Bar Associations and has been ratedBV-Distinguished (44 out of 50) by Martindale-Hubbell

William F Clark was born and raised in Fayetteville Arkansas He graduated from VanderbiltUniversity in 2007 with a Bachelor of Arts in Political Science Cum Laude and received his JurisDoctor degree from the University of Arkansas School of Law at Fayetteville Magna Cum Laudein 2010 In law school Will was named the Joe C Barrett Commercial Transactions Scholar was a member of the Board of Advocates and served as an Associate Editor for the Arkansas LawReview where his case note Blazing a New Trail The Effect of Medical Liability Mutual InsuranceCo v Alan Curtis on the ldquoAmerican Rulerdquo and an Insurerrsquos Right to Attorneysrsquo Fees was publishedin 2009

III REAL ESTATE EXPERIENCE

Davis Law Firm has regularly represented residential and commercial real property owners in thenegotiation purchase sale development and leasing of real estate ranging from modest residencesto multimillion-dollar developed and undeveloped commercial property purchases and sales Thesetransactions include the Curry to U of A sale of the Razorback Road property at approximately$2500000 recent Lloyd to commercial developer for student high-rise property at the northwestcorner of Lafayette Street and West Avenue ($825000) and in and around 2000 several Ben IsraelDixie Development commercial acquisitions on both Joyce Street and Highway 71 (before themarket fell with resulting financial distress) Our firm has also regularly represented developersseeking zoning and use permits before city agencies such as Walgreens at Highway 62Walmart andthe Strip Center at the southeast corner of Sycamore Street and College Avenue We representedabout half of the medical clinics involved in the development of North Hills Medical Park (NWARadiology McDonald Eye Associates Highlands Oncology Group Ozark Orthopaedic) in theiracquisition of lots and the resulting development and construction of North Hills Medical Park More recently we represented Highlands Oncology Group in its acquisition and constructiondevelopment of its 8-figure clinic on Horse Barn Road at Pinnacle Point in Rogers In recent yearswith the severe recession in development and construction we have not represented real estateacquisition and development companies so much as regular business clients in their acquisition anddevelopment of their own business properties We have represented Coldwell Banker Harris

-3-

McHaney Faucette Real Estate one of the two largest real estate firms in Northwest Arkansas formany years

The following is a list of the types of real estate related legal services for which our firm has beenretained

bull Drafting and review of real estate contracts including those for commercial

developments

bull Negotiation drafting and review of commercial and residential real estate leaseagreements

bull Lease disputes and related litigation

bull Reviewing real estate purchase agreements and lease agreements associated withfranchise purchases

bull Drafting deeds for the transfer of real property

bull Advising clients regarding the implications of the purchase of real estate inconjunction with the overall purchase of a business

bull Assisting subdivisions in the drafting of restrictive covenants

bull Represented developers seeking zoning and use permits

bull Land dispute litigation including easement boundary line and adverse possessionclaims

bull Real estate related litigation including

- successful unlawful detainer and ejectment actions

- successful real estate foreclosure and materialmanrsquos lien foreclosurelawsuits and

- successful defense of claims against real estate companies and theiragents

bull Appeals to Arkansas appellate courts in cases involving various real estate issues

-4-

IV REPRESENTATIVE CLIENTS

The following are representative of those clients who have received real estate related legal servicesfrom Davis Law Firm

bull JV Manufacturing Incbull Ben Israel Dixie Developmentbull Highlands Oncology Group PA bull Transwesternbull Vista Healthbull Coldwell Banker Harris McHaney Faucette Real Estatebull Northwest Arkansas Radiology Associates PAbull McDonald Eye Associatesbull Ozark Orthopaedicbull Melodyrsquos Choicesbull N2 Yogurtbull Port Elgin Incbull Prairie Creek Veterinary Hospital PAbull Polo Country Estatesbull Walton Arts Centerbull National Association of Credit Management - Lien and Bond Servicesbull Simmons First Bank of Northwest Arkansas bull Farm Credit Services of Western Arkansas bull Western Federal Credit Unionbull Oklahoma State Bankbull Travelers Insurance Companybull Coldwell Banker Fleming-Lau Realtybull King Realty Groupbull Downum Realty Group Incbull Clark Long amp Associates Real Estate and Insurance LLCbull National Loan Investors LPbull Rajesh Rana bull Scutterrsquos Cafeacute LLCbull White River Natural Foods LLC bull Schumacher Homes of Arkansas Inc bull Scherrie L Bolinbull Cecil R Combsbull UARK Federal Credit Unionbull American Residential Communities andbull Stoneleigh Centerton Apartments

-5-

V NO MALPRACTICE CLAIMS

The above-listed Davis Law Firm attorneys are not aware of any malpractice claims or professionalconduct claims ever being lodged against them

VI FEE SCHEDULE

The Davis Law Firm fee scale is as follows

Senior Partner Rate $25000hour(25 years plus experience)

Partner Rate $17500hour

Associate Rate $15000hour

Paralegal Rate $7500hour

Law Clerk Rate $5000hour

Attorneysrsquo fees will be charged along with expenses incurred in connection with each matter DavisLaw Firm prides itself on providing quality legal services in an economical manner While legalissues will be handled at the lowest fee level that is appropriate for a given matter you will benefitfrom the experience and insights of senior partners as dictated by the circumstances of each uniquesituation

VII SCOPE OF REPRESENTATION

Davis Law Firm is interested in representing the Fayetteville Advertising and PromotionsCommission on real estate related matters Any representation of the Fayetteville Advertising andPromotions Commission would not constitute representation of the City of Fayetteville Davis LawFirm reserves the right to represent clients that are potentially adverse to the City of Fayetteville solong as those matters do not involve issues directly related to the Fayetteville Town Center andorthe Fayetteville Advertising and Promotions Commission

VIII CONTACT INFORMATION

Joshua McFaddenDavis Clark Butt Carithers amp Taylor PLCPO Box 1688Fayetteville AR 72702-1688

Telephone (479) 521-7600Fax (479) 521-7661

jmcfaddendavis-firmcom

-6-

McHaney Faucette Real Estate one of the two largest real estate firms in Northwest Arkansas formany years

The following is a list of the types of real estate related legal services for which our firm has beenretained

bull Drafting and review of real estate contracts including those for commercial

developments

bull Negotiation drafting and review of commercial and residential real estate leaseagreements

bull Lease disputes and related litigation

bull Reviewing real estate purchase agreements and lease agreements associated withfranchise purchases

bull Drafting deeds for the transfer of real property

bull Advising clients regarding the implications of the purchase of real estate inconjunction with the overall purchase of a business

bull Assisting subdivisions in the drafting of restrictive covenants

bull Represented developers seeking zoning and use permits

bull Land dispute litigation including easement boundary line and adverse possessionclaims

bull Real estate related litigation including

- successful unlawful detainer and ejectment actions

- successful real estate foreclosure and materialmanrsquos lien foreclosurelawsuits and

- successful defense of claims against real estate companies and theiragents

bull Appeals to Arkansas appellate courts in cases involving various real estate issues

-4-

IV REPRESENTATIVE CLIENTS

The following are representative of those clients who have received real estate related legal servicesfrom Davis Law Firm

bull JV Manufacturing Incbull Ben Israel Dixie Developmentbull Highlands Oncology Group PA bull Transwesternbull Vista Healthbull Coldwell Banker Harris McHaney Faucette Real Estatebull Northwest Arkansas Radiology Associates PAbull McDonald Eye Associatesbull Ozark Orthopaedicbull Melodyrsquos Choicesbull N2 Yogurtbull Port Elgin Incbull Prairie Creek Veterinary Hospital PAbull Polo Country Estatesbull Walton Arts Centerbull National Association of Credit Management - Lien and Bond Servicesbull Simmons First Bank of Northwest Arkansas bull Farm Credit Services of Western Arkansas bull Western Federal Credit Unionbull Oklahoma State Bankbull Travelers Insurance Companybull Coldwell Banker Fleming-Lau Realtybull King Realty Groupbull Downum Realty Group Incbull Clark Long amp Associates Real Estate and Insurance LLCbull National Loan Investors LPbull Rajesh Rana bull Scutterrsquos Cafeacute LLCbull White River Natural Foods LLC bull Schumacher Homes of Arkansas Inc bull Scherrie L Bolinbull Cecil R Combsbull UARK Federal Credit Unionbull American Residential Communities andbull Stoneleigh Centerton Apartments

-5-

V NO MALPRACTICE CLAIMS

The above-listed Davis Law Firm attorneys are not aware of any malpractice claims or professionalconduct claims ever being lodged against them

VI FEE SCHEDULE

The Davis Law Firm fee scale is as follows

Senior Partner Rate $25000hour(25 years plus experience)

Partner Rate $17500hour

Associate Rate $15000hour

Paralegal Rate $7500hour

Law Clerk Rate $5000hour

Attorneysrsquo fees will be charged along with expenses incurred in connection with each matter DavisLaw Firm prides itself on providing quality legal services in an economical manner While legalissues will be handled at the lowest fee level that is appropriate for a given matter you will benefitfrom the experience and insights of senior partners as dictated by the circumstances of each uniquesituation

VII SCOPE OF REPRESENTATION

Davis Law Firm is interested in representing the Fayetteville Advertising and PromotionsCommission on real estate related matters Any representation of the Fayetteville Advertising andPromotions Commission would not constitute representation of the City of Fayetteville Davis LawFirm reserves the right to represent clients that are potentially adverse to the City of Fayetteville solong as those matters do not involve issues directly related to the Fayetteville Town Center andorthe Fayetteville Advertising and Promotions Commission

VIII CONTACT INFORMATION

Joshua McFaddenDavis Clark Butt Carithers amp Taylor PLCPO Box 1688Fayetteville AR 72702-1688

Telephone (479) 521-7600Fax (479) 521-7661

jmcfaddendavis-firmcom

-6-

IV REPRESENTATIVE CLIENTS

The following are representative of those clients who have received real estate related legal servicesfrom Davis Law Firm

bull JV Manufacturing Incbull Ben Israel Dixie Developmentbull Highlands Oncology Group PA bull Transwesternbull Vista Healthbull Coldwell Banker Harris McHaney Faucette Real Estatebull Northwest Arkansas Radiology Associates PAbull McDonald Eye Associatesbull Ozark Orthopaedicbull Melodyrsquos Choicesbull N2 Yogurtbull Port Elgin Incbull Prairie Creek Veterinary Hospital PAbull Polo Country Estatesbull Walton Arts Centerbull National Association of Credit Management - Lien and Bond Servicesbull Simmons First Bank of Northwest Arkansas bull Farm Credit Services of Western Arkansas bull Western Federal Credit Unionbull Oklahoma State Bankbull Travelers Insurance Companybull Coldwell Banker Fleming-Lau Realtybull King Realty Groupbull Downum Realty Group Incbull Clark Long amp Associates Real Estate and Insurance LLCbull National Loan Investors LPbull Rajesh Rana bull Scutterrsquos Cafeacute LLCbull White River Natural Foods LLC bull Schumacher Homes of Arkansas Inc bull Scherrie L Bolinbull Cecil R Combsbull UARK Federal Credit Unionbull American Residential Communities andbull Stoneleigh Centerton Apartments

-5-

V NO MALPRACTICE CLAIMS

The above-listed Davis Law Firm attorneys are not aware of any malpractice claims or professionalconduct claims ever being lodged against them

VI FEE SCHEDULE

The Davis Law Firm fee scale is as follows

Senior Partner Rate $25000hour(25 years plus experience)

Partner Rate $17500hour

Associate Rate $15000hour

Paralegal Rate $7500hour

Law Clerk Rate $5000hour

Attorneysrsquo fees will be charged along with expenses incurred in connection with each matter DavisLaw Firm prides itself on providing quality legal services in an economical manner While legalissues will be handled at the lowest fee level that is appropriate for a given matter you will benefitfrom the experience and insights of senior partners as dictated by the circumstances of each uniquesituation

VII SCOPE OF REPRESENTATION

Davis Law Firm is interested in representing the Fayetteville Advertising and PromotionsCommission on real estate related matters Any representation of the Fayetteville Advertising andPromotions Commission would not constitute representation of the City of Fayetteville Davis LawFirm reserves the right to represent clients that are potentially adverse to the City of Fayetteville solong as those matters do not involve issues directly related to the Fayetteville Town Center andorthe Fayetteville Advertising and Promotions Commission

VIII CONTACT INFORMATION

Joshua McFaddenDavis Clark Butt Carithers amp Taylor PLCPO Box 1688Fayetteville AR 72702-1688

Telephone (479) 521-7600Fax (479) 521-7661

jmcfaddendavis-firmcom

-6-

V NO MALPRACTICE CLAIMS

The above-listed Davis Law Firm attorneys are not aware of any malpractice claims or professionalconduct claims ever being lodged against them

VI FEE SCHEDULE

The Davis Law Firm fee scale is as follows

Senior Partner Rate $25000hour(25 years plus experience)

Partner Rate $17500hour

Associate Rate $15000hour

Paralegal Rate $7500hour

Law Clerk Rate $5000hour

Attorneysrsquo fees will be charged along with expenses incurred in connection with each matter DavisLaw Firm prides itself on providing quality legal services in an economical manner While legalissues will be handled at the lowest fee level that is appropriate for a given matter you will benefitfrom the experience and insights of senior partners as dictated by the circumstances of each uniquesituation

VII SCOPE OF REPRESENTATION

Davis Law Firm is interested in representing the Fayetteville Advertising and PromotionsCommission on real estate related matters Any representation of the Fayetteville Advertising andPromotions Commission would not constitute representation of the City of Fayetteville Davis LawFirm reserves the right to represent clients that are potentially adverse to the City of Fayetteville solong as those matters do not involve issues directly related to the Fayetteville Town Center andorthe Fayetteville Advertising and Promotions Commission

VIII CONTACT INFORMATION

Joshua McFaddenDavis Clark Butt Carithers amp Taylor PLCPO Box 1688Fayetteville AR 72702-1688

Telephone (479) 521-7600Fax (479) 521-7661

jmcfaddendavis-firmcom

-6-

VIII CONCLUSION

Davis Law Firm is particularly suited to represent the Fayetteville Advertising and PromotionsCommissionrsquos need for real estate related legal services Our attorneysrsquo legal abilities are wellrecognized and we have a strong connection and commitment to the community Our firmrsquos locationon Mountain Street gives us proximity to the Fayetteville Town Center as well as the FayettevilleAdvertising and Promotions Commission offices and a unique perspective on the dynamics ofFayettevillersquos downtown district Davis Law Firm seeks the opportunity to provide superior legalservices to the Fayetteville Advertising and Promotions Commission

-7-

1

Jessica Edwards Leonard

From Marilyn Heifner ltmheifnertwncentercomgtSent Monday April 02 2012 1057 AMTo Jessica Edwards LeonardSubject A amp P Report 4

Scarpino Building

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4

5

6

7

8

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10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

1

Jessica Edwards Leonard

From Marilyn Heifner ltmheifnertwncentercomgtSent Monday April 02 2012 1057 AMTo Jessica Edwards LeonardSubject A amp P Report 4

Scarpino Building

2

3

4

5

6

7

8

9

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

2

3

4

5

6

7

8

9

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

3

4

5

6

7

8

9

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

4

5

6

7

8

9

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

5

6

7

8

9

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

6

7

8

9

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

7

8

9

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

8

9

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

9

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino

10

• APagenda (2)
• AP Minutes - 3-12-12
• HMR Summary 2009-2012
• FAY AampP Feb 2012
• clinton_house
• Town_Center
• Analytics_wwwtwncentercom_201203_(TWNCNTER_Analytics)
• Analytics_wwwexperiencefayettevillecom_201203_(DashboardReport)
• Analytics_wwwexperiencefayettevillecom_20120326-20120401_(EXP_FAY_Stats_)
• Appraisal of Old Post Office
• Real Estate Legal Services Proposal - Davis Law Firm
• scarpino