Appraisal EastPark One

Market Value Appraisal
Class-A Office Complex
Prepared for
USA Bank Corp 2 East Mifflin Street Madison, WI 53703 East Park One 4600 American Parkway Madison, Wisconsin 53718 October 11, 2012
Property Appraised
Date of Valuation
Prepared by
UW Madison Real Estate Appraisal
Appraisers:
Elizabeth Breitlow Morgan Whiteley Robert Anderson Timothy Balcerzak
UW MADISON REAL ESTATE APPRAISAL

GRAINGER HALL 975 UNIVERSITY AVENUE MADISON, WISCONSIN UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS 1
- Subject Photo East Park One 4600 American Parkway Madison, Wisconsin
Located in: The American Center Business Park
UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS
UW Madison Real Estate Appraisal

Real Estate Appraisers and Consultants 975 University Avenue Madison, Wisconsin 53706 December 15, 2012 Mr. President USA Bank Corp 2 East Mifflin Street Madison, WI 53703 Re: East Park One 4600 American Parkway Madison, Wisconsin 53718 UW Madison Real Estate Appraisal Market Value Appraisal of East Park One Dear Mr. President: We have prepared the following Appraisal Report of the above referenced property for the purpose of estimating the As Is market value of the leased fee interest as of October 11, 2012. This report has been prepared based on the scope of work outlined in the following pages. This report is intended for the use of USA Bank Corp, with the purpose being to estimate the As Is market value of the subject property for commercial mortgage underwriting as of October 11, 2012, the last date of inspection. No additional intended users are identified or intended by the appraisers. Thus, no other persons or entities should rely on this appraisal other than those noted herein. The subject was inspected by and the report prepared and written by Elizabeth Breitlow, Morgan Whiteley, Robert Anderson, and Timothy Balcerzak. The subject property is located in the American Center Business Park, within Dane County, in Madison Wisconsin, just off highway 151, north of its intersection with I90/94. The American Center Business Park is approximately 88 years old but is only about 50% developed to date, leaving room for future development. The subject property, EastPark One, consisting of 74,736 Sq. Ft. improved office space on a 5.08 acre lot, is located on the west side of American Parkway, a two-way, six-lane asphalt paved road with moderate traffic. EastPark One is a Class-A office building with some current tenants as well as open units throughout the building. Today, vacancy is at approximately 44%.
The property is asking a current rental rate of around $13 per square foot NNN of property tax, building insurance, and building maintenance (among others). This rental rate appears to be reasonable under current market conditions. In order to prepare the analysis, the following items were supplied: A. Building Specifications (MGL Commercial) B. Floor Plans & Site Plan (MGL Commercial) C. Photographs (Mike Hershberger) D. East Park One Rental Information (Mike Hershberger) E. Tax Payment History (Mike Hershberger) Any deviation from the information supplied and assumptions used herein will likely result in a change of value. Therefore, observations and conclusions made in this appraisal report may vary from those previously made if actual conditions differ significantly from the assumptions made in earlier reports. As a result of our investigation and analysis of the subject property, it is our opinion that the As Is market value of the leased fee interest as of October 11, 2012 is:
$ 6,100,000
Respectfully submitted,
Elizabeth Breitlow General Appraiser
Morgan Whiteley General Appraiser
Robert Anderson General Appraiser
Timothy Balcerzak General Appraiser
Table Of Contents
CERTIFICATE OF VALUE ........................................................................................................................ 8 GENERAL ASSUMPTIONS AND LIMITING CONDITIONS ........................................................... 10 SUMMARY OF SALIENT FACTS AND CONCLUSIONS .................................................................. 11 SUMMARY OF SUBJECT PROPERTY ..................................................................................................................... 11 CONCLUSIONS OF VALUE...................................................................................................................................... 12 APPRAISAL ASSIGNMENT .................................................................................................................. 13 APPRAISAL PROCESS............................................................................................................................................. 13 PURPOSE OF THE APPRAISAL .............................................................................................................................. 13 SCOPE OF WORK.................................................................................................................................................... 13 CLIENT, INTENDED USER AND USE OF THE APPRAISAL REPORT ................................................................. 14 IDENTIFICATION OF THE PROPERTY................................................................................................................... 14 OWNERSHIP HISTORY .......................................................................................................................................... 14 DEFINITION OF INTEREST BEING APPRAISED .................................................................................................. 14 DEFINITION OF MARKET VALUE ........................................................................................................................ 15 TAXES & ASSESSMENTS ....................................................................................................................................... 16 DATE OF APPRAISAL ............................................................................................................................................. 16 MARKET AREA DESCRIPTION AND ANALYSIS ............................................................................ 17 IDENTIFICATION OF MSA, COUNTY, CITY, NEIGHBORHOOD AND SUB-DISTRICTS .................................... 17 DEMOGRAPHIC TRENDS AND ANALYSIS ............................................................................................................ 17 ECONOMIC TRENDS............................................................................................................................................... 18 TRANSPORTATION INFRASTRUCTURE ............................................................................................................... 19 LOCAL AND REGIONAL GOVERNMENT ............................................................................................................... 19 SOCIAL CHARACTERISTICS ................................................................................................................................... 19 NEIGHBORHOOD ANALYSIS ................................................................................................................................. 20 OFFICE MARKET ANALYSIS ................................................................................................................................. 20 PROPERTY DESCRIPTION AND ANALYSIS SITE ANALYSIS.................................................. 22 SITE ANALYSIS AND PHYSICAL CHARACTERISTICS .......................................................................................... 22 LOCATION ............................................................................................................................................................... 23 ADJACENT PROPERTIES AND LAND USES.......................................................................................................... 23 OWNERSHIP AND TITLE ....................................................................................................................................... 23 GOVERNMENTAL RESTRICTIONS AND NEIGHBORHOOD PLANNING ............................................................. 24 UTILITIES AND SERVICES ..................................................................................................................................... 24 OTHER SITE CHARACTERISTICS .......................................................................................................................... 24 SITE IMPROVEMENTS ........................................................................................................................................... 24 PROPERTY DESCRIPTION AND ANALYSIS IMPROVED PROPERTY ANALYSIS ............. 25 PROPERTY DESCRIPTION ..................................................................................................................................... 25 PHYSICAL CONDITION .......................................................................................................................................... 27 FUNCTIONAL UTILITY ........................................................................................................................................... 27 SPECIAL CHARACTERISTICS ................................................................................................................................. 27 HIGHEST AND BEST USE ANALYSIS ................................................................................................ 28 HIGHEST AND BEST USE FOR IMPROVED PARCEL ........................................................................................... 28 As Improved ............................................................................................................................................................28 As Vacant ..................................................................................................................................................................29 HIGHEST AND BEST USE FOR VACANT PARCEL ............................................................................................... 29
INCOME APPROACH ............................................................................................................................. 31 OPERATING INCOME ............................................................................................................................................. 31 Market Rent Analysis ..........................................................................................................................................31 Market Rent Changes .........................................................................................................................................31 Broker Analysis......................................................................................................................................................32 Market Leasing Assumptions ..........................................................................................................................32 Rent Roll Existing Tenants ...........................................................................................................................34 Expense Recoveries ..............................................................................................................................................35 Miscellaneous Income ........................................................................................................................................35 VACANCY AND COLLECTION LOSS ...................................................................................................................... 35 OPERATING EXPENSES AND CAPITAL IMPROVEMENTS .................................................................................. 36 RATE ANALYSIS ..................................................................................................................................................... 37 Capitalization Rate ..............................................................................................................................................37 Terminal Cap Rate ...............................................................................................................................................38 Discount Rate .........................................................................................................................................................38 Growth Rates ..........................................................................................................................................................39 Discounted Cash Flow analysis ......................................................................................................................39 DIRECT SALES COMPARISON APPROACH .................................................................................... 44 PROPERTY VALUATION ........................................................................................................................................ 44 COMPARABLE SALES ............................................................................................................................................. 45 SALES COMPARISON ADJUSTMENTS................................................................................................................... 47 MARKET VALUE CONCLUSION ............................................................................................................................ 48 COST APPROACH................................................................................................................................... 49 LAND COMPARISON .............................................................................................................................................. 49 Site Valuation .........................................................................................................................................................49 Comparables ...........................................................................................................................................................49 Land Sale Comparison Adjustments ............................................................................................................51 Market Value Conclusion ..................................................................................................................................51 IMPROVEMENT ANALYSIS .................................................................................................................................... 52 Hard Costs ................................................................................................................................................................52 Soft Costs ..................................................................................................................................................................52 Site Improvements ...............................................................................................................................................52 Depreciation ...........................................................................................................................................................52 REPLACEMENT COST SUMMARY ......................................................................................................................... 53 DEPRECIATION ANALYSIS .................................................................................................................................... 54 SITE IMPROVEMENT ANALYSIS ........................................................................................................................... 55 SUMMARY OF FINAL VALUE ................................................................................................................................ 56 RECONCILIATION AND FINAL VALUE CONCLUSIONS ............................................................... 57 INCOME APPROACH .............................................................................................................................................. 57 DIRECT SALES COMPARISON APPROACH .......................................................................................................... 57 COST APPROACH ................................................................................................................................................... 57 SUMMARY ............................................................................................................................................................... 57 APPENDICES & OTHER INFORMATION ......................................................................................... 59 APPENDIX A: MAPS............................................................................................................................................... 59 Location of Subject Property...........................................................................................................................59 AERIAL PHOTOGRAPH .......................................................................................................................................... 59 APPENDIX B: TRANSPORTATION ........................................................................................................................ 60 Madison Metro Transit Route 25- Capital Square to American Center ......................................60
Madison Metro Transit Route 26: American Center to East Towne Mall ..................................60 APPENDIX C: OVERALL MAP OF COMPARABLE SALES.................................................................................... 61 RENTAL A.................................................................................................................................................................62 RENTAL B.................................................................................................................................................................63 RENTAL C .................................................................................................................................................................64 APPENDIX D: FLOOD INSURANCE RATE ............................................................................................................ 65 APPENDIX E: PHOTOS OF SUBJECT SITE AND IMPROVEMENTS ..................................................................... 66 APPENDIX F: THE AMERICAN CENTER PEDESTRIAN TRAIL SYSTEM - MAP .............................................. 72 APPENDIX G: SITE PLAN & MAP ........................................................................................................................ 73
Certificate of Value
The undersigned does hereby certify that, to the best of our knowledge and belief: 1. The statements of fact in this appraisal report are true and correct; 2. The reported analyses, opinions, and conclusions in this appraisal report are limited by the reported assumptions, limiting conditions, and our personal, impartial, and unbiased professional analyses, opinions, and conclusions as to the value of the subject property; 3. We 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. We have no bias with respect to the property that is the subject of this report or to the parties involved; 5. Our engagement in this assignment was not contingent upon any action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report; 6. Our compensation for completing this assignment is not contingent upon the reporting of a predetermined value or direction in value, approval of a loan, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the following requirements. a. The Code of Professional Ethics and the Standard of Professional Practice of the Appraisal Institute b. Uniform Standards of Professional Appraisal Practice (USPAP) 8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives; 9. All significant professional appraisal assistance, including sources of information material to significant conclusions, has been acknowledged within the appraisal; 10. We have made personal inspections of the property that is the subject of this report; 11. UW Madison Real Estate Appraisal has not performed any valuation or professional services involving the subject property in any capacity, nor are we presently involved with the management, leasing, disposition, nor any similar service regarding the subject property;
12. The valuation herein does not include any fixtures, furniture or equipment related to the operation of business. The valuation herein does not include a value for any business entity, or entities occupying the subject property; 13. The estimated market value of the As Is market value of the fee simple interest as of October 11, 2012 is:
$ 6,100,000
Elizabeth Breitlow General Appraiser
Morgan Whiteley General Appraiser
Robert Anderson General Appraiser
Timothy Balcerzak General Appraiser
Date of Report: December 15, 2012
General Assumptions and Limiting Conditions

This appraisal report has been made with the following general assumptions: 1. No responsibility is assumed for the legal description or for matters pertaining to legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated; 2. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated; 3. Responsible ownership and competent property management are assumed; 4. The information supplied by others is believed to be reliable but no warranty is given for its accuracy; 5. Plot plans and illustrative materials in this report are included only to help the reader visualize the property; 6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. The values estimated herein are subject to typical building inspections; 7. It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless a non-conformity has been identified, described, and considered in the appraisal; 8. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property described and considered in the appraisal; 9. The physical condition of the improvements, if any, described herein was based on visual inspection. 10. Neither all nor any part of this appraisal report shall be disseminated to the general public using the appraisers name or appraisal designation, without prior written consent of the appraisers signing this appraisal report
Limiting Conditions
1. The allocation of total value between land and improvements applies only under the described utilization. The separate valuations for land and improvements must not be used in conjecture with any other appraisal and are invalid is so used; 2. This appraisal contains no extraordinary assumptions or hypothetical conditions.
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Summary of Salient Facts and Conclusions

Summary of Subject Property Property Name Legal Description Location EastPark One FIRST ADDITION TO THE AMERICAN CENTER PLAT, LOT 14 The subject property is located on the East side of Madison in the West side of the American Center Business Park, located off highway 151, just north of its intersection with I-90/94. Leased Fee Interest Madison, City of 4600 American Parkway Madison, WI 53718 0810-221-0203-2 Multi-Tenant Office Property consists of both leased and vacant Class-A office space 1994 Irregular / Corner 221,250 sqft (5.08 acres) 86,098
24,559 24,559 25,618 11,362
Rights and Type of Property Appraised Municipality Address Parcel Identification Number (PIN) Type of Use
Year Built Shape Site Size Gross Building Area

1st Floor 2nd Floor 3rd Floor Basement
Rentable Building Area

1st Floor 2nd Floor 3rd Floor
74,736
24,559 24,559 25,618
Zoning Date of Appraisal Report Effective Date of Appraisal Highest and Best Use as Vacant Highest and Best Use as Improved
0-4; Administrative Office and Research and Development District November 21, 2012 October 11, 2012 Commercial office Present use, commercial office
Improvements
A three-story multi-tenant Class A office
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building constructed in 1994. Fully improved 2nd generation space available. The exterior is finished with brick, precast masonry, glass windows and large pillar style columns at the main entrance. The interior features marble, terrazzo flooring and high-end finishes with a large atrium style lobby featuring dramatic floor to ceiling windows. The three floors are partitioned into eighteen rentable suites with access to a spacious common conference and training room, which seats up to 45. Additionally amenities onsite include showers and vending areas in addition to rentable storage spaces for tenant use.
CONCLUSIONS OF VALUE
Income Approach Price per Square foot 86,098 Direct Sales Comparison Approach Price per Square Foot Cost Approach Price per Square Foot Final Value Estimate Price per Square Foot $ 4,850,270.00 $ 56.33 $ 7,650,000.00 $ 88.85 $ 10,525,000.00 $ 122.24 $ 6,100,000.00 $ 79.85
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Appraisal Assignment
Appraisal Process According to the Appraisal Institute, the standardized Appraisal Process is a procedure used to formulate an opinion on the value of a property. When appraising a property, there are many methods in which one can derive a value estimate. The three most common include the income approach, sales comparison approach, and the cost approach. Another analysis used in appraisal to determine the appropriate use for which a property should be valued is called highest and best use analysis (or most probable use). This report has examined all three approaches to value, which were then reconciled to derive a final estimate of value for the subject property, 4600 American Parkway. Purpose of the Appraisal The purpose of this appraisal report is to estimate the As Is market value for the leased fee interest as of October 11, 2012 to be used for commercial mortgage underwriting. Scope of Work The appraisal problem herein is to estimate the As Is market value of the leased fee interest as of October 11, 2012. To arrive at an accurate value conclusion, we conducted site inspections, performed analysis of comparable properties, analyzed physical and financial characteristics of the property and applied various approaches to value to the appraisal problem. The approaches used herein are considered sufficient to develop credible assignment results in solving the appraisal problem. For this assignment, all typical approaches to value the cost approach, the sales comparison approach, and the income capitalization approach are considered. Data on the subject property is derived from various sources, including but not limited to, the property owner, the county property appraisers office, surveys, and building plans. Data should be confirmed through a second source whenever possible. Land size is strictly based on surveys (when available), public records, and recorded plats. The parties who perform the appraisal do not perform Land measurements. Description of the improvements is based on visual inspection and/or plans. Consequently, appraisers cannot attest to the soundness of a structure. Only those problems that are evident by visual inspection are considered in the valuation, and such are noted within the body of the report.
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Comparable improved sales and rentals were inspected from the exterior with interior inspections completed when possible. Sale prices are gathered from public records and are typically confirmed with a party to the transaction. Research of comparables included, but was not limited to the following data sources: Loopnet.com National Multiple Listing Services Madison Commercial Data Exchange Additionally, we consulted with local real estate brokers working in the subject area in order to gather current information on various market influences such as vacancy, absorption rates, and competitive property sales. Supplementary to our site visit(s), Mike Hershberger provided us with pictures of the subject property that we use throughout this report and have included in the appendices. Client, Intended User and Use of the Appraisal Report The intended user of this appraisal is USA Bank Corp and-or its affiliates. Their intended use of this valuation is for commercial mortgage underwriting. No additional intended users are identified or intended by the appraisers. Identification of the property The subject property appraised is located at 4600 American Parkway, Madison, Dane County, Wisconsin. The legal description is as follows: FIRST ADDITION TO THE AMERICAN CENTER PLAT, LOT 14 Ownership History The current owner of EastPark One is American Family Insurance Corp Real Estate Q22D. Definition of Interest Being Appraised The property right appraised in this report is the leased fee interest of the subject property. The interest appraised herein is as follows: Leased fee interest: the ownership interest held by the lessor, which includes the right to contract rent specified in the lease plus the reversionary right when the lease expires.
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Generally, a leased fee provides the lessor with the following: Rent to be paid by the lessee under stipulated terms The right of repossession at the termination of the lease Default provisions The right of disposition, including the right to sell, mortgage, or bequeath the property, subject to the lessees rights, during the lease period
Source: Appraisal of Real Estate, 13th Edition, Appraisal Institute
Definition of Market Value Market Value is a major part of appraisal assignments. Therefore, it must be an ordinarily understood and agreed upon concept. One of the current agreed upon definitions used for Market Value in the United States is as follows: The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress. Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised and acting in what they consider their own best interest; 3. A reasonable time is allowed for exposure to the open market; 4. Payment is made in terms of cash in US dollars or in terms of financial arrangements comparable thereto; and 5. The price represents a normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Source: Appraisal of Real Estate, 13th Edition, Appraisal Institute
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Taxes & Assessments The subject property, parcel 081022102032, is assessed by the following jurisdictions: Wisconsin, Dane County, The City of Madison, MATC, & SCH Sun Prairie. Assessment Year: 2011 TAX BREAKDOWN
Taxing Jurisdiction Wisconsin Dane County City of Madison MATC SCH Sun Prairie Total First Dollar Credit Lottery & Gaming Credit Net Property Tax 2010 Net Tax 2011 Net Tax % Change
1,119.23 16,736.86 54,424.95 9,727.96 69,484.58 151,493.58 -83.64 0

151,409.94
1,116.01 17,611.6 56,884.04 11,238.76 72,217.82 159,068.23 -85.81 0

158,982.42
- .3% 5.4% 4.5% 15.5% 3.9% 5.0% 2.6% 0%

5%
Source: Access Dane Treasurer Tax Information
TAX ASSESSMENT: 4600 AMERICAN PARKWAY

Parcel Number 0810-221-0203-2 Size (acres) 5.08 Land $ 774,500 Improvements $ 5,676,400 Total $ 6,450,900 2011 Estate Taxes $ 159,068.23
($ 85.81) $ 158,982.42
First Dollar Credit Net property Tax Source: Access Dane Treasurer Tax Information
Average assessment ratio for 2011 was 98.196% Date of Appraisal The date of our value estimate is October 11, 2012
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Market Area Description and Analysis
Identification of MSA, County, City, Neighborhood and Sub-Districts East Park One is located at 4600 American Parkway in the metropolitan statistical area of Madison in Dane County, Wisconsin. The building is part of the American Center, which is located off highway 151, just north of its intersection with I-90/94. The property is part of the 24th ward in the 17th aldermanic district on the eastern side of the city of Madison. Demographic Trends and Analysis According to the U.S. Census Bureau, the city of Madison, Wisconsin had an estimated population of 236,901 residents as of 2011. This shows a population increase of 1.6% from the previous year (2010), and a 12.2% increase from the past eleven years (2000). There has also been an increase in population across the entire Dane County of about 16.3%. From the three decades ranging from 2000-2030, it is predicted that Madison will grow its population by 27.3%, which shows that future growth is estimated at 5.1% over the next two decades. This shows there will need to be an increase in various types of real estate to support this increase in population. Lastly, the city of Madison has its mean population within the usual working age, which shows a demand for jobs, businesses and office space. THE CITY OF MADISON AND DANE COUNTY POPULATION
2000 208,054 426,526 2010 233,209 488,073 2011 236,901 495,959 % Change since 2010 1.6% 1.6% % Change since 2000 12.2% 16.3% Est. % Change 2000-2030 27.3% 36%
Madison Dane Co.
Source: US Bureau of Census, 2010 Census of Population
The city of Madison has a population gender, age and race breakdown as follows: BREAKDOWN OF MADISON POPULATION (%)
Gender Males Females Age Under 18 18-24 25-44 45-64 65 and older Median Age
Source: 2010 U.S. Census Bureau
49.2% 50.8% 17.9% 21.4% 32.2% 19.3% 9.2% 31.1 years
Race/ Ethnicity White Black/ African American Asian Hispanic Native American
78.9% 7.3% 7.4% 6.8% 0.4%
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Economic Trends The city of Madison is home to the Wisconsin state government and the University of Wisconsin-Madison, two of the citys largest employers. Madison prides itself on its high education level, which attracts many businesses to the area and contributes to the citys low unemployment rate. According to the Department of Numbers, as of August 2012, Madison has an unemployment rate of 5.3%, which is lower than both the state of Wisconsin (7.5%) and the national average (8.1%). Madisons ability to keep a low unemployment level during the past uneven economy and constantly shifting unemployment rate throughout the United States, shows the citys steady and desirable environment. With unemployment lower than average, Madison has a higher demand for office space than other cities. UNEMPLOYMENT RATE:
--- MADISON --- WISCONSIN --- NATION
Note: Recessions shown in gray

Source: Department of Numbers- Madison, Wisconsin Unemployment
According to the Federal Reserve Economic Data, Madisons per capita personal income for the years 2000-2012 has been higher than both the state of Wisconsin and the nation. This not only demonstrates Madisons current and potential economic growth, but also shows that they are more financially stable in comparison to the state and the nation. As Madison continues to experience this economic growth and development, the subject property will benefit from the resulting greater demand for office space and should yield a higher overall property value for the subject. PER CAPITA PERSONAL INCOME
--- MADISON --- WISCONSIN --- NATION
Note: Recessions shown in gray

Source: Federal Reserve Economic Data
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Transportation Infrastructure The subject property is located on the east side of the city of Madison off of the northeast intersection of highway 151 and interstate 90/94, the two major highways in the area. This gives the property great accessibility for Madison and Dane County residents, as well as easy accessibility for commuters. The Madison Metro Transit provides a widespread bus service across the whole city. There are two routes, which provide a commuter service for the American Center residents. Route 25 on the transit will provide a limited-stop transportation between the American Center and Capitol Square. Also, route 26 on the transit, will provide hourly transportation between the American Center and East Town Mall. In addition to the bus service, there are also approximately 10 cab companies servicing the city. The Dane County Regional Airport is approximately 7 miles, or a 15-minute drive, from the subject property. The airport services Madison as well as all of south central Wisconsin. The close proximity to the airport makes the region very accessible to larger Cities such as Minneapolis, Chicago, St. Louis, Milwaukee etc. For additional air travel options, the Mitchell International Airport, located in Milwaukee, is approximately an hour drive away. Local and Regional Government The city of Madison has a mayor-council system of government, known as the Common Council. The Common Council of Madison has 20 aldermen, each of whom represent one of the 20 districts in Madison. Each council member serves a two-year term. Currently, the mayor of Madison is Paul Soglin, who is serving for his third time. The subject property is located in the 17th district, which is represented by alder Joseph Clausius. The city of Madison is a part of Dane County, which is overseen by Executive Joe Parisi. The subject property is part of the 21st district of Dane County and David Wiganowsky is the Dane County supervisor. Social Characteristics As a top Midwestern city, Madison is consistently ranked for being one of the best places to live, work and raise a family. Last year in 2011, Mens Health magazine ranked Madison the most educated city in America, Forbes ranked Madison the 3rd best city for young professionals, and Outside magazine ranked it the 10th best town to live. The city has three lakes (Lake Mendota, Lake Monona, and Lake Wingra) with the downtown area located on an isthmus between Lakes Mendota and Monona. These locational characteristics provide the community with beautiful scenery, walking/ biking paths and many other outdoor activities.
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In the heart of downtown resides the University of Wisconsin- Madison, which is one of the top ranked schools in the nation. The campus is merged within the downtown area, bringing energy and spirit to the city. In addition to being home to the Badgers, the social scene in Madison is filled with shopping, various types of cuisine, and multiple art and music venues. Residents can also enjoy spending time exploring the Henry Vilas Zoo, the botanical gardens, the arboretum, or attending a show at the Overture Center. Neighborhood Analysis The subject property resides in the American Center Business Park, developed by American Family Mutual Insurance, and the home to their headquarters. Currently the park is about 50% developed and around 88 years old. The park consists of buildings with tenants in the financial, medical, legal, and technical fields. The area offers 3 miles of biking and walking paths that wind though the parks mixture of greenspace, ponds and wooden hills. Two major highways surround the park: highway 151 and interstate 90/94. Both these highways are major commuter roads and provide quick access to Madisons other sub districts. Across interstate 90/94 from the American Center is a strip of retail stores, restaurants, hotels, and various other businesses, in addition to one of the areas two major indoor malls, East Towne Mall. The Madison Metro Transit has a bus departing every 30 minutes from American Center to the East Towne Mall area, making the office park easily accessible to an array of retail, food and other activities. Office Market Analysis In spite of the economic recession that has swept the country the past five years, Madison has been able to hold fairly stable economic and employment levels. Over this period, the city has not only experienced an unemployment rate below the national average, but has actually seen an increase in population, labor force and per capital personal income. Theoretically these positive economic indicators should lead to an increase in and greater demand for jobs, which would subsequently create a greater demand for commercial space; notwithstanding this theory, office market activity in Madison has remained in recovery mode with little growth over the last five years. Although Madisons office market has been relatively stagnant due to the depressed economic state of the entire county, Grubb & Ellis assert that the market is slowly easing into recovery and will continue to see more and more improvements this year and in future years as economic wellbeing returns. They expect Madison to experience a rise in absorption rates to around 200,000 square feet, a decrease in vacancy of around 1.0-1.4 percentage points and an overall increase in Class A rental rates. In 2011, Madison experienced a 1.0 percentage point increase in overall average gross rent. Historically, it has been noted that rental rates are one of the last key metrics to signal improvement, giving hope that impending recovery in Madisons office market will continue for the remainder of 2012 and increase in years to come.
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The subject property is a Class A building located in Madisons East submarket, which has been experiencing slower growth than Madisons West and South markets. Although in general Madisons office vacancy rates have decreased, the East market has historically held a higher than average vacancy level. In 2011, the East submarket had a vacancy rate of 20.8%, 5.1 points above the citys overall office vacancy level of 15.7%. HISTORIC VACANCY RATES MADISON, WISCONSIN
2009 Class All Class A Class B Class C Location Downtown East Far West Near West South 17.3% 15.3% 16.9% 24.8% 12.8% 19.9% 17.2% 16.9% 21.6% 2010 16.2% 11.7% 19.5% 24.3% 14.2% 22.0% 16.0% 8.4% 16.1% 2011 15.7% 11.7% 17.3% 20.9% 12.9% 20.8% 16.3% 8.2% 13.3%
Source: Grubb & Ellis- Office Trends Report, 4Q 2011
4Q 2011 SNAPSHOT EAST SIDE OFFICE MARKET 1% Absorption (% of Total Sq. Ft.) 20.8% Vacancy Rate $18.07 Asking Gross Rent The East submarket has been experiencing difficultly due to having older buildings, which are in need of more improvement. According to the broker panel, the east side has experienced tenants moving from Class A buildings, into newer Class B buildings in order to obtain space that has no need for improvements, while securing a lower rent. In 2011 the average asking gross rent for office space in the East submarket was $18.07 per square foot, which was $5.72 lower than Madisons total Class A average asking rent. Although the East submarket is performing below the Madison average, the city of Madison has committed to encourage and promote economic development to boost growth and excitement in the area.
$24.00 $22.00 $20.00 $18.00 $16.00 $14.00 2007 2008 Class A 2009 Class B 2010 Class C 2011
Asking Gross Rents - By Class Source: Grubb & Ellis- Office Trends Report, 4Q 20 1
$23.00 $22.00 $21.00 $20.00 $19.00 $18.00 $17.00 $16.00 $15.00 $14.00
Asking Gross Rents - By Submarket
Downtown
East 2010 2011
Far West
South
Source: Grubb & Ellis- Office Trends Report, 4Q 2011
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Property Description and Analysis Site Analysis
Site Analysis and Physical Characteristics The building is located on approximately 221,285 square feet, or 5.08 acres, of a pentagonal parcel of land. The topography of the site is completely level. There is extensive landscaping around the building. The perimeter of the property is grassed. According to the United States Department of Agricultures Conservation Service, the property is 93% covered with Griswold loam soil, with 7% of the propertys east side covered with Ringwood silt loam. These soil conditions would not be expected to result in any building encumbrance or future construction issues. There are also no other environmental issues that would be of concern for the subject site or for the surrounding properties. The soil composition of the subject property has two main areas of interest: GwC Griswold loam and Ringwood silt loam. The following tables outline the properties and qualities of each. Properties and Qualities:
Slope Depth to restrictive feature Drainage class Capacity of the most limiting layer of transmit water Depth to water table Frequency of flooding Frequency of ponding Calcium carbonate, maximum content Available water capacity
Source: USDA, Web Soil Survey
Griswold (GwC)
6-12% More than 80 inches Well drained Moderately high to high (0.57 to 1.98 inches/hour More than 80 inches None None 40% Moderate (about 9 inches)
Properties and Qualities:

Slope Depth to restrictive feature Drainage class Capacity of the most limiting layer of transmit water Depth to water table Frequency of flooding Frequency of ponding Calcium carbonate, maximum content Available water capacity
Source: USDA, Web Soil Survey
Ringwoood Silt Loam (RnB)

2-6% More than 80 inches Well drained Moderately high to high (0.57 to 1.98 inches/hour More than 80 inches None None 30% High (about 9.9 inches)
The subject property does not have any environmental conditions that would negatively affect the site, surrounding area and or site improvements.
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Location The site is located within the American Center Office Park, which is approximately 447 acres spanning the area between Highway 151 and Interstate 90/94/39. The building is located on the west side of American Parkway, which is a two-way, sixlane asphalt paved road with moderate traffic. There is approximately 418 feet of frontage on American Parkway. To the south, the site has approximately 300 feet of frontage on EastPark Boulevard, which is a two-way, four lane asphalt paved road. The site can be accessed by curb openings from the northeast via American Parkway, or from the south via EastPark Boulevard. Parking is available from either entrance around the building. The parking lot is entirely asphalt paved. There is no parking available on EastPark Boulevard or American Parkway. According to the most recent City of Madison traffic report from 2011, approximately 7,000 vehicles utilize American Parkway northbound from Highway 151 daily. Approximately 2,200 vehicles use EastPark Boulevard. On a daily basis, the heavily traveled Highway 151 sees approximately 65,000 vehicles. Highway 151 serves as the main street of transportation on the east side of Madison, especially in the area surrounding the site. It is also the most easily accessible route to Madison from the populous suburban areas northeast of the city. There is high visibility on all sides of the building, with smaller office buildings surrounding the site to the west and a credit union to the north. The east and south sides of the buildings provide overlooks of EastPark Boulevard and American Parkway. Adjacent Properties and Land Uses The properties in the American Center are mostly composed of commercial office and retail space, with some outlying restaurants, banks, and automotive shops. Surrounding the site directly are all commercial office and business space. There is also an open field directly to the south of the site with no known plans of construction. Highway 151 is a positive externality with some drawbacks. It allows efficient access to and from the site for tenants and their employees. It also provides easy access to the restaurants, hotels, and retail shopping that are all located on or around the highway. The road can also be heavily congested and noisy. However, the EastPark One location is far enough away that the noise would probably not be an issue. The surrounding office buildings are positive externalities, as they all are fairly modern and well kept. They are of similar age and quality of the subject property. Ownership and Title The owner of the property is American Family Insurance Corp Real Estate, which holds a warranty deed. There is no form of ground lease restriction or encroachment issues. The owners, tenants, employees, visitors, and all other persons are provided the easement of road usage, trail usage, and parking within the American Park.
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Governmental Restrictions and Neighborhood Planning EastPark One is in zone 0-4, or Office-Administrative Office and Research and Development District. After reviewing the Zone 0-4 Requirements in the Madison Zoning Code, section 28.085(5), there is no evidence of any zoning violations by the EastPark One property. EastPark One is included in the City of Madison Planning and Development Units Rattman Neighborhood Development Plan. The American Park composes approximately 60% of the neighborhoods area. The plans details are focused on providing wide usage of the land for office and retail uses. The neighborhood is reliant upon American Family for the continued development of the area. There is also discussion of future development eastward into the suburban city of Sun Prairie, which may be a positive forecast for the future of the subject property. In summary, there do not seem to be any reasonably foreseeable issues from this development plan for the subject property. Utilities and Services All public utilities, including sewer, water, electricity, and telephone, are provided and accessible to EastPark One. These utilities are all functional. Other Site Characteristics Almost the entire EastPark One property is developed, with the exception of surrounding landscaping and lawn. There does not seem to be the prospect of surplus land or secondary land uses, unless the parking area is deemed excessive or the aesthetics of the site are sacrificed. Site Improvements One of the major site improvements is an asphalt parking lot surrounding the building. Included in this lot are 300 parking spaces equating to around 4 spots per 1,000 square feet. The parking lot is lit by 25-foot pillar lights and features concrete pathways that lead to all entrances in addition to the west-wing loading dock. American Family also provides approximately 4 miles of cement walking trails throughout the American Park, with the 1.4-mile Highland Loop accessible from the subject property. The property has expansive landscaping directly surrounding the building, as well as planted trees throughout the parking lot. The border of the property along EastPark Boulevard and American Parkway is also lined with trees and shrubs. One ground-planted stone sign is located on the southeast corner of the building, facing the intersection of EastPark Boulevard and American Parkway.
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Property Description and Analysis Improved Property Analysis

Property Description Size: 3 story office building with basement Gross Building Area: 86,098 square feet Rentable Area: 74,736 square feet The 86,000 sq. ft. property is made up of three floors; each floor plate is approximately 21,000-22,000 sq. ft., and is divided into rentable suites. Additionally there is a common conference room and rentable storage space in the basement. Floor one has an open, atrium style two story lobby with floor to ceiling windows. Elevators in the center of the lobby lead to the second and third floor and the basement. Stairwells on each end of building provide access to all floors. Floors 1-3 are entirely filled with rentable suites that can be combined or connected to meet tenant needs. Suites are of differing layouts and sizes. Floors 1-3 each have their own common area bathroom. Basement also has bathroom that contains showers. None The building has 10-foot high ceilings throughout with unique shape at endcaps. Irregular 2 (Land & Building) Corner 1 (Land) Paved, Curb-gutter, No Sidewalk, No alley Primary: 418.37 ft. American Pkwy.
Layout:
Parking Structure: Architectural Characteristics: Lot Characteristics: Street Frontage
Framing: Foundation: Roof:
Floor:
Wall
Secondary: 318.5 ft. EastPark Blvd. No water frontage Steal Poured Concrete Type: Steal Frame: concrete Cover: Built Up Type: Tile Frame: Steal Deck: Concrete Basement: Part Finish: Drywall Ceiling: Acoustical Ceiling (Ac) Tile
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Elevator:
Plumbing: Utilities
Electrical: HVAC:
Fire Protection: Entrances/Exits/Stairs:
Exterior Finishes: Building Signage: Interior Finish:
Common Areas:
Tenant Spaces:
Special Features &Amenities:
There are two elevators in the center of the building. One goes from the basement to floor three, while the other goes from floor one to floor 3. Standard office plumbing. Water: Stubbed In Sewer: Stubbed In Gas: Stubbed In 3 phase main electrical service Standard heating, ventilation, and air-conditioning system that allow for custom temperature per suite (Central Air/Conditioning) Sprinkler system throughout the building. Primary entrance has pillars with two story windows. There are three glass doors in the main entrance. There are also entrances in the back of the building and on one of the endcaps. There are staircases in both endcaps of the building. Exterior of building is brick with large windows all throughout the building. Exterior building signage is available at for a fee (negotiable) High quality interior. Terrazo floors in main lobby. All suites have carpet. Some suites have revealed edge ceiling and parabolic lighting Primary common areas include the main lobby, bathrooms on each floor and in the basement and conference/training room in basement. Tenant spaces are highly customizable through tenant improvements. Suites of varying shapes and sizes are available for tenants to divide or combine. Common conference/training room located in the basement: Available on a first come first serve basis and at no additional cost Versatile space featuring a projector and whiteboards Seats up to 45 Showers Vending Area Storage space in the basement available for rent
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Physical Condition The subject property is a Class A multi-tenant, office building built in 1994 and was one of the first developments to create synergy in the park. Today the building remains in above average condition and has seen some structural and aesthetic improvements. Daily janitorial service keeps the building clean and creates a pleasant, comfortable work environment for tenants. In regards to short-lived capital items, Chuck Redjinski mentioned that the EastPark One building still has its original roof and therefore may need a new one in the next 5 years; otherwise all other improvements are included in the budgeted allowance for maintenance and improvements. Functional Utility The building is currently at 44% vacancy. It operates well for its intended use as an office building. Special Characteristics As one of the first buildings in the prestigious American Center Business Park, EastPark One is a highly regarded Class A office space. Additionally, the esteemed anchor tenants of the American Center Business Parks create a propitious aura in the park and more specifically, at EastPark One. These tenants include American Family Mutual Insurance, Alliant Energy, and others. Located on the junction of Interstate 90/94/39 and US Highway 151, the property has optimal egress, ingress, and visibility. Beyond the valuable locational characteristics possessed by EastPark One, the building offers a number of special amenities that give it an edge over their competition. Included in these amenities are: a common conference/training room that seats 45, showers, a vending area, and rentable storage space in the basement.
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Highest and Best Use Analysis

Highest and best use, as defined by The Appraisal of Real Estate, is, "the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value." The four filtering criteria used in HBU analysis are physically possible, legally permissible, financially feasible, and maximally productive (i.e. highest price). In using this set of criteria to analyze the subject property as improved and as vacant, we can determine the highest and best use of the property. Highest and Best Use for Improved Parcel As Improved Legally Permitted The property is currently used as office space, which conforms to the Dane County Zoning Ordinance for which the property resides. The property conforms to all basic development standards, building setbacks, building standards, landscaping, parking and loading area standards, outdoor storage standards, and utilities standards. The surrounding area is developed with office space. We are unaware of any restrictions that may interfere with the current use. Physically Possible The site is improved with a multi-tenant office building. The building consists of 74,736 Sq. Ft and has a 33% Land Coverage Ratio. All land not used for the building is used for parking. The topography of the site provides a stable construction environment. The parcel has good visibility within the American Parkway and easy access to two major highways. The surrounding area includes other office space. Financially Feasible Financially feasible analyzes uses which would be the most profitable while conforming to the legally permitted and physically possible tests. As improved, it is profitable for the site to be used as office space. The current rents generate more income than the expenses of the office. Maximally Productive The maximally productive use is the use that provides the highest possible return. In order to find the highest use all possible uses allowed by the zoning code must be considered. Currently, this is only office so this is the maximally productive use.
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As Vacant Legally Permitted Several legal factors can limit a site highest and best use. Some of these restrictions include zoning, deed restrictions, building codes, and environmental regulations. The subject site currently conforms to all standards and restrictions of the current zoning. The site is currently zoned under Madisons O-4 office and research and development district. This district allows for large administrative offices and research and development activities and testing laboratories all of which are integrated in a planned development. Physically Possible The shape, size, and physical characteristics, as well as locational attributes and Characteristics of the surrounding area are factors that determine the physically possible uses of the site as vacant. The rectangular shape, the square footage, access from major highways and graded topography of the site make it desirable for the legally permitted uses. The subject site has water, sewer and all public utilities in place. Its location makes it desirable for office buildings because of its proximity to the highways. Financially Feasible Financial feasibility is analyzed after determining the legally permissible and physically possible uses. A use that generates a positive return is financially feasible. Income must be sufficient to cover all operating expenses and financial obligations of owning the property. Office is the only legally permitted type of building allowed on this property so it would be financially feasible for it to be used for office space. Maximally Productive A site is maximally productive if it generates the highest possible return for that site. This test builds off the legally permitted, physically possible and financially feasible test to eliminate other potential uses of the site. Considering the propertys current NOI we do not expect any other use to provide a higher return, especially considering office space is the only legally permitted use. Highest and Best Use for Vacant Parcel Legally Permitted The zoning for the improved parcel is the same as the vacant parcel. The parcel conforms to all standards and restrictions of the current zoning. The zoning permits large administrative offices and research and development activities and testing laboratories. Physically Possible Considering the legal restrictions of the zoning of the site the only physically possible use of the site would be office space.
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Financially Feasible Office space is the only financially feasible use for the site as it is the only way to generate a return at the site. The site is located near major highways, making it an attractive location for office. Maximally Productive The most profitable use of the site is office space as it is the only type of building legally permitted under the current zoning code. This makes it the only possible use that generates a return. Office space in the office parks generates positive returns. Although other uses may generate higher rents per Sq. Ft they are not legally permitted. In conclusion, office is the maximally productive use for the property. NOTE: Under the direction of Mike Hershberger, our model and consideration of value assumes that the Highest and Best Use for the subject property is the current use, Class A Office space. This assumption is used for purposes of simplifying our model and should be noted when using this report for commercial underwriting purposes.
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Income Approach
The Income approach to value is an appraisal method used to estimate the value of income producing properties (such as the subject property) and is based on anticipated cash flows. This approach uses a discounted cash flow (DCF) and considers two things: (1) the expected market rent, (2) the reversion value of the property. For the purpose of this report, we used ARGUS valuation software to create a DCF model based on our assumptions and market leasing assumptions. Operating Income Market Rent Analysis In analyzing the East Submarket for Office buildings in Madison, Wisconsin, we found an average gross rent of $15.15. Two of the comparable properties are located in the American Center Business Park. The third comparable (C) is located further from the subject property and has a higher rent, $19.50, which is the reason the average market rent came in higher than that of our subject property. For our ARGUS model, we will start at a gross rent of $16.00 increasing this to $18.07 after eight years as this is the average rent for the East submarket as quoted in the Grubb & Ellis quarter four report on market trends for 2011. The following table summarizes our rent comparables:
Location 4600 American Parkway Madison, Wisconsin 5133 West Terrace Drive Madison, Wisconsin 5100 EastPark Blvd Madison, Wisconsin 8401 Excelsior Drive Madison, Wisconsin Area East East East East Site Size 221,250 SF 334,310 SF 160,687 SF 91,163 SF Bldg Size 74,736 SF 81,593 SF 57,402 SF 45,996 SF Year Built 1994 1999 2003 2002 Class A A A A Floors 3 4 3 3 Construction Type Steel Frame Steel Frame Steel Frame Steel Frame Average Asking Rate -$13 $12.95 $19.50 Expenses NNN NNN NNN Gross
Market Rent Changes November 1, 2012, we held a panel with local brokers during which we addressed current market conditions in the Madison office market as a whole, and also in the East submarket more specifically. The brokers in attendance were Chuck Redjinski, Teri Bell and Chris Calum of MG&L Commercial, T Wall Properties, and Oakbrook Corporation, respectively. Each broker provided different insights about the market, some with higher expectations than others, but overall, the general consensus about the market as a whole was congruent with all three brokers.
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Broker Analysis Some observations made during the broker panel include the following: Tenant Improvement dollars are still very high in the East Submarket, mostly because many of the suites need general updates. ($15-$20) In the short run, landlords are offering free rent up front to avoid lowering overall rental rates in the long term. There is very little, to no growth in the market today. The market is under asking rates, but landlords are still very stubborn to lower rates they would rather offer free rent up front Credit issues are making the rental environment difficult and changing how leases are drawn up. There are currently two practices in the market: (1) Offering lower rent to accommodate low credit tenants, but forcing the tenant to bear all costs of tenant improvements (2) Allowing some buildings to remain vacant for 5+ years Land values are decreasing on the east side In addition to the broker panel, the Grubb & Ellis Office Trends Report Fourth Quarter 2011, Madison Market, was provided to each appraiser for our own reference. From this report we gathered that while were currently in a half-speed recovery, the future looks promising. Rents are projected to continue rising, especially for class A buildings, while concessions will slowly reduce. In regards to vacancy, we saw a drop in both Class A and Class B properties over the last year. Although we have seen overall vacancy on the downfall, the east submarket still has an elevated vacancy, but we are optimistic about the market as the east side observed a 1.8% drop in vacancy last year. When looking at market rents in the East submarket, rates were virtually unchanged and remain at an average gross asking rate of $18.07 per square foot. In light of the broker panel and data found in the Grubb & Ellis report, we have made the following assumptions: Rents are generally on the rise; Vacancy is slowly falling; and TI dollars and expenses will remain high until the market fully recovers Market Leasing Assumptions Our Market Leasing Assumptions (MLAs) are based market information and discussions with local real estate professionals. Our ARGUS model uses a single set of MLAs, as it is difficult to make assumptions for items with limited public data available. For example, rent values for individual suites are not adjusted for items such as floor level, directional location within the building, or tenant type. Making these adjustments would require further survey and analysis of the property and its tenants, and has been deemed unnecessary and beyond the scope of this report. Additionally, using a simplified set of MLAs reduces the potential risks of producing a skewed or biased ARGUS model due to invalid or erred assumptions.
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MARKET LEASING ASSUMPTIONS

New Market Renewal Probability Gross Market Rent (PSF) Tenant Improvements (PSF) Leasing Commissions Months Vacant Rent Abatements Rent Changes (See Rent Roll Forward) Reimbursements Term Length $18.07 $15.00 6% 10 Months 2 Months Renewals 70% $18.07 $5.00 3% N/A 0 Months
Net 7 Years
Market Rent According to the Brokers Panel, the current average rent on Madisons East Side is around $11-$13 per square foot. Average gross rents in this same market are $18.07 according to the 2012 Grubb & Ellis report. We started our model at the current average rent of $16, increasing this to a base rate of $18.07 beginning in year 3. It is relatively high compared to the Brokers estimates, however this is due to the Class A nature of the property and based off the assumption of future economic improvement. Renewal Probability We estimate the probability of tenant renewals to be 70%. Because of the desirable location in the American Center Office Park and its various amenities, we feel this rate is maintainable. This is higher than 65%, which is what we see from the Q3 2011 RERC report, but is justified due to the quality of the property, prestige of the office park and the propertys tenants, and the lack of new space construction. Months Vacant Based upon discussion with the Brokers Panel, the Madison area typically has between 6 and 24 months of turnover between tenants. According to Chuck Redjinski, the recovering east side market in addition to the high quality and attraction of EastPark One and the American Family Business Center in general, has kept vacancy around 18%. Despite low vacancy in the office park, there is increased competition for tenants due to lower asking rates in the Sun Prairie market. For the subject property, we assume vacancy duration of ten months. Tenant Improvements Based on information gathered during the brokers panel, our ARGUS model assumes a $15 PSF tenant improvement allowance for new rentals. We feel this is a reasonable allowance for EastPark One because many of the suites are already built out and in above average condition. During the brokers panel, it was also mentioned that renewal rates for tenant improvements are currently ranging from $5 - $8. In our ARGUS model we were conservative, applying an allowance of $5 PFS, since suites need minimal improvements.
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Lease Commissions Commissions are expected to be 6% for new leases and 3% for renewals. This is consistent with the Broker Panels suggestions and typical rates. Also, these are comparable to the rates in the 2011 financial information for the property. Rent Roll Existing Tenants Based upon current tenants and future assumptions, the following chart shows what EastPark One can expect to receive in rental incomes after adjustments for vacancy and collection losses. Below is the eight year Rent Roll Forward, as modeled by ARGUS: TOTAL RENT ROLL FORWARD FOR EXISTING TENANTS
For the Years Ending Tenant Potential Gross Revenue Base Rental Revenue Absorption & Turnover Vacancy Base Rent Abatements Scheduled Base Rental Revenue Base Rental Step Revenue Porters' Wage Revenue Miscellaneous Rental Revenue CPI & Other Adjustment Revenue Parking Revenue Retail Sales Percent Revenue Expense Reimbursement Non-Refundable Deposits Earned Interest Total Potential Gross Revenue Leasing & Capital Costs Tenant Improvements Leasing Commissions Security Deposits Investment of Capital Distribution from Investment Deposit Refund Total Leasing & Capital Costs Tenant Potential Net Cash Flow Summary Information Potential Market Rent per Sq. Ft Scheduled Base Rent per Sq. Ft Retail Sales per Sq. Ft Deposit Balance Average Occupancy Year 1 Mar-2013 $ 574,598 (29,216) (19,477 525,905 ------------------------------------------------------303,701 ------------------829,606 ---------58,432 52,706 ------------------------------------111,138 $ 718,468 Year 2 Mar-2014 $ 771,944 (55,232) (36,821) 679,891 ------------------------------------------------------311,739 ------------------991,630 ---------104,995 99,638 ------------------------------------204,633 $ 786,997 Year 3 Mar-2015 $ 835,226 (82,060) (54,707) 698,459 ------------------------------------------------------314,605 ------------------1,013,064 ---------148,211 148,036 ------------------------------------296,247 $ 716,817 Year 4 Mar-2016 $ 859,825 (20,950) (13,967) 824,908 ------------------------------------------------------359,893 ------------------1,184,801 ---------38,586 37,793 ------------------------------------76,379 $1,108,422 Year 5 Mar-2017 $ 873,759 (18,663) (12,442) 842,654 ------------------------------------------------------381,716 ------------------1,224,370 ---------35,055 33,667 ------------------------------------68,722 $ 1,155,648 Year 6 Mar-2018 $ 875,484 (18,663) (12,442) 875,484 ------------------------------------------------------404,784 ------------------1,280,268 ---------35,055 33,667 ---------------------------------------------$ 1,280,268 Year 7 Mar-2019 $ 877,014 (18,663) (12,442) 877,014 ------------------------------------------------------416,926 ------------------1,293,940 ---------35,055 33,667 ---------------------------------------------$ 1,293,940 Year 8 Mar-2020 $ 895,919 (44,673) (5,638) 845,608 ------------------------------------------------------409,615 ------------------1,255,223 ---------16,847 15,256 ------------------------------------32,103 $ 1,223,120
16 7.2 ------------------48,064
17.17 9.31 ------------------47,586
18.43 9.57 ------------------46,351
18.62 11.3 ------------------49,678
18.8 11.54 ------------------49,811
18.99 11.99 ------------------50,803
19.18 12.01 ------------------50,803
19.37 11.58 ------------------48,497
Note: In the following pages, you will find a detailed rent roll, which will show individual totals for each tenant.
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Expense Recoveries Typical Class A office space utilizes net leases which reimburse management for various fees. For the subject property, these fees include cleaning, repairs, roads, landscaping, security, taxes, and insurance. In our case, the management company typically charges a flat rate per square foot to recover all expenses. Although most of the current leases at 4600 American Parkway are done this way, there are select tenants who have specific terms as mentioned below: REIMBURSEMENT EXCEPTIONS
Tenant Andrus Sceales, et. al. Malpezzi Terrazo Flooring Walsh Valuation Services Hers Group Suite 104 206 107 201 Reimbursement Description Gross lease: flat rate covering rent and expenses Gross lease: flat rate covering rent and expenses Modified Gross Lease: Real Estate taxes capped at $2.00 per square foot Modified Gross Lease: Real Estate taxes paid above base of $2.00 per square foot
Miscellaneous Income For the subject property, tenants are given the opportunity to purchase storage space in the basement at a gross rate. There are six spaces of 500 useable square feet. Currently, three of the storage spaces are occupied at a rate of $8.00 per square foot. We expect this amount to grow approximately 3% per year, which is in line with the rent growth. Vacancy and Collection Loss Existing Vacant: There are currently six vacant spaces in the building, totaling 22,193 rentable square feet. This amounts to a 30% vacancy rate. Upcoming Vacancy: The major expiring lease is that of American Family Insurance, which is currently leasing 11,217 square feet. This lease is due to expire in March of 2013. However, because American Family owns the park, we do not feel this is a significant risk of vacancy. Andrus, Sceales, et al.s lease also expires in August of 2013. See the Tenant Rent Roll Forward for more information. General Vacancy: For the Argus Model, an overall vacancy rate of 2% and a collection loss of 1% will be applied to reflect uncertainties in the rental market and difficulty in collection. We feel this is sufficient because the property has reputable tenants with low default risk.
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Operating Expenses and Capital Improvements Operating Expense Calculations: As of now, we have utilized the management company's budget for operating expenses. For our estimates, we will be utilizing a simple growth rate. Management Fees: Management fees are calculated on a percentage basis, with a minimum amount if the basis isn't sufficient. In our ARGUS model we applied a 4% general rate and $800 minimum fee. CAM Expenses: Included in CAM are cleaning services for the property, general maintenance and repairs, road maintenance and landscaping, security, utilities, management fees, parking fees, marketing expenses, taxes, and insurance. Growth Rate Assumptions: As of now, we have no reason to believe expenses will grow at a different rate than rents. ANNUAL STATEMENT
Revenue Rental Income CAM Income LED Storage Other Revenue Total Revenues Operating Expenses Cleaning Expenses Repairs / Maintenance Roads / Grounds / Landscaping Security Utilities Administration Parking Marketing Taxes Insurance Miscellaneous Total CAM Expenses Net Operating Income Other Expenses Professional Fees Net Income 2011 $646,860.00 $327,042.00 $804.00 $2,616.00 $977,322.00 $10.19 $5.15 $0.01 $0.04 $15.40 2012 (Estimated) $529,591.22 $333,582.84 $12,000.00 $2,668.32 $877,842.38 $8.34 $5.26 $0.19 $0.04 $13.83
$74,249.00 $72,201.00 $24,354.00 $360.00 $133,567.00 $36,732.00 $1,000.00 $604.00 $154,440.00 $7,164.00 $516.00 $505,187.00 $472,135.00
$1.17 $1.14 $0.38 $0.01 $2.10 $0.58 $0.02 $0.01 $2.43 $0.11 $0.01 $7.96 $7.44
$63,180.00 $73,429.60 $12,550.00 $4,200.00 $126,210.50 $36,376.26 $500.00 $0.00 $157,440.00 $11,964.00 $0.00 $485,850.36 $391,992.02
$1.00 $1.16 $0.20 $0.07 $1.99 $0.57 $0.01 $ ---$2.48 $0.19 $ ---$7.65 $6.18
$1,800.00 $470,335.00
$0.03 $7.41
$1,836.00 $390,156.02
$0.03 $6.15
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Rate Analysis Capitalization Rate In order to determine a capitalization rate for the subject property, we analyzed two surveys carried out by Pricewaterhouse Coopers in addition to a transaction analysis for the Midwest region, which was done by REIS, Inc. The tables below summarize cap rate information gathered from various investor and broker surveys over the past year. Note that some surveys are on a national basis, while others are regional and centered near or within the subject property. A detailed analysis of the data is offered after the tables. SURVEY OF OAR CAP RATES
Q3 Q4 2010 - National Suburban Office Range 6.0 11.5% 6.0 11.5% 2011 - National Suburban Office Range 5.5 11.5% 5.5 11.0% 5.0 11.0% NA 2012 National Suburban Office Range 5.0 11.0% 5.0 11.5% 5.0 11.5% Average 8.40% 8.17%
Q1 Q2 Q3 Q4
Average 8.04% 7.60% 7.47% NA Average 7.52% 7.57% 7.53% 7.79%
Q1 Q2 Q3 Overall Average
Source: Pricewaterhouse Coopers
REIS MIDWEST NON-CBD MARKET REPORT

Cap Rates 2012 Q3 Mean Median Current Range Midwest USA 2011 Year 2012 YTD Average
Source: REIS
8.4% 8.3% 7.3 12.4% 4.4 13.4% Regional Non-CBD 8.50% 8.10% 8.10%
Mean Overall Cap 7.60% 8.20% 8.20%
By Class 8.20% 7.60% 7.60%
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Over the past couple of years the capitalization rates in the US and most comparable major cities around the Midwest, have been declining. The national average for suburban office markets is 7.54% down from 7.70 % last year. Nationally there is also more variability in market capitalization rates. This is likely a product of the rapidly changing confidence in todays real estate market. Over the next few years we can expect consumer and investor confidence to slowly rise, which will cause a rise in the property selling prices. However, because these surveys were based off of larger areas than Madison, and to err on the side of conservatism, we used an 8% capitalization rate for our valuation. Terminal Cap Rate Terminal cap rate information was obtained from PwC and the averages for suburban office space are listed below: TERMINAL/GOING OUT CAP RATES (%)
3 Q 2011 4 Q 2011 1 Q 2012 2 Q 2012 3 Q 2012 PwC 7.93 N/A 7.52 7.41 7.38
Terminal cap rates have been falling slightly over the past few quarters. Madison is not first tier so our estimate is 8%. The spread between the cap rate and terminal cap rate is explained by the difference in actual cap rates now and assumptions for the future. Discount Rate We estimate a discount rate of 9.5%. Discount rates have been rising over the past few quarters and we expect this to continue into this quarter. DISCOUNT RATES (%)
3 Q 2011 4 Q 2011 1 Q 2012 2 Q 2012 3 Q 2012 PwC 8.61 N/A 8.33 8.32 9.38
The difference between the going in cap rate and the discount rate is about 1%, which can be explained by the expected growth rate, which equals Discount Rate-Cap Rate.
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Growth Rates During the broker panel, each broker had a slightly different take on the direction to which market rents have been moving and where they see them going in the future. Terry brought up the fact that she is currently urging to lower rents on her East side properties because the market simply isnt there at their current prices. Additionally, she addressed two different landlord perspectives on dealing with the market. The first perspective is to offer free rent up front with a higher long-term rate, whereas the second perspective offers no free rent, but rather gives a low rent rate up front and caps the rate at 5-10 years into the lease. The majority is leaning more towards the first perspective, of offering free rent, since this method has no impact on the long-term value of the building and the landlord still prospers from the high rental rates while the lesee feels they are getting a great deal with free rent. Another factor that has been affecting rental rates the last two year is the allocation of Tenant Improvement dollars (TI). Relative to PWCs quarter 3 report on the national suburban office market, stating a national average TI allowance of $8, tenant improvement allowances for the East Side are still relatively high. This can be attributed to the fact that many of the suites in Madisons East Side are due for general updates and most tenants need at least minor build outs. The last major observation is that credit issues have been having a tremendous impact on the rental environment. Since so many tenants possess less than ideal credit, landlords are accommodating these tenants by offering a low to moderate rental rate, but no TI dollars. The Oakbrook Office Trends Report indicates that average gross asking rents rose 1.0% overall in 2011 and that rents will continue to rise, most notably in Class A buildings. Although the market as a whole is experiencing overall growth in rates, the East side rates are virtually unchanged, at an average gross rate of $18.07 PSF. In support of this finding, during the broker panel it was observed that the East side is experiencing very slow growth, if any at all. Discounted Cash Flow analysis The discounted cash flow (DCF) method estimates the property value by projecting cash flows from rents, expenses, and other predicted cash events. It does not include any analysis of depreciation, interest, financing, or tax considerations, as these are not expected to transfer with the property when sold. Our DCF can be called a property level DCF as it is free of these items that are below the Property Before Tax Cash Flow line item. The projected cash flows are then discounted by the estimated discount rate to take into account the time value of money and returns demanded by investors.
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The final year includes a reversion, or estimated sale, of the subject property. This is a solid analysis of the long-term property value and illustrates whether a property deal is profitable or not. It is, if accurately used, free from bubble market effects (except the increase in rents attributable to this). The approach is heavily based upon assumptions, which may limit its effectiveness or conceal certain errors if the assumptions offset one another. In short, the DCF approach is only as good as its assumptions, and may be easily manipulated. The provided tenant rent roll does however present an accurate portrayal of rent cash flows as these are already in contracts and are only subject to changes in collection problems. In short, this is an excellent method of valuing an investment property if done properly. Argus Presentation Rent Roll Forward Below is the Rent Roll forward Report, as presented by Argus. It presents all of the subject propertys tenants, their leasing periods, and the projected cash flows for the first year of operations. In this case, the values are for the fiscal year 2012. TENANT RENT ROLL FORWARD AS PRESENTED BY ARGUS
Tenant Name American Family Insurance American Family Insurance Andrus, Sceales, et al Hersh Group Ltd. Malpezzi Flooring Midwest Food Processors Assn Strategem Unisource Walsh Valuation Services Wells Fargo Mortgage Wisconsin Dialisis Wisconsin Dialisis Total Average PSF Suite 300 301 104 201 206 210 204 103 107 208 101 102 Lease Type Office Office Office Office Office Office Office Office Office Office Office Office Tenant Size 11,217 15,318 1,650 1,311 987 1,746 2,961 2,489 1,540 1,672 2,608 7,304 50,803 Lease Status Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Lease Start Date 3/12 10/06 9/10 5/12 6/12 5/12 6/12 11/10 4/12 9/06 3/12 10/07 Lease Expiration Date 3/13 3/14 8/13 4/16 8/16 4/19 8/15 10/14 3/15 8/16 12/19 10/12 Potential Gross Revenue 224,609 216,486 38,476 19,341 15,216 30,026 46,796 57,677 18,865 40,314 41,807 79,993 $829,606 $16 Net Cash Flow 224,609 216,486 38,476 19,341 15,216 30,026 46,796 57,677 18,865 40,314 41,807 (31,145) $718,468 $14
Cash Flow Report As Presented By Argus Below is the Cash Flow Report from Argus. It is a representation of all cash inflows and outflows for the property, forecasting for eight years. These numbers are utilized in the discounted cash flow report to follow. (Next page)
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CASH FLOW REPORT AS PRESENTED BY ARGUS

For the Years Ending Potential Gross Revenue Base Rental Revenue Absorption & Turnover Vacancy Base Rent Abatements Scheduled Base Rental Revenue Expense Reimbursement Revenue CAM Expenses Real Estate Taxes Insurance Total Reimbursement Revenue Other Revenue Hersh Group LTD. Malpezzi Flooring Strategem Total Total Potential Gross Revenue General Vacancy Collection Loss Effective Gross Revenue Operating Expenses CAM Expenses Cleaning Expenses Repairs / Maintenance Roads / Grounds / Landscaping Security Utilities Administration Parking Marketing Total Real Estate Taxes Insurance Total Operating Expenses Net Operating Income Leasing & Capital Costs Tenant Improvements Leasing Commissions Security Deposits Investment of Capital Distribution from Investment Deposit Refund Total Leasing & Capital Costs Cash Flow Before Debt Service & Taxes Year 1 Mar-2013 574,598 (29,216) (19,477) 525,905 Year 2 Mar-2014 771,944 (55,232) (36,821) 679,891 Year 3 Mar-2015 835,226 (82,060) (54,707) 698,459 Year 4 Mar-2016 859,825 (20,950) (13,967) 824,908 Year 5 Mar-2017 873,759 (18,663) (12,442) 842,654 Year 6 Mar-2018 875,484 ----------------875,484 Year 7 Mar-2019 877,014 ----------------877,014 Year 8 Mar-2020 895,919 (44,673) (5,638) 845,608
186,907 109,693 7,101 303,701
191,667 112,787 7,285 311,739
193,401 113,854 7,350 314,605
221,522 129,954 8,417 359,893
237,380 135,316 9,020 381,716
251,950 143,261 9,573 404,784
259,508 147,557 9,861 416,926
254,957 144,970 9,688 409,615
4,000 4,000 4,000 12,000 841,606 --------(8,416) 833,190
4,040 4,040 4,040 12,120 1,003,750 --------(10,038) 993,712
4,080 4,080 4,121 12,281 1,025,345 --------(10,253) 1,015,092
4,121 4,121 4,244 12,486 1,197,287 (3,415) (11,973) 1,181,899
4,162 4,162 4,372 12,696 1,237,066 (6,452) (12,371) 1,218,243
4,204 4,204 4,503 12,911 1,293,179 (25,864) (12,932) 1,254,383
4,246 4,246 4,638 13,130 1,307,070 (26,141) (13,071) 1,267,858
4,289 4,289 4,777 13,355 1,268,578 --------(12,686) 1,255,892
63,674 73,862 12,735 4,457 126,711 36,294 637 --------318,370 181,028 12,098 511,496 321,694
64,947 75,339 12,989 4,546 129,245 37,020 649 --------324,735 184,648 12,340 521,723 471,989
66,246 76,846 13,249 4,637 131,830 37,760 662 --------331,230 188,341 12,587 532,158 482,934
68,234 79,151 13,647 4,776 135,785 38,893 682 --------341,168 193,991 12,964 548,123 633,776
70,281 81,526 14,056 4,920 139,859 40,060 703 --------351,405 199,811 13,353 564,569 653,674
72,389 83,972 14,478 5,067 144,055 41,262 724 --------361,947 205,805 13,754 581,506 672,877
74,561 86,491 14,912 5,219 148,376 42,500 746 --------372,805 211,980 14,167 598,952 668,906
76,798 89,085 15,360 5,376 152,828 43,775 768 --------383,990 218,339 14,592 616,921 638,971
58,432 52,706 --------------------------------111,138 $210,556
104,995 99,638 --------------------------------204,633 $267,356
148,211 148,036 --------------------------------296,247 $186,687
38,586 37,793 --------------------------------76,379 $557,397
35,055 33,667 --------------------------------68,722 $584,952
--------------------------------------------------------$672,877
--------------------------------------------------------$668,906
16,847 15,256 --------------------------------32,103 $606,868
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DCF Valuation The report below shows the Argus calculations of discounted cash flow valuations at varying discount rates. At our projected discount rate of 9.5%, the propertys present value is $5.4 million. DISCOUNTED CASH FLOW REPORT AS PROVIDED BY ARGUS
Analysis Period Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Ending Mar-2013 Mar-2014 Mar-2015 Mar-2016 Mar-2017 Mar-2018 Mar-2019 Mar-2020 Annual Cash Flow $210,556 267,356 186,687 557,397 584,952 672,877 668,906 606,868 3,755,599 5,418,844 ------------------P.V. of Cash Flow @ 8.00% $202,608 238,206 154,013 425,776 413,726 440,662 405,612 340,734 2,621,337 3,262,333 $5,883,670 $5,884,000 80.6 P.V. of Cash Flow @ 8.50% $202,140 236,562 152,244 418,949 405,215 429,608 393,615 329,133 2,567,466 3,150,237 $5,717,703 $5,718,000 78.33 P.V. of Cash Flow @ 9.00% $201,676 234,936 150,504 412,261 396,918 418,880 382,026 317,977 2,515,178 3,042,485 $5,557,663 $5,558,000 76.14 P.V. of Cash Flow @ 9.50% $201,215 233,329 148,792 405,709 388,828 408,468 370,828 307,248 2,464,417 2,938,892 $5,403,309 $5,403,000 74.02 P.V. of Cash Flow @ 10.00% $200,757 231,740 147,107 399,292 380,937 398,360 360,008 296,927 2,415,128 2,839,278 $5,254,406 $5,254,000 71.98 P.V. of Cash Flow @ 10.50% $200,303 230,168 145,449 393,003 373,242 388,546 349,551 286,997 2,367,259 2,743,473 $5,110,732 $5,111,000 70.01 P.V. of Cash Flow @ 11.00% $199,851 228,615 143,816 386,843 365,735 379,017 339,443 277,441 2,320,761 2,651,316 $4,972,077 $4,972,000 68.12
Total Cash Flow Property Resale @ 8% Cap Rate Total Property Present Value Rounded to Thousands Per Sq. Ft. Percentage Value Distribution Assured Income Prospective Income Prospective Property Resale
15.50% 29.05% 55.45% 100.00%
15.84% 29.06% 55.10% 100.00%
16.18% 29.08% 54.74% 100.00%
16.52% 29.09% 54.39% 100.00%
16.87% 29.09% 54.04% 100.00%
17.23% 29.09% 53.68% 100.00%
17.59% 29.09% 53.32% 100.00%
Direct Capitalization Analysis Using this simple analysis, we utilize the projected net income in year one, dividing it by the projected cap rate to achieve a valuation. CAP RATE ANALYSIS
NOI ($) 321,694.00 Cap Rate 8.00% $ Value 4,021,175.00
Final DCF Valuation Reconciliation The present value of the discounted cash flows shown above in Argus gives us a value of $5,403,000 and the Direct Capitalization Analysis gives a value of $4,021,175. The direct cap method uses a first year NOI, focusing on current market conditions. The DCF method takes all current conditions into account as well as accounting for our future assumptions.
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Ideally, the increase in the first year NOI would be offset by the increased discount rate, and the terminal rate would equal the going in cap rate. This is not the case, however, because the cash flows change each year according to the leases, expenses, and all other assumptions. Properties also receive relatively lower rents in the future, accounting for a terminal cap rate that is less than the going in rate. The direct cap is subject to far fewer assumptions, but doesnt exactly paint the whole picture of the property. In our case, the first year net income will be much lower than future years because of a number of leases beginning in the middle of 2012. Also, because we are using a cap rate based on the market conditions, and each real estate property is unique, the cap rate of 8% may not be the ideal rate for our property. We feel the DCF, which has many assumptions but reflects the entire holding period of the subject, is a more applicable measure in this case. Therefore, we will weight that approach more heavily than the Direct Cap Approach. The following chart breaks down our final estimate of value. INCOME APPROACH RECONCILIATION
Method Direct Capitalization Discounted Cash Flow Final Value Est. Value $4,021,175.00 $5,403,000.00 Weight 30% 60% Weighted Value $1,206,000.00 $3,782,000.00 $4,988,000.00
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Direct Sales Comparison Approach

Property Valuation The direct sales comparison approach is a frequently used appraisal method used to value real estate assets. Based on the principle of substitution, this method uses the One Price Rule, which declares equivalent goods tend to sell for equivalent prices, to derive an estimate of value based on other comparable sales in the market area. Additionally, a sales comparison should reflect the same highest and best use as the subject property. This is important since the true value of a real estate asset is not necessarily its current use, but the best use that is physically possible, legally permissible, maximally productive and financially feasible. Although this approach can be used to value nearly any real estate asset, it is more applicable to some assets than others. A direct sales comparison yields the most accurate results when used to reflect buyers and sellers analysis, such as in single-family housing, or when sales data of similar properties is plentiful. When buyers and sellers do not typically use the property being appraised, such as is the case with income producing properties, or if the data for comparable sales is sparse and/or outdated; this approach can produce a heavily erred value estimate. In executing this approach to valuation, there are two steps; the first step is to identify sales of similar properties in the same or a similar market, the next and final step is critical to deriving a reasonably accurate result from this approach to valuation adjusting sale prices to reflect differences from the subject property. Since real estate is a unique asset, which would normally make it one that is not comparable, the adjustments made to each individual sale, in essence, eliminate the unique traits of each comparable; putting all comps on a level playing field. These adjustments consist of both transactional (property rights, financing terms, conditions of sale, expenditures at sale, and market conditions) and property adjustments (location, physical characteristics, and economic characteristics), all of which are reconciled at the end in the final adjustment. Adjustments can be made one of two ways; by dollar amount or percentage points both will produce the same end result. Data for comparable properties can be found in a variety of ways, the most common method is through sources such as CoStar Group, Xceligent and Loopnet. These online listing sites often provide most, if not all, of the data needed for an accurate sales comparison. To fill in the gaps and determine how to make adjustments, it is common to use data found in market reports or talk to local real estate professionals to get a sense of how the market is functioning. In our sales comparison for EastPark One, we used all of the above-mentioned listing sites to identify our comparable properties, and based our adjustments on information we gathered during the brokers panel as well as from the Grubb & Ellis Office Trends Report for the fourth quarter of 2011.
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Descriptions of each comparable property, a sales comparison gird, rationales for our adjustments, and a value conclusion can be found in the proceeding pages: Comparable Sales 5133 W Terrace Drive Sales 1 A four story multi-tenant office building located in American Center Business Park, 0.6 miles south of the subject property. The property sits on a 7.68-acre lot and consists of 76,257 square feet of office space. American Family Insurance Corp Real Estate built the building in 1999. It has a historical sale listing in 2007 of $7,300,000 or $95.73/SF. This property is comparable to our subject property since it is located in the same office park, therefore including a majority of the same amenities.
744 Heartland Trail - Sales 2 A two story, class A, multi-tenant office building in Old Sauk Trails located right off of W Beltline highway. The building can accommodate 81,520 sf office user or office/lab user. TI packages and building upgrade options included in lease rates.
8413 Excelsior Drive Sales 3 Single story office building with nice finishes, key card entry, ample parking, wireless internet, T1 lines, conference rooms, and constructed in 2000. Located in Old Sauk Trails business park on the more desirable west side of Madison, WI. This business park is apprx. 400 acres, and home to over 75 corporations and businesses. Approximately 96% of the business park has been developed which makes this a great longterm investment. Building is within walking distance of restaurants, hotels, convention center, and shopping. Location provides great access to downtown Madison, and an easy drive to the interstate (I-94).
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COMPARABLE SALES GRID

Subject Address Sale Price Transactional Adjustments Real Property Rights Adjustment Financing Terms Adjustment Conditions of Sale Adjustment Expenditures at Sale Adjustment Market Conditions Adjustment Property Adjustments Proximity Adjustment Locational Features Adjustment Accessibility/Visibility Adjustment Site Size Adjustment Stories Adjustment Building Size Adjustment Age/Condition Adjustment Parking Adjustment Sales Price/SF Net Adjustments Adjusted Unit Price N/A Fee Simple -Cash -Market -None 0% N/A ------------Hwy 151 & 90/94 -Excellent -221,250 SF -3 -86,098 SF -1994 Ave+ -Paved -------------Sale 1 5133 W Terrace Dr.
$ 7,300,000
Fee Simple 0% Cash 0% Market 0% None 0% 2007 -10% .8 Miles North 0% Hwy 151 & 90/94 0% Excellent 0% 334,410 SF 10% 4 0% 76,257 SF 0% 1998 Ave+ 0% Paved 0% $ 95.73 0% $ 95.73
Sale 2 744 Heartland Trail $ 6,860,000 Fee Simple 0% Cash 0% Market 0% None 0% October 2005 -10% 21 Miles West -15% W Beltline Hwy 0% Average -5% 312,315 SF 10% 3 0% 84,345 SF 0% 1988 Ave 5% Paved 0% $ 81.33 -15% 12.2 $ 69.13
Sale 3 8413 Excelsior Dr. $ 9,590,000 Fee Simple 0% Cash 0% Market 0% None 0% July 2006 -10% 21 Miles West -15% W Beltline Hwy 0% Average -5% 215,836 SF 0% 1 0% 60,024 0% 2000 Excellent -15% Paved 0% $ 159.77 -45% 71.89 $ 87.88
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Sales Comparison Adjustments Real Property Rights: all of the sales are leased fee and do not require any adjustments. Financing Terms: it was assumed that all financing was cash to seller and did not require adjustments Conditions of Sale: all sales were arms length and under typical market conditions, therefore they do not require adjustments. Expenditures of Sale: all sales were made in absence of expenditures at sale and do not require any adjustments. Market Conditions: in light of the 2008 financial crisis and subsequent economic downturn, there real estate market has seen significant declines in value. All sales were executed prior to the 2008 financial crisis; based on comparative market analysis on inflation rates and other key market indicators discussed in the brokers panel, a 10% downward adjustment was applied all sales. Proximity to Subject Site: sale 1 is in the same business park as the subject site and therefore does not require any adjustments. Sales 2 and 3 were located in the West submarket where prices ten to be higher. A 15% downward adjustment was applied due to the superior locations. This adjustment was determined by looing at sales data for the West submarket in addition to our discussion on this submarket during the brokers panel. Locational Features: all of the sales are located off of a major arterial and do not require any adjustments. Accessibility/Visibility: all sales are easily accessible from well-maintained arterials, but Sale 1 and the Subject have greater visibility as compared to sales 2 and 3. A 5% downward adjustment was applied to sales 2 and 3 to compensate for their inferior locations. Site Size: sale 3 is comparable in size to the subject and required no adjustment. Sales 1 and 2 however, are both significantly larger than the subject. Historically, smaller sites tend to sell at a higher price per square foot, so a 10% upward adjustment was applied to both of these properties due to the larger site size. Stories: sales 1 and 2 are both comparable to the subject, as they are 3 and 4 stories respectively. Sale 3 is only 1 story however, historically, building height has had little impact on value so no adjustments were applied to any of the sales comps. Building Size: all of the comparable sales were similar in size to the subject and required no adjustments.
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Age/Condition: sale 1, which was built in 1998 and currently is in above average condition, did not require any adjustment as the subject was built only 4 years earlier and is also in above average condition. Because older buildings require more repair and maintenance, and upward adjustment was applied to Sale 2, which was built 6 years earlier than the subject. On the other hand, Sale 3 was built more recently in 2000, 18 years after the subject property, thus a downward adjustment of 15% was applied to this property. Age adjustments: 5% for every 5 years older/younger Parking: all properties had similar parking conditions and therefore no adjustments were made for this item. Market Value Conclusion Due to the lack of recent and highly comparable sales in the Madison market, this approach is less reliable than we would normally consider appropriate. To compensate for this lack of reliability, we applied a net adjustment to each sale to derive a net adjusted sale price, which was weighted for the adjusted sales price per square foot. Sale 1 is most comparable with the subject and therefore was given the 60% of the weight for this valuation. Sales 2 and 3, which are less reliable were weighted at 20% each due to their less comparable nature with regard to the subject. The adjusted sale price per square foot is $88.84/SF. To conclude a final value, the weighted average sales price per square foot was multiplied by the gross building area. WEIGHTED ADJUSTED SALE PRICE/SF
Sale 1 Sale 2 Sale 3 Total Net Adjusted Price/SF $ 95.73 $ 69.13 $ 87.88 Weight 60% 20% 20% 100% Weighted Value $ 57.44 $ 13.82 $ 17.58 $ 88.84
WEIGHTED FINAL VALUE

Average Sale Price/SF Gross SF Value Opinion of Value $ 88.84 86,098 $ 7,648,946 $ 7,650,000
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Cost Approach
The third approach to valuing real estate is the cost approach. The foundation of this approach is that a prospective buyer/user will not, or shouldnt, pay more for a property than what it would cost to build an equivalent or replacement. To calculate the value of a new property, one must subtract the accumulated depreciation from the total value of the property, then add the value of the land as vacant. The depreciation is calculated by combining the value of the land and its improvement, then subtracting the value of the property. There are five main steps to this approach: Step 1: Value the land (assuming vacancy) Step 2: Estimate the replacement cost of the improvements. Step 3: Estimate a profit adequate enough to attract an investor Step 4: Estimate accumulated depreciation and subtract it from the replacement cost, which includes entrepreneurial profits, to arrive at a value for the improvements. Step 5: Add in the value of the land to step four to arrive at a final value for the cost approach. Land Comparison Site Valuation The highest and best use analysis of the improved and vacant parcel concluded that the highest and best use as vacant is for office space. Sources used to find comparable data include Xceligent, CoStar, and Loopnet. A summary of each land sales comparable, a land sales comparison grid and rationales supporting each adjustment and a value conclusion are located below. Comparables 66 Buttonwood Court, Madison, WI 3.2-acre parcel located in the American Center Business Center on the east side of Madison. Slightly smaller than the subject property but within the same business park. 4702-4845 Tradewinds Parkway, Madison, WI 2.97-acre parcel located in the Tradewinds Business Center on the southeast side of Madison. Parcel is smaller in size to the subject property but is also near Highway 12-18. 3190 Deming Way, Middleton, WI 3.20-acre parcel located in the Airport Road Business Park in Middleton. The site is slightly smaller than the subject property and has quick access to Highway 12-1
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COMPARISON LAND SALES GRID

Address Sale Price Transactional Adjustments Real Property Rights Adjustment Financing Terms Adjustment Conditions of Sale Adjustment Market Conditions Adjustment Property Adjustments Property Size (Acres) Adjustment Zoning Adjustment Location Adjustment Frontage Adjustment Access Adjustment Topography Adjustment Street Improvement Adjustment Sales Price/Sq Ft Net Adjustments Adjusted Unit Price Subject American Parkway N/A Fee Simple ------------Market ------------5.97 -O-4 -East -Decent -Excellent -Level, Clear -In Place -------------Land Sale 1 Buttomwood Court $715,419 Fee Simple 0% Cash 0% Market 0% 2012 0% 3.04 -5% O-1 0% Far East 0% Similar 0% Excellent 0% Level, Clear 0% In Place 0% $5.40 -5% $5.13 Land Sale 2 Tradewinds Parkway $646,886 Fee Simple 0% Cash 0% Market 0% 2012 0% 2.97 -5% M-1 0% South East 10% Similar 0% Good 5% Level, Clear 0% In Place 0% $5.00 10% $5.5 Land Sale 3 Deming Way $1,010,692 Fee Simple 0% Cash 0% Market 0% 2012 0% 3.2 -5% PDD -7% Far West -15% Similar 0% Excellent 0% Level, Clear 0% In Place 0% $7.46 -20% $5.97
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Land Sale Comparison Adjustments Real Property Rights: All land sales comparables are fee simple so no adjustments were necessary. Financing Terms: All sales involved typical cash financing and no adjustments were necessary. Conditions of Sale: All sales were arms length and in normal market conditions. No adjustments were necessary. Size: Smaller lots tend to have higher per square foot sale prices than larger lots. Land sale 1 is much larger so a 15% adjustment was added. Land sale 2 was slightly smaller so a -2% adjustment was added. Location: West side office space in Madison is currently more valuable than East Side so -7% adjustment was added to subject property 3. Frontage: All sales have frontage and access very similar to the subject so no adjustments were made. Topography: All sales are generally clear and level so no adjustments were made. Street Improvements: All sales had all street improvements in place and did not require adjustments. Market Value Conclusion Due to the similarities of the vacant parcel and improved parcel we used the same land sales and price per square foot to value each property. Each parcel is zoned for office space with a highest and best use of office space. The three comparable properties are all near major highways like our subject. After applying a net adjustment percentage specific to each land sale comparable to get a net adjusted sales price per square foot, an average of the adjusted sales price per square foot was calculated. An average sales price was used instead of a weighted average sales price because all of the comparables are very similar to the subject site. The average adjusted sale price per square foot is $6.47. To conclude a final value the adjusted sale price per square foot was multiplied by gross land size.
MARKET VALUE
Vacant Site Gross Land Size 221,250 Average Adjusted PFS $5.53 Adjusted Sale Price $1,224,250 Market Value Opinion $1,225,000
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Improvement Analysis Hard Costs The hard costs are the structural improvements, which are the construction and physical building materials for the improvement of the property. Soft Costs The soft costs include architectural, development, engineering, legal, and other intangible costs such as license fees and permits required by local government. Soft costs include all of the non-construction costs involved in in the process to get to a finished property. To obtain our estimated value, we utilized information from the Broker Panels discussion. Site Improvements While on site visits and analyzing pictures of the subject property, we compiled a list of the site improvements, their approximate replacement costs, current ages and life expectancies. We will rely upon the Marshall Valuation Service to calculate life expectancies; approximate replacement costs and apply applicable multipliers. For now, the table below utilizes multipliers attained from prior years appraisal. Depreciation Accrued depreciation consists of physical deterioration, functional obsolescence, and external obsolescence. For 4600 American Parkway, physical deterioration is the main concern. The others are also discussed below. Because of its construction in 1995, we feel the depreciated value can be obtained by using the average life expectancy of an Average Class A building being 65 years. We accounted for the 17 years of wear and tear by using the average useful life of 65 years and calculating the long life depreciation percentage of 26.15%. We estimate the building has depreciated about $3.7 million since it was constructed. We estimated no functional obsolescence will affect the value of the subject property. Due to the recent improvements, building age, and amenities, the subject property is adequately fit for its intended use. External obsolescence is a detrimental effect caused by negative influences outside of the subject property site. Generally, external obsolescence is incurable by the owner of the property, and are often locational in nature. Due to the flat or increasing vacancy rate, and being located on Madisons east side, which has suffered dramatically from the recent economic environment, we estimate 8% external obsolescence for the site
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Replacement Cost Summary Below is the proposed valuation of the subject site at replacement cost if new: STRUCTURAL IMPROVEMENTS
EastPark One Type of Building Building Class Base Square Foot Cost Square Foot Refinements Heating & Cooling Sprinklers Total Cost Height & Size Refinements Number of Stories Height per Story Floor Area-Perimeter Multiplier Total Multiplier Refined Square Foot cost Final Refinements Current Cost Multiplier Local Multiplier Total Multiplier Final Square Foot Cost Building Area (Sq. Ft.) Total Hard Cost Lump Sum Adjustments Basement Parking Total Replacement Cost New Office Building Class A Above Average $129.90
($6.20) $1.90 $125.60 1.000 1.000 .918 .918 $115.300
1.030 1.020 1.051 $121.18 86,098 $10,433,356
$0 $10,433,3556
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Depreciation Analysis Below is the calculation of the physical depreciation of the subject site: PHYSICAL DEPRECIATION
EastPark One I. Physical Curable Depreciation Carpet Replacement ADA Compliance HVAC Replacement Roof Repairs Others: Total Curable Depreciation II. Physical Incurable Depreciation Short Life Items Total Physical Incurable Short Term Depreciation Physical Incurable Depreciation Long Life Items Total Replacement Cost New Bldg. Less: RCN of Physical Curable Items Less: RCN of Physical Incurable Short Life Items Replacement Cost New Long Life Items Life Expectancy of Long Life Items (Years) Effective Age of Long Life Items (Years) Long Life Depreciation Percentage Long Life Depreciation Total Physical Depreciation 13,078,211 300,000 0 12,778,211 50 18.0 36.0% 36.0% $4,600,156 $4,900,156 East Park One Cost To Cure 50,000 0 50,000 200,000 0 0 300,000
III.
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Site Improvement Analysis
Below is the analysis of site improvements for the subject: SITE IMPROVEMENT ANALYSIS
EastPark One
Multipliers Description Parking & Drives-Asphalt Concrete Sidewalk Landscaping Concrete Curbs Exterior Lighting Flood Lights (Mercury) Exterior Lighting 15 Poles Parking Lot Striping Other Unit Cost ($)
1.89 3.34 3.35 6.50 760.00 765.00 4.50 39,500
No. of Units
85,000 1500 124,836 2,500 20 20 300 0
Unit
SF SF SF LF Ea. Ea. Ea. Ea.
Subtotal ($)
160,650 5,010 418,199 16,250 15,200 15,300 1,350 ----
Current Cost
1.040 1.040 1.030 1.030 1.030 1.030 1.030 1.030
Local Cost
1.020 1.020 1.020 1.020 1.020 1.020 1.020 1.020
Total Mult.
1.061 1.061 1.051 1.051 1.051 1.051 1.051 1.051
Total RCN Cost ($)

170,450 5,316 439,527 17,079 15,975 16,080 1,419 ---$665,846
Soft Cost Mult.

1.090 1.090 1.090 1.090 1.090 1.090 1.090 1.100
Total RCN Cost ($)

185,791 5,794 479,084 18,616 17,413 17,527 1,547 ---$725,772
Age
6.0 8.0 6.0 8.0 8.0 8.0 3.0 5.0
Life
8.0 13.0 10.0 13.0 13.0 13.0 5.0 10.0
Dep. (%)
75.0% 61.5% 60% 61.5% 61.5% 61.5% 60.0% 50.0%
RCN Less Depreciation

46,448 2,228 191,634 7,160 6,697 6,714 619 ---$261,527 $262,000
Replacement Cost New Site Improvements Rounded
55
Summary of Final Value In order to move forward with this procedure, we must be given some direction in regards to determining depreciation. Also, we would utilize Marshall Valuation Services Building Cost Manual in order to value the buildings improvements more accurately. The Final Replacement Cost Summary is shown below. We estimated soft costs as 12% and entrepreneurial profit as 6.5% of hard costs, which are both in line with the average market rates for commercial office properties. COST APPROACH SUMMARY
East Park One Replacement Cost New (Hard Costs) Soft Cost @ Total Soft and Hard Costs Entrepreneurial (Developers) Profit Total Improvement Costs New Less: Accrued Depreciation Physical Depreciation Curable Incurable Total Physical Depreciation Functional Obsolescence Curable Incurable Total Functional Obsolescence External Obsolescence (@ 0%) Total Accrued Depreciation Depreciation Replacement Cost Plus: Depreciated Cost of Site Improvements Plus: Site Value Indicated Value Via Cost Approach Rounded 9% 15% $10,433,356 939,002 $11,372,358 1,705,854 $13,078,211
$300,000 $4,708,156 $5,008,156
$0 $0 $0 $0 $5,008,156 $8,070,055 $262,000 $980,000 $9,312,055 $9,300,000
The table above is a final summary of the analysis done in the Cost Approach. After estimating hard costs, site improvements, soft costs, and depreciation, our final opinion of value is:
$9,300,000
56
Reconciliation and Final Value Conclusions

4600 AMERICAN PARKWAY FINAL VALUATIONS Income Approach $ 4,850,270.00 Direct Sales Comparison Approach $ 7,650,000.00 Cost Approach $ 10,525,000.00 Note: Cost approach final value includes value of land ($1,225,000) Income Approach The strength of the income approach is that it projects the future income of the property, and takes future cash flows into consideration when arriving at a final value conclusion. However, because it projects a value in the future, it does not account for fluctuations in the market and unforeseeable circumstances. Also, the utilization of cap rates leaves it vulnerable to manipulation. Direct Sales Comparison Approach The direct sales comparison approach is beneficial to valuation because it uses recent sales data to reflect current market conditions to determine a value. However, it can be very difficult to make adjustments to compensate for differences in location, tenant quality, and attributes of the building. It is a very subjective analysis, and leaves a lot of discretion to the appraiser. Also, if a building is unique, it makes this comparison very difficult, if not impossible. Cost Approach The cost approach takes into consideration the current cost to build a replacement of the building on the site. It also accounts for physical depreciation and functional and external obsolescence. Because this approach doesnt put any weight into market conditions or overall demand, it is not typically the best measure for appraisal. Summary We felt it was necessary to incorporate all three approaches into one final value. The cost of construction, current market trends, and future cash considerations are all components of a propertys worth. For our final value, however, we weighted the amount towards the income approach. This approach focuses on the long-term investment value, which is the most applicable for real estate professionals. The direct sales comparison approach gives an insight into
57
the current market conditions; however, if there are no recent sales or if the recently sold properties are not similar to the subject, this valuation can be very volatile. In this case, the lack of Class A office buildings sold in Madison made the valuation difficult. The replacement cost approach is the least applicable, as it doesnt take into consideration the future market demand or future pricing of building construction materials. The cost relies heavily on the Marshall Valuation to estimate replacement costs, which are assumptions about every Class A building and may not be applicable to the subject. In the recovering market on the east side of Madison, we feel the appraised value should focus on the propertys long term investment outlook and income producing potential rather than the current prices. Potential buyers are most interested in the cash flows the subject property can produce. Therefore, we weighted the appraised value as displayed in the following table: FINAL ESTIMATION OF IMPROVED PARCEL
Approach Income Sales Comparison Cost Total Total Rounded Value Estimate $ 4,850,270.00 $ 7,650,000.00 $ 10,525,000.00 Weight 65% 25% 10% Weighted Value $ 3,152,675.50 $ 1,912,500.00 $ 1,052,500.00 $ 6,117,675.50 $ 6,100,000.00
FINAL ESTIMATION OF VACANT PARCEL

Approach Vacant Site Total Value Estimate $ 1,225,000
58
Appendices & Other Information

Appendix A: Maps Location of Subject Property
Source: Google Maps
Aerial Photograph
Source: Google Maps
59
Appendix B: Transportation Madison Metro Transit Route 25- Capital Square to American Center
Madison Metro Transit Route 26: American Center to East Towne Mall
60
Appendix C: Overall Map of Comparable Sales
Overall Map of Comparable Sales
Source: Google Maps; My Places
61
RENTAL A
Name of Property Address 5133 West Terrace Drive Madison, Wisconsin Property Type Office Commercial
Recording Information Sale Price: Sale Date: Prior Sale: Units of Comparison Price Per Rentable Sq.Ft.: Overall Capitalization Rate: Rentable Area
7,300,000 N/A
$95.73
Size Sq. Ft. 81,593
Land:Bldg -
Parking Space 0
Property Description Year Built: No. Stories: Land Size: Zoning: Condition: Parking Spaces: Legal Description:
Parcel Number: Comments
1999 4 334,310 O-4 Ave+ 0 CERTIFIED SURVEY MAP NO 9547 AS RECORDED IN DANE COUNTY REGISTER OF DEEDS IN VOL 54 PAGE 278 OF CERTIFIED SURVEYS, LOT 1. 081022406012 A four story multi-tenant office building located in American Center Business Park, 0.6 miles south of the subject property. The property sits on a 7.68 acre lot and consists of 76,257 square feet of office space. The building was built in 1999 by American Family Insurance Corp Real Estate. It has a historical sale listing in 2007 of $7,300,000 or $95.73/SF. This property is comparable to our subject property since it is located in the same office park, therefore including a majority of the same amenities.
62
RENTAL B
Name of Property The 5100 Building Address 5100 EastPark Blvd Madison, Wisconsin Property Type Office Commercial
7,100,000 -
$12.95 Size Sq. Ft. 57,402 Land:Bldg Parking Space 0
Property Description Year Built: No. Stories: Land Size: Zoning: Condition: Parking Spaces: Legal Description: Parcel Number: Comments
2003 3 160,687 O-4 Average 0 THE AMERICAN CENTER PLAT EASTPARK ADDITION, LOT 38. 081022106068 > American Center Business Park > Expenses: Tenant responsible for all additional operating expenses on a pro-rata share basis, which includes real estate taxes, insurance, common area maintenance, utilities and janitorial services (3-10 year lease terms - Load factor 12%)
63
RENTAL C
Name of Property Address 8401 Excelsior Drive Madison, Wisconsin Property Type Office Commercial
5,600,000 -
$19.5 Size Sq. Ft. 45,996 Land:Bldg Parking Space 0
Property Description Year Built: No. Stories: Land Size: Zoning: Condition: Parking Spaces: Legal Description: Parcel Number: Comments
2002 3 91,163 RPSM Average 0 OLD SAUK TRAILS PARK FIRST ADDITION, LOT 13 070815403096
64
Appendix D: Flood Insurance Rate Below is the Flood Insurance Rate Map, effective January 2009, for the area around 4600 American Parkway. The EastPark One property is designated by the black rectangle. FLOOD INSURANCE RATE MAP (FIRM)
Source: FEMA
65
Appendix E: Photos of Subject Site and Improvements BUILDING EXTERIOR
66
PARKING LOT & SIGNAGE
67
FEATURES & AMENITIES
68
OFFICE SUITES
69
MISCELLANEOUS / OTHER
70
LOBBY & ACCESS
71
Appendix F: The American Center Pedestrian Trail System - Map
72
Appendix G: Site Plan & Map
73

Appraisal EastPark One

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Appraisal EastPark One

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Market Value Appraisal

Class-A Office Complex

UW Madison Real Estate Appraisal

Elizabeth Breitlow Morgan Whiteley Robert Anderson Timothy Balcerzak

UW MADISON REAL ESTATE APPRAISAL

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW Madison Real Estate Appraisal

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

Elizabeth Breitlow General Appraiser

Morgan Whiteley General Appraiser

Robert Anderson General Appraiser

Timothy Balcerzak General Appraiser

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

Elizabeth Breitlow General Appraiser

Morgan Whiteley General Appraiser

Robert Anderson General Appraiser

Timothy Balcerzak General Appraiser

Date of Report: December 15, 2012

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

General Assumptions and Limiting Conditions

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

Summary of Salient Facts and Conclusions

Year Built Shape Site Size Gross Building Area

Rentable Building Area

A three-story multi-tenant Class A office

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

1,119.23 16,736.86 54,424.95 9,727.96 69,484.58 151,493.58 -83.64 0

1,116.01 17,611.6 56,884.04 11,238.76 72,217.82 159,068.23 -85.81 0

- .3% 5.4% 4.5% 15.5% 3.9% 5.0% 2.6% 0%

Source: Access Dane Treasurer Tax Information

TAX ASSESSMENT: 4600 AMERICAN PARKWAY

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

Market Area Description and Analysis

Madison Dane Co.

Source: US Bureau of Census, 2010 Census of Population

49.2% 50.8% 17.9% 21.4% 32.2% 19.3% 9.2% 31.1 years

78.9% 7.3% 7.4% 6.8% 0.4%

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

--- MADISON --- WISCONSIN --- NATION

Note: Recessions shown in gray

Note: Recessions shown in gray

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

Source: Grubb & Ellis- Office Trends Report, 4Q 2011

Asking Gross Rents - By Submarket

East 2010 2011

Source: Grubb & Ellis- Office Trends Report, 4Q 2011

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

Property Description and Analysis Site Analysis

Properties and Qualities:

Ringwoood Silt Loam (RnB)

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

UW MADISON REAL ESTATE APPRAISAL REAL ESTATE APPRAISERS AND CONSULTANTS

Property Description and Analysis Improved Property Analysis