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HomeMy WebLinkAboutSova Appraisal s ovA Appraisal • Valuation . Consulting APPRAISAL OF THE CENTRAL HIGHLANDS PLAZA PROPERTY 4601 NE SUNSET BOULEVARD RENTON, WASHINGTON yy�L 4' eftA 9, PREPARED FOR MS.SONJA DAVIS RES GROUP NW 624 S. LANDER STREET,SUITE 202 SEATTLE,WA 98134 PREPARED BY SOVA CONSULTING 925 FOURTH AVENUE,STE 2000 SEATTLE,WA 98104 SOVA PROJECT 20014 925 Fourth Ave Ste 2000 Seattle,WA 98104 Appraisal • Valuation • Consulting Greg Goodman,MA1,206.369.0451 Matt Sloan MAI,SRA,206.234.6458 March 4, 2020 Ms.Sonja Davis RES Group NW 624 S. Lander Street,Suite 202 Seattle, Washington, 98134 RE: Appraisal Report Central Highlands Plaza 4601 NE Sunset Boulevard Renton, Washington 98059 Dear Ms. Davis: In response to your request,we have completed an appraisal of the above referenced property.The purpose of the appraisal is to report our opinions and conclusions of the market value of the subject property"before and after" a proposed partial acquisition by the City of Renton.This appraisal is intended for use by RES Group NW and the City of Renton,as well as both parties'agents, representatives,and legal counsel.The appraisers do not intend use of this report by others. The subject property consists of a four-parcel assemblage located at the southwest corner of NE Sunset Boulevard and Duvall Avenue NE, east of Interstate 405 (1-405) in the Highlands Park neighborhood of Renton. The site is of a typical square/rectangular shape and has a level to gently sloping topography and is at or near grade of fronting streets. It contains a total of 349,720sf(8.03 acres) and is zoned Commercial Arterial (CA) by the City of Renton.The site is improved with a neighborhood retail center with four large, box retailers including Albertson's, Planet Fitness, Big Lots, and Ace Hardware. The buildings contain a total approximately 93,571sf and were constructed in 1979. The buildings appear to be in average condition based on our exterior observations. The proposed acquisition consists of a five-foot slope and utility easement along the easterly property boundary, a total of 2,912sf. In addition to the permanent easement, an additional 5-foot strip will be encumbered with a TCE to allow contractors access to the site while constructing street improvements within the abutting Duvall Avenue NE right-of-way and easement area for a period of 24 months.The area of acquisition is improved with asphalt/curbing at three driveway locations,several mid-size to large trees and extensive juniper and small shrub landscaping. It is our understanding the trees will not be removed; groundcover juniper will likely be removed and not replaced.Asphalt pavement and curbing will be replaced if removed/impacted. The total TCE area will occupy 4,820sf for 24-months. This Appraisal Report is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a)of the Uniform Standards of Professional Appraisal Practice (USPAP), as well as Federal, State and Sound Transit requirements. As such, it presents detailed discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value.Additional supporting documentation and analyses is retained in the appraiser's file. Based on our research and analysis, it is our opinion the market value of the subject site, "before and after"the proposed acquisition,as of February 22, 2020, is: Value Conclusions&Allocations Site Area Total Before Condition $11,569,000 After Condition $11,497,000 Just Compensation/Diminution $72,000 Easement Acqusition (Rounded) $24,000 Temporary Construction Easement $20,000 Impacted Site Improvements $28,000 ROUNDED $72,000 If you have further questions not answered in the accompanying report or if we can be of additional assistance, please do not hesitate to contact us. Sincerely, Matthew C.Sloan, MAI,SRA SOVA Consulting Enclosures Central Highlands Plaza 20014-Copyright©2020 Transmittal Page 2 • JSOVA Appraisal.Valuation.Consu!tin` TABLE OF CONTENTS Page Letter of Transmittal Executive Summary Subject Property Photographs Introduction 1 Factual Data 4 Area/Market Analysis 7 Highest and Best Use 9 Before Condition Valuation 11 After Condition Analysis 21 Before and After Value Conclusion 26 Addenda 29 Assumptions and Limiting Conditions Title Report Appraiser Qualification • Central Highlands Plaza 20014-Copyright©2020 Page i EriL ,ing APPRAISAL SUMMARY AND CONCLUSIONS Property/project: Central Highlands Plaza Property Location: 4601 NE Sunset Boulevard, Renton,WA Site Size: 349,720sf Improvements: Retail buildings and site improvements(93,571sf) Utilities: All available Zoning: TL 5 Highest and Best Use: Continued use of the existing improvements Acquisition Description: Slope and Utility Easement containing 2,912sf and a corresponding 24-month TCE Value Conclusions: Before Condition: $11,569,000 After Condition: $11,497,000 Diminution/Just Compensation: $72,000 Date of Valuation: February 22,2020 Appraisers: Matthew Sloan, MAI,SRA File: 20014 Central Highlands Plaza 20014-Copyright©2020 Page ii •SOVA Appraisal•Valuation•Consulting AERIAL PHOTO r'- �a �� - • 41it1' r , ' o? tl i•'` �� ii {`. ' _._.rat ' ' w nor, ;;114 F^ _ �i. for' ,4-• •f to. -I ter, t's - V - ° _ ' + .* .� x a 4: act e4 ;:a , ., .U, _ v ;Ir ' ryas l .,t . r t • �- 4 7.,. .. �. �.•. .' .'�, fir(' t _r t.ti.__ - _'' Riti old':.: +'v.'' i!> ...a.itos,. i ,. ... SY t 1 i — r: i i , : ,, , ...: lt,. .4fest.- , -II 11 mil? w., _ ! S 3 , ,. f i z ° ' + jn'ill +. C rF'`r *' 4 tit. . ,p. 'elf r r" Central Highlands Plaza 20014-Copyright©2020 Eii S OVA Appraisal.Valuation.Corsu'ling NEIGHBORHOOD MAP .:�rdiril mil ii Bellevue co co g b Newcastie 104601 Northeast. ....._... Sunset Boulevard Will TukwilaRenton U ,:iT ac 0 Maple Vallev' Kent (Ti) r:egdi n inn Central Highlands Plaza 20014-Copyright©2020 Page iv r SOVA SUBJECT PHOTOS - F ._ ,. _ OR ..._,,, t it! — t. ....,.. __' Subject property • ti . .: ■:Law, , i +iier, ., —Subject property Central Highlands Plaza 20014-Copyright©2020 'agE°v JSOVA npprasai Vaivaton Cor au ding SUBJECT PHOTOS .b 11 • 1 d 1iR'^' r . s `' rr r Existing frontage on Duvall Avenue NE (facing north from southerly driveway) • ". GIs. Existing frontage on Duvall Avenue NE (facing south from northerly driveway) Central Highlands Plaza 20014-Copyright©2020 Page vi ■Soya Appraisal•Valuation.Consulting SUBJECT PHOTOS 04, k, • 1t . {• �' '�J 4 �� ;�,` L+ y e. 1 rs , z . *'....1i..":-:. 1 IS.' ' y -di •.P 1 �:+ 4 444 foi V y d ,[ 4 I r 2 ae fl �y�a . L Iff j / i�'w . Approximate location of property boundary/right-of-way . k„•„ r1 '',. 1. ..2'it °",.: ,a r '�',, ;l. _ V ..,,,�rl "* .IS — .'� li d�t. lw a.b y` I . ik ' • •7 4� R `��n � t 1°� �Y/r►v .rti �, ¢ $ }a 't,t '"Al ;-'' '1 1 '•}4 • r ++t" 1 .M „ey,„ kii4. 7M "ls ' $ 44 fir kt: . ... ' �...r:A.... ,t ,. • *X' Approximate location of proposed utility easement Central Highlands Plaza 20014-Copyright©2020 Page vii El SOYA Appraisal Valuation.Car su'r ng SUBJECT PHOTOS t, i ; a ts d.'..n r. Ir ''if 4a'.. F _ .4k ./ti ( is Ys . 4 i •1z r /+' .,,, 41; ` ', ,, tut i i *; � al`> ' ' I7ak , IY.a'YfJe 1t '1,... .yam .an'A16 W _ mx 1. a 4-.; 't . 1„...,. ..,r,3,1 8'2 „4.:'.". 10.,' . '246,,'4,4 ' l',.. , .,,: ' .I:-..,- ',...i.' till*, Approximate location of proposed TCE P•0•41 lir- --. ... .. •-•,•.. --.- ''' i .- ' hM„a •F.,y 3 1 .yr ...: � z • 4 r : •Slaw , Aak"" f .«. Juniper/shrubs within permanent easement/TCE area may be removed Large trees will be retained Central Highlands Plaza 20014-Copyright©2020 Page viii SOVA APDraisal.Valuation.(orsu'nog INTRODUCTION Identification of the Subject Property/Legal Description The subject property consists of a four-parcel assemblage located at the southwest corner of NE Sunset Boulevard and Duvall Avenue NE, east of 1-405 in the Highlands Park neighborhood of Renton. The site is of a typical square/rectangular shape and has a level to gently sloping topography and is at or near grade of fronting streets. It contains a total of 349,720sf(8.03 acres)and is zoned Commercial Arterial(CA) by the City of Renton. The site is improved with a neighborhood retail center with four large, box retailers including Albertson's, Planet Fitness, Big Lots,and Ace Hardware.The buildings contain a total approximately 93,571sf and were constructed in 1979.The buildings appear to be in average condition based on our exterior observations. A complete legal description can be found in the title report provided by the client, a copy of which is included in the Addenda to this appraisal.The property is further identified as Assessor's Parcel Numbers 149450-0010, -0020,-0030,-0050. Purpose of the Appraisal The purpose of this appraisal is to report our opinions and conclusions of the market value of the subject property in the before and after conditions. The difference between the before and after conditions (plus the TCE) is the diminution in value resulting from the acquisition, or just compensation due the property owner. Client/Intended Use/Intended Users The client for this assignment is RES Group NW, acting on behalf of the City of Renton. Intended users of this report include the client's authorized employees, representatives, agents, and/or legal counsel, as well as the City of Renton. The intended use of this report is to assist the client and City of Renton in the acquisition of property rights required for the Duvall Avenue NE improvement project. Property Rights Appraised The property right appraised is the fee simple interest subject to existing easements, covenants, and deed restrictions. Fee simple interest is defined as: ' Absolute ownership unencumbered by any other interest or estate,subject only to the limitations imposed by the governmental powers of taxation, eminent domain,police power,and escheat. An easement is defined as follows: 2 An interest in real property that transfers use,but not ownership, of a portion of an owner's property. This definition may be expanded as: 1 From The Appraisal of Real Estate,Fourteenth Edition,2013,Appraisal Institute,page 5. 2 From The Appraisal of Real Estate,Fourteenth Edition,2013,Appraisal Institute,page 74. Central Highlands Plaza 20014-Copyright©2020 Page 1 SOVA Appraisal.Valuation Cor su'.ring ...the right to perform a specific action on a particular parcel of property, or portion thereof, by the grantees who do not hold the underlying fee. 3 Definition of Value The property has been appraised for market value.The definition of Market Value is as follows: 4 The amount of cash which a well-informed buyer, willing but not obligated to buy the property, would pay,and which a well-informed seller, willing but not obligated to sell it, would accept, taking into consideration all uses to which the property is adapted or may reasonably be adaptable. Appraisal Problem/Scope of Work The appraisal problem is to report our opinion of property value diminution as a result of the proposed acquisition.The before condition reflects the property (land and impacted site improvements only) as it exists today, prior to the proposed acquisition and without prior knowledge of the project. We note the property is located on an older,4-lane arterial with a center two-way turn lane.The after condition assumes the acquisition has occurred and the project is complete as designed.In this case,the after condition reflects the encumbrance of the slope and utility easement and the loss of site improvements and landscaping within the acquisition area. Further,it reflects the property being located on a newly reconfigured four-lane arterial with new curbs,gutters, sidewalks, and street lighting.A Temporary Construction Easement (TCE)adjacent to the permanent easement is necessary to allow contractors access to the site while constructing project improvements and to tie-in existing driveway approaches with the newly configured roadway improvements has also been analyzed. The scope initially considered all three standard approaches to value: Cost Approach, Income Approach and Sales Comparison Approach. Following our review, we conclude the improvements will not be impacted by the acquisition and they have been excluded from our analysis.This appraisal consists of a before and after analysis of the underlying land and impacted site improvements. The most typical approach to value vacant land is the Sales Comparison Approach; the Cost Approach is not relevant because the building improvements have been excluded and the Income Approach is typically only relied upon for improved properties. Our valuation relies only on the Sales Comparison Approach, an analysis of the most recent and comparable commercial development land sales in the subject or competing neighborhoods. We have relied upon a modified Cost Approach in determining the contribution/replacement cost of site improvements that will be removed but not replaced by the project.The TCE has been analyzed as a rate-of-return to the underlying land value. In appraising the subject property,the following was performed: • Discussed the project and subject acquisition with project engineers and client representatives • Inspected the property(exterior only) • Inspected the subject and competing neighborhoods • Researched King County records, Costar, and CBA databases for comparable sales • Confirmed all sales with buyers,sellers,their agents,and/or public records • Inspected all comparable sales used in this analysis 3 From The Appraisal of Real Estate,Fourteenth Edition,2013,Appraisal Institute,page 75. 4 From Washington Pattern Jury Instructions,WPI 150.08 Central Highlands Plaza 20014-Copyright©2020 Page 2 EISovi,, • Reviewed all documents as cited throughout this report Date of Inspection/Valuation The subject property was not inspected with the property owner. The appraiser discussed the property and proposed acquisition with the owner's Asset Manager,Dayna Desmond,who authorized the appraiser to inspect the property independently.The appraisers inspected the property from the public right-of-way and acquisition area on numerous occasions, most recently on February 22, 2020. The effective date of this appraisal is as of the most recent inspection by the appraiser on February 22, 2020. Ownership and Five-Year Sale History According to the King County records and the title report contained in the Addenda, ownership of the subject property is vested in Argo Renton LLC (Argonaut Investments, LLC). County records indicate the current owner purchased the property in October 2013 for$8,950,000. Exposure Period Based on the sales and listings relied upon in this appraisal,as well as the marketing time reflected in the market analysis section of this report, a typical exposure period prior to sale of about 6 to 12 months is considered to have occurred prior to the valuation date. Extraordinary Assumptions/Hypothetical Conditions Hazardous Waste We have not been provided information regarding environmental contamination/hazardous waste on the subject property. We assume the property is clean and free of contaminates that would result in a negative impact to its market value. If contamination or hazardous waste is found to be present on the subject property, our value conclusion may be impacted. Project Influence State and Federal standards require the appraiser is to disregard any decrease or increase in the fair market value of the subject caused by the project in the before condition.This is a Jurisdictional Exception Rule to USPAP in order comply with this local legal requirement, which is found in RCW 8.26.180 and WAC 468 100 102 (2). Project influence is considered in the after condition per Washington Pattern Jury Instructions. Larger Parcel In eminent domain, unity of ownership (title/control), contiguity and current use are the three conditions that establish a larger parcel ownership.In this case,the subject consists of four separate tax parcels,with the largest parcel containing the shared parking and areas of circulation around the building structures.The three other tax parcels consist of building footprint areas only.The three parcels are all commonly owned, physically contiguous and put to the same or a complimentary use. As such, we conclude the four tax parcels described herein constitute the larger parcel ownership. Personal Property There is no personal property included in the concluded values. Central Highlands Plaza 20014-Copyright©2020 Page 3 !isovt,. FACTUAL DATA Description of the Subject Site Site The subject property consists of a four-parcel assemblage located at the southwest corner of NE Sunset Boulevard and Duvall Avenue NE, east of 1-405 in the Highlands Park neighborhood of Renton. The site is of a typical square/rectangular shape and contains a total of 349,720sf (8.03 acres). Site dimensions is about 600 feet wide (east-west)and with about 590 feet(average)of north-south depth. Y.n..' ti ei MORON , 3fl8 ' C • — x glum a I a srgm � t n acsawma : Wmw ✓ aa�t. ; Topography Topography is generally level to only gently sloping and is at-grade or near-grade with the fronting streets and surrounding parcels. It is slightly below grade of Duvall Avenue NE. Access/Exposure The property has direct access and exposure to both NE Sunset Boulevard and Duvall Avenue NE, both of which are commercial arterials that make-up the north and east property boundaries, respectively.The west property boundary consists of Anacortes Avenue NE, a lower-volume side street that provides secondary access to the subject and a variety of apartments to the south and west.Sunset Boulevard NE is the most significant east-west corridor through the subject neighborhood, providing regional access to 1-405 to the west. The property has average commercial exposure, with two intervening pad sites partially blocking exposure to Sunset Boulevard NE but good exposure to Duvall Avenue NE. Central Highlands Plaza 20014-Copyright©2020 Page 4 la SOVA Sensitive Areas According to available mapping and per an inspection of the property, the site contains no apparent environmentally sensitive areas that would hinder development or have a negative impact on market value. Soils No soil information was provided by the client. Based on the existing improvements on the subject and surrounding properties,the soils are assumed adequate for development. Utilities All typical utilities, including electricity,sewer, gas, water, and telephone services are available to the site. Easements and Encumbrances The property is impacted by a variety of encumbering easements,though most are relatively minor/typical and do not impact the current use, nor will they have a significant impact on likely future uses. We note reciprocal parking and access agreements with the frontage pad sites,which is typical for this property type. Zoning The subject is zoned Commercial Arterial (CA) by the City of Renton. The purpose of the Commercial Arterial Zone (CA) is to evolve from "strip commercial" linear business districts to business areas characterized by enhanced site planning and pedestrian orientation, incorporating efficient parking lot design, coordinated access, amenities and boulevard treatment with greater densities. The CA Zone provides for a wide variety of retail sales, services, and other commercial activities along high-volume traffic corridors. Residential uses may be integrated into the zone through mixed-use buildings. Front yard setbacks range from 15 to 20 feet, with varying additional setback requirements for side and rear yards. Maximum building height is 35 feet. IN (400) CA R-4 RM-F R-8 L R-8 R-8 Central Highlands Plaza 20014-Copyright©2020 Page 5 SOVA Appraisal.Valuation Cor su'ting Description of Improvements The site is improved with three retail buildings that together contain approximately 93,571sf that are occupied by large box retailers including Albertson's, Big Lots, Planet Fitness, and an Ace Hardware. The buildings are all similar in in design,construction and appeal,with concrete slab foundations, masonry construction, and a built- up asphalt roof. The buildings were constructed in 1979 and appear to be in average condition based on our exterior observations.Site improvements consist of a large asphalt-paved parking lot and perimeter landscaping. Following our review,we conclude the improvements are not impacted by the acquisition.As such,this analysis is of the vacant site and impacted site improvements only. The contribution of the structures (if any) are not reflected in the before or after value conclusions. Assessed Value and Real Estate Taxes The subject property is assessed and taxed by King County.The current assessed values and taxes are as follows: 2019 Assessed Values and Taxes Tax Account Land Structure Total Taxes 149450-0050 $4,476,800 $0 $4,476,800 $47,930 149450-0010 $1,069,300 $1,360,300 $2,429,600 $34,829 149450-0020 $546,700 $889,200 $1,435,900 $20,212 149450-0030 $951,000 $2,129,700 $3,080,700 $42,082 Total $7,043,800 $4,379,200 $11,423,000 $145,053 $/sf Land $20.14 Central Highlands Plaza 20014-Copyright©2020 Page 6 SOVA M1ppraisal.Valuation.Corsu'.t ing AREA/MARKET ANALYSIS Neighborhood Description/Analysis The Seattle Metropolitan Statistical Area(SMA)and Puget Sound region are well known to intended users of this report. For brevity,these descriptions have been excluded but are available upon request. The subject properties/project are located in the Renton Highlands area of the City of Renton. Renton was incorporated in 1901 and growth over the years was often fueled by people migrating to the area to work in the booming wartime industries. In 1940,the Boeing Company built a new manufacturing plant at the south end of Lake Washington, and this remains one of the city's primary economic engines to date. Renton continues to be an important center of employment; providing over 50,000 jobs, roughly half in manufacturing.The downtown area remains fairly lively, with activity centered on government and service-related including City Hall and the Renton Library. Much of the downtown retail and commercial activity has been displaced by local malls and shopping centers. Tenants in the downtown core tend to be small family owned restaurants, thrift shops, and antique or"collectibles" businesses. McLendon's Hardware and Wal Mart are two of the larger retailers in the CBD. Two large projects in Renton have been completed over the last several years,with the most noteworthy being the large multi-use project"The Landing." Developed by Harvest Partners, this is a $300 million, 46-acre urban village style shopping center immediately at the south end of Lake Washington. It was developed on Boeing surplus property and has approximately 800,000sf of retail shops and restaurants and over 1,000 residential units (mostly townhomes and condominiums). It is expected that this project will bring a major revitalization to afterhours businesses and attract complementary office and retail development in other nearby areas of Renton. The second project is the development of a Seattle Seahawks Training Facility along the eastern shores of Lake Washington in north Renton.Situated on 19 acres of industrial land that was formerly a tar and creosote plant, the building has 200,000sf,which makes it the second largest in the NFL.The property was developed by Vulcan Real Estate and opened in summer 2008. Properties immediately surrounding the subject consist of a variety of primarily commercial uses in older/similar- era buildings along Sunset Boulevard NE to the east and west. Pad sites between the subject and the arterial frontage include a fast food restaurant (taqueria) and a Starbucks. Properties setback from the arterial and adjacent to the property are primarily residential in nature. Retail Market Analysis The following market analysis of the retail property market is based on data obtained from the CoStar Group, Inc., a leading provider of real estate information services.The information provide begins with data for retail properties in the Puget Sound Area.Also included is the retail submarket for the subject property,which includes data from the various cities that comprise southeast King County. The following table illustrates the historical market performance of the Puget Sound Metropolitan market: Central Highlands Plaza 20014-Copyright©2020 Page 7 ..sovtnl Seattle/Puget Sound SE King County Total SF Under Net Percent Rental Rate Total SF Under Net Percent Rental Rate Quarter Square Feet Construction Absorption Vacant (Triple Net) Square Feet Construction Absorption Vacant (Triple Net) 2019 Q3 177,718,811 861,259 263,643 2.90% $20.65 11,813,886 12,087 -30,812 6.20% $21.68 2019 Q2 177,657,635 934,113 293,856 3.00% $20.48 11,813,886 12,087 -24,332 6.00% $21.31 2019 Q1 177,723,289 830,206 -97,040 3.20% $20.09 11,813,886 0 -69,422 5.70% $22.44 2018 Q4 177,677,205 782,550 264,384 3.10% $20.18 11,813,886 0 -9,206 5.20% $21.48 2018 Q3 177,598,606 575,578 623,601 3.20% $19.68 11,813,886 0 61,946 5.10% $19.55 2018 Q2 177,452,657 702,626 -298,251 3.50% $19.34 11,773,153 32,293 -236,434 5.40% $18.14 2018 Q1 177,378,638 811,293 95,908 3.30% $19.58 11,770,513 34,933 50,448 3.30% $17.76 2017 Q4 177,408,670 750,500 337,002 3.40% $19.27 11,768,829 36,617 19,403 3.70% $17.50 2017 Q3 177,347,506 559,318 67,393 3.50% $19.28 11,768,829 22,613 17,720 3.90% $17.01 2017 Q2 177,092,685 715,902 162,450 3.50% $19.17 11,768,829 20,929 55,205 4.10% $15.80 2017 Q1 177,510,743 579,529 460,212 3.80% $18.84 11,768,829 0 -10,905 4.50% $15.72 2016 Q4 176,516,967 1,539,059 387,175 3.50% $18.68 11,768,829 0 109,990 4.40% $15.76 2016 Q3 176,475,616 1,419,809 -203,316 3.70% $18.36 11,750,055 18,774 -10,846 5.20% $15.66 2016 Q2 176,505,096 1,434,815 200,017 3.60% $18.20 11,755,702 18,774 30,662 5.20% $16.45 2016 Q1 176,646,355 998,530 293,420 3.80% $17.86 11,755,702 7,485 -36 5.40% $16.43 As is indicated,vacancy in the greater metro market area has experienced continued stability and improvement over the last several years.This can be attributed to strong economic conditions and thus increased demand by various users of retail space. Furthermore,this increased demand has not been met by a significant increase in supply due to the relatively limited amount of new development over the last several years, with any new construction being absorbed quickly. As such, rental rates have experienced continued stability to a slight increase over the last year. Vacancy rates in the subject's submarket for retail space are above the regional average and have experienced an upward trend over the last several quarters.Asking rental rates for retail space are higher than the regional average at a rate of $21.68, triple-net as of the current date. Overall the retail market in the subject area generally performed consistent with to slightly inferior than other submarkets throughout the Puget Sound area. The subject's immediate market area, as well as the Puget Sound retail market as a whole, has experienced continued stability over the last several years. The subject submarket is similar in that it has experienced continued stability. Overall,vacancy rates have remained stable and/or increased slightly,with rental rates and net absorption exhibiting a similar trend.We would expect the market to remain fairly level in terms of rent over the near term. Central Highlands Plaza 20014-Copyright©2020 Page 8 SOVA Appraisal.Valuation.Con su''t.ng HIGHEST AND BEST USE Highest and best use is defined as: 5 The highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. The Highest and Best Use of a property is the use that is legally permissible, physically possible, and financially feasible which results in the highest value. The appraiser's opinion of the highest and best use is based on consideration of this criteria given market conditions as of the effective date of value and/or anticipated future conditions to the extent they impact the current market value.The Highest and Best Use is considered on an As Vacant and As Improved basis. As if Vacant In determining the highest and best use of the property as if vacant, we examine the potential for: 1) near term development, 2) a subdivision of the site, 3) an assemblage of the site with other land, or 4) holding the land as an investment. Legally Permissible Legally permissible uses are largely dictated by zoning and municipal restrictions such as overlays,neighborhood plans and other ordinances.Zoning controls the general nature of permissible uses that are appropriate for the location and physical elements of the subject property, providing for a consistent use in the general neighborhood. The subject site is zoned CA, which allows for uses including office, retail, and multifamily. We have also reviewed a title report for the subject, with no other significant easements or private encumbrances identified. We note reciprocal parking and access agreements with the frontage pad sites, which is typical for this property type. Physically Possible The physical attributes allow for a number of potential uses. Elements such as size,shape,availability of utilities, known hazards(flood,environmental,etc.),and other potential influences are described in the Factual Data and have been considered.Other than the property's relatively narrow width relative to its depth,there are no other items of a physical nature that would materially limit appropriate and likely development. Financially Feasible The probable use of the site for mixed-use development comprised of both commercial and multifamily uses conforms to the pattern of land use in the market area.A review of published yield, rental and occupancy rates suggest that there is a balanced supply and demand is sufficient to support construction costs and ensure timely absorption of additional inventory in this market.Therefore, near-term speculative development of the subject site is financially feasible. 5 The Dictionary of Real Estate Appraisal,Sixth Edition,2015,Appraisal Institute,page 109. Central Highlands Plaza 20014-Copyright©2020 Page 9 !i,Sc,vt. Maximally Productive Among the financially feasible uses, the use that results in the highest value (the maximally productive use) is the highest and best use. Considering these factors, the maximally productive use as though vacant is for a mixed-use development comprised of some commercial but primarily multifamily uses. Conclusion of Highest and Best Use As If Vacant The conclusion of the highest and best use as if vacant is for mixed use development comprised of commercial and/or multifamily uses. As Improved In determining the highest and best use of the property as improved, the focus is on three possibilities for the property: 1) continuation of the existing use, 2) modification of the existing use, or 3) demolition and redevelopment of the land. Determining the feasibility of the existing use requires analysis of the subject's income potential to determine if the capitalized value is equal to or less than the underlying land value; an indication the improvements have reached the end of their useful economic life. The subject improvements consist of approximately 93,571sf of rentable retail.Our research of market rents for box retail in the subject's submarket indicate a range from about $10.00 to$15.00/sf on a NNN basis.Applying a typical deduction vacancy and non-reimbursed owner expenses and capitalizing the NOI at 6%, this brief income analysis indicates a value as improved value bracketing $20,000,000,which is substantially higher than the value of the site as if vacant. Conclusion of Highest and Best Use As Improved The highest and best use of the subject property,as improved,is for continued use of the existing improvements. Conclusion of Highest and Best Use Considering our concluded land value and our brief income analysis, we conclude the highest and best use of the subject property is for continued use of the existing improvements. Central Highlands Plaza 20014-Copyright 0 2020 Page 10 SOVA Appraisal.Valuation.Corsu.nng BEFORE CONDITION VALUATION Appraisal Methodology There are three traditional approaches typically used to value real property value: the Cost, Sales Comparison, and Income Capitalization approaches. Cost Approach The Cost Approach is based upon the principle that a prudent purchaser would pay no more for a property than the cost to purchase a similar site and construct similar improvements without undue delay, producing a property of equal desirability and utility.This approach is particularly applicable when the improvements being appraised are relatively new or proposed,or when the improvements are so specialized that there are too few comparable sales to develop a credible Sales Comparison Approach analysis. Sales Comparison Approach In the Sales Comparison Approach, the appraiser analyzes sales and listings of similar properties, adjusting for differences to account for superior/inferior property characteristics between the subject and comparables.This method is particularly useful for valuing common commercial and residential properties when an active sales market results in sufficient comparable sales for analysis. It is a good indicator of value when the most likely buyer of the subject would be an owner-user(not an investor or developer). Income Capitalization Approach The Income Capitalization (Income)Approach is based on the principle that a prudent investor will pay no more for the property than he or she would for another investment of similar risk and cash flow characteristics. The income capitalization approach is widely used and relied upon in appraising income-producing properties, especially those for which there is an active investment sales market. Because the improvements are not impacted by the acquisition,their income potential and contribution are the same in both the before and after conditions. The contribution of the improvements, if any, is not reflected in our value conclusions. The most relevant approach to value vacant land is the Sales Comparison Approach, an analysis of the most comparable sales and listings. The Cost and Income Approaches are not relevant, as the building improvements have been excluded. Sales Comparison Approach The Sales Comparison Approach consists of an analysis of the most comparable sales and listings to provide an indication of value for the subject.The sales price or another unit of measure, such sale price/unit,sale price/sf, etc., is adjusted to account for market conditions, transactional considerations and inferior/superior property characteristics. The comparable sales most similar to the subject property and a detailed discussion of the necessary adjustments is as follows: Central Highlands Plaza 20014-Copyright©2020 Page 11 appraisal.Valuation Cosu Ming S OVA COMPARABLE SALES SUMMARY AND LOCATION MAP Sale Sale Size Price Comp Address/Location Date Price (sf) $/sf Zoning 1 4325 NE Sunset Boulevard Listing $3,250,000 81,457 $39.90 CA 2 515 Industry Drive 01/04/19 $6,200,000 140,202 $44.22 TUC 3 4500 Talbot Road 05/23/18 $4,500,000 201,683 $22.31 CO 4 3123 NE Sunset Boulevard 10/13/17 $940,000 17,059 $55.10 CV 5 13120 Newcastle Commons 01/24/17 $3,500,000 94,525 $37.03 MUR Subj 4601 NE Sunset Boulevard 349,720 CA C„Ck 1.ti 4,19iA ft 1 Coal Creek P, E,^+ t t� Natur reDD Seward Park ping Field Newcastle: 4Q Kubota Garden`` 4 1 90C \ i,c' Coaltiel sv9 � att.t•NsOW" Bryn Mawr-Skyway East {1] I acoma ��tional % CD rport o 9 s,s set tHOEPiz SeaTac '81 Cascade-Fairwood Central Highlands Plaza 20014-Copyright©2020 Pagu •SOVA Ap Vraica1.Valuation.Car,.tlog COMPARABLE SALE 1 vd' y�`,�i' b t _tt ,.aS i' 4.„ .ar' as ,y ''y. .+'c"!."xy. .. y" ,,, ry t 4 rt li fgn ,a../. 8 fi t �' an ■F #_ F /. z � P � r aic a +. .. ....r: .� li w -� a lily 11 Property Identification Address 4325 NE Sunset Boulevard Assessor Parcel 032305-9055 City,State,ZIP Renton,WA 98059 Transaction Details Sale Date Listing Property Rights/Terms Fee Simple Typical Sale Price $3,250,000 Excise Tax No. N/A Grantor Workman Estate Confirmation Gary Penitsch Grantee Confirmation Phone 206-799-6101 Property Description Site Size 81,457sf Shape Rectangular Street Type Commercial arterials Topography Level,at or near grade Exposure Good/commercial Zoning CA Discussion This is the current listing of a 1.87-acre parcel on the south side of NE Sunset Boulevard, between Union Avenue NE and Duvall Avenue NE in the Highlands neighborhood of Renton. The site is improved with an older single-family residence that was concluded to be of no contributory value.The adjacent property is currently in planned for a 16- unit apartment building with ground floor retail. Central Highlands Plaza 20014-Copyright©2020 Page 13 SOVA aaoa:a!.vamaao .co..:o!uoa COMPARABLE SALE 2 4641,4 441‘1.0 . .., ., . . . 4.t..e. :„ ..,.. It ,,...,.. , ..,.. , .. .... Tteck Dr '" ..yk G X°`:'aye i l }'� ...." wcn -• I' `4 r^ „ g Property Identification Address 515 Industry Drive Assessor Parcel 022340-0070 City,State,ZIP Tukwila,WA 9818 Transaction Details Sale Date 01/04/2019 Property Rights/Terms Fee Simple/Typical Sale Price $6,200,000 Excise Tax No. E2969048 Grantor Myong&Young LLD Confirmation Jason Rosauer Grantee Tukwila Hotel Group Confirmation Phone 206-296-9608 Property Description Site Size 140,202sf Shape Slightly irregular Street Type Commercial arterial Topography Level,at or near grade Exposure Good/commercial Zoning TUC Discussion This is the January 2019 sale of 3.22 acres of vacant,undeveloped land in Tukwila for$6,200,000.The TUC TOD-zoned (Tukwila Urban Center Transit Oriented Development) property has all utilities available to the site and is supportive of commercial, mixed-use, multi-family, and/or office development.The site is located east of Interstate 5,south of Interstate 405, and west of the Duwamish River. The property is level and cleared with no known environmentally sensitive areas.The site was previously developed with an office building which was demolished in 2008.Subsequent to sale,onsite construction has started for the 177-room Element Hotel.The property was listed at$6,700,000.The property previously sold in July 2013 for $2,550,749. The buyer of that transaction planned a large spa for the property,which ultimately fell through. Central Highlands Plaza 20014-Copyright©2020 Page 14 SOVA appraisal.Valuation.Cosu'.ring COMPARABLE SALE 3 10, I -7 7 +M '-''. 4 Mike. • yz. ` ,� r sue. 1*/•.,0' 14„ r Property Identification Address 4500 Talbot Road Assessor Parcel 312305-9094,-9067 City,State,ZIP Renton,WA 98055 Transaction Details Sale Date 06/27/2018 Property Rights/Terms Fee Simple/Typical Sale Price $4,500,000 Excise Tax No. E2933275 Grantor John C. Radovich, LLC Confirmation Nick Radovich Grantee Weatherly Renton LLC Confirmation Phone 206-267-6060 Property Description Site Size 212,573sf Shape Irregular Street Type Commercial arterial Topography Gently to mod sloping Exposure Good/commercial Zoning CO Discussion This is a 2018 purchase of two tax lots totaling 4.63 acres located on the east side of Talbot Road S. in Renton.There is a large multi-family apartment complex located to the south of the site and a medical/office complex to the north. The lot has a gradual slope to the east; the buyer and seller of the site indicated that approximately 20% of the property was of limited utility due to slopes.The site had previously been improved with a 2,110sf residence built in 1966; the onsite improvement was completely removed from the site before the sale. The site is currently under construction with a 2-building, 117-unit senior living center called Weatherly Inn. Net usable area is about 170,058sf. Central Highlands Plaza 20014-Copyright©2020 Page 15 SOVA COMPARABLE SALE 4 • Qz r • r :tisk x. . �: „, Y: $t ♦6 e%. , 7 0 ''' �• O r • = I [. 4E 12th St Property Identification Address 3123 NE Sunset Boulevard Assessor Parcel 042305-9155 City,State,ZIP Renton,WA 98056 Transaction Details Sale Date 10/13/2017 Property Rights/Terms Fee Simple/Typical Sale Price $940,000 Excise Tax No. E2895168 Grantor John/Cheri Zavaglia Confirmation Tiom Graff Grantee Kiddie Research LLC Confirmation Phone 206-441-7900 Property Description Site Size 17,059sf Shape Irregular Street Type Commercial Topography Level Exposure Good/commercial Zoning CV Discussion This is the October 2017 sale of a somewhat irregular-shaped corner lot at NE 12th Street and NE Sunset Blvd.The site is level and at-grade with all utilities available.The property was developed with an older car wash considered to be of no contributory value.The buyer plans to develop the site with a day care. Central Highlands Plaza 20014-Copyright©2020 Page 16 SOVA appraisal Valuation Col su t ng COMPARABLE SALE 5 'fir i ..y. l.` 8•._; t t ik Property Identification Address 13120 Newcastle Commons Assessor Parcel 272405-9006,-9040 City,State,ZIP Newcastle,WA 98059 -9099 Transaction Details Sale Date 01/24/2017 Property Rights/Terms Fee Simple/Typical Sale Price $3,500,000 Excise Tax No. E2845658 Grantor Newcastle Joint Venture Confirmation Rick Hart Grantee Newcastle Retail Group Confirmation Phone 425-462-6985 Property Description Site Size 94,525sf Shape Irregular Street Type Commercial Topography Level Exposure Good/commercial Zoning MUR Discussion The property is located on the northeast and southeast corner of the intersection of Newcastle Commons Drive and Coal Creek Parkway SE. The property is comprised of two separate sites that were purchased together in a single transaction. Each of the sites is mostly rectangular in shape and level and had been graded at the time of the sale. Since the time of sale,both sites have been improved with multi-tenant retail buildings.These sites are part of a larger mixed-use project with other retail and multifamily.There is a protected wetland behind the property. Central Highlands Plaza 20014-Copyright©2020 Page 17 EISoVILu''tLng Comparable Adjustment Analysis Unadjusted,the comparables indicate a relatively wide range of value from$22/sf to$55/sf for the subject, but each sale requires consideration of adjustments to account for differences in market conditions, location and a variety of physical characteristics.The comparables are adjusted on a$/sf basis as summarized below. Market Conditions The comparables transacted between early 2017 and 2019, with escalating sale prices/rents and favorable market conditions during this time. Our research indicates some slowing of the market over the past year in some sectors,though conditions are still favorable. Comparable 2 transacted within about the past year, during similar market conditions as exist as of the date of the appraisal. No adjustment is required. Comparables 3, 4, and 5 are older transactions with more significant appreciation since their older sale dates. Upward adjustments have been applied. Comparable 1 is a current listing that has no offers at this time. We've applied a downward adjustment for comparison. Location The subject and all of the comparables are located in south end King County submarkets.Comparables 1,3,and 4 are specifically located in Renton like the subject and with similar or offsetting superior/inferior influences. Comparable 2 is located in Southcenter and influenced by its proximity to Southcenter Mall and significant new development in this area (such as the Interurban Hotel)and Comparable 4 is located in an area of higher values and significant new development.We have applied downward adjustments to Comparables 2 and 4. Lot Size The comparables are all smaller than the subject property, usually resulting in higher unit prices due to a larger pool of potential buyers. With the exception of Comparable 3, varying downward adjustments have been applied.Comparable 3 is most similar in size and no adjustment has been applied. Minor differences in site size is reflected in our final correlation. Shape/Topo The subject consists of a regular,square to rectangular shape and a level to only gently sloping topography.The comparables generally have a regular shape and/or have critical mass to offset any minor irregularities.With the exception of Comparable 3,the remaining comparables are also level to only gently sloping and no adjustment is required. Comparable 3 has a moderate slope and development required additional excavation costs to fully utilize the site.An upward adjustment has been applied. Zoning The subject and the comparables have similar commercial/mixed-use zoning that allow for similar building size/densities. No adjustments are necessary. Access/Exposure The subject and all of the comparables have similar commercial access suitable for a variety of office, retail,and multifamily uses. In terms of exposure,the subject is situated at the corner of a primary commercial arterial and a high-volume 4-lane arterial that provides connectivity to moderate to densely developed residential areas, though pad sites between the subject and Sunset Boulevard NE block some visibility. Comparables 1 and 3 are Central Highlands Plaza 20014-Copyright©2020 Page 18 SOVA Appraisal.Valuation.Corsu'tog inferior mid-block locations,with upward adjustments applied. Comparable 4 is also at a signalized intersection, but with no blockage of intervening parcels/buildings and generally superior exposure.A downward adjustment has been applied. Comparables 2 and 5 have similar exposure and no adjustment is necessary. A summary of the adjustments is as follows: Land Sale Adjustments Price Market N'Hood Site Shape/ Access Total Comp $/sf Conditions Location Size Topo Zoning Exposure Indication 1 $39.90 Sup(-) Sim Sup(-) Sim Sim Inf(+) Sup(-) 2 $44.22 Sim Sup (-) Sup(-) Sim Sim Sim Sup(--) 3 $22.31 Inf(+) Sim Sim Inf(+) Sim Inf(+) Inf(+++) 4 $55.10 Inf(+) Sim Sup(--) Sim Sim Sup(-) Sup(--) 5 $37.03 Inf(++) Sup (-) Sup (-) Sim Sim Sim Sim All of the comparables bracket the characteristics of the subject property (except size; all are smaller) and are good indicators of value.The low end of the range is set by Comparable 3,which is the largest of the comparables but still much smaller than the subject. it is located just east of SR-167 in the southerly part of Renton, near Valley Hospital. This comparable requires upward adjustment for its older sale date, topography that required excavation of the rear portion and somewhat inferior exposure given its mid-block location.The high end of the range is an older sale of a much smaller parcel, but it has been included for analysis because it is on the same arterial and shares most of the subject's location characteristics. This comparable requires upward adjustment for time, but it is more than offset by a large downward adjustment its superior size and exposure. These comparables indicate a value for the subject above$22/sf and well below$55/sf. The remaining comparables indicate a much narrower range of value in the low to mid-$30s/sf. Comparable 1 is the current listing of much smaller site that shares the neighborhood characteristics, Sunset Boulevard NE frontage, and zoning designation. Comparable 3 is a more recent transaction of a site near Southcenter, requiring downward adjustment for its superior location and size. Comparable 5 is the oldest transaction and thus it requires a larger upward adjustment for market conditions. This adjustment is more than offset by its superior location and size. Considering each of the comparables and the adjustments necessary for comparison, we conclude a value for the the subject at$33/sf. Impacted Site Improvements The area of acquisition contains asphalt pavement/curbing for driveways and small shrubs and groundcover landscaping such as juniper. We assume any asphalt/curbing disturbed will be replaced by the contractor at no cost to the property owner. Landscaping within the permanent easement and TCE may be removed and will be placed with inferior hydroseed.We estimate about 4,800sf of landscaping map be disturbed (including both the permanent easement and TCE areas). The contribution of the landscaping is concluded to be equal to its or a suitable alternative's replacement cost, which we've estimated based on the Marshall Valuation Service Cost Central Highlands Plaza 20014-Copyright©2020 Page 19 111 SOVA Appraisal.Valuation.Consulting Manual (Marshall's) and our experience on other projects. Using a contribution value of$5/sf and including a 15%entrepreneurial incentive,the contribution of impacted landscaping is calculated at$28,000(rounded). Conclusion of Valuation Based on our investigation and analysis of all relevant data, it is our opinion the market value of the subject site and impacted site improvements, as of February 22, 2020, is: Before Value Conclusion Site Area Size(sf) Unit Value Total Land Total 349,720 $33.00 $11,540,760 Plus: Impacted Site Improvements $28,000 Land + Impacted Site Improvements $11,568,760 ROUNDED $11,569,000 Central Highlands Plaza 20014-Copyright©2020 Page 20 S OVA Appraisal.Valuat,on.Cor su'tlnq AFTER CONDITION ANALYSIS Description of Project and Proposed Acquisition The project includes reconstruction/resurfacing of Duvall Avenue NE, including new pavement, curb, gutter, sidewalk, streetlights, storm drainage, channelization and bike lanes from NE 7th St to Sunset Blvd NE. The purpose of the project is to enhance safety for pedestrians, bicyclists and vehicles along this corridor. The proposed acquisition consists of a five-foot slope and utility easement along the easterly property boundary, a total of 2,912sf. In addition to the permanent easement, an additional 5-foot strip will be encumbered with a TCE to allow contractors access to the site while constructing street improvements within the abutting Duvall Avenue NE right-of-way and easement area for a period of 24 months.The area of acquisition is improved with asphalt/curbing at three driveway locations,several mid-size to large trees and extensive juniper and small shrub landscaping. It is our understanding the trees will not be removed; groundcover juniper will likely be removed and not replaced. Asphalt pavement and curbing will be replaced if removed/impacted. The total TCE area will occupy 4,820sf for 24-months. Description of Subject Property in the After Condition The easterly fronting street (Duvall Avenue NE) will be reconstructed as previously described. The most significant change to the property is the encumbrance of 2,912sf with a slope and utility easement. Because there is no fee acquisition,the site will be the same size,shape,and general configuration in the after condition. The property will have a loss of some landscaping due the installation of utilities and construction of the project. The slope and utility easement area will be used primarily for underground utilities. Project plans call for new sidewalks with deep-caste foundations and streetlight along the property boundary(mostly located within the exiting right-of-way), though thicker foundations (necessary to adjust for slope differences) and footings for streetlights may also encroach into the easement area. Largely, the surface of the easement area will be available for the property owner's use in the after condition, likely for landscaping as in the before condition. The easement area is entirely contained within required setbacks and will not impact the existing or planned future uses of the property. Physical characteristics of the site, such as size, shape, topography, soils, and available utilities will remain the same. Access will be about the same, with the existing driveways remaining as in the before condition and reconfigured by the project. Legal restrictions will be the same in the after condition, as no change to zoning is anticipated and no permanent easements are proposed. Highest and Best Use—After Condition Because the site retains essentially the same general shape and other characteristics.We conclude the highest and best use of the property in the after condition is unchanged from the before condition and is for continued used of the existing improvements. Central Highlands Plaza 20014-Copyright©2020 Page 21 Sio .,�ar un Cornultln� ACQUISITION MAP/AERIAL ` ,,,`, ' � { 1 II PR(�SED �� 1 TEMI RARY y,� / i.,' 1 1 CONSTRUCTION s'N' / q`.; EXISTING I O LIN Sp EASFMFNTt IMIT i,- � 1 b O lk PERMANENT ' EASEMENT %. z AI A� �I r 1 "»1 i :� 5L,.,4_447,,'•... ' 1111,44 it ,, �B 'd / _ �: -,, . 3 NI 1 I ,If I ,I. 1 , f.., 1 i . �. ,x `,- I , t ,N "k, . Liltef- , l Central Highlands Plaza 20014-Copyright©2020 Page 22 SOVA APPraisal Valuation Cor su'sing Valuation—After Condition To value the property in the after condition, we have relied on the same comparables that were used in the before condition. Given the similar characteristics of the property in the after condition, we conclude the same unencumbered fee value of $33/sf. We note the contribution of impacted site improvements has been eliminated in the after condition. Utility Easement Contribution An easement involves a discount to the value of a property to account for the loss of property rights. In accordance with the "bundle of rights" theory of property, real property can be analyzed as a bundle of rights or a bundle of sticks with the fee interest representing the complete bundle. An easement under this analogy represents the loss or the taking of some of these rights or sticks in the bundle.Typically,the property is then of less value due to the owner's loss of some rights associated with fee ownership. Based on a variety of published studies and our independent research, typical easement discount ranges are as follows: Easement Discount Ranges Low High Easement Type/Description End End Exclusive Surface Uses 75% 100% Joint Surface Uses 25% 75% Air Rights 25% 75% Subsurface(Utilties,Surface Restrictions) 15% 50% Subsurface(No or limited surface restrictions) 0% 15% The range of easement discounts is relatively large,with the actual discount depending on the specific easement encumbrance(language/rights afforded the easement holder)and the property impacted by the easement. For instance, if an easement for overhead powerlines prohibits surface structures within an area of the site that would be developed with buildings per its unencumbered highest and best use, the easement may diminish at the high end of the range (chart above), or perhaps higher. But if the same powerline easement encumbers a site in an undevelopable area, such as overlapping required building setbacks or sensitive area, or if accessory parking can be a developed within the easement area beneath the powerlines,a diminution at lower end of the range (or lower) may be more reflective of the actual impact. In this case, the permanent acquisition consists of a slope and utility easement that will largely be available to the property owner for landscaping in the after condition, as in the before condition. The easement overlaps three existing driveways, which will be maintained. Because the driveways will be maintained and the balance of the easement area consists only of landscaping, there will be no significant impact to the current use. The easement is entirely located within required setback areas and can be incorporated into site/parking lot landscaping requirements, indicating it will have little or no impact on future redevelopment. Given its minimal impact on current and/or future uses, we conclude an easement discount slightly higher than subsurface easements given some (but minimal) surface uses at 25%. While we have not been provided the easement document, the easements generally allow for construction of the project, which is reflected in the easement discount(no additional TCE for this area is thus necessary) Central Highlands Plaza 20014-Copyright©2020 Page 23 Sova Appraisal.Valurtlon.Corso t, Remainder Damages and Special Benefits We have also considered damages and special benefits to the remainder property.The only onsite change is the slightly smaller unencumbered site size/easement encumbrance. As such, the loss of the acquisition area will have only a minimal impact on the maximum building size developable on the property when redeveloped to its highest and best use. Minor site improvements including asphalt pavement and landscaping have been considered in our analysis. No parking loss or significant change in access is anticipated. We conclude no remainder damages resulting from the acquisition. With regard to special benefits, the project will result in increased traffic flow efficiency and modernization of the street frontage, which will allow for and promote/encourage transition of current land use patterns to denser development more consistent to current market trends. Given the historical plans for these improvements, it is likely the City would require dedication of the proposed acquisition as a development condition. But as of the date of value, no plans for redevelopment are known to be in progress. And while the frontage improvements will benefit the property,these benefits are largely general and nature and measurable special benefits are speculative at this time. We conclude no compensable/measurable special benefits at this time. Temporary Construction Easement In order to construct the project and reconnect the subject's existing access points and to construct the new sidewalk and street lighting along the property boundary,the City will require a TCE along the easterly property boundary abutting Duvall Avenue NE. The TCE is required for a period of 24 months, though given the limited scope of work to be completed within the TCE area(driveway reconnections;limited use for general construction purposes) the cumulative physical occupation of the TCE is estimated at a maximum of only 12 months. And even during the 12-month active use time, the property owner will continue to have joint use. It is our understanding/assumption the driveways will not be blocked for any significant period of time and blocked only when asphalt/concrete is curing; the driveways will not be blocked at the same time. A TCE is essentially a short-term land lease. Land lease valuation typically involves applying an annualized rate- of-return to the underlying land value to calculate market rent. Like other investments, the rate-of-return is largely based on the risk associated with the lease. Long-term leases and high quality, credit tenants represent lower risk to the underlying landowner and typically have lower rates. Short-term leases of vacant or interim- use property sometimes have a low rate-of-return, as any income to offset holding costs would be beneficial. Shorter-term leases and higher risk tenants usually have the higher rates-of-return. In order to determine an appropriate rate-of-return for the subject, we considered a number of long and short-term ground lease comparables, surveyed agencies who typically lease property, and researched published data such as the Price Waterhouse Cooper (PwC), formerly Korpacz, survey. The PwC is a national real estate investor survey, which cites capitalization and rates-of-return for a variety of property types.While this information is national, it is still a good indicator of regional performance given the investor-grade characteristics of the Seattle MSA. Local agencies that lease their portfolio (such as the Port of Seattle) indicate a range of about 6%to 10% depending upon the length and complexity of the lease and degree of property/operational impact. Our review of specific ground leases indicate a range from about 5% to 10% with long term national retailers, such as fast food restaurants, and public agencies at the lower end of the range; and localized specialty users required to pay higher rates-of-return, as would be expected. PwC indicates an appropriate rate-of-return for a variety of Central Highlands Plaza 20014-Copyright©2020 Page 24 SOVA APPra.sal.Valuation.Corsu't.ng property types in the range of 6% to 12%. We note these stated ranges generally reflect exclusive or near- exclusive use (occupancy)of the property for the lease term. In valuing short-term uses, the total easement size, duration, location onsite/impact and disruption to current use and the intensity of the intended use(exclusive vs non-exclusive) must be considered. In this case,the active period is estimated at only about 12 months within a 24-month window, though some risk of a longer use is inherent and not guaranteed by the TCE document language to our knowledge.Given the TCEs proposed for the subject impact driveway areas to a retail center, the active use period (estimated at about 12 months) may be disruptive, but the anticipated non-construction portion of the TCE(estimated at about 12 months)will have no functional impact on the subject. Nonetheless,the TCE will result in a title encumbrance for the entire 24-month period.Considering the anticipated use of the TCE and its impact on the subject,as well as our knowledge of the market reaction to sales of properties with similar TCEs at the time of sale or lease, we conclude a market rent for the joint-use of the TCE area at 6%/year for the 2-year period. Applying this discount to the previously concluded land value of$33/sf and a TCE area of 4,820sf, compensation for the TCE is calculated at $20,000 (rounded). Conclusion of Valuation Based on our investigation and analysis of all relevant data, it is our opinion the market value of the subject site in the after condition, as of February 22, 2020, is: After Value Conclusion Site Area Size(sf) Unit Value Total Unencumbered Land Value 346,808 $33.00 $11,444,664 Easement Encumberd Value 2,912 $24.75 $72,072 After Condition Value $11,516,736 Less:TCE Encumbrance -$20,000 Total $11,496,736 ROUNDED $11,497,000 Central Highlands Plaza 20014-Copyright©2020 Page 25 S OVA aooa Tsai.vawano .cosng BEFORE AND AFTER VALUE CONCLUSION Based on our research and analysis, it is our opinion the market value of the subject property, before and after the proposed acquisition,as of February 22, 2020, is: Value Conclusions&Allocations Site Area Total Before Condition $11,569,000 After Condition $11,497,000 Just Compensation/Diminution $72,000 Easement Acqusition (Rounded) $24,000 Temporary Construction Easement $20,000 Impacted Site Improvements $28,000 ROUNDED $72,000 Central Highlands Plaza 20014-Copyright©2020 Page 26 Eli S0VA APpralsal Valuation.cor su'ting CERTIFICATION I certify that,to the best of my knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial,and unbiased professional analyses,opinions,and conclusions. 3. I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. I have performed no other real estate services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. 5. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. My engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of value opinion, the attainment of a stipulated result,or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. My analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 9. I have made a personal inspection of the property that is the subject of this report. (If more than one person signs this certification, the certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property.) 10. No one provided significant real property appraisal assistance to the person signing this certification, unless otherwise noted. 11. The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 13. As of the date of this report, I have completed the continuing education program for Designated Members of the Appraisal Institute. Date of Value: February 22,2020 (\\--49 Matthew C.Sloan, MAI,SRA State Cert.#27011-1101655 Central Highlands Plaza 20014-Copyright©2020 Page 27 SOVA Appraisal.Valuation Cor zu'ting REPORT OF CONTACT WITH PROPERTY OWNER Person(s)Contacted: Dayna Desmond Owner Address: 101 Lakespur Landing Circle, Suite 120 Lakespur,CA 94939 Phone: 415-945-2473 Email: ddesmond@argoinvest.com Date of Contact: Multiple, calls and emails, February 2020 Date of Joint Inspection: None Persons Accompanying Appraisers: N/A Relationship to Owner: Ms. Desmond is the Asset Manager for Argonaut Investments, LLC,the ownership entity. Central Highlands Plaza 20014-Copyright©2020 Page 28 • ISOVA Appraisal•Valuation•Consulting ADDENDA Assumptions and Limiting Conditions Title Report Qualifications Ii I li II Central Highlands Plaza 20014-Copyright©2020 iSOVA Ap prasal Valuation (a+'vu ling ASSUMPTIONS AND LIMITING CONDITIONS This appraisal is subject to the following limiting conditions: 1. The legal description—if furnished to us—is assumed to be correct. 2. No responsibility is assumed for legal matters, questions of survey or title, soil or subsoil conditions, engineering, availability or capacity of utilities, or other similar technical matters. The appraisal does not constitute a survey of the property appraised. All existing liens and encumbrances have been disregarded and the property is appraised as though free and clear, under responsible ownership and competent management unless otherwise noted. 3. Unless otherwise noted, the appraisal will value the property as though free of contamination. Soya Consulting will conduct no hazardous materials or contamination inspection of any kind. It is recommended that the client hire an expert if the presence of hazardous materials or contamination poses any concern. 4. The stamps and/or consideration placed on deeds used to indicate sales are in correct relationship to the actual dollar amount of the transaction. 5. Unless otherwise noted, it is assumed there are no encroachments, zoning violations or restrictions existing in the subject property. 6. The appraiser is not required to give testimony or attendance in court by reason of this appraisal,unless previous arrangements have been made. 7. Unless expressly specified in the engagement letter, the fee for this appraisal does not include the attendance or giving of testimony by Appraiser at any court, regulatory, or other proceedings, or any conferences or other work in preparation for such proceeding. If any partner or employee of Soya Consulting is asked or required to appear and/or testify at any deposition, trial, or other proceeding about the preparation, conclusions or any other aspect of this assignment, client shall compensate Appraiser for the time spent by the partner or employee in appearing and/or testifying and in preparing to testify according to the Appraiser's then current hourly rate plus reimbursement of expenses. 8. The values for land and/or improvements,as contained in this report,are constituent parts of the total value reported and neither is (or are)to be used in making a summation appraisal of a combination of values created by another appraiser. Either is invalidated if so used. 9. The dates of value to which the opinions expressed in this report apply are set forth in this report. We assume no responsibility for economic or physical factors occurring at some point at a later date,which may affect the opinions stated herein. The forecasts, projections, or operating estimates contained herein are based on current market conditions and anticipated short-term supply and demand factors and are subject to change with future conditions. Central Highlands Plaza 20014-Copyright©2020 EilSOVA APOrasal Valu:to Corsu t ng 10. The sketches, maps, plats and exhibits in this report are included to assist the reader in visualizing the property. The appraiser has made no survey of the property and assumed no responsibility in connection with such matters. 11. The information, estimates and opinions, which were obtained from sources outside of this office, are considered reliable. However, no liability for them can be assumed by the appraiser. 12. Possession of this report, or a copy thereof, does not carry with it the right of publication. Neither all, nor any part of the content of the report, or copy thereof(including conclusions as to property value, the identity of the appraisers, professional designations, reference to any professional appraisal organization or the firm with which the appraisers are connected), shall be disseminated to the public through advertising, public relations, news, sales, or other media without prior written consent and approval. 13. No claim is intended to be expressed for matters of expertise that would require specialized investigation or knowledge beyond that ordinarily employed by real estate appraisers. We claim no expertise in areas such as, but not limited to, legal, survey, structural, environmental, pest control, mechanical, etc. 14. This appraisal was prepared for the sole and exclusive use of the client for the function outlined herein. Any party who is not the client or intended user identified in the appraisal or engagement letter is not entitled to rely upon the contents of the appraisal without express written consent of Soya Consulting and Client. The Client shall not include partners, affiliates, or relatives of the party addressed herein. The appraiser assumes no obligation, liability or accountability to any third party. 15. Distribution of this report is at the sole discretion of the client,but third-parties not listed as an intended user on the face of the appraisal or the engagement letter may not rely upon the contents of the appraisal. In no event shall client give a third-party a partial copy of the appraisal report. We will make no distribution of the report without the specific direction of the client. 16. This appraisal shall be used only for the function outlined herein, unless expressly authorized by Soya Consulting. 17. This appraisal shall be considered in its entirety. No part thereof shall be used separately or out of context. 18. Unless otherwise noted in the body of this report,this appraisal assumes that the subject property does not fall within the areas where mandatory flood insurance is effective. Unless otherwise noted,we have not completed nor have we contracted to have completed an investigation to identify and/or quantify the presence of non-tidal wetland conditions on the subject property. Because the appraiser is not a surveyor, he or she makes no guarantees,express or implied, regarding this determination. Central Highlands Plaza 20014-Copyright©2020 !Sovu tang 19. The flood maps are not site specific.We are not qualified to confirm the location of the subject property in relation to flood hazard areas based on the FEMA Flood Insurance Rate Maps or other surveying techniques. It is recommended that the client obtain a confirmation of the subject's flood zone classification from a licensed surveyor. 20. If the appraisal is for mortgage loan purposes 1) we assume satisfactory completion of improvements if construction is not complete, 2) no consideration has been given for rent loss during rent-up unless noted in the body of this report, and 3) occupancy at levels consistent with our"Income and Expense Projection" are anticipated. 21. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures which would render it more or less valuable. No responsibility is assumed for such conditions or for engineering which may be required to discover them. 22. Our inspection included an observation of the land and improvements thereon only. It was not possible to observe conditions beneath the soil or hidden structural components within the improvements. We inspected the buildings involved, and reported damage (if any) by termites, dry rot, wet rot, or other infestations as a matter of information, and no guarantee of the amount or degree of damage (if any) is implied. Condition of heating, cooling, ventilation, electrical and plumbing equipment is considered to be commensurate with the condition of the balance of the improvements unless otherwise stated. Should the client have concerns in these areas, it is the client's responsibility to order the appropriate inspections. The appraiser does not have the skill or expertise to make such inspections and assumes no responsibility for these items. 23. This appraisal does not guarantee compliance with building code and life safety code requirements of the local jurisdiction.It is assumed that all required licenses,consents,certificates of occupancy or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value conclusion contained in this report is based unless specifically stated to the contrary. 24. When possible, we have relied upon building measurements provided by the client, owner, or associated agents of these parties. In the absence of a detailed rent roll, reliable public records, or "as-built" plans provided to us, we have relied upon our own measurements of the subject improvements.We follow typical appraisal industry methods; however,we recognize that some factors may limit our ability to obtain accurate measurements including, but not limited to, property access on the day of inspection, basements, fenced/gated areas, grade elevations, greenery/shrubbery, uneven surfaces,multiple story structures,obtuse or acute wall angles,immobile obstructions,etc. Professional building area measurements of the quality, level of detail, or accuracy of professional measurement services are beyond the scope of this appraisal assignment. 25. We have attempted to reconcile sources of data discovered or provided during the appraisal process, including assessment department data. Ultimately,the measurements that are deemed by us to be the most accurate and/or reliable are used within this report. While the measurements and any Central Highlands Plaza 20014-Copyright©2020 SOVA Appraisal.Val uaton Cor su r ng accompanying sketches are considered to be reasonably accurate and reliable, we cannot guarantee their accuracy.Should the client desire a greater level of measuring detail,they are urged to retain the measurement services of a qualified professional (space planner, architect or building engineer). We reserve the right to use an alternative source of building size and amend the analysis, narrative and concluded values (at additional cost) should this alternative measurement source reflect or reveal substantial differences with the measurements used within the report. 26. In the absence of being provided with a detailed land survey, we have used assessment department data to ascertain the physical dimensions and acreage of the property. Should a survey prove this information to be inaccurate, we reserve the right to amend this appraisal (at additional cost) if substantial differences are discovered. 27. If only preliminary plans and specifications were available for use in the preparation of this appraisal, then this appraisal is subject to a review of the final plans and specifications when available (at additional cost) and we reserve the right to amend this appraisal if substantial differences are discovered. 28. Unless otherwise stated in this report, the value conclusion is predicated on the assumption that the property is free of contamination,environmental impairment or hazardous materials. Unless otherwise stated,the existence of hazardous material was not observed by the appraiser and the appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required for discovery.The client is urged to retain an expert in this field, if desired. 29. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a specific compliance survey of the property to determine if it is in conformity with the various requirements of the ADA. It is possible that a compliance survey of the property, together with an analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this could have a negative effect on the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible noncompliance with the requirements of ADA in developing an opinion of value. 30. This appraisal applies to the land and building improvements only. The value of trade fixtures, furnishings, and other equipment, or subsurface rights (minerals, gas, and oil) were not considered in this appraisal unless specifically stated to the contrary. 31. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated, unless specifically stated to the contrary. 32. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute prediction of future operating results. Furthermore, it is Central Highlands Plaza 20014-Copyright©2020 !ISvA ulsing inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. 33. Any estimate of insurable value, if included within the scope of work and presented herein, is based upon figures developed consistent with industry practices. However, actual local and regional construction costs may vary significantly from our estimate and individual insurance policies and underwriters have varied specifications, exclusions, and non-insurable items. As such, we strongly recommend that the Client obtain estimates from professionals experienced in establishing insurance coverage. This analysis should not be relied upon to determine insurance coverage and we make no warranties regarding the accuracy of this estimate. 34. The data gathered in the course of this assignment (except data furnished by the Client) shall remain the property of the Appraiser. The appraiser will not violate the confidential nature of the appraiser-client relationship by improperly disclosing any confidential information furnished to the appraiser. Notwithstanding the foregoing,the Appraiser is authorized by the client to disclose all or any portion of the appraisal and related appraisal data to appropriate representatives of the Appraisal Institute if such disclosure is required to enable the appraiser to comply with the Bylaws and Regulations of such Institute now or hereafter in effect. 35. You and Soya Consulting both agree that any dispute over matters in excess of$5,000 will be submitted for resolution by arbitration.This includes fee disputes and any claim of malpractice.The arbitrator shall be mutually selected. If Soya Consulting and the client cannot agree on the arbitrator, the presiding head of the Local County Mediation&Arbitration panel shall select the arbitrator.Such arbitration shall be binding and final. In agreeing to arbitration, we both acknowledge that, by agreeing to binding arbitration,each of us is giving up the right to have the dispute decided in a court of law before a judge or jury. In the event that the client, or any other party, makes a claim against Soya Consulting or any of its employees in connections with or in any way relating to this assignment, the maximum damages recoverable by such claimant shall be the amount actually received by Soya Consulting for this assignment,and under no circumstances shall any claim for consequential damages be made. 36. Soya Consulting shall have no obligation, liability, or accountability to any third party.Any party who is not the "client" or intended user identified on the face of the appraisal or in the engagement letter is not entitled to rely upon the contents of the appraisal without the express written consent of Soya Consulting. "Client" shall not include partners, affiliates, or relatives of the party named in the engagement letter. Client shall hold Soya Consulting and its employees harmless in the event of any lawsuit brought by any third party, lender, partner,or part-owner in any form of ownership or any other party as a result of this assignment.The client also agrees that in case of lawsuit arising from or in any way involving these appraisal services, client will hold Soya Consulting harmless from and against any liability, loss, cost, or expense incurred or suffered by Soya Consulting in such action, regardless of its outcome. 37. Acceptance and/or use of this appraisal report constitutes acceptance of the foregoing general assumptions and limiting conditions. Central Highlands Plaza 20014-Copyright©2020 • ■SOVA Appraisal•Valuation•Consulting TITLE REPORT i it Central Highlands Plaza 20014-Copyright©2020 SUBDIVISION Guarantee/Certificate Number: Issued By: 0 CHICAGO TITLE 194834-TC INSURANCE COMPANY CHICAGO TITLE INSURANCE COMPANY a corporation, herein called the Company GUARANTEES Parametrix herein called the Assured, against actual loss not exceeding the liability amount stated in Schedule A which the Assured shall sustain by reason of any incorrectness in the assurances set forth in Schedule A. LIABILITY EXCLUSIONS AND LIMITATIONS 1. No guarantee is given nor liability assumed with respect to the identity of any party named or referred to in Schedule A or with respect to the validity, legal effect or priority of any matter shown therein. 2. The Company's liability hereunder shall be limited to the amount of actual loss sustained by the Assured because of reliance upon the assurance herein set forth, but in no event shall the Company's liability exceed the liability amount set forth in Schedule A. Please note carefully the liability exclusions and limitations and the specific assurances afforded by this guarantee. If you wish additional liability, or assurances other than as contained herein, please contact the Company for further information as to the availability and cost. Chicago Title Insurance Company By: Chicago Title Company of Washington 1142 Broadway, Suite 200 4 i.._ Tacoma,WA 98402 President Countersigned By: V Attest: 19 •ti.:,,r,-,,,,, 1.P SE *I► lOt�l ,___-5sP----\-4sIs:z-- ,,1 *, Authorized Officer or Agent ` ''� Secretary Subdivision Guarantee/Certificate Printed: 12.02.19 @ 02.17 PM Page 1 WA-CT-FBCM-02150.620753-SPS-1-19-194834-TC CHICAGO TITLE INSURANCE COMPANY GUARANTEE/CERTIFICATE NO. 194834-TC ISSUING OFFICE: Title Officer: Rob Hainey Chicago Title Company of Washington 1142 Broadway, Suite 200 Tacoma, WA 98402 Fax: 866-671-3908 Main Phone: (253)671-6623 Email: Rob.Hainey@ctt.com SCHEDULE A Liability Premium Tax $1,000.00 $350.00 $35.70 Effective Date: November 22, 2019 at 12:00 AM The assurances referred to on the face page are: That, according to those public records which, under the recording laws, impart constructive notice of matter relative to the following described property: SEE EXHIBIT"A"ATTACHED HERETO AND MADE A PART HEREOF Title to said real property is vested in: Argo Renton, LLC, a Delaware limited liability company subject to the matters shown below under Exceptions, which Exceptions are not necessarily shown in the order of their priority. END OF SCHEDULE A Subdivision Guarantee/Certificate Printed: 12.02.19 @ 02:17 PM Page 2 WA-CT-FBCM-02150.620753-SPS-1-19-194834-TC EXHIBIT "A" Legal Description Lot 5, Central Highlands Plaza, a Binding Site Plan, according to the plat theroef, recorded in Volume 141 of Plats, pages 59 and 60, and Amended in Volume 176 of Plats, pages 76 and 77, in King County, Washington. Subdivision Guarantee/Certificate Printed: 12.02.19 02:17 PM Page 3 WA-CT-FBCM-02150.620753-SPS-1-19-194834-TC CHICAGO TITLE INSURANCE COMPANY GUARANTEE/CERTIFICATE NO. 194834-TC SCHEDULE B H. Reservations and exceptions in United States Patents or in Acts authorizing the issuance thereof. SPECIAL EXCEPTIONS 1. Covenants, conditions, restrictions, recitals, reservations, easements, easement provisions, dedications, building setback lines, notes, statements, and other matters, if any, but omitting any covenants or restrictions, if any, including but not limited to those based upon race, color, religion, sex, sexual orientation, familial status, marital status, disability, handicap, national origin, ancestry, or source of income, as set forth in applicable state or federal laws, except to the extent that said covenant or restriction is permitted by applicable law, as set forth on Joseph P. Marshall Tracts: Recording No: 3250442 2. Easement(s)for the purpose(s) shown below and rights incidental thereto, as granted in a document: Granted to: May Creek Flood Zone District, a created municipal corporation Purpose: Drainage channel and/or other flood control works Recording Date: October 20, 1965 Recording No.: 5943056 Affects: A portion of said premises 3. Easement(s)for the purpose(s) shown below and rights incidental thereto, as granted in a document: Granted to: May Creek Flood Control Zone District a created municipal corporation Purpose: Drainage channel and/or other flood control works Recording Date: October 20, 1965 Recording No.: 5943057 Affects: A portion of said premises 4. Covenants, conditions, restrictions and easements but omitting any covenants or restrictions, if any, including but not limited to those based upon race, color, religion, sex, sexual orientation, familial status, marital status, disability, handicap, national origin, ancestry, source of income, gender, gender identity, gender expression, medical condition or genetic information, as set forth in applicable state or federal laws, except to the extent that said covenant or restriction is permitted by applicable law, as set forth in the document Recording Date: August 19, 1977 Recording No.: 7708190846 5. Declaration of Easements and the terms and provisions thereof Recording Date: September 21, 1977 Recording No.: 7709210680 Said Declaration of Easements has been modified by instrument(s) recorded under Recording No. 8104290507 and Recording No. 9604300819. Subdivision Guarantee/Certificate Printed: 12.02.19©02:18 PM Page 4 WA-CT-FBCM-02150.620753-SPS-1-19-194834-TC CHICAGO TITLE INSURANCE COMPANY GUARANTEE/CERTIFICATE NO. 194834-TC SCHEDULE B (continued) 6. Easement(s)for the purpose(s) shown below and rights incidental thereto, as granted in a document: Granted to: City of Renton, a municipal corporation Purpose: Storm sewer with necessary appurtenances Recording Date: November 16, 1977 Recording No.: 7711160658 Affects: A portion of said premises 7. Easement(s)for the purpose(s) shown below and rights incidental thereto, as granted in a document: Granted to: City of Renton, a municipal corporation Purpose: Water line with necessary appurtenances Recording Date: November 16, 1977 Recording No.: 7711160659 Affects: A portion of said premises 8. Easement(s)for the purpose(s) shown below and rights incidental thereto, as granted in a document: Granted to: Puget Sound Power& Light Company Purpose: Electric transmission and/or distribution system Recording Date: July 3, 1978 Recording No.: 7807030820 Affects: A portion of said premises 9. Easement(s)for the purpose(s) shown below and rights incidental thereto, as granted in a document: Granted to: Puget Sound Power& Light Company Purpose: Electric transmission and/or distribution system Recording Date: March 6, 1979 Recording No.: 7903060809 Affects: A portion of said premises 10. Covenants, conditions, restrictions, recitals, reservations, easements, easement provisions, dedications, building setback lines, notes, statements, and other matters, if any, but omitting any covenants or restrictions, if any, including but not limited to those based upon race, color, religion, sex, sexual orientation, familial status, marital status, disability, handicap, national origin, ancestry, or source of income, as set forth in applicable state or federal laws, except to the extent that said covenant or restriction is permitted by applicable law, as set forth on Central Plaza Short Plat 1: Recording No: 8002269014 11. Ordinance No. 4025, and the terms and provisions thereof: Recording Date: December 3, 1986 Recording No.: 8612031455 Subdivision Guarantee/Certificate Printed: 12.02.19©02:18 PM Page 5 WA-CT-FBCM-02150.620753-SPS-1-19-194834-TC • CHICAGO TITLE INSURANCE COMPANY GUARANTEE/CERTIFICATE NO. 194834-TC SCHEDULE B (continued) 12. Covenants, conditions, restrictions, recitals, reservations, easements, easement provisions, dedications, building setback lines, notes, statements, and other matters, if any, but omitting any covenants or restrictions, if any, including but not limited to those based upon race, color, religion, sex, sexual orientation, familial status, marital status, disability, handicap, national origin, ancestry, or source of income, as set forth in applicable state or federal laws, except to the extent that said covenant or restriction is permitted by applicable law, as set forth on Central Highlands Plaza, a Binding Site Plan, File No. BSP. 091-87: Recording No: 8805200326 An amendement to the Binding Site Plan, recorded April 29,1996, under recording number 9604290131. 13. Administrative Site Plan Review City of Redmond Report and Decision on Amendment to Binding Site Plan and the terms and provisions thereof: Recording Date: May 8, 1996 Recording No.: 9605081004 14. Easement(s)for the purpose(s) shown below and rights incidental thereto, as granted in a document: Granted to: Puget Sound Energy, Inc. Purpose: Transmission, distribution and sale of gas Recording Date: October 6, 2011 Recording No.: 20111006000430 Affects: A portion of said premises 15. General and special taxes and charges, payable February 15, delinquent if first half unpaid on May 1, second half delinquent if unpaid on November 1 of the tax year(amounts do not include interest and penalties): Year: 2019 Tax Account No.: 149450-0050 Levy Code: 2100 Assessed Value-Land: $4,476,800.00 Assessed Value-Improvements: $0.00 General and Special Taxes: Billed: $47,930.09 Paid: $47,930.09 Unpaid: $0.00 16. A Deed of Trust and Assignment of Rents and/or Leases Amount: $6,550,000.00 Dated: October 24, 2013 Trustor/Grantor:Argo Renton, LLC, a Delaware limited liability company Trustee: First American Title Insurance Company Beneficiary: The Bancorp Bank Recording Date:October 24, 2013 Recording No: 20131024001185 Affects: Lot 5 and other property Subdivision Guarantee/Certificate Printed: 12.02.19 @ 02 18 PM Page 6 WA-CT-FBCM-02150.620753-SPS-1-19-194834-TC CHICAGO TITLE INSURANCE COMPANY GUARANTEE/CERTIFICATE NO. 194834-TC SCHEDULE B (continued) An assignment of the beneficial interest under said deed of trust which names: Assignee: U. S. Bank National Association, as Trustee on behalf of the Registered Holders of Citigroup Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates Series 2013-GC17 Recording Date: January 17, 2014 Recording No.: 20140117000693 17. Assignment of Rents and Leases Assigned to: The Bancorp Bank Assigned by: Argo Renton, LLC, a Delaware limited liability company Recording Date:October 24, 2013 Recording No.: 20131024001186 Affects: Lot 5 and other property An assignment of assignment of rents and leases which names: Assignee: U. S. Bank National Association, as Trustee on behalf of the Registered Holders of Citigroup Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates Series 2013-GC17 Recording Date: January 17, 2014 Recording No.: 20140117000694 18. A financing statement as follows: Debtor: Argo Renton, LLC Secured Party: The Bancorp Bank Recording Date:October 24, 2013 Recording No.: 20131024001187 Affects: Lot 5 and other property 19. A change to the above financing statement was filed Nature of Change: Assignment Assigned To: U. S. Bank National Association, as Trustee on behalf of the Registered Holders of Citigroup Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates Series 2013-GC17 Recording Date: January 17, 2014 Recording No.: 20140117000695 20. A change to the above financing statement was filed: Nature of Change: Continuation Recording Date: May 9, 2018 Recording No.: 20180509000046 Subdivision Guarantee/Certificate Printed: 12.02.19 @ 02:18 PM Page 7 WA-CT-FBCM-02150.620753-SPS-1-19-194834-TC CHICAGO TITLE INSURANCE COMPANY GUARANTEE/CERTIFICATE NO. 194834-TC SCHEDULE B (continued) Note 1: FOR INFORMATIONAL PURPOSES ONLY: The following may be used as an abbreviated legal description on the documents to be recorded, per Amended RCW 65.04.045. Said abbreviated legal description is not a substitute for a complete legal description within the body of the document: Lot 5, Central Highlands Plaza (Amended), Vol 176, Pages 76-77, King Co Tax Account No.: 149450-0050 Note 2: Any map furnished with this Guarantee is for convenience in locating the land indicated herein with reference to streets and other land. No liability is assumed by reason of reliance thereon. Note 3: The legal description in this Guarantee is based on information provided with the application and the Public Records. All parties must notify the Title Insurance Company if the description does not conform to their expectations. END OF SCHEDULE B Subdivision Guarantee/Certificate Printed: 12.02.19 @ 02:18 PM Page 8 WA-CT-FBCM-02150.620753-SPS-1-19-194834-TC 925 Fourth Ave Ste 2000 Seattle, Greg Goodman,MAI,206.36 4 369.0415.0415 Ipraisal . Valuation . Consulting Matt Sloan MAI,SRA,206.234.6458 Qualifications of Matthew C. Sloan, MAI, SRA Principal of Soya Consulting Experience Matt Sloan, MAI,SRA, has nearly 20 years of experience working directly with a wide variety of agencies,earning his MAI designation in 2016 and SRA in 2019. Experience includes an extensive history of large right of way projects throughout the region, focused on valuation-related consulting but also including many aspects of the public project development process including project scoping/impact analysis, project budgeting,sensitivity and risk analysis, federal funding participation, key appraiser and appraisal management activities. His practice focuses on appraisal and valuation issues relating partial acquisitions, easements, and specialized studies of damages and special benefits related to commercial, industrial and residential properties. He has also worked on large Local Improvement Districts(LIDs) and performed a wide variety of other specialized studies. Education University of Washington, Seattle, Washington: Commercial Real Estate Certificate, a nine-month interdisciplinary program of specialized subject study including commercial real estate development, valuation, insurance, risk management, and business and real estate law. Completed June 2006. City University, Seattle, Washington: Bachelor of Science in Business Administration, emphasis in project management. Completed June 2005. Appraisal Institute/Other Completion of extensive required coursework, examination,capstone project and peer-audited experience review for obtaining MAI and SRA designations. Continual ongoing courses and seminars to satisfy continuing education requirements for both the Appraisal Institute and Washington Department of Licensing. Select Client List: Sound Transit Washington State Department of Transportation Port of Seattle Community Transit Puget Sound Energy Seattle Public Schools City of Seattle City of Bellevue King County Snohomish County Pierce County Skagit County Miller Nash Graham & Dunn Ellis Li McKinstry Preston Gates Enslee Best CH2M Hill HDR Engineering Universal Field Services LaBonde Land RESGroup NW Abeyeta &Associates